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As filed with the Securities and Exchange Commission on May 16, 2012

Registration No. 333-180615

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

To

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

 

 

BLOOMIN’ BRANDS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		5812				20-8023465
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)				(I.R.S. Employer Identification Number)

 

 

 

2202 North West Shore Boulevard, Suite 500 Tampa, Florida 33607 (813) 282-1225 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

 

Joseph J. Kadow Executive Vice President and Chief Legal Officer Bloomin’ Brands, Inc. 2202 North West Shore Boulevard, Suite 500, Tampa, Florida 33607 (813) 282-1225 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)
Copies to:
John M. Gherlein Janet A. Spreen Baker & Hostetler LLP PNC Center 1900 East 9th Street Cleveland, Ohio 44114 Telephone: (216) 621-0200 Facsimile: (216) 696-0740		Keith F. Higgins Marko S. Zatylny Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, Massachusetts 02199-3600 Telephone: (617) 951-7000 Facsimile: (617) 951-7050

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462 under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

		Large accelerated filer    ¨		Accelerated filer    ¨		Non-accelerated filer    x		Smaller reporting company    ¨

 

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Proposed Maximum Aggregate Offering Price (1)(2)		Amount of Registration Fee (3)
Common Stock, $.01 par value per share		$345,000,000		$39,537

(1)	Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) promulgated under the Securities Act.

(2)	Includes shares of common stock that may be issuable upon exercise of an option to purchase additional shares granted to the underwriters.

(3)	$34,380 of this amount was previously paid.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

Subject to Completion

Preliminary Prospectus dated May 16, 2012

P R O S P E C T U S

Shares

 

 

Common Stock

 

 

This is Bloomin’ Brands, Inc.’s initial public offering. We are selling         shares of our common stock and the selling stockholders identified in this prospectus are selling          shares of our common stock. We will not receive any proceeds from the sale of shares by the selling stockholders.

We expect the public offering price to be between $         and $        per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares will trade on              the Nasdaq Global Select Market under the symbol “BLMN.”

Investing in the common stock involves risks that are described in the “Risk Factors” section beginning on page 12 of this prospectus.

 

 

 

		Per Share						Total
Public offering price		$						$
Underwriting discount		$						$
Proceeds, before expenses, to us		$						$
Proceeds, before expenses, to selling stockholders		$						$

The underwriters may also exercise their option to purchase up to an additional              shares from the selling stockholders at the public offering price, on the same terms and conditions as set forth above, for 30 days after the date of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The shares will be ready for delivery on or about                 , 2012.

 

 

Joint Book-Running Managers

 

BofA Merrill Lynch		Morgan Stanley		J.P. Morgan
Deutsche Bank Securities				Goldman, Sachs & Co.

Co-Lead Manager

Jefferies

Co-Managers

 

William Blair		Raymond James		Wells Fargo Securities		The Williams Capital Group, L.P.

 

 

The date of this prospectus is             , 2012.

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PROSPECTUS SUMMARY			1
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA			9
RISK FACTORS			12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			31
USE OF PROCEEDS			33
DIVIDEND POLICY			34
CAPITALIZATION			35
DILUTION			36
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA			37
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS			40
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			52
BUSINESS			95
MANAGEMENT			123
COMPENSATION DISCUSSION AND ANALYSIS			128
EXECUTIVE COMPENSATION			136
RELATED PARTY TRANSACTIONS			153
DESCRIPTION OF INDEBTEDNESS			157
PRINCIPAL AND SELLING STOCKHOLDERS			166
DESCRIPTION OF CAPITAL STOCK			169
SHARES ELIGIBLE FOR FUTURE SALE			172
MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR NON-U.S. HOLDERS			174
UNDERWRITING			178
LEGAL MATTERS			186
EXPERTS			186
WHERE YOU CAN FIND MORE INFORMATION			186
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

 

 

You should rely only on the information contained in this prospectus or in any free writing prospectus that we authorize be distributed to you. We have not, and the underwriters have not, authorized anyone to provide you with additional or different information. This document may only be used where it is legal to sell these securities. You should assume that the information contained in this prospectus is accurate only as of the date of this prospectus.

No action is being taken in any jurisdiction outside the United States to permit a public offering of the common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of the prospectus applicable to that jurisdiction.

 

 

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MARKET AND OTHER INDUSTRY DATA

In this prospectus, we rely on and refer to information regarding the restaurant industry, sectors within the restaurant industry, such as full-service restaurants, and categories within the full-service sector that are generally defined by price point (e.g., casual or fine dining) and menu type (e.g., steak or Italian), based on information published by industry research firms Technomic, Inc., The NPD Group, Inc. (which prepares and disseminates Consumer Reported Eating Share Trends (“CREST^®”) data), Euromonitor International and Knapp-Track, or compiled from market research reports, analyst reports and other publicly available information. Delineations of our competitors by price or menu categories may vary by data source.

Unless otherwise indicated in this prospectus:

 

•

market data relating to (i) the U.S. market positions of Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill or Fleming’s Prime Steakhouse and Wine Bar and (ii) the size of the U.S. full-service restaurant sector’s markets in the menu categories of steak, Italian and seafood was taken from Technomic, Inc.’s 2012 Top 500 Chain Restaurant Report and is based on 2011 calendar year sales;

 

•

market data relating to the U.S. full-service restaurant sector’s casual dining category was published as CREST® data and is based on sales for the 12 months ended November 30, 2011, as reported by The NPD Group, Inc. as of January 5, 2012;

 

•

market data relating to a foreign country’s full-service restaurant sector or the market position of Outback Steakhouse restaurants in a particular foreign market was published by, or was derived by us from, Euromonitor International, and such data is as of December 31, 2010, which is the most recent available data; and

 

•

market data relating to traffic growth of U.S. full-service restaurants tracked by Knapp-Track™ was derived by us from Malcolm M. Knapp, Inc.’s Knapp-Track reports dated December 2011. Knapp-Track Casual Dining is a monthly sales and guest count tracking service for the full-service restaurant sector in the United States that tracks a competitive set of participants by aggregating 10,400 full-service casual restaurants with over $32.1 billion in total sales. Knapp-Track High End is a similar tracking service that tracks a competitive set of U.S. participants by aggregating approximately 287 full-service high end restaurants with an estimated $1.5 billion in total sales.

All other industry and market data included in this prospectus are from internal analyses based upon publicly available data or other proprietary research and analysis. We believe this information to be true and accurate; however, this information cannot always be verified with complete certainty because of the limitations on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties.

TRADEMARKS, SERVICE MARKS AND COPYRIGHTS

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this prospectus are listed without the ©, ® and ™ symbols, but we will assert, to the fullest extent permissible under applicable law, our rights to our copyrights, trademarks, service marks and trade names. All brand names or other trademarks appearing in this prospectus are the property of their respective owners, and their use or display should not be construed to imply a relationship with, or an endorsement or a sponsorship of us by, these other parties.

 

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RISK FACTORS

An investment in our common stock involves various risks. You should carefully consider the following risks and all of the other information contained in this prospectus before investing in our common stock. The risks described below are those that we believe are the material risks that we face. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment in our common stock.

Risks Related to Our Business and Industry

We face significant competition for customers, real estate and employees and competitive pressure to adapt to changes in conditions driving customer traffic. Our inability to compete effectively may affect our traffic, sales and profit margins, which could adversely affect our business, financial condition and results of operations.

The restaurant industry is intensely competitive with a substantial number of restaurant operators that compete directly and indirectly with us in respect to price, service, location and food quality, and there are other well-established competitors with significant financial and other resources. There is also active competition for management personnel as well as attractive suitable real estate sites. Consumer tastes, nutritional and dietary trends, traffic patterns and the type, number and location of competing restaurants often affect the restaurant business, and our competitors may react more efficiently and effectively to those conditions. Further, we face growing competition from the supermarket industry, with the improvement of their “convenient meals” in the deli section, and from quick service and fast casual restaurants, as a result of higher-quality food and beverage offerings by those restaurants. If we are unable to continue to compete effectively, our traffic, sales and margins could decline and our business, financial condition and results of operations would be adversely affected.

Challenging economic conditions may have a negative effect on our cash flows through lower consumer confidence and discretionary spending, availability and cost of credit, foreign currency exchange rates and other items.

Challenging economic conditions may negatively impact consumer confidence and discretionary spending and thus cause a decline in our cash flow from operations. For example, during the economic downturn starting in 2008, continuing disruptions in the overall economy, including the ongoing impacts of the housing crisis, high unemployment, and financial market volatility and unpredictability, caused a related reduction in consumer confidence, which negatively affected customer traffic and sales throughout our industry. These factors, as well as national, regional and local regulatory and economic conditions, gasoline prices, disposable consumer income and consumer confidence, affect discretionary consumer spending. If challenging economic conditions persist for an extended period of time or worsen, consumers might make long-lasting changes to their discretionary spending behavior, including dining out less frequently. The ability of the U.S. economy to continue to recover from these challenging economic conditions is likely to be affected by many national and international factors that are beyond our control, including current economic trends in Europe. Continued weakness in or a further worsening of the economy, generally or in a number of our markets, and our customers’ reactions to these trends could adversely affect our business and cause us to, among other things, reduce the number and frequency of new restaurant openings, close restaurants or delay remodeling of our existing restaurant locations.

In addition, as noted in our other risk factors, our high degree of leverage could increase our vulnerability to general economic and industry conditions and require that a substantial portion of cash flow from operations be dedicated to the payment of principal and interest on our indebtedness. Further, the availability of credit already arranged for under our revolving credit facilities and the cost and availability of future credit may be adversely impacted by economic challenges. Foreign currency exchange rates for the countries in which we operate may decline. In addition, we may experience interruptions in supplies and other services from our third-party vendors as a result of market conditions. These disruptions in the economy are beyond our control, and there is no guarantee that any government response will restore consumer confidence, stabilize the economy or increase the availability of credit.

 

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Loss of key management personnel could hurt our business and inhibit our ability to operate and grow successfully.

Our success will continue to depend, to a significant extent, on our leadership team and other key management personnel. If we are unable to attract and retain sufficiently experienced and capable management personnel, our business and financial results may suffer. If members of our leadership team or other key management personnel leave, we may have difficulty replacing them, and our business may suffer. There can be no assurance that we will be able to successfully attract and retain our leadership team and other key management personnel that we need.

We could face labor shortages that could slow our growth and adversely impact our ability to operate our restaurants.

Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified employees, including managing partners, restaurant managers, kitchen staff and servers, necessary to keep pace with our anticipated expansion schedule and meet the needs of our existing restaurants. A sufficient number of qualified individuals of the requisite caliber to fill these positions may be in short supply in some communities. Competition in these communities for qualified staff could require us to pay higher wages and provide greater benefits. Any inability to recruit and retain qualified individuals may also delay the planned openings of new restaurants and could adversely impact our existing restaurants. Any such inability to retain or recruit qualified employees, increased costs of attracting qualified employees or delays in restaurant openings could adversely affect our business and results of operations.

Risks associated with our expansion plans may have adverse effects on our ability to increase revenues.

As part of our business strategy, we intend to continue to expand our current portfolio of restaurants. Current development schedules call for the construction of approximately 30 or more new restaurants in 2012. A variety of factors could cause the actual results and outcome of those expansion plans to differ from the anticipated results, including among other things:

 

•

the availability of attractive sites for new restaurants and the ability to obtain appropriate real estate at those sites at acceptable prices;

 

•

the ability to obtain all required governmental permits, including zoning approvals and liquor licenses, on a timely basis;

 

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the impact of moratoriums or approval processes of state, local or foreign governments, which could result in significant delays;

 

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the ability to obtain all necessary contractors and sub-contractors;

 

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union activities such as picketing and hand billing, which could delay construction;

 

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the ability to negotiate suitable lease terms;

 

•

the ability to recruit and train skilled management and restaurant employees;

 

•

the ability to receive the premises from the landlord’s developer without any delays; and

 

•

weather, natural disasters and disasters beyond our control resulting in construction delays.

Some of our new restaurants may take several months to reach planned operating levels due to lack of market awareness, start-up costs and other factors typically associated with new restaurants. There is also the possibility that new restaurants may attract customers away from other restaurants we own, thereby reducing the revenues of those existing restaurants.

 

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Development rates for each concept may differ significantly. The development of each concept may not be as successful as our experience in the past. It is difficult to estimate the performance of newly opened restaurants. Earnings achieved to date by restaurants open for less than two years may not be indicative of future operating results. Should enough of these new restaurants not meet targeted performance, it could have a material adverse effect on our operating results.

Our business is subject to seasonal fluctuations and past results are not indicative of future results.

Historically, customer spending patterns for our established restaurants are generally highest in the first quarter of the year and lowest in the third quarter of the year. Additionally, holidays may affect sales volumes seasonally in some of the markets in which we operate. Our quarterly results have been and will continue to be affected by the timing of new restaurant openings and their associated pre-opening costs, as well as restaurant closures and exit-related costs and impairments of goodwill, intangible assets and property, fixtures and equipment. As a result of these and other factors, our financial results for any quarter may not be indicative of the results that may be achieved for a full fiscal year.

Significant adverse weather conditions and other disasters could negatively impact our results of operations.

Adverse weather conditions and natural disasters, such as regional winter storms, floods, major hurricanes and earthquakes, severe thunderstorms and other disasters, such as oil spills, could negatively impact our results of operations. Temporary and prolonged restaurant closures may occur and customer traffic may decline due to the actual or perceived effects from these events.

We may be required to use cash to pay one of our franchisees in connection with a put right under a settlement agreement, which could have an adverse impact on our development plans and operating results.

In connection with the settlement of litigation with T-Bird, which include the franchisees of 56 Outback Steakhouse restaurants in California, we entered into an agreement with T-Bird pursuant to which T-Bird has the right, referred to as the Put Right, to require us to purchase for cash all of the ownership interests in the T-Bird entities (which include general and limited partnership interests in such entities) that own 56 restaurants. The Put Right will become exercisable by T-Bird for a one-year period beginning on the date of closing of this offering. The Put Right is also exercisable if we sell our Outback Steakhouse concept. If the Put Right is exercised, we will pay a purchase price equal to a multiple of the T-Bird entities’ adjusted EBITDA, net of liabilities, for the trailing 12 months as of the closing of the purchase from T-Bird. The multiple will be equal to 75% of the multiple of our adjusted EBITDA for the same trailing 12-month period as reflected in our stock price in the case of this offering or, in a sale of our Outback Steakhouse concept, 75% of the multiple of adjusted EBITDA that we are receiving in the sale. We have a one-time right to reject the exercise of the Put Right if the transaction would be dilutive to our consolidated earnings per share. In that event, the Put Right is extended until the first anniversary of our notice to the T-Bird entities of that rejection. We have agreed to waive all rights of first refusal in our franchise arrangements with the T-Bird entities in connection with a sale of all, and not less than all, of the assets, or at least 75% of the ownership, of the T-Bird entities. If the Put Right is exercised, we will have to use cash to pay the purchase price that could have been allocated to more profitable development initiatives or other business needs, and we will then own restaurants that may not fit our current expansion criteria. This could have an adverse impact on our operating results.

We have limited control with respect to the operations of our franchisees and joint venture partners, which could have a negative impact on our business.

Our franchisees and joint venture partners are obligated to operate their restaurants according to the specific guidelines we set forth. We provide training opportunities to these franchisees and joint venture partners to fully integrate them into our operating strategy. However, since we do not have control over these restaurants, we cannot give assurance that there will not be differences in product quality or that there will be adherence to all

 

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of our guidelines at these restaurants. The failure of these restaurants to operate effectively could adversely affect our cash flows from those operations or have a negative impact on our reputation or our business.

Our failure to comply with government regulation, and the costs of compliance or non-compliance, could adversely affect our business.

We are subject to various federal, state, local and foreign laws affecting our business. Each of our restaurants is subject to licensing and regulation by a number of governmental authorities, which may include, among others, alcoholic beverage control, health and safety, nutritional menu labeling, health care, environmental and fire agencies in the state, municipality or country in which the restaurant is located. Difficulty in obtaining or failing to obtain the required licenses or approvals could delay or prevent the development of a new restaurant in a particular area. Additionally, difficulties or inabilities to retain or renew licenses, or increased compliance costs due to changed regulations, could adversely affect operations at existing restaurants.

Approximately 15% of our consolidated restaurant sales are attributable to the sale of alcoholic beverages. Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license or permit to sell alcoholic beverages on the premises and to provide service for extended hours and on Sundays. Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of patrons and employees, hours of operation, advertising, training, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages. The failure of a restaurant to obtain or retain liquor or food service licenses would adversely affect the restaurant’s operations. Additionally, we are subject in certain states to “dramshop” statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.

Our restaurant operations are also subject to federal and state labor laws, including the Fair Labor Standards Act, governing such matters as minimum wages, overtime, tip credits and worker conditions. Our employees who receive tips as part of their compensation, such as servers, are paid at a minimum wage rate, after giving effect to applicable tip credits. We rely on our employees to accurately disclose the full amount of their tip income, and we base our FICA tax reporting on the disclosures provided to us by such tipped employees. Our other personnel, such as our kitchen staff, are typically paid in excess of minimum wage. As significant numbers of our food service and preparation personnel are paid at rates related to the applicable minimum wage, further increases in the minimum wage or other changes in these laws could increase our labor costs. Our ability to respond to minimum wage increases by increasing menu prices will depend on the responses of our competitors and customers. Further, we are continuing to assess the impact of federal health care legislation on our health care benefit costs. The imposition of any requirement that we provide health insurance benefits to employees that are more extensive than the health insurance benefits we currently provide, or the imposition of additional employer paid employment taxes on income earned by our employees, could have an adverse effect on our results of operations and financial position. Our distributors and suppliers also may be affected by higher minimum wage and benefit standards, which could result in higher costs for goods and services supplied to us.

The Patient Protection and Affordability Act of 2010 (the “PPACA”) enacted in March 2010 requires chain restaurants with 20 or more locations in the United States to comply with federal nutritional disclosure requirements. The FDA has indicated that it intends to issue final regulations by the middle of 2012 and begin enforcing the regulations by the end of 2012. A number of states, counties and cities have also enacted menu labeling laws requiring multi-unit restaurant operators to disclose certain nutritional information to customers, or have enacted legislation restricting the use of certain types of ingredients in restaurants. Although the federal legislation is intended to preempt conflicting state or local laws on nutrition labeling, until we are required to comply with the federal law we will be subject to a patchwork of state and local laws and regulations regarding nutritional content disclosure requirements. Many of these requirements are inconsistent or are interpreted

 

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differently from one jurisdiction to another. The effect of such labeling requirements on consumer choices, if any, is unclear at this time.

There is also a potential for increased regulation of food in the United States under the recent changes in the HACCP system requirements. HACCP refers to a management system in which food safety is addressed through the analysis and control of potential hazards from production, procurement and handling, to manufacturing, distribution and consumption of the finished product. Many states have required restaurants to develop and implement HACCP Systems and the United States government continues to expand the sectors of the food industry that must adopt and implement HACCP programs. For example, the Food Safety Modernization Act (the “FSMA”), signed into law in January 2011, granted the FDA new authority regarding the safety of the entire food system, including through increased inspections and mandatory food recalls. Although restaurants are specifically exempted from or not directly implicated by some of these new requirements, we anticipate that the new requirements may impact our industry. Additionally, our suppliers may initiate or otherwise be subject to food recalls that may impact the availability of certain products, result in adverse publicity or require us to take actions that could be costly for us or otherwise harm our business.

We are subject to the Americans with Disabilities Act, or the ADA, which, among other things, requires our restaurants to meet federally mandated requirements for the disabled. The ADA prohibits discrimination in employment and public accommodations on the basis of disability. Under the ADA, we could be required to expend funds to modify our restaurants to provide service to, or make reasonable accommodations for the employment of, disabled persons. In addition, our employment practices are subject to the requirements of the Immigration and Naturalization Service relating to citizenship and residency. Government regulations could affect and change the items we procure for resale such as commodities. We may also become subject to legislation or regulation seeking to tax or regulate high fat and high sodium foods, particularly in the United States, which could be costly to comply with. Our results can be impacted by tax legislation and regulation in the jurisdictions in which we operate and by accounting standards or pronouncements.

We are also subject to laws and regulations relating to information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud, and any failure or perceived failure to comply with these laws and regulations could harm our reputation or lead to litigation, which could adversely affect our financial condition.

We face a variety of risks associated with doing business in foreign markets that could have a negative impact on our financial performance.

We have a significant number of franchised, joint venture and company-owned Outback Steakhouse restaurants outside the United States, and we intend to continue our efforts to grow internationally. Although we believe we have developed the support structure for international operations and growth, there is no assurance that international operations will be profitable or international growth will continue.

Our foreign operations are subject to all of the same risks as our domestic restaurants, as well as additional risks including, among others, international economic and political conditions and the possibility of instability and unrest, differing cultures and consumer preferences, diverse government regulations and tax systems, the ability to source high quality ingredients and other commodities in a cost-effective manner, uncertain or differing interpretations of rights and obligations in connection with international franchise agreements and the collection of ongoing royalties from international franchisees, the availability and cost of land and construction costs, and the availability of experienced management, appropriate franchisees and area operating partners.

Currency regulations and fluctuations in exchange rates could also affect our performance. We have direct investments in restaurants in South Korea, Hong Kong and Brazil, as well as international franchises, in a total of 21 countries and territories. As a result, we may experience losses from foreign currency translation, and such losses could adversely affect our overall sales and earnings.

 

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We are subject to governmental regulation throughout the world, including antitrust and tax requirements, anti-boycott regulations, import/export/customs regulations and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act. Any new regulatory or trade initiatives could impact our operations in certain countries. Failure to comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could harm our business, results of operations and financial condition.

Increased commodity, energy and other costs could decrease our profit margins or cause us to limit or otherwise modify our menus, which could adversely affect our business.

The performance of our restaurants depends on our ability to anticipate and react to changes in the price and availability of food commodities, including among other things beef, chicken, seafood, butter, cheese and produce. Prices may be affected due to market changes, increased competition, the general risk of inflation, shortages or interruptions in supply due to weather, disease or other conditions beyond our control, or other reasons. Increased prices or shortages could affect the cost and quality of the items we buy or require us to raise prices or limit our menu options. For example, in 2011, commodity costs increased by approximately 5% and, as a result, we increased our prices at each of our concepts in the range of 1.5% to 3.0%. These events, combined with other more general economic and demographic conditions, could impact our pricing and negatively affect our sales and profit margins.

The performance of our restaurants is also adversely affected by increases in the price of utilities, such as natural gas, whether as a result of inflation, shortages or interruptions in supply, or otherwise. We use derivative instruments to mitigate some of our overall exposure to material increases in natural gas prices. We do not apply hedge accounting to these instruments, and any changes in the fair value of the derivative instruments are marked-to-market through earnings in the period of change. To date, effects of these derivative instruments have been immaterial to our financial statements for all periods presented.

Our business also incurs significant costs for insurance, labor, marketing, taxes, real estate, borrowing and litigation, all of which could increase due to inflation, changes in laws, competition or other events beyond our control.

Our ability to respond to increased costs by increasing menu prices or by implementing alternative processes or products will depend on our ability to anticipate and react to such increases and other more general economic and demographic conditions, as well as the responses of our competitors and customers. All of these things may be difficult to predict and beyond our control. In this manner, increased costs could adversely affect our performance.

Infringement of our intellectual property could diminish the value of our restaurant concepts and harm our business.

We regard our service marks, including “Outback Steakhouse,” “Carrabba’s Italian Grill,” “Bonefish Grill” and “Fleming’s Prime Steakhouse and Wine Bar,” and our “Bloomin’ Onion” trademark as having significant value and as being important factors in the marketing of our restaurants. We have also obtained trademarks for several of our other menu items and for various advertising slogans. In addition, the overall layout, appearance and designs of our restaurants are valuable assets. We believe that these and other intellectual property are valuable assets that are critical to our success. We rely on a combination of protections provided by contracts, copyrights, patents, trademarks, and other common law rights, such as trade secret and unfair competition laws, to protect our restaurants and services from infringement. We have registered certain trademarks and service marks and have other registration applications pending in the United States and foreign jurisdictions. However, not all of the trademarks or service marks that we currently use have been registered in all of the countries in which we do business, and they may never be registered in all of these countries. There may not be adequate protection for certain intellectual property such as the overall appearance of our restaurants. We are aware of names and marks similar to our service marks being used by other persons in certain geographic

 

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areas in which we have restaurants. Although we believe such uses will not adversely affect us, further or currently unknown unauthorized uses or other misappropriation of our trademarks or service marks could diminish the value of our brands and restaurant concepts and may adversely affect our business. We may be unable to detect such unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.

Effective intellectual property protection may not be available in every country in which we have or intend to open or franchise a restaurant. Failure to adequately protect our intellectual property rights could damage or even destroy our brands and impair our ability to compete effectively. Even where we have effectively secured statutory protection for intellectual property, our competitors may misappropriate our intellectual property and our employees, consultants and suppliers may breach their obligations not to reveal our confidential information, including trade secrets. Although we have taken appropriate measures to protect our intellectual property, there can be no assurance that these protections will be adequate or that our competitors will not independently develop products or concepts that are substantially similar to our restaurants and services. Despite our efforts, it may be possible for third-parties to reverse-engineer, otherwise obtain, copy, and use information that we regard as proprietary. Furthermore, defending or enforcing our trademark rights, branding practices and other intellectual property, and seeking injunctions against and/or compensation for misappropriation of confidential information, could result in the expenditure of significant resources.

Restaurant companies, including ours, have been the target of class action lawsuits and other proceedings alleging, among other things, violations of federal and state workplace and employment laws. Proceedings of this nature are costly, divert management attention and, if successful, could result in our payment of substantial damages or settlement costs.

Our business is subject to the risk of litigation by employees, consumers, suppliers, shareholders or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. The outcome of litigation, particularly class action and regulatory actions, is difficult to assess or quantify. In recent years, we and other restaurant companies have been subject to lawsuits, including class action lawsuits, alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. Similar lawsuits have been instituted from time to time alleging violations of various federal and state wage and hour laws regarding, among other things, employee meal deductions, the sharing of tips among certain employees, overtime eligibility of assistant managers and failure to pay for all hours worked. If we are required to pay substantial damages and expenses as a result of these or other types of lawsuits our business and results of operations would be adversely affected.

Occasionally, our customers file complaints or lawsuits against us alleging that we are responsible for some illness or injury they suffered at or after a visit to one of our restaurants, including actions seeking damages resulting from food borne illness and relating to notices with respect to chemicals contained in food products required under state law. We are also subject to a variety of other claims from third parties arising in the ordinary course of our business, including personal injury claims, contract claims and claims alleging violations of federal and state laws. In addition, our restaurants are subject to state “dram shop” or similar laws which generally allow a person to sue us if that person was injured by a legally intoxicated person who was wrongfully served alcoholic beverages at one of our restaurants. The restaurant industry has also been subject to a growing number of claims that the menus and actions of restaurant chains have led to the obesity of certain of their customers. We may also be subject to lawsuits from our employees, the U.S. Equal Employment Opportunity Commission or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters. For example, in December 2009, we entered into a Consent Decree in settlement of certain litigation brought by the U.S. Equal Employment Opportunity Commission alleging gender discrimination in promotions to management within the Outback Steakhouse organization, which required us to make a settlement payment of $19.0 million. In addition, during the four-year term of the Consent Decree, we are required to fulfill certain training, record-keeping and reporting requirements and maintain an open access system for restaurant employees to express interest in promotions within the Outback Steakhouse organization, and employ a human resources executive.

 

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Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations. In addition, they may generate negative publicity, which could reduce customer traffic and sales. Although we maintain what we believe to be adequate levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters. A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from claims could adversely affect our business and results of operations.

Our insurance policies may not provide adequate levels of coverage against all claims, and fluctuating insurance requirements and costs could negatively impact our profitability.

We are self-insured, or carry insurance programs with specific retention levels or deductibles, for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, liquor liability, employment practices liability, property, health benefits and other insurable risks. However, there are types of losses we may incur that cannot be insured against or that we believe are not commercially reasonable to insure. These losses, if they occur, could have a material and adverse effect on our business and results of operations. Additionally, health insurance costs in general have risen significantly over the past few years and are expected to continue to increase. These increases could have a negative impact on our profitability, and there can be no assurance that we will be able to successfully offset the effect of such increases with plan modifications and cost control measures, additional operating efficiencies or the pass-through of such increased costs to our customers or employees.

Conflict or terrorism could negatively affect our business.

We cannot predict the effects of actual or threatened armed conflicts or terrorist attacks, efforts to combat terrorism, military action against any foreign state or group located in a foreign state or heightened security requirements on local, regional, national, or international economies or consumer confidence. Such events could negatively affect our business, including by reducing customer traffic or the availability of commodities.

If our advertising and marketing programs are unsuccessful in maintaining or driving increased customer traffic or are ineffective in comparison to those of our competitors, our results of operations could be adversely affected.

We conduct ongoing promotion-based brand awareness advertising campaigns and customer loyalty programs. If these programs are not successful or conflict with evolving customer preferences, we may not increase or maintain our customer traffic and will incur expenses without the benefit of higher revenues. In addition, if our competitors increase their spending on marketing and advertising programs, or develop more effective campaigns, this could have a negative effect on our brand relevance, customer traffic and results of operations.

Unfavorable publicity could harm our business by reducing demand for our concepts or specific menu offerings.

Our business could be negatively affected by publicity resulting from complaints or litigation, either against us or other restaurant companies, alleging poor food quality, food-borne illness, personal injury, adverse health effects (including obesity) or other concerns. Regardless of the validity of any such allegations, unfavorable publicity relating to any number of restaurants or even a single restaurant could adversely affect public perception of the entire brand.

Additionally, unfavorable publicity towards a food product generally could negatively impact our business. For example, publicity regarding health concerns or outbreaks of disease in a food product, such as bovine spongiform encephalopathy (also known as “mad cow” disease), which, according to the USDA, has recently been found in a dairy cow in California, could reduce demand for our menu offerings. These factors could have a material adverse effect on our business.

 

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Consumer reaction to public health issues, such as an outbreak of flu viruses or other diseases, could have an adverse effect on our business.

Our business could be harmed if the United States or other countries in which we operate experience an outbreak of flu viruses or other diseases. If a virus is transmitted by human contact, our employees or customers could become infected or could choose or be advised to avoid gathering in public places. This could adversely affect our restaurant traffic, our ability to adequately staff our restaurants, our ability to receive deliveries on a timely basis or our ability to perform functions at the corporate level. Our business could also be negatively affected if mandatory closures, voluntary closures or restrictions on operations are imposed in the jurisdictions in which we operate. Even if such measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or significant health risk may have a material adverse effect on our business.

Food safety and food-borne illness concerns throughout the supply chain may have an adverse effect on our business by reducing demand and increasing costs.

Food safety issues could be caused by food suppliers or distributors and, as a result, be out of our control. In addition, regardless of the source or cause, any report of food-borne illnesses and other food safety issues including food tampering or contamination at one of our restaurants could adversely affect the reputation of our brands and have a negative impact on our sales. Even instances of food-borne illness, food tampering or food contamination occurring solely at restaurants of our competitors could result in negative publicity about the food service industry generally and adversely impact our sales. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, resulting in higher costs and lower margins.

The food service industry is affected by consumer preferences and perceptions. Changes in these preferences and perceptions may lessen the demand for our products, which would reduce sales and harm our business.

Food service businesses are affected by changes in consumer tastes and demographic trends. For instance, if prevailing health or dietary preferences cause consumers to avoid steak and other products we offer in favor of foods that are perceived as more healthy, our business and operating results would be harmed.

We have a limited number of suppliers for our major products and rely on one custom distribution company for our national distribution program in the U.S. If our suppliers or custom distributor are unable to fulfill their obligations under their contracts, we could encounter supply shortages and incur higher costs.

We have a limited number of suppliers for our major products, such as beef. In 2011, we purchased more than 90% of our beef raw materials from four beef suppliers who represent approximately 75% of the total beef marketplace in the U.S. Due to the nature of our industry, we expect to continue to purchase a substantial amount of our beef from a small number of suppliers. In addition, we use one distribution company to provide distribution services in the U.S. Although we have not experienced significant problems with our suppliers or distributor, if our suppliers or distributor are unable to fulfill their obligations under their contracts, we could encounter supply shortages and incur higher costs.

Shortages or interruptions in the supply or delivery of fresh food products could adversely affect our operating results.

We are dependent on frequent deliveries of fresh food products that meet our specifications. Shortages or interruptions in the supply of fresh food products caused by unanticipated demand, problems in production or distribution, inclement weather or other conditions could adversely affect the availability, quality and cost of ingredients, which would adversely affect our operating results.

 

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We outsource certain accounting processes to a third-party vendor, which subjects us to many risks that could disrupt our business, increase our costs and negatively impact our internal control processes.

In early 2011, we began to outsource certain accounting processes to a third-party vendor. The third-party vendor may not be able to handle the volume of activity or perform the quality of service that we have currently achieved at a cost-effective rate, which could adversely affect our business. The decision to outsource was made based on cost savings initiatives; however, we may not achieve these savings because of unidentified intangible costs and legal and regulatory matters, which could adversely affect our results of operations or financial condition. In addition, the transition of certain business processes to outsourcing could negatively impact our internal control processes.

We rely heavily on information technology in our operations and any material failure, weakness, interruption or breach of security could prevent us from effectively operating our business.

We rely heavily on information systems across our operations, including for point-of-sale processing in our restaurants, management of our supply chain, payment of obligations, collection of cash, data warehousing to support analytics and other various processes and procedures. Our ability to efficiently and effectively manage our business depends significantly on the reliability and capacity of these systems. The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms, or a breach in security of these systems could result delays in customer service and reduce efficiency in our operations. Remediation of such problems could result in significant unplanned capital investments.

Security breaches of confidential customer information in connection with our electronic processing of credit and debit card transactions may adversely affect our business.

The majority of our restaurant sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches in which credit and debit card information of their customers has been stolen. We may in the future become subject to lawsuits or other proceedings for purportedly fraudulent transactions arising out of the actual or alleged theft of our customers’ credit or debit card information. Any such claim or proceeding, or any adverse publicity resulting from these allegations, may have a material adverse effect on our business.

An impairment in the carrying value of our goodwill or other intangible assets could adversely affect our financial condition and results of operations.

We test goodwill for impairment in the second quarter of each fiscal year and whenever events or changes in circumstances indicate that impairment may have occurred. A significant amount of judgment is involved in determining if an indication of impairment exists. Factors may include, among others:

 

•

a significant decline in our expected future cash flows;

 

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a significant adverse change in legal factors or in the business climate;

 

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unanticipated competition;

 

•

the testing for recoverability of a significant asset group within a reporting unit; and

 

•

slower growth rates.

Any adverse change in these factors would have a significant impact on the recoverability of these assets and negatively affect our financial condition and results of operations. We compare the carrying value of a reporting unit, including goodwill, to the fair value of the reporting unit. Carrying value is based on the assets and

 

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liabilities associated with the operations of that reporting unit. If the carrying value is less than the fair value, no impairment exists. If the carrying value is higher than the fair value, there is an indication of impairment and a second step is required to measure a goodwill impairment loss, if any. We are required to record a non-cash impairment charge if the testing performed indicates that goodwill has been impaired.

We evaluate our other intangible assets, primarily the Outback Steakhouse (domestic and international), Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar and Roy’s trademarks or trade names, to determine if they are definite or indefinite-lived. Reaching a determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets.

As with goodwill, we test our indefinite-lived intangible assets for impairment in the second quarter of each fiscal year and whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We estimate the fair value of these indefinite-lived intangible assets based on an income valuation model using the relief from royalty method, which requires assumptions related to projected revenues from our annual long-range plan, assumed royalty rates that could be payable if we did not own the assets and a discount rate.

During the years ended December 31, 2011 and 2010, we did not record any goodwill or material intangible asset impairment charges. During the year ended December 31, 2009, we recorded goodwill and intangible asset impairment charges of $58.1 million and $43.7 million, respectively. We cannot accurately predict the amount and timing of any impairment of assets. Should the value of goodwill or other intangible assets become further impaired, there could be an adverse effect on our financial condition and results of operations.

Changes to estimates related to our property, fixtures and equipment and definite-lived intangible assets or operating results that are lower than our current estimates at certain restaurant locations may cause us to incur impairment charges on certain long-lived assets, which may adversely affect our results of operations.

In accordance with accounting guidance as it relates to the impairment of long-lived assets, we make certain estimates and projections with regard to individual restaurant operations, as well as our overall performance, in connection with our impairment analyses for long-lived assets. When impairment triggers are deemed to exist for any location, the estimated undiscounted future cash flows are compared to its carrying value. If the carrying value exceeds the undiscounted cash flows, an impairment charge equal to the difference between the carrying value and the sum of the discounted cash flows is recorded. The projections of future cash flows used in these analyses require the use of judgment and a number of estimates and projections of future operating results. If actual results differ from our estimates, additional charges for asset impairments may be required in the future. If impairment charges are significant, our results of operations could be adversely affected.

The possibility of future misstatement exists due to inherent limitations in our control systems, which could adversely affect our business.

We cannot be certain that our internal control over financial reporting and disclosure controls and procedures will prevent all possible error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, in our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake, which could have an adverse impact on our business.

 

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Our reported financial results may be adversely affected by changes in accounting principles applicable to us.

Generally accepted accounting principles in the U.S. are subject to interpretation by the Financial Accounting Standards Board, or FASB, the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change, such as standards relating to leasing. In addition, the SEC has announced a multi-year plan that could ultimately lead to the use of International Financial Reporting Standards by U.S. issuers in their SEC filings. Any such change could have a significant effect on our reported financial results.

We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to fund our operations, which could prevent us from meeting our obligations.

We have no direct operations and derive all of our cash flow from our subsidiaries. Because we conduct our operations through our subsidiaries, we depend on those entities for dividends and other payments or distributions to fund our operations. The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could limit or impair their ability to pay dividends or other distributions to us.

Risks Related to Our Indebtedness

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and expose us to interest rate risk in connection with our variable-rate debt.

We are highly leveraged. As of March 31, 2012, our total indebtedness was approximately $1.8 billion. See “Description of Indebtedness.” As of March 31, 2012, we also had approximately $83.2 million in available unused borrowing capacity under our working capital revolving credit facility (after giving effect to undrawn letters of credit of approximately $66.8 million) and $67.0 million in available unused borrowing capacity under our pre-funded revolving credit facility that provides financing for capital expenditures only.

Our high degree of leverage could have important consequences, including:

 

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making it more difficult for us to make payments on indebtedness;

 

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increasing our vulnerability to general economic, industry and competitive conditions;

 

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increasing our cost of borrowing;

 

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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

 

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exposing us to the risk of increased interest rates because certain of our borrowings under our senior secured credit facilities and commercial mortgage-backed securities loans are at variable rates of interest;

 

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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

 

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limiting our ability to obtain additional financing for working capital, capital expenditures, restaurant development, debt service requirements, acquisitions and general corporate or other purposes; and

 

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limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who may not be as highly leveraged.

 

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We may incur substantial additional indebtedness in the future, subject to the restrictions contained in our senior secured credit facilities, the 2012 CMBS Loan and the indenture governing our Senior Notes. If new indebtedness is added to our current debt levels, the related risks that we now face could increase.

Approximately $1.0 billion of debt outstanding under our senior secured credit facilities and approximately $49.0 million of our 2012 CMBS Loan bears interest based on a floating rate index. An increase in these floating rates could cause a material increase in our interest expense.

Our debt agreements contain restrictions that limit our flexibility in operating our business.

We are a holding company and conduct our operations through our subsidiaries, certain of which have incurred their own indebtedness. Our subsidiaries’ debt agreements contain various covenants that limit our ability to obtain funds from our subsidiaries through dividends, loans or advances. In addition, certain of our debt agreements limit our and our subsidiaries’ ability to, among other things, incur or guarantee additional indebtedness, pay dividends on, redeem or repurchase our capital stock, make certain acquisitions or investments, incur or permit to exist certain liens, enter into transactions with affiliates or sell our assets to, merge or consolidate with or into, another company. Our debt agreements require us to satisfy certain financial tests and ratios and limit our ability to make capital expenditures. Our ability to satisfy such tests and ratios may be affected by events outside of our control.

Upon a breach of the covenants under our debt agreements, the lenders could elect to declare all amounts outstanding under the agreements to be immediately due and payable and terminate all commitments to extend further credit. If we are unable to repay those amounts, the lenders under the senior secured credit facilities and the 2012 CMBS Loan could proceed against the collateral granted to them to secure that indebtedness. We have pledged substantially all of our assets as collateral under our senior secured credit facilities and the 2012 CMBS Loan. If the lenders under the senior secured credit facilities and the 2012 CMBS Loan accelerate the repayment of borrowings, we cannot be certain that we will have sufficient assets to repay them and our unsecured indebtedness.

We may not be able to generate sufficient cash to service all of our indebtedness and operating lease obligations, and we may be forced to take other actions to satisfy our obligations under our indebtedness and operating lease obligations, which may not be successful. If we fail to meet these obligations, we would be in default under our debt agreements and the lenders could elect to declare all amounts outstanding under them to be immediately due and payable and terminate all commitments to extend further credit.

Our ability to make scheduled payments on or to refinance our debt obligations and to satisfy our operating lease obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot be certain that we will maintain a level of cash flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, or to pay our operating lease obligations. If our cash flow and capital resources are insufficient to fund our debt service obligations and operating lease obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of sufficient operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations or take other actions to meet our debt service and other obligations. Our debt agreements restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could otherwise realize from such dispositions and any such proceeds that are realized may not be adequate to meet any debt service obligations then due. The failure to meet our debt service obligations or the failure to remain in compliance with the financial covenants under our debt agreements would constitute an event of default under those agreements and the lenders could elect to declare all amounts outstanding under them to be immediately due and payable and terminate all commitments to extend further credit.

 

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All of the proceeds received by us from this offering will be used to pay our existing debt, and will therefore not be available to help us grow as a business.

We expect to receive net proceeds, after deducting estimated offering expenses and underwriting discounts and commissions, of approximately $         million, based on an assumed offering price of $             per share (the midpoint of the price range set forth on the cover page of this prospectus). We intend to apply the net proceeds from this offering, together with cash on hand, to retire all of our outstanding Senior Notes. These proceeds will therefore not be available to us to help us grow our business. See “Use of Proceeds” and “Description of Indebtedness.”

Risks Related to this Offering and Our Common Stock

We are a “controlled company” within the meaning of Nasdaq Stock Market rules and, as a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

After completion of this offering our Sponsors will continue to control a majority of the voting power of our outstanding common stock. As a result, we qualify as a “controlled company” within the meaning of the corporate governance rules of the Nasdaq Stock Market (“Nasdaq”). Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

 

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the requirement that a majority of the board of directors consist of independent directors;

 

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the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, or otherwise have director nominees selected by vote of a majority of the independent directors;

 

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the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

 

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the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees.

Following this offering, we intend to utilize these exemptions. As a result, we will not have a majority of independent directors, our compensation committee and nominating and corporate governance committee will not consist entirely of independent directors and the board committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to the Nasdaq corporate governance requirements.

Our Sponsors, however, are not subject to any contractual obligation to retain their controlling interest, except that they have agreed, subject to certain exceptions, not to sell or otherwise dispose of any shares of our common stock or other capital stock or other securities exercisable or convertible therefor for a period of at least 180 days after the date of this prospectus without the prior written consent of the underwriters for this offering. Except for this brief period, there can be no assurance as to the period of time during which any of our Sponsors will maintain their ownership of our common stock following the offering.

 

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Our stock price could be extremely volatile and, as a result, you may not be able to resell your shares at or above the price you paid for them.

Volatility in the market price of our common stock may prevent you from being able to sell your shares at or above the price you paid for your shares. The stock market in general has been highly volatile. As a result, the market price of our common stock is likely to be similarly volatile. You may experience a decrease, which could be substantial, in the value of your stock, including decreases unrelated to our operating performance or prospects, and could lose part or all of your investment. The price of our common stock could be subject to wide fluctuations in response to a number of factors, including those described elsewhere in this prospectus and others such as:

 

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actual or anticipated fluctuations in our quarterly or annual operating results and the performance of our competitors;

 

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publication of research reports by securities analysts about us, our competitors or our industry;

 

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our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;

 

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additions and departures of key personnel;

 

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sales, or anticipated sales, of large blocks of our stock or of shares held by our directors or executive officers;

 

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strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

 

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the passage of legislation or other regulatory developments affecting us or our industry;

 

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speculation in the press or investment community, whether or not correct, involving us, our suppliers or our competitors;

 

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changes in accounting principles;

 

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litigation and governmental investigations;

 

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terrorist acts, acts of war or periods of widespread civil unrest;

 

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a food borne illness outbreak;

 

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natural disasters and other calamities; and

 

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changes in general market and economic conditions.

As we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

 

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There is no existing market for our common stock, and we do not know if one will develop to provide you with adequate liquidity.

Prior to this offering, there has not been a public market for our common stock. An active market for our common stock may not develop following the completion of this offering, or if it does develop, may not be maintained. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. The initial public offering price for the shares of our common stock will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price you paid in this offering.

There may be sales of a substantial amount of our common stock after this offering by our current stockholders, and these sales could cause the price of our common stock to fall.

After this offering, there will be                      shares of common stock outstanding. Of our issued and outstanding shares, all the common stock sold in this offering will be freely transferable, except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). Following completion of this offering, approximately     % of our outstanding common stock will be held by investment funds affiliated with our Sponsors and members of our management and employees (or     % if the underwriters exercise their option to purchase additional shares from the selling stockholders in full).

Each of our directors and executive officers and substantially all of our stockholders have entered into a lock-up agreement with the representatives of the underwriters which regulates their sales of our common stock for a period of at least 180 days after the date of this prospectus, subject to certain exceptions and automatic extensions in certain circumstances. See “Related Party Transactions—Arrangements With Our Investors.”

Sales of substantial amounts of our common stock in the public market after this offering, or the perception that such sales will occur, could adversely affect the market price of our common stock and make it difficult for us to raise funds through securities offerings in the future. Of the shares to be outstanding after the offering, the shares offered by this prospectus will be eligible for immediate sale in the public market without restriction by persons other than our affiliates. Our remaining outstanding shares will become available for resale in the public market as shown in the chart below, subject to the provisions of Rule 144 and Rule 701.

 

Number of Shares		Date Available for Resale
		On the date of this offering (                )
		180 days after this offering (                ), subject to certain exceptions and automatic extensions in certain circumstances

Beginning 180 days after this offering, subject to certain exceptions and automatic extensions in certain circumstances, holders of shares of our common stock may require us to register their shares for resale under the federal securities laws, and holders of additional shares of our common stock would be entitled to have their shares included in any such registration statement, all subject to reduction upon the request of the underwriter of the offering, if any. See “Related Party Transactions—Arrangements With Our Investors.” Registration of those shares would allow the holders to immediately resell their shares in the public market. Any such sales or anticipation thereof could cause the market price of our common stock to decline.

In addition, after this offering, we intend to register shares of common stock that are reserved for issuance under our stock incentive plans. See “Executive Compensation—Equity Incentive Plans.”

 

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Provisions in our certificate of incorporation and bylaws, our 2012 CMBS Loan documents and Delaware law may discourage, delay or prevent a change of control of our company or changes in our management and, therefore, may depress the trading price of our stock.

Our certificate of incorporation and bylaws include certain provisions that could have the effect of discouraging, delaying or preventing a change of control of our company or changes in our management, including, among other things:

 

•

our board is classified into three classes of directors with only one class subject to election each year;

 

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restrictions on the ability of our stockholders to fill a vacancy on the board of directors;

 

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our ability to issue preferred stock with terms that the board of directors may determine, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

 

•

the inability of our stockholders to call a special meeting of stockholders;

 

•

our directors may only be removed from the board of directors for cause by the affirmative vote of the holders of at least 75% of the voting power of outstanding shares of our capital stock entitled to vote generally in the election of directors;

 

•

the absence of cumulative voting in the election of directors, which may limit the ability of minority stockholders to elect directors; and

 

•

advance notice requirements for stockholder proposals and nominations, which may discourage or deter a potential acquirer from soliciting proxies to elect a particular slate of directors or otherwise attempting to obtain control of us.

In addition, the mortgage loan agreement for the 2012 CMBS Loan requires that, following this offering, our Sponsors, our Founders and our management stockholders or other permitted holders either own no less than 51% of our common stock or if they do not, that certain other conditions are satisfied. These provisions in our certificate of incorporation and bylaws and the 2012 CMBS Loan documents may discourage, delay or prevent a transaction involving a change in control of our company that is in the best interests of our minority stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging future takeover attempts.

Section 203 of the Delaware General Corporation Law may affect the ability of an “interested stockholder” to engage in certain business combinations, including mergers, consolidations or acquisitions of additional shares, for a period of three years following the time that the stockholder becomes an “interested stockholder.” An “interested stockholder” is defined to include persons owning directly or indirectly 15% or more of the outstanding voting stock of a corporation. We have elected in our certificate of incorporation not to be subject to Section 203 of the Delaware General Corporation Law. However, our certificate of incorporation will contain provisions that have the same effect as Section 203, except that they provide that our Sponsors and their respective affiliates will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions.

If you purchase shares in this offering, you will suffer immediate and substantial dilution.

If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution in the book value of your stock of $         per share as of                     , 2012, because the price that you pay will be substantially greater than the net tangible book value per share of the shares you acquire. You will

 

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experience additional dilution upon the exercise of options and warrants to purchase our common stock, including those options currently outstanding and possibly those granted in the future, and the issuance of restricted stock or other equity awards under our stock incentive plans. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial additional dilution. See “Dilution.”

If securities analysts or industry analysts downgrade our stock, publish negative research or reports, or do not publish reports about our business, our stock price and trading volume could decline.

We expect that the trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us, our business and our industry. If one or more analysts adversely change their recommendation regarding our stock or our competitors’ stock, our stock price would likely decline. If one or more analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Our Sponsors will continue to have significant influence over us after this offering, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of key transactions, including a change of control.

We are currently controlled, and after this offering is completed will continue to be controlled, by our Sponsors. Upon completion of this offering, investment funds affiliated with our Sponsors will beneficially own approximately     % of our outstanding common stock (or    % if the underwriters exercise their option to purchase additional shares from the selling stockholders in full). For as long as our Sponsors continue to beneficially own shares of common stock representing more than 50% of the voting power of our common stock, they will be able to direct the election of all of the members of our board of directors and could exercise a controlling influence over our business and affairs, including any determinations with respect to mergers or other business combinations, the acquisition or disposition of assets, the incurrence of indebtedness, the issuance of any additional common stock or other equity securities, the repurchase or redemption of common stock and the payment of dividends. Similarly, these entities will have the power to determine matters submitted to a vote of our stockholders without the consent of our other stockholders, will have the power to prevent or approve a change in our control and could take other actions that might be favorable to them. Even if their ownership falls below 50%, our Sponsors will continue to be able to strongly influence or effectively control our decisions.

Additionally, certain of our directors are also officers or control persons of our Sponsors. Although these directors owe a fiduciary duty to manage us in a manner beneficial to us and our stockholders, these individuals also owe fiduciary duties to these other entities and their stockholders, members and limited partners. Because our Sponsors have such interests in other companies and engage in other business activities, certain of our directors may experience conflicts of interest in allocating their time and resources among our business and these other activities. Our Founders also serve as our directors and, due to their interests in certain transactions with us and our affiliates, they may also experience such conflicts of interest. Furthermore, these individuals could make substantial profits as a result of investment opportunities allocated to entities other than us. As a result, these individuals could pursue transactions that may not be in our best interest, which could have a material adverse effect on our operations and your investment.

Because we have no plans to pay cash dividends on our common stock for the foreseeable future, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of

 

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any existing and future outstanding indebtedness we or our subsidiaries incur, including our senior credit facility. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it. See “Dividend Policy.”

Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements.

Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt or a combination of both. Additional financing may not be available on favorable terms or at all. If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements. If we issue new debt securities, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity securities, existing stockholders may experience dilution, and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” section of this prospectus, which include, but are not limited to, the following:

 

•

the restaurant industry is a highly competitive industry with many well-established competitors;

 

•

challenging economic conditions may affect our liquidity by adversely impacting numerous items that include, but are not limited to: consumer confidence and discretionary spending; the availability of credit presently arranged from our revolving credit facilities; the future cost and availability of credit; interest rates; foreign currency exchange rates; and the liquidity or operations of our third-party vendors and other service providers;

 

•

our ability to expand is dependent upon various factors such as the availability of attractive sites for new restaurants; ability to obtain appropriate real estate sites at acceptable prices; our ability to obtain all required governmental permits including zoning approvals and liquor licenses on a timely basis; the impact of government moratoriums or approval processes, which could result in significant delays; our ability to obtain all necessary contractors and subcontractors; union activities such as picketing and hand billing that could delay construction; our ability to generate or borrow funds; our ability to negotiate suitable lease terms; our ability to recruit and train skilled management and restaurant employees; and our ability to receive the premises from the landlord’s developer without any delays;

 

•

our results can be impacted by changes in consumer tastes and the level of consumer acceptance of our restaurant concepts (including consumer tolerance of our prices); local, regional, national and international economic and political conditions; the seasonality of our business; demographic trends; traffic patterns and our ability to effectively respond in a timely manner to changes in traffic patterns; changes in consumer dietary habits; employee availability; the cost of advertising and media; government actions and policies; inflation or deflation; unemployment rates; interest rates; exchange rates; and increases in various costs, including construction, real estate and health insurance costs;

 

•

weather, natural disasters and other disasters could result in construction delays and also adversely affect the results of one or more restaurants for an indeterminate amount of time;

 

•

our results can be impacted by tax and other legislation and regulation in the jurisdictions in which we operate and by accounting standards or pronouncements;

 

•

minimum wage increases and mandated employee benefits could cause a significant increase in our labor costs;

 

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•

commodities, including but not limited to such items as beef, chicken, shrimp, pork, seafood, dairy, potatoes, onions and energy supplies, are subject to fluctuation in price and availability and price could increase or decrease more than we expect;

 

•

our results can be affected by consumer reaction to public health issues;

 

•

our results can be affected by consumer perception of food safety;

 

•

inability to protect customer credit and debit card data; and

 

•

our substantial leverage and significant restrictive covenants in our various credit facilities could adversely affect our ability to raise additional capital to fund our operations, limit our ability to make capital expenditures to invest in new or renovate restaurants, limit our ability to react to changes in the economy or our industry, and expose us to interest rate risk in connection with our variable-rate debt.

Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.

In light of these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this prospectus speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

 

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USE OF PROCEEDS

We estimate that the net proceeds we will receive from the sale of          shares of our common stock in this offering, after deducting underwriter discounts and commissions and estimated expenses payable by us, will be approximately $         million. This estimate assumes an initial public offering price of $         per share, the midpoint of the price range set forth on the cover page of this prospectus.

A $1.00 increase (decrease) in the assumed initial public offering price of $             per share would increase (decrease) the net proceeds to us from this offering by $             million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

We intend to use the net proceeds from this offering, together with cash on hand, to retire all of our outstanding Senior Notes. The Senior Notes bear interest at 10% per annum and mature on June 15, 2015. There was outstanding approximately $248.1 million in aggregate principal amount of Senior Notes as of March 31, 2012. See “Description of Indebtedness—Senior Notes.”

We will not receive any proceeds from the sale of shares of common stock by the selling stockholders. See “Principal and Selling Stockholders.”

 

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DIVIDEND POLICY

We do not currently pay cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determinations relating to our dividend policies will be made at the discretion of our board of directors and will depend on conditions then existing, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. In addition, our ability to obtain funds from our subsidiaries and therefore to declare and pay dividends is restricted by covenants in our debt agreements. For an explanation of these restrictions, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facilities and Other Indebtedness” and “Description of Indebtedness.”

 

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and our consolidated capitalization as of March 31, 2012 on (i) an actual basis and (ii) an as adjusted basis to give effect to the issuance of common stock in this offering and the retirement of all outstanding Senior Notes as described in “Use of Proceeds.”

This table should be read in conjunction with “Use of Proceeds,” “Selected Historical Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this prospectus.

 

		As of March 31, 2012
		Actual				As Adjusted
		($ in thousands)
Cash and cash equivalents (1)		$	335,059			$
Total debt, net:
Senior secured term loan facility		$	1,011,125			$
Senior secured working capital revolving credit facility (2)			—
Senior secured pre-funded revolving credit facility			33,000
2012 CMBS Loan			495,186
Senior notes, interest rate of 10.00%			248,075
Guaranteed debt, sale-leaseback and capital lease obligations and other notes payable			37,767
Total debt, net			1,825,153
Shareholders’ equity:
Preferred stock, $.01 par value; no shares authorized, issued and outstanding on an actual basis; 25,000,000 shares authorized and no shares issued and outstanding on an as adjusted basis			—
Common stock $.01 par value; 120,000,000 shares authorized and 106,516,725 shares issued and outstanding on an actual basis; 475,000,000 shares authorized and              shares issued and outstanding on an as adjusted basis			1,065
Additional paid-in capital			877,191
Accumulated deficit			(773,057	)
Accumulated other comprehensive loss			(19,195	)
Total Bloomin’ Brands, Inc. shareholders’ equity			86,004
Noncontrolling interests			9,120
Total shareholders’ equity			95,124
Total capitalization		$	1,920,277			$

 

(1)	Excludes $27.5 million of restricted cash.

(2)

There were no loans outstanding under the revolving credit facility at March 31, 2012; however, $66.8 million of the credit facility was not available for borrowing. See “Description of Indebtedness” and Note 9 of our Notes to Unaudited Consolidated Financial Statements for the three months ended March 31, 2012.

 

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DILUTION

If you invest in our common stock, your ownership interest will experience immediate book value dilution to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock after this offering. Dilution results from the fact that the initial public offering price per share of the common stock is substantially in excess of the net tangible book value per share of common stock attributable to the existing stockholders for the presently outstanding shares of common stock. Net tangible book value per share represents the amount of our total tangible assets less our total liabilities, divided by the number of shares of our common stock outstanding.

Our net tangible book value deficiency at              was approximately $            , or $             per share of our common stock before giving effect to this offering. Dilution in net tangible book value deficiency per share represents the difference between the amount per share that you pay in this offering and the net tangible book value deficiency per share immediately after this offering.

After giving effect to our sale of shares in this offering, assuming an initial public offering price of $             per share (the midpoint of the price range set forth on the cover page of this prospectus), and the application of the estimated net proceeds as described under “Use of Proceeds,” our as adjusted net tangible book value deficiency at              would have been approximately $            , or $             per share of common stock. This represents an immediate decrease in net tangible book value deficiency per share of $             to existing stockholders and an immediate increase in net tangible book value deficiency per share of $(            ) to you. The following table illustrates this dilution per share.

 

Assumed initial public offering price per share of common stock						$
Net tangible book value per share at March 31, 2012		$
Increase per share attributable to new investors in this offering
Pro forma net tangible book value per share of common stock after this offering
Dilution per share to new investors						$

A $1.00 increase (decrease) in the assumed initial public offering price of $             per share of our common stock would decrease (increase) our pro forma net tangible book value deficiency after giving effect to the offering by $             million, or by $             per share of our common stock, assuming no change to the number of shares of our common stock offered by us as set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and estimated expenses payable by us.

The following table sets forth, as of         , 2012, the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders and to be paid by new investors purchasing shares of common stock in this offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

		Shares Purchased						Total Consideration
		Number		Percent				Amount				Percent				Average Price Per Share
Existing stockholders					%			$					%			$
New investors																$
Total					100	%		$					100	%		$

If the underwriters were to exercise in full their option to purchase additional shares of our common stock from the selling stockholders, the percentage of shares of our common stock held by existing stockholders would be         %, and the percentage of shares of our common stock held by new investors would be         %.

To the extent any outstanding options or other equity awards are exercised or become vested or any additional options or other equity awards are granted and exercised or become vested or other issuances of shares of our common stock are made, there may be further economic dilution to new investors.

 

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following table sets forth our selected consolidated financial and other data as of the dates and for the periods indicated. The selected consolidated financial data as of December 31, 2011 and December 31, 2010 and for each of the three years in the period ended December 31, 2011 presented in this table have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated financial data as of December 31, 2009, December 31, 2008 and December 31, 2007 and for the year ended December 31, 2008 and for the periods from June 15 to December 31, 2007 and from January 1 to June 14, 2007 have been derived from our unaudited consolidated financial statements for such years and periods, which are not included in this prospectus. The selected consolidated financial data as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 have been derived from the unaudited interim consolidated financial statements included in this prospectus. The selected consolidated balance sheet data as of March 31, 2011 have been derived from our historical unaudited interim consolidated financial statements that are not included in this prospectus. Historical results are not necessarily indicative of future results.

This selected consolidated financial and other data should be read in conjunction with the disclosure set forth under “Risk Factors,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and the related notes thereto appearing elsewhere in this prospectus.

 

		Successor (1)																						Predecessor (1)						Successor (1)
		Years Ended December 31,																Period From June 15 to December 31,						Period From January 1 to June 14,						Three Months Ended March 31,
(in thousands, except per share amounts)		2011				2010				2009				2008				2007						2007						2012				2011
														(unaudited)				(unaudited)						(unaudited)						(unaudited)				(unaudited)
Statements of Operations Data:
Revenues
Restaurant sales		$	3,803,252			$	3,594,681			$	3,573,760			$	3,937,894			$	2,229,468					$	1,916,689					$	1,045,466			$	993,109
Other revenues			38,012				33,606				27,896				23,262				12,015						9,948						10,160				8,740
Total revenues			3,841,264				3,628,287				3,601,656				3,961,156				2,241,483						1,926,637						1,055,626				1,001,849
Costs and expenses
Cost of sales			1,226,098				1,152,028				1,184,074				1,389,365				790,749						681,455						335,859				317,764
Labor and other related			1,094,117				1,034,393				1,024,063				1,094,907				623,158						540,281						293,501				282,807
Other restaurant operating			890,004				864,183				849,696				938,374				512,236						440,545						218,965				214,157
Depreciation and amortization			153,689				156,267				186,074				205,492				112,693						74,846						38,860				38,288
General and administrative (2)			291,124				252,793				252,298				264,021				141,246						158,147						76,002				61,578
(Recovery) allowance of note receivable from affiliated entity (3)			(33,150	)			—				—				33,150				—						—						—				—
Loss on contingent debt guarantee			—				—				24,500				—				—						—						—				—
Goodwill impairment			—				—				58,149				726,486				—						—						—				—
Provision for impaired assets and restaurant closings (4)			14,039				5,204				134,285				117,699				23,023						8,530						4,435				208
(Income) loss from operations of unconsolidated affiliates			(8,109	)			(5,492	)			(2,196	)			(2,343	)			(1,260	)					692						(2,404	)			(3,646	)
Total costs and expenses			3,627,812				3,459,376				3,710,943				4,767,151				2,201,845						1,904,496						965,218				911,156
Income (loss) from operations			213,452				168,911				(109,287	)			(805,995	)			39,638						22,141						90,408				90,693
Gain (loss) on extinguishment of debt (5)			—				—				158,061				48,409				—						—						(2,851	)			—
Other income (expense), net			830				2,993				(199	)			(11,122	)			—						—						54				(303	)
Interest expense, net (5)			(83,387	)			(91,428	)			(115,880	)			(197,041	)			(132,339	)					(4,651	)					(20,974	)			(21,193	)
Income (loss) before provision (benefit) for income taxes			130,895				80,476				(67,305	)			(965,749	)			(92,701	)					17,490						66,637				69,197
Provision (benefit) for income taxes			21,716				21,300				(2,462	)			(99,416	)			(49,427	)					(1,656	)					12,805				11,082
Net income (loss)			109,179				59,176				(64,843	)			(866,333	)			(43,274	)					19,146						53,832				58,115
Less: net income (loss) attributable to noncontrolling interests			9,174				6,208				(380	)			(3,041	)			871						1,685						3,833				3,223
Net income (loss) attributable to Bloomin’ Brands, Inc.		$	100,005			$	52,968			$	(64,463	)		$	(863,292	)		$	(44,145	)				$	17,461					$	49,999			$	54,892

 

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		Successor(1)																						Predecessor(1)				Successor(1)
		Years Ended December 31,																Period From June 15 to December 31,						Period From January 1 to June 14,				Three Months Ended March 31,
(in thousands, except Share and per share amounts)		2011				2010				2009				2008				2007						2007				2012				2011
														(unaudited)				(unaudited)						(unaudited)				(unaudited)				(unaudited)
Basic net income (loss) attributable to Bloomin’ Brands, Inc. per share (6)		$	0.94			$	0.50			$	(0.62	)		$	(8.43	)		$	(0.43	)								$	0.47			$	0.52
Diluted net income (loss) attributable to Bloomin’ Brands, Inc. per share (6)		$	0.94			$	0.50			$	(0.62	)		$	(8.43	)		$	(0.43	)								$	0.47			$	0.52
Weighted average shares outstanding
Basic			106,224				105,968				104,442				102,383				101,896										106,332				106,093
Diluted			106,689				105,968				104,442				102,383				101,896										107,058				106,526

 

		Successor(1)
		December 31,																				March 31,				March 31,
(in thousands)		2011				2010				2009				2008				2007				2012				2011
										(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Balance Sheet Data:
Cash and cash equivalents (7)			482,084				365,536				330,957				311,118				174,406				335,059				366,742
Net working capital (deficit) (8)(9)			(248,145	)			(120,135	)			(187,648	)			(171,095	)			(197,870	)			(29,981	)			(53,017	)
Total assets			3,353,936				3,243,411				3,340,708				3,695,696				4,672,969				3,037,222				3,221,765
Total debt, net (5)(9)			2,109,290				2,171,524				2,302,233				2,562,889				2,648,027				1,825,153				2,169,086
Total Bloomin’ Brands, Inc. shareholders’ equity (deficit)			30,850				(69,234	)			(135,597	)			(93,521	)			807,957				86,004				(10,724	)
Total shareholders’ equity (deficit)			40,297				(55,911	)			(116,625	)			(66,814	)			842,819				95,124				1,827

 

(1)

On June 14, 2007, an investor group formed Bloomin’ Brands, Inc., formerly known as Kangaroo Holdings, Inc., and acquired OSI by means of the Merger. Therefore, the selected historical consolidated financial data is presented for two periods: Predecessor and Successor, which relate to the period preceding the Merger and the period succeeding the Merger, respectively. As a result of the Merger, there are several factors that affect the comparability of the selected historical consolidated financial data for the two periods including, but not limited to: (i) depreciation and amortization are higher in the Successor periods through 2009 due to fair value assessments completed at the time of the Merger, (ii) annual interest expense increased substantially in the Successor period in connection with our financing agreements and (iii) certain professional service costs incurred in connection with the Merger and the management services provided by our management company are included in General and administrative expenses in our Consolidated Statements of Operations in the Successor period.

(2)

Includes management fees and out-of-pocket and other reimbursable expenses paid to a management company owned by our Sponsors and Founders of $9.4 million, $11.6 million, $10.7 million, $9.9 million and $5.2 million for the years ended December 31, 2011, 2010, 2009 and 2008 and the period from June 15 to December 31, 2007, respectively, and $2.3 million for each of the three months ended March 31, 2012 and 2011 under a management agreement that will terminate upon the completion of this offering. In connection with such termination, we will pay an $8.0 million termination fee to the management company within 60 days of completion of the offering, but no later than December 31, 2012, plus the pro-rated periodic fee. See “Related Party Transactions—Arrangements With Our Investors.”

(3)

In November 2011, we received a settlement payment from T-Bird, a limited liability company affiliated with our California franchisees of Outback Steakhouse restaurants, in connection with a settlement agreement that satisfied all outstanding litigation with T-Bird. This litigation began in early 2009 and therefore, we had recorded an allowance for the note receivable for the year ended December 31, 2008.

(4)

During 2009, our Provision for impaired assets and restaurant closings primarily included: (i) $46.0 million of impairment charges to reduce the carrying value of the assets of Cheeseburger in Paradise to their estimated fair market value due to our sale of the concept in the third quarter of 2009, (ii) $47.6 million of impairment charges and restaurant closing expense for certain of our other restaurants and (iii) $36.0 million of impairment charges for the domestic Outback Steakhouse and Carrabba’s Italian Grill trade names. During 2008, our Provision for impaired assets and restaurant closings primarily included: (i) $49.0 million of impairment charges for the domestic and international Outback Steakhouse and Carrabba’s Italian Grill trade names, (ii) $3.5 million of impairment charges for the Blue Coral Seafood and Spirits trademark and (iii) $63.9 million of impairment charges and restaurant closing expense for certain of our restaurants.

 

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(5)

In March 2009 and November 2008, we repurchased $240.1 million and $61.8 million, respectively, of our outstanding Senior Notes for $73.0 million and $11.7 million, respectively. These repurchases resulted in gains on extinguishment of debt, after the pro rata reduction of unamortized deferred financing fees and other related costs, of $158.1 million in 2009 and $48.4 million in 2008. Annualized interest expense savings from these debt extinguishments approximates $30.2 million per year.

(6)	As a result of the Merger, our capital structures for periods before and after the Merger are not comparable, and therefore we are presenting our net income (loss) attributable to Bloomin’ Brands, Inc. per share and weighted average share information only for periods subsequent to the Merger.

(7)	Excludes restricted cash.

(8)

We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies). We operate successfully with negative working capital because cash collected on restaurant sales is typically received before payment is due on our current liabilities and our inventory turnover rates require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are used to service debt obligations and for capital expenditures.

(9)

On June 14, 2007, PRP entered into the CMBS Loan totaling $790.0 million, which had a maturity date of June 9, 2012. Effective March 27, 2012, New PRP entered into the 2012 CMBS Loan totaling $500.0 million and repaid the CMBS Loan. The 2012 CMBS Loan is a five-year loan maturing on April 10, 2017. See “Description of Indebtedness” and Note 20 of our Notes to Consolidated Financial Statements for the year ended December 31, 2011. As a result of the CMBS Refinancing, the net amount repaid along with scheduled maturities within one year, $281.3 million, was classified as current at December 31, 2011.

 

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated financial statements of Bloomin’ Brands, Inc. for the year ended December 31, 2011, and as of and for the three months ended March 31, 2012, are based on historical consolidated financial statements of Bloomin’ Brands, Inc. included elsewhere in this prospectus and give effect to the following transactions (collectively, the “Transactions”) as if they had occurred on January 1, 2011 or March 31, 2012, as indicated below.

 

•

Sale-Leaseback Transaction. Effective March 14, 2012, we entered into the Sale-Leaseback Transaction with two third-party real estate institutional investors in which we sold 67 restaurant properties at fair market value for net proceeds of $192.9 million and then simultaneously leased these properties back under nine master leases. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Transactions” and Note 7 of our Notes to Consolidated Financial Statements for the three months ended March 31, 2012 for a further description of the Sale-Leaseback Transaction.

 

•

CMBS Refinancing. Effective March 27, 2012, New PRP entered into the 2012 CMBS Loan, which totals $500.0 million and comprises a first mortgage loan in the amount of $324.8 million, collateralized by 261 of our properties, and two mezzanine loans totaling $175.2 million. The proceeds from the 2012 CMBS Loan, together with the proceeds from the Sale-Leaseback Transaction and excess cash, were used to repay our existing CMBS Loan. See “Description of Indebtedness” and Note 9 of our Notes to Consolidated Financial Statements for the three months ended March 31, 2012 for a further description of the 2012 CMBS Loan.

 

•

Initial Public Offering. We expect to issue and sell          shares of common stock in this offering and receive net proceeds, after deducting estimated offering expenses payable by us and underwriting discounts and commissions of approximately $          million, assuming an initial public offering price of $          per share (the mid-point of the price range set forth on the cover page of this prospectus). We intend to use these proceeds, together with cash on hand, to retire all of our outstanding Senior Notes, of which an aggregate principal amount of $248.1 million was outstanding as of March 31, 2012. Upon completion of this offering, we will incur one-time compensation expense with respect to certain stock options held by our Chief Executive Officer and the time vested portion of certain employee stock option containing a management call option. In addition, we will incur compensation expense associated with the retention bonus (the “Retention Bonus”) and performance-based bonus (the “Incentive Bonus”) payable to our Chief Executive Officer within 60 days of completion of the offering, but no later than December 31, 2012.

 

•

Termination of Management Agreement. Upon completion of the Merger, we entered into a management agreement with a management company, whose members are entities affiliated with the Sponsors and our Founders. The management company receives annual management fees and reimbursement for out-of-pocket and other reimbursable expenses incurred by it in connection with the provision of services pursuant to the agreement. Upon the completion of this offering, the management agreement will terminate, and we will pay an $8.0 million termination fee to the management company within 60 days of completion of the offering, but no later than December 31, 2012.

The unaudited pro forma consolidated balance sheet at March 31, 2012 gives effect to the initial public offering and the termination of the management agreement, as if each had occurred on March 31, 2012. The CMBS Refinancing and the Sale-Leaseback Transaction both occurred prior to March 31, 2012 and are therefore reflected in the historical as reported consolidated balance sheet.

The unaudited pro forma consolidated statements of operations and comprehensive income for the year ended December 31, 2011, and for the three months ended March 31, 2012, give effect to the Transactions, as if

 

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each had occurred on January 1, 2011. The unaudited pro forma consolidated statements of operations and comprehensive income do not reflect the following charges that will be or were incurred by us: (1) professional fees associated with the CMBS Refinancing; (2) impairment expense and selling costs associated with the Sale-Leaseback Transaction; (3) loss on debt extinguishment related to the CMBS Refinancing and repayment of the Senior Notes; (4) one-time compensation expense recorded upon completion of this offering with respect to certain stock options held by our Chief Executive Officer and the time vested portion of certain employee stock options containing a management call option because the call option automatically terminates upon completion of this offering; (5) compensation expense associated with the Retention Bonus and the Incentive Bonus payable to our Chief Executive Officer as a result of this offering; and (6) fee associated with the termination of the management agreement upon completion of this offering. We expect these charges will be approximately $         million in the aggregate and were or will be recorded by us in the period in which these transactions are completed.

The unaudited pro forma consolidated financial statements are presented for informational purposes only and do not purport to represent what the actual financial condition or results of operations of Bloomin’ Brands, Inc. would have been if the Transactions had been completed as of the date or for the periods indicated above or that may be achieved as of any future date or for any future period. The unaudited pro forma consolidated financial statements should be read in conjunction with the accompanying notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical consolidated financial statements and accompanying notes included elsewhere in this prospectus.

 

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Bloomin’ Brands, Inc.

Unaudited Pro Forma Consolidated Balance Sheet

March 31, 2012

 

						Pro Forma Adjustments
(in thousands)		Historical As Reported March 31, 2012				Initial Public Offering/ Termination of Management Agreement				Pro Forma
Assets
Current Assets
Cash		$	335,059					(a)		$
Current portion of restricted cash			7,076
Inventories			68,394
Deferred income tax assets			27,656					(b)
Other current assets, net			87,798
Total current assets			525,983
Restricted cash			20,415
Property, fixtures and equipment, net			1,478,356
Investments in and advances to unconsolidated affiliates, net			37,681
Goodwill			269,414
Intangible assets, net			562,208
Other assets, net			143,165					(c)
Total assets		$	3,037,222							$
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable		$	106,835							$
Accrued and other current liabilities			171,439					(d)
Current portion of accrued buyout liability			16,999
Unearned revenue			202,201
Current portion of long-term debt			58,490
Total current liabilities			555,964
Partner deposit and accrued buyout liability			94,633
Deferred rent			73,056
Deferred income tax liabilities			188,550					(e)
Long-term debt, net			1,742,163					(f)
Guaranteed debt			24,500
Other long-term liabilities, net			263,232
Total liabilities			2,942,098
Commitments and contingencies
Shareholders’ Equity
Bloomin’ Brands, Inc. Shareholders’ Equity
Common stock			1,065
Additional paid-in capital			877,191					(g)
Accumulated deficit			(773,057	)				(h)
Accumulated other comprehensive loss			(19,195	)
Total Bloomin’ Brands, Inc. shareholders’ equity			86,004
Noncontrolling interests			9,120
Total shareholders’ equity			95,124
Total liabilities and shareholders’ equity		$	3,037,222							$

 

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Adjustments Related to the Offering

 

(a)	To reflect adjustments made to cash for the following:

 

Proceeds to us from this offering		$
Less: estimated offering fees and expenses payable by us
Less: repayment of the Senior Notes			(248,075	)
Less: redemption premium resulting from early repayment of the Senior Notes
Less: payment of accrued interest on the Senior Notes			(7,304	)
Less: payment of management agreement termination fee			(8,000	)
		$

 

(b)

To adjust deferred income tax assets, net, at an estimated statutory rate of 38.7% to reflect income tax benefits of $         million and $         million related to the share-based compensation expense, as calculated in note (h)(2) below, and bonus expense as calculated in note (h)(3) below, respectively.

 

(c)	To reflect the write-off of deferred financing fees of $2.7 million associated with the repayment of the Senior Notes.

 

(d)	To reflect adjustments made to accrued and other current liabilities for the following:

 

Chief Executive Officer’s Incentive Bonus (1)		$
Chief Executive Officer’s Retention Bonus (2)
Payment of accrued interest on the Senior Notes			(7,304	)
		$

 

(1)

Our Chief Executive Officer is entitled to the Incentive Bonus divided into four tranches (A-D) of $3.8 million each. Tranche A vests 20% over 5 years and is payable within 10 days of a Qualifying Liquidity Event, or (“QLE”), as defined in her bonus agreement, or the tenth anniversary of her hire date, whichever is earlier. Tranches B-D also vest 20% over five years, but are generally only payable in the event of a QLE meeting applicable performance targets for each tranche, and following this offering, if the volume-weighted average trading price, as defined in the bonus agreement, exceeds specified performance targets over a rolling six-month measurement period until it is otherwise forfeited. On May 10, 2012, the Incentive Bonus was modified to require payment under all four tranches in the aggregate amount of $15.2 million within 60 days of the completion of this offering, but no later than December 31, 2012, provided she is employed as Chief Executive Officer through completion of this offering. This adjustment represents the additional bonus expense, net of $0.9 million accrued in historical as reported amounts, giving effect to the offering as if it was completed on March 31, 2012, to reflect the vesting of the Incentive Bonus.

 

(2)

Our Chief Executive Officer is entitled to remaining aggregate Retention Bonus payments of $7.2 million in November 2012 and 2013. On May 10, 2012, the Retention Bonus was modified to require payment of the $7.2 million within 60 days of the completion of this offering, but no later than December 31, 2012, provided she is employed as Chief Executive Officer through completion of this offering. This adjustment represents the unpaid Retention Bonus payments due, giving effect to the offering as if it was completed on March 31, 2012.

 

(e)

To adjust deferred income tax liabilities, net, at an estimated statutory rate of 38.7% to reflect income tax benefits of $         million and $         million related to the loss on debt extinguishment to be recorded in connection with the redemption of the Senior Notes, as calculated in note (h)(1), and the fee to be paid upon termination of our management agreement, as calculated in note (h)(4), respectively.

 

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(f)	To reflect the decrease in long-term debt resulting from the repayment of the Senior Notes.

 

(g)	Adjustments to additional paid-in capital are as follows:

 

Proceeds to us from this offering (1)		$
Less: estimated offering fees and expenses payable by us
Net proceeds from this offering
Less: Par value of common stock issued in this offering (2)
Additional paid-in capital on shares of common stock issued in this offering
Incremental share-based compensation expense (3)
Total adjustment to additional paid-in capital		$

 

(1)

To reflect the issuance and sale by us of         shares of our common stock offered hereby at an assumed initial public offering price of $         per share (the midpoint of the price range set forth on the cover page of this prospectus).

 

(2)

To reflect common stock at par value of $.01 per share for the shares issued in this offering.

 

(3)

To reflect the following:

 

(i)

approximately $         million of share-based compensation expense expected to be recorded upon completion of this offering relating to the vested portion of approximately         million employee stock options. Shares acquired upon the exercise of stock options that are subject to a management call option may be repurchased by us upon termination of employment at any time prior to the earlier of an initial public offering or a change of control. As a result of certain transfer restrictions and the management call option, we have not recorded compensation expense for stock options that contain the management call option since an employee cannot realize monetary benefit from the stock options or any shares acquired upon the exercise of the stock options unless the employee is employed at the time of an initial public offering or change of control. The management call option automatically terminates upon completion of this offering. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Stock-Based Compensation.” The weighted average grant date fair value of these stock options is approximately $         per share.

 

(ii)

approximately $         million of share-based compensation expense expected to be recorded upon completion of this offering relating to stock options held by our Chief Executive Officer, who has options to purchase an aggregate of         million shares of our common stock that vest over a five-year period and become exercisable (to the extent then vested) if following this offering and until the expiration of the option, the volume-weighted average trading price of our common stock, as defined in the agreement, is equal to or greater than specified performance targets over a rolling six-month period. The weighted average grant date fair value of these stock options is approximately $         per share.

 

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(h)	To reflect the following:

 

(1)

$         million after-tax loss on debt extinguishment to be recorded in connection with the redemption of the Senior Notes, determined as follows:

 

Write-off of deferred financing costs associated with the Senior Notes		$	(2,731	)
Redemption premium resulting from early repayment of the Senior Notes
Loss on debt extinguishment before income taxes
Income tax benefit at an estimated statutory tax rate of 38.7%
Loss on debt extinguishment after income taxes		$

 

(2)

$         million after-tax share-based compensation expense consists of $         million of aggregate pre-tax share-based compensation expense as discussed in notes (g)(3)(i) and (ii), net of a deferred tax benefit of $         million calculated at an estimated statutory tax rate of 38.7%.

 

(3)

$         million after-tax bonus expense consists of $         million of pre-tax bonus expense as discussed in notes (d)(1) and (2), net of a deferred tax benefit of $         million calculated at an estimated statutory tax rate of 38.7%.

 

(4)

$4.9 million after-tax management agreement termination fee consists of $8.0 million of pre-tax management agreement termination fee, net of a deferred tax benefit of $3.1 million calculated at an estimated statutory tax rate of 38.7%.

 

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Bloomin’ Brands, Inc.

Unaudited Pro Forma Statement of Operations and Comprehensive Income

Year Ended December 31, 2011

 

						Pro Forma Adjustments
(in thousands)		Historical As Reported Year Ended December 31, 2011				CMBS Refinancing/ Sale-Leaseback Transaction				Initial Public Offering				Pro Forma
Revenues
Restaurant sales		$	3,803,252			$	—							$
Other revenues			38,012				—
Total revenues			3,841,264				—
Costs and expenses
Cost of sales			1,226,098				—
Labor and other related			1,094,117				—
Other restaurant operating			890,004				16,123	(a)
Depreciation and amortization			153,689				(3,641	)(b)
General and administrative			291,124				(2,208	)(c)				(f)
Recovery of note receivable from affiliated entity			(33,150	)			—
Provision for impaired assets and restaurant closings			14,039				(6,289	)(b)
Income from operations of unconsolidated affiliates			(8,109	)			—
Total costs and expenses			3,627,812				3,985
Income (loss) from operations			213,452				(3,985	)
Other income, net			830				—
Interest expense, net			(83,387	)			(11,888	)(d)				(g)
Income (loss) before provision (benefit) for income taxes			130,895				(15,873	)
Provision (benefit) for income taxes			21,716				(6,149	)(e)				(h)
Net income (loss)			109,179				(9,724	)
Less: net income attributable to noncontrolling interests			9,174				—
Net income (loss) attributable to Bloomin’ Brands, Inc.		$	100,005				(9,724	)						$
Net income (loss)		$	109,179				(9,724	)						$
Other comprehensive income (loss):
Foreign currency translation adjustment			(2,711	)			—
Comprehensive income (loss)			106,468				(9,724	)
Less: comprehensive income attributable to noncontrolling interests			9,174				—
Comprehensive income (loss) attributable to Bloomin’ Brands, Inc.		$	97,294			$	(9,724	)						$
Pro forma net income (loss) attributable to Bloomin’ Brands, Inc. per share:
Basic
Diluted
Pro forma weighted average shares outstanding:
Basic
Diluted

 

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Adjustments Related to the CMBS Refinancing and the Sale-Leaseback Transaction

 

(a)

To reflect (1) rent expense on the 67 properties associated with the Sale-Leaseback Transaction, which includes $2.8 million of deferred rent expense associated with the difference between straight-line rent expense and rent paid due to escalating rental amounts; and (2) one year of annual amortization of deferred lease related costs and recognition of the deferred gain over the 20-year lease term for the properties associated with the Sale-Leaseback Transaction. The adjustments consist of the following:

 

Rent expense on properties associated with the Sale-Leaseback Transaction, including deferred rent expense		$	18,130
Amortization of deferred lease related costs associated with the Sale-Leaseback Transaction			140
Recognition of deferred gain associated with the Sale-Leaseback Transaction (1)			(2,147	)
		$	16,123

 

(1)

The recognition of the deferred gain on sale of properties associated with the Sale-Leaseback Transaction is determined as follows:

 

Net proceeds from properties sold at a gain .		$	161,602
Less: Net book value of properties sold at a gain			(118,663	)
Total deferred gain			42,939
Divided by: Lease term (in years)			20
Annual gain recognition		$	2,147

 

(b)

To reflect a reduction of depreciation expense of $3.6 million and a reduction of impairment expense of $6.3 million associated with the 67 properties as if the Sale-Leaseback Transaction occurred on January 1, 2011. We recorded impairment expense in the historical as reported amounts for the properties that resulted in a loss upon sale based on expected sales proceeds as compared with remaining net book value at December 31, 2011.

 

(c)	To reflect the reversal of professional fees of $2.2 million associated with the CMBS Refinancing and Sale-Leaseback Transaction that are included in historical as reported December 31, 2011 results that are not our ongoing expenses.

 

(d)	The adjustment to historical as reported interest expense consists of the following:

 

CMBS Loan (1)		$	(15,041	)
Deferred financing fees (2)			3,490
Debt discount (2)			(337	)
		$	(11,888	)

 

(1)

Elimination of historical as reported interest expense on the CMBS Loan that was incurred during the year ended December 31, 2011 in the amount of $15.6 million, offset by pro forma interest expense on the 2012 CMBS Loan in the amount of $30.6 million, using a weighted average interest rate of 6.1%.

 

(2)

Elimination of historical as reported deferred financing fee amortization of $5.1 million and debt discount amortization on the CMBS Loan of $0.7 million that were incurred during the year ended December 31, 2011, offset by pro forma amortization of deferred financing fees and debt discount on the 2012 CMBS Loan in the amount of $1.6 million, and $1.0 million, respectively.

 

(e)	To reflect the tax effect of the pro forma adjustments at an estimated statutory tax rate of 38.7%.

 

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Adjustments Related to the Initial Public Offering

 

(f)	To reflect the following:

 

(1)

On-going share-based compensation expense in the aggregate amount of $         million resulting from employee stock options due to (i) termination of the management call option upon completion of this offering and (ii) in the case of our Chief Executive Officer, stock options that vest over a five-year period and become exercisable (to the extent then vested) if following this offering and until the expiration of the options, the volume-weighted average trading price of our common stock, as defined in the agreement, is equal to or greater than specified performance targets over a rolling six-month period.

 

(2)

Elimination of historical as reported recurring annual management fee of $9.1 million and reimbursement for out-of-pocket and other reimbursable expenses upon the termination of the management agreement upon completion of this offering.

 

(g)

To reflect the elimination of historical as reported interest expense of $24.8 million and deferred financing fee amortization of $1.1 million incurred during the year ended December 31, 2011 on the Senior Notes. The pro forma adjustment reflects the use of proceeds of the offering to repay $248.1 million of Senior Notes as if the offering occurred on, and the Senior Notes were repaid, on January 1, 2011. The adjustment to interest expense is calculated at an annual interest rate of 10%.

 

(h)	To reflect the tax effect of the pro forma adjustments at an estimated statutory tax rate of 38.7%.

 

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Bloomin’ Brands, Inc.

Unaudited Pro Forma Consolidated Statement of Operations and Comprehensive Income

Three Months Ended March 31, 2012

 

						Pro Forma Adjustments
(in thousands)		Historical As Reported Three Months Ended March 31, 2012				CMBS Refinancing/ Sale-Leaseback Transaction				Initial Public Offering				Pro Forma
Revenues
Restaurant sales		$	1,045,466			$	—							$
Other revenues			10,160				—
Total revenues			1,055,626				—
Costs and expenses
Cost of sales			335,859				—
Labor and other related			293,501				—
Other restaurant operating			218,965				4,219	(a)
Depreciation and amortization			38,860				(734	)(b)
General and administrative			76,002				(6,752	)(c)				(g)
Provision for impaired assets and restaurant closings			4,435				—
Income from operations of unconsolidated affiliates			(2,404	)			—
Total costs and expenses			965,218				(3,267	)
Income from operations			90,408				3,267
Gain (loss) on extinguishment of debt			(2,851	)			2,851	(d)
Other income, net			54				—
Interest expense, net			(20,974	)			(2,464	)(e)				(h)
Income before provision for income taxes			66,637				3,654
Provision for income taxes			12,805				1,416	(f)				(i)
Net income			53,832				2,238
Less: net income attributable to noncontrolling interests			3,833				—
Net income attributable to Bloomin’ Brands, Inc.		$	49,999				2,238							$
Net income		$	53,832				2,238							$
Other comprehensive income:
Foreign currency translation adjustment			3,149				—
Comprehensive income			56,981				2,238
Less: comprehensive income attributable to noncontrolling interests			3,833				—
Comprehensive income attributable to Bloomin’ Brands, Inc.		$	53,148			$	2,238							$
Pro forma net income attributable to Bloomin’ Brands, Inc. per share:
Basic
Diluted
Pro forma weighted average shares outstanding:
Basic
Diluted

 

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Adjustments Related to the CMBS Refinancing and the Sale-Leaseback Transaction

 

(a)

To reflect (1) rent expense on the 67 properties associated with the Sale-Leaseback Transaction, which includes $0.5 million of deferred rent expense associated with the difference between straight-line rent expense and rent paid due to escalating rental amounts; and (2) three months of amortization of deferred lease related costs and recognition of the deferred gain over the 20-year lease term for the properties associated with the Sale-Leaseback Transaction. The adjustments consist of the following:

 

Rent expense on properties associated with the Sale-Leaseback Transaction, including deferred rent expense		$	3,647
Amortization of deferred lease related costs associated with the Sale-Leaseback Transaction			35
Recognition of deferred gain associated with the Sale-Leaseback Transaction (1)			537
		$	4,219

 

(1)

The recognition of the deferred gain on sale of properties associated with the Sale-Leaseback Transaction is determined as follows:

 

Net proceeds from properties sold at a gain		$	161,602
Less: Net book value of properties sold at a gain			(118,663	)
Total deferred gain			42,939
Divided by: Lease term (in years)			20
Annual gain recognition		$	2,147
Quarterly gain recognition		$	537

 

(b)	To reflect a reduction of depreciation expense of $0.7 million associated with the 67 properties as if the Sale-Leaseback Transaction occurred on January 1, 2011.

 

(c)	To reflect the reversal of professional fees of $6.8 million associated with the CMBS Refinancing that are included in the historical as reported three months ended March 31, 2012 results that are not our ongoing expenses.

 

(d)	To reflect the elimination of the historical as reported loss on debt extinguishment of $2.9 million related to the CMBS Refinancing.

 

(e)	The adjustment to historical as reported interest expense consists of the following:

 

CMBS Loan (1)		$	(3,201	)
Deferred financing fees (2)			811
Debt discount (2)			(74	)
		$	(2,464	)

 

(1)

Elimination of historical as reported interest expense on the CMBS Loan that was incurred during the three months ended March 31, 2012 in the amount of $4.0 million, offset by pro forma interest expense on the 2012 CMBS Loan in the amount of $7.2 million, using a weighted average interest rate of 6.1%.

 

(2)

Elimination of historical as reported deferred financing fee amortization of $1.2 million and debt discount amortization on the CMBS Loan of $0.2 million that were incurred during the three months ended March 31, 2012, offset by pro forma amortization of deferred financing fees and debt discount on the 2012 CMBS Loan in the amount of $0.4 million and $0.2 million, respectively.

 

(f)	To reflect the tax effect of the pro forma adjustments at an estimated statutory tax rate of 38.7%.

 

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Adjustments Related to the Initial Public Offering

 

(g)	To reflect the following:

 

(1)

On-going share-based compensation expense in the aggregate amount of $         million resulting from employee stock options due to (i) termination of the management call option upon completion of this offering and (ii) in the case of our Chief Executive Officer, stock options that vest over a five-year period and become exercisable (to the extent then vested) if following this offering, and until the expiration of the options, the volume-weighted average trading price, as defined in the agreement, is equal to or greater than specified performance targets over a rolling six-month period.

 

(2)

Elimination of historical as reported recurring annual management fee and reimbursement for out-of-pocket and other reimbursable expenses upon the termination of the management agreement upon completion of this offering.

 

(h)

To reflect the elimination of historical as reported interest expense of $6.2 million and deferred financing fee amortization of $0.3 million incurred during the three months ended March 31, 2012 on the Senior Notes. The pro forma adjustment reflects the use of proceeds of the offering to repay $248.1 million of Senior Notes as if the offering occurred on, and the Senior Notes were repaid, on January 1, 2011. The adjustment to interest expense is calculated at an annual interest rate of 10%.

 

(i)	To reflect the tax effect of the pro forma adjustments at an estimated statutory tax rate of 38.7%.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the “Selected Historical Consolidated Financial and Other Data” and the audited and unaudited historical consolidated financial statements and related notes. This discussion contains forward-looking statements about our markets, the demand for our products and services and our future results and involves numerous risks and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and generally contain words such as “believes,” expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions. Our forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from those projected or implied by the forward-looking statement. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. See “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of factors that could cause our actual results to differ from those expressed or implied by forward-looking statements.

Overview

We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. We own and operate 1,247 restaurants and have 195 restaurants operating under a franchise or joint venture arrangement across 49 states and 21 countries and territories internationally. We have five founder-inspired concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar and Roy’s. Our concepts seek to provide a compelling customer experience combining great food, highly attentive service and lively and contemporary ambience at attractive prices. Our restaurants attract customers across a variety of occasions, including everyday dining, celebrations and business entertainment. Each of our concepts maintains a unique, founder-inspired brand identity and entrepreneurial culture, while leveraging our scale and enhanced operating model. We consider Outback Steakhouse, Carrabba’s, Bonefish Grill and Fleming’s to be our core concepts.

The restaurant industry is a highly competitive and fragmented industry and is sensitive to changes in the economy, trends in lifestyles, seasonality (customer spending patterns at restaurants are generally highest in the first quarter of the year and lowest in the third quarter of the year) and fluctuating costs. Operating margins for restaurants can vary due to competitive pricing strategies and fluctuations in prices of commodities, including beef, chicken, seafood, butter, cheese, produce and other necessities to operate a restaurant, such as natural gas or other energy supplies. The pace of new unit growth has slowed in the casual dining category over the last few years. Given this dynamic, companies tend to be more focused on increasing market share and comparable restaurant sales growth. Competitive pressure for market share, inflation, foreign currency exchange rates and other market conditions have had and could continue to have an adverse impact on our business.

Our industry is characterized by high initial capital investment, coupled with high labor costs, and chain restaurants have been increasingly taking share from independent restaurants over the past several years. We believe that this trend will continue due to increasing barriers that may prevent independent restaurants and/or start-up chains from building scale operations, including menu labeling, burdensome labor regulations and healthcare reforms that will be enforced once chains grow past a certain number of restaurants or number of employees. The combination of these factors underscores our initiative to drive increased sales at existing restaurants in order to raise margins and profits, because the incremental contribution to profits from every additional dollar of sales above the minimum costs required to open, staff and operate a restaurant is relatively high. Historically, we have not focused on growth in the number of restaurants just to generate additional sales. Our expansion and operating strategies have balanced investment and operating cost considerations in order to generate reasonable, sustainable margins and achieve acceptable returns on investment from our restaurant concepts.

 

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In 2010, we launched a new strategic plan and operating model, strengthened our management team and adapted practices from the consumer products and retail industries to complement our restaurant acumen and enhance our brand management, analytics and innovation. This new model keeps the customer at the center of our decision-making and focuses on continuous innovation and productivity to drive sustainable sales and profit growth. As a result of these initiatives, we are recommitted to new unit development after curtailing expansion from 2009 to 2011. We believe that a substantial development opportunity remains for our concepts in the U.S. and internationally.

In 2011, we continued to balance near-term growth in share gains with investments to achieve sustainable growth. Our key objectives for 2011 and some of the steps we took to achieve those objectives included:

Continuation of Share Growth by Enhancing Brand Competitiveness in a Challenging Environment. In order to drive market share growth, we continued to develop unique promotions throughout our concepts that fit our brand positioning and focus on delivering a superior dining experience. We identified additional opportunities to increase innovation in our menu, service and operations across all of our concepts, such as broadening our Outback Steakhouse menu by adding more salads, seafood and side items and offering the choice between our traditional seared steak and one prepared on a wood-fired grill. In addition, Carrabba’s introduced a Cucina Casuale section to its menu during the third quarter of 2011 to offer consumers a more casual dining experience with salads, sandwiches and other smaller or lighter offerings.

Acceleration of Brand Investment, Including Renovations and New Unit Development. Our brand investments have focused on accelerating our multi-year Outback Steakhouse renovation plan and increasing unit development in higher return, high growth concepts with a focus on Bonefish Grill. We renovated 194 Outback Steakhouse locations and opened six Bonefish Grill restaurants in 2011.

Improvement of Organizational Effectiveness and Infrastructure for Sustainable Growth. We focused on building our competencies in human resources, information technology and real estate, design and construction to support accelerated growth. This is a multi-year effort that includes the implementation of a human resource information system, expanded data warehousing capability, and increased resources and tools to accelerate renovations and new unit site selection. We also implemented a modified managing and chef partner compensation structure that seeks to drive sustainable growth by aligning field incentives and paying higher amounts for growth in restaurant sales and cash flow on an annual basis. See “—Liquidity and Capital Resources—Stock-Based and Deferred Compensation Plans.”

Effective Cost Management by Mitigating Commodity Risk and Accelerating Continuous Productivity Improvement. We leveraged our scale and long-term supply agreements when they were attractive relative to market trends, accelerated productivity improvements and took modest pricing action to maintain value perceptions among consumers.

Key Performance Indicators

Key measures that we use in evaluating our restaurants and assessing our business include the following:

 

•

Average restaurant unit volumes—average sales per restaurant to measure changes in customer traffic, pricing and development of the brand;

 

•

System-wide sales—total restaurant sales volume for all company-owned, franchise and unconsolidated joint venture restaurants, regardless of ownership, to interpret the overall health of our brands;

 

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•

Comparable restaurant sales—year-over-year comparison of sales volumes for domestic, company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants;

 

•

Adjusted EBITDA—calculated by adjusting EBITDA (earnings before interest, taxes, depreciation and amortization) to exclude certain stock-based compensation expenses, non-cash expenses and significant, unusual items; and

 

•

Customer satisfaction scores—measurement of our customers’ experiences in a variety of key attributes.

Recent Highlights

Our recent financial results include:

 

•

In the first quarter of 2012 as compared to the same period in 2011, an increase in consolidated revenues of 5.4% to $1.1 billion, driven primarily by 5.2% growth in combined comparable restaurant sales at existing domestic company-owned core restaurants;

 

•

In 2011 as compared to 2010, an increase in consolidated revenues of 5.9% to $3.8 billion, driven primarily by 4.9% growth in combined comparable restaurant sales at existing domestic company-owned core restaurants;

 

•

15 system-wide restaurant openings across most brands (of which seven were company-owned, five were joint ventures and three were franchises), and 194 Outback Steakhouse renovations in 2011;

 

•

Successfully implemented productivity and cost management initiatives that we estimate allowed us to save over $50 million in the aggregate in 2011, while our costs increased due to rising commodity prices; and

 

•

Generation of income from operations of $213.5 million in 2011 compared to $168.9 million in 2010, primarily attributable to the increase in consolidated revenues described above and the T-Bird settlement described in “—Costs and Expenses—Recovery of Notes Receivable from Affiliated Entity.”

Our Growth Strategies and Outlook

For the remainder of 2012, our key growth strategies, which are enabled by continued improvements in infrastructure and organizational effectiveness, are:

 

•

Grow Comparable Restaurant Sales. We plan to continue our efforts to remodel our Outback Steakhouse and Carrabba’s restaurants, use limited-time offers and multimedia marketing campaigns to drive traffic, grow beyond our traditional weekend dinner traffic and introduce innovative menu items that match evolving consumer preferences.

 

•

Pursue New Domestic and International Development With Strong Unit Level Economics. We believe that a substantial development opportunity remains for our concepts in the U.S. and internationally. We added significant resources in site selection, construction and design in 2010 and 2011 to support the opening of new restaurants. We expect to open 30 or more restaurants in 2012 and increase the pace thereafter.

 

•

Drive Margin Improvement. We believe we have the opportunity to increase our margins through cost reductions in labor, food cost, supply chain and restaurant facilities.

 

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Ownership Structures

Our restaurants are predominantly company-owned or controlled, including through joint ventures, and otherwise operated under franchise arrangements. We generate our revenues primarily from our company-owned or controlled restaurants and secondarily through ongoing royalties from our franchised restaurants and sales of franchise rights.

Company-owned or controlled restaurants include restaurants owned directly by us, by limited partnerships in which we are the general partner and our managing partners and chef partners are limited partners and by joint ventures in which we are a member. Our legal ownership interests as a general partner in these partnerships and joint ventures generally range from 50% to 90%. Our cash flows from these entities are limited to the relative portion of our ownership. In the future, we do not expect to use limited partnerships for domestic company-owned restaurants. Instead, new restaurants will be wholly-owned by us and we are transitioning our compensation structure so that the area operating, managing and chef partners will receive their distributions of restaurant cash flow as employee compensation rather than partnership distributions. Company-owned restaurants also include restaurants owned by our Roy’s joint venture and our consolidated financial statements include the accounts and operations of our Roy’s joint venture even though we have less than majority ownership. See Note 18 of our Notes to Consolidated Financial Statements for the year ended December 31, 2011, for additional information.

Through a joint venture arrangement with PGS Participacoes Ltda., we hold a 50% ownership interest in PGS Consultoria e Serviços Ltda. (the “Brazilian Joint Venture”). The Brazilian Joint Venture was formed in 1998 for the purpose of operating Outback Steakhouse franchise restaurants in Brazil. We account for the Brazilian Joint Venture under the equity method of accounting. We are responsible for 50% of the costs of new restaurants operated by the Brazilian Joint Venture and our joint venture partner is responsible for the other 50% and has operating control. Income and loss derived from the Brazilian Joint Venture is presented in the line item “Income from operations of unconsolidated affiliates” in our Consolidated Statements of Operations and Comprehensive Income. We do not consider restaurants owned by the Brazilian Joint Venture as “company-owned” restaurants.

We derive no direct income from operations of franchised restaurants other than initial and developmental franchise fees and ongoing royalties, which are included in “Other revenues” in our Consolidated Statements of Operations and Comprehensive Income.

Factors Impacting Financial Results

As discussed in more detail below and in addition to the other factors discussed above, under “Risk Factors” and elsewhere in this prospectus, the following factors have impacted our financial results and will impact our future financial results.

Effective March 14, 2012, we entered into the Sale-Leaseback Transaction with two third-party real estate institutional investors in which we sold 67 restaurant properties at fair market value for net proceeds of $192.9 million and then simultaneously leased these properties back under nine master leases. We will defer the recognition of the $42.9 million gain on the sale of certain of the properties over the initial term of the lease. See “—Liquidity and Capital Resources—Transactions” and Note 7 of our Notes to Unaudited Consolidated Financial Statements for the three months ended March 31, 2012 for a further description of the Sale-Leaseback Transaction.

Effective March 27, 2012, New PRP entered into the 2012 CMBS Loan, which totals $500.0 million and comprises a first mortgage loan in the amount of $324.8 million, collateralized by 261 of our properties, and two mezzanine loans totaling $175.2 million. The loans have a maturity date of April 10, 2017, and a weighted average interest rate as of the closing of 6.1%. The proceeds from the 2012 CMBS Loan, together with the

 

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proceeds from the Sale-Leaseback Transaction and excess cash, were used to repay the existing CMBS Loan. As a result of the CMBS Refinancing, the net amount repaid along with scheduled maturities within one year, $281.3 million, was classified as current at December 31, 2011. During the first quarter of 2012, we recorded a $2.9 million loss on extinguishment of debt. See “Description of Indebtedness” and Note 9 of our Notes to Unaudited Consolidated Financial Statements for the three months ended March 31, 2012 for a further description of the 2012 CMBS Loan.

Upon completion of this offering, we expect to immediately record approximately $         of aggregate non-cash compensation expense with respect to (i) certain stock options held by our Chief Executive Officer that become exercisable (to the extent then vested) if following this offering and until expiration of the option, the volume-weighted average trading price of our common stock is equal to or greater than specified performance targets over a six-month period and (ii) the time vested portion of stock options containing a management call option due to the automatic termination of the call option upon completion of the offering. In addition to these amounts expected to be recorded upon completion of the offering, we expect to record an additional $             million in stock-based compensation expense through 2017 related to the portion of these same stock options that will continue to vest following this offering. These amounts are only for the stock options in (i) and (ii) above and are in addition to stock-based compensation expense we will recognize related to other outstanding equity awards and other equity awards that may be granted in the future. See “—Critical Accounting Policies and Estimates—Stock-Based Compensation” for a further description of the call option. Additionally, this offering will trigger payment of $22.4 million for the Retention Bonus and Incentive Bonus due to our Chief Executive Officer. We will also pay the management company an $8.0 million fee in connection with the termination of the management agreement within 60 days of the completion of this offering, but no later than December 31, 2012.

As our net income increases, we expect our effective income tax rate to increase due to the benefit of U.S. income tax credits becoming a smaller percentage of net income and the fact that the substantial majority of our earnings are generated in the U.S., where we have higher statutory rates. We expect our effective income tax rate for 2012 to range between 20% and 30%. We expect to maintain a full valuation allowance on our net U.S. deferred income tax assets, excluding deferred income tax liabilities related to indefinite-lived assets, until we sustain an appropriate level of profitability that generates taxable income that would enable us to conclude that it is more likely than not that a portion of our deferred income tax assets will be realized. Such a decrease in the valuation allowance could result in a significant decrease in our effective income tax rate for the period in which it occurs.

 

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Results of Operations

The following tables set forth, for the periods indicated, (1) percentages that items in our Consolidated Statements of Operations and Comprehensive Income bear to total revenues or restaurant sales, as indicated, and (2) selected operating data:

 

		Years Ended December 31,												Three Months Ended March 31,
		2011				2010				2009				2012				2011
Revenues
Restaurant sales			99.0	%			99.1	%			99.2	%			99.0	%			99.1	%
Other revenues			1.0				0.9				0.8				1.0				0.9
Total revenues			100.0				100.0				100.0				100.0				100.0
Costs and expenses
Cost of sales (1)			32.2				32.0				33.1				32.1				32.0
Labor and other related (1)			28.8				28.8				28.7				28.1				28.5
Other restaurant operating (1)			23.4				24.0				23.8				20.9				21.6
Depreciation and amortization			4.0				4.3				5.2				3.7				3.8
General and administrative			7.6				7.0				7.0				7.2				6.1
Recovery of note receivable from affiliated entity			(0.9	)			—				—				—				—
Loss on contingent debt guarantee			—				—				0.7				—				—
Goodwill impairment			—				—				1.6				—				—
Provision for impaired assets and restaurant closings			0.4				0.1				3.7				0.4				*
Income from operations of unconsolidated affiliates			(0.2	)			(0.2	)			(0.1	)			(0.2	)			(0.4	)
Total costs and expenses			94.4				95.3				103.0				91.4				90.9
Income (loss) from operations			5.6				4.7				(3.0	)			8.6				9.1
Gain (loss) on extinguishment of debt			—				—				4.4				(0.3	)			—
Other income (expense), net			*				0.1				(*	)			*				(*	)
Interest expense, net			(2.2	)			(2.5	)			(3.3	)			(2.0	)			(2.2	)
Income (loss) before provision (benefit) for income taxes			3.4				2.3				(1.9	)			6.3				6.9
Provision (benefit) for income taxes			0.6				0.6				(0.1	)			1.2				1.1
Net income (loss)			2.8				1.7				(1.8	)			5.1				5.8
Less: net income (loss) attributable to noncontrolling interests			0.2				0.2				(*	)			0.4				0.3
Net income (loss) attributable to Bloomin’ Brands, Inc.			2.6	%			1.5	%			(1.8	)%			4.7	%			5.5	%

 

(1)	As a percentage of restaurant sales.

*	Less than 1/10th of one percent of total revenues.

 

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The table below presents the number of our restaurants in operation at the end of the periods indicated:

 

		December 31,												March 31,
		2011				2010				2009				2012				2011
Number of restaurants (at end of the period):
Outback Steakhouse
Company-owned—domestic			669				670				680				669				670
Company-owned—international			111				120				119				111				120
Franchised—domestic			106				108				108				106				107
Franchised and joint venture—international			81				70				63				81				70
Total			967				968				970				967				967
Carrabba’s Italian Grill
Company-owned			231				232				232				230				232
Franchised			1				1				1				1				1
Total			232				233				233				231				233
Bonefish Grill
Company-owned			151				145				145				151				145
Franchised			7				7				7				7				7
Total			158				152				152				158				152
Fleming’s Prime Steakhouse and Wine Bar
Company-owned			64				64				64				64				64
Other
Company-owned (1)			22				22				58				22				22
System-wide total			1,443				1,439				1,477				1,442				1,438

 

(1)

In September 2009, we sold our Cheeseburger in Paradise concept, which included 34 restaurants, to Paradise Restaurant Group, LLC (“PRG”). Based on the terms of the purchase and sale agreement, we consolidated PRG after the sale transaction. Upon adoption of new accounting guidance for variable interest entities, we deconsolidated PRG on January 1, 2010. As a result, subsequent to 2009 this category includes only our Roy’s concept.

We operate restaurants under brands that have similar economic characteristics, nature of products and services, class of customer and distribution methods, and as a result, aggregate our operating segments into a single reporting segment.

System-Wide Sales

System-wide sales increased 7.0% in 2011 and 2.2% in 2010 and increased 6.4% for the three months ended March 31, 2012 as compared with the corresponding period in 2011. System-wide sales is a non-GAAP financial measure that includes sales of all restaurants operating under our brand names, whether we own them or not. System-wide sales comprises sales of company-owned restaurants and sales of franchised and

 

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unconsolidated joint venture restaurants. The table below presents the first component of system-wide sales, which is sales of company-owned restaurants:

 

		Years Ended December 31,												Three Months Ended March 31,
		2011				2010				2009				2012				2011
Company-Owned Restaurant Sales (in millions):
Outback Steakhouse
Domestic		$	2,027			$	1,960			$	1,954			$	560			$	532
International			336				281				260				83				83
Total			2,363				2,241				2,214				643				615
Carrabba’s Italian Grill			682				653				633				187				180
Bonefish Grill			441				403				375				127				114
Fleming’s Prime Steakhouse and Wine Bar			239				223				199				67				63
Other (1)			78				75				153				21				21
Total company-owned restaurant sales		$	3,803			$	3,595			$	3,574			$	1,045			$	993

 

(1)

In September 2009, we sold our Cheeseburger in Paradise concept, which included 34 restaurants, to PRG. Based on the terms of the purchase and sale agreement, we consolidated PRG after the sale transaction. Upon adoption of new accounting guidance for variable interest entities, we deconsolidated PRG on January 1, 2010. As a result, subsequent to 2009 this category includes primarily our Roy’s concept.

The following information presents the second component of system-wide sales, which is sales of franchised and unconsolidated joint venture restaurants. These are restaurants that are not consolidated and from which we only receive a franchise royalty or a portion of their total income. Management believes that franchise and unconsolidated joint venture sales information is useful in analyzing our revenues because franchisees and affiliates pay royalties and/or service fees that generally are based on a percentage of sales. Management also uses this information to make decisions about future plans for the development of additional restaurants and new concepts as well as evaluation of current operations.

The following do not represent our sales and are presented only as an indicator of changes in the restaurant system, which management believes is important information regarding the health of our restaurant concepts.

 

		Years Ended December 31,												Three Months Ended March 31,
		2011				2010				2009				2012				2011
Franchise and Unconsolidated Joint Venture Sales (in millions) (1):
Outback Steakhouse
Domestic		$	300			$	296			$	294			$	82			$	80
International			311				234				170				87				69
Total			611				530				464				169				149
Carrabba’s Italian Grill			4				4				3				1				1
Bonefish Grill			18				16				16				5				4
Total franchise and unconsolidated joint venture sales (1)		$	633			$	550			$	483			$	175			$	154
Income from franchise and unconsolidated joint ventures (2)		$	36			$	31			$	26			$	11			$	10

 

(1)	Franchise and unconsolidated joint venture sales are not included in revenues in the Consolidated Statements of Operations and Comprehensive Income.

(2)	Represents the franchise royalty and the portion of total income related to restaurant operations included in the Consolidated Statements of Operations and Comprehensive Income in the line items “Other revenues” and “Income from operations of unconsolidated affiliates,” respectively.

 

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Results of Operations—Three Months Ended March 31, 2012 and 2011

Revenues

Restaurant Sales

 

		Three Months Ended March  31,
(dollars in millions):		2012				2011				$ Change				% Change
Restaurant sales		$	1,045.5			$	993.1			$	52.4				5.3	%

The increase in restaurant sales in the three months ended March 31, 2012 as compared to the same period in 2011 was primarily attributable to (i) a $53.8 million increase in comparable restaurant sales at our existing restaurants (including a 5.2% combined comparable restaurant sales increase in the first quarter of 2012 at our core domestic concepts) which was primarily due to increases in customer traffic and general menu prices and (ii) a $7.0 million increase in sales from nine restaurants not included in our comparable restaurant sales base. We believe the increase in customer traffic was primarily a result of promotions throughout our concepts, innovations in our menu, service and operations, mild winter weather conditions, the additional day in February due to the leap year and renovations at additional Outback Steakhouse locations. The increase in restaurant sales in the three months ended March 31, 2012 as compared to the same period in 2011 was partially offset by a $6.0 million decrease from the sale (and franchise conversion) of nine of our company-owned Outback Steakhouse restaurants in Japan in October 2011 and a $2.4 million decrease from the closing of five restaurants since March 31, 2011.

The following table includes additional information about changes in restaurant sales at domestic company-owned restaurants for our core brands:

 

		Three Months Ended March 31,
		2012				2011
Average restaurant unit volumes (weekly):
Outback Steakhouse		$	64,437			$	61,785
Carrabba’s Italian Grill		$	62,510			$	60,423
Bonefish Grill		$	64,869			$	60,977
Fleming’s Prime Steakhouse and Wine Bar		$	80,511			$	77,171
Operating weeks:
Outback Steakhouse			8,693				8,614
Carrabba’s Italian Grill			2,991				2,983
Bonefish Grill			1,957				1,864
Fleming’s Prime Steakhouse and Wine Bar			832				823
Year over year percentage change:
Menu price increases: (1)
Outback Steakhouse			2.0	%			1.6	%
Carrabba’s Italian Grill			2.4	%			1.7	%
Bonefish Grill			2.7	%			1.2	%
Fleming’s Prime Steakhouse and Wine Bar			2.4	%			2.0	%
Comparable restaurant sales (restaurants open 18 months or more):
Outback Steakhouse			5.3	%			4.3	%
Carrabba’s Italian Grill			4.3	%			3.9	%
Bonefish Grill			6.2	%			9.6	%
Fleming’s Prime Steakhouse and Wine Bar			5.4	%			11.4	%
Combined (concepts above)			5.2	%			5.4	%

 

(1)	The stated menu price changes exclude the impact of product mix shifts to new menu offerings.

 

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Costs and Expenses

Cost of Sales

 

		Three Months Ended March  31,
(dollars in millions):		2012				2011				Change
Cost of sales		$	335.9			$	317.8
% of Restaurant sales			32.1	%			32.0	%			0.1	%

Cost of sales, consisting of food and beverage costs, increased as a percentage of restaurant sales for the three months ended March 31, 2012 as compared to the same period in 2011. The increase as a percentage of restaurant sales was primarily 1.2% from increases in beef, seafood, dairy and other commodity costs and 0.4% from changes in our product mix. The increase was partially offset by decreases as a percentage of restaurant sales of 0.7% from the impact of certain cost savings initiatives and 0.7% from menu price increases.

Labor and Other Related Expenses

 

		Three Months Ended March  31,
(dollars in millions):		2012				2011				Change
Labor and other related		$	293.5			$	282.8
% of Restaurant sales			28.1	%			28.5	%			(0.4	)%

Labor and other related expenses include all direct and indirect labor costs incurred in operations, including distribution expense to managing partners, costs related to the Partner Equity Plan and the Partner Ownership Account Plan (see “Liquidity and Capital Resources—Stock-Based and Deferred Compensation Plans”), and other incentive compensation expenses. Labor and other related expenses decreased as a percentage of restaurant sales in the three months ended March 31, 2012 as compared to the same period in 2011. The decrease as a percentage of restaurant sales was primarily 0.8% from higher average unit volumes at our restaurants and 0.5% from the impact of certain cost savings initiatives. The decrease was partially offset by increases as a percentage of restaurant sales of the following: (i) 0.3% from higher field management labor, bonus and distribution expenses, (ii) 0.2% from higher kitchen and service labor costs, (iii) 0.2% from increases in worker’s compensation and health insurance costs and (iv) 0.1% from an increase in the Partner Equity Plan and other deferred compensation participant investment account obligations.

Other Restaurant Operating Expenses

 

		Three Months Ended March  31,
(dollars in millions):		2012				2011				Change
Other restaurant operating		$	219.0			$	214.2
% of Restaurant sales			20.9	%			21.6	%			(0.7	)%

Other restaurant operating expenses include certain unit-level operating costs such as operating supplies, rent, repairs and maintenance, advertising expenses, utilities, pre-opening costs and other occupancy costs. A substantial portion of these expenses is fixed or indirectly variable. The decrease as a percentage of restaurant sales in the three months ended March 31, 2012 as compared to the same period in 2011 was primarily due to 0.6% from higher average unit volumes at our restaurants and 0.3% from certain cost savings initiatives. The decrease was partially offset by an increase as a percentage of restaurant sales of 0.3% in general liability insurance expense.

 

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General and Administrative Expenses

 

		Three Months Ended March  31,
(in millions):		2012				2011				Change
General and administrative		$	76.0			$	61.6			$	14.4

General and administrative costs increased in the three months ended March 31, 2012 as compared to the same period in 2011 primarily due to the following: (i) $7.4 million of additional legal and other professional fees mainly resulting from amendment and restatement of a lease between OSI and PRP, (ii) $3.3 million of increased general and administrative costs associated with field support, managers-in-training and field compensation, bonus, distribution and partner buyout expense, (iii) $2.7 million of additional corporate compensation, taxes, benefits and business travel expenses primarily as a result of increasing our resources in consumer insights, research and development, productivity and human resources, (iv) $1.1 million of additional information technology expense, (v) a $1.0 million increase in severance expense and (vi) a $0.9 million increase in corporate occupancy costs primarily as a result of our amended home office lease. This was partially offset by a $1.4 million net increase in the cash surrender value of life insurance investments.

Provision for Impaired Assets and Restaurant Closings

 

		Three Months Ended March 31,
(in millions):		2012				2011				Change
Provision for impaired assets and restaurant closings		$	4.4			$	0.2			$	4.2

During the three months ended March 31, 2012, we had $4.2 million of additional restaurant closing expense and impairment charges as compared to the same period in 2011. Restaurant impairment charges primarily resulted from the carrying value of a restaurant’s assets exceeding its estimated fair market value, primarily due to declining future cash flows from lower projected sales at existing locations (see “—Liquidity and Capital Resources—Fair Value Measurements”).

Income From Operations

 

		Three Months Ended March  31,
(dollars in millions):		2012				2011				Change
Income from operations		$	90.4			$	90.7
% of Total revenues			8.6	%			9.1	%			(0.5	)%

Income from operations decreased in the three months ended March 31, 2012 as compared to the same period in 2011 primarily as a result of $7.4 million of additional legal and other professional fees mainly resulting from amendment and restatement of a lease between OSI and PRP included in General and administrative costs and increased expenses in Provision for impaired assets and restaurant closings both discussed above. These increases are offset by a 10.5% increase in operating margins at the restaurant level and higher average unit volumes at our restaurants. Operating margins are calculated as restaurant sales after deduction of the main restaurant-level operating costs (comprised of cost of sales, labor and other related costs and other restaurant operating expenses).

Loss on Extinguishment of Debt

During the first quarter of 2012, we recorded a $2.9 million loss related to the extinguishment of the CMBS Loan in connection with the CMBS Refinancing. See “Description of Indebtedness” for a further description of the 2012 CMBS Loan.

 

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Provision For Income Taxes

 

		Three Months Ended March 31,
		2012				2011				Change
Effective income tax rate			19.2	%			16.0	%			3.2	%

The net increase in the effective income tax rate in the three months ended March 31, 2012 as compared to the same period in 2011 was primarily due to the foreign tax provision being a higher percentage of projected consolidated pretax income as compared to the prior year.

The effective income tax rate for the three months ended March 31, 2012 was lower than the combined federal and state statutory rate of 38.7% primarily due to the benefit of the tax credit for excess FICA tax on employee-reported tips and the elimination of noncontrolling interest together being such a large percentage of pretax income. This was partially offset by an increase in the valuation allowance. The effective income tax rate for the three months ended March 31, 2011 was lower than the combined federal and state statutory rate of 38.9% due to the benefit of the expected tax credit for excess FICA tax on employee-reported tips being such a large percentage of projected annual pretax income. This was partially offset by the income taxes in states that only have limited deductions in computing the state current tax provision.

Results of Operations—Years Ended December 31, 2011, 2010 and 2009

Revenues

Restaurant Sales

 

		Years Ended December 31,																Years Ended December 31,
(dollars in millions):		2011				2010				$ Change				% Change				2010				2009				$ Change				% Change
Restaurant sales		$	3,803.3			$	3,594.7			$	208.6				5.8	%		$	3,594.7			$	3,573.8			$	20.9				0.6	%

The increase in restaurant sales in 2011 as compared to 2010 was primarily attributable to (i) a $195.7 million increase in comparable restaurant sales at our existing restaurants (including a 4.9% combined comparable restaurant sales increase in 2011 at our core domestic restaurants), which was primarily due to increases in customer traffic and general menu prices and (ii) a $15.9 million increase in sales from 17 restaurants not included in our comparable restaurant sales base. The increase in customer traffic was primarily a result of promotions throughout our concepts, innovations in our menu, service and operations and renovations at Outback Steakhouse. The increase in restaurant sales in 2011 as compared to 2010 was partially offset by a $2.0 million decrease from the closing of three restaurants during 2011 and a $1.0 million decrease from the sale (and franchise conversion) of nine of our company-owned Outback Steakhouse restaurants in Japan in October 2011.

The increase in restaurant sales in 2010 as compared to 2009 was primarily attributable to (i) a $90.0 million increase in comparable restaurant sales at our existing restaurants (2.7% combined comparable restaurant sales increase in 2010 at our core domestic restaurants) primarily due to an increase in customer traffic and partially offset by customer selection of lower-priced menu items and (ii) a $23.1 million increase in sales from 32 restaurants not included in our comparable restaurant sales base. The increase in customer traffic was primarily a result of promotions throughout our concepts, innovations in our menu, service and operations and an increase in the overall level of marketing spending. The increase in restaurant sales in 2010 as compared to 2009 was partially offset by a $75.5 million decrease from the sale and de-consolidation of 34 Cheeseburger in Paradise locations and a $16.7 million decrease from the closing of 16 restaurants during 2010.

 

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The following table includes additional information about changes in restaurant sales at domestic company-owned restaurants for our core brands:

 

		Years Ended December 31,
		2011				2010				2009
Average restaurant unit volumes (in thousands):
Outback Steakhouse			$3,029				$2,906				$2,857
Carrabba’s Italian Grill			$2,946				$2,816				$2,737
Bonefish Grill			$3,023				$2,781				$2,606
Fleming’s Prime Steakhouse and Wine Bar			$3,730				$3,476				$3,148
Operating weeks:
Outback Steakhouse			34,914				35,200				35,720
Carrabba’s Italian Grill			12,077				12,097				12,065
Bonefish Grill			7,600				7,553				7,491
Fleming’s Prime Steakhouse and Wine Bar			3,337				3,337				3,292
Year over year percentage change:
Menu price increases (decreases):(1)
Outback Steakhouse			1.5	%			(0.1	)%			1.3	%
Carrabba’s Italian Grill			1.5	%			0.4	%			1.6	%
Bonefish Grill			1.9	%			0.2	%			1.5	%
Fleming’s Prime Steakhouse and Wine Bar			3.0	%			0.5	%			0.6	%
Comparable restaurant sales (restaurants open 18 months or more):
Outback Steakhouse			4.0	%			1.5	%			(8.8	)%
Carrabba’s Italian Grill			4.6	%			2.9	%			(6.1	)%
Bonefish Grill			8.3	%			6.5	%			(5.9	)%
Fleming’s Prime Steakhouse and Wine Bar			7.4	%			10.4	%			(16.4	)%
Combined (concepts above)			4.9	%			2.7	%			(8.6	)%

 

(1)	The stated menu price changes exclude the impact of product mix shifts to new menu offerings.

Costs and Expenses

Cost of Sales

 

		Years Ended December 31,												Years Ended December 31,
(dollars in millions):		2011				2010				Change				2010				2009				Change
Cost of sales		$	1,226.1			$	1,152.0							$	1,152.0			$	1,184.1
% of Restaurant sales			32.2	%			32.0	%			0.2	%			32.0	%			33.1	%			(1.1	)%

Cost of sales, consisting of food and beverage costs, increased as a percentage of restaurant sales in 2011 as compared to 2010. The increase as a percentage of restaurant sales was primarily 1.4% from increases in seafood, dairy, beef and other commodity costs. The increase was partially offset by decreases as a percentage of restaurant sales of 0.9% from the impact of certain cost savings initiatives and 0.4% from menu price increases.

The decrease as a percentage of restaurant sales in 2010 as compared to 2009 was primarily 1.1% from the impact of certain cost savings initiatives and 0.7% from decreases in beef costs. The decrease was partially offset by increases as a percentage of restaurant sales of the following: (i) 0.3% from increases in produce, dairy and other commodity costs, (ii) 0.2% due to changes in our product mix and (iii) 0.2% from changes in our limited-time offers and other promotions.

 

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Labor and Other Related Expenses

 

		Years Ended December 31,												Years Ended December 31,
(dollars in millions):		2011				2010				Change				2010				2009				Change
Labor and other related		$	1,094.1			$	1,034.4							$	1,034.4			$	1,024.1
% of Restaurant sales			28.8	%			28.8	%			—	%			28.8	%			28.7	%			0.1	%

Labor and other related expenses include all direct and indirect labor costs incurred in operations, including distribution expense to managing partners, costs related to the Partner Equity Plan and the Partner Ownership Account Plan (see “—Liquidity and Capital Resources—Stock-Based and Deferred Compensation Plans”), and other incentive compensation expenses. Labor and other related expenses were flat as a percentage of restaurant sales in 2011 as compared to 2010. Items that contributed to an increase as a percentage of restaurant sales included the following: (i) 0.4% from higher kitchen and service labor costs, (ii) 0.3% from higher field management labor, bonus and distribution expenses, (iii) 0.2% from a settlement of an Internal Revenue Service assessment of employment taxes and (iv) 0.1% from an increase in health insurance costs. These increases were offset by decreases as a percentage of restaurant sales of 0.7% from higher average unit volumes at our restaurants and 0.3% from the impact of certain cost savings initiatives.

Labor and other related expenses increased as a percentage of restaurant sales in 2010 as compared with 2009. The increase as a percentage of restaurant sales was primarily due to the following: (i) 0.4% from higher kitchen, service and field management labor costs, (ii) 0.2% from an increase in health insurance costs and (iii) 0.2% from higher distribution expense to managing partners. The increase was partially offset by decreases as a percentage of restaurant sales of 0.5% from the impact of certain cost savings initiatives and 0.2% from higher average unit volumes at our restaurants.

Other Restaurant Operating Expenses

 

		Years Ended December 31,												Years Ended December 31,
(dollars in millions):		2011				2010				Change				2010				2009				Change
Other restaurant operating		$	890.0			$	864.2							$	864.2			$	849.7
% of Restaurant sales			23.4	%			24.0	%			(0.6	)%			24.0	%			23.8	%			0.2	%

Other restaurant operating expenses include certain unit-level operating costs such as operating supplies, rent, repairs and maintenance, advertising expenses, utilities, pre-opening costs and other occupancy costs. A substantial portion of these expenses is fixed or indirectly variable. The decrease as a percentage of restaurant sales in 2011 as compared to 2010 was primarily 0.7% from higher average unit volumes at our restaurants and 0.4% from certain cost savings initiatives. The decrease was partially offset by increases as a percentage of restaurant sales of 0.2% in operating supplies expense and 0.2% in advertising costs.

The increase as a percentage of restaurant sales in 2010 as compared to 2009 was primarily due to the following: (i) 0.4% from increases in advertising costs, (ii) 0.2% from increases in the recognition of deferred gift card fees, (iii) 0.2% from increases in repairs and maintenance costs, occupancy costs and operating supplies expense and (iv) 0.2% from higher general liability insurance expense. The increase was partially offset by decreases as a percentage of restaurant sales of 0.5% from higher average unit volumes at our restaurants and 0.2% from certain cost savings initiatives.

Depreciation and Amortization Expenses

 

		Years Ended December 31,												Years Ended December 31,
(dollars in millions):		2011				2010				Change				2010				2009				Change
Depreciation and amortization		$	153.7			$	156.3							$	156.3			$	186.1
% of Total revenues			4.0	%			4.3	%			(0.3	)%			4.3	%			5.2	%			(0.9	)%

 

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Depreciation and amortization expense decreased as a percentage of total revenues in 2011 as compared to 2010. This decrease as a percentage of total revenues was primarily 0.2% from certain assets being fully depreciated as of June 2010 as a result of purchase accounting adjustments recorded in conjunction with the Merger and 0.2% from higher average unit volumes at our restaurants. The decrease was partially offset by an increase as a percentage of restaurant sales of 0.1% from depreciation expense on property, fixtures and equipment additions during 2011 primarily due to our Outback Steakhouse renovations.

The decrease as a percentage of total revenues in 2010 as compared to 2009 was primarily 0.7% from certain assets being fully depreciated as of June 2009 and June 2010 as a result of purchase accounting adjustments recorded in conjunction with the Merger and 0.1% from higher average unit volumes at our restaurants.

General and Administrative Expenses

 

		Years Ended December 31,												Years Ended December 31,
(in millions):		2011				2010				Change				2010				2009				Change
General and administrative		$	291.1			$	252.8			$	38.3			$	252.8			$	252.3			$	0.5

General and administrative costs increased in 2011 as compared to 2010 primarily due to the following: (i) $12.1 million of additional corporate compensation, bonus and relocation expenses primarily as a result of increasing our resources in consumer insights, research and development, productivity and human resources, (ii) $8.2 million of increased general and administrative costs associated with field support, managers-in-training and field compensation, bonus, distribution and buyout expense, (iii) a $6.2 million net decline in the cash surrender value of life insurance investments, (iv) $7.4 million of additional legal and other professional fees, (v) a $4.3 million loss from the sale of nine of our company-owned Outback Steakhouse restaurants in Japan in October 2011, (vi) $3.8 million of additional information technology expense, (vii) $1.7 million of increased corporate business travel and meeting-related expenses and (viii) $0.5 million of expenses incurred in 2011 in connection with the Sale-Leaseback Transaction. This increase was partially offset by $5.3 million of cost savings initiatives and a $2.0 million allowance for the PRG promissory note recorded in the first quarter of 2010.

The increase in 2010 as compared to 2009 was primarily attributable to the following: (i) $10.2 million of increased general and administrative costs associated with field support, managers-in-training and distribution expense, (ii) $10.0 million of additional consulting and legal fees primarily related to our productivity improvement and brand growth strategies, (iii) $4.4 million of additional corporate compensation expense as a result of increasing our resources in consumer insights, research and development, productivity and human resources and (iv) a $4.1 million net decline in the cash surrender value of life insurance investments. This increase was substantially offset by the following: (i) a $14.0 million decrease in restricted stock, deferred compensation and partner buyout expenses that was mostly attributable to accelerated vesting of restricted stock for certain executive officers in 2009, (ii) a $7.1 million reduction of bonus and severance expenses, (iii) a $3.8 million decrease from certain cost savings initiatives and (iv) a $1.3 million decrease in ongoing operating costs at closed locations.

Recovery of Note Receivable From Affiliated Entity

In November 2011, we received a settlement payment of $33.3 million from T-Bird in connection with a settlement agreement that satisfied all outstanding litigation with T-Bird.

Loss on Contingent Debt Guarantee

We are the guarantor of an uncollateralized line of credit that permits borrowing of up to $24.5 million for the company’s joint venture partner, RY-8, in the development of Roy’s restaurants (see “—Liquidity and Capital Resources—Debt Guarantees”). We recorded a $24.5 million loss associated with this guarantee in the year ended December 31, 2009.

 

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Goodwill Impairment

We did not record a goodwill impairment charge during the years ended December 31, 2011 and 2010. We recorded a goodwill impairment charge of $58.1 million for the domestic Outback Steakhouse concept during the second quarter of 2009 in connection with our annual impairment test.

Our review of the recoverability of goodwill was based primarily upon an analysis of the discounted cash flows of the related reporting units as compared to their carrying values. These goodwill impairment charges occurred due to poor overall economic conditions, declining sales at our restaurants, reductions in our projected results for future periods and a challenging environment for the restaurant industry (see “—Critical Accounting Policies and Estimates”).

Provision for Impaired Assets and Restaurant Closings

 

		Years Ended December 31,												Years Ended December 31,
(in millions):		2011				2010				Change				2010				2009				Change
Provision for impaired assets and restaurant closings		$	14.0			$	5.2			$	8.8			$	5.2			$	134.3			$	(129.1	)

During the years ended December 31, 2011 and 2010 and 2009, we recorded a provision for impaired assets and restaurant closings of $14.0 million, $5.2 million and $134.3 million, respectively, for certain of our restaurants, intangible assets and other assets (see “—Liquidity and Capital Resources—Fair Value Measurements”).

During 2009, our provision for impaired assets and restaurant closings primarily included: (i) $46.0 million of impairment charges to reduce the carrying value of the assets of Cheeseburger in Paradise to their estimated fair market value due to our sale of the concept in the third quarter of 2009, (ii) $47.6 million of impairment charges and restaurant closing expense for certain of our other restaurants and (iii) $36.0 million of impairment charges for the domestic Outback Steakhouse and Carrabba’s Italian Grill trade names.

We used the discounted cash flow method to determine the fair value of our intangible assets. The trade name impairment charges occurred due to poor overall economic conditions, declining sales at our restaurants, reductions in our projected results for future periods and a challenging environment for the restaurant industry. Restaurant impairment charges primarily resulted from the carrying value of a restaurant’s assets exceeding its estimated fair market value, primarily due to anticipated closures or declining future cash flows from lower projected future sales at existing locations (see “—Critical Accounting Policies and Estimates”).

Income (Loss) From Operations

 

		Years Ended December 31,												Years Ended December 31,
(dollars in millions):		2011				2010				Change				2010				2009				Change
Income (loss) from operations		$	213.5			$	168.9							$	168.9			$	(109.3	)
% of Total revenues			5.6	%			4.7	%			0.9	%			4.7	%			(3.0	)%			7.7	%

Income (loss) from operations increased in 2011 as compared to 2010 and in 2010 as compared to 2009 primarily as a result of a 9.0% and 5.5% increase in operating margins, respectively, higher average unit volumes at our restaurants and certain other items as described above.

Gain on Extinguishment of Debt

During the first quarter of 2009, OSI purchased $240.1 million in aggregate principal amount of its Senior Notes in a cash tender offer. OSI paid $73.0 million for the Senior Notes purchased and $6.7 million of

 

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accrued interest. We recorded a gain from the extinguishment of debt of $158.1 million in 2009. The gain was reduced by $6.1 million for the pro rata portion of unamortized deferred financing fees that related to the extinguished Senior Notes and by $3.0 million for fees related to the tender offer.

Interest Expense, Net

 

		Years Ended December 31,												Years Ended December 31,
(in millions):		2011				2010				Change				2010				2009				Change
Interest expense, net		$	83.4			$	91.4			$	(8.0	)		$	91.4			$	115.9			$	(24.5	)

The decrease in net interest expense in 2011 as compared to 2010 was primarily due to a $4.6 million decline in interest expense for OSI’s senior secured credit facilities, largely as a result of a decline in the total outstanding balance of those facilities, and to $1.4 million of interest expense on our interest rate collar for OSI’s senior secured credit facilities during 2010 that was not incurred in 2011 (since the collar matured in 2010).

The decrease in net interest expense in 2010 as compared to 2009 was primarily due to a net $14.1 million decrease in interest expense mainly due to mark to market adjustments on our interest rate collar for OSI’s senior secured credit facilities that matured effective September 30, 2010 and a reduction of approximately $5.2 million of interest expense as a result of the $240.1 million decrease in principal outstanding on OSI’s Senior Notes from its completion of a cash tender offer during March of 2009.

Provision (Benefit) For Income Taxes

 

		Years Ended December 31,												Years Ended December 31,
		2011				2010				Change				2010				2009				Change
Effective income tax rate			16.6	%			26.5	%			(9.9	)%			26.5	%			3.7	%			22.8	%

The net decrease in the effective income tax rate in 2011 as compared to the previous year was primarily due to the increase in the domestic pretax book income in which the deferred income tax assets are subject to a valuation allowance and the state and foreign income tax provision being a lower percentage of consolidated pretax income as compared to the prior year. The net increase in the effective income tax rate in 2010 as compared to the previous year was primarily due to the effect of the change in the valuation allowance against deferred income tax assets.

The effective income tax rate for the year ended December 31, 2011 was lower than the combined federal and state statutory rate of 38.7% primarily due to the benefit of the tax credit for excess FICA tax on employee-reported tips and loss on investments as a result of the sale of assets in Japan together being such a large percentage of pretax income. The effective income tax rate for the year ended December 31, 2010 was lower than the combined federal and state statutory rate of 38.9% primarily due to the benefit of the tax credit for excess FICA tax on employee-reported tips, which was partially offset by the valuation allowance and income taxes in states that only have limited deductions in computing the state current income tax provision. The effective income tax rate for the year ended December 31, 2009 was significantly lower than the combined federal and state statutory rate of 38.9% primarily due to an increase in the valuation allowance on deferred income tax assets, which was partially offset by the benefit of the tax credit for excess FICA tax on employee-reported tips being such a large percentage of pretax loss.

 

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Selected Quarterly Financial Data

The following table sets forth our unaudited quarterly consolidated statements of operations data (in thousands) for each of the four quarters in 2011. The data has been prepared on the same basis as the audited Consolidated Financial Statements and related Notes for the year ended December 31, 2011 included in this prospectus and you should read the following tables together with such financial statements. The quarterly results of operations include all normal recurring adjustments necessary for a fair presentation of this data. Results of interim periods are not necessarily indicative of results for the entire year and are not necessarily indicative of future results.

 

		Three Months Ended
		December  31, 2011				September  30, 2011				June 30, 2011				March 31, 2011
Revenues
Restaurant sales		$	945,017			$	919,093			$	946,033			$	993,109
Other revenues			10,621				9,182				9,469				8,740
Total revenues			955,638				928,275				955,502				1,001,849
Costs and expenses
Cost of sales			303,191				300,140				305,003				317,764
Labor and other related			273,651				262,345				275,314				282,807
Other restaurant operating			220,887				230,268				224,692				214,157
Depreciation and amortization			39,131				37,807				38,463				38,288
General and administrative			83,117				76,881				69,548				61,578
Recovery of note receivable from affiliated entity			(33,150	)			—				—				—
Provision for impaired assets and restaurant closings			8,900				1,208				3,723				208
Income from operations of unconsolidated affiliates			(1,052	)			(1,416	)			(1,995	)			(3,646	)
Total costs and expenses			894,675				907,233				914,748				911,156
Income from operations			60,963				21,042				40,754				90,693
Other (expense) income, net			(660	)			1,234				559				(303	)
Interest expense, net			(20,828	)			(20,674	)			(20,692	)			(21,193	)
Income before provision for income taxes			39,475				1,602				20,621				69,197
Provision for income taxes			6,222				234				4,178				11,082
Net income			33,253				1,368				16,443				58,115
Less: net income attributable to noncontrolling interests			2,722				789				2,440				3,223
Net income attributable to Bloomin’ Brands, Inc.		$	30,531			$	579			$	14,003			$	54,892

 

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The following table sets forth, for the periods indicated, (1) percentages that items in our unaudited quarterly condensed consolidated statements of operations bear to total revenues or restaurant sales, as indicated, and (2) selected operating data:

 

		Three Months Ended
		December 31,				September 30,				June 30,				March 31,
		2011				2011				2011				2011
Revenues
Restaurant sales			98.9	%			99.0	%			99.0	%			99.1	%
Other revenues			1.1				1.0				1.0				0.9
Total revenues			100.0				100.0				100.0				100.0
Costs and expenses
Cost of sales (1)			32.1				32.7				32.2				32.0
Labor and other related (1)			29.0				28.5				29.1				28.5
Other restaurant operating (1)			23.4				25.1				23.8				21.6
Depreciation and amortization			4.1				4.1				4.0				3.8
General and administrative			8.7				8.3				7.3				6.1
Recovery of note receivable from affiliated entity			(3.5	)			—				—				—
Provision for impaired assets and restaurant closings			0.9				0.1				0.4				*
Income from operations of unconsolidated affiliates			(0.1	)			(0.2	)			(0.2	)			(0.4	)
Total costs and expenses			93.6				97.7				95.7				90.9
Income from operations			6.4				2.3				4.3				9.1
Other (expense) income, net			(0.1	)			0.1				0.1				(*	)
Interest expense, net			(2.2	)			(2.2	)			(2.2	)			(2.2	)
Income before provision for income taxes			4.1				0.2				2.2				6.9
Provision for income taxes			0.6				*				0.5				1.1
Net income			3.5				0.2				1.7				5.8
Less: net income attributable to noncontrolling interests			0.3				0.1				0.2				0.3
Net income attributable to Bloomin’ Brands, Inc.			3.2	%			0.1	%			1.5	%			5.5	%

 

(1)	As a percentage of Restaurant sales.

*	Less than 1/10th of one percent of total revenues.

Changes in restaurant sales reflect the seasonality of our business throughout the year (customer spending patterns at restaurants are generally highest in the first quarter of the year and lowest in the third quarter of the year).

General and administrative expenses continued to trend higher each quarter in 2011 primarily driven by our near-term growth strategy initiatives which generated additional corporate compensation, bonus and relocation expenses primarily as a result of increasing our resources in consumer insights, research and development, productivity and human resources as well as additional field support, managers-in-training and field compensation, bonus and distribution expenses.

In November 2011, we received a settlement payment of $33.3 million from T-Bird in connection with a settlement agreement that satisfied all outstanding litigation with T-Bird, which is recorded in Recovery of note receivable from affiliated entity. Provision for impaired assets and restaurant closings expenses represents impairment charges for nonrecurring fair value measurements on our long-lived assets held and used and is recognized to the extent that the fair value of the assets is less than the carrying value.

 

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The effective income tax rates for the three months ended December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011 were 15.8%, 14.6%, 20.3% and 16.0%, respectively. The net changes in the effective income tax rate in these periods were primarily due to the changes in the pretax book income in the jurisdictions in which the deferred tax assets are subject to a valuation allowance and the foreign income tax provision varying as a percentage of consolidated pretax income.

Liquidity and Capital Resources

Potential Impacts of Market Conditions on Capital Resources

During 2010 and 2011, we experienced a strengthening of trends in consumer traffic and increases in comparable restaurant sales, operating cash flows and operating income. Our comparable restaurant sales continued to increase during the first quarter of 2012. However, the restaurant industry continues to be challenged and uncertainty exists as to the sustainability of these favorable trends. We have continued to implement various cost savings initiatives, including food cost decreases through waste reduction and supply chain and labor efficiency initiatives. We developed new menu items to appeal to value-conscious consumers and used marketing campaigns to promote these items.

As of March 31, 2012 and December 31, 2011, we had approximately $83.2 million and $82.4 million, respectively, in available unused borrowing capacity under our working capital revolving credit facility (after giving effect to undrawn letters of credit of approximately $66.8 million and $67.6 million, respectively,) and $67.0 million in available unused borrowing capacity under our pre-funded revolving credit facility that provides financing for capital expenditures only (see “Description of Indebtedness”).

We believe that expected cash flow from operations, planned borrowing capacity, short-term investments and restricted cash balances are adequate to fund debt service requirements, operating lease obligations, capital expenditures and working capital obligations for the next twelve months. However, our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to achieve anticipated levels of revenue and cash flow and our ability to manage costs and working capital successfully. At March 31, 2012 and December 31, 2011, we were in compliance with our covenants.

Summary of Cash Flows

We require capital primarily for principal and interest payments on our debt, prepayment requirements under our term loan facility (see “Description of Indebtedness”), obligations related to our deferred compensation plans, the development of new restaurants, remodeling older restaurants, investments in technology, and acquisitions of franchisees and joint venture partners.

The following table presents a summary of our cash flows provided by (used in) operating, investing and financing activities for the periods indicated (in thousands):

 

		Years Ended December 31,												Three Months Ended March 31,
		2011				2010				2009				2012				2011
Net cash provided by operating activities		$	322,450			$	275,154			$	195,537			$	2,096			$	41,644
Net cash (used in) provided by investing activities			(113,142	)			(71,721	)			(39,171	)			155,820				(18,927	)
Net cash used in financing activities			(89,300	)			(167,315	)			(137,397	)			(306,404	)			(23,025	)
Effect of exchange rate changes on cash and cash equivalents			(3,460	)			(1,539	)			870				1,463				1,514
Net increase (decrease) in cash and cash equivalents		$	116,548			$	34,579			$	19,839			$	(147,025	)		$	1,206

 

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Operating Activities

Net cash provided by operating activities decreased in the three months ended March 31, 2012 as compared to the same period in 2011 primarily as a result of decreases in the changes in accounts payable and accrued expenses mainly due to acceleration of payments prior to the end of 2010 and an increase in gift card redemptions in the first quarter of 2012 as compared to the first quarter of 2011. The decrease in net cash provided by operating activities was partially offset by an increase in cash generated from restaurant operations due to increases in comparable restaurant sales and a decrease in the change in other current assets primarily due to timing of holiday gift card sales collections from third-party vendors.

Net cash provided by operating activities increased in 2011 as compared to 2010 primarily as a result of the following: (i) an increase in cash generated from restaurant operations due to comparable restaurant sales increases, (ii) certain food, labor and other cost savings initiatives, (iii) an acceleration of certain accounts payable and other related payments prior to the end of 2010 and (iv) a decrease in cash paid for interest, which was $72.1 million for the year ended December 31, 2011 compared to $96.7 million in 2010. The increase in net cash provided by operating activities was partially offset by an increase in other current assets primarily due to an increase in third-party gift card receivables and an increase in cash paid for income taxes, net of refunds, which was $27.7 million for the year ended December 31, 2011 compared to $10.8 million in 2010.

Net cash provided by operating activities increased in 2010 as compared to 2009 primarily as a result of the following: (i) an increase in cash generated from restaurant operations due to comparable restaurant sales increases, (ii) certain food, labor and other cost savings initiatives, (iii) a delay in accounts payable and other related payments at December 31, 2008, (iv) a decrease in cash paid for interest, which was $96.7 million for the year ended December 31, 2010 compared to $109.0 million in 2009 and (v) a decrease in cash paid for income taxes, net of refunds, which was $10.8 million for the year ended December 31, 2010 compared to $21.3 million in 2009. The increase in net cash provided by operating activities was partially offset by (i) a significant decline in inventory during 2009 as a result of utilization of inventory on hand, (ii) a significant increase in bonuses paid during 2010 as compared to 2009 and (iii) an acceleration of certain accounts payable and other related payments prior to the end of 2010.

Investing Activities

Net cash provided by investing activities during the three months ended March 31, 2012 consisted primarily of $192.9 million of proceeds from the Sale-Leaseback Transaction partially offset by $34.0 million of capital expenditures and the $4.3 million net difference between restricted cash received and restricted cash used, which was mainly related to the use of restricted cash for deferred compensation plans. Net cash used in investing activities during the three months ended March 31, 2011 was primarily driven by $20.5 million of capital expenditures.

We estimate that our capital expenditures will total between approximately $180.0 million and $210.0 million in 2012. The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things, including restrictions imposed by our borrowing arrangements. We expect to continue to review the level of capital expenditures throughout 2012.

Net cash used in investing activities during the year ended December 31, 2011 consisted primarily of capital expenditures of $120.9 million and a royalty termination fee of $8.5 million. This was partially offset by $10.1 million of proceeds from the sale of nine of our company-owned Outback Steakhouse restaurants in Japan. Net cash used in investing activities during the year ended December 31, 2010 consisted primarily of the following: (i) capital expenditures of $60.5 million, (ii) the $11.3 million net difference between restricted cash received and restricted cash used, which was primarily related to the use of restricted cash for deferred compensation plans and (iii) deconsolidated PRG cash of $4.4 million. This was partially offset by the $4.0 million net difference between the proceeds from the sale and purchases of company-owned life insurance. Net

 

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cash used in investing activities for the year ended December 31, 2009 was primarily attributable to capital expenditures of $57.5 million and was partially offset by the $10.3 million net difference between the proceeds from the sale and the purchases of company-owned life insurance.

Financing Activities

Net cash used in financing activities during the three months ended March 31, 2012 was primarily attributable to the following: (i) extinguishment of PRP’s CMBS Loan (see “Description of Indebtedness”) of $777.6 million, (ii) repayments of partner deposits and accrued partner obligations of $9.2 million, (iii) repayments of long-term debt of $6.6 million, (iv) deferral of $5.4 million of financing fees associated with the refinancing of PRP’s CMBS Loan and (v) distributions to noncontrolling interests of $4.3 million. This was partially offset by the proceeds received from the 2012 CMBS Loan of $495.2 million. Net cash used in financing activities during the three months ended March 31, 2011 was primarily attributable to the following: (i) repayments of partner deposits and accrued partner obligations of $13.3 million, (ii) repayments of long-term debt of $5.7 million and (iii) distributions to noncontrolling interests of $4.0 million.

Net cash used in financing activities during the year ended December 31, 2011 was primarily attributable to the following: (i) repayments of borrowings on long-term debt and OSI’s revolving credit facilities of $103.3 million, (ii) the net difference between repayments and receipts of partner deposits and other contributions of $36.0 million and (iii) distributions to noncontrolling interests of $13.5 million. This was partially offset by the collection of the note receivable from T-Bird of $33.3 million and proceeds from borrowings on OSI’s revolving credit facilities of $33.0 million. Net cash used in financing activities during the year ended December 31, 2010 was primarily attributable to the following: (i) repayments of borrowings on long-term debt and OSI’s revolving credit facilities of $196.8 million, (ii) the net difference between repayment and receipt of partner deposit and accrued buyout contributions of $18.0 million and (iii) distributions to noncontrolling interests of $11.6 million. This was partially offset by proceeds from borrowings on OSI’s revolving credit facilities of $61.0 million. Net cash used in financing activities for the year ended December 31, 2009 was primarily attributable to: (i) $76.0 million of cash paid for the extinguishment of a portion of OSI’s Senior Notes and related fees, (ii) repayments of borrowings on long-term debt and OSI’s revolving credit facilities of $37.2 million, (iii) $33.3 million of cash paid for the purchase of the note related to OSI’s guaranteed debt for T-Bird and (iv) distributions to noncontrolling interests of $9.1 million. Net cash used in financing activities in 2009 was partially offset by $23.7 million of proceeds from borrowings on OSI’s revolving credit facilities.

Financial Condition as of March 31, 2012

Current assets decreased to $526.0 million at March 31, 2012 as compared with $708.3 million at December 31, 2011 primarily due to decreases in Cash and cash equivalents of $147.0 million (see “—Summary of Cash Flows”) and Current portion of restricted cash of $13.6 million. The decrease in Current portion of restricted cash was due to the CMBS Refinancing effective in March 2012 (see “Description of Indebtedness”). Other current assets also decreased $16.6 million mainly due to a $23.7 million decrease in receivables primarily as a result of seasonality in third-party gift card and promotional sales and $7.3 million of individually immaterial other current assets partially offset by timing related increases of $14.4 million in prepaid expense.

Working capital (deficit) totaled ($30.0) million and ($248.1) million at March 31, 2012 and December 31, 2011, respectively, and included Unearned revenue from unredeemed gift cards of $202.2 million and $299.6 million at March 31, 2012 and December 31, 2011, respectively. We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies). We operate successfully with negative working capital because cash collected on restaurant sales is typically received before payment is due on our current liabilities and our inventory turnover rates require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are used to service debt obligations and for capital expenditures.

Current liabilities decreased to $556.0 million at March 31, 2012 as compared with $956.4 million at December 31, 2011 primarily due to an decrease in the Current portion of long-term debt of $274.4 million as a result of the CMBS Refinancing. The decrease was also driven by a decline in Unearned revenue of $97.4

 

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million as a result of seasonality in third-party gift card and promotional sales and redemptions. Accrued and other current liabilities decreased $40.1 million primarily due to a decrease in accrued payroll and other compensation for 2011 performance compensation paid in March 2012.

Financial Condition as of December 31, 2011

Current assets increased to $708.3 million at December 31, 2011 as compared with $530.9 million at December 31, 2010 primarily due to an increase in Cash and cash equivalents of $116.5 million. This increase in Cash and cash equivalents was driven by a reduction in net repayments of long-term debt and borrowings on OSI’s revolving credit facilities during 2011 as compared to 2010 of $65.5 million, the receipt of a $33.3 million settlement payment from T-Bird in November 2011 and an increase in cash provided by our restaurant operations. This increase was partially offset by $60.4 million of additional capital expenditures during 2011 as compared to 2010. Other current assets also increased $32.6 million driven primarily by a $36.5 million increase in receivables as a result of third-party gift card and promotional sales.

Working capital (deficit) totaled ($248.1) million and ($120.1) million at December 31, 2011 and 2010, respectively, and included Unearned revenue from unredeemed gift cards of $299.6 million and $269.1 million at December 31, 2011 and 2010, respectively. We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies). We operate successfully with negative working capital because cash collected on restaurant sales is typically received before payment is due on our current liabilities and our inventory turnover rates require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are used to service debt obligations and for capital expenditures.

Current liabilities increased to $956.4 million at December 31, 2011 as compared with $651.0 million at December 31, 2010 primarily due to an increase in the Current portion of long-term debt of $237.6 million as a result of the June 2012 maturity of PRP’s CMBS Loan (see “Description of Indebtedness”). This increase was also due to an increase in unearned revenue of $30.5 million as a result of the increase in third-party gift card and promotional sales. Accounts payable also increased $19.1 million driven by an acceleration of certain accounts payable and other related payments prior to the end of 2010 as well as an increase in our construction in progress accrual in 2011 due to increased remodeling activity and new restaurant development.

Transactions

Effective March 14, 2012, we entered into the Sale-Leaseback Transaction with two third-party real estate institutional investors in which we sold 67 restaurant properties at fair market value for net proceeds of $192.9 million. We then simultaneously leased these properties back under nine master leases (collectively, the “REIT Master Leases”). The initial term of the REIT Master Leases are 20 years with four five-year renewal options. One renewal period is at a fixed rental amount and the last three renewal periods are generally based at then-current fair market values. The sale at fair market value and subsequent leaseback qualified for sale-leaseback accounting treatment, and the REIT Master Leases are classified as operating leases. We deferred the recognition of the $42.9 million gain on the sale of certain of the properties over the initial term of the lease. In accordance with the applicable accounting guidance, the 67 restaurant properties are not classified as held for sale at December 31, 2011 since we are leasing back the properties.

On May 10, 2012, we entered into a first amendment to our management agreement with Kangaroo Management Company I, LLC (the “Management Company”), whose members are entities affiliated with our Sponsors and our Founders. This amendment provides that if the management agreement is terminated due to an initial public offering (including this offering) in 2012, we will pay the Management Company, within 60 days of completion of the offering, but no later than December 31, 2012, a termination fee of $8.0 million. This termination fee will be paid in addition to the pro-rated periodic fee as provided in the management agreement and the management agreement will terminate immediately prior to the completion of this offering.

On May 10, 2012, the Retention Bonus and the Incentive Bonus with our Chief Executive Officer (“CEO”) were amended. The amendment to the bonus agreements provides that if an initial public offering (including this offering) is completed in 2012, the remaining payments under each agreement are accelerated to a single lump sum payment of $22.4 million payable within 60 days of the completion of the offering, but no later than December 31, 2012, provided she is employed as CEO at the time of such offering.

 

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Credit Facilities and Other Indebtedness

Bloomin’ Brands is a holding company and conducts its operations through its subsidiaries, certain of which have incurred their own indebtedness as described below.

On June 14, 2007, OSI entered into senior secured credit facilities with a syndicate of institutional lenders and financial institutions. These senior secured credit facilities provide for senior secured financing of up to $1.6 billion, consisting of a $1.3 billion term loan facility, a $150.0 million working capital revolving credit facility, including letter of credit and swing-line loan sub-facilities, and a $100.0 million pre-funded revolving credit facility that provides financing for capital expenditures only.

The senior secured term loan facility matures June 14, 2014. At each rate adjustment, OSI has the option to select a Base Rate plus 125 basis points or a Eurocurrency Rate plus 225 basis points for the borrowings under this facility. The Base Rate option is the higher of the prime rate of Deutsche Bank AG New York Branch and the federal funds effective rate plus 0.5 of 1% (3.25% at March 31, 2012, December 31, 2011 and 2010). The Eurocurrency Rate option is the 30, 60, 90 or 180-day Eurocurrency Rate (ranging from 0.31% to 0.81%, 0.38% to 0.88% and from 0.31% to 0.50% at March 31, 2012, December 31, 2011 and 2010, respectively). The Eurocurrency Rate may have a nine- or twelve-month interest period if agreed upon by the applicable lenders. With either the Base Rate or the Eurocurrency Rate, the interest rate is reduced by 25 basis points if the associated Moody’s Applicable Corporate Rating then most recently published is B1 or higher (the rating was Caa1 at March 31, 2012, December 31, 2011 and 2010).

OSI is required to prepay outstanding term loans, subject to certain exceptions, with:

 

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50% of its “annual excess cash flow” (with step-downs to 25% and 0% based upon its rent-adjusted leverage ratio), as defined in the credit agreement and subject to certain exceptions;

 

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100% of its “annual minimum free cash flow,” as defined in the credit agreement, not to exceed $75.0 million for each fiscal year, if its rent-adjusted leverage ratio exceeds a certain minimum threshold;

 

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100% of the net proceeds of certain assets sales and insurance and condemnation events, subject to reinvestment rights and certain other exceptions; and

 

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100% of the net proceeds of any debt incurred, excluding permitted debt issuances.

Additionally, OSI is required, on an annual basis, to first, repay outstanding loans under the pre-funded revolving credit facility and second, fund a capital expenditure account to the extent amounts on deposit are less than $100.0 million, in both cases with 100% of its “annual true cash flow,” as defined in the credit agreement. In accordance with these requirements, in April 2012, OSI repaid its pre-funded revolving credit facility outstanding loan balance of $33.0 million and funded $37.6 million to its capital expenditure account using its “annual true cash flow.” In April 2011, OSI repaid its pre-funded revolving credit facility outstanding loan balance of $78.1 million and funded $60.5 million to its capital expenditure account.

OSI’s senior secured credit facilities require scheduled quarterly payments on the term loans equal to 0.25% of the original principal amount of the term loans for the first six years and three quarters following June 14, 2007. These payments are reduced by the application of any prepayments, and any remaining balance will be paid at maturity. The outstanding balance on the term loans was $1.0 billion at March 31, 2012, December 31, 2011 and 2010. OSI classified $13.1 million of its term loans as current at March 31, 2012, December 31, 2011 and 2010 due to its required quarterly payments and the results of its projected and actual covenant calculations, which indicate the additional term loan prepayments, as described above, will not be required. The amount of outstanding term loans required to be prepaid in accordance with OSI’s debt

 

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covenants may vary based on year-end results. In October 2011, we sold our nine company-owned Outback Steakhouse restaurants in Japan to a subsidiary of S Foods, Inc. and used the net cash proceeds from this sale to pay down $7.5 million of OSI’s outstanding term loans in accordance with the terms of the OSI credit agreement amended in January 2010. The amount of outstanding term loans required to be prepaid in accordance with OSI’s debt covenants may vary based on year-end results.

Proceeds of loans and letters of credit under OSI’s $150.0 million working capital revolving credit facility provide financing for working capital and general corporate purposes and, subject to a rent-adjusted leverage condition, for capital expenditures for new restaurant growth. This revolving credit facility matures June 14, 2013 and bears interest at rates ranging from 100 to 150 basis points over the Base Rate or 200 to 250 basis points over the Eurocurrency Rate. There were no loans outstanding under the revolving credit facility at March 31, 2012, December 31, 2011 and 2010; however, $66.8 million, $67.6 million and $70.3 million, respectively, of the credit facility was committed for the issuance of letters of credit and not available for borrowing. OSI may have to extend additional letters of credit in the future. If the need for letters of credit exceeds the $75.0 million maximum permitted by OSI’s working capital revolving credit facility, OSI may have to use cash to fulfill its collateral requirements. Fees for the letters of credit range from 2.00% to 2.25% and the commitment fees for unused working capital revolving credit commitments range from 0.38% to 0.50%.

Proceeds of loans under OSI’s $100.0 million pre-funded revolving credit facility, which expires on June 14, 2013, are available to provide financing for capital expenditures, if the capital expenditure account described above has a zero balance. As of March 31, 2012, December 31, 2011 and 2010, OSI had $33.0 million, $33.0 million and $78.1 million, respectively, outstanding on its pre-funded revolving credit facility. These borrowings were recorded in “Current portion of long-term debt” in our Consolidated Balance Sheets, as OSI is required to repay any outstanding borrowings in April following each fiscal year using its “annual true cash flow,” as defined in the credit agreement. At each rate adjustment, OSI has the option to select the Base Rate plus 125 basis points or a Eurocurrency Rate plus 225 basis points for the borrowings under this facility. In either case, the interest rate is reduced by 25 basis points if the associated Moody’s Applicable Corporate Rating then most recently published is B1 or higher. Fees for the unused portion of the pre-funded revolving credit facility are 2.43%.

At March 31, 2012, December 31, 2011 and 2010, OSI was in compliance with its debt covenants. See “Description of Indebtedness” for further information about OSI’s debt covenants.

On June 14, 2007, Private Restaurant Properties LLC, or PRP, our indirect wholly owned subsidiary, entered into the CMBS Loan totaling $790.0 million. As part of the CMBS Loan, the lenders had a security interest in PRP’s properties and related improvements located throughout the United States and direct and indirect equity interests in PRP.

The CMBS Loan comprised a note payable and four mezzanine notes. The CMBS Loan had a maturity date of June 9, 2011, subject to one additional one-year extension by PRP to a maximum maturity date of June 9, 2012. During 2011, PRP exercised the one-year extension.

All notes bore interest at the one-month London Interbank Offered Rate (“LIBOR”) which was 0.28% and 0.27% at December 31, 2011 and 2010, respectively, plus an applicable spread which ranges from 0.51% to 4.25%. Interest-only payments were made on the ninth calendar day of each month and interest accrued beginning on the fifteenth calendar day of the preceding month.

PRP’s CMBS Loan required it to comply with certain financial covenants, including a lease coverage ratio and a loan to value ratio as defined in the CMBS Loan agreement. The CMBS Loan also contained customary representations, warranties, affirmative covenants and events of default. Upon disposal of any location that collateralizes the CMBS Loan, PRP was required to pay the portion of the CMBS Loan principal that related

 

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to each disposed location. During the years ended December 31, 2011 and 2010, PRP did not dispose of any locations and therefore did not pay any principal on the CMBS Loan for disposed locations. At December 31, 2011 and 2010, the outstanding balance on PRP’s CMBS Loan was $775.3 million and $774.7 million, respectively.

Effective March 27, 2012, New Private Restaurant Properties, LLC and two of our other indirect wholly-owned subsidiaries (collectively, “New PRP”) entered into the 2012 CMBS Loan. The 2012 CMBS Loan totals $500.0 million and comprises a first mortgage loan in the amount of $324.8 million, collateralized by 261 of our properties, and two mezzanine loans totaling $175.2 million. The loans have a maturity date of April 10, 2017. The first mortgage loan has five fixed rate components and a floating rate component. The fixed rate components bear interest at a rate of 2.37% to 6.81% per annum. The floating rate component bears interest at a rate per annum equal to the 30-day LIBOR rate (with a floor of 1%) plus 2.37%. The first mezzanine loan bears interest at a rate of 9.0% per annum, and the second mezzanine loan bears interest at a rate of 11.25% per annum. The proceeds from the 2012 CMBS Loan, together with the proceeds from the Sale-Leaseback Transaction in March 2012 (see “—Transactions”) and excess cash held in PRP, were used to repay the existing CMBS Loan. As a result of the CMBS Refinancing, the net amount repaid along with scheduled maturities within one year, $281.3 million, was classified as current at December 31, 2011. During the first quarter of 2012, we recorded a $2.9 million loss related to the extinguishment in the line item, “Loss on extinguishment of debt” in our Consolidated Statement of Operations and Comprehensive Income. As of March 31, 2012, we deferred $7.6 million of financing costs incurred to complete this transaction of which $2.2 million had been capitalized as of December 31, 2011. These deferred financing costs are included in the line item, “Other assets, net” in our Consolidated Balance Sheets. See “Description of Indebtedness” for a further description of the 2012 CMBS Loan. At March 31, 2012, the outstanding balance, excluding the debt discount, on the 2012 CMBS Loan was $500.0 million.

We used an interest rate cap with a notional amount of $775.7 million as a method to limit the volatility of PRP’s variable-rate CMBS Loan. During the first quarter of 2012, this interest rate cap was terminated. In connection with the 2012 CMBS Loan, New PRP entered into an interest rate cap (the “Rate Cap”) as a method to limit the volatility of the floating rate component of the first mortgage loan. Under the Rate Cap, if the 30-day LIBOR market rate exceeds 7.0% per annum, the counterparty must pay to New PRP such excess on the notional amount of the floating rate component. Should it be necessary, New PRP would record any mark-to-market changes in the fair value of its derivative instrument into earnings in the period of change. The Rate Cap has a term of approximately two years from the closing of the 2012 CMBS Loan. Upon the expiration or termination of the Rate Cap or the downgrade of the credit ratings of the counterparty under the Rate Cap’s specified thresholds, New PRP is required to replace the Rate Cap with a replacement interest rate cap in a notional amount equal to the outstanding principal balance (if any) of the floating rate component.

On June 14, 2007, OSI issued Senior Notes in an original aggregate principal amount of $550.0 million under an indenture among OSI, as issuer, OSI Co-Issuer, Inc., as co-issuer (“Co-Issuer”), a third-party trustee and the Guarantors. The Senior Notes mature on June 15, 2015. Interest is payable semiannually in arrears, at 10% per annum, in cash on each June 15 and December 15. Interest payments to the holders of record of the Senior Notes occur on the immediately preceding June 1 and December 1. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months. The principal balance of Senior Notes outstanding at March 31, 2012, December 31, 2011 and 2010 was $248.1 million. See “Description of Indebtedness” for a further description of the Senior Notes.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases in the open market, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

 

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During the first quarter of 2009, OSI purchased $240.1 million in aggregate principal amount of its Senior Notes in a cash tender offer. OSI paid $73.0 million for the Senior Notes purchased and $6.7 million of accrued interest. We recorded a gain from the extinguishment of debt of $158.1 million in the line item “Gain on extinguishment of debt” in our Consolidated Statement of Operations for the year ended December 31, 2009. The gain was reduced by $6.1 million for the pro rata portion of unamortized deferred financing fees that related to the extinguished Senior Notes and by $3.0 million for fees related to the tender offer. The purpose of the tender offer was to reduce the principal amount of debt outstanding, reduce the related debt service obligations and improve OSI’s financial covenant position under its senior secured credit facilities.

As of March 31, 2012, December 31, 2011 and 2010, OSI had approximately $8.6 million, $9.1 million and $7.6 million, respectively, of notes payable at interest rates ranging from 0.76% to 7.00% as of March 31, 2012 and December 31, 2011 and from 1.07% to 7.00% as of December 31, 2010. These notes have been primarily issued for buyouts of managing and area operating partner interests in the cash flows of their restaurants and generally are payable over a period of two through five years.

Debt Guarantees

OSI is the guarantor of an uncollateralized line of credit that permits borrowing of up to $24.5 million for its joint venture partner, RY-8, in the development of Roy’s restaurants. The line of credit originally expired in December 2004 and was amended for a fourth time on April 1, 2009 to a revised termination date of April 15, 2013. According to the terms of the credit agreement, RY-8 may borrow, repay, re-borrow or prepay advances at any time before the termination date of the agreement. On the termination date of the agreement, the entire outstanding principal amount of the loan then outstanding and any accrued interest is due. At March 31, 2012, December 31, 2011 and 2010, the outstanding balance on the line of credit was $24.5 million.

RY-8’s obligations under the line of credit are unconditionally guaranteed by OSI and Roy’s Holdings, Inc. (“RHI”). If an event of default occurs, as defined in the agreement, the total outstanding balance, including any accrued interest, is immediately due from the guarantors. At March 31, 2012, December 31, 2011 and 2010, $24.5 million of OSI’s $150.0 million working capital revolving credit facility was committed for the issuance of a letter of credit for this guarantee.

OSI is not aware of any non-compliance with the underlying terms of the borrowing agreements for which it provides a guarantee that would result in it having to perform in accordance with the terms of the guarantee.

Goodwill and Indefinite-Lived Intangible Assets

During the second quarter of 2011, we performed our annual assessment for impairment of goodwill and other indefinite-lived intangible assets. Our review of the recoverability of goodwill was based primarily upon an analysis of the discounted cash flows of the related reporting units as compared to the carrying values. We also used the discounted cash flow method to determine the fair value of our indefinite-lived intangible assets. We did not record any goodwill or indefinite-lived intangible asset impairment charges as a result of this assessment and determined that none of our reporting units are at risk for material goodwill impairment.

Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date (exit price) and is a market-based measurement, not an entity-specific measurement. To measure fair value, we incorporate assumptions that market participants would use in pricing the asset or liability, and utilize market data to the maximum extent possible. Measurement of fair value incorporates nonperformance risk (i.e., the risk that an obligation will not be fulfilled). In measuring fair value, we reflect the impact of our own credit risk on our liabilities, as well as any collateral. We also consider the credit standing of our counterparties in measuring the fair value of our assets.

 

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We are highly leveraged and are exposed to interest rate risk to the extent of our variable-rate debt. In September 2007, we entered into an interest rate collar with a notional amount of $1.0 billion as a method to limit the variability of OSI’s senior secured credit facilities. The collar consisted of a LIBOR cap of 5.75% and a LIBOR floor of 2.99%. The collar’s first variable-rate set date was December 31, 2007, and the option pairs expired at the end of each calendar quarter beginning March 31, 2008 and ending September 30, 2010. The quarterly expiration dates corresponded to the scheduled amortization payments of OSI’s term loan. Our interest rate collar matured on September 30, 2010. We expensed $19.9 million and $21.4 million of interest for the years ended December 31, 2010 and 2009, respectively, as a result of the quarterly expiration of the collar’s option pairs. We recorded mark-to-market changes in the fair value of the derivative instrument in earnings in the period of change. We included $18.5 million and $5.8 million of net interest income for the years ended December 31, 2010 and 2009, respectively, in the line item “Interest expense” in our Consolidated Statements of Operations for the mark-to-market effects of this derivative instrument.

At December 31, 2011, we were highly leveraged and exposed to interest rate risk to the extent of its variable-rate debt. The Company used an interest rate cap with a notional amount of $775.7 million as a method to limit the volatility of PRP’s variable-rate CMBS Loan. During the first quarter of 2012, this interest rate cap was terminated. In connection with the CMBS Refinancing that was effective in March 2012, a Rate Cap with a notional amount of $48.7 million was entered into for similar purposes (see “—Credit Facilities and Other Indebtedness”). The interest rate caps did not have any fair market value at March 31, 2012 and December 31, 2011.

We invested $7.9 million, $37.7 million and $51.4 million of our excess cash in money market funds classified as Cash and cash equivalents or restricted cash on our Consolidated Balance Sheets at March 31, 2012, December 31, 2011 and December 31, 2010, respectively, at a net value of 1:1 for each dollar invested. The fair value of the investment in the money market funds is determined by using quoted prices for identical assets in an active market. As a result, we have determined that the inputs used to value this investment fall within Level 1 of the fair value hierarchy.

We recorded $4.2 million of impairment charges as a result of the fair value measurement on a nonrecurring basis during the three months ended March 31, 2012 primarily related to two specifically identified restaurant locations with individual store under-performance. At March 31, 2012, the impaired long-lived assets had $0.9 million of remaining fair value. We used a third-party market appraisal for the fair value of the assets included in Level 2 and a discounted cash flow model to estimate the fair value of the long-lived assets included in Level 3. Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and projected trends of current operating results. As a result, we have determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs that fall within Level 3 of the fair value hierarchy.

The following table presents quantitative information related to the unobservable inputs used in our Level 3 fair value measurements for the impairment loss incurred in the three months ended March 31, 2012:

 

Unobservable Input		Range
Weighted-average cost of capital			11.2%
Long-term growth rates			3.0%
Annual revenue growth rates (1)			(8.7)% -3.0%

 

(1)	Weighted average of the annual revenue growth rate at March 31, 2012 was 2.4%.

During the three months ended March 31, 2011, we did not have any goodwill and other indefinite-lived intangible asset impairment charges, nor did we incur impairment charges on long-lived assets held and used as a result of fair value measurements on a nonrecurring basis.

 

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During the year ended December 31, 2011, we did not have any goodwill and other indefinite-lived intangible asset impairment charges, but we did incur impairment charges on long-lived assets held and used as a result of fair value measurements on a nonrecurring basis. We used a discounted cash flow model (Level 3) and quoted prices from brokers (Level 1) to estimate the fair value of the long-lived assets. Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and projected trends of current operating results. We recorded $11.6 million of impairment charges as a result of the fair value measurement on a nonrecurring basis of our long-lived assets held and used during the year ended December 31, 2011. The impaired long-lived assets had $30.8 million of remaining fair value at December 31, 2011.

Sales declines at our restaurants, unplanned increases in health insurance, commodity or labor costs, deterioration in overall economic conditions and challenges in the restaurant industry may result in future impairment charges. It is possible that changes in circumstances or changes in our judgments, assumptions and estimates, could result in a future impairment charge of a portion or all of our goodwill, other intangible assets or long-lived assets held and used.

During the year ended December 31, 2010, we did not incur any goodwill and other indefinite-lived intangible asset impairment charges or any other material impairment charges as a result of fair value measurements on a nonrecurring basis. We recorded $91.4 million of impairment charges as a result of the fair value measurement on a nonrecurring basis of our long-lived assets held and used during the year ended December 31, 2009. The impaired long-lived assets had $9.3 million of remaining fair value at December 31, 2009.

We performed a separate valuation for five of our closed restaurant sites that collateralize the CMBS Loan using quoted prices from brokers for similar properties. The restaurant sites were written down to fair value resulting in impairment charges of $7.3 million (included in the total above) during the year ended December 31, 2009. We determined that the majority of these inputs are observable inputs that fall within Level 2 of the fair value hierarchy.

Due to the third quarter of 2009 sale of our Cheeseburger in Paradise concept, we recorded a $46.0 million impairment charge (included in the total above) during the second quarter of 2009 to reduce the carrying value of this concept’s long-lived assets to their estimated fair market value. We used a weighted-average probability analysis and estimates of expected future cash flows to determine the fair value of this concept. We have determined that the majority of the inputs used to value this concept are unobservable inputs that fall within Level 3 of the fair value hierarchy.

We used a discounted cash flow model to estimate the fair value of the remaining long-lived assets held and used in the total above. Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and projected trends of current operating results. We have determined that the majority of these inputs are unobservable inputs that fall within Level 3 of the fair value hierarchy. The long-lived assets were written down to fair value, resulting in impairment charges of $38.1 million (included in the total above) during the year ended December 31, 2009.

We recorded goodwill impairment charges of $58.1 million and indefinite-lived intangible asset impairment charges of $36.0 million during the year ended December 31, 2009 as a result of our annual impairment test. We test both our goodwill and our indefinite-lived intangible assets, which are trade names, for impairment by utilizing discounted cash flow models to estimate their fair values. These cash flow models involve several assumptions. Changes in our assumptions could materially impact our fair value estimates. Assumptions critical to our fair value estimates are: (i) weighted-average cost of capital rates used to derive the present value factors used in determining the fair value of the reporting units and trade names; (ii) projected annual revenue growth rates used in the reporting unit and trade name models; and (iii) projected long-term growth rates used in the derivation of terminal year values. Other assumptions include estimates of projected

 

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capital expenditures and working capital requirements. These and other assumptions are impacted by economic conditions and expectations of management and will change in the future based on period-specific facts and circumstances. As a result, we have determined that the majority of the inputs used to value our goodwill and indefinite-lived intangible assets are unobservable inputs that fall within Level 3 of the fair value hierarchy.

The following table presents the range of assumptions we used to derive our fair value estimates among our reporting units, which vary between goodwill and trade names, during the annual impairment test conducted in the second quarter of 2009:

 

		Assumptions
		Goodwill				Trade Names
Weighted-average cost of capital			12.5% -15.0%				13.0% -14.0%
Long-term growth rates			3.0%				3.0%
Annual revenue growth rates			(6.9)% -12.0%				(3.9)% - 5.0%

Stock-Based and Deferred Compensation Plans

Managing and Chef Partners

Historically, the managing partner of each company-owned domestic restaurant and the chef partner of each Fleming’s and Roy’s restaurant were required, as a condition of employment, to sign a five-year employment agreement and to purchase a non-transferable ownership interest in a partnership (“Management Partnership”) that provided management and supervisory services to his or her restaurant. The purchase price for a managing partner’s ownership interest was fixed at $25,000, and the purchase price for a chef partner’s ownership interest ranged from $10,000 to $15,000. Managing and chef partners had the right to receive monthly distributions from the Management Partnership based on a percentage of their restaurant’s monthly cash flows for the duration of the agreement, which varied by concept from 6% to 10% for managing partners and 2% to 5% for chef partners. Further, managing and chef partners were eligible to participate in the Partner Equity Plan (“PEP”), a deferred compensation program, upon completion of their five-year employment agreement.

In April 2011, we implemented modifications to our managing and chef partner compensation structure to provide greater incentives for sales and profit growth. Under the revised program, managing and chef partners continue to sign five-year employment agreements and receive monthly distributions of the same percentage of their restaurant’s cash flow as under the prior program. However, under the revised program, in lieu of participation in the PEP, managing partners and chef partners are eligible to receive deferred compensation payments under a new Partner Ownership Account Plan (the “POA”). The POA places greater emphasis on year-over-year growth in cash flow than the PEP. Managing and chef partners will receive a greater value under the POA than they would have received under the PEP if certain levels of year-over-year cash flow growth are achieved and a lesser value than under the PEP if these levels are not achieved.

The POA requires managing and chef partners to make an initial deposit of up to $10,000 into their “Partner Investment Account,” and we will make a bookkeeping contribution to each partner’s “Company Contributions Account” no later than the end of February of each year following the completion of each year (or partial year where applicable) under the partner’s employment agreement. The value of each of our contributions will be equal to a percentage of the partner’s restaurant’s cash flow plus, if the restaurant has been open at least 18 calendar months, a percentage of the year-over-year increase in the restaurant’s cash flow.

The revised program also provides an annual bonus known as the President’s Club, paid in addition to the monthly distributions of cash flow, designed to reward increases in annual sales above the concept sales plan with a required flow-through percentage of the incremental sales to cash flow. Managing and chef partners whose restaurants achieve certain annual sales targets (and the required flow-through percentage) receive a bonus equal to a percentage of the incremental sales, such percentage determined by the sales target achieved.

 

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Amounts credited to each partner’s account under the POA may be allocated by the partner among benchmark funds offered under the POA, and the account balances of the partner will increase or decrease based on the performance of the benchmark funds. Upon termination of employment, all remaining balances in the Company Contributions Account in the POA are forfeited unless the partner has been with us for twenty years or more. Unless previously forfeited under the terms of the POA, 50% of the partner’s total account balances generally will be distributed in the March following the completion of the initial five-year contract term with subsequent distributions varying based on the length of continued employment as a partner. The deferred compensation obligations under the POA are our unsecured obligations.

All managing and chef partners who execute new employment agreements after May 1, 2011 are required to participate in the new partner program, including the POA. Managing and chef partners with a current employment agreement scheduled to expire December 1, 2011 or later had the opportunity (from April 27, 2011 through July 27, 2011) to amend their employment agreements to convert their existing partner program to participation in the new partner program, including the POA, effective June 1, 2011. As a result of this conversion, $2.7 million of our total partner deposit liability was accelerated for the return of partners’ capital that was required under the old program. As of March 31, 2012 and December 31, 2011, our POA liability was $10.1 million and $8.0 million, respectively, which primarily was recorded in the line item “Partner deposits and accrued partner obligations” in our Consolidated Balance Sheets.

Upon the closing of the Merger, certain stock options that had been granted to managing and chef partners under a pre-merger managing partner stock plan (the “MP Stock Plan”) upon completion of a previous employment contract were converted into the right to receive cash in the form of a “Supplemental PEP” contribution. Additionally, all outstanding, unvested partner employment grants of restricted stock under the MP Stock Plan were converted into the right to receive cash on a deferred basis. Additionally, certain members of management were given the option to either convert some or all of their restricted stock granted under the pre-merger stock plan in the same manner as managing partners or convert some or all of it into restricted stock of Kangaroo Holdings, now known as Bloomin’ Brands. Grants of restricted stock under the pre-merger stock plan that converted into the right to receive cash are referred to as “Restricted Stock Contributions.”

As of March 31, 2012, our total vested liability with respect to obligations primarily under the PEP, Supplemental PEP and Restricted Stock Contributions was approximately $113.9 million, of which $13.7 million and $100.2 million was included in the line items “Accrued and other current liabilities” and “Other long-term liabilities, net,” respectively, in our Consolidated Balance Sheet. As of December 31, 2011, our total vested liability with respect to obligations primarily under the PEP, Supplemental PEP and Restricted Stock Contributions was approximately $107.8 million, of which $11.8 million and $96.0 million was included in the line items “Accrued and other current liabilities” and “Other long-term liabilities, net,” respectively, in our Consolidated Balance Sheet. As of December 31, 2010, our total vested liability with respect to obligations primarily under the PEP, Supplemental PEP and Restricted Stock Contributions was approximately $101.4 million, of which $14.0 million and $87.5 million was included in the line items “Accrued and other current liabilities” and “Other long-term liabilities, net,” respectively, in our Consolidated Balance Sheet. Partners and management may allocate the contributions into benchmark investment funds, and these amounts due to participants will fluctuate according to the performance of their allocated investments and may differ materially from the initial contribution and current obligation.

Prior to the Merger, certain partners participating in the PEP were to receive common stock (“Partner Shares”) upon completion of their employment contract. Upon closing of the Merger, these partners were entitled to receive a deferred payment of cash instead of common stock upon completion of their current employment term. Partners will not receive the deferred cash payment if they resign or are terminated for cause prior to completing their current employment terms. There will not be any future earnings or losses on these amounts prior to payment to the partners. The amount accrued for the Partner Shares obligation was less than $0.1 million and approximately $0.7 million as of March 31, 2012 and December 31, 2011, respectively, and was included in the line item “Accrued and other current liabilities” in our Consolidated Balance Sheets. The amount accrued for

 

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the Partner Shares obligation was approximately $6.6 million as of December 31, 2010, of which $6.5 million and $0.1 million was included in the line items “Accrued and other current liabilities” and “Other long-term liabilities, net,” respectively, in our Consolidated Balance Sheet.

As of March 31, 2012 and December 31, 2011 and 2010, we had approximately $59.5 million, $56.9 million and $58.0 million, respectively, in various corporate-owned life insurance policies and another $0.5 million, $0.3 million and $1.0 million, respectively, of restricted cash, both of which are held within an irrevocable grantor or “rabbi” trust account for settlement of our obligations under the PEP, Supplemental PEP, Restricted Stock Contributions and POA. We are the sole owner of any assets within the rabbi trust and participants are considered our general creditors with respect to assets within the rabbi trust.

As of March 31, 2012 and December 31, 2011 and 2010, there were $62.4 million, $55.6 million and $49.0 million, respectively, of unfunded obligations related to the PEP, Supplemental PEP, Restricted Stock Contributions, Partner Shares liabilities and POA, excluding amounts not yet contributed to the partners’ investment funds, which may require the use of cash resources in the future.

We require the use of capital to fund the PEP and the POA as each managing and chef partner earns a contribution, and currently estimate funding requirements ranging from $21.0 million to $23.0 million for PEP and from $4.0 million to $6.0 million for POA in each of the two years through March 31, 2014. Actual funding of the current PEP and POA obligations and future funding requirements may vary significantly depending on timing of partner contracts, forfeiture rates and numbers of partner participants and may differ materially from estimates.

Area Operating Partners

Historically, an area operating partner has been required, as a condition of employment and within 30 days of the opening of his or her first restaurant, to make an initial investment of $50,000 in the Management Partnership that provides supervisory services to the restaurants that the area operating partner oversees. This interest gave the area operating partner the right to distributions from the Management Partnership based on a percentage of his or her restaurants’ monthly cash flows for the duration of the agreement, typically ranging from 4% to 9%. We have the option to purchase an area operating partner’s interest in the Management Partnership after the restaurant has been open for a five-year period on the terms specified in the agreement.

For restaurants opened between January 1, 2007 and December 31, 2011, the area operating partner’s percentage of cash distributions and buyout percentage was calculated based on the associated restaurant’s return on investment compared to our targeted return on investment and ranged from 3.0% to 12.0%. This percentage was determined after the first five full calendar quarters from the date of the associated restaurant’s opening and was adjusted each quarter thereafter based on a trailing 12-month restaurant return on investment. The buy-out percentage was the area operating partner’s average distribution percentage for the 24 months immediately preceding the buy-out. Buyouts were paid in cash within 90 days or paid over a two-year period.

In 2011, we also began a version of the President’s Club annual bonus described above under “—Managing and Chef Partners” for area operating partners to provide additional rewards for achieving sales targets with a required flow-through of the incremental sales to cash flow.

In April 2012, we revised our area operating partner program for restaurants opened on or after January 1, 2012. For these restaurants, an area operating partner is required, as a condition of employment, to make a deposit of $10,000 within 30 days of the opening of each new restaurant that he or she oversees, up to a maximum deposit of $50,000 (taking into account investments under prior programs). This deposit gives the area operating partner the right to monthly payments based on a percentage of his or her restaurants’ monthly cash flows for the duration of the employment agreement, typically ranging from 4.0% to 4.5%. After the restaurant has been open for a five-year period, the area operating partner will receive a bonus equal to a multiple of the area operating partner’s average monthly payments for the 24 months immediately preceding the bonus date. The bonus will be paid within 90 days or over a two-year period, depending on the bonus amount.

 

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Highly Compensated Employees

We provide a deferred compensation plan for our highly compensated employees who are not eligible to participate in the OSI Restaurant Partners, LLC Salaried Employees 401(k) Plan and Trust. The deferred compensation plan allows these employees to contribute from 5% to 90% of their base salary and up to 100% of their cash bonus on a pre-tax basis to an investment account consisting of various investment fund options. We do not currently intend to provide any matching or profit-sharing contributions, and participants are fully vested in their deferrals and their related returns. Participants are considered unsecured general creditors in the event of our bankruptcy or insolvency.

Income Taxes

As of March 31, 2012 and December 31, 2011, we had $335.1 million and $482.1 million, respectively, in cash and cash equivalents (excluding restricted cash of $27.5 million and $24.3 million, respectively), of which approximately $81.1 million and $82.2 million, respectively, was held by foreign affiliates, a portion of which would be subject to additional taxes if repatriated to the United States. Based on domestic cash and working capital projections, we believe we will generate sufficient cash flows from our United States operations to meet our future debt repayment requirements, anticipated working capital needs and planned capital expenditures in the United States, as well as all of our other domestic business needs.

A provision for income taxes has not been recorded for any United States or additional foreign taxes on undistributed earnings related to our foreign affiliates as these earnings were and are expected to continue to be permanently reinvested. If we identify an exception to our general reinvestment policy of undistributed earnings, additional taxes will be posted. It is not practical to determine the amount of unrecognized deferred income tax liabilities on the undistributed earnings. The international jurisdictions in which we operate do not have any known restrictions that would prohibit the repatriation of cash and cash equivalents.

Dividends

Payment of dividends by OSI to Bloomin’ Brands is restricted under OSI’s credit agreement and the indenture governing its senior notes to dividends for the purpose of paying Bloomin’ Brands’ franchise and income taxes and ordinary course operating expenses (in the case of the credit agreement, subject to an annual cap of $2.5 million); dividends for certain other limited purposes; and other dividends subject to an aggregate cap over the term of the credit agreement or indenture.

Our board of directors does not intend to pay regular dividends on our common stock after the offering. However, we expect to reevaluate our dividend policy on a regular basis following the offering and may, subject to compliance with the covenants contained in our senior credit facility and other considerations, determine to pay dividends in the future.

Other Material Commitments

Our contractual obligations, debt obligations, commitments and debt guarantees as of December 31, 2011 are summarized in the table below (in thousands):

 

		Payments Due By Period
		Total				Less Than 1 Year				1-3 Years				3-5 Years				More Than 5 Years
Contractual Obligations
Long-term debt (including current portion) (1)		$	2,084,790			$	332,905			$	1,025,357			$	270,746			$	455,782
Interest (2)			309,580				82,169				148,525				71,667				7,219
Operating leases (3)			503,379				106,258				179,945				110,046				107,130
Purchase obligations (4)			430,069				365,680				51,809				12,580				—
Partner deposits and accrued partner obligations (5)			113,725				15,044				52,659				12,669				33,353
Other long-term liabilities (6)			153,840				—				49,202				54,615				50,023
Other current liabilities (7)			41,383				41,383				—				—				—
Total contractual obligations		$	3,636,766			$	943,439			$	1,507,497			$	532,323			$	653,507
Debt Guarantees
Maximum availability of debt guarantees		$	25,957			$	—			$	24,500			$	—			$	1,457
Amount outstanding under debt guarantees			25,957				—				24,500				—				1,457
Carrying amount of liabilities			24,500				—				24,500				—				—

 

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(1)

Timing of long-term debt payments assume that OSI’s rent-adjusted leverage ratio is greater than or equal to 5.25 to 1.00. Long-term debt excludes our potential obligations under debt guarantees (shown separately above). Amounts include the CMBS Loan totaling $790.0 million, which had a maturity date of June 9, 2012. Effective March 27, 2012, New PRP entered into the 2012 CMBS Loan totaling $500.0 million. The 2012 CMBS Loan is a five-year loan maturing on April 10, 2017. As a result of the 2012 CMBS Loan refinancing, the net amount repaid along with scheduled maturities within one year, $281.3 million, was classified as current at December 31, 2011 (see “Description of Indebtedness”).

(2)

Includes interest on OSI’s Senior Notes with an outstanding balance of $248.1 million and interest estimated on OSI’s senior secured term loan facility, OSI’s senior secured pre-funded revolving credit facility and the CMBS Loan with outstanding balances of $1.0 billion, $33.0 million and $775.3 million, respectively, at December 31, 2011. Projected future interest payments for OSI’s variable-rate senior secured credit facilities are based on interest rates in effect at December 31, 2011, and projected future interest payments for the CMBS Loan are based on interest rates in effect during the first quarter of 2012 as well as the interest rate that will apply to the 2012 CMBS Loan. Interest obligations also include letter of credit and commitment fees for the used and unused portions of OSI’s senior secured working capital revolving credit facility, commitment fees for the used and unused portions of OSI’s pre-funded revolving credit facility and interest related to OSI’s capital lease obligations. Interest on OSI’s notes payable issued for the return of capital to managing and area operating partners and the buyouts of area operating partner interests has been excluded from the table. In addition, interest expense associated with deferred financing fees was excluded from the table as the expense is non-cash in nature.

(3)

Total minimum lease payments have not been reduced by minimum sublease rentals of $3.0 million due in future periods under non-cancelable subleases. On March 14, 2012, we entered into the Sale-Leaseback Transaction with two third-party real estate institutional investors in which we sold 67 restaurant properties and then simultaneously leased these properties back under nine master leases with initial terms of 20 years each. As a result, we will have an additional $362.6 million of operating lease payments over the initial terms of these lease agreements.

(4)	We have minimum purchase commitments with various vendors through June 2016. Outstanding minimum purchase commitments consist primarily of beef, cheese, potatoes and other food and beverage products, as well as, commitments for advertising, marketing, sports sponsorships, printing and technology.

(5)	Timing of payments of partner deposits and accrued partner obligations are estimates only and may vary significantly in amounts and timing of settlement based on employee turnover, return of deposits to us in accordance with employee agreements and changes to buyout values of employee partners.

(6)

Other long-term liabilities include but are not limited to: long-term insurance accruals, long-term incentive plan compensation for certain officers, long-term portion of amounts owed to managing and chef partners and certain members of management for various compensation programs, long-term portion of operating leases for closed restaurants, long-term severance expenses and long-term split dollar arrangements on life insurance policies. The long-term portion of the liability for unrecognized tax benefits and the related accrued interest and penalties were $1.5 million and $1.2 million, respectively, at December 31, 2011. These amounts were excluded from the table since it is not possible to estimate when these future payments will occur. In addition, net unfavorable leases and other miscellaneous items of approximately $62.3 million at December 31, 2011 were excluded from the table as payments are not associated with these liabilities.

(7)

Other current liabilities include the current portion of the liability for unrecognized tax benefits and the accrued interest and penalties related to uncertain tax positions, the current portion of insurance accruals, the current portion of operating leases for closed restaurants, the current portion of severance expenses and the current portion of amounts owed to managing and chef partners and certain members of management for various compensation programs.

Critical Accounting Policies and Estimates

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statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities during the reporting period. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We consider an accounting estimate to be critical if it requires assumptions to be made and changes in these assumptions could have a material impact on our consolidated financial condition or results of operations.

Property, Fixtures and Equipment

Property, fixtures and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Improvements to leased properties are depreciated over the shorter of their useful life or the lease term, which includes renewal periods that are reasonably assured. The useful lives of the assets are based upon our expectations for the period of time that the asset will be used to generate revenues. We periodically review the assets for changes in circumstances, which may impact their useful lives.

 

Buildings and building improvements			20 to 30 years
Furniture and fixtures			5 to 7 years
Equipment			2 to 7 years
Leasehold improvements			5 to 20 years
Capitalized software			3 to 5 years

Our accounting policies regarding property, fixtures and equipment include certain management judgments and projections regarding the estimated useful lives of these assets, the residual values to which the assets are depreciated or amortized, the determination of expected lease terms and the determination of what constitutes increasing the value and useful life of existing assets. These estimates, judgments and projections may produce materially different amounts of depreciation and amortization expense than would be reported if different assumptions were used.

Operating Leases

Rent expense for our operating leases, which generally have escalating rentals over the term of the lease and may include potential rent holidays, is recorded on a straight-line basis over the initial lease term and those renewal periods that are reasonably assured. The initial lease term includes the “build-out” period of our leases, which is typically before rent payments are due under the terms of the lease. The difference between rent expense and rent paid is recorded as deferred rent and is included in the Consolidated Balance Sheets. Payments received from landlords as incentives for leasehold improvements are recorded as deferred rent and are amortized on a straight-line basis over the term of the lease as a reduction of rent expense. Lease termination fees, if any, and future obligated lease payments for closed locations are recorded as an expense in the period they are incurred. Exit-related lease obligations of $0.8 million and $1.1 million are recorded in “Accrued and other current liabilities” and $0.4 million and $0.4 million are recorded in “Other long-term liabilities, net” in our Consolidated Balance Sheets as of December 31, 2011 and 2010, respectively. Assets and liabilities resulting from the Merger relating to favorable and unfavorable lease amounts are amortized on a straight-line basis to rent expense over the remaining lease term.

Impairment or Disposal of Long-Lived Assets

We assess the potential impairment of definite lived intangibles, including trademarks, franchise agreements and net favorable leases, and other long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In evaluating long-lived restaurant assets for impairment, we consider a number of factors relevant to the assets’ current market value and future ability to generate cash flows.

 

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If these factors indicate that we should review the carrying value of the restaurant’s long-lived assets, we perform a two-step impairment analysis. Each of our restaurants is evaluated individually for impairment since that is the lowest level at which identifiable cash flows can be measured independently from cash flows of other asset groups. If the total future undiscounted cash flows expected to be generated by the assets are less than the carrying amount, as prescribed by step one testing, recoverability is measured in step two by comparing fair value of the asset to its carrying amount. Should the carrying amount exceed the asset’s estimated fair value, an impairment loss is charged to earnings. Restaurant fair value is determined based on estimates of discounted future cash flows; and impairment charges primarily occur as a result of the carrying value of a restaurant’s assets exceeding its estimated fair market value, primarily due to anticipated closures or declining future cash flows from lower projected future sales at existing locations.

The company incurred total long-lived asset impairment charges and restaurant closing expense of $4.4 million and $0.2 million for the three months ended March 31, 2012 and 2011, respectively, and $14.0 million, $5.2 million and $95.4 million for the years ended December 31, 2011, 2010 and 2009, respectively (see “—Results of Operations—Costs and Expenses—Provision for Impaired Assets and Restaurant Closings”). All impairment charges are recorded in the line item “Provision for impaired assets and restaurant closings” in our Consolidated Statements of Operations and Comprehensive Income.

Our judgments and estimates related to the expected useful lives of long-lived assets are affected by factors such as changes in economic conditions, operating performance and expected use. As we assess the ongoing expected cash flows and carrying amounts of our long-lived assets, these factors could cause us to realize a material impairment charge.

Restaurant sites and certain other assets to be sold are included in assets held for sale when certain criteria are met, including the requirement that the likelihood of selling the assets within one year is probable. For assets that meet the held for sale criteria, we separately evaluate whether the assets also meet the requirements to be reported as discontinued operations. If we no longer had any significant continuing involvement with respect to the operations of the assets and cash flows were discontinued, we would classify the assets and related results of operations as discontinued. Assets whose sale is not probable within one year remain in property, fixtures and equipment until their sale is probable within one year. We had $0.1 million and $1.3 million of assets held for sale as of March 31, 2012 and December 31, 2011, respectively, and did not have any assets classified as held for sale as of December 31, 2010.

Generally, restaurant closure costs are expensed as incurred. When it is probable that we will cease using the property rights under a non-cancelable operating lease, we record a liability for the net present value of any remaining lease obligations net of estimated sublease income that can reasonably be obtained for the property. The associated expense is recorded in “Provision for impaired assets and restaurant closings.” Any subsequent adjustments to the liability from changes in estimates are recorded in the period incurred.

Goodwill and Indefinite-Lived Intangible Assets

Our indefinite-lived intangible assets consist only of goodwill and our trade names. Goodwill represents the residual after allocation of the purchase price to the individual fair values and carryover basis of assets acquired. On an annual basis (during the second quarter of the fiscal year) or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, we review the recoverability of goodwill and indefinite-lived intangible assets. The impairment test for goodwill involves comparing the fair value of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure a goodwill impairment loss, if any. This step revalues all assets and liabilities of the reporting unit to their current fair values and then compares the implied fair value of the reporting unit’s goodwill to the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess. The impairment test for trade names involves comparing fair value of the trade name, as determined through a discounted cash flow approach, to its carrying value.

 

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We test both our goodwill and our trade names for impairment primarily by utilizing discounted cash flow models to estimate their fair values. These cash flow models involve several assumptions. Changes in our assumptions could materially impact our fair value estimates. Assumptions critical to our fair value estimates are: (i) weighted-average cost of capital rates used to derive the present value factors used in determining the fair value of the reporting units and trade names; (ii) projected annual revenue growth rates used in the reporting unit and trade name models; and (iii) projected long-term growth rates used in the derivation of terminal year values. Other assumptions include estimates of projected capital expenditures and working capital requirements. These and other assumptions are impacted by economic conditions and expectations of management and will change in the future based on period-specific facts and circumstances.

We performed our annual impairment test in the second quarter of 2011 and determined at that time that none of our four reporting units with remaining goodwill were at risk for material goodwill impairment since the fair value of each reporting unit was substantially in excess of its carrying amount. We did not record any goodwill or indefinite-lived intangible asset impairment charges during the three months ended March 31, 2012 and the years ended December 31, 2011 and 2010. As a result of our annual impairment test in the second quarter of 2009, we recorded goodwill and indefinite-lived intangible asset impairment charges of $58.1 million and $36.0 million, respectively.

Sales declines at our restaurants, unplanned increases in health insurance, commodity or labor costs, deterioration in overall economic conditions and challenges in the restaurant industry may result in future impairment charges. It is possible that changes in circumstances or changes in our judgments, assumptions and estimates could result in an impairment charge of a portion or all of our goodwill or other intangible assets.

Insurance Reserves

We self-insure or maintain a deductible for a significant portion of expected losses under our workers’ compensation, general liability, health and property insurance programs. We purchase insurance for individual claims that exceed the amounts listed in the following table:

 

		2012				2011
Workers’ Compensation		$	1,500,000			$	1,500,000
General Liability			1,500,000				1,500,000
Health (1)			400,000				400,000
Property Coverage (2)			2,500,000 / 500,000				2,500,000 / 500,000
Employment Practices Liability			2,000,000				2,000,000
Directors’ and Officers’ Liability			250,000				250,000
Fiduciary Liability			25,000				25,000

 

(1)	We are self-insured for all aggregate health benefits claims, limited to $0.4 million per covered individual per year. In 2012 and 2011, we retained the first $0.3 million of payable losses under the plan as an additional deductible.

(2)	We have a $0.5 million deductible per occurrence for those properties that collateralize the 2012 CMBS Loan and a $2.5 million deductible per occurrence for all other locations. Property limits are $60.0 million each occurrence, and we do not quota share in any loss above either deductible level.

We record a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost to us. In establishing our reserves, we consider certain actuarial assumptions and judgments regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices. Unanticipated changes in these factors or future adjustments to these estimates may produce materially different amounts of expense that would be reported under these programs. Reserves recorded for worker’s compensation and general liability claims are discounted using the average of the 1-year and 5-year risk free rate of monetary assets that have comparable maturities. When recovery for an insurance policy is considered probable, a receivable is recorded.

 

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Revenue Recognition

We record food and beverage revenues upon sale. Initial and developmental franchise fees are recognized as income once we have substantially performed all of our material obligations under the franchise agreement, which is generally upon the opening of the franchised restaurant. Continuing royalties, which are a percentage of net sales of the franchisee, are recognized as income when earned. Franchise-related revenues are included in the line “Other revenues” in our Consolidated Statements of Operations and Comprehensive Income.

We defer revenue for gift cards, which do not have expiration dates, until redemption by the customer. We also recognize gift card “breakage” revenue for gift cards when the likelihood of redemption by the customer is remote, which we determined are those gift cards issued on or before three years prior to the balance sheet date. We recorded breakage revenue of $11.1 million, $11.0 million and $9.3 million for the years ended December 31, 2011, 2010 and 2009, respectively. Breakage revenue is recorded as a component of “Restaurant sales” in our Consolidated Statements of Operations and Comprehensive Income.

Gift cards sold at a discount are recorded as revenue upon redemption of the associated gift cards at an amount net of the related discount. Gift card sales commissions paid to third-party providers are initially capitalized and subsequently recognized as “Other restaurant operating” expenses upon redemption of the associated gift card. Deferred expenses are $9.7 million and $8.1 million as of December 31, 2011 and 2010, respectively, and are reflected in “Other current assets, net” in our Consolidated Balance Sheets. Gift card sales that are accompanied by a bonus gift card to be used by the customer at a future visit result in a separate deferral of a portion of the original gift card sale. Revenue is recorded when the bonus card is redeemed at a value based on the estimated fair market value of the bonus card.

We collect and remit sales, food and beverage, alcoholic beverage and hospitality taxes on transactions with customers and report such amounts under the net method in our Consolidated Statements of Operations and Comprehensive Income. Accordingly, these taxes are not included in gross revenue.

Employee Partner Payments and Buyouts

The managing partner of each company-owned domestic restaurant and the chef partner of each Fleming’s and Roy’s company-owned domestic restaurant, as well as area operating partners, generally receive distributions or payments for providing management and supervisory services to their restaurants based on a percentage of their associated restaurants’ monthly cash flows. The expense associated with the monthly payments for managing and chef partners is included in “Labor and other related” expenses, and the expense associated with the monthly payments for area operating partners is included in “General and administrative” expenses in our Consolidated Statements of Operations and Comprehensive Income.

We estimate future purchases of area operating partners’ interests, as well as deferred compensation obligations to managing and chef partners, using current and historical information on restaurant performance and record the partner obligations in the line item “Partner deposits and accrued partner obligations” in our Consolidated Balance Sheets. In the period we purchase the area operating partner’s interests, an adjustment is recorded to recognize any remaining expense associated with the purchase and reduce the related accrued buyout liability. Deferred compensation expenses for managing and chef partners are included in “Labor and other related” expenses and buyout expenses for area operating partners are included in “General and administrative” expenses in our Consolidated Statements of Operations and Comprehensive Income.

Stock-Based Compensation

Our 2007 Equity Incentive Plan (the “Equity Plan”) permits the grant of stock options and restricted stock to our management and other key employees. We account for our stock-based employee compensation using a fair value based method of accounting.

 

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Generally, stock options vest and become nominally exercisable in 20% increments over a period of five years contingent on continued employee service. Shares acquired upon the exercise of stock options under the Equity Plan are generally subject to a stockholder’s agreement that contains a management call option that allows us to repurchase all shares purchased through exercise of stock options upon termination of employment at any time prior to the earlier of an initial public offering or a change of control. If an employee’s termination of employment is a result of death or disability, by us other than for cause or by the employee for good reason, we may repurchase exercised stock under this call option at fair market value. If an employee’s termination of employment is by us for cause or by the employee without good reason, we may repurchase the stock under this call provision for the lesser of the exercise price or fair market value. Additionally, the holder of shares acquired upon the exercise of stock options is prohibited from transferring the shares to any person, subject to narrow exceptions, and should a permitted transfer occur, the transferred shares remain subject to the management call option. As a result of the transfer restrictions and call option, we do not record compensation expense for these stock options upon vesting since employees cannot realize monetary benefit from the options or any shares acquired upon the exercise of the options unless the employee is employed at the time of an initial public offering or change of control. There have not been any exercises of stock options by any employee to date, and all stock options of terminated employees with a call provision have been forfeited.

We use the Black-Scholes option pricing model to estimate the weighted-average grant date fair value of stock options granted. Expected volatilities are based on historical volatilities of the stock of comparable companies. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Results may vary depending on the assumptions applied within the model. The benefits of tax deductions in excess of recognized compensation cost, if any, are reported as a financing cash flow.

We recorded compensation expense of $0.1 million and $2.2 million for the three months ended March 31, 2012 and the year ended December 31, 2011, respectively, for vested stock options not subject to the call option described above. As of March 31, 2012 and December 31, 2011, there was $5.3 million and $5.7 million, respectively, of total unrecognized compensation expense related to non-vested stock options not subject to the call option described above, which is expected to be recognized over a weighted-average period of approximately 3.7 years.

Compensation expense related to restricted stock awards for the three months ended March 31, 2012 was $0.6 million and unrecognized pre-tax compensation expense related to non-vested restricted stock awards was approximately $0.2 million at March 31, 2012 and will be recognized over a weighted-average period of 0.1 years.

Compensation expense related to restricted stock awards for the year ended December 31, 2011 was $1.7 million and unrecognized pre-tax compensation expense related to non-vested restricted stock awards was approximately $0.8 million at December 31, 2011 and will be recognized over a weighted-average period of 0.5 years.

Income Taxes

In determining net income for financial statement purposes, we make certain estimates and judgments in the calculation of tax expense and the resulting tax liabilities as well as in the recoverability of deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenue and expense.

Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The

 

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effect on deferred income tax assets and liabilities of a change in the tax rate is recognized in income in the period that includes the enactment date of the rate change. We recorded a valuation allowance to reduce our deferred income tax assets to the amount that is more likely than not to be realized. We have considered future taxable income and ongoing feasible tax planning strategies in assessing the need for the valuation allowance.

Judgments made regarding future taxable income may change due to changes in market conditions, changes in tax laws or other factors. If the assumptions and estimates change in the future, the valuation allowance established may be increased or decreased, resulting in a respective increase or decrease in income tax expense.

We use an estimate of our annual effective tax rate at each interim period based on the facts and circumstances available at that time while the actual effective tax rate is calculated at year-end.

Recently Issued Financial Accounting Standards

In May 2011, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU No. 2011-04”), that establishes a number of new requirements for fair value measurements. These include: (i) a prohibition on grouping financial instruments for purposes of determining fair value, except when an entity manages market and credit risks on the basis of the entity’s net exposure to the group; (ii) an extension of the prohibition against the use of a blockage factor to all fair value measurements (that prohibition currently applies only to financial instruments with quoted prices in active markets); and (iii) a requirement that for recurring Level 3 fair value measurements, entities disclose quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements. Additionally, for items not carried at fair value but for which fair value is disclosed, entities will be required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed. ASU No. 2011-04 is effective for interim and annual periods beginning after December 15, 2011. The adoption of ASU No. 2011-04 on January 1, 2012 increased our fair value disclosure requirements but did not have an impact on our financial position, results of operations or cash flows.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU No. 2011-05”), that eliminates the option to report other comprehensive income and its components in the statement of changes in equity. Instead, the new guidance requires us to present the components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. ASU No. 2011-05 must be applied retrospectively and is effective for public companies during the interim and annual periods beginning after December 15, 2011, with early adoption permitted. Additionally, in December 2011, the FASB issued ASU No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU No. 2011-12”), which indefinitely defers the requirement in ASU No. 2011-05 to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. The deferral of the presentation requirements does not impact the effective date of the other requirements in ASU 2011-05. During the deferral period, the existing requirements in U.S. GAAP for the presentation of reclassification adjustments must continue to be followed. ASU No. 2011-12 is effective for public companies during the interim and annual periods beginning after December 15, 2011. ASU No. 2011-05 and ASU No. 2011-12 did not have an impact on our financial position, results of operations or cash flows as the guidance only requires a presentation change to comprehensive income.

 

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In September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU No. 2011-08”), which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before applying the two-step quantitative goodwill impairment test. If it is determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing entities to go directly to the quantitative assessment. ASU No. 2011-08 is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011, with early adoption permitted. This guidance did not have an impact on our financial position, results of operations or cash flows.

In December 2011, the FASB issued ASU No. 2011-10, “Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate—a Scope Clarification” (“ASU No. 2011-10”), which applies to a parent company that ceases to have a controlling financial interest in a subsidiary, that is in substance real estate, as a result of a default on the subsidiary’s nonrecourse debt. The new guidance emphasizes that the parent should only deconsolidate the real estate subsidiary when legal title to the real estate is transferred to the lender and the related nonrecourse debt has been extinguished. If the reporting entity ceases to have a controlling financial interest under subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. This standard takes effect for public companies during the annual and interim periods beginning on or after June 15, 2012. The adoption of this guidance is not expected to have a material impact on our financial statements.

In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”), which enhances current disclosures about financial instruments and derivative instruments that are either offset on the statement of financial position or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset on the statement of financial position. The guidance requires us to provide both net and gross information for these assets and liabilities. ASU No. 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods with retrospective application required. This guidance will not have an impact on our financial position, results of operations or cash flows as it only requires a presentation change to offsetting (netting) assets and liabilities.

Impact of Inflation

In the last three years, we have not operated in a period of high general inflation; however, we have experienced material increases in specific commodity costs. Our restaurant operations are subject to federal and state minimum wage laws governing such matters as working conditions, overtime and tip credits. Significant numbers of our food service and preparation personnel are paid at rates related to the federal and/or state minimum wage and, accordingly, increases in the minimum wage have increased our labor costs in the last three years. To the extent permitted by competition and the economy, we have mitigated increased costs by increasing menu prices and may continue to do so if deemed necessary in future years.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates on debt, changes in foreign currency exchange rates and changes in commodity prices.

Interest Rate Risk

At March 31, 2012, December 31, 2011 and 2010, our total debt, excluding consolidated guaranteed debt, was approximately $1.8 billion, $2.1 billion and $2.1 billion, respectively. For fixed-rate debt, interest rate changes affect the fair value of debt. However, for variable-rate debt, interest rate changes generally impact our

 

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earnings and cash flows, assuming other factors are held constant. Our current exposure to interest rate fluctuations includes OSI’s borrowings under its senior secured credit facilities and the floating rate component of the first mortgage loan in New PRP’s 2012 CMBS Loan that bear interest at floating rates based on the Eurocurrency Rate or the Base Rate and the one-month LIBOR, respectively, plus an applicable borrowing margin. We manage our interest rate risk by offsetting some of our variable-rate debt with fixed-rate debt, through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments.

We use an interest rate cap to limit the volatility of the floating rate component of the first mortgage loan in New PRP’s 2012 CMBS Loan. From September 2007 to September 2010, we used an interest rate collar as part of our interest rate risk management strategy to manage our exposure to interest rate movements related to OSI’s senior secured credit facilities. Given the interest rate environment, we did not enter into another derivative financial instrument upon the maturity of this interest rate collar on September 30, 2010. We do not enter into financial instruments for trading or speculative purposes.

At March 31, 2012, we had $451.3 million of fixed-rate debt outstanding, excluding the debt discount, on New PRP’s 2012 CMBS Loan. At March 31, 2012, December 31, 2011 and 2010, we had $248.1 million of fixed-rate debt outstanding through OSI’s Senior Notes and $1.1 billion, $1.8 billion and $1.9 billion, respectively, of variable-rate debt outstanding on OSI’s senior secured credit facilities, New PRP’s 2012 CMBS Loan and PRP’s CMBS Loan. We also had $83.2 million, $82.4 million and $79.7 million, respectively, in available unused borrowing capacity under OSI’s working capital revolving credit facility (after giving effect to undrawn letters of credit of approximately $66.8 million, $67.6 million and $70.3 million, respectively), and $67.0 million, $67.0 million and $21.9 million, respectively, in available unused borrowing capacity under OSI’s pre-funded revolving credit facility that provides financing for capital expenditures only. Based on $1.1 billion of outstanding variable-rate debt at March 31, 2012, an increase of one percentage point on April 1, 2012, would cause an increase to cash interest expense of approximately $10.9 million per year.

If a one percentage point increase in interest rates were to occur over the next four quarters, such an increase would result in the following additional interest expense, assuming the current borrowing level remains constant:

 

		Principal Outstanding at March 31,				Additional Interest Expense
						Q2				Q3				Q4				Q1
Variable-Rate Debt		2012				2012				2012				2012				2013
Senior secured term loan facility, interest rate of 2.56% at March 31, 2012		$	1,011,125,000			$	2,527,813			$	2,527,813			$	2,527,813			$	2,527,813
Senior secured pre-funded revolving credit facility, interest rate of 4.50% at March 31, 2012			33,000,000				82,500				82,500				82,500				82,500
Floating rate component of mortgage loan, interest rate of 3.37% at March 31, 2012			48,720,000				121,800				121,800				121,800				121,800
Total		$	1,092,845,000			$	2,732,113			$	2,732,113			$	2,732,113			$	2,732,113

A change in interest rates generally does not have an impact upon our future earnings and cash flow for fixed-rate debt instruments. As fixed-rate debt matures, however, and if additional debt is acquired to fund the debt repayment, future earnings and cash flow may be affected by changes in interest rates. This effect would be realized in the periods subsequent to the periods when the debt matures.

 

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Foreign Currency Exchange Rate Risk

Our foreign currency exchange risk has not changed materially from 2010 to March 31, 2012. If foreign currency exchange rates depreciate in certain of the countries in which we operate, we may experience declines in our international operating results but such exposure would not be material to the consolidated financial statements. We currently do not use financial instruments to hedge foreign currency exchange rate changes.

Commodity Pricing Risk

Many of the ingredients used in the products sold in our restaurants are commodities that are subject to unpredictable price volatility. Although we attempt to minimize the effect of price volatility by negotiating fixed price contracts for the supply of key ingredients, there are no established fixed price markets for certain commodities such as produce and wild fish, and we are subject to prevailing market conditions when purchasing those types of commodities. Other commodities are purchased based upon negotiated price ranges established with vendors with reference to the fluctuating market prices. The related agreements may contain contractual features that limit the price paid by establishing certain price floors and caps. Extreme changes in commodity prices or long-term changes could affect our financial results adversely. We expect that in most cases increased commodity prices could be passed through to our consumers through increases in menu prices. However, if there is a time lag between the increasing commodity prices and our ability to increase menu prices, or if we believe the commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected. Additionally, from time to time, competitive circumstances could limit menu price flexibility, and in those cases margins would be negatively impacted by increased commodity prices.

Our restaurants are dependent upon energy to operate and are impacted by changes in energy prices, including natural gas. We utilize derivative instruments to mitigate some of our overall exposure to material increases in natural gas prices. We record mark-to-market changes in the fair value of derivative instruments in earnings in the period of change. The effects of these derivative instruments were immaterial to our financial statements for all periods presented.

In addition to the market risks identified above and to the risks discussed elsewhere in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we are subject to business risk as our beef supply is highly dependent upon a limited number of vendors. In 2011, we purchased more than 90% of our beef raw materials from four beef suppliers who represent approximately 75% of the total beef marketplace in the U.S. Due to the nature of our industry, we expect to continue to purchase a substantial amount of our beef from a small number of suppliers. If these vendors were unable to fulfill their obligations under their contracts, we could encounter supply shortages and incur higher costs to secure adequate supplies.

This market risk discussion contains forward-looking statements. Actual results may differ materially from the discussion based upon general market conditions and changes in domestic and global financial markets.

 

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BUSINESS

Our Company

We are one of the largest casual dining restaurant companies in the world, with a portfolio of leading, differentiated restaurant concepts. We own and operate 1,247 restaurants and have 195 restaurants operating under franchise or joint venture arrangements across 49 states and 21 countries and territories internationally. We have five founder-inspired concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar and Roy’s. Outback Steakhouse holds the #1 U.S. market position in the steak category, and Carrabba’s and Bonefish Grill each holds the #2 U.S. market position in its respective full-service restaurant category (Italian and seafood). Fleming’s is the fourth largest fine dining steakhouse brand in the U.S. The full-service restaurant sector is highly fragmented and even the largest companies have a relatively small market share.

In 2010, we launched a new strategic plan and operating model, strengthened our management team and adapted practices from the consumer products and retail industries to complement our restaurant acumen and enhance our brand management, analytics and innovation. This new model keeps the customer at the center of our decision-making and focuses on continuous innovation and productivity to drive sustainable sales and profit growth. We have made these changes while preserving our entrepreneurial culture at the operating level. Our restaurant managing partners are a key element of this culture, each of whom shares in the cash flows of his or her restaurant after making a required initial cash investment.

We believe our new strategic plan and operating model have driven our recent market share gains and improved margins while providing a solid foundation for continuing sales and profit growth. For the three months ended March 31, 2012 and the year ended December 31, 2011, we had $1.1 billion and $3.8 billion of revenue, $50.0 million and $100.0 million of net income and $140.3 million and $361.5 million of Adjusted EBITDA, respectively. In the U.S., each of our four core concepts generated positive comparable restaurant sales over the last eight consecutive quarters, and in 2011 and 2010, our combined comparable restaurant sales at our core concepts grew 4.9% and 2.7%, respectively. Additionally, over the last two years, Outback Steakhouse, Carrabba’s, Bonefish Grill and Fleming’s have significantly outperformed their applicable Knapp-Track index on traffic growth by 8.5%, 11.2%, 20.2% and 16.5%, respectively. Over the three years ended December 31, 2011, our net income increased from a net loss of $64.5 million to net income of $100.0 million, and Adjusted EBITDA increased from $319.9 million to $361.5 million. Our Adjusted EBITDA margin grew from 8.9% to 9.4% over the same period and was 13.3% for the three months ended March 31, 2012.

Our concepts seek to provide a compelling customer experience combining great food, highly attentive service and lively and contemporary ambience at attractive prices. Our restaurants attract customers across a variety of occasions, including everyday dining, celebrations and business entertainment. We believe each of our concepts maintains its unique, founder-inspired brand identity and entrepreneurial culture, while leveraging our scale and enhanced operating model. Below is an overview of our four core concepts:

 

		Outback Steakhouse – A casual dining steakhouse featuring high quality, freshly prepared food, attentive service and Australian décor. As of March 31, 2012, we owned and operated 669 restaurants and franchised 106 restaurants across 49 states, and we owned and operated 111 restaurants, franchised 47 restaurants and operated 34 restaurants through a joint venture across 21 countries and territories internationally. Outback Steakhouse holds the #1 market position in the U.S. in the full-service steak restaurant category based on 2011 sales. In 2010, Outback Steakhouse also held the #1 position in Brazil in the full-service sector and in South Korea among western full-service restaurant concepts. The menu offers several cuts of uniquely seasoned and seared or wood-fire grilled steaks, chops, chicken, seafood, pasta, salads and seasonal specials. The menu also includes several specialty appetizers, including our signature “Bloomin’ Onion®,” and desserts, together with full bar service featuring Australian wine and beer. The average check per person at our domestic Outback Steakhouse restaurants was approximately $20 in 2011.

 

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		Carrabba’s Italian Grill – An authentic Italian casual dining restaurant featuring high quality handcrafted dishes, an exhibition kitchen and a welcoming atmosphere. As of March 31, 2012, we owned and operated 230 restaurants and had one franchised restaurant across 32 states. Carrabba’s holds the #2 market position in the full-service Italian restaurant category based on 2011 sales in the U.S. The menu includes Italian pasta, chicken and seafood dishes and wood-fired pizza. The menu also includes specialty appetizers, desserts and coffees, together with full bar service featuring Italian wines and specialty drinks. The average check per person at Carrabba’s was approximately $21 in 2011.
		Bonefish Grill – An upscale casual seafood restaurant featuring market fresh grilled fish, high-end yet approachable service and a lively bar. As of March 31, 2012, we owned and operated 151 restaurants and franchised seven restaurants across 28 states. Bonefish Grill holds the #2 market position in the U.S. full-service seafood restaurant category based on 2011 sales. Bonefish Grill ranked “Top Overall” across all full-service restaurant chains according to Zagat’s in 2010 and 2011 and was ranked #1 for all casual dining chains according to Nation’s Restaurant News in 2011. The menu is anchored by fresh grilled fish with freshly prepared sauces and regularly rotating seafood specials. In addition, Bonefish Grill offers non-seafood entrees, several specialty appetizers, including our signature “Bang Bang Shrimp®,” and desserts. Bonefish Grill’s bar provides an energetic setting for drinks, dining and socializing with a bar menu featuring a large variety of specialty cocktails, wine and beer selections. Alcoholic beverages account for approximately 25% of Bonefish Grill’s restaurant sales. The average check per person at Bonefish Grill was approximately $23 in 2011.
		Fleming’s Prime Steakhouse and Wine Bar – An upscale, contemporary prime steakhouse for food and wine lovers seeking a stylish and lively dining experience. As of March 31, 2012, we owned and operated 64 restaurants across 28 states. Fleming’s is the fourth largest fine dining steakhouse brand in the U.S based on 2011 sales. The menu features prime cuts of beef, fresh seafood, as well as pork, veal and chicken entrees accompanied by an extensive assortment of freshly prepared salads and side dishes available a la carte, plus several specialty appetizers and desserts. Among national high-end steak concepts, Fleming’s offers the largest selection of wines by the glass, with 100 quality wines available, as well as specialty cocktails. Alcoholic beverages account for approximately 30% of Fleming’s restaurant sales. The average check per person at Fleming’s was approximately $68 in 2011.

We also hold a 50% interest in a joint venture that owns and operates 22 Roy’s restaurants. Roy’s provides an upscale dining experience featuring Pacific Rim cuisine.

History and Evolution of Our Business

Our predecessor was incorporated in August 1987, and we opened our first Outback Steakhouse restaurant in 1988. We changed our name to Outback Steakhouse, Inc. in 1990 and became a Delaware corporation in 1991 as part of a corporate reorganization completed in connection with our predecessor’s initial public offering. Between 1994 and 2004, we grew from approximately 200 restaurants to approximately 1,175 restaurants system-wide and acquired Carrabba’s, Fleming’s, Roy’s and Bonefish Grill. We began expanding the Outback Steakhouse concept internationally in 1996, and as of March 31, 2012, we had 192 restaurants across 21 countries and territories internationally, including 111 restaurants that we owned and operated, 47 restaurants that we franchised and 34 restaurants that are operated by a joint venture. In June 2007, we were acquired by investment funds advised by our Sponsors, our Founders and certain members of management.

 

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In November 2009, we hired Elizabeth A. Smith as Chief Executive Officer. Ms. Smith brought close to 20 years of consumer products experience, including five years as a senior executive at Avon Products, Inc. and 14 years at Kraft Foods Inc. Under Ms. Smith’s leadership, we launched our new strategic plan and operating model. The key initiatives we implemented as part of this plan and model, many of which are ongoing, are summarized below:

 

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Enhanced Our Brand / Concept Competitiveness. Based on consumer research, we have undertaken the following initiatives to enhance our brand relevance and competitiveness:

 

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Evolved our menus by supplementing our classic items with greater variety and lighter dishes to broaden appeal. We also added lower priced items, small plates and handhelds and enhanced bar and happy hour offerings to improve our value perception and affordability and increase traffic.

 

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Shifted our marketing strategy away from principally using brand awareness messages to traffic, generating messages focused on quality, value and limited-time offers. We also enhanced the quality of our marketing and altered our media mix to improve returns on investment.

 

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Initiated a remodel program focused on Outback Steakhouse and Carrabba’s to refresh the restaurant base. During 2010 and 2011, we remodeled 256 Outback Steakhouse restaurants to implement a more contemporary design, and we are testing remodel designs at Carrabba’s.

 

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Refocused our service to improve execution on aspects of the dining experience that matter most to our customers as indicated through ongoing customer surveys. For example, the percentage of surveyed customers that rated their overall customer satisfaction at Outback Steakhouse as “excellent” or “very good” increased by 20% from April 2009 to December 2011, and is now above the average for casual dining restaurants included in the Service Management Group (SMG) customer satisfaction measurement program (which is consistent with the current relative ratings of our other concepts that participate in this program) as of December 2011. See “—Restaurant Operations—Service.”

 

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Strengthened Management Team and Organizational Capabilities. We added senior executives with experience from leading consumer products and retail companies and added resources in key functional support areas, such as R&D, human resources, consumer research and analytics, real estate development, technology, supply chain management and productivity. We built an organization that maintains deep restaurant industry expertise at the operating level, coupled with a functional corporate support team that drives innovation, productivity and scale efficiencies. We also redesigned our field management compensation structure to better reward growth in sales and profits and to attract and retain top talent.

 

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Accelerated Innovation. We believe we have strengthened our innovation capability by increasing our resources and by focusing on a collaborative process to develop, test and roll out new menu, service and marketing initiatives. This has increased our new product pipeline capacity, and we are able to introduce these new initiatives faster than we have in the past.

 

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Improved Analytics and Information Flow. To supplement the deep industry expertise of our restaurant operators, we instituted an enterprise-wide, analytical approach to guide our decision-making that relies on increased consumer research and feedback, product testing and data analysis. We believe this provides our management team with much improved visibility regarding consumer trends and a better basis for making product, pricing and marketing decisions. Additionally, we believe we have standardized and improved the performance metrics provided to our managing and area operating partners to support management at the restaurant level.

 

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Increased Productivity and Generated Significant Cost Savings. In 2008, we began to focus on increased productivity and cost savings by leveraging our scale and corporate support infrastructure. From 2008 through 2011, we implemented productivity and cost management initiatives that we estimate allowed us to save over $200 million in the aggregate, while improving our customer ratings on quality and service as measured by SMG, although we faced rising commodities prices.

 

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Invested in Information Technology Infrastructure. In 2010, we launched a multi-year upgrade of our technology infrastructure to support our analytical focus and growth opportunities. Our investments included the completion of standardized point of sale (POS) systems across our concepts, a data warehouse to improve data accessibility, real estate site selection tools and a new human resources information system (HRIS).

Competitive Strengths

We believe the following competitive strengths, when combined with our strategic plan and operating model, provide a platform to deliver sustainable sales and profit growth:

 

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strong market position with highly recognizable brands;

 

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compelling customer experience;

 

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diversified portfolio with global presence;

 

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business model focused on continuous innovation and productivity; and

 

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experienced executive and field management teams.

Strong Market Position With Highly Recognizable Brands

We have market leadership positions in each of our core concepts domestically, as well as in our core international markets. Based on 2011 sales in the U.S., Outback Steakhouse ranked #1 in the full-service steak category, Carrabba’s ranked #2 in the full-service Italian category and Bonefish Grill ranked #2 in the full-service seafood category. Fleming’s is the fourth largest fine dining steakhouse brand in the United States. Bonefish Grill, Carrabba’s and Outback Steakhouse held three of the top seven positions for top casual dining chains in the 2011 Nation’s Restaurant News Annual Consumer Picks survey. In 2010, Outback Steakhouse ranked #1 in market share in Brazil among full-service restaurants and in South Korea among western full-service restaurant concepts. We believe our market leadership positions and scale will allow us to continue to gain market share in the fragmented restaurant industry.

Compelling Customer Experience

We believe we offer a compelling dining experience with superior value by providing great food, highly attentive service and lively ambience at attractive prices. Our strategic plan and operating model keep the customer at the center of our decision-making and use customer research and analytics to continually improve each concept’s dining experience. We believe our customer experience and value perception, based on the following elements, drive strong customer loyalty:

 

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Great Food. We deliver consistently executed, freshly prepared meals using high quality ingredients. Consumers have validated our food quality through numerous casual dining awards, including ranking Outback Steakhouse first in the “Best Steak” category and ranking Bonefish Grill and Carrabba’s first and third, respectively, for all full-service restaurant chains in the “Top Food” category in the 2011 Zagat’s customer survey. We also expanded our menus during 2010 and 2011 to extend beyond our core focus at each concept to attract a broader mix of customers.

 

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Highly Attentive Service. We seek to deliver superior service to each customer at every opportunity. We offer customers prompt, friendly and efficient service, keep wait staff-to-table ratios high and staff each restaurant with managing partners to ensure consistent and attentive customer service. For example, in Zagat’s customer survey in 2011, Bonefish Grill and Carrabba’s were ranked first and third, respectively, for all full-service restaurant chains in the “Top Service” category.

 

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Lively and Contemporary Ambience. We believe each of our restaurant concepts offers a distinct, energetic atmosphere. We are committed to maintaining a contemporary look and feel at each of our concepts that is consistent with its individual brand positioning.

 

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Attractive Prices. Since 2009, to broaden appeal and increase traffic, we have enhanced the value we offer our customers through menu and promotional innovation, rather than aggressive discounting where we would simply offer the same menu items at a lower price. At each of our concepts, we have increased the number of lower priced items, such as the Cucina Casuale selection at Carrabba’s that features entrees starting at $10. We have also expanded our limited-time offers of specials not contained on our regular menu, such as Outback Steakhouse’s $14.99 steak and lobster promotion, which has been very popular with our customers. These menu changes and promotions allow us to offer the customer new choices at lower prices, since they were developed taking into account our costs and target profit margins as well as customer spending preferences. Our regular menu item prices have experienced some increases to cover rising commodity costs.

Diversified Portfolio With Global Presence

Our diversified portfolio of distinct concepts and global presence provide us with a broad growth platform to capture additional market share domestically and internationally. We are diversified by concept, category and geography as follows:

 

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By Concept and Category. We believe our concepts are differentiated relative to each other by category and to their respective key competitors. Our core concepts target three separate, large and highly fragmented menu categories of the full-service restaurant sector: steak ($14.1 billion in 2011 sales), Italian ($15.0 billion in 2011 sales) and seafood ($8.5 billion in 2011 sales). Outback Steakhouse, Carrabba’s and Bonefish Grill target the casual dining price category, and Fleming’s targets the fine dining category. Each concept’s percentage of our company-owned sales for 2011 was as follows: Outback Steakhouse 62%, Carrabba’s 18%, Bonefish Grill 12%, Fleming’s 6% and Roy’s 2%.

 

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By Geography. The system-wide sales of our international Outback Steakhouse restaurants represented 15% of our total system-wide sales in 2011. A majority of our international restaurants are company-owned or operated through a joint venture, and we believe this differentiates us relative to many of our casual dining peers, which primarily operate through franchises internationally. Our restaurants are located across 49 states and 21 countries and territories around the world. Our two largest international markets are South Korea, where we ranked #1 among western full-service restaurant concepts in 2010 with 103 company-owned restaurants, and Brazil where we ranked #1 in the full-service sector in 2010 with 34 restaurants operated through a joint venture. We also own and operate seven restaurants in Hong Kong. Our 47 franchised international restaurants are primarily located in Asia, Latin America, the Middle East and Canada.

Business Model Focused on Continuous Innovation and Productivity

Our business model leverages leading practices from the consumer products and retail industries to keep the customer at the center of our decision-making and focuses on innovation and productivity to drive sustainable sales and profit growth. We heavily rely on market and product research and customer feedback to develop new

 

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ideas and to mitigate the risks of implementation.

 

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Innovation. We have established an enterprise-wide innovation process to enhance every dimension of the customer experience. Cross-functional innovation teams collaborate across R&D, purchasing, operations, marketing, finance and market intelligence to manage a pipeline of new menu, service and marketing ideas. For example, we have added over 60 new menu items across our concepts since 2010, including many items under 600 calories, which has broadened the appeal of our menus.

 

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Productivity. Without compromising the customer experience, we continuously explore opportunities to increase productivity and reduce costs across every aspect of our business. Our cost-savings allow us to reinvest in innovation initiatives, offset commodity inflation and increase margins. We have a dedicated team that coordinates all productivity initiatives and actively manages a pipeline of ideas from testing through implementation.

Experienced Executive and Field Management Teams

Our management team is led by our Chairman and Chief Executive Officer, Elizabeth A. Smith, former President of Avon Products, Inc., who joined us in November 2009. Ms. Smith has nearly 20 years of experience in the consumer products industry. Our senior leadership team also includes executives from consumer and retail companies such as Starbucks, YUM Brands, Mars, Kraft, Best Buy and Home Depot. We have expanded our capabilities by adding resources in R&D, human resources, consumer research and analytics, real estate development, technology, supply chain management and productivity.

Our functional corporate support team complements our deep restaurant experience at the operating level. Our field operating and management teams are made up of individuals with deep experience operating our restaurants and in the restaurant industry. Our core concept presidents have been with us for an average of 20 years and have an average of 30 years of industry experience. Our regional field management team has an average of over 13 years of experience working with us at the managing partner level or above. We believe our operators are highly motivated to drive growth in sales and profits through our improved compensation structure. This structure requires an initial investment from our managing partners and allows them to share in a portion of the restaurants’ monthly cash flow and an annual bonus tied to increases in their restaurant’s sales above the concept’s sales plan and long-term compensation tied to growth in their restaurants’ cash flow. We believe this structure supports our entrepreneurial culture and differentiates us from any competitor of similar size.

Our Growth Strategy

We believe there are significant opportunities to continue to drive sustainable sales and profit growth through the following three strategies:

Grow Comparable Restaurant Sales

Building on the strong momentum of the business, we believe we have the following opportunities to continue to grow comparable restaurant sales:

 

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Remodel Our Restaurants. In the near term, we are focused on remodeling our Outback Steakhouse and Carrabba’s restaurants. For Outback Steakhouse, we plan to complete 160 remodels in 2012 and a cumulative total of approximately 450 remodels by the end of 2013. Traffic at our remodeled restaurants has increased approximately 3% from 2010 to 2011 compared to non-remodeled

 

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restaurants, which we believe primarily resulted from our remodel program. We plan to implement a remodel program at Carrabba’s when testing of the design alternatives is complete.

 

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Continue to Improve Promotional Marketing to Drive Traffic. We plan to continue to improve our limited-time offers and multimedia marketing campaigns. By promoting continuously evolving menu items at attractive prices, we seek to drive traffic and maintain brand relevance without sacrificing margins. With our new analytical and innovation capabilities, we believe we are able to develop promotions to achieve targeted margins and measure and improve the effectiveness of our marketing campaigns.

 

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Expand Share of Occasions and Increase Frequency. We believe we have a strong market share of weekend dinner occasions and a significant opportunity to grow our share of other dining occasions across all concepts. With our broader menu variety and improved affordability – specifically, through our small plates, handhelds and bar menu options – we are better positioned to expand our weekday and non-dinner occasions. We realized traffic gains in 2011 through our Sunday lunch expansion at Outback Steakhouse and the introduction of happy hour menus at Bonefish Grill and Fleming’s. We are open for Saturday lunch at most of our Carrabba’s locations. In 2012, we are planning to roll out Saturday lunch at most of our Outback Steakhouse locations. We are also evaluating the selective expansion of weekday lunch in markets where demographics support doing so.

 

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Continue Innovating New Menu Items and Categories. Our menu strategy will continue to focus on broadening appeal while maintaining classic items. Our R&D team will continue to seek to introduce innovative items that we believe match evolving consumer preferences.

Pursue New Domestic and International Development With Strong Unit Level Economics

We are recommitted to new unit development after curtailing expansion from 2009 to 2011. We believe that a substantial development opportunity remains for our concepts in the U.S. and internationally, particularly given our revitalized concepts, improved margins, expanded affordability and broadened customer appeal. Resources in site selection, construction and design were added in 2010 and 2011 in order to increase the pace of new unit openings. We expect to open 30 company-owned and five joint venture units in 2012 and increase the pace of development thereafter. We are targeting a minimum of a 15% average pre-tax return on initial investment on our new domestic restaurants, although there is no guarantee that we will achieve this target. We expect that the mix of new units will be initially weighted approximately 75% to domestic opportunities, but will shift to a greater weight of international units as we continue to implement our international expansion plans.

 

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Pursue Domestic Development Focused on Bonefish Grill and Carrabba’s. We believe we have the potential to double the Bonefish Grill concept over the next five to seven years from an existing base of 158 units as of March 31, 2012. Currently, the majority of Bonefish Grill restaurants are located in the southern and eastern U.S., with significant geographic expansion potential in the top 100 U.S. markets. Bonefish Grill unit growth will be our top domestic development priority in 2012, with 20 or more new restaurants planned. Over the last five years, Bonefish Grill restaurants open for more than a year have averaged a pre-tax return on initial investment of greater than 20%.

We see significant opportunities to expand Carrabba’s from an existing base of 231 units as of March 31, 2012. Currently, the majority of Carrabba’s restaurants are also located in the southern and eastern U.S., with significant geographic expansion potential in the top 100 U.S. markets. We are developing an updated restaurant design for Carrabba’s, and we plan to test this model in ten to 15 units over the next two years. Based on the results of this test, we plan to accelerate new unit development.

 

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Accelerate International Growth Focused on Outback Steakhouse Brand. We believe we are well-positioned to expand internationally beyond our 192 restaurants located across 21 countries and territories. The system-wide sales of our international Outback Steakhouse restaurants represented 15% of our total system-wide sales in 2011. We believe the international business represents a significant growth opportunity. In 2012, we plan to open six or more company-owned or joint venture units in existing markets. We will continue to leverage our market position by offering our top-ranked Outback Steakhouse concept in a format adapted to local cultural preferences. We have enhanced our organization structure to better position us for international growth by adding a new President of Outback Steakhouse International and integrating our international team into our corporate headquarters to leverage our enterprise-wide capabilities. Over the last five years, our international units have produced attractive returns with an average pre-tax return on initial investment above 30%. We will approach growth in a disciplined manner, focusing on growing in existing markets such as South Korea, Brazil and Hong Kong, while expanding in strategically selected emerging and high growth, developed markets. We are focusing our new market growth in China, Mexico and South America. We will utilize the ownership structure and market entry strategy that best fits the need for a particular market, including company-owned restaurants, joint ventures and franchises. In markets with the most potential for unit growth, we expect to focus on company-owned and joint venture arrangements rather than franchises.

Drive Margin Improvement

We believe that we have the opportunity to increase our margins through continued productivity and increased fixed-cost leverage as we grow comparable restaurant sales. We plan to continue to focus additional resources on productivity improvement as needed to ensure continuous progress, including the recent addition of a Chief Value Chain Officer role with responsibility for global supply chain management, productivity and information technology. We have developed a multi-year productivity plan that is expected to yield productivity and cost savings of approximately $50 million in 2012 and additional savings in future years. Our actual savings will depend on various economic factors, including commodity and labor costs, and other circumstances that impact our supply chain. This plan focuses on high value initiatives across the following four categories:

 

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Labor Optimization. We are implementing a plan to optimize our staff scheduling and improve efficiencies in service. In addition, we have identified and are testing new front of house service models that improve both service and efficiency.

 

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Food Cost Reductions. We are implementing new systems and tools to minimize waste and will continue to work with our supply chain partners to reduce our overall food costs without affecting quality.

 

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Supply Chain Efficiencies. We are improving inbound and outbound freight logistics and implementing electronic invoicing, improved distribution management and better demand forecasting processes and tools to decrease costs. We will also continue to expand the application of purchasing disciplines to a larger percentage of goods and services purchased.

 

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Sustainable, Cost-Effective Restaurant Facilities. We are implementing enterprise-level policies and service contracts that reduce rates on repairs and maintenance at our restaurants and are also reducing energy usage.

 

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Industry Overview

According to the National Restaurant Association, U.S. restaurant industry sales were $610.4 billion in 2011. We compete primarily in the casual dining price category of the full-service restaurant sector. Total sales in 2011 for the casual dining price category were $85 billion as stated in CREST data. Technomic reports that the full-service sector is expected to grow 2.9% in 2012.

 

Casual dining restaurants within the full-service sector are also categorized by menu type, each of which is defined by a few large players and is otherwise highly fragmented. Our concepts primarily compete in the steak, Italian and seafood menu categories. While we have primarily focused on serving dinner, which represents 67% ($56.3 billion) of the casual dining category’s total 2011 sales according to CREST data, we believe we have an opportunity to further expand into the lunch market, which represents 29% ($24.4 billion) of the casual dining category’s total sales according to CREST data.

 

While independent restaurants still represent 45.4% of the total sales of all casual dining restaurants according to CREST data, chains have been increasingly taking share from independents over the past several years. We believe that this trend will continue as barriers increase preventing independent restaurants and start-up chains from building scale operations, including menu labeling, burdensome labor regulations and healthcare reforms that will be enforced once chains grow past a certain number of restaurants or employees.

Our Concepts

Each of our concepts maintains its unique, founder-inspired brand identity and seeks to provide a compelling customer experience combining great food, highly attentive service and lively and contemporary ambience at prices that our customers find attractive.

Outback Steakhouse

Outback Steakhouse is a casual dining steakhouse featuring high quality, freshly prepared food, attentive service and Australian décor. As of March 31, 2012, we owned and operated 669 restaurants and 106 were franchised across 49 states. Outback Steakhouse holds the #1 market position in the U.S. in the full-service steak restaurant category based on 2011 sales. In the 2011 Zagat’s full-service chain customer survey, Outback Steakhouse was ranked #1 in the “Best Steak” category.

The Outback Steakhouse menu offers several cuts of uniquely seasoned and seared or wood-fire grilled steaks, chops, chicken, seafood, pasta, salads and seasonal specials. The menu also includes several specialty appetizers, including our signature “Bloomin’ Onion^®,” and desserts, together with full bar service featuring Australian wine and beer. Alcoholic beverages account for approximately 11% of domestic Outback

 

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Steakhouse’s restaurant sales. The average check per person, which varies for all of our concepts based on limited-time offers, special menu items and promotions, was approximately $20 during 2011. Outback Steakhouse also offers a low-priced children’s menu.

The décor includes a contemporary, casual atmosphere with blond woods, large booths and tables and Australian artwork. Outback Steakhouse restaurants serve dinner every day of the week and most locations are open for lunch on Sunday. Some locations are also open for lunch on Saturday.

Carrabba’s Italian Grill

Carrabba’s Italian Grill is an authentic Italian casual dining restaurant featuring high quality handcrafted dishes, an exhibition kitchen and a welcoming atmosphere. As of March 31, 2012, we owned and operated 230 restaurants and had one franchised restaurant across 32 states. Carrabba’s holds the #2 market position in the U.S. in the full-service Italian restaurant category based on 2011 sales. In the 2011 Zagat’s full-service chain customer survey, Carrabba’s was ranked third in the “Top Food” and “Top Service” categories.

The Carrabba’s menu includes a variety of Italian pasta, chicken and seafood dishes and wood-fired pizza. Our use of a wood-fired grill, combined with our signature grill seasoning, produces Italian dishes with flavors we believe are unique to the category. The menu also includes specialty appetizers, desserts and coffees, together with full bar service featuring Italian wines and specialty drinks. Alcoholic beverages account for approximately 17% of Carrabba’s restaurant sales. The average check per person was approximately $21 during 2011.

The décor includes dark woods, large booths and tables and Italian memorabilia featuring Carrabba family photos and authentic Italian pottery. Its traditional Italian exhibition kitchen allows customers to watch hand-made dishes being prepared. The majority of Carrabba’s restaurants serve dinner every day of the week and are open for lunch on Saturday and Sundays.

Bonefish Grill

Bonefish Grill is an upscale casual seafood restaurant featuring market fresh grilled fish, high-end yet approachable service and a lively bar. The wait staff wears chef coats, but emphasizes a concept goal of providing a comfortable rather than stuffy dining experience. As of March 31, 2012, we owned and operated 151 and franchised seven restaurants across 28 states. Bonefish Grill holds the #2 market position in the U.S. in the full-service seafood restaurant category based on 2011 sales. Bonefish Grill ranked “Top Overall” in 2010 and 2011 across all full-service dining chains according to Zagat’s and in 2011 was ranked #1 for all casual dining chains according to Nation’s Restaurant News. In the 2011 Zagat’s customer survey of all full-service chains, Bonefish Grill also received “Top Food” and “Top Service” rankings.

The Bonefish Grill menu is anchored by market fresh grilled fish with freshly prepared sauces and regularly rotating seafood specials. In addition, Bonefish Grill offers beef, pork and chicken entrees, several specialty appetizers, including our signature “Bang Bang Shrimp^®,” and desserts. Bonefish Grill’s bar provides an energetic setting for drinks, dining and socializing, with large tables, music from emerging artists and a bar menu featuring a large variety of specialty cocktails, including a specialty martini list, wine and beer selections. Alcoholic beverages account for approximately 25% of Bonefish Grill’s restaurant sales. The average check per person was approximately $23 in 2011.

The décor is warm and inviting, with hardwood floors, large booths and tables and distinctive artwork inspired by regional coastal settings. Bonefish Grill restaurants typically serve dinner only.

 

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Fleming’s Prime Steakhouse and Wine Bar

Fleming’s Prime Steakhouse and Wine Bar is an upscale, contemporary prime steakhouse for food and wine lovers seeking a stylish, lively and memorable dining experience. As of March 31, 2012, we owned and operated 64 Fleming’s restaurants across 28 states. Fleming’s is the fourth largest fine dining steakhouse brand in the U.S. based on 2011 sales. Fleming’s offers a large variety of highly rated wines and has been recognized with numerous awards for its beverage offerings, including best chain wine program in Cheers Magazine’s 2012 Beverage Excellence Awards, a 2012 VIBE Award for “innovative spirits,” and a Wine Spectator award at each of our 64 restaurants.

The Fleming’s menu features prime cuts of beef, fresh seafood, and pork, veal and chicken entrees accompanied by an extensive assortment of freshly prepared salads and side dishes available a la carte, plus several specialty appetizers and desserts. Among national high-end steak concepts, Fleming’s offers the largest selection of wines by the glass, with 100 quality wines available, as well as specialty cocktails. Alcoholic beverages account for approximately 30% of Fleming’s restaurant sales. The average check per person was approximately $68 in 2011.

The décor features an open dining room built around an exhibition kitchen and expansive bar, with lighter woods and colors with rich cherry wood accents and high ceilings. Private dining rooms are available for private gatherings or corporate functions. Fleming’s restaurants serve dinner only.

Roy’s

Roy’s provides an upscale dining experience featuring Pacific Rim cuisine. As of March 31, 2012, we owned a 50% interest in a joint venture that owned and operated 22 Roy’s restaurants located across seven states.

The Roy’s menu offers Chef Roy Yamaguchi’s “Hawaiian Fusion” cuisine, a blend of bold Asian spices, European sauces and local ingredients, and features a variety of fish and seafood, beef, short ribs, pork, lamb and chicken. The menu also includes several specialty appetizers and desserts. In addition to full bar service, Roy’s offers a large selection of highly rated wines. Alcoholic beverages account for approximately 28% of Roy’s restaurant sales. The average check per person was approximately $57 during 2011.

The décor features large dining rooms, a lounge area, an outdoor dining patio in certain locations and Roy’s signature exhibition kitchen. Private dining rooms are available for private gatherings or corporate functions. The majority of Roy’s restaurants serve dinner only.

International

Outback Steakhouse International is our business unit for developing and operating Outback Steakhouse restaurants outside of the U.S. In 2011, we enhanced our international organizational structure by adding a new unit president and recruiting internal and external talent from market-leading companies with the experience we believe is needed to drive international growth. This team is integrating into our corporate headquarters to leverage enterprise-wide capabilities, including marketing, finance, consumer research and analytics, real estate development, information technology, legal, supply chain management and productivity, to support both company-owned and franchised locations. In addition, our company-owned and joint venture operations in South Korea, Hong Kong and Brazil have cross-functional, local management staffs in place to grow and support restaurants in those locations.

 

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Our international Outback Steakhouse restaurants held the #1 position in both South Korea and Brazil among casual dining restaurants in the full-service sector as of 2010 based on sales in such countries. Our other concepts currently do not operate outside of the U.S. As of March 31, 2012, we owned and operated 111 international Outback Steakhouse restaurants, 34 were owned and operated through a joint venture and 47 were operated under franchise arrangements across 21 countries and territories as follows:

 

Country/Territory		Ownership Type		Total
South Korea		Company-owned			103
Hong Kong		Company-owned			7
Puerto Rico		Company-owned			1
Brazil		Joint venture			34
Japan		Franchise			9
Australia		Franchise			6
Mexico		Franchise			5
Taiwan		Franchise			5
Canada		Franchise			4
Philippines		Franchise			3
Saudi Arabia		Franchise			3
Indonesia		Franchise			2
United Arab Emirates		Franchise			2
Costa Rica		Franchise			1
Dominican Republic		Franchise			1
Egypt		Franchise			1
Guam		Franchise			1
Malaysia		Franchise			1
Singapore		Franchise			1
Thailand		Franchise			1
Venezuela		Franchise			1
Total					192

International Outback Steakhouse restaurants have substantially the same core menu items as domestic Outback Steakhouse locations, although certain side items and other menu items are local in nature. The prices that we charge in individual locations are reflective of local demographics and related local costs involved in procuring product. Most of our international locations serve lunch and dinner.

We utilize a global core menu policy to ensure consistency and quality in our menu offerings. We allow local tailoring of the menu to best address the preference of local customers in a market. Prior to the addition of an item to the core menu, we conduct customer research and it is reviewed and approved by our R&D team. In South Korea, for example, we serve “lunch box sets,” offering affordable options to busy customers seeking a quick lunch at Outback Steakhouse. Similarly, in Brazil, we offer “set pricing” lunch options that provide various price point options for our lunchtime diners.

Our international Outback Steakhouse locations are similar in the look and feel of our domestic locations, although there is more diversity in certain restaurant locations, layouts and sizes.

Financial information about geographic areas is included in this prospectus in Note 19 of our Notes to Consolidated Financial Statements for the year ended December 31, 2011.

 

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Restaurant Development and Design

Site Design

We generally construct freestanding buildings on leased properties, although our leased sites are also located in strip shopping centers. Construction of a new restaurant takes approximately 90 to 180 days from the date the location is leased or under contract and fully permitted. In the future, we intend to either convert existing third-party leased retail space or construct new restaurants through leases in the majority of circumstances. We typically design the interior of our restaurants in-house, utilizing outside architects when necessary.

A typical Outback Steakhouse is approximately 6,200 square feet and features a dining room and a full-service liquor bar. The dining area of a typical Outback Steakhouse consists of 45 to 48 tables and seats approximately 220 people. The bar area consists of approximately ten tables and has seating capacity for approximately 54 people. Appetizers and complete dinners are served in the bar area.

Outback Steakhouse international restaurants range in size from 3,500 to 10,000 square feet and may be basement or second floor locations.

A typical Carrabba’s is approximately 6,500 square feet and features a dining room, pasta bar seating that overlooks the exhibition kitchen and a full-service liquor bar. The dining area of a typical Carrabba’s consists of 40 to 45 tables and seats approximately 230 people. The liquor bar area typically includes six tables and seating capacity for approximately 60 people, and the pasta bar has seating capacity for approximately ten people. Appetizers and complete dinners are served in both the pasta bar and liquor bar areas.

A typical Bonefish Grill is approximately 5,500 square feet and features a dining room and full-service liquor bar. The dining area of a typical Bonefish Grill consists of approximately 38 tables and seats approximately 145 people. The bar area is generally in the front of the restaurant and offers community-style seating with approximately ten tables and bar seating with a capacity for approximately 72 people. Appetizers and complete dinners are served in the bar area.

A typical Fleming’s is approximately 7,100 square feet and features a dining room, a private dining area, an exhibition kitchen and full-service liquor bar. The main dining area of a typical Fleming’s consists of approximately 35 tables and seats approximately 170 people, while the private dining area seats approximately 30 additional people. The bar area includes approximately six tables and bar seating with a capacity for approximately 35 people. Appetizers and complete dinners are served in the bar area.

A typical Roy’s is approximately 7,100 square feet and features a dining room, a private dining area, an exhibition kitchen and full-service liquor bar. The main dining area of a typical Roy’s consists of approximately 41 tables and seats approximately 155 people, while the private dining area seats an additional 50 people. The bar area includes tables and bar seating with a capacity for approximately 35 people. Appetizers and complete dinners are served in the bar area.

Remodel / Renovation Plan

We are committed to the strategy of continuing to maintain relevance with our décor by implementing an ongoing renovation program across all concepts.

In 2009, we began a remodeling program at Outback Steakhouse to refresh our restaurants base and modernize the look and feel of the dining experience. The Outback Steakhouse décor now features larger, more comfortable waiting areas, a brighter more upscale bar and a natural, contemporary dining area. To date, we have remodeled 256 restaurants, including 194 in 2011. We plan to complete 160 remodels in 2012 and a cumulative total of approximately 450 remodels by the end of 2013. Our average remodel cost has been approximately $250,000 and traffic at our remodeled locations has increased by approximately 3%, compared to non-remodeled locations.

 

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Carrabba’s is currently implementing a similar renovation program, which includes the creation of a more contemporary Italian-themed décor that maintains its welcoming atmosphere and matches the high quality of our food. We are currently testing new design alternatives, and once testing is complete, the design will be rolled out to additional locations.

Site Selection Process

We consider the location of a restaurant to be critical to its long-term success and as such, we devote significant effort to the investigation and evaluation of potential sites. We have a central team serving all of our concepts comprised of real estate development, property/lease management and design and construction personnel. We have significantly increased the resources dedicated to this team since 2009, enabling the acceleration of remodels and unit additions. Our site selection team utilizes a combination of existing field operations managers, internal development personnel and outside real estate brokers to identify and qualify potential sites. We have developed a robust analytical infrastructure, aided by site selection software we have recently acquired and customized to assist our site selection team in implementing our new restaurant growth plan. By leveraging expanded data regarding potential sites, developing success criteria and using predictive models, we are improving site selection.

We follow a phased approach to new site selection and approval, with all proposed sites reviewed and approved by the appropriate concept president, Chief Development Officer, Chief Financial Officer and Chief Executive Officer.

Restaurant Development

We are recommitted to new unit development after curtailing expansion from 2009 to 2011. We believe that a substantial development opportunity remains for our concepts in the U.S. and internationally. We expect to open 30 company-owned and five joint venture units in 2012 and increase the pace thereafter. We expect that the mix of new units will be initially weighted approximately 75% to domestic opportunities, but will shift to a higher weight of international units as we continue to implement our international expansion plans.

Domestic Development

We believe we are well equipped to reaccelerate new unit development with a disciplined approach focusing on achieving unit returns at target levels across each of our concepts. In 2012, we plan to open 30 or more locations, with a primary domestic focus on opening new Bonefish Grill units.

We believe we have the potential to double the Bonefish Grill concept over the next five to seven years from an existing base of 158 units as of March 31, 2012. Currently, the majority of Bonefish Grill restaurants are located in the southern and eastern U.S., with significant geographic expansion potential in the top 100 U.S. markets. Bonefish Grill unit growth will be our top domestic development priority in 2012, with 20 or more new restaurants planned. Over the last five years, Bonefish Grill restaurants open for more than a year have averaged a pre-tax return on initial investment of greater than 20%.

We also see significant opportunities to expand Carrabba’s from an existing base of 231 units as of March 31, 2012. Currently, the majority of Carrabba’s restaurants are also located in the southern and eastern U.S., with significant geographic expansion potential in the top 100 U.S. markets. We are developing an updated restaurant design for Carrabba’s, and we plan to test this model in ten to 15 units over the next two years. Based on the results of this test, we plan to accelerate new unit development.

In addition, we believe that Fleming’s has existing geography fill-in and market expansion opportunities based on its current location mix.

International Development

We believe we are well-positioned to expand internationally and plan to approach such growth in a disciplined, prioritized manner, leveraging existing markets in South Korea, Brazil and Hong Kong, while

 

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expanding in strategically selected new emerging and high growth developed markets. The system-wide sales of our international Outback Steakhouse restaurants represented 15% of our total system-wide sales in 2011. We believe the international business represents a significant growth opportunity. We will continue to leverage our market position by offering our top-ranked Outback Steakhouse concept in a format adapted to local cultural preferences. For example, we believe that we can leverage existing infrastructure and expertise in the Asia-Pacific region and Latin America to grow in those areas and accelerate entry into nearby countries.

As a part of the restructuring of our international business unit, we developed a prioritized growth agenda. We are focusing our existing market growth in South Korea, Brazil and Hong Kong and our new market growth in China, Mexico and South America. Our company-owned operations in Hong Kong and Korea, where we have over 100 restaurants, provide operational expertise in running multi-unit operations, but also cultural insights and available talent to deploy into new Asian markets. In addition, our Outback Steakhouse International leadership team has significant experience in opening retail outlets in China that we can further leverage into our expansion efforts. We will utilize the ownership structure and market entry strategy that best fits the need for a particular market, including company-owned units, joint ventures and franchises. In markets where there is potential for a significant number of restaurants, we expect to focus on company-owned and joint venture arrangements rather than franchises.

Research & Development / Innovation

In 2010, we added a company-wide head of R&D to our senior management team and increased the size of that team to approximately 20 people. We believe we have since strengthened our innovation capability by establishing a focused, collaborative process and enhancing our R&D capabilities, and expanded the scope of innovation to focus on new product development, product efficiency and core menu quality. As a result, we believe we are now better able to continuously evolve our product offerings based on consumer trends and feedback and improve productivity. We have a 12-month pipeline of new menu and promotional items and are able to introduce items faster than we have in the past.

Our cross-functional innovation processes leverage practices of the consumer products industry to continuously research and enhance every dimension of the customer experience. Our innovation teams collaborate across R&D, purchasing, operations, marketing, finance and market intelligence. Our goal is continuous innovation of our new menu, service and marketing initiatives to improve brand relevance, productivity and competitiveness based on evolving consumer trends and direct customer feedback on our products. For example, as the direct result of market and consumer research, we have added over 60 new menu items across our concepts since 2010, including many items under 600 calories, which have broadened the appeal of our menus. By incorporating analytics, testing and customer feedback, we are able to refine and reduce the potential risks associated with these introductions or changes. For new menu items and significant product changes, we have a meaningful testing process that includes internal testing, testing at one restaurant and testing at a group of restaurants before the roll-out is staged across a concept based on the type of product change. Throughout this process, our customers provide direct feedback on the product as well as pricing.

We also utilize our cross-functional process to develop limited-time offers with compelling price points and attractive margins. This requires more occasion-based testing and research to validate that the special offer was valued by customers based on the occasion. For example, Outback Steakhouse has offered a recurring $14.99 steak and lobster promotion that has not only been very popular with our customers, but also meets our profitability, food quality and execution efficiency objectives.

 

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Strategy and Market Intelligence

Our strategy and market intelligence (SMI) function was created in 2010 to identify opportunities for profitable growth based on customer research, and to help improve returns on the investments we make in capital and operations, through the targeted application of analytics. The following summarizes a few of our analytics initiatives used across our corporation functions and concepts:

 

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Advanced Analytics. We believe we have realized significant benefits from studies regarding customer sensitivity to price changes. Our customer feedback and testing process enables rapid assessment of how new ideas and productivity initiatives perform with customers, allowing us to make improvements before they are launched nationally. Our marketing mix models guide reallocation of our marketing investments to more efficient and effective programs and have prompted increased marketing investments in Bonefish Grill and Carrabba’s.

 

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Development Analytics. We have developed a robust analytical infrastructure to drive our increased new restaurant growth plan. By leveraging expanded data regarding potential sites, developing success criteria and using predictive models, we are improving the site selection process.

 

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Consumer Intelligence. Our customer research techniques provide a greater perspective into customer behavior. We deploy a variety of qualitative approaches ranging from basic focus groups to techniques designed to capture deeper consumer insights based on emotional responses. On the quantitative side, we develop, execute and analyze consumer research related to menu items, restaurant design, consumer communication, brand positioning and casual dining segment health.

 

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Data and Metrics. We have automated business performance reports for field management that were manually created in the past, freeing up time and providing better and more timely information.

Management Information Systems

In late 2010, we hired a new Chief Information Officer and developed a multi-year information technology strategy to further transform information technology into a growth enabling function by focusing on building infrastructure, increasing technical staff, creating a technology platform to support sales growth and enabling productivity improvements.

Beginning in 2010, we added significant resources that focused on building our competencies in human resources, information technology and real estate, design and construction, including the completion of standardized POS systems across our core concepts, the implementation of a HRIS system, uniform and comprehensive training programs, expanded data warehousing capability, and increased resources and tools to accelerate renovations and new unit site selection.

Restaurant level financial and accounting controls are handled through a point-of-sale computer system and network in each restaurant that communicates with our corporate headquarters. The POS system is also used to authorize and transmit credit card sales transactions and to manage the business and control costs, such as labor. Our company-owned restaurants are connected through data centers and a portal to provide our corporate employees and regional partners with access to business information and tools that allow them to collaborate, communicate, train and share information between restaurants and the corporate office. During 2012, we expect to upgrade our wireless access points in all of our restaurants. This will provide enhanced capability to pilot and roll out new mobile technology devices within our restaurants to enhance our operational capability.

 

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Advertising and Marketing

Our marketing strategy is designed to drive comparable restaurant sales growth by increasing the frequency of and occasions for visits by our current customers as well as attracting new customers.

To maintain customer interest and relevance, each concept leverages limited-time offers featuring seasonal specials, ingredients and flavors that are consistent with the concept’s offerings, but provide something new to discover on the menu. We have increased the frequency of these promotions so that Outback Steakhouse, Carrabba’s and Bonefish Grill generally have five to seven promotion periods each year. The nature of the message regarding these promotions has also changed to encourage prompt action, rather than just promote brand awareness, resulting in more immediate increases in traffic. For example, for the past few years, Outback Steakhouse has created the Thanks for Giving promotion that featured a special menu and donated a portion of the proceeds to Operation Homefront, a charity that supports members of the U.S. military and their families. We promoted the initiative through extensive television, radio, social media, public relations, in-restaurant materials and celebrity support, which resulted in significant traffic and a donation of approximately $2 million for the charity.

We promote our Outback Steakhouse and Carrabba’s restaurants through national and spot television and/or radio media and our Bonefish Grill restaurants through radio advertising. We advertise on television selectively when we have a sufficient number of restaurants in a market to make the media purchase efficient. Each of our concepts has an active public relations program and relies on word-of-mouth customer experience, site visibility, marketing in local venues, direct mail, on-line/digital advertising and billboards. We also create point-of-sale materials to communicate and promote key brand initiatives to our guests while they are dining in our restaurants. We have local marketing personnel who customize these programs to optimize them for their target market.

We also use the openings of new restaurants as an opportunity to employ a comprehensive marketing strategy. We reach out to various media outlets as well as the local community to obtain appearances on radio and television, establish relationships with local charities and gain coverage in local newspapers and magazines. The managing partner in each restaurant is the visible face of the concept and, with local involvement, reinforces our role as a concerned, active member of the community.

We have increased our use of e-marketing tools, which enable us to reach a significant number of people in a timely and targeted fashion at a fraction of the cost of traditional media. We believe that our customers are frequent internet users and will explore e-applications to make dining decisions or to share dining experiences. We have set up pages and advertise on various social media and other websites.

These methods of advertising promote and maintain brand image and generate consumer awareness of new menu offerings, such as new items added to appeal to value-conscious consumers. We also strive to increase sales through excellence in execution. Our marketing strategy of enticing customers to visit frequently and also recommending our restaurants to others complements our goal of providing a compelling dining experience. Additionally, we engage in a variety of promotional activities, such as contributing goods, time and money to charitable, civic and cultural programs, in order to give back to the communities we serve and increase public awareness of our restaurants.

Restaurant Operations

We believe the success of our restaurants depends on our service-oriented employees and consistent execution of our menu items in a well-managed restaurant.

Management and Employees

The management staff of a typical Outback Steakhouse, Carrabba’s or Bonefish Grill consists of one managing partner, one assistant manager and one kitchen manager. The management staff of a typical Fleming’s

 

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or Roy’s consists of one managing partner, a chef partner and two assistant managers. Each restaurant also employs approximately 55 to 75 hourly employees, many of whom work part-time. The managing partner of each restaurant has primary responsibility for the day-to-day operation of his or her restaurant and is required to abide by company-established operating standards. Area operating partners are responsible for overseeing the operations of typically eight to 15 restaurants and managing partners in a specific region.

Area Operating, Managing and Chef Partner Programs

We have established a compensation structure for our area operating, managing and chef partners that we believe encourages high quality restaurant operations, fosters long-term employee commitment and generally results in profitable restaurants.

Historically, the managing partner of each company-owned domestic restaurant and the chef partner of each Fleming’s and Roy’s restaurant was required, as a condition of employment, to sign a five-year employment agreement and to purchase a non-transferable ownership interest in a partnership (“Management Partnership”) that provided management and supervisory services to his or her restaurant. The purchase price for a managing partner’s ownership interest was fixed at $25,000, and the purchase price for a chef partner’s ownership interest ranged from $10,000 to $15,000. Managing and chef partners had the right to receive monthly distributions from the Management Partnership based on a percentage of their restaurant’s monthly cash flows for the duration of the agreement, which varied by concept from 6% to 10% for managing partners and 2% to 5% for chef partners. Further, managing and chef partners were eligible to participate in the PEP, a deferred compensation program, upon completion of their five-year employment agreement.

In April 2011, we implemented modifications to our managing and chef partner compensation structure to provide greater incentives for sales and profit growth. Under the revised program, managing and chef partners continue to sign five-year employment agreements and receive monthly distributions of the same percentage of their restaurant’s cash flow as under the prior program. However, under the revised program, in lieu of participation in the PEP, managing partners and chef partners are eligible to receive deferred compensation payments under the new POA. The POA places greater emphasis on year-over-year growth in cash flow than the PEP. Managing and chef partners will receive a greater value under the POA than they would have received under the PEP if certain levels of year-over-year cash flow growth are achieved and a lesser value than under the PEP if these levels are not achieved.

The POA requires managing and chef partners to make an initial deposit of up to $10,000 into their “Partner Investment Account,” and we will make a bookkeeping contribution to each partner’s “Company Contributions Account” no later than the end of February of each year following the completion of each year (or partial year where applicable) under the partner’s employment agreement. The value of each of our contributions will be equal to a percentage of the partner’s restaurant’s cash flow plus, if the restaurant has been open at least 18 calendar months, a percentage of the year-over-year increase in the restaurant’s cash flow.

The revised program also provides an annual bonus known as the President’s Club, paid in addition to the monthly distributions of cash flow, designed to reward increases in a restaurant’s annual sales above the concept sales plan with a required flow-through percentage of the incremental sales to cash flow. Managing and chef partners whose restaurants achieve certain annual sales targets above the concept’s sales plan (and the required flow-through percentage) receive a bonus equal to a percentage of the incremental sales, such percentage determined by the sales target achieved.

All managing and chef partners who execute new employment agreements after May 1, 2011 are required to participate in the new partner program, including the POA. Managing and chef partners with an employment agreement scheduled to expire December 1, 2011 or later had the opportunity (from April 27, 2011 through July 27, 2011) to amend their employment agreements to convert their existing partner program to

 

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participation in the new partner program, including the POA, effective June 1, 2011. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Stock-Based and Deferred Compensation Plans.” As of March 31, 2012, approximately 58% of our managing and chef partners were participating in the POA.

Many of Outback Steakhouse international restaurant managing partners enter into employment agreements and purchase participation interests in the cash distributions from the restaurants they manage. The amount and terms vary by country. This interest gives the managing partner the right to receive a percentage of his or her restaurant’s annual cash flows for the duration of the agreement. Additionally, each new unaffiliated franchisee is required to provide the same opportunity to the managing partner of each new restaurant opened by that franchisee.

Historically, an area operating partner has been required, as a condition of employment and within 30 days of the opening of his or her first restaurant, to make an initial investment of $50,000 in a Management Partnership within 30 days of the opening of his or her first restaurant. This interest gave the area operating partner the right to distributions from the Management Partnership based on a percentage of his or her restaurants’ monthly cash flows for the duration of the agreement, typically ranging from 4% to 9%. We have the option to purchase an area operating partner’s interest in the Management Partnership after the restaurant has been open for a five-year period on the terms specified in the agreement. For restaurants opened between January 1, 2007 and December 31, 2011, the area operating partner’s percentage of cash distributions and buyout percentage was calculated based on the associated restaurant’s return on investment compared to our targeted return on investment and may range from 3.0% to 12.0% depending on the concept.

In 2011, we also began a version of the President’s Club annual bonus described above for area operating partners to provide additional rewards for achieving sales targets with a required flow-through of the incremental sales to cash flow.

In April 2012, we revised our area operating partner program for restaurants opened on or after January 1, 2012. For these restaurants, an area operating partner is required, as a condition of employment, to make a deposit of $10,000 within 30 days of the opening of each new restaurant that he or she oversees, up to a maximum deposit of $50,000 (taking into account investments under prior programs). This deposit gives the area operating partner the right to monthly payments based on a percentage of his or her restaurants’ monthly cash flows for the duration of the employment agreement, typically ranging from 4.0% to 4.5%. After the restaurant has been open for a five-year period, the area operating partner will receive a bonus equal to a multiple of the area operating partner’s average monthly payments for the 24 months immediately preceding the bonus date. The bonus will be paid within 90 days or over a two-year period, depending on the bonus amount.

We have also improved our field operations performance evaluation and development processes since 2009. All field managing partners and area managers receive feedback on performance with consistent metrics linked to quarterly restaurant, area and concept business objectives.

By offering these types of compensation arrangements and by providing the area operating, managing and chef partners a significant interest in the success of their restaurants, we believe we are able to attract and retain experienced and highly motivated area operating, managing and chef partners.

Supervision and Training

We require our area operating partners and restaurant managing partners to have significant experience in the full-service restaurant industry. As part of our management development programs, we engage in succession planning at a total company and concept level to identify promotable personnel, with focused training programs to prepare managers for the next level of responsibility. Our core concept presidents have been with us for an average of 20 years and have an average of 30 years of industry experience. Our regional field management team has an average of over 13 years of experience working with us at the managing partner level or above.

 

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All operating partners and managing partners are required to complete a comprehensive training program that emphasizes our operating strategy, procedures and standards. Our senior management meets quarterly with our area operating partners to discuss business-related issues and share ideas. In addition, members of senior management visit restaurants regularly to ensure that our concept, strategy and standards of quality are being adhered to in all aspects of restaurant operations.

The restaurant managing and area operating partners, together with our Presidents, Regional Vice Presidents, Senior Vice Presidents of Training and Directors of Training, are responsible for selecting and training the employees for each new restaurant. The training period for new non-management employees lasts approximately one week and is characterized by on-the-job supervision by an experienced employee. Ongoing employee training remains the responsibility of the restaurant manager. Written tests and observation in the work place are used to evaluate each employee’s performance. Special emphasis is placed on the consistency and quality of food preparation and service which is monitored through monthly meetings between kitchen managers and management.

Service

We seek to deliver superior service to each customer at every opportunity. We offer customers prompt, friendly and efficient service, keep wait staff-to-table ratios high and staff each restaurant with experienced management teams to ensure consistent and attentive customer service. In Zagat’s customer survey in 2011, Bonefish Grill and Carrabba’s were ranked first and third, respectively, for all full-service chains in the “Top Service” category.

In order to better assess and improve our performance, in 2009 we began using Service Management Group (SMG) to conduct an on-going satisfaction measurement program that utilizes a random invitation to participate in a web-based survey printed on 25% of our customer checks per week and provides us with benchmarking information from other restaurants. The program measures satisfaction across a wide range of experience elements, from the pace of the experience to the temperature of the food. Results are compiled and reported through a central web site at the national, regional and individual restaurant level. The minimum sample size for our SMG customer surveys is 100 customers per restaurant per month.

Currently, 24 casual dining restaurant concepts, including Outback Steakhouse, Carrabba’s and Bonefish Grill, and nine fine dining concepts, including Fleming’s, participate in the SMG survey web methodology and contribute to the SMG average comparison measures for casual and fine dining, respectively, that we utilize in assessing our performance. The percentage of surveyed customers that rated their overall customer satisfaction at Outback Steakhouse as “excellent” or “very good” increased by 20% from April 2009 to December 2011, based on our SMG customer satisfaction measurement program, which we believe is attributable to the initiatives we implemented. Each of our core concepts was above the average for comparable restaurants included in the SMG customer satisfaction measurement program in 2011.

Food Preparation and Quality Control

We focus on using high quality ingredients in our menu items, including the grade of our beef and freshness of our seafood and vegetables. Food safety is a critical priority, and we dedicate resources to ensuring that our customers enjoy safe, quality food products. We have taken various steps to mitigate food quality and safety risks and have central teams focused on this goal together with our supply chain, food safety/quality assurance and R&D teams.

We have an R&D facility located in Tampa that serves as a test kitchen and vendor product qualification site. Our supply chain organization manages internal auditors for vendor evaluations along with external third parties to inspect vendor adherence to quality, food safety and product specification on a risk based schedule. Vendors that do not comply with quality, food safety and other specifications are not utilized until they have corrective actions in place and are re-certified for compliance. Additionally, a daily “line check” is performed by

 

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the restaurant managing partner and their key team members to inspect food prepared for that day, as well as the freshness of liquor, beverages, condiments and other perishables used for all menu items.

We also employ two outside advisory councils comprised of external subject matter experts to advise our senior management on industry trends and on quality, safety and animal considerations pertinent to our industry, such as well-being strategies and procedures.

Sourcing and Supply

We take a centralized approach to purchasing and supply chain management, with our corporate team serving all concepts domestically and internationally. In addition, we have dedicated supply chain management personnel at the local level in our larger international operations in Asia and South America. The supply chain management organization is responsible for all food and operating supply purchases as well as a large percentage of field and home office services. In addition, we have logistics teams dedicated to optimizing freight costs. The supply chain management organization’s mission is to utilize a combination of centralized domestic and locally-based supply to capture the efficiencies and economies of scale that come from making strategic buys, while maintaining (or improving) quality and building stronger relationships with our key vendors.

We work to address the end-to-end costs (from the source to the fork) associated with the products and goods we purchase. We utilize a “total cost of ownership” (TCO) approach, which focuses on both the initial purchase price, coupled with the cost structure underlying the procurement and order fulfillment process. The TCO approach includes monitoring commodity markets and trends and seeking to execute product purchases at the most advantageous times. We develop commodity sourcing strategies for all major commodity categories based on the dynamics of each category. Those strategies include both spot purchases and long-term contracts of generally one year or less where we believe long-term contract prices are more attractive than anticipated spot prices. In addition, we limit exposure to potential risk by requiring our vendor partners to meet or exceed our quality assurance standards.

We have a national distribution program in place that includes food, beverage, and packaging goods. This program is with a custom distribution company that uses a limited number of warehouses that provide only products approved for our system.

Proteins represent about 50% of our commodity purchasing composition, with beef representing slightly over half of total purchased proteins. In 2011, we purchased more than 90% of our beef raw materials from four beef suppliers who represent approximately 75% of the total beef marketplace in the U.S. Due to the nature of our industry, we expect to continue to purchase a substantial amount of our beef from a small number of suppliers. Other major commodity categories purchased include produce, dairy, bread and pasta and energy sources to operate our restaurants, such as natural gas.

Restaurant Ownership Structures

Our restaurants are predominately company-owned or controlled, including through joint ventures, and otherwise operated under franchise arrangements. We generate our revenues primarily from our company-owned or controlled restaurants and secondarily through ongoing royalties from our franchised restaurants and sales of franchise rights.

Company-Owned Restaurants

Company-owned or controlled restaurants include restaurants owned directly by us, by limited partnerships in which we are the general partner and our managing partners and chef partners are limited partners and by joint ventures in which we are a member. Our legal ownership interests as general partner in these partnerships and joint ventures generally range from 50% to 90%. Our cash flows from these entities are limited to the relative portion of our ownership. The results of operations of company-owned restaurants are included in our consolidated operating results. The portion of income or loss attributable to the other partners’ interests is eliminated in the line item in our Consolidated Statements of Operations and Comprehensive Income entitled “Net income (loss) attributable to noncontrolling interests.”

 

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In the future we do not plan to utilize limited partnerships for domestic company-owned restaurants. Instead, the restaurants will be wholly-owned by us and the area operating, managing and chef partners will receive their distributions of restaurant cash flow as employee compensation rather than partnership distributions.

With respect to Carrabba’s restaurants opened after 1994, we pay royalties to the Carrabba’s founders ranging from 1.0% to 1.5% of sales pursuant to agreements we entered into with the founders.

We also include the restaurants owned by our Roy’s joint venture as company-owned restaurants, and their accounts and operations are included in our consolidated financial statements, even though we have less than majority ownership. We determined we are the primary beneficiary of the joint venture since we have the power to direct or cause the direction of the activities that most significantly impact the entity on a day-to-day basis, such as decisions regarding menu development, purchasing, restaurant expansion and closings and the management of employee-related processes. Additionally, we have the obligation to absorb losses or the right to receive benefits of the Roy’s joint venture that could potentially be significant to the Roy’s joint venture. The majority of capital contributions made by our partner in the Roy’s joint venture, RY-8, have been funded by loans to RY-8 from a third party, which we guarantee. The guarantee is secured by a collateral interest in RY-8’s membership interest in the joint venture. We did not have an economic interest in nine Roy’s as of December 31, 2011, including six in Hawaii and one each in the continental United States, Japan and Guam.

Through our Brazilian Joint Venture with PGS Participacoes Ltda., we hold a 50% ownership interest in PGS Consultoria e Serviços Ltda. The Brazilian Joint Venture was formed in 1998 for the purpose of operating Outback Steakhouse franchise restaurants in Brazil. We account for the Brazilian Joint Venture under the equity method of accounting. We are responsible for 50% of the costs of new restaurants operated by the Brazilian Joint Venture and our joint venture partner is responsible for the other 50%. Income and loss derived from the Brazilian Joint Venture is presented in the line item “Income from operations of unconsolidated affiliates” in our Consolidated Statements of Operations and Comprehensive Income.

In addition, under our settlement agreement with T-Bird, T-Bird has a right we refer to as the Put Right, which would require us to purchase for cash all of the ownership interests in the T-Bird entities that own Outback Steakhouse restaurants and certain rights under the development agreement with T-Bird entity. The Put Right is non-transferable, other than under limited circumstances set forth in the Settlement Agreement. The Put Right will become exercisable by T-Bird for a one-year period beginning on the date of closing of this initial public offering. The Put Right is also exercisable if we sell our Outback Steakhouse concept. If the Put Right is exercised, we will pay a purchase price equal to a multiple of the T-Bird entities’ adjusted EBITDA for the trailing 12 months, net of liabilities of the T-Bird entities. The multiple is equal to 75% of the multiple of our adjusted EBITDA reflected in our stock price in the case of an IPO or, in a sale of the Outback Steakhouse concept, 75% of the multiple of adjusted EBITDA that we are receiving in the sale. We have a one-time right to reject the exercise of the Put Right if the transaction would be dilutive to our consolidated earnings per share. In such event, the Put Right is extended until the first anniversary of our notice to the T-Bird entities of such rejection. The closing of the Put Right is subject to certain conditions, including the negotiation of a transaction agreement reasonably acceptable to the parties, the absence of dissenters’ rights being exercised by the equity owners above a specified level and compliance with our debt agreements.

Unaffiliated Franchise Program

Our unaffiliated franchise arrangements grant third parties a license to establish and operate a restaurant using one of our concepts, our systems and our trademarks in a given area. The unaffiliated franchisee pays us for the concept ideas, strategy, marketing, operating system, training, purchasing power and brand recognition.

Franchised restaurants must be operated in compliance with each concept’s methods, standards and specifications, including regarding menu items, ingredients, materials, supplies, services, fixtures, furnishings, decor and signs, although the franchisee has full discretion to determine menu prices. In addition, all franchisees are required to purchase all food, ingredients, supplies and materials from approved suppliers. Our regional vice presidents semi-annually inspect franchised restaurants to confirm compliance with our requirements.

 

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At March 31, 2012, there were 106 domestic franchised Outback Steakhouse restaurants and 47 international franchised Outback Steakhouse restaurants. Each domestic franchisee paid an initial franchise fee of $40,000 for each restaurant and is required to pay a continuing monthly royalty of 3.0% of gross restaurant sales and a monthly marketing administration fee of 0.5% of gross restaurant sales. Initial fees and royalties for international franchisees vary by market. Generally, each international franchisee paid an initial franchise fee of $40,000 to $200,000 for each restaurant and are expected to pay a continuing monthly royalty of 2.0% to 4.0% of gross restaurant sales. Certain international franchisees enter into an international development agreement that requires them to pay a development fee in exchange for the right and obligation to develop and operate up to five restaurants within a defined development territory pursuant to separate franchise agreements. All domestic franchisees are required to expend an annually adjusted percentage of gross restaurant sales, up to a maximum of 3.5%, for national advertising on a monthly basis (3.0% in 2011).

At March 31, 2012, there was one domestic franchised Carrabba’s. The franchisee paid an initial franchise fee of $40,000 and pays a continuing monthly royalty of 5.75% of gross restaurant sales.

At March 31, 2012, there were seven domestic franchised Bonefish Grills. Four of these franchisees paid an initial franchise fee of $50,000 for each restaurant and pay a continuing monthly royalty of 3.5% to 4.0% of gross restaurant sales. Three of these franchisees pay royalties up to 4.0%, depending on sales volumes. Under the terms of the franchise agreement, the franchisees are required to expend, on a monthly basis, a minimum of 2.5% of gross restaurant sales on local advertising and pay a monthly marketing administration fee of 0.5% of gross restaurant sales.

There were no unaffiliated franchises of any of our other restaurant concepts at March 31, 2012.

Under the development agreement granted to one of the T-Bird entities, for the period ending in 2031, the T-Bird entities have the exclusive right through 2031 to develop and operate Outback Steakhouse restaurants as a franchisee in the State of California. We have agreed to waive all rights of first refusal in our franchise arrangements with the T-Bird entities in connection with a sale of all, and not less than all, of the assets, or at least 75% of the ownership of the T-Bird entities.

Competition

The restaurant industry is highly competitive with a substantial number of restaurant operators that compete directly and indirectly with us in respect to price, service, location and food quality, and there are other well-established competitors with significant financial and other resources. There is also active competition for management personnel, attractive suitable real estate sites, supplies and restaurant employees. Further, we face growing competition from the supermarket industry, with improved selections of prepared meals, and from quick service and fast casual restaurants, as a result of higher-quality food and beverage offerings. We expect intense competition to continue in all of these areas.

Industry and internal research conducted suggests that consumers consider casual dining restaurants within a given trade area when making dining decisions. As a result, an individual restaurant’s competitors will vary based on their trade area and will include both independent and chain restaurants. At an aggregate level, all major casual dining restaurants would be considered competitors of our concepts.

We believe our principal strategies, which include but are not limited to, the use of high quality ingredients, the variety of our menu and concepts, the quality and consistency of our food and service, the use of various promotions and the selection of appropriate locations for our restaurants, allow us to effectively and efficiently compete in the restaurant industry.

 

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Government Regulation

We are subject to various federal, state, local and international laws affecting our business. Each of our restaurants is subject to licensing and regulation by a number of governmental authorities, which may include, among others, alcoholic beverage control, health and safety, nutritional menu labeling, health care, environmental and fire agencies in the state, municipality or country in which the restaurant is located. Difficulty in obtaining or failing to obtain the required licenses or approvals could delay or prevent the development of a new restaurant in a particular area. Additionally, difficulties or inabilities to retain or renew licenses, or increased compliance costs due to changed regulations, could adversely affect operations at existing restaurants.

Approximately 15% of our consolidated restaurant sales are attributable to the sale of alcoholic beverages. Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license or permit to sell alcoholic beverages on the premises and to provide service for extended hours and on Sundays. Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of patrons and employees, hours of operation, advertising, training, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages. The failure of a restaurant to obtain or retain liquor or food service licenses would adversely affect the restaurant’s operations. Additionally, we are subject in certain states to “dramshop” statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.

Our restaurant operations are also subject to federal and state labor laws, including the Fair Labor Standards Act, governing such matters as minimum wages, overtime, tip credits and worker conditions. Our employees who receive tips as part of their compensation, such as servers, are paid at a minimum wage rate, after giving effect to applicable tip credits. We rely on our employees to accurately disclose the full amount of their tip income, and we base our FICA tax reporting on the disclosures provided to us by such tipped employees. Our other personnel, such as our kitchen staff, are typically paid in excess of minimum wage. As significant numbers of our food service and preparation personnel are paid at rates related to the applicable minimum wage, further increases in the minimum wage or other changes in these laws could increase our labor costs. Our ability to respond to minimum wage increases by increasing menu prices will depend on the responses of our competitors and customers. Further, we are continuing to assess the impact of federal health care legislation on our health care benefit costs. The imposition of any requirement that we provide health insurance benefits to employees that are more extensive than the health insurance benefits we currently provide, or the imposition of additional employer paid employment taxes on income earned by our employees, could have an adverse effect on our results of operations and financial position. Our distributors and suppliers also may be affected by higher minimum wage and benefit standards, which could result in higher costs for goods and services supplied to us.

We may also be subject to lawsuits from our employees, the U.S. Equal Employment Opportunity Commission or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters. A number of lawsuits have resulted in the payment of substantial damages by the defendants. For example, in December 2009, we entered into a Consent Decree in settlement of certain litigation brought by the U.S. Equal Employment Opportunity Commission alleging gender discrimination in promotions to management in the Outback Steakhouse organization, which required us to make a settlement payment of $19.0 million. In addition, during the four-year term of the Consent Decree, we are required to fulfill certain training, record-keeping and reporting requirements and maintain an open access system for restaurant employees to express interest in promotions within the Outback Steakhouse organization, and employ a human resources executive.

The Patient Protection and Affordability Act of 2010 (the “PPACA”) enacted in March 2010 requires chain restaurants with 20 or more locations in the United States to comply with federal nutritional disclosure requirements. The FDA has indicated that it intends to issue final regulations by the middle of 2012 and begin enforcing the regulations by the end of 2012. A number of states, counties and cities have also enacted menu

 

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labeling laws requiring multi-unit restaurant operators to disclose certain nutritional information to customers, or have enacted legislation restricting the use of certain types of ingredients in restaurants. Although the federal legislation is intended to preempt conflicting state or local laws on nutrition labeling, until we are required to comply with the federal law we will be subject to a patchwork of state and local laws and regulations regarding nutritional content disclosure requirements. Many of these requirements are inconsistent or are interpreted differently from one jurisdiction to another. While our ability to adapt to consumer preferences is a strength of our concepts, the effect of such labeling requirements on consumer choices, if any, is unclear at this time.

There is potential for increased regulation of food in the United States under the recent changes in the HACCP system requirements. HACCP refers to a management system in which food safety is addressed through the analysis and control of potential hazards from production, procurement and handling, to manufacturing, distribution and consumption of the finished product. Many states have required restaurants to develop and implement HACCP Systems and the United States government continues to expand the sectors of the food industry that must adopt and implement HACCP programs. For example, the Food Safety Modernization Act (the “FSMA”), signed into law in January 2011, granted the FDA new authority regarding the safety of the entire food system, including through increased inspections and mandatory food recalls. Although restaurants are specifically exempted from or not directly implicated by some of these new requirements, we anticipate that the new requirements may impact our industry. Additionally, our suppliers may initiate or otherwise be subject to food recalls that may impact the availability of certain products, result in adverse publicity or require us to take actions that could be costly for us or otherwise harm our business.

We are subject to the Americans with Disabilities Act, or the ADA, which, among other things, requires our restaurants to meet federally mandated requirements for the disabled. The ADA prohibits discrimination in employment and public accommodations on the basis of disability. Under the ADA, we could be required to expend funds to modify our restaurants to provide service to, or make reasonable accommodations for the employment of, disabled persons. In addition, our employment practices are subject to the requirements of the Immigration and Naturalization Service relating to citizenship and residency. Government regulations could affect and change the items we procure for resale. We may also become subject to legislation or regulation seeking to tax and/or regulate high-fat and high-sodium foods, particularly in the United States, which could be costly to comply with. Our results can be impacted by tax legislation and regulation in the jurisdictions in which we operate and by accounting standards or pronouncements.

We are also subject to laws and regulations relating to information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud, and any failure or perceived failure to comply with these laws and regulations could harm our reputation or lead to litigation, which could adversely affect our financial condition.

See “Risk Factors” for a discussion of risks relating to federal, state, local and international regulation of our business.

Employees

As of March 31, 2012, we employed approximately 86,000 persons, of which 800 are corporate personnel, approximately 5,100 are restaurant management personnel and the remainder are hourly restaurant personnel. Of the 800 corporate employees, approximately 180 are in management and 620 are administrative or office employees. None of our employees are covered by a collective bargaining agreement.

Properties

During the year ended December 31, 2011, we added fifteen new restaurant sites, closed eleven others and, in October 2011, we sold our nine company-owned Outback Steakhouse restaurants in Japan to a subsidiary of S Foods, Inc. The buyer has the right to develop Outback Steakhouse international franchise restaurants in Japan in the future and will pay us a royalty based on sales volumes.

 

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As of March 31, 2012, we had the following number of owned and franchised domestic restaurants located in the following states:

 

State		Outback Steakhouse				Carrabba’s				Bonefish Grill				Fleming’s				Roy’s				Total
Alabama			14				4				4				1				—				23
Alaska			1				—				—				—				—				1
Arizona			16				8				—				5				2				31
Arkansas			8				1				2				—				—				11
California			63				—				—				11				9				83
Colorado			16				6				4				1				—				27
Connecticut			10				1				—				1				—				12
Delaware			2				—				—				—				—				2
Florida			92				65				45				7				6				215
Georgia			28				12				8				1				—				49
Hawaii			7				—				—				—				—				7
Idaho			5				—				1				—				—				6
Illinois			19				2				3				2				1				27
Indiana			15				2				4				1				—				22
Iowa			6				—				1				1				—				8
Kansas			6				2				2				—				—				10
Kentucky			11				3				3				—				—				17
Louisiana			14				3				3				1				—				21
Maine			1				—				—				—				—				1
Maryland			23				9				6				1				1				40
Massachusetts			15				3				—				1				—				19
Michigan			23				8				2				2				—				35
Minnesota			9				—				—				—				—				9
Mississippi			6				—				2				—				—				8
Missouri			13				1				1				1				—				16
Montana			3				—				—				—				—				3
Nebraska			4				1				1				1				—				7
Nevada			11				2				—				1				2				16
New Hampshire			2				1				—				—				—				3
New Jersey			19				8				11				2				—				40
New Mexico			5				—				—				—				—				5
New York			33				6				4				—				—				43
North Carolina			34				16				9				3				—				62
Ohio			30				10				6				3				—				49
Oklahoma			8				1				1				1				—				11
Oregon			8				—				—				—				—				8
Pennsylvania			26				9				5				1				—				41
Rhode Island			1				1				—				1				—				3
South Carolina			22				9				7				—				—				38
South Dakota			2				—				—				—				—				2
Tennessee			20				9				8				3				—				40
Texas			52				14				—				6				1				73
Utah			4				1				—				1				—				6
Vermont			1				—				—				—				—				1
Virginia			35				11				12				2				—				60
Washington			16				—				2				—				—				18
West Virginia			8				—				—				—				—				8
Wisconsin			6				2				1				2				—				11
Wyoming			2				—				—				—				—				2
Total			775				231				158				64				22				1250

 

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In connection with the Merger on June 14, 2007, we implemented a new ownership and financing arrangement for some of our restaurant properties, pursuant to which Private Restaurant Properties, LLC, or PRP, our wholly-owned subsidiary, acquired 343 restaurant properties from our wholly-owned primary operating subsidiary, OSI Restaurant Partners, LLC, or OSI. Immediately after the purchase, PRP leased the properties back to a subsidiary of OSI (the “Tenant”), under a 15-year market rate master lease agreement (the “Master Lease”). PRP’s sole purpose is to own and lease all its real property to the Tenant and PRP. As of December 31, 2011, approximately 25% of our restaurant sites were leased by Tenant from PRP. The remaining 75% of our restaurant sites were leased by our subsidiaries from third parties.

On March 14, 2012, PRP sold 67 properties to two independent real estate institutional investors and the Tenant entered into new 20-year market-rate leases with the buyers. The leases are net leases that require the Tenant to pay the costs of insurance, taxes and common area operating costs. Also, on March 27, 2012, we completed the CMBS Refinancing associated with the remaining 261 properties. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Transactions” for a description of the CMBS Refinancing. Following the CMBS Refinancing, New PRP continues to own and lease the 261 restaurant properties to the Tenant under the Amended and Restated Master Lease, which has a 15-year term. The Amended and Restated Master Lease is a net lease that requires the Tenant to pay the costs of insurance, taxes and common area operating costs. Following the Sale-Leaseback Transaction, approximately 20% of our restaurant sites are leased by Tenant from New PRP. The remaining 80% of our restaurant sites are leased from third parties, including the buyers of the 67 properties from PRP.

Initial lease expirations for our other leased properties typically range from five to ten years, with the majority of the leases providing for an option to renew for two or more additional terms. All of our leases provide for a minimum annual rent, and many leases call for additional rent based on sales volume at the particular location over specified minimum levels. Generally, the leases are net leases that require us to pay our share of the costs of insurance, taxes and common area operating costs.

As of March 31, 2012, we leased approximately 179,000 and 4,500 square feet of office space in Tampa, Florida for our corporate headquarters and research and development facilities under leases expiring January 31, 2025 and July 15, 2012, respectively.

Trademarks

We regard our “Outback Steakhouse,” “Carrabba’s Italian Grill,” “Bonefish Grill,” “Fleming’s Prime Steakhouse and Wine Bar” and “Roy’s” service marks and our “Bloomin’ Onion” trademark as having significant value and as being important factors in the marketing of our restaurants. We have also obtained trademarks for several of our other menu items and for various advertising slogans. We are aware of names and marks similar to the service marks of ours used by other persons in certain geographic areas in which we have restaurants. However, we believe such uses will not adversely affect us. Our policy is to pursue registration of our marks whenever possible and to oppose vigorously any infringement of our marks.

We license the use of our registered trademarks to franchisees and third parties through franchise arrangements and licenses. The franchise and license arrangements restrict franchisees’ and licensees’ activities with respect to the use of our trademarks, and impose quality control standards in connection with goods and services offered in connection with the trademarks.

Seasonality and Quarterly Results

Our business is subject to seasonal fluctuations. Historically, customer spending patterns for our established restaurants are generally highest in the first quarter of the year and lowest in the third quarter of the year. Additionally, holidays, severe winter weather, hurricanes, thunderstorms and similar conditions may affect sales volumes seasonally in some of our markets. Quarterly results have been and will continue to be significantly affected by general economic conditions, the timing of new restaurant openings and their associated

 

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pre-opening costs, restaurant closures and exit-related costs and impairments of goodwill and property, fixtures and equipment. As a result of these and other factors, our financial results for any given quarter may not be indicative of the results that may be achieved for a full fiscal year.

Legal Proceedings

We are subject to legal proceedings, claims and liabilities, such as liquor liability, sexual harassment and slip and fall cases, which arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of ultimate liability with respect to those actions will not have a material adverse impact on our financial position or results of operations and cash flows. We accrue for loss contingencies that are probable and reasonably estimable. We generally do not accrue for legal costs expected to be incurred with a loss contingency until those services are provided.

 

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MANAGEMENT

Below is a list of the names, ages as of May 15, 2012, positions, and a brief account of the business experience, of the individuals who serve as the executive officers and directors as of the date of this prospectus.

 

Name		Age				Position
Elizabeth A. Smith			49			Chairman of the Board of Directors and Chief Executive Officer
David J. Deno			54			Executive Vice President and Chief Financial Officer
David P. Berg			50			Executive Vice President and President of Outback Steakhouse International
Jody L. Bilney			50			Executive Vice President and Chief Brand Officer
John W. Cooper			59			Executive Vice President and President of Bonefish Grill
Joseph J. Kadow			55			Executive Vice President and Chief Legal Officer
Dirk A. Montgomery			49			Executive Vice President and Chief Value Chain Officer
David A. Pace			53			Executive Vice President and Chief Resources Officer
Steven T. Shlemon			52			Executive Vice President and President of Carrabba’s
Jeffrey S. Smith			49			Executive Vice President and President of Outback Steakhouse
Andrew B. Balson			45			Director
Robert D. Basham			65			Director
J. Michael Chu			54			Director
Philip H. Loughlin			44			Director
John J. Mahoney			61			Director
Mark E. Nunnelly			53			Director
Chris T. Sullivan			64			Director

We anticipate that we will appoint at least one additional director who is not affiliated with us or any of our stockholders within 90 days of the completion of this offering and one additional director who is not affiliated with us or any of our stockholders within one year of the completion of this offering, resulting in a board that includes at least three independent directors.

Elizabeth A. Smith was appointed Chairman of our board of directors effective January 4, 2012 and has served as our Chief Executive Officer and a director since November 2009. From September 2007 to October 2009, Ms. Smith was President of Avon Products, Inc. and was responsible for its worldwide product-to-market processes, infrastructure and systems, including Global Brand Marketing, Global Sales, Global Supply Chain and Global Information Technology. In January 2005, Ms. Smith joined Avon Products as President, Global Brand, and was given the additional role of leading Avon North America in August 2005. From September 1990 to November 2004, Ms. Smith worked in various capacities at Kraft Foods Inc. Ms. Smith is a member of the board of directors of Staples, Inc. The board of directors believes Ms. Smith’s qualifications to serve as Chairman include her role as Chief Executive Officer, her extensive experience with global companies and retail sales, her expertise in corporate strategy development and her knowledge of marketing, sales, supply chain and information technology systems.

David J. Deno has served as our Executive Vice President and Chief Financial Officer since May 2012. Prior to May 2012, Mr. Deno served as Chief Financial Officer of the international division of Best Buy Co. since December 2009. Prior to joining Best Buy Co., Mr. Deno was a consultant with Obelysk Capital from

 

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February 2009 to December 2009. Prior to joining Obelysk Capital, Mr. Deno was a Managing Director of CCMP Capital Advisors, LLC (“CCMP”), a private equity firm from August 2006 to February 2009. While with CCMP, Mr. Deno was the President and then CEO of Quiznos, LLC, an operator of quick service restaurants. Prior to this, he had a 15 year career with YUM! Brands where he served as Chief Financial Officer and later as Chief Operating Officer.

David P. Berg has been the President of Outback Steakhouse International since September 2011 and our Executive Vice President since January 1, 2012. Prior to joining the company, Mr. Berg was Executive Vice President and Chief Operating Officer of GNC Holdings, Inc., a global specialty retailer of vitamins, supplements and nutritional products that operates in 48 countries, from June 2010 to September 2011 and served as Executive Vice President—International from September 2009 to June 2010. Mr. Berg was the Executive Vice President and Chief Operating Officer—Best Buy International for Best Buy Co., Inc. from 2008 to 2009 and served as a Vice President and Senior Vice President of Best Buy from 2002 to 2008. Mr. Berg is a member of the board of directors of Imation Corp.

Jody L. Bilney has served as Chief Brand Officer since January 2008 and our Executive Vice President since January 1, 2012. Ms. Bilney also has responsibility for our R&D function. She was Chief Marketing Officer of Outback Steakhouse from October 2006 to January 2008.

John W. Cooper has been the President of Bonefish Grill since August 2001 and our Executive Vice President since January 1, 2012.

Joseph J. Kadow has been our Executive Vice President and Chief Legal Officer since April 2005 and served as our Senior Vice President and General Counsel from April 1994 to April 2005. Mr. Kadow has also served as Secretary since April 1994.

Dirk A. Montgomery has served as our Chief Value Chain Officer since May 2012, and as an Executive Vice President since January 1, 2012. Mr. Montgomery served as our Chief Financial Officer from November 2005 to May 2012. From 2000 to 2004, Mr. Montgomery was employed as Chief Financial Officer by Express, a subsidiary of Limited Brands, Inc.

David A. Pace has served as our Chief Resources Officer and Executive Vice President since August 2010. Mr. Pace served as a consultant for Egon Zehnder International from 2009 to 2010. From 2002 to 2008, Mr. Pace served as Executive Vice President of Partner Resources for Starbucks Coffee Company. Mr. Pace has also held various positions with other companies prior to his position with Starbucks Coffee Company, including with PepsiCo, Inc. and YUM Brands.

Steven T. Shlemon has been the President of Carrabba’s since April 2000 and our Executive Vice President since January 1, 2012.

Jeffrey S. Smith has served as President of Outback Steakhouse since April 2007 and our Executive Vice President since January 1, 2012. Mr. Smith served as a Vice President of Bonefish Grill from May 2004 to April 2007 and as Regional Vice President—Operations of Outback Steakhouse from January 2002 to May 2004.

Andrew B. Balson has served as a director since June 2007 and is a Managing Director of Bain Capital. Mr. Balson serves on the boards of directors of Domino’s Pizza, Inc., FleetCor Technologies, Inc., and Dunkin’ Brands Group, Inc. as well as a number of other private companies. The board of directors believes Mr. Balson’s qualifications to serve as a member of our board include his extensive experience with global companies, his industry and financial expertise and his years of experience providing strategic advisory services to complex organizations.

 

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Robert D. Basham is one of our Founders and has served as a director since 1991. Mr. Basham was Chief Operating Officer from 1991 until March 2005 when he resigned and became Vice Chairman of the board until June 2007. From 1988 to 1991, Mr. Basham founded OSI and developed Outback Steakhouse restaurants prior to its initial public offering in 1991. The board of directors believes Mr. Basham’s qualifications to serve as a member include his extensive experience in the restaurant industry and his historical perspective of our business and strategic challenges, including his leadership as a director and executive officer for over 20 years.

J. Michael Chu has served as a director since June 2007 and is a Managing Partner of Catterton Partners, a private equity firm he co-founded in 1989. The board of directors believes Mr. Chu’s qualifications to serve as a member include his extensive experience in managing capital intensive operations, international operations, corporate finance and strategic advisory services.

Philip H. Loughlin has served as a director since June 2007 and is a Managing Director of Bain Capital. Prior to joining Bain Capital in 1996, Mr. Loughlin was a consultant at Bain & Company and served in operating roles at Eagle Snacks, Inc. and Norton Company. Mr. Loughlin serves on the boards of directors of Applied Systems, Inc., Ariel Holdings, Ltd., AMC Entertainment, Inc., and RBS WorldPay (Ship Luxo 3 S.a.r.l). The board of directors believes Mr. Loughlin’s qualifications to serve as a member include his strong executive background in corporate strategic development and organizational acumen.

John J. Mahoney has served as a director since May 2012. He serves as Vice Chairman of Staples, Inc., a position he has held since January 2006. Mr. Mahoney also served as Chief Financial Officer of Staples from September 1996 to January 2012. He also served as Executive Vice President, Chief Administrative Officer and Chief Financial Officer of Staples from October 1997 to January 2006, and as Executive Vice President and Chief Financial Officer of Staples from September 1996, when he first joined Staples, to October 1997. Before joining Staples, Mr. Mahoney was a partner with the accounting firm of Ernst & Young LLP where he worked for 20 years, including service in the firm’s National Office Accounting and Auditing group. Mr. Mahoney also serves on the Board of Directors of Chico’s FAS, Inc. and Zipcar, Inc. The board of directors believes Mr. Mahoney’s qualifications to serve as a member include his experience as a financial executive and certified public accountant, with expertise in the retail industry, including accounting, controls, financial reporting, tax, finance, risk management and financial management.

Mark E. Nunnelly has served as a director since June 2007 and is a Managing Director of Bain Capital. Prior to joining Bain Capital in 1989, Mr. Nunnelly was a Vice President of Bain & Company, with experience in the domestic, Asian and European strategy practices. Previously, Mr. Nunnelly worked at Procter & Gamble in product management. Mr. Nunnelly serves on the board of directors of Dunkin’ Brands Group, Inc. The board of directors believes Mr. Nunnelly’s qualifications to serve as a member include his industry experience, his extensive experience with managing capital intensive industry operations and his strong skills in international operations and strategic planning.

Chris T. Sullivan is one of our Founders and has served as a director since 1991. Mr. Sullivan was the Chairman of our board of directors from 1991 until June 2007 and was our Chief Executive Officer from 1991 until March 2005. Mr. Sullivan founded OSI in 1988 and developed Outback Steakhouse restaurants prior to its initial public offering in 1991. Mr. Sullivan serves on the board of directors of Lightyear Network Solutions, Inc., a provider of telecommunications services to businesses and residential consumers. The board of directors believes Mr. Sullivan’s qualifications to serve as a member include his four decades of experience in the restaurant industry and his historical perspective of our business and strategic challenges, including his leadership as a director and executive officer for over 20 years.

Board Structure and Committee Composition

Upon the completion of this offering, we will have an audit committee, a nominating and corporate governance committee and a compensation committee with the composition and responsibilities described below.

 

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Each committee will operate under a charter that will be approved by our board of directors prior to completion of the offering. The members of each committee are appointed by and serve at the pleasure of the board of directors. In addition, from time to time, special committees may be established under the direction of the board of directors when necessary to address specific issues.

We intend to avail ourselves of the “controlled company” exception under Nasdaq rules. As a result, we will not have a majority of independent directors, and our nominating and corporate governance committee and compensation committee will not be composed entirely of independent directors as defined under                  rules. The controlled company exception does not modify the independence requirements for the audit committee, and we intend to comply with the requirements of the Sarbanes-Oxley Act and Nasdaq rules with respect to the audit committee. These rules require that our audit committee be composed of at least three members, one of whom must be independent on the date of listing on Nasdaq, a majority of whom must be independent within 90 days of the effective date of the registration statement containing this prospectus, and all of whom must be independent within one year of the effective date of the registration statement containing this prospectus.

Audit Committee

The purpose of the audit committee will be set forth in the audit committee charter and will be primarily to assist the board in overseeing:

 

•

the integrity of our financial statements, our financial reporting process and our systems of internal accounting and financial controls;

 

•

our compliance with legal and regulatory requirements;

 

•

the independent auditor’s qualifications and independence;

 

•

the evaluation of enterprise risk issues; and

 

•

the performance of our internal audit function and independent auditor.

Upon completion of this offering, the audit committee will consist of Messrs. Chu, Loughlin and Mahoney. Our board of directors has determined that Mr. Mahoney is an independent director and an “audit committee financial expert” within the meaning of Item 407 of Regulation S-K. Prior to the completion of this offering, our board of directors will adopt a written charter under which the audit committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and Nasdaq, will be available on our website.

Nominating and Corporate Governance Committee

The purpose of the nominating and corporate governance committee will be set forth in the nominating and corporate governance committee charter and will be primarily to:

 

•

identify individuals qualified to become members of our board of directors, and to recommend to our board of directors the director nominees for each annual meeting of stockholders or to otherwise fill vacancies on the board;

 

•

review and recommend to our board of directors committee structure, membership and operations;

 

•

recommend to our board of directors the persons to serve on each committee and a chairman for such committee;

 

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•

develop and recommend to our board of directors a set of corporate governance guidelines applicable to us; and

 

•

lead our board of directors in its annual review of its performance.

Upon completion of this offering, the nominating and corporate governance committee will consist of                     ,                      and                     . Prior to the completion of this offering, our board of directors will adopt a written charter under which the nominating and corporate governance committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and Nasdaq, will be available on our website.

Compensation Committee

The purpose of the compensation committee will be set forth in the compensation committee charter and will be primarily to:

 

•

oversee our executive compensation policies and practices;

 

•

discharge the responsibilities of our board of directors relating to executive compensation by determining and approving the compensation of our Chief Executive Officer and our other executive officers and reviewing and approving any compensation and employee benefit plans, policies and programs, and exercising discretion in the administration of such programs; and

 

•

produce, approve and recommend to our board of directors for its approval reports on compensation matters required to be included in our annual proxy statement or annual report, in accordance with all applicable rules and regulations.

Upon completion of this offering, the compensation committee will consist of Messrs. Balson, Chu and Sullivan. Prior to the completion of this offering, our board of directors will adopt a written charter under which the compensation committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and Nasdaq, will be available on our website.

Board Leadership Structure

The board of directors does not have a formal policy on whether the roles of Chief Executive Officer and chairman of the board of directors should be separate. However, Elizabeth A. Smith currently serves as both Chief Executive Officer and chairman of the board of directors. The board of directors has considered its leadership structure and believes at this time that the company and its stockholders are best served by having one person serve both positions. Combining the roles fosters accountability, effective decision-making and alignment between interests of the board of directors and management. Ms. Smith also is able to use the in-depth focus and perspective gained in her executive function to assist our board of directors in addressing both internal and external issues affecting the company. The board of directors expects to periodically review its leadership structure to ensure that it continues to meet the company’s needs.

Board’s Role in Risk Oversight

The entire board of directors is engaged in risk management oversight. At the present time, the board of directors has not established a separate committee to facilitate its risk oversight responsibilities. The board of directors will continue to monitor and assess whether such a committee would be appropriate. The audit committee assists the board of directors in its oversight of our risk management and the process established to identify, measure, monitor, and manage risks, in particular major financial risks. The board of directors will receive regular reports from management, as well as from the audit committee, regarding relevant risks and the actions taken by management to address those risks.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Following this offering, a current copy of the code, and information regarding any amendment to or waiver from its provisions, will be posted on our website.

 

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This Compensation Discussion and Analysis discusses the objectives and design of our executive compensation program. It includes a description of the compensation provided for 2011 to our executive officers who are named in the Summary Compensation Table under “Executive Compensation.” Our “named executive officers” for 2011 were:

 

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Elizabeth A. Smith, Chief Executive Officer

 

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Dirk A. Montgomery, Chief Financial Officer

 

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David P. Berg, Executive Vice President and President of Outback Steakhouse International

 

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Jody L. Bilney, Executive Vice President and Chief Brand Officer

 

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Joseph J. Kadow, Executive Vice President and Chief Legal Officer

Overview of Compensation Philosophy and 2011 Performance

For 2011, the compensation committee of the board of directors of OSI was responsible for setting the compensation of our executive officers and certain other corporate executives. Following the offering, executive compensation will be established by the compensation committee of the board of directors of Bloomin’ Brands. The compensation committee of OSI and Bloomin’ Brands, which we refer to in this prospectus collectively as the “compensation committee,” consist of the same members: Messrs. Balson, Chu and Sullivan.

The compensation committee’s primary objective is to establish an executive compensation program that will enable us to attract and retain qualified executives in today’s competitive market, that motivates and rewards them to achieve annual company-wide and concept-specific performance goals and that aligns management, employee and shareholder interests over the long-term. Our compensation program is designed to provide a total competitive compensation package that aligns the interests of executive officers and our shareholders by tying a significant portion of an executive’s cash compensation to the achievement of annual performance goals and long-term incentive compensation to growth in the value of the company.

We achieved strong financial performance in 2011, and we believe that our named executive officers were instrumental in helping us achieve these results. Highlights of our 2011 performance include the following:

 

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an increase in consolidated revenues of 5.9% to $3.8 billion, driven primarily by 4.9% growth in combined comparable restaurant sales at existing domestic company-owned core restaurants;

 

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15 system-wide restaurant openings across most brands (of which seven were company-owned, five were joint ventures and three were franchises), and 194 Outback Steakhouse remodels in 2011;

 

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productivity and cost management initiatives that we estimate allowed us to save over $50 million in the aggregate in 2011; and

 

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generation of income from operations of $213.5 million in 2011 compared to $168.9 million in 2010, primarily attributable to the increase in consolidated revenues described above and a $33.3 million payment received in November 2011 from T-Bird in connection with a settlement agreement that satisfied all outstanding litigation.

This strong financial performance led to significant payments to our named executive officers under our annual cash incentive plan as described under “—Compensation Elements—Performance-Based Cash Incentives” below.

 

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Compensation Setting Process

Our compensation committee oversees our executive compensation program and is responsible for approving the type and amount of compensation paid to our named executive officers. The compensation committee approves employment agreements with our executive officers and administers our equity compensation plan. The compensation committee also has overall responsibility for establishing, implementing and monitoring the executive compensation program for our corporate level executives other than our named executive officers. Salary and target bonus amounts, as well as stock option awards for other corporate level executives, are recommended by management to the compensation committee for its consideration and approval.

Each of our named executive officers has an employment agreement with us that was entered into at the time of the Merger or, if later, at the time of hire. Each employment agreement establishes, among other things, the executive’s minimum base salary and minimum target bonus, measured as a percentage of base salary. Each year since the Merger, the compensation committee has reviewed with management whether any changes to base salary or bonus targets of our named executive officers were appropriate. No changes were made to the base salaries or bonus targets of our named executive officers for 2011.

The compensation committee did not, for compensation paid in 2011, use a compensation consultant or formally obtain competitive data, except with respect to the stock option grants described under “—Compensation Elements—Long-Term Stock Incentives.”

Compensation Elements

The principal components of compensation for our named executive officers consist of the following:

 

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base salary;

 

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performance-based cash incentives;

 

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for our Chief Executive Officer, retention-based cash incentives;

 

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long-term stock incentives, generally in the form of stock options;

 

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other benefits and perquisites; and

 

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change in control and termination benefits.

Mix of Total Compensation

A significant percentage of cash compensation and total compensation for our named executive officers is allocated to performance-based compensation. Performance-based cash incentives are targeted to approach or exceed base salaries so that a meaningful percentage of their annual cash compensation is dependent on our performance. Long-term stock incentives in the form of stock options supplement cash compensation and provide value to our executives when the company’s equity value increases. Generally, our executives are only able to realize value from stock options upon a liquidity event such as a change in control or initial public offering. Some of our named executive officers hold restricted stock that was granted to them at the time of the Merger. Since the Merger, the compensation committee has not used restricted stock as a form of compensation for our executive officers, but the compensation committee may re-evaluate its use in the future. In evaluating annual compensation of our named executive officers and other members of management, the compensation committee considers previous equity grants.

Base Salary

Base salaries are established pursuant to employment agreements with each of our named executive officers and generally reflect demonstrated experience, skills and competencies. Base salary levels of our named

 

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executive officers may be increased as part of the annual performance review process, upon an executive officer’s promotion or other change in job responsibilities or if necessary to address internal or external equity issues as recommended by management. Base salaries of the named executive officers are listed in the table below.

 

Named Executive Officer		2011 Base Salary				Change From 2010
Elizabeth A. Smith		$	1,000,000				—
Dirk A. Montgomery			472,000				—
David P. Berg (1)			450,000				N/A
Jody L. Bilney			400,000				—
Joseph J. Kadow			497,640				—

 

(1)	Mr. Berg was hired as President of Outback International effective September 12, 2011.

Performance-Based Cash Incentives

Cash incentives are awarded to all of our executive officers under performance-based cash incentive plans. These awards are payable based on the achievement of annually established financial objectives, which are intended to provide incentives and rewards for achievement of the company’s annual financial goals for corporate executive officers and a combination of company goals and concept goals for our executive officers who have operating responsibility at one of our concepts. The design of the bonus plans reflects the compensation committee’s belief that a significant portion of annual compensation for each named executive officer should be based on the financial performance of the company.

Annual performance-based cash incentive targets, measured as a percentage of base salary, are set forth in each named executive officer’s employment agreement and are listed in the table below. The compensation committee believes, based on its own analysis and experience in the restaurant industry, that the total potential annual cash compensation of the named executive officers is competitive with the marketplace. The following table presents the 2011 annual performance-based cash incentive target for each named executive officer, as a percentage of his or her base salary.

 

Named Executive Officer		2011 Annual Performance- Based Cash Incentive Target, as a Percentage of Base Salary				Change From 2010
Elizabeth A. Smith			85	%		—
Dirk A. Montgomery			150	%		—
David P. Berg (1)			85	%		N/A
Jody L. Bilney			100	%		—
Joseph J. Kadow			100	%		—

 

(1)	Mr. Berg was hired as President of Outback International effective September 12, 2011. His 2011 bonus was guaranteed at his targeted amount.

For 2011, the annual performance-based cash incentive plan for our named executive officers, except for Mr. Berg (the “2011 Corporate Bonus Plan”), was based on two equally weighted measures of OSI’s 2011 financial performance: Adjusted EBITDA (the “Adjusted EBITDA Bonus”) and comparable sales performance targets (the “Comparable Sales Bonus”). Under each of these measures, each named executive officer could earn up to 75% of such executive’s annual cash incentive target, with the aggregate maximum payout for each under the 2011 Corporate Bonus Plan capped at 150% of the executive’s annual cash incentive target.

For purposes of the 2011 Corporate Bonus Plan, “OSI Adjusted EBITDA” was calculated by adjusting OSI’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) to exclude certain stock-based compensation expenses, non-cash expenses, and significant non-recurring items. OSI Adjusted EBITDA is a

 

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measure established for the 2011 Corporate Bonus Plan and is different than Adjusted EBITDA for Bloomin’ Brands used elsewhere in this prospectus. The OSI Adjusted EBITDA Bonus was payable on a sliding scale of OSI Adjusted EBITDA ranging from $365.0 million (representing payout at 15% of target) to a maximum payout at OSI Adjusted EBITDA of $435.0 million (representing payout at 75% of target), with OSI Adjusted EBITDA of $395.0 million representing payout at 50% of target. The Comparable Sales Bonus was based on the company’s 2011 comparable sales performance relative to the company’s 2011 comparable sales targets. The Comparable Sales Bonus was payable on a sliding scale of comparable sales ranging from 0% (representing payment at 25% of target) to a maximum payout at 4.1% (representing payout at 75% of target), with 2.1% representing payment at 50% of target.

OSI Adjusted EBITDA and comparable sales performance payment levels were established by the compensation committee at the beginning of the year based on consideration of company initiatives as well as industry and general economic conditions and trends, among other considerations. The actual OSI Adjusted EBITDA Bonus payout to our named executive officers under the 2011 Corporate Bonus Plan was at 65.9% of target which resulted from OSI Adjusted EBITDA of $424.0 million. The actual Comparable Sales Bonus payout to our named executive officers was at 75% of target, which resulted from company-wide comparable sales performance of 5.7%. Accordingly, the total payouts to our named executive officers under the 2011 Corporate Bonus Plan, as reported in the Summary Compensation Table, were 140.9% of their bonus targets.

For 2011, the annual performance-based cash incentive plan for Mr. Berg, President of Outback International (the “2011 International Bonus Plan”), was based 50% on the 2011 Corporate Business Plan, as described above, and 50% on a bonus plan structured much like the 2011 Corporate Bonus Plan, but based on the results of Outback International. Under each of these measures, Mr. Berg could earn up to 75% of his annual cash incentive target, with the aggregate maximum payout capped at 150% of his annual cash incentive target. The Outback International component was based on two equally weighted measures of Outback International’s performance: 2011 adjusted EBITDA for Outback International (“International Adjusted EBITDA”), which was calculated in a manner similar to OSI Adjusted EBITDA, and comparable sales performance for Outback International relative to 2011 comparable sales targets (the “International Comparable Sales”). The bonus based on International Adjusted EBITDA was payable on a sliding scale of International Adjusted EBITDA ranging from $53.7 million (representing payout at 7.5% of target) to a maximum payout at International Adjusted EBITDA of $64.7 million (representing payout at 37.5% of target), with International Adjusted EBITDA of $58.7 million representing payout at target. The bonus based on International Comparable Sales was payable on a sliding scale of International Comparable Sales ranging from 1% (representing payout at 12.5% of target) to a maximum payout at 5% (representing payout at 37.5% of target), with 3% representing payment at 25% of target. For 2011, Mr. Berg’s bonus was guaranteed at target pursuant to his employment agreement. The actual payment to Mr. Berg for 2011 was 145.4% of his target bonus based on the results of the 2011 Corporate Bonus Plan, International Adjusted EBITDA of $72.0 million and International Comparable Sales of 14.9%.

In addition to her participation in the 2011 Corporate Bonus Plan, Ms. Smith’s cash bonus compensation includes two separate bonus arrangements: the Retention Bonus and the Incentive Bonus. The Retention Bonus provides for an aggregate bonus opportunity of $12.0 million, which is payable to Ms. Smith over a four-year period that began in 2010 in installments of $1.8 million, $3.0 million and two installments of $3.6 million, generally subject to her remaining continuously employed through the applicable payment date, or, if sooner to occur, within 60 days of the completion of an initial public offering in 2012. The Retention Bonus is structured with larger payments scheduled for the later payment dates in order to provide a greater incentive to Ms. Smith to remain employed through the full term of her employment agreement. The Incentive Bonus provides for an aggregate bonus opportunity of up to $15.2 million. The Incentive Bonus will generally only be paid to Ms. Smith if we (a) complete an initial public offering in 2012 or (b) experience a change in control and if certain performance targets are met relating to the value of our common stock at the time of the Qualifying Liquidity Event (each, a “Qualifying Liquidity Event”). This offering, if it is completed, will be a Qualifying Liquidity Event.

 

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Performance-based cash incentives earned by the named executive officers are reflected in the “Executive Compensation—Summary Compensation Table” under the heading “Non-Equity Incentive Plan Compensation.” Threshold, target and maximum payments for the 2011 Bonus Plan are reflected in “Executive Compensation—Grants of Plan-Based Awards for Fiscal 2011.” The installments paid with respect to Ms. Smith’s Retention Bonus are reflected in “Executive Compensation—Summary Compensation Table” under the heading “Bonus.”

Long-Term Stock Incentives

Long-term stock incentives are designed to align a significant portion of total compensation with our long-term goal of increasing the value of the company. At the time of the Merger, the long-term stock incentive component of the compensation package consisted of restricted stock and stock options. Since that time, long-term stock incentive awards have consisted solely of stock options and have been primarily granted to newly hired or promoted executive officers.

Stock options are designed to reward longer-term performance, facilitate equity ownership, deter recruitment of our key personnel by competitors and others and further align the interests of our executives with those of our stockholders. Stock option awards under the 2007 Incentive Plan have generally been limited to our executive officers and other key employees and managers who are in a position to contribute substantially to our growth and success.

Shares acquired upon the exercise of stock options under the 2007 Incentive Plan are generally subject to a stockholder’s agreement that contains a management call option that allows us to repurchase all shares purchased through exercise of stock options upon termination of employment at any time prior to the earlier of an initial public offering or a change in control. If an employee’s termination of employment is a result of death or disability, by us other than for Cause or by the employee for Good Reason (see “Executive Compensation—Potential Payments Upon Termination or Change in Control” for a summary of these definitions), we may repurchase exercised stock under this call option at fair market value. If an employee’s termination of employment is by us for Cause or by the employee without Good Reason, we may repurchase the stock under this call provision for the lesser of the exercise price or fair market value. Additionally, the holder of shares acquired upon the exercise of stock options is prohibited from transferring the shares to any person, subject to narrow exceptions, and should a permitted transfer occur, the transferred shares remain subject to the management call option. As a result of the transfer restrictions and call option, we do not record compensation expense for stock options that contain the call option since employees cannot realize monetary benefit from the options or any shares acquired upon the exercise of the options unless the employee is employed at the time of an initial public offering or a change in control.

In November 2009, Ms. Smith received a stock option grant that contained a modified form of the management call option for one quarter of the option shares. In accordance with accounting guidance for stock-based compensation, this form of the management call option does not preclude us from recording compensation expense during the vesting period. Compensation expense is not recorded for the remaining three quarters of the option shares since they are not considered vested from an accounting standpoint until the occurrence of a Qualifying Liquidity Event, as defined in Ms. Smith’s stock option agreement.

On July 1, 2011, Ms. Smith was granted an option to purchase 550,000 shares of our common stock under the 2007 Incentive Plan in accordance with the terms of her employment agreement. This option has an exercise price of $10.03 per share and is subject to the modified form of the management call option that applied to one quarter of her 2009 grant. In accordance with accounting for stock-based compensation, this modified form of the call option does not preclude us from recording compensation expense during the service period. These options will vest and compensation expense will be recorded in equal amounts over a five-year period on each anniversary of the grant date, contingent upon her continued employment with us.

 

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Mr. Berg was granted an option to purchase 250,000 shares of our common stock under the 2007 Incentive Plan in connection with his hiring in September 2011. This option has an exercise price of $10.03 per share, and the shares are subject to the management call option and transfer restrictions. As a result of these provisions, among other considerations, compensation expense will not be recorded for his grant. The shares subject to the option will vest in equal amounts over a five-year period on each anniversary of his employment start date, contingent upon his continued employment with us, and any unvested portion will be forfeited upon termination of his employment.

On December 9, 2011, Mr. Kadow and Ms. Bilney were granted an option to purchase 134,250 and 200,800 shares of our common stock, respectively, under the 2007 Incentive Plan as one-time market adjustments based on the recommendation of OSI’s compensation consultant after a review of total compensation of the officers. These options have an exercise price of $10.03 per share, and the shares are subject to the management call option and transfer restrictions. As a result of these provisions, among other considerations, compensation expense has not been recorded for these grants. The options will vest in equal amounts over a five-year period on each anniversary of the grant date, contingent upon continued employment with us, and any unvested portion will be forfeited upon termination of employment.

See “Executive Compensation—Grants of Plan-Based Awards for Fiscal 2011” for additional information regarding 2011 stock option grants to the named executive officers.

Other Benefits and Perquisites

Under their employment agreements, the named executive officers are each entitled to receive certain perquisites and personal benefits. We believe these benefits are reasonable and consistent with our overall compensation program and better enable us to attract and retain qualified employees for key positions. Such benefits include complimentary food at our restaurant concepts (limited to $100 per visit and a quarterly maximum of $1,000), automobile allowances, life insurance, medical insurance, annual physical examinations, vacation, personal use of corporate aircraft for our Chief Executive Officer, and reimbursement for income taxes on certain taxable benefits. In connection with Ms. Smith’s commencement of employment and transition and relocation to Florida, we agreed to reimburse her for certain costs related to her relocation, including travel and moving expenses and reimbursement of taxes for these amounts. The compensation committee periodically reviews the levels of perquisites and other personal benefits provided to the named executive officers.

We own endorsement split dollar life insurance policies with a death benefit of approximately $5.0 million for each of Messrs. Montgomery and Kadow, which were acquired in 2006. We are the beneficiary of the policies to the extent of premiums paid or the cash value, whichever is greater, with the balance being paid to a personal beneficiary designated by the executive. The executive’s employment agreements provide that we may not terminate the arrangements regardless of continued employment, except that we may terminate Mr. Montgomery’s agreement prior to January 1, 2013.

Effective October 1, 2007, we implemented a deferred compensation plan for our highly compensated employees who are not eligible to participate in the OSI Restaurant Partners, LLC Salaried Employees 401(k) Plan and Trust. The deferred compensation plan allows highly compensated employees to contribute from 5% to 90% of their base salary and up to 100% of their cash bonus on a pre-tax basis to an investment account consisting of various investment fund options. The plan permits us to make a discretionary contribution to the plan on behalf of an eligible employee from time to time; however, no such discretionary contribution has been made to date. In the event of the employee’s termination of employment other than by reason of disability or death, the employee is entitled to receive the full balance in the account in a single lump sum unless the employee has completed either five years of participation or ten years of service as of the date of termination of employment, in which case, the account will be paid as elected by the employee in equal annual installments over a specified period of two to 15 years. If the employee’s employment terminates due to death or disability prior to commencement of benefits, we will pay to the employee (or the employee’s beneficiary if applicable) the full balance in the account in a single lump sum.

 

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The amounts attributable to perquisites and other personal benefits provided to the named executive officers are reflected in the “Executive Compensation—Summary Compensation Table” under the heading “All Other Compensation.”

Change in Control and Termination Benefits

Each of the named executive officers is party to an employment agreement and other arrangements with the company that may entitle him or her to payments or benefits upon a termination of employment and/or a change in control. For a summary of these agreements and arrangements, see “Executive Compensation—Potential Payments Upon Termination or Change in Control—Summary of Employment Agreements and Other Compensatory Arrangements.”

Compensation Changes for 2012

In the fourth quarter of 2011, management engaged the consulting firm Radford, or the compensation consultant, to provide comparative market data and recommendations in connection with our analysis of our cash and equity compensation practices for executive officers. As a result of this analysis, the compensation committee granted stock options to two named executive officers as described above and made market-based adjustments to base salaries and bonus targets. For 2012, Ms. Smith’s base salary was reduced by $75,000 to $925,000, Ms. Bilney’s base salary was increased by $50,000 to $450,000 and Mr. Kadow’s base salary was increased by $2,360 to $500,000. In addition, Ms. Smith’s bonus target was increased from 85% to 100% of base salary and the bonus targets for all of the other named executive officers are now 85% of base salary.

The comparative market data used by the compensation committee included a combination of published survey data, proprietary Aon survey data and data from a peer group of the following companies in the restaurant, hotel and retail industries that have annual revenues and numbers of employees roughly comparable to us:

 

Abercrombie & Fitch Co.		Limited Brands, Inc.
American Eagle Outfitters, Inc.		MGM Resorts International
Bed Bath & Beyond Inc.		PetSmart, Inc.
Big Lots, Inc.		Ross Stores, Inc.
Bob Evans Farms, Inc.		Royal Caribbean Cruises Ltd.
Brinker International, Inc.		Ruby Tuesday, Inc.
Cracker Barrel Old Country Store, Inc.		Starbucks Corporation
Darden Restaurants, Inc.		Starwoods Hotels & Resorts Worldwide, Inc.
Dollar Tree, Inc.		Texas Roadhouse, Inc.
Family Dollar Stores, Inc.		The Cheesecake Factory Incorporated
Foot Locker, Inc.		The Wendy’s Company
GameStop Corp.		V.F. Corporation
Hyatt Hotels Corporation		YUM! Brands, Inc.
Las Vegas Sands Corp.

Our annual performance-based cash incentive plan for 2012 (the “2012 Bonus Plan”) will be structured substantially the same as the 2011 program based on achievement of company-wide or concept adjusted EBITDA and comparable sales targets. However, for 2012, executives’ payout under the 2012 Bonus Plan will be subject to reduction (but not increase) based on individual performance as determined by the compensation committee.

In February 2012, the compensation committee retained Radford as its compensation consultant. Following the offering, the compensation committee expects to obtain comparative market data each year as a basis for making recommendations regarding the various elements of compensation provided to our executive officers.

 

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Tax and Accounting Implications

In making decisions about executive compensation, the compensation committee took into account certain tax and accounting considerations, including Sections 409A and 280G of the Internal Revenue Code. As neither OSI’s nor our equity securities were publicly held, Section 162(m) of the Internal Revenue Code did not apply to the company. Additionally, we account for stock-based payments in accordance with the requirements of Accounting Standards Codification No. 718, “Compensation—Stock Compensation.” Following this offering, at such time as we are subject to the deduction limitations of Section 162(m), we expect that our compensation committee will seek to qualify the variable compensation paid to our named executive officers for an exemption from the deductibility limitations of Section 162(m). However, our compensation committee may, in its judgment, authorize compensation payments that do not comply with the exemptions in Section 162(m) when it believes that such payments are appropriate to attract and retain executive talent.

Our compensation committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

Compensation Committee Interlocks and Insider Participation

The compensation committee consists of Andrew Balson, J. Michael Chu and Chris T. Sullivan. Mr. Balson is our director and an officer and a Managing Director of Bain Capital. Affiliates of Bain Capital are our stockholders. Mr. Chu is our director and an officer and a Managing Partner and Co-Founder of Catterton Partners. Catterton Partners and its affiliates are our stockholders. Mr. Sullivan is one of our Founders, our former Chief Executive Officer, one of our stockholders and our director.

Upon completion of the Merger, we entered into the management agreement with Kangaroo Management Company I, LLC, or the management company, whose members are the Founders and entities affiliated with Bain Capital and Catterton. In accordance with the terms of the management agreement, the management company provides management services to us until the tenth anniversary of the completion of the Merger, with one-year extensions thereafter until terminated. The management company receives an aggregate annual management fee equal to $9.1 million and reimbursement for out-of-pocket and other reimbursable expenses incurred by it, its members, or their respective affiliates in connection with the provision of services pursuant to the agreement. Management fees, including out-of-pocket and other reimbursable expenses, of $9.4 million for the year ended December 31, 2011 were included in general and administrative expenses in our Consolidated Statement of Operations. Of this amount, $3.2 million was paid to Bain Capital, $0.6 million was paid to Catterton, $2.2 million was paid to Mr. Sullivan and $3.4 million was paid to the other Founders who are not members of the compensation committee. The management agreement includes customary exculpation and indemnification provisions in favor of the management company, Bain Capital and Catterton and their respective affiliates. The management agreement may be terminated by us, Bain Capital and Catterton at any time and will terminate automatically upon an initial public offering or a change in control. In connection with the termination of the management agreement upon completion of this offering, we will pay an $8.0 million termination fee to the management company within 60 days of completion of the offering, but no later than December 31, 2012. This termination fee will be in addition to the pro-rated periodic fee as provided in the agreement.

Compensation-Related Risk

As part of its oversight and administration of our compensation programs, the compensation committee considered the impact of our compensation policies and programs for our employees, including our executive officers, to determine whether they present a significant risk to the company or encourage excessive risk taking by our employees. Based on its review, the compensation committee concluded that our compensation programs do not encourage excessive risk taking and are not reasonably likely to have a material adverse effect on the company.

 

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes compensation for the three-year period ending December 31, 2011 earned by our principal executive officer, our principal financial officer and our three other most highly compensated executive officers. These individuals are referred to as our named executive officers.

 

Named Executive Officer		Year		Salary				Bonus (1)				Stock Awards (2)				Option Awards (2)						Non-Equity Incentive Plan Compensation (3)				All Other Compensation (4)				Total
Elizabeth A. Smith		2011		$	1,000,000			$	3,000,000				—			$	3,041,066					$	1,197,650			$	308,523			$	8,547,239
Chief Executive Officer		2010			1,000,000				1,800,000				—				—						1,275,000				793,998				4,868,998
(Principal Executive Officer)		2009			115,385				107,123				—				4,447,875			(5)			—				150,235				4,820,618
Dirk A. Montgomery (7)		2011			472,000				—				—				—						997,572				3,552				1,473,124
Chief Financial Officer		2010			472,000				—				—				122,546			(6)			1,062,000				3,349				1,659,895
(Principal Financial and		2009			472,000				212,400				—				—						1,188,024				3,100				1,875,524
Accounting Officer)
David P. Berg (8)		2011			135,616				550,000				—				1,382,303						556,155				23,104				2,647,178
President of Outback Steakhouse
International, LP
Jody L. Bilney		2011			400,000				217,451				—				1,094,064						563,600				4,200				2,279,315
Executive Vice President		2010			400,000				214,203				—				32,023			(6)			600,000				4,200				1,250,426
and Chief Brand Officer		2009			400,000				336,536				—				—						671,200				4,200				1,411,936
Joseph J. Kadow		2011			497,640				—				—				731,465						701,175				9,620				1,939,900
Executive Vice President		2010			497,640				—				—				256,035			(6)			746,460				9,315				1,509,450
and Chief Legal Officer		2009			497,640				149,292				—				—						835,040				9,188				1,491,160

 

(1)

Bonus amounts consist of: (i) for Ms. Smith, the 2011 and 2010 bonuses are amounts paid under her Retention Bonus and the 2009 bonus is her target annual bonus, pro-rated for the number of days she was employed during 2009, (ii) for Ms. Bilney, the 2011 and 2010 bonuses, and part of her 2009 bonus, reflect cash paid for the vesting of a portion of her restricted stock that was granted at the time of her employment and then converted at the time of the Merger into the right to receive cash on a deferred basis, (iii) for Mr. Berg, the 2011 bonus represents $550,000 paid in 2011 as part of a one-time signing bonus of $700,000 per the terms of his employment agreement and (iv) for all named executive officers other than Ms. Smith, the 2009 bonus amounts represent a discretionary bonus at an amount equal to 30% of the executive’s annual cash incentive target.

(2)

Represents the aggregate grant date fair value of stock option awards. The stock option awards were valued at fair value on the grant date using the Black-Scholes option pricing model. See Note 3, “Stock-Based and Deferred Compensation Plans,” of our Notes to Consolidated Financial Statements for the year ended December 31, 2011 for the assumptions made to value the stock option awards.

(3)

Non-equity incentive plan compensation represents amounts earned under the 2011 and 2010 Annual Bonus Plans and the financial and OSI plan bonuses in 2009. The financial and OSI plan bonus amounts earned in 2009 were based on the achievement of specified, pre-determined levels of Adjusted EBITDA relative to a percentage of the named executive officer’s bonus potential.

(4)	The table below sets forth the 2011 components of “All Other Compensation.”

(5)

Aggregate grant date fair value in 2009 relates only to a portion of Ms. Smith’s stock options awarded that year. See the “—Outstanding Equity Awards at Fiscal Year-End” table, including footnote 4 thereto. No compensation expense is included in the Summary Compensation Table with respect to the remainder of the stock options granted to her in 2009 since the performance conditions are not considered probable of occurrence.

 

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(6)

Represents the aggregate exchange date incremental fair value of stock option awards computed in accordance with accounting guidance for stock-based compensation. The stock option awards were valued at fair value on the exchange date using the Black-Scholes option pricing model. See Note 2 to the “—Outstanding Equity Awards at Fiscal Year-End” table for a description of the option exchange program.

(7)	Effective in May 2012, Mr. Montgomery is no longer Chief Financial Officer and became Chief Value Chain Officer.

(8)	Mr. Berg commenced employment effective September 12, 2011.

All Other Compensation

 

Named Executive Officer		Year				Life Insurance				Auto				Airplane (1)				Reimbursable Other Expenses (2)				Total
Elizabeth A. Smith			2011			$	—			$	—			$	293,789			$	14,734			$	308,523
Dirk A. Montgomery			2011				3,552				—				—				—				3,552
David P. Berg			2011				—				—				—				23,104				23,104
Jody L. Bilney			2011				—				4,200				—				—				4,200
Joseph J. Kadow			2011				4,820				4,800				—				—				9,620

 

(1)

The amount in this column reflects the aggregate incremental cost to the company of personal use of the company aircraft based on an hourly charge, determined to include the cost of fuel and other variable costs associated with the particular flights. Since the company’s aircraft are primarily for business travel, the company does not include the fixed costs that do not change based on usage, including the cost to purchase the aircraft and the cost of maintenance not related to specific trips. The amount for Ms. Smith includes the reimbursement of a “gross-up” for the payment of taxes ($0.1 million). Reimbursement for tax gross-up was capped at 50 hours for Ms. Smith in 2011.

(2)	The amounts paid were for relocation-related costs and include the reimbursement of a “gross-up” for the payment of taxes: Ms. Smith ($3,897) and Mr. Berg ($5,185).

Grants of Plan-Based Awards for Fiscal 2011

Stock Options and Non-Equity Incentives

The following table summarizes for fiscal 2011 the non-equity incentive plan awards under the 2011 Bonus Plan as well as long-term stock incentive awards in the form of stock options:

 

						Estimated Future Payouts Under Non-Equity Incentive Plan Awards												Estimated Future Payouts Under Equity Incentive Plan Awards												All Other Option Awards Number of Securities Underlying Options (#)				Exercise Price of Option Awards ($/Sh)				Grant Date Fair Value of Option Awards ($)
Named Executive Officer		Grant Date				Threshold ($)				Target ($)				Maximum ($)				Threshold (#)				Target (#)				Maximum (#)
Elizabeth A. Smith
Annual Bonus Plan (1)			—			$	340,000			$	850,000			$	1,275,000				—				—				—				—			$	—			$	—
Stock Options (2)			7/1/2011				—				—				—				—				—				—				550,000				10.03				3,041,066
Dirk A. Montgomery
Annual Bonus Plan (1)			—				283,200				708,000				1,062,000				—				—				—				—				—				—
David P. Berg
Annual Bonus Plan (1)			—				153,000				382,500				573,750				—				—				—				—				—				—
Stock Options (2)			7/1/2011				—				—				—				—				—				—				250,000				10.03				1,382,303
Jody L. Bilney
Annual Bonus Plan (1)			—				160,000				400,000				600,000				—				—				—				—				—				—
Stock Options (2)			12/9/2011				—				—				—				—				—				—				200,800				10.03				1,094,064
Joseph J. Kadow
Annual Bonus Plan (1)			—				199,056				497,640				746,460				—				—				—				—				—				—
Stock Options (2)			12/9/2011				—				—				—				—				—				—				134,250				10.03				731,465

 

(1)	Amounts represent performance-based cash incentive awards under the 2011 Bonus Plan.

 

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(2)

Ms. Smith was granted an option to purchase 550,000 shares of common stock under the 2007 Incentive Plan in accordance with the terms of her employment agreement. These stock options have an exercise price of $10.03 per share and are subject to a modified form of the management call option. In accordance with accounting for stock-based compensation, this modified form of the call option does not preclude us from recording compensation expense during the service period. These shares will vest and compensation expense will be recorded in equal amounts over a five-year period on each anniversary of the grant date, contingent upon her continued employment with us. Mr. Kadow and Ms. Bilney were granted an option to purchase 134,250 and 200,800 shares of common stock, respectively, under the 2007 Incentive Plan as one-time market adjustments to their total compensation. Their stock options have an exercise price of $10.03 per share and vest 20% on each anniversary of the grant date, contingent upon their continued employment with us. Compensation expense will not be recorded for their grants described above as, among other considerations, they are subject to the management call option and transfer restrictions. Mr. Berg was granted an option to purchase 250,000 shares of common stock under the 2007 Incentive Plan in connection with his hiring. His stock options have an exercise price of $10.03 per share and vest 20% on each anniversary of his employment start date, contingent upon his continued employment with us. He forfeits any portion of an option that is unvested upon his termination date. Compensation expense will not be recorded for his grant as, among other considerations, it is subject to the management call option and transfer restrictions.

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes outstanding stock options and unvested restricted stock awards for each named executive officer as of December 31, 2011. The holder of restricted stock has the right to vote and receive dividends with respect to the shares, but may not transfer or otherwise dispose of the shares. The unvested portion of each restricted stock award is subject to forfeiture if the holder’s employment terminates prior to vesting.

 

		Options Awards																				Stock Awards
		Number of Securities Underlying Unexercised Options (#)								Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price Per Share (2)				Option Expiration Date				Shares of Restricted Stock Awards That Have Not Vested
Named Executive Officer		Exercisable				Unexercisable (1)																Number of Shares (#) (1)				Market Value (3)
Elizabeth A. Smith
Stock Options - Grant A - Tranche A (4)(5)			435,000				652,500				—			$	6.50				11/16/2019				—			$	—
Stock Options - Grant A - Tranche B, C, D (4)(6)			—				—				3,262,500				6.50				11/16/2019				—				—
Stock Options - Grant B			—				550,000				—				10.03				7/1/2021				—				—
Dirk A. Montgomery			107,148				45,923				—				6.50				6/14/2017				82,300				989,246
David P. Berg			—				250,000				—				10.03				7/1/2021				—				—
Jody L. Bilney			—				—				—				—				—				20,575				247,312
Stock Options - Grant A			22,000				18,000				—				6.50				2/11/2018				—				—
Stock Options - Grant B			—				200,800				—				10.03				12/9/2021				—				—
Joseph J. Kadow
Stock Options - Grant A			223,866				95,944				—				6.50				6/14/2017				—				—
Stock Options - Grant B			—				134,250				—				10.03				12/9/2021				—				—

 

(1)

Stock option and restricted stock grants vest and become nominally exercisable in 20% increments over a period of five years contingent on continued employment. See “—Potential Payments Upon Termination or Change in Control” for additional information regarding accelerated vesting on certain terminations of employment.

(2)

In March 2010, we offered all then active executive officers, other than Ms. Smith (since her stock options already had an exercise price of $6.50 per share), and all of our other then active employees the opportunity to exchange outstanding stock options with an exercise price of $10.00 per share for the same number of replacement stock options with an exercise price of $6.50 per share. Under the exchange program, the vested portion of the eligible stock options as of the grant date of the replacement stock options were exchanged for stock options that were fully vested. The unvested portion of the exchanged

 

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stock options were exchanged for unvested replacement stock options that vest and become exercisable over a period of time that is equal to the remaining vesting period of the exchanged stock options, plus one year, subject to the participant’s continued employment through the new vesting date. All eligible stock options were exchanged pursuant to the exchange program. The original stock options were cancelled, and the issuance of the replacement stock options occurred on April 6, 2010.

(3)	Market value is calculated by multiplying $12.02, which is the fair market value of a share of common stock on December 31, 2011 by the number of shares subject to the award.

(4)

On November 16, 2009, we granted Ms. Smith an option to purchase an aggregate of 4,350,000 shares of common stock under the 2007 Incentive Plan in four tranches (A-D) of 1,087,500 options each. The stock options have a term of ten years and an exercise price of $6.50, which represents an amount equal to or greater than the fair market value of a share of common stock on the date the option was granted. The options vest in five equal annual installments, with accelerated vesting upon a termination of employment without cause or for good reason, each as defined in Ms. Smith’s employment agreement (50% in the event of a termination of employment other than after a Qualifying Liquidity Event and 100% in the event of a termination of employment following a Qualifying Liquidity Event). In accordance with the accounting guidance for stock-based compensation, 3,262,500 of the options (tranches B, C and D) are not considered probable of occurrence since a Qualifying Liquidity Event was not probable at the time of grant. As such, there is no associated fair value on the grant date. The stock options, to the extent vested, will remain outstanding for a period ranging from 90 days to three years in the case of a termination of Ms. Smith’s employment, depending on the type of stock option and the nature of the termination, except that all stock options, whether or not then vested, will be forfeited upon a termination for cause.

(5)	Tranche A stock options vest and become exercisable in equal installments on each of November 16, 2010, 2011, 2012, 2013 and 2014, generally subject to Ms. Smith remaining continuously employed on each vesting date.

(6)

Tranches B, C and D stock options vest in equal installments on each of November 16, 2010, 2011, 2012, 2013 and 2014, generally subject to Ms. Smith remaining continuously employed through each vesting date, and will only become exercisable (to the extent then vested) upon a Qualifying Liquidity Event in which the value of our common stock at such Qualifying Liquidity Event exceeds a certain minimum threshold ranging from $5.00 per share to $10.00 per share, depending on the particular tranche.

Option Exercises and Restricted Stock Vested for Fiscal 2011

The following table summarizes the vesting of restricted stock during fiscal 2011. No stock options were exercised during fiscal 2011.

 

		Option Awards								Restricted Stock Awards
Named Executive Officer		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise ($)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($) (1)
Elizabeth A. Smith			—			$	—				—			$	—
Dirk A. Montgomery			—				—				82,300				785,965
David P. Berg			—				—				—				—
Jody L. Bilney			—				—				20,575				196,491
Joseph J. Kadow			—				—				—				—

 

(1)	Value realized on vesting of restricted stock awards is calculated by multiplying the estimated fair market value of our common stock on June 14, 2011 ($9.55 per share) by the number of shares vesting.

On June 14, 2011, 82,300 and 20,575 shares of restricted stock issued to Mr. Montgomery and Ms. Bilney, respectively, vested. In accordance with the terms of the Employee Rollover Agreements and the Restricted Stock Agreements entered into with the executives at the time of the Merger, we loaned approximately $0.3 million and $0.1 million to these individuals, respectively, in June 2011 for their personal income tax and associated interest obligations that resulted from vesting. The loans are full recourse and are collateralized by the

 

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vested shares of restricted stock. The total outstanding balances of restricted stock loans for the named executive officers as of December 31, 2011 were as follows: Mr. Montgomery, $0.8 million; Mr. Kadow, $0.4 million; and Ms. Bilney, $0.2 million. During the first quarter of 2012, these officers repaid their entire loan balances.

Pension Benefits

The company does not sponsor any defined benefit pension plans.

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

We have a Deferred Compensation Plan for our highly compensated employees who are not eligible to participate in the OSI Restaurant Partners, LLC Salaried Employees 401(k) Plan and Trust, as described in “Compensation Discussion and Analysis—Compensation Elements—Other Benefits and Perquisites.”

The following table summarizes current year contributions to our Deferred Compensation Plan by the only named executive officer who participated along with aggregate gains for the year and the aggregate balance as of December 31, 2011. We did not make any contributions to the Deferred Compensation Plan during 2011. Named executive officers are fully vested in all contributions to the plan. The amounts listed as executive contributions are included as “Salary” in the “Summary Compensation Table.” Aggregate earnings of the Deferred Compensation Plan are not included in the “Summary Compensation Table.”

 

Named Executive Officer		Executive Contributions in 2011				Aggregate Earnings in 2011				Withdrawals/ Distributions in 2011				Aggregate Balance at December 31, 2011
Dirk A. Montgomery		$	47,200			$	(3,277	)		$	—			$	384,031

Potential Payments Upon Termination or Change in Control

Summary of Employment Agreements and Other Compensatory Arrangements

We have entered into employment agreements and other arrangements with each of our named executive officers that provide certain rights and benefits upon termination of employment and/or a change in control. See the table included under “—Executive Benefits and Payments Upon Separation” below for the amount of compensation payable under the employment agreements and other arrangements described below to the individuals serving as named executive officers as of the end of fiscal 2011.

Rights and Potential Payments Upon Termination or Change in Control: Ms. Smith

Effective November 16, 2009, we entered into an employment agreement with Ms. Smith in connection with the commencement of her employment with us. Her employment agreement is for a period of five years commencing on November 16, 2009, subject to earlier termination under certain circumstances described below. The term of her employment is automatically renewed for successive renewal terms of one year unless either party elects not to renew by giving written notice to the other party not less than 60 days prior to the start of any renewal term.

Ms. Smith’s employment may be terminated as follows:

 

•

upon her death or Disability (as such term is defined in the agreement);

 

•

by us for Cause. For purposes of her employment agreement, “Cause” is defined to include: her (i) willful failure to perform, or gross negligence in the performance of, her duties and responsibilities to us or our affiliates (other than any such failure from incapacity due to physical or mental illness), subject to notice and cure periods, (ii) indictment or conviction of or plea of guilty

 

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or nolo contendere to a felony or other crime involving moral turpitude, (iii) engaging in illegal misconduct or gross misconduct that is intentionally harmful to us or our affiliates or (iv) any material and knowing violation by her of any covenant or restriction contained in her employment agreement or any other agreement entered into with us or our affiliates;

 

•

by us other than for Cause;

 

•

by Ms. Smith for Good Reason. For purposes of her employment agreement, “Good Reason” is defined to include: (i) a material diminution in the nature or scope of the executive’s duties, authority or responsibilities, including, without limitation, loss of membership on our or certain of our subsidiaries’ board of directors (with certain listed exceptions), (ii) a reduction of her annual base salary or annual target cash bonus, (iii) requiring her to be based at a location in excess of 50 miles from the location of our principal executive offices in Tampa, Florida as of the effective date of her employment agreement, or (iv) a material breach by us of our obligations under her employment agreement or the Retention Bonus agreement; or

 

•

by Ms. Smith other than for Good Reason.

Under Ms. Smith’s employment agreement, she will be entitled to receive severance benefits if her employment is terminated by us other than for Cause or if she terminates employment for Good Reason. If her employment is terminated under these circumstances, she will be entitled to receive severance benefits as follows:

 

•

earned but unpaid base salary as of the date of termination, any annual bonus earned in the fiscal year preceding that in which termination occurs that remains unpaid, and unreimbursed expenses, including certain tax gross-up payments through the date of termination; and

 

•

severance equal to two times the sum of her base salary at the rate in effect on the date of termination plus her target annual cash bonus for the year of termination, payable in 24 equal monthly installments from the effective date of such termination.

In the event Ms. Smith’s employment is terminated due to her death or Disability, she will receive any earned but unpaid amounts described above as of the date of her employment termination. She will also be entitled to receive a pro rata annual target bonus calculated based on the number of days during the year that she was employed. A change in control of the company does not trigger any severance payments to her under the employment agreement.

In addition to the rights and potential payments due Ms. Smith upon termination under her employment agreement, Ms. Smith, upon termination of employment or a change in control, also has certain rights and potential payments due her under the Retention and Incentive Bonus agreements. On May 10, 2012, the Retention Bonus and Incentive Bonus agreements were amended to provide that if an initial public offering (including this offering) is completed in 2012, the remaining payments under each agreement are accelerated to a single lump sum payment of $22.4 million payable within 60 days of the completion of the offering, but no later than December 31, 2012, provided she is still employed as CEO at the time of such offering.

Retention Bonus

On a termination of Ms. Smith’s employment by us without Cause or by her for Good Reason (prior to the completion of an initial public offering in 2012), she will be entitled to receive any then unpaid amounts of the Retention Bonus, whether vested or unvested, and this amount will be reduced (but not below zero) by the severance amount provided under her employment agreement as described above.

 

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Incentive Bonus

Ms. Smith’s Incentive Bonus is divided into four tranches (A-D) of $3.8 million each. Tranche A vests 20% over five years and is paid on the earlier of a Qualifying Liquidity Event or the tenth anniversary of the Incentive Bonus agreement. The other tranches also vest 20% per year over five years, but are generally only payable in the event of a Qualifying Liquidity Event. If Ms. Smith’s employment is terminated by us other than for Cause or by her for Good Reason prior to the occurrence of a Qualifying Liquidity Event, the vested portion and 50% of the unvested portion of the tranche A Incentive Bonus will be payable to Ms. Smith upon such termination. In addition, after such a termination, the vested portion and 50% of the unvested portions of the other tranches of the Incentive Bonus (or a percentage thereof) may become payable upon a subsequent Qualifying Liquidity Event meeting the performance targets, if applicable, for each tranche. If any such termination occurs following a change in control, all of the tranche A Incentive Bonus will be payable to Ms. Smith, and, if any such change in control meets applicable performance targets for each tranche, the other tranches of the Incentive Bonus will be payable to Ms. Smith to the extent earned. If Ms. Smith is employed by us on the first anniversary of a change in control (or a change in control that meets the relevant performance targets, as applicable), to the extent earned, the then unpaid portion of the Incentive Bonus will be paid to her.

If Ms. Smith’s employment is terminated by reason of her death or Disability, Ms. Smith (or her estate) will be entitled to receive the vested portion of the tranche A Incentive Bonus as of the date of such termination. If a Qualifying Liquidity Event occurs within one year following such a termination, Ms. Smith (or her estate) may also be entitled to receive the vested portions of the other tranches of the Incentive Bonus to the extent such Qualifying Liquidity Event meets applicable performance targets for each tranche.

Upon a voluntary termination of employment, Ms. Smith will not receive any of the Incentive Bonus unless and until a subsequent Qualifying Liquidity Event occurs. Upon such an occurrence, Ms. Smith would be entitled to receive the vested portion of the tranche A Incentive Bonus (as of the date of her termination) and the vested portions of the other tranches of the Incentive Bonus (as of the date of her termination) to the extent the Qualifying Liquidity Event meets the performance targets, if applicable, for each tranche.

In the case of a termination for Cause, any unpaid portion of the Incentive Bonus will be forfeited in its entirety.

Rights and Potential Payments Upon Termination or Change in Control: Messrs. Montgomery and Kadow

Mr. Montgomery and Mr. Kadow entered into employment agreements with us as of June 14, 2007, the Merger closing date. The employment agreements have been amended since that time. Their employment agreements, as amended, were for an original term of five years commencing on June 14, 2007 and expiring on the fifth anniversary thereof. The terms of their employment agreements are automatically renewed for successive renewal terms of one year unless either party elects not to renew by giving written notice to the other party not less than 60 days prior to the start of any renewal term.

The employment of each executive may be terminated as follows:

 

•

upon the executive’s death or Disability (as such term is defined in the agreement); or

 

•

by us for Cause. For Mr. Montgomery, “Cause” is defined to include: his (i) gross neglect of duty or prolonged absence from duty (other than any such failure resulting from incapacity due to physical or mental illness), subject to notice and cure periods; (ii) conviction or a plea of guilty or nolo contendere with respect to commission of a felony under federal law or in the last of the stage in which such action occurred; (iii) the willful engaging in illegal misconduct or gross misconduct that is materially and demonstrably injurious to us or (iv) any material violation of any material covenant or restriction contained in his employment agreements. For Mr. Kadow, “Cause” means

 

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any of the following: (i) conviction or plea of guilty or nolo contendere with respect to commission of a felony under federal law or under the law of the state in which such action occurred or (ii) the willful engaging in illegal misconduct or gross misconduct that is materially and demonstrably injurious to us;

 

•

at our election, at any time and including in the event of a determination by us to cease business operations;

 

•

by the executive for Good Reason. For purposes of their agreements, “Good Reason” is defined to include: (i) the assignment to the executive of any duties inconsistent in any respect with the executive’s position, duties or responsibilities as in effect immediately prior to the effective date, or any diminution in such position, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is promptly remedied by us; (ii) a reduction in the executive’s base salary or benefits as in effect immediately prior to the effective date; (iii) requiring the executive to be based at or generally work from any location more than 50 miles from the location at which the executive was based or generally worked immediately prior to the effective date or (iv) the failure by us to provide the fringe benefits provided for in their agreements; or

 

•

by the executive without Good Reason.

For all purposes of their agreements, termination for Cause shall be deemed to have occurred on the date of the executive’s resignation when, because of existing facts and circumstances, subsequent termination for Cause can be reasonably foreseen.

Under each executive’s employment agreement, the executive will be entitled to receive severance benefits if his employment is terminated by us other than for Cause or if he terminates employment for Good Reason. If the executive’s employment is terminated under these circumstances, he will be entitled to receive severance benefits as follows:

 

•

severance equal to the base salary then in effect and the average of the three most recent annual bonuses paid to the executive, payable in 12 equal monthly installments from the effective date of such termination;

 

•

any accrued but unpaid bonus in respect to the fiscal year preceding the year in which such termination of employment occurred;

 

•

continuation for one year of medical, dental and vision benefits generally available to executive officers; and

 

•

full vesting of life insurance benefits if not already vested.

Their employment agreements provide that they will only receive, upon termination of employment for death or Disability, any accrued but unpaid bonus in respect to the fiscal year preceding that in which termination occurs. The executives must deliver a separation agreement to us within 30 days of their termination dates or their severance will be forfeited. A change in control does not trigger any severance payments to the executive under his employment agreement.

 

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Rights and Potential Payments Upon Termination or Change in Control: Ms. Bilney

Ms. Bilney entered into an employment agreement with us effective October 1, 2006 and amended effective February 5, 2008. Her employment agreement was for an original term of five years, commencing on October 1, 2006 and expiring on the fifth anniversary thereof. The term of her employment agreement is automatically renewed for successive renewal terms of one year unless either party elects not to renew by giving written notice to the other party not less than 60 days prior to the start of any renewal term.

Ms. Bilney’s employment may be terminated as follows:

 

•

upon her death or Disability (as such term is defined in the agreement);

 

•

by us for Cause. For purposes of her agreement, “Cause” is defined to include: (i) her failure to perform the duties assigned to her in a manner satisfactory to us, in our sole discretion; (ii) any dishonesty in her dealing with us or our affiliates, the commission of fraud by her, negligence in the performance of her duties, insubordination, willful misconduct, or her conviction (or plea of guilty or nolo contendere) of any felony or any other crime involving dishonesty or moral turpitude; (iii) any violation of any covenant or restriction contained in specified sections of her employment agreement; or (iv) any violation of any of our or our affiliates’ material published policies; or

 

•

at our election, including upon the sale of majority ownership interest in us or substantially all of our assets or in the event of a determination by us to cease business operations.

For all purposes of her agreement, termination for Cause shall be deemed to have occurred on the date of the executive’s resignation when, because of existing facts and circumstances, subsequent termination for Cause can be reasonably foreseen.

Ms. Bilney’s employment agreement provides that she will receive severance benefits in the event of a termination of employment by us without Cause. Under these circumstances, she will be entitled to receive an amount equal to the sum of the base salary then in effect payable bi-weekly for one year. A change in control does not trigger any severance payments to her under her employment agreement.

Rights and Potential Payments Upon Termination or Change in Control: Mr. Berg

Mr. Berg entered into an employment agreement with Outback International, effective September 12, 2011 and amended effective November 4, 2011. The initial term of his employment agreement is for a period of five years commencing on September 12, 2011 and expiring on the fifth anniversary thereof subject to earlier termination as described in the termination section of the agreement as explained below. The term of his employment agreement is automatically renewed for successive renewal terms of one year unless either party elects not to renew by giving written notice to the other party not less than 60 days prior to the start of any renewal term.

Mr. Berg’s employment may be terminated as follows:

 

•

upon his death or Disability (as such term is defined in the agreement);

 

•

by Outback International for Cause. For purposes of his agreement, “Cause” is defined to include: (i) any dishonesty in his dealing with Outback International, the commission of fraud by the executive, negligence in the performance of his duties, insubordination, willful misconduct, or his conviction (or plea of guilty or nolo contendere) of any felony or any other crime involving dishonesty or moral turpitude; (ii) any violation of any covenant or restriction contained in his employment agreement; or (iii) any violation of any material published policy of Outback International or its affiliates;

 

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•

at the election of Outback International, including upon the sale of majority ownership interest in the company or substantially all the assets of the company or in the event of a determination by the company to cease business operations; or

 

•

by Outback International in its sole discretion, for any reason or no reason.

For all purposes of his agreement, termination for Cause shall be deemed to have occurred on the date of the executive’s resignation when, because of existing facts and circumstances, subsequent termination for Cause can be reasonably foreseen.

Mr. Berg’s employment agreement provides that he will only receive severance benefits in the event of a termination of employment if his employment is terminated by Outback International in its sole discretion, for any reason or no reason. In this case, he will be entitled to receive as severance compensation an amount equal to the sum of his base salary then in effect payable bi-weekly for one year. A change in control does not trigger any severance payments to him under his employment agreement.

Stock Options and Restricted Stock

The treatment of equity awards held by the named executive officers upon a termination of employment and/or a change in control is described below.

Stock Options: Ms. Smith

Pursuant to the terms of Ms. Smith’s option agreement, upon a termination of Ms. Smith’s employment with us by her for Good Reason or by us other than for Cause, Ms. Smith will be entitled to receive accelerated vesting of her outstanding options (50% in the event of a termination of employment other than after a qualifying change in control and 100% in the event of a termination of employment following a qualifying change in control). A portion of Ms. Smith’s outstanding stock options will become exercisable only following an initial public offering or a change in control in which the value of our common stock exceeds certain minimum thresholds. This offering, if it is completed, will exceed the minimum thresholds. The options, to the extent vested, will remain outstanding for a period ranging from 90 days to three years in the case of a termination of Ms. Smith’s employment, depending on the type of option and the nature of the termination, except that all options, whether or not then vested, will be forfeited on a termination for Cause.

Stock Options and Restricted Stock: Mr. Montgomery, Mr. Kadow, Ms. Bilney and Mr. Berg

Pursuant to agreements with Mr. Montgomery, Mr. Kadow, Ms. Bilney and Mr. Berg, any then outstanding unvested stock options will terminate upon any termination of employment (in connection with a change in control or otherwise).

To the extent the stock option is vested and exercisable prior to the cessation of employment, the stock option will remain exercisable (i) for one year in the case of a termination of employment resulting from death or Disability or (ii) for 90 days following the termination of employment for any other reason.

Pursuant to an agreement with Mr. Montgomery and Ms. Bilney, unvested restricted stock will vest immediately upon (i) a change in control; (ii) termination of the executive by us without Cause; (iii) termination by the executive for Good Reason or (iv) death or Disability. Unvested restricted stock will immediately be forfeited if the executive is terminated by us for Cause.

All of Mr. Kadow’s restricted stock awards are vested. Mr. Berg does not have any outstanding restricted stock awards.

 

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Restrictive Covenants

Each of the named executive officers is subject to non-competition and other restrictive covenants under his or her employment agreement. Based on the terms of their agreements, each named executive officer has agreed not to compete with us during his or her employment and for a specified period of time following a termination of employment for any reason (Ms. Smith, Ms. Bilney and Mr. Berg for a period of 24 months and Messrs. Montgomery and Kadow for a period of 12 months). Each named executive officer’s continued compliance with this non-competition covenant is a condition to our obligation to pay the severance amounts due under his or her employment agreement, and in the case of Ms. Smith, any amounts due under her Retention Bonus agreement.

Tax Gross-Up

If a “change in control” under Treasury Regulations 1.280G-1 occurs, we and our executives, other than Ms. Smith, have agreed to use commercially reasonable best efforts to take such actions as may be necessary to avoid the imposition of any excise tax imposed by Section 4999 of the Code on the executive, including seeking to obtain stockholder approval in accordance with the terms of Section 280G(b)(5) of the Code. In the case of Ms. Smith, if she does not request that we seek the stockholder approval referenced in the preceding sentence, we will provide her with a gross-up for 50% of any excise taxes imposed under Section 4999 of the Code.

Life Insurance

We maintain endorsement split dollar life insurance policies with a $5.0 million death benefit for each of Messrs. Montgomery and Kadow. We are the beneficiary of the policies to the extent of premiums paid or the cash value, whichever is greater, with the balance being paid to a personal beneficiary designated by the named executive officer. We have agreed not to terminate the arrangements regardless of continued employment except that we may terminate Mr. Montgomery’s agreement prior to his completion of seven years of employment with us commencing January 1, 2006.

In the event of termination by us without Cause or a termination by the executive for Good Reason, we will pay the remaining premiums under the policy terms and the named executive officer will become fully vested.

 

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Executive Benefits and Payments Upon Separation

The table below reflects the amount of compensation payable under the employment agreements and arrangements described above to the individuals serving as named executive officers following a termination of employment (i) by us without Cause or by the executive for Good Reason without a change in control, (ii) by us without Cause or by the executive for Good Reason, following a change in control, (iii) by the executive voluntarily, (iv) as a result of Disability or (v) as a result of death, in each case, assuming that such termination of employment occurred on December 31, 2011. No payments or benefits are due to the named executive officers following a termination of employment for Cause. The table assumes that the change in control transaction resulted in per share consideration of $12.02, which was the fair market value of a share of common stock on December 31, 2011, as determined by an independent stock valuation. The actual amounts to be paid upon a termination of employment or a change in control can only be determined at the time of such executive’s separation from us, or upon the occurrence of a change in control (if any).

 

Named Executive Officer		Executive Payments and Benefits Upon Separation (1)		Involuntary Termination Without Cause or Termination by Executive For Good Reason Without Change in Control ($)				Involuntary Termination Without Cause or Termination by Executive For Good Reason With Change in Control ($)				Voluntary Termination ($)				Disability ($)				Death ($)
Elizabeth A. Smith (2)		Severance		$	3,700,000			$	3,700,000			$	—			$	—			$	—
		Stock Options (3)			4,202,100				21,045,000				—				2,401,200				2,401,200
		Incentive Bonus			2,664,375				15,225,000				—				1,522,500				1,522,500
		Retention Bonus			3,500,000				3,500,000				—				—				—
		Total		$	14,066,475			$	43,470,000			$	—			$	3,923,700			$	3,923,700
Dirk A. Montgomery		Severance		$	1,625,332			$	1,625,332			$	—			$	—			$	—
		Stock Options (3)			591,457				591,457				591,457				591,457				591,457
		Health and Welfare Benefits			7,940				7,940				—				—				—
		Split Dollar Life Insurance (4)			—				—				—				—				5,000,000
		Restricted Stock (5)			989,246				989,246				—				989,246				989,246
		Total		$	3,213,975			$	3,213,975			$	591,457			$	1,580,703			$	6,580,703
David P. Berg		Severance (7)		$	450,000			$	—			$	—			$	—			$	—
		Stock Options (3)			—				—				—				—				—
		Total		$	450,000			$	—			$	—			$	—			$	—
Jody L. Bilney		Severance (6)		$	400,000			$	—			$	—			$	—			$	—
		Stock Options (3)			121,440				121,440				121,440				121,440				121,440
		Restricted Stock (5)			247,312				247,312				—				247,312				247,312
		Total		$	768,752			$	368,752			$	121,440			$	368,752			$	368,752
Joseph J. Kadow		Severance		$	1,308,296			$	1,308,296			$	—			$	—			$	—
		Stock Options (3)			1,235,740				1,235,740				1,235,740				1,235,740				1,235,740
		Health and Welfare Benefits			14,442				14,442				—				—				—
		Split Dollar Life Insurance (4)			—				—				—				—				5,000,000
		Total		$	2,558,478			$	2,558,478			$	1,235,740			$	1,235,740			$	6,235,740

 

(1)	Amounts in the table do not include amounts for accrued but unpaid base salary, annual bonus or other expenses.

(2)

This table assumes that Ms. Smith has requested that we seek shareholder approval of payments in connection with the assumed change in control and that she is therefore not entitled to a 50% excise tax gross-up. It also assumes that Ms. Smith is not entitled to a pro rata bonus on a termination due to death or disability since she is assumed to have been employed until the end of the fiscal year.

 

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(3)	Amounts represent intrinsic value of vested stock options since the fair market value of a share of common stock, as of December 31, 2011, was greater than the exercise price of the stock options held by the named executive officers.

(4)

See “Compensation Discussion and Analysis—Compensation Elements—Other Benefits and Perquisites” for discussion of the split dollar life insurance policies. The amounts in the table represent the amounts due to the personal beneficiaries designated by the named executive officers and are reduced by the premiums paid by us or the cash value, whichever is greater.

(5)	The fair market value of the unvested restricted stock due to Mr. Montgomery and Ms. Bilney under these termination circumstances is determined by multiplying the number of shares of restricted stock by $12.02, which is the fair market value of a share of common stock on December 31, 2011.

(6)	Ms. Bilney’s severance (base salary in effect at termination) is only payable upon termination of employment by us without cause (as defined in her employment agreement).

(7)	Mr. Berg’s severance (base salary in effect at termination) is only payable in the event his employment is terminated at the election of Outback International in its sole discretion, for any reason or no reason.

Director Compensation

The following table summarizes the amounts earned and paid to members of our board of directors for 2011:

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
A. William Allen III (1)		$	200,000			$	—			$	—			$	—			$	—			$	4,200			$	204,200
Andrew Balson (2)			—				—				—				—				—				—				—
Robert D. Basham (3)			—				—				—				—				—				325,300				325,300
J. Michael Chu (2)			—				—				—				—				—				—				—
Philip Loughlin (2)			—				—				—				—				—				—				—
Mark Nunnelly (2)			—				—				—				—				—				—				—
Elizabeth A. Smith			*				*				*				*				*				*				*
Chris T. Sullivan (3)			—				—				—				—				—				323,100				323,100
Mark Verdi (2)(4)			—				—				—				—				—				—				—

 

*	See “—Summary Compensation Table”

(1)	Mr. Allen received an annual retainer of $0.2 million for serving as the Chairman of the board of directors and received $4,200 for life insurance. Mr. Allen resigned from the board of directors effective January 1, 2012.

(2)	Directors are associated with Bain Capital Partners or Catterton and do not receive compensation for service on the board of directors.

(3)

Mr. Basham and Mr. Sullivan are Founders and serve on the board of directors. As result of the termination of their employment agreements effective October 1, 2010, each of our Founders received a severance payment of $0.6 million, which is equal to the amount of base salary due the Founder through the later of the termination date of the employment agreement or 24 months. The severance payments are payable bi-weekly over a two-year period from their termination dates. The amounts in the table include $25,300 and $23,100, for Mr. Basham and Mr. Sullivan, respectively, for life insurance and $0.3 million each in severance payments received during 2011.

(4)	Mr. Verdi resigned from the board of directors effective May 2012.

In May 2012, we approved a compensation policy for our non-employee directors. Pursuant to this policy, each member of our board of directors who is not an employee of the company will be eligible to receive compensation for his or her service as a director as follows. Each non-employee director will receive an annual retainer of $90,000 for board services. The chair of the audit committee will receive an additional annual retainer of $20,000, the chair of the compensation committee will receive an additional annual retainer of $15,000 and the chair of the nominating and corporate governance committee will receive an additional annual retainer of $10,000. Each member (other than the chair) of the audit committee, compensation committee and nominating and corporate governance committee will receive an additional annual retainer of $10,000, $7,500 and $5,000, respectively, for service on such committee. In addition, non-employee directors will receive an annual grant of restricted stock with a fair market value of $100,000, vesting as to one-third of the shares on each anniversary of the grant date, granted under the 2012 Incentive Plan. While we are a “controlled company” for purposes of Nasdaq, neither our Founders nor directors affiliated with the Sponsors will be compensated for board service.

 

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Equity Incentive Plans

2012 Incentive Award Plan

In connection with this offering, our board of directors plans to adopt the Bloomin’ Brands, Inc. 2012 Incentive Award Plan (the “2012 Incentive Plan”). The 2012 Incentive Plan will replace our 2007 Incentive Plan (described below). The following summary describes the material terms of the 2012 Incentive Plan. This summary is not a complete description of all provisions of the 2012 Incentive Plan and is qualified in its entirety by reference to the 2012 Incentive Plan, a copy of which will be filed with the SEC.

Purpose. The purposes of the 2012 Incentive Plan are to motivate and reward employees and other individuals who are expected to contribute significantly to our success to perform at the highest level and to further our best interests.

Administration. The 2012 Incentive Plan will be administered by our compensation committee. The compensation committee will have the authority to, among other things, designate recipients, determine the types, amounts and terms and conditions of awards, and to take other actions necessary or desirable for the administration of the 2012 Incentive Plan. The compensation committee will also have authority to implement certain clawback policies and procedures, and may provide for clawbacks as a result of financial restatements in an award agreement.

Authorized Shares. Subject to adjustment as described in the 2012 Incentive Plan, the maximum number of shares of our common stock available for issuance pursuant to the 2012 Incentive Plan is initially 3,000,000 shares. As of the first business day of each fiscal year, commencing on January 1, 2013, the aggregate number of shares that may be issued pursuant to the 2012 Incentive Plan will automatically increase by a number equal to 2% of the total number of our shares then issued and outstanding. Shares underlying awards that are expired, forfeited, or otherwise terminated without the delivery of shares, or are settled in cash, will again be available for issuance under the 2012 Incentive Plan.

Eligibility. Awards may be granted to employees, consultants and directors. In certain circumstances, we may also grant substitute awards to holders of equity-based awards of a company that we acquire or combine with (a “substitute award”).

Types of Awards. The 2012 Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock and restricted stock units, performance awards and other stock-based awards determined by the compensation committee.

 

•

Stock Options. The exercise price of an option is not permitted to be less than the fair market value of a share of our common stock on the date of grant, other than in the case of a substitute award. The compensation committee will determine the vesting, exercise and other terms, although the term of an option may not exceed ten years from the grant date. However, the committee may provide for an extension of such ten-year term in an award agreement if exercise at expiration would be prohibited by law or our insider trading policy. Options may be granted as incentive stock options that meet the requirements of Section 422 of the Internal Revenue Code.

 

•

Stock Appreciation Rights. A stock appreciation right is an award that entitles the participant to receive stock or cash upon exercise or settlement that is equal to the excess of the value of the shares subject to the right over the exercise or hurdle price of the right. The exercise or hurdle price is not permitted to be less than the fair market value of a share of our common stock on the date of grant, other than in the case of a substitute award. The compensation committee will determine the vesting, exercise and other terms, although the term of a stock appreciation right will not exceed ten years from the grant date. However, the committee may provide for an extension of such ten-year term in an award agreement if exercise at expiration would be prohibited by law or our insider trading policy.

 

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•

Restricted Stock and Restricted Stock Units. A restricted stock award is an award of our common stock subject to vesting restrictions. A restricted stock unit is a contractual right to receive cash, shares or a combination of both based on the value of a share of our common stock. The compensation committee will determine the vesting and delivery schedule and other terms of restricted stock and restricted stock unit awards.

 

•

Performance Awards. A performance award is an award, which may be stock-based or cash-based, that will be earned upon achievement or satisfaction of performance conditions specified by the compensation committee.

 

•

Other Stock-Based Awards. The compensation committee may also grant other awards that are payable in or otherwise based on or related to shares of common stock and determine the terms and conditions of such awards.

Termination of Employment or Service. The compensation committee will determine the effect of a termination of employment or service on an award. However, unless otherwise provided, upon a termination of employment or service all unvested options and stock appreciation rights will terminate. Unless otherwise provided, vested options and stock appreciation rights must be exercised within certain limited time periods after the date of termination, depending on the reason for termination; provided, however, that if a participant’s employment or service is terminated for cause (as will be defined in the award agreement), all options and stock appreciation rights, whether vested or unvested, will terminate immediately.

Performance Measures. The 2012 Incentive Plan provides that grants of performance awards will be made based upon, and subject to achieving, one or more performance measures over a performance period of not less than one year established by the compensation committee.

If the compensation committee intends that a performance award qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code, the award agreement will include a pre-established formula, such that payment, retention or vesting of the award is subject to the achievement of one or more performance measures during a performance period. The performance measures must be specified in the award agreement or by the compensation committee within the first 90 days of the performance period. Performance measures may be established on an absolute or relative basis, and may be established on a corporate-wide basis or with respect to one or more concepts, business units, divisions, subsidiaries or business segments. Relative performance may be measured against a group of peer companies, a financial market index or other acceptable objective and quantifiable indices.

A performance measure with respect to a performance award intended to qualify as performance-based compensation for purposes of Section 162(m) means one or more of the following measures with respect to the company or our restaurant concepts: sales; revenue; net sales; net revenue; revenue or sales growth or product revenue or sales growth; comparable or same restaurant sales; system-wide sales; operating income (before or after taxes); pre- or after-tax income or loss (before or after allocation of corporate overhead and bonus); net earnings; earnings per share; net income or loss (before or after taxes); return on equity; total shareholder return; return on assets or net assets; appreciation in and/or maintenance of share price; market share; gross profits; earnings or loss (including earnings or loss before taxes, interest and taxes, or interest, taxes, depreciation and amortization including, in each case, specified adjustments); economic value-added models or equivalent metrics; comparisons with various stock market indices; reductions in costs; cash flow or cash flow per share (before or after dividends); return on capital (including return on total capital or return on invested capital); cash flow return on investment; improvement in or attainment of expense levels or working capital levels, including cash, inventory and accounts receivable; operating margin; gross margin; cash margin; year-end cash; debt reduction; shareholder equity; operating efficiencies; market share; customer satisfaction; customer growth; employee satisfaction; research and development achievements; regulatory achievements (including submitting or filing applications or other documents with regulatory authorities or receiving approval of any such applications or other documents and passing pre-approval inspections); financial ratios, including those

 

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measuring liquidity, activity, profitability or leverage; cost of capital or assets under management; financing and other capital raising transactions (including sales of the company’s equity or debt securities; sales or licenses of the company’s assets, including its intellectual property, whether in a particular jurisdiction or territory or globally; or through partnering transactions); and implementation, completion or attainment of measurable objectives with respect to research, development, commercialization, products or projects, production volume levels, acquisitions and divestitures; and recruiting and maintaining personnel.

With respect to any award intended to qualify as performance-based compensation for purposes of Section 162(m), no more than the following amounts of awards may be awarded to any participant during any calendar year, subject to adjustment as described in the 2012 Incentive Plan: (i) options and stock appreciation rights that relate to 2,000,000 shares of common stock; (ii) performance awards that relate to 1,000,000 shares of common stock and (iii) cash awards that relate to $6.0 million.

Transferability. Awards under the plan generally may not be transferred except through will or by the laws of descent and distribution. However, if provided in an award agreement (for awards other than incentive stock options), certain additional transfers may be permitted in limited circumstances.

Change of Control. The compensation committee may provide for accelerated vesting of an award upon, or as a result of events following, a change of control (as defined in the 2012 Incentive Plan). This may be done in the award agreement or in connection with the change of control. In the event of a change of control, the compensation committee may also cause an award to be canceled in exchange for a cash payment to the participant or cause an award to be assumed by a successor corporation.

No Repricing. Stockholder approval will be required in order to reduce the exercise or hurdle price of an option or stock appreciation right or to cancel such an award in exchange for a new award when the exercise or hurdle price is below the fair market value of the underlying common stock.

Amendment and Termination. The board of directors may amend or terminate the 2012 Incentive Plan. Shareholder approval (if required by law or stock exchange rule) or participant consent (if the action would materially adversely affect the participant’s rights) may be required for certain actions. The 2012 Incentive Plan will terminate on the earliest of: (i) ten years from its effective date and (ii) when the board of directors terminates the 2012 Incentive Plan.

2007 Equity Incentive Plan

The following is a description of the material terms of our 2007 Equity Incentive Plan, which we refer to as the “2007 Incentive Plan.” This summary is not a complete description of all provisions of the 2007 Incentive Plan and is qualified in its entirety by reference to the 2007 Incentive Plan, a copy of which has been filed with the SEC. Following this offering, we will no longer make awards under the 2007 Incentive Plan and will instead make awards under the 2012 Incentive Plan (described above). However, 2007 Incentive Plan will continue to govern outstanding awards made under it.

Administration. The 2007 Incentive Plan is administered by our board of directors, subject to delegation to a committee or other persons in certain circumstances. The board will delegate administration of the 2007 Incentive Plan following this offering to the compensation committee. The administrator has the authority to interpret the 2007 Incentive Plan, to determine eligibility for and grant awards, to determine, modify or waive the terms and conditions of awards, and otherwise to do all things necessary to carry out the purposes of the 2007 Incentive Plan.

Authorized Shares. As of May 15, 2012, options to purchase 11,794,250 shares of our common stock at a weighted average exercise price of approximately $7.53 were outstanding under the 2007 Incentive Plan. Subject to adjustment, the maximum number of shares of common stock that may be delivered in satisfaction of awards under the 2007 Incentive Plan is 13,200,000. As noted above, we will no longer make awards under the 2007 Incentive Plan following this offering.

 

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Eligibility. The administrator selected participants from among our key employees, directors, consultants and advisors.

Types of Awards. The 2007 Incentive Plan provides for grants of stock options and restricted stock. The exercise price of an option is not permitted to be less than the fair market value of a share of common stock on the date of grant. Options may not have a term that exceeds ten years from the grant date. Additional requirements may apply to options intended to be incentive stock options under Section 422 of the Internal Revenue Code.

Termination of Employment. Unless otherwise provided by the administrator, upon a termination of employment all unvested awards will be forfeited. Unless otherwise provided, vested options must be exercised within certain limited time periods after the date of termination, depending on the reason for termination; provided, however, that if a participant’s employment is terminated for cause, all options will terminate immediately.

Transferability. Awards under the 2007 Incentive Plan may not be transferred except through will or by the laws of descent and distribution.

Corporate Transactions. In the event of certain corporate transactions (including dissolution or liquidation, the sale of substantially all of the assets, or certain mergers or consolidations), unless otherwise provided in connection with a particular award, the administrator may provide for substitution of new awards for outstanding awards or may cancel awards in exchange for a cash payments based on the value of the award, in each case subject to restrictions that the administrator deems appropriate.

Amendment and Termination. The administrator may amend or terminate the 2007 Incentive Plan. Shareholder approval (if required by law) or participant consent (if the action would materially adversely affect the participant’s rights) may be required for certain actions.

 

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RELATED PARTY TRANSACTIONS

Arrangements With Our Investors

Management Agreement

Upon completion of the Merger, we entered into a management agreement with Kangaroo Management Company I, LLC, as the management company, whose members are the Founders and entities affiliated with Bain Capital and Catterton. In accordance with the management agreement, the management company provides management services to us until the tenth anniversary of the completion of the Merger, with one-year extensions thereafter until terminated. The management company receives an aggregate annual management fee equal to $9.1 million and reimbursement for out-of-pocket and other reimbursable expenses incurred by it, its members, or their respective affiliates in connection with the provision of services pursuant to the agreement. Management fees, including out-of-pocket and other reimbursable expenses, of $2.3 million, $9.4 million, $11.6 million, $10.7 million, $9.9 million and $5.2 million for the three months ended March 31, 2012, the years ended December 31, 2011, 2010, 2009, 2008 and the period from June 15 to December 31, 2007, respectively, were included in General and administrative expenses in our Consolidated Statements of Operations and Comprehensive Income.

The management agreement includes customary exculpation and indemnification provisions in favor of the management company, Bain Capital and Catterton and their respective affiliates. The management agreement may be terminated by us, Bain Capital and Catterton at any time and will terminate automatically upon the completion of this offering or a change of control. In connection with the termination of the management agreement upon completion of this offering, we will pay an $8.0 million termination fee to the management company within 60 days of completion of the offering, but no later than December 31, 2012. This termination fee will be in addition to the pro-rated periodic fee as provided in the agreement.

Stockholders Agreement

In connection with the Merger, we entered into a stockholders agreement with our Sponsors and certain other investors, stockholders and executive officers. In connection with the completion of this offering, all of the provisions of the stockholders agreement will have been terminated in accordance with the terms of the stockholders agreement.

Registration Rights Agreement

In connection with the Merger, we entered into a registration rights agreement with our Sponsors and certain other stockholders. The registration rights agreement provides our Sponsors with certain demand registration rights following the expiration of the 180-day lock-up period in respect of the shares of our common stock held by them. In addition, in the event that we register additional shares of common stock for sale to the public following the completion of this offering, we are required to give notice of such registration to our Sponsors and the other stockholders party to the agreement of our intention to effect such a registration, and, subject to certain limitations, our Sponsors and such holders have piggyback registration rights providing them with the right to require us to include shares of common stock held by them in such registration. We are required to bear the registration expenses, other than underwriting discounts and commissions and transfer taxes, associated with any registration of shares by our Sponsors or other holders described above. The registration rights agreement also contains certain restrictions on the sale of shares by our Sponsors. The registration rights agreement includes customary indemnification provisions in favor of any person who is or might be deemed a controlling person within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, who we refer to as controlling persons, and related parties against liabilities under the Securities Act incurred in connection with the registration of any of our debt or equity securities. These provisions provide indemnification against certain liabilities arising under the Securities Act and certain liabilities resulting from violations of other

 

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applicable laws in connection with any filing or other disclosure made by us under the securities laws relating to any such registration. We agreed to reimburse such persons for any legal or other expenses incurred in connection with investigating or defending any such liability, action or proceeding, except that we are not required to indemnify any such person or reimburse related legal or other expenses if such loss or expense arises out of or is based on any untrue statement or omission made in reliance upon and in conformity with written information provided by such person.

Other Arrangements

Tax Loans

Shares of our restricted stock issued to certain of our current and former executive officers and other members of management vest each June 14 through 2012. In accordance with the terms of their applicable agreements, we loaned an aggregate of $0.9 million, $0.7 million and $3.3 million to these individuals in 2011, 2010 and 2009, respectively, for their personal income tax and associated interest obligations that resulted from vesting of restricted stock. As of December 31, 2011, a total of $7.2 million of loans to current and former executive officers and other members of management were outstanding. The loans are full recourse and are collateralized by the vested shares of our restricted stock. Although these loans are permitted in accordance with the terms of the agreements, we are not required to issue them in the future. On May 10, 2012, we approved an amendment to the loans to extend the timing for mandatory prepayment in connection with an initial public offering to require full repayment by the last trading day in the first trading window subsequent to the expiration of contractual lock-up restrictions imposed in connection with the offering.

The 2011 loan amounts for our board members and/or executive officers were as follows: Jody L. Bilney, $0.1 million and Dirk A. Montgomery, $0.3 million. The 2010 loan amounts for our board members and/or executive officers were as follows: A. William Allen III, $0.1 million; Ms. Bilney, $0.1 million; Joseph J. Kadow, $6,000; Mr. Montgomery, $0.2 million; Richard L. Renninger, $0.1 million; and Irene D. Wenzel, $10,000. The 2009 loan amounts for our board members or executive officers were as follows: Mr. Allen, $1.6 million; Paul E. Avery, $1.1 million; Ms. Bilney, $28,000; Mr. Kadow, $0.3 million; Mr. Montgomery, $0.1 million; and Mr. Renninger, $28,000. The total amounts outstanding for our board members or executive officers as of December 31, 2011 were as follows: Mr. Allen, $2.6 million, Mr. Montgomery, $0.8 million; Mr. Kadow, $0.4 million; and Ms. Bilney $0.2 million, which were the largest amounts outstanding during 2011 for each of these individuals. There were no amounts repaid by any executive officer and/or director during 2011. Ms. Bilney and Messrs. Kadow and Montgomery fully repaid their loans in the first quarter of 2012, and as of May 15, 2012, there were no amounts outstanding for our current board members or executive officers.

Director and Executive Officer Investments and Employment Arrangements

A. William Allen III, our Chief Executive Officer through November 15, 2009 and Chairman of our board of directors through December 31, 2011, through a revocable trust in which he and his wife are the grantors, trustees and sole beneficiaries, owns all of the equity interests in AWA III Steakhouses, Inc., which owns 2.50% of OSI/Flemings, LLC, a Delaware limited liability company. OSI/Flemings, LLC owns certain Fleming’s Prime Steakhouse and Wine Bar restaurants directly or indirectly by serving as the general partner of limited partnerships. Mr. Allen, through his ownership interest in OSI/Flemings, LLC, received $0.3 million, $0.6 million, $0.5 million and $0.2 million in distributions during for the three months ended March 31, 2012 and the years ended December 31, 2011, 2010 and 2009, respectively and, in 2009, made capital contributions of $0.2 million. In addition, we entered into a consulting services agreement dated August 23, 2011 (the “Consulting Agreement”) with Mr. Allen. In accordance with the Consulting Agreement, Mr. Allen will provide consulting services as an independent contractor to us and identify, evaluate and recommend acquisition and investment opportunities for us in the restaurant business. Beginning in the first quarter of 2012, Mr. Allen will receive a consulting fee at the rate of $50,000 per calendar quarter, payable in advance, until the earlier of the consulting project’s completion or termination. Either party has the right to terminate the Consulting Agreement with ten business days’ notice.

 

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Jeffrey S. Smith, an executive officer, has made investments in the aggregate amount of approximately $0.5 million in eleven Outback Steakhouse restaurants, fourteen Carrabba’s Italian Grill restaurants and fourteen Bonefish Grill restaurants (five of which are franchise restaurants). This officer received distributions of $39,000 for the three months ended March 31, 2012 and $0.1 million in each of the years ended December 31, 2011, 2010, and 2009 from these ownership interests.

Relationships With Family Members of Executive Officers

A sibling of Mr. Shlemon, an executive officer, is employed with one of our subsidiaries as a restaurant managing partner, with an annual compensation, including bonus, of approximately $28,000 for the three months ended March 31, 2012 and $0.1 million for the years ended December 31, 2011, 2010 and 2009. As a qualified managing partner, the sibling was entitled to make investments in our restaurants, on the same basis as other qualified managing partners, and has made an additional investment of invested $0.4 million in partnerships that own and operate two Outback Steakhouse restaurants. For the three months ended March 31, 2012 and the years ended December 31, 2011, 2010 and 2009, this sibling received distributions of $38,000, $23,000, $26,000 and $25,000, respectively, related to his investments as a qualified managing partner and $0.1 million related to his additional investments in the partnerships noted above in each of these years.

A sibling of Joseph J. Kadow, a named executive officer, is employed by one of our subsidiaries as a Vice President of Operations. In the first quarter of 2012 and for the years ended December 31, 2011, 2010 and 2009, the sibling received total cash compensation of $0.3 million, $0.6 million , $0.7 million and $0.6 million, respectively and benefits consistent with other employees in the same capacity. In addition, the sibling receives distributions that are based on a percentage of a particular restaurant’s annual cash flows (on the same basis as other similarly situated employees). He has invested an aggregate of $0.3 million in 25 limited partnerships that own and operate nine Outback Steakhouse restaurants, 11 Bonefish Grill restaurants and five Carrabba’s Italian Grill restaurants. This sibling received a return of his investment and distributions in the aggregate amount of $33,000 for the three months ended March 31, 2012 and $0.1 million in each of the years ended December 31, 2011, 2010 and 2009.

The wife of John W. Cooper, an executive officer, is employed by one of our subsidiaries as Senior Vice President, Training. In the first quarter of 2012 and for the years ended December 31, 2011, 2010 and 2009, she received total cash compensation of $0.2 million, $0.3 million, $0.3 million and $0.2 million, respectively and benefits consistent with other employees in the same capacity.

Sale of Lee Roy Selmon’s Concept

Effective December 31, 2008, we sold our interest in our Lee Roy Selmon’s concept, which included six restaurants, to MVP LRS, LLC, an entity owned primarily by our Founders (two of whom are also board members), one of its named executive officers and a former employee, for $4.2 million. In the third quarter of 2009, the named executive officer transferred his ownership interest in Selmon’s to two of the Founders (who are also board members) at his initial investment cost. We continued to provide certain accounting, technology, purchasing and other services to Selmon’s at agreed-upon rates, however, all services, except for purchasing, were transitioned to Selmon’s during the first quarter of 2010. Purchasing services were transitioned to Selmon’s on January 1, 2012. We earned $29,000, $26,000 and $0.2 million for the services described above in 2011, 2010 and 2009, respectively. We also subleased restaurant properties to MVP LRS, LLC, and continue to do so. We received $0.2 million for the three months ended March 31, 2012 and $0.6 million in connection with these subleases in each of the years ended December 31, 2011, 2010 and 2009.

Review, Approval or Ratification of Transactions With Related Persons

OSI adopted a written code of business conduct and ethics in 2004, which was revised in 2007. The above transactions were reviewed under the OSI code of business conduct and ethics. We have adopted a code of business conduct and ethics for the review and approval or ratification of related person transactions following

 

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the completion of this offering. Under each of these codes of business conduct and ethics, as applicable, each member of the board of directors and each member of management and the management of our subsidiaries and of each of our significant affiliates must disclose to the Chief Legal Officer and/or audit committee, as applicable, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person’s direct or indirect interest in, or relationship to, the related person transaction. The Chief Legal Officer and/or audit committee must advise the board of the related person transaction and any requirement for disclosure in our applicable filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended and related rules, and, to the extent required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with such acts and related rules.

 

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DESCRIPTION OF INDEBTEDNESS

Senior Credit Facility

General

On June 14, 2007, OSI, as borrower, and OSI HoldCo, Inc. (“OSI HoldCo”), OSI’s immediate parent corporation, entered into senior secured credit facilities with a syndicate of institutional lenders and financial institutions. The credit agreement related to the senior secured credit facilities was amended on January 28, 2010. These senior secured credit facilities provide for senior secured financing of up to approximately $1.6 billion, consisting of:

 

•

a $1.3 billion term loan facility that matures June 14, 2014;

 

•

a $150.0 million working capital revolving credit facility, including letter of credit and swing-line loan sub-facilities, that matures June 14, 2013; and

 

•

a $100.0 million pre-funded revolving credit facility that provides financing for capital expenditures only and matures June 14, 2013.

Proceeds of the term loans were used to finance the Merger. Proceeds of loans and letters of credit under the working capital revolving credit facility provide financing for working capital and general corporate purposes and, subject to a rent-adjusted leverage condition, for capital expenditures for new restaurant growth. Proceeds of loans under the pre-funded revolving credit facility are available to provide financing for capital expenditures, subject to OSI’s full utilization of amounts on deposit in a $100 million capital expenditure account initially funded on the closing date of the Merger, which may also be available to repay indebtedness under certain circumstances.

All borrowings under the senior secured credit facilities are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of certain representations and warranties.

Interest Rate and Fees

Borrowings under the senior secured credit facilities, other than swingline loans, bear interest at a rate per annum equal to, at OSI’s option, either (i) a base rate determined by reference to the higher of (a) the prime rate of Deutsche Bank AG New York Branch and (b) the federal funds effective rate plus  ¹/2 of 1% or (ii) a eurocurrency rate adjusted for statutory reserve requirements for a 30, 60, 90 or 180 day interest period, or a nine- or twelve-month interest period if agreed upon by the applicable lenders, in each case, plus an applicable margin. Swingline loans bear interest at the interest rate applicable to base rate loans.

The applicable margin for borrowings under the senior secured credit facilities is (i) for term loans and pre-funded revolving credit loans, (a) 1.25% for base rate loans and (b) 2.25% for eurocurrency rate loans, and (ii) for working capital revolving credit loans, (a) 1.00% to 1.50% for base rate loans and (b) 2.00% to 2.50% for eurocurrency rate loans, subject to step downs based upon our total leverage ratio.

With either the base rate or the eurocurrency rate, the interest rate is reduced by 25 basis points if OSI’s Moody’s Applicable Corporate Rating then most recently published is B1 or higher (the rating was Caa1 at December 31, 2011).

On the last day of each calendar quarter, OSI is required to pay a commitment fee ranging from 0.38% to 0.50% per annum in respect of any unused commitments under the working capital revolving credit facility, which is subject to reduction based upon OSI’s total leverage ratio, and a facility fee of 2.43% in respect of the

 

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undrawn portion of the pre-funded revolving credit facility. The fee is based on the applicable rate for eurocurrency rate loans under the pre-funded revolving credit facility plus the cost of investing the cash deposit related to the facility. Fees for the letters of credit range from 2.00% to 2.25%. We are also required to pay certain other agency fees.

Prepayments

OSI is required to prepay outstanding term loans, subject to certain exceptions, with:

 

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50% of OSI’s “annual excess cash flow” (with step-downs to 25% and 0% based upon OSI’s rent-adjusted leverage ratio), as defined in the credit agreement and subject to certain exceptions;

 

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100% of OSI’s “annual minimum free cash flow,” as defined in the credit agreement, not to exceed $75.0 million for each fiscal year, if OSI’s rent-adjusted leverage ratio exceeds a certain threshold;

 

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100% of the net proceeds of certain assets sales and insurance and condemnation events, subject to reinvestment rights and certain other exceptions; and

 

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100% of the net proceeds of any debt incurred, excluding permitted debt issuances.

Additionally, OSI is required, on an annual basis, to (i) first, repay outstanding loans under the pre-funded revolving credit facility and (ii) second, fund the capital expenditure account to the extent amounts on deposit are less than $100.0 million, in both cases with 100% of OSI’s “annual true cash flow,” as defined in the credit agreement.

In addition, commitment reductions of the working capital revolving credit facility and pre-funded revolving credit facility, and voluntary prepayments of the term loans and loans under the working capital revolving credit facility are permitted, in whole or in part, in minimum amounts without premium or penalty, other than customary breakage costs with respect to eurocurrency rate loans. Voluntary prepayments of loans under the pre-funded revolving credit facility may only be made with the proceeds of new cash equity contributions unless such loans are to be repaid in full and all commitments thereunder are terminated.

Amortization of Principal

The senior secured credit facilities require scheduled quarterly payments on the term loans equal to 0.25% of the original principal amount of the term loans for the first six years and three quarters following June 14, 2007. These payments are reduced by the application of any prepayments, and any remaining balance will be paid at maturity.

Guarantees and Collateral

The obligations under the senior secured credit facilities are guaranteed by each of OSI’s current and future domestic wholly-owned restricted subsidiaries in its Outback and Carrabba’s concepts, certain non-restaurant subsidiaries and OSI HoldCo and subject to the next succeeding sentence, are secured by a perfected security interest in substantially all of OSI’s assets and the assets of the guarantors, in each case, now owned or later acquired, including a pledge of all of OSI’s capital stock, the capital stock of substantially all of OSI’s domestic wholly-owned subsidiaries and 65% of the capital stock of certain of OSI’s material foreign subsidiaries that are directly owned by OSI, OSI HoldCo or a guarantor. Additionally, the senior secured credit facilities require OSI to provide additional guarantees of the senior secured credit facilities in the future from other domestic wholly-owned restricted subsidiaries if the consolidated EBITDA (as defined in the credit agreement) attributable to OSI’s non-guarantor domestic wholly-owned restricted subsidiaries (taken together as a group) would exceed 10% of OSI’s consolidated EBITDA as determined on a company-wide basis, at which

 

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time guarantees would be required from additional domestic wholly-owned restricted subsidiaries in such number that would be sufficient to lower the aggregate consolidated EBITDA of the non-guarantor domestic wholly-owned restricted subsidiaries (taken together as a group) to an amount not in excess of 10% of OSI’s company-wide consolidated EBITDA.

Restrictive Covenants and Other Matters

The senior secured credit facilities require OSI to comply with certain financial covenants, including a quarterly Total Leverage Ratio (“TLR”) test and an annual Minimum Free Cash Flow (“MFCF”) test. The TLR is the ratio of OSI’s Consolidated Total Debt to OSI’s Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization and certain other adjustments as defined in the senior secured credit facilities) and may not exceed 6.00 to 1.00. On an annual basis, if the Rent Adjusted Leverage Ratio (“RALR”), as defined, is greater than or equal to 5.25 to 1.00, OSI’s MFCF cannot be less than $75.0 million. MFCF is calculated as OSI’s Consolidated EBITDA plus decreases in OSI’s Consolidated Working Capital less OSI’s Consolidated Interest Expense, OSI’s Capital Expenditures (except for that funded by OSI’s senior secured pre-funded revolving credit facility), increases in OSI’s Consolidated Working Capital and OSI’s cash paid for taxes. (All of the above capitalized terms are as defined in the credit agreement). In addition, the senior secured credit facilities agreement includes negative covenants that, subject to certain exceptions, limit OSI’s ability and the ability of its restricted subsidiaries, to, among other things:

 

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incur liens;

 

•

make investments and loans;

 

•

make capital expenditures;

 

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incur indebtedness or guarantees;

 

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engage in mergers, acquisitions and asset sales;

 

•

declare dividends, make payments or redeem or repurchase equity interests;

 

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alter the business they conduct;

 

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engage in certain transactions with affiliates;

 

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enter into agreements limiting subsidiary distributions; and

 

•

prepay, redeem or purchase certain indebtedness.

The senior secured credit facilities contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the senior secured credit facilities will be entitled to take various actions, including the acceleration of amounts due under the senior secured credit facilities and all actions permitted to be taken by a secured creditor.

This summary describes the material provisions of the senior secured credit facilities, but may not contain all information that is important to you. We urge you to read the provisions of the credit agreement governing the senior secured credit facilities, which has been included as an exhibit to the registration statement of which this prospectus forms a part. See “Where You Can Find More Information.”

 

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Senior Notes

General

On June 14, 2007, OSI and OSI Co-Issuer, Inc. (“Co-Issuer”), as co-issuers, issued the Senior Notes in an original aggregate principal amount of $550.0 million under an indenture among OSI, Co-Issuer, a third-party trustee and certain guarantors. The principal balance of the Senior Notes outstanding at March 31, 2012 was $248.1 million. The Senior Notes mature on June 15, 2015. Interest is payable semiannually in arrears, at 10% per annum, in cash on each June 15 and December 15. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months. The notes are guaranteed, jointly and severally, on an unsecured basis by each of OSI’s and Co-Issuer’s restricted subsidiaries that act as a guarantor under the senior secured credit facilities or other indebtedness of OSI.

The Senior Notes are general, unsecured senior obligations of OSI, Co-Issuer and the guarantors and are equal in right of payment to all existing and future senior indebtedness, including the senior secured credit facility. The Senior Notes are effectively subordinated to all of OSI’s, Co-Issuer’s and the guarantors’ secured indebtedness, including the senior secured credit facility, to the extent of the value of the assets securing such indebtedness. The Senior Notes are senior in right of payment to all of OSI’s, Co-Issuer’s and the guarantors’ existing and future subordinated indebtedness.

Covenants

The indenture governing the outstanding Senior Notes contains a number of covenants that, among other things and subject to certain exceptions, restrict OSI’s ability and the ability of its restricted subsidiaries to:

 

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pay dividends on capital stock or redeem, repurchase or retire capital stock or any subordinated indebtedness;

 

•

make investments, loans, advances and acquisitions;

 

•

incur additional indebtedness or issue certain types of capital stock;

 

•

incur certain liens;

 

•

consolidate, merge or transfer all or substantially all of OSI’s assets and the assets of the guarantors;

 

•

engage in transactions with affiliates;

 

•

prepay, redeem or purchase certain indebtedness;

 

•

enter into agreements restricting the restricted subsidiaries’ ability to pay dividends; and

 

•

guarantee indebtedness of OSI.

The indenture also prohibits Co-Issuer from holding any material assets, becoming liable for any material obligation, engaging in any material trade or business or conducting any material business activity, subject to certain limited exceptions.

 

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Optional Redemption

OSI and Co-Issuer may redeem the outstanding Senior Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of Senior Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve-month period beginning on June 15 of each of the years indicated below:

 

Year		Percentage
2011			105.0	%
2012			102.5	%
2013 and thereafter			100.0	%

If OSI experiences certain kinds of changes in control, OSI and Co-Issuer must offer to purchase the outstanding Senior Notes at 101% of their principal amount, plus accrued and unpaid interest.

Asset Sales

If OSI or its restricted subsidiaries engage in certain asset sales, OSI or the restricted subsidiary generally must either invest the net cash proceeds from such sales in its business within a specified period of time or prepay certain debt (which may include open market purchases of the notes or offers to purchase the notes). If net proceeds not invested or applied in accordance with the foregoing exceed $40.0 million, OSI must make an offer to purchase a principal amount of the outstanding Senior Notes equal to those excess net cash proceeds, subject to certain exceptions. The purchase price of the outstanding Senior Notes will be 100% of their principal amount, plus accrued and unpaid interest.

This summary describes the material provisions of the Senior Notes but may not contain all information that is important to you. We urge you to read the provisions of the indenture governing these Senior Notes, which has been included as an exhibit to the registration statement of which this prospectus forms a part. See “Where You Can Find More Information.”

2012 CMBS Loan

General

The 2012 CMBS Loan is in the amount of $500.0 million and consists of:

 

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a $324.8 million first mortgage loan to New Private Restaurant Properties, LLC (“New PRP”);

 

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an $87.6 million first mezzanine loan to the parent of New PRP, New PRP Mezz 1, LLC (“New PRP 1”); and

 

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an $87.6 million second mezzanine loan to the parent of New PRP 1, New PRP Mezz 2, LLC (“New PRP 2”).

Each of the loans comprising the 2012 CMBS Loan has a scheduled maturity date of April 10, 2017. The proceeds from the 2012 CMBS Loan, together with the proceeds from the Sale-Leaseback Transaction and excess cash, were used to repay our existing CMBS Loan.

Concurrently with the funding of the first mortgage loan, the originating lenders sold it to an affiliate of one of the lenders, who in turn transferred it into a securitization trust. The sale of the interests in such trust closed concurrently with, and were the source of, the funding of the first mortgage loan. In connection with the origination of the first and second mezzanine loans, the originating lenders syndicated all of their respective interests in the first and second mezzanine loans to third-party investors.

 

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Interest Rate

The first mortgage loan has five fixed-rate components and a floating rate component, with original principal amounts and component interest rates as follows:

 

Mortgage Loan Component		Initial Principal Balance				Rate Description				Component Interest Rate
A-1		$	41,316,000				Fixed				2.3666	%
A-2-FX		$	143,464,000				Fixed				3.3756	%
A-2-FL		$	48,720,000				Floating				LIBOR plus 2.3736	%(1)
B		$	29,300,000				Fixed				4.8536	%
C		$	26,100,000				Fixed				5.8336	%
D		$	35,900,000				Fixed				6.8096	%

 

(1)	In no event will LIBOR be less than 1% per annum.

In connection with the 2012 CMBS Loan, New PRP entered into an interest rate cap (the “Rate Cap”) as a method to limit the volatility of the floating rate component of the first mortgage loan. Under the Rate Cap, if the 30-day LIBOR market rate exceeds 7% per annum, the counterparty must pay to New PRP such excess on the notional amount of the floating rate component. The Rate Cap has a term of approximately two years from the closing of the 2012 CMBS Loan. Upon the expiration or termination of the Rate Cap or the downgrade of the credit ratings of the counterparty under the Rate Cap below specified thresholds, New PRP is required to replace the Rate Cap with a replacement interest rate cap in a notional amount equal to the outstanding principal balance (if any) of the floating rate component.

The first mezzanine loan bears interest at a fixed rate of 9% per annum.

The second mezzanine loan bears interest at a fixed rate of 11.25% per annum.

Payments of Principal and Interest

On a monthly basis, each of New PRP, New PRP 1 and New PRP 2 will pay with respect to its loan an amount equal to accrued interest plus principal based on a 25 year amortization schedule; provided that they will pay accrued interest only on the first payment date of April 10, 2012. Scheduled monthly principal payments under the mortgage loan will generally be applied in sequential order (in other words, first to Component A-1, then Components A-2-FX and A-2-FL, then Component B, then Component C and then Component D), as a consequence of which, as the lower-interest rate components are repaid over the course of the term, New PRP’s blended interest rate on the mortgage loan will rise.

Prepayments; Defeasance; Release of Collateral

New PRP will be permitted to prepay the floating rate component of the first mortgage loan, in whole or in part, at any time, subject to the satisfaction of certain conditions. With respect to any prepayment made prior to April 10, 2013 that is not made in connection with the release of a property, New PRP must pay a prepayment premium in an amount equal to 1.0% of the amount prepaid.

Except as described above with respect to the mortgage borrower’s right to prepay the floating rate component, none of the borrowers under the mortgage or mezzanine loans will be permitted to voluntarily prepay its respective loan in whole or in part prior to January 10, 2017. At any time on and after that date, each borrower will be permitted to prepay (in whole but not in part) its loan (plus accrued interest through the next payment date) without payment of any yield maintenance premium, prepayment premium or other prepayment penalty or fee, subject to the satisfaction of certain conditions, including that the first mezzanine loan may not be prepaid unless the first mortgage loan has been or is then being prepaid in full and the second mezzanine loan may not be prepaid unless the first mortgage loan and first mezzanine loan have been or are then being prepaid in full.

 

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In connection with the release of a property, new PRP may defease all or any portion of the fixed-rate components of the mortgage loan, subject to the satisfaction of certain conditions, including that the floating rate component has been paid in full and that a pro rata portion of each mezzanine loan is being concurrently defeased. Components of the mortgage loan will be defeased in sequential order (in other words, first the A-1 Component, then the A-2- Component, and so on through the D Component). Each mezzanine borrower may defease its mezzanine loan, in whole or in part, subject to the satisfaction of certain conditions, including that a pro rata portion of the mortgage loan and the other mezzanine loan are being concurrently defeased.

New PRP will be required to prepay the first mortgage loan in connection with certain casualties and condemnations. No yield maintenance premium, prepayment premium or other prepayment penalty or fee will be due in connection with any such involuntary prepayment.

New PRP has the right to obtain the release of properties from the lien securing the first mortgage loan, and New PRP 1 and New PRP 2 may cause New PRP to effect such release, upon the defeasance of the first mortgage loan (or, if the floating rate component is still outstanding, the prepayment of that component) and if the floating rate component has been fully repaid, the defeasance of the mezzanine loans in the amounts required in the applicable loan agreement and the satisfaction of certain other conditions.

Guarantees and Collateral

The first mortgage loan is secured by mortgages on 261 restaurant properties owned by New PRP. Subject to certain limited exceptions, recourse on the first mortgage loan is limited to New PRP’s interest in such properties, the master lease with Private Restaurant Master Lessee LLC (“Master Lessee”), as described below, and the guaranty of the tenant’s obligations under such master lease issued by OSI.

The first mezzanine loan is secured by 100% of New PRP 1’s ownership interests in New PRP, The second mezzanine loan is secured by 100% of New PRP 2’s ownership interests in New PRP 1. Subject to certain limited exceptions, recourse on each such loan is limited to its respective collateral.

OSI HoldCo I, Inc. has guaranteed to the lender under each loan the recourse obligations of its respective borrower.

Restrictive Covenants and Other Matters

New PRP’s sole purpose is to own and lease all its real property to Master Lessee, and New PRP is generally not permitted to acquire additional assets or properties under the 2012 CMBS Loan.

The first mortgage loan includes negative covenants that, subject to certain exceptions, limit New PRP’s ability to, among other things:

 

•

incur debt;

 

•

incur liens;

 

•

partition any restaurant property;

 

•

transfer any restaurant property;

 

•

file for bankruptcy;

 

•

incur material liability under ERISA;

 

•

modify reciprocal easement agreements;

 

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•

take actions relating to zoning reclassification of any restaurant property;

 

•

change its principal place of business; and

 

•

cancel, forgive or release any material claim or debt owed to it.

In addition, the mortgage loan requires that, subsequent to certain initial public offerings of indirect parent entities of the mortgage loan borrower (the “IPO Entity”), such as this offering, either (i) our Sponsors, our Founders and the management stockholders or other permitted holders (collectively, “Permitted Holders”), own no less than 51% of the voting stock of the IPO Entity, and have the right, directly or indirectly, to designate (and do so designate) a majority of the board of directors of the IPO Entity, or (ii) both of the following criteria are satisfied: (a) no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, other than Permitted Holders, is the owner of more than the greater of (1) 35% of the shares outstanding of the IPO Entity, and (2) the percentage of the then outstanding voting stock of the IPO Entity owned by the Permitted Holders, and (b) a majority of the board of directors of the IPO Entity consist of the directors of HoldCo on the closing date of the mortgage loan, and each other director of OSI HoldCo if such other director’s nomination for election to the board of directors of OSI HoldCo is recommended by a majority of the then continuing directors or such other director receives the vote of one or more of the Permitted Holders in his or her election by the stockholders of OSI HoldCo. For purposes of the mortgage loan, management stockholders means members of management of OSI or its subsidiaries (excluding the Founders) who are both (i) actively involved in the management of OSI or its subsidiaries and (ii) investors in OSI HoldCo or any direct or indirect parent thereof.

The mezzanine loans contain similar negative covenants.

The first mortgage loan and mezzanine loans contain certain customary representations and warranties, affirmative covenants and events of default. Also, the first mezzanine loan is cross-defaulted to the mortgage loan and the second mezzanine loan is cross-defaulted to the first mezzanine loan and the first mortgage loan. In addition, all of the loans are cross-defaulted to the above-described lease with Master Lessee. If an event of default under one or more loans occurs, the applicable lender(s) will be entitled to take various actions, including the acceleration of amounts due under the applicable loan.

This summary describes the material provisions of each of the loan documents for the 2012 CMBS Loan, but may not contain all of the information that is important to you. We urge you to read the 2012 CMBS loan documents, which have been included as exhibits to the registration statement of which this prospectus forms a part. See “Where You Can Find More Information.”

Notes Payable

As of March 31, 2012, OSI had approximately $8.6 million of notes payable at interest rates ranging from 0.76% to 7.00%. These notes have been primarily issued for buyouts of managing and operating partner interests in the cash flows of their restaurants and generally are payable over two to five years.

Debt Guarantee

OSI is the guarantor of an uncollateralized line of credit that permits borrowing of up to $24.5 million for its joint venture partner, RY-8, in the development of Roy’s restaurants. The line of credit originally expired in December 2004 and was amended for a fourth time on April 1, 2009 to a revised termination date of April 15, 2013. According to the credit agreement, RY-8 may borrow, repay, re-borrow or prepay advances at any time before the termination date of the agreement. On the termination date of the agreement, the entire outstanding principal amount of the loan then outstanding and any accrued interest will be due. At March 31, 2012, the outstanding balance on the line of credit was $24.5 million.

 

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RY-8’s obligations under the line of credit are unconditionally guaranteed by OSI and Roy’s Holdings, Inc., RY-8’s parent company (“RHI”). If an event of default occurs, as defined in the agreement, the total outstanding balance, including any accrued interest, is immediately due from the guarantors. At March 31, 2012, $24.5 million of the $150.0 million working capital revolving credit facility was committed for the issuance of a letter of credit for this guarantee.

If an event of default occurs and RY-8 is unable to pay the outstanding balance owed, OSI would, as one of the two guarantors, be liable for this balance. However, in conjunction with the credit agreement, RY-8 and RHI have entered into an Indemnity Agreement and a pledge of interest and security agreement in OSI’s favor. These agreements provide that if OSI is required to perform under its obligation as guarantor pursuant to the credit agreement, then RY-8 and RHI will indemnify OSI against all losses, claims, damages or liabilities which arise out of or are based upon OSI’s guarantee of the credit agreement. RY-8’s and RHI’s obligations under these agreements are collateralized by a first priority lien upon and a continuing security interest in any and all of RY-8’s interests in the joint venture.

 

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of our common stock at May 15, 2012 for:

 

•

each person whom we know beneficially owns more than five percent of our common stock;

 

•

each of our directors;

 

•

each of our named executive officers;

 

•

all of our directors and executive officers as a group; and

 

•

each selling stockholder.

The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Unless otherwise indicated below, the address for each listed director, officer and stockholder is c/o Bloomin’ Brands, Inc., 2202 North West Shore Boulevard, Suite 500, Tampa, Florida 33607.

The percentage of common stock beneficially owned by each person before the offering is based on 106,770,725 shares of common stock outstanding as of May 15, 2012, and the percentage beneficially owned after the offering is based on                  shares of common stock expected to be outstanding following this offering after giving effect to the                  shares of common stock offered hereby. See “Description of Capital Stock.” Shares of common stock that may be acquired within 60 days following May 15, 2012 pursuant to the exercise of options are deemed to be outstanding for the purpose of computing the percentage ownership of such holder but are not deemed to be outstanding for computing the percentage ownership of any other person shown in the table.

Upon the completion of this offering, investment funds affiliated with our Sponsors will own, in the aggregate, approximately     % of our common stock, assuming the underwriters do not exercise their option to purchase additional shares of our common stock. As a result, we intend to be a “controlled company” within the meaning of the corporate governance rules of Nasdaq.

 

		Shares Owned before the Offering										Shares Owned after the Offering
Name of Beneficial Owner		Number of Shares Beneficially Owned				Percentage of Shares Beneficially Owned				Number of Shares to be Sold in the Offering		Number of Additional Shares to be Sold at Underwriters Option		Number of Shares Beneficially Owned		Percentage of Shares Beneficially Owned
Beneficial owners of 5% or more of our common stock:
Bain Capital and related funds (1)			70,075,000				65.63	%
Catterton and related funds (2)			14,500,000				13.58	%
Directors and Named Executive Officers:
Andrew B. Balson (3)			—				—
Robert D. Basham (4)			8,604,652				8.06	%
David P. Berg (5)			—				—
Jody L. Bilney (6)			130,875				*
J. Michael Chu (2)(7)			14,500,000				13.58	%
David J. Deno			—				—
Joseph J. Kadow (8)			580,462				*
Philip Loughlin (3)			—				—
John M. Mahoney			—				—
Dirk A. Montgomery (9)			541,608				*
Mark Nunnelly (3)			—				—
Elizabeth A. Smith (10)			1,850,000				1.70	%
Chris T. Sullivan (11)			5,929,331				5.55	%
All directors and executive officers as a group			18,816,860				17.15	%
Other Selling Stockholders:

 

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*	Indicates less than one percent of common stock.

(1)

The shares included in the table consist of: (i) 54,006,582 shares of common stock held by Bain Capital (OSI) IX, L.P., whose managing partner is Bain Capital Investors, LLC (“BCI”); (ii) 15,295,203 shares of common stock held by Bain Capital (OSI) IX Coinvestment, L.P., whose managing partner is BCI; (iii) 637,456 shares of common stock held by Bain Capital Integral 2006, LLC, whose administrative member is BCI; (iv) 126,959 shares of common stock held by BCIP TCV, LLC, whose administrative member is BCI; and (v) 8,800 shares of common stock held by BCIP Associates—G, whose managing general partner is BCI. As a result of the relationships described above, BCI may be deemed to share beneficial ownership of the shares held by each of Bain Capital (OSI) IX, L.P., Bain Capital (OSI) IX Coinvestment, L.P., Bain Capital Integral Investors 2006, LLC, BCIP TCV, LLC and BCIP Associates-G (collectively, the “Bain Capital Entities”). Voting and investment determinations with respect to the shares held by the Bain Capital Entities are made by an investment committee comprised of the following managing directors of BCI: Andrew Balson, Steven Barnes, Joshua Bekenstein, John Connaughton, Todd Cook, Paul Edgerley, Christopher Gordon, Blair Hendrix, Jordan Hitch, Jon Kilgallon, Lew Klessel, Matthew Levin, Ian Loring, Philip Loughlin, Seth Meisel, Mark Nunnelly, Stephen Pagliuca, Ian Reynolds, Mark Verdi and Stephen Zide. As a result, and by virtue of the relationships described in this footnote, the investment committee of BCI may be deemed to exercise voting and dispositive power with respect to the shares held by the Bain Capital Entities. Each of the members of the investment committee of BCI disclaims beneficial ownership of such shares. Each of the Bain Capital Entities has an address c/o Bain Capital Partners, LLC, John Hancock Tower, 200 Clarendon Street, Boston, Massachusetts 02116.

(2)

Represents shares held of record by Catterton Partners VI -Kangaroo, L.P. (“Catterton Partners VI”), a Delaware limited partnership, and Catterton Partners VI—Kangaroo Coinvest, L.P. (“Catterton Partners VI, Coinvest”), a Delaware limited partnership. Catterton Managing Partner VI, L.L.C. (“Catterton Managing Partner VI”), a Delaware limited liability company, is the general partner of Catterton Partners VI and Catterton Partners VI, Coinvest. CP6 Management, L.L.C. (“CP6 Management,” and together with Catterton Partners VI, Catterton Partners VI, Coinvest, and Catterton Managing Partner VI collectively, “Catterton Partners and Related Funds”), a Delaware limited liability company, is the managing member of Catterton Managing Partner VI and as such exercises voting and dispositive control over the shares held of record by Catterton Partners VI and Catterton Partners VI, Coinvest. The management of CP6 Management is controlled by a managing board. J. Michael Chu and Scott A. Dahnke are the members of the managing board of CP6 Management and as such could be deemed to share voting and dispositive control over the shares held of record and beneficially owned by Catterton Partners and Related Funds. Mr. Chu and Mr. Dahnke both disclaim beneficial ownership of any of the shares held of record and beneficially owned by Catterton Partners and Related Funds.

(3)

Does not include shares of common stock held by the Bain Capital Entities. Each of Messrs. Balson, Loughlin and Nunnelly is a Managing Director and serves on the investment committee of BCI and as a result, and by virtue of the relationships described in footnote (1) above, may be deemed to share beneficial ownership of the shares held by the Bain Capital Entities. Each of Messrs. Balson, Loughlin and Nunnelly disclaims beneficial ownership of the shares held by the Bain Capital Entities. The address for Messrs. Balson, Loughlin and Nunnelly is c/o Bain Capital Partners, LLC, John Hancock Tower, 200 Clarendon Street, Boston, Massachusetts 02116.

(4)	Shares owned by RDB Equities, Limited Partnership, an investment partnership (“RDBLP”). Mr. Basham is a limited partner of RDBLP and the sole member of RDB Equities, LLC, the sole general partner of RDBLP.

(5)	Does not include 250,000 shares subject to stock options that are not exercisable within 60 days of May 15, 2012 by Mr. Berg.

(6)

Includes 20,575 shares of restricted stock that vest on June 14, 2012. Also includes 28,000 shares subject to stock options that Ms. Bilney has the right to acquire within 60 days of May 15, 2012 at an exercise price of $6.50 per share. Does not include 212,800 shares subject to stock options that are not exercisable within 60 days of May 15, 2012.

(7)	The management of CP6 Management is controlled by a managing board. J. Michael Chu and Scott A. Dahnke are the members of the managing board of CP6 Management and as such could be deemed to share

 

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voting and dispositive control over the shares held of record and beneficially owned by Catterton Partners and Related Funds. Mr. Chu disclaims beneficial ownership of any shares held of record and beneficially owned by Catterton Partners and Related Funds. The business address of Mr. Chu is c/o Catterton Partners, 599 West Putnam Avenue, Greenwich, Connecticut 06830.

(8)	Includes 271,837 shares subject to stock options that Mr. Kadow has the right to acquire within 60 days of May 15, 2012 at an exercise price of $6.50 per share. Does not include 182,223 shares subject to stock options that are not exercisable within 60 days of May 15, 2012.

(9)

Includes 82,300 shares of restricted stock that vest on June 14, 2012. Also includes 130,108 shares subject to stock options that Mr. Montgomery has the right to acquire within 60 days of May 15, 2012 at an exercise price of $6.50 per share. Does not include 22,963 shares subject to stock options that are not exercisable within 60 days of May 15, 2012.

(10)	Includes 1,850,000 shares subject to stock options that Ms. Smith has the right to acquire within 60 days of May 15, 2012 at an exercise price of $6.50 per share. Does not include up to 3,050,000 shares subject to stock options that are not exercisable within 60 days of May 15, 2012.

(11)

Includes 5,317,916 shares owned by CTS Equities, Limited Partnership, an investment partnership (“CTSLP”). Mr. Sullivan is a limited partner of CTSLP and the sole member of CTS Equities, LLC, the sole general partner of CTSLP. Also includes 611,415 shares held by a charitable foundation for which Mr. Sullivan serves as trustee.

 

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DESCRIPTION OF CAPITAL STOCK

General

Upon the closing of this offering, our certificate of incorporation will be amended and restated to provide for authorized capital stock of 475,000,000 shares of common stock, par value $0.01 per share, and 25,000,000 shares of undesignated preferred stock. As of May 15, 2012, we had outstanding 106,770,725 shares of common stock held by 95 stockholders of record, and we had outstanding options to purchase 11,794,250 shares of common stock, which options were exercisable at a weighted average exercise price of $7.53 per share.

After giving effect to this offering, we will have                  shares of common stock and no shares of preferred stock outstanding. The following summary describes all material provisions of our capital stock. We urge you to read our certificate of incorporation and our bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part.

Our certificate of incorporation and bylaws will contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and that may have the effect of delaying, deferring or preventing a future takeover or change in control of our company unless that takeover or change in control is approved by our board of directors. These provisions include a classified board of directors, elimination of stockholder action by written consents (except in limited circumstances), elimination of the ability of stockholders to call special meetings (except in limited circumstances), advance notice procedures for stockholder proposals, and supermajority vote requirements for amendments to our certificate of incorporation and bylaws.

Common Stock

Dividend Rights. Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of common stock will be entitled to receive dividends out of assets legally available at the times and in the amounts as the board of directors may from time to time determine.

Voting Rights. Each outstanding share of common stock will be entitled to one vote on all matters submitted to a vote of stockholders. Holders of shares of our common stock will not have cumulative voting rights.

Preemptive Rights. Our common stock will not be entitled to preemptive or other similar subscription rights to purchase any of our securities.

Conversion or Redemption Rights. Our common stock will be neither convertible nor redeemable.

Liquidation Rights. Upon our liquidation, the holders of our common stock will be entitled to receive pro rata our assets that are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding.

Listing. We intend to apply to have our shares of common stock listed on Nasdaq under the symbol “BLMN.”

Preferred Stock

Our board of directors may, without further action by our stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the designations, powers, preferences, privileges, and relative participating, optional or special rights as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption

 

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and liquidation preferences, any or all of which may be greater than the rights of the common stock. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of our common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of our liquidation before any payment is made to the holders of shares of our common stock. Under specified circumstances, the issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, our board of directors, without stockholder approval, may issue shares of preferred stock with voting and conversion rights that could adversely affect the holders of shares of our common stock and the market value of our common stock. Upon completion of this offering, there will be no shares of preferred stock outstanding, and we have no present intention to issue any shares of preferred stock.

Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws

Our certificate of incorporation and bylaws will contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and that may have the effect of delaying, deferring or preventing a future takeover or change in control of the company unless that takeover or change in control is approved by our board of directors.

These provisions include:

Classified Board. Our certificate of incorporation will provide that our board of directors will be divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board. In addition, because our board will be classified, under Delaware General Corporation Law, directors may only be removed for cause. Our certificate of incorporation will also provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed exclusively pursuant to a resolution adopted by our board of directors. Upon completion of this offering, our board of directors will have nine members.

Action by Written Consent; Special Meetings of Stockholders. Our certificate of incorporation will provide that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting once investment funds affiliated with our Sponsors cease to beneficially own more than 50% of our outstanding shares. Our certificate of incorporation and bylaws will also provide that, except as otherwise required by law, special meetings of the stockholders can be called only pursuant to a resolution adopted by a majority of the total number of directors that the company would have if there were no vacancies or, until the date that investment funds affiliated with our Sponsors cease to beneficially own more than 50% of our outstanding shares, at the request of holders of 50% or more of our outstanding shares. Except as described above, stockholders will not be permitted to call a special meeting or to require the board of directors to call a special meeting.

Advance Notice Procedures. Our bylaws will establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our Secretary timely written notice, in accordance with our bylaws, of the stockholder’s intention to bring that business before the meeting. Although the bylaws will not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may

 

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discourage or deter a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the company.

Super Majority Approval Requirements. The Delaware General Corporation Law generally provides that the affirmative vote of a majority of the outstanding stock entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless either a corporation’s certificate of incorporation or bylaws require a greater percentage. Our certificate of incorporation and bylaws will provide that the affirmative vote of holders of at least 75% of the total votes entitled to vote in the election of directors will be required to amend, alter, change or repeal our bylaws and specified provisions of our certificate of incorporation once investment funds affiliated with our Sponsors cease to beneficially own more than 50% of our outstanding shares. This requirement of a supermajority vote to approve amendments to our certificate of incorporation and bylaws could enable a minority of our stockholders to exercise veto power over any such amendments.

Authorized but Unissued Shares. Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise.

Business Combinations With Interested Stockholders. We have elected in our certificate of incorporation not to be subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more of the corporation’s voting stock, for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Accordingly, we are not subject to any anti-takeover effects of Section 203. However, our certificate of incorporation will contain provisions that have the same effect as Section 203, except that they provide that our Sponsors and their respective affiliates will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions.

Corporate Opportunities

Our certificate of incorporation will provide that we renounce any interest or expectancy of the company in the business opportunities of our Sponsors and of their officers, directors, agents, shareholders, members, partners, affiliates and subsidiaries and each such party shall not have any obligation to offer us those opportunities unless presented to a director or officer of the company in his or her capacity as a director or officer of the company.

Limitations on Liability and Indemnification of Officers and Directors

Our certificate of incorporation will limit the liability of our directors to the fullest extent permitted by the Delaware General Corporation Law, and our bylaws will provide that we will indemnify them to the fullest extent permitted by such law. We expect to enter into indemnification agreements with our current directors and executive officers prior to the completion of this offering and expect to enter into a similar agreement with any new directors or executive officers. We expect to increase our directors’ and officers’ liability insurance coverage prior to the completion of this offering.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be                 . Its telephone number is     .

 

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for shares of our common stock. We cannot predict the effect, if any, that future sales of shares of our common stock, or the availability for future sale of shares of our common stock, will have on the market price of shares of our common stock prevailing from time to time. The sale of substantial amounts of shares of our common stock in the market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock.

Sale of Restricted Shares

Upon completion of this offering, we will have                  shares of common stock outstanding. Of these shares, the shares sold in this offering, plus any shares sold upon exercise of the underwriters’ option to purchase additional shares, will be freely tradable without restriction under the Securities Act, except for any shares purchased by our “affiliates” as that term is defined in Rule 144 promulgated under the Securities Act. In general, affiliates include our executive officers, directors, and 10% shareholders. Shares purchased by affiliates will remain subject to the resale limitations of Rule 144.

Upon completion of this offering,                  shares of our common stock will be “restricted securities,” as that term is defined in Rule 144 promulgated under the Securities Act. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 promulgated under the Securities Act, which are summarized below.

As a result of the lock-up agreements described below and the provisions of Rules 144 and Rule 701 promulgated under the Securities Act, the shares of our common stock (excluding the shares sold in this offering) will be available for sale in the public market as follows:

 

•

shares will be eligible for sale on the date of this prospectus;

 

•

shares will be eligible for sale upon the expiration of the lock-up agreements, as more particularly described below, beginning 180 days after the date of this prospectus; and

 

•

shares will be eligible for sale, upon the exercise of vested options, upon the expiration of the lock-up agreements, as more particularly described below, beginning 180 days after the date of this prospectus.

Rule 144

Generally, Rule 144 provides that an affiliate who has beneficially owned “restricted” shares of our common stock for at least six months will be entitled to sell on the open market in brokers’ transactions, within any three-month period, a number of shares that does not exceed the greater of:

 

•

1% of the number of shares of our common stock then outstanding, which will equal approximately                  shares immediately after this offering; or

 

•

the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

In addition, sales under Rule 144 are subject to requirements with respect to manner of sale, notice, and the availability of current public information about us.

 

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If any person who is deemed to be our affiliate purchases shares of our common stock in this offering or acquires shares of our common stock pursuant to one of our employee benefits plans, sales under Rule 144 of the shares held by that person will be subject to the volume limitations and other restrictions described in the preceding two paragraphs.

The volume limitation, manner of sale and notice provisions described above will not apply to sales by non-affiliates. For purposes of Rule 144, a non-affiliate is any person or entity who is not our affiliate at the time of sale and has not been our affiliate during the preceding three months. Once we have been a reporting company for 90 days, persons who have beneficially owned restricted shares of our common stock for six months may rely on Rule 144 provided that certain public information regarding us is available. The six-month holding period increases to one year if we have not been a reporting company for at least 90 days. However, a non-affiliate who has beneficially owned the restricted shares proposed to be sold for at least one year will not be subject to any restrictions under Rule 144 regardless of how long we have been a reporting company.

Rule 701

Under Rule 701, each of our employees, officers, directors, consultants or advisors who purchased shares pursuant to a written compensatory plan or contract is eligible to resell these shares 90 days after the effective date of this offering in reliance upon Rule 144, but without compliance with specific restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the holding period requirement and that non-affiliates may sell their shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation, or notice provisions of Rule 144.

Lock-Up Agreements

We, our directors and officers and holders of substantially all of our equity securities have agreed, subject to certain exceptions, not to offer, sell or transfer any common stock or securities convertible into or exchangeable or exercisable for common stock for 180 days after the date of this prospectus without first obtaining the written consent of each of the representatives of the underwriters, subject to a possible extension beyond the end of such 180-day period. See “Underwriting” for a description of these lock-up agreements.

Registration Statements on Form S-8

We intend to file one or more registration statements on Form S-8 under the Securities Act as soon as practicable after the completion of this offering for shares issued upon the exercise of options and shares to be issued under our employee benefit plans. As a result, any such options or shares will be freely tradable in the public market. We have granted options to purchase                  shares of our common stock that will vest and will be exercisable upon the completion of this offering. However, such shares held by affiliates will still be subject to the volume limitation, manner of sale, notice, and public information requirements of Rule 144 unless otherwise resalable under Rule 701.

Registration Rights

Beginning 180 days after the date of this prospectus, subject to certain exceptions and automatic extensions in certain circumstances, holders of                  shares of our common stock will be entitled to the registration rights described under “Related Party Transactions—Arrangements With Our Investors.” Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon effectiveness of the registration.

 

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MATERIAL U.S. FEDERAL INCOME AND ESTATE

TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

The following is a summary of the material U.S. federal income and estate tax considerations relating to the purchase, ownership and disposition of our common stock by Non-U.S. Holders (defined below). This summary does not purport to be a complete analysis of all the potential tax considerations relevant to Non-U.S. Holders of our common stock. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), the Treasury regulations promulgated or proposed thereunder and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect.

This summary assumes that shares of our common stock are held as “capital assets” within the meaning of Section 1221 of the Internal Revenue Code. This summary does not purport to deal with all aspects of U.S. federal income and estate taxation that might be relevant to particular Non-U.S. Holders in light of their particular investment circumstances or status, nor does it address specific tax considerations that may be relevant to particular persons (including, for example, financial institutions, broker-dealers, insurance companies, partnerships or other pass-through entities, certain U.S. expatriates, tax-exempt organizations, pension plans, “controlled foreign corporations,” “passive foreign investment companies,” corporations that accumulate earnings to avoid U.S. federal income tax, persons in special situations, such as those who have elected to mark securities to market or those who hold common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment, or holders subject to the alternative minimum tax). In addition, except as explicitly addressed herein with respect to estate tax, this summary does not address estate and gift tax considerations or considerations under the tax laws of any state, local or non-U.S. jurisdiction.

For purposes of this summary, a “Non-U.S. Holder” means a beneficial owner of common stock that for U.S. federal income tax purposes is not treated as a partnership and is not:

 

•

an individual who is a citizen or resident of the United States;

 

•

a corporation or any other organization taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

 

•

an estate, the income of which is included in gross income for U.S. federal income tax purposes regardless of its source; or

 

•

a trust, if (i) a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions or (i) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of persons treated as its partners for U.S. federal income tax purposes will generally depend upon the status of the partner and the activities of the partnership. Partnerships and other entities that are classified as partnerships for U.S. federal income tax purposes and persons holding our common stock through a partnership or other entity classified as a partnership for U.S. federal income tax purposes are urged to consult their own tax advisors.

There can be no assurance that the Internal Revenue Service (“IRS”) will not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, a ruling from the IRS with respect to the U.S. federal income or estate tax consequences to a Non-U.S. Holder of the purchase, ownership or disposition of our common stock.

THIS SUMMARY IS NOT INTENDED TO BE TAX ADVICE. NON-U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME AND ESTATE TAXATION, STATE, LOCAL AND NON-U.S. TAXATION AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK.

 

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Distributions on Our Common Stock

As discussed under “Dividend Policy” above, we do not currently expect to pay regular dividends on our common stock. If we do make a distribution of cash or property with respect to our common stock, any such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will constitute a return of capital and will first reduce the holder’s basis in our common stock, but not below zero. Any remaining excess will be treated as capital gain, subject to the tax treatment described below in “Gain on Sale, Exchange or Other Taxable Disposition of Our Common Stock.” Any such distribution would also be subject to the discussion below in “—Additional Withholding and Information Reporting Requirements.”

Dividends paid to a Non-U.S. Holder generally will be subject to a 30% U.S. federal withholding tax unless such Non-U.S. Holder provides us or our agent, as the case may be, with the appropriate IRS Form W-8, such as:

 

•

IRS Form W-8BEN (or successor form) certifying, under penalties of perjury, a reduction in withholding under an applicable income tax treaty, or

 

•

IRS Form W-8ECI (or successor form) certifying that a dividend paid on common stock is not subject to withholding tax because it is effectively connected with a trade or business in the United States of the Non-U.S. Holder (in which case such dividend generally will be subject to regular graduated U.S. federal income tax rates as described below).

The certification requirement described above also may require a Non-U.S. Holder that provides an IRS form or that claims treaty benefits to provide its U.S. taxpayer identification number. Special certification and other requirements apply in the case of certain Non-U.S. Holders that are intermediaries or pass-through entities for U.S. federal income tax purposes.

Each Non-U.S. Holder is urged to consult its own tax advisor about the specific methods for satisfying these requirements. A claim for exemption will not be valid if the person receiving the applicable form has actual knowledge or reason to know that the statements on the form are false.

If dividends are effectively connected with a trade or business in the United States of a Non-U.S. Holder (and, if required by an applicable income tax treaty, attributable to a U.S. permanent establishment), the Non-U.S. Holder, although exempt from the withholding tax described above (provided that the certifications described above are satisfied), generally will be subject to U.S. federal income tax on such dividends on a net income basis in the same manner as if it were a resident of the United States. In addition, if a Non-U.S. Holder is treated as a corporation for U.S. federal income tax purposes, the Non-U.S. Holder may be subject to an additional “branch profits tax” equal to 30% (unless reduced by an applicable income treaty) of its earnings and profits in respect of such effectively connected dividend income.

If a Non-U.S. Holder is eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty, the holder may obtain a refund or credit of any excess amount withheld by timely filing an appropriate claim for refund with the IRS.

Gain on Sale, Exchange or Other Taxable Disposition of Our Common Stock

Subject to the discussion below in “—Additional Withholding and Information Reporting Requirements,” in general, a Non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax on gain realized upon such holder’s sale, exchange or other taxable disposition of shares of our common stock unless (i) such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the

 

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taxable year of disposition, and certain other conditions are met, (ii) we are or have been a “United States real property holding corporation,” as defined in the Internal Revenue Code (a “USRPHC”), at any time within the shorter of the five-year period preceding the disposition and the Non-U.S. Holder’s holding period in the shares of our common stock, and certain other requirements are met, or (iii) such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States).

If the first exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty) on the amount by which such Non-U.S. Holder’s capital gains allocable to U.S. sources (including gain, if any, realized on a disposition of our common stock) exceed capital losses allocable to U.S. sources during the taxable year of the disposition. If the third exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax with respect to such gain on a net income basis in the same manner as if it were a resident of the United States, and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch profits tax with respect any earnings and profits attributable to such gain at a rate of 30% (or at a reduced rate under an applicable income tax treaty).

Generally, a corporation is a USRPHC only if the fair market value of its U.S. real property interests (as defined in the Internal Revenue Code) equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. Although there can be no assurance in this regard, we believe that we are not, and do not anticipate becoming, a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we became a USRPHC, a Non-U.S. Holder would not be subject to U.S. federal income tax on a sale, exchange or other taxable disposition of our common stock by reason of our status as a USRPHC so long as our common stock is regularly traded on an established securities market at any time during the calendar year in which the disposition occurs and such Non-U.S. Holder does not own and is not deemed to own (directly, indirectly or constructively) more than 5% of our common stock at any time during the shorter of the five-year period ending on the date of disposition and the holder’s holding period. However, no assurance can be provided that our common stock will be regularly traded on an established securities market for purposes of the rules described above. Prospective investors are encouraged to consult their own tax advisors regarding the possible consequences to them if we are, or were to become, a USRPHC.

Additional Withholding and Information Reporting Requirements

Legislation enacted in March 2010 (commonly referred to as “FATCA”) generally will impose a U.S. federal withholding tax of 30% on payments to certain non-U.S. entities (including certain intermediaries), including dividends on and the gross proceeds from a sale or other disposition of our common stock, unless such persons comply with a complicated U.S. information reporting, disclosure and certification regime. This new regime requires, among other things, a broad class of persons to enter into agreements with the IRS to obtain, disclose and report information about their investors and account holders. This new regime and its requirements are different from and in addition to the certification requirements described elsewhere in this discussion. As currently proposed, the FATCA withholding rules would apply to certain payments, including dividend payments on our common stock, if any, paid after December 31, 2013, and to payments of gross proceeds from the sale or other dispositions of our common stock paid after December 31, 2014.

Although administrative guidance and proposed regulations have been issued, regulations implementing the new FATCA regime have not yet been finalized and the exact scope of these rules remains unclear and potentially subject to material changes. Prospective investors should consult their own tax advisors regarding the possible impact of these rules on their investment in our common stock, and the entities through which they hold our common stock, including, without limitation, the process and deadlines for meeting the applicable requirements to prevent the imposition of this 30% withholding tax under FATCA.

 

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Backup Withholding and Information Reporting

We must report annually to the IRS and to each Non-U.S. Holder the gross amount of the distributions on our common stock paid to the holder and the tax withheld, if any, with respect to the distributions.

Non-U.S. Holders may have to comply with specific certification procedures to establish that the holder is not a United States person (as defined in the Internal Revenue Code) in order to avoid backup withholding at the applicable rate, currently 28% and scheduled to increase to 31% for taxable years 2013 and thereafter, with respect to dividends on our common stock. Dividends paid to Non-U.S. Holders subject to the U.S. withholding tax, as described above in “—Distributions on Our Common Stock,” generally will be exempt from U.S. backup withholding.

Information reporting and backup withholding will generally apply to the proceeds of a disposition of our common stock by a Non-U.S. Holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the holder certifies its status as a Non-U.S. Holder and satisfies certain other requirements, or otherwise establishes an exemption. Dispositions effected through a non-U.S. office of a U.S. broker or a non-U.S. broker with substantial U.S. ownership or operations generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker. Prospective investors should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

Copies of information returns may be made available to the tax authorities of the country in which the Non-U.S. Holder resides or in which the Non-U.S. Holder is incorporated under the provisions of a specific treaty or agreement.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a Non-U.S. Holder can be refunded or credited against the Non-U.S. Holder’s U.S. federal income tax liability, if any, provided that an appropriate claim is timely filed with the IRS.

Federal Estate Tax

Common stock owned (or treated as owned) by an individual who is not a citizen or a resident of the United States (as defined for U.S. federal estate tax purposes) at the time of death will be included in the individual’s gross estate for U.S. federal estate tax purposes, unless an applicable estate or other tax treaty provides otherwise, and, therefore, may be subject to U.S. federal estate tax.

Medicare Contributions Tax

For taxable years beginning after December 31, 2012, a 3.8% tax is imposed on the net investment income (which includes dividends and gains recognized upon of a disposition of stock) of certain individuals, trusts and estates with adjusted gross income in excess of certain thresholds. This tax is imposed on individuals, estates and trusts that are U.S. Holders. The tax is expressly not imposed on nonresident aliens; however, estates and trusts that are not U.S. Holders are not expressly exempted from the tax. Therefore, non-U.S. Holders of our common shares should consult their tax advisors regarding application of this Medicare contribution tax in their particular situations.

 

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UNDERWRITING

Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are acting as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in an underwriting agreement among us, the selling stockholders and the underwriters, we and the selling stockholders have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us and the selling stockholders, the number of shares of common stock set forth opposite its name below.

 

Underwriter		Number of Shares
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. LLC
J.P. Morgan Securities LLC
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
Jefferies & Company, Inc.
William Blair & Company, L.L.C.
Raymond James & Associates, Inc.
Wells Fargo Securities, LLC
The Williams Capital Group, L.P.
Total

Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the shares sold under the underwriting agreement if any of these shares are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the underwriting agreement may be terminated.

We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Commissions and Discounts

The representatives have advised us and the selling stockholders that the underwriters propose initially to offer the shares to the public at the public offering price set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $         per share. After the initial offering, the public offering price, concession or any other term of the offering may be changed.

 

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The following table shows the public offering price, underwriting discount and proceeds before expenses to us and the selling stockholders. The information assumes either no exercise or full exercise by the underwriters of their option to purchase additional shares.

 

Per Share

Without Option

With Option

Public offering price

$

$

$

Underwriting discount

$

$

$

Proceeds, before expenses, to us

$

$

$

Proceeds, before expenses, to the selling stockholders

$

$

$

The expenses of the offering, not including the underwriting discount, are estimated at $             and are payable by us.

Option to Purchase Additional Shares

The selling stockholders have granted an option to the underwriters, exercisable for 30 days after the date of this prospectus, to purchase up to                  additional shares at the public offering price, less the underwriting discount. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional shares proportionate to that underwriter’s initial amount reflected in the above table.

Reserved Shares

At our request, the underwriters have reserved for sale, at the initial public offering price, up to 5% of the shares offered by this prospectus for sale to some of our directors, officers, employees and certain other persons who are associated with us. If these persons purchase reserved shares, this will reduce the number of shares available for sale to the general public. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus.

No Sales of Similar Securities

We, our executive officers and directors, the selling stockholders and our other existing security holders have agreed, subject to certain exceptions, not to sell or transfer any of our common stock or securities convertible into, exchangeable for, exercisable for, or repayable with our common stock, for 180 days after the date of this prospectus without first obtaining the written consent of the representatives. Specifically, we and these other persons have agreed, with certain limited exceptions, not to directly or indirectly:

 

•

offer, pledge, sell or contract to sell any of our common stock;

 

•

sell any option or contract to purchase any of our common stock;

 

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purchase any option or contract to sell any of our common stock;

 

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grant any option, right or warrant for the sale of any of our common stock;

 

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lend or otherwise dispose of or transfer any of our common stock;

 

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request or demand that we file a registration statement related to our common stock; or

 

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enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any of our common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.

 

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This lock-up provision applies to our common stock and to securities convertible into or exchangeable or exercisable for or repayable with our common stock. It also applies to our common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. In the event that either (x) during the last 17 days of the lock-up period referred to above, we issue an earnings release or material news or a material event relating to us occurs or (y) prior to the expiration of the lock-up period, we announce that we will release earnings results or become aware that material news or a material event will occur during the 16-day period beginning on the last day of the lock-up period, the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

Listing

We expect the shares to be approved for listing on the Nasdaq Global Select Market, subject to notice of issuance, under the symbol “BLMN.”

Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us, the selling stockholders and the representatives. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are:

 

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the valuation multiples of publicly traded companies that the representatives believe to be comparable to us;

 

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our financial information;

 

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the history of, and the prospects for, our company and the industry in which we compete;

 

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an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues;

 

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the present state of our development; and

 

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the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.

An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price.

The underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority.

Price Stabilization, Short Positions and Penalty Bids

Until the distribution of the shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price.

In connection with the offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not

 

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greater than the underwriters’ option to purchase additional shares described above. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option granted to them. “Naked” short sales are sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. The underwriters may conduct these transactions on the Nasdaq Global Select Market, in the over-the-counter market or otherwise.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Distribution

In connection with the offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail.

Other Relationships

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making and brokerage, and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of those services to us and to persons and entities with relationships with us, for which they received or will receive customary fees and expenses.

Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc. acted as initial purchasers in connection with the offering of our Senior Notes. In addition, affiliates of certain underwriters act in various capacities under our senior credit facility. Bank of America, N.A., an affiliate of, Merrill Lynch, Pierce, Fenner & Smith Incorporated, acts as syndication agent and Deutsche Bank AG New York Branch, an affiliate of Deutsche Bank Securities Inc., acts as administrative agent, pre-funded revolving credit facility deposit bank, swing line lender and a letter of credit issuer. Affiliates of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC also act as lenders under our senior credit facility. In addition, Bank of America, N.A., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, and German American Capital Corporation, an affiliate of Deutsche Bank Securities Inc., co-originated our 2012 CMBS Loan. Banc of America Merrill Lynch Large Loan Inc., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, acted as depositor in connection with the securitization of the mortgage loan portion of the 2012 CMBS Loan. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc. also acted

 

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as co-lead manager, bookrunner and placement agent, and JP Morgan Securities LLC acted as co-manager and placement agent for the 2012 CMBS Loan. Bank of America, N.A., is also acting as servicer for the 2012 CMBS Loan.

The underwriters may have ongoing relationships with, render services to, and engage in transactions with us and our affiliates, which relationships and transactions may create conflicts of interest between the underwriters, on the one hand, and the investors in this offering, on the other hand. For example, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc. acted as the placement agents for the mezzanine portion of the 2012 CMBS Loans, and may have ongoing relationships with these lenders. The underwriters also assisted us in arranging the Sale-Leaseback Transaction. These restaurant properties do not secure the 2012 CMBS Loan but include restaurants of the same brand and/or concept as those that do secure the 2012 CMBS Loan. In light of such activities and the ongoing relationships of the underwriters with us, for purposes of your assessment of potential conflicts of interest involving the underwriters as it relates to their placement of these securities, you should assume that the underwriters will be, or would like to become, involved as arrangers, placement agents, underwriters or in other roles in other transactions for such parties.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to securities and/or instruments of ours (directly, as collateral securing other obligations or otherwise) and/or person and entities with relationships with us. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Notice to Prospective Investors in the European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), no offer of shares may be made to the public in that Relevant Member State other than:

 

•

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

 

•

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives; or

 

•

in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares shall require the company or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed that (i) it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive, and (ii) in the case of any shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the shares acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, or in circumstances in which the prior consent of the representatives has been given to the offer or resale. In the case of any shares being offered to a financial intermediary as that term is used in

 

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Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.

The company, the representatives and their affiliates will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement.

This prospectus has been prepared on the basis that any offer of shares in any Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of shares. Accordingly, any person making or intending to make an offer in that Relevant Member State of shares which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for the company or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither the company nor the underwriters have authorized, nor do they authorize, the making of any offer of shares in circumstances in which an obligation arises for the company or the underwriters to publish a prospectus for such offer.

For the purpose of the above provisions, the expression “an offer to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Notice to Prospective Investors in the United Kingdom

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This document must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any investment or investment activity to which this document relates is only available to, and will be engaged in with, relevant persons.

Notice to Prospective Investors in Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the company, or the shares has been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss

 

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Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Notice to Prospective Investors in the Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

Notice to Prospective Investors in Hong Kong

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder.

Notice to Prospective Investors in Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (i) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (i) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (ii) where no consideration is given for the transfer; or (iii) by operation of law.

 

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Notice to Prospective Investors in Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

 

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LEGAL MATTERS

Baker & Hostetler LLP, Cleveland, Ohio, has passed upon the validity of the common stock offered hereby on our behalf. The underwriters are being represented by Ropes & Gray LLP, Boston, Massachusetts.

EXPERTS

The financial statements as of December 31, 2011 and 2010 and for each of the three years in the period ended December 31, 2011 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered certified public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of PGS Consultoria e Serviços Ltda. at December 31, 2010, and for the year then ended, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young Terco Auditores Independentes S.S., independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act that registers the shares of our common stock to be sold in this offering. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to us and our common stock, you should refer to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.

We are not currently subject to the informational requirements of the Securities Exchange Act of 1934. As a result of this offering, we will become subject to the informational requirements of the Exchange Act and, in accordance therewith, will file reports and other information with the SEC. The registration statement, reports and other information we file with the SEC can be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. You may obtain information regarding the operation of the public reference room by calling 1-800-SEC-0330. The SEC also maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information that we file electronically with the SEC.

 

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

Bloomin’ Brands, Inc.
		Page
Audited financial statements for the years ended December 31, 2011, 2010 and 2009
Report of Independent Registered Certified Public Accounting Firm			F-2
Consolidated Balance Sheets as of December 31, 2011 and 2010			F-3
Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009			F-4
Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the years ended December 31, 2011, 2010 and 2009			F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009			F-6
Notes to Consolidated Financial Statements for the years ended December 31, 2011, 2010 and 2009			F-8
		Page
Unaudited financial statements for the quarterly period ended March 31, 2012
Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011			F-54
Consolidated Statements of Operations and Comprehensive Income for the three months ended March  31, 2012 and 2011			F-55
Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March  31, 2012 and 2011			F-56
Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011			F-57
Notes to Unaudited Consolidated Financial Statements			F-59
PGS Consultoria e Serviços Ltda.
		Page
Financial statements for the years ended December 31, 2011 (unaudited), 2010 and 2009 (unaudited)
Report of Independent Auditors			F-73
Consolidated Balance Sheets as of December 31, 2011 (unaudited), 2010 and 2009 (unaudited)			F-74
Consolidated Income Statements for the years ended December  31, 2011 (unaudited), 2010 and 2009 (unaudited)			F-75
Consolidated Statements of Changes in Members’ Equity for the years ended December  31, 2011 (unaudited), 2010 and 2009 (unaudited)			F-76
Consolidated Statements of Cash Flows for the years ended December 31, 2011 (unaudited), 2010 and 2009 (unaudited)			F-77
Notes to Consolidated Financial Statements for the years ended December  31, 2011 (unaudited), 2010 and 2009 (unaudited)			F-78

 

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Report of Independent Registered Certified Public Accounting Firm

To the Board of Directors and Shareholders of

Bloomin’ Brands, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in shareholders’ equity (deficit), and cash flows present fairly, in all material respects, the financial position of Bloomin’ Brands, Inc. and its subsidiaries at December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 16(b) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits. We conducted our audits of these statements and the financial statement schedule in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements and the financial statement schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements and the financial statement schedule, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Tampa, Florida

April 6, 2012

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data)

 

		December 31,
		2011				2010
ASSETS
Current Assets
Cash and cash equivalents		$	482,084			$	365,536
Current portion of restricted cash			20,640				8,145
Inventories			69,223				58,974
Deferred income tax assets			31,959				26,418
Other current assets, net			104,373				71,820
Total current assets			708,279				530,893
Restricted cash			3,641				19,527
Property, fixtures and equipment, net			1,635,898				1,673,281
Investments in and advances to unconsolidated affiliates, net			35,033				31,673
Goodwill			268,772				269,901
Intangible assets, net			566,148				572,066
Other assets, net			136,165				146,070
Total assets		$	3,353,936			$	3,243,411
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable		$	97,393			$	78,254
Accrued and other current liabilities			211,486				194,431
Current portion of partner deposits and accrued partner obligations			15,044				14,001
Unearned revenue			299,596				269,058
Current portion of long-term debt			332,905				95,284
Total current liabilities			956,424				651,028
Partner deposits and accrued partner obligations			98,681				109,906
Deferred rent			70,135				57,743
Deferred income tax liabilities			193,262				187,843
Long-term debt, net			1,751,885				2,051,740
Guaranteed debt			24,500				24,500
Other long-term liabilities, net			218,752				216,562
Total liabilities			3,313,639				3,299,322
Commitments and contingencies (see Note 16)
Shareholders’ Equity (Deficit)
Bloomin’ Brands, Inc. Shareholders’ Equity (Deficit)
Common stock, $.01 par value, 120,000,000 shares authorized; 106,573,193 shares issued and outstanding at December 31, 2011; and 120,000,000 shares authorized; 106,573,193 shares issued and outstanding at December 31, 2010			1,066				1,066
Additional paid-in capital			874,753				871,963
Accumulated deficit			(822,625	)			(922,630	)
Accumulated other comprehensive loss			(22,344	)			(19,633	)
Total Bloomin’ Brands, Inc. shareholders’ equity (deficit)			30,850				(69,234	)
Noncontrolling interests			9,447				13,323
Total shareholders’ equity (deficit)			40,297				(55,911	)
Total liabilities and shareholders’ equity (deficit)		$	3,353,936			$	3,243,411

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Data)

 

		Years Ended December 31,
		2011				2010				2009
Revenues
Restaurant sales		$	3,803,252			$	3,594,681			$	3,573,760
Other revenues			38,012				33,606				27,896
Total revenues			3,841,264				3,628,287				3,601,656
Costs and expenses
Cost of sales			1,226,098				1,152,028				1,184,074
Labor and other related			1,094,117				1,034,393				1,024,063
Other restaurant operating			890,004				864,183				849,696
Depreciation and amortization			153,689				156,267				186,074
General and administrative			291,124				252,793				252,298
Recovery of note receivable from affiliated entity			(33,150	)			—				—
Loss on contingent debt guarantee			—				—				24,500
Goodwill impairment			—				—				58,149
Provision for impaired assets and restaurant closings			14,039				5,204				134,285
Income from operations of unconsolidated affiliates			(8,109	)			(5,492	)			(2,196	)
Total costs and expenses			3,627,812				3,459,376				3,710,943
Income (loss) from operations			213,452				168,911				(109,287	)
Gain on extinguishment of debt			—				—				158,061
Other income (expense), net			830				2,993				(199	)
Interest expense, net			(83,387	)			(91,428	)			(115,880	)
Income (loss) before provision (benefit) for income taxes			130,895				80,476				(67,305	)
Provision (benefit) for income taxes			21,716				21,300				(2,462	)
Net income (loss)			109,179				59,176				(64,843	)
Less: net income (loss) attributable to noncontrolling interests			9,174				6,208				(380	)
Net income (loss) attributable to Bloomin’ Brands, Inc.		$	100,005			$	52,968			$	(64,463	)
Net income (loss) per common share:
Basic		$	0.94			$	0.50			$	(0.62	)
Diluted		$	0.94			$	0.50			$	(0.62	)
Weighted average common shares outstanding:
Basic			106,224				105,968				104,442
Diluted			106,689				105,968				104,442

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

(In Thousands)

 

		Bloomin’ Brands, Inc.
		Common Stock				Common Stock Amount				Additional Paid-in Capital				Accum- ulated Deficit				Accumulated Other Comprehensive Loss				Noncontrolling Interests				Total
Balance, December 31, 2008			106,573			$	1,066			$	857,088			$	(917,213	)		$	(34,462	)		$	26,707			$	(66,814	)
Net loss			—				—				—				(64,463	)			—				(380	)			(64,843	)
Foreign currency translation adjustment			—				—				—				—				10,273				(19	)			10,254
Total comprehensive loss			—				—				—				—				—				(399	)			(54,589	)
Stock-based compensation			—				—				15,503				—				—				—				15,503
Issuance of notes receivable due from shareholders			—				—				(3,389	)			—				—				—				(3,389	)
Distributions to noncontrolling interests			—				—				—				—				—				(9,083	)			(9,083	)
Contributions from noncontrolling interests			—				—				—				—				—				1,747				1,747
Balance, December 31, 2009			106,573			$	1,066			$	869,202			$	(981,676	)		$	(24,189	)		$	18,972			$	(116,625	)
Net income			—				—				—				52,968				—				6,208				59,176
Foreign currency translation adjustment			—				—				—				—				4,556				—				4,556
Total comprehensive income			—				—				—				—				—				6,208				63,732
Cumulative effect from adoption of variable interest entity guidance			—				—				—				6,078				—				(386	)			5,692
Stock-based compensation			—				—				3,411				—				—				—				3,411
Issuance of notes receivable due from shareholders			—				—				(747	)			—				—				—				(747	)
Repayments of notes receivable due from shareholders			—				—				97				—				—				—				97
Distributions to noncontrolling interests			—				—				—				—				—				(11,596	)			(11,596	)
Contributions from noncontrolling interests			—				—				—				—				—				125				125
Balance, December 31, 2010			106,573			$	1,066			$	871,963			$	(922,630	)		$	(19,633	)		$	13,323			$	(55,911	)
Net income			—				—				—				100,005				—				9,174				109,179
Foreign currency translation adjustment			—				—				—				—				(2,711	)			—				(2,711	)
Total comprehensive income			—				—				—				—				—				9,174				106,468
Stock-based compensation			—				—				3,907				—				—				—				3,907
Issuance of notes receivable due from shareholders			—				—				(1,082	)			—				—				—				(1,082	)
Repayments of notes receivable due from shareholders			—				—				3				—				—				—				3
Distributions to noncontrolling interests			—				—				(38	)			—				—				(13,472	)			(13,510	)
Contributions from noncontrolling interests			—				—				—				—				—				422				422
Balance, December 31, 2011			106,573			$	1,066			$	874,753			$	(822,625	)		$	(22,344	)		$	9,447			$	40,297

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

 

		Years Ended December 31,
		2011				2010				2009
Cash flows provided by operating activities:
Net income (loss)		$	109,179			$	59,176			$	(64,843	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization			153,689				156,267				186,074
Amortization of deferred financing fees			12,297				13,435				14,315
Amortization of capitalized gift card sales commissions			18,058				15,046				10,884
Goodwill impairment			—				—				58,149
Provision for impaired assets and restaurant closings			14,039				5,204				134,285
Accretion on debt discounts			663				616				566
Stock-based and other non-cash compensation expense			39,228				39,512				47,604
Income from operations of unconsolidated affiliates			(8,109	)			(5,492	)			(2,196	)
Change in deferred income taxes			(189	)			5,149				(15,145	)
Loss on disposal of property, fixtures and equipment			1,987				4,050				5,575
Unrealized loss (gain) on derivative financial instruments			723				(18,267	)			(6,998	)
Gain on life insurance and restricted cash investments			(126	)			(2,821	)			(8,550	)
Loss on contingent debt guarantee			—				—				24,500
Gain on extinguishment of debt			—				—				(158,061	)
Loss (gain) on disposal of business			4,331				—				(2,491	)
Provision for bad debt expense			117				768				1,870
Recovery of note receivable from affiliated entity			(33,150	)			—				—
Change in assets and liabilities:
(Increase) decrease in inventories			(10,525	)			(2,599	)			27,471
Increase in other current assets			(59,570	)			(13,891	)			(11,409	)
Decrease in other assets			8,209				10,721				8,305
Decrease in accrued interest payable			(27	)			(181	)			(2,227	)
Increase (decrease) in accounts payable and accrued and other current liabilities			32,179				(28,420	)			(66,175	)
Increase in deferred rent			12,510				10,677				14,193
Increase in unearned revenue			30,623				31,964				24,847
Decrease in other long-term liabilities			(3,686	)			(5,760	)			(25,006	)
Net cash provided by operating activities			322,450				275,154				195,537
Cash flows used in investing activities:
Purchases of Company-owned life insurance			(2,027	)			(2,405	)			(6,571	)
Proceeds from sale of Company-owned life insurance			2,638				6,411				16,886
Proceeds from sale of property, fixtures and equipment			1,190				462				3,070
De-consolidation of subsidiary			—				(4,398	)			—
Acquisition of business			—				—				(450	)
Proceeds from sale of a business			10,119				—				1,653
Capital expenditures			(120,906	)			(60,476	)			(57,528	)
Restricted cash received for capital expenditures, property taxes and certain deferred compensation plans			86,579				18,545				27,386

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

(In Thousands)

 

		Years Ended December 31,
		2011				2010				2009
Restricted cash used to fund capital expenditures, property taxes and certain deferred compensation plans			(83,148	)			(29,860	)			(23,782	)
Royalty termination fee			(8,547	)			—				—
Payments from unconsolidated affiliates			960				—				165
Net cash used in investing activities			(113,142	)			(71,721	)			(39,171	)
Cash flows used in financing activities:
Repayments of long-term debt			(25,189	)			(140,853	)			(24,506	)
Proceeds from borrowings on revolving credit facilities			33,000				61,000				23,700
Repayments of borrowings on revolving credit facilities			(78,072	)			(55,928	)			(12,700	)
Collection of note receivable from affiliated entity			33,300				—				—
Extinguishment of senior notes			—				—				(75,967	)
Deferred financing fees			(2,222	)			(1,391	)			(183	)
Purchase of note related to guaranteed debt of affiliated entity			—				—				(33,283	)
Contributions from noncontrolling interests			422				125				1,747
Distributions to noncontrolling interests			(13,510	)			(11,596	)			(9,083	)
Repayments of partner deposits and accrued partner obligations			(37,286	)			(20,936	)			(7,124	)
Receipts of partner deposits and other contributions			1,336				2,914				3,391
Issuance of notes receivable due from shareholders			(1,082	)			(747	)			(3,389	)
Repayments of notes receivable due from shareholders			3				97				—
Net cash used in financing activities			(89,300	)			(167,315	)			(137,397	)
Effect of exchange rate changes on cash and cash equivalents			(3,460	)			(1,539	)			870
Net increase in cash and cash equivalents			116,548				34,579				19,839
Cash and cash equivalents at the beginning of the period			365,536				330,957				311,118
Cash and cash equivalents at the end of the period		$	482,084			$	365,536			$	330,957
Supplemental disclosures of cash flow information:
Cash paid for interest		$	72,099			$	96,718			$	109,023
Cash paid for income taxes, net of refunds			27,699				10,779				21,342
Supplemental disclosures of non-cash investing and financing activities:
Conversion of partner deposits and accrued partner obligations to notes payable		$	5,764			$	5,685			$	1,204
Decrease in guaranteed debt			—				—				(24,500	)
Acquisitions of property, fixtures and equipment through accounts payable or capital lease liabilities			8,683				2,506				5,021

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Bloomin’ Brands, Inc. (“Bloomin’ Brands” or the “Company”), formerly known as Kangaroo Holdings, Inc. was formed by an investor group comprised of funds advised by Bain Capital Partners, LLC (“Bain Capital”), Catterton Management Company, LLC (“Catterton”), Chris T. Sullivan, Robert D. Basham and J. Timothy Gannon (the “Founders”) and certain members of our management. On June 14, 2007, Bloomin’ Brands acquired OSI Restaurant Partners, Inc. by means of a merger and related transactions (the “Merger”). At the time of the Merger, OSI Restaurant Partners, Inc. was converted into a Delaware limited liability company named OSI Restaurant Partners, LLC (“OSI”). In connection with the Merger, Bloomin’ Brands implemented a new ownership and financing arrangement for some of our restaurant properties, pursuant to which Private Restaurant Properties, LLC (“PRP”), a wholly-owned subsidiary of Bloomin’ Brands, acquired 343 restaurant properties from OSI and leased them back to subsidiaries of OSI. OSI remains our primary operating entity and a wholly-owned subsidiary of Bloomin’ Brands continues to lease certain of our owned restaurant properties to OSI’s subsidiaries.

The total purchase price for the Merger was approximately $3.1 billion, and it was financed by borrowings under senior secured credit facilities and a commercial mortgage-backed securities loan (see Note 11), proceeds from the issuance of senior notes (see Note 11), an investment made by Bain Capital and Catterton, rollover equity from the Founders and investments made by certain members of management.

The Company owns and operates casual, upscale casual and fine dining restaurants primarily in the United States. The Company’s restaurant portfolio has five concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar and Roy’s. Additional Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants in which the Company has no direct investment are operated under franchise agreements.

In the opinion of the Company, all adjustments necessary for the fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented have been included.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Company’s consolidated financial statements include the accounts and operations of Bloomin’ Brands, Inc. and its wholly-owned subsidiaries, including OSI and PRP. All intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest entities in which the Company is deemed to have a controlling financial interest as a result of the Company having: (1) the power to direct the activities that most significantly impact the entity’s economic performance and (2) the obligation to absorb the losses or the right to receive the benefits that could potentially be significant to the variable interest entity. If the Company has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the operations of the variable interest entity are included in the consolidated financial statements (see Note 18).

The Company is a franchisor of 161 restaurants as of December 31, 2011, but does not possess any ownership interests in its franchisees and generally does not provide financial support to franchisees in its typical franchise relationship. These franchise relationships are not deemed variable interest entities and are not consolidated.

The equity method of accounting is used for investments in affiliated companies in which the Company is not in control, the Company’s interest is generally between 20% and 50% and the Company has the ability to exercise significant influence over the entity. The Company’s share of earnings or losses of affiliated companies

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

accounted for under the equity method is recorded in “Income from operations of unconsolidated affiliates” in its Consolidated Statements of Operations. Through a joint venture arrangement with PGS Participacoes Ltda., the Company holds a 50% ownership interest in PGS Consultoria e Serviços Ltda. (the “Brazilian Joint Venture”). The Brazilian Joint Venture was formed in 1998 for the purpose of operating Outback Steakhouse franchise restaurants in Brazil. The Company accounts for the Brazilian Joint Venture under the equity method of accounting (see Note 17).

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated.

Cash and Cash Equivalents

Cash equivalents consist of investments that are readily convertible to cash with an original maturity date of three months or less. Cash and cash equivalents include $44.3 million and $31.5 million as of December 31, 2011 and 2010, respectively, for amounts in transit from credit card companies since settlement is reasonably assured.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash and cash equivalents and restricted cash. The Company attempts to limit its credit risk by utilizing outside investment managers with major financial institutions that, in turn, invest in United States treasury security funds, certificates of deposit, money market funds, noninterest-bearing accounts and other highly rated investments and marketable securities. At times, cash balances may be in excess of FDIC insurance limits.

Financial Instruments

Disclosure of fair value information about financial instruments, whether or not recognized in the Consolidated Balance Sheets, is required for those instruments for which it is practical to estimate that value. Fair value is a market-based measurement.

The Company’s non-derivative financial instruments at December 31, 2011 and 2010 consist of cash equivalents, restricted cash, accounts receivable, accounts payable and current and long-term debt. The fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts reported in the Consolidated Balance Sheets due to their short duration. The carrying amounts of restricted cash, PRP’s commercial mortgage-backed securities loan and OSI’s other notes payable, sale-leaseback obligations and guaranteed debt approximate fair value. The fair value of OSI’s senior secured credit facilities and senior notes is determined based on quoted market prices. The following table includes the carrying value and fair value of OSI’s senior secured credit facilities and senior notes at December 31, 2011 and 2010 (in thousands):

 

		December 31,
		2011								2010
		Carrying Value				Fair Value				Carrying Value				Fair Value
Senior secured term loan facility		$	1,014,400			$	953,536			$	1,035,000			$	985,838
Senior secured pre-funded revolving credit facility			33,000				31,020				78,072				74,364
Senior notes			248,075				254,277				248,075				257,998

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

Derivatives

The Company is highly leveraged and exposed to interest rate risk to the extent of its variable-rate debt. The Company manages its interest rate risk by offsetting some of its variable-rate debt with fixed-rate debt, through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The Company uses an interest rate cap as a method to limit the volatility of PRP’s variable-rate commercial mortgage-backed securities loan. Under this interest rate cap, which renews annually, interest rate payments have a ceiling of 6.31%. If the market rate exceeds the ceiling, the counterparty must pay the Company an amount sufficient to reduce the interest payment to 6.31%. The interest rate cap did not have any market value at December 31, 2011 and 2010. From September 2007 to September 2010, the Company used an interest rate collar as part of its interest rate risk management strategy to manage its exposure to interest rate movements related to OSI’s senior secured credit facilities. Given the interest rate environment, the Company did not enter into another derivative financial instrument upon the maturity of its interest rate collar on September 30, 2010.

The Company’s restaurants are dependent upon energy to operate and are impacted by changes in energy prices, including natural gas. The Company uses derivative instruments to mitigate some of its overall exposure to material increases in natural gas prices. The Company records mark-to-market changes in the fair value of derivative instruments in earnings in the period of change. The Company does not enter into financial instruments for trading or speculative purposes.

Inventories

Inventories consist of food and beverages, and are stated at the lower of cost (first-in, first-out) or market. The Company periodically makes advance purchases of various inventory items to ensure adequate supply or to obtain favorable pricing. At December 31, 2011 and 2010, inventories included advance purchases of approximately $23.4 million and $10.7 million, respectively.

Consideration Received from Vendors

The Company receives consideration for a variety of vendor-sponsored programs, such as volume rebates, promotions and advertising allowances. Vendor consideration is recorded as a reduction of Cost of sales or Other restaurant operating expenses when recognized in the Company’s Consolidated Statements of Operations. Advertising allowances are intended to offset the Company’s costs of promoting and selling menu items in its restaurants and are recorded as a reduction to Other restaurant operating expenses when earned.

Restricted Cash

At December 31, 2011 and 2010, the current portion of restricted cash of $20.6 million and $8.1 million, respectively, was restricted for the payment of property taxes, the settlement of obligations in a rabbi trust for the Partner Equity Plan (the “PEP”) and the settlement of other deferred compensation plans and bonus arrangements. The current portion of restricted cash at December 31, 2011 also included the fulfillment of certain provisions in PRP’s commercial mortgage-backed securities loan. Long-term restricted cash at December 31, 2011 and 2010 of $3.6 million and $19.5 million, respectively, was restricted for the settlement of other deferred compensation plans and bonus arrangements. Long-term restricted cash at December 31, 2010 also included amounts restricted for the fulfillment of certain provisions in PRP’s commercial mortgage-backed securities loan.

Property, Fixtures and Equipment

Property, fixtures and equipment are stated at cost, net of accumulated depreciation. At the time property, fixtures and equipment are retired, or otherwise disposed of, the asset and accumulated depreciation are

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

removed from the accounts and any resulting gain or loss is included in earnings. The Company expenses repair and maintenance costs that maintain the appearance and functionality of the restaurant but do not extend the useful life of any restaurant asset. Improvements to leased properties are depreciated over the shorter of their useful life or the lease term, which includes renewal periods that are reasonably assured. Depreciation is computed on the straight-line method over the following estimated useful lives:

 

Buildings and building improvements			20 to 30 years
Furniture and fixtures			5 to 7 years
Equipment			2 to 7 years
Leasehold improvements			5 to 20 years
Capitalized software			3 to 5 years

The Company’s accounting policies regarding property, fixtures and equipment include certain management judgments and projections regarding the estimated useful lives of these assets, the residual values to which the assets are depreciated or amortized, the determination of expected lease terms and the determination of what constitutes increasing the value and useful life of existing assets. These estimates, judgments and projections may produce materially different amounts of depreciation and amortization expense than would be reported if different assumptions were used.

Operating Leases

Rent expense for the Company’s operating leases, which generally have escalating rentals over the term of the lease and may include potential rent holidays, is recorded on a straight-line basis over the initial lease term and those renewal periods that are reasonably assured. The initial lease term includes the “build-out” period of the Company’s leases, which is typically before rent payments are due under the terms of the lease. The difference between rent expense and rent paid is recorded as deferred rent and is included in the Consolidated Balance Sheets. Payments received from landlords as incentives for leasehold improvements are recorded as deferred rent and are amortized on a straight-line basis over the term of the lease as a reduction of rent expense. Lease termination fees, if any, and future obligated lease payments for closed locations are recorded as an expense in the period that they are incurred. Exit-related lease obligations of $0.8 million and $1.1 million are recorded in “Accrued and other current liabilities” and $0.4 million and $0.4 million are recorded in “Other long-term liabilities, net” in the Company’s Consolidated Balance Sheets as of December 31, 2011 and 2010, respectively. Assets and liabilities resulting from the Merger relating to favorable and unfavorable lease amounts are amortized on a straight-line basis to rent expense over the remaining lease term.

Pre-Opening Expenses

Non-capital expenditures associated with opening new restaurants are expensed as incurred.

Impairment or Disposal of Long-Lived Assets

The Company assesses the potential impairment of amortizable intangibles, including trademarks, franchise agreements and net favorable leases, and other long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In evaluating long-lived restaurant assets for impairment, the Company considers a number of factors such as:

 

•

A significant change in market price;

 

•

A significant adverse change in the manner in which a long-lived asset is being used;

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

•

New laws and government regulations or a significant adverse change in business climate that adversely affect the value of a long-lived asset;

 

•

A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life; and

 

•

A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection that demonstrates continuing losses associated with the use of the underlying long-lived asset.

If the aforementioned factors indicate that the Company should review the carrying value of the restaurant’s long-lived assets, the Company performs a two-step impairment analysis. Each Company-owned restaurant is evaluated individually for impairment since that is the lowest level at which identifiable cash flows can be measured independently from cash flows of other asset groups. If the total future undiscounted cash flows expected to be generated by the assets are less than its carrying amount, as prescribed by step one testing, recoverability is measured in step two by comparing the fair value of the assets to its carrying amount. Should the carrying amount exceed the asset’s estimated fair value, an impairment loss is charged to earnings. Restaurant fair value is determined based on estimates of discounted future cash flows; and impairment charges primarily occur as a result of the carrying value of a restaurant’s assets exceeding its estimated fair market value, primarily due to anticipated closures or declining future cash flows from lower projected future sales at existing locations.

The Company incurred total long-lived asset impairment charges and restaurant closing expense of $14.0 million, $5.2 million and $95.4 million for the years ended December 31, 2011, 2010 and 2009, respectively (see Note 7). All impairment charges are recorded in the line item “Provision for impaired assets and restaurant closings” in the Company’s Consolidated Statements of Operations.

The Company’s judgments and estimates related to the expected useful lives of long-lived assets are affected by factors such as changes in economic conditions and changes in operating performance and expected use. As the Company assesses the ongoing expected cash flows and carrying amounts of its long-lived assets, these factors could cause it to realize a material impairment charge. The Company uses the straight-line method to amortize definite-lived intangible assets.

Restaurant sites and certain other assets to be sold are included in assets held for sale when certain criteria are met, including the requirement that the likelihood of selling the assets within one year is probable. For assets that meet the held for sale criteria, the Company separately evaluates whether the assets also meet the requirements to be reported as discontinued operations. If the Company no longer had any significant continuing involvement with respect to the operations of the assets and cash flows were discontinued, it would classify the assets and related results of operations as discontinued. Assets whose sale is not probable within one year remain in property, fixtures and equipment until their sale is probable within one year. The Company had $1.3 million of assets held for sale as of December 31, 2011 and did not have any assets classified as held for sale as of December 31, 2010.

Generally, restaurant closure costs are expensed as incurred. When it is probable that the Company will cease using the property rights under a non-cancelable operating lease, it records a liability for the net present value of any remaining lease obligations net of estimated sublease income that can reasonably be obtained for the property. The associated expense is recorded in “Provision for impaired assets and restaurant closings.” Any subsequent adjustments to the liability from changes in estimates are recorded in the period incurred.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

Goodwill and Indefinite-Lived Intangible Assets

The Company’s indefinite-lived intangible assets consist only of goodwill and trade names. Goodwill represents the residual after allocation of the purchase price to the individual fair values and carryover basis of assets acquired. On an annual basis (during the second quarter of the fiscal year) or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, the Company reviews the recoverability of goodwill and indefinite-lived intangible assets. The impairment test for goodwill involves comparing the fair value of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure a goodwill impairment loss, if any. This step revalues all assets and liabilities of the reporting unit to their current fair values and then compares the implied fair value of the reporting unit’s goodwill to the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess. The impairment test for trade names involves comparing fair value of the trade name, as determined through a discounted cash flow approach, to its carrying value.

Impairment indicators that may necessitate goodwill impairment testing in between the Company’s annual impairment tests include the following:

 

•

A significant adverse change in legal factors or in the business climate;

 

•

An adverse action or assessment by a regulator;

 

•

Unanticipated competition;

 

•

A loss of key personnel;

 

•

A more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of; and

 

•

The testing for recoverability of a significant asset group within a reporting unit.

Impairment indicators that may necessitate indefinite-lived intangible asset impairment testing in between the Company’s annual impairment tests are consistent with those of its long-lived assets.

The Company performed its annual impairment test in the second quarter of 2011 and determined at that time that none of its four reporting units with remaining goodwill were at risk for material goodwill impairment since the fair value of each reporting unit was substantially in excess of its carrying amount. The Company did not record any goodwill or indefinite-lived intangible asset impairment charges during the years ended December 31, 2011 and 2010. As a result of the Company’s annual impairment test in the second quarter of 2009, it recorded goodwill and indefinite-lived intangible asset impairment charges of $58.1 million and $36.0 million, respectively (see Note 8).

Sales declines at the Company’s restaurants, unplanned increases in health insurance, commodity or labor costs, deterioration in overall economic conditions and challenges in the restaurant industry may result in future impairment charges. It is possible that changes in circumstances or changes in management’s judgments, assumptions and estimates could result in an impairment charge of a portion or all of its goodwill or other intangible assets.

Construction in Progress

The Company capitalizes all direct restaurant construction costs. Upon restaurant opening, these costs are depreciated and charged to expense based upon their classification within property, fixtures and equipment. The amount of interest capitalized in connection with restaurant construction was immaterial in all periods.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

Deferred Financing Fees

The Company capitalizes deferred financing fees related to the issuance of debt obligations. The Company amortizes deferred financing fees to interest expense over the terms of the respective financing arrangements using the effective interest method or the straight-line method.

Liquor Licenses

The costs of obtaining non-transferable liquor licenses directly issued by local government agencies for nominal fees are expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets and included in “Other assets, net.” Annual liquor license renewal fees are expensed over the renewal term.

Revenue Recognition

The Company records food and beverage revenues upon sale. Initial and developmental franchise fees are recognized as income once the Company has substantially performed all of its material obligations under the franchise agreement, which is generally upon the opening of the franchised restaurant. Continuing royalties, which are a percentage of net sales of the franchisee, are recognized as income when earned. Franchise-related revenues are included in the line “Other revenues” in the Consolidated Statements of Operations.

The Company defers revenue for gift cards, which do not have expiration dates, until redemption by the customer. The Company also recognizes gift card “breakage” revenue for gift cards when the likelihood of redemption by the customer is remote, which the Company determined are those gift cards issued on or before three years prior to the balance sheet date. The Company recorded breakage revenue of $11.1 million, $11.0 million and $9.3 million for the years ended December 31, 2011, 2010 and 2009, respectively. Breakage revenue is recorded as a component of “Restaurant sales” in the Consolidated Statements of Operations.

Gift cards sold at a discount are recorded as revenue upon redemption of the associated gift cards at an amount net of the related discount. Gift card sales commissions paid to third-party providers are initially capitalized and subsequently recognized as “Other restaurant operating” expenses upon redemption of the associated gift card. Deferred expenses are $9.7 million and $8.1 million as of December 31, 2011 and 2010, respectively, and are reflected in “Other current assets, net” in the Company’s Consolidated Balance Sheets. Gift card sales that are accompanied by a bonus gift card to be used by the customer at a future visit result in a separate deferral of a portion of the original gift card sale. Revenue is recorded when the bonus card is redeemed at a value based on the estimated fair market value of the bonus card.

The Company collects and remits sales, food and beverage, alcoholic beverage and hospitality taxes on transactions with customers and reports such amounts under the net method in its Consolidated Statements of Operations. Accordingly, these taxes are not included in gross revenue.

Advertising Costs

Advertising production costs are expensed in the period when the advertising first occurs. All other advertising costs are expensed in the period in which the costs are incurred. The total amounts charged to advertising expense were $161.4 million, $146.1 million and $140.0 million, for the years ended December 31, 2011, 2010 and 2009, respectively, and were recorded in “Other restaurant operating” expenses in the Consolidated Statements of Operations.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

Foreign Currency Translation and Comprehensive Income (Loss)

For all significant non-U.S. operations, the functional currency is the local currency. Assets and liabilities of those operations are translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Results of operations are translated using the average exchange rates for the reporting period. Translation gains and losses are reported as a separate component of Accumulated other comprehensive loss in shareholders’ equity (deficit).

Foreign currency transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange rates between the U.S dollar and the currency in which a transaction is denominated increases or decreases the expected amount of cash flows in U.S. dollars upon settlement of the transaction. This increase or decrease is a foreign currency transaction gain or loss that generally will be included in determining net income (loss) for the period in which the exchange rate changes. Similarly, a transaction gain or loss, measured from the transaction date or the most recent intervening balance sheet date, whichever is later, realized upon settlement of a foreign currency transaction generally will be included in determining net income (loss) for the period in which the transaction is settled.

Income Taxes

Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in the tax rate is recognized in income in the period that includes the enactment date of the rate change. The Company recorded a valuation allowance to reduce its deferred income tax assets to the amount that is more likely than not to be realized. The Company has considered future taxable income and ongoing feasible tax planning strategies in assessing the need for the valuation allowance. Judgments made regarding future taxable income may change due to changes in market conditions, changes in tax laws or other factors. If the assumptions and estimates change in the future, the valuation allowance established may be increased or decreased, resulting in a respective increase or decrease in income tax expense.

The noncontrolling interest in domestic affiliated entities includes no provision or liability for income taxes, as any tax liability related thereto is the responsibility of the holder of the noncontrolling interest.

Employee Partner Payments and Buyouts

The managing partner of each Company-owned domestic restaurant and the chef partner of each Fleming’s and Roy’s Company-owned domestic restaurant, as well as area operating partners, generally receive distributions or payments for providing management and supervisory services to their restaurants based on a percentage of their associated restaurants’ monthly cash flows. The expense associated with the monthly payments for managing and chef partners is included in “Labor and other related” expenses, and the expense associated with the monthly payments for area operating partners is included in “General and administrative” expenses in the Consolidated Statements of Operations.

Managing and chef partners that are eligible to participate in a deferred compensation program receive an unsecured promise of a cash contribution (see Note 3). An area operating partner’s interest in the partnership (the “Management Partnership”) that provides management and supervisory services to his or her restaurant may

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

be purchased, at the Company’s option, after the restaurant has been open for a five-year period based on the terms specified in the agreement. The Company estimates future purchases of area operating partners’ interests, as well as deferred compensation obligations to managing and chef partners, using current and historical information on restaurant performance and records the partner obligations in the line item “Partner deposits and accrued partner obligations” in its Consolidated Balance Sheets. In the period the Company purchases the area operating partner’s interests, an adjustment is recorded to recognize any remaining expense associated with the purchase and reduce the related accrued buyout liability. Deferred compensation expenses for managing and chef partners are included in “Labor and other related” expenses and buyout expenses for area operating partners are included in “General and administrative” expenses in the Consolidated Statements of Operations.

Stock-based Compensation

The Company’s 2007 Equity Incentive Plan (the “Equity Plan”) permits the grant of stock options and restricted stock to Company management and other key employees. The Company accounts for its stock-based employee compensation using a fair value based method of accounting.

Generally, stock options vest and become nominally exercisable in 20% increments over a period of five years contingent on continued employee service. Shares acquired upon the exercise of stock options under the Equity Plan are generally subject to a stockholder’s agreement that contains a management call option that allows the Company to repurchase all shares purchased through exercise of stock options upon termination of employment at any time prior to the earlier of an initial public offering or a change of control. If an employee’s termination of employment is a result of death or disability, by the Company other than for cause or by the employee for good reason, the Company may repurchase exercised stock under this call option at fair market value. If an employee’s termination of employment is by the Company for cause or by the employee without good reason, the Company may repurchase the stock under this call provision for the lesser of the exercise price or fair market value. Additionally, the holder of shares acquired upon the exercise of stock options is prohibited from transferring the shares to any person, subject to narrow exceptions, and should a permitted transfer occur, the transferred shares remain subject to the management call option. As a result of the transfer restrictions and call option, the Company does not record compensation expense for stock options that contain the call option since employees cannot realize monetary benefit from the options or any shares acquired upon the exercise of the options unless the employee is employed at the time of an initial public offering or change of control. There have not been any exercises of stock options by any employee to date, and all stock options of terminated employees with a call provision have been forfeited.

The Company uses the Black-Scholes option pricing model to estimate the weighted-average grant date fair value of stock options granted. Expected volatilities are based on historical volatilities of the stock of comparable companies. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Results may vary depending on the assumptions applied within the model. The benefits of tax deductions in excess of recognized compensation cost, if any, are reported as a financing cash flow.

Net Income (Loss) per Share

Basic net income (loss) per share is computed on the basis of the weighted average number of common shares that were outstanding during the period. Diluted net income (loss) per share includes the dilutive effect of common stock equivalents consisting of restricted stock and stock options, using the treasury stock method. Performance-based restricted stock and stock options are considered dilutive when the related performance criterion has been met.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The computation of basic and diluted net income (loss) per common share is as follows (in thousands, except share and per share amounts):

 

		Years Ended December 31,
		2011				2010				2009
Net income (loss) attributable to Bloomin’ Brands, Inc.		$	100,005			$	52,968			$	(64,463	)
Basic weighted average common shares outstanding			106,224,241				105,968,069				104,441,533
Effect of diluted securities:
Employee stock options			399,103				—				—
Unvested restricted stock			66,003				—				—
Diluted weighted average common shares outstanding			106,689,347				105,968,069				104,441,533
Basic net income (loss) per common share		$	0.94			$	0.50			$	(0.62	)
Diluted net income (loss) per common share		$	0.94			$	0.50			$	(0.62	)

As of the year ended December 31, 2011 and 2010, the Company excluded 550,000 and 2,575,500 outstanding stock options, respectively, in the diluted net income per share calculation because the options were out of the money and to do so would have been antidilutive. As of the year ended December 31, 2009, the Company excluded 2,888,476 and 775,266 outstanding stock options and unvested restricted stock, respectively, in the diluted net loss per share calculation because the inclusion of these share based awards would have been antidilutive.

3. Stock-based and Deferred Compensation Plans

Stock-based and Deferred Compensation Plans

Managing and Chef Partners

Historically, the managing partner of each Company-owned domestic restaurant and the chef partner of each Fleming’s and Roy’s restaurant were required, as a condition of employment, to sign a five-year employment agreement and to purchase a non-transferable ownership interest in the Management Partnership that provided management and supervisory services to his or her restaurant. The purchase price for a managing partner’s ownership interest was fixed at $25,000, and the purchase price for a chef partner’s ownership interest ranged from $10,000 to $15,000. Managing and chef partners had the right to receive monthly distributions from the Management Partnership based on a percentage of their restaurant’s monthly cash flows for the duration of the agreement, which varied by concept from 6% to 10% for managing partners and 2% to 5% for chef partners. Further, managing and chef partners were eligible to participate in the Partner Equity Plan (“PEP”), a deferred compensation program, upon completion of their five-year employment agreement.

In April 2011, the Company implemented modifications to its managing and chef partner compensation structure to provide greater incentives for sales and profit growth. Under the revised program, managing and chef partners continue to sign five-year employment agreements and receive monthly distributions of the same percentage of their restaurant’s cash flow as under the prior program. However, under the revised program, in lieu of participation in the PEP, managing partners and chef partners are eligible to receive deferred compensation payments under a new Partner Ownership Account Plan (the “POA”). The POA places greater

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

emphasis on year-over-year growth in cash flow than the PEP. Managing and chef partners will receive a greater value under the POA than they would have received under the PEP if certain levels of year-over-year cash flow growth are achieved and a lesser value than under the PEP if these levels are not achieved.

The POA requires, managing and chef partners to make an initial deposit of up to $10,000 into their “Partner Investment Account,” and the Company will make a bookkeeping contribution to each partner’s “Company Contributions Account” no later than the end of February of each year following the completion of each year (or partial year where applicable) under the partner’s employment agreement. The value of each Company contribution will be equal to a percentage of the partner’s restaurant’s cash flow plus, if the restaurant has been open at least 18 calendar months, a percentage of the year-over-year increase in the restaurant’s cash flow.

The revised program also provides an annual bonus known as the President’s Club, paid in addition to the monthly distributions of cash flow, designed to reward increases in their restaurant’s annual sales above the concept sales plan with a required flow-through percentage of the incremental sales to cash flow. Managing and chef partners whose restaurants achieve certain annual sales targets (and the required flow through percentage) receive a bonus equal to a percentage of the incremental sales, such percentage determined by the sales target achieved.

Amounts credited to each partner’s account under the POA may be allocated by the partner among benchmark funds offered under the POA, and the account balances of the partner will increase or decrease based on the performance of the benchmark funds. Upon termination of employment, all remaining balances in the Company Contributions Account in the POA are forfeited unless the partner has been with the Company for twenty years or more. Unless previously forfeited under the terms of the POA, 50% of the partner’s total account balances generally will be distributed in the March following the completion of the initial five-year contract term with subsequent distributions varying based on the length of continued employment as a partner. The deferred compensation obligations under the POA are unsecured obligations of the Company.

All managing and chef partners who execute new employment agreements after May 1, 2011 are required to participate in the new partner program, including the POA. Managing and chef partners with a current employment agreement scheduled to expire December 1, 2011 or later had the opportunity (from April 27, 2011 through July 27, 2011) to amend their employment agreements to convert their existing partner program to participation in the new partner program, including the POA, effective June 1, 2011. As a result of this conversion, $2.7 million of the Company’s total partner deposit liability was accelerated for the return of partners’ capital that was required under the old program. As of December 31, 2011, the Company’s POA liability was $8.0 million which was recorded in the line item “Partner deposits and accrued partner obligations” in its Consolidated Balance Sheet.

Upon the closing of the Merger, certain stock options that had been granted to managing and chef partners under a pre-merger managing partner stock plan (the “MP Stock Plan”) upon completion of a previous employment contract were converted into the right to receive cash in the form of a “Supplemental PEP” contribution. Additionally, all outstanding, unvested partner employment grants of restricted stock under the MP Stock Plan were converted into the right to receive cash on a deferred basis. Additionally, certain members of management were given the option to either convert some or all of their restricted stock granted under the pre-merger stock plan in the same manner as managing partners or convert some or all of it into restricted stock of Kangaroo Holdings, Inc., now known as Bloomin’ Brands, Inc. In accordance with the terms of the Employee Rollover Agreement adopted by the Company on June 14, 2007, those shares converted into restricted stock, now Bloomin’ Brands restricted stock, vest 20% annually over five years, and grants are fully vested upon an

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

initial public offering or a change of control. Grants of restricted stock under the pre-merger stock plan that converted into the right to receive cash are referred to as “Restricted Stock Contributions.”

As of December 31, 2011, the Company’s total vested liability with respect to obligations primarily under the PEP, Supplemental PEP and Restricted Stock Contributions was approximately $107.8 million, of which $11.8 million and $96.0 million was included in the line items “Accrued and other current liabilities” and “Other long-term liabilities, net,” respectively, in its Consolidated Balance Sheet. As of December 31, 2010, the Company’s total vested liability with respect to obligations primarily under the PEP, Supplemental PEP and Restricted Stock Contributions was approximately $101.4 million, of which $14.0 million and $87.5 million was included in the line items “Accrued and other current liabilities” and “Other long-term liabilities, net,” respectively, in its Consolidated Balance Sheet. Partners and management may allocate the contributions into benchmark investment funds, and these amounts due to participants will fluctuate according to the performance of their allocated investments and may differ materially from the initial contribution and current obligation.

Prior to the Merger, certain partners participating in the PEP were to receive common stock (“Partner Shares”) upon completion of their employment contract. Upon closing of the Merger, these partners are entitled to receive a deferred payment of cash instead of common stock upon completion of their current employment term. Partners will not receive the deferred cash payment if they resign or are terminated for cause prior to completing their current employment terms. There will not be any future earnings or losses on these amounts prior to payment to the partners. The amount accrued for the Partner Shares obligation was approximately $0.7 million as of December 31, 2011 and was included in the line item “Accrued and other current liabilities” in the Company’s Consolidated Balance Sheet. The amount accrued for the Partner Shares obligation was approximately $6.6 million as of December 31, 2010, of which $6.5 million and $0.1 million was included in the line items “Accrued and other current liabilities” and “Other long-term liabilities, net,” respectively, in the Company’s Consolidated Balance Sheet.

As of December 31, 2011 and 2010, the Company had approximately $56.9 million and $58.0 million, respectively, in various corporate owned life insurance policies and another $0.3 million and $1.0 million, respectively, of restricted cash, both of which are held within an irrevocable grantor or “rabbi” trust account for settlement of the Company’s obligations under the PEP, Supplemental PEP, Restricted Stock Contributions and POA. The Company is the sole owner of any assets within the rabbi trust and participants are considered general creditors of the Company with respect to assets within the rabbi trust.

As of December 31, 2011 and 2010, there were $55.6 million and $49.0 million, respectively, of unfunded obligations related to the PEP, Supplemental PEP, Restricted Stock Contributions, Partner Shares liabilities and POA, excluding amounts not yet contributed to the partners’ investment funds, which may require the use of cash resources in the future.

Amounts credited to partners’ PEP accounts are fully vested at all times and participants have no discretion with respect to the form of benefit payments under the PEP. Effective January 1, 2009, the Company accelerated the distribution of PEP and Supplemental PEP benefits to certain active participants. Active managing and chef partners who complete an employment contract on or after January 1, 2009 and remain employed with the Company until their PEP accounts are fully distributed will receive their PEP distributions at certain payment dates throughout a seven-year period after completion of their employment contracts (previously each account was generally distributed to the participant over a ten-year period). Managing and chef partners who complete an employment contract on or after January 1, 2009 and do not remain employed with the Company until their PEP accounts are fully distributed will receive their entire PEP account balance in the seventh year after completion of their employment contract. Their PEP account balance will be determined as of

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

the date of termination of employment, subject to any subsequent increases or decreases based on the performance of their investment elections.

Managing and chef partners whose PEP accounts relate to an employment contract completed before January 1, 2009 and those with Supplemental PEP accounts from the Merger, who in either case were employed with the Company through December 31, 2008, were permitted to keep the original ten-year distribution schedule or elect a new distribution schedule. Approximately 75% of participants elected the new distribution schedule, which results in distribution of their account balance at certain payment dates throughout a seven-year period.

If participants do not remain employed by the Company through 2015, then their remaining PEP account balance will be distributed in one payment in 2015. Their account balance will be determined as of the date of termination of employment, subject to any subsequent increases or decreases based on the performance of their investment choices.

Participants with PEP or Supplemental PEP accounts who were not employed with the Company through December 31, 2008 were required to keep the original ten-year distribution schedule.

Area Operating Partners

Area operating partners are required, as a condition of employment and within 30 days of the opening of his or her first restaurant, to make an initial investment of $50,000 in the Management Partnership that provides supervisory services to the restaurants that the area operating partner oversees within 30 days of the opening of his or her first restaurant. This interest gives the area operating partner the right to distributions from the Management Partnership based on a percentage of his or her restaurants’ monthly cash flows for the duration of the agreement, typically ranging from 4% to 9%. The Company has the option to purchase an area operating partner’s interest in the Management Partnership after the restaurant has been open for a five-year period on the terms specified in the agreement.

For restaurants opened on or after January 1, 2007, the area operating partner’s percentage of cash distributions and buyout percentage is calculated based on the associated restaurant’s return on investment compared to the Company’s targeted return on investment and may range from 3.0% to 12.0%. This percentage is determined after the first five full calendar quarters from the date of the associated restaurant’s opening and is adjusted each quarter thereafter based on a trailing 12-month restaurant return on investment. The buy-out percentage is the area operating partner’s average distribution percentage for the 24 months immediately preceding the buy-out. Buyouts are paid in cash within 90 days or paid over a two-year period.

Management and Other Key Employees

During the years ended December 31, 2011 and 2009, 1,350,000 and 4,727,680 additional shares, respectively, were approved for stock option and restricted stock grants under the Equity Plan by the Board of Directors. During the year ended December 31, 2010, no additional shares were approved. A total of 12,350,000 shares were approved for stock options and restricted stock grants under the Equity Plan by the Board of Directors as of December 31, 2011. The maximum term of stock options and restricted stock granted under the Equity Plan is ten years.

Other Benefit Plans

The Company has a qualified defined contribution 401(k) plan (the OSI Restaurant Partners, LLC Salaried Employees 401(k) Plan and Trust, or the “401(k) Plan”) covering substantially all full-time employees,

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

except officers and certain highly compensated employees. Assets of the 401(k) Plan are held in trust for the sole benefit of the employees. The Company contributed $2.0 million, $1.9 million, and $2.0 million to the 401(k) Plan for the plan years ended December 31, 2011, 2010 and 2009, respectively.

The Company provides a deferred compensation plan for its highly compensated employees who are not eligible to participate in the 401(k) Plan. The deferred compensation plan allows these employees to contribute from 5% to 90% of their base salary and up to 100% of their cash bonus on a pre-tax basis to an investment account consisting of various investment fund options. The Company does not currently intend to provide any matching or profit-sharing contributions, and participants are fully vested in their deferrals and their related returns. Participants are considered unsecured general creditors in the event of Company bankruptcy or insolvency.

Stock Options

The following table presents a summary of the Company’s stock option activity for the year ended December 31, 2011 (in thousands, except exercise price and contractual life):

 

		Options				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Life (years)				Aggregate Intrinsic Value
Outstanding at December 31, 2010			10,338			$	7.00				8.1			$	29,011
Granted			2,037				9.80
Forfeited			(432	)			6.50
Outstanding at December 31, 2011			11,943			$	7.50				7.5			$	53,989
Exercisable at December 31, 2011			5,704			$	7.42				6.7			$	26,222

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2011, 2010 and 2009 was $6.02, $3.18, and $3.65, respectively, and was estimated using the Black-Scholes option pricing model. The following assumptions were used to calculate the fair value of options granted during the years ended December 31, 2011, 2010 and 2009: (1) weighted-average risk-free interest rates of 2.09%, 1.95%, and 2.27%, respectively; (2) dividend yield of 0.0%; (3) expected term of six and a half years, six and a half years, and five years, respectively; and (4) weighted-average volatilities of 54.8%, 73.9% and 65.3%, respectively. The Company did not have any stock options exercised in the years ended December 31, 2011, 2010 and 2009 and therefore did not have any tax benefits realized from the exercise of stock options in these periods.

Generally, stock options vest and become nominally exercisable in 20% increments over a period of five years contingent on continued employee service. Shares acquired upon the exercise of stock options under the Equity Plan are generally subject to a stockholder’s agreement that contains a management call option that allows the Company to repurchase all shares purchased through exercise of stock options upon termination of employment at any time prior to the earlier of an initial public offering or a change of control. If an employee’s termination of employment is a result of death or disability, by the Company other than for cause or by the employee for good reason, the Company may repurchase exercised stock under this call option at fair market value. If an employee’s termination of employment is by the Company for cause or by the employee without good reason, the Company may repurchase the stock under this call provision for the lesser of the exercise price or fair market value. Additionally, the holder of shares acquired upon the exercise of stock options is prohibited from transferring the shares to any person, subject to narrow exceptions, and should a permitted transfer occur,

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

the transferred shares remain subject to the management call option. As a result of the transfer restrictions and call option, the Company does not record compensation expense for stock options that contain the call option since employees cannot realize monetary benefit from the options or any shares acquired upon the exercise of the options unless the employee is employed at the time of an initial public offering or change of control. There have not been any exercises of stock options by any employee to date, and all stock options of terminated employees with a call provision have been forfeited.

During the second quarter of 2009, the stock option agreements between the Company and certain of the Company’s then named executive officers were amended to eliminate the call option, resulting in the recording of stock option compensation expense. Their amended stock option agreements also contain provisions that extend the stock option exercise period for each of these officers under certain circumstances. Further, the amendments add a provision that upon retirement, the number of options to be fully vested and exercisable shall be the greater of (i) the amount of options that are vested and exercisable as of the officer’s separation date or (ii) 40% or 100% of the officer’s options, depending on the officer.

In November 2009, the Company’s chief executive officer (“CEO”) received a stock option grant that contained a modified form of the call option. In accordance with accounting for stock-based compensation, this modified form of the call option does not preclude the Company from recording compensation expense during the service period for one quarter of her option shares. Compensation expense is not recorded for the remaining three quarters of her option shares since they are not considered vested from an accounting standpoint until the occurrence of a Qualifying Liquidity Event, as defined in the CEO’s stock option agreement. On July 1, 2011, the CEO was granted an option to purchase 550,000 shares of common stock under the Equity Plan in accordance with the terms of her employment agreement. This option has an exercise price of $10.03 per share and is subject to the modified form of the management call option that applied to one quarter of her 2009 grant described above. These options will vest and compensation expense will be recorded equally over a five-year period on each anniversary of the grant date, contingent upon her continued employment with the Company.

In March 2010, the Company offered all then active employees the opportunity to exchange outstanding stock options with an exercise price of $10.00 per share for the same number of replacement stock options with an exercise price of $6.50 per share. Under the exchange program, the vested portion of the eligible stock options as of the grant date of the replacement stock options were exchanged for stock options that were fully vested. The unvested portion of the exchanged stock options were exchanged for unvested replacement stock options that vest and become exercisable over a period of time that is equal to the remaining vesting period of the exchanged stock options, plus one year, subject to the participant’s continued employment through the new vesting date. For exchanged stock options that contained both performance-based and time-based vesting conditions, the replacement stock options contain only time-based vesting conditions and vest in accordance with the above terms. All eligible stock options were exchanged pursuant to the exchange program. The original stock options were cancelled, and the issuance of the replacement stock options occurred on April 6, 2010. As a result of the management call option, the stock options exchange did not have a material effect on the Company’s consolidated financial statements.

The Company recorded compensation expense of $2.2 million, $1.1 million and $0.6 million and total recognized tax benefit of $0.8 million, $0.4 million and $0.2 million during the years ended December 31, 2011, 2010, and 2009 respectively, for vested stock options. The Company did not capitalize any stock-based compensation costs during any periods presented. As of December 31, 2011, there is $5.7 million of total unrecognized compensation expense related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 3.7 years.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

Restricted Stock

 

		Number of Restricted Share Awards (in thousands)				Weighted- Average Grant Date Fair Value Per Award
Restricted stock outstanding at December 31, 2010			481			$	10.00
Vested			242				10.00
Restricted stock outstanding at December 31, 2011			239			$	10.00

During the second quarter of 2009, the restricted stock agreements between the Company and certain of the Company’s then named executive officers were amended. These amendments accelerated the vesting of these officers’ shares of restricted stock such that they were fully vested on June 14, 2009. Of the total compensation expense recorded for the vesting of restricted stock during the year ended December 31, 2009, $10.3 million (2,036,925 shares) related to the accelerated vesting of the restricted stock held by these officers.

Compensation expense recognized in net income (loss) for the years ended December 31, 2011, 2010 and 2009 was $1.7 million, $2.0 million and $14.6 million, respectively, for restricted stock awards. The total tax benefit recognized related to the compensation expense recorded for restricted stock awards was $0.7 million, $0.8 million and $5.7 million for the years ended December 31, 2011, 2010 and 2009, respectively. As measured on the vesting date, the total fair value of restricted stock that vested during the years ended December 31, 2011, 2010 and 2009 was $2.3 million, $1.8 million and $8.9 million, respectively. Unrecognized pre-tax compensation expense related to non-vested restricted stock awards was approximately $0.8 million at December 31, 2011 and will be recognized over a weighted-average period of 0.5 years.

Shares of restricted stock issued to certain of the Company’s current and former executive officers and other members of management vest each June 14 through 2012. In accordance with the terms of their applicable agreements, the Company loaned an aggregate of $0.9 million, $0.7 million and $3.3 million to these individuals in June and July of 2011 and 2010 and 2009, respectively, for their personal income tax obligations that resulted from vesting. As of December 31, 2011, a total of $7.2 million of loans and associated interest obligations to current and former executive officers and other members of management was outstanding and was recorded in the line item “Additional paid-in capital” in the Company’s Consolidated Balance Sheet. The loans are full recourse and are collateralized by the vested shares of restricted stock. Although these loans are permitted in accordance with the terms of the agreements, the Company is not required to issue them in the future. During the first quarter of 2012, the Company’s current executive officers repaid their entire loan balances.

4. Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date (exit price) and is a market-based measurement, not an entity-specific measurement. To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability, and utilizes market data to the maximum extent possible. Measurement of fair value incorporates nonperformance risk (i.e., the risk that an obligation will not be fulfilled). In measuring fair value, the Company reflects the impact of its own credit risk on its liabilities, as well as any collateral. The Company also considers the credit standing of its counterparties in measuring the fair value of its assets.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

As a basis for considering market participant assumptions in fair value measurements, a three-tier fair value hierarchy prioritizes the inputs used in measuring fair value as follows:

 

•

Level 1—Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access;

 

•

Level 2—Inputs, other than the quoted market prices included in Level 1, which are observable for the asset or liability, either directly or indirectly; and

 

•

Level 3—Unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market data available.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Fair Value Measurements on a Recurring Basis

The Company invested $37.7 million and $51.4 million of its excess cash in money market funds classified as Cash and cash equivalents or restricted cash in its Consolidated Balance Sheet as of December 31, 2011 and 2010, at a net value of 1:1 for each dollar invested. The fair value of the investment in the money market funds is determined by using quoted prices for identical assets in an active market. As a result, the Company has determined that the inputs used to value this investment fall within Level 1 of the fair value hierarchy.

The Company is highly leveraged and exposed to interest rate risk to the extent of its variable-rate debt. The Company uses an interest rate cap with a notional amount of $775.7 million as a method to limit the volatility of PRP’s variable-rate commercial mortgage-backed securities loan. As this interest rate cap did not have any fair market value at December 31, 2011 and 2010, it has been excluded from the applicable tables within this footnote.

The following tables present the Company’s money market funds measured at fair value on a recurring basis as of December 31, 2011 and 2010, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

 

		Total December 31, 2011				Level 1				Level 2				Level 3
Assets:
Money market funds		$	37,707			$	37,707			$	—			$	—

 

		Total December 31, 2010				Level 1				Level 2				Level 3
Assets:
Money market funds		$	51,441			$	51,441			$	—			$	—

Fair Value Measurements on a Nonrecurring Basis

The Company performs its annual goodwill and other indefinite-lived intangible assets impairment test during the second quarter. During the year ended December 31, 2011, the Company did not have any goodwill

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

and other indefinite-lived intangible asset impairment charges, but it did incur impairment charges on long-lived assets held and used as a result of fair value measurements on a nonrecurring basis.

The following table presents losses related to the Company’s assets and liabilities that were measured at fair value on a nonrecurring basis during the year ended December 31, 2011 aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

 

		Year Ended December 31, 2011				Level 1				Level 2				Level 3				Total Losses
Long-lived assets held and used		$	30,840			$	29,455			$	—			$	1,385			$	11,593

The Company recorded $11.6 million of impairment charges as a result of the fair value measurement on a nonrecurring basis of its long-lived assets held and used during the year ended December 31, 2011. The impaired long-lived assets had $30.8 million of remaining fair value at December 31, 2011. The Company used a discounted cash flow model (Level 3) and quoted prices from brokers (Level 1) to estimate the fair value of the long-lived assets included in the table above. Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and projected trends of current operating results.

During the year ended December 31, 2010, the Company did not incur any goodwill and other indefinite-lived intangible asset impairment charges or any other material impairment charges as a result of fair value measurements on a nonrecurring basis.

During the year ended December 31, 2009, the Company incurred goodwill and other indefinite-lived intangible asset impairment charges as well as other impairment charges as a result of fair value measurements on a nonrecurring basis. The following table presents losses related to the Company’s assets and liabilities that were measured at fair value on a nonrecurring basis during the year ended December 31, 2009 aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

 

		Year Ended December  31, 2009				Level 1				Level 2				Level 3				Total Losses
Long-lived assets held and used		$	9,277			$	—			$	3,500			$	5,777			$	91,388
Investments in and advances to unconsolidated affiliates			—				—				—				—				2,876
Goodwill(1)			124,440				—				—				124,440				58,149
Indefinite-lived intangible assets(1)			356,000				—				—				356,000				36,000

 

(1)	Amounts from the Company’s annual impairment test.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The Company recorded $91.4 million of impairment charges as a result of the fair value measurement on a nonrecurring basis of its long-lived assets held and used during the year ended December 31, 2009. The impaired long-lived assets had $9.3 million of remaining fair value at December 31, 2009.

The Company performed a separate valuation for five of its closed restaurant sites that collateralize PRP’s commercial mortgage-backed securities loan using quoted prices from brokers for similar properties. The restaurant sites were written down to fair value resulting in impairment charges of $7.3 million (included in the total above) during the year ended December 31, 2009. The Company determined that the majority of these inputs are observable inputs that fall within Level 2 of the fair value hierarchy.

Due to the third quarter of 2009 sale of its Cheeseburger in Paradise concept, the Company recorded a $46.0 million impairment charge (included in the total above) during the second quarter of 2009 to reduce the carrying value of this concept’s long-lived assets to their estimated fair market value. The Company used a weighted-average probability analysis and estimates of expected future cash flows to determine the fair value of this concept. The Company has determined that the majority of the inputs used to value this concept are unobservable inputs that fall within Level 3 of the fair value hierarchy.

The Company used a discounted cash flow model to estimate the fair value of the remaining long-lived assets held and used in the table above. Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and projected trends of current operating results. The Company has determined that the majority of these inputs are unobservable inputs that fall within Level 3 of the fair value hierarchy. The long-lived assets were written down to fair value, resulting in impairment charges of $38.1 million (included in the total above) during the year ended December 31, 2009.

The Company recorded goodwill impairment charges of $58.1 million and indefinite-lived intangible asset impairment charges of $36.0 million during the year ended December 31, 2009 as a result of its annual impairment test. The Company tests both its goodwill and its indefinite-lived intangible assets, which are trade names, for impairment by utilizing discounted cash flow models to estimate their fair values. These cash flow models involve several assumptions. Changes in the Company’s assumptions could materially impact its fair value estimates. Assumptions critical to its fair value estimates are: (i) weighted-average cost of capital rates used to derive the present value factors used in determining the fair value of the reporting units and trade names; (ii) projected annual revenue growth rates used in the reporting unit and trade name models; and (iii) projected long-term growth rates used in the derivation of terminal year values. Other assumptions include estimates of projected capital expenditures and working capital requirements. These and other assumptions are impacted by economic conditions and expectations of management and will change in the future based on period-specific facts and circumstances. As a result, the Company has determined that the majority of the inputs used to value its goodwill and indefinite-lived intangible assets are unobservable inputs that fall within Level 3 of the fair value hierarchy.

The following table presents the range of assumptions the Company used to derive its fair value estimates among its reporting units, which vary between goodwill and trade names, during the annual impairment test conducted in the second quarter of 2009:

 

		Assumptions
		Goodwill		Trade Names
Weighted-average cost of capital		12.5% - 15.0%		13.0% - 14.0%
Long-term growth rates		3%		3%
Annual revenue growth rates		(6.9)% - 12.0%		(3.9)% - 5.0%

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

5. Derivative Instruments and Hedging Activities

The Company is exposed to market risk from changes in interest rates on debt, changes in commodity prices and changes in foreign currency exchange rates.

Interest rate changes associated with the Company’s variable-rate debt generally impact its earnings and cash flows, assuming other factors are held constant. The Company’s exposure to interest rate fluctuations includes OSI’s borrowings under its senior secured credit facilities and PRP’s commercial mortgage-backed securities loan that bear interest at floating rates based on the Eurocurrency Rate or the Base Rate and the one-month London Interbank Offered Rate (“LIBOR”), respectively, plus an applicable borrowing margin (see Note 11). The Company manages its interest rate risk by offsetting some of its variable-rate debt with fixed-rate debt, through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments.

The Company uses an interest rate cap as a method to limit the volatility of PRP’s variable-rate commercial mortgage-backed securities loan. Under the $775.7 million notional interest rate cap that terminates on June 15, 2012, interest rate payments have a ceiling of 6.31%. If the market rate exceeds the ceiling, the counterparty must pay the Company an amount sufficient to reduce the interest payment to 6.31%. The interest rate cap did not have any fair market value at December 31, 2011 and 2010. In connection with the refinancing of PRP’s commercial mortgage-backed securities loan, the Company entered into a replacement interest rate cap effective March 27, 2012 with a notional amount of $48.7 million, a cap rate of 7.00% and a termination date of April 13, 2014. If necessary, the Company would record mark-to-market changes in the fair value of this derivative instrument in earnings in the period of change. The effects of this interest rate cap were immaterial to the Company’s consolidated financial statements for all periods presented and have been excluded from any tables within this footnote.

From September 2007 to September 2010, the Company used an interest rate collar as part of its interest rate risk management strategy to manage its exposure to interest rate movements related to OSI’s senior secured credit facilities. Given the interest rate environment, the Company did not enter into another derivative financial instrument upon the maturity of this interest rate collar on September 30, 2010. The Company does not enter into financial instruments for trading or speculative purposes.

Many of the ingredients used in the products sold in the Company’s restaurants are commodities that are subject to unpredictable price volatility. Although the Company attempts to minimize the effect of price volatility by negotiating fixed price contracts for the supply of key ingredients, there are no established fixed price markets for certain commodities such as produce and wild fish, and the Company is subject to prevailing market conditions when purchasing those types of commodities. Other commodities are purchased based upon negotiated price ranges established with vendors with reference to the fluctuating market prices. The Company attempts to offset the impact of fluctuating commodity prices with other strategic purchasing initiatives. The Company does not use derivative financial instruments to manage its commodity price risk, except for natural gas as described below.

The Company’s restaurants are dependent upon energy to operate and are impacted by changes in energy prices, including natural gas. The Company utilizes derivative instruments to mitigate some of its overall exposure to material increases in natural gas prices. The Company records mark-to-market changes in the fair value of these derivative instruments in earnings in the period of change. The effects of these natural gas swaps were immaterial to the Company’s consolidated financial statements for all periods presented and have been excluded from any tables within this footnote.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The Company’s exposure to foreign currency exchange fluctuations relates primarily to its direct investment in restaurants in South Korea, Hong Kong and Brazil and to its royalties from international franchisees. The Company has not used financial instruments to hedge foreign currency exchange rate changes.

In addition to the market risks identified above, the Company is subject to business risk as its beef supply is highly dependent upon a limited number of vendors. In 2011, the Company purchased more than 90% of its domestic beef raw materials from four beef suppliers who represent approximately 75% of the total beef marketplace in the United States.

Non-designated Hedges of Interest Rate Risk

In September 2007, the Company entered into an interest rate collar with a notional amount of $1.0 billion as a method to limit the variability of OSI’s senior secured credit facilities. The collar consisted of a LIBOR cap of 5.75% and a LIBOR floor of 2.99%. The collar’s first variable-rate set date was December 31, 2007, and the option pairs expired at the end of each calendar quarter beginning March 31, 2008 and ending September 30, 2010, which was the maturity date of the collar. The quarterly expiration dates corresponded to the scheduled amortization payments of OSI’s term loan.

The Company’s interest rate collar was a non-designated hedge of the Company’s exposure to interest rate risk. The Company recorded mark-to-market changes in the fair value of the derivative instrument in earnings in the period of change.

The following table presents the location and effect of the Company’s interest rate collar on its Consolidated Statement of Operations for the years ended December 31, 2011, 2010, and 2009 (in thousands):

 

Derivatives Not Designated as Hedging Instruments		Location of Loss Recognized In Income on Derivative		Amount of Loss Recognized In Income on Derivative
				Years Ended December 31,
				2011				2010				2009
Interest rate collar		Interest expense, net		$	—			$	(1,436	)		$	(15,568	)

6. Other Current Assets, Net

Other current assets, net, consisted of the following (in thousands):

 

		December 31,
		2011				2010
Prepaid expenses		$	18,113			$	17,495
Accounts receivable—vendors, net			48,568				13,432
Accounts receivable—franchisees, net			2,396				6,137
Accounts receivable—other, net			11,869				10,109
Other current assets, net			23,427				24,647
		$	104,373			$	71,820

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

7. Property, Fixtures and Equipment, Net

Property, fixtures and equipment, net, consisted of the following (in thousands):

 

		December 31,
		2011				2010
Land		$	329,143			$	333,599
Buildings and building improvements			1,013,618				1,005,466
Furniture and fixtures			263,266				232,255
Equipment			362,649				336,175
Leasehold improvements			369,726				365,970
Construction in progress			22,011				5,459
Less: accumulated depreciation			(724,515	)			(605,643	)
		$	1,635,898			$	1,673,281

As of December 31, 2011, the Company had certain land and buildings, with carrying amounts of $14.1 million and $20.3 million, respectively, that have been leased to third parties under operating leases. Accumulated depreciation related to these leased assets of $3.4 million is included in Property, fixtures and equipment at December 31, 2011.

The Company expensed repair and maintenance costs of approximately $97.3 million, $94.3 million and $93.8 million for the years ended December 31, 2011, 2010 and 2009, respectively. Depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $147.4 million, $150.4 million and $180.2 million, respectively.

During the years ended December 31, 2011 and 2010 and 2009, the Company recorded property, fixtures and equipment impairment charges of $11.5 million, $2.0 million and $82.9 million, respectively, for certain of the Company’s restaurants in the line item “Provision for impaired assets and restaurant closings” in its Consolidated Statements of Operations (see Note 4).

Due to the third quarter of 2009 sale of the Company’s Cheeseburger in Paradise concept, the Company recorded a $46.0 million impairment charge ($39.2 million of which is included in the 2009 total above) during the second quarter of 2009 to reduce the carrying value of this concept’s long-lived assets to their estimated fair market value. This impairment included $39.2 million of charges to property, fixtures and equipment, $5.9 million of charges to intangible assets and $0.9 million of charges to other assets.

The fixed asset impairment charges described above primarily occurred as a result of the carrying value of a restaurant’s assets exceeding its estimated fair market value, primarily due to anticipated closures or declining future cash flows from lower projected future sales at existing locations.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

8. Goodwill and Intangible Assets, Net

The change in goodwill for the years ended December 31, 2011 and 2010 is as follows (in thousands):

 

		2011				2010
Balance as of January 1:
Goodwill		$	1,059,051			$	1,059,051
Accumulated purchase accounting adjustments			3,604				3,604
Accumulated impairment losses			(784,636	)			(784,636	)
Cumulative translation adjustments			(8,118	)			(9,560	)
			269,901				268,459
Translation adjustments			(79	)			1,442
Disposal adjustment			(1,050	)			—
Balance as of December 31:
Goodwill			1,059,051				1,059,051
Accumulated purchase accounting adjustments			3,604				3,604
Accumulated impairment losses			(784,636	)			(784,636	)
Cumulative translation adjustments			(8,197	)			(8,118	)
Accumulated disposal adjustments			(1,050	)			—
		$	268,772			$	269,901

The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets each year during the second quarter. The Company’s review of the recoverability of goodwill is based primarily upon an analysis of the discounted cash flows of the related reporting units as compared to their carrying values (see Note 4). The Company also uses the discounted cash flow method to determine the fair value of its intangible assets.

The Company did not record any goodwill or indefinite-lived intangible asset impairment charges or any material definite-lived intangible asset impairment charges during 2011 and 2010. In October 2011, the Company sold its nine Company-owned Outback Steakhouse restaurants in Japan to a subsidiary of S Foods, Inc., one of the Company’s beef supplier’s in Japan, for $9.4 million. The buyer will have the right for future development of Outback Steakhouse franchise restaurants in Japan and will pay the Company a royalty in the range of 2.75% to 4.0% based on sales volumes. The Company used the net cash proceeds from this sale to pay down $7.5 million of OSI’s outstanding term loans in accordance with the terms of the credit agreement amended in January 2010. The Company recorded a $1.1 million adjustment to reduce goodwill related to the disposal of these assets and recorded a loss of $4.3 million from this sale in General and administrative expenses in its Consolidated Statement of Operations for the year ended December 31, 2011.

Due to poor overall economic conditions, declining sales at Company-owned restaurants, reductions in the Company’s projected results for future periods and a challenging environment for the restaurant industry, the Company recorded a goodwill impairment loss of $58.1 million for the domestic Outback Steakhouse concept and impairment charges of $36.0 million for the domestic Outback Steakhouse and Carrabba’s Italian Grill trade names during the year ended December 31, 2009. The Company also recorded impairment charges of $7.7 million for other intangible assets for the year ended December 31, 2009.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The accumulated purchase accounting adjustments to goodwill of $3.6 million were the result of adjustments to appraised fair values of acquired tangible assets.

Goodwill impairment charges are included in the line item “Goodwill impairment” and intangible asset impairment charges are included in the line item “Provision for impaired assets and restaurant closings” in the Company’s Consolidated Statements of Operations.

Intangible assets, net, consisted of the following (in thousands):

 

		Weighted Average Remaining Amortization Period (years)				December 31,
						2011				2010
Trade names (gross)			Indefinite			$	413,000			$	413,000
Trademarks (gross)			19				87,531				87,531
Less: accumulated amortization							(18,454	)			(14,392	)
Net trademarks							69,077				73,139
Favorable leases (gross, lives ranging from 0.8 to 25 years)			15				99,391				102,460
Less: accumulated amortization							(34,752	)			(29,182	)
Net favorable leases							64,639				73,278
Franchise agreements (gross)			9				17,385				17,385
Less: accumulated amortization							(6,073	)			(4,736	)
Net franchise agreements							11,312				12,649
Other intangibles (gross)			5				8,547				—
Less: accumulated amortization							(427	)			—
Net other intangibles							8,120				—
Intangible assets, less total accumulated amortization of $59,706 and $48,310 at December 31, 2011 and 2010, respectively			16			$	566,148			$	572,066

Definite-lived intangible assets are amortized on a straight-line basis. The aggregate expense related to the amortization of the Company’s trademarks, favorable leases, franchise agreements and other intangibles was $13.9 million, $14.0 million and $14.6 million for the years ended December 31, 2011, 2010 and 2009, respectively. Annual expense related to the amortization of intangible assets is anticipated to be approximately $14.4 million in 2012, $13.8 million in 2013, $13.2 million in 2014, $12.7 million in 2015 and $11.8 million in 2016.

In accordance with the terms of an asset purchase agreement that was amended in December 2004, the Company was obligated to pay a royalty to its Bonefish Grill founder and joint venture partner during his employment term with the Company. The Company had the option to terminate this royalty within 45 days of his termination of employment by making an aggregate payment equal to five times the amount of the royalty payable during the twelve full calendar months immediately preceding the month of his termination. As his employment terminated on October 1, 2011, the Company paid the approximately $8.5 million royalty termination fee in October 2011 and recorded this payment as an intangible asset in its Consolidated Balance Sheet in the fourth quarter of 2011. The intangible asset will be amortized over a five-year useful life.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

9. Other Assets, Net

Other assets, net, consisted of the following (in thousands):

 

		December 31,
		2011				2010
Company-owned life insurance		$	51,955			$	48,538
Deferred financing fees, net of accumulated amortization of $66,275 and $54,052 at December 31, 2011 and 2010, respectively			19,988				30,063
Liquor licenses			25,545				25,387
Other assets			38,677				42,082
		$	136,165			$	146,070

The Company amortizes deferred financing fees to interest expense over the terms of the respective financing arrangements using the effective interest method or the straight-line method, and it amortized $12.3 million, $13.4 million and $14.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

10. Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

 

		December 31,
		2011				2010
Accrued payroll and other compensation		$	117,013			$	109,443
Accrued insurance			19,284				20,541
Other			75,189				64,447
		$	211,486			$	194,431

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

11. Long-term Debt, net

Long-term debt, net consisted of the following (in thousands):

 

		December 31,
		2011				2010
Senior secured term loan facility, interest rate of 2.63% at December 31, 2011 and 2010(1)(2)		$	1,014,400			$	1,035,000
Senior secured pre-funded revolving credit facility, interest rates of 2.63% and 2.56% at December 31, 2011 and 2010, respectively(2)			33,000				78,072
Note payable, weighted average interest rates of 0.98% and 0.97% at December 31, 2011 and 2010, respectively(3)			466,319				466,353
First mezzanine note, interest rates of 3.28% and 3.27% at December 31, 2011 and 2010, respectively(3)			88,900				88,900
Second mezzanine note, interest rates of 3.53% and 3.52% at December 31, 2011 and 2010, respectively(3)			123,190				123,190
Third mezzanine note, interest rates of 3.54% and 3.53% at December 31, 2011 and 2010, respectively(3)			49,095				49,095
Fourth mezzanine note, interest rates of 4.53% and 4.52% at December 31, 2011 and 2010, respectively(3)			48,113				48,113
Senior notes, interest rate of 10.00% at December 31, 2011 and 2010(2)			248,075				248,075
Other notes payable, uncollateralized, interest rates ranging from 0.76% to 7.00% and from 1.07% to 7.00% at December 31, 2011 and 2010, respectively(2)			9,094				7,628
Sale-leaseback obligations(2)			2,375				2,375
Capital lease obligations(2)			2,520				1,177
Guaranteed debt, interest rates of 2.65% and 2.75% at December 31, 2011 and 2010, respectively(2)			24,500				24,500
			2,109,581				2,172,478
Less: current portion of long-term debt			(332,905	)			(95,284	)
Less: guaranteed debt			(24,500	)			(24,500	)
Less: debt discount			(291	)			(954	)
Long-term debt, net		$	1,751,885			$	2,051,740

 

(1)	At December 31, 2011, $61.9 million of OSI’s outstanding senior secured term loan facility was at 4.50%.

(2)	Represents obligations of OSI.

(3)	Represents obligations of PRP.

Bloomin’ Brands, Inc. is a holding company and conducts its operations through its subsidiaries, certain of which have incurred their own indebtedness as described below.

On June 14, 2007, in connection with the Merger, OSI entered into senior secured credit facilities with a syndicate of institutional lenders and financial institutions. These senior secured credit facilities provide for senior secured financing of up to $1.6 billion, consisting of a $1.3 billion term loan facility, a $150.0 million working capital revolving credit facility, including letter of credit and swing-line loan sub-facilities, and a $100.0 million pre-funded revolving credit facility that provides financing for capital expenditures only.

The senior secured term loan facility matures June 14, 2014. At each rate adjustment, OSI has the option to select a Base Rate plus 125 basis points or a Eurocurrency Rate plus 225 basis points for the borrowings under

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

this facility. The Base Rate option is the higher of the prime rate of Deutsche Bank AG New York Branch and the federal funds effective rate plus 0.5 of 1% (“Base Rate”) (3.25% at December 31, 2011 and 2010). The Eurocurrency Rate option is the 30, 60, 90 or 180-day Eurocurrency Rate (“Eurocurrency Rate”) (ranging from 0.38% to 0.88% and from 0.31% to 0.50% at December 31, 2011 and 2010, respectively). The Eurocurrency Rate may have a nine- or twelve-month interest period if agreed upon by the applicable lenders. With either the Base Rate or the Eurocurrency Rate, the interest rate is reduced by 25 basis points if the associated Moody’s Applicable Corporate Rating then most recently published is B1 or higher (the rating was Caa1 at December 31, 2011 and 2010).

OSI is required to prepay outstanding term loans, subject to certain exceptions, with:

 

•

50% of its “annual excess cash flow” (with step-downs to 25% and 0% based upon its rent-adjusted leverage ratio), as defined in the credit agreement and subject to certain exceptions;

 

•

100% of its “annual minimum free cash flow,” as defined in the credit agreement, not to exceed $75.0 million for each fiscal year, if its rent-adjusted leverage ratio exceeds a certain minimum threshold;

 

•

100% of the net proceeds of certain assets sales and insurance and condemnation events, subject to reinvestment rights and certain other exceptions; and

 

•

100% of the net proceeds of any debt incurred, excluding permitted debt issuances.

Additionally, OSI is required, on an annual basis, to first, repay outstanding loans under the pre-funded revolving credit facility and second, fund a capital expenditure account to the extent amounts on deposit are less than $100.0 million, in both cases with 100% of OSI’s “annual true cash flow,” as defined in the credit agreement. In accordance with these requirements, in April 2012, OSI is required to repay its pre-funded revolving credit facility outstanding loan balance of $33.0 million and fund $37.6 million to its capital expenditure account using its “annual true cash flow.” In April 2011, OSI repaid its pre-funded revolving credit facility outstanding loan balance of $78.1 million and funded $60.5 million to its capital expenditure account.

OSI’s senior secured credit facilities require scheduled quarterly payments on the term loans equal to 0.25% of the original principal amount of the term loans for the first six years and three quarters following June 14, 2007. These payments are reduced by the application of any prepayments, and any remaining balance will be paid at maturity. The outstanding balance on the term loans was $1.0 billion at December 31, 2011 and 2010. OSI has classified $13.1 million of its term loans as current at December 31, 2011 and 2010 due to its required quarterly payments and the results of its covenant calculations, which indicate the additional term loan prepayments, as described above, will not be required. In October 2011, the Company sold its nine Company-owned Outback Steakhouse restaurants in Japan to a subsidiary of S Foods, Inc. and used the net cash proceeds from this sale to pay down $7.5 million of OSI’s outstanding term loans in accordance with the terms of the OSI credit agreement amended in January 2010 (see Note 8).

Proceeds of loans and letters of credit under OSI’s $150.0 million working capital revolving credit facility, which matures June 14, 2013, provide financing for working capital and general corporate purposes and, subject to a rent-adjusted leverage condition, for capital expenditures for new restaurant growth. This revolving credit facility bears interest at rates ranging from 100 to 150 basis points over the Base Rate or 200 to 250 basis points over the Eurocurrency Rate. There were no loans outstanding under the revolving credit facility at December 31, 2011 and 2010; however, $67.6 million and $70.3 million, respectively, of the credit facility was

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

not available for borrowing as: (i) $35.1 million and $36.5 million, respectively, of the credit facility was committed for the issuance of letters of credit as required by insurance companies that underwrite the Company’s workers’ compensation insurance and also, where required, for construction of new restaurants, (ii) $24.5 million of the credit facility was committed for the issuance of a letter of credit for OSI’s guarantee of an uncollateralized line of credit for its joint venture partner, RY-8, Inc. (“RY-8”), in the development of Roy’s restaurants, (iii) $6.0 million of the credit facility was committed for the issuance of a letter of credit to the insurance company that underwrites the Company’s bonds for liquor licenses, utilities, liens and construction and (iv) $2.0 million and $3.2 million, respectively, of the credit facility was committed for the issuance of other letters of credit. OSI’s total outstanding letters of credit issued under its working capital revolving credit facility may not exceed $75.0 million. Fees for the letters of credit range from 2.00% to 2.25% and the commitment fees for unused working capital revolving credit commitments range from 0.38% to 0.50%.

Proceeds of loans under OSI’s $100.0 million pre-funded revolving credit facility, which expires June 14, 2013, are available to provide financing for capital expenditures, if the capital expenditure account described above has a zero balance. As of December 31, 2011 and 2010, OSI had $33.0 million and $78.1 million, respectively, outstanding on its pre-funded revolving credit facility. These borrowings were recorded in “Current portion of long-term debt” in the Company’s Consolidated Balance Sheets, as OSI is required to repay any outstanding borrowings in April following each fiscal year using its “annual true cash flow,” as defined in the credit agreement. At each rate adjustment, OSI has the option to select the Base Rate plus 125 basis points or a Eurocurrency Rate plus 225 basis points for the borrowings under this facility. In either case, the interest rate is reduced by 25 basis points if the associated Moody’s Applicable Corporate Rating then most recently published is B1 or higher. Fees for the unused portion of the pre-funded revolving credit facility are 2.43%.

OSI’s senior secured credit facilities require it to comply with certain financial covenants, including a quarterly Total Leverage Ratio (“TLR”) test and an annual Minimum Free Cash Flow (“MFCF”) test. The TLR is the ratio of OSI’s Consolidated Total Debt to OSI’s Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization and certain other adjustments as defined in the senior secured credit facilities) and may not exceed 6.00 to 1.00. On an annual basis, if the Rent Adjusted Leverage Ratio (“RALR”), as defined, is greater than or equal to 5.25 to 1.00, OSI’s MFCF cannot be less than $75.0 million. MFCF is calculated as OSI’s Consolidated EBITDA plus decreases in OSI’s Consolidated Working Capital less OSI’s Consolidated Interest Expense, OSI’s Capital Expenditures (except for that funded by OSI’s senior secured pre-funded revolving credit facility), increases in OSI’s Consolidated Working Capital and OSI’s cash paid for taxes. (All of the above capitalized terms are as defined in the credit agreement). The credit agreement governing OSI’s senior secured credit facilities, as amended on January 28, 2010, also includes negative covenants that, subject to significant exceptions, limit its ability and the ability of its restricted subsidiaries to: incur liens, make investments and loans, make capital expenditures (as described below), incur indebtedness or guarantees, engage in mergers, acquisitions and assets sales, declare dividends, make payments or redeem or repurchase equity interests, alter its business, engage in certain transactions with affiliates, enter into agreements limiting subsidiary distributions and prepay, redeem or purchase certain indebtedness. OSI’s senior secured credit facilities contain customary representations and warranties, affirmative covenants and events of default. At December 31, 2011 and 2010, OSI was in compliance with its debt covenants.

OSI’s capital expenditures are limited by the credit agreement. The annual capital expenditure limits range from $200.0 million to $250.0 million with various carry-forward and carry-back allowances. OSI’s annual expenditure limits may increase after an acquisition. However, if (i) the RALR at the end of a fiscal year is greater than 5.25 to 1.00, (ii) OSI’s “annual true cash flow” is insufficient to repay fully its pre-funded revolving credit facility and (iii) the capital expenditure account has a zero balance, its capital expenditures will be limited to $100.0 million for the succeeding fiscal year. This limitation will remain until there are no pre-funded

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

revolving credit facility loans outstanding and the amount on deposit in the capital expenditures account is greater than zero or until the RALR is less than 5.25 to 1.00. In 2010, OSI’s capital expenditures were limited to $100.0 million as a result of the conditions described above. In 2011, OSI was not subject to this limitation and will not be subject to it in 2012.

The obligations under OSI’s senior secured credit facilities are guaranteed by each of its current and future domestic 100% owned restricted subsidiaries in its Outback Steakhouse and Carrabba’s Italian Grill concepts and certain non-restaurant subsidiaries (the “Guarantors”) and by OSI HoldCo, Inc. (“OSI HoldCo”), the Company’s indirect, wholly-owned subsidiary and OSI’s direct owner. Subject to the conditions described below, the obligations are secured by a perfected security interest in substantially all of OSI’s assets and the assets of the Guarantors and OSI HoldCo, in each case, now owned or later acquired, including a pledge of all of OSI’s capital stock, the capital stock of substantially all of OSI’s domestic wholly-owned subsidiaries and 65% of the capital stock of certain of OSI’s material foreign subsidiaries that are directly owned by OSI, OSI HoldCo, or a Guarantor. Also, OSI is required to provide additional guarantees of the senior secured credit facilities in the future from other domestic wholly-owned restricted subsidiaries if the Consolidated EBITDA attributable to OSI’s non-guarantor domestic wholly-owned restricted subsidiaries as a group exceeds 10% of OSI’s Consolidated EBITDA as determined on an OSI company-wide basis. If this occurs, guarantees would be required from additional domestic wholly-owned restricted subsidiaries in such number that would be sufficient to lower the aggregate Consolidated EBITDA of the non-guarantor domestic wholly-owned restricted subsidiaries as a group to an amount not in excess of 10% of the OSI company-wide Consolidated EBITDA.

On June 14, 2007, PRP entered into first mortgage and mezzanine loans (together, the commercial mortgage-backed securities loan, or the “CMBS Loan”) totaling $790.0 million. As part of the CMBS Loan, the lenders, German American Capital Corporation and Bank of America, N.A., have a security interest in PRP’s properties and related improvements located throughout the United States and direct and indirect equity interests in PRP.

The CMBS Loan comprised a note payable and four mezzanine notes. The CMBS Loan had a maturity date of June 9, 2011, subject to one additional one-year extension by PRP to a maximum maturity date of June 9, 2012. During 2011, PRP elected to exercise the one-year extension.

All notes bore interest at the one-month LIBOR which was 0.28% and 0.27% at December 31, 2011 and 2010, respectively, plus an applicable spread which ranged from 0.51% to 4.25%. Interest-only payments were made on the ninth calendar day of each month and interest accrues beginning on the fifteenth calendar day of the preceding month.

The CMBS Loan required PRP to comply with certain financial covenants, including a lease coverage ratio and a loan to value ratio as defined in the CMBS Loan agreement. The CMBS Loan also contained customary representations, warranties, affirmative covenants and events of default. Upon disposal of any location that collateralized the CMBS Loan, PRP was required to pay the portion of the CMBS Loan principal that related to each disposed location. During the years ended December 31, 2011 and 2010, PRP did not dispose of any locations and therefore did not pay any principal on the CMBS loan for disposed location.

Subsequent to December 31, 2011, PRP repaid its CMBS Loan and New Private Restaurant Properties, LLC (“New PRP”), the Company’s wholly-owned, indirect subsidiary, entered into a new commercial mortgage-backed securities loan (the “2012 CMBS Loan”). As a result of the 2012 CMBS Loan refinancing, the net amount repaid along with scheduled maturities within one year, $281.3 million, was classified as current at December 31, 2011 (see Note 20).

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

On June 14, 2007, OSI issued senior notes in an original aggregate principal amount of $550.0 million under an indenture among OSI, as issuer, OSI Co-Issuer, Inc., as co-issuer (“Co-Issuer”), a third-party trustee and the Guarantors. The senior notes mature on June 15, 2015. Interest is payable semiannually in arrears, at 10% per annum, in cash on each June 15 and December 15. Interest payments to the holders of record of the senior notes occur on the immediately preceding June 1 and December 1. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months. The principal balance of senior notes outstanding at December 31, 2011 and 2010 was $248.1 million.

The senior notes are guaranteed on a senior unsecured basis by each restricted subsidiary that guarantees the senior secured credit facility. Under the terms of the indenture, the restricted subsidiaries shall be automatically and unconditionally released and discharged as guarantors of the senior notes if: (i) the subsidiary is sold or sells all of its fixed assets; (ii) the subsidiary is declared “unrestricted” for covenant purposes; (iii) the subsidiary’s guarantee of other indebtedness is terminated or released; or (iv) the requirement for legal defeasance or covenant defeasance or to discharge the indenture have been satisfied.

The senior notes are general, unsecured senior obligations of OSI, Co-Issuer and the Guarantors and are equal in right of payment to all existing and future senior indebtedness, including the senior secured credit facility. The senior notes are effectively subordinated to all of OSI’s, Co-Issuer’s and the Guarantors’ secured indebtedness, including the senior secured credit facility, to the extent of the value of the assets securing such indebtedness. The senior notes are senior in right of payment to all of OSI’s, Co-Issuer’s and the Guarantors’ existing and future subordinated indebtedness.

The indenture governing the senior notes limits, under certain circumstances, OSI’s ability and the ability of Co-Issuer and OSI’s restricted subsidiaries to: incur liens, make investments and loans, incur indebtedness or guarantees, engage in mergers, acquisitions and assets sales, declare dividends, make payments or redeem or repurchase equity interests, alter its business, engage in certain transactions with affiliates, enter into agreements limiting subsidiary distributions and prepay, redeem or purchase certain indebtedness.

In accordance with the terms of the senior notes and the senior secured credit facility, OSI’s restricted subsidiaries are also subject to restrictive covenants. Under certain circumstances, OSI is permitted to designate subsidiaries as unrestricted subsidiaries, which would cause them not to be subject to the restrictive covenants of the indenture or the credit agreement. As of December 31, 2011 and 2010, all but one of OSI’s consolidated subsidiaries were restricted subsidiaries, as a subsidiary that operated six restaurants in Canada was designated as an unrestricted subsidiary in April 2009.

Additional senior notes may be issued under the indenture from time to time, subject to certain limitations. Initial and additional senior notes issued under the indenture will be treated as a single class for all purposes under the indenture, including waivers, amendments, redemptions and offers to purchase.

OSI may redeem some or all of the senior notes at the redemption prices (expressed as percentages of principal amount of the senior notes to be redeemed) listed below, plus accrued and unpaid interest thereon and additional interest, if any, to the applicable redemption date. The redemption prices are effective for a twelve-month period beginning on June 15 of each of the years indicated below.

 

After June 15th		Percentage
2011			105.0	%
2012			102.5	%
2013 and thereafter			100.0	%

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

Upon a change in control as defined in the indenture, OSI would be required to make an offer to purchase all of the senior notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued interest and unpaid interest and additional interest, if any, to the date of purchase.

During the first quarter of 2009, OSI purchased $240.1 million in aggregate principal amount of its senior notes in a cash tender offer. OSI paid $73.0 million for the senior notes purchased and $6.7 million of accrued interest. The Company recorded a gain from the extinguishment of debt of $158.1 million in the line item “Gain on extinguishment of debt” in its Consolidated Statement of Operations for the year ended December 31, 2009. The gain was reduced by $6.1 million for the pro rata portion of unamortized deferred financing fees that related to the extinguished senior notes and by $3.0 million for fees related to the tender offer. The purpose of the tender offer was to reduce the principal amount of debt outstanding, reduce the related debt service obligations and improve OSI’s financial covenant position under its senior secured credit facilities.

As of December 31, 2011 and 2010, OSI had approximately $9.1 million and $7.6 million, respectively, of notes payable at interest rates ranging from 0.76% to 7.00% and from 1.07% to 7.00%, respectively. These notes have been primarily issued for buyouts of managing and area operating partner interests in the cash flows of their restaurants and generally are payable over a period of two through five years.

Debt Guarantees

OSI is the guarantor of an uncollateralized line of credit that permits borrowing of up to a maximum of $24.5 million for its joint venture partner, RY-8, in the development of Roy’s restaurants. The line of credit originally expired in December 2004 and was amended for a fourth time on April 1, 2009 to a revised termination date of April 15, 2013. According to the terms of the credit agreement, RY-8 may borrow, repay, re-borrow or prepay advances at any time before the termination date of the agreement. On the termination date of the agreement, the entire outstanding principal amount of the loan then outstanding and any accrued interest is due. At December 31, 2011 and 2010, the outstanding balance on the line of credit was $24.5 million.

RY-8’s obligations under the line of credit are unconditionally guaranteed by OSI and Roy’s Holdings, Inc. (“RHI”). If an event of default occurs, as defined in the agreement, the total outstanding balance, including any accrued interest, is immediately due from the guarantors. At December 31, 2011 and 2010, $24.5 million of OSI’s $150.0 million working capital revolving credit facility was committed for the issuance of a letter of credit for this guarantee.

If an event of default occurs and RY-8 is unable to pay the outstanding balance owed, OSI would, as one of the two guarantors, be liable for this balance. However, in conjunction with the credit agreement, RY-8 and RHI have entered into an Indemnity Agreement and a Pledge of Interest and Security Agreement in OSI’s favor. These agreements provide that if OSI is required to perform under its obligation as guarantor pursuant to the credit agreement, then RY-8 and RHI will indemnify OSI against all losses, claims, damages or liabilities which arise out of or are based upon its guarantee of the credit agreement. RY-8’s and RHI’s obligations under these agreements are collateralized by a first priority lien upon and a continuing security interest in any and all of RY-8’s interests in the joint venture.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The aggregate mandatory principal payments of total consolidated debt outstanding at December 31, 2011 (excluding guaranteed debt), for the next five years, are summarized as follows (in thousands):

 

2012		$	332,905
2013			87,695
2014			937,662
2015			259,300
2016			11,446
Thereafter			455,782
Total		$	2,084,790

The following table includes the maturity of the Company’s debt and debt guarantees (in thousands):

 

		Total				Payable During 2012				Payable During 2013-2016				Payable After 2016
Debt		$	2,084,790			$	332,905			$	1,296,103			$	455,782
Debt guarantees:
Maximum availability of debt guarantees		$	25,957			$	—			$	24,500			$	1,457
Amount outstanding under debt guarantees			25,957				—				24,500				1,457
Carrying amount of liabilities			24,500				—				24,500				—

12. Other Long-term Liabilities, Net

Other long-term liabilities, net, consisted of the following (in thousands):

 

		December 31,
		2011				2010
Accrued insurance liability		$	39,575			$	40,181
Unfavorable leases, net of accumulated amortization of $18,891 and $15,034 at December 31, 2011 and 2010, respectively			62,012				66,660
PEP obligation			77,642				65,880
Supplemental PEP obligation			16,235				20,055
Other liabilities			23,288				23,786
		$	218,752			$	216,562

The Company maintains endorsement split dollar insurance policies with a death benefit ranging from $5.0 million to $10.0 million for certain of its current and former executive officers. The Company is the beneficiary of the policies to the extent of premiums paid or the cash value, whichever is greater, with the balance being paid to personal beneficiaries designated by the executive officers. The Company has agreed not to terminate the policies regardless of continued employment except that the Company may terminate one executive officer’s policy prior to his completion of seven years of employment with the Company commencing January 1, 2006. As of December 31, 2011 and 2010, the Company has $13.4 million and $12.4 million recorded in Other long-term liabilities for the endorsement split dollar insurance policies.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

13. Comprehensive Income (Loss) and Foreign Currency Translation and Transactions

Comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments. Total comprehensive income (loss) for the years ended December 31, 2011, 2010 and 2009 was $106.5 million, $63.7 million and ($54.6) million, respectively, which included the effect of (losses) and gains from translation adjustments of approximately ($2.7) million, $4.6 million and $10.3 million, respectively.

Accumulated other comprehensive loss contained only foreign currency translation adjustments as of December 31, 2011 and 2010.

Foreign currency transaction gains and losses are recorded in “Other income (expense), net” in the Company’s Consolidated Statements of Operations and was a net gain (loss) of $0.8 million, $3.0 million and $(0.2) million for the years ended December 31, 2011, 2010 and 2009, respectively.

14. Income Taxes

The following table presents the domestic and foreign components of income (loss) before provision (benefit) for income taxes (in thousands):

 

		Years Ended December 31,
		2011				2010				2009
Domestic		$	105,620			$	58,346			$	(80,202	)
Foreign			25,275				22,130				12,897
		$	130,895			$	80,476			$	(67,305	)

Provision (benefit) for income taxes consisted of the following (in thousands):

 

		Years Ended December 31,
		2011				2010				2009
Current provision (benefit):
Federal		$	382			$	(4,324	)		$	(75	)
State			10,556				12,430				6,794
Foreign			10,953				8,012				6,858
			21,891				16,118				13,577
Deferred (benefit) provision:
Federal			(127	)			1,215				(12,345	)
State			(179	)			10				(2,467	)
Foreign			131				3,957				(1,227	)
			(175	)			5,182				(16,039	)
Provision (benefit) for income taxes		$	21,716			$	21,300			$	(2,462	)

 

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The reconciliation of income taxes calculated at the United States federal tax statutory rate to the Company’s effective income tax rate is as follows:

 

		Years Ended December 31,
		2011				2010				2009
Income taxes at federal statutory rate			35.0	%			35.0	%			35.0	%
State and local income taxes, net of federal benefit			4.1				4.8				(3.8	)
Provision for goodwill impairment			—				—				(30.3	)
Valuation allowance on deferred income tax assets			7.6				13.2				(15.0	)
Employment related credits, net			(19.1	)			(22.4	)			26.9
Net officers life insurance expense			0.9				(1.3	)			3.7
Noncontrolling interests			(4.3	)			(5.1	)			1.0
Tax settlements and related adjustments			1.3				3.8				(7.2	)
Excess tax benefits from stock-based compensation arrangements			—				—				(9.0	)
Loss on investments			(5.6	)			—				—
Foreign rate differential			(2.4	)			(2.1	)			1.9
Other, net			(0.9	)			0.6				0.5
Total			16.6	%			26.5	%			3.7	%

The effective income tax rate for the year ended December 31, 2011 was 16.6% compared to 26.5% for the year ended December 31, 2010. The net decrease in the effective income tax rate in 2011 as compared to the previous year was primarily due to the increase in the domestic pretax book income in which the deferred income tax assets are subject to a valuation allowance and the state and foreign income tax provision being a lower percentage of consolidated pretax income as compared to the prior year. The effective income tax rate for the year ended December 31, 2010 was 26.5% compared to 3.7% for the year ended December 31, 2009. The net increase in the effective income tax rate in 2010 as compared to the previous year was primarily due to the effect of the change in the valuation allowance against deferred income tax assets.

The effective income tax rate for the year ended December 31, 2011 was lower than the combined federal and state statutory rate of 38.7% primarily due to the benefit of the tax credit for excess FICA tax on employee-reported tips and loss on investments as a result of the sale of assets in Japan together being such a large percentage of pretax income. The effective income tax rate for the year ended December 31, 2010 was lower than the combined federal and state statutory rate of 38.9% primarily due to the benefit of the tax credit for excess FICA tax on employee-reported tips, which was partially offset by the valuation allowance and income taxes in states that only have limited deductions in computing the state current income tax provision. The effective income tax rate for the year ended December 31, 2009 was significantly lower than the combined federal and state statutory rate of 38.9% primarily due to an increase in the valuation allowance on deferred income tax assets, which was partially offset by the benefit of the tax credit for excess FICA tax on employee-reported tips being such a large percentage of pretax loss.

 

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows (in thousands):

 

		December 31,
		2011				2010
Deferred income tax assets:
Deferred rent		$	26,421			$	21,879
Insurance reserves			21,740				22,849
Unearned revenue			9,375				8,716
Deferred compensation			78,351				67,710
Allowance for receivables			762				13,696
Net operating loss carryforward			19,397				35,356
Federal tax credit carryforward			146,991				105,802
Deferred loss on contingent debt guarantee			9,493				9,538
Other, net			105				5,348
Gross deferred income tax assets			312,635				290,894
Less: valuation allowance			(35,837	)			(25,886	)
Net deferred income tax assets			276,798				265,008
Deferred income tax liabilities:
Less: property, fixtures and equipment basis differences			(232,604	)			(225,631	)
Less: intangible asset basis differences			(148,433	)			(143,702	)
Less: deferred gain on extinguishment of debt			(57,064	)			(57,100	)
Net deferred income tax liabilities		$	(161,303	)		$	(161,425	)

The changes in the valuation allowance account for the deferred income tax assets are as follows (in thousands):

 

Balance at January 1, 2009		$	4,992
Change in assessments about the realization of deferred income tax assets			16,985
Balance at December 31, 2009			21,977
Change in assessments about the realization of deferred income tax assets			3,909
Balance at December 31, 2010			25,886
Change in assessments about the realization of deferred income tax assets			9,951
Balance at December 31, 2011		$	35,837

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

A valuation allowance reduces the deferred income tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred income tax assets will not be realized. After consideration of all of the evidence, the Company has determined that a valuation allowance of $35.8 million and $25.9 million is necessary at December 31, 2011 and 2010, respectively.

A provision (benefit) for income taxes has not been recorded for any United States or additional foreign taxes on undistributed earnings related to the Company’s foreign affiliates as these earnings were and are expected to continue to be permanently reinvested. If the Company identifies an exception to its general reinvestment policy of undistributed earnings, additional taxes will be posted. It is not practical to determine the amount of unrecognized deferred income tax liabilities on the undistributed earnings.

The Company has a federal net operating loss carryforward for tax purposes of approximately $49.4 million. This loss can be carried forward for 20 years from the tax year in which it is was generated and will expire in the years 2027 and 2029. The Company has state net operating loss carryforwards of approximately $46.2 million. These state net operating loss carryforwards will expire between 2012 and 2029. The Company has foreign net operating loss carryforwards of approximately $5.5 million. These foreign net operating loss carryforwards will expire between 2015 and 2018.

The Company has general business tax credits of approximately $138.8 million. These credits can be carried forward for 20 years and will expire between 2027 and 2031. The Company has foreign tax credits available to utilize against federal income taxes of approximately $15.6 million. These credits can be carried forward for ten years and will expire between 2017 and 2021.

As of December 31, 2011 and December 31, 2010, the Company had $14.0 million and $16.4 million, respectively, of unrecognized tax benefits ($1.5 million and $1.3 million, respectively, in “Other long-term liabilities, net,” $2.5 million and $6.3 million, respectively, in “Accrued and other current liabilities” and $10.0 million and $8.8 million, respectively, in “Deferred income tax liabilities”). Additionally, the Company accrued $4.1 million and $6.1 million of interest and penalties related to uncertain tax positions as of December 31, 2011 and December 31, 2010, respectively. Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $15.2 million and $18.0 million, respectively, if recognized, would impact the Company’s effective tax rate. The difference between the total amount of unrecognized tax benefits and the amount that would impact the effective tax rate consists of items that are offset by deferred income tax assets and the federal tax benefit of state income tax items.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):

 

Balance at January 1, 2009		$	16,537
Increases for tax positions taken during a prior period			2,920
Increases for tax positions taken during the current period			2,536
Settlements with taxing authorities			(5,189	)
Lapses in the applicable statutes of limitations			(2,393	)
Balance at December 31, 2009		$	14,411
Increases for tax positions taken during a prior period			1,889
Decreases for tax positions taken during a prior period			(676	)
Increases for tax positions taken during the current period			3,801
Settlements with taxing authorities			58
Lapses in the applicable statutes of limitations			(3,096	)
Balance at December 31, 2010		$	16,387
Increases for tax positions taken during a prior period			472
Decreases for tax positions taken during a prior period			(708	)
Increases for tax positions taken during the current period			2,136
Settlements with taxing authorities			(4,190	)
Lapses in the applicable statutes of limitations			(58	)
Balance at December 31, 2011		$	14,039

In many cases, the Company’s uncertain tax positions are related to tax years that remain subject to examination by relevant taxable authorities. Based on the outcome of these examinations, or as a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related recorded unrecognized tax benefits for tax positions taken on previously filed tax returns will decrease by approximately $5.0 million to $6.0 million within the next twelve months after December 31, 2011.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2007 through 2010. The Company and its subsidiaries’ state and foreign income tax returns are also open to audit under the statute of limitations for the years ended December 31, 2000 through 2010.

The Company accounts for interest and penalties related to uncertain tax positions as part of its Provision for income taxes and recognized expense of $0.9 million, $2.1 million and $1.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

 

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

15. Recently Issued Financial Accounting Standards

In May 2011, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” (“ASU No. 2011-04”) that establishes a number of new requirements for fair value measurements. These include: (i) a prohibition on grouping financial instruments for purposes of determining fair value, except when an entity manages market and credit risks on the basis of the entity’s net exposure to the group; (ii) an extension of the prohibition against the use of a blockage factor to all fair value measurements (that prohibition currently applies only to financial instruments with quoted prices in active markets); and (iii) a requirement that for recurring Level 3 fair value measurements, entities disclose quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements. Additionally, for items not carried at fair value but for which fair value is disclosed, entities will be required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed. ASU No. 2011-04 is effective for interim and annual periods beginning after December 15, 2011. While the provisions of ASU No. 2011-04 will increase the Company’s fair value disclosures, this guidance will not have an impact on the Company’s financial position, results of operations or cash flows.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” (“ASU No. 2011-05”) that eliminates the option to report other comprehensive income and its components in the statement of changes in equity. Instead, the new guidance requires the Company to present the components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. ASU No. 2011-05 must be applied retrospectively and is effective for public companies during the interim and annual periods beginning after December 15, 2011, with early adoption permitted. Additionally, in December 2011, the FASB issued ASU No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU No. 2011-12”), which indefinitely defers the requirement in ASU No. 2011-05 to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. The deferral of the presentation requirements does not impact the effective date of the other requirements in ASU 2011-05. During the deferral period, the existing requirements in generally accepted accounting principles in the United States (“U.S. GAAP”) for the presentation of reclassification adjustments must continue to be followed. ASU No. 2011-12 is effective for public companies during the interim and annual periods beginning after December 15, 2011. ASU No. 2011-05 and ASU No. 2011-12 will not have an impact on the Company’s financial position, results of operations or cash flows as the guidance only requires a presentation change to comprehensive income.

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350)—Testing Goodwill for Impairment,” (“ASU No. 2011-08”) which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before applying the two-step quantitative goodwill impairment test. If it is determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing entities to go directly to the quantitative assessment. ASU No. 2011-08 is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011, with early adoption permitted. This guidance will not have a material impact on the Company’s financial position, results of operations or cash flows.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

In December 2011, the FASB issued ASU No. 2011-10, “Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate—a Scope Clarification,” (“ASU No. 2011-10”) which applies to a parent company that ceases to have a controlling financial interest in a subsidiary, that is in substance real estate, as a result of a default on the subsidiary’s nonrecourse debt. The new guidance emphasizes that the parent should only deconsolidate the real estate subsidiary when legal title to the real estate is transferred to the lender and the related nonrecourse debt has been extinguished. If the reporting entity ceases to have a controlling financial interest under subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. This standard takes effect for public companies during the annual and interim periods beginning on or after June 15, 2012. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210) -Disclosures about Offsetting Assets and Liabilities,” (“ASU 2011-11”) which enhances current disclosures about financial instruments and derivative instruments that are either offset on the statement of financial position or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset on the statement of financial position. The guidance requires the Company to provide both net and gross information for these assets and liabilities. ASU No. 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods with retrospective application required. This guidance will not have an impact on the Company’s financial position, results of operations or cash flows as it only requires a presentation change to offsetting (netting) assets and liabilities.

16. Commitments and Contingencies

Operating Leases

The Company leases restaurant and office facilities and certain equipment under operating leases having initial terms expiring between 2012 and 2024. The restaurant facility leases have renewal clauses primarily from five to 30 years exercisable at the option of the Company. Rent expense for the Company’s operating leases, which generally have escalating rentals over the term of the lease and may include potential rent holidays, is recorded on a straight-line basis over the initial lease term and those renewal periods that are reasonably assured. Certain of these leases require the payment of contingent rentals leased on a percentage of gross revenues, as defined by the terms of the applicable lease agreement. Total rental expense for the years ended December 31, 2011, 2010 and 2009 was approximately $132.9 million, $128.1 million and $132.0 million, respectively, and included contingent rentals of approximately $5.6 million, $4.5 million and $3.8 million, respectively.

As of December 31, 2011, future minimum rental payments under non-cancelable operating leases (including leases for restaurants scheduled to open in 2012) are as follows (in thousands):

 

2012		$	106,258
2013			98,174
2014			81,771
2015			64,053
2016			45,993
Thereafter			107,130
Total minimum lease payments(1)		$	503,379

 

(1)	Total minimum lease payments have not been reduced by minimum sublease rentals of $3.0 million due in future periods under non-cancelable subleases. On March 14, 2012, the Company entered into a sale-

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

leaseback transaction with two third-party real estate institutional investors in which the Company sold 67 restaurant properties and then simultaneously leased these properties back under nine master leases with initial terms of 20 years each. As a result, the Company will have an additional $362.6 million of operating lease payments over the initial terms of these lease agreements (see Note 20).

Purchase Obligations

The Company has minimum purchase commitments with various vendors through June 2016. Outstanding commitments consist primarily of minimum purchase commitments of beef, cheese, potatoes and other food and beverage products related to normal business operations and contracts for advertising, marketing, sports sponsorships, printing and technology. In 2011, the Company purchased more than 90% of its beef raw materials from four beef suppliers who represented approximately 75% of the total beef marketplace in the United States.

Litigation and Other Matters

The Company is subject to legal proceedings, claims and liabilities, such as liquor liability, sexual harassment and slip and fall cases, which arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of ultimate liability with respect to those actions will not have a material adverse impact on the Company’s financial position or results of operations and cash flows. The Company accrues for loss contingencies that are probable and reasonably estimable. The Company generally does not accrue for legal costs expected to be incurred with a loss contingency until those services are provided.

Guarantees and RY-8, Inc.

OSI guarantees debt owed to banks by one of its joint venture partners and by landlords of one of its Outback Steakhouse restaurants in South Korea. The maximum amount guaranteed and the outstanding guaranteed amount were each approximately $26.0 million at December 31, 2011. OSI would have to perform under the guarantees if the borrowers default under their respective loan agreements. A default would cause OSI to exercise all available rights and remedies.

Pursuant to the Company’s joint venture agreement for the development of Roy’s restaurants, RY-8, its joint venture partner, has the right to require the Company to purchase up to 50% of RY-8’s interest in the joint venture at any time after June 17, 2009. The purchase price would be equal to the fair market value of the joint venture as of the date that RY-8 exercised its put option multiplied by the percentage purchased.

As of December 31, 2011, the Company is due $2.8 million from RY-8 for interest and line of credit renewal fees and capital expenditures for additional restaurant development made on behalf of RY-8 because the joint venture partner’s $24.5 million line of credit was fully extended. This amount is eliminated in consolidation (see Note 18). Additional payments on behalf of RY-8 may be required in the future.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

Insurance

The Company purchased insurance for individual claims that exceed the amounts listed in the following table:

 

		2011				2010				2009
Workers’ Compensation		$	1,500,000			$	1,500,000			$	1,500,000
General Liability(1)			1,500,000				1,500,000				1,500,000
Health(2)			400,000				300,000				300,000
Property Coverage(3)			2,500,000 / 500,000				2,500,000 / 500,000				2,500,000 /500,000
Employment Practices Liability			2,000,000				2,000,000				2,000,000
Directors’ and Officers’ Liability			250,000				250,000				250,000
Fiduciary Liability			25,000				25,000				25,000

 

(1)

In 2011, claims arising from liquor liability had the same self-insured retention as general liability. For claims in 2010 and 2009, there was an additional $1.0 million self-insured retention per claim until a $2.0 million liquor liability aggregate had been met. At that time, any claims arising from liquor liability reverted to the general liability self-insured retention.

(2)

The Company is self-insured for all aggregate health benefits claims, limited to $0.4 million per covered individual in 2011 and $0.3 million per covered individual in 2010 and 2009. The Company retained the first $0.3 million, $0.4 million and $0.2 million of payable losses under the plan as an additional deductible in 2011, 2010 and 2009, respectively. The 2010 and 2009 insurer’s liability was limited to $2.0 million per individual per year.

(3)

The Company has a $0.5 million deductible per occurrence for those properties that collateralize PRP’s CMBS Loan and a $2.5 million deductible per occurrence for all other locations. Property limits are $60.0 million each occurrence, and the Company does not quota share in any loss above either deductible level.

The Company records a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost to the Company. In establishing reserves, the Company considers certain actuarial assumptions and judgments regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices. Unanticipated changes in these factors or future adjustments to these estimates may produce materially different amounts of expense that would be reported under these programs. Reserves recorded for worker’s compensation and general liability claims are discounted using the average of the 1-year and 5-year risk free rate of monetary assets that have comparable maturities. When recovery from an insurance policy is considered probable, a receivable is recorded.

The payments the Company expects to make as of December 31, 2011 for each of the five succeeding years and the aggregate amount thereafter are as follows:

 

2012		$	13,574
2013			13,117
2014			6,727
2015			4,473
2016			4,474
Thereafter			11,645
		$	54,010

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

A reconciliation of the expected aggregate undiscounted amount to the amount recognized in the Consolidated Balance Sheets is as follows:

 

		December 31,
		2011				2010
Reconciliation of Undiscounted Amount to Liability
Undiscounted liability		$	54,010			$	56,894
Less: discount			(862	)			(1,450	)
Liability balance		$	53,148			$	55,444

Discount rates of 0.48% and 0.70% were used for December 31, 2011 and 2010, respectively. The discounted liabilities are presented in the Company’s Consolidated Balance Sheets as follows:

 

		December 31,
		2011				2010
Accrued and other current liabilities		$	13,574			$	15,263
Other long-term liabilities, net			39,574				40,181

17. Related Parties

Paradise Restaurant Group, LLC

In September 2009, the Company sold its Cheeseburger in Paradise concept, which included 34 restaurants, to Paradise Restaurant Group, LLC (“PRG”), an entity formed and controlled by the president of the concept. Other investors in PRG include a current development partner in certain Carrabba’s Italian Grill restaurants and former Company employees. Based on the terms of the purchase and sale agreement, the Company continued to consolidate PRG after the sale transaction since the Company was considered the primary beneficiary of the entity under the then applicable accounting guidance. However, upon adoption of new accounting guidance for variable interest entities on January 1, 2010, the Company is no longer the primary beneficiary of PRG, and as a result, PRG is no longer considered a related party as of January 1, 2010 (see Note 18).

The Company provided the financing for the sale of the Cheeseburger in Paradise concept in the form of a $2.0 million promissory note that bears interest at a rate of 600 basis points over the 90-day LIBOR. The promissory note must be repaid in five annual installments that commence one year from the September 15, 2009 closing date. In accordance with the terms of the promissory note, the annual principal and interest payment amounts are based on the cash flow of PRG, subject to certain maximum payment limits. The promissory note and the payment of the purchase price are secured by a first priority purchase money security interest in the membership interests and assets of PRG. The loan agreement for the promissory note also contains certain protective covenants such as, but not limited to: (i) PRG must obtain the Company’s prior written approval before incurring any additional indebtedness or new lease obligations or before extending or renewing any existing obligations, (ii) the Company retains the right to approve PRG’s financial capital and development plans, (iii) PRG cannot make any distributions, dividends or other payment of funds other than approved in an annual capital and financial plan and (iv) PRG cannot make any substantial change to its executive or management personnel or change its general character of business without the Company’s prior written consent.

The Company also provided PRG a $2.0 million revolving line of credit (reduced to $1.0 million in September 2010) to assist with seasonal cash flow shortages. The revolving line of credit matured on September 15, 2011 and there were no draws on the revolving line of credit prior to maturity.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The Company assigned PRG all restaurant property leases under their current terms, except for three locations that are leased under modified terms as provided in the purchase and sale agreement. For certain of the assigned third-party leases, the Company remains contingently liable. The buyer is responsible for paying common area maintenance, real estate taxes and other expenses on these restaurant properties.

T-Bird Nevada, LLC

On February 19, 2009, the Company filed an action in Florida against T-Bird Nevada, LLC (“T-Bird”) and certain of its affiliates (collectively, the “T-Bird Parties”). T-Bird is a limited liability company affiliated with the Company’s California franchisees of Outback Steakhouse restaurants. The action sought payment on a promissory note made by T-Bird that the Company purchased from T-Bird’s former lender, among other remedies. The principal balance on the promissory note, plus accrued and unpaid interest, was approximately $33.3 million at the time it was purchased. On September 11, 2009, the T-Bird Parties filed an answer and counterclaims against the Company and certain of its officers and affiliates. The answer generally denied T-Bird’s liability on the loan, and the counterclaims restated the same claims made by the T-Bird Parties in their California action (as described below).

On February 20, 2009, the T-Bird Parties filed suit against the Company and certain of its officers and affiliates in the Superior Court of the State of California, County of Los Angeles. After certain legal proceedings, the T-Bird Parties filed an amended complaint on November 29, 2010. Like the original complaint, the T-Bird Parties’ amended complaint claimed, among other things, that the Company made various misrepresentations and breached certain oral promises allegedly made by the Company and certain of its officers to the T-Bird Parties that the Company would acquire the restaurants owned by the T-Bird Parties and until that time the Company would maintain financing for the restaurants that would be nonrecourse to the T-Bird Parties. The amended complaint sought damages in excess of $100.0 million, exemplary or punitive damages, and other remedies.

On September 26, 2011, the Company entered into a settlement agreement (the “Settlement Agreement”) with the T-Bird Parties to settle all outstanding litigation with T-Bird. In accordance with the terms of the Settlement Agreement, T-Bird agreed to pay $33.3 million to the Company to satisfy the T-Bird promissory note that the Company purchased from T-Bird’s former lender. This settlement payment was received in November 2011 and recorded as Recovery of note receivable from affiliated entity in the Company’s Consolidated Statement of Operations for the year ended December 31, 2011.

Pursuant to the Settlement Agreement, the Company (through its indirect subsidiary, Outback Steakhouse of Florida, LLC) granted to California Steakhouse Developer, LLC, a T-Bird affiliate, for a period of 20 years, the right to develop and operate Outback Steakhouse restaurants as a franchisee in the State of California as set forth in a development agreement dated November 23, 2011 (the “Development Agreement”).

Additionally, the Company has granted certain T-Bird affiliates (the “T-Bird Entities”) the non-transferable right (the “Put Right”) to require the Company to acquire all of the equity interests in the T-Bird Entities that own Outback Steakhouse restaurants and the rights under the Development Agreement for cash. The closing of the Put Right is subject to certain conditions including the negotiation of a transaction agreement reasonably acceptable to the parties, the absence of dissenters rights being exercised by the equity owners above a specified level and compliance with the Company’s debt agreements. The Put Right is exercisable for a one-year period beginning on the date of closing of an initial public offering (an “IPO”) of at least $100 million worth of shares of the Company’s or an affiliate’s common stock or if the Company or OSI has not completed an IPO, for a period of 60 days after execution of a definitive agreement to sell only the Outback Steakhouse brand and all of its Company-owned Outback Steakhouse restaurants.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

If the Put Right is exercised, the Company will pay a purchase price equal to a multiple of the T-Bird Entities’ earnings before interest, taxes, depreciation and amortization, subject to certain adjustments (“Adjusted EBITDA”), for the trailing 12 months, net of liabilities of the T-Bird Entities. The multiple is equal to 75% of the multiple of the Company’s or affiliate’s Adjusted EBITDA reflected in its stock price in the case of an IPO or, in a sale of the Outback Steakhouse brand, 75% of the multiple of the Adjusted EBITDA that the Company is receiving in the sale. The Company has a one-time right to reject the exercise of the Put Right if the transaction would be dilutive to its consolidated earnings per share. In such event, the Put Right is extended until the first anniversary of the Company’s notice to the T-Bird Entities of such rejection. The Company has agreed to waive all rights of first refusal in its franchise arrangements with the T-Bird Entities in connection with a sale of all, and not less than all, of the assets, or at least 75% of the ownership of the T-Bird Entities.

Bain, Catterton, Founders and Board of Directors

Upon completion of the Merger, the Company entered into a management agreement with Kangaroo Management Company I, LLC (the “Management Company”), whose members are the Founders and entities affiliated with Bain Capital and Catterton. In accordance with the terms of the management agreement, the Management Company provides management services to the Company until the tenth anniversary of the consummation of the Merger, with one-year extensions thereafter until terminated. The Management Company receives an aggregate annual management fee equal to $9.1 million and reimbursement for out-of-pocket and other reimbursable expenses incurred by it, its members, or their respective affiliates in connection with the provision of services pursuant to the agreement. Management fees, including out-of-pocket and other reimbursable expenses, of $9.4 million, $11.6 million and $10.7 million for the years ended December 31, 2011, 2010 and 2009, respectively, were included in “General and administrative” expenses in the Company’s Consolidated Statements of Operations. The management agreement includes customary exculpation and indemnification provisions in favor of the Management Company, Bain Capital and Catterton and their respective affiliates. The management agreement may be terminated by the Company, Bain Capital and Catterton at any time and will terminate automatically upon an initial public offering or a change of control unless the Company and the counterparty(s) determine otherwise.

The Company holds an 89.62% interest in OSI/Fleming’s, LLC and a minority interest holder in the Fleming’s Prime Steakhouse and Wine Bar joint venture holds a 7.88% interest in any Fleming’s Prime Steakhouse and Wine Bar restaurants that opened prior to 2009. The remaining 2.50% is owned by AWA III Steakhouses, Inc., which is wholly-owned by a former Chairman of the Board of Directors (through December 31, 2011) and former named executive officer of the Company, through a revocable trust in which he and his wife are the grantors, trustees and sole beneficiaries. The Company assumed the minority interest holder’s 7.88% ownership interest in any Fleming’s Prime Steakhouse and Wine Bar restaurants that opened in 2009 or later and AWA III Steakhouses, Inc.’s interest remains at 2.50% for these restaurants.

Other

The Company holds a 50% ownership interest in the Brazilian Joint Venture, which was formed in 1998 for the purpose of operating Outback Steakhouse franchise restaurants in Brazil. The Company accounts for the Brazilian Joint Venture under the equity method of accounting. At December 31, 2011 and 2010, the net investment of $34.0 million and $31.0 million, respectively, was recorded in “Investments in and advances to unconsolidated affiliates, net,” and a foreign currency translation adjustment of ($3.8) million and $3.5 million, respectively, was recorded in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets and the Company’s share of earnings of $6.8 million, $5.5 million and $2.7 million was recorded in “Income from operations of unconsolidated affiliates” in the Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009, respectively.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

One of the current and one of the former owners of the Company’s primary domestic beef cutting operation have a greater than 50% combined ownership interest in SEA Restaurants, LLC, the Company’s franchisee of six Outback Steakhouse restaurants in Southeast Asia. These individuals have not received any distributions related to this ownership interest.

18. Variable Interest Entities

The Company consolidates variable interest entities in which the Company is deemed to have a controlling financial interest as a result of the Company having (1) the power to direct the activities that most significantly impact the entity’s economic performance and (2) the obligation to absorb the losses or the right to receive the benefits that could potentially be significant to the variable interest entity. If the Company has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the operations of the variable interest entity are included in the consolidated financial statements (see Note 2).

Roy’s and RY-8, Inc.

The Company’s consolidated financial statements include the accounts and operations of its Roy’s joint venture although it has less than majority ownership. The Company determined it is the primary beneficiary of the joint venture since the Company has the power to direct or cause the direction of the activities that most significantly impact the entity on a day-to-day basis such as decisions regarding menu development, purchasing, restaurant expansion and closings and the management of employee-related processes. Additionally, the Company has the obligation to absorb losses or the right to receive benefits of the Roy’s joint venture that could potentially be significant to the Roy’s joint venture. The majority of capital contributions made by the Company’s partner in the Roy’s joint venture, RY-8, have been funded by loans to RY-8 from a third party where OSI provides a guarantee (see Note 11). The guarantee is secured by a collateral interest in RY-8’s membership interest in the joint venture. The carrying amounts of consolidated assets and liabilities included within the Company’s Consolidated Balance Sheets for the Roy’s joint venture were $26.2 million and $9.6 million, respectively, at December 31, 2011 and $28.7 million and $10.5 million, respectively, at December 31, 2010.

The Company is also the primary beneficiary of RY-8 because its implicit variable interest in that entity, which is considered a de facto related party, indirectly receives the variability of the entity through absorption of RY-8’s expected losses, and therefore the Company also consolidates RY-8. Since RY-8’s $24.5 million line of credit became fully extended in 2007, the Company made interest payments, paid line of credit renewal fees and made capital expenditures for additional restaurant development on behalf of RY-8. The Company is obligated to provide financing, either through OSI’s guarantee with a third-party institution or loans, for all required capital contributions and interest payments. Therefore, any additional RY-8 capital requirements in connection with the joint venture likely will be the Company’s responsibility. The Company classifies OSI’s $24.5 million contingent obligation as guaranteed debt and the portion of income or loss attributable to RY-8 is eliminated in the line item in the Consolidated Statement of Operations entitled “Net income (loss) attributable to noncontrolling interests.” All material intercompany balances and transactions have been eliminated.

Paradise Restaurant Group, LLC

In September 2009, the Company sold its Cheeseburger in Paradise concept, which included 34 restaurants, for $2.0 million to PRG, an entity formed and controlled by the president of the concept. Based on the terms of the purchase and sale agreement, the Company determined at that time that it was the primary beneficiary and continued to consolidate PRG after the sale transaction.

Upon adoption of new accounting guidance for variable interest entities on January 1, 2010, the Company determined that it is no longer the primary beneficiary of PRG. As a result, the Company

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

deconsolidated PRG on January 1, 2010. The Company determined that certain rights pursuant to a $2.0 million promissory note, which is fully reserved, owed to the Company by PRG are non-substantive participating rights, and as a result, the Company does not have the power to direct the activities that most significantly impact the entity. At December 31, 2011, the maximum undiscounted exposure to loss as a result of the Company’s involvement with PRG is $25.8 million related to lease payments over a period of 11 years in the event that PRG defaults on these leases.

19. Segment Reporting

The Company operates restaurants under five brands that have similar economic characteristics, nature of products and services, class of customer and distribution methods, and the Company believes it meets the criteria for aggregating its six operating segments, which are the five brands and the Company’s international Outback Steakhouse operations, into a single reporting segment in accordance with the applicable accounting guidance. Approximately 9% of the Company’s total revenues for the year ended December 31, 2011 and 8% of the Company’s total revenues for the years ended December 31, 2010 and 2009 were attributable to operations in foreign countries. Approximately 2% and 3% of the Company’s total long-lived assets, excluding goodwill and intangible assets, were located in foreign countries where the Company holds assets as of December 31, 2011 and 2010, respectively.

20. Subsequent Events

We have evaluated subsequent events for potential recognition and/or disclosure through April 6, 2012, which is the date the consolidated financial statements included in this prospectus were filed with the Securities and Exchange Commission.

Effective March 14, 2012, the Company entered into a sale-leaseback transaction with two third party real estate institutional investors in which the Company sold 67 restaurant properties at fair market value for $194.9 million. The Company then simultaneously leased these properties under nine master leases (collectively, the “REIT Master Leases”). The initial term of the REIT Master Leases are 20 years with four five-year renewal options. One renewal period is at a fixed rental amount and the last three renewal periods are generally based at the then-current fair market values. The sale at fair market value and subsequent leaseback qualified for sale-leaseback accounting treatment, and the REIT Master Leases are classified as operating leases. The Company will defer the recognition of the $42.7 million gain on the sale of certain of the properties over the initial term of the lease. In accordance with the applicable accounting guidance, the 67 restaurant properties are not classified as held for sale at December 31, 2011 since the Company will be leasing back the properties.

Effective March 27, 2012, New PRP entered into the 2012 CMBS Loan with German American Capital Corporation and Bank of America, N.A. The 2012 CMBS Loan totals $500.0 million and is comprised of a first mortgage loan in the amount of $324.8 million, collateralized by 261 of the Company’s properties, and two mezzanine loans totaling $175.2 million. The loans have a maturity date of April 10, 2017. The first mortgage loan has five fixed rate components and a floating rate component. The fixed rate components bear interest at a rate of 2.37% to 6.81% per annum. The floating rate component bears interest at a rate per annum equal to the 30-day LIBOR rate (with a floor of 1%) plus 2.37%. The first mezzanine loan bears interest at a rate of 9.0% per annum, and the second mezzanine loan bears interest at a rate of 11.25% per annum. The proceeds from the 2012 CMBS Loan, together with the proceeds from the sale-leaseback transaction described above and excess cash held in PRP, were used to repay PRP’s existing CMBS Loan. As a result of the 2012 CMBS Loan refinancing, the net amount repaid along with scheduled maturities within one year, $281.3 million, was classified as current at December 31, 2011. During the first quarter of 2012, the Company recorded a $2.9 million Loss on extinguishment of debt.

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data, Unaudited)

 

		March 31, 2012				December 31, 2011
ASSETS
Current Assets
Cash and cash equivalents		$	335,059			$	482,084
Current portion of restricted cash			7,076				20,640
Inventories			68,394				69,223
Deferred income tax assets			27,656				31,959
Other current assets, net			87,798				104,373
Total current assets			525,983				708,279
Restricted cash			20,415				3,641
Property, fixtures and equipment, net			1,478,356				1,635,898
Investments in and advances to unconsolidated affiliates, net			37,681				35,033
Goodwill			269,414				268,772
Intangible assets, net			562,208				566,148
Other assets, net			143,165				136,165
Total assets		$	3,037,222			$	3,353,936
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable		$	106,835			$	97,393
Accrued and other current liabilities			171,439				211,486
Current portion of partner deposits and accrued partner obligations			16,999				15,044
Unearned revenue			202,201				299,596
Current portion of long-term debt			58,490				332,905
Total current liabilities			555,964				956,424
Partner deposits and accrued partner obligations			94,633				98,681
Deferred rent			73,056				70,135
Deferred income tax liabilities			188,550				193,262
Long-term debt, net			1,742,163				1,751,885
Guaranteed debt			24,500				24,500
Other long-term liabilities, net			263,232				218,752
Total liabilities			2,942,098				3,313,639
Commitments and contingencies
Shareholders’ Equity
Bloomin’ Brands, Inc. Shareholders’ Equity
Common stock, $.01 par value, 120,000,000 shares authorized; 106,516,725 shares issued and outstanding at March 31, 2012; and 120,000,000 shares authorized; 106,573,193 shares issued and outstanding at December 31, 2011			1,065				1,066
Additional paid-in capital			877,191				874,753
Accumulated deficit			(773,057	)			(822,625	)
Accumulated other comprehensive loss			(19,195	)			(22,344	)
Total Bloomin’ Brands, Inc. shareholders’ equity			86,004				30,850
Noncontrolling interests			9,120				9,447
Total shareholders’ equity			95,124				40,297
Total liabilities and shareholders’ equity		$	3,037,222			$	3,353,936

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In Thousands, Except Per Share Data, Unaudited)

 

		Three Months Ended March 31,
		2012				2011
Revenues
Restaurant sales			1,045,466				993,109
Other revenues			10,160				8,740
Total revenues			1,055,626				1,001,849
Costs and expenses
Cost of sales			335,859				317,764
Labor and other related			293,501				282,807
Other restaurant operating			218,965				214,157
Depreciation and amortization			38,860				38,288
General and administrative			76,002				61,578
Provision for impaired assets and restaurant closings			4,435				208
Income from operations of unconsolidated affiliates			(2,404	)			(3,646	)
Total costs and expenses			965,218				911,156
Income from operations			90,408				90,693
Loss on extinguishment of debt			(2,851	)			—
Other income (expense), net			54				(303	)
Interest expense, net			(20,974	)			(21,193	)
Income before provision for income taxes			66,637				69,197
Provision for income taxes			12,805				11,082
Net income			53,832				58,115
Less: net income attributable to noncontrolling interests			3,833				3,223
Net income attributable to Bloomin’ Brands, Inc.		$	49,999			$	54,892
Net income		$	53,832			$	58,115
Other comprehensive income:
Foreign currency translation adjustment			3,149				3,020
Comprehensive income			56,981				61,135
Less: comprehensive income attributable to noncontrolling interests			3,833				3,223
Comprehensive income attributable to Bloomin’ Brands, Inc.		$	53,148			$	57,912
Net income attributable to Bloomin’ Brands, Inc. per common share:
Basic		$	0.47			$	0.52
Diluted		$	0.47			$	0.52
Weighted average common shares outstanding:
Basic			106,332				106,093
Diluted			107,058				106,526

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In Thousands, Unaudited)

 

		Bloomin’ Brands, Inc.
		Common Stock				Common Stock Amount				Additional Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Loss				Noncontrolling Interests				Total
Balance, December 31, 2011			106,573			$	1,066			$	874,753			$	(822,625	)		$	(22,344	)		$	9,447			$	40,297
Net income			—				—				—				49,999				—				3,833				53,832
Foreign currency translation adjustment			—				—				—				—				3,149				—				3,149
Stock-based compensation			—				—				706				—				—				—				706
Repurchase of common stock			(56	)			(1	)			316				(431	)			—				—				(116	)
Issuance of notes receivable due from shareholders			—				—				(47	)			—				—				—				(47	)
Repayments of notes receivable due from shareholders			—				—				1,463				—				—				—				1,463
Distributions to noncontrolling interests			—				—				—				—				—				(4,337	)			(4,337	)
Contributions from noncontrolling interests			—				—				—				—				—				177				177
Balance, March 31, 2012			106,517			$	1,065			$	877,191			$	(773,057	)		$	(19,195	)		$	9,120			$	95,124
		Bloomin’ Brands, Inc.
		Common Stock				Common Stock Amount				Additional Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Loss				Noncontrolling Interests				Total
Balance, December 31, 2010			106,573			$	1,066			$	871,963			$	(922,630	)		$	(19,633	)		$	13,323			$	(55,911	)
Net income			—				—				—				54,892				—				3,223				58,115
Foreign currency translation adjustment			—				—				—				—				3,020				—				3,020
Stock-based compensation			—				—				676				—				—				—				676
Issuance of notes receivable due from shareholders			—				—				(40	)			—				—				—				(40	)
Distributions to noncontrolling interests			—				—				(38	)			—				—				(4,006	)			(4,044	)
Contributions from noncontrolling interests			—				—				—				—				—				11				11
Balance, March 31, 2011			106,573			$	1,066			$	872,561			$	(867,738	)		$	(16,613	)		$	12,551			$	1,827

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Unaudited)

 

		Three Months Ended March 31,
		2012				2011
Cash flows provided by operating activities:
Net income		$	53,832			$	58,115
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			38,860				38,288
Amortization of deferred financing fees			2,924				3,168
Amortization of capitalized gift card sales commissions			6,690				5,668
Provision for impaired assets and restaurant closings			4,435				208
Accretion on debt discounts			173				161
Stock-based and other non-cash compensation expense			12,543				11,290
Income from operations of unconsolidated affiliates			(2,404	)			(3,646	)
Change in deferred income taxes			(333	)			(2	)
Loss on disposal of property, fixtures and equipment			484				1,120
Unrealized loss (gain) on derivative financial instruments			194				(51	)
Gain on life insurance and restricted cash investments			(3,156	)			(1,059	)
Loss on extinguishment of debt			2,851				—
Change in assets and liabilities:
Decrease in inventories			886				4,838
Decrease (increase) in other current assets			12,763				(7,897	)
Decrease in other assets			2,447				1,999
Increase in accrued interest payable			5,830				6,123
(Decrease) increase in accounts payable and accrued and other current liabilities			(42,193	)			14,519
Increase in deferred rent			2,834				2,475
Decrease in unearned revenue			(97,751	)			(87,675	)
Increase (decrease) in other long-term liabilities			187				(5,998	)
Net cash provided by operating activities			2,096				41,644
Cash flows provided by (used in) investing activities:
Purchases of Company-owned life insurance			(350	)			(342	)
Proceeds from sale of Company-owned life insurance			—				1,055
Proceeds from sale of property, fixtures and equipment			1,255				—
Proceeds from sale-leaseback transaction			192,886				—
Capital expenditures			(34,019	)			(20,480	)
Restricted cash received for capital expenditures, property taxes and certain deferred compensation plans			16,816				4,807
Restricted cash used to fund capital expenditures, property taxes and certain deferred compensation plans			(21,100	)			(3,967	)
Return on investment from unconsolidated affiliates			332				—
Net cash provided by (used in) investing activities		$	155,820			$	(18,927	)

 

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

(In Thousands, Unaudited)

 

		Three Months Ended March 31,
		2012				2011
Cash flows used in financing activities:
Proceeds from issuance of long-term debt		$	495,186			$	—
Repayments of long-term debt			(6,642	)			(5,695	)
Extinguishment of debt			(777,563	)			—
Deferred financing fees			(5,399	)			—
Contributions from noncontrolling interests			177				11
Distributions to noncontrolling interests			(4,337	)			(4,044	)
Repayments of partner deposits and accrued partner obligations			(9,242	)			(13,257	)
Issuance of notes receivable due from shareholders			(47	)			(40	)
Repayments of notes receivable due from shareholders			1,463				—
Net cash used in financing activities			(306,404	)			(23,025	)
Effect of exchange rate changes on cash and cash equivalents			1,463				1,514
Net (decrease) increase in cash and cash equivalents			(147,025	)			1,206
Cash and cash equivalents at the beginning of the period			482,084				365,536
Cash and cash equivalents at the end of the period		$	335,059			$	366,742
Supplemental disclosures of cash flow information:
Cash paid for interest		$	13,420			$	12,109
Cash paid for income taxes, net of refunds			4,992				8,521
Supplemental disclosures of non-cash investing and financing activities:
Conversion of partner deposits and accrued partner obligations to notes payable		$	2,646			$	2,807
Acquisitions of property, fixtures and equipment through accounts payable or capital lease liabilities			3,423				925

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

Bloomin’ Brands, Inc. (“Bloomin’ Brands” or the “Company”), formerly known as Kangaroo Holdings, Inc., was formed by an investor group comprised of funds advised by Bain Capital Partners, LLC (“Bain Capital”), Catterton Management Company, LLC (“Catterton”), Chris T. Sullivan, Robert D. Basham and J. Timothy Gannon (the “Founders”) and certain members of management. On June 14, 2007, Bloomin’ Brands acquired OSI Restaurant Partners, Inc. by means of a merger and related transactions (the “Merger”). At the time of the Merger, OSI Restaurant Partners, Inc. was converted into a Delaware limited liability company named OSI Restaurant Partners, LLC (“OSI”). In connection with the Merger, Bloomin’ Brands implemented a new ownership and financing arrangement for some of its restaurant properties, pursuant to which Private Restaurant Properties, LLC (“PRP”), a wholly-owned subsidiary of Bloomin’ Brands, acquired 343 restaurant properties from OSI and leased them back to subsidiaries of OSI. OSI remains the primary operating entity and a wholly-owned subsidiary of Bloomin’ Brands continues to lease certain of the Company-owned restaurant properties to OSI’s subsidiaries.

The Company owns and operates casual, upscale casual and fine dining restaurants primarily in the United States. The Company’s restaurant portfolio has five concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar and Roy’s. Additional Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants in which the Company has no direct investment are operated under franchise agreements.

The accompanying interim unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of the Company, all adjustments considered necessary for the fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented have been included and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2011 included in this prospectus.

2. Recently Issued Financial Accounting Standards

In May 2011, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU No. 2011-04”), that establishes a number of new requirements for fair value measurements. These include: (i) a prohibition on grouping financial instruments for purposes of determining fair value, except when an entity manages market and credit risks on the basis of the entity’s net exposure to the group; (ii) an extension of the prohibition against the use of a blockage factor to all fair value measurements (that prohibition currently applies only to financial instruments with quoted prices in active markets); and (iii) a requirement that for recurring Level 3 fair value measurements, entities disclose quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements. Additionally, for items not carried at fair value but for which fair value is disclosed, entities will be required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed. ASU No. 2011-04 is effective for interim and annual periods beginning after December 15, 2011. The adoption of ASU No. 2011-04 on January 1, 2012 increased the Company’s fair value disclosures requirements but did not have an impact on the Company’s financial position, results of operations or cash flows.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU No. 2011-05”), that eliminates the option to report other comprehensive income and its components in the statement of changes in equity. Instead, the new guidance requires the Company to present the components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. ASU No. 2011-05 must be applied retrospectively and is effective for public companies during the interim and annual periods beginning after December 15, 2011. Additionally, in December 2011, the FASB issued ASU No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU No. 2011-12”), which indefinitely defers the requirement in ASU No. 2011-05 to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. The deferral of the presentation requirements does not impact the effective date of the other requirements in ASU 2011-05. During the deferral period, the existing requirements in U.S. GAAP for the presentation of reclassification adjustments must continue to be followed. ASU No. 2011-12 is effective for public companies during the interim and annual periods beginning after December 15, 2011. The adoption of ASU No. 2011-05 and ASU No. 2011-12 on January 1, 2012 did not have an impact on the Company’s financial position, results of operations or cash flows as the guidance only requires a presentation change to comprehensive income.

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU No. 2011-08”), which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before applying the two-step quantitative goodwill impairment test. If it is determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing entities to go directly to the quantitative assessment. ASU No. 2011-08 is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011. The adoption of this guidance on January 1, 2012 did not have an impact on the Company’s financial position, results of operations or cash flows.

In December 2011, the FASB issued ASU No. 2011-10, “Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate—a Scope Clarification” (“ASU No. 2011-10”), which applies to a parent company that ceases to have a controlling financial interest in a subsidiary, that is in substance real estate, as a result of a default on the subsidiary’s nonrecourse debt. The new guidance emphasizes that the parent should only deconsolidate the real estate subsidiary when legal title to the real estate is transferred to the lender and the related nonrecourse debt has been extinguished. If the reporting entity ceases to have a controlling financial interest under subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. This standard takes effect for public companies during the annual and interim periods beginning on or after June 15, 2012. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”), which enhances current disclosures about financial instruments and derivative instruments that are either offset on the statement of financial position or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset on the

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

statement of financial position. The guidance requires the Company to provide both net and gross information for these assets and liabilities. ASU No. 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods with retrospective application required. This guidance will not have an impact on the Company’s financial position, results of operations or cash flows as it only requires a presentation change to offsetting (netting) assets and liabilities.

3. Stock-based and Deferred Compensation Plans

During the three months ended March 31, 2012, three of the Company’s named executive officers and certain other former members of management repaid their entire restricted stock loan balances to the Company. These loans were made by the Company for their personal income tax obligations that resulted from the vesting of their restricted stock. As of March 31, 2012 and December 31, 2011, a total of $5.5 million and $7.2 million, respectively, of loans and associated interest obligations to current and former executive officers and other members of management was outstanding and was recorded as contra-equity in the line item “Additional paid-in capital” in the Company’s Consolidated Balance Sheets. The loans are full recourse and are collateralized by the vested shares of restricted stock. Although these loans are permitted in accordance with the terms of the agreements, the Company is not required to make them in the future. On May 10, 2012, we approved an amendment to the loans to extend the timing for mandatory prepayment in connection with an initial public offering to require full repayment by the last trading day in the first trading window subsequent to the expiration of contractual lock-up restrictions imposed in connection with the offering.

4. Net Income Attributable to Bloomin’ Brands, Inc. Per Common Share

Basic net income per common share is computed on the basis of the weighted average number of common shares that were outstanding during the period. Diluted net income attributable to Bloomin’ Brands, Inc. per common share includes the dilutive effect of common stock equivalents consisting of restricted stock and stock options, using the treasury stock method. Performance-based restricted stock and stock options are considered dilutive when the related performance criterion has been met.

The computation of basic and diluted net income attributable to Bloomin’ Brands, Inc. per common share is as follows (in thousands, except share and per share amounts):

 

		Three months ended March 31,
		2012				2011
Net income attributable to Bloomin’ Brands, Inc.		$	49,999			$	54,892
Basic weighted average common shares outstanding			106,332,078				106,092,561
Effect of diluted securities:
Employee stock options			591,501				200,692
Unvested restricted stock			134,568				233,066
Diluted weighted average common shares outstanding			107,058,147				106,526,319
Basic net income attributable to Bloomin’ Brands, Inc. per common share		$	0.47			$	0.52
Diluted net income attributable to Bloomin’ Brands, Inc. per common share		$	0.47			$	0.52

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

As of the three months ended March 31, 2012 and 2011, the Company excluded 550,000 and 1,488,000 outstanding stock options, respectively, in the diluted net income attributable to Bloomin’ Brands, Inc. per common share calculation because the inclusion of these share-based awards would have been antidilutive.

5. Variable Interest Entities

The Company consolidates variable interest entities in which it is deemed to have a controlling financial interest as a result of the Company having (1) the power to direct the activities that most significantly impact the entity’s economic performance and (2) the obligation to absorb the losses or the right to receive the benefits that could potentially be significant to the variable interest entity. If the Company has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the operations of the variable interest entity are included in the consolidated financial statements.

Roy’s and RY-8, Inc.

The Company’s consolidated financial statements include the accounts and operations of its Roy’s joint venture although it has less than majority ownership. The Company determined it is the primary beneficiary of the joint venture since the Company has the power to direct or cause the direction of the activities that most significantly impact the entity on a day-to-day basis, such as decisions regarding menu development, purchasing, restaurant expansion and closings and the management of employee-related processes. Additionally, the Company has the obligation to absorb losses or the right to receive benefits of the Roy’s joint venture that could potentially be significant to the Roy’s joint venture. The majority of capital contributions made by the Company’s partner in the Roy’s joint venture, RY-8, have been funded by loans to RY-8 from a third party which OSI guarantees (see Note 9). The guarantee is secured by a collateral interest in RY-8’s membership interest in the joint venture. The carrying amounts of consolidated assets and liabilities included within the Company’s Consolidated Balance Sheets for the Roy’s joint venture were $26.6 million and $8.3 million, respectively, at March 31, 2012 and $26.2 million and $9.6 million, respectively, at December 31, 2011.

The Company is also the primary beneficiary of RY-8 because its implicit variable interest in that entity, which is considered a de facto related party, indirectly receives the variability of the entity through absorption of RY-8’s expected losses, and therefore the Company also consolidates RY-8. Since RY-8’s $24.5 million line of credit became fully extended in 2007, the Company made interest payments, paid line of credit renewal fees and made capital expenditures for additional restaurant development on behalf of RY-8. The Company is obligated to provide financing, either through OSI’s guarantee with a third-party institution or loans, for all required capital contributions and interest payments. Therefore, any additional RY-8 capital requirements in connection with the joint venture likely will be the Company’s responsibility. The Company classifies OSI’s $24.5 million contingent obligation as guaranteed debt and the portion of income or loss attributable to RY-8 is eliminated in the line item in the Consolidated Statements of Operations and Comprehensive Income entitled “Net income attributable to noncontrolling interests.” All material intercompany balances and transactions have been eliminated.

Paradise Restaurant Group, LLC

In September 2009, the Company sold its Cheeseburger in Paradise concept, which included 34 restaurants, for $2.0 million to Paradise Restaurant Group, LLC (“PRG”), an entity formed and controlled by the president of the concept. Based on the terms of the purchase and sale agreement, the Company determined at that time that it was the primary beneficiary and continued to consolidate PRG after the sale transaction.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

Upon adoption of new accounting guidance for variable interest entities on January 1, 2010, the Company determined that it is no longer the primary beneficiary of PRG. As a result, the Company deconsolidated PRG on January 1, 2010. The Company determined that certain rights pursuant to a $2.0 million promissory note, which is fully reserved, owed to the Company by PRG are non-substantive participating rights, and as a result, the Company does not have the power to direct the activities that most significantly impact the entity. At March 31, 2012, the maximum undiscounted exposure to loss as a result of the Company’s involvement with PRG is $22.1 million related to lease payments extending through June 13, 2022 in the event that PRG defaults on these leases.

6. Other Current Assets, Net

Other current assets, net, consisted of the following (in thousands):

 

		March 31, 2012				December 31, 2011
Prepaid expenses		$	32,552			$	18,113
Accounts receivable—vendors, net			29,922				48,568
Accounts receivable—franchisees, net			3,441				2,396
Accounts receivable—other, net			5,784				11,869
Other current assets, net			16,099				23,427
		$	87,798			$	104,373

7. Property, Fixtures and Equipment, Net

Property, fixtures and equipment, net, consisted of the following (in thousands):

 

		March 31, 2012				December 31, 2011
Land		$	265,932			$	329,143
Buildings and building improvements			904,561				1,013,618
Furniture and fixtures			270,144				263,266
Equipment			378,374				362,649
Leasehold improvements			377,545				369,726
Construction in progress			23,061				22,011
Less: accumulated depreciation			(741,261	)			(724,515	)
		$	1,478,356			$	1,635,898

Effective March 14, 2012, the Company entered into a sale-leaseback transaction (the “Sale-Leaseback Transaction”) with two third party real estate institutional investors in which the Company sold 67 restaurant properties at fair market value for net proceeds of $192.9 million. The Company then simultaneously leased these properties under nine master leases (collectively, the “REIT Master Leases”). The initial term of the REIT Master Leases are 20 years with four five-year renewal options. One renewal period is at a fixed rental amount and the last three renewal periods are generally based at then-current fair market values. The sale at fair market value and subsequent leaseback qualified for sale-leaseback accounting treatment, and the REIT Master Leases are classified as operating leases. In accordance with the applicable accounting guidance, the 67 restaurant properties are not classified as held for sale at December 31, 2011 since the Company is leasing back the properties. The Company recorded the deferred gain of $42.9 million on the sale of certain of the properties over the initial term of the lease primarily in the line item “Other long-term liabilities, net” in its Consolidated Balance Sheet as of March 31, 2012.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

8. Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

 

		March 31, 2012				December 31, 2011
Accrued payroll and other compensation		$	75,441			$	117,013
Accrued insurance			21,388				19,284
Other			74,610				75,189
		$	171,439			$	211,486

9. Long-term Debt, Net

Long-term debt, net consisted of the following (in thousands):

 

		March 31, 2012				December 31, 2011
Senior secured term loan facility, interest rates of 2.56% and 2.63% at March 31, 2012 and December 31, 2011, respectively(1)(2)		$	1,011,125			$	1,014,400
Senior secured pre-funded revolving credit facility, interest rates of 4.50% and 2.63% at March 31, 2012 and December 31, 2011, respectively(2)			33,000				33,000
Mortgage loan, weighted average interest rate of 3.96% at March 31, 2012(3)			324,795				—
First mezzanine loan, interest rate of 9.00% at March 31, 2012(3)			87,600				—
Second mezzanine loan, interest rate of 11.25% at March 31, 2012(3)			87,600				—
Note payable, weighted average interest rate of 0.98% at December 31, 2011(3)			—				466,319
First mezzanine note, interest rate of 3.28% at December 31, 2011(3)			—				88,900
Second mezzanine note, interest rate of 3.53% at December 31, 2011(3)			—				123,190
Third mezzanine note, interest rate of 3.54% at December 31, 2011(3)			—				49,095
Fourth mezzanine note, interest rate of 4.53% at December 31, 2011(3)			—				48,113
Senior notes, interest rate of 10.00% at March 31, 2012 and December 31, 2011(2)			248,075				248,075
Other notes payable, uncollateralized, interest rates ranging from 0.76% to 7.00% at March 31, 2012 and December 31, 2011(2)			8,558				9,094
Sale-leaseback obligations(2)			2,375				2,375
Capital lease obligations(2)			2,334				2,520
Guaranteed debt, interest rate of 2.65% at March 31, 2012 and December 31, 2011(2)			24,500				24,500
			1,829,962				2,109,581
Less: current portion of long-term debt			(58,490	)			(332,905	)
Less: guaranteed debt			(24,500	)			(24,500	)
Less: debt discount			(4,809	)			(291	)
Long-term debt, net		$	1,742,163			$	1,751,885

 

(1)	At March 31, 2012 and December 31, 2011, $5.0 million and $61.9 million, respectively, of OSI’s outstanding senior secured term loan facility was at an interest rate of 4.50%.

(2)	Represents obligations of OSI.

(3)	Represents obligations of New PRP (as defined below) as of March 31, 2012 and obligations of PRP as of December 31, 2011.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

Bloomin’ Brands is a holding company and conducts its operations through its subsidiaries, certain of which have incurred their own indebtedness as described below.

On June 14, 2007, OSI entered into senior secured credit facilities with a syndicate of institutional lenders and financial institutions. These senior secured credit facilities provide for senior secured financing of up to $1.6 billion, consisting of a $1.3 billion term loan facility, a $150.0 million working capital revolving credit facility, including letter of credit and swing-line loan sub-facilities, and a $100.0 million pre-funded revolving credit facility that provides financing for capital expenditures only.

The senior secured term loan facility matures June 14, 2014. At each rate adjustment, OSI has the option to select a Base Rate plus 125 basis points or a Eurocurrency Rate plus 225 basis points for the borrowings under this facility. The Base Rate option is the higher of the prime rate of Deutsche Bank AG New York Branch and the federal funds effective rate plus 0.5 of 1% (“Base Rate”) (3.25% at March 31, 2012 and December 31, 2011). The Eurocurrency Rate option is the 30, 60, 90 or 180-day Eurocurrency Rate (“Eurocurrency Rate”) (ranging from 0.31% to 0.81% and from 0.38% to 0.88% at March 31, 2012 and December 31, 2011, respectively). The Eurocurrency Rate may have a nine- or twelve-month interest period if agreed upon by the applicable lenders. With either the Base Rate or the Eurocurrency Rate, the interest rate is reduced by 25 basis points if the associated Moody’s Applicable Corporate Rating then most recently published is B1 or higher (the rating was Caa1 at March 31, 2012 and December 31, 2011).

OSI is required to prepay outstanding term loans, subject to certain exceptions, with:

 

•

50% of its “annual excess cash flow” (with step-downs to 25% and 0% based upon its rent-adjusted leverage ratio), as defined in the credit agreement and subject to certain exceptions;

 

•

100% of its “annual minimum free cash flow,” as defined in the credit agreement, not to exceed $75.0 million for each fiscal year, if its rent-adjusted leverage ratio exceeds a certain minimum threshold;

 

•

100% of the net proceeds of certain assets sales and insurance and condemnation events, subject to reinvestment rights and certain other exceptions; and

 

•

100% of the net proceeds of any debt incurred, excluding permitted debt issuances.

Additionally, OSI is required, on an annual basis, to first, repay outstanding loans under the pre-funded revolving credit facility and second, fund a capital expenditure account to the extent amounts on deposit are less than $100.0 million, in both cases with 100% of OSI’s “annual true cash flow,” as defined in the credit agreement. In accordance with these requirements, OSI repaid its pre-funded revolving credit facility outstanding loan balance of $33.0 million and funded $37.6 million to its capital expenditure account using its “annual true cash flow” in April 2012.

OSI’s senior secured credit facilities require scheduled quarterly payments on the term loans equal to 0.25% of the original principal amount of the term loans for the first six years and three quarters following June 14, 2007. These payments are reduced by the application of any prepayments, and any remaining balance will be paid at maturity. The outstanding balance on the term loans was $1.0 billion at March 31, 2012 and December 31, 2011. OSI has classified $13.1 million of its term loans as current at March 31, 2012 and December 31, 2011 due to its required quarterly payments and the results of its projected covenant calculations, which indicate the additional term loan prepayments, as described above, will not be required. The amount of outstanding term loans required to be prepaid in accordance with OSI’s debt covenants may vary based on year-end results.

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

Proceeds of loans and letters of credit under OSI’s $150.0 million working capital revolving credit facility, which matures June 14, 2013, provide financing for working capital and general corporate purposes and, subject to a rent-adjusted leverage condition, for capital expenditures for new restaurant growth. This revolving credit facility bears interest at rates ranging from 100 to 150 basis points over the Base Rate or 200 to 250 basis points over the Eurocurrency Rate. There were no loans outstanding under the revolving credit facility at March 31, 2012 and December 31, 2011; however, $66.8 million and $67.6 million, respectively, of the credit facility was committed for the issuance of letters of credit and not available for borrowing. OSI’s total outstanding letters of credit issued under its working capital revolving credit facility may not exceed $75.0 million.

Proceeds of loans under OSI’s $100.0 million pre-funded revolving credit facility, which expires June 14, 2013, are available to provide financing for capital expenditures, if the capital expenditure account described above has a zero balance. As of March 31, 2012 and December 31, 2011, the Company had $33.0 million outstanding on its pre-funded revolving credit facility. These borrowings were recorded in “Current portion of long-term debt” in the Company’s Consolidated Balance Sheets, as the Company is required to repay any outstanding borrowings in April following each fiscal year using its “annual true cash flow,” as defined in the credit agreement.

At March 31, 2012 and December 31, 2011, the Company was in compliance with its debt covenants. See the Company’s audited financial statements for the year ended December 31, 2011 included within this prospectus for further information about the Company’s debt covenant requirements.

In March 2012, the Company refinanced the debt at PRP. Until that time, PRP had first mortgage and mezzanine loans (together, the commercial mortgage-backed securities loan, or the “CMBS Loan”) totaling $790.0 million, which were entered into on June 14, 2007. As part of the CMBS Loan, German American Capital Corporation and Bank of America, N.A. et al (the “Lenders”) had a security interest in the acquired real estate and related improvements, and direct and indirect equity interests of certain of the Company’s subsidiaries. The CMBS Loan comprised a note payable and four mezzanine notes. All notes bore interest at the one-month LIBOR which was 0.28% at December 31, 2011, plus an applicable spread which ranged from 0.51% to 4.25%. Interest-only payments were made on the ninth calendar day of each month and interest accrued beginning on the fifteenth calendar day of the preceding month.

Effective March 27, 2012, New Private Restaurant Properties, LLC and two of the Company’s other indirect wholly-owned subsidiaries (collectively, “New PRP”) entered into a new commercial mortgage-backed securities loan (the “2012 CMBS Loan”) with German American Capital Corporation and Bank of America, N.A. The 2012 CMBS Loan totals $500.0 million and is comprised of a first mortgage loan in the amount of $324.8 million, collateralized by 261 of the Company’s properties, and two mezzanine loans totaling $175.2 million. The loans have a maturity date of April 10, 2017. The first mortgage loan has five fixed rate components and a floating rate component. The fixed rate components bear interest at a rate of 2.37% to 6.81% per annum. The floating rate component bears interest at a rate per annum equal to the 30-day LIBOR rate (with a floor of 1%) plus 2.37%. The first mezzanine loan bears interest at a rate of 9.0% per annum, and the second mezzanine loan bears interest at a rate of 11.25% per annum. The proceeds from the 2012 CMBS Loan, together with the proceeds from the Sale-Leaseback Transaction and excess cash held in PRP, were used to repay PRP’s existing CMBS Loan. As a result of the 2012 CMBS Loan refinancing, the net amount repaid along with scheduled maturities within one year, $281.3 million was classified as current at December 31, 2011. During the first quarter of 2012, the Company recorded a $2.9 million loss related to the extinguishment in the line item, “Loss on extinguishment of debt” in its Consolidated Statement of Operations and Comprehensive Income. The Company deferred $7.6 million of financing costs incurred to complete this transaction of which $2.2 million had

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

been capitalized as of December 31, 2011. These deferred financing costs are included in the line item, “Other assets, net” in its Consolidated Balance Sheets. At March 31, 2012, the outstanding balance, excluding the debt discount, on the 2012 CMBS Loan was $500.0 million.

Historically, the Company used an interest rate cap with a notional amount of $775.7 million as a method to limit the volatility of PRP’s variable-rate CMBS Loan. During the first quarter of 2012, this interest rate cap was terminated. In connection with the 2012 CMBS Loan refinancing, New PRP entered into a replacement interest rate cap instrument (“Rate Cap”) effective March 27, 2012 with a notional amount of $48.7 million as a method to limit the volatility of the floating rate component of the first mortgage loan. Under the Rate Cap, if the 30-day LIBOR market rate exceeds 7.0% per annum, the counterparty must pay to New PRP such excess on the notional amount of the floating rate component. Should it be necessary, New PRP would record any mark-to-market changes in the fair value of its derivative instrument into earnings in the period of change. The Rate Cap has a term of approximately two years from the closing of the 2012 CMBS Loan. Upon the expiration or termination of the Rate Cap or the downgrade of the credit ratings of the counterparty under the Rate Cap’s specified thresholds, New PRP is required to replace the Rate Cap with a replacement interest rate cap in a notional amount equal to the outstanding principal balance (if any) of the floating rate component.

10. Other Long-term Liabilities, Net

Other long-term liabilities, net, consisted of the following (in thousands):

 

		March 31, 2012				December 31, 2011
Accrued insurance liability		$	39,650			$	39,575
Unfavorable leases, net of accumulated amortization of $19,825 and $18,891 at March 31, 2012 and December 31, 2011, respectively			60,950				62,012
PEP obligation			81,533				77,642
Supplemental PEP obligation			16,780				16,235
Deferred gain on Sale-Leaseback Transaction			40,792				—
Other liabilities			23,527				23,288
		$	263,232			$	218,752

11. Fair Value Measurements

Fair Value Measurements on a Recurring Basis

The Company invested $7.9 million and $37.7 million of its excess cash in money market funds classified as Cash and cash equivalents or restricted cash in its Consolidated Balance Sheets at March 31, 2012 and December 31, 2011, respectively, at a net value of 1:1 for each dollar invested. The fair value of the investment in the money market funds is determined by using quoted prices for identical assets in an active market.

At December 31, 2011, the Company was highly leveraged and exposed to interest rate risk to the extent of its variable-rate debt. The Company used an interest rate cap with a notional amount of $775.7 million as a method to limit the volatility of PRP’s variable-rate commercial mortgage-backed securities loan. During the first quarter of 2012, this interest rate cap was terminated. In connection with the refinancing of the commercial mortgage-backed securities loan that was effective in March 2012, a new Rate Cap with a notional amount of

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

$48.7 million was entered into for similar purposes (see Note 9). The interest rate caps did not have any fair market value at March 31, 2012 and December 31, 2011 and, therefore, were excluded from the applicable tables within this footnote.

The following tables present the Company’s money market funds measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

 

		March 31, 2012
						Fair Value
		Carrying Value				Level 1				Level 2				Level 3
Assets:
Money market funds—Cash equivalents		$	208			$	208			$	—			$	—
Money market funds—Restricted cash			7,689				7,689				—				—
Total recurring fair value measurements		$	7,897			$	7,897			$	—			$	—
		December 31, 2011
						Fair Value
		Carrying Value				Level 1				Level 2				Level 3
Assets:
Money market funds—Cash equivalents		$	30,208			$	30,208			$	—			$	—
Money market funds—Restricted cash			7,499				7,499				—				—
Total recurring fair value measurements		$	37,707			$	37,707			$	—			$	—

Fair Value Measurements on a Nonrecurring Basis

The Company periodically evaluates long-lived assets held for use whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. The Company analyzes historical cash flows of operating locations and compares results of poorer performing locations to more profitable locations as well as lease terms, condition of the assets and related need for capital expenditures or repairs. Impairment loss is recognized to the extent that the fair value of the assets is less than the carrying value.

The following table presents losses related to the Company’s assets and liabilities that were measured at fair value on a nonrecurring basis during the three months ended March 31, 2012 aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

 

		March 31, 2012																Three Months Ended March 31, 2012 Total Losses
						Remaining Fair Value
		Carrying Value				Level 1				Level 2				Level 3
Long-lived assets held and used		$	864			$	—			$	650			$	214			$	4,158

The Company recorded $4.2 million of impairment charges as a result of the fair value measurement on a nonrecurring basis during the three months ended March 31, 2012 primarily related to two specifically

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

identified restaurant locations with individual store under-performance. At March 31, 2012, the impaired long-lived assets had $0.9 million of remaining fair value. The Company used a third-party market appraisal for the fair value of the assets included in Level 2 in the table above and a discounted cash flow model to estimate the fair value of the long-lived assets included in Level 3 in the table above. Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and projected trends of current operating results. As a result, the Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs that fall within Level 3 of the fair value hierarchy.

The following table presents quantitative information related to the unobservable inputs used in the Company’s Level 3 fair value measurements for the impairment loss incurred in the three months ended March 31, 2012:

 

Unobservable Input		Range
Weighted-average cost of capital		11.2%
Long-term growth rates		3.0%
Annual revenue growth rates (1)		(8.7)% - 3.0%

 

(1)	Weighted average of the annual revenue growth rate at March 31, 2012 was 2.4%.

The Company performed its annual goodwill and other indefinite-lived intangible assets impairment test during the second quarter of 2011 and did not have any impairment charges. Additionally, the Company did not have any other material impairment charges as a result of fair value measurements on a nonrecurring basis during the three months ended March 31, 2011.

Interim Disclosures about Fair Value of Financial Instruments

The Company’s non-derivative financial instruments at March 31, 2012 and December 31, 2011 consist of cash equivalents, restricted cash, accounts receivable, accounts payable and current and long-term debt. The fair values of cash equivalents, restricted cash, accounts receivable and accounts payable approximate their carrying amounts reported in the Consolidated Balance Sheets due to their short duration. The fair value of OSI’s senior secured credit facilities and senior notes is determined based on quoted market prices in inactive markets. The fair value of PRP’s and New PRP’s commercial mortgage-backed securities is based on assumptions derived from current conditions in the real estate and credit environments, changes in the underlying collateral and expectations of management. Fair value estimates for other notes payable and Guaranteed debt are derived using a discounted cash flow approach. Discounted cash flow inputs primarily include cost of debt rates which are used to derive the present value factors for the determination of fair value. Guaranteed debt fair value also includes assumptions of the probability and timing of performance under the guarantee. These inputs represent assumptions impacted by economic conditions and management expectations and may change in the future based on period-specific facts and circumstances.

 

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

The following table includes the carrying value and fair value of the Company’s financial instruments (excluding cash equivalents and restricted cash shown in the table above) at March 31, 2012 aggregated by the level in the fair value hierarchy in which those measurements fall (in thousands):

 

		March 31, 2012
						Fair Value
		Carrying Value				Level 1				Level 2				Level 3
Senior secured term loan facility (1)		$	1,011,125			$	—			$	993,430			$	—
Senior secured pre-funded revolving credit facility (1)			33,000				—				32,423				—
Mortgage loan (2)			324,795				—				—				324,795
First mezzanine loan (2)			87,600				—				—				87,600
Second mezzanine loan (2)			87,600				—				—				87,600
Senior notes (1)			248,075				—				256,758				—
Other notes payable (1)			8,558				—				—				7,969
Guaranteed debt (1)			24,500				—				—				22,797

 

(1)	Represents obligations of OSI.

(2)	Represents obligations of New PRP.

The carrying amounts of PRP’s commercial mortgage-backed securities loan and OSI’s other notes payable and Guaranteed debt approximated fair value at December 31, 2011. The following table includes the carrying value and fair value of OSI’s senior secured credit facilities and senior notes at December 31, 2011 (in thousands):

 

		December 31, 2011
		Carrying Value				Fair Value
Senior secured term loan facility		$	1,014,400			$	953,536
Senior secured pre-funded revolving credit facility			33,000				31,020
Senior notes			248,075				254,277

12. Income Taxes

The effective income tax rate for the three months ended March 31, 2012 was 19.2% compared to 16.0% for the same period in 2011. The net increase in the effective income tax rate in this period was primarily due to the foreign tax provision being a higher percentage of projected consolidated pretax income as compared to the prior year.

The effective income tax rate for the three months ended March 31, 2012 was lower than the combined federal and state statutory rate of 38.7% primarily due to the benefit of the tax credit for excess FICA tax on employee-reported tips and the elimination of noncontrolling interest together being such a large percentage of pretax income. This was partially offset by an increase in the valuation allowance. The effective income tax rate for the three months ended March 31, 2011 was lower than the combined federal and state statutory rate of 38.9% due to the benefit of the expected tax credit for excess FICA tax on employee-reported tips being such a large percentage of projected annual pretax income. This was partially offset by the income taxes in states that only have limited deductions in computing the state current tax provision.

As of March 31, 2012 and December 31, 2011, the Company had $13.2 million and $14.0 million, respectively, of unrecognized tax benefits ($1.7 million and $1.5 million, respectively, in “Other long-term liabilities, net,” $1.5 million and $2.5 million, respectively, in “Accrued and other current liabilities” and

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

$10.0 million in “Deferred income tax liabilities”). Additionally, the Company accrued $3.2 million and $4.1 million of interest and penalties related to uncertain tax positions as of March 31, 2012 and December 31, 2011, respectively. Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $14.0 million and $15.2 million, respectively, if recognized, would impact the Company’s effective tax rate. The difference between the total amount of unrecognized tax benefits and the amount that would impact the effective tax rate consists of items that are offset by deferred income tax assets and the federal tax benefit of state income tax items.

In many cases, the Company’s uncertain tax positions are related to tax years that remain subject to examination by relevant taxable authorities. Based on the outcome of these examinations, or as a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related recorded unrecognized tax benefits for tax positions taken on previously filed tax returns will decrease by approximately $2.0 million to $4.0 million within the next twelve months after March 31, 2012.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2007 through 2011. The Company and its subsidiaries’ state and foreign income tax returns are also open to audit under the statute of limitations for the years ended December 31, 2000 through 2011.

13. Subsequent Events

We have evaluated subsequent events for potential recognition and/or disclosure through May     , 2012, which is the date the unaudited financial statements for the three months ended March 31, 2012 and 2011 included in this prospectus were filed with the Securities and Exchange Commission.

In April 2012, the Company revised its area operating partner program for restaurants opened on or after January 1, 2012. For these restaurants, an area operating partner is required, as a condition of employment, to make a deposit of $10,000 within 30 days of the opening of each new restaurant that he or she oversees, up to a maximum deposit of $50,000 (taking into account investments in prior programs). This deposit gives the area operating partner the right to monthly payments based on a percentage of his or her restaurants’ monthly cash flows for the duration of the employment agreement, typically ranging from 4.0% to 4.5%. After the restaurant has been open for a five-year period, the area operating partner will receive a bonus equal to a multiple of the area operating partner’s average monthly payments for the 24 months immediately preceding the bonus date. The bonus will be paid within 90 days or over a two-year period, depending on the bonus amount.

Effective May 7, 2012, the Company appointed David J. Deno as the Executive Vice President and Chief Financial Officer of the Company. Under the material terms of Mr. Deno’s employment, he will receive a one-time grant of options to purchase 400,000 shares of common stock subject to the terms of the Bloomin’ Brands 2007 Equity Incentive Plan. The options have standard vesting of five years contingent upon continued employment with the Company.

On May 10, 2012, the Board of Directors authorized an additional 850,000 shares for issuances of stock options and restricted stock under the Company’s 2007 Equity Incentive Plan (the “Equity Plan”). The total shares authorized under the Equity Plan, including the increase, is 13,200,000.

On May 10, 2012, the Company entered into a first amendment to its management agreement with Kangaroo Management Company I, LLC (the “Management Company”), whose members are entities affiliated with Bain Capital and Catterton and the Founders. This amendment provides that if the management agreement is

 

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

 

terminated due to an initial public offering in 2012, the Company will pay the Management Company a termination fee of $8.0 million within 60 days of completion of the offering, but no later than December 31, 2012. This termination fee will be paid in addition to the pro-rated periodic fee as provided in the management agreement and the management agreement will terminate immediately prior to the completion of the offering.

On May 10, 2012, the retention bonus and the incentive bonus agreements with the Company’s Chief Executive Officer (“CEO”) were amended. The amendment to the bonus agreements provides that if an initial public offering is completed in 2012, the remaining payments under each agreement are accelerated to a single lump sum payment of $22.4 million payable within 60 days of the completion of the offering, but no later than December 31, 2012, provided she is employed as CEO at the time of such offering.

 

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Report of independent auditors

To the Management and Members of

PGS Consultoria e Serviços Ltda.

We have audited the accompanying consolidated balance sheet of PGS Consultoria e Serviços Ltda. as of December 31, 2010, and the related consolidated statement of income, changes in members’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of PGS Consultoria e Serviços Ltda. as of December 31, 2010, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting practices adopted in Brazil.

The accounting practices adopted in Brazil differ, in certain significant respects, from the accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 18 to the consolidated financial statements.

Rio de Janeiro, Brazil, March 25, 2011

ERNST & YOUNG TERCO

Auditores Independentes S.S.

CRC - 2SP 015.199/O-6 - F - RJ

 

/s/ Márcio F. Ostwald

Márcio F. Ostwald

Accountant CRC - 1RJ 086.202/O-4

 

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PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated balance sheets

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais)

 

		2011				2010				2009
		(unaudited)								(unaudited)
Assets
Current assets
Cash and cash equivalents (Note 5)			21,832				11,032				3,298
Trade accounts receivable (Note 6)			15,553				9,856				7,409
Inventories (Note 7)			10,065				10,460				9,487
Recoverable taxes			226				1,004				2,294
Advances from suppliers			65				359				370
Prepaid expenses			902				576				272
Other			1,357				790				807
Total current assets			50,000				34,077				23,937
Noncurrent assets
Transactions with related parties (Note 10)			129				122				537
Judicial deposits (Note 12)			4,003				2,787				1,833
Deferred income tax and social contribution (Note 13)			5,776				3,129				2,219
			9,908				6,038				4,589
Property, fixtures and equipment (Note 8)			101,467				86,192				72,731
Intangible assets (Note 9)			6,656				3,122				3,244
			108,123				89,314				75,975
Total noncurrent assets			118,031				95,352				80,564
Total assets			168,031				129,429				104,501
Liabilities and members’ equity
Current liabilities
Loans (Note 11)			762				165				283
Transactions with related parties (Note 10)			577				822				940
Trade accounts payable			9,998				8,743				6,531
Rental payable			2,376				2,096				1,430
Payroll, provisions and social charges			10,866				8,078				5,560
Income tax and social contribution payable (Note 11)			2,557				2,171				2,041
Taxes and contributions payable			4,680				3,245				3,364
Royalties payable (Note 10)			1,867				1,604				3,865
Franchise fees payable (Note 10)			375				205				79
Deferred rent			114				—				—
Current portion of accrued buyout liability			332				482				283
Accounts payable to minority partners			1,077				1,309				1,807
Other			2,578				1,716				1,460
Total current liabilities			38,159				30,636				27,643
Noncurrent liabilities
Loans (Note 11)			1,732				—				165
Accrued buyout liability			8,224				5,271				3,023
Minority partner deposit			2,591				2,216				2,009
Transactions with related parties (Note 10)			203				528				1,430
Provision for contingency (Note 12)			2,100				—				—
CIDE payable (Note 12)			3,538				2,389				1,582
Deferred rent			1,158				—				—
Other			345				601				824
Total noncurrent liabilities			19,891				11,005				9,033
Members’ equity (Note 14)
Capital stock			21,864				21,864				21,864
Retained earnings			88,117				65,924				45,961
			109,981				87,788				67,825
Total liabilities and members’ equity			168,031				129,429				104,501

See accompanying notes.

 

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PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated income statements

For the years ended December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais)

 

		2011				2010				2009
		(unaudited)								(unaudited)
Gross revenue from sales			406,455				313,380				248,245
Gross revenue from services			—				1,035				902
			406,455				314,415				249,147
Taxes and deductions from sales			(36,677	)			(28,466	)			(22,991	)
Net revenue from sales			369,778				285,949				226,156
Cost of sales			(118,513	)			(86,942	)			(71,933	)
Gross profit			251,265				199,007				154,223
Operating income (expenses)
Restaurant payroll expenses			(80,148	)			(59,052	)			(47,833	)
Operating stores expenses			(44,445	)			(33,638	)			(28,793	)
Royalties expenses (Note 10)			(18,356	)			(14,576	)			(11,228	)
Administrative fee—credit cards/tickets			(8,932	)			(6,972	)			(5,330	)
Depreciation and amortization			(10,968	)			(9,439	)			(7,734	)
Loss on impairment of property, fixture and equipment (Note 5)			(300	)			—				—
Pre-opening expenses			(1,683	)			(1,597	)			(1,430	)
Corporate payroll expenses			(11,943	)			(7,067	)			(5,624	)
General and administrative expenses			(8,375	)			(12,662	)			(8,252	)
Financial income			1,849				791				2,694
Financial expense			(1,086	)			(1,342	)			(611	)
Other operating expenses, net			(25,967	)			(20,473	)			(16,281	)
			(210,354	)			(166,027	)			(130,422	)
Income before income tax and social contribution			40,911				32,980				23,801
Current income tax and social contribution (Note 13)			(21,365	)			(13,927	)			(10,653	)
Deferred income tax and social contribution (Note 13)			2,647				910				243
Net income for the year			22,193				19,963				13,391

See accompanying notes.

 

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PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statements of changes in members’ equity

For the years ended December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais)

 

		Capital stock				Retained earnings				Total
Balances at December 31, 2009 (unaudited)			21,864				45,961				67,825
Net income for the year			—				19,963				19,963
Balances at December 31, 2010			21,864				65,924				87,788
Net income for the year			—				22,193				22,193
Balances at December 31, 2011(unaudited)			21,864				88,117				109,981

See accompanying notes.

 

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PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statements of cash flows

For the years ended December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais)

 

		2011 (unaudited)				2010				2009 (unaudited)
Cash flow from operating activities
Income before income tax and social contribution			40,911				32,980				23,801
Adjustments for
Depreciation and amortization (Note 8,9)			10,968				9,439				8,105
Provision for contingency (Note 12)			2,100				—				—
Provision for CIDE			1,149				807				727
Disposal of property, fixture and equipment and intangibles			10				163				40
Loss on impairment of property, fixture and equipment			300				—				—
Interest and monetary variation on loans			—				150				(642	)
			55,438				43,539				32,031
Changes in assets and liabilities
(Increase) decrease in assets
Trade accounts receivable			(5,697	)			(2,447	)			(1,501	)
Inventories			395				(973	)			(1,552	)
Recoverable taxes			778				1,290				(1,794	)
Advances from suppliers			294				11				1,066
Prepaid expenses			(326	)			(304	)			7
Judicial deposits			(1,216	)			(954	)			(796	)
Other assets			(567	)			17				355
Increase (decrease) in liabilities
Trade accounts payable			1,255				2,212				(465	)
Rental payable			280				666				176
Payroll, provisions and social charges			2,788				2,518				1,368
Taxes and contributions payable			1,435				(119	)			1,474
Royalties and franchise fees payable			433				(2,135	)			(2,060	)
Deferred rent			1,272				—				—
Accounts payable to minority partners			(232	)			(498	)			360
Other liabilities			606				33				(240	)
Transactions with related parties, net			(577	)			382				324
Income tax and social contribution paid			(20,979	)			(13,797	)			(9,936	)
Net cash provided by operating activities			35,380				29,441				18,817
Cash flow from investing activities
Purchase of property, fixture and equipment (Note 8)			(26,275	)			(22,441	)			(17,624	)
Purchase of intangibles (Note 9)			(3,812	)			(500	)			(792	)
Net cash used in investing activities			(30,087	)			(22,941	)			(18,416	)
Cash flows from financing activities
Proceeds from loans			2,494				—				—
Repayment of loans			(165	)			(1,255	)			(1,766	)
Dividends paid to equity holders of the parent			—				—				(749	)
Receipt of minority partner deposit and accrued buyouts			3,178				2,654				860
Interest paid			—				(165	)			(330	)
Net cash provided by (used in) financing activities			5,507				1,234				(1,985	)
Increase (decrease) in cash and cash equivalents			10,800				7,734				(1,584	)
Cash and cash equivalents at the end of the year (Note 5)			21,832				11,032				3,298
Cash and cash equivalents at the beginning of the year (Note 5)			11,032				3,298				4,882
Increase (decrease) in cash and cash equivalents			10,800				7,734				(1,584	)

See accompanying notes.

 

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PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

1. Corporate information

PGS Consultoria e Serviços Ltda. (“PGS Consultoria” or the “Parent Company”) was formed in May 1997 and is headquartered at Av. Dr. Chucri Zaidan, 80, 8^th floor, in the City and State of São Paulo.

PGS Consultoria is the holding company of the CLS Companies (collectively referred as the “Group”). The main purpose of the CLS Companies (“CLS”), which is comprised of (i) CLS São Paulo Ltda. (“CLS SP”); (ii) CLS Restaurantes Rio de Janeiro Ltda. (“CLS RJ”); (iii) CLS Restaurantes Brasília Ltda. (“CLS BSB”); and (iv) CLS Restaurantes do Sul Ltda. (“CLS do Sul”), is to explore and manage restaurants under the trade mark “Outback Steakhouse” in Brazil.

“Outback Steakhouse” is an Australian steakhouse concept, open for dinner only in the United States of America, but for both lunch and dinner in some areas of the world, such as in Brazil. Although beef and steak items make up a good portion of the menu, the concept offers a variety of chicken, ribs, seafood, and pasta dishes. The Group’s strategy is to differentiate its restaurants by emphasizing consistently high-quality food, concentrated service, generous portions at affordable prices and a casual atmosphere suggestive of the Australian Outback.

CLS operates 34 (thirty four) restaurants altogether, in sixteen different cities, being: (i) 8 (eight) in Rio de Janeiro and 1 (one) in Niterói, State of Rio de Janeiro, and 1 (one) in Vitoria, State of Espirito Santo (CLS RJ); (ii) 10 (ten) in São Paulo, 2 (two) in Campinas, 1(one) in Barueri, 1 (one) in São Bernado do Campo, 1(one) in São Caetano do Sul, 1(one) in São José dos Campos and 1 (one) in Ribeirão Preto, State of São Paulo (CLS SP); (iii) 2 (two) in Brasilia, Federal District, 1 (one) in Belo Horizonte, State of Minas Gerais, 1 (one) in Salvador, State of Bahia, and 1 (one) in Goiânia, State of Goiás (CLS BSB); and (iv) 1 (one) in Porto Alegre, State of Rio Grande do Sul and 1 (one) in Curitiba, State of Paraná (CLS do Sul).

These consolidated financial statements were approved by the Parent Company’s management on March 25, 2011.

2. Basis of preparation

The preparation of the accompanying consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts. These estimates were determined based on objective and subjective factors, considering management’s judgment to determine the adequate amounts to be recorded in the consolidated financial statements.

Significant items subject to such estimates and assumptions include selection of useful lives of property, fixtures and equipment and analysis of their recoverability in operations, credit risk assessment to determine the allowance for doubtful accounts, as well as analysis of other risks to determine other provisions, including those set up for contingencies. Settlement of transactions involving these estimates may result in amounts significantly different from those recorded in the consolidated financial statements due to the uncertainties inherent in the estimation process. The Group reviews its estimates and assumptions at least annually.

The consolidated financial statements were prepared and are presented in accordance with the accounting practices adopted in Brazil, which comprise the pronouncements, interpretations and guidance issued by the Brazilian Accounting Pronouncements Committee (Comitê de Pronunciamentos Contábeis (“CPC”)), which are converged to the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

2. Basis of preparation (Continued)

 

The consolidated financial statements presented herein do not include the Parent Company’s stand alone financial statements and are not intended to be used for statutory purposes.

Accounting practices adopted in Brazil (“BR GAAP”) differ in significant respects from accounting principles generally accepted in the United States of America (“US GAAP”). A description of certain differences on cash flows from BR GAAP to US GAAP is provided in Note 18.

3. Basis of consolidation

The consolidated financial statements include the operations of PGS Consultoria and the “CLS Companies”. The details of the participation in CLS Companies, comprised of CLS SP, CLS RJ, CLS BSB and CLS do Sul, are summarized as follow:

 

		2011 (unaudited)								2010								2009 (unaudited)
		Capital				Retained				Capital				Retained				Capital				Retained
		stock(1)				earnings(2)				stock(1)				earnings(2)				stock(1)				earnings(2)
CLS SP			89.96	%			100	%			91.60	%			100	%			90.78	%			100	%
CLS RJ			96.22	%			100	%			96.08	%			100	%			96.72	%			100	%
CLS BSB			95.51	%			100	%			95.63	%			100	%			95.72	%			100	%
CLS do Sul			97.17	%			100	%			97.17	%			100	%			97.17	%			100	%

 

(1)	The capital stock of the CLS Companies is shared primarily between PGS Consultoria, proprietors (stores’ managing partners) and JVs (operating partners who supervise the Rio de Janeiro, São Paulo, Brasília and South Region stores), in accordance with their respective interests.

(2)

According to each individual partners’ association document known as “Protocolo de Entendimentos” (Memorandum of Understanding), dividends are distributed to minority partners (proprietors and JV’s) based on certain criteria, such as a percentage of the pre-tax income results of their respective restaurants and supervision areas and other, being the remaining undistributed earnings 100% of PGS Consultoria. Such dividends are recognized as compensation expense in the income statement in the period earned by the minority partners.

 

The financial statements of the CLS Companies are prepared for the same reporting period as the Parent Company. Accounting policies of CLS Companies have been adjusted to ensure consistency with the accounting policies adopted by the Group. All intra-group balances, income and expenses, unrealized gain and losses and dividends resulting from intra-group transactions have been eliminated in consolidation.

Basis of consolidation from January 1, 2010

Capital contributions to the CLS Companies received from the minority partners are recorded as long-term liabilities in the line item “minority partner deposit”. Monthly payments made pursuant to the “Protocolo de Entendimentos” (Memorandum of Understanding) are paid as dividends and are recognized as compensation expense in the period earned by the minority partners.

Basis of consolidation prior to January 1, 2010

The above-mentioned requirements were applied on a retrospective basis.

 

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

4. Summary of significant accounting policies

4.1. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits are likely to flow to the Group and the revenue can be reliably measured, regardless of when payment is made.

Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes.

Revenue from sale is recognized when the significant risks and rewards have passed to the buyer. No revenue is recognized if there are significant uncertainties regarding its realization.

4.2. Foreign currency translation

The consolidated financial statements are presented in Brazilian Reais, which is also the Parent Company and the CLS Companies’ functional currency.

Foreign currency transactions are initially recorded by the Group entities at the functional currency exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in foreign currency are translated at the functional currency exchange rate on the reporting date. All differences are recorded to the income statement.

4.3. Financial instruments

Financial instruments are only recognized as of the date when the Group becomes a part of the contract provisions of financial instruments. Once recognized, they are initially recorded at their fair value plus transaction costs that are directly attributable to their acquisition or issuance, except in the case of financial assets and liabilities classified in the category at fair value through profit or loss (“P&L”), when such costs are directly charged to P&L for the period. Subsequent measurement of financial assets and liabilities is determined by their classification at each balance sheet.

The Group’s most significant financial assets are cash and cash equivalents and accounts receivable, whereas the main financial liabilities are comprised of trade accounts payable and loans.

4.4. Cash and cash equivalents

Cash and cash equivalents include bank account balances and short-term investments redeemable within three months or less from the date of acquisition, subject to insignificant risk of change in their market value. The short-term investments included as cash equivalents are mostly classified as “financial assets at fair value through P&L”.

4.5. Trade accounts receivable

Trade accounts receivable are shown at realization amounts, and refer primarily to the amounts to be received from credit cards companies due to the sales in the restaurants. No allowance for doubtful accounts has been recorded due to the remote chances of losses on receivables.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

4. Summary of significant accounting policies (Continued)

 

4.6. Inventories

Inventories are valued at the lower of cost and net realizable value. Inventories consist of food and beverages and restaurant supplies, and are stated at the average purchase cost.

4.7. Property, fixtures and equipment

Property, fixtures and equipment are stated at acquisition cost, net of accumulated depreciation. Improvements to leased properties are depreciated over the lease term. Depreciation is computed on the straight-line method over the following estimated useful lives:

 

Furniture and fixtures			10 years
Computers			5 years
Equipment and facilities			10 years
Buildings			25 years
Leasehold improvements			10 to 15 years

The CLS companies capitalize all direct costs incurred to construct its restaurants. Upon restaurant opening, these costs are depreciated and charged to the consolidated statements of income. The amount of interest capitalized in connection with restaurant construction was immaterial in all periods.

An item of property, fixtures and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gains or losses arising on derecognition of the asset is included in the consolidated statements of income when the asset is derecognized.

The assets’ residual value, useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if appropriate.

4.8. Intangible assets

Intangible assets consist primarily of software and franchise fees. Intangible assets acquired separately are measured on initial recognition at cost. After the initial recognition, intangible assets are presented at cost, net of accrued amortization and impairment losses.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life. Both finite and indefinite intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.

Gains or losses arising from derecognition of an intangible asset are included in the consolidated statements of income when the asset is derecognized.

4.9. Loans

Loans are recognized initially at fair value, plus directly attributable transaction costs. Following the initial recognition, loans subject to interest are measured at the amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement at the time when the liabilities are written off, as well as during the amortization process according to the effective interest rate method.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

4. Summary of significant accounting policies (Continued)

 

4.10. Other assets and liabilities

Liabilities are recognized in the balance sheet when the Group has a legal or constructive obligation arising from past events, the settlement of which is expected to result in an outflow of economic benefits. Provisions are recorded reflecting the best estimates of the risk involved. An asset is recognized in the balance sheet when it is likely that its economic benefits will flow to the Group and its cost or value may be safely measured.

Assets and liabilities are classified as current when their realization or settlement is likely to occur within the following twelve months. Otherwise they are stated as noncurrent.

4.11. Taxation

Taxes on sales

Revenues from sales and services are subject to the following taxes and contributions, at the rates shown below:

 

State VAT—ICMS			From 2% to 25%
Social Contribution Tax on Gross Revenue for Social Integration Program—PIS			From 0.65 to 1.65%
Social Contribution Tax on Gross Revenue for Social Security Funding—COFINS			From 3.00 to 7.60%
Service Tax—ISS			5%

The above charges are presented as deductions from sales in the consolidated statements of income.

Income tax and social contribution—current

Taxation on income includes the income tax and the social contribution. CLS SP, CLS RJ and CLS Brasília record the income tax and social contribution based on taxable income (previously based on the presumed profits method). Income tax is calculated at a rate of 15%, plus a surtax of 10% on taxable profit exceeding R$ 240 over 12 months, whereas social contribution tax is computed at a rate of 9% on taxable profit, both recognized on an accrual basis. Therefore, additions to the book profit of expenses, temporarily nondeductible, or exclusions from revenues, temporarily nontaxable, for computation of current taxable profit generate deferred tax credits or debits.

The computation for income tax and social contribution for the CLS Sul was calculated according with the presumed profits method, which basis and rates are set forth in the tax legislation in force. CLS BSB was included in the presumed profits method until December 31, 2010.

Advances or amounts subject to offset are stated in current or non-current assets, according to the estimate of their realization.

 

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PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

4. Summary of significant accounting policies (Continued)

 

4.11. Taxation (Continued)

 

Income tax and social contribution—deferred

Deferred income tax and social contribution are generated by tax loss carryforwards and by temporary differences on the balance sheet date between the tax basis of assets and liabilities and their book values.

The book value of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred income tax and social contribution assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted at the reporting date.

Deferred tax assets and liabilities are offset if a legally enforceable right to offset exists and the deferred taxes relate to the same taxable entity and the same taxation authority.

4.12. Judgments, estimates and significant accounting assumptions

Judgments

The preparation of the consolidated financial statements requires management to make judgments and estimates, and adopt assumptions that affect the amounts stated for revenues, expenses, assets and liabilities, as well as the disclosures of contingent liabilities on the financial statement date.

However, uncertainties regarding these estimates and assumptions might lead to results that require significant adjustments to the book value of an asset or liability affected in future periods.

Estimates and assumptions

Major assumptions related to sources of uncertainty in future estimates and other relevant sources of uncertainty in estimates on the balance sheet date that entail significant risk of material adjustment to the book value of assets and liabilities in the next financial year are discussed as follows.

Impairment loss on nonfinancial assets

Impairment loss exists when the carrying value of an asset or cash-generating unit exceeds its recoverable amount, which is the higher of fair value less sales costs and value in use. The fair value less sales cost is calculated based on available information about similar asset sales transactions or market-observable prices less additional costs to dispose of the asset item. In 2011 the Company recorded impairment loss in the amount of R$300 related to leasehold improvements located in office spaces that the Company plans to vacate. No other evidence indicating that the asset net book values exceeding their recoverable amounts has been identified.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

4. Summary of significant accounting policies (Continued)

 

4.12. Judgments, estimates and significant accounting assumptions (Continued)

 

Estimates and assumptions (Continued)

 

Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities. The amount of such provisions is based on several factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority.

Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax strategies.

The Group has tax loss carryforwards for both income tax and social contribution amounting approximately to R$2,197 at December 31, 2011 (R$2,100 in 2010). These losses, which relate to the Parent Company that has a history of taxable losses, do not expire and may not be used to offset taxable income elsewhere in the Group. Tax-offsettable losses generated in Brazil may be offset against future taxable profit up to 30% of the taxable profit determined in any given year. CLS SP, CLS RJ and CLS Brasília have no tax losses, but taxable temporary differences.

If the Group was able to recognize all unrecognized deferred tax assets, profit would increase by R$1,143 at December 31, 2011 (R$705 in 2010). Further details on deferred taxes are disclosed in Note 13.3.

Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the income statement net of any reimbursement.

Provisions are recorded in an amount considered sufficient by the Group’s management, supported by the opinion of their legal advisors, to cover probable losses on lawsuits. Further details on contingencies are disclosed in Note 12.

4.13. Minority partner distributions and buyouts

The proprietors and the JVs are required to sign a five to seven-year agreement (“Protocolo de Entendimentos”—Memorandum of Understanding) and to purchase an ownership interest in the CLS Companies. This ownership interest gives the proprietor and the JVs the right to receive distributions based on a percentage of the after-tax income results of their respective restaurants for the duration of the agreement.

PGS Consultoria has the option to purchase the minority partners’ interests after a five to seven-year period based on the terms specified in the agreement.

 

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PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

4. Summary of significant accounting policies (Continued)

 

4.13. Minority partner distributions and buyouts (Continued)

 

The Group estimates future purchases of proprietors’ and JVs’ interests using current information on restaurant performance and records the minority partner obligations in the line item “accrued buyout liability” in the consolidated balance sheets. In the period the Group purchases the proprietors’ and JVs’ interests, an adjustment is recorded to recognize any remaining expense associated with the purchase and reduce the related accrued buyout liability.

Distributions made to proprietors and JVs are included in “restaurant payroll expenses” and “general and administrative expenses,” respectively, in the consolidated statements of income.

4.14 Operating Leases

Rent expense for the Company’s operating leases, which generally have escalating rentals over the term of the lease and may include potential rent holidays, is recorded on a straight-line basis over the initial lease term and those renewal periods that are reasonably assured. The initial lease term includes the “build-out” period of the Company’s leases, which is typically before rent payments are due under the terms of the lease. The difference between rent expense and rent paid is recorded as deferred rent and is included in the Consolidated Balance Sheets. Payments received from landlords as incentives for leasehold improvements are recorded as deferred rent and are amortized on a straight-line basis over the term of the lease as a reduction of rent expense. Lease termination fees, if any, and future obligated lease payments for closed locations are recorded as an expense in the period that they are incurred.

4.15. Pre-Opening Expenses

Non-capital expenditures associated with opening new restaurants are expensed as incurred.

5. Cash and cash equivalents

 

		2011								2009
		(unaudited)				2010				(unaudited)
Cash			60				50				60
Bank deposits			8,228				1,917				3,236
Short term investments			13,544				9,065				2
			21,832				11,032				3,298

Cash equivalents consist of investments that are readily convertible to cash with an original maturity date of three months or less.

 

 

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PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

6. Trade accounts receivable

Trade accounts receivable consist mainly of amounts receivable from credit card companies, as follows:

 

		2011								2009
		(unaudited)				2010				(unaudited)
Redecard (Mastercard/Diners/Credicard)			3,884				2,604				2,012
Visanet (Visa/Visa electron)			8,722				5,501				4,355
American express			729				366				473
Other			2,218				1,385				569
			15,553				9,856				7,409

7. Inventories

 

		2011								2009
		(unaudited)				2010				(unaudited)
Kitchen utensils			1,768				1,666				1,551
Meat and Chicken			1,184				969				736
Dairy			251				245				207
Pagers			342				252				282
Distilled			321				256				240
Beverage			324				309				261
Vegetables			149				134				103
Wine			282				148				177
Beer			149				122				89
Shrimp			68				40				37
Fish			111				66				48
Inventories held by third-parties			3,634				3,530				3,707
Imports in transit			298				717				559
Other			1,184				2,006				1,490
			10,065				10,460				9,487

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

8. Property, fixtures and equipment

 

		Land				Furniture and  fixture				Computers				Equipment and  facilities				Buildings				Leasehold improvements				Construction in progress				Total
Cost
Balances at December 31, 2008 (unaudited)			3,363				11,142				4,224				24,568				33,408				7,729				73				84,507
Additions			—				2,168				999				5,021				7,225				951				1,260				17,624
Write-offs			—				(18	)			—				—				—				—				(13	)			(31	)
Balances at December 31, 2009 (unaudited)			3,363				13,292				5,223				29,589				40,633				8,680				1,320				102,100
Additions			—				2,301				1,153				7,148				8,495				1,778				1,566				22,441
Transfer			—				1,280				90				804				—				712				(2,886	)			—
Balances at December 31, 2010			3,363				16,873				6,466				37,541				49,128				11,170				—				124,541
Additions			—				1,156				587				5,953				2,975				8,521				7,083				26,275
Transfer			—				3,043				(41	)			3,193				8,265				(7,377	)			(7,083	)			—
Balances at December 31, 2011 (unaudited)			3,363				21,072				7,012				46,687				60,368				12,314				—				150,816
Depreciation
Balances at December 31, 2008 (unaudited)			—				(3,445	)			(2,041	)			(7,977	)			(5,583	)			(2,424	)			—				(21,470	)
Additions			—				(1,207	)			(759	)			(2,750	)			(2,466	)			(717	)			—				(7,899	)
Balances at December 31, 2009 (unaudited)			—				(4,652	)			(2,800	)			(10,727	)			(8,049	)			(3,141	)			—				(29,369	)
Additions			—				(1,283	)			(825	)			(3,109	)			(3,098	)			(750	)			—				(9,065	)
Write-offs			—				—				—				—				85				—				—				85
Balances at December 31, 2010			—				(5,935	)			(3,625	)			(13,836	)			(11,062	)			(3,891	)			—				(38,349	)
Additions							(1,597	)			(831	)			(3,592	)			(3,763	)			(917	)			—				(10,700	)
Impairment			—				—				—				—				—				(300	)			—				(300	)
Balances at December 31, 2011 (unaudited)			—				(7,532	)			(4,456	)			(17,428	)			(14,825	)			(5,108	)			—				(49,349	)
Residual value
Balances at December 31, 2009 (unaudited)			3,363				8,640				2,423				18,862				32,584				5,539				1,320				72,731
Balances at December 31, 2010			3,363				10,938				2,841				23,705				38,066				7,279				—				86,192
Balances at December 31, 2011 (unaudited)			3,363				13,540				2,556				29,259				45,543				7,206				—				101,467
Average annual depreciation rate			—				10%				20%				10%				4%				6.7% to 10%				—				—

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

8. Property, fixtures and equipment (Continued)

 

In 2011 the Company recorded impairment loss in the amount of R$300 related to leasehold improvements located in office spaces that the Company plans to vacate. No other evidence indicating that the asset net book values exceeding their recoverable amounts has been identified.

9. Intangible assets

 

		Software				Franchise fees				Other				Total
Cost
Balances at December 31, 2008 (unaudited)			—				2,215				1,119				3,334
Additions			190				493				109				792
Write-offs			—				—				(9)				(9)
Balances at December 31, 2009 (unaudited)			190				2,708				1,219				4,117
Additions			93				374				33				500
Write-offs			—				(57)				(191)				(248)
Balances at December 31, 2010			283				3,025				1,061				4,369
Additions			2,416				431				965				3,812
Write-offs			—				(6)				(4)				(10)
Balances at December 31, 2011 (unaudited)			2,699				3,450				2,022				8,171
Amortization
Balances at December 31, 2008 (unaudited)			—				(604)				(63)				(667)
Additions			—				(120)				(86)				(206)
Balances at December 31, 2009 (unaudited)			—				(724)				(149)				(873)
Additions			(148)				(140)				(86)				(374)
Balances at December 31, 2010			(148)				(864)				(235)				(1,247)
Additions			—				(154)				(114)				(268)
Balances at December 31, 2011 (unaudited)			(148)				(1,018)				(349)				(1,515)
Residual value
Balances at December 31, 2009 (unaudited)			190				1,984				1,070				3,244
Balances at December 31, 2010			135				2,161				826				3,122
Balances at December 31, 2011 (unaudited)			2,551				2,432				1,673				6,656
Average annual amortization rate			20%				5%				20%

Franchise fee

The Group has a franchise agreement with Outback Steakhouse International (“OSI”), which expires generally 20 years after the date restaurant is opened. The Group has the option to renew the agreement for one consecutive term of 20 years, subject to certain conditions. Pursuant to the Agreement, the Group must operate the restaurant in strict conformity with the methods, standards and specifications prescribed by OSI, regarding training, staff, health standards, suppliers and advertising, among others. The Group is contractually bound to pay franchise fees of US$ 40 at the opening of each restaurant, and monthly royalties of 4% to 5% of net sales after the restaurant is opened. Royalties fees are charged to expenses as incurred.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

10. Transactions with related parties

On December 31, 2011 (unaudited), 2010 and 2009 (unaudited) the balance of transactions with related parties can be summarized as follows:

 

		Assets												Liabilities
		2011								2009				2011								2009
		(unaudited)				2010				(unaudited)				(unaudited)				2010				(unaudited)
Current
Loans
Outback Steakhouse International			—				—				—				577				822				940
Royalties payable
Outback Steakhouse International			—				—				—				1,867				1,604				3,865
Franchise fees
Outback Steakhouse International			—				—				—				375				205				79
Total current			—				—				—				2,819				2,631				4,884
Noncurrent
Accounts receivable/payable
Outback Steakhouse International			19				18				7				57				11				32
Starbucks Brasil Comércio de Cafés Ltda.			110				104				530				—				—				—
			129				122				537				57				11				32
Loans
Outback Steakhouse International			—				—				—				—				505				1,374
Other			—				—				—				146				12				24
Total noncurrent			129				122				537				203				528				1,430
Total			129				122				537				3,022				3,159				6,314

Until 2010, PGS Consultoria provided administrative and/or technical services to Starbucks Brasil Comércio de Cafés Ltda., which were billed according to the agreements between the parties. The service revenues were R$ 1,035 in 2010 and R$ 908 in 2009 (unaudited).

 

		2011 (unaudited)								2010								2009 (unaudited)
		Royalties (i)				Financial results (ii)				Royalties (i)				Financial results (ii)				Royalties (i)				Financial results (ii)
Outback Steakhouse International			18,356				124				14,576				(118	)			11,228				706
			18,356				124				14,576				(118	)			11,228				706

 

(i)	Refer to the royalties calculated on the net revenues posted by the stores.

(ii)	Refer, basically, to the interest expenses and exchange variation on Outback Steakhouse International loans.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

10. Transactions with related parties (Continued)

 

Outback Steakhouse International—“OSI”

The transactions between the Group and OSI consist of:

 

•

The Group is contractually bound to pay franchise fees of US$ 40 at the opening of each restaurant and monthly royalties of 4% to 5% of net sales after the restaurant is opened. Monthly royalty fees are charged to expenses as incurred.

 

•

The original principal balance of loans provided by OSI totaled US$ 3,200. The proceeds were substantially used to build the stores in Moema, Center Norte and Market Place, located in the city of São Paulo; Leblon and Norte Shopping, located in the city of Rio de Janeiro; and Flamboyant, located in the city of Goiania. The outstanding balance as of December 31, 2011 (unaudited), 2010 and 2009 (unaudited) can be summarized as follows:

 

		2011 (unaudited)												2010
Description		Current				Noncurrent				Total				Current				Noncurrent				Total
Promissory Note—US$ 400—BZ 13			—				—				—				80				5				85
Promissory Note—US$ 400—BZ 14			83				—				83				133				67				200
Promissory Note—US$ 600—BZ 15			146				—				146				203				133				336
Promissory Note—US$ 600—BZ 16			146				—				146				203				133				336
Promissory Note—US$ 600—BZ 18			202				—				202				203				167				370
Total			577				—				577				822				505				1,327

 

		2009 (unaudited)
Description		Current				Noncurrent				Total
Promissory Note—US$ 600—BZ 11			35				—				35
Promissory Note—US$ 400—BZ 13			139				86				225
Promissory Note—US$ 400—BZ 14			139				209				348
Promissory Note—US$ 600—BZ 15			209				348				557
Promissory Note—US$ 600—BZ 16			209				348				557
Promissory Note—US$ 600—BZ 18			209				383				692
Total			940				1,374				2,314

At December 31, 2011 the main terms of outstanding loans can be summarized as follows:

 

Description		Amount		Index		Interest rate		Maturity date
Promissory Note		US$ 400		US Dollars		7% p.a		July, 2012
Promissory Note		US$ 600		US Dollars		7% p.a		September, 2012
Promissory Note		US$ 600		US Dollars		7% p.a		September, 2012
Promissory Note		US$ 600		US Dollars		7% p.a		November, 2012

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

10. Transactions with related parties (Continued)

 

Distribution of Profits—CLS Companies

Dividends paid to proprietors (stores’ managing partners) and to JVs (operating partners who supervise the Rio de Janeiro, São Paulo, Brasília and South Region stores) are distributed according to the criteria stated within each individual partner’s association document referred to as “Protocolo de Entendimento” (Memorandum of Understanding).

Partners are paid dividends according to a percentage of the after-tax income results (“ATI”) of their respective restaurants, as per their P&L statements. It is 7.5% of ATI for managing partners and 3.5% to 6% for operating partners. Members of top management have also received dividends based on certain monthly fixed amounts stipulated in the previous year’s budget submitted to and approved by OSI.

Based on the above and in accordance with local laws allowing actual distributions to be different than the exact amount owed to a partner, based on his/her members’ position, the CLS Companies distributed the following amounts to its partners during 2011 (unaudited), 2010, and 2009 (unaudited):

 

		2011 (unaudited)				2010				2009 (unaudited)
Proprietors (stores’ managing partners)			2,675				1,495				1,190
JVs (operating partners)			1,950				1,782				1,296
Executives			2,113				3,241				2,052
			6,738				6,518				4,538

Dividends paid to the minority partners are recognized as compensation expense in the consolidated statements of income in the period earned.

11. Loans

 

		2011 (unaudited)												2010
Description		Current				Noncurrent				Total				Current				Noncurrent				Total
Banco do Brasil S.A. (i)			—				—				—				165				—				165
Banco Nordeste Brasil S.A.(ii)			762				1,732				2,494				—				—				—
Total			762				1,732				2,494				165				—				165

 

		2009 (unaudited)
Description		Noncurrent				Noncurrent				Total
Banco do Brasil S.A. (i)			283				165				448
Banco Nordeste Brasil S.A. (ii)			—				—				—
Total			283				165				448

 

(i)

The principal amount was subject to annual interest of 14%. The guarantees pledged in connection with the Banco do Brasil S.A. loan were substantially comprised of properties owned by PGS Consultoria, and improvements made in rented properties financed through this contract, amounting to approximately R$ 1,500. The Banco do Brasil loan matured in 2011.

(ii)

On January 10, 2011, CLS Brasília entered into a loan agreement with Banco Nordeste Brasil S.A. The principal amount of the loan on that date was R$ 2,494 and is to be paid in 36 monthly installments of principal and interest beginning on February 10, 2012 and ending on January 10, 2015. Interest charges are waived for the period January 10, 2011 to January 10, 2012. The principal amount is subject to annual interest of 9.5%. The loan is guaranteed by PGS Consultoria.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

12. Contingencies

The Group is involved in tax, civil and labor lawsuits arising in the normal course of operations. These matters are discussed at the administrative and judicial levels. Judicial deposits related to these matters are made, when applicable. The Company accrues for loss contingencies that are probable and reasonably estimable.

The provision amount of R$ 2,100 was recorded as of December 31, 2011 and is related mainly by approximately R$2,000 to uniforms allowance that was not subjected to social contribution and withholding income tax. Such provision covers all CLS companies.

At December 31, 2011 (unaudited), 2010 and 2009 (unaudited), the Group’s external legal advisors estimate the chances of a final unfavorable outcome as “possible” in certain matters, primarily related to labor and tax claims. The total possible contingencies that are uncertain at this time and could have a material adverse effect on the Company’s financial condition are R$11,600 as of December 31, 2011.

The three most significant cases for the CLS Companies involve amounts totaling approximately R$ 4,600 (CLS SP). These suits were filed by Secretaria de Fazenda do Estado de São Paulo seeking additional payments for ICMS under the taxpayer substitution system in addition to fines for noncompliance with other accessory obligations. The most significant case for PGS Consultoria, involves an amount totaling approximately R$ 2,900. In this matter the tax authorities are questioning the payment of income tax and social contribution.

The Group is questioning a matter related to the validity of the social contribution tax for intervention in the economic order (CIDE), established by law, on the remittance of royalties. Management, supported by preliminary injunctions granted in its favor, is judicially paying this tax. The judicial deposit related to this matter amounts to R$ 4,003 at December 31, 2011 (unaudited), (R$ 2,787 in 2010 and R$ 1,833 in 2009 (unaudited)). The Group maintains a provision related to this tax, which is presented in noncurrent liabilities in accordance with the expected date of outcome of these proceedings.

13. Income tax and social contribution

CLS do Sul has elected to calculate income tax and social contribution using the “presumed profits” method. Under the “presumed profits” method, taxable income is calculated as an amount equal to different percentages of gross revenue based on the activities of the taxpayer.

Under current Brazil tax law, the percentages of the CLS Companies’ gross revenues are 8% for calculating income tax, and 12% for social contribution. The Parent Company, CLS SP, CLS RJ, and CLS BSB calculate their income tax and social contribution using the “actual profits” method, which is based on total taxable income.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

13. Income tax and social contribution (Continued)

 

Tax loss carry forwards through December 31, 2011 (unaudited) and 2010 relating to income tax and social contributions were approximately R$2,764 and R$ 2,100, respectively, comprised entirely of fiscal results of the Parent Company. These tax loss carry forwards can offset future taxable income. Brazilian tax laws restrict the offset of tax losses to 30% of taxable profits on an annual basis. These losses can be used indefinitely and are not impacted by a change in ownership of the Parent Company.

13.1. Components of income tax and social contribution provision

 

		2011 (unaudited)				2010				2009 (unaudited)
Current income tax and social contribution			21,365				13,927				10,653
Deferred income tax and social contribution			(2,647	)			(910	)			(243	)
			18,718				13,017				10,410

13.2. Reconciliation income tax and social contribution provision at statutory rate to effective rate

 

		2011 (unaudited)				2010				2009 (unaudited)
Income before income tax and social contribution			40,911				32,980				23,801
Income tax and social contribution at statutory rate of 34%			13,910				11,213				8,092
Benefits of utilizing presumed profits method of calculating of income tax and social contribution for CLS do Sul (also for CLS BSB in 2010)			(738	)			(2,033	)			(426	)
Non-deductible expenses for minority partner distributions and buyouts			3,398				3,354				2,200
Other non-deductible expenses			1,782				487				650
Provisions arising from write-down of tax losses			438				44				—
Benefit of utilizing previously written-down tax losses			—				—				(58	)
Benefits of income excluded from income tax surcharge			(72	)			(48	)			(48	)
Effective income tax and social contribution provision			18,718				13,017				10,410
Effective rate			45.8	%			39.5	%			43.7	%

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

13. Income tax and social contribution (Continued)

 

13.3 Components of deferred income tax and social contribution

 

		2011 (unaudited)				2010				2009 (unaudited)
Tax loss carry forward			940				705				661
Temporary differences
Pre-opening costs			2,308				2,135				1,782
Provision for contingency			571				—				—
Lease			413				—				—
Provision for CIDE			1,026				667				437
Provision for bonus			1,112				136				—
Other			449				191				—
			6,819				3,834				2,880
Unrecognized deferred tax assets			(1,043	)			(705	)			(661	)
			5,776				3,129				2,219

Deferred income tax and social contribution assets, resulting from tax loss carry forwards and temporary differences, are recorded taking into consideration the probable realization thereof, based on projected future results of operations considering internal assumptions and future economic scenarios that are subject to change. These projections indicate that future operating results will provide taxable income for CLS SP, CLS RJ and CLS BSB. Therefore the Group’s management expects to realize the deferred tax assets. The unused credits reflect the assessment of the likelihood of realizing the deferred tax asset comprised of the tax loss carry forwards attributable to the Parent Company.

14. Members’ equity

14.1. Capital stock

At December 31, 2011 (unaudited), 2010, and 2009 (unaudited) the Parent Company’s subscribed capital amounted to R$ 21,864, divided into 20,244,048 units of interest with par value of R$ 1.08 each, distributed as follows:

 

		Numbers of units of interest
PGS Participações Ltda.			10,122,024
Outback Steakhouse International Investments Co. (“OSI”)			10,122,024
			20,244,048

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

14. Members’ equity (Continued)

 

14.2 Distribution of profits

 

The Parent Company’s management decided to maintain profits for 2011 (unaudited) and 2010 in retained earnings, to be later appropriated in a members meeting. The members approved the distribution of dividends in the amount of R$ 749, relating to profits for 2009, distributed as follow:

 

		Numbers of units of interest
PGS Participações Ltda.			374.5
Outback Steakhouse International Investments Co. (“OSI”)			374.5
			749.0

The Parent Company’s management also decided to maintain the remaining profits for 2009 (unaudited) in retained earnings, to be later appropriated in a members meeting.

15. Financial instruments

The Group evaluated its financial assets and liabilities in relation to market value through available information available and appropriate evaluation methodologies. The interpretation of market data and the selection of evaluation methods require extensive judgment and estimates to calculate the most appropriate realization value. Consequently, the estimates presented do not necessarily show the amounts that may be realized in the market. The use of different market assumptions and/or methods may have a material effect on the estimated realization values.

The Group’s main financial instruments consist of cash and cash equivalents, trade accounts receivable, trade accounts payable and current and noncurrent loans.

Fair value measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and is a market-based measurement. To measure fair value, the Group incorporates assumptions that market participants would use in pricing the asset or liability, and utilizes market data to the maximum extent possible.

Set out below is a comparison by financial statement class of the book value and fair value of the Group’s financial instruments that are carried in the consolidated financial statements.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

15. Financial instruments (Continued)

 

Fair value measurements (Continued)

 

		Book value												Fair value
Description		2011 (unaudited)				2010				2009 (unaudited)				2011 (unaudited)				2010				2009 (unaudited)
Financial assets
Cash and cash equivalents			21,832				11,032				3,298				21,832				11,032				3,298
Trade accounts receivable			15,553				9,856				7,409				15,553				9,856				7,409
Recoverable taxes			226				1,004				2,294				226				1,004				2,294
Credits from related parties			129				122				537				129				122				537
Other assets			2,324				1,725				1,449				2,324				1,725				1,449
			40,064				23,739				14,987				40,064				23,739				14,987
Financial liabilities
Loans, including related party			3,071				1,492				2,762				3,071				1,492				2,762
Trade accounts payable			9,998				8,743				6,531				9,998				8,743				6,531
Rental payable, including deferred			3,648				2,096				1,430				3,648				2,096				1,430
Payroll, provisions and social charges			10,866				8,078				5,560				10,866				8,078				5,560
Taxes and contributions			7,237				5,416				5,405				7,237				5,416				5,405
Royalties and franchises fee			2,242				1,809				3,944				2,242				1,809				3,944
Accounts payable to minority partners			1,077				1,309				1,807				1,077				1,309				1,807
Accrued buyout liability			8,556				5,753				3,306				8,556				5,753				3,306
Other liabilities			3,069				2,340				2,340				3,069				2,340				2,340
			49,764				37,036				33,085				49,764				37,036				33,085

The fair values of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term accounts payable approximate their respective book values due to the their short-term maturity. Loans are recognized initially at fair value, plus directly attributable transaction costs. Following the initial recognition, loans subject to interest are measured at the amortized cost using the effective interest rate method.

As a basis for considering the market participant assumptions in fair value measurements, a three-tier fair value hierarchy prioritizes the inputs used in measuring fair values as follows:

 

•

Level 1—observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group has the ability to access;

 

•

Level 2—inputs, other than the quoted market prices included in Level 1, which are observable for the asset or liability, either directly or indirectly; and

 

•

Level 3—unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market data available.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

15. Financial instruments (Continued)

 

Fair value measurements (Continued)

 

The fair value measurement of short-term investments classified as cash and cash equivalents at December 31, 2011, 2010 and 2009, in the amount of R$13,544 (unaudited), R$ 8,863, and R$ 2 (unaudited), respectively, uses inputs that fall within Level 2 of the fair value hierarchy.

The Group is not engaged in any outstanding hedging instruments, term contracts, swap operations, options, futures, or embedded derivatives operations. Therefore, the Group has no risk related to derivatives utilization policies.

Significant market risk factors affecting the Group’s business are as follows:

Exchange rate risk

This risk arises from the possibility of the Group incurring losses because of fluctuations in foreign currency exchange rates. The Group presents liabilities denominated in US dollars, mainly in connection with the loans from the related party OSI.

The Group does not use hedging instruments to protect against exchange rate fluctuations between the Brazilian real and the US dollar.

Credit risk

This risk mainly involves the Groups’ cash and cash equivalents and accounts receivable. The Group carries out operations with highly-rated banks, which minimizes risk. Accounts receivable are substantially generated from credit card companies resulting from sales in the restaurants. Management does not anticipate losses in the realization of such receivables.

Liquidity risk

Liquidity risk arises from the possibility that the Group may not have sufficient funds to comply with their financial commitments due to the different currencies and settlement terms of their rights and obligations.

In order to mitigate liquidity risk for the Parent Company and its subsidiaries. the Group’s liquidity and cash flow is monitored on a daily basis by Management, assuring that cash flow from operations and available funding, when necessary, is sufficient to meet its commitment schedule.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

15. Financial instruments (Continued)

 

Liquidity risk (Continued)

 

The tables below summarize the maturity profile of the Group’s financial liabilities on contractual and undiscounted payments.

 

		Year ended December 31, 2011 (unaudited)
		Up to 1 year				1 to 5 years				> 5 years				Total
Loans, including related party			1,339				1,732				—				3,071
Trade accounts payable			9,998				—				—				9,998
Rental payable, including deferred			2,490				686				472				3,648
Payroll, provisions and social charges			10,866				—				—				10,866
Taxes and contributions			7,237				—				—				7,237
Royalties and franchises fee			2,242				—				—				2,242
Accrued buyout liability			332				8,224				—				8,556
Other liabilities			3,655				491				—				4,146
			38,159				11,133				472				49,764
		Year ended December 31, 2010
		Up to 1 year				1 to 5 years				> 5 years				Total
Loans, including related party			987				505				—				1,492
Trade accounts payable			8,743				—				—				8,743
Rental payable			2,096				—				—				2,096
Payroll, provisions and social charges			8,078				—				—				8,078
Taxes and contributions			5,416				—				—				5,416
Royalties and franchises fee			1,809				—				—				1,809
Accrued buyout liability			482				5,271								5,753
Other liabilities			3,649				—				—				3,649
			31,260				5,776				—				37,036
		Year ended December 31, 2009 (unaudited)
		Up to 1 year				1 to 5 years				> 5 years				Total
Loans, including related party			1,223				1,539				—				2,762
Trade accounts payable			6,531				—				—				6,531
Rental payable			1,430				—				—				1,430
Payroll, provisions and social charges			5,560				—				—				5,560
Taxes and contributions			5,405				—				—				5,405
Royalties and franchises fee			3,944				—				—				3,944
Accrued buyout liability			283				3,023								3,306
Other liabilities			4,147				—				—				4,147
			28,523				4,562				—				33,085

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

15. Financial instruments (Continued)

 

Interest rate risk

Interest rate risk arises from the possibility that the Group incurs losses because of fluctuations in interest rates that could increase certain financial expenses related to loans and financing raised from the market. The Group’s exposure to market risks for changes in interest rates relates primarily to the bank debt and loans with related parties. Considering the Group’s debt profile, management considers the risk of exposure to interest rate variation to be insignificant.

Capital Management

Capital includes units of interest and equity attributable to the equity holders of the Parent.

The primary objective of the Group’s capital management is to ensure that it maintains sufficient capital in order to support its business and maximize member value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to members, return capital to members, take out new loans, or issue new units of interest. No changes were made to the objectives, policies, or processes for managing capital during the years ended December 31, 2011 (unaudited), 2010, and 2009 (unaudited).

Included within net debt are loans, trade accounts payable, less cash and cash equivalents.

 

		2011 (unaudited)				2010				2009 (unaudited)
Loans, including related party			3,071				1,492				2,762
Trade accounts payable			9,998				8,743				6,531
Less: cash and cash equivalents			(21,832	)			(11,032	)			(3,298	)
Net debt			(8,763	)			(797	)			5,995
Members’ equity			109,981				87,788				67,825
Members’ equity and net debt			101,218				86,991				73,820

16. Operating lease commitments

Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent. Rental expense for operating leases during 2011 (unaudited), 2010, and 2009 (unaudited) was R$12,255, R$8,448, and R$7,061, respectively.

The Group has entered into operating leases for the restaurants locations. These leases have an average life of between 10 to 15 years. Future minimum rentals payable under non-cancellable operating leases as at December 31 are as follows:

 

		2011								2009
		(unaudited)				2010				(unaudited)
Within one year			12,802				6,513				7,660
After one year but not more than five years			47,444				45,306				46,408
More than five years			61,940				74,862				66,100
			122,186				126,681				120,168

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

17. Insurance coverage

The Group maintains insurance coverage primarily for risks of loss relating to property damages, loss of profit, and fixed asset items. Coverage amounts are deemed sufficient by Management to cover any potential losses. At December 31, 2011, the Group had the following main insurance policies contracted with third parties:

 

Type		Insurance company		Inception date		Expiry date		Maximum indemnity limit
Property damages		Generali Brasil Seguros		30/Sep/2011		30/Jun/2012		R$	10,000
General civil liability		Chubb do Brasil Cia de Seguros		30/Jun/2011		30/Jun/2012		R$	3,000
Directors and Officers liability		Ace Seguradora S.A.		11/Jul/2011		11/Jul/2012		R$	5,000

18. Summary and reconciliation of the differences between the accounting practices adopted in Brazil and accounting principles generally accepted in the United States of America

The consolidated financial statements were prepared and are presented in accordance with BR GAAP, which comprise the pronouncements, interpretations and guidance issued by the Brazilian Accounting Pronouncements Committee (“CPC”). Note 4 to the consolidated financial statements summarizes the principal accounting practices adopted by the Group.

BR GAAP differs, in certain significant respects, from US GAAP. No relevant differences between BR GAAP and US GAAP were identified for the Group’s members’ equity and net income as of and for the years ended December 31, 2011 (unaudited), 2010, and 2009 (unaudited).

Classification of statement of cash flows

Under BR GAAP, the classification of certain cash flow items is presented differently from US GAAP. Under BR GAAP, interest paid is recorded in financing activities. For US GAAP purposes, interest paid is classified in operating activities.

Recently Issued Accounting Standards

In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position, and to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards (IFRS). The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. The Company will implement the provisions of ASU 2011-11 as of January 1, 2013.

 

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Notes to consolidated financial statements

December 31, 2011 (unaudited), 2010 and 2009 (unaudited)

(In thousands of reais, except when mentioned otherwise)

 

18. Summary and reconciliation of the differences between the accounting practices adopted in Brazil and accounting principles generally accepted in the United States of America (Continued)

 

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. Under this ASU, an entity will have the option to present the components of net income and comprehensive income in either one or two consecutive financial statements. The ASU eliminates the option in U.S. GAAP to present other comprehensive income in the statement of changes in equity. An entity should apply the ASU retrospectively. For a nonpublic entity, the ASU is effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. Early adoption is permitted. In December 2011, the FASB decided to defer the effective date of those changes in ASU 2011-05 that relate only to the presentation of reclassification adjustments in the statement of income by issuing ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive income in Accounting Standards Update 2011-05. The Company plans to implement the provisions of ASU 2011-05 by presenting a separate statement of other comprehensive income following the statement of income in 2012.

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The new standards do not extend the use of fair value but, rather, provide guidance about how fair value should be applied where it already is required or permitted under IFRS or U.S. GAAP. For U.S. GAAP, most of the changes are clarifications of existing guidance or wording changes to align with IFRS. A nonpublic entity is required to apply the ASU prospectively for annual periods beginning after December 15, 2011. The Company expects that the adoption of ASU 2011-04 in 2012 will not have a material impact on its consolidated financial statements.

In October 2009, the FASB issued Accounting Standards Update (ASU) 2009-13, Revenue Recognition (Topic 605): Multiple Deliverable Revenue Arrangements (EITF Issue No. 08-1, “Revenue Arrangements with Multiple Deliverables”). ASU 2009-13 amends FASB ASC Subtopic 605-25, Revenue Recognition-Multiple-Element Arrangements, to eliminate the requirement that all undelivered elements have vendor specific objective evidence of selling price (VSOE) or third party evidence of selling price (TPE) before an entity can recognize the portion of an overall arrangement fee that is attributable to items that already have been delivered. In the absence of VSOE and TPE for one or more delivered or undelivered elements in a multiple element arrangement, entities will be required to estimate the selling prices of those elements. The overall arrangement fee will be allocated to each element (both delivered and undelivered items) based on their relative selling prices, regardless of whether those selling prices are evidenced by VSOE or TPE or are based on the entity’s estimated selling price. Application of the “residual method” of allocating an overall arrangement fee between delivered and undelivered elements will no longer be permitted upon adoption of ASU 2009-13. Additionally, the new guidance will require entities to disclose more information about their multiple element revenue arrangements. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of ASU 2009-13 in 2011 did not have an effect on the Company’s consolidated financial statements.

 

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SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS (in thousands):

 

		Balance at the Beginning of the Period				Charged to Costs and Expenses				Deductions(1)				Balance at the End of the Period
Year Ended December 31, 2011
Allowance for note receivable for affiliated entity(2)		$	33,150			$	(33,150	)		$	—			$	—
Allowance for doubtful accounts			2,454				117				(454	)			2,117
Valuation allowance on deferred income tax assets			25,886				12,948				(2,997	)			35,837
		$	61,490			$	(20,085	)		$	(3,451	)		$	37,954
Year Ended December 31, 2010
Allowance for note receivable for affiliated entity		$	33,150			$	—			$	—			$	33,150
Allowance for doubtful accounts			1,697				2,295				(1,538	)			2,454
Valuation allowance on deferred income tax assets			21,977				3,909				—				25,886
		$	56,824			$	6,204			$	(1,538	)		$	61,490
Year Ended December 31, 2009
Allowance for note receivable for affiliated entity		$	33,150			$	—			$	—			$	33,150
Allowance for doubtful accounts			3,011				724				(2,038	)			1,697
Valuation allowance on deferred income tax assets			4,992				18,743				(1,758	)			21,977
		$	41,153			$	22,701			$	(7,030	)		$	56,824

 

(1)	Deductions for Allowance for doubtful accounts represent the write off of uncollectible accounts or reductions to allowances previously provided. Deductions for Valuation allowance on deferred income tax assets represent changes in timing differences between periods.

(2)

On September 26, 2011, the Company entered into a settlement agreement with the T-Bird Parties to settle all outstanding litigation with T-Bird. In accordance with the terms of the settlement agreement, T-Bird agreed to pay $33.3 million to the Company, which included $33.2 million to satisfy the T-Bird promissory note that the Company purchased from T-Bird’s former lender. The settlement payment was received in November 2011, and $33.2 million was recorded as Recovery of note receivable from affiliated entity in the Company’s Consolidated Statement of Operations for the year ended December 31, 2011.

 

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Until             , 2012, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

             Shares

Common stock

 

 

P R O S P E C T U S

 

BofA Merrill Lynch

Morgan Stanley

J.P. Morgan

Deutsche Bank Securities

Goldman, Sachs & Co.

Jefferies

William Blair

Raymond James

Wells Fargo Securities

The Williams Capital Group, L.P.

                    , 2012

 

 

 

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Part II

Information Not Required in Prospectus

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses payable by us in connection with the sale and distribution of the securities registered hereby, other than underwriting discounts or commissions. All amounts are estimates except for the SEC registration fee and the Financial Industry Regulatory Authority filing fee.

 

SEC Registration Fee		$	39,537
Financial Industry Regulatory Authority, Inc. Filing Fee			30,500
Listing Fee			*
Printing and Engraving			*
Legal Fees and Expenses			*
Accounting Fees and Expenses			*
Transfer Agent and Registrar Fees			*
Miscellaneous			*
Total		$	*

 

*	To be completed by amendment.

Item 14. Indemnification of Directors and Officers.

The Registrant is governed by the Delaware General Corporation Law, or DGCL. Section 145 of the DGCL provides that a corporation may indemnify any person, including an officer or director, who was or is, or is threatened to be made, a party to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was or is an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such officer, director, employee or agent acted in good faith and in a manner such person reasonably believed to be in, or not opposed to, the corporation’s best interest and, for criminal proceedings, had no reasonable cause to believe that such person’s conduct was unlawful. A Delaware corporation may indemnify any person, including an officer or director, who was or is, or is threatened to be made, a party to any threatened, pending or contemplated action or suit by or in the right of such corporation, under the same conditions, except that such indemnification is limited to expenses (including attorneys’ fees) actually and reasonably incurred by such person, and except that no indemnification is permitted without judicial approval if such person is adjudged to be liable to such corporation. Where an officer or director of a corporation is successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to above, or any claim, issue or matter therein, the corporation must indemnify that person against the expenses (including attorneys’ fees) which such officer or director actually and reasonably incurred in connection therewith.

The Registrant’s amended and restated bylaws will authorize the indemnification of its officers and directors, consistent with Section 145 of the Delaware General Corporation Law, as amended. The Registrant intends to enter into indemnification agreements with each of its directors and executive officers. These agreements, among other things, will require the Registrant to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including advancement of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of the Registrant, arising out of the person’s services as a director or executive officer.

 

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Reference is made to Section 102(b)(7) of the DGCL, which enables a corporation in its original certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director for violations of the director’s fiduciary duty, except (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL, which provides for liability of directors for unlawful payments of dividends or unlawful stock purchases or redemptions or (iv) for any transaction from which a director derived an improper personal benefit.

The Registrant expects to maintain standard policies of insurance that provide coverage (i) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act and (ii) to the Registrant with respect to indemnification payments that it may make to such directors and officers.

The proposed form of Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement provides for indemnification to the Registrant’s directors and officers by the underwriters against certain liabilities.

Item 15. Recent Sales of Unregistered Securities.

Equity Securities

During the year ended December 31, 2009, we granted to certain eligible participants 4,350,000 options to purchase our common stock with an exercise price of $6.50 and 1,043,124 options to purchase our common stock with an exercise price of $10.00 under our Equity Plan. The options were issued without registration in reliance on the exemption afforded by Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering, or Rule 701 promulgated under the Securities Act, as a transaction pursuant to a compensatory benefit plan.

During the year ended December 31, 2010, we granted to certain eligible participants 1,026,110 options to purchase our common stock with an exercise price of $6.50 and 51,249 options to purchase our common stock with an exercise price of $10.00 under our Equity Plan. The options were issued without registration in reliance on the exemption afforded by Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering, or Rule 701 promulgated under the Securities Act, as a transaction pursuant to a compensatory benefit plan.

In March 2010, we offered all active employees the opportunity to exchange outstanding stock options with a $10.00 exercise price for the same number of replacement stock options with a $6.50 exercise price. The replacement stock options were awarded on April 6, 2010 following completion of the exchange offer, have an exercise price of $6.50 per share, and have new vesting provisions. In aggregate there were 3,874,949 stock options eligible for exchange, all of which were tendered and accepted for exchange in the exchange offer. The original options were cancelled following the expiration of the offer. No consideration was paid to us by any recipient. The replacement stock options were issued without registration in reliance on the exemptions afforded by Section 3(a)(9) of the Securities Act, as an exchange by the issuer with its existing security holders without commission.

During the year ended December 31, 2011, we granted to certain eligible participants 131,000 options to purchase our common stock with an exercise price of $6.50. These options were later cancelled and reissued with an exercise price of $10.03. In addition, we also granted to such participants 1,775,447 options to purchase our common stock with an exercise price of $10.03 under our Equity Plan. The options were issued without registration in reliance on the exemption afforded by Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering, or Rule 701 promulgated under the Securities Act, as a transaction pursuant to a compensatory benefit plan.

 

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During the period beginning January 1, 2012 through May 15, 2012, we granted to certain eligible participants 35,000 options to purchase our common stock with an exercise price of $10.03 and 20,000 options to purchase our common stock with an exercise price of $12.02 under our Equity Plan. The options were issued without registration in reliance on the exemption afforded by Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering, or Rule 701 promulgated under the Securities Act, as a transaction pursuant to a compensatory benefit plan.

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits

 

Exhibit Number		Description of Exhibits
1.1**		Form of Underwriting Agreement
3.1**		Form of Amended and Restated Certificate of Incorporation of Bloomin’ Brands, Inc. (to be in effect prior to the completion of the offering made under this Registration Statement)
3.2**		Form of Amended and Restated Bylaws of Bloomin’ Brands, Inc. (to be in effect prior to the completion of the offering being made under this Registration Statement)
4.1**		Form of Common Stock Certificate
4.2*		Indenture dated as of June 14, 2007 among OSI Restaurant Partners, LLC, OSI Co-Issuer, Inc., the Guarantors listed on the signature pages thereto and Wells Fargo Bank, National Association, as Trustee
4.3*		Form of 10% Senior Notes due 2015 (contained in Exhibit 4.2)
4.4*		Agreement of Resignation, Appointment and Acceptance, dated as of February 5, 2009 by and among OSI Restaurant Partners, LLC, a Delaware limited liability company, OSI Co-Issuer, Inc., a Delaware corporation, HSBC Bank USA, National Association, a national banking association and Wells Fargo Bank, National Association, a national banking association
4.5*		Registration Rights Agreement dated June 14, 2007 among Kangaroo Holdings, Inc. (now known as Bloomin’ Brands, Inc.) and certain stockholders of Kangaroo Holdings, Inc.
5.1**		Opinion of Baker & Hostetler LLP
10.1		Kangaroo Holdings, Inc. 2007 Equity Incentive Plan, as amended
10.2**		Bloomin’ Brands, Inc. 2012 Incentive Award Plan
10.3*		Unrestricted Stock Rollover Agreement dated June 14, 2007 between Kangaroo Holdings, Inc. and Steven T. Shlemon or his affiliates
10.4*		Employee Rollover Agreement for conversion of OSI Restaurant Partners, Inc. restricted stock to Kangaroo Holdings, Inc. restricted stock entered into by the individuals listed on Schedule 1 thereto
10.5*		Founder Rollover Agreement dated June 14, 2007 between Kangaroo Holdings, Inc. and certain rollover investors of Kangaroo Holdings, Inc. listed on Schedule 1 thereto

 

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Exhibit Number		Description of Exhibits
10.6*		Royalty Agreement dated April 1995 among Carrabba’s Italian Grill, Inc., Outback Steakhouse, Inc., Mangia Beve, Inc., Carrabba, Inc., Carrabba Woodway, Inc., John C. Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr., as amended by First Amendment to Royalty Agreement dated January 1997 and Second Amendment to Royalty Agreement made and entered into effective April 7, 2010 by and among Carrabba’s Italian Grill, LLC, OSI Restaurant Partners, LLC, Mangia Beve, Inc., Mangia Beve II, Inc., Original, Inc., Voss, Inc., John C. Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr.
10.7*		Joint Venture Agreement of Roy’s/Outback dated June 17, 1999 between OS Pacific, Inc., a wholly-owned subsidiary of Outback Steakhouse, Inc., and Roy’s Holdings, Inc., as amended by First Amendment to Joint Venture Agreement dated October 31, 2000, effective for all purposes as of June 17, 1999, between RY-8, Inc., a Hawaii corporation, being a wholly owned subsidiary of Roy’s Holding’s, Inc., and OS Pacific, Inc., a Florida corporation, being a wholly owned subsidiary of Outback Steakhouse, Inc.
10.8*		Amended and Restated Operating Agreement for OSI/Fleming’s, LLC made as of June 4, 2010 by and among OS Prime, LLC, a wholly-owned subsidiary of OSI Restaurant Partners, LLC, FPSH Limited Partnership and AWA III Steakhouses, Inc.
10.9*		Credit Agreement dated as of June 14, 2007 among OSI Restaurant Partners, LLC, as Borrower, OSI HoldCo, Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as Administrative Agent, Pre-Funded RC Deposit Bank, Swing Line Lender and an L/C Issuer, Bank of America, N.A., as Syndication Agent, and General Electric Capital Corporation, SunTrust Bank, Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. “Rabobank International,” New York Branch, LaSalle Bank, N.A., Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents, as amended by First Amendment to Credit Agreement dated as of January 28, 2010 and entered into by and among OSI Restaurant Partners, LLC, the Borrower, OSI HoldCo, Inc., Deutsche Bank AG New York Branch, as Administrative Agent, the Lenders party thereto, and, for purposes of Section IV, the Guarantors listed on the signature pages
10.10		Loan and Security Agreement, dated March 27, 2012, between New Private Restaurant Properties, LLC, as borrower, and German American Capital Corporation and Bank of America, N.A., collectively as lender1
10.11*		Mezzanine Loan and Security Agreement (First Mezzanine), dated March 27, 2012, between New PRP Mezz 1, LLC, as borrower, and German American Capital Corporation and Bank of America, N.A., collectively as lender
10.12*		Mezzanine Loan and Security Agreement (Second Mezzanine), dated March 27, 2012, between New PRP Mezz 2, LLC, as borrower, and German American Capital Corporation and Bank of America, N.A., collectively, as lender
10.13*		Environmental Indemnity, dated March 27, 2012, by OSI HoldCo I, Inc. for the benefit of German American Capital Corporation and Bank of America, N.A.
10.14*		Environmental Indemnity, dated March 27, 2012, by OSI Restaurant Partners, LLC and Private Restaurant Master Lessee, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.15*		Environmental Indemnity, dated March 27, 2012, by PRP Holdings, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.16*		Environmental Indemnity (First Mezzanine), dated March 27, 2012, by OSI HoldCo I, Inc. for the benefit of German American Capital Corporation and Bank of America, N.A.
10.17*		Environmental Indemnity (First Mezzanine), dated March 27, 2012, by OSI Restaurant Partners, LLC and Private Restaurant Master Lessee, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.

 

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Exhibit Number		Description of Exhibits
10.18*		Environmental Indemnity (First Mezzanine), dated March 27, 2012, by PRP Holdings, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.19*		Environmental Indemnity (Second Mezzanine), dated March 27, 2012, by OSI HoldCo I, Inc. for the benefit of German American Capital Corporation and Bank of America, N.A.
10.20*		Environmental Indemnity (Second Mezzanine), dated March 27, 2012, by OSI Restaurant Partners, LLC and Private Restaurant Master Lessee, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.21*		Environmental Indemnity (Second Mezzanine), dated March 27, 2012, by PRP Holdings, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.22*		Guaranty of Recourse Obligations, dated March 27, 2012, by OSI HoldCo I, Inc. to and for the benefit of German American Capital Corporation and Bank of America, N.A.
10.23*		Guaranty of Recourse Obligations (First Mezzanine), dated March 27, 2012, by OSI HoldCo I, Inc. to and for the benefit of German American Capital Corporation and Bank of America, N.A.
10.24*		Guaranty of Recourse Obligations (Second Mezzanine), dated March 27, 2012, by OSI HoldCo I, Inc. to and for the benefit of German American Capital Corporation and Bank of America, N.A.
10.25*		Subordination, Non-Disturbance and Attornment Agreement (New Private Restaurant Properties, LLC), dated March 27, 2012, by and between Bank of America, N.A., German American Capital Corporation, Private Restaurant Master Lessee, LLC and New Private Restaurant Properties, LLC, with the acknowledgement, consent and limited agreement of OSI Restaurant Partners, LLC
10.26		Amended and Restated Master Lease Agreement, dated March 27, 2012, between New Private Restaurant Properties, LLC, as landlord, and Private Restaurant Master Lessee, LLC, as tenant1
10.27*		Amended and Restated Guaranty, dated March 27, 2012, by OSI Restaurant Partners, LLC to and for the benefit of New Private Restaurant Properties, LLC
10.28*		Amended and Restated Employment Agreement dated June 14, 2007, between Dirk A. Montgomery and OSI Restaurant Partners, LLC, as amended on January 1, 2009, December 30, 2010, January 1, 2012 and January 10, 2012
10.29*		Amended and Restated Employment Agreement dated June 14, 2007, between Joseph J. Kadow and OSI Restaurant Partners, LLC, as amended on January 1, 2009, June 12, 2009, December 30, 2010 and December 16, 2011
10.30*		Employment Agreement dated June 14, 2007, between Robert D. Basham and OSI Restaurant Partners, LLC, as amended on January 1, 2009
10.31*		Employment Agreement dated June 14, 2007, between Chris T. Sullivan and OSI Restaurant Partners, LLC, as amended on January 1, 2009
10.32*		Officer Employment Agreement dated January 23, 2008 and effective April 12, 2007 by and among Jeffrey S. Smith and Outback Steakhouse of Florida, LLC, as amended on January 1, 2009 and January 1, 2012
10.33*		Officer Employment Agreement amended November 1, 2006 and effective April 27, 2000, by and among Steven T. Shlemon and Carrabba’s Italian Grill, Inc., as amended on January 1, 2012
10.34*		Officer Employment Agreement made and entered into effective August 1, 2001, by and among John W. Cooper and Bonefish Grill, Inc., as amended on January 1, 2012
10.35*		Assignment and Amendment and Restatement of Officer Employment Agreement made and entered into March 26, 2009 and effective as of February 5, 2008, by and among Jody Bilney and Outback Steakhouse of Florida, LLC and OSI Restaurant Partners, LLC, as amended on January 1, 2012

 

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Exhibit Number		Description of Exhibits
10.36*		Employment Agreement, as amended and restated as of December 31, 2009, by and between Elizabeth A. Smith and OSI Restaurant Partners, LLC, as amended on January 1, 2011 and February 2, 2012
10.37*		Officer Employment Agreement made and entered into August 16, 2010 and effective for all purposes as of August 16, 2010 by and among David A. Pace and OSI Restaurant Partners, LLC
10.38*		Amended and Restated Officer Employment Agreement, effective September 12, 2011, by and among David Berg, OS Management, Inc. and Outback Steakhouse International, L.P., as amended on January 1, 2012
10.39**		Form of Bloomin’ Brands, Inc. Indemnification Agreement by and between Bloomin’ Brands, Inc. and each member of its board of directors
10.40*		Option Agreement, dated November 16, 2009, by and between Kangaroo Holdings, Inc. and Elizabeth A. Smith, as amended December 31, 2009
10.41*		Option Agreement, dated July 1, 2011, by and between Kangaroo Holdings, Inc. and Elizabeth A. Smith
10.42*		Form of Option Agreement for Options under the Kangaroo Holdings, Inc. 2007 Equity Incentive Plan
10.43**		Form of Option Agreement for Options under the Bloomin’ Brands, Inc. 2012 Incentive Award Plan
10.44*		Retention Bonus Agreement, dated November 2, 2009, between Kangaroo Holdings, Inc. and Elizabeth A. Smith
10.45*		Bonus Agreement, dated December 31, 2009, between Kangaroo Holdings, Inc. and Elizabeth A. Smith
10.46*		OSI Restaurant Partners, LLC HCE Deferred Compensation Plan effective October 1, 2007
10.47*		Split Dollar Agreement dated August 12, 2008, by and between OSI Restaurant Partners, LLC (formerly known as Outback Steakhouse, Inc.) and Dirk A. Montgomery, Trustee of the Dirk A. Montgomery Revocable Trust dated April 12, 2001
10.48*		Split Dollar Agreement dated August 12, 2008 and effective March 30, 2006, by and between OSI Restaurant Partners, LLC (formerly known as Outback Steakhouse, Inc.) and Joseph J. Kadow
10.49*		Split Dollar Agreement dated August 19, 2008 and effective August 2005, by and between OSI Restaurant Partners, LLC (formerly known as Outback Steakhouse, Inc.) and Richard Danker, Trustee of Robert D. Basham Irrevocable Trust Agreement of 1999 dated December 20, 1999
10.50*		Split Dollar Agreement dated December 18, 2008 and effective August 18, 2005, by and between OSI Restaurant Partners, LLC (formerly known as Outback Steakhouse, Inc.) and Shamrock PTC, LLC, Trustee of the Chris Sullivan 2008 Insurance Trust dated July 17, 2008 and William T. Sullivan, Trustee of the Chris Sullivan Non-exempt Irrevocable Trust dated January 5, 2000 and the Chris Sullivan Exempt Irrevocable Trust dated January 5, 2000
10.51		Lease, dated June 14, 2007, between OS Southern, LLC and Selmon’s/Florida-I, Limited Partnership (predecessor to MVP LRS, LLC)
10.52		Lease, dated June 14, 2007, between OS Southern, LLC and Selmon’s/Florida-I, Limited Partnership (predecessor to MVP LRS, LLC), as amended May 27, 2010
10.53		Officer Employment Agreement, made and entered into effective May 7, 2012, by and among David Deno and OSI Restaurant Partners, LLC

 

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Exhibit Number		Description of Exhibits
10.54		Management Agreement, dated June 14, 2007, by and among Kangaroo Management Company I, LLC, Kangaroo Holdings, Inc. and the subsidiaries of Kangaroo Holdings, Inc. set forth on the signature page thereto, as amended May 10, 2012
10.55		Amendment to Bonus Agreements, dated May 10, 2012, by and between Elizabeth A. Smith and Bloomin’ Brands, Inc.
21.1*		Subsidiaries of the Registrant
23.1		Consent of PricewaterhouseCoopers LLP
23.2		Consent of Ernst & Young Terco
23.3**		Consent of Baker & Hostetler LLP (included in the opinion to be filed as Exhibit 5.1 hereto)
24.1		Power of Attorney (included on signature page)

 

*	Previously filed

**	To be filed by amendment

1	Portions of Exhibits 10.10 and 10.26 have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission.

(b) Financial Statement Schedules

The following financial statement schedule is filed as part of this registration statement on page S-1 of the prospectus: Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 2011, 2010 and 2009. All other schedules are omitted because they are not applicable or the required information is included in the financial statements or notes thereto.

Item 17. Undertakings.

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tampa, State of Florida, on May 16, 2012.

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities held on the dates indicated.

 

Signature		Title		Date
/s/ Elizabeth A. Smith Elizabeth A. Smith		President, Chief Executive Officer and Director (Principal Executive Officer)		May 16, 2012
* Chris T. Sullivan		Director		May 16, 2012
* Robert D. Basham		Director		May 16, 2012
* Andrew B. Balson		Director		May 16, 2012
* J. Michael Chu		Director		May 16, 2012

 

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Signature		Title		Date
* Philip H. Loughlin		Director		May 16, 2012
* Mark E. Nunnelly		Director		May 16, 2012

 

*BY:		/s/ Joseph J. Kadow
		Joseph J. Kadow, Attorney-in-fact

POWER OF ATTORNEY

We, the undersigned officer and director of Bloomin’ Brands, Inc., hereby severally constitute and appoint Joseph J. Kadow, Dirk A. Montgomery and Amanda L. Shaw, and each of them singly (with full power to each of them to act alone), our true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution in each of them for him or her and in his or her name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and any other registration statement for the same offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as he or she might or could do, in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities held on the dates indicated.

 

Signature		Title		Date
/s/ David J. Deno David J. Deno		Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)		May 16, 2012
/s/ John J. Mahoney John J. Mahoney		Director		May 16, 2012

 

II-9

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Table of Contents

EXHIBIT INDEX

 

Exhibit Number		Description of Exhibits
1.1**		Form of Underwriting Agreement
3.1**		Form of Amended and Restated Certificate of Incorporation of Bloomin’ Brands, Inc. (to be in effect prior to the completion of the offering made under this Registration Statement)
3.2**		Form of Amended and Restated Bylaws of Bloomin’ Brands, Inc. (to be in effect prior to the completion of the offering being made under this Registration Statement)
4.1**		Form of Common Stock Certificate
4.2*		Indenture dated as of June 14, 2007 among OSI Restaurant Partners, LLC, OSI Co-Issuer, Inc., the Guarantors listed on the signature pages thereto and Wells Fargo Bank, National Association, as Trustee
4.3*		Form of 10% Senior Notes due 2015 (contained in Exhibit 4.2)
4.4*		Agreement of Resignation, Appointment and Acceptance, dated as of February 5, 2009 by and among OSI Restaurant Partners, LLC, a Delaware limited liability company, OSI Co-Issuer, Inc., a Delaware corporation, HSBC Bank USA, National Association, a national banking association and Wells Fargo Bank, National Association, a national banking association
4.5*		Registration Rights Agreement dated June 14, 2007 among Kangaroo Holdings, Inc. (now known as Bloomin’ Brands, Inc.) and certain stockholders of Kangaroo Holdings, Inc.
5.1**		Opinion of Baker & Hostetler LLP
10.1		Kangaroo Holdings, Inc. 2007 Equity Incentive Plan, as amended
10.2**		Bloomin’ Brands, Inc. 2012 Incentive Award Plan
10.3*		Unrestricted Stock Rollover Agreement dated June 14, 2007 between Kangaroo Holdings, Inc. and Steven T. Shlemon or his affiliates
10.4*		Employee Rollover Agreement for conversion of OSI Restaurant Partners, Inc. restricted stock to Kangaroo Holdings, Inc. restricted stock entered into by the individuals listed on Schedule 1 thereto
10.5*		Founder Rollover Agreement dated June 14, 2007 between Kangaroo Holdings, Inc. and certain rollover investors of Kangaroo Holdings, Inc. listed on Schedule I thereto
10.6*		Royalty Agreement dated April 1995 among Carrabba’s Italian Grill, Inc., Outback Steakhouse, Inc., Mangia Beve, Inc., Carrabba, Inc., Carrabba Woodway, Inc., John C. Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr., as amended by First Amendment to Royalty Agreement dated January 1997 and Second Amendment to Royalty Agreement made and entered into effective April 7, 2010 by and among Carrabba’s Italian Grill, LLC, OSI Restaurant Partners, LLC, Mangia Beve, Inc., Mangia Beve II, Inc., Original, Inc., Voss, Inc., John C. Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr.
10.7*		Joint Venture Agreement of Roy’s/Outback dated June 17, 1999 between OS Pacific, Inc., a wholly-owned subsidiary of Outback Steakhouse, Inc., and Roy’s Holdings, Inc., as amended by First Amendment to Joint Venture Agreement dated October 31, 2000, effective for all purposes as of June 17, 1999, between RY-8, Inc., a Hawaii corporation, being a wholly owned subsidiary of Roy’s Holding’s, Inc., and OS Pacific, Inc., a Florida corporation, being a wholly owned subsidiary of Outback Steakhouse, Inc.
10.8*		Amended and Restated Operating Agreement for OSI/Fleming’s, LLC made as of June 4, 2010 by and among OS Prime, LLC, a wholly-owned subsidiary of OSI Restaurant Partners, LLC, FPSH Limited Partnership and AWA III Steakhouses, Inc.

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Table of Contents

Exhibit Number		Description of Exhibits
10.9*		Credit Agreement dated as of June 14, 2007 among OSI Restaurant Partners, LLC, as Borrower, OSI HoldCo, Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as Administrative Agent, Pre-Funded RC Deposit Bank, Swing Line Lender and an L/C Issuer, Bank of America, N.A., as Syndication Agent, and General Electric Capital Corporation, SunTrust Bank, Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. “Rabobank International,” New York Branch, LaSalle Bank, N.A., Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents, as amended by First Amendment to Credit Agreement dated as of January 28, 2010 and entered into by and among OSI Restaurant Partners, LLC, the Borrower, OSI HoldCo, Inc., Deutsche Bank AG New York Branch, as Administrative Agent, the Lenders party thereto, and, for purposes of Section IV, the Guarantors listed on the signature pages
10.10		Loan and Security Agreement, dated March 27, 2012, between New Private Restaurant Properties, LLC, as borrower, and German American Capital Corporation and Bank of America, N.A., collectively as lender1
10.11*		Mezzanine Loan and Security Agreement (First Mezzanine), dated March 27, 2012, between New PRP Mezz 1, LLC, as borrower, and German American Capital Corporation and Bank of America, N.A., collectively as lender
10.12*		Mezzanine Loan and Security Agreement (Second Mezzanine), dated March 27, 2012, between New PRP Mezz 2, LLC, as borrower, and German American Capital Corporation and Bank of America, N.A., collectively, as lender
10.13*		Environmental Indemnity, dated March 27, 2012, by OSI HoldCo I, Inc. for the benefit of German American Capital Corporation and Bank of America, N.A.
10.14*		Environmental Indemnity, dated March 27, 2012, by OSI Restaurant Partners, LLC and Private Restaurant Master Lessee, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.15*		Environmental Indemnity, dated March 27, 2012, by PRP Holdings, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.16*		Environmental Indemnity (First Mezzanine), dated March 27, 2012, by OSI HoldCo I, Inc. for the benefit of German American Capital Corporation and Bank of America, N.A.
10.17*		Environmental Indemnity (First Mezzanine), dated March 27, 2012, by OSI Restaurant Partners, LLC and Private Restaurant Master Lessee, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.18*		Environmental Indemnity (First Mezzanine), dated March 27, 2012, by PRP Holdings, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.19*		Environmental Indemnity (Second Mezzanine), dated March 27, 2012, by OSI HoldCo I, Inc. for the benefit of German American Capital Corporation and Bank of America, N.A.
10.20*		Environmental Indemnity (Second Mezzanine), dated March 27, 2012, by OSI Restaurant Partners, LLC and Private Restaurant Master Lessee, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.21*		Environmental Indemnity (Second Mezzanine), dated March 27, 2012, by PRP Holdings, LLC for the benefit of German American Capital Corporation and Bank of America, N.A.
10.22*		Guaranty of Recourse Obligations, dated March 27, 2012, by OSI HoldCo I, Inc. to and for the benefit of German American Capital Corporation and Bank of America, N.A.
10.23*		Guaranty of Recourse Obligations (First Mezzanine), dated March 27, 2012, by OSI HoldCo I, Inc. to and for the benefit of German American Capital Corporation and Bank of America, N.A.

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Table of Contents

Exhibit Number		Description of Exhibits
10.24*		Guaranty of Recourse Obligations (Second Mezzanine), dated March 27, 2012, by OSI HoldCo I, Inc. to and for the benefit of German American Capital Corporation and Bank of America, N.A.
10.25*		Subordination, Non-Disturbance and Attornment Agreement (New Private Restaurant Properties, LLC), dated March 27, 2012, by and between Bank of America, N.A., German American Capital Corporation, Private Restaurant Master Lessee, LLC and New Private Restaurant Properties, LLC, with the acknowledgement, consent and limited agreement of OSI Restaurant Partners, LLC
10.26		Amended and Restated Master Lease Agreement, dated March 27, 2012, between New Private Restaurant Properties, LLC, as landlord, and Private Restaurant Master Lessee, LLC, as tenant1
10.27*		Amended and Restated Guaranty, dated March 27, 2012, by OSI Restaurant Partners, LLC to and for the benefit of New Private Restaurant Properties, LLC
10.28*		Amended and Restated Employment Agreement dated June 14, 2007, between Dirk A. Montgomery and OSI Restaurant Partners, LLC, as amended on January 1, 2009, December 30, 2010, January 1, 2012 and January 10, 2012
10.29*		Amended and Restated Employment Agreement dated June 14, 2007, between Joseph J. Kadow and OSI Restaurant Partners, LLC, as amended on January 1, 2009, June 12, 2009, December 30, 2010 and December 16, 2011
10.30*		Employment Agreement dated June 14, 2007, between Robert D. Basham and OSI Restaurant Partners, LLC, as amended on January 1, 2009
10.31*		Employment Agreement dated June 14, 2007, between Chris T. Sullivan and OSI Restaurant Partners, LLC, as amended on January 1, 2009
10.32*		Officer Employment Agreement dated January 23, 2008 and effective April 12, 2007 by and among Jeffrey S. Smith and Outback Steakhouse of Florida, LLC, as amended on January 1, 2009 and January 1, 2012
10.33*		Officer Employment Agreement amended November 1, 2006 and effective April 27, 2000, by and among Steven T. Shlemon and Carrabba’s Italian Grill, Inc., as amended on January 1, 2012
10.34*		Officer Employment Agreement made and entered into effective August 1, 2001, by and among John W. Cooper and Bonefish Grill, Inc., as amended on January 1, 2012
10.35*		Assignment and Amendment and Restatement of Officer Employment Agreement made and entered into March 26, 2009 and effective as of February 5, 2008, by and among Jody Bilney and Outback Steakhouse of Florida, LLC and OSI Restaurant Partners, LLC, as amended on January 1, 2012
10.36*		Employment Agreement, as amended and restated as of December 31, 2009, by and between Elizabeth A. Smith and OSI Restaurant Partners, LLC, as amended on January 1, 2011 and February 2, 2012
10.37*		Officer Employment Agreement made and entered into August 16, 2010 and effective for all purposes as of August 16, 2010 by and among David A. Pace and OSI Restaurant Partners, LLC
10.38*		Amended and Restated Officer Employment Agreement, effective September 12, 2011, by and among David Berg, OS Management, Inc. and Outback Steakhouse International, L.P., as amended on January 1, 2012
10.39**		Form of Bloomin’ Brands, Inc. Indemnification Agreement by and between Bloomin’ Brands, Inc. and each member of its board of directors
10.40*		Option Agreement, dated November 16, 2009, by and between Kangaroo Holdings, Inc. and Elizabeth A. Smith, as amended December 31, 2009
10.41*		Option Agreement, dated July 1, 2011, by and between Kangaroo Holdings, Inc. and Elizabeth A. Smith

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Table of Contents

Exhibit Number		Description of Exhibits
10.42*		Form of Option Agreement for Options under the Kangaroo Holdings, Inc. 2007 Equity Incentive Plan
10.43**		Form of Option Agreement for Options under the Bloomin’ Brands, Inc. 2012 Incentive Award Plan
10.44*		Retention Bonus Agreement, dated November 2, 2009, between Kangaroo Holdings, Inc. and Elizabeth A. Smith
10.45*		Bonus Agreement, dated December 31, 2009, between Kangaroo Holdings, Inc. and Elizabeth A. Smith
10.46*		OSI Restaurant Partners, LLC HCE Deferred Compensation Plan effective October 1, 2007
10.47*		Split Dollar Agreement dated August 12, 2008, by and between OSI Restaurant Partners, LLC (formerly known as Outback Steakhouse, Inc.) and Dirk A. Montgomery, Trustee of the Dirk A. Montgomery Revocable Trust dated April 12, 2001
10.48*		Split Dollar Agreement dated August 12, 2008 and effective March 30, 2006, by and between OSI Restaurant Partners, LLC (formerly known as Outback Steakhouse, Inc.) and Joseph J. Kadow
10.49*		Split Dollar Agreement dated August 19, 2008 and effective August 2005, by and between OSI Restaurant Partners, LLC (formerly known as Outback Steakhouse, Inc.) and Richard Danker, Trustee of Robert D. Basham Irrevocable Trust Agreement of 1999 dated December 20, 1999
10.50*		Split Dollar Agreement dated December 18, 2008 and effective August 18, 2005, by and between OSI Restaurant Partners, LLC (formerly known as Outback Steakhouse, Inc.) and Shamrock PTC, LLC, Trustee of the Chris Sullivan 2008 Insurance Trust dated July 17, 2008 and William T. Sullivan, Trustee of the Chris Sullivan Non-exempt Irrevocable Trust dated January 5, 2000 and the Chris Sullivan Exempt Irrevocable Trust dated January 5, 2000
10.51		Lease, dated June 14, 2007, between OS Southern, LLC and Selmon’s/Florida-I, Limited Partnership (predecessor to MVP LRS, LLC)
10.52		Lease, dated June 14, 2007, between OS Southern, LLC and Selmon’s/Florida-I, Limited Partnership (predecessor to MVP LRS, LLC), as amended May 27, 2010
10.53		Officer Employment Agreement, made and entered into effective May 7, 2012, by and among David Deno and OSI Restaurant Partners, LLC
10.54		Management Agreement, dated June 14, 2007, by and among Kangaroo Management Company I, LLC, Kangaroo Holdings, Inc. and the subsidiaries of Kangaroo Holdings, Inc. set forth on the signature page thereto, as amended May 10, 2012
10.55		Amendment to Bonus Agreements, dated May 10, 2012, by and between Elizabeth A. Smith and Bloomin’ Brands, Inc.
21.1*		Subsidiaries of the Registrant
23.1		Consent of PricewaterhouseCoopers LLP
23.2		Consent of Ernst & Young Terco
23.3**		Consent of Baker & Hostetler LLP (included in the opinion to be filed as Exhibit 5.1 hereto)
24.1		Power of Attorney (included on signature page)

 

*	Previously filed

**	To be filed by amendment

1	Portions of Exhibits 10.10 and 10.26 have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission.

Exhibit 10.1

KANGAROO HOLDINGS INC.

2007 EQUITY INCENTIVE PLAN

1. DEFINED TERMS

Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.

2. PURPOSE

The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Stock-based Awards.

3. ADMINISTRATION

The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures; and otherwise do all things necessary to carry out the purposes of the Plan. Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.

4. LIMITS ON AWARDS UNDER THE PLAN

(a) Number of Shares. A maximum of 4,000,000 shares of Stock may be delivered in satisfaction of Awards under the Plan. The number of shares of Stock delivered in satisfaction of Awards shall, for purposes of the preceding sentence, be determined net of shares of Stock withheld by the Company in payment of the exercise price of the Award or in satisfaction of tax withholding requirements with respect to the Award. To the extent that any Award granted under the Plan terminates, expires or is canceled without having been exercised, the Stock covered by such Award shall again be available for Awards under the Plan. The limit set forth in this Section 4(a) shall be construed to comply with Section 422. To the extent consistent with the requirements of Section 422, Stock issued under awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition shall not reduce the number of shares available for Awards under the Plan.

(b) Type of Shares. Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company.

5. ELIGIBILITY AND PARTICIPATION

The Administrator will select Participants from among those key Employees and directors of, and consultants and advisors to, the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its Affiliates. Eligibility for ISOs is limited to employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Section 424 of the Code.

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6. RULES APPLICABLE TO AWARDS

(a) All Awards

(1) Award Provisions. The Administrator will determine the terms of all Awards, subject to the limitations provided herein. By accepting an Award, the Participant agrees to the terms of the Award and the Plan. Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.

(2) Term of Plan. No Awards may be made after June 30, 2017, but previously granted Awards may continue beyond that date in accordance with their terms.

(3) Transferability. Awards may not be transferred other than by will or by the laws of descent and distribution, and, during a Participant’s lifetime, Awards requiring exercise may be exercised only by the Participant.

(4) Vesting, Etc. The Administrator may determine the time or times at which an Award will vest or become exercisable, and the terms on which an Award requiring exercise will remain exercisable. Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration. Unless the Administrator expressly provides otherwise, however, the following rules will apply: immediately upon the cessation of the Participant’s Employment, each Award requiring exercise that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate, and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited, except that:

(A) subject to (B) and (C) below, all Stock Options held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then vested and exercisable, and any Stock Options that become vested and exercisable as a result of the cessation of the Participant’s Employment, will remain exercisable for the lesser of (i) a period of 90 days, or (ii) the period ending on the latest date on which such Stock Option could have been exercised without regard to this Section 6(a)(4), and will thereupon terminate;

(B) all Stock Options held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the Participant’s death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) the one year period ending with the first anniversary of the Participant’s death or Disability, or (ii) the period ending on the latest date on which such Stock Option could have been exercised without regard to this Section 6(a)(4), and will thereupon terminate; and

(C) all Stock Options held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation if the Administrator determines that such cessation of Employment is the result of Cause.

 

 

Kangaroo Equity Incentive Plan		-2-

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(5) Taxes. The Administrator will make such provision for the withholding of taxes as it deems necessary. The Administrator may, but need not unless otherwise specified in an Award, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law).

(6) Dividend Equivalents, Etc. Except as otherwise provided in an Award, the Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award. Any entitlement to dividend equivalents or similar entitlements shall be established and administered consistent either with exemption from, or compliance with, the requirements of Section 409A.

(7) Rights Limited. Nothing in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.

(8) Coordination with Other Plans. Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its Affiliates. For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its Affiliates may be settled in Stock (including, without limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares delivered shall be treated as awarded under the Plan (but shall not reduce the number of shares available under the Plan as set forth in Section 4 above).

(9) Section 409A. Each Award shall contain such terms as the Administrator determines, and shall be construed and administered, such that the Award either (i) qualifies for an exemption from the requirements of Section 409A to the extent applicable, or (ii) satisfies such requirements.

(10) Certain Requirements of Corporate Law. Awards shall be granted and administered consistent with the requirements of applicable Delaware law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case as determined by the Administrator.

(11) Other Restrictions. For the avoidance of doubt, Awards and Stock issued upon exercise of Awards may be subject to restrictions under other agreements to which Participants are, or may become, party.

 

 

Kangaroo Equity Incentive Plan		-3-

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(b) Awards Requiring Exercise

(1) Time And Manner Of Exercise. Unless the Administrator expressly provides otherwise in an Award, an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator) signed by the appropriate person and accompanied by any payment (in cash or Stock, as applicable) required under the Award, if any. If the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.

(2) Exercise Price. The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise shall be 100% (in the case of an ISO granted to a ten-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the Fair Market Value of the Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant.

(3) Payment Of Exercise Price. Where the exercise of an Award is to be accompanied by payment, payment of the exercise price shall be by cash or check reasonably acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of shares of Stock that have been outstanding for at least six months (unless the Administrator approves a shorter period) and that have a Fair Market Value equal to the exercise price, (ii) at such time, if any, as the Stock is publicly traded, through a broker-assisted exercise program reasonably acceptable to the Administrator, (iii) by other means reasonably acceptable to the Administrator or (iv) by any combination of the foregoing permissible forms of payment. The delivery of shares of Stock in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may reasonably prescribe.

(4) Maximum Term. Awards requiring exercise will have a maximum term not to exceed ten years from the date of grant.

7. EFFECT OF CERTAIN TRANSACTIONS

(a) Mergers, Etc. Except as otherwise provided in an Award:

(1) Assumption or Substitution. Subject to any required action by the stockholders of the Company, in the event that the Company shall be the surviving corporation in any merger or consolidation (except a merger or consolidation as a result of which the holders of shares of Stock receive securities of another corporation), the Awards outstanding on the date of such merger or consolidation shall pertain to and apply to the securities that a holder of the number of shares of Stock subject to any such Award would have received in such merger or consolidation (it being understood that if, in connection with such transaction, the holders of Stock of the Company retain their shares of Stock and are not entitled to any additional or other consideration, the Awards shall not be affected by such transaction).

 

 

Kangaroo Equity Incentive Plan		-4-

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(2) Cash-Out of Awards. In the event of (i) a dissolution or liquidation of the Company or any of its Affiliates, (ii) a sale, directly or indirectly, of all or substantially all of the Company’s assets, (iii) a merger or consolidation involving the Company or any of its Affiliates in which the Company or any of its Affiliates is not the surviving corporation or (iv) a merger or consolidation involving the Company or any of its Affiliates in which the Company or any of its Affiliates is the surviving corporation but the holders of shares of Stock receive securities of another corporation and/or other property, including cash, the Administrator shall, in its sole discretion (a) have the power to provide for the exchange of each Award outstanding immediately prior to such event (whether or not then exercisable) for an award on some or all of the property for which the stock underlying such Awards are exchanged, and, incident thereto, make an equitable adjustment, as reasonably determined by the Administrator, in the exercise price of Awards, or the number or kind of securities or amount of property subject to the Awards and/or, (b) if appropriate, cancel, effective immediately prior to such event, any outstanding Award (whether or not exercisable or vested) and in full consideration of such cancellation pay to the Participant an amount in cash, with respect to each underlying share of Stock, equal to the excess of (1) the value, as determined by the Administrator in its good faith discretion, of securities and/or property (including cash) received by such holders of shares of Stock as a result of such event over (2) the exercise price, as the Administrator may in good faith consider appropriate to prevent dilution or enlargement of rights; provided, that the Administrator shall not exercise discretion under this Section 7(a)(2) with respect to an Award or portion thereof providing for “nonqualified deferred compensation” subject to Section 409A in a manner that would constitute an extension or acceleration of, or other change in, payment terms if such change would be inconsistent with the applicable requirements of Section 409A.

(3) Additional Limitations. Any share of Stock and any cash or other property delivered pursuant to Section 7(a)(2) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject as of such transaction and that did not lapse (and were not satisfied) in connection with such transaction. In the case of Restricted Stock that does not vest in connection with such transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with such transaction be placed in escrow, or otherwise be made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.

(b) Changes in and Distributions With Respect to Stock

(1) Basic Adjustment Provisions. Subject to any required action by the stockholders of the Company, in the event of any increase or decrease in the number or change in the kind of issued shares of stock or securities that results from a subdivision or consolidation of shares of Stock, the payment of a stock dividend or from a recapitalization, or any other increase, decrease or other change in the number of such shares effected without receipt of consideration by the Company, the Administrator shall make such adjustments with respect to the number of shares of Stock or other securities specified in Section 4(a) above, the number and kind of shares of Stock or other securities subject to the Awards and/or the exercise price per share of Stock or other security, as the Administrator may consider appropriate to prevent the enlargement or dilution of rights.

 

 

Kangaroo Equity Incentive Plan		-5-

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(2) Certain Other Adjustments. The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1) above, or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder, having due regard for the qualification of ISOs under Section 422 and the requirements of Section 409A, where applicable.

(3) Continuing Application of Plan Terms. References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7.

8. LEGAL CONDITIONS ON DELIVERY OF STOCK

The Company will not be obligated to deliver any shares of Stock pursuant to the Plan, or to remove any restriction from shares of Stock previously delivered under the Plan, until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved, (ii) if a Public Market for the Stock exists, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance and (iii) all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.

9. AMENDMENT AND TERMINATION

The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, that, except as otherwise expressly provided in the Plan, the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Plan or an Award, unless the Administrator expressly reserved the right to do so at the time of the Award. Any amendments to the Plan shall be conditioned upon stockholder approval only to the extent, if any, such approval is required by law (including the Code), as determined by the Administrator.

10. OTHER COMPENSATION ARRANGEMENTS

The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to Award a person bonuses or other compensation in addition to Awards under the Plan.

 

 

Kangaroo Equity Incentive Plan		-6-

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11. MISCELLANEOUS

(a) WAIVER OF JURY TRIAL. BY ACCEPTING AN AWARD UNDER THE PLAN, EACH PARTICIPANT WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THE PLAN AND ANY AWARD, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. BY ACCEPTING AN AWARD UNDER THE PLAN, EACH PARTICIPANT CERTIFIES THAT NO OFFICER, REPRESENTATIVE OR ATTORNEY OF THE COMPANY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE COMPANY WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS.

(b) Limitation of Liability. Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate, nor the Administrator, nor any person acting on behalf of the Company, any Affiliate, or the Administrator, shall be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax, asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code; provided, that (i) nothing in this Section 11(b) shall limit the ability of the Administrator or the Company to provide by separate express written agreement with a Participant for a gross-up payment or other payment in connection with any such tax or additional tax, and (ii) nothing in this Section 11(b) shall limit the liability of the Company to any Participant or to the estate or beneficiary of such Participant by reason of the failure of an Award to satisfy the requirements of Section 409A to the extent such failure results from the Administrator’s gross negligence in connection with the administration of the Plan.

 

 

Kangaroo Equity Incentive Plan		-7-

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EXHIBIT A

Definition of Terms

The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:

“Administrator”: The Board, except that the Board may delegate its authority under the Plan to a committee of the Board, in which case references herein to the Board shall refer to such committee. The Board may delegate (i) to one or more of its members such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant rights or options to the extent permitted by Section 157(c) of the Delaware General Corporation Law; and (iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, the term “Administrator” shall include the person or persons so delegated to the extent of such delegation.

“Affiliate”: Any corporation or other entity that stands in a relationship to the Company that would result in the Company and such corporation or other entity being treated as one employer under Section 414(b) and Section 414(c) of the Code, except that in determining eligibility for the grant of a Stock Option by reason of service for an Affiliate, Sections 414(b) and 414(c) of the Code shall be applied by substituting “at least 50%” for “at least 80%” under Section 1563(a)(1), (2) and (3) of the Code and Treas. Regs. § 1.414(c)-2; provided, that to the extent permitted under Section 409A, “at least 20%” shall be used in lieu of “at least 50%”; and further provided, that the lower ownership threshold described in this definition (50% or 20% as the case may be) shall apply only if the same definition of affiliation is used consistently with respect to all compensatory stock options or stock awards (whether under the Plan or another plan).

“Award”: Any or a combination of the following:

(i) Stock Options.

(ii) Restricted Stock

“Board”: The Board of Directors of the Company.

“Cause”: The termination of the Participant’s Employment on account of “Cause” has the meaning ascribed to it in the Participant’s Award, or, if there is no definition of “Cause” in the Participant’s Award, in the Participant’s employment agreement with the Company or its Affiliates, or, if the Participant does not have an employment agreement or there is no definition of “Cause” in the Participant’s employment agreement, (i) the willful failure by the Participant to substantially perform his duties with the Company or any Affiliate (other than any such failure resulting from incapacity due to physical or mental illness); (ii) the Participant’s negligence, willful misconduct or illegal conduct in the performance of his duties for the Company or any

 

 

Kangaroo Equity Incentive Plan		-8-

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Affiliate which has resulted in, or is reasonably expected to result in, injury to the Company or any Affiliate; (iii) the Participant’s conviction of, or entering a plea of guilty or nolo contendere to, a misdemeanor involving theft or embezzlement, or a felony; or (iv) the breach by the Participant of any obligations under any written agreement or covenant with the Company or any of its Affiliates, or of any fiduciary duty or any material act of disloyalty, in any case, which has resulted in or is reasonably expected to result in injury to the Company or any Affiliates.

“Change in Control”: shall have the meaning set forth in the Company’s Stockholders Agreement dated as of June 14, 2007.

“Code”: The U.S. Internal Revenue Code of 1986, as from time to time amended and in effect, or any successor statute, as from time to time in effect.

“Company”: Kangaroo Holdings, Inc.

“Disability”: a permanent disability as defined in the Company’s or an Affiliate’s disability plans, or as defined from time to time by the Company, in its discretion, or as specified in the Participant’s Award; provided, that in the event the Participant is party to an effective employment agreement or other written agreement with respect to the termination of a Participant’s Employment, and such agreement contains or operates under a different definition of Disability (or any derivative of such term), the definition of Disability used in such agreement shall be substituted for the definition set forth above for all purposes hereunder.

“Employee”: Any person who is employed by the Company or an Affiliate.

“Employment”: A Participant’s employment or other service relationship (including, for the avoidance of doubt, service as a director) with the Company or any of its Affiliates. Employment will be deemed to continue so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 hereto to, the Company or its Affiliates. If a Participant’s employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant’s Employment will be deemed to have terminated when the entity ceases to be an Affiliate, unless the Participant transfers Employment to the Company or any of its remaining Affiliates.

“Exchange Act”: The Securities Exchange Act of 1934, as amended.

“Fair Market Value”: As of any date (i) prior to the existence of a Public Market for the Stock, the value per share of Stock as reasonably determined in good faith by the Board, taking into account the fair market value of the entire equity of the Company determined on a going concern basis as between a willing buyer and a willing seller, and taking into account any relevant factors determinative of value, without, however, giving effect to any discount for any lack of liquidity attributable to a lack of a Public Market, any block discount or discount attributable to the size of any person’s holdings of Stock, any minority interest or any voting rights or lack thereof; or (ii) on which a Public Market for the Stock exists, (a) closing price on such day of a share of Stock as reported on the principal securities exchange on which shares of

 

 

Kangaroo Equity Incentive Plan		-9-

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Stock are then listed or admitted to trading, or (b) if not so reported, the average of the closing bid and ask prices on such day as reported on the National Association of Securities Dealers Automated Quotation System, or (c) if not so reported, as furnished by any member of the National Association of Securities Dealers, Inc. (“NASD”) selected by the Administrator. The Fair Market Value of a share of Stock as of any such date on which the applicable exchange or inter-dealer quotation system through which trading in the Stock regularly occurs is closed shall be the Fair Market Value determined pursuant to the preceding sentence as of the immediately preceding date on which the Stock is traded, a bid and ask price is reported or a trading price is reported by any member of NASD selected by the Administrator. In the event that the price of a share of Stock shall not be so reported or furnished, the Fair Market Value shall be determined by the Administrator in good faith to reflect the fair market value of a share of Stock.

“Good Reason”: means any of the following: (i) a reduction by the Company in the Employee’s base salary or benefits as in effect immediately prior to a Change in Control, unless a similar reduction is made in salary and benefits of all employees, or (ii) the Company requires the Employee to be based at or generally work from any location more than 50 miles from the location at which the Employee was based or generally worked immediately prior to a Change in Control. Notwithstanding the foregoing, if, as of the date of determination, the Participant is a party to an effective employment agreement or other written agreement with respect to the termination of a Participant’s Employment or an Award that contains or operates under a different definition of the term “Good Reason” (or any derivation of such term), the definition used by (i) first, such employment agreement or (ii) second, absent an employment agreement, such other written agreement, shall be substituted for the definition set forth above for all purposes hereunder.

“ISO”: A Stock Option intended to be an “incentive stock option” within the meaning of Section 422. Each option granted pursuant to the Plan will be treated as providing by its terms that it is to be a non-incentive stock option unless, as of the date of grant, it is expressly designated as an ISO.

“Participant”: A person who is granted an Award under the Plan.

“Plan”: The Kangaroo Holdings, Inc. 2007 Equity Incentive Plan, as from time to time amended and in effect.

“Public Market”: A Public Market shall be deemed to exist for purposes of the Plan if the Stock is registered under Section 12(b) or 12(g) of the Exchange Act and trading regularly occurs in such Stock in, on or through the facilities of securities exchanges and/or inter-dealer quotation systems in the United States (within the meaning of Section 902(n) of the Securities Act) or any designated offshore securities market (within the meaning of Rule 902(a) of the Securities Act).

“Restricted Stock”: Stock subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.

 

 

Kangaroo Equity Incentive Plan		-10-

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“Section 409A”: Section 409A of the Code.

“Section 422”: Section 422 of the Code.

“Securities Act”: The Securities Act of 1933, as amended.

“Stock”: Common Stock of the Company, par value $ 0.01 per share.

“Stock Option”: An option entitling the holder to acquire shares of Stock upon payment of the exercise price.

“Unrestricted Stock”: Stock not subject to any restrictions under the terms of the Award.

 

 

Kangaroo Equity Incentive Plan		-11-

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FIRST AMENDMENT TO THE KANGAROO HOLDINGS, INC.

2007 EQUITY INCENTIVE PLAN

The Kangaroo Holdings, Inc. 2007 Equity Incentive Plan is hereby amended as follows:

Clause (b) of the definition of Change of Control is hereby amended in its entirety to read as follows:

“(b) any change in the ownership of the Stock if, immediately after giving effect thereto, the Investors and their Affiliates (each as defined in the Company’s Stockholders Agreement dated as of June 14, 2007) shall own less than 25% of the Equivalent Shares (as defined in the Company’s Stockholders Agreement dated as of June 14, 2007); provided, however, that this clause (b) shall not apply to any change in the ownership of the Stock that occurs while there is a Public Market (as defined in this Plan) for the Stock.”

This amendment to the definition of Change of Control shall not apply to the existing Stock Option Award Agreements issued to Elizabeth Smith and Joseph Kadow.

Approved and adopted by the Kangaroo Holdings, Inc. Board of Directors on December 2, 2010.

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Bloomin’ Brands, Inc.

SECRETARY’S CERTIFICATE

The undersigned, being the duly elected and authorized Secretary of Bloomin’ Brands, Inc., a Delaware corporation formerly known as Kangaroo Holdings, Inc. (the “Company”), hereby certifies that the following resolution amending the Company’s 2007 Equity Incentive Plan (the “Equity Plan”) was duly adopted by the Board of Directors of the Company on October 26, 2007:

RESOLVED: The Equity Plan is hereby amended by deleting the first sentence of Section 4(a) of the Equity Plan and substituting in its place the following: “A maximum of 6,272,320 shares of Stock may be delivered in satisfaction of Awards under the Plan.”

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of April 5, 2012.

/s/ Joseph J. Kadow                                                     

Joseph J. Kadow

Secretary

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Bloomin’ Brands, Inc.

SECRETARY’S CERTIFICATE

The undersigned, being the duly elected and authorized Secretary of Bloomin’ Brands, Inc., a Delaware corporation formerly known as Kangaroo Holdings, Inc. (the “Company”), hereby certifies that the following resolution amending the Company’s 2007 Equity Incentive Plan (the “Equity Plan”) was duly adopted by the Board of Directors of the Company on July 29, 2011:

RESOLVED: That the Equity Plan is hereby amended by deleting the first sentence of Section 4(a) of the Equity Plan and substituting in its place the following: “A maximum of 11,700,000 shares of Stock may be delivered in satisfaction of Awards under the Plan.”

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of April 5, 2012.

/s/ Joseph J. Kadow                                                     

Joseph J. Kadow

Secretary

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Bloomin’ Brands, Inc.

SECRETARY’S CERTIFICATE

The undersigned, being the duly elected and authorized Secretary of Bloomin’ Brands, Inc., a Delaware corporation formerly known as Kangaroo Holdings, Inc. (the “Company”), hereby certifies that the following resolution amending the Company’s 2007 Equity Incentive Plan (the “Plan”) was duly adopted by the Board of Directors of the Company on December 9, 2011:

RESOLVED, that the number of shares of KHI common stock that may be delivered in satisfaction of awards under the Plan is hereby increased from 11,700,000 to 12,350,000 shares.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of April 5, 2012.

/s/ Joseph J. Kadow                                                     

Joseph J. Kadow

Secretary

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Bloomin’ Brands, Inc.

SECRETARY’S CERTIFICATE

The undersigned, being the duly elected and authorized Secretary of Bloomin’ Brands, Inc., a Delaware corporation formerly known as Kangaroo Holdings, Inc. (the “Company”), hereby certifies that the following resolution amending the Company’s 2007 Equity Incentive Plan (the “2007 Plan”) was duly adopted by the Board of Directors of the Company on May 10, 2012:

RESOLVED, that the additional 850,000 shares of Common Stock* authorized for issuance under the 2007 Plan be and hereby are reserved for issuance under the 2007 Plan and, when such shares are issued in accordance with the 2007 Plan, and the terms of any awards granted thereunder, such shares will be fully paid, validly issued and nonassessable;

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of May 10, 2012.

 

 

*	Defined as shares of Common Stock of Bloomin’ Brands, Inc.

Exhibit 10.10

LOAN AND SECURITY AGREEMENT

Dated as of March 27, 2012

Between

NEW PRIVATE RESTAURANT PROPERTIES, LLC

as Borrower

and

GERMAN AMERICAN CAPITAL CORPORATION

and

BANK OF AMERICA, N.A.

collectively, as Lender

Loan and Security Agreement

 

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

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TABLE OF CONTENTS

 

		Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION			1
1.1 Definitions			1
1.2 Principles of Construction			52
II. GENERAL TERMS			53
2.1 Loan; Components; Disbursement to Borrower			53
2.1.1 The Loan			53
2.1.2 Components of the Loan			53
2.1.3 Disbursement to Borrower			53
2.1.4 The Note, Security Instrument and Loan Documents			53
2.1.5 Use of Proceeds			53
2.2 Interest; Loan Payments; Late Payment Charge			53
2.2.1 Payment and Accrual of Interest			53
2.2.2 Payment of Monthly Payment Amount; Application of Principal; Method and Place of Payment			54
2.2.3 Late Payment Charge			56
2.2.4 Usury Savings			56
2.3 Prepayments			57
2.3.1 Voluntary Prepayments			57
2.3.2 Mandatory Prepayments			57
2.3.3 Prepayments After Event of Default; Application of Amounts Paid			58
2.3.4 Application of Prepayments			58
2.3.5 Release of All Property			58
2.3.6 Release of Individual Properties and Outparcels			59
2.3.7 Provisions Relating to Individual Properties That Go Dark			64
2.3.8 Excess Account Collateral			64
2.3.9 Reserve Requirements			64
2.4 Defeasance			65
2.4.1 Conditions to Total Defeasance Event			65
2.4.2 Conditions to Partial Defeasance			66
2.4.3 Defeasance Collateral Account			68
2.4.4 Successor Borrower			68
2.5 Regulatory Change; Taxes			69
2.5.1 Increased Costs			69
2.5.2 Special Taxes			70
2.5.3 Other Taxes			70
2.5.4 Indemnity			70
2.5.5 Change of Office			70
2.5.6 Survival			71
III. CASH MANAGEMENT			71
3.1 Cash Management			71

 

Loan and Security Agreement

 

i

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3.1.1 Establishment of Accounts			71
3.1.2 Pledge of Account Collateral			72
3.1.3 Maintenance of Collateral Accounts			72
3.1.4 Eligible Accounts			73
3.1.5 Deposits into Sub-Accounts			73
3.1.6 Monthly Funding of Sub-Accounts; Master Lease Rent Shortfalls; Sub-Account Shortfalls			73
3.1.7 Required Payments from Sub-Accounts			77
3.1.8 Cash Management Bank			77
3.1.9 Borrower’s Representations, Warranties and Covenants Regarding Holding Account			77
3.1.10 Account Collateral and Remedies			78
3.1.11 Transfers and Other Liens			79
3.1.12 Reasonable Care			79
3.1.13 Lender’s Liability			79
3.1.14 Continuing Security Interest			80
3.1.15 Distributions			80
IV. REPRESENTATIONS AND WARRANTIES			80
4.1 Borrower Representations			80
4.1.1 Organization			80
4.1.2 Proceedings			81
4.1.3 No Conflicts			81
4.1.4 Litigation			82
4.1.5 Agreements			82
4.1.6 Title			82
4.1.7 No Bankruptcy Filing			83
4.1.8 Full and Accurate Disclosure			83
4.1.9 All Property			84
4.1.10 No Plan Assets			84
4.1.11 Compliance			84
4.1.12 Financial and Property Information			85
4.1.13 Condemnation			85
4.1.14 Federal Reserve Regulations			85
4.1.15 Utilities and Public Access			85
4.1.16 Not a Foreign Person			85
4.1.17 Separate Lots			85
4.1.18 Subdivision			86
4.1.19 Reserved			86
4.1.20 Enforceability			86
4.1.21 Reserved			86
4.1.22 Insurance			86
4.1.23 Use of Property			86
4.1.24 Certificate of Occupancy; Licenses			86
4.1.25 Flood Zone			86
4.1.26 Physical Condition			86
4.1.27 Boundaries			87

 

Loan and Security Agreement

 

ii

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4.1.28 Subleases			87
4.1.29 Filing and Recording Taxes			87
4.1.30 Opinion Assumptions			87
4.1.31 [Reserved]			88
4.1.32 Illegal Activity			88
4.1.33 Reserved			88
4.1.34 Reserved			88
4.1.35 Tax Filings			88
4.1.36 Solvency/Fraudulent Conveyance			88
4.1.37 Investment Company Act			89
4.1.38 Interest Rate Cap Agreement			89
4.1.39 Labor			89
4.1.40 Brokers			89
4.1.41 No Other Debt			89
4.1.42 Taxpayer Identification Number			89
4.1.43 Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws			89
4.1.44 [Reserved]			90
4.1.45 Rights of First Refusal or First Offer to Lease or Purchase			90
4.2 Survival of Representations			90
4.3 Borrower’s Knowledge			90
V. BORROWER COVENANTS			90
5.1 Affirmative Covenants			90
5.1.1 Performance by Borrower			90
5.1.2 Existence; Compliance with Legal Requirements; Insurance			91
5.1.3 Litigation			91
5.1.4 [Reserved]			91
5.1.5 [Reserved]			91
5.1.6 Access to Property			91
5.1.7 Notice of Default			91
5.1.8 Cooperate in Legal Proceedings			91
5.1.9 Rights of First Refusal or First Offer to Lease or Purchase			92
5.1.10 Insurance			92
5.1.11 Further Assurances			92
5.1.12 Mortgage Taxes			92
5.1.13 Operation			93
5.1.14 Business and Operations			93
5.1.15 Title to the Property			93
5.1.16 Costs of Enforcement			94
5.1.17 Estoppel Statements			94
5.1.18 Loan Proceeds			94
5.1.19 No Joint Assessment			94
5.1.20 No Further Encumbrances			94
5.1.21 [Reserved]			95
5.1.22 Master Lease			95

 

Loan and Security Agreement

 

iii

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5.2 Negative Covenants			97
5.2.1 Incur Debt			97
5.2.2 Encumbrances			97
5.2.3 Partition			97
5.2.4 Transfer of Property			97
5.2.5 Bankruptcy			98
5.2.6 ERISA			98
5.2.7 Distributions			98
5.2.8 Modify REAs			98
5.2.9 [Reserved]			98
5.2.10 Zoning Reclassification			98
5.2.11 Change of Principal Place of Business			98
5.2.12 Debt Cancellation			98
5.2.13 Misapplication of Funds			98
5.2.14 Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws			98
5.2.15 Affiliate Transactions			99
5.2.16 Material Agreements			99
5.3 Single Purpose Entity/Separateness			99
5.4 Independent Manager			103
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION			104
6.1 Insurance Coverage Requirements			104
6.1.1 Property Insurance			104
6.1.2 Liability Insurance			105
6.1.3 Workers’ Compensation Insurance			105
6.1.4 Commercial Rents Insurance			105
6.1.5 Builder’s All-Risk Insurance			105
6.1.6 Boiler and Machinery Insurance			106
6.1.7 Flood Insurance; Windstorm Insurance			106
6.1.8 Earthquake Insurance			106
6.1.9 Terrorism Insurance			107
6.1.10 Other Insurance			107
6.1.11 Ratings of Insurers			107
6.1.12 Form of Insurance Policies; Endorsements			107
6.1.13 Certificates			108
6.1.14 Separate Insurances			109
6.1.15 Blanket Policies			109
6.2 Condemnation and Insurance Proceeds			110
6.2.1 Notification			110
6.2.2 Proceeds			110
6.2.3 Lender to Take Proceeds			111
6.2.4 Borrower to Restore			112
6.2.5 Disbursement of Proceeds			114
VII. REAL ESTATE IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS			115
7.1 Borrower to Pay Real Estate Impositions and Other Charges			115

 

Loan and Security Agreement

 

iv

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7.2 No Liens			115
7.3 Contest			115
VIII. TRANSFERS, INDEBTEDNESS AND OTHER FUNDAMENTAL MATTERS			116
8.1 General Restriction on Transfers, Indebtedness and Other Fundamental Matters			116
8.2 Sale of Building Equipment			118
8.3 Immaterial Transfers and Easements, etc.			119
8.4 Permitted Equity Transfers			119
8.5 Guarantor Net Worth; Qualifying Replacement Guarantor			121
8.6 Deliveries to Lender			122
8.7 Loan Assumption			122
8.8 Subleases			123
8.8.1 New Subleases and Sublease Modifications			123
8.8.2 Leasing Conditions			123
8.8.3 Delivery of New Sublease or Sublease Modification			125
8.8.4 Sublease Amendments			125
8.8.5 Security Deposits			125
8.8.6 No Default Under Subleases			125
8.8.7 Subordination			126
8.8.8 Attornment			126
8.8.9 Non-Disturbance Agreements			126
8.8.10 [Reserved]			127
8.8.11 Leaseable Building Pads			127
IX. INTEREST RATE CAP AGREEMENT			129
9.1 Interest Rate Cap Agreement			129
9.2 Pledge and Collateral Assignment			129
9.3 Covenants			129
9.4 Powers of Borrower Prior to an Event of Default			131
9.5 Representations and Warranties			131
9.6 Payments			132
9.7 Remedies			132
9.8 Sales of Rate Cap Collateral			134
9.9 Public Sales Not Possible			134
9.10 Receipt of Sale Proceeds			135
X. MAINTENANCE OF PROPERTY; ALTERATIONS			135
10.1 Maintenance of Property			135
10.2 Conditions to Alteration			135
10.3 Costs of Alteration			135
XI. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION			137
11.1 Books and Records			137
11.2 Financial Statements			137
11.2.1 Monthly Reports			137
11.2.2 Quarterly Reports			138

 

Loan and Security Agreement

 

v

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11.2.3 Annual Reports			139
11.2.4 Disclosure Restrictions			140
11.2.5 Capital Expenditures Summaries			140
11.2.6 Master Lease			140
11.2.7 Annual Budget; Operating Agreement Annual Budgets			141
11.2.8 Other Information			142
11.2.9 Confidentiality			142
XII. ENVIRONMENTAL MATTERS			143
12.1 Representations			143
12.2 Covenants			143
12.2.1 Compliance with Environmental Laws			143
12.2.2 Lead Based Paint, Asbestos and O&M Plans			144
12.3 Environmental Reports			144
12.4 Environmental Indemnification			145
12.5 Recourse Nature of Certain Indemnifications			145
XIII. THE OPERATING AGREEMENTS			146
13.1 Operating Agreement Representations, Warranties			146
13.2 Cure by Lender			147
13.3 [Reserved]			147
13.4 Operating Agreement Covenants			147
13.4.1 Waiver of Interest In REAs			147
13.4.2 No Election to Terminate			147
13.4.3 Notice Prior to Rejection			147
13.4.4 Lender Right to Perform			148
13.4.5 Lender Attorney in Fact			148
13.4.6 Payment of Sums Due Under Operating Agreements			148
13.4.7 Performance of Covenants			148
13.4.8 Reserved			148
13.4.9 No Modification or Termination			149
13.4.10 Notices of Default			149
13.4.11 Delivery of Information			149
13.4.12 No Subordination			149
13.4.13 Further Assurances			149
13.4.14 Estoppel Certificates			149
13.4.15 Common Area/Common Elements Insurance			150
13.5 Lender Right to Participate			150
13.6 No Liability			150
XIV. SECURITIZATION AND PARTICIPATION			150
14.1 Sale of Note and Securitization			150
14.2 Securitization Financial Statements			152
14.3 Regulation AB Information			152
14.4 Retention of Servicer and other Parties; Trust Fund Expenses			152
14.5 Information for an Issuer or Sponsor of a Securitization			152

 

Loan and Security Agreement

 

vi

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XV. ASSIGNMENTS AND PARTICIPATIONS			152
15.1 Assignments and Participations			152
15.2 Register			153
XVI. RESERVE ACCOUNTS			153
16.1 Tax Reserve Account			153
16.2 Insurance Reserve Account			154
16.3 Required Repairs Reserve Account			155
16.4 Capital Expenditure Reserve Account			155
XVII. DEFAULTS			157
17.1 Event of Default			157
17.2 Remedies			161
17.3 Remedies Cumulative; Waivers			163
17.4 Costs of Collection			163
XVIII. SPECIAL PROVISIONS			163
18.1 Exculpation			163
18.1.1 Exculpated Parties			163
18.1.2 Loss Carveouts From Non-Recourse Limitations			164
18.1.3 Full Recourse Carveouts From Non-Recourse Limitations			165
18.1.4 Limitation of Liability of Borrower			166
XIX. MISCELLANEOUS			168
19.1 Survival			168
19.2 Lender’s Discretion			168
19.3 Governing Law			168
19.4 Modification, Waiver in Writing			169
19.5 Delay Not a Waiver			169
19.6 Notices			169
19.7 TRIAL BY JURY			171
19.8 Headings			171
19.9 Severability			171
19.10 Preferences			172
19.11 Waiver of Notice			172
19.12 Expenses; Indemnity			172
19.13 Exhibits and Schedules Incorporated			174
19.14 Offsets, Counterclaims and Defenses			174
19.15 Liability of Assignees of Lender			174
19.16 No Joint Venture or Partnership; No Third Party Beneficiaries			175
19.17 Publicity			175
19.18 Waiver of Marshalling of Assets			175
19.19 Waiver of Counterclaim and other Actions			175
19.20 Conflict; Construction of Documents; Reliance			176
19.21 Prior Agreements			176
19.22 Certain Additional Rights of Lender (VCOC)			176
19.23 Counterparts			177
19.24 Intercreditor Agreement			177

 

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EXHIBITS AND SCHEDULES

 

EXHIBIT A		BORROWER ORGANIZATIONAL STRUCTURE
EXHIBIT B		INTEREST RATE CAP AGREEMENT
EXHIBIT C		FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
EXHIBIT D		FORM OF MASTER LEASE RENT PAYMENT DIRECTION LETTER
EXHIBIT E		COUNTERPARTY ACKNOWLEDGMENT
SCHEDULE I		EXISTING SUBLEASES; RLP SUBLEASES; NON-DISTURBANCE ELIGIBLE SUBLEASES; UNAFFILIATED SUBLEASES; EXCLUDED LICENSES, SUPERIOR LEASES; DEFAULTS OR PREPAID RENT UNDER SUBLEASES
SCHEDULE II		LITIGATION; CONDEMNATION; WORK STOPPAGES
SCHEDULE III		ALLOCATED LOAN AMOUNTS AND COMBINED ALLOCATED LOAN AMOUNTS
SCHEDULE IV		MAXIMUM MASTER LEASE BASE RENT REDUCTIONS FOR RELEASED PROPERTIES
SCHEDULE V		INTENTIONALLY OMITTED
SCHEDULE VI		RIGHTS OF FIRST REFUSAL OR RIGHTS OF FIRST OFFER (OR OTHER RIGHTS OR OPTIONS) TO LEASE OR PURCHASE INDIVIDUAL PROPERTIES
SCHEDULE VII		AMORTIZATION SCHEDULE
SCHEDULE VIII		PORTFOLIO FOUR-WALL EBITDAR HISTORICAL CALCULATIONS
SCHEDULE IX		REQUIRED REPAIRS
SCHEDULE X		OUTPARCELS, LEASEABLE BUILDING PADS
SCHEDULE XI		INTENTIONALLY OMITTED
SCHEDULE XII		SEPARATE TAX LOTS
SCHEDULE XIII		INDIVIDUAL PROPERTY SQUARE FOOTAGE
SCHEDULE XIV		EXCLUDED PERSONAL PROPERTY AND FIXTURES
SCHEDULE XV		MASTER OWNED PROPERTY SCHEDULE

 

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LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT dated as of March 27, 2012 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), between NEW PRIVATE RESTAURANT PROPERTIES, LLC, a Delaware limited liability company (“Borrower”), having an office at 2202 North West Shore Blvd., Suite 470C, Tampa, Florida 33607, GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation, having an address at 60 Wall Street, New York, New York 10005, and BANK OF AMERICA, N.A., a national banking association, having an address at Hearst Tower, 214 North Tryon Street, Charlotte, North Carolina 28255 (each, together with their respective successors and assigns, a “Co-Lender”, and, collectively, “Lender”).

RECITALS:

WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from Lender;

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the terms of this Agreement and the other Loan Documents (as hereinafter defined).

NOW, THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Agreement, the parties hereto hereby covenant, agree, represent and warrant as follows:

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

1.1 Definitions. For all purposes of this Agreement:

“80% Cash Sweep Period” shall mean any period (a) commencing on the Payment Date following the conclusion of any Fiscal Quarter for which the Lease Coverage Ratio is less than 80% of Closing Date Lease Coverage Ratio and (b) ending on the day immediately preceding the Payment Date following the conclusion of any Fiscal Quarter for which the Lease Coverage Ratio exceeds 80% of Closing Date Lease Coverage Ratio.

“90% Cash Sweep Period” shall mean any period (a) commencing on the Payment Date following the conclusion of any Fiscal Quarter for which the Lease Coverage Ratio is less than 90% of Closing Date Lease Coverage Ratio and (b) ending on the day immediately preceding the Payment Date following the conclusion of any Fiscal Quarter for which the Lease Coverage Ratio exceeds 90% of Closing Date Lease Coverage Ratio.

“Account Collateral” shall have the meaning set forth in Section 3.1.2.

“Acknowledgment” shall mean the Acknowledgment, dated on or about the date hereof made by Counterparty, or as applicable, Approved Counterparty in the form of Exhibit E.

“Act” shall have the meaning set forth in Section 5.3(c).

 

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“Additional Non-Consolidation Opinion” shall mean a non-consolidation opinion, from the counsel that delivered the Non-Consolidation Opinion or other outside counsel to Borrower reasonably acceptable to Lender, that is in form and substance satisfactory to the Rating Agencies, and is required to be delivered subsequent to the Closing Date pursuant to, and in connection with, the Loan Documents.

“Affiliate” shall mean, with respect to any specified Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with, or any general partner or managing member in, such specified Person. An Affiliate of a Person includes, without limitation, (i) any officer or director of such Person, and (ii) any Affiliate of the foregoing; provided, however, that no Sponsor Portfolio Company shall be deemed to be an Affiliate of Sponsors. Notwithstanding the above, for purposes of this definition, references to an Affiliate of the Borrower or Mezzanine Borrowers shall not include Master Lease Guarantor or its subsidiaries, and references to an Affiliate of Master Lease Guarantor or its subsidiaries shall not include PropCo or its subsidiaries.

“Affiliate Agreements” shall have the meaning provided in Section 5.2.15.

“Affiliated Sublease” shall mean a Sublease under which the Tenant is a Close Subsidiary of Master Lease Guarantor. Affiliated Subleases shall include Concept Subleases, Pass-Through Subleases and RLP Subleases.

“Agreement” shall mean this Agreement, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ALTA” shall mean American Land Title Association, or any successor thereto.

“Allocated Loan Amount” shall mean, with respect to each Individual Property, the designated “Allocated Loan Amount” applicable to the Restaurant Location that is located on such Individual Property, as set forth on Schedule III attached hereto; provided, however, that with respect to any Individual Property on which two or more Restaurant Locations are located, the Allocated Loan Amount for such Individual Property shall equal the sum of the Allocated Loan Amounts for all Restaurant Locations located thereon, as set forth on Schedule III attached hereto.

“Alteration” shall have the meaning set forth in Article X; provided however that the term “Alteration” shall not include Alterations being undertaken at the sole cost and expense of (a) the Master Lessee pursuant to the Master Lease so long as the security required for any such alteration under the Master Lease is deposited in accordance with the Master Lease or (b) a Tenant pursuant to a Sublease.

“Annual Budget” shall mean the combined operating expense and capital expenditure budget for the applicable Fiscal Year or other period prepared by (i) Master Lessee pursuant to the Master Lease setting forth, in reasonable detail, Master Lessee’s good faith estimates of the anticipated operating expenses for the Leased Premises, including but not limited to, Master Lease Variable Additional Rent, Master Lease Scheduled Additional Rent, sales projections and planned capital expenditures under the Master Lease (the “Master Lease Annual Budget”), and (ii) Asset Manager pursuant to the Asset Management Agreement setting forth, in reasonable

 

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detail, Asset Manager’s good faith estimates of the anticipated operating expenses for the Property (other than the Leased Premises), Borrower, any Mezzanine Borrower, PRP, PropCo and any SPE Component Entity, including, but not limited to, Real Estate Impositions, Other Charges and planned capital expenditures, which in all events, shall exclude any operating expenses or capital expenditures that are set forth in the Master Lease Annual Budget or that are otherwise required to be paid by the Master Lessee under the Master Lease or by the Tenant under any Affiliated Sublease, Unaffiliated Sublease, Specified Prior Sublease or Leaseable Building Pad (the “Asset Manager Annual Budget”).

“Applicable Interest” shall mean (a) with respect to any prepayment of the Floating Rate Component or any portion thereof (or any repayment of the Floating Rate Component or any portion thereof on the Maturity Date), (i) if such prepayment or repayment is made on a Payment Date, then interest on the Floating Rate Component through the end of the Interest Period in which such Payment Date occurs, or (ii) if such prepayment or repayment is made on any day other than a Payment Date, then interest on the Floating Rate Component through the end of the Interest Period in which the immediately succeeding Payment Date occurs, in each case, notwithstanding that such Interest Period extends beyond such prepayment date or repayment date and calculated as if the Floating Rate Component has not been prepaid or repaid on such prepayment date or repayment date; and (b) with respect to any prepayment of any Fixed Rate Component or any portion thereof (or any repayment of any Fixed Rate Component or any portion thereof on the Maturity Date), (i) if such prepayment or repayment is made on a Payment Date, then interest on such Fixed Rate Component through the end of the Interest Period ending immediately prior to such Payment Date, or (ii) if such prepayment or repayment is made on any day other than a Payment Date, then interest on such Fixed Rate Component through the end of the Interest Period ending immediately prior to the immediately succeeding Payment Date, notwithstanding that such Interest Period extends beyond such prepayment date or repayment date and calculated as if such Fixed Rate Component has not been prepaid or repaid on such prepayment date or repayment date.

“Approved Counterparty” shall mean either (a) a bank or other financial institution which has (i) either (A) a long-term unsecured debt rating of “A2” or higher by Moody’s or (B) if the long-term unsecured debt rating is “A3” or lower by Moody’s, a short-term unsecured debt rating of not less than “P1” from Moody’s; and (ii) either (A) a long-term unsecured debt rating of not less than “A (high)” or higher by DBRS or (B) if the long-term unsecured debt rating is “A (Middle)” or lower by DBRS, a short-term unsecured debt rating of not less than “R-1 (middle)” from DBRS; or (b) a bank or financial institution which provides a guaranty acceptable to Lender and the Rating Agencies of its obligations under the Interest Rate Cap Agreement by a guarantor which meets the requirements set forth in (a) above.

“Approved Expense Distribution” shall have the meaning set forth in Section 3.1.6(a).

“Approved Expenses” shall mean, on the date of any funding of Sub-Accounts pursuant to Section 3.1.6(a), (a) one-twelfth (1/12) of the annual fee payable to the Asset Manager under the Asset Management Agreement, and (b) Borrower’s estimate of monthly operating expenses of the Property, Borrower, any Mezzanine Borrower, PRP, PropCo and any SPE Component Entity (other than operating expenses that are set forth in the Master Lease Annual Budget or that are otherwise required to be paid by the Master Lessee under the Master Lease or by the Tenant

 

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under any Affiliated Sublease, Unaffiliated Sublease, Specified Prior Sublease or Leaseable Building Pad) for the immediately following month, not to exceed 110% of the amount provided for in the Asset Manager Annual Budget, as set forth in an Officer’s Certificate delivered by Borrower to Lender, which shall also contain a statement of the actual amount of operating expenses paid by Borrower during the previous month.

“Approved Servicing Agreement” means the Trust and Servicing Agreement entered into on March 27, 2012, among Banc of America Merrill Lynch Large Loan, Inc., as depositor, Bank of America, N.A., as servicer, Midland Loan Services, a Division of PNC Bank, National Association, as special servicer, Wells Fargo Bank, National Association, as Trustee, Wells Fargo Bank, National Association, as certificate administrator, and Park Bridge Lender Services LLC, as trust advisor, and any modifications, supplements or amendments thereto or replacements thereof approved by Borrower.

“Appurtenances” shall mean, collectively, all real property included in “Appurtenances” as such term is defined in each and every Security Instrument.

“Architect” shall mean an architect, engineer or construction consultant selected by Borrower (which can be an employee of Borrower or an Affiliate of Borrower or Master Lessee), licensed to practice in the relevant State (if required by the laws of the applicable State) and has at least five (5) years of architectural experience and which is reasonably acceptable to Lender.

“Asbestos” shall have the meaning provided in Section 12.2.2.

“Asbestos Report” shall have the meaning provided in Section 12.2.2.

“Asset Management Agreement” shall mean the Asset Management Agreement, dated as of the date hereof, by and among Borrower, Mezzanine Borrower, PropCo and Asset Manager, pursuant to which the Asset Manager is to provide asset management and other services with respect to the Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“Asset Manager” shall mean OS Management, Inc., a Florida corporation.

“Asset Manager Annual Budget” shall have the meaning set forth in the definition of “Annual Budget.”

“Assignment of Leases” shall mean individually or collectively, as the context may require, those certain first priority Assignments of Master Lease, Subleases, Rents and Security Deposits, each dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee, assigning to Lender all of Borrower’s interest in and to the Master Lease, the Subleases, Rents and Security Deposits as security for the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Assumption Fee” shall mean a fee in the amount of $162,400.

“Bankruptcy Code” shall mean Title 11, U.S.C.A., as amended from time to time and any successor statute thereto.

 

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“Base PropCo Ownership Requirements” shall have the meaning set forth in Section 8.1(b).

“Base Sublease Conditions” shall have the meaning set forth in Section 8.8.2.

“Base Transfer Conditions” shall mean, with respect to any Transfer for which the Base Transfer Conditions are required to be satisfied pursuant to the terms of this Agreement, the following conditions to such Transfer: (a) Lender shall receive no less than thirty (30) days prior written notice of such Transfer (provided that such notice may be given within thirty (30) days after such Transfer in the event of transfers among Permitted Holders that do not require delivery of an Additional Non-consolidation Opinion under clause (c) below); (b) immediately prior to such Transfer, no Event of Default shall have occurred and be continuing; (c) in the case of a Transfer to an Intermediate Entity, or if such Transfer shall otherwise cause any transferee, together with its Affiliates, to acquire indirect Equity Interests in Borrower aggregating more than forty-nine percent (49%), or to increase its indirect Equity Interests in Borrower from an amount that is less than forty-nine percent (49%) to an amount that is greater than forty-nine percent (49%), then Borrower shall deliver to Lender an Additional Non-Consolidation Opinion, (d) the Base PropCo Ownership Requirements shall continue to be satisfied subsequent to such Transfer, (e) Borrower shall continue at all times to be a Special Purpose Entity; and (f) if such Transfer, together with all prior Transfers occurring after the Closing Date, results in a Transfer of more than forty-nine percent (49%) of the indirect Equity Interests in Borrower, then Borrower shall pay to Lender the Assumption Fee; provided, however, that no Assumption Fee shall be owed in the case of a Qualifying IPO or if immediately following such Transfer, Permitted Holders (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders) continue to own no less than fifty-one percent (51%) of the indirect Equity Interests in Borrower.

“Blanket Policy” shall have the meaning provided in Section 6.1.15.

“Borrower” shall have the meaning set forth in the first paragraph of this Agreement.

“Borrower Group” means Borrower and all other Single Purpose Entities which are taxable as domestic corporations for federal income tax purposes (or which would be taxable as domestic corporations in the case of Borrower and each other Single Purpose Entity created or organized in or under the laws of the United States or any state that is a disregarded entity for federal income tax purposes if each such entity had timely made an election to be treated as an association for federal income tax purposes effective on the date of such entity’s formation).

“Borrower’s Account” shall mean an account or accounts maintained by Borrower for its own account at such bank and with such account number as may be designated in writing by Borrower to Lender and Cash Management Bank from time to time.

“Building Equipment” shall mean, collectively, all real and personal property included in “Building Equipment” as such term is defined in each and every Security Instrument.

“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which national banks in New York or Pittsburgh, Pennsylvania, or in the state in which Servicer or the special servicer is located, are not open for business. When used with respect to a Floating Rate Determination Date, Business Day shall mean any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market.

 

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“Capital Expenditure Funds” shall have the meaning set forth in Section 16.4(a).

“Capital Expenditure Reserve Account” shall have the meaning set forth in Section 3.1.1.

“Capped Interest Rate” shall mean a rate per annum equal to the sum of (a) the LIBOR Cap Strike Rate and (b) the LIBOR Margin.

“Cash” shall mean the legal tender of the United States of America.

“Cash and Cash Equivalents” shall mean any one or a combination of the following: (i) Cash, and (ii) U.S. Government Obligations.

“Cash Management Bank” shall mean Bank of America, N.A., or any successor Eligible Institution acting as Cash Management Bank, or other financial institution selected by the Lender and the Rating Agencies.

“Casualty Amount” shall mean with respect to each Individual Property, forty percent (40%) of the designated Combined Allocated Loan Amount applicable to such Individual Property.

“Cause” shall have the meaning set forth in Section 5.4.

“Close Affiliate” shall mean with respect to any Person (the “First Person”) any other Person (each, a “Second Person”) which is an Affiliate of the First Person and in respect of which any of the following are true: (a) the Second Person owns, directly or indirectly, at least 75% of all of the legal, beneficial and/or equitable interest in such First Person, (b) the First Person owns, directly or indirectly, at least 75% of all of the legal, beneficial and/or equitable interest in such Second Person, or (c) a third Person owns, directly or indirectly, at least 75% of all of the legal, beneficial and/or equitable interest in both the First Person and the Second Person.

“Close Subsidiary” of a Person shall mean a Subsidiary of such Person, no less than 75% of the outstanding Equity Interests of which (other than (x) director’s qualifying shares and (y) shares issued to foreign nationals to the extent required by Legal Requirements) are owned by such Person and/or by one or more wholly-owned Subsidiaries of such Person.

“Closing Date” shall mean the date of this Agreement set forth in the first paragraph hereof.

“Closing Date Lease Coverage Ratio” shall mean the Lease Coverage Ratio calculated using the trailing twelve (12) month Portfolio Four-Wall EBITDAR as of February 29, 2012, and twelve (12) times the Master Lease Base Rent due and owing for the first month of the Master Lease term, which Closing Date Lease Coverage Ratio is equal to 3.59x.

 

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“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be further amended from time to time, and any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

“Collateral Accounts” shall have the meaning set forth in Section 3.1.1.

“Combined Allocated Loan Amount” shall mean, with respect to each Individual Property, the designated “Combined Allocated Loan Amount” applicable to the Restaurant Location that is located on such Individual Property, as set forth on Schedule III attached hereto; provided, however, that with respect to any Individual Property on which two or more Restaurant Locations are located, the Combined Allocated Loan Amount for such Individual Property shall equal the sum of the Combined Allocated Loan Amounts for all Restaurant Locations located thereon, as set forth on Schedule III attached hereto.

“Combined Principal Amount” shall mean the sum of the Principal Amount and the Principal Amount (Mezzanine).

“Combined Release Price” shall mean with respect to each Individual Property, the product of the designated Combined Allocated Loan Amount applicable to such Individual Property and the Release Price Percentage; provided, however, that with respect to any Individual Property transferred to any Affiliate of Borrower, Guarantor, Master Lessee or Master Lease Guarantor, the Combined Release Price for such Individual Property shall be the greater of (a) the product of the designated Combined Allocated Loan Amount applicable to such Individual Property and the Release Price Percentage, and (b) the Fair Market Value of such Individual Property at the time of such transfer.

“Common Elements” shall mean, with respect to each Condominium Property, those portions of any Improvements and other rights relating to a Condominium that are designated as “Common Elements,” “Common Areas” or a substantially equivalent term under the applicable Condominium Documents.

“Common Charges” shall mean, with respect to each Condominium Property, Borrower’s share of the common expenses, or substantially equivalent expenses, of the Condominium as defined and determined in accordance with the Condominium Documents.

“Components” shall mean, collectively, Component A-1, Component A-2-FX, Component A-2-FL, Component B, Component C and Component D, each as more particularly set forth in Section 2.1.1 hereof, and “Component” shall mean any one of the foregoing.

“Component Interest Rate” shall mean, (a) with respect to Component A-1, 2.3666% per annum; (b) with respect to Component A-2-FX, 3.3756% per annum; (c) with respect to Component A-2-FL, the LIBOR Rate, provided that during the Initial Interest Period, the Component Interest Rate for Component A-2-FL shall be 3.3736% per annum; (d) with respect to Component B, 4.8536% per annum; (e) with respect to Component C, 5.8336% per annum; and (f) with respect to Component D, 6.8096% per annum.

 

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“Concept” shall mean (a) each of Bonefish Grill, Carrabba’s Italian Grill, Fleming’s Prime Steakhouse and Wine Bar, Outback Steakhouse and Roy’s Restaurant; provided, however, that any such restaurant brand shall constitute a “Concept” only for so long as such brand is owned by Master Lease Guarantor or its Close Subsidiaries, and (b) any future restaurant brand owned by Master Lease Guarantor or its Close Subsidiaries, so long as at the time that one or more Individual Properties are first opened for operation under such new restaurant brand, no less than twenty (20) restaurants in the United States (including, but not limited to, such Individual Properties) are open and operated by Master Lease Guarantor or its Close Subsidiaries under such new restaurant brand.

“Concept Sublease” shall mean any Sublease entered into by a Concept Subsidiary and Master Lessee, together with any amendments thereto or replacements thereof, for all or any portion of the Leased Premises as and to the extent permitted under the terms and conditions of the Master Lease and the terms and conditions of this Agreement, including Section 8.8 hereof. As of the Closing Date, the Concept Subleases are those certain amended and restated Subleases, each dated as of the Closing Date, between Master Lessee, as sublandlord, and one of the following as subtenant: Outback Steakhouse of Florida, LLC, Carrabba’s Italian Grill, LLC, Bonefish Grill, LLC, OS Pacific, LLC or OS Prime, LLC.

“Concept Subsidiary” shall mean any direct or indirect Close Subsidiary of Master Lease Guarantor that operates any Individual Property as a Concept Restaurant Location located thereon, either directly or indirectly through RLP Subleases, in accordance with the terms of this Agreement. As of the Closing Date, the Concept Subsidiaries are Carrabba’s Italian Grill, LLC, Outback Steakhouse of Florida, LLC, Bonefish Grill, LLC, OS Pacific, LLC and OS Prime.

“Condominium” shall mean, with respect to each Condominium Property, the condominium regime created by the Condominium Documents.

“Condominium Board” shall mean, with respect to each Condominium Property, the board of managers of the condominium association, or substantially equivalent body, of the Condominium established pursuant to the Condominium Documents.

“Condominium Declaration” shall mean, collectively, all condominium declarations, bylaws, floor plans, and other related documents included in “Condominium Declaration” as such term is defined in each and every Security Instrument.

“Condominium Documents” shall mean, with respect to each Condominium Property, collectively, the Condominium Declaration, the by-laws of the Condominium, the floor plans attached to the Condominium Declaration, and any other similar written agreements among or otherwise binding upon any unit owners of the Condominium in their capacity as such and that govern or otherwise relate to the establishment, continuance, maintenance or operation of the Condominium, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Condominium Properties” shall mean, collectively, all of the Individual Properties that are or become subject to a Condominium, and “Condominium Property” shall mean each such Individual Property.

“Condominium Units” shall mean, collectively, all condominium units, together with all other real and personal property, rights, title and interest, estate and appurtenances relating thereto, included in “Condominium Units” as such term is defined in each and every Security Instrument.

 

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“Contemplated Transactions” shall mean, collectively, (i) the transfers of the Individual Properties to Borrower, (ii) the leasing of the Individual Properties from Borrower to Master Lessee pursuant to the Master Lease, and (iii) the execution and delivery of the Loan Documents or the Mezzanine Loan Documents, Borrower’s or Mezzanine Borrower’s performance thereunder, and the recordation of the Security Instrument.

“Continuing Directors” shall mean the directors of HoldCo on the Closing Date, and each other director of HoldCo if such other director’s nomination for election to the board of directors of HoldCo (or Master Lease Guarantor after a Qualifying IPO of Master Lease Guarantor) is recommended by a majority of the then Continuing Directors or such other director receives (i) the vote of one or more of the Permitted Holders or (ii) following a Transfer to one or more Permitted Transferees permitted under this Agreement, the vote of one or more of such Permitted Transferees in such director’s election by the stockholders of HoldCo (or Master Lease Guarantor after a Qualifying IPO of Master Lease Guarantor).

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise, and Control shall not be deemed absent solely because another member, partner or other Person shall have a veto with respect to major decisions and shall not be deemed absent solely because such other member, partner or other Person has been granted such veto right, and the terms Controlled, Controlling and Common Control shall have correlative meanings.

“Controlling Mezzanine Lender” shall have the meaning set forth in Section 18.1.4(b).

“Counterparty” shall mean, with respect to the Interest Rate Cap Agreement, SMBC Derivative Products Limited, and with respect to any Replacement Interest Rate Cap Agreement, any substitute Approved Counterparty.

“Counterparty Opinion” shall have the meaning set forth in Section 9.3(g).

“Creditors Rights Laws” shall mean with respect to any Person any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, arrangement, adjustment, winding-up, liquidation, dissolution, assignment for the benefit of creditors, composition or other relief with respect to its debts or debtors.

“DBRS” shall mean DBRS, Inc.

“Debt” shall mean, with respect to any Person at any time, (a) indebtedness or liability of such Person for borrowed money whether or not evidenced by bonds, debentures, notes or other instruments, or for the deferred purchase price of property or services; (b) obligations of such Person as lessee under leases which should have been or should be, in accordance with GAAP, recorded as capital leases; (c) current liabilities of such Person in respect of unfunded vested benefits under plans covered by Title IV of ERISA; (d) obligations issued for, or liabilities incurred on the account of, such Person (to the extent such obligations or liabilities otherwise

 

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constitute “Debt” under another subclause of the definition of “Debt”); (e) obligations or liabilities of such Person arising under letters of credit, credit facilities or other acceptance facilities; (f) obligations of such Person under any guarantees or other agreement to become secondarily liable for any obligation of any other Person, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or otherwise to assure a creditor against loss; (g) obligations of such Person secured by any Lien (excluding Liens for Real Estate Impositions or Other Charges not yet due and payable) on any property of such Person, whether or not the obligations have been assumed by such Person; or (h) obligations of such Person under any interest rate or currency exchange agreement.

“Debt Service” shall mean, with respect to any particular period of time, scheduled interest and principal payments due and payable under all Components.

“Debt Service (First Mezzanine)” shall mean, with respect to any particular period of time, scheduled interest and principal payments due and payable under the First Mezzanine Loan Agreement.

“Debt Service (Second Mezzanine)” shall mean, with respect to any particular period of time, scheduled interest and principal payments due and payable under the Second Mezzanine Loan Agreement.

“Debt Service (Mezzanine)” shall mean, with respect to any particular period of time, combined scheduled interest and principal payments due and payable under each Mezzanine Loan Agreement.

“Debt Service Reserve Account” shall have the meaning set forth in Section 3.1.1.

“Default” shall mean the occurrence of any event hereunder or under any other Loan Document which, but for the giving of notice or passage of time, or both, would be an Event of Default.

“Default Rate” shall mean, (a) with respect to each Component of the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate and (ii) three percent (3%) above the Component Interest Rate applicable to such Component, and (b) with respect to any other Obligations, the lesser of (i) the Maximum Legal Rate and (ii) three percent (3%) above the Component Interest Rate applicable to Component D.

“Defeasance Collateral” shall mean the Total Defeasance Collateral or the Partial Defeasance Collateral, as the context may require.

“Defeasance Collateral Account” shall have the meaning set forth in Section 2.4.3.

“Defeasance Date” shall mean the Total Defeasance Date or the Partial Defeasance Date, as the context may require.

“Defeasance Event” shall mean the Total Defeasance Event or the Partial Defeasance Event, as the context may require.

 

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“Defeasance Security Agreement” shall mean a security agreement in form and substance that would be reasonably satisfactory to a prudent lender pursuant to which Borrower grants Lender a perfected, first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral.

“Defeased Note” shall have the meaning set forth in Section 2.4.2(d).

“Deficiency” shall have the meaning set forth in Section 6.2.4(b).

“Disqualified Transferee” shall mean any Person that (i) has been convicted in a criminal proceeding for a felony or a crime involving moral turpitude or that is an organized crime figure or is reputed (as determined by Lender in its sole discretion) to have substantial business or other affiliations with an organized crime figure; (ii) has at any time filed a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (iii) as to which an involuntary petition has at any time been filed under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law and which was not dismissed prior to the entry of an order for relief; (iv) has at any time filed an answer consenting to or acquiescing in any involuntary petition filed against it by any other person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (v) has at any time consented to or acquiesced in or joined in an application for the appointment of a custodian, receiver, trustee or examiner for itself or any of its property; or (vi) has at any time made an assignment for the benefit of creditors, or has at any time admitted its insolvency or inability to pay its debts as they become due; provided, however, that any Person that would otherwise be a “Disqualified Transferee” by reason of any one or more of clauses (ii) through (vi) above, such Person shall not be a Disqualified Transferee if, at the time of determination, (A) such Person is solvent, such Person and such Person’s property is not subject to a custodian, receiver, trustee or examiner, and neither such Person nor its debts or assets are subject to any federal or state bankruptcy or insolvency proceeding, (B) such Person has been reasonably approved by Lender, and (C) Borrower has delivered to Lender a Rating Agency Confirmation with respect to such Person.

“Direct Control Remedies” shall have the meaning set forth in Section 18.1.4(b).

“Divested Borrower” shall have the meaning set forth in Section 18.1.4(a).

“Divested Property” shall have the meaning set forth in Section 18.1.4 (a).

“Eligible Account” shall mean (i) a segregated trust account or accounts maintained with the corporate trust department of a federal depository institution or state-chartered depository institution subject to regulations regarding fiduciary funds on deposit such as or similar to Title 12 of the Code of Federal Regulations Section 9.10(b) which, in either case, has corporate trust powers, acting in its fiduciary capacity or (ii) a segregated account maintained at an Eligible Institution. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.

“Eligible Institution” shall mean (a) a depository institution or trust company insured by the Federal Deposit Insurance Corporation the short term unsecured debt obligations and commercial paper of which are rated at least “P1” by Moody’s and “R-1 (middle)” by DBRS in the case of accounts in which funds are held for thirty (30) days or less (or, in the case of

 

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accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least “A2” by Moody’s and “A (low)” by DBRS), or (b) an insured depository institution that is the subject of a Rating Agency Confirmation (i) from the Rating Agency for which the minimum rating is not met with respect to any account listed in the clauses above or which is not expressly enumerated above, or (ii) from each Rating Agency, with respect to a depository institution other than one listed in the clauses above.

“Environmental Certificate” shall have the meaning set forth in Section 12.2.1.

“Environmental Claim” shall mean any claim, action, cause of action, investigation or written notice by any Person alleging potential liability (including potential liability for investigatory costs, cleanup costs, natural resource damages, property damages, personal injuries or penalties) arising out of, based upon or resulting from (a) the presence, threatened presence, release or threatened release into the environment of any Hazardous Materials from or at the Property, or (b) the violation, or alleged violation, of any Environmental Law relating to the Property.

“Environmental Event” shall have the meaning set forth in Section 12.2.1.

“Environmental Indemnity” shall mean (a) those certain Environmental Indemnities, each dated the date hereof, one executed by PropCo, one executed by Guarantor and one executed by Master Lease Guarantor and Master Lessee, and each in favor of Lender, and (b) any Replacement Indemnity, in each case, as the same may be amended, supplemented, restated or otherwise modified from time to time.

“Environmental Law” shall have the meaning provided in the Environmental Indemnity.

“Environmental Reports” shall have the meaning set forth in Section 12.1.

“Equity Interests” means (i) any ownership, management or membership interests in any limited liability company, (ii) any general or limited partnership interest in any partnership, (iii) any common, preferred or other stock interest in any corporation, (iv) any share, participation, unit or other interest in the property or enterprise of an issuer that evidences ownership rights therein, (v) any ownership or beneficial interest in any trust or, (vi) any option, warrant or other right to convert into or otherwise receive any of the foregoing.

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

“Event of Default” shall have the meaning set forth in Section 17.1(a).

“Excess Account Collateral” shall have the meaning set forth in Section 2.3.8.

“Excess Cash Flow” shall have the meaning set forth in Section 3.1.6(a)(xiv).

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

 

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“Excluded Licenses” shall mean the month to month parking licenses and sign leases and other minor licenses and leases in the name of the Master Lessee or its Affiliates, including those set forth on Schedule I, as the same may be amended, modified or replaced by Borrower, Master Lessee or their respective Affiliates without Lender’s consent except to the extent such amendment, modification or replacement would have a Material Adverse Effect.

“Excluded Personal Property” shall mean, collectively, (a) all of the Personal Property and Trade Fixtures of Master Lessee, Master Lease Guarantor, and its Affiliates, (b) any licenses or other intellectual property of Master Lessee, Master Lease Guarantor and its Affiliates, and any Tenants (including without limitation, relating to the Concepts or Third-Party Brands, or directly relating to the business of any Tenant under an Unaffiliated Sublease or Specified Prior Sublease), and (c) any Personal Property or Trade Fixtures owned by Tenants under Unaffiliated Subleases or Specified Prior Subleases; provided, that such Excluded Personal Property shall not include any capital improvements, replacements or alterations to any Individual Property that automatically become the landlord’s property upon the expiration or termination of the Master Lease. Without limiting the generality of the foregoing, with respect to any Restaurant Location, Excluded Personal Property includes all items labeled as “Excluded Personal Property” on Schedule XIV, but expressly excludes all items labeled as “Fixtures” on Schedule XIV.

“Excluded Release” means any release of (a) Individual Properties that Go Dark, (b) Individual Properties made in connection with a casualty or Taking pursuant to Section 6.2.3 hereof, (c) Outparcels pursuant to Section 2.3.6(b), or (d) Individual Properties released to cure a Default or Event of Default as provided in the last paragraph of Section 2.3.6(a).

“Excluded SPE Breach” shall mean a breach by Borrower or any SPE Component Entity of (a) Section 5.3(a)(xv), (b) Section 5.3(a)(xviii), provided that such breach shall constitute an Excluded SPE Breach if and only if such breach arises from Borrower or any SPE Component Entity failing to pay its own liabilities or failing to be solvent (as opposed to a breach arising from Borrower or any SPE Component Entity paying its own liabilities from funds of another Person), and (c) Section 5.3(a)(vii), provided that such breach shall constitute an Excluded SPE Breach if and only if such breach arises from the fact that there is insufficient cash flow from the operation of the Property to pay trade payables, operational debt, deferred purchase payments for services and indebtedness incurred by Borrower in the financing of equipment, personal property and Fixtures used on the Property incurred in the ordinary course of Borrower’s business, not secured by Liens on the Property.

“Exculpated Parties” shall have the meaning set forth in Section 18.1.1.

“Excusable Delay” shall mean a delay solely due to acts of God, governmental restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable control of Borrower, but Borrower’s lack of funds in and of itself shall not be deemed a cause beyond the control of Borrower.

“Existing Intercompany Loans” shall have the meaning set forth in the definition of Guarantor Intercompany Loans herein.

 

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“Fair Market Value” with respect to any Individual Property shall mean the fair market value of such Individual Property as determined by a FIRREA compliant appraisal prepared by an Independent Appraiser.

“First Mezzanine Account” shall mean an account designated by First Mezzanine Lender to Lender from time to time pursuant to the terms of the First Mezzanine Loan Agreement.

“First Mezzanine Borrower” shall mean New PRP Mezz 1, LLC, a Delaware limited liability company.

“First Mezzanine Debt Service Reserve Account” shall have the meaning set forth in Section 3.1.1.

“First Mezzanine Lender” shall mean German American Capital Corporation, a Maryland corporation, Bank of America, N.A., and each of their respective successors and/or assigns, as the holder of the First Mezzanine Loan.

“First Mezzanine Lender Monthly Debt Service Notice” shall mean the written notice required to be delivered by First Mezzanine Lender pursuant to Section 3.1.6 of the First Mezzanine Loan Agreement to Lender at least five (5) Business Days prior to each Payment Date setting forth the First Mezzanine Loan Debt Service Amount payable by First Mezzanine Borrower on the first Payment Date occurring after the date such notice is delivered; provided, however, that any First Mezzanine Lender Monthly Debt Service Notice delivered to Lender shall be applicable with respect to all future Payment Dates until First Mezzanine Lender delivers a new First Mezzanine Lender Monthly Debt Service Notice to Lender, it being understood that First Mezzanine Lender will not be required to deliver a new First Mezzanine Lender Monthly Debt Service Notice to Lender unless and until the First Mezzanine Loan Debt Service Amount due on the ensuing Payment Date is different from the First Mezzanine Loan Debt Service Amount due on the immediately preceding Payment Date, and Lender shall be permitted to rely on the most recently received First Mezzanine Lender Monthly Debt Service Notice until Lender receives a new First Mezzanine Lender Monthly Debt Service Notice from First Mezzanine Lender.

“First Mezzanine Loan” shall mean that certain $87,600,000 mezzanine loan, made as of the date hereof, from First Mezzanine Lender to First Mezzanine Borrower.

“First Mezzanine Loan Agreement” shall mean that certain Mezzanine Loan and Security Agreement (First Mezzanine), dated as of the date hereof, between First Mezzanine Borrower, as borrower, and First Mezzanine Lender, as lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“First Mezzanine Loan Debt Service Amount” shall mean, with respect to any Payment Date, interest and principal payments scheduled to be due under the First Mezzanine Loan (or the undefeased portion thereof in the event of a defeasance of a portion thereof) pursuant to the First Mezzanine Loan Documents (excluding default or accrued interest other than regularly scheduled interest, but including all servicing fees due on such Payment Date under Section 16.3 of the First Mezzanine Loan Agreement) on such date (as set forth in the First Mezzanine Lender Monthly Debt Service Notice delivered to Lender), and repayment in full of the principal balance of the First Mezzanine Note on the scheduled maturity of the First Mezzanine Loan (but excluding any principal payments on account of an acceleration of the First Mezzanine Loan or a default under any of the First Mezzanine Loan Documents).

 

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“First Mezzanine Loan Default Notice” shall mean a notice from First Mezzanine Lender to Lender (upon which Lender may conclusively rely without any inquiry into the validity thereof) that an “Event of Default” has occurred and is continuing under any of the First Mezzanine Loan Documents.

“First Mezzanine Loan Default Revocation Notice” shall have the meaning set forth in Section 3.1.6 hereof.

“First Mezzanine Loan Documents” shall mean the documents evidencing and securing the First Mezzanine Loan, as may be modified, amended, extended, supplemented, restated or replaced from time to time.

“First Mezzanine Note” shall mean, collectively, (a) that certain Mezzanine Note A-1 (First Mezzanine) in the original principal amount of $9,000,000 dated as of the date hereof, from First Mezzanine Borrower to Bank of America, N.A., (b) that certain Mezzanine Note A-2 (First Mezzanine) in the original principal amount of $6,000,000 dated as of the date hereof, from First Mezzanine Borrower to German American Capital Corporation, (c) that certain Mezzanine Note A-3 (First Mezzanine) in the original principal amount of $17,400,000 dated as of the date hereof, from First Mezzanine Borrower to Bank of America, N.A., (d) that certain Mezzanine Note A-4 (First Mezzanine) in the original principal amount of $11,600,000 dated as of the date hereof, from First Mezzanine Borrower to German American Capital Corporation, (e) that certain Mezzanine Note A-5 (First Mezzanine) in the original principal amount of $3,000,000 dated as of the date hereof, from First Mezzanine Borrower to First Mezzanine Lender, (f) that certain Mezzanine Note A-6 (First Mezzanine) in the original principal amount of $15,600,000 dated as of the date hereof, from First Mezzanine Borrower to First Mezzanine Lender, and (g) that certain Mezzanine Note A-7 (First Mezzanine) in the original principal amount of $25,000,000 dated as of the date hereof, from First Mezzanine Borrower to First Mezzanine Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, but excluding any portion of such notes that have been defeased in accordance with the First Mezzanine Loan Agreement.

“Fiscal Quarter” shall mean each three month period ending March 31, June 30, September 30 and December 31.

“Fiscal Year” shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the term of the Loan or the portion of any such 12-month period falling within the term of the Loan in the event that such a 12-month period occurs partially before or after, or partially during, the term of the Loan.

“Fitch” shall mean Fitch Ratings Inc.

“Fixed Rate Components” shall mean, collectively, each of Component A-1, Component A-2-FX, Component B, Component C and Component D, and “Fixed Rate Component” shall mean any one of the foregoing.

 

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“Fixtures” shall have the meaning set forth in the Uniform Commercial Code in effect in the State of New York, and, in addition, shall include the following: general, non-specialized building mechanical, electrical and plumbing and HVAC systems and equipment, elevators and escalators (together with all related controls equipment, parts and supplies used to service, repair, maintain and equip the foregoing), sprinkler systems, fire suppression/fire alarm systems, security system, awnings, ceiling tile and grids, restroom and utility plumbing fixtures, carpeting, hard wood flooring, domestic water heaters, brick pizza oven, and general and emergency lighting; but shall expressly exclude any Excluded Personal Property. Without limiting the generality of the foregoing, with respect to any Restaurant Location, the term “Fixtures” shall specifically include the items set forth as “Fixtures” on Schedule XIV.

“Floating Rate Component” shall mean Component A-2-FL.

“Floating Rate Determination Date” shall mean, with respect to each Interest Period with respect to the Floating Rate Component, the date which is two (2) Business Days prior to the beginning of such Interest Period.

“Foreclosure Divestment” shall have the meaning set forth in Section 18.1.4(a).

“Founders” shall mean (i) Christopher T. Sullivan, Robert D. Basham and J. Timothy Gannon, or in the event of any such Person’s death such Person’s estate; (ii) any trust Controlled by any of the Persons described in clause (i) (or in the event of the death or incompetency of any such Person, such Person’s estate, executor, administrator or committee administering such estate) created for the benefit of any of the Persons described in clause (i) or any of (or any combination of) the spouses, ancestors, siblings, descendants (including children or grandchildren by adoption) and the descendants of any of the siblings of the Persons referred to in clause (i), or any trust for the benefit of such trust Controlled by any of the Persons described in clause (i) (or in the event of the death or incompetency of any such Person, such Person’s estate, executor, administrator or committee administering such estate); or (iii) any entity that both (a) is Controlled by any of the Persons described in clause (i) (or in the event of the death or incompetency of any such Person, such Person’s estate, executor, administrator or committee administering such estate) and (b) no less than fifty-one percent (51%) of the Equity Interests in which entity are owned by any of the Persons described in any of clauses (i) or (ii) above (any such entity described in this clause (iii), a “Founder Entity”.

“Founder Entity” shall have the meaning in the definition of “Founders” above.

“GAAP” shall mean generally accepted accounting principles from time to time in effect and as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession, to the extent such principles are applicable to the facts and circumstances on the date of determination; provided, however, that if the Borrower or the Master Lessee (with respect to reports to be generated by Master Lessee) notifies the Lender that such Person requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP

 

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or in the application thereof on the operation of such provision (or if the Lender notifies the Borrower and Master Lessee (with respect to reports to be generated by Master Lessee) that the Lender requests an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

“Go Dark” shall mean, with respect to any Restaurant Location (a Restaurant Location that shall Go Dark is sometime referred to herein as a “Go Dark Restaurant Location”, (a) if the Restaurant Location is not open for business to the public for a period of thirty (30) consecutive days, unless such closure (i) is a result of a Taking of or casualty or other damage or injury to such Individual Property, so long as Borrower (A) promptly and diligently pursues and completes repair or restoration of such Restaurant Location, or takes other appropriate actions to resolve such closure, and (B) reopens such Restaurant Location to the public no later than two hundred seventy (270) days after the date of the initial closure, subject to an extension not to exceed an additional two hundred seventy (270) days in the event that such closure continues due to Excusable Delay, upon the expiration of which, such Restaurant Location shall be a Go Dark Restaurant Location; or (ii) subject to the proviso below, is temporary and is in connection with an Alteration permitted hereunder, so long as Borrower (A) promptly and diligently pursues and completes such Alteration, and (B) reopens such Restaurant Location to the public no later than one hundred eighty (180) days after the date of the initial closure, subject to an extension not to exceed sixty (60) days in the event that such closure continues due to Excusable Delay, upon the expiration of which, such Restaurant Location shall be a Go Dark Restaurant Location; provided, however, that no greater than ten percent (10%) of all Restaurant Locations that remain subject to the Lien of the Security Instrument at the time of determination (rounded up to the nearest whole number, which number as of the Closing Date is 27 based on 261 Restaurant Locations being subject to the Lien of the Security Instrument as of the Closing Date) shall be permitted to be closed pursuant to this clause (a)(ii) at any one time; and (b) if the Restaurant Location is a Go Dark Purchase Option Property, if the Restaurant Location is not open for business to the public for any period of time, and such closure would constitute an event after which a purchase right, termination right, recapture right or option could be triggered (regardless of the applicability of the provisions of the foregoing clause (a) that would otherwise result in such Restaurant Location not being considered a Go Dark Restaurant Location).

“Go Dark Purchase Option Property” means any Restaurant Location having an Operating Agreement or other agreement of record (or off record and evidenced by a recorded memorandum) which contains a purchase right, termination right, recapture right or option that would be exercisable if such Restaurant Location is not open for business to the public for a period designated in such Operating Agreement or other agreement of record, including but not limited to the Restaurant Locations listed on Schedule VI which are specifically designated as having such a purchase right, termination right, recapture right or option.

“Go Dark Restaurant Location” has the meaning set forth in the definition of “Go Dark” above.

 

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“Go Dark/Sublease Limit” shall mean, at any given time, fourteen percent (14%) of the Restaurant Locations that remain subject to the Lien of the Security Instrument at the time of determination (rounded up to the nearest whole number). As of the Closing Date, the Go Dark/Sublease Limit is equal to 37 Restaurant Locations based on 261 Restaurant Locations being subject to the Lien of the Security Instrument as of the Closing Date.

“Governmental Authority” shall mean any court, board, agency, commission, office or other authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

“Guarantor” shall mean OSI HoldCo I, Inc., a Delaware corporation.

“Guarantor Asset Covenant” shall mean the covenant that Guarantor shall continue to own, directly or indirectly, 100% of the Equity Interests in Master Lease Guarantor.

“Guarantor Group” means, collectively, Guarantor and all other entities taxable as corporations for federal (or applicable state, local or foreign) Tax purposes which join with Guarantor (or any other entity which is (i) either (x) directly or indirectly Controlled by Guarantor or (y) a domestic corporation for federal tax purposes that owns, directly or indirectly through wholly owned domestic corporations, all of the Equity Interests in Guarantor and (ii) neither a member of the Borrower Group nor any Equity Interests in which are owned directly or indirectly by the Borrower) in filing a consolidated federal income tax return (or any consolidated, combined, unitary or similar group tax return pursuant to state, local or foreign Tax law) for any taxable year with Guarantor (or such other entity) as the common parent of such group.

“Guarantor Group Tax” means, for any period, the actual consolidated federal income Tax liability and the actual applicable consolidated, combined, unitary or similar group Tax liability imposed under state, local or foreign Tax law of the Guarantor Group for such period. For avoidance of doubt, in no event shall the term “Tax liability” as used in this definition be construed to refer to a negative amount.

“Guarantor Intercompany Loans” means (i) the current outstanding loans from HoldCo to Guarantor in the original principal amount of $20,539,053 (the “Existing Intercompany Loans”), and (ii) future loans from HoldCo to Guarantor (the “Guarantor Subsequent Intercompany Loans”); provided that (A) the aggregate original principal amount of Existing Intercompany Loans and Guarantor Subsequent Intercompany Loans outstanding at any time shall not exceed $50,000,000 and (B) the Guarantor Subsequent Intercompany Loans shall be distributed to Guarantor’s direct or indirect parent entities (which direct or indirect parent entities shall not include the Sponsors or any Founder Entity) to permit such direct or indirect parent to (1) make loans or other payments in connection with, or satisfy any funding or other contractual obligation with respect to, any employment, compensation or equity participation arrangement to any future, present or former employee, consultant or director of Guarantor or any direct or indirect parent of Guarantor (which direct or indirect parent entities shall not include the Sponsors or any Founder Entity), (2) pay for the repurchase, retirement or other acquisition or retirement for value of, or any tax withholding or other obligation with respect to, Equity Interests of Guarantor or of any parent of Guarantor (which parent shall not include the

 

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Sponsors or any Founder Entity) held by any future, present or former employee, consultant or director of Guarantor or any direct or indirect parent of Guarantor (which parent shall not include the Sponsors or any Founder Entity) or (3) pay principal or interest on promissory notes that were issued to any future, present or former employee, consultant or director of Guarantor or any direct or indirect parent of Guarantor (which parent shall not include the Sponsors or any Founder Entity) in lieu of cash payments for the repurchase, retirement or other acquisition or retirement for value of such Equity Interests held by such Persons, in each case, pursuant to any employee or director equity plan, employee or director stock option plan or any other employee or director benefit plan or any agreement (including any stock subscription or shareholder agreement) with any employee, consultant or director of Guarantor or any direct or indirect parent of Guarantor (which direct or indirect parent shall not include the Sponsors or any Founder Entity).

“Guarantor Net Worth Requirements” shall have the meaning set forth in Section 8.5.

“Guarantor Subsequent Intercompany Loans” shall have the meaning set forth in the definition of Guarantor Intercompany Loans herein.

“Hazardous Materials” shall have the meaning provided in the Environmental Indemnity.

“HoldCo” shall mean OSI HoldCo, Inc., a Delaware corporation.

“Holdings” shall mean Kangaroo Holdings, Inc., a Delaware corporation.

“Holding Account” shall have the meaning set forth in Section 3.1.1.

“Hypothetical Borrower Group Tax” means, for any period, the sum of the hypothetical consolidated federal income tax liability and the applicable Tax liability imposed under state, local or foreign Tax law of the Borrower Group for such period with respect to a Tax that is described in the definition of Guarantor Group Tax (including any Tax liability of any member of the Borrower Group) determined in accordance with the Code and Treasury regulations thereunder and comparable provisions of applicable state, local or foreign Tax law as if the Borrower Group were, as applicable, a separate affiliated group of corporations filing a consolidated federal income tax return (or the applicable comparable group filing consolidated, unitary, combined or similar group Tax returns, or applicable separate entity filing separate Tax returns, under state, local or foreign Tax law) including any elections and accounting methods available which the Master Lessee or Guarantor on behalf of the Master Lessee (or other parent of the applicable Guarantor Group) has made pursuant to the Code and Treasury regulations (or comparable provisions of applicable state, local or foreign Tax law) and other administrative pronouncements. For avoidance of doubt, in no event shall the term “Tax liability” as used in this definition be construed to refer to a negative amount.

“Impositions” shall mean all Taxes, governmental assessments (including all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not commenced or completed within the term of this Agreement), water, sewer or other rents and charges, excises, levies, fees (including license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of

 

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the Property and/or any Rents (including all interest and penalties thereon), which at any time prior to, during or in respect of the term hereof may be assessed or imposed on or in respect of or be a Lien upon (a) Guarantor Group, provided such amounts shall in no event exceed the Separate Borrower Group Tax Liability for the applicable period, (b) the Property, or any other collateral delivered or pledged to Lender in connection with the Loan, or any part thereof, or any Rents therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in connection with the Property or the leasing or use of all or any part thereof. Nothing contained in this Agreement shall be construed to require Borrower to pay any Tax, assessment, levy or charge imposed on (i) any tenant occupying any portion of the Property or (ii) except as provided in Section 2.5, Lender in the nature of a capital levy, estate, inheritance, succession, income or net revenue Tax.

“Improvements” shall mean, collectively, all real and personal property included in “Improvements” as such term is defined in each and every Security Instrument.

“Income Tax” means federal, state, local and foreign income Taxes and franchise Taxes based on net income, including alternative minimum Tax and any interest, penalties, fines, assessments or additions imposed in respect of the foregoing.

“Increased Costs” shall have the meaning set forth in Section 2.5.1.

“Indebtedness” shall mean, at any given time, the Principal Amount, together with all accrued and unpaid interest thereon and all other obligations and liabilities due or to become due to Lender pursuant hereto, under the Note or in accordance with the other Loan Documents and all other amounts, sums and expenses paid by or payable to Lender hereunder or pursuant to the Note or the other Loan Documents.

“Indemnified Parties” shall have the meaning set forth in Section 19.12(b).

“Indemnity Agreement” shall mean that certain Indemnification Certificate and Agreement, dated as of the date hereof, made by Borrower for the benefit of Bank of America, N.A., German American Capital Corporation, Banc of America Merrill Lynch Large Loan, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

“Independent” shall mean, when used with respect to any Person, a Person who: (i) does not have any direct financial interest or any material indirect financial interest in any Borrower or in any Affiliate of any Borrower or Master Lessee, (ii) is not connected with any Borrower or any Affiliate of any Borrower or Master Lessee as an officer, employee, promoter, underwriter, trustee, partner, member, manager, creditor, director, customer or supplier (other than a customer or supplier in the ordinary course of business on terms applicable generally to all customers and suppliers) or person performing similar functions and (iii) is not a member of the immediate family of a Person defined in (i) or (ii) above.

“Independent Accountant” shall mean a firm of nationally recognized, certified public accountants which is Independent and which is selected by Borrower and reasonably acceptable to Lender.

 

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“Independent Appraiser” shall mean (a) Cushman & Wakefield, or (b) such other Independent MAI appraiser which (i) is a reputable, nationally or regionally recognized real estate appraiser having at least five (5) years’ experience in the appraisal of commercial restaurant properties, (ii) has, for at least five (5) years prior to its engagement by Borrower, acted as an appraiser of commercial properties with leasable square footage equal to at least the lesser of (A) 1,000,000 leasable square feet and (B) five (5) times the leasable square feet of the Property, and (iii) is not the subject of a bankruptcy or similar insolvency proceeding.

“Independent Leasing Broker” shall mean (a) Cushman & Wakefield, or (b) such other Independent leasing broker which (i) is a reputable, nationally or regionally recognized leasing broker having at least five (5) years’ experience in the leasing of commercial restaurant properties, (ii) has, for at least five (5) years prior to its engagement by Borrower to provide the certificate required under Section 8.8.9, acted as leasing broker for commercial properties with leasable square footage equal to at least the lesser of (A) 1,000,000 leasable square feet and (B) five (5) times the leasable square feet of the Property, and (iii) is not the subject of a bankruptcy or similar insolvency proceeding.

“Independent Manager” of any corporation or limited liability company means an individual with at least three (3) years of employment experience serving as an independent director or independent manager, and who is provided by, and is in good standing with, CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, Lord Securities Corporation or, if none of those companies is then providing professional independent directors or independent managers or is not acceptable to the Rating Agencies, another nationally-recognized company reasonably approved by Lender and, if required by Lender, the Rating Agencies, in each case, that is not an Affiliate of such corporation or limited liability company and that provides professional independent directors or independent managers and other corporate services in the ordinary course of its business, and which individual is duly appointed as a member of the board of directors or board of managers of such corporation or limited liability company and is not, and has never been, and will not while serving as Independent Manager be:

(i) a member (other than an independent, non-economic “springing member”), partner, equityholder, manager, director, officer or employee of such corporation or limited liability company, or any of its equityholders or Affiliates (other than as an independent director or independent manager of an Affiliate of such corporation or limited liability company that is not in the direct chain of ownership of such corporation or limited liability company and that is required by a creditor to be a single purpose bankruptcy remote entity, provided that such Independent Manager is employed by a company that routinely provides professional independent directors or independent managers);

(ii) a customer, creditor, supplier or service provider (including provider of professional services) to such corporation or limited liability company or any of its equityholders or Affiliates (other than a nationally-recognized company that routinely provides professional independent directors or independent managers and other corporate services to such corporation or limited liability company or any of its equityholders or Affiliates in the ordinary course of business);

 

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(iii) a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or

(iv) a Person that Controls or is under common Control with (whether directly, indirectly or otherwise) any of (i), (ii) or (iii) above.

A natural person who otherwise satisfies the foregoing definition other than subparagraph (i) by reason of being the independent director or independent manager of a single purpose bankruptcy remote entity in the direct chain of ownership of such corporation or limited liability company shall not be disqualified from serving as an Independent Manager of such corporation or limited liability company, provided that the fees that such individual earns from serving as independent director or independent manager of such Affiliates in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year. Notwithstanding anything to the contrary herein, (A) Borrower may not have the same independent directors or independent managers as any Mezzanine Borrower, and (B) Borrower’s independent directors or independent managers shall not be Affiliates of Master Lessee or Master Lease Guarantor.

“Individual Property” shall mean all real and personal property included in one “Individual Property” as such term is defined in any one of the Security Instruments.

“Initial Interest Period” shall mean, (a) with respect to each Fixed Rate Component, a period from and including the Closing Date and ending on and including April 9, 2012, and (b) with respect to the Floating Rate Component, a period from and including the Closing Date and ending on and including April 12, 2012

“Insurance Requirements” shall mean, collectively, (i) all material terms of any insurance policy required pursuant to this Agreement and (ii) all material regulations and then-current standards applicable to or affecting the Property or any part thereof or any use or condition thereof, which may, at any time, be recommended by the Board of Fire Underwriters, if any, having jurisdiction over the Property, or such other body exercising similar functions.

“Insurance Reserve Account” shall have the meaning set forth in Section 3.1.1.

“Insurance Reserve Amount” shall have the meaning set forth in Section 16.2.

“Intercreditor Agreement” shall have the meaning set forth in Section 19.24.

“Interest Period” shall mean, (a) with respect to each Fixed Rate Component, a period from and including the tenth (10^th) calendar day of each calendar month during the term of the Loan and ending on and including the ninth (9^th) calendar day of the immediately succeeding calendar month, and (b) with respect to the Floating Rate Component, a period from and including the thirteenth (13^th) calendar day of each calendar month during the term of the Loan and ending on and including the twelfth (12^th) calendar day of the immediately succeeding calendar month.

“Interest Rate” shall mean, with respect to each Component, the applicable Component Interest Rate, or where applicable pursuant to this Agreement or any other Loan Document, the applicable Default Rate.

 

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“Interest Rate Cap Agreement” shall mean an agreement (together with the confirmation and schedules relating thereto), dated on or about the date hereof, between the Counterparty and Borrower, obtained by Borrower and collaterally assigned to Lender pursuant to this Agreement. After delivery of a Replacement Interest Rate Cap Agreement to Lender, the term “Interest Rate Cap Agreement” shall be deemed to mean such Replacement Interest Rate Cap Agreement. The Interest Rate Cap Agreement shall be governed by the laws of the State of New York and shall contain each of the following:

(a) Notional Amount. The notional amount of the Interest Rate Cap Agreement shall be equal to the then outstanding principal balance of the Floating Rate Component;

(b) Remaining Term. For so long as any portion of the Floating Rate Component is outstanding, (i) the initial Interest Rate Cap Agreement shall at all times extend through the end of the Interest Period in which the April, 2014 Payment Date occurs, and (ii) each Replacement Interest Rate Cap Agreement shall at all times extend through the last day of (x) an Interest Period that ends no earlier than two (2) years after the effective date of such Replacement Interest Rate Cap Agreement, or (y) the Interest Period in which the Maturity Date occurs, whichever is earlier;

(c) Parties. The Interest Rate Cap Agreement shall be issued by the Counterparty to Borrower and shall be pledged to Lender by Borrower in accordance with this Agreement;

(d) Payment Stream. The Counterparty under the Interest Rate Cap Agreement shall be obligated to make a stream of payments directly to the Holding Account (whether or not an Event of Default has occurred) from time to time equal to the product of (i) the notional amount of such Interest Rate Cap Agreement multiplied by (ii) the excess, if any, of LIBOR (including any upward rounding under the definition of LIBOR) over the LIBOR Cap Strike Rate;

(e) Acknowledgment. The Counterparty under the Interest Rate Cap Agreement shall execute and deliver the Acknowledgment; and

(f) Other. The Interest Rate Cap Agreement shall impose no material obligation on the beneficiary thereof (after payment of the acquisition cost) and shall be in all material respects reasonably satisfactory in form and substance to Lender.

“Intermediate Entity” means any Intermediate HoldCo Entity or Intermediate PropCo Entity.

“Intermediate HoldCo Entity” shall mean any Person satisfying all of the following: (a) 100% of the direct or indirect Equity Interests in such Person are owned by, and such Person is Controlled by, Guarantor, (b) such Person owns, directly or indirectly, 100% of the Equity Interests in, and Controls, HoldCo, and (c) such Person does not own, directly or indirectly, any Equity Interest in any Person other than another Intermediate HoldCo Entity (if any) and, indirectly by virtue of its direct or indirect Equity Interests in HoldCo, the Persons in which HoldCo owns a direct or indirect Equity Interest. As of the Closing Date, there are no Intermediate HoldCo Entities.

 

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“Intermediate PropCo Entity” shall mean any Person satisfying all of the following: (a) 100% of the direct or indirect Equity Interests in such Person are owned by, and such Person is Controlled by, HoldCo, (b) such Person owns, directly or indirectly, 100% of the Equity Interests in, and Controls, PropCo and does not directly or indirectly own any Equity Interest in Master Lease Guarantor, and (c) such Person does not own, directly or indirectly, any Equity Interest in any Person other than another Intermediate PropCo Entity (if any) and, indirectly by virtue of its direct or indirect Equity Interests in PropCo, PRP, each Mezzanine Borrower and Borrower. As of the Closing Date, there are no Intermediate PropCo Entities.

“Inventory” shall have the meaning set forth in the Uniform Commercial Code in effect in the State of New York.

“Involuntary Lien” shall mean any lien on the Property other than a lien that Borrower or any Affiliate of Borrower voluntarily causes to be placed, or which Borrower or any Affiliate of Borrower colludes in the placing, on the Property.

“IPO Entity” shall mean any Lower Tier Entity or Upper Tier Entity.

“Land” shall mean, collectively, all real property interests included in “Land” as such term is defined in each and every Security Instrument.

“Late Payment Charge” shall have the meaning set forth in Section 2.2.3.

“Lead Based Paint” shall have the meaning provided in Section 12.2.2.

“Lead Based Paint Report” shall have the meaning provided in Section 12.2.2.

“Leaseable Building Pad” shall have the meaning set forth in Section 8.8.11.

“Lease Coverage Ratio” shall mean a ratio, as determined by Lender for the twelve calendar months immediately preceding the date of calculation, in which:

(a) the numerator is the Portfolio Four-Wall EBITDAR, applied consistently, stated on the most recent monthly report or reports delivered to Lender pursuant to Sections 11.2.1 through 11.2.3 for the trailing twelve (12) month period ended on the last day of the period covered by such report; and

(b) the denominator is the aggregate amount of Master Lease Base Rent payable under the Master Lease for the twelve calendar months immediately prior to the applicable calculation date, provided that for the twelve-month period following the Closing Date, Lease Coverage Ratio shall be calculated based on the Master Lease Base Rent payable under the Master Lease from the Closing Date through the full calendar month preceding the calculation date, with such sum annualized to determine the Master Lease Base Rent for a full twelve month period.

Notwithstanding the foregoing, when determining whether the Lease Coverage Ratio condition is satisfied in connection with a Property Release, the following shall apply: (i) the numerator of Lease Coverage Ratio immediately prior to the Release Date shall only include the trailing

 

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twelve (12) month Portfolio Four-Wall EBITDAR contributed by the Individual Properties that are subject to the Lien of the Security Instrument immediately prior to the Property Release, including the subject Release Property, but excluding all previous Release Properties regardless of the applicable Release Dates; (ii) the numerator of Lease Coverage Ratio on the Release Date shall only include the trailing twelve (12) month Four-Wall EBITDAR contributed by the Individual Properties that are subject to the Lien of the Security Instrument immediately following the Property Release, excluding the subject Release Property and all previous Release Properties regardless of the applicable Release Date; (iii) the denominator of Lease Coverage Ratio immediately prior to the Release Date shall equal the monthly Master Lease Base Rent in effect immediately prior to the Property Release, multiplied by twelve (12); and (iv) the denominator of Lease Coverage Ratio on the Release Date shall equal the monthly Master Lease Base Rent to be in effect immediately following the Property Release (taking into account the reduction of the Master Lease Base Rent with respect to the subject Release Property), multiplied by twelve (12).

“Leased Premises” shall mean that portion of the Property leased to the Master Lessee from time to time pursuant to the Master Lease.

“Legal Requirements” shall mean all laws, statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules, regulations and requirements of every Governmental Authority affecting the Loan, any Securitization of the Loan, Borrower or any Individual Property or any part thereof, or the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or reconstruction of any Individual Property or any part thereof, or the Improvements or the Building Equipment thereon, whether now or hereafter enacted and in force, including without limitation, the Securities Act, the Exchange Act, Regulation AB, the rules and regulations promulgated pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Environmental Laws, all covenants, restrictions and conditions now or hereafter of record, building and zoning codes and ordinances and laws relating to handicapped accessibility.

“Lender” shall have the meaning set forth in the first paragraph of this Agreement.

“Lender’s Consultant” shall mean an environmental and engineering consulting firm selected by Lender having experience (i) conducting environmental and engineering assessments for properties similar to the Property and (ii) preparing and supervising remediation plans for properties similar to the Property.

“Letter of Credit” shall mean an irrevocable, unconditional, transferable, clean sight draft letter of credit (either an evergreen letter of credit or one which does not expire until at least sixty (60) days after the Maturity Date (the “LC Expiration Date”)), in favor of Lender and entitling Lender to draw thereon in New York, New York, based solely on a statement executed by an officer or authorized signatory of Lender and issued by an Eligible Institution. If at any time (a) the institution issuing any such Letter of Credit shall cease to be an Eligible Institution or (b) the Letter of Credit is due to expire prior to the LC Expiration Date, Lender shall have the right immediately to draw down the same in full and hold the proceeds thereof in accordance with the provisions of this Agreement, unless Borrower shall deliver a replacement Letter of Credit from an Eligible Institution within (i) as to (a) above, twenty (20) days after Lender delivers written notice to Borrower that the institution issuing the Letter of Credit has ceased to be an Eligible Institution or (ii) as to (b) above, at least twenty (20) days prior to the expiration date of said Letter of Credit.

 

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“LIBOR” shall mean, with respect to any Floating Rate Determination Date, the rate (expressed as a percentage per annum rounded upwards, if necessary, to the nearest one one-thousandth (1/1000) of one percent (1%)) for deposits in U.S. Dollars for a one (1) month period that appears on Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on such Floating Rate Determination Date. If such rate does not appear on Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on the applicable Floating Rate Determination Date, the Lender shall request the principal London office of any four (4) prime banks in the London interbank market selected by the Lender to provide such banks’ quotations of the rates at which deposits in U.S. Dollars are offered by such banks at approximately 11:00 a.m., London time, to prime banks in the London interbank market for a one (1) month period commencing on the first day of the related Interest Period and in a principal amount that is representative for a single transaction in the relevant market at the relevant time. If at least two (2) such offered quotations are so provided, LIBOR will be the arithmetic mean of such quotations (expressed as a percentage and rounded upwards, if necessary, to the nearest one one-thousandth (1/1000) of one percent (1%)). If fewer than two (2) such quotations are so provided, the Lender will request major banks in New York City selected by the Lender to quote such banks’ rates for loans in U.S. Dollars to leading European banks as of approximately 11:00 a.m., New York City time, on the applicable Floating Rate Determination Date for a one (1) month period commencing on the first day of the related Interest Period and in an amount that is representative for a single transaction in the relevant market at the relevant time. If at least two (2) such rates are so provided, LIBOR will be the arithmetic mean of such rates (expressed as a percentage and rounded upwards, if necessary, to the nearest one one-thousandth (1/1000) of one percent (1%)). If fewer than two (2) rates are so provided, then LIBOR will be LIBOR used to determine the LIBOR Rate during the immediately preceding Interest Period.

“LIBOR Cap Strike Rate” shall mean 7.0% per annum.

“LIBOR Floor” shall mean one percent (1.0%) per annum.

“LIBOR Margin” shall mean 2.3736% per annum.

“LIBOR Rate” shall mean, with respect to each Interest Period, an interest rate per annum equal to the sum of (a) the greater of (i) LIBOR, determined as of the Floating Rate Determination Date immediately preceding the commencement of such Interest Period, or (ii) the LIBOR Floor, plus (b) the LIBOR Margin.

“License” shall have the meaning set forth in Section 4.1.24.

“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance or charge on or affecting Borrower, the Property, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and the filing of mechanic’s, materialmen’s and other similar liens and encumbrances, in each case, excluding any such items filed against and solely affecting the Excluded Personal Property.

 

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“LLC Agreement” shall have the meaning set forth in Section 5.3(c).

“Loan” shall mean the loan in the amount of the Loan Amount made by Lender to Borrower pursuant to this Agreement.

“Loan Amount” shall mean the original principal amount of the Loan equal to $324,800,000.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instrument, the Assignment of Leases, the Environmental Indemnity, the Master Lease SNDA, the Recourse Guaranty, the Subordination of Asset Management Agreement and all other documents executed and/or delivered by Borrower, Master Lessee or Guarantor for the benefit of Lender in connection with the Loan, including any opinion certificates or other certifications or representations delivered by or on behalf of Borrower or any Affiliate of Borrower for the benefit of Lender; provided, however, that “Loan Documents” shall exclude the Indemnity Agreement.

“Loan Party” shall mean, individually or collectively as the context requires, Borrower, each SPE Component Entity and Guarantor.

“Lockout Expiration Date” shall have the meaning set forth in Section 2.3.1 hereof.

“Losses” shall mean any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, judgments, awards, amounts paid in settlement of whatever kind or nature (including but not limited to reasonable legal fees and other costs of defense).

“Low Lease Coverage Ratio Cash Sweep Period” shall mean any period of time during which a 90% Cash Sweep Period and/or an 80% Cash Sweep Period exists.

“Lower Tier Entity” shall mean any of Master Lease Guarantor, HoldCo or any Intermediate HoldCo Entity.

“Management Stockholders” means the bona fide members of management of Master Lease Guarantor or its Subsidiaries (excluding the Founders) who are as of the relevant date of determination both (i) actively involved in the management of Master Lease Guarantor or its Subsidiaries and (ii) investors in Guarantor or any direct or indirect parent thereof.

“Master Lease” shall mean that certain Amended and Restated Master Lease Agreement for the Properties by and between Borrower, as lessor, and Master Lessee, as lessee, dated the date hereof, as more particularly described in Section 5.1.22. Lender acknowledges that Borrower does not own, and Lender does not have a lien on, the Excluded Personal Property and that the term “Master Lease” shall not include the Excluded Personal Property or leases or licenses with respect to the Excluded Personal Property.

 

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“Master Lease Additional Charges” shall mean the “Additional Charges” as defined under the Master Lease.

“Master Lease Annual Budget” shall have the meaning set forth in the definition of “Annual Budget.”

“Master Lease Base Rent” shall mean monthly “Base Rent” as defined under the Master Lease.

“Master Lease Default” shall mean a default by Master Lessee or Borrower under the terms of the Master Lease beyond any applicable notice and cure periods contained therein.

“Master Lease Guarantor” shall mean OSI Restaurant Partners, LLC, a Delaware limited liability company.

“Master Lease Guarantor Asset Covenants” shall mean the following covenants pertaining to the Master Lease Guarantor, except to the extent such covenants are no longer complied with as a result of a foreclosure (or transfer in lieu thereof) of the Liens granted by HoldCo, Master Lease Guarantor or any of Master Lease Guarantor’s Subsidiaries resulting from the exercise of remedies as set forth in the Master Lease Guarantor Facility: (i) Master Lease Guarantor shall continue to own, directly or through Close Subsidiaries, the restaurant brands and related intellectual property and businesses known as “Outback Steakhouse” and “Carraba’s Italian Grill”; (ii) Master Lease Guarantor shall not dispose of all or substantially all of its assets, exclusive of transfers to and among Master Lease Guarantor’s Close Subsidiaries; and (iii) Master Lessee shall continue to be a wholly owned Subsidiary of Master Lease Guarantor and Master Lease Guarantor shall not permit and shall not consent to any assignment by Master Lessee of its interest in the Master Lease or its rights and interests thereunder.

“Master Lease Guarantor Consolidated EBITDA” shall mean, as of any date of determination, Consolidated EBITDA (as defined in the Master Lease Guarantor Initial Credit Agreement, assuming for this purpose all adjustments thereto made pursuant to the Master Lease Guarantor Initial Credit Agreement for purposes of determining the Total Leverage Ratio, as defined in the Master Lease Guarantor Initial Credit Agreement) for the Test Period (as defined in the Master Lease Guarantor Initial Credit Agreement) then last ended.

“Master Lease Guarantor Facility” shall mean the credit facilities provided under the Credit Agreement, dated as of June 14, 2007, by and among Master Lease Guarantor, as borrower, HoldCo, Deutsche Bank AG, New York Branch, as Administrative Agent, and the other lenders from time to time party thereto (the “Master Lease Guarantor Initial Credit Agreement”), and any amendments, supplements, modifications, extensions, replacements, renewals, restatements, refundings or refinancings thereof and any one or more indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that extend, replace, refund, refinance, renew or defease any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof or adds additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders; provided, however, that in no event shall such

 

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credit facilities, or any amendments, supplements, modifications, extensions, replacements, renewals, restatements, refundings or refinancings thereof, be secured in whole or in part by the direct or indirect Equity Interests in Guarantor or any of its direct or indirect parent entities or in HoldCo, any Intermediate Entity, PropCo, PRP, any Mezzanine Borrower or Borrower.

“Master Lease Guarantor Initial Credit Agreement” shall have the meaning set forth in the definition of Master Lease Guarantor Facility, without giving effect to any amendments, supplements, modifications, extensions, replacements, renewals, restatements, refundings or refinancings thereof.

“Master Lease Guarantor Total Leverage Ratio” shall mean, as of any date of determination, the Total Leverage Ratio (as defined in the Master Lease Initial Credit Agreement) for the Test Period (as defined in the Master Lease Guarantor Initial Credit Agreement) then last ended.

“Master Lease Guaranty” shall mean that certain Master Lease Guaranty, dated as of the date hereof, by Master Lease Guarantor in favor of Borrower, as the same may, with Lender’s consent, be amended, supplemented, restated or otherwise modified from time to time.

“Master Lease Minimum Shortfall Reserve Amount” shall mean an amount equal to two (2) months of monthly Master Lease Base Rent.

“Master Lease 90% Reserve Amount” shall mean an amount equal to twelve (12) months of monthly Master Lease Base Rent.

“Master Lease Rent” shall mean, collectively, the Master Lease Base Rent and the Master Lease Additional Charges.

“Master Lease Rent Payment Direction Letter” shall mean a letter in the form of Exhibit D pursuant to which Borrower instructs Master Lessee (a) to make payments of Master Lease Base Rent directly to the Holding Account, and (b) to the extent that any Master Lease Additional Charges are payable by Master Lessee to Borrower under the Master Lease, to make payments of such Master Lease Additional Charges directly to the Holding Account, in each case, as more particularly set forth in Section 3.1.9(a).

“Master Lease Rent Shortfall” shall mean the amount, if any, by which deposits made by Master Lessee into the Holding Account on account of Master Lease Rent are less than the amount of Master Lease Rent required to be deposited therein by Master Lessee pursuant to the Master Lease Rent Payment Direction Letter.

“Master Lease Rent Shortfall Reserve Account” shall have the meaning provided in Section 3.1.1.

“Master Lease Scheduled Additional Rent” shall mean, collectively, the “Scheduled Additional Charges” as defined under the Master Lease.

“Master Lease Scheduled Rent” shall mean, collectively, the “Scheduled Lease Payments” as defined under the Master Lease.

 

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“Master Lease SNDA” shall mean that certain Subordination, Non-Disturbance and Attornment agreement among Borrower, Master Lessee and Lender, dated as of the date hereof.

“Master Lease Tenant Default” shall mean a default by Master Lessee under the terms of the Master Lease beyond any applicable notice and cure periods contained therein.

“Master Lease Variable Additional Rent” shall mean the “Variable Additional Charges” as defined under the Master Lease.

“Master Lessee” shall mean Private Restaurant Master Lessee, LLC, a Delaware limited liability company.

“Master Lessee Officer’s Certificate” shall mean a certificate executed by an authorized signatory of Master Lessee that is familiar with the financial condition of Master Lessee and the operation of the Property.

“Master Owned Property Schedule” shall mean the schedule attached hereto as Schedule XV, which shall include the Concept or Third-Party Brand, address, lot size, building size, and Net Sales/EBITDAR (for the period set forth thereon) relating to each Property.

“Material Action” shall mean, as to any Person, (i) to consolidate or merge such Person with or into any Person, (ii) to sell all or substantially all of the assets of such Person, (iii) to institute proceedings to have such Person be adjudicated bankrupt or insolvent or, to file or consent to the institution of bankruptcy or insolvency proceedings against such Person, (iv) to file, institute, commence or seek relief under, any petition, proceeding, action or case under any Creditors Rights Laws, or to seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for such Person or a substantial part of its property, (v) to make any assignment for the benefit of creditors of such Person, (vi) to admit in writing such Person’s inability to pay its debts generally as they become due (other than, with respect to Borrower and any Mezzanine Borrower, communications with Lender or any Mezzanine Lender), (vii) to the fullest extent permitted by law, to dissolve or liquidate such Person, or (viii) to take action in furtherance of any of the foregoing.

“Material Adverse Effect” shall mean any event or condition that has a material adverse effect on (i) the Property taken as a whole, (ii) the use, operation, or value of any Individual Property, (iii) the business, profits, operations or financial condition of Borrower, or (iv) the ability of Borrower to repay the principal and/or interest of the Loan as it becomes due or to satisfy any of Borrower’s material obligations under the Loan Documents.

“Material Agreements” shall mean any contract and agreement relating to the ownership, management, development, use, operation, leasing, maintenance, repair or improvement of the Properties or any Individual Property that provides for annual payments by Borrower or any other Loan Party of $50,000.00 or more unless the same is cancelable without penalty or premium on no more than thirty (30) days notice (other than the Master Lease, the Asset Management Agreement, the Operating Agreements, and excluding any contracts entered into for the restoration of an Individual Property in accordance with the Loan Documents and the Master Lease).

 

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“Material Alteration” shall mean any Alteration which, when aggregated with all related Alterations (other than decorative work such as painting, wall papering and carpeting and the replacement of fixtures, furnishings and equipment to the extent being of a routine and recurring nature and performed in the ordinary course of business) constituting a single project, involves an estimated cost exceeding forty percent (40%) of the designated Allocated Loan Amount applicable to the Individual Property with respect to such Alteration or related Alterations (including the Alteration in question) then being undertaken at such Individual Property; provided however that the term “Material Alteration” shall not include Alterations being undertaken at the sole cost and expense of (a) the Master Lessee pursuant to the Master Lease so long as the security required for any such material alteration under the Master Lease is deposited with Lender as and to the extent required under the Master Lease, and so long as neither Borrower nor any Affiliate of Borrower has or will have any obligation to reimburse Master Lessee for its costs of such Alteration, or (b) a Tenant pursuant to a Sublease.

“Maturity Date” shall mean the Stated Maturity Date, or such earlier date on which the final payment of principal of the Loan becomes due and payable as provided herein, whether by declaration of acceleration, or otherwise.

“Maximum Legal Rate” shall mean the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

“Member” shall have the meaning set forth in Section 5.3(c).

“Mezzanine Account” shall mean the First Mezzanine Account and/or the Second Mezzanine Account, or both such accounts collectively, as the context may require.

“Mezzanine Borrower” shall mean the First Mezzanine Borrower and/or Second Mezzanine Borrower, or both such borrowers collectively, as the context may require.

“Mezzanine Foreclosure Divestment” shall have the meaning set forth in Section 18.1.4(a).

“Mezzanine Lender” shall mean the First Mezzanine Lender and/or Second Mezzanine Lender, or both such lenders collectively, as the context may require.

“Mezzanine Lender Controlled Actions” shall have the meaning set forth in Section 18.1.4(b).

“Mezzanine Loan” shall mean the First Mezzanine Loan and/or the Second Mezzanine Loan, or both such loans collectively, as the context may require.

“Mezzanine Loan Agreement” shall mean the First Mezzanine Loan Agreement and/or the Second Mezzanine Loan Agreement, or both such loan agreements collectively, as the context may require.

 

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“Mezzanine Loan Default Notice” shall mean a First Mezzanine Loan Default Notice and/or a Second Mezzanine Loan Default Notice, or both such default notices collectively, as the context may require.

“Mezzanine Loan Documents” shall mean the First Mezzanine Loan Documents and/or the Second Mezzanine Loan Documents, or all such loan documents, collectively, as the context may require.

“Mezzanine Note” shall mean the First Mezzanine Note and/or Second Mezzanine Note, or both such notes collectively, as the context may require.

“Minimum Net Worth” shall have the meaning set forth in Section 8.5.

“Minimum Ownership/Control Requirements” shall have the meaning set forth in Section 8.4(d).

“Monetary Default” shall mean a Default (i) that can be cured with the payment of money or (ii) arising pursuant to Section 17.1(a)(vi) or (vii).

“Monthly Capital Expenditure Reserve Amount” shall have the meaning set forth in Section 16.4(a).

“Monthly Insurance Reserve Amount” shall have the meaning set forth in Section 16.2.

“Monthly Payment Amount” shall mean, for each Payment Date, an amount equal to the sum of (a) the aggregate amount of interest which has accrued during the relevant Interest Period on each Component at the applicable Component Interest Rate, plus (b) the amount of principal payable on such Payment Date based on the amortization schedule attached hereto as Schedule VII and made a part hereof, as such schedule may be amended from time to time in accordance with the last sentence of the definition of Scheduled Defeasance Payments.

“Monthly Tax Reserve Amount” shall have the meaning set forth in Section 16.1.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Net Sales” shall mean gross sales net of free or discounted meals provided to employees and others.

“Net Worth” of a Person shall mean, as of a given date, the net worth of such Person as calculated in accordance with GAAP; provided (a) that the Individual Properties and such Person’s direct or indirect equity therein shall be excluded from the calculation of net worth, and (b) all computations of Net Worth shall be made without giving effect to any election under Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any indebtedness or other liabilities at “fair value”, as defined therein.

“Net Worth Covenants” shall have the meaning set forth in Section 8.5.

 

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“New Sublease” shall have the meaning set forth in Section 8.8.1.

“Non-Consolidation Opinion” shall mean that certain bankruptcy non-consolidation opinion letter dated the date hereof delivered by Edwards Wildman Palmer LLP in connection with the Loan.

“Non-Disturbance Agreement” shall have the meaning set forth in Section 8.8.9.

“Non-Disturbance Eligible Sublease” shall mean any existing Sublease, or any new Sublease entered into in accordance with this Agreement, in each case, where neither Master Lease Guarantor nor any of its Affiliates owns any direct or indirect Equity Interests in, or Controls, the subtenant that is the party thereto; provided, however, that as of the Closing Date, no Specified Prior Subleases are Non-Disturbance Eligible Subleases. All Non-Disturbance Eligible Subleases as of the Closing Date are listed on Schedule I attached hereto.

“Note” shall mean that certain Note, dated the date hereof, made by Borrower, as maker, in favor of Lender, as payee, in the principal amount of $324,800,00, evidencing all of the Components of the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, including any Undefeased Note that may exist from time to time, but excluding any Defeased Note.

“NRSRO” shall mean any credit rating agency that has elected to be treated as a nationally recognized statistical rating organization for purposes of Section 15E of the Exchange Act, without regard to whether or not such credit rating agency has been engaged by Lender or its designees in connection with, or in anticipation of, a Securitization or has rated the Securities in connection with any Securitization.

“O&M Plan” shall have the meaning provided in Section 12.2.2.

“Obligations” shall mean, collectively, Borrower’s obligations for the payment of the Indebtedness and the performance of all other obligations of Borrower contained in this Agreement, the Note or any other Loan Document, or any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of this Agreement, the Note or any other Loan Document.

“OFAC” List means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and accessible through the internet website www.treas.gov/ofac/t11sdn.pdf.

“Officer’s Certificate” shall mean a certificate executed by an authorized signatory of Borrower that is familiar with the financial condition of Borrower and the operation of the Property, or, in the case of Officer’s Certificates required under Section 11, the Chief Financial Officer of Borrower.

“Opco Equity Foreclosure” shall have the meaning set forth in Section 8.4(a).

“Operating Agreements” shall mean, collectively, the REAs, the Condominium Documents and all amendments, modifications and supplements thereto.

 

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“Opinion of Counsel” shall mean an opinion of counsel of a law firm selected by Borrower and reasonably acceptable to Lender.

“Other Charges” shall mean, collectively, (i) Common Charges and any special assessments and other similar amounts charged to Borrower under the Condominium Documents or otherwise payable with respect to the Condominium Properties pursuant to the Condominium Documents, (ii) all sums, charges, fees, costs, expenses, common area maintenance charges and other charges or assessments reserved in or payable under the REAs and (iii) maintenance charges, impositions other than Real Estate Impositions, and any other charges, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter levied or assessed or imposed against the Property or any part thereof by any Governmental Authority.

“Other Taxes” shall have the meaning set forth in Section 2.5.3.

“Outparcel” shall have the meaning set forth in Section 2.3.6(b).

“Outparcel Release Conditions” shall have the meaning set forth in Section 2.3.6(b).

“Outparcel Release Instruments” shall have the meaning set forth in Section 2.3.6(b).

“Partial Defeasance Collateral” shall mean, with respect to a Partial Defeasance Event, U.S. Securities that provide payments (a) on or prior to, but as close as possible to, the Business Day immediately preceding each Payment Date after the Defeasance Date of such Partial Defeasance Event and up to and including the Lockout Expiration Date (or any date thereafter as specified by Borrower on or prior to the Defeasance Date), and (b) in amounts equal to or greater than the Scheduled Defeasance Payments relating to each such Partial Defeasance Event.

“Partial Defeasance Date” shall have the meaning set forth in Section 2.4.2(a).

“Partial Defeasance Event” shall have the meaning set forth in Section 2.4.2.

“Participations” shall have the meaning set forth in Section 14.1.

“Partner Equity Program” shall mean the Outback Steakhouse, Inc. Partner Equity Plan and OSI Restaurant Partners, LLC Partner Ownership Account Plan, each as may be modified, amended, extended, supplemented, restated or replaced from time to time.

“Pass-Through Sublease” shall mean any Sublease entered into by a Pass-Through Subsidiary and Master Lessee, together with any amendments thereto or replacements thereof, for all or any portion of the Leased Premises as and to the extent permitted under the terms and conditions of the Master Lease and the terms and conditions of this Agreement, including Section 8.8 hereof. As of the Closing Date, the Pass-Through Subleases are those certain Subleases, each dated as of June 14, 2007, between Master Lessee, as sublandlord, and either OS Southern, LLC or OS Tropical, LLC, as subtenant, as amended.

“Pass-Through Subsidiary” shall mean any direct or indirect wholly-owned Subsidiary of Master Lease Guarantor that subleases from Master Lessee any Individual Property at which an Unaffiliated Business is being operated. As of the Closing Date, the Pass-Through Subsidiaries are OS Southern, LLC and OS Tropical, LLC.

 

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“Payment Date” shall mean, with respect to each Component, the tenth (10^th) calendar day of each calendar month, and if such day is not a Business Day, then the Business Day immediately preceding such day, commencing on April 10, 2012 and continuing to and including the Maturity Date.

“Permitted Debt” shall mean, as applicable:

(a) with respect to Borrower only, (i) the Loan and the other obligations, indebtedness and liabilities specifically provided for in any Loan Document to which Borrower is a party, and secured by this Agreement, the Security Instrument and the other Loan Documents, and (ii) trade payables, operational debt, deferred purchase payments for services and indebtedness incurred by Borrower in the financing of equipment, personal property and Fixtures used on the Property incurred in the ordinary course of Borrower’s business, not secured by Liens on the Property (other than liens being properly contested in accordance with the provisions of this Agreement or the Security Instrument), not to exceed 2.0% of the Principal Amount in the aggregate at any one time outstanding, payable by or on behalf of Borrower for or in respect of the operation of the Property in the ordinary course of operating Borrower’s business, provided that (but subject to the remaining terms of this definition) each such amount shall be paid within sixty (60) days following the date on which each such amount is incurred;

(b) with respect to each Mezzanine Borrower only, such Mezzanine Borrower’s related Mezzanine Loan and the other obligations, indebtedness and liabilities specifically provided for in the Mezzanine Loan Documents evidencing and/or securing such Mezzanine Loan to which such Mezzanine Borrower is a party and any other Debt permitted to be incurred by such Mezzanine Borrower pursuant to the Mezzanine Loan Documents to which such Mezzanine Borrower is a party (in the form of such Mezzanine Documents as of the Closing Date);

(c) with respect to Guarantor, the Guarantor Intercompany Loans and the obligations, indebtedness and liabilities of Guarantor specifically provided for in the Loan Documents and Mezzanine Loan Documents to which Guarantor is a party;

(d) with respect to PropCo, the obligations, indebtedness and liabilities of PropCo specifically provided for in the Loan Documents and Mezzanine Loan Documents to which PropCo is a party; and

(e) with respect to HoldCo, the Master Lease Guarantor Facility and any Debt permitted to be incurred by HoldCo pursuant thereto; provided that HoldCo shall not grant Liens upon, nor shall the Master Lease Guarantor Facility be secured in whole or in part by, the direct or indirect Equity Interests in Guarantor, or any of its direct or indirect parent entities, or in HoldCo, any Intermediate Entity, PropCo, PRP, any Mezzanine Borrower or Borrower.

Nothing contained herein shall be deemed to require Borrower to pay any amount, so long as Borrower is in good faith, and by proper legal proceedings, diligently contesting the validity, amount or application thereof, provided that in each case, at the time of the commencement of

 

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any such action or proceeding, and during the pendency of such action or proceeding (i) no Event of Default shall exist and be continuing hereunder, (ii) adequate reserves with respect thereto are maintained on the books of Borrower in accordance with GAAP, and (iii) such contest operates to suspend collection or enforcement, as the case may be, of the contested amount and such contest is maintained and prosecuted continuously and with diligence. Notwithstanding anything set forth herein, in no event shall Borrower be permitted under this provision to enter into a note (other than the Note and the other Loan Documents) or other instrument for borrowed money.

“Permitted Encumbrances” shall mean collectively, (a) the Liens and security interests created by the Loan Documents; (b) all Liens, encumbrances and other matters disclosed in the Title Policy; (c) Liens, if any, for Real Estate Impositions imposed by any Governmental Authority not yet due or delinquent; (d) Liens which are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted in accordance with Article VII hereof; (e) statutory Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens arising by operation of law, which are incurred in the ordinary course of business or permitted alterations hereunder or under the Master Lease for sums which are not more than thirty (30) days past due or being contested in good faith in accordance with Article VIII; (f) easements, licenses, restrictions, covenants, reservations, rights of way and other Transfers permitted under Section 8.3; (g) the Specified Prior Subleases; and (h) such other Liens as Lender may approve in writing in Lender’s sole discretion.

“Permitted Holders” shall mean the Sponsors, the Founders and the Management Stockholders; provided that, for purposes of determining under the provisions of this Agreement the percentage of stock or ownership interests directly or indirectly owned by the Permitted Holders at any time, (i) if the Management Stockholders own beneficially or of record more than ten percent (10%) of the outstanding Equity Interests of any Person in the aggregate, they shall be treated as Permitted Holders of only ten percent (10%) of the outstanding Equity Interests of such Person at such time; and (ii) if the Founders own beneficially or of record more than fifteen percent (15%) of the outstanding Equity Interests of any Person in the aggregate, they shall be treated as Permitted Holders of only fifteen percent (15%) of the outstanding Equity Interests of such Person at such time.

“Permitted Transferee” shall mean any Person that, immediately prior to the applicable Transfer, satisfies the following: (a) such Person, together with its Close Affiliates, has (or at least 51% of the Equity Interests in such Person are owned, directly or indirectly, by and such Person is Controlled, directly or indirectly, by one or more Persons that each, together with its Close Affiliates, has) a net worth of at least $1 Billion, and (b) if immediately following the applicable Transfer, such Person will own direct or indirect Equity Interests in PropCo, PRP, any Mezzanine Borrower, Borrower or any Transferee Borrower, then such Person, together with its Close Affiliates, controls (or at least 51% of the Equity Interests in such Person are owned, directly or indirectly, by and such Person is Controlled, directly or indirectly, by one or more Persons that each, together with its Close Affiliates, controls) real estate assets of at least $1 Billion, and (c) neither such Person, nor any Person directly or indirectly Controlling such Person is, a Disqualified Transferee.

 

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“Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

“Personal Property” shall mean all tangible and intangible personal property of any kind or character, Inventory, equipment, furniture, furnishings, objects of art, goods, tools, supplies, appliances, general intangibles, investment property, contract rights, accounts, accounts receivable, intellectual property, franchises and licenses, certificates and permits obtained by Master Lessee, Master Lease Guarantor and its Affiliates or any Tenant for its own business, in each case, of any kind or character whatsoever (as defined in and subject to the provisions of the Uniform Commercial Code as in effect in the State of New York) which are located within or about the Land and the Improvements, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof.

“Plan” shall have the meaning set forth in Section 4.1.10.

“PML” shall have the meaning set forth in Section 6.1.8.

“Portfolio Four-Wall EBITDAR” shall mean, with respect to any Individual Property or the Property, as the case may be, earnings from restaurant and related operations conducted thereon (after deducting compensation payable directly or indirectly to restaurant employees in the nature of regular salaries, wages and bonuses, but prior to deductions, without duplication, for payment of management services fees to any management partnerships owned by employees or other partners which are based upon earnings or cash flow, elimination of minority partner interest or distributions payable to partners and joint venturers) plus, to the extent deducted in determining such earnings:

(a) interest expense,

(b) income taxes,

(c) depreciation and amortization,

(d) any rental expense on real property,

(e) regional office allocation and corporate-level overhead expense (including marketing, insurance, accounting and supervision expense allocable to the restaurant-level for internal accounting purposes),

(f) royalty charges from affiliates,

(g) pre-opening expenses and restructuring expenses,

(h) provisions for impairments, closings and disposals, and

 

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(i) any non-cash charges (whether positive or negative including but not limited to gains/losses on sales of assets, provisions for restatement of prior periods and non-cash compensation expense, including Partner Equity Program expense).

Portfolio Four-Wall EBITDAR shall be calculated consistently with past practice, as reflected in the Portfolio Four-Wall EBITDAR calculations for purposes of determining the Closing Date Lease Coverage Ratio and past periods pursuant to the past period calculations and associated financial statements attached hereto as Schedule VIII.

“Post-IPO Change of Control” shall mean, in the event of a Qualifying IPO of any IPO Entity, that the Post-IPO Control Requirements are no longer satisfied.

“Post-IPO Control Requirements” shall mean, in the event of a Qualifying IPO of an IPO Entity, that either (i) Permitted Holders or, following a Transfer to a Permitted Transferee permitted under this Agreement, such Permitted Transferee (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders), shall own, directly or indirectly, of record and beneficially, no less than fifty-one percent (51%) of the voting stock of such IPO Entity, and have the right, directly or indirectly, to designate (and do so designate) a majority of the board of directors of such IPO Entity, or (ii) both of the following criteria are satisfied: (A) no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person and its subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than one or more Permitted Holders or, following a Transfer to a Permitted Transferee permitted under this Agreement, such Permitted Transferee, shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act), directly or indirectly, of more than the greater of (x) thirty-five percent (35%) of the shares outstanding of such IPO Entity, and (y) the percentage of the then outstanding voting stock of such IPO Entity owned, directly or indirectly, beneficially by the Permitted Holders or, following a Transfer to a Permitted Transferee permitted under this Agreement, such Permitted Transferee (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders), and (B) the majority of the board of directors of such IPO Entity consist of Continuing Directors.

“Prepayment Premium” shall mean (a) with respect to any prepayment of the Floating Rate Component or any portion thereof occurring prior to the Payment Date occurring in April 2013 (except a prepayment made in connection with a Property Release), an amount equal to one percent (1.0%) of the amount prepaid, and (b) with respect to any prepayment of the Floating Rate Component or portion thereof on or after the Payment Date occurring in April 2013, or at any time in connection with a Property Release, zero.

“Principal Amount” shall mean the aggregate outstanding principal balance from time to time of the Components of the Loan.

“Principal Amount (Mezzanine)” shall mean, collectively, the aggregate “Principal Amount” under each of the Mezzanine Loans, as such term is defined in each of the Mezzanine Loan Agreements.

 

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“Prohibited Person” means any Person identified on the OFAC List or any other Person with whom a U.S. Person may not conduct business or transactions by prohibition of Federal law or Executive Order of the President of the United States or America.

“Proceeds” shall have the meaning set forth in Section 6.2.2.

“Proceeds Reserve Account” shall have the meaning set forth in Section 3.1.1.

“PropCo” shall mean PRP Holdings, LLC, a Delaware limited liability company.

“Property” shall mean, collectively, all Individual Properties.

“Property Release” shall have the meaning set forth in Section 2.3.6.

“Property Release Notice” shall have the meaning set forth in Section 2.3.6(a).

“Proprietary Information” shall have the meaning set forth in Section 11.2.9.

“Provided Information” shall have the meaning set forth in Section 14.1(a).

“PRP” shall mean Private Restaurant Properties, LLC, a Delaware limited liability company.

“PZR” shall mean The Planning Zoning Resource Corporation.

“Qualified Capital Expenditures” shall mean amounts expended by Borrower or Master Lessee for repairs, replacements, alterations and improvements to the Property that are required to be capitalized according to GAAP, and that are necessary to keep the Property in good order and repair and in a good marketable condition or prevent deterioration of the Property, including but not limited to, those repairs, replacements, alterations and improvements more particularly described in the engineer’s inspection reports prepared in connection with the closing of the Loan; provided, however, that “Qualified Capital Expenditures” shall exclude expenditures for (a) Required Repairs, (b) repairs or restorations made as a result of a casualty or a Taking, (c) furniture, fixtures and equipment and (d) Excluded Personal Property or any other property not owned by Borrower.

“Qualified Manager” shall mean a property manager of the Property which (a) is a reputable management company having at least five (5) years’ experience in the management of commercial restaurant properties, (b) has, for at least five (5) years prior to its engagement as property manager, managed commercial properties with leasable square footage equal to at least the lesser of (i) 1,000,000 leasable square feet and (ii) five (5) times the leasable square feet of the Property, and (c) is not the subject of a bankruptcy or similar insolvency proceeding.

“Qualifying IPO” shall mean, with respect to any IPO Entity, the issuance by such IPO Entity of its common equity interests in an underwritten public offering (other than a public offering pursuant to a registration statement on Form S-8), satisfying the following conditions: (a) such public offering is made pursuant to an effective registration statement filed with the SEC in accordance with the Securities Act, (b) the publicly-offered common equity interests of such

 

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IPO Entity are listed and traded on the New York Stock Exchange, the NASDAQ Global Market or other nationally or internationally recognized stock exchange or automated quotation system, and (c) after giving effect to such public offering, the Post-IPO Change of Control Requirements are satisfied.

“Qualifying Replacement Guarantor” shall mean a Person that: (a) Controls each of PropCo, PRP, each Mezzanine Borrower and Borrower; and (b) satisfies the Guarantor Net Worth Requirements.

“Rate Cap Collateral” shall have the meaning set forth in Section 9.2.

“Rating Agencies” shall mean each nationally-recognized statistical rating organization which has rated the Securities in any Securitization.

“Rating Agency Confirmation” shall mean, with respect to any matter, confirmation in writing (which may be in electronic form) by each applicable Rating Agency that a proposed action, failure to act or other event with respect to which such Rating Agency Confirmation is sought will not in and of itself result in the downgrade, withdrawal or qualification of the then-current rating assigned to any Securities (if then rated by such Rating Agency); provided that upon the deemed waiver or the receipt of a written acknowledgment or waiver (which may be in electronic form) from a Rating Agency indicating its decision not to review the matter for which Rating Agency Confirmation is sought, the requirement to obtain Rating Agency Confirmation for such matter at such time will be considered not to apply (as if such requirement did not exist for such matter at such time) with respect to such Rating Agency. In the event that, at any given time, no Securities are then outstanding, then the term Rating Agency Confirmation shall be deemed instead to require the written approval of Lender based on its good faith determination of whether the Rating Agencies would issue a Rating Agency Confirmation if any such Securities were outstanding.

“REAs” shall mean, collectively, any recorded “construction, operation and reciprocal easement agreement” or similar agreement (including any “separate agreement” or other agreement between Borrower and one or more other parties to an REA with respect to such REA) affecting any Individual Property or portion thereof.

“Real Estate Impositions” shall mean all real estate taxes, governmental assessments (including all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not commenced or completed within the term of this Agreement), water, sewer or other rents and charges, excises, levies, fees (including license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Property and/or any Rents (including all interest and penalties thereon), which at any time prior to, during or in respect of the term hereof may be assessed or imposed on or in respect of or be a Lien upon (a) Borrower or the Property, or any part thereof, or any Rents therefrom or any estate, right, title or interest therein, or (b) any occupancy, operation, or possession of the Property or the leasing or use of all or any part thereof. Nothing contained in this Agreement shall be construed to require Borrower to pay any Tax, assessment, levy or charge imposed on (i) any tenant occupying any portion of the Property or (ii) Lender in the nature of a capital levy, estate, inheritance, succession, income or net revenue Tax.

 

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“Real Property” shall mean, collectively, the Land, the Improvements and the Appurtenances.

“Receivership Event” shall have the meaning set forth in Section 18.1.4(a).

“Receivership Period” shall have the meaning set forth in Section 18.1.4(a).

“Receivership Property” shall have the meaning set forth in Section 18.1.4(a).

“Recourse Guaranty” shall mean (a) that certain Guaranty of Recourse Obligations of Borrower, dated as of the date hereof, by Guarantor in favor of Lender, and (b) any Replacement Guaranty, in each case, as the same may be amended, supplemented, restated or otherwise modified from time to time.

“Recourse Obligations” shall have the meaning set forth in Section 18.1.4(a).

“Register” shall have the meaning set forth in Section 15.2.

“Regulation AB” shall mean Regulation AB under the Securities Act and the Exchange Act, as such Regulation may be amended from time to time.

“Regulatory Change” shall mean any change after the date of this Agreement in federal, state or foreign laws or regulations or the adoption or the making, after such date, of any interpretations, directives or requests applying to Lender, or any Person Controlling Lender or to a class of banks or companies Controlling banks of or under any federal, state or foreign laws or regulations (whether or not having the force of law) by any court or Governmental Authority or monetary authority charged with the interpretation or administration thereof.

“Related Holding Entity shall have the meaning set forth in Section 8.4(d).

“Release” shall have the meaning provided in the Environmental Indemnity.

“Release Date” shall have the meaning provided in Section 2.3.6(a).

“Release Instruments” shall have the meaning provided in Section 2.3.6(a)(iv).

“Release Price” shall mean, with respect to each Individual Property, the product of the designated Allocated Loan Amount applicable to such Individual Property and the Release Price Percentage; provided, however, that with respect to any Individual Property transferred to any Affiliate of Borrower, Guarantor, Master Lessee or Master Lease Guarantor, the Release Price for such Individual Property shall be the greater of (a) the product of the designated Allocated Loan Amount applicable to such Individual Property and the Release Price Percentage, and (b) the product of (i) the Fair Market Value of such Individual Property at the time of such transfer, multiplied by (ii) a fraction, the numerator of which is the Allocated Loan Amount for such Individual Property, and the denominator of which is Combined Allocated Loan Amount for such Individual Property.

 

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“Release Price Percentage” shall mean 115%; provided, however, that with respect to a release in connection with a casualty or Taking pursuant to Section 6.2.3 hereof, the Release Price Percentage shall equal 100%.

“Release Price (Mezzanine)” with respect to any Mezzanine Loan shall have the meaning ascribed to the term “Release Price” in the related Mezzanine Loan Agreement for such Mezzanine Loan.

“Release Property” shall have the meaning provided in Section 2.3.6(a).

“Release Property-Specific Default” shall have the meaning set forth in Section 2.3.6(a).

“Remaining Property” shall have the meaning set forth in Section 2.3.6(b).

“Rents” shall mean all rents, rent equivalents, moneys payable as damages or in lieu of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including, without limitation, security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower from any and all sources arising from or attributable to the Property, including, but not limited to the Master Lease and, upon termination thereof, the Subleases, and Proceeds, if any, from business interruption or other loss of income insurance.

“Replacement Guaranty” shall have the meaning set forth in Section 8.5.

“Replacement Indemnity” shall have the meaning set forth in Section 8.5.

“Replacement Interest Rate Cap Agreement” shall mean an interest rate cap agreement from an Approved Counterparty with terms that are the same in all material respects as the terms of the Interest Rate Cap Agreement except that the same shall be effective as of the date required in Section 9.3(c); provided that to the extent any such interest rate cap agreement does not meet the foregoing requirements, a Replacement Interest Rate Cap Agreement shall be such interest rate cap agreement approved in writing by Lender and each of the Rating Agencies with respect thereto.

“Required Repairs” shall have the meaning set forth in Section 16.3(a).

“Required Repairs Funds” shall have the meaning set forth in Section 16.3(a).

“Required Repairs Reserve Account” shall have the meaning set forth in Section 3.1.1.

“Required Tax Distribution Amount” shall mean, for any period, that portion of the amount required by law to be paid by a member of the Stand Alone Guarantor Group equal to the following: (i) solely with respect to Separate Borrower Group Tax Liability, if payments of estimated Taxes (as reasonably determined pursuant to Section 6655 of the Code or comparable

 

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provisions of state, local or foreign Tax law and payable on a timely basis) are required to be made by a member of the Stand Alone Guarantor Group for any quarter in which all of the interests in the Borrower were owned by a member of the Stand Alone Guarantor Group, the amount of any estimated Separate Borrower Group Tax Liability for such period and (ii) if the consolidated federal Income Tax return (or any consolidated, combined, unitary or similar group Tax return pursuant to state, local or foreign Tax law) of the Guarantor Group is required to be filed for any taxable year during which all of the interests in the Borrower were owned by a member of the Stand Alone Guarantor Group, the positive difference between the Separate Borrower Group Tax Liability for such taxable year and the sum of the estimated Tax amounts computed in accordance with clause (i) above for each prior quarter of such taxable year.

“Restaurant Locations” shall mean the restaurants listed on Schedule XV attached hereto located at the corresponding street addresses set forth therein. Where only a single restaurant is operated at an Individual Property, then “Restaurant Location” with respect to such restaurant shall mean such Individual Property. Where two or more restaurants are operated at an Individual Property, then (a) “Restaurant Location” with respect to each such restaurant shall mean the portion of such Individual Property related to the use and operation of such restaurant, and (b) all such “Restaurant Locations” shall in the aggregate mean such Individual Property.

“Restricted Party” shall mean Borrower, any Mezzanine Borrower, any SPE Component Entity, PRP, PropCo, HoldCo, Guarantor, any Intermediate Entity, or any shareholder, partner, member or non-member manager, or direct or indirect legal or beneficial owner of Borrower, any Mezzanine Borrower, any SPE Component Entity, HoldCo, Guarantor or any Intermediate Entity.

“Reuters Screen LIBOR01 Page” shall mean the display page currently so designated on the Reuters Monitor Money Rates (or such other page as may replace that page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying comparable rates or prices).

“RLP Subleases” shall mean the Subleases listed on Schedule I between a Concept Subsidiary, as sub-sublandlord, and the entity party thereto as sub-subtenants, for all or any portion of an Individual Property, and any amendments or modifications thereto or replacements thereof; provided, however, that if Master Lease Guarantor’s direct or indirect ownership percentage of any such entity decreases below 75% or its ownership percentage as of the Closing Date, whichever is lower, or if Master Lease Guarantor no longer Controls such entity, then the Sublease to which such entity is a party shall no longer be an RLP Sublease, and shall become an Unaffiliated Sublease.

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

“Scheduled Defeasance Payments” shall mean (a) in the case of a Total Defeasance Event, scheduled payments of interest on and principal of the Fixed Rate Components of the Loan (less, for clarity, any previously defeased portion thereof) for each Payment Date occurring after the Defeasance Date and up to and including the Payment Date selected by Borrower from and after (and including) the Lockout Expiration Date (including the outstanding principal

 

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balance of the Fixed Rate Components of the Loan as of such Payment Date so selected), and (b) in the case of a Partial Defeasance Event, with respect to the principal portion of each Fixed Rate Component being defeased, scheduled payments of interest on and principal of such principal portion for each Payment Date occurring after the Defeasance Date and up to and including the Payment Date selected by Borrower from and after (and including) the Lockout Expiration Date (including the outstanding principal balance of such principal portion as of such Payment Date so selected). In the case of a Partial Defeasance Event, for purposes of clause (b) of the preceding sentence, the scheduled payments of principal on each Payment Date in respect of the principal portion being defeased will be equal to the product of (i) the amount of principal payable on such Payment Date based on the amortization schedule attached hereto as Schedule VII (as the same shall have been amended in connection with any prior Partial Defeasance Event in accordance with the immediately following sentence) multiplied by (ii) a fraction, the numerator of which is such principal portion being defeased as of the Defeasance Date for such Partial Defeasance Event, and the denominator of which is the Principal Amount as of the Defeasance Date for such Partial Defeasance Event (for clarity, excluding any portion of the Loan previously defeased). Such amortization schedule will be amended in connection with such Partial Defeasance Event by deducting from the scheduled principal payment to be made on each Payment Date pursuant to such schedule (as the same may have been previously amended in connection with a prior Partial Defeasance Event) the scheduled payments of principal on such Payment Date in respect of the Defeased Note for such Partial Defeasance Event, as determined in accordance with the immediately preceding sentence.

“SEC” shall mean the United States Securities and Exchange Commission.

“Second Mezzanine Account” shall mean an account designated by Second Mezzanine Lender to Lender from time to time pursuant to the terms of the Second Mezzanine Loan Agreement.

“Second Mezzanine Borrower” shall mean New PRP Mezz 2, LLC, a Delaware limited liability company.

“Second Mezzanine Debt Service Reserve Account” shall have the meaning set forth in Section 3.1.1.

“Second Mezzanine Lender” shall mean German American Capital Corporation, a Maryland corporation, and Bank of America, N.A., a national banking association, and each of their respective successors and/or assigns, as the holder of the Second Mezzanine Loan.

“Second Mezzanine Lender Monthly Debt Service Notice” shall mean the written notice required to be delivered by Second Mezzanine Lender pursuant to Section 3.1.6 of the Second Mezzanine Loan Agreement to Lender at least five (5) Business Days prior to each Payment Date setting forth the Second Mezzanine Loan Debt Service Amount payable by Second Mezzanine Borrower on the first Payment Date occurring after the date such notice is delivered; provided, however, that any Second Mezzanine Lender Monthly Debt Service Notice delivered to Lender shall be applicable with respect to all future Payment Dates until Second Mezzanine Lender delivers a new Second Mezzanine Lender Monthly Debt Service Notice to Lender, it being understood that Second Mezzanine Lender will not be required to deliver a new Second

 

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Mezzanine Lender Monthly Debt Service Notice to Lender unless and until the Second Mezzanine Loan Debt Service Amount due on the ensuing Payment Date is different from the Second Mezzanine Loan Debt Service Amount due on the immediately preceding Payment Date, and Lender shall be permitted to rely on the most recently received Second Mezzanine Lender Monthly Debt Service Notice until Lender receives a new Second Mezzanine Lender Monthly Debt Service Notice from Second Mezzanine Lender.

“Second Mezzanine Loan” shall mean that certain $87,600,000 mezzanine loan, made as of the date hereof, from Second Mezzanine Lender to Second Mezzanine Borrower.

“Second Mezzanine Loan Agreement” shall mean that certain Mezzanine Loan and Security Agreement (Second Mezzanine), dated as of the date hereof, between Second Mezzanine Borrower, as borrower, and Second Mezzanine Lender, as lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Second Mezzanine Loan Debt Service Amount” shall mean, with respect to any Payment Date, interest and principal payments scheduled to be due under the Second Mezzanine Loan (or the undefeased portion thereof in the event of a defeasance of a portion thereof) pursuant to the Second Mezzanine Loan Documents (excluding default or accrued interest other than regularly scheduled interest, but including all servicing fees due on such Payment Date under Section 16.3 of the Second Mezzanine Loan Agreement) on such date (as set forth in the Second Mezzanine Lender Monthly Debt Service Notice delivered to Lender), and repayment in full of the principal balance of the Second Mezzanine Note on the scheduled maturity of the Second Mezzanine Loan (but excluding any principal payments on account of an acceleration of the Second Mezzanine Loan or a default under any of the Second Mezzanine Loan Documents).

“Second Mezzanine Loan Default Notice” shall mean a notice from Second Mezzanine Lender to Lender (upon which Lender may conclusively rely without any inquiry into the validity thereof) that an “Event of Default” has occurred and is continuing under any of the Second Mezzanine Loan Documents.

“Second Mezzanine Loan Default Revocation Notice” shall have the meaning set forth in Section 3.1.6 hereof.

“Second Mezzanine Loan Documents” shall mean the documents evidencing and securing the Second Mezzanine Loan, as may be modified, amended, extended, supplemented, restated or replaced from time to time.

“Second Mezzanine Note” shall mean that certain Second Mezzanine Note in the original principal amount of $87,600,000 dated as of the date hereof, from Second Mezzanine Borrower to Second Mezzanine Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, but excluding any portion of such note that has been defeased in accordance with the Second Mezzanine Loan Agreement.

“Securities” shall have the meaning set forth in Section 14.1.

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

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“Securitization” shall have the meaning set forth in Section 14.1.

“Security Deposits” shall have the meaning set forth in Section 8.8.5.

“Security Instrument” shall mean individually or collectively, as the context may require, those certain first priority Mortgage, Deed to Secure Debt and/or Deed of Trust, with Security Agreement, Financing Statement, Fixture Filing and Assignment of Master Lease, Subleases, Rents and Security Deposits (and/or those certain first priority Mortgages with respect to Individual Properties located in Michigan), each dated the date hereof, each executed and delivered by Borrower to Lender (or to a trustee for the benefit of lender, as applicable) and each encumbering one or more Individual Properties, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Separate Borrower Group Tax Liability” means, with respect to any period, the lesser of (a) the Hypothetical Borrower Group Tax for such period and (b) the Guarantor Group Tax for such period reduced by any payments (estimated or otherwise) made in respect of any applicable Imposition for or with respect to such period by a member of the Borrower Group other than any such payments financed by short term Debt that is Permitted Debt or other Debt permitted to be incurred hereunder.

“Servicer” shall mean such Person designated in writing with an address for such Person by Lender, in its sole discretion, to act as Lender’s agent hereunder with such powers as are specifically delegated to the Servicer by Lender, whether pursuant to the terms of this Agreement or otherwise, together with such other powers as are reasonably incidental thereto.

“Single Purpose Entity” shall mean a Person, other than an individual, that complies with the provisions of Sections 5.3 and 5.4.

“Special Member” shall have the meaning set forth in Section 5.3(c).

“Special Taxes” shall mean any and all Taxes, levies, imposts, deductions, charges or withholdings, or any liabilities with respect thereto, arising after the date hereof as result of the adoption of or any change in law, treaty, rule, regulation, guideline or determination of a Governmental Authority or any change in the interpretation or application thereof by a Governmental Authority but excluding, in the case of Lender, such Taxes (including Income Taxes, franchise Taxes and branch profit Taxes) as are imposed on or measured by Lender’s net income by the United States of America or any Governmental Authority of the jurisdiction under the laws under which Lender is organized or maintains a lending office.

“SPE Component Entity” shall have the meaning set forth in Section 5.3(b).

“Specified Prior Sublease” shall mean those certain leases described on Schedule I hereto, as the same may be amended, modified or replaced by Borrower or Master Lessee without Lender’s consent except to the extent such amendment, modification or replacement would have a Material Adverse Effect.

 

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“Sponsors” shall mean Bain Capital Partners, LLC, Catterton Partners and any investment funds advised or managed by either of them, but not including, however, any Sponsor Portfolio Companies.

“Sponsor Portfolio Company” shall mean a company and the related business in which any Sponsor, or any investment fund advised or managed by any Sponsor, is invested, so long as such company is not otherwise an Affiliate of Borrower, any Mezzanine Borrower, PRP, PropCo, HoldCo, Guarantor, Master Lessee, Master Lease Guarantor or any of their respective Subsidiaries.

“Stand Alone Guarantor Group” shall mean Guarantor and all other members of the Guarantor Group, other than Borrower and each subsidiary of Guarantor which owns, directly or indirectly, Equity Interests in Borrower.

“State” shall mean, with respect to each Individual Property, the State in which such Individual Property or any part thereof is located.

“Stated Maturity Date” shall mean the Payment Date occurring in April, 2017.

“Sub-Account(s)” shall have the meaning set forth in Section 3.1.1.

“Sublease” shall mean any lease (other than the Master Lease), sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect), pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, subsublease, letting, license, concession or other agreement entered into in connection with such lease, sublease, subsublease, letting, license, concession or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto. Lender acknowledges that Borrower does not own, and Lender does not have a lien on, the Excluded Personal Property and that the term “Subleases” shall not include the Excluded Personal Property or leases or licenses with respect to the Excluded Personal Property.

“Sublease Modification” shall have the meaning set forth in Section 8.8.1.

“Subordination of Asset Management Agreement” shall mean that certain Asset Manager’s Consent and Subordination of Asset Management Agreement, dated as of the date hereof, among Borrower, Lender and Asset Manager.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise Controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.

“Successor Borrower” shall have the meaning set forth in Section 2.4.4.

 

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“Survey” shall mean, for each of the Individual Properties, a certified ALTA/ACSM (or applicable state standards for the state in which such Individual Property is located) survey of each parcel comprising such Individual Property, prepared by a surveyor licensed in the State, and each in form reasonably satisfactory to Lender and Title Company.

“Taking” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.

“Tax” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, environmental, customs duties, capital stock, profits, documentary, property, franchise, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add on minimum, or other tax of any kind whatsoever, including any interest, penalty, fine, assessment or addition thereto.

“Tax Reserve Account” shall have the meaning set forth in Section 3.1.1.

“Tax Reserve Amount” shall have the meaning set forth in Section 16.1.

“Tenant” shall mean any Person leasing, subleasing or otherwise occupying any portion of the Property, other than Master Lessee and its employees and agents.

“Tenant Security Period” shall have the meaning assigned thereto in the Master Lease.

“Terrorism Insurance” shall have the meaning set forth in Section 6.1.9.

“Threshold Amount” shall mean 2% of the Loan Amount.

“Third-Party Brand” shall mean any restaurant brand operated at an Individual Property where such restaurant brand is not owned by Master Lease Guarantor or its Close Subsidiaries (regardless of whether such Individual Property is subleased by a Pass-Through Subsidiary). As of the Closing Date, the Third-Party Brands are Cheeseburger in Paradise, Lee Roy Selmon’s and Sterling’s Bistro.

“Threat of Release” shall have the meaning provided in the Environmental Indemnity.

“Title Company” shall mean, collectively, Chicago Title Insurance Company (as to one-third of coverage), Fidelity National Title Insurance Company (as to one-third of coverage) and Lawyers Title Insurance Corporation (as to one-third of coverage).

“Title Policy” shall mean an ALTA mortgagee title insurance policy in a form reasonably acceptable to Lender (or, if an Individual Property is in a State which does not permit the issuance of such ALTA policy, such form as shall be permitted in such State and reasonably acceptable to Lender) issued by the Title Company with respect to an Individual Property and insuring the Lien of the applicable Security Instrument.

 

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“Total Defeasance Collateral” shall mean, with respect to a Total Defeasance Event, U.S. Securities that provide payments (a) on or prior to, but as close as possible to, the Business Day immediately preceding each Payment Date after the Defeasance Date of such Total Defeasance Event and up to and including the Lockout Expiration Date (or any date thereafter as specified by Borrower on or prior to the Defeasance Date), and (b) in amounts equal to or greater than the Scheduled Defeasance Payments relating to such Total Defeasance Event.

“Total Defeasance Date” shall have the meaning set forth in Section 2.4.1(a).

“Total Defeasance Event” shall have the meaning set forth in Section 2.4.1.

“Total Loss” shall mean with respect to each Individual Property (i) a casualty, damage or destruction of the Individual Property which, in the reasonable judgment of Lender, (A) involves an actual or constructive loss of more than forty percent (40%) of the designated Allocated Loan Amount applicable to such Individual Property, or (B) results in the cancellation of the Master Lease or of Subleases comprising more than forty percent (40%) of the rentable area of the Individual Property, and in either case with respect to which the Master Lease and the Subleases do not require Proceeds to be applied to the restoration of the Individual Property or (ii) a permanent Taking which, in the reasonable judgment of Lender, (A) involves an actual or constructive loss of more than forty percent (40%) of the designated Allocated Loan Amount applicable to such Individual Property, or (B) renders untenantable either more than forty percent (40%) of the rentable area of the Individual Property, or (iii) a casualty, damage, destruction or Taking that affects so much of the Individual Property such that it would be impracticable, in Lender’s reasonable discretion, even after restoration, to operate the Individual Property as an economically viable whole.

“Trade Fixtures” shall mean any furniture, furnishings, signs, machinery, equipment or improvements installed, placed or made on or to the Land or Improvements by Master Lessee or its Affiliates or any Tenant, whether or not affixed to the Land or Improvements, and either (i) used for the specific purposes of the business being conducted by Master Lessee or any Tenant thereon, or (ii) that contains or displays the trade name or proprietary marks or intellectual property of any Concept or Third-Party Brand, or of any Tenant under an Unaffiliated Sublease or Specified Prior Sublease, including electronic data-processing and other office equipment, refrigerators, refrigeration units, freezers, coolers, stoves, ovens, fryers, kitchen exhaust, dishwashers, bars, bar sinks and bar equipment, booths, serving stations, phone systems, computer systems, decorative lighting and chandeliers (as opposed to general, primary or emergency lighting) and trade signage, and any and all additions, substitutions and replacements of any of the foregoing; provided, however, that with respect to any Restaurant Location, the term “Trade Fixtures” expressly excludes any items set forth as “Fixtures” on Schedule XIV.

“Transfer” shall mean to, directly or indirectly, sell, assign, convey, mortgage, transfer, pledge, hypothecate, encumber, grant a security interest in, exchange or otherwise dispose of any legal or beneficial interest or grant any option or warrant with respect to, or where used as a noun, a direct or indirect sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of any legal or beneficial interest by any means whatsoever whether voluntary, involuntary, by operation of law or otherwise. A

 

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“Transfer” shall include, but not be limited to, (a) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (b) an agreement by Borrower to lease all or any part of the Property other than pursuant to the Master Lease and the Subleases in accordance with the terms of this Agreement (including without limitation, Sections 5.1.22 and 8.8), or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to the Master Lease, any Subleases or any Rents except in favor of Lender in accordance with the Loan Documents; (c) if a Restricted Party is a corporation, any merger or consolidation, or any sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of such corporation’s stock, or the creation or issuance of new stock in one or a series of transactions; (d) if a Restricted Party is a limited or general partnership or joint venture, any merger or consolidation, or any sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of the partnership interest of any general or limited partner or any profits or proceeds relating to such partnership interests, or the change, removal, resignation or addition of a general partner, or the creation or issuance of new partnership interests; (e) if a Restricted Party is a limited liability company, any merger or consolidation, or any sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of the membership interest of any member or any profits or proceeds relating to such membership interest, or the change, removal, resignation or addition of a managing member or non-member manager (or if no managing member, any member); or (f) if a Restricted Party is a trust or nominee trust, any merger or consolidation, or sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of the legal or beneficial interest in such Restricted Party, or the creation or issuance of new legal or beneficial interests.

“Transferee Borrower” shall have the meaning set forth in Section 8.7.

“True Lease Opinion” shall mean that certain true lease opinion letter dated the date hereof delivered by Sullivan & Cromwell LLP in connection with the Loan.

“Trust Fund Expenses” shall mean (a) any interest payable to the Servicer, or any special servicer, trustee, operating advisor or certificate administrator in connection with the Loan pursuant to the Approved Servicing Agreement in respect of advances made by any of the foregoing; (b) all compensation payable to any special servicer under the Approved Servicing Agreement in connection with servicing the Loan when it is a specially serviced loan or its administration of any of the Property foreclosed upon (including special servicing, work-out and liquidation fees); and (c) except for the regular monthly fees payable to the Servicer, the trustee, the operating advisor and any certificate administrator under the Approved Servicing Agreement, any other reasonable out-of-pocket cost, fee or expense of the trust fund administering the Loan pursuant to the Approved Servicing Agreement (including, but not limited to, any costs or expenses of any kind to be paid by Servicer, the special servicer, the trustee, the operating advisor or any certificate administrator under the Approved Servicing Agreement in connection with the Account Collateral, any costs and expenses in connection with appraisals of the Property (or any updates to any appraisals) and/or property inspections conducted by the Servicer and/or special servicer, reimbursements to the trustee thereof, the Servicer, the special servicer, the operating advisor, any certificate administrator thereunder and related Persons of each of the foregoing pursuant to the Approved Servicing Agreement, indemnification to Persons

 

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entitled thereto and the cost of opinions of counsel, if any, required to be obtained pursuant to the Approved Servicing Agreement in connection with servicing the Loan and administration of the trust fund and any taxes payable from the assets of the Securitization vehicle and other tax-related expenses, but only to the extent such taxes and tax-related expenses are otherwise amounts that Borrower is expressly required to pay under the Loan Documents or by law). Further, for clarity, (i) any cost or expense which, pursuant to the Approved Servicing Agreement, is to be borne by the trustee, Servicer, special servicer, the operating advisor or certificate administrator “at its own expense” or words of similar import and is not reimbursable as an advance or otherwise by the trust fund under the Approved Servicing Agreement, including without limitation, fidelity bonds and errors and omissions policies, shall not be a Trust Fund Expense, and (ii) any losses or enforcement costs arising out of the failure of the issuer or obligor under any investment administered by the Servicer, any special servicer, the trustee, the operating advisor or any certificate administrator pursuant to the Approved Servicing Agreement to make any payment in respect of such investment, or otherwise to fail to perform any obligation required in respect of such investment, shall not be Trust Fund Expenses.

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the State from time to time; provided that for purposes of Article III and Article IX hereof only, “UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the State of New York from time to time.

“Unaffiliated Business” shall mean a business being operated at an Individual Property where either or both of the following conditions are satisfied: (a) such business is a Third-Party Brand restaurant or is any other business that is not a Concept restaurant; and/or (b) the Tenant operating such business is the subtenant under an Unaffiliated Sublease.

“Unaffiliated Sublease” shall mean (a) any Sublease (other than a Specified Prior Sublease or a lease of a Leaseable Building Pad) under which the Tenant is not a Close Subsidiary of Master Lease Guarantor; or (b) any RLP Sublease that becomes an Unaffiliated Sublease pursuant to the definition of “RLP Sublease,” it being agreed that no RLP Sublease shall be deemed to be an Unaffiliated Sublease unless and until such RLP Sublease becomes an Unaffiliated Sublease pursuant to the definition of “RLP Sublease”. All Unaffiliated Subleases as of the Closing Date are listed on Schedule I attached hereto.

“Undefeased Note” shall have the meaning set forth in Section 2.4.2(d) hereof.

“Upper Tier Entity” shall mean any of Guarantor or any direct or indirect parent of Guarantor.

“U.S. Government Obligations” shall mean any direct obligations of, or obligations guaranteed as to principal and interest by, the United States Government or any agency or instrumentality thereof, provided that such obligations are backed by the full faith and credit of the United States. Any such obligation must be limited to instruments that have a predetermined fixed dollar amount of principal due at maturity that cannot vary or change. If any such obligation is rated by S&P, it shall not have an “r” highlighter affixed to its rating. Interest must be fixed or tied to a single interest rate index plus a single fixed spread (if any), and move proportionately with said index. U.S. Government Obligations include, but are not limited to:

 

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U.S. Treasury direct or fully guaranteed obligations, Farmers Home Administration certificates of beneficial ownership, General Services Administration participation certificates, U.S. Maritime Administration guaranteed Title XI financing, Small Business Administration guaranteed participation certificates or guaranteed pool certificates, U.S. Department of Housing and Urban Development local authority bonds, and Washington Metropolitan Area Transit Authority guaranteed transit bonds. In no event shall any such obligation have a maturity in excess of 365 days.

“U.S. Securities” shall mean obligations or securities not subject to prepayment, call or early redemption which are (a) obligations of, or obligations fully guaranteed as to timely payment by, the United States of America or (b) obligations of any agency or instrumentality of the United States of America that qualify as “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, in each case, that are sufficient for Lender to obtain a Rating Agency Confirmation.

“wholly-owned” shall mean, with respect to a Subsidiary of a Person, a Subsidiary of such Person all of the outstanding Equity Interests of which (other than (x) director’s qualifying shares and (y) shares issued to foreign nationals to the extent required by Legal Requirements) are owned by such Person and/or by one or more wholly-owned Subsidiaries of such Person.

“Work” shall have the meaning provided in Section 6.2.4(a).

“Yield Maintenance Premium” shall mean, with respect to each Fixed Rate Component outstanding at the time of such calculation, the amount (if any) which, when added to the aggregate outstanding principal amount of such Fixed Rate Component (or any portion thereof evidenced by any Undefeased Note as applicable, but excluding any Defeased Note) attributable to such Fixed Rate Component will be sufficient to purchase U.S. Securities providing the required Scheduled Defeasance Payments.

1.2 Principles of Construction. All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto. Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the definitions given them in this Agreement when used in any other Loan Document or in any certificate or other document made or delivered pursuant thereto. All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words hereof, herein and hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.

 

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II. GENERAL TERMS

 

2.1

Loan; Components; Disbursement to Borrower.

2.1.1 The Loan. Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.

2.1.2 Components of the Loan. For purposes of the computation of the interest accrued on the Loan from time to time and certain other computations set forth herein, the Loan shall be divided into multiple components designated as “Component A-1”, “Component A-2-FX”, “Component A-2-FL”, Component B”, “Component C” and “Component D”. The following table sets forth the initial principal amount of each such Component.

 

Component		Initial Principal Amount
Component A-1		$41,316,000
Component A-2-FX		$143,464,000
Component A-2-FL		$48,720,000
Component B		$29,300,000
Component C		$26,100,000
Component D		$35,900,000

2.1.3 Disbursement to Borrower. Borrower may request and receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed. Borrower acknowledges and agrees that the full proceeds of the Loan have been disbursed by Lender to Borrower on the Closing Date.

2.1.4 The Note, Security Instrument and Loan Documents. The Loan and all of the Components thereof shall be evidenced by the Note and secured by the Security Instrument, the Assignment of Leases, this Agreement and the other Loan Documents.

2.1.5 Use of Proceeds. Borrower may use the proceeds of the Loan only to (a) acquire and refinance the Property, (b) make deposits into the Sub-Accounts as required hereunder, (c) pay Trust Fund Expenses due and payable on the Closing Date and (d) pay costs and expenses incurred in connection with the closing of the Loan.

 

2.2

Interest; Loan Payments; Late Payment Charge.

2.2.1 Payment and Accrual of Interest.

(i) Except as set forth in Section 2.2.1(ii), interest shall accrue on the outstanding principal balance of each Component of the Loan during each Interest Period at the applicable Component Interest Rate. The total interest accrued under the Loan shall be the sum of the interest accrued on the outstanding principal balance of each of the Components.

 

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(ii) Upon the occurrence and during the continuance of an Event of Default and from and after the Maturity Date if the entire Principal Amount is not repaid on the Maturity Date, interest on the outstanding principal balance of each Component of the Loan and, to the extent permitted by law, overdue interest and other amounts due in respect of the Loan shall accrue at the Default Rate calculated from the date such payment was due without regard to any grace or cure periods contained herein. Interest at the Default Rate shall be computed from the occurrence of the Event of Default until the actual receipt and collection of the Indebtedness (or that portion thereof that is then due). To the extent permitted by applicable law, interest at the Default Rate shall be added to the Indebtedness, shall itself accrue interest at the same rate as the Loan and shall be secured by the Security Instrument. This paragraph shall not be construed as an agreement or privilege to extend the date of the payment of the Indebtedness, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default, and Lender retains its rights under the Loan Documents to accelerate and to continue to demand payment of the Indebtedness upon the happening of any Event of Default.

(iii) Except as expressly set forth herein to the contrary, interest shall accrue on all amounts advanced by Lender pursuant to the applicable provisions of the Loan Documents (other than the Principal Amount, which shall accrue interest in accordance with clauses (i) and (ii) above) at the Default Rate.

(iv) Interest on the outstanding principal balance of each Fixed Component shall accrue and be computed based on the daily rate produced assuming a three hundred sixty (360) day year, consisting of twelve (12) months of thirty (30) days each, determined (a) for each Interest Period (other than the Initial Interest Period) as one-twelfth (1/12^th) of the aggregate annualized interest that would accrue on such outstanding principal balance of such Fixed Component at the applicable Component Interest Rate, and (b) for the Initial Interest Period, as the product of (x) one-twelfth (1/12^th) of the aggregate annualized interest that would accrue on such outstanding principal balance of such Fixed Component at the applicable Component Interest Rate multiplied by (y) a fraction the numerator of which is the number of days from and including the Closing Date through and including the last day of the Initial Interest Period, and the denominator of which is 30. Interest on the outstanding principal balance of the Floating Rate Component shall accrue and be computed based on the daily rate produced assuming a three hundred sixty (360) day year and the actual number of days in each Interest Period. The accrual period for calculating interest due on each Payment Date shall be (A) the Interest Period ending immediately prior to such Payment Date with respect to Fixed Rate Components, and (B) the Interest Period during which such Payment Date occurs with respect to the Floating Rate Component.

(v) The provisions of this Section 2.2.1 are subject in all events to the provisions of Section 2.2.4 below.

2.2.2 Payment of Monthly Payment Amount; Application of Principal; Method and Place of Payment.

(a) On each Payment Date, Borrower shall pay to Lender consecutive monthly installments of principal and interest in an amount equal to the Monthly Payment Amount until the entire Indebtedness is fully paid, except that any remaining Indebtedness, if not sooner paid,

 

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shall be due and payable on the Maturity Date; provided, however, that on the first Payment Date (occurring on April 10, 2012), Borrower shall pay to Lender interest only on the outstanding principal balance of each Component accruing during the Initial Interest Period at the applicable Component Interest Rate, with no principal amortization due on such first Payment Date. The principal component of the Monthly Payment Amount shall be applied as follows (and, to the extent applied to a Fixed Rate Component, shall not be applied to any portion of such Fixed Rate Component that is evidenced by a Defeased Note):

(i) first, to the reduction of the outstanding principal balance of Component A-1, until reduced to zero;

(ii) second, to the reduction of the outstanding principal balance of Component A-2-FX and Component A-2-FL, pro rata and pari passu, based on the unpaid principal balance for each such Component, until reduced to zero;

(iii) third, to the reduction of the outstanding principal balance of Component B until reduced to zero;

(iv) fourth, to the reduction of the outstanding principal balance of Component C until reduced to zero; and

(v) fifth, to the reduction of the outstanding principal balance of Component D until reduced to zero.

(b) Notwithstanding the provisions of the foregoing Section 2.2.2(a), if at any time Lender notifies Borrower that a “Cross-Over Date” has occurred in connection with any Securitization of the Loan, the principal portion of the Monthly Payment Amount may be applied by Lender among the Components in Lender’s sole discretion, including without limitation, in the following order of priority (and, to the extent applied to a Fixed Rate Component, shall not be applied to any portion of such Fixed Rate Component that is evidenced by a Defeased Note):

(i) first, to the reduction of the outstanding principal balance of Component A-1, Component A-2-FX and Component A-2-FL, pro rata and pari passu, based on the unpaid principal balance for each such Component, until reduced to zero;

(ii) second, to the reduction of the outstanding principal balance of Component B, until reduced to zero;

(iii) third, to the reduction of the outstanding principal balance of Component C, until reduced to zero; and

(iv) fourth, to the reduction of the outstanding principal balance of Component D, until reduced to zero.

(c) All payments made by Borrower hereunder or under any of the Loan Documents shall be made on or before 2:00 p.m. New York City time. Any payments received after such time shall be credited to the next following Business Day.

 

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(d) All amounts advanced by Lender pursuant to the applicable provisions of the Loan Documents, other than the Principal Amount, together with any interest at the Default Rate or other charges as provided therein, shall be due and payable hereunder as provided in the Loan Documents. In the event any such advance or charge is not so repaid by Borrower, Lender may, at its option, first apply any payments received under the Note to repay such advances, together with any interest thereon, or other charges as provided in the Loan Documents, and the balance, if any, shall be applied in payment of any installment of interest or principal then due and payable.

(e) The entire Principal Amount, all unpaid accrued interest (including all Applicable Interest) and all other fees and sums then payable hereunder or under the Loan Documents, including, without limitation the Yield Maintenance Premium (if applicable), shall be due and payable in full on the Maturity Date.

(f) Amounts due hereunder shall be payable, without any counterclaim, setoff or deduction whatsoever, at the office of Lender or its agent or designee at the address set forth on the first page of this Agreement or at such other place as Lender or its agent or designee may from time to time designate in writing.

(g) All amounts due hereunder, including, without limitation, interest and the Principal Amount, shall be due and payable in lawful money of the United States.

(h) To the extent that Borrower makes a payment or Lender receives any payment or proceeds for Borrower’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the obligations of Borrower hereunder intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Lender.

2.2.3 Late Payment Charge. If any principal, interest or any other sums due under the Loan Documents (other than the outstanding Principal Amount due and payable on the Maturity Date) is not paid by Borrower on or prior to the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of three percent (3%) of such unpaid sum or the Maximum Legal Rate (the “Late Payment Charge”) in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment. Any such amount shall be secured by this Agreement, the Security Instrument and the other Loan Documents to the extent permitted by applicable law.

2.2.4 Usury Savings. This Agreement and the Note are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due under the Note at a rate in excess of the Maximum Legal Rate, then the Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate

 

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shall be deemed to have been payments in reduction of principal and not on account of the interest due under the Note. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

2.3 Prepayments.

2.3.1 Voluntary Prepayments. Except as otherwise provided in this Agreement, Borrower shall not have the right to prepay any Component in whole or in part prior to the Stated Maturity Date. Notwithstanding the foregoing, Borrower may prepay the Floating Rate Component, in whole or in part, either (a) in connection with a Property Release in accordance with Section 2.3.6, or (b) at any other time provided that (i) no Event of Default has occurred and is continuing at the time of any such prepayment; (ii) Borrower gives Lender not less than ten (10) days’ notice specifying a date on which such prepayment is to occur (provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual reasonable out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment); (iii) Borrower pays Lender, in addition to the outstanding principal amount of the Floating Rate Component to be prepaid, all Applicable Interest with respect to the outstanding principal amount of the Floating Rate Component being prepaid; and (iv) Borrower pays to Lender the Prepayment Premium, if applicable. Any prepayment pursuant to clause (b) above received by Lender on a date other than a Payment Date shall be held by Lender in an interest bearing money-market account (and the interest shall accrue for the benefit of Borrower) as collateral security for the Loan and shall be applied to the Floating Rate Component on the next Payment Date. Further, on the Payment Date occurring in January, 2017 (the “Lockout Expiration Date”) and on any Business Day thereafter, Borrower may, at its option and upon ten (10) Business Days’ prior written notice to Lender (provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual reasonable out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment), prepay the entire Principal Amount in whole (but not in part) without payment of the Yield Maintenance Premium, Prepayment Premium or other penalty or premium. If Borrower prepays the entire Principal Amount, Borrower shall pay Lender, in addition to the Principal Amount, all Applicable Interest.

2.3.2 Mandatory Prepayments. On the next occurring Payment Date following the date on which Lender actually receives any Proceeds in accordance with Section 6.2.3 hereof, (a) such Proceeds shall be applied to prepay the Principal Amount to the extent of the Release Price for the affected Individual Property in accordance with Section 6.2.3 hereof, and such amount prepaid by Borrower shall result in a corresponding reduction of the Release Price and the Combined Release Price of the affected Individual Property, (b) Borrower shall pay to Lender all Applicable Interest, and (c) Borrower shall pay (without duplication) all reasonable costs and expenses of Lender incurred in connection with such prepayment (including without limitation, any reasonable costs and expenses associated with a release or assignment of the Lien of the applicable Security Instrument as set forth in Section 2.3.6 below and reasonable attorneys’ fees and expenses).

 

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2.3.3 Prepayments After Event of Default; Application of Amounts Paid. If, after the occurrence and during the continuance of an Event of Default, Lender shall accelerate the Indebtedness and Borrower thereafter tenders payment of all or any part of the Indebtedness, or if all or any portion of the Indebtedness is recovered by Lender after such Event of Default, (a) such payment may be made only on the next occurring Payment Date together with all Applicable Interest and all other fees and sums payable hereunder or under the Loan Documents, including without limitation, interest that has accrued at the Default Rate and any Late Payment Charges, (b) such payment shall be deemed a voluntary prepayment by Borrower, and (c) to the extent that the same would, if a prepayment, be prohibited under Section 2.3.1, Borrower shall pay, in addition to the Indebtedness and any Prepayment Premium due with respect to the Floating Rate Component, an amount equal to the greater of (i) three percent (3%) of the then outstanding principal amount of the Loan to be prepaid or satisfied (excluding the Floating Rate Component and excluding any portion thereof evidenced by Defeased Notes), or (ii) the Yield Maintenance Premium in respect of each Fixed Rate Component outstanding at the time of such prepayment (excluding any portion thereof evidenced by Defeased Notes). Notwithstanding anything contained herein to the contrary, upon the occurrence and during the continuance of any Event of Default, any payment of principal or interest from whatever source may be applied by Lender among the Components in Lender’s sole discretion.

2.3.4 Application of Prepayments. All prepayments of principal (other than those made in accordance with Sections 2.2.2(a) and 2.2.2(b) and those applied in reduction of the Floating Rate Component), in whole or in part, voluntary or involuntary, shall be applied as follows (and, to the extent applied to a Fixed Rate Component, shall not be applied to any portion of such Fixed Rate Component that is evidenced by a Defeased Note):

(a) first, to the reduction of the outstanding principal balance of Component A-1, Component A-2-FX and Component A-2-FL, pro rata and pari passu, based on the unpaid principal balance for each such Component, until reduced to zero;

(b) second, to the reduction of the outstanding principal balance of Component B until reduced to zero;

(c) third, to the reduction of the outstanding principal balance of Component C until reduced to zero; and

(d) fourth, to the reduction of the outstanding principal balance of Component D until reduced to zero.

2.3.5 Release of All Property.

(a) Upon Repayment in Full of Loan. If Borrower has repaid the entire Principal Amount in accordance with Section 2.3.1 or Section 2.3.3 and paid to Lender all other amounts due and payable under the Loan Documents in accordance with the terms and provisions of the Note and this Agreement, then Lender shall (i) release the Lien of (A) this Agreement upon the Account Collateral and the Rate Cap Collateral and (B) the Security Instrument and Assignment

 

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of Leases on the Property (or assign it (together with the Note), in whole or in part, to a new lender without representation, warranty or recourse) and (ii) remit any amounts or collateral remaining on deposit in the Collateral Accounts or being held by Lender to (A) First Mezzanine Lender if the First Mezzanine Loan is still outstanding, (B) Second Mezzanine Lender, if the First Mezzanine Loan has been paid in full and the Second Mezzanine Loan is still outstanding, or (C) Borrower if both the First Mezzanine Loan and the Second Mezzanine Loan have been paid in full. In such event, Borrower shall submit to Lender, not less than ten (10) Business Days prior to the date of such release or assignment, a release of lien or assignment of lien, as applicable, for such property for execution by Lender. Such release or assignment, as applicable, shall be in a form appropriate in each jurisdiction in which the Property is located and satisfactory to Lender in its reasonable discretion. In addition, Borrower shall provide all other documentation Lender reasonably requires to be delivered by Borrower in connection with such release or assignment, as applicable.

(b) Upon Total Defeasance Event. If Borrower has repaid in full the Floating Rate Component, defeased the Fixed Rate Components of the Loan in their entirety in accordance with Section 2.4.1, and paid to Lender all other amounts due and payable under the Loan Documents in accordance with the terms and provisions of the Note and this Agreement, then Lender shall (i) release the Lien of (A) this Agreement upon the Account Collateral and the Rate Cap Collateral and (B) the Security Instrument and Assignment of Leases on the Property (or assign it, in whole or in part, to a new lender without representation, warranty or recourse), and the U.S. Securities constituting the Total Defeasance Collateral, pledged pursuant to the Defeasance Security Agreement, shall be the sole source of collateral securing the Note and (ii) remit any amounts or collateral remaining on deposit in the Collateral Accounts or being held by Lender to (A) First Mezzanine Lender if the First Mezzanine Loan is still outstanding, (B) Second Mezzanine Lender, if the First Mezzanine Loan has been paid in full and the Second Mezzanine Loan is still outstanding, or (C) Borrower if both the First Mezzanine Loan and the Second Mezzanine Loan have been paid in full. In such event, Borrower shall submit to Lender, not less than ten (10) Business Days prior to the date of such release or assignment, a release of lien for such property for execution by Lender. Such release shall be in a form appropriate in each jurisdiction in which the Property is located and satisfactory to Lender in its reasonable discretion. In addition, Borrower shall provide all other documentation Lender reasonably requires to be delivered by Borrower in connection with such release.

2.3.6 Release of Individual Properties and Outparcels.

(a) Individual Properties. Subject to satisfaction of each of the conditions set forth below with respect to any Individual Property, Lender shall (w) release such Individual Property (each a “Release Property”) from the Lien of the applicable Security Instrument and related Loan Documents (or to the extent so requested by Borrower, assign the Lien of the applicable Security Instrument to a new lender without representation, warranty or recourse) (each release under this Section 2.3.6, a “Property Release”), (x) authorize a reduction in the notional amount of the Interest Rate Cap Agreement equal to the reduction of the outstanding principal balance of the Floating Rate Component, if any, (y) instruct the Cash Management Bank to return to Borrower any Excess Account Collateral subject to and in accordance with Section 2.3.8 except to the extent otherwise provided in such Section, and (z) comply with Section 2.3.9 with regard to adjusting the ongoing reserve requirements hereunder:

 

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(i) Borrower shall deliver a written notice (a “Property Release Notice”) to Lender of its desire to effect such Property Release no later than thirty (30) days prior to the date of such desired Property Release, and setting forth the Business Day (the “Release Date”) on which Borrower desires that Lender release its interest in such Release Property (provided such Property Release Notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual reasonable out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment);

(ii) Borrower shall either:

(A) if the outstanding principal balance of the Floating Rate Component is greater than or equal to the Combined Release Price for the Release Property, then Borrower shall pay to Lender (x) the Combined Release Price for the Release Property, to be applied in reduction of the Floating Rate Component, (y) all Applicable Interest on the portion of the Floating Rate Component being repaid, and (z) all other sums due and payable under this Agreement, the Note, the Security Instrument and the other Loan Documents through and including the Release Date; or

(B) if the outstanding principal balance of the Floating Rate Component has previously been reduced to zero, then Borrower shall partially defease the Fixed Rate Components in an aggregate amount equal to the Release Price for the Release Property, in accordance with Section 2.4.2; or

(C) if the outstanding principal balance of the Floating Rate Component is greater than zero but less than the Combined Release Price for the Release Property, then Borrower shall (x) pay to Lender the outstanding principal balance of the Floating Rate Component, to be applied in reduction of the Floating Rate Component, (y) pay to Lender the amounts specified in clauses (y) and (z) of subparagraph (ii)(A) above, and (z) if and only if the outstanding principal balance of the Floating Rate Component being repaid pursuant to clause (x) of this subparagraph (C) is less than the Release Price for the Release Property, partially defease the Fixed Rate Components in an amount equal to the positive difference between the Release Price for the Release Property and the outstanding principal balance of the Floating Rate Component being repaid, in accordance with Section 2.4.2.

(iii) as a condition precedent to a Property Release when the outstanding principal balance of the Floating Rate Component is less than the Combined Release Price for the Release Property, but not as a direct covenant of Borrower, on the Release Date, each Mezzanine Borrower shall partially defease its related Mezzanine Loan in accordance with the provisions of the applicable Mezzanine Loan Agreement, in an amount equal to either:

(A) if the outstanding principal balance of the Floating Rate Component is less than the Release Price or has previously been reduced to zero, then the applicable Release Price (Mezzanine) for the Release Property; otherwise

(B) the amount by which the Combined Release Price for the Release Property exceeds the outstanding principal balance of the Floating Rate Component, multiplied

 

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by a fraction, the numerator of which is the principal balance of the applicable Mezzanine Loan immediately prior to the Property Release, and the denominator of which is the aggregate principal balance of all Mezzanine Loans immediately prior to the Property Release. This Subsection 2.3.6(a)(iii) shall not create a debtor-creditor relationship between Borrower and any Mezzanine Lender;

(iv) Borrower shall submit to Lender not less than ten (10) Business Days prior to the Release Date (which must be on a Business Day), a release of Liens (and related Loan Documents) for each applicable Release Property (for execution by Lender) in a form appropriate in the applicable state and otherwise satisfactory to Lender in its reasonable discretion and all other documentation Lender reasonably requires to be delivered by Borrower in connection with such Property Release (collectively, “Release Instruments”) for each applicable Release Property, together with an Officer’s Certificate certifying that (A) the Release Instruments are in compliance with all Legal Requirements, (B) the release to be effected will not violate the terms of this Agreement, (C) the release to be effected will not impair or otherwise adversely affect the Liens, security interests and other rights of Lender under the Loan Documents not being released (or as to the Properties subject to the Loan Documents not being released) and (D) the requirement described in paragraph (v) below is satisfied in connection with such Property Release (together with calculations and supporting documentation demonstrating the same in reasonable detail);

(v) with respect to any Property Release (other than an Excluded Release), after giving effect to such Property Release, the Lease Coverage Ratio as of the Release Date for all of the Individual Properties then remaining subject to the Liens of the Security Instrument shall not be less than the greater of (A) the Closing Date Lease Coverage Ratio and (B) the Lease Coverage Ratio for the Properties subject to the Lien of the Security Instrument immediately prior to the Release Date;

(vi) no Event of Default shall have occurred and then be continuing on the date on which Borrower delivers the Property Release Notice or on the Release Date (except as provided in the last grammatical paragraph of this Section 2.3.6(a));

(vii) the Release Property is simultaneously transferred pursuant to a bona fide all-cash sale on arms-length terms and conditions;

(viii) Borrower executes and delivers such other instruments, certificates, opinions of counsel and documentation as Lender and the Rating Agencies shall reasonably request in order to preserve, confirm or secure the Liens and security granted to Lender by the Loan Documents, including any amendments, modifications or supplements to any of the Loan Documents;

(ix) Borrower shall pay for any and all reasonable out-of-pocket costs and expenses incurred in connection with any proposed Property Release, including Lender’s reasonable attorneys’ fees and disbursements;

(x) prior to the Release Date, Borrower shall deliver to Lender evidence reasonably satisfactory to Lender that all amounts owing to any parties in connection with the

 

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transaction relating to the proposed Property Release have been paid in full, or will simultaneously be paid in full on the Release Date or adequate reserves therefor are established by Borrower in cash with respect to contingent or other liabilities that may arise out of such transaction and for which Borrower is not adequately indemnified or insured against as reasonably determined by Lender;

(xi) as a condition precedent to a Property Release but not as a direct covenant of the Borrower, on the Release Date, each Mezzanine Borrower shall have satisfied all conditions to such Property Release set forth in the applicable Mezzanine Loan Documents; provided that this paragraph shall not create a debtor-creditor relationship between Borrower and any Mezzanine Lender;

(xii) the transfer of the Release Property in connection with the Property Release does not trigger any rights of first refusal or purchase options in any Operating Agreements, including, but not limited to the rights or obligations set forth on Schedule VI as to any remaining Property unless the same have been waived or terminated by the holder thereof;

(xiii) following such Property Release, Borrower shall continue to be a Single Purpose Entity and comply with all provisions of the Loan Documents pertaining to a Single Purpose Entity; and

(xiv) Borrower shall enter into an amendment to the Master Lease with Master Lessee (A) to effect the reduction in the Master Lease Base Rent by an amount not to exceed the amount allocable to such Individual Property as set forth on Schedule IV attached hereto, and (B) to cause such Release Property to be removed from the Master Lease, including amending the legal description of the “Leased Property” (as defined therein) to effect such removal.

Notwithstanding anything to the contrary in this Agreement or the other Loan Documents, if on the date Borrower delivers a Property Release Notice, (a) a Default or Event of Default has occurred and is continuing which relates solely to the Individual Property or Individual Properties subject to the proposed Property Release (each or any such Default or Event of Default, a “Release Property-Specific Default”), (b) the Allocated Loan Amounts of such Individual Properties do not exceed, in the aggregate of all Individual Properties that are then subject to a Release Property-Specific Default, 15% of the Principal Amount, and (c) no other Default or Event of Default exists, Borrower shall not be prohibited from exercising a release with respect to such Individual Property or Individual Properties and such Release-Property-Specific Default will be deemed to have been cured upon completion of the Property Release of such Individual Property or Individual Properties by (1) delivery of such Property Release Notice and (2) completion of the Property Release of such Individual Property or Individual Properties; provided, that, if Borrower fails to complete the Property Release of each Individual Property then subject to a Release-Property-Specific Default by a Release Date that is not more than forty-five (45) days after receiving written notice from Lender or otherwise obtaining actual knowledge of the occurrence of such Release Property-Specific Default, such Default or Event of Default shall be deemed not to have been cured by delivery of such Property Release Notice and shall be retroactive to the date such Default or Event of Default first occurred.

 

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(b) Outparcels. Provided no Event of Default has occurred and is continuing, Borrower may request that Lender release certain portions of certain Individual Properties as described on Schedule X hereto (the “Outparcels”) in accordance with the terms of this Section 2.3.6(b). Prior to releasing any Outparcel, Borrower shall have satisfied the following conditions (collectively, “Outparcel Release Conditions”): (1) the Outparcel shall constitute a separate conveyable legal parcel in accordance with the subdivision map act or the equivalent thereof in the jurisdiction of the applicable Individual Property or other relevant granted government approvals in such jurisdiction; (2) to the extent any easements, covenants or restrictions benefiting or burdening such Outparcel are necessary or appropriate for the use or operation of such parcel or the remaining portions of the applicable Individual Property (such remaining portion of an applicable Individual Property, the “Remaining Property”), such easements, covenants or restrictions shall have been granted or reserved prior to or at the time of the release or reconveyance of such Outparcel and shall have been approved by Lender, which approval shall not be unreasonably withheld or delayed; (3) the Remaining Property shall remain a legal parcel (or parcels) in compliance in all material respects with all Legal Requirements, zoning, subdivision, land use and other applicable laws and regulations; (4) at the time of, but not prior to, any release or reconveyance, each Outparcel shall be transferred to a person or entity that does not result in a breach of Borrower’s obligation to be a Single Purpose Entity; (5) Lender shall have received satisfactory evidence that any tax, bond or assessment that constitutes a lien against the applicable Property has (i) prior to such release, been properly allocated between the Outparcel and the Remaining Property and (ii) after such release, will be properly assessed against the Outparcel and the Remaining Property separately; (6) Lender shall have received such endorsements to the Title Policy (or substantially equivalent assurance) for the applicable Property as Lender may reasonably require confirming continuing title insurance and that (A) the applicable Security Instrument constitutes a first priority lien (subject to Permitted Encumbrances) on the Remaining Property after the release, (B) the Remaining Property constitutes a separate tax lot or tax lots (or will constitute a separate tax lot or tax lots in the next assessment cycle and Borrower provides evidence reasonably satisfactory to Lender (which may include guaranties and indemnities) that all Real Estate Impositions on the Remaining Property and Outparcel will be paid until such time as the Remaining Parcel and Outparcel constitute and are assessed as separate tax lots) and (C) such release shall not result in the Remaining Property ceasing to comply in all material respects with all applicable Legal Requirements, zoning, land use and subdivision laws; (7) Borrower shall have executed and delivered such documents (including amendments to the Loan Documents) as Lender may reasonably require to reflect such release; (8) Borrower shall pay to Lender all reasonable out-of-pocket costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and any applicable costs and expenses of the Rating Agencies) in connection with each such release; (9) Borrower shall have provided Lender at least thirty (30) days prior written notice of such requested release; and (10) Borrower shall submit to Lender not less than fifteen (15) days prior to the date of such proposed release (which must be on a Business Day), a release of Liens (and related Loan Documents) for each applicable Outparcel (for execution by Lender) in a form appropriate in the applicable state and otherwise satisfactory to Lender in its reasonable discretion and all other documentation Lender reasonably requires to be delivered by Borrower in connection with such release (collectively, “Outparcel Release Instruments”) (for execution by Lender) together with an Officer’s Certificate certifying that (i) the Outparcel Release Instruments are in compliance with all Legal Requirements, (ii) the release to be effected will not

 

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violate the terms of this Agreement and (iii) the release to be effected will not impair or otherwise adversely affect the Liens, security interests and other rights of Lender under the Loan Documents not being released (or as to the parties to the Loan Documents and Properties subject to the Loan Documents not being released). Any proceeds from the sale of an Outparcel shall be paid into the Holding Account for disbursement in accordance with Section 3.1.6.

2.3.7 Provisions Relating to Individual Properties That Go Dark. (a) At any one time and from time to time, Borrower may allow Restaurant Locations to Go Dark provided that (i) the number of Go Dark Restaurant Locations plus the number of Restaurant Locations that are being operated as one or more Unaffiliated Businesses (without duplication) does not exceed the Go Dark/Sublease Limit at any time, and (ii) in no event may Borrower allow any Go Dark Purchase Option Property to Go Dark unless the holder of the purchase right, termination right, recapture right, option or similar right has irrevocably waived in writing such rights with respect to the period during which such Go Dark Purchase Option Property continues to be a Go Dark Restaurant Location. If the number of Go Dark Restaurant Locations plus the number of Restaurant Locations that are being operated as one or more Unaffiliated Businesses (without duplication) exceeds the Go Dark/Sublease Limit at any time, then within thirty (30) days of such Go Dark/Sublease Limit being exceeded, Borrower shall cause one or more Individual Properties to be released from the Lien of the applicable Security Instrument in accordance with Section 2.3.6 hereof such that the number of Go Dark Restaurant Locations plus the number of Restaurant Locations that are being operated as one or more Unaffiliated Businesses (without duplication) does not exceed the Go Dark/Sublease Limit.

(b) If any Restaurant Location shall Go Dark, Borrower will promptly send written notice thereof to Lender. If an Restaurant Location shall Go Dark, the full Master Lease Rent payment as and when, and to the extent, required under the Master Lease and the Rent Payment Direction Letter with respect to all Restaurant Locations that are leased pursuant to the Master Lease shall nonetheless be required to be deposited into the Holding Account without reduction.

2.3.8 Excess Account Collateral. Upon the occurrence of any Property Release, provided no Low Lease Coverage Ratio Cash Sweep Period exists and no Event of Default has occurred and is continuing, Lender shall promptly perform an analysis of the Account Collateral in order to reasonably determine the amount of the Account Collateral (including, but not limited to, Proceeds) attributable to the Release Property (the “Excess Account Collateral”), and shall promptly instruct Cash Management Bank to return to Borrower the Excess Account Collateral, if any, except to the extent that Lender reasonably determines that a shortfall exists in such Sub-Account with respect to the Property other than the Release Property.

2.3.9 Reserve Requirements. Upon the occurrence of a Property Release, provided no Low Lease Coverage Ratio Cash Flow Sweep Period exists and no Event of Default has occurred and is continuing, Lender shall promptly prepare a revised estimate, with respect to the remaining Individual Properties, of Real Estate Impositions and Other Charges in accordance with Section 16.1, insurance premiums in accordance with Section 16.2, and Qualified Capital Expenditures in accordance with Section 16.4, and shall promptly provide Borrower and Cash Management Bank with notice of the revised Monthly Tax Reserve Amount, Monthly Insurance Reserve Amount and Monthly Capital Expenditure Reserve Amount.

 

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2.4 Defeasance. Provided no Event of Default shall have occurred and be continuing, Borrower shall have the right at any time after the Closing Date to voluntarily defease all or any portion of the Fixed Rate Components of the Loan in sequential order (i.e., first, Component A-1 until defeased in full, then Component A-2-FX until defeased in full, then Component B until defeased in full, then Component C until defeased in full and finally Component D, until defeased in full) by and upon satisfaction of the following conditions (such event being a “Defeasance Event”):

2.4.1 Conditions to Total Defeasance Event. Provided that Borrower shall have paid in full the Floating Rate Component (either previously or simultaneously with the Total Defeasance Event), Borrower shall have the right to voluntarily defease the entire outstanding principal balance of the Fixed Rate Components of the Loan without Yield Maintenance Premium or other premium or penalty and obtain a release of the Lien of the Security Instrument by providing Lender with the Total Defeasance Collateral (herein, a “Total Defeasance Event”), subject to the satisfaction of the following conditions precedent:

(a) Except as otherwise set forth herein, Borrower shall have delivered to Lender all documentary deliveries required pursuant to this Section 2.4.1 at least thirty (30) days prior to the requested effective date of such proposed Total Defeasance Event and shall specify a date (the “Total Defeasance Date”) on which the Total Defeasance Event is to occur (provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual reasonable out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment);

(b) Borrower shall pay to Lender (i) all payments of principal and interest due on the Loan to and including the Total Defeasance Date, and (ii) all other sums then due on such Total Defeasance Date under the Note, this Agreement, the Security Instrument and the other Loan Documents;

(c) Borrower shall deposit the Total Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of Section 2.4.3 hereof;

(d) Borrower shall execute and deliver to Lender a Defeasance Security Agreement in respect of the Defeasance Collateral Account and the Total Defeasance Collateral;

(e) Borrower shall deliver to Lender (i) an Opinion of Counsel for Borrower that is reasonably satisfactory to Lender opining that (A) Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Total Defeasance Collateral, and (B) the Total Defeasance Event pursuant to this Section 2.4.1 does not constitute a “significant modification” under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code and will not cause a federal income tax to be imposed on any Securitization vehicle and (ii) a non-consolidation opinion with respect to the Successor Borrower;

 

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(f) Borrower shall deliver to Lender a Rating Agency Confirmation as to the Total Defeasance Collateral and the documents to be entered into in connection with the Total Defeasance Event;

(g) On or prior to the Total Defeasance Date, Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in this Section 2.4.1 have been satisfied;

(h) Borrower shall deliver a certificate of an Independent certified public accounting firm reasonably acceptable to Lender certifying that the Total Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments;

(i) Borrower shall deliver such other certificates, opinions, documents and instruments as Lender may reasonably request, to the extent such delivery would be required by a reasonably prudent lender defeasing mortgage loans for securitization similar to the Loan, provided that Borrower shall not be required to deliver any certificate, opinion, document or instrument that would increase Borrower’s obligations or liabilities under this Agreement or any other Loan Document;

(j) Borrower shall pay to Lender a defeasance and release fee in an amount equal to $10,000; and

(k) Borrower shall pay all reasonable out-of-pocket costs and expenses of Lender incurred in connection with the Total Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and fees and expenses of the Rating Agencies.

2.4.2 Conditions to Partial Defeasance. Provided that Borrower shall have paid in full the Floating Rate Component (either previously or simultaneously with the Partial Defeasance Event), Borrower shall have the right to voluntarily defease a portion of the outstanding principal balance of the Fixed Rate Components of the Loan without Yield Maintenance Premium or other premium or penalty, in connection with a Property Release consummated in accordance with Section 2.3.6(a), by providing Lender with the Partial Defeasance Collateral (herein, a “Partial Defeasance Event”), subject to the satisfaction of the following conditions precedent:

(a) Except as otherwise set forth herein, Borrower shall have delivered to Lender all documentary deliveries required pursuant to this Section 2.4.2 at least thirty (30) days prior to the requested effective date of such proposed Partial Defeasance Event and shall specify a date (the “Partial Defeasance Date”) on which the Partial Defeasance Event is to occur (provided such notice shall be revocable at any time and for any reason by Borrower and may be adjourned on a day-to-day basis on reasonable notice to Lender, but Borrower shall pay any actual reasonable out-of-pocket expenses incurred by Lender in connection with such revocation and/or adjournment);

(b) Borrower shall pay to Lender (i) all payments of principal and interest due on the Loan to and including the Partial Defeasance Date, and (ii) all other sums then due on such Partial Defeasance Date under the Note, this Agreement, the Security Instrument and the other Loan Documents;

 

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(c) Borrower shall deposit the Partial Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of Section 2.4.3 hereof;

(d) Borrower shall prepare all necessary documents to modify this Agreement and to amend and restate the Note and issue substitute notes, with one or more substitute notes having an aggregate principal balance equal to either (i) if the outstanding principal balance of the Floating Rate Component has previously been reduced to zero, the aggregate Release Price for the Release Property or Release Properties, or otherwise (ii) the amount by which the aggregate Release Price for the Release Property or Release Properties exceeds the outstanding principal balance of the Floating Rate Component (collectively, the “Defeased Note”), and one or more substitute notes having a principal balance equal to the excess of (i) the original principal amount of the Fixed Rate Components, over (ii) the amount of the Defeased Note and any prior Defeased Note issued (collectively, the “Undefeased Note”). The Defeased Note and Undefeased Note shall have identical terms as the Note except for the principal balance and the monthly payment amount. The Defeased Note and the Undefeased Note shall not be cross defaulted or cross collateralized. A Defeased Note may not be the subject of any further defeasance, and all amounts paid in reduction of the principal balance thereof will be exclusively from the Scheduled Defeasance Payments in accordance herewith. In addition, a Defeased Note may be repaid in whole in connection with a repayment of the entire Loan on or after the Lockout Expiration Date in accordance with the terms hereof;

(e) Borrower shall execute and deliver to Lender a Defeasance Security Agreement in respect of the Defeasance Collateral Account and the Partial Defeasance Collateral;

(f) Borrower shall deliver to Lender (i) an Opinion of Counsel for Borrower that is reasonably satisfactory to Lender opining that (A) Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Partial Defeasance Collateral and (B) that the Partial Defeasance Event pursuant to this Section 2.4.2 does not constitute a “significant modification” under Section 1001 of the Code, will not cause any Securitization vehicle to fail to qualify as a grantor trust under the Code and will not cause any federal income tax to be imposed on any Securitization vehicle and (ii) a non-consolidation opinion with respect to the Successor Borrower;

(g) Borrower shall deliver to Lender a Rating Agency Confirmation as to the Partial Defeasance Collateral and the documents to be entered into in connection with the Partial Defeasance Event;

(h) on or prior to the Partial Defeasance Date, Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in this Section 2.4.2 have been satisfied;

(i) Borrower shall deliver a certificate of an Independent certified public accounting firm reasonably acceptable to Lender certifying that the Partial Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments;

(j) Borrower shall deliver such other certificates, opinions, documents and instruments as Lender may reasonably request, to the extent such delivery would be required by a reasonably prudent lender defeasing mortgage loans for securitization similar to the Loan, provided that Borrower shall not be required to deliver any certificate, opinion, document or instrument that would increase Borrower’s obligations or liabilities under this Agreement or any other Loan Document;

 

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(k) Borrower shall pay to Lender a defeasance and release fee in an amount equal to $10,000;

(l) Borrower shall pay all reasonable out-of-pocket costs and expenses of Lender incurred in connection with the Partial Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and fees and expenses of the Rating Agencies;

(m) Borrower shall have complied with the provisions of Section 2.3.6 with respect to the Individual Property or Properties being released; and

(n) as a condition precedent to a Partial Defeasance Event but not as a direct covenant of Borrower, on the Defeasance Date, each Mezzanine Borrower shall have partially defeased the applicable Mezzanine Loan in accordance with the provisions of the applicable Mezzanine Loan Agreement in the amount specified in Section 2.3.6(a)(iii).

2.4.3 Defeasance Collateral Account. On or before the date on which Borrower delivers the Total Defeasance Collateral or Partial Defeasance Collateral, as applicable, Borrower shall open at any Eligible Institution the defeasance collateral account (the “Defeasance Collateral Account”) which shall at all times be an Eligible Account. The Defeasance Collateral Account shall contain only (a) Total Defeasance Collateral or the applicable Partial Defeasance Collateral, and (b) cash from interest and principal paid on the Total Defeasance Collateral or the applicable Partial Defeasance Collateral. All cash from interest and principal payments paid on the Total Defeasance Collateral or Partial Defeasance Collateral shall be paid over to Lender on each Payment Date and applied in accordance with the terms of this Agreement. Following the payment of all Scheduled Defeasance Payments, any cash from interest and principal paid on the Total Defeasance Collateral or Partial Defeasance Collateral in excess of the amounts necessary to pay the Scheduled Defeasance Payments shall be paid to Borrower or, if there is a Successor Borrower, to Successor Borrower. Borrower shall cause the Eligible Institution at which the Total Defeasance Collateral or Partial Defeasance Collateral is deposited to enter into an agreement with Borrower or Successor Borrower, as applicable, and Lender, satisfactory to Lender in its reasonable discretion, pursuant to which such Eligible Institution shall agree to hold and distribute the Total Defeasance Collateral or Partial Defeasance Collateral in accordance with this Agreement. Borrower or Successor Borrower, as applicable, shall be the owner of the Defeasance Collateral Account and shall report all income accrued on Total Defeasance Collateral or Partial Defeasance Collateral for federal, state and local income tax purposes in its income tax return. Borrower shall pay all costs and expenses associated with opening and maintaining the Defeasance Collateral Account. Lender shall not in any way be liable by reason of any insufficiency in the Defeasance Collateral Account. At Borrower’s election, different Defeasance Collateral Accounts may be established for each defeasance consummated pursuant to this Agreement.

2.4.4 Successor Borrower. In connection with a Defeasance Event under this Section 2.4, Borrower shall, if required by the Rating Agencies or if Borrower elects to do so,

 

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establish or designate a successor entity (the “Successor Borrower”) which shall be a single purpose bankruptcy remote entity and which shall be approved by the Rating Agencies (which may be evidenced by a Rating Agency Confirmation). Any such Successor Borrower may, at Borrower’s option, be an Affiliate of Borrower unless the Rating Agencies shall require otherwise. Borrower shall transfer and assign all obligations, rights and duties under and to the Note (in connection with a Total Defeasance Event) and under the Defeased Note (in connection with a Partial Defeasance Event), together with the Total Defeasance Collateral or Partial Defeasance Collateral, as applicable, to such Successor Borrower. Such Successor Borrower shall assume the obligations under the Note (in connection with a Total Defeasance Event) and under the Defeased Note (in connection with a Partial Defeasance Event) and the Defeasance Security Agreement and Borrower shall be relieved of its obligations under such documents. Borrower shall pay all reasonable, out-of-pocket costs and expenses incurred by Lender, including Lender’s reasonable attorney’s fees and expenses, incurred in connection therewith. A different Successor Borrower may be established for each defeasance consummated pursuant to this Agreement.

2.5 Regulatory Change; Taxes.

2.5.1 Increased Costs. If as a result of any Regulatory Change or compliance of Lender therewith, the basis of taxation of payments to Lender or any company Controlling Lender of the principal of or interest on the Loan is changed or Lender or the company Controlling Lender shall be subject to (i) any Tax, duty, charge or withholding of any kind with respect to this Agreement (excluding taxation of the overall net income of Lender or the company Controlling Lender); or (ii) any reserve, special deposit or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities, of Lender or any company Controlling Lender is imposed, modified or deemed applicable; or (iii) any other condition affecting loans to borrowers subject to LIBOR-based interest rates is imposed on Lender or any company Controlling Lender, and Lender determines that, by reason thereof, the cost to Lender or any company Controlling Lender of making, maintaining or extending the Loan to Borrower is increased, or any amount receivable by Lender or any company Controlling Lender hereunder in respect of any portion of the Loan to Borrower is reduced, in each case by an amount deemed by Lender in good faith to be material (such increases in cost and reductions in amounts receivable being herein called “Increased Costs”), then Lender shall provide notice thereof to Borrower and Borrower agrees that it will pay to Lender upon Lender’s written request such additional amount or amounts as will compensate Lender or any company Controlling Lender for such Increased Costs to the extent Lender determines that such Increased Costs are allocable to the Loan; provided, however, that with respect to the period during which the Loan is held by a Securitization trust, Borrower’s liability under this Section 2.5.1 shall be limited to the Increased Costs to which such Securitization trust itself is subject, if any. If Lender requests compensation under this Section 2.5.1, Borrower may, by notice to Lender, require that Lender furnish to Borrower a statement setting forth the basis for requesting such compensation and the method for determining the amount thereof. In the event that Borrower is required to pay any Increased Costs in accordance with the terms hereof, Borrower shall have the right to prepay the Principal Amount (together with all Applicable Interest) without the imposition of any Yield Maintenance Premium or Prepayment Premium.

 

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2.5.2 Special Taxes. Borrower shall make all payments hereunder free and clear of and without deduction for Special Taxes. If Borrower shall be required by law to deduct any Special Taxes from or in respect of any sum payable hereunder or under any other Loan Document to Lender, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.5.2) Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. Notwithstanding anything to the contrary contained in this Section 2.5, Borrower shall not be liable for any amounts as a result of (a) withholding for Special Taxes or additional costs incurred as a result of the assignment of all or any portion of the Loan by Lender to any Person that is subject to Special Taxes at the time of such assignment, which Special Taxes exceed the Special Taxes to which the assignor is subject, and which is organized under or has its principal place of business outside of the United States of America or any political subdivision thereof or (b) failure of Lender to comply with any certification, identification, information, documentation or other reporting requirement if (i) such compliance is required by law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or reduction in the rate of, deduction or withholding of any Special Taxes and (ii) at least thirty (30) days prior to the first Payment Date with respect to which the Borrower shall apply this clause (b), Borrower shall have notified the Lender that the Lender will be required to comply with such requirement, provided, however, that the exclusion set forth in this clause (b) shall not apply in respect of any certification, identification, information, documentation or other reporting requirement if such requirement would be materially more onerous, in form, in procedure or in the substance of information disclosed, to the Lender than comparable information or other reporting requirements imposed under U.S. Tax law, regulation and administrative practice (such as IRS Forms W-8BEN and W-9).

2.5.3 Other Taxes. In addition, Borrower agrees to pay any present or future stamp or documentary taxes or other excise or property taxes, charges, or similar levies which arise from any payment made hereunder, or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the other Loan Documents, or the Loan (hereinafter referred to as “Other Taxes”).

2.5.4 Indemnity. Subject to the limitations in the last sentence of Section 2.5.2, Borrower shall indemnify Lender for the full amount of Special Taxes and Other Taxes (including any Special Taxes or Other Taxes imposed by any Governmental Authority on amounts payable under this Section 2.5.4) paid by Lender and any liability (including penalties, interest, and reasonable out-of-pocket expenses) arising therefrom or with respect thereto, whether or not such Special Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days after the date Lender makes written demand therefor.

2.5.5 Change of Office. To the extent that changing the jurisdiction of Lender’s applicable office would have the effect of minimizing Special Taxes, Other Taxes or Increased Costs, Lender shall use reasonable efforts to make such a change, provided that same would not otherwise be disadvantageous to Lender.

 

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2.5.6 Survival . Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section 2.5 shall survive the payment in full of principal and interest hereunder, and the termination of this Agreement.

III. CASH MANAGEMENT

3.1 Cash Management.

3.1.1 Establishment of Accounts. Borrower hereby acknowledges that (A) simultaneously with the execution of this Agreement, Lender has established with Cash Management Bank, in the name of Lender, a holding account (the “Holding Account”), which has been established as a deposit account, and (B) Lender shall be the customer (within the meaning of Section 4-104(1)(e) of the UCC) of Cash Management Bank with respect to the Holding Account and each sub-account thereof. The Holding Account and each sub-account of such account and the funds deposited therein shall serve as additional security for the Loan. Borrower shall not have any right to make, and shall not deliver any orders to Cash Management Bank for, any withdrawals from the Collateral Accounts (as defined below). In addition, Lender has established with Cash Management Bank the following sub-accounts of the Holding Account (each, a “Sub-Account” and, collectively, the “Sub-Accounts” and together with the Holding Account, the “Collateral Accounts”), which (i) may be ledger or book entry sub-accounts and need not be actual sub-accounts, (ii) shall each be linked to the Holding Account, (iii) shall each be a “Deposit Account” pursuant to Article 9 of the UCC and (iv) shall each be an Eligible Account to which certain funds shall be allocated and from which disbursements shall be made pursuant to the terms of this Agreement:

(a) a sub-account for the retention of Account Collateral in respect of Real Estate Impositions and Other Charges for the Property (the “Tax Reserve Account”);

(b) a sub-account for the retention of Account Collateral in respect of insurance premiums for the Property (the “Insurance Reserve Account”);

(c) a sub-account for the retention of Account Collateral in respect of Debt Service on the Loan (the “Debt Service Reserve Account”);

(d) a sub-account for the retention of Account Collateral in respect of Required Repairs Funds (the “Required Repairs Reserve Account”);

(e) a sub-account for the retention of Account Collateral in respect of Capital Expenditure Funds (the “Capital Expenditure Reserve Account”);

(f) a sub-account for the retention of Account Collateral in respect of reserves relating to shortfalls in Master Lease Rent (the “Master Lease Rent Shortfall Reserve Account”);

(g) a sub-account for the retention of Account Collateral in respect of certain Proceeds as more fully set forth in Section 6.2 (the “Proceeds Reserve Account”);

 

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(h) a sub-account for the retention of Account Collateral in respect of Debt Service (First Mezzanine) (the “First Mezzanine Debt Service Reserve Account”); and

(i) a sub-account for the retention of Account Collateral in respect of Debt Service (Second Mezzanine) (the “Second Mezzanine Debt Service Reserve Account”).

3.1.2 Pledge of Account Collateral. To secure the full and punctual payment and performance of the Obligations, Borrower hereby collaterally assigns, grants a security interest in and pledges to Lender, to the extent not prohibited by applicable law, a first priority continuing security interest in and to the following property of Borrower, whether now owned or existing or hereafter acquired or arising and regardless of where located (all of the same, collectively, the “Account Collateral”):

(a) the Collateral Accounts and all cash, deposits and/or wire transfers from time to time deposited or held in, credited to or made to Collateral Accounts;

(b) all interest and cash from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing or purchased with funds from the Collateral Accounts unless released; and

(c) to the extent not covered by clauses (a) or (b) above, all proceeds (as defined under the UCC) of any or all of the foregoing.

In addition to the rights and remedies herein set forth, Lender shall have all of the rights and remedies with respect to the Account Collateral available to a secured party at law or in equity, including, without limitation, the rights of a secured party under the UCC, as if such rights and remedies were fully set forth herein.

This Agreement shall constitute a security agreement for purposes of the Uniform Commercial Code and other applicable law.

3.1.3 Maintenance of Collateral Accounts. (a) Borrower agrees that each of the Collateral Accounts is and shall be maintained (i) as a “deposit account” (as such term is defined in Section 9-102(a)(29) of the UCC), (ii) in such a manner that Lender is the customer (within the meaning of Section 4-104(a)(5) of the UCC) of Cash Management Bank with respect to the Collateral Accounts and Lender (or such other Person designated in writing by the Lender to Borrower from time to time) shall have control (within the meaning of Section 9-104(a)(2) of the UCC) over the Collateral Accounts, and (iii) such that Borrower shall have no right of withdrawal from the Collateral Accounts and, except as provided herein, no Account Collateral shall be released to Borrower from the Collateral Accounts.

(b) Notwithstanding Section 3.1.3(a)(i) above, Borrower shall be permitted to cause the Collateral Accounts to be maintained as “securities accounts” pursuant to Article 8 of the UCC, provided that (i) Lender is the entitlement holder (within the meaning of Section 8-102(a)(7) of the UCC) with respect to Collateral Accounts, (ii) Lender (or such other Person designated in writing by the Lender to the Borrower from time to time) shall have control (within the meaning of Section 8-106(d) of the UCC) over such “securities account” and at all times Lender shall have a perfected first priority lien on the Collateral Account, (iii) such

 

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account shall be maintained in such a manner that the Cash Management Bank shall agree to treat all property credited to the Collateral Account as “financial assets” and, (iv) all securities or other property underlying any financial assets credited to the Collateral Account shall be registered in the name of Cash Management Bank, endorsed to Cash Management Bank or in blank or credited to another securities account maintained in the name of Cash Management Bank and in no case will any financial asset credited to any of the Collateral Account be registered in the name of Borrower, payable to the order of Borrower or specially indorsed to Borrower except to the extent the foregoing have been specially indorsed to Cash Management Bank or in blank.

3.1.4 Eligible Accounts. The Collateral Accounts shall be Eligible Accounts. The Collateral Accounts shall be subject to such applicable laws, and such applicable regulations of the Board of Governors of the Federal Reserve System and of any other banking or governmental authority, as may now or hereafter be in effect. Income and interest accruing on the Collateral Accounts or any investments held in such accounts shall be periodically added to the principal amount of such account and shall be held, disbursed and applied in accordance with the provisions of this Agreement. Borrower shall be the beneficial owner of the Collateral Accounts for federal income tax purposes and shall report all income on the Collateral Accounts.

3.1.5 Deposits into Sub-Accounts. On the date hereof, Borrower has deposited the following amounts into the Sub-Accounts:

(i) $2,995,085.86 into the Tax Reserve Account;

(ii) $0.00 into the Insurance Reserve Account;

(iii) $1,716,062.50 into the Required Repairs Reserve Account;

(iv) $6,010,448.00 into the Capital Expenditure Reserve Account;

(v) $0.00 into the Debt Service Reserve Account;

(vi) $9,080,562.00 into the Master Lease Rent Shortfall Reserve Account;

(vii) $0.00 into the Proceeds Reserve Account;

(viii) $0.00 into the First Mezzanine Debt Service Reserve Account; and

(ix) $0.00 into the Second Mezzanine Debt Service Reserve Account.

3.1.6 Monthly Funding of Sub-Accounts; Master Lease Rent Shortfalls; Sub-Account Shortfalls.

(a) Monthly Funding of Sub-Accounts. Borrower hereby irrevocably authorizes Lender to transfer, and Lender shall transfer, from the Holding Account by 11:00 a.m. New York time on the date on which each payment of Master Lease Base Rent under the Master Lease is made to the Holding Account, or as soon thereafter as sufficient funds are in the Holding Account to make the applicable transfers, commencing on the date of the first payment of Master Lease Base Rent under the Master Lease, funds in the following amounts and in the following order of priority:

 

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(i) funds in an amount equal to the Monthly Tax Reserve Amount and any other amounts required pursuant to Section 16.1 for the month in which the transfer from the Holding Account is made to the Tax Reserve Account;

(ii) funds in an amount equal to the Monthly Insurance Reserve Amount and any other amounts required pursuant to Section 16.2 for the month in which the transfer from the Holding Account is made to the Insurance Reserve Account;

(iii) funds in an amount equal to the amount of Debt Service due on the Payment Date on which the transfer from the Holding Account is made to the Debt Service Reserve Account, and all other amounts under the Loan Documents that are due and owing on or prior to such Payment Date that are not specifically covered by another clause of this Section 3.1.6(a);

(iv) provided that no Event of Default has occurred and is continuing, funds in an amount equal to the Monthly Capital Expenditure Reserve Amount and any other amounts required pursuant to Section 16.4 for the month in which the transfer from the Holding Account is made to the Capital Expenditure Reserve Account;

(v) provided that no Event of Default has occurred and is continuing, to the extent Lender receives a First Mezzanine Lender Monthly Debt Service Notice, funds in an amount equal to the First Mezzanine Loan Debt Service Amount due on the Payment Date on which the transfer from the Holding Account occurs and transfer the same to the First Mezzanine Debt Service Reserve Account;

(vi) provided that no Event of Default has occurred and is continuing, and provided (a) Lender has not received a First Mezzanine Loan Default Notice, and (b) to the extent Lender receives a Second Mezzanine Lender Monthly Debt Service Notice, funds in an amount equal to the Second Mezzanine Loan Debt Service Amount due on the Payment Date on which the transfer from the Holding Account occurs and transfer the same to the Second Mezzanine Debt Service Reserve Account;

(vii) [reserved];

(viii) [reserved];

(ix) provided that no Event of Default has occurred and is continuing, during any Low Lease Coverage Ratio Cash Sweep Period, to the Borrower’s Account an amount equal to the sum of Approved Expenses for the month following the month in which the transfer from the Holding Account is made (the “Approved Expense Distribution”); provided, (i) in the event that Borrower’s estimate of operating expenses in clause (b) of the definition of Approved Expenses for the prior month exceeded the operating expenses actually paid by Borrower for such period, the Approved Expense Distribution shall be decreased in an amount equal to such difference, and (ii) in the event that Borrower’s estimate of operating expenses in clause (b) of the definition of Approved Expenses for the prior month was less than the operating expenses actually paid by Borrower for such period, the Approved Expense Distribution shall be increased in an amount equal to such difference;

 

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(x) provided that no Event of Default has occurred and is continuing and Lender has not received a Mezzanine Loan Default Notice, not more than once per calendar quarter, during any Low Lease Coverage Ratio Cash Sweep Period, to the Borrower’s Account funds equal to the lesser of (a) the Required Tax Distribution Amount estimated in good faith by Borrower to be due, and (b) twenty-five percent (25%) of the balance (if any) remaining in the Holding Account after the foregoing transfers; provided, however, such disbursement shall be conditioned upon the following: (i) Borrower shall have provided Lender with a written request for such disbursement at least ten (10) Business Days prior to such disbursement date, and (ii) Borrower shall provide Lender with an Officer’s Certificate certifying that such requested amount is based on Guarantor’s good faith estimate of the Required Tax Distribution Amount and a pro forma tax return supporting the amount of such good faith calculation;

(xi) if the balance in the Master Lease Rent Shortfall Reserve Account is less than the Master Lease Minimum Shortfall Reserve Amount, funds in an amount equal to the balance (if any) remaining in the Holding Account after the foregoing transfers to the Master Lease Rent Shortfall Reserve Account up to a maximum sum such that the Master Lease Minimum Shortfall Reserve Amount is maintained therein at all times during the term of the Loan;

(xii) during any 90% Cash Sweep Period, if the balance in the Master Lease Rent Shortfall Reserve Account is less than the Master Lease 90% Reserve Amount, funds in an amount equal to the balance (if any) remaining in the Holding Account after the foregoing transfers to the Master Lease Rent Shortfall Reserve Account up to a maximum sum such that a balance equal to the Master Lease 90% Reserve Amount is maintained therein at all times during any such 90% Cash Sweep Period;

(xiii) during any 80% Cash Sweep Period, funds in an amount equal to the balance (if any) remaining in the Holding Account after the foregoing transfers to the Master Lease Rent Shortfall Reserve Account; and

(xiv) provided that no Event of Default has occurred and is continuing, funds in an amount equal to the balance (if any) remaining in the Holding Account after the foregoing transfers (such remainder being hereinafter referred to as “Excess Cash Flow”), (A) if Lender has received a Mezzanine Loan Default Notice, to the applicable Mezzanine Account in accordance with Section 3.1.6(g) or (B) provided Lender has not received a Mezzanine Loan Default Notice, to the Borrower’s Account.

(b) [Reserved]

(c) Release of Funds from Master Lease Rent Shortfall Reserve Account. In the event that no Low Lease Coverage Ratio Cash Sweep Period or Event of Default is then continuing, Lender shall direct the Cash Management Bank to transfer the unapplied portion, if any, of the funds in the Master Lease Rent Shortfall Reserve Account to the Holding Account to be applied in accordance with Section 3.1.6(a) such that a balance equal to the Master Lease

 

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Minimum Shortfall Reserve Amount remains in the Master Lease Rent Shortfall Reserve Account. In the event that an 80% Cash Sweep Period is no longer continuing but a 90% Cash Sweep Period is then continuing, and provided no Event of Default is then continuing, Lender shall direct the Cash Management Bank to transfer the unapplied portion, if any, of the sums in the Master Lease Rent Shortfall Reserve Account to the Holding Account to be applied in accordance with Section 3.1.6(a), such that a balance equal to the Master Lease 90% Reserve Amount is maintained in the Master Lease Rent Shortfall Reserve Account at all times during any such 90% Cash Sweep Period.

(d) [Reserved]

(e) Sub-Account Shortfalls. If there are insufficient funds in the Holding Account to make any of the transfers required under clauses (i), (ii) or (iv) of Section 3.1.6(a), as reasonably determined by Lender, Lender shall provide notice to Borrower of such insufficiency and, within five (5) Business Days after receipt of said notice and prior to the expiration of any grace period applicable to such payment, Borrower shall deposit into the Holding Account an amount equal to the shortfall of available funds in the Holding Account taking into account any funds which accumulate in the Holding Account during such five (5) Business Day period. Notwithstanding anything to the contrary contained in this Agreement or in the other Loan Documents, Borrower shall not be deemed to be in default hereunder or thereunder in the event funds sufficient for a required transfer are held in an appropriate Sub-Account and Lender or Cash Management Bank fails to timely make any transfer from such Sub-Account as contemplated by this Agreement unless due to the negligence or willful misconduct of Borrower.

(f) To the extent that Borrower shall fail to pay any mortgage recording tax, costs, expenses or other amounts pursuant to Section 19.12 of this Agreement (other than any such costs, expenses or other amounts to be paid at closing) within the time period set forth therein, Lender shall have the right, at any time, without notice to Borrower, to withdraw from the Holding Account (excluding to the extent required under the last sentence of Section 3.1.10(a) any funds that would otherwise be directed into the Tax Reserve Account, the Insurance Reserve Account and, to the extent the Master Lessee is entitled to Proceeds under the Master Lease or such Proceeds are required for restoration under the Master Lease, the Proceeds Reserve Account), an amount equal to such unpaid taxes, costs, expenses and/or other amounts and pay such amounts to the Person(s) entitled thereto.

(g) In the event that Lender has received a Mezzanine Loan Default Notice, Borrower hereby irrevocably directs that all Excess Cash Flow shall (in lieu of transferring such funds to the Borrower’s Account pursuant to Section 3.1.6(a)(xiv)(B)): (i) to the extent Lender has received a First Mezzanine Loan Default Notice and until such time as Lender receives a notice from First Mezzanine Lender that such event of default under the First Mezzanine Loan is no longer continuing (a “First Mezzanine Loan Default Revocation Notice”), be deposited directly into the First Mezzanine Account, or (ii) provided Lender has not received a First Mezzanine Loan Default Notice but has received a Second Mezzanine Loan Default Notice and until such time as Lender receives a notice from Second Mezzanine Lender that such event of default under the Second Mezzanine Loan is no longer continuing (a “Second Mezzanine Loan Default Revocation Notice”), be deposited directly in the Second Mezzanine Account. The direction set forth in the immediately preceding sentence shall not be changed or terminated without the

 

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written consent of the applicable Mezzanine Lender. Notwithstanding any provision herein to the contrary, no Mezzanine Loan Default Notice shall be required for the deposit of Proceeds into the respective Mezzanine Account in accordance with the terms of Section 6.2.3(b) hereof.

3.1.7 Required Payments from Sub-Accounts. Borrower irrevocably authorizes Lender to make and, Lender hereby agrees to make or to direct the Cash Management Bank to make, the following payments from the Sub-Accounts to the extent of the monies on deposit therefor:

(i) funds from the Tax Reserve Account to Lender sufficient to permit Lender to pay (A) Real Estate Impositions and (B) Other Charges, on the respective due dates therefor, and Lender shall so pay such funds to the Governmental Authority having the right to receive such funds;

(ii) funds from the Insurance Reserve Account to Lender sufficient to permit Lender to pay insurance premiums for the insurance required to be maintained pursuant to the terms of this Agreement and the Security Instrument, on the respective due dates therefor, and Lender shall so pay such funds to the insurance company having the right to receive such funds;

(iii) [reserved];

(iv) funds from the Debt Service Reserve Account to Lender sufficient to pay Debt Service on each Payment Date and all other amounts under the Loan Documents that are due and owing on or prior to such Payment Date that are not specifically covered by another clause of Section 3.1.6(a), and Lender, on each Payment Date, shall apply such funds to the payment of the Debt Service payable on such Payment Date and payment of such other amounts;

(v) provided that no Event of Default has occurred and is continuing, funds from the First Mezzanine Debt Service Reserve Account to the First Mezzanine Account on each Payment Date; and

(vi) provided that no Event of Default has occurred and is continuing, funds from the Second Mezzanine Debt Service Reserve Account to the Second Mezzanine Account on each Payment Date.

3.1.8 Cash Management Bank. Lender shall have the right at Borrower’s sole cost and expense to replace the Cash Management Bank at any time with another Eligible Institution without the consent of Borrower. Upon the occurrence and during the continuance of an Event of Default, Lender shall have the right at Borrower’s sole cost and expense to replace Cash Management Bank at any time, without notice to Borrower. Borrower shall cooperate with Lender in connection with the appointment of any replacement Cash Management Bank. Borrower shall have no right to replace the Cash Management Bank.

3.1.9 Borrower’s Representations, Warranties and Covenants Regarding Holding Account.

(a) Borrower represents, warrants and covenants that as of the date hereof, Borrower has irrevocably directed the Master Lessee pursuant to a letter substantially in the form of the

 

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Master Lease Rent Payment Direction Letter (i) to make all payments of Master Lease Base Rent directly to the Holding Account at all times during the term of the Loan, and (ii) to the extent that any Master Lease Additional Charges is payable by Master Lessee to Borrower under the Master Lease, to make payments of such Master Lease Additional Charges directly to the Holding Account.

(b) Borrower further represents, warrants and covenants that (i) Borrower shall cause Master Lessee to deposit all amounts payable to Borrower pursuant to the Master Lease directly into the Holding Account, (ii) Borrower shall pay or cause to be paid all Rents, Cash and Cash Equivalents or other items of operating income not covered by the preceding subsection (a) within one (1) Business Day after receipt thereof by Borrower or its Affiliates directly into the Holding Account and, until so deposited, any such amounts held by Borrower or its Affiliates shall be deemed to be Account Collateral and shall be held in trust by it for the benefit, and as the property, of Lender and shall not be commingled with any other funds or property of Borrower or its Affiliates, (iii) there are no accounts other than the Collateral Accounts maintained by Borrower or any other Person with respect to the Property or the collection of Rents and (vii) so long as the Loan shall be outstanding, neither Borrower nor any other Person shall open any other operating accounts with respect to the Property or the collection of Rents, except for the Collateral Accounts; provided that, Borrower shall not be prohibited from utilizing one or more separate accounts for the disbursement or retention of funds that have been transferred to the Borrower’s Account pursuant to Section 3.1.6.

3.1.10 Account Collateral and Remedies.

(a) Upon the occurrence and during the continuance of an Event of Default, without additional notice from Lender to Borrower, (i) Lender may, in addition to and not in limitation of Lender’s other rights, make any and all withdrawals from, and transfers between and among, the Collateral Accounts as Lender shall determine in its sole and absolute discretion and in any order of priority to pay any Obligations, operating expenses and/or capital expenditures for the Property; (ii) all Excess Cash Flow shall be retained in the Holding Account or applicable Sub-Accounts and (iii) all payments to the Mezzanine Lender pursuant to Section 3.1.7 shall immediately cease. Notwithstanding anything to the contrary contained herein, except to the extent that Borrower is entitled to such funds under the terms and provisions of the Master Lease due to the continuance of a Master Lease Default thereunder or otherwise, funds deposited into the Tax Reserve Account, the Insurance Reserve Account and, to the extent the Master Lessee is entitled to Proceeds under the Master Lease or such Proceeds are required for restoration under the Master Lease, the Proceeds Reserve Account (excluding any sums earned thereon) (i) may not be applied by Lender in satisfaction of the Obligations and (ii) shall continue to be disbursed by Lender as provided in Article XVI and this Article III as if no Event of Default has occurred.

(b) Upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably constitutes and appoints Lender as Borrower’s true and lawful attorney-in-fact, with full power of substitution, to execute, acknowledge and deliver any instruments and to exercise and enforce every right, power, remedy, option and privilege of Borrower with respect to the Account Collateral, and do in the name, place and stead of Borrower, all such acts, things and deeds for and on behalf of and in the name of Borrower, which Borrower could or might do or which Lender may deem necessary or desirable to more

 

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fully vest in Lender the rights and remedies provided for herein and to accomplish the purposes of this Agreement. The foregoing powers of attorney are irrevocable and coupled with an interest. Upon the occurrence and during the continuance of an Event of Default, Lender may perform or cause performance of any such agreement, and any reasonable out-of-pocket expenses of Lender incurred in connection therewith shall be paid by Borrower as provided in Section 5.1.16.

(c) Except for any notice required by this Agreement and the related Loan Documents, Borrower hereby expressly waives, to the fullest extent permitted by law, presentment, demand, protest or any notice of any kind in connection with this Agreement or the Account Collateral. Borrower acknowledges and agrees that ten (10) days’ prior written notice of the time and place of any public sale of the Account Collateral or any other intended disposition thereof shall be reasonable and sufficient notice to Borrower within the meaning of the UCC.

3.1.11 Transfers and Other Liens. Borrower agrees that it will not (i) sell or otherwise dispose of any of the Account Collateral or (ii) create or permit to exist any Lien upon or with respect to all or any of the Account Collateral, except for the Lien granted to Lender under this Agreement.

3.1.12 Reasonable Care. Beyond the exercise of reasonable care in the custody thereof, Lender shall have no duty as to any Account Collateral in its possession or control as agent therefor or bailee thereof or any income thereon or the preservation of rights against any person or otherwise with respect thereto. Lender shall be deemed to have exercised reasonable care in the custody of the Account Collateral in its possession if the Account Collateral is accorded treatment substantially equal to that which Lender accords its own property, it being understood that Lender shall not be liable or responsible for any loss or damage to any of the Account Collateral, or for any diminution in value thereof, by reason of the act or omission of Lender, its Affiliates, agents, employees or bailees, except to the extent that such loss or damage results from Lender’s gross negligence or willful misconduct. In no event shall Lender be liable either directly or indirectly for losses or delays resulting from any event which may be the basis of an Excusable Delay, computer malfunctions, interruption of communication facilities, labor difficulties or other causes beyond Lender’s reasonable control or for indirect, special or consequential damages except to the extent of Lender’s gross negligence or willful misconduct. Notwithstanding the foregoing, Borrower acknowledges and agrees that (i) Cash Management Bank has custody of the Account Collateral, and (ii) Lender has no obligation or duty to supervise Cash Management Bank or to see to the safe custody of the Account Collateral.

3.1.13 Lender’s Liability.

(a) Lender shall be responsible for the performance only of such duties with respect to the Account Collateral as are specifically set forth in this Section 3.1 or elsewhere in the Loan Documents, and no other duty shall be implied from any provision hereof. Lender shall not be under any obligation or duty to perform any act with respect to the Account Collateral which would cause it to incur any expense or liability or to institute or defend any suit in respect hereof, or to advance any of its own monies. Borrower shall indemnify and hold Lender, its employees and officers harmless from and against any loss, cost or damage (including, without limitation,

 

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reasonable attorneys’ fees and disbursements) incurred by Lender in connection with the transactions contemplated hereby with respect to the Account Collateral except as such may be caused by the gross negligence or willful misconduct of Lender, its employees, officers or agents.

(b) Lender shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper, document or signature believed by it in good faith to be genuine, and, in so acting, it may be assumed that any person purporting to give any of the foregoing in connection with the provisions hereof has been duly authorized to do so. Lender may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder and in good faith in accordance therewith.

3.1.14 Continuing Security Interest. This Agreement shall create a continuing security interest in the Account Collateral and shall remain in full force and effect until payment in full of the Indebtedness. Upon payment in full of the Indebtedness, this security interest shall automatically terminate without further notice from any party and Borrower shall be entitled to the return, upon its request, of such of the Account Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof and Lender shall execute such instruments and documents as may be reasonably requested by Borrower to evidence such termination and the release of the Account Collateral.

3.1.15 Distributions. Transfers of Borrower’s funds from any of the Collateral Accounts to or for the benefit of any of the Mezzanine Borrowers shall constitute distributions to First Mezzanine Borrower, and deemed distributions by the First Mezzanine Borrower to the Second Mezzanine Borrower, as applicable, and, in each case, must comply with the requirements as to distributions of the Delaware Limited Liability Company Act. The provisions of this Article III shall not create a debtor-creditor relationship between Borrower and any Mezzanine Lender.

IV. REPRESENTATIONS AND WARRANTIES

4.1 Borrower Representations. Borrower represents and warrants as of the Closing Date that:

4.1.1 Organization. Each of Borrower, Master Lessee and Master Lease Guarantor is a limited liability company and has been duly organized and is validly existing and in good standing pursuant to the laws of the State of Delaware with requisite power and authority to own its properties and to transact the businesses in which it is now engaged. Guarantor is a corporation and has been duly organized and is validly existing and in good standing pursuant to the laws of the State of Delaware with requisite power and authority to own its properties and to transact the businesses in which it is now engaged. Borrower, Guarantor, Master Lessee and Master Lease Guarantor have each duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with its properties, businesses and operations, or, in the case of qualifications in the various States (a) an application for such qualification has been duly filed with the applicable Governmental Authority and all fees required in order to obtain such qualification have been paid in full, (b) all conditions to

 

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obtaining such qualification have been satisfied under applicable law and the issuance of such qualification is a ministerial act of the applicable Governmental Authority, and (c) no such failure to qualify would be reasonably likely to have a Material Adverse Effect. Each of Borrower, Master Lessee, Guarantor and Master Lease Guarantor possesses all material rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own its properties and to transact the businesses in which it is now engaged, and the sole business of Borrower is the ownership of the Properties. The organizational structure of Borrower, Guarantor, Master Lessee and Master Lease Guarantor is accurately depicted by the schematic diagram attached hereto as Exhibit A. Borrower shall not change or permit to be changed (i) Borrower’s name, (ii) Borrower’s identity (including its trade name or names), (iii) Borrower’s principal place of business set forth on the first page of this Agreement, (iv) the corporate, partnership or other organizational structure of Borrower or any SPE Component Entity, (v) Borrower’s state of organization, or (vi) Borrower’s organizational identification number, unless it shall have given Lender thirty (30) days prior written notice of any such change (and, in the case of a change in Borrower’s structure, has first obtained the prior written consent of Lender) and shall have taken all steps reasonably requested by Lender to grant, perfect, protect and/or preserve the liens and security interest granted to Lender under the Loan Documents. Borrower expressly authorizes Lender and its counsel to file such financing statements, with or without the signature of Borrower, as Lender may elect, as may be necessary or desirable to perfect the lien of Lender’s security interest in any personal property or Fixtures described in the Security Instrument or any other Loan Document, including without limitation, UCC financing statements describing the collateral as all assets and personal property of the Borrower, whether now owned or existing or hereafter acquired or arising and wheresoever located, including all accessions thereto and products and proceeds thereof, or using words with similar effect (notwithstanding and subject to the understanding that no security interest in the Excluded Personal Property is in fact granted under any of the Loan Documents). At the request of Lender, Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property. If Borrower does not now have an organizational identification number and later obtains one, or if the organizational identification number assigned to Borrower subsequently changes, Borrower shall promptly notify Lender of such organizational identification number or change.

4.1.2 Proceedings. Each of Borrower, Guarantor and Master Lessee has full power to and has taken all necessary action to authorize the execution, delivery and performance of the Loan Documents to which it is a party.

4.1.3 No Conflicts. The execution, delivery and performance of this Agreement and the other Loan Documents by Borrower, Mezzanine Borrower, Guarantor and Master Lessee, as applicable, will not conflict with or result in a material breach of any of the terms or provisions of, or constitute a material default under, or result in the creation or imposition of any lien, charge or encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of any such Person pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, partnership agreement or other agreement or instrument to which any such Person is a party or by which any of such Person’s property or assets is subject (unless consents from all applicable parties thereto have been obtained), except for any conflict that would not individually or in the aggregate reasonably be expected to result in a Material Adverse Effect,

 

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nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority, and any material consent, approval, authorization, order, registration or qualification of or with any Governmental Authority required for the execution, delivery and performance by Borrower, Mezzanine Borrower, Guarantor and Master Lessee of this Agreement or any other Loan Document has been obtained and is in full force and effect.

4.1.4 Litigation. Except as set forth on Schedule II attached hereto, there are no arbitration proceedings, governmental investigations, actions, suits or proceedings at law or in equity by or before any Governmental Authority now pending or, to the best of Borrower’s knowledge, threatened against or affecting Borrower, Mezzanine Borrower, Guarantor, Master Lessee, Master Lease Guarantor or any Individual Property (other than claims (A) (i) which are being covered by insurance, (ii) which are being defended by the relevant insurance company and (iii) as to which Borrower has not received a notice from such insurance company that the claim exceeds the total amount of insurance coverage with respect to such claim by more than $500,000; or (B) which relate to claims for which liability in the event any such matter is adversely determined could not reasonably be expected to exceed $500,000). The actions, suits or proceedings identified on Schedule II, if determined against Borrower, Mezzanine Borrower, Guarantor, Master Lease Guarantor, Master Lessee or the Property, would not materially and adversely affect the condition or operation of any Individual Property.

4.1.5 Agreements. The Operating Agreements, the Master Lease and the Subleases listed on Schedule I attached hereto (including the Concept Subleases, the RLP Subleases, the Pass-Through Subleases, the Specified Prior Leases and the Unaffiliated Subleases) constitute all of the material agreements to which Borrower or any of its Affiliates are party or are bound which are material to the ownership and operation of any Individual Property. Borrower is not a party to any agreement or instrument or subject to any restriction which is reasonably likely to materially and adversely affect Borrower or Borrower’s business, properties or assets, operations or condition, financial or otherwise. Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any material agreement or instrument to which it is a party or by which Borrower or the Property is bound. Borrower has no material financial obligation (contingent or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other similar agreement or instrument to which Borrower is a party or by which Borrower or the Property is otherwise bound, other than (a) obligations constituting Permitted Debt which are incurred in the ordinary course of the ownership and operation of the Property and (b) obligations under the Loan Documents.

4.1.6 Title.

(a) Borrower has good, marketable and insurable fee simple title to the Land and the Improvements relating to Properties, in each case free and clear of all Liens whatsoever except the Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan Documents and the Liens created by the Loan Documents. Borrower has good and marketable title to the remainder of the Property (excluding the Excluded Personal Property), free and clear of all Liens whatsoever except the Permitted Encumbrances. The Security Instrument, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing

 

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statements required to be filed in connection therewith, will create (i) a valid, perfected first mortgage lien on the Land and the Improvements subject only to Permitted Encumbrances and (ii) perfected security interests in and to all personalty other than the Excluded Personal Property (including the Subleases) or any leases of equipment from third parties, all in accordance with the terms thereof, to the extent such security interest may be perfected by filing a Uniform Commercial Code financing statement under Article 9 of the UCC, in each case subject only to any applicable Permitted Encumbrances. There are no claims for payment for work, labor or materials affecting the Property which are or may become a lien prior to, or of equal priority with, the Liens created by the Loan Documents other than the Permitted Encumbrances. Borrower represents and warrants that none of the Permitted Encumbrances would individually or in the aggregate reasonably be expected to result in a Material Adverse Effect as of the Closing Date and thereafter. Borrower shall preserve its right, title and interest in and to the Property, except for Individual Properties released under the terms hereof, for so long as the Note remains outstanding and will warrant and defend same and the validity and priority of the Lien hereof from and against any and all claims whatsoever other than the Permitted Encumbrances.

(b) With respect to any Individual Property for which no survey has been prepared or updated in connection with the Loan, to the actual knowledge of Borrower after diligent inquiry (which shall not generally include site visits except where deemed necessary to confirm or investigate issues raised in reviewing company files or interviews with property managers):

(i) other than as disclosed in the 2007 surveys provided to Lender in connection with the Loan, there are no easements, encroachments or other title defects that would be disclosed by an accurate survey as of this date that could interfere in any material respect with the continued use and operation of such Individual Property as used as of the date hereof; and

(ii) other than as disclosed in the 2007 surveys provided to Lender in connection with the Loan, the Improvements and parking at such Individual Property and purported to be owned by Borrower and appraised pursuant to the appraisal received by Lender in connection with the origination of the Loan are wholly located on the Land related to such Individual Property.

4.1.7 No Bankruptcy Filing. None of Borrower, Guarantor, Master Lessee or Master Lease Guarantor is contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of such entity’s assets or property, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it or against Borrower, Guarantor, Master Lessee or Master Lease Guarantor.

4.1.8 Full and Accurate Disclosure.

(a) To Borrower’s knowledge, no material information submitted by Borrower to Lender in writing in connection with the Loan, nor any statement of material fact made by Borrower in this Agreement or in any of the other Loan Documents, contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not materially misleading as of the date made in light of the circumstances in which such information was submitted or such statements were made.

 

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(b) There is no fact presently known to Borrower which has not been disclosed which would reasonably be expected to have a Material Adverse Effect.

4.1.9 All Property. The Property constitutes all of the real property, personal property, equipment and fixtures currently (i) owned or leased by Borrower and (ii) used in the operation of the business located on the Property, other than the Excluded Personal Property and Excluded Licenses.

4.1.10 No Plan Assets.

(a) Borrower does not maintain an employee benefit plan as defined by Section 3(3) of ERISA, which is subject to Title IV of ERISA, and Borrower (i) has no knowledge of any material liability which has been incurred or is expected to be incurred by Borrower which is or remains unsatisfied for any taxes or penalties with respect to any “employee benefit plan,” within the meaning of Section 3(3) of ERISA, or any “plan,” within the meaning of Section 4975(e)(1) of the Internal Revenue Code or any other benefit plan (other than a multiemployer plan) maintained, contributed to, or required to be contributed to by Borrower or by any entity that is under common control with Borrower within the meaning of ERISA Section 4001(a)(14) (a “Plan”) or any plan that would be a Plan but for the fact that it is a multiemployer plan within the meaning of ERISA Section 3(37); and (ii) has made and shall continue to make when due all required contributions to all such Plans, if any. Each such Plan has been and will be administered in compliance with its terms and the applicable provisions of ERISA, the Internal Revenue Code, and any other applicable federal or state law; and no action shall be taken or fail to be taken that would result in the disqualification or loss of tax-exempt status of any such Plan intended to be qualified and/or tax exempt; and

(b) Borrower is not an employee benefit plan, as defined in Section 3(3) of ERISA, subject to Title I of ERISA, none of the assets of Borrower constitutes or will constitute plan assets of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101 and Borrower is not a governmental plan within the meaning of Section 3(32) of ERISA and transactions by or with Borrower are not subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the Code currently in effect, which prohibit or otherwise restrict the transactions contemplated by this Agreement.

4.1.11 Compliance. Borrower and the Property and the use thereof comply in all material respects with all applicable Legal Requirements, including, without limitation, building and zoning ordinances and codes (except for any non-compliance that individually or in the aggregate would not reasonably be expected to result in a Material Adverse Effect). To the best of Borrower’s knowledge, Borrower is not in default or in violation of any order, writ, injunction, decree or demand of any Governmental Authority. To the best of Borrower’s knowledge, there has not been committed by Borrower any act or omission affording the federal government or any other Governmental Authority the right of forfeiture as against the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents.

 

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4.1.12 Financial and Property Information. The information set forth in the Master Owned Property Schedule of even date herewith (a) is true, complete and correct in all material respects and (b) fairly represents the financial condition of the Property as of the Closing Date. Borrower does not have any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower (other than (i) such liabilities as are set forth in the financial statements furnished to the Lender, and (ii) obligations arising under this Agreement, and the other Loan Documents).

4.1.13 Condemnation. Except as set forth on Schedule II, no Taking is pending or, to Borrower’s knowledge, is contemplated with respect to all or any portion of the Property. No Taking is pending or, to Borrower’s knowledge, is contemplated for the relocation of roadways providing access to the Property. None of the Taking matters listed on Schedule II is reasonably likely to result in (a) a material reduction in the vehicular or pedestrian access to any Individual Property, (b) a material reduction in the parking rights located on or appurtenant to any Individual Property or (c) a Material Adverse Effect.

4.1.14 Federal Reserve Regulations. None of the proceeds of the Loan will be used for the purpose of purchasing or carrying any “margin stock” as defined in Regulation U, Regulation X or Regulation T or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry “margin stock” or for any other purpose which might constitute this transaction a “purpose credit” within the meaning of Regulation U or Regulation X, which in any such case would cause the Loan, the Borrower or the Lender to be in violation of Regulation U. As of the Closing Date, Borrower does not own any “margin stock.”

4.1.15 Utilities and Public Access. Each Individual Property has rights of access to one or more public ways, either directly or through a recorded easement or REA, which access is insured under the Title Policy for each Individual Property, except those Individual Properties located in Florida. Each Individual Property is served by water, sewer, sanitary sewer and storm drain facilities adequate to service the Property for its intended uses (except to the extent any such failure individually or in the aggregate would not reasonably be expected to result in a Material Adverse Effect). All utilities necessary to the existing use of the Property are located either in the public right-of-way abutting the Property or in recorded easements or REAs serving the Property (except, to the extent any such failure would not reasonably be expected to result in a Material Adverse Effect), and such easements or REAs are set forth in the Title Policy.

4.1.16 Not a Foreign Person. Borrower is not a foreign person within the meaning of § 1445(f)(3) of the Code.

4.1.17 Separate Lots. Except as set forth on Schedule XII, each Individual Property is comprised of one (1) or more contiguous parcels which constitute a separate tax lot or lots and does not constitute or include a portion of any other tax lot not a part of such Individual Property.

 

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4.1.18 Subdivision. The Individual Properties located in Florida, New Mexico, Pennsylvania, New York, Texas, Maryland and Michigan comply in all material respects with all applicable subdivision laws, ordinances and regulations.

4.1.19 Reserved.

4.1.20 Enforceability. This Agreement and the other Loan Documents are the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms, subject only to applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or similar laws from time to time in effect affecting creditor’s rights.

4.1.21 Reserved.

4.1.22 Insurance. Borrower has obtained and has delivered to Lender certified copies or originals of all insurance policies required under this Agreement, reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. Borrower has not, and to the best of Borrower’s knowledge no Person has, done by act or omission anything which would impair the coverage of any such policy.

4.1.23 Use of Property. Each Individual Property is used exclusively as a Concept or Third-Party Brand property and other appurtenant and related uses, except for the portions of the property subleased pursuant to the Specified Prior Subleases.

4.1.24 Certificate of Occupancy; Licenses. All material certifications, permits, licenses and approvals, including without limitation, liquor licenses and certificates of completion and occupancy permits required for the legal use, occupancy and operation of each Individual Property for its current use as an applicable restaurant property (collectively, the “Licenses”), have been obtained and are in full force and effect (except, to the extent any such failure would not reasonably be expected to result in a Material Adverse Effect). Borrower shall or shall cause Master Lessee to keep and maintain all Licenses necessary for the operation of each Individual Property in accordance with its current use as an applicable restaurant property (except, to the extent any such failure would not reasonably be expected to result in a Material Adverse Effect and subject to Section 2.3.7). The use being made of each Individual Property is in conformity with the certificate of occupancy issued for such Individual Property.

4.1.25 Flood Zone. None of the Improvements on the Property are located in an area as identified by the Federal Emergency Management Agency as an area having special flood hazards except as identified on the flood certifications delivered to Lender prior to the date hereof, and Borrower has obtained the insurance required under Article VI with respect to any Improvements located in any such special flood hazards.

4.1.26 Physical Condition. To the best of Borrower’s knowledge, the Property, including, without limitation, all buildings, Improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and repair in all material respects; to the best of Borrower’s knowledge, there exists no structural or other material defects or damages in or to the Property, whether latent or otherwise, and Borrower has not received any written notice from

 

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any insurance company or bonding company of any defects or inadequacies in the Property, or any part thereof, which would materially and adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.

4.1.27 Boundaries. Except as set forth in and insured pursuant to the Title Policy, to the best of Borrower’s knowledge and, where applicable, in reliance on the Surveys (except to the extent any such failure would not reasonably be expected to result in a Material Adverse Effect) (a) all of the Improvements lie wholly within the boundaries and building restriction lines of the Real Property relating to the applicable Individual Property, (b) no improvements on adjoining properties encroach upon the Real Property, and (c) no easements or other encumbrances upon the Real Property encroach upon any of the Improvements, so as to have a Material Adverse Effect.

4.1.28 Subleases. The Property is not subject to any leases other than the Master Lease, Affiliated Subleases, Unaffiliated Subleases, Excluded Licenses and the Specified Prior Subleases, in each case as set forth on Schedule I. No Person has any possessory interest in the Property or right to occupy the same except under and pursuant to the provisions of the Master Lease, the Affiliated Subleases, the Unaffiliated Subleases, Excluded Licenses, the Specified Prior Subleases and the REAs. The current Subleases are in full force and effect and to Borrower’s knowledge, there are no material defaults thereunder by either party (other than as expressly disclosed on Schedule I. No Rent has been paid more than one (1) month in advance of its due date, except as set forth on Schedule I. There has been no prior sale, transfer or assignment, hypothecation or pledge by Borrower or Master Lessee of the Master Lease or any Sublease or of the Rents received thereunder, which will be outstanding following the funding of the Loan, other than those being assigned to Lender concurrently herewith.

4.1.29 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable Legal Requirements currently in effect in connection with (i) the transfer of the Property to Borrower and (ii) the granting and recording of the Security Instrument and the UCC financing statements required to be filed in connection with the Loan have been paid or provided for. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Security Instrument, have been paid or provided for, and, under current Legal Requirements, the Security Instrument is enforceable against Borrower in accordance with its terms by Lender (or any subsequent holder thereof) subject only to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally, and subject as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

4.1.30 Opinion Assumptions.

(a) All of the assumptions relating to Borrower and each SPE Component Entity made in the Non-Consolidation Opinion, including, but not limited to, any exhibits attached thereto, are true and correct in all material respects and any Additional Non-Consolidation

 

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Opinion, including, but not limited to, any exhibits attached thereto, will have been and shall be true and correct in all material respects. Borrower and each SPE Component Entity have complied and will comply in all material respects with all of the assumptions made with respect to it in the Non-Consolidation Opinion in all material respects. Borrower and each SPE Component Entity will have complied and will comply with all of the assumptions made with respect to it in any Additional Non-Consolidation Opinion. Each entity other than Borrower with respect to which an assumption shall be made in any Additional Non-Consolidation Opinion will have complied and will comply in all material respects with all of the assumptions made with respect to it in any Additional Non-Consolidation Opinion.

(b) All of the assumptions made in the True Lease Opinion, including, but not limited to, any exhibits attached thereto, are true and correct in all material respects; provided, however, that Borrower is not making any representation or warranty with respect to any assumption that relies upon factual information provided by Cushman & Wakefield or any other third party.

4.1.31 [Reserved]

4.1.32 Illegal Activity. No portion of the Property has been or will be purchased with proceeds of any illegal activity.

4.1.33 Reserved.

4.1.34 Reserved.

4.1.35 Tax Filings. Borrower has filed (or has obtained effective extensions for filing) all federal, state and local tax returns required to be filed and has paid or made adequate provision for the payment of all federal, state and local taxes, charges and assessments payable by Borrower.

4.1.36 Solvency/Fraudulent Conveyance. Borrower (a) does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay such Debts and liabilities as they mature in their ordinary course; (b) is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which its assets would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which Borrower is engaged; (c) represents that the fair value of the assets of Borrower is greater than the total amount of liabilities, including without limitation, contingent liabilities of Borrower, such contingent liabilities computed at the amount which, in light of all the facts and circumstances existing at this time, represents the amount that can reasonably be expected to become an actual or matured liability; (d) represents that the present fair saleable value of the assets of Borrower is not less than the amount that will be required to pay the probable liability of Borrower on its debts as they become absolute and matured; (e) has not entered into the transaction contemplated by this Agreement or any Loan Document with the actual intent to hinder, delay, or defraud either present or future creditors or any other person to which Borrower is or will become, on or after the date hereof, indebted; and (f) has received reasonably equivalent value in exchange for its obligations under the Loan Documents.

 

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4.1.37 Investment Company Act. Borrower is not an investment company or a company Controlled by an investment company, within the meaning of the Investment Company Act of 1940, as amended.

4.1.38 Interest Rate Cap Agreement. A complete and correct copy of the Interest Rate Cap Agreement is attached hereto as Exhibit B. The Interest Rate Cap Agreement is in full force and effect and enforceable against Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws generally affecting the enforcement of creditors’ rights and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

4.1.39 Labor. Except as set forth on Schedule II, no organized work stoppage or labor strike is pending or threatened by employees and other laborers at the Property. Except as set forth in Schedule II or to the extent any such failure would not reasonably be expected to result in a Aggregate Material Adverse Effect, none of Borrower or Master Lessee, (i) is involved in or, to the best knowledge of Borrower, threatened with any labor dispute, grievance or litigation relating to labor matters involving any employees and other laborers at the Property, including, without limitation, violation of any federal, state or local labor, safety or employment laws (domestic or foreign) and/or charges of unfair labor practices or discrimination complaints, (ii) has engaged in any unfair labor practices within the meaning of the National Labor Relations Act or the Railway Labor Act or (iii) is a party to, or bound by, any collective bargaining agreement or union contract with respect to employees and other laborers at the Property and no such agreement or contract is currently being negotiated by the Borrower or Master Lessee.

4.1.40 Brokers. Borrower has not dealt with, and Lender hereby represents that it has not dealt with, any broker or finder with respect to the transactions contemplated by the Loan Documents, and neither party has done any acts, had any negotiations or conversations, or made any agreements or promises which will in any way create or give rise to any obligation or liability for the payment by either party of any brokerage fee, charge, commission or other compensation to any Person with respect to the transactions contemplated by the Loan Documents. Borrower and Lender shall each indemnify and hold harmless the other from and against any loss, liability, cost or expense, including any judgments, attorneys’ fees, or costs of appeal, incurred by the other party and arising out of or relating to any breach or default by the indemnifying party of its representations, warranties and/or agreements set forth in this Section 4.1.40. The provisions of this Section 4.1.40 shall survive the expiration and termination of this Agreement and the payment of the Indebtedness.

4.1.41 No Other Debt. Borrower has not borrowed or received debt financing that has not been heretofore repaid in full, other than the Permitted Debt.

4.1.42 Taxpayer Identification Number. Borrower’s Federal taxpayer identification number is 37-1666111.

4.1.43 Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws. (i) None of Borrower, Guarantor or any Person who Controls Borrower or Guarantor currently is identified on the OFAC List or otherwise qualifies as a Prohibited Person, and (ii) none of Borrower or Guarantor is in violation of any Legal Requirements relating to anti-

 

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money laundering or anti-terrorism, including, without limitation, Legal Requirements related to transacting business with Prohibited Persons or the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the related regulations issued thereunder, including temporary regulations, all as amended from time to time. To Borrower’s knowledge, no tenant at the Property currently is identified on the OFAC List or otherwise qualifies as a Prohibited Person and no tenant at the Property is owned or Controlled by a Prohibited Person.

4.1.44 [Reserved]

4.1.45 Rights of First Refusal or First Offer to Lease or Purchase. No Person, whether pursuant to an Operating Agreement or otherwise has a right of first refusal, right of first offer or other right or option pursuant to such Operating Agreement or otherwise to lease or purchase or to restrict or impose requirements upon the lease or purchase of all or any part of any Individual Property except as set forth on Schedule VI. None of the matters set forth on Schedule VI has been or will be triggered by any of the Contemplated Transactions and Borrower and its Affiliates are not in default of any of the provisions referenced in Schedule VI. None of the matters set forth on Schedule VI has or will have a material adverse effect on the value or marketability on any such Individual Property.

4.2 Survival of Representations. Borrower agrees that all of the representations and warranties of Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the other Loan Documents shall be deemed given and made as of the date hereof and survive for so long as any amount remains owing to Lender under this Agreement or any of the other Loan Documents by Borrower or Guarantor unless a longer survival period is expressly stated in a Loan Document with respect to a specific representation or warranty, in which case, for such longer period. All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.

4.3 Borrower’s Knowledge. Whenever a representation or warranty is made “to Borrower’s knowledge,” “to Borrower’s best knowledge,” or a term of similar import, such term shall mean the actual knowledge of Borrower or its officers or directors who would be likely to have actual knowledge of the relevant subject matter.

V. BORROWER COVENANTS

5.1 Affirmative Covenants. From the Closing Date and until payment and performance in full of all obligations of Borrower under the Loan Documents (other than contingent obligations for which a claim has not been made), Borrower hereby covenants and agrees with Lender that:

5.1.1 Performance by Borrower. Borrower shall in a timely manner observe, perform and fulfill in all material respects each and every covenant, term and provision of each Loan Document executed and delivered by, or applicable to, Borrower, and shall not enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Loan Document executed and delivered by, or applicable to, Borrower, as applicable, without the prior written consent of Lender.

 

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5.1.2 Existence; Compliance with Legal Requirements; Insurance. Subject to Borrower’s right of contest pursuant to Section 7.3, Borrower shall at all times comply and cause the Property to be in compliance in all material respects with all Legal Requirements applicable to the Borrower, any SPE Component Entity and the Property and the uses permitted upon the Property. Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, material rights, licenses, permits and material franchises necessary to comply with all Legal Requirements applicable to it and the Property. There shall never be committed by Borrower, and Borrower shall not knowingly permit any other Person in occupancy of or involved with the operation or use of the Property to commit, any act or omission affording the federal government or any state or local government the right of forfeiture as against the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. Borrower hereby covenants and agrees not to commit, knowingly permit or suffer to exist any act or omission affording such right of forfeiture. Borrower shall at all times maintain, preserve and protect all franchises and trade names where the failure to so preserve and protect would be reasonably likely to have an Material Adverse Effect, and preserve all the remainder of its property used in and necessary for the conduct of its business and shall keep the Property in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, all as more fully set forth in the Security Instrument. Borrower shall keep the Property insured at all times to such extent and against such risks, and maintain liability and such other insurance, as is more fully set forth in this Agreement.

5.1.3 Litigation. Borrower shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened in writing against Borrower which, if determined adversely to Borrower, would reasonably be expected to result in liability (not covered by insurance) to Borrower in excess of $500,000.

5.1.4 [Reserved]

5.1.5 [Reserved]

5.1.6 Access to Property. Borrower shall permit agents, representatives and employees of Lender and the Rating Agencies to inspect the Property or any part thereof during normal business hours on Business Days upon reasonable advance notice.

5.1.7 Notice of Default. Borrower shall promptly advise Lender (a) of any event or condition of which Borrower has knowledge that has or is likely to have an Material Adverse Effect or (b) of the occurrence of any Event of Default of which Borrower has knowledge.

5.1.8 Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which would reasonably be expected to affect in any material adverse way the rights of Lender hereunder or under any of the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.

 

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5.1.9 Rights of First Refusal or First Offer to Lease or Purchase.

(a) Borrower shall, within five (5) days after receipt by Borrower, forward to Lender any written notice delivered to Borrower (each a “Purchase Option Exercise”) exercising any right of first refusal, right of first offer or other right or option to purchase or lease all or any portion of any Individual Property, including but not limited to, any notice of the exercise of such options as are described on Schedule VI (each, a “Purchase Option”).

(b) In connection with any Transfer of all or any portion of any Individual Property relating to a Purchase Option Exercise, such Property shall be deemed a Release Property hereunder and Borrower shall (irrespective of whether the applicable Security Instrument is senior or subordinate to the Lien of the related Purchase Option) comply in all respects with Section 2.3.6, including but not limited to, the delivery on the date of such Transfer of the net sales proceeds of any such Transfer to Lender together with any shortfall between such sales proceeds and the release price required to be paid to Lender and/or defeased with respect thereto pursuant to Section 2.3.6, for such Individual Property. Provided no Event of Default has occurred and is continuing, Lender shall apply such proceeds and shortfall payment to the repayment of the Floating Rate Component and/or the defeasance of the Fixed Rate Components in accordance with Section 2.3.6.

5.1.10 Insurance.

(a) Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Proceeds lawfully or equitably payable in connection with the Property, and Lender shall be reimbursed for any reasonable out-of-pocket expenses incurred in connection therewith (including reasonable attorneys’ fees and disbursements) out of such Proceeds.

(b) Borrower shall comply with all Insurance Requirements and shall not bring or keep or permit to be brought or kept any article upon any of the Property or cause or permit any condition to exist thereon which would be prohibited by any Insurance Requirement, or would invalidate insurance coverage required hereunder to be maintained by Borrower on or with respect to any part of the Property pursuant to Section 6.1.

5.1.11 Further Assurances. Borrower shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to Lender all documents, and take all actions, reasonably required by Lender from time to time to confirm the rights created or now or hereafter intended to be created under this Agreement and the other Loan Documents and any security interest created or purported to be created thereunder, to protect and further the validity, priority and enforceability of this Agreement and the other Loan Documents, to subject to the Loan Documents any property of Borrower intended by the terms of any one or more of the Loan Documents to be encumbered by the Loan Documents, or otherwise carry out the purposes of the Loan Documents and the transactions contemplated thereunder.

5.1.12 Mortgage Taxes. Borrower shall pay all taxes, charges, filing, registration and recording fees, excises and levies payable with respect to the Note or the Liens created or secured by the Loan Documents, other than income, franchise and doing business taxes imposed on Lender.

 

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5.1.13 Operation. Borrower shall (i) exercise commercially reasonable efforts, acting as a prudent landlord, to cause Master Lessee to promptly perform and/or observe in all material respects all of the covenants and agreements required to be performed and observed by it under the Master Lease and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of any Master Lease Default of which it is aware; (iii) promptly deliver to Lender a copy of each financial statement, capital expenditures plan, property improvement plan and any other notice, report and estimate received by it under the Master Lease; (iv) exercise commercially reasonable efforts, acting as a prudent landlord, to enforce in a commercially reasonable manner the performance and observance of all of the covenants and agreements required to be performed and/or observed by the Master Lessee under the Master Lease; and (v) not waive any Master Lease Default without Lender’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed with respect to Master Lease Defaults that are neither monetary nor material (and any purported waiver by Borrower without having obtained Lender’s prior written consent shall be void ab initio). Whenever in this Agreement or in any other Loan Document Borrower is obligated to cause the Master Lessee or not permit Master Lessee to take or refrain from taking a certain action, then such provisions shall be construed (and limited) to mean that Borrower shall exercise its commercially reasonable efforts acting as a prudent landlord to cause Master Lessee or not permit Master Lessee to take or refrain from taking such action, or performing such action, through the exercise of such legal rights and remedies as shall be available to Borrower under the Master Lease or applicable law.

5.1.14 Business and Operations. Borrower shall continue to engage in the businesses presently conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Property. Borrower shall qualify to do business and shall remain in good standing subject to the terms hereof under the laws of the State in which the Property is located as and to the extent required for the ownership, maintenance, management and operation of the Property.

5.1.15 Title to the Property.

(a) Borrower shall warrant and defend (i) its title to the Property and every part thereof, subject only to Permitted Encumbrances and (ii) the validity and priority of the Liens of the Security Instrument, the Assignment of Leases and this Agreement on the Property, subject only to Permitted Encumbrances, in each case, against the claims of all Persons whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by Lender if an interest in the Property, other than as permitted hereunder, is claimed by another Person.

(b) Borrower agrees to comply with the provisions contained in Section 3(e) of each Security Instrument regarding the spreading of the Lien of such Security Instrument to cover additional property intended to be secured thereby.

 

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5.1.16 Costs of Enforcement. In the event (a) that this Agreement or the Security Instrument is foreclosed upon in whole or in part or that by reason of Borrower’s default hereunder this Agreement or the Security Instrument is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any security agreement prior to or subsequent to this Agreement in which proceeding Lender is made a party, or a mortgage prior to or subsequent to the Security Instrument in which proceeding Lender is made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors, Borrower, its successors or assigns, shall be chargeable with and agrees to pay all reasonable out-of-pocket costs of collection and defense, including reasonable attorneys’ fees and costs, incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, together with all required service or use taxes.

5.1.17 Estoppel Statements. Borrower shall, from time to time, upon thirty (30) days’ prior written request from Lender, execute, acknowledge and deliver to the Lender, an Officer’s Certificate, stating that this Agreement and the other Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that this Agreement and the other Loan Documents are in full force and effect as modified and setting forth such modifications), stating the amount of accrued and unpaid interest and the outstanding principal amount of the Note and each Component and containing such other information with respect to the Borrower, the Property and the Loan as Lender shall reasonably request. Lender shall, from time to time, upon thirty (30) days’ prior written request from Borrower, execute, acknowledge and deliver to Borrower, a certificate signed by an officer of Lender, stating that this Agreement and the other Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that this Agreement and the other Loan Documents are in full force and effect as modified and setting forth such modifications). The estoppel certificate from Borrower shall also state either that, to Borrower’s knowledge, no Default exists hereunder or, if any Default shall exist hereunder, specify such Default and the steps being taken to cure such Default and the estoppel certificate from Lender shall state whether Lender has delivered notice of a Default or an Event of Default.

5.1.18 Loan Proceeds. Borrower shall use the proceeds of the Loan received by it on the Closing Date only for the purposes set forth in Section 2.1.5.

5.1.19 No Joint Assessment. Borrower shall not suffer, permit or initiate the joint assessment of the Property, (a) with any other real property constituting a tax lot separate from the Property and (b) which constitutes real property with any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to such real property portion of the Property.

5.1.20 No Further Encumbrances. Subject to Section 8.3, Borrower shall do, or cause to be done, all things necessary to keep and protect the Property and all portions thereof unencumbered from any Liens, easements or agreements granting rights in or restricting the use or development of the Property, except for (a) Permitted Encumbrances, (b) Liens permitted pursuant to the Loan Documents, (c) Liens for Real Estate Impositions prior to the imposition of any interest, charges or expenses for the non-payment thereof and (d) the Subleases entered into in accordance with Section 8.8.

 

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5.1.21 [Reserved]

5.1.22 Master Lease.

(a) Except with respect to Excluded Licenses and leases of Leaseable Building Pads, each Individual Property shall at all times be leased directly and exclusively by the Borrower to the Master Lessee or any permitted successor or assign of Master Lessee under the Master Lease in accordance with the terms hereof. Master Lessee shall be permitted to enter into Subleases subject to and in accordance with Section 8.8.

(b) The Master Lease shall have a term ending fifteen (15) years after the Closing Date.

(c) The Master Lease shall require Master Lessee to make payments of Master Lease Rent. Pursuant to the Master Lease and the Master Lease Rent Payment Direction Letter, all Master Lease Base Rent and, to the extent payable by Master Lessee to Borrower under the Master Lease, Master Lease Additional Charges, shall at all times during the term of the Loan be made directly to the Holding Account (the Master Lease Base Rent portion of which shall be payable on a monthly basis).

(d) The Master Lease shall require the Master Lessee to prepare the Master Lease Annual Budget of expenses and revenue in accordance with Article XI and to submit copies to Lender for its reference, not for its approval.

(e) The Master Lease shall require the Master Lessee to maintain each Individual Property in accordance with Section 10.1 hereof.

(f) Borrower shall not terminate, and shall not grant consent to or acquiesce in any request by Master Lessee to terminate, the Master Lessee as to all or any portion of any Individual Property if Borrower would be unable to effectuate a release of such Individual Property (or portion thereof) pursuant to the terms of the applicable provisions of Section 2.3.6 hereof.

(g) Except with respect to Outparcels or Leaseable Building Pads, the Master Lease shall provide for the release of an Individual Property therefrom only in connection with a prepayment and/or defeasance of such Individual Property’s Combined Release Price and the release of such Individual Property from the lien of the applicable Security Instrument pursuant to the provisions hereof. Upon any such release of an Individual Property from the Master Lease, the Master Lease Base Rent will be reduced by an amount not to exceed the amount allocable to such Individual Property as set forth on Schedule IV attached hereto.

(h) Except for the Transfers permitted under Article VIII, the Borrower shall not, nor shall the Borrower permit the Master Lessee to, Transfer its interest in the Master Lease or any interest therein without the prior written consent of the Lender. Borrower shall not permit and shall not consent to any assignment by Master Lessee of its interest in the Master Lease or its rights and interests thereunder.

 

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(i) Subject to Borrower’s right to amend the Master Lease pursuant to Subsection 2.3.6(a)(xiv) in connection with a Property Release (including a Property Release permitted under Section 6.2.3(b) in connection with a casualty or Taking), Borrower shall not without the prior written consent of Lender and the delivery by Borrower of a Rating Agency Confirmation, (i) renew, extend, effectuate the release of any Individual Property from, agree to the termination of, agree to a reduction of rents or other sums payable under, accept a surrender of, or agree to shorten the term of, the Master Lease, (ii) appoint any appraiser, which consent will not be unreasonably withheld, (iii) make any determination of “Post-Casualty Value,” “Post-Condemnation Value,” “Fair Market Rent” or “Fair Market Value” (as such terms are defined in the Master Lease) such consent not to be unreasonably withheld, (iv) grant any waiver of any provisions of the Master Lease, provided that Borrower shall have the right to waive any provisions of the Master Lease (provided that any such waiver shall be limited to the particular matter under the particular circumstances subject to such waiver and shall not constitute an amendment or modification of the Master Lease), so long as such waiver would not have the effect of (A) waiving any of the provisions of the Master Lease identified in clauses (v), (vi) or (vii) below, or (B) waiving or reducing the monetary obligations of Master Lessee under the Master Lease, or (C) either permitting Borrower and/or Master Lessee to take an action that Borrower or Master Lessee is prohibited from taking under this Agreement or any other Loan Document, or preventing Borrower and/or Master Lessee from complying with an obligation on the part of Borrower or Master Lessee under this Agreement or any other Loan Document, (v) amend, modify or waive in any respect any provision of the Master Lease contained in the Statement of Intent, Article I (“Leased Properties; Term”), Article III (“Rent”), Article IV (“Termination; Abatement”), Article V (“Ownership of the Leased Properties”), Section 6.1(a)(ii) (including provisions in respect of permitted uses), Section 6.1(a)(iii) (including provisions in respect of continuous operation), Section 6.1(b) (“Taxes and Other Charges; Contest for Taxes and Other Charges, Legal Requirements and Liens”), Section 6.1(f) (“Cooperate in Legal Proceedings”), Section 6.1(g) (“Insurance Benefits”), Section 6.1(h) (“Financial Reporting and Other Information”), Article VIII (“Alterations; Leasing), Article X (“Casualty and Condemnation), Article XI (“Accounts and Reserves”), Article XII (“Events of Default and Remedies”), Section 13.2 (“Transition Services”), Section 13.3 (“Cooperation”), Section 13.4 (“Rights of Superior Parties”), Article XV (“Subordination”), Section 23.1 (“Appraisers”), Article XXIV (“Confidentiality”), Section 26.8 (“Governing Law”, including the waivers of right to trial by jury in Section 26.8(c)), Article XXVIII (“True Lease”), any Schedule to the Master Lease, or any of the definitions in Article II (“Definitions”) related to any of the foregoing provisions, Articles or Sections, or to any Schedule, (vi) amend, modify or waive any provision of the Master Lease not listed in clause (v) in a manner adverse to Lender in any material respect (including without limitation any amendment of any provision (A) requiring Lender’s consent or approval prior to Master Lessee taking any action, or creating, incurring, assuming, permitting or suffering to exist a circumstance or condition, or (B) requiring Master Lessee to cooperate with Lender or reimburse Lender for amounts expended by Lender) or that would decrease Master Lessee’s obligations or increase Borrower’s obligations thereunder, or (vii) amend, modify or waive any provision of the Master Lease in such a way as to cause its terms to become inconsistent with the material terms of any Affiliated Sublease, Unaffiliated Sublease or Specified Prior Sublease (unless the terms of such Affiliated Sublease, Unaffiliated

 

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Sublease or Specified Prior Sublease are similarly modified or waived). In addition, Borrower acknowledges and agrees that (x) any approval by Borrower of any “Alteration” requiring Borrower’s approval under Section 8.1 of the Master Lease shall require, as a condition thereto, Lender’s written approval, and no such approval by Borrower shall be effective absent such written approval by Lender, (y) any approval by Borrower of the amount of “Eligible Collateral” under Section 6.1 of the Master Lease shall require, as a condition thereto, Lender’s written approval, and no such approval by the Borrower shall be effective absent such written approval by Lender, and (z) any approval by Borrower (as “Indemnitee”) of a compromise or settlement of any claim requiring Borrower’s approval under Section 15.9(A) of the Master Lease shall require, as a condition thereto, Lender’s written approval, and no such approval by Borrower shall be effective absent such written approval by Lender. Notwithstanding the terms hereof, Borrower shall not permit any amendment, modification or waiver of the Master Lease Guaranty without the prior written consent of Lender.

(j) The Master Lease shall be subject and subordinate to the Loan pursuant to the Master Lease SNDA. To the extent of any conflict or inconsistency between the provisions of the Master Lease SNDA and the provisions hereof, the provisions of the Master Lease SNDA shall control.

(k) Lender shall have the right to declare a Master Lease Default under the Master Lease pursuant to the assignment of such right in the Assignment of Leases and the confirmation of such right by Master Lessee in the Master Lease SNDA.

(l) The Master Lease shall at all times be guaranteed by the Master Lease Guarantor.

5.2 Negative Covenants. From the Closing Date until payment and performance in full of all obligations of Borrower under the Loan Documents (other than contingent obligations for which a claim has not been made) or the earlier release of the Lien of this Agreement or the Security Instrument in accordance with the terms of this Agreement and the other Loan Documents, Borrower covenants and agrees with Lender that it will not do, directly or indirectly, any of the following:

5.2.1 Incur Debt. Incur, create or assume any Debt other than Permitted Debt or Transfer or lease all or any part of the Property or any interest therein, except as permitted in the Loan Documents;

5.2.2 Encumbrances. Other than in connection with the Mezzanine Loan, incur, create or assume or permit the incurrence, creation or assumption of any Debt secured by any direct or indirect interest in Borrower, Mezzanine Borrower or any SPE Component Entity;

5.2.3 Partition. Except as otherwise provided herein, partition any Individual Property;

5.2.4 Transfer of Property. Transfer any Property, or any portion thereof or any interest therein, except in each case (including in connection with a Property Release) as may be permitted hereby or in the other Loan Documents;

 

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5.2.5 Bankruptcy. File or solicit the filing of an involuntary bankruptcy petition against Borrower, PRP, PropCo, HoldCo, Guarantor, Master Lessee, Master Lease Guarantor or any SPE Component Entity;

5.2.6 ERISA. Engage in any activity that would subject Borrower to material liability under ERISA or qualify it as an “employee benefit plan” (within the meaning of Section 3(3) of ERISA) to which ERISA applies and Borrower’s assets do not and will not constitute plan assets within the meaning of 29 C.F.R. Section 2510.3-101;

5.2.7 Distributions. From and after the occurrence and during the continuance of an Event of Default, make any distributions to or for the benefit of any of its partners or members or its or their Affiliates;

5.2.8 Modify REAs. Without the prior consent of Lender, which shall not be unreasonably withheld, delayed or conditioned, Borrower shall not execute modifications to the REAs, except as would not reasonably be expected to have a Material Adverse Effect;

5.2.9 [Reserved]

5.2.10 Zoning Reclassification. Without the prior written consent of Lender (which in the case of clause (a) shall not be unreasonably withheld), (a) initiate or consent to any zoning reclassification of any portion of the Property, (b) seek any variance under any existing zoning ordinance that could result in the use of the Property becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, or (c) allow any portion of the Property to be used in any manner that could result in the use of the Property becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation;

5.2.11 Change of Principal Place of Business. Change its principal place of business and chief executive office set forth on the first page of this Agreement without first giving Lender thirty (30) days’ prior written notice (but in any event, within the period required pursuant to the UCC) and there shall have been taken such action, reasonably satisfactory to Lender, as may be necessary to maintain fully the effect, perfection and priority of the security interest of Lender hereunder in the Account Collateral and the Rate Cap Collateral at all times;

5.2.12 Debt Cancellation. Cancel or otherwise forgive or release any material claim or debt owed to it by any Person, except for adequate consideration or in the ordinary course of its business and except for termination of a Sublease as permitted by Section 8.8;

5.2.13 Misapplication of Funds. Distribute any revenue from the Property or any Proceeds in violation of the provisions of this Agreement, fail to remit amounts to the Holding Account, as applicable, as required by Section 3.1, misappropriate any security deposit or portion thereof or apply the proceeds of the Loan in violation of Section 2.1.5; or

5.2.14 Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws. Permit (i) any of Borrower, Guarantor or any Person who Controls Borrower or Guarantor to be identified on the OFAC List or otherwise qualified as a Prohibited Person, or (ii) Borrower or Guarantor to be in violation of any Legal Requirements relating to anti-money

 

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laundering or anti-terrorism, including, without limitation, Legal Requirements related to transacting business with Prohibited Persons or the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the related regulations issued thereunder, including temporary regulations, all as amended from time to time.

5.2.15 Affiliate Transactions. Any contracts or agreements relating to the Property in any manner between or among any Loan Party and any other Loan Party or their respective direct or indirect partners, members, shareholders or Affiliates (collectively, the “Affiliate Agreements”) shall provide that such agreement is terminable by Borrower or Lender immediately upon notice, without the payment of any fee, penalty, premium or liability for future or accrued liabilities or obligations, if an Event of Default shall have occurred and be continuing. Following an Event of Default, if requested by Lender in writing, Borrower shall, or shall cause the applicable Loan Party to, terminate any existing Affiliate Agreement specified by Lender within five (5) days after delivery of Lender’s request without payment of any penalty, premium, termination fee or any other amount which might be due and payable under such Affiliate Agreement. If such Affiliate Agreement is not terminated in accordance with the immediately preceding sentence, Lender shall have the right, and Borrower hereby irrevocably authorizes Lender and irrevocably appoints Lender as Borrower’s attorney-in-fact coupled with an interest, at Lender’s sole option, to terminate such Affiliate Agreement on behalf of and in the name of the applicable Loan Party, and Borrower hereby releases and waives any claims against Lender arising out of Lender’s exercise of such authority.

5.2.16 Material Agreements.

(a) Borrower shall not enter into any Material Agreement without the consent of Lender not to be unreasonably withheld, conditioned or delayed, unless Borrower shall deliver to Lender a recognition agreement from the service or material provider under such Material Agreement providing for such Person’s agreement to the termination of such Material Agreement without penalty a premium on no more than thirty (30) days’ notice.

(b) Except as specifically set forth herein, Borrower will not amend or modify (but Borrower may rescind or terminate (so long as such action will not have a Material Adverse Effect), any Material Agreement for which Lender’s consent had been obtained if the same would reasonably likely have a material adverse effect on Lender, unless Lender’s approval (such approval not to be unreasonably withheld conditioned or delayed), is obtained therefor.

5.3 Single Purpose Entity/Separateness. Until the Indebtedness has been paid in full, Borrower represents, warrants and covenants as follows:

(a) Borrower has not and will not:

(i) engage in any business or activity other than the use, ownership, management, leasing, renovation, financing, development, operation and maintenance of the Property and activities related thereto;

(ii) acquire or own any assets other than (A) the Property, and (B) such incidental Personal Property as may be necessary for the operation of the Property;

 

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(iii) merge into or consolidate with any Person, or, to the fullest extent permitted by law, dissolve, wind-up, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;

(iv) fail to observe all organizational formalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or amend, modify, terminate or fail to comply with the provisions of its organizational documents;

(v) own any subsidiary, or make any investment in, any Person;

(vi) commingle its assets with the assets of any other Person, or permit Master Lessee, any Affiliate of either of them or any constituent party independent access to its bank accounts;

(vii) incur any Debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than the Permitted Debt of Borrower;

(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;

(ix) except for capital contributions or capital distributions permitted under the terms and conditions of the Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, Master Lessee or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties (it being agreed and acknowledged that the Asset Management Agreement is on terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties);

(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;

(xi) assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit as being available to satisfy the obligations of any other Person;

(xii) make any loans or advances to any Person;

 

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(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements, and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that the Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of the Borrower;

(xiv) fail either to hold itself out to the public as a legal entity separate and distinct from any other Person or to own its assets or conduct its business solely in its own name or fail to correct any known misunderstanding regarding its separate identity;

(xv) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations (provided, however, that the foregoing shall not require any equity owner to make any additional capital contributions to Borrower);

(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of 100% of the managers of Borrower, including without limitation, each Independent Manager, take any Material Action or other action that is reasonably likely to cause such entity to become insolvent;

(xvii) fail to allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses and to use separate stationery, invoices and checks;

(xviii) fail to pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds, and Borrower represents that it is, as of the Closing Date, solvent and intends to be solvent;

(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;

(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any Non-Consolidation Opinion delivered to Lender in connection with the Loan;

(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;

(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name; or

(xxiii) have any of its obligations guaranteed by Master Lessee or any Affiliate of Borrower or Master Lessee except as contemplated by the Loan Documents, and except for the guarantee by PRP of Borrower’s obligations under that certain Agreement of Repurchase and Right of First Refusal, executed and made effective as of March 30, 1998, between Tanger Properties Limited Partnership, as grantor, and PRP, as successor-in-interest to Outback Steakhouse of Florida, as grantee, pursuant to Section 2(c) thereof.

 

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(b) If Borrower is a partnership or limited liability company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be a corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company, each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.3(a)(iii)—(vi) and (viii)—(xxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (ii) will not engage in any business or activity other than owning an interest in Borrower; (iii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (iv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (v) will cause Borrower to comply with the provisions of this Section 5.3 and Section 5.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation or limited liability company agreement, as applicable, are substantially similar to those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is a single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsections (c) and (d) below, no SPE Component Entity shall be required.

(c) In the event Borrower is a single-member Delaware limited liability company, the limited liability company agreement of Borrower (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the sole member of Borrower (“Member”) to cease to be the member of Borrower (other than (A) upon an assignment by Member of all of its limited liability company interest in Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Manager of Borrower (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower, automatically be admitted to Borrower and shall continue Borrower without dissolution and (ii) Special Member may not resign from Borrower or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower as Special Member in accordance with requirements of Delaware law and (B) such successor Special Member has also accepted its appointment as an Independent Manager. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower upon the admission to Borrower of a substitute Member, (ii) Special Member shall be a member of Borrower that has no interest in the profits, losses and capital of Borrower and has no right to receive any distributions of Borrower assets, (iii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to Borrower and shall not receive a limited liability company interest in Borrower, (iv) Special Member, in its capacity as Special Member, may not bind Borrower, and (v) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower, including,

 

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without limitation, the merger, consolidation or conversion of Borrower; provided, however, that such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Manager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower as Special Member, Special Member shall not be a member of Borrower.

(d) In the event Borrower is a single-member Delaware limited liability company, the LLC Agreement shall provide that upon the occurrence of any event that causes the Member to cease to be a member of Borrower, to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower, agree in writing (i) to continue Borrower and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower and upon the occurrence of such an event, the business of Borrower shall continue without dissolution. The LLC Agreement shall provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower.

(e) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.

(f) Notwithstanding anything to the contrary contained in this Section 5.3 or Article VIII, in connection with and contemporaneously with a refinancing in full of the Loan and the Mezzanine Loans, Borrower may (i) amend its organizational documents and/or (ii) form one or more new direct or indirect wholly-owned Subsidiaries and transfer all or a portion of the Property to such direct or indirect wholly-owned Subsidiaries subject to escrow and other customary closing arrangements reasonably acceptable to Lender.

5.4 Independent Manager. The organizational documents of Borrower shall include the following provisions: (a) at all times there shall be, and Borrower shall cause there to be, at least two Independent Managers; (b) the board of managers of Borrower shall not take any action which, under the terms of any certificate of formation or limited liability company agreement, requires unanimous vote of the board of managers of Borrower unless at the time of such action there shall be at least two members of the board of managers who are Independent Managers; (c) Borrower shall not, without the unanimous written consent of its board of managers including the Independent Managers, take any Material Action or any action that is reasonably likely to cause Borrower to become insolvent, and when voting with respect to such matters, the Independent Managers shall consider only the interests of Borrower, including its creditors; and (d) no Independent Manager of Borrower may be removed or replaced unless Borrower provides Lender with not less than three (3) Business Days’ prior written notice of (i) any proposed

 

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removal of an Independent Manager, together with a statement as to the reasons for such removal, and (ii) the identity of the proposed replacement Independent Manager, together with a certification that such replacement satisfies the requirements set forth in the organizational documents for an Independent Manager. Without limiting the generality of the foregoing, such documents shall expressly provide that, to the greatest extent permitted by law, except for duties to Borrower (including duties to Borrower’s equity holders solely to the extent of their respective economic interests in Borrower and to Borrower’s creditors as set forth in the immediately preceding sentence), such Independent Managers shall not owe any fiduciary duties to, and shall not consider, in acting or otherwise voting on any matter for which their approval is required, the interests of (A) any SPE Component Entity or Borrower’s other equity holders, (B) other Affiliates of Borrower or Master Lessee, or (C) any group of Affiliates of which the Borrower is a part; provided, however, the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing. No resignation or removal of an Independent Manager, and no appointment of a successor Independent Manager, shall be effective until such successor (y) shall have accepted his or her appointment as an Independent Manager by a written instrument, which may be a counterpart signature page to the LLC Agreement, and (z) shall have executed a counterpart to the LLC Agreement. No Independent Manager may be removed other than for Cause. “Cause” means, with respect to an Independent Manager, (1) acts or omissions by such Independent Manager that constitute willful disregard of such Independent Manager’s duties as set forth in the Borrower’s organizational documents, (2) that such Independent Manager has engaged in or has been charged with, or has been convicted of, fraud or other acts constituting a crime under any law applicable to such Independent Manager, (3) that such Independent Manager is unable to perform his or her duties as Independent Manager due to death, disability or incapacity, (4) that such Independent Manager no longer meets the definition of Independent Manager, or (5) an increase in the fees charged by the Independent Manager that is not reasonably acceptable to Borrower.

VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

6.1 Insurance Coverage Requirements. Borrower shall, at its sole cost and expense, keep in full force and effect, or cause the Master Lessee or, to the extent within Borrower’s control, the applicable party to the Operating Agreements to keep in full force and effect, insurance coverage of the types and minimum limits as follows during the term of this Agreement (it being understood that to the extent that Master Lessee or any party to any Operating Agreement maintains any such coverage on the Closing Date, but thereafter fails to maintain such coverage, Borrower shall obtain such coverage at its sole cost and expense):

6.1.1 Property Insurance. Insurance against loss customarily included under so called “All Risk” policies including flood, earthquake, windstorm, vandalism, and malicious mischief, boiler and machinery, and such other insurable hazards as, under good insurance practices, from time to time are insured against for other property and buildings similar to the Improvements and Building Equipment in nature, use, location, height, and type of construction. Such insurance policy shall also insure (subject to normal and customary sublimits as reasonably approved by Lender) the additional expense of demolition and if any of the Improvements or the use of the Property shall at any time constitute legal non-conforming structures or uses, provide coverage for contingent liability from Operation of Building Laws, Demolition Costs and Increased Cost of Construction and containing “Ordinance or Law Coverage” or “Enforcement”

 

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coverage. The amount of such “All Risk” insurance shall be not less than one hundred percent (100%) of the replacement cost value of the Improvements and the Building Equipment. Each such insurance policy shall contain an agreed amount (coinsurance waiver) and replacement cost value endorsement and shall cover, without limitation, all tenant improvements and betterments which Borrower is required to insure in accordance with any Sublease. If the insurance required under this paragraph is not obtained by blanket insurance policies, the insurance policy shall be endorsed to also provide guaranteed building replacement cost. Lender shall be named “Loss Payee” on a “Standard Mortgagee Endorsement” and be provided not less than thirty (30) days advance notice of change in coverage, cancellation or non-renewal.

6.1.2 Liability Insurance. “General Public Liability” insurance, including, without limitation, “Commercial General Liability” insurance; “Owned” (if any), “Liquor Liability” insurance; “Hired” and “Non Owned Auto Liability”; and “Umbrella Liability” coverage for “Personal Injury”, “Bodily Injury”, “Death, Accident and Property Damage”, providing in combination no less than $100,000,000 per occurrence and in the annual aggregate. The policies described in this paragraph shall not exclude, without limitation: elevators, escalators, independent contractors, “Contractual Liability” (covering, to the maximum extent permitted by law, Borrower’s obligation to indemnify Lender as required under this Agreement, but subject to the terms and conditions of such policies) and “Products and Completed Operations Liability” coverage. All public liability insurance shall name Lender as “Additional Insured” either on a specific endorsement or under a blanket endorsement satisfactory to Lender.

6.1.3 Workers’ Compensation Insurance. Workers compensation and disability insurance as required by law.

6.1.4 Commercial Rents Insurance. “Commercial rents” insurance plus a 180-day extended period of indemnity endorsement and with a limit of liability sufficient to avoid any co-insurance penalty and to provide Proceeds which will cover the actual loss of profits and rents sustained following the date of casualty. Such policies of insurance shall be subject only to exclusions that are reasonably acceptable to Lender; provided, however, that such exclusions are reasonably consistent with those required for loans similar to the Loan provided herein. Such insurance shall be deemed to include “loss of rental value” insurance where applicable. The term “rental value” means the sum of (A) the total then ascertainable Rents payable under the Master Lease and (B) the total ascertainable amount of all other amounts to be received by Borrower from third parties which are the legal obligation of Tenants, reduced to the extent such amounts would not be received because of operating expenses not incurred during a period of non-occupancy of that portion of such Property then not being occupied.

6.1.5 Builder’s All-Risk Insurance. During any period of repair or restoration, builder’s risk insurance in an amount equal to not less than the full insurable value of the Property against such risks (including so called “All Risk” perils coverage and collapse of the Improvements to agreed limits as Lender may reasonably request, in form and substance reasonably acceptable to Lender); provided, however, that no such builder’s risk insurance shall be required if the property insurance required to be maintained as to the applicable Individual Property under Section 6.1.1 includes coverage for the Improvements located thereon while in the course of construction.

 

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6.1.6 Boiler and Machinery Insurance. Comprehensive boiler and machinery insurance (without exclusion for explosion) covering all mechanical and electrical equipment against physical damage, rent loss and improvements loss and covering, without limitation, all tenant improvements and betterments that Borrower or Master Lessee is required to insure pursuant to the Master Lease or any Sublease on a replacement cost basis. The minimum amount of limits to be provided shall be $10,000,000 per accident.

6.1.7 Flood Insurance; Windstorm Insurance.

(a) If any portion of the Improvements is located within an area designated as “flood prone” or a “special flood hazard area” (as defined under the regulations adopted under the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973), flood insurance shall be provided, in an amount not less than the maximum limit of coverage available under the Federal Flood Insurance plan with respect to the Property. Lender reserves the right to require flood insurance in excess of that available under the Federal Flood Insurance plan.

(b) If any Individual Property is in an area prone to hurricanes and windstorms, as reasonably determined by Lender, Borrower shall provide, to the extent commercially available, windstorm insurance (including coverage for windstorm, cyclone, hurricane or tornado (including rain or wind driven rain which enters the covered building or structure through an opening created by the force of windstorm)) in an amount equal to the lesser of (i) 100% of the replacement cost value of the Improvements and the Building Equipment, with a maximum deductible no greater than five percent (5%) of the insured amount (subject to a $500,000 minimum), plus business interruption coverage, (ii) the Combined Release Price with respect to the subject Individual Property, and (iii) and the Probable Maximum Loss as identified in a Windstorm PML study with such study based upon a 500-year return period using current windstorm modeling software, inclusive of demand surge and storm surge, with total insurable values inclusive of building replacement cost, contents and rental value each acceptable to Lender.

6.1.8 Earthquake Insurance. If earthquake insurance limits and aggregates are shared with locations other than the Properties insured on the same policy as any of the Properties or, if the amount of Earthquake insurance provided is less than 100% of the insurable values of the building and rental income combined, then the amount of earthquake coverage shall be based on a “Probable Maximum Loss” Study (“PML”) for the applicable Individual Property, which must be conducted by a seismic engineering company reasonably satisfactory to Lender. The results of the PML study, on an Individual Property basis and for all locations insured in the same earthquake insurance policies, shall be used to determine the amount of earthquake coverage to be provided by Borrower. The amount of insurance shall be determined by adding the total expected damage to all Improvements subject to a single earthquake event in a given region together along with the expected loss of Rents and other income from the applicable Properties. Earthquake insurance shall provide a limit inclusive of rent loss for “Very High,” “High,” and “Moderate” Hazard Earthquake Risk ratings at twice the annual rental amount. Other lower risk-rated buildings shall provide a limit inclusive of rent loss at one times the annual rental loss. The total amount of earthquake insurance in limits shall be the sum of expected property damage, reconstruction cost and rental income loss calculation. Amounts of insurance required by this paragraph shall be solely for the protection of the Improvements. If the amounts of earthquake coverage required by any REA or Condominium Documents is

 

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greater than the amounts required herein then Borrower shall maintain such higher amounts of insurance. If the earthquake insurance and associated aggregate limits are shared among other locations the risks associated with other locations also insured in the same policy shall be taken into consideration in determining the amount of insurance to be provided herein.

6.1.9 Terrorism Insurance. Borrower shall be required to carry insurance with respect to the Improvements and Building Equipment covering acts of sabotage or acts by terrorist groups or individuals (“Terrorism Insurance”) throughout the Loan term in an amount equal to $10,000,000 and having a deductible not greater than $100,000, or such lesser coverage amount or such greater deductible, on a blanket basis, that is acceptable to the Rating Agencies as evidenced by a Rating Agency Confirmation. The Terrorism Insurance shall also include 18 months of business interruption coverage. Borrower agrees that if any property insurance policy covering any of the Properties provides for any exclusions of coverage for acts of terrorism, then a separate Terrorism Insurance policy in the coverage amount required under this section and in form and substance acceptable to Lender will be obtained by the Borrower for such Property. Lender agrees that Terrorism Insurance coverage may be provided under a blanket policy that is acceptable to Lender. Notwithstanding anything to the contrary in this Section 6.1.9, Borrower shall not be obligated to maintain Terrorism Insurance (a) in an amount more than that which can be purchased for a sum equal to $100,000 per annum and (b) except to the extent commercially available.

6.1.10 Other Insurance. At Lender’s reasonable request, such other insurance with respect to the Property against loss or damage of the kinds from time to time customarily insured against and in such amounts as are generally required by institutional lenders on loans of similar amounts and secured by properties comparable to, and in the general vicinity of, the Property; provided, however, that Directors and Officers (D&O) Liability Insurance shall not be subject to the Lien of the Loan Documents and shall be paid directly to Persons covered thereby.

6.1.11 Ratings of Insurers. Borrower shall maintain the insurance coverage described in Section 6.1.2 through Section 6.1.10 above, in all cases, with one or more primary insurers reasonably acceptable to Lender, having both claims-paying-ability and financial strength ratings by S&P of not less than “A” and its equivalent by the other Rating Agencies. The Borrower will maintain the insurance coverage described in Section 6.1.1 above with one or more primary insurers reasonably acceptable to Lender, (a) having a claims-paying-ability and financial strength ratings by S&P of not less than “A” and its equivalent by the other Rating Agencies with respect to the first $50,000,000 of coverage and (b) having a claims-paying-ability and financial strength ratings by S&P of not less than “BBB” and its equivalent by the other Rating Agencies (or, if not rated by any of the Rating Agencies, an Alfred M. Best Company, Inc. rating of “A-” or better and a financial size category of not less than “VII”) with respect to the balance of coverage. All insurers providing insurance required by this Agreement shall be authorized to issue insurance in the State or shall be an admitted or approved non-admitted insurer.

6.1.12 Form of Insurance Policies; Endorsements. All insurance policies shall be in such form and with such endorsements as are satisfactory to Lender (and Lender shall have the right, subject to the provisions of this Agreement, to approve amounts, form, risk coverage, deductibles, loss payees and insureds). A certificate of insurance with respect to all of the above-

 

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mentioned insurance policies has been delivered to Lender and copies of all such policies shall be delivered to Lender when the same are available (but no later than one hundred twenty (120) days after the date hereof) and shall be held by Lender. All policies shall name Lender as a loss payee (except for general liability, liquor liability and automobile liability policies, which shall name Lender as an additional insured), shall provide that all Proceeds (except with respect to Proceeds of general liability, workers’ compensation, liquor liability and automobile liability insurance) be payable to Lender as and to the extent set forth in Section 6.2, and shall contain: (i) a standard “non-contributory mortgagee” endorsement or its equivalent relating, inter alia, to recovery by Lender notwithstanding the negligent or willful acts or omissions of Borrower; (ii) a waiver of subrogation endorsement in favor of Lender; (iii) except with respect to general liability, workers’ compensation, liquor liability and automobile liability insurance, an endorsement providing that no policy shall be impaired or invalidated by virtue of any act, failure to act, negligence of, or violation of declarations, warranties or conditions contained in such policy by Borrower, Lender or any other named insured, additional insured or loss payee, except for the willful misconduct of Lender knowingly in violation of the conditions of such policy; (iv) an endorsement providing for a deductible per loss of an amount not more than that which is customarily maintained by prudent owners of properties with a standard of operation and maintenance comparable to and in the general vicinity of the Property, but in no event in excess of an amount reasonably acceptable to Lender (and except as provided in Section 6.1.7(b), in no event shall Borrower be required to obtain deductibles lower than $500,000 on property insurance policies, $1,500,000 on worker’s compensation policies, $1,500,000 self-insured retention on liquor liability policies and $500,000 on automobile liability policies); and (v) a provision that such policies shall not be canceled, terminated or expire without at least thirty (30) days’ prior written notice to Lender, in each instance. Each insurance policy shall contain a provision whereby the insurer: (i) agrees that such policy shall not be canceled or terminated, and such policy shall not be canceled or fail to be renewed, without in each case, at least thirty (30) days prior written notice to Lender, and (ii) provides that Lender at its option, shall be permitted to make payments to effect the continuation of such policy upon notice of cancellation due to non-payment of premiums. In the event any insurance policy (except for general public and other liability and workers compensation insurance) shall contain breach of warranty provisions, such policy shall provide that with respect to the interest of Lender, such insurance policy shall not be invalidated by and shall insure Lender regardless of (A) any act, failure to act or negligence of or violation of warranties, declarations or conditions contained in such policy by any named insured, (B) the occupancy or use of the Property for purposes more hazardous than permitted by the terms thereof, or (C) any foreclosure or other action or proceeding taken by Lender pursuant to any provision of this Agreement. Lender hereby confirms and acknowledges that Borrower has delivered to Lender certificates of insurance with respect to Master Lessee’s insurance program, in amount, form and content so as to satisfy the requirements of this Section 6.1 in all material respects as of the Closing Date, and that any renewals or modifications that comply with Section 6.1.11 and are otherwise not, in substance, materially different from the approved program in place on the Closing Date shall be deemed to be in compliance.

6.1.13 Certificates.

(a) Certificates of insurance with respect to all replacement policies shall be delivered to Lender prior to the expiration date of any of the insurance policies required to be maintained

 

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hereunder, and upon demand by Lender, replacement insurance policies shall be delivered to Lender within 120 days of the expiration of the insurance policies required to be maintained hereunder. If Borrower fails to maintain and deliver to Lender the certificates of insurance and certified copies or originals required by this Agreement, upon five (5) Business Days’ prior notice to Borrower, Lender may procure such insurance, and all costs thereof (and interest thereon at the Default Rate) shall be added to the Indebtedness. Lender shall not, by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any insurance, incur any liability for or with respect to the amount of insurance carried, the form or legal sufficiency of insurance contracts, solvency of insurance companies, or payment or defense of lawsuits, and Borrower hereby expressly assumes full responsibility therefor and all liability, if any, with respect to such matters.

(b) Concurrently with the delivery of each replacement policy or a binding commitment for the same pursuant to clause (a) above, Borrower shall deliver to Lender a letter from a reputable and experienced insurance broker or from the insurer, stating that the insurance obtained by Borrower through such broker or from such insurer pursuant to this Section 6.1, as applicable, meets the minimum requirements of this Section 6.1, that all insurance premiums then due thereon have been paid in full to the applicable insurers and that such insurance policies are in full force and effect (or if such letter shall not be available after Borrower shall have used its reasonable efforts to provide the same, Borrower will deliver to Lender an Officer’s Certificate containing the information to be provided in such report), and Borrower shall deliver to Lender an Officer’s Certificate stating that such insurance otherwise complies in all material respects with the requirements of this Section 6.1.

6.1.14 Separate Insurances. Borrower shall not take out separate insurance contributing in the event of loss with that required to be maintained pursuant to this Section 6.1 unless such insurance complies with this Section 6.1.

6.1.15 Blanket Policies. The insurance coverage required under this Section 6.1 may be effected under a blanket policy or policies covering the Property and other properties and assets not constituting a part of the Property (a “Blanket Policy”); provided that any such Blanket Policy shall specify, except in the case of public liability, workers’ compensation, liquor liability, automobile liability and umbrella liability insurance, the portion of the total coverage of such policy that is allocated to the Property, and any sublimits in such Blanket Policy applicable to the Property, which amounts shall not be less than the amounts required pursuant to this Section 6.1 and which shall in any case comply in all other respects with the requirements of this Section 6.1. Borrower shall provide internal allocated premiums for the Individual Properties in a manner that is reasonably satisfactory to Lender. If no such allocation is available, Lender shall have the right to increase the amount required to be deposited into the Insurance Reserve Account in an amount sufficient to purchase a non-blanket policy covering the applicable Property or Properties from insurance companies which qualify under this Agreement. Upon Lender’s request, Borrower shall deliver to Lender an Officer’s Certificate setting forth (i) the number of properties covered by such policy, (ii) the location by city (if available, otherwise, county) and state of the properties, (iii) the average square footage of the properties (or the aggregate square footage), (iv) a brief description of the typical construction type included in the Blanket Policy and (v) such other information as Lender may reasonably request.

 

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6.2 Condemnation and Insurance Proceeds.

6.2.1 Notification. Borrower shall promptly notify Lender in writing upon obtaining knowledge of (i) the institution of any proceedings relating to any Taking (whether material or immaterial) of the Property or any portion thereof, or (ii) the occurrence of any casualty, damage or injury to the Property or any portion thereof, the restoration of which is estimated by Borrower in good faith to cost more than the Casualty Amount as to any Individual Property. In addition, each such notice shall set forth such good faith estimate of the cost of repairing or restoring such casualty, damage, injury or Taking in reasonable detail if the same is then available and, if not, as soon thereafter as it can reasonably be provided. Borrower shall promptly provide Lender with copies of any material documentation available to Borrower and requested by Lender relating to any Taking, including, but not limited to, documentation relating to the Taking matters set forth on Schedule II.

6.2.2 Proceeds. In the event of any Taking of or any casualty or other damage or injury to any Individual Property, including, but not limited to, pursuant to the Taking matters set forth on Schedule II, Borrower’s right, title and interest in and to all compensation, awards, proceeds, damages, claims, insurance recoveries, causes and rights of action (whether accrued prior to or after the date hereof) and payments which Borrower may receive or to which Borrower may become entitled with respect to such Individual Property or any part thereof other than payments received in connection with any liability or loss of rental value or business interruption insurance and other than any of the foregoing with respect to the Excluded Personal Property (collectively, “Proceeds”), in connection with any such Taking of, or casualty or other damage or injury to, such Individual Property or any part thereof are hereby assigned by Borrower to Lender and, except as otherwise herein provided, shall be paid to the Lender. Borrower shall, in good faith and in a commercially reasonable manner, file and prosecute the adjustment, compromise or settlement of any claim for Proceeds and, subject to Borrower’s right to receive the direct payment of any Proceeds as herein provided, will cause the same to be paid directly to Lender to be held and applied in accordance with the provisions of this Agreement. Except upon the occurrence and during the continuance of a Monetary Default or an Event of Default, Borrower may settle any insurance claim with respect to Proceeds which does not exceed the Casualty Amount as to any Individual Property. Whether or not a Monetary Default or an Event of Default shall have occurred and be continuing, Lender shall have the right to approve, such approval not to be unreasonably withheld, any settlement which might result in any Proceeds in excess of the Casualty Amount as to any Individual Property and Borrower shall deliver or cause to be delivered to Lender all instruments reasonably requested by Lender to permit such approval. Borrower shall pay all reasonable out-of-pocket costs, fees and expenses reasonably incurred by Lender (including all reasonable attorneys’ fees and expenses, the reasonable fees of insurance experts and adjusters and reasonable costs incurred in any litigation or arbitration), and interest thereon at the Default Rate to the extent not paid within ten (10) Business Days after delivery of a request for reimbursement by Lender, in connection with the settlement of any claim for Proceeds and seeking and obtaining of any payment on account thereof in accordance with the foregoing provisions. If any Proceeds are received by Borrower and may be retained by Borrower pursuant to this Section 6.2, such Proceeds shall, until the completion of the related Work, be held in trust for Lender and shall be segregated from other funds of Borrower to be used to pay for the cost of the Work in accordance with the terms hereof, and in the event such Proceeds exceed the Casualty Amount as to any Individual

 

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Property, such Proceeds shall be forthwith paid directly to and held by Lender in the Proceeds Reserve Account in trust for Borrower, in each case to be applied or disbursed in accordance with this Section 6.2. If an Event of Default shall have occurred and be continuing, or if Borrower fails to file and/or prosecute any insurance claim for a period of fifteen (15) Business Days following Borrower’s receipt of written notice from Lender, Borrower hereby irrevocably empowers Lender, in the name of Borrower as its true and lawful attorney-in-fact, to file and prosecute such claim (including settlement thereof) with counsel satisfactory to Lender and to collect and to make receipt for any such payment, all at Borrower’s expense (including payment of interest at the Default Rate for any amounts advanced by Lender pursuant to this Section 6.2). Notwithstanding anything to the contrary set forth in this Agreement, however, and excluding situations requiring prepayment of the Note, to the extent any Proceeds (either singly or when aggregated with all other then unapplied Proceeds with respect to the Property) do not exceed the Casualty Amount as to any Individual Property, and provided that no Event of Default has occurred and is continuing, such Proceeds are to be paid directly to Borrower to be applied to restoration of the Property in accordance with the terms hereof (except that Proceeds paid in respect of the insurance described in Section 6.1.4 shall be deposited directly to the Holding Account as revenue of the Property).

6.2.3 Lender to Take Proceeds.

(a) Subject to Section 6.2.3(c) below, if (i) a Monetary Default or an Event of Default shall have occurred and be continuing, (ii) a Total Loss with respect to an Individual Property shall have occurred, (iii) the Work is not capable of being completed before the date which is six (6) months prior to the earlier of the Stated Maturity Date and the date on which the business interruption insurance carried by Borrower with respect to such Individual Property shall expire (the “Cut-Off Date”), unless on or prior to the Cut-Off Date the Borrower shall deliver to the Lender and there shall remain in effect a binding written commitment, subject only to customary conditions, of an Eligible Institution or such other financial institution or investment bank reasonably satisfactory to Lender for a loan from such Eligible Institution or such other financial institution or investment bank to the Borrower in a principal amount of not less than the then Combined Principal Amount and which shall, in the Lender’s reasonable judgment, enable the Borrower to refinance the Loan and the Mezzanine Loan prior to the Maturity Date, (iv) such Individual Property is not capable of being restored substantially to its condition prior to such Taking or casualty and such incapacity could reasonably be expected to have a Material Adverse Effect, (v) Subleases demising in the aggregate less than 50% of the total rentable space in such Individual Property which has been demised under executed and delivered Subleases in effect as of the date of the occurrence of such fire or other casualty remain in full force and effect during and after the completion of the restoration, (vi) the Master Lessee or Borrower shall exercise any termination right under the Master Lease or (vii) Lender reasonably determines that upon a reasonable period (not less than 12 months) after the completion of the restoration, the Portfolio Four-Wall EBITDAR of such Individual Property will not be restored to a level equal to 80% of the lesser of the Portfolio Four-Wall EBITDAR of such Individual Property at Closing and the Portfolio Four-Wall EBITDAR of such Individual Property immediately prior to the applicable casualty or Taking; then in any such case, all Proceeds shall be paid over to Lender (if not paid directly to Lender) for application as set forth in clause (b) below.

 

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(b) Subject to Section 6.2.3(c) below, any Proceeds remaining after reimbursement of Lender’s or its agent’s reasonable out-of-pocket costs and expenses actually incurred in connection with recovery of any such Proceeds (including, without limitation, reasonable out-of-pocket administrative costs and inspection fees) shall, except to the extent required under the provisions hereof to be applied for restoration, be applied by Lender to prepay the Components to the extent of the Release Price for such Individual Property in accordance with Section 2.3.4, and the balance, if any shall be paid over to (i) the First Mezzanine Lender to be applied in accordance with the terms of the First Mezzanine Loan Agreement to the extent of the Release Price (Mezzanine) set forth therein for such Individual Property, (ii) with the balance, if any, to the Second Mezzanine Lender to be applied in accordance with the terms of the Second Mezzanine Loan Agreement to the extent of the Release Price (Mezzanine) set forth therein, and (iii) with the balance, if any (or if the Mezzanine Loans are no longer outstanding), to Borrower’s Account. If the Proceeds applied by Lender and Mezzanine Lenders pursuant to the preceding sentence (together with any other prepayment or defeasance permitted under this Agreement or the Mezzanine Loan Agreement) equal or exceed the Combined Release Price for such Individual Property, Borrower shall be entitled to obtain a Property Release subject to and in accordance with Section 2.3.6(a) (exclusive of paragraphs (ii) and (iii) of Section 2.3.6(a)). Transfers of Proceeds to or for the benefit of any of the Mezzanine Borrowers shall constitute distributions to First Mezzanine Borrower, and deemed distributions by the First Mezzanine Borrower to the Second Mezzanine Borrower, as applicable, and, in each case, must comply with the requirements as to distributions of the Delaware Limited Liability Company Act. The provisions of this Section 6.2.3 shall not create a debtor-creditor relationship between Borrower and any Mezzanine Lender.

(c) Notwithstanding Sections 6.2.3(a) and (b) above, so long as (i) the Master Lease is in full force and effect, (ii) no Master Lease Default has occurred and is continuing and (iii) the terms and provisions of the Master Lease pertaining to the use and disposition of Proceeds have not been amended in violation of the terms hereof, then to the extent that the terms and provisions of the Master Lease pertaining to the use and disposition of Proceeds are inconsistent with the terms and provisions set forth in Section 6.2.3(a) and/or (b) above, the terms and provisions of the Master Lease shall control.

6.2.4 Borrower to Restore.

(a) Subject to Borrower’s rights pursuant to Section 2.3.6 to cause an Individual Property to be released from the Lien of the Security Instrument, promptly after the occurrence of any damage or destruction to all or any portion of any Individual Property or a Taking of a portion of such Individual Property which does not constitute a Total Loss with respect to such Individual Property, Borrower shall commence and diligently prosecute, or cause to be commenced and diligently prosecuted, to completion, subject to Excusable Delays, the repair, restoration and rebuilding of such Individual Property (in the case of a partial Taking, to the extent it is capable of being restored) so damaged, destroyed or remaining after such Taking in full compliance with all material Legal Requirements and free and clear of any and all Liens except Permitted Encumbrances (such repair, restoration and rebuilding are collectively referred to herein as the “Work”). The plans and specifications shall require that the Work be done in a good and workmanlike manner at least equivalent to the quality and character prior to the damage or destruction (provided, however, that in the case of a partial Taking, the Property

 

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restoration shall be done to the extent reasonably practicable after taking into account the consequences of such partial Taking), so that upon completion thereof, such Individual Property shall be at least equal in value and general utility to such Individual Property prior to the damage or destruction; it being understood, however, that Borrower shall not be obligated to restore such Individual Property to the precise condition of such Individual Property prior to any partial Taking of, or casualty or other damage or injury to, such Individual Property, if the Work actually performed, if any, or failed to be performed, shall have no Material Adverse Effect on the use, value or operation of such Individual Property from the use, value and operation that such Individual Property would have had if the same had been restored to its condition immediately prior to such Taking or casualty. Subject to Borrower’s rights pursuant to Section 2.3.6 to cause an Individual Property to be released from the Lien of the Security Instrument, Borrower shall be obligated to restore any Individual Property suffering a casualty or which has been subject to a partial Taking in accordance with the provisions of this Section 6.2 at Borrower’s sole cost and expense whether or not the Proceeds shall be sufficient, provided that, if applicable, the Proceeds shall be made available to Borrower by Lender in accordance with this Agreement.

(b) If Proceeds are not required to be applied toward payment of the Indebtedness pursuant to the terms hereof, then Lender shall make the Proceeds which it is holding pursuant to the terms hereof (after payment of any reasonable out-of-pocket expenses actually incurred by Lender pursuant to Section 6.2.2 in connection with the collection thereof, plus interest thereon at the Default Rate (from the date advanced through the date of reimbursement) to the extent the same are not paid within ten (10) Business Days after request for reimbursement by Lender) available to Borrower for payment of or reimbursement of Borrower’s or the applicable Tenant’s expenses incurred with respect to the Work, upon the terms and subject to the conditions set forth in paragraphs (i) through (iv) below and in Section 6.2.5:

(i) at the time of loss or damage or at any time thereafter while Lender is holding any portion of the Proceeds, there shall be no continuing Monetary Default or Event of Default;

(ii) if, at any time, the estimated cost of the Work (as estimated by the Architect referred to in clause (iii) below) shall exceed the Proceeds (a “Deficiency”) and for so long as such Deficiency shall exist, Lender shall not be required to make any Proceeds disbursement to Borrower unless Borrower (within a reasonable period of time after receipt of such estimate), at its election, either deposits with or delivers to Lender (A) Cash, Cash Equivalents and/or a Letter or Letters of Credit in an amount equal to the estimated cost of the Work less the Proceeds available, or (B) such other evidence of Borrower’s ability to meet such excess costs and which is satisfactory to Lender and the Rating Agencies;

(iii) Lender and the Architect shall have reasonably approved the plans and specifications for the Work and any change orders in connection with such plans and specifications; and

(iv) Lender shall, within a reasonable period of time prior to request for initial disbursement, be furnished with an estimate of the cost of the Work accompanied by an Architect’s certification as to such costs and appropriate plans and specifications for the Work.

 

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Borrower shall restore all Improvements such that when they are fully restored and/or repaired, such Improvements and their contemplated use fully comply with all applicable Legal Requirements including zoning, environmental and building laws, codes, ordinances and regulations.

6.2.5 Disbursement of Proceeds.

(a) Disbursements of the Proceeds in Cash or Cash Equivalents to Borrower hereunder shall be made from time to time (but not more frequently than once in any month) by Lender but only for so long as no Monetary Default or Event of Default shall have occurred and be continuing, as the Work progresses upon receipt by Lender of (i) an Officer’s Certificate dated not more than ten (10) Business Days prior to the application for such payment, requesting such payment or reimbursement and describing the Work performed that is the subject of such request, the parties that performed such Work and the actual cost thereof, and also certifying that such Work and materials are or, upon disbursement of the payment requested to the parties entitled thereto, will be free and clear of Liens other than Permitted Encumbrances, (ii) subject to Borrower’s right to contest under Section 7.3, evidence reasonably satisfactory to Lender that (A) all materials installed and work and labor performed in connection with such Work have been paid for in full and (B) there exists no notices of pendency, stop orders, mechanic’s liens or notices of intention to file same (unless the same is required by the applicable State law as a condition to the payment of a contractor) or any liens or encumbrances of any nature whatsoever on the Property arising out of the Work which have not been either fully bonded to the satisfaction of Lender or discharged of record or in the alternative, fully insured to the satisfaction of Lender by the Title Company, and (iii) an Architect’s certificate certifying performance of the Work together with an estimate of the cost to complete the Work. No payment made prior to the final completion of the Work, as certified by the Architect, except for payment made to contractors or subcontractors whose Work shall have been fully completed and from which final lien waivers have been received, shall exceed ninety percent (90%) (the “Retainage Release Threshold”) of the value of the Work performed and materials furnished and incorporated into the Improvements by such contractor or subcontractor, as applicable, from time to time until such time as fifty percent (50%) of such Work has been satisfactorily completed (as certified by the Architect), at which time the Retainage Release Threshold with respect to such Work may be increased to ninety-five (95%), and at all times the undisbursed balance of said Proceeds together with all amounts deposited, bonded, guaranteed or otherwise provided for pursuant to Section 6.2.4(b) above, shall be at least sufficient to pay for the estimated cost of completion of the Work, final payment of all Proceeds remaining with Lender shall be made upon receipt by Lender of a certification by an Architect, as to the completion of the Work substantially in accordance with the submitted plans and specifications, final lien releases, and the filing of a notice of completion and the expiration of the period provided under the law of the applicable State for the filing of mechanics’ and materialmens’ liens which are entitled to priority as to other creditors, encumbrances and purchasers, as certified pursuant to an Officer’s Certificate, and delivery of a certificate of occupancy with respect to the Work, or, if not applicable, an Officer’s Certificate to the effect that a certificate of occupancy is not required.

(b) If, after the Work is completed in accordance with the provisions hereof and Lender receives evidence that all costs of completion have been paid, there are excess Proceeds, such excess Proceeds shall be paid over to Lender for application in accordance with Section 6.2.3(b).

 

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VII. REAL ESTATE IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS

7.1 Borrower to Pay Real Estate Impositions and Other Charges. Borrower shall pay or cause Master Lessee to pay all Real Estate Impositions now or hereafter levied or assessed or imposed against the Property or any part thereof prior to the imposition of any interest, charges or expenses for the non-payment thereof and shall pay or cause Master Lessee to pay all Other Charges on or before the date they are due. Borrower shall deliver to Lender annually, no later than fifteen (15) Business Days after the first day of each fiscal year of Borrower, and shall update as new information is received, a schedule describing all Real Estate Impositions, payable or estimated to be payable during such fiscal year attributable to or affecting the Property or Borrower. At any time any Real Estate Impositions or Other Charges are not paid by Master Lessee pursuant to the Master Lease, and subject to Borrower’s right of contest set forth in Section 7.3, and provided that there are sufficient funds available in the Tax Reserve Account, Lender, on behalf of Borrower, shall pay all Real Estate Impositions and Other Charges which are attributable to or affect the Property or Borrower, prior to the date such Real Estate Impositions or Other Charges shall become delinquent or late charges may be imposed thereon, directly to the applicable taxing authority with respect thereto. Lender shall, or Lender shall direct the Cash Management Bank to, pay to the taxing authority such amounts to the extent funds in the Tax Reserve Account are sufficient to pay such Real Estate Impositions. Nothing contained in this Agreement or the Security Instrument shall be construed to require Borrower to pay any tax, assessment, levy or charge imposed on Lender in the nature of a franchise, capital levy, estate, inheritance, succession, income or net revenue tax.

7.2 No Liens. Subject to its right of contest set forth in Section 7.3, Borrower shall at all times keep, or cause to be kept, the Property free from all Liens (other than Permitted Encumbrances) and shall pay when due and payable (or bond over) all claims and demands of mechanics, materialmen, laborers and others which, if unpaid, might result in or permit the creation of a Lien on the Property or any portion thereof and shall in any event cause the prompt, full and unconditional discharge of all Liens imposed on or against the Property or any portion thereof within forty-five (45) days after receiving written notice of the filing (whether from Lender, the lienor or any other Person) thereof. Borrower shall do or cause to be done, at the sole cost of Borrower, everything reasonably necessary to fully preserve the first priority of the Lien of the Security Instrument against the Property, subject to the Permitted Encumbrances. Upon the occurrence and during the continuance of an Event of Default with respect to its Obligations as set forth in this Article VII, Lender may (but shall not be obligated to) make such payment or discharge such Lien, and Borrower shall reimburse Lender on demand for all such advances pursuant to Section 19.12 (together with interest thereon at the Default Rate).

7.3 Contest. Nothing contained herein shall be deemed to require Borrower to pay, or cause to be paid, any Imposition or to satisfy any Lien, or to comply with any Legal Requirement or Insurance Requirement, so long as Borrower is in good faith, and by proper legal proceedings, where appropriate, diligently contesting the validity, amount or application thereof, provided that in each case, at the time of the commencement of any such action or proceeding, and during the

 

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pendency of such action or proceeding (i) no Event of Default shall exist and be continuing hereunder, (ii) Borrower shall keep Lender informed of the status of such contest at reasonable intervals, (iii) if Borrower is not providing security as provided in clause (vi) below, adequate reserves with respect thereto are maintained on Borrower’s books in accordance with GAAP or in the Tax Reserve Account or Insurance Reserve Account, as applicable, or in the Proceeds Reserve Account pursuant to Article VI, as applicable, (iv) either such contest operates to suspend collection or enforcement, as the case may be, of the contested Imposition, Lien or Legal Requirement and such contest is maintained and prosecuted continuously and with diligence, or the Imposition or Lien is bonded, (v) in the case of any Insurance Requirement, the failure of Borrower to comply therewith shall not impair the validity of any insurance required to be maintained by Borrower under Section 6.1 or the right to full payment of any claims thereunder, and (vi) in the case of Real Estate Impositions and Liens which are not bonded in excess of Two Million Dollars ($2,000,000) individually, or in the aggregate, during such contest, Borrower, shall deposit with or deliver to Lender either Cash and Cash Equivalents or a Letter or Letters of Credit in an amount equal to 110% of (A) the amount of Borrower’s obligations being contested plus (B) any additional interest, charge, or penalty arising from such contest. Notwithstanding the foregoing, the creation of any such reserves or the furnishing of any bond or other security, Borrower promptly shall comply with any contested Legal Requirement or Insurance Requirement or shall pay any contested Imposition or Lien, and compliance therewith or payment thereof shall not be deferred, if, at any time the Property or any portion thereof shall be, in Lender’s reasonable judgment, in imminent danger of being forfeited or lost or Lender is likely to be subject to civil or criminal damages as a result thereof. If such action or proceeding is terminated or discontinued adversely to Borrower, (a) provided no Event of Default has occurred and is continuing hereunder, Lender shall disburse to Borrower or the Person entitled to such sums, the security provided therefor under this Section 7.3 and (b) Borrower shall deliver to Lender reasonable evidence of Borrower’s compliance with such contested Imposition, Lien, Legal Requirements or Insurance Requirements, as the case may be. Notwithstanding the foregoing, any contest conducted by the Master Lessee in accordance with the Master Lease that would satisfy the terms and conditions of this Section 7.3 if Borrower were the party conducting such contest will be deemed to satisfy the requirements of this Section 7.3 provided that any security deposited by Master Lessee pursuant to the provisions of the Master Lease in connection with such contest is delivered to Lender.

VIII. TRANSFERS, INDEBTEDNESS AND OTHER FUNDAMENTAL MATTERS

8.1 General Restriction on Transfers, Indebtedness and Other Fundamental Matters.

(a) Unless otherwise expressly permitted under the provisions of this Article VIII, Borrower shall not cause, suffer or permit, and in no event shall there be permitted to occur, regardless of whether Borrower shall have or have not caused, suffered to permitted the same to occur:

(i) any Transfer of any Individual Property or any part thereof or any legal or beneficial interest therein, other than Permitted Encumbrances or a Property Release thereof permitted under, and satisfying the provisions of, Section 2.3.6 and the other provisions of this Agreement;

 

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(ii) any Transfer of an Equity Interest in any Restricted Party;

(iii) unless and until the Guarantor Net Worth Requirements are imposed upon Guarantor or the Qualifying Replacement Guarantor, as applicable, pursuant to Section 8.5, any distribution or transfer by Guarantor of any of its assets to any Person, including its direct or indirect parent entities or their Affiliates unless as of the date of such distribution the Master Lease Guarantor Total Leverage Ratio is less than 3.50:1.00 (as certified by an Officer’s Certificate and certificate of Guarantor provided to Lender, together with the related background financial statements and calculations in reasonable detail, delivered to Lender within five Business Days after such distribution or transfer); provided, however, that the foregoing restrictions shall not apply to the following distributions and transfers, which shall be expressly permitted pursuant to this Section 8.1(a)(iii):

(A) following a Qualifying IPO of an Upper Tier Entity (other than Guarantor), distributions of assets to such Upper Tier Entity for payment by such Upper Tier Entity of reasonable out-of-pocket costs and expenses incurred by such Upper Tier Entity in connection with consummating such Qualifying IPO and ongoing compliance by such Upper Tier Entity with federal and state securities laws and regulations, SEC rules and regulations and the Sarbanes–Oxley Act of 2002 (as amended from time to time and any successor statute thereto);

(B) distributions of assets to Holdings for payment by Holdings of its franchise taxes and for payment by Holdings of Income Taxes that are attributable to the income of Holdings to the extent such income is attributable to the operations of Holdings, Guarantor and/or its direct or indirect Subsidiaries (but not any Subsidiary of Holdings that is not also a Subsidiary of Guarantor);

(C) distributions of assets to a direct or indirect parent of Guarantor for payment of the operating expenses (including administrative, legal, accounting and similar expenses provided by third parties) incurred by such parent in the ordinary course of business to the extent such operating expenses are directly related to the ownership of the direct or indirect Equity Interests in Guarantor and/or to the operations of Guarantor and/or its direct or indirect Subsidiaries;

(D) transfers of assets to Guarantor’s direct or indirect Subsidiaries; and

(E) distribution of the proceeds of the Guarantor Subsequent Intercompany Loans to its parent entity;

(iv) any failure by Guarantor to satisfy the Guarantor Asset Covenant, unless the Guarantor Asset Covenant is expressly terminated pursuant to the provisions of Section 8.5 as a result of the imposition of the Guarantor Net Worth Requirements;

(v) in the event the Guarantor Net Worth Requirements are imposed upon Guarantor or the Qualifying Replacement Guarantor, as applicable, pursuant to Section 8.5, any failure by Guarantor or the Qualifying Replacement Guarantor, as applicable, to satisfy the Guarantor Net Worth Requirements;

 

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(vi) any failure, prior to a Qualifying IPO, of the Minimum Ownership/Control Requirements set forth in clause (A) of the definition thereof set forth in Section 8.4 to continue to be satisfied;

(vii) any failure, subsequent to a Qualifying IPO of Master Lease Guarantor, of the Minimum Ownership/Control Requirements set forth in clause (B) of the definition thereof set forth in Section 8.4 to continue to be satisfied;

(viii) in the event a Qualifying IPO permitted under Section 8.4 occurs, any Post-IPO Change of Control;

(ix) any of Borrower, any Mezzanine Borrower, any SPE Component Entity, PRP, PropCo, HoldCo, Guarantor or any Intermediate Entity incurring any Debt, other than the Permitted Debt of such Person; or

(x) any failure of Master Lease Guarantor to satisfy the Master Lease Guarantor Asset Covenants.

(b) Notwithstanding anything to the contrary set forth in this Article VIII or any other provision of this Agreement, (i) PropCo shall at all times own 100% of the direct Equity Interests in, and Control, PRP, (ii) PRP shall at all times own 100% of the direct Equity Interests in, and Control, Second Mezzanine Borrower, (iii) Second Mezzanine Borrower shall at all times own 100% of the direct Equity Interests in, and Control, First Mezzanine Borrower (other than as a result of a foreclosure or transfer in lieu thereof of the Second Mezzanine Loan), and (iv) First Mezzanine Borrower shall at all times own 100% of the direct Equity Interests in, and Control, Borrower (other than as a result of a foreclosure or transfer in lieu thereof of the First Mezzanine Loan) (the foregoing (i)-(iv), the “Base PropCo Ownership Requirements”).

(c) Nothing in this Section 8.1 shall prohibit (i) any action or event occurring following receipt by Borrower of written consent of Lender approving such action or event and, if a Securitization has occurred, a Rating Agency Confirmation with respect to such action or event, provided that Borrower pays to Lender a commercially reasonable fee in connection with such action or event (which fee shall in all events be reasonable in relation to the Assumption Fee payable pursuant to Section 8.7 hereof), or (ii) the grant of a Lien by Master Lessee, Master Lease Guarantor, any direct or indirect Subsidiary of Master Lease Guarantor or any Tenant on the Excluded Personal Property.

8.2 Sale of Building Equipment. Borrower may sell or dispose of Building Equipment which is being replaced or which is no longer necessary in connection with the operation of the Property free from the Lien of the Security Instrument, provided that such sale or disposal will not have a Material Adverse Effect and will not result in a reduction or abatement of, or right of offset against, the Rents payable under the Master Lease or any Sublease, in either case, as a result thereof, and provided further that any new Building Equipment acquired by Borrower (and not so disposed of) shall be subject to the Lien of the Security Instrument. In connection with any sale or disposition permitted pursuant to this Section 8.2, Lender shall, from time to time, upon receipt of an Officer’s Certificate requesting the same and confirming satisfaction of the conditions set forth above, execute a written instrument reasonably necessary or appropriate and in form reasonably satisfactory to Lender to confirm that such Building Equipment which is to be, or has been, sold or disposed of is free from the Lien of the Security Instrument.

 

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8.3 Immaterial Transfers and Easements, etc. Borrower may, without the consent of Lender, (i) make immaterial Transfers of portions of the Property to Governmental Authorities for dedication or public use (subject to the provisions of Section 6.2), or immaterial Transfers of portions of the Property to third parties for the purpose of erecting and operating additional structures whose use is integrated with the use of the Property, and (ii) grant easements, licenses, restrictions, covenants, reservations and rights of way in the ordinary course of business for access, water and sewer lines, telephone and telegraph lines, electric lines or other utilities or for other similar purposes, provided that no such Transfer, conveyance or encumbrance set forth in the foregoing clauses (i) and (ii) shall have a Material Adverse Effect. In connection with any Transfer permitted pursuant to this Section 8.3, Lender shall execute and deliver a written instrument reasonably necessary or appropriate and in form reasonably satisfactory to Lender, in the case of the Transfers referred to in clause (i) above, to release the portion of the Property affected by such Taking or such Transfer from the Lien of the Security Instrument or, in the case of clause (ii) above, to subordinate the Lien of the Security Instrument to such easements, restrictions, covenants, reservations and rights of way or other similar grants upon receipt by Lender of:

(a) thirty (30) days prior written notice thereof;

(b) a copy of the instrument or instruments of Transfer;

(c) an Officer’s Certificate stating (x) with respect to any Transfer, the consideration, if any, being paid for the Transfer and (y) that such Transfer will not have a Material Adverse Effect; and

(d) reimbursement of all of Lender’s reasonable out-of-pocket costs and expenses incurred in connection with such Transfer.

8.4 Permitted Equity Transfers. Notwithstanding anything herein to the contrary, but subject to Section 8.1(b), the following Transfers shall not require the prior written consent of Lender or a Rating Agency Confirmation:

(a) the pledge of the Equity Interests in Master Lease Guarantor or any of its Subsidiaries pursuant to the terms of the Master Lease Guarantor Facility or a foreclosure (or transfer in lieu of thereof) of such Equity Interests in Master Lease Guarantor or any of its Subsidiaries resulting from the exercise of remedies as set forth in the Master Lease Guarantor Facility (an “Opco Equity Foreclosure”);

(b) a Transfer (but not a pledge or encumbrance) by (i) Guarantor or any then-existing Intermediate HoldCo Entity of 100% (and not less than 100%) of its direct Equity Interests in HoldCo or any then-existing Intermediate HoldCo Entity to a new Intermediate HoldCo Entity, provided that the Base Transfer Conditions have been satisfied, or (ii) HoldCo or any then-existing Intermediate PropCo Entity of 100% (and not less than 100%) of its direct Equity Interests in PropCo or any then-existing Intermediate PropCo to a new Intermediate PropCo Entity, provided that the Base Transfer Conditions have been satisfied;

 

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(c) a Transfer of direct or indirect Equity Interests in any Sponsor;

(d) a Qualifying IPO of any IPO Entity, or any other Transfer (but not a pledge or encumbrance) of the direct or indirect Equity Interests in Guarantor, Master Lease Guarantor, HoldCo, any Intermediate Entity or PropCo (such Person in which such Equity Interests are transferred by means other than a Qualifying IPO, a “Related Holding Entity”), provided that the following conditions have been satisfied:

(i) the Base Transfer Conditions have been satisfied;

(ii) with respect to (A) any such Transfer other than a Qualifying IPO, subsequent to such Transfer, (1) Permitted Holders or in the case of a Transfer to a Permitted Transferee, the related Permitted Transferee (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders), directly or indirectly own no less than fifty-one percent (51%) of the Equity Interests in, and Control, the Related Holding Entity (and, through ownership of the Related Holding Entity, in each direct or indirect Subsidiary of the Related Holding Entity) and (2) Permitted Holders or in the case of a Transfer to a Permitted Transferee, the related Permitted Transferee (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders), directly or indirectly own no less than fifty-one percent (51%) of the Equity Interests in, and Control, PropCo, PRP, each Mezzanine Borrower and Borrower, and (B) any Qualifying IPO of the Master Lease Guarantor, Permitted Holders or in the case of a prior Transfer to a Permitted Transferee, the related Permitted Transferee, (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders), directly or indirectly own no less than fifty-one percent (51%) of the Equity Interests in, and Control, PropCo, PRP, each Mezzanine Borrower and Borrower (the foregoing requirements of (A) and (B) above, as applicable, the “Minimum Ownership/Control Requirements”), and (C) any Qualifying IPO, following such Qualifying IPO, the Post-IPO Control Requirements shall be satisfied; and

(iii) if subsequent to any Qualifying IPO or any other Transfer, the Guarantor Asset Covenant would no longer be satisfied, then as an additional condition to completing any such Qualifying IPO or other such Transfer, the Guarantor Net Worth Requirements must be satisfied in accordance with Section 8.5; or

(e) upon and subsequent to a Qualifying IPO of any IPO Entity, Transfers (whether direct or indirect and whether in open market transactions or otherwise) of the shares in such IPO Entity, provided that no Post-IPO Change of Control occurs; or

(f) a Transfer (but not a pledge or encumbrance) of direct or indirect Equity Interests in any Permitted Transferee, provided that (i) subsequent to such Transfer, such Person shall continue to satisfy the criteria for a Permitted Transferee set forth in the definition thereof, and (ii) if such Permitted Transferee holds a direct Equity Interest in any Lower Tier Entity and such Transfer shall cause any transferee, together with its Affiliates, to acquire indirect Equity Interests in Borrower aggregating more than forty-nine percent (49%), or to increase its indirect Equity Interests in Borrower from an amount that is less than forty-nine percent (49%) to an amount that is greater than forty-nine percent (49%), an Additional Non-Consolidation Opinion is provided to Lender as a condition to such Transfer;

 

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(g) upon and subsequent to a Qualifying IPO of an Upper Tier Entity, Transfers of direct or indirect Equity Interests in such Upper Tier Entity, provided that no Post-IPO Change of Control occurs; or

(h) the pledge of any direct or indirect Equity Interest in Borrower or First Mezzanine Borrower pursuant to the Mezzanine Loan Documents and the exercise of, and any Transfer that results from the exercise of, any rights or remedies that any Mezzanine Lender may have under the Mezzanine Loan Documents.

Borrower shall be responsible for the payment of and shall pay or reimburse Lender for all of Lender’s reasonable out-of-pocket fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and costs and any Rating Agency fees and expenses, actually incurred by Lender in connection with the review, negotiation and implementation of the provisions and documentation provided for in this Section 8.4.

8.5 Guarantor Net Worth; Qualifying Replacement Guarantor. If the Guarantor Asset Covenant would no longer be satisfied subsequent to any Qualifying IPO or any other Transfer, or if the Guarantor Asset Covenant would no longer be satisfied as a result of any proposed transaction or for any other reason (other than as a result of an Opco Foreclosure), then:

(a) either (i) Guarantor shall continue to Control PropCo, PRP, each Mezzanine Borrower and Borrower and shall have and maintain a Net Worth of not less than $200,000,000 (the “Minimum Net Worth”) and demonstrate its Net Worth to Lender’s reasonable satisfaction, with such reasonable supporting evidence as Lender may reasonably require, and shall confirm in writing to Lender that the covenants respecting the ongoing maintenance by Guarantor of the Minimum Net Worth set forth in Section 9 of the Recourse Guaranty (the “Net Worth Covenants”) have been triggered and are in full force and effect as on-going covenants of Guarantor, in which event, the Guarantor Asset Covenant shall no longer be in force or effect, as provided in Section 9 of the Recourse Guaranty, as a result of the Net Worth Covenants having been triggered in lieu thereof, or (ii) a Qualifying Replacement Guarantor having a Net Worth of not less than the Minimum Net Worth shall demonstrate its Net Worth to Lender’s reasonable satisfaction, with such reasonable supporting evidence as Lender may reasonably require, and (A) such Qualifying Replacement Guarantor shall execute and deliver to Lender (x) a guaranty of recourse obligations in the same form as the Recourse Guaranty delivered to Lender by Guarantor on the Closing Date, modified such that the Net Worth Covenants are in full force and effect as on-going covenants of the Qualifying Replacement Guarantor, that the Guarantor Asset Covenant is not a covenant of the Qualifying Replacement Guarantor and, if the Qualifying Replacement Guarantor is not an Affiliate of the Guarantor being replaced, that the Qualifying Replacement Guarantor’s liability is limited to circumstances, conditions, actions and events first occurring after the date on which the Replacement Guaranty is delivered (the “Replacement Guaranty”), and (y) an environmental indemnity agreement in the same form as the Environmental Indemnity delivered to Lender by Guarantor on the Closing Date, provided that if the Qualifying Replacement Guarantor is not an Affiliate of the Guarantor being replaced, such

 

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environmental indemnity agreement shall be modified such that the Qualifying Replacement Guarantor’s liability is limited to circumstances, conditions, actions and events first occurring after the date on which the Replacement Indemnity is delivered (the “Replacement Indemnity”), and (B) Borrower and the Qualifying Replacement Guarantor shall provide to Lender an Additional Non-Consolidation Opinion, together with customary legal opinions and organizational document and certificate deliveries respecting the existence, due formation and organization and good standing of the Qualifying Replacement Guarantor and the due authorization, execution and delivery, and enforceability of the Replacement Guaranty and Replacement Indemnity, in each case reasonably satisfactory to Lender and in form and substance in nature and scope provided by or on behalf of Guarantor in connection with its execution and delivery of the Recourse Guaranty and Environmental Indemnity (the foregoing requirements of clause (i) or clause (ii), as applicable, including the continued maintenance of the Minimum Net Worth by the Guarantor or Qualifying Replacement Guarantor, as applicable, the “Guarantor Net Worth Requirements”). Upon a Qualifying Replacement Guarantor satisfying the conditions under clause (ii) above, the then existing Guarantor shall be released under the Recourse Guaranty and the Environmental Indemnity with respect to circumstances, conditions, actions and events first occurring after the date on which the Replacement Guaranty and the Replacement Indemnity are delivered; and

(b) upon satisfaction of the conditions set forth in the foregoing paragraph (a), the Guarantor Asset Covenant shall no longer be in force or effect and the Guarantor Net Worth Requirements shall be in full force and effect in lieu thereof.

8.6 Deliveries to Lender. Borrower shall deliver to Lender (a) with respect to any Transfer to which the Base Transfer Conditions apply, not less than thirty (30) days prior to the closing of such Transfer, an Officer’s Certificate describing the proposed transaction and stating that such transaction is permitted by this Article VIII, together with any appraisal or other documents upon which such Officer’s Certificate is based, (b) an Officer’s Certificate promptly following the realization or foreclosure upon any pledge or encumbrance described in Section 8.4, and (c) copies of executed deeds or other similar closing documents within ten (10) Business Days after the closing of any Transfer described in clauses (a) or (b) above.

8.7 Loan Assumption. Provided no Event of Default is then continuing, Borrower shall have the one time right to Transfer (but not mortgage, hypothecate, pledge or otherwise encumber or grant a security interest in) the fee simple title to all (but not fewer than all) of the Individual Properties only if after giving effect to the proposed transaction, the Individual Properties will be owned by one or more Single Purpose Entities (collectively, “Transferee Borrower”), which Transferee Borrower shall be wholly owned and Controlled by a Permitted Transferee, and which Transferee Borrower shall have executed and delivered to Lender an assumption agreement in form and substance acceptable to Lender, assuming all of Borrower’s obligations under the Loan Documents. Any such transfer to a Transferee Borrower and assumption of the Loan shall be conditioned upon Lender’s reasonable approval, which may be conditioned upon among other things, (i) the delivery of financial information, including, without limitation, audited financial statements, for Transferee Borrower and the direct and indirect owners of Transferee Borrower, (ii) the delivery of evidence that Transferee Borrower is a Single Purpose Entity, and that neither Transferee Borrower nor any Person that Controls Transferee Borrower is a Disqualified Transferee, (iii) the management of the Property by a

 

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Qualified Manager or by a property manager reasonably acceptable to Lender and acceptable to the Rating Agencies; (iv) the satisfaction of the Guarantor Net Worth Requirements, (v) the execution and delivery of all documentation reasonably requested by Lender, (vi) the delivery of Opinions of Counsel requested by Lender, including, without limitation, an Additional Non-Consolidation Opinion with respect to Transferee Borrower and other entities identified by Lender or requested by the Rating Agencies and opinions with respect to the valid formation, due authority and good standing of Transferee Borrower, Qualifying Replacement Guarantor and any additional pledgors, and the continued enforceability of the Loan Documents and any other matters requested by Lender, (vii) the delivery of an endorsement to each Title Policy in form and substance acceptable to Lender, insuring the lien of the Security Instrument, as assumed, subject only to the Permitted Encumbrances, (viii) satisfaction of all requirements of the Mezzanine Loan Documents respecting such Transfer and assumption, and confirmation of the Mezzanine Lenders that such requirements have been satisfied, (ix) the payment of all of Lender’s reasonable out-of-pocket fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and costs, actually incurred by Lender in connection with such assumption, and (x) payment to Lender of the Assumption Fee (in addition to the payments required under the foregoing clause (ix)).

8.8 Subleases.

8.8.1 New Subleases and Sublease Modifications. Borrower represents and warrants that each Individual Property is currently leased to Master Lessee pursuant to the Master Lease, is operated as one or more Restaurant Locations under a Concept or a Third-Party Brand, and is occupied and operated pursuant to a Concept Sublease, an RLP Sublease or an Unaffiliated Sublease, and may also be subject to the Specified Prior Subleases.

8.8.2 Leasing Conditions. Except as otherwise provided in this Section 8.8.2, Borrower shall not, and shall not provide its consent to Master Lessee or any subtenant or Affiliate of Master Lessee to (i) enter into any Sublease (a “New Sublease”) or (ii) modify any Sublease (including, without limitation, accept a surrender of any portion of the Property subject to a Sublease (unless otherwise required by law), allow a reduction in the term of any Sublease or a reduction in the Rent payable under any Sublease, change any renewal provisions of any Sublease, materially increase the obligations of the landlord or materially decrease the obligations of any Tenant) or terminate any Sublease unless the Tenant under such Sublease is in default (any such action referred to in clause (ii) being referred to herein as a “Sublease Modification”) without the prior written consent of Lender which consent shall not be unreasonably withheld or delayed; provided, however, that Borrower may permit Master Lessee, or any subtenant or Affiliate of Master Lessee, to terminate a Sublease (x) that is an Affiliated Sublease or a Specified Prior Sublease, (y) for Master Lessee or a Concept Subsidiary to use the Individual Property formerly subleased for itself as a Concept or (z) subject to compliance with Section 2.3.7, in connection with the decision to have the applicable store Go Dark. Any New Sublease or Sublease Modification that requires Lender’s consent shall be delivered to Lender for approval not less than ten (10) Business Days prior to the effective date of such New Sublease or Sublease Modification. If Lender fails to respond to a request for Lender’s consent pursuant to this Section 8.8.2 within ten (10) Business Days of Lender’s receipt of Borrower’s request therefor, Borrower may deliver to Lender a second request in an envelope or under cover of a letter marked “URGENT” and including a legend in bold typeface that Lender’s failure to

 

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grant or deny the requested consent within ten (10) Business Days of the receipt thereof will result in the requested consent being deemed to have been granted. If Lender fails to respond to such second request within ten (10) Business Days of its receipt thereof, Lender’s consent shall be deemed granted. Notwithstanding the foregoing, provided no Event of Default shall have occurred and be continuing, Borrower may permit Master Lessee to enter into a New Sublease or a Sublease Modification, without Lender’s prior written consent, that satisfies each of the following conditions (collectively, the “Base Sublease Conditions”):

(i) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, will not result in the number of Go Dark Restaurant Locations plus the number of Restaurant Locations that are being operated as one or more Unaffiliated Businesses (without duplication) exceeding the Go Dark/Sublease Limit;

(ii) the term of such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, including any and all renewal options, does not exceed the remaining stated term of the Master Lease;

(iii) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, shall not include the payment by Master Lessee of any tenant improvement allowances or leasing commissions, or similar sublessor monetary obligations, unless such Sublease expressly provides that such obligations will not be binding upon Borrower or its successors or assigns upon the termination of the Master Lease, and shall not be binding upon Lender or its successors or assigns upon foreclosure of the applicable Security Instrument (or a deed in lieu thereof);

(iv) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, does not trigger any of the rights or obligations set forth on Schedule VI, and does not grant to the Tenant thereunder any new purchase option, right of first refusal or other preferential rights with respect to the applicable Individual Property;

(v) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, provides that the premises demised thereby can only be used for operation of a Concept restaurant (or, so long as paragraph (i) above is satisfied, an Unaffiliated Business), but cannot be used for any of the following uses: any pornographic or obscene purposes, any commercial sex establishment, any pornographic, obscene, nude or semi-nude performances, modeling, obscene materials, activities or sexual conduct or any other use that has or could reasonably be expected to have a Material Adverse Effect;

(vi) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, does not prevent Proceeds from being held and disbursed by Lender in accordance with the terms hereof;

(vii) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, does not conflict with the terms of the Master Lease or any of the Loan Documents;

(viii)(A) the Tenant under such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, shall not have the benefit of the Master

 

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Lease SNDA, and (B) except for a new or existing Non-Disturbance Eligible Sublease with respect to which Lender has executed a Non-Disturbance Agreement pursuant to Section 8.8.9 below (and except for any existing Specified Prior Subleases), such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, shall not provide for non-disturbance for the Tenant thereunder, and shall, by its express terms, terminate upon the expiration or termination of the Master Lease; and

(ix) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, satisfies the requirements of Section 8.8.7 and Section 8.8.8.

Notwithstanding the terms of this Section 8.8.2, and without limiting any sublease rights of Master Lessee under the Master Lease, any Affiliate of Master Lessee that has entered into a Concept Sublease for an Individual Property shall be permitted to subsublease such Individual Property to an Affiliate of Master Lessee provided such subsublease complies with the Base Sublease Conditions, and such subsublease shall not limit or release Master Lease Guarantor’s obligations under the Master Lease Guaranty.

8.8.3 Delivery of New Sublease or Sublease Modification. Upon the execution of any New Sublease or Sublease Modification, as applicable, Borrower shall deliver to Lender an executed copy of the Sublease. In addition, Borrower shall, from time to time, at the advance written request of Lender, but not more than one (1) time per calendar year unless an Event of Default has occurred and is continuing, deliver to Lender a list of (a) each and every Sublease then affecting all or any part of the Property, and (b) all sublicenses or other grants of possessory interests in any portion of the Property to which Borrower has given its consent or of which Borrower otherwise has knowledge, said list to be certified by Borrower as true, complete and correct in all material respects.

8.8.4 Sublease Amendments. Borrower agrees that it shall not have the right or power, as against Lender without its consent (which consent shall not be unreasonably withheld or delayed except as provided herein), to cancel, abridge, amend or otherwise modify any Sublease, unless such modification complies with this Section 8.8.

8.8.5 Security Deposits. All security or other deposits of Tenants of the Property (collectively, the “Security Deposits”) shall be treated as trust funds and shall not be commingled with any other funds of Borrower, and such deposits shall be deposited, upon receipt of the same by Borrower, in a separate trust account maintained by Borrower expressly for such purpose. Within ten (10) Business Days after written request by Lender, Borrower shall furnish to Lender reasonably satisfactory evidence of compliance with this Section 8.8.5, together with a statement of all lease securities deposited with Borrower by the Tenants and the location and account number of the account in which such security deposits are held.

8.8.6 No Default Under Subleases. Borrower shall or shall cause Master Lessee to (i) promptly perform and observe all of the material terms, covenants and conditions required to be performed and observed by Borrower or Master Lessee under the Subleases, if the failure to perform or observe the same would have a Material Adverse Effect; (ii) exercise, within ten (10) Business Days after a written request by Lender, any right to request from the Tenant under any Sublease a certificate with respect to the status thereof and (iii) not collect any of the Rents,

 

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more than one (1) month in advance (except that Borrower may collect such security deposits and last month’s Rents as are permitted by Legal Requirements and are commercially reasonable in the prevailing market and collect other charges in accordance with the terms of each Sublease).

8.8.7 Subordination. All Sublease Modifications and New Subleases entered into by Master Lessee or any sublessee of Master Lessee after the date hereof shall be expressly subject and subordinate to this Agreement, the Security Instrument and the Master Lease (either through a subordination provision contained in such Sublease or, at Lender’s option, in a separate subordination agreement in form reasonably satisfactory to Lender).

8.8.8 Attornment. Each New Sublease entered into from and after the date hereof shall provide that in the event of the enforcement by Lender of any remedy under this Agreement or the Security Instrument, the Tenant under such Sublease shall, at the option of Lender or of any other Person succeeding to the interest of Lender as a result of such enforcement, attorn to Lender or to such Person and shall recognize Lender or such successor-in-interest as lessor under such Sublease without change in the provisions thereof; provided, however, neither Lender nor such successor-in-interest shall be liable for or bound by (i) any payment of an installment of rent or additional rent made more than thirty (30) days before the due date of such installment, (ii) any act or omission of or default by Borrower under any such Sublease (but the Lender, or such successor-in-interest, shall be subject to the continuing obligations of the landlord to the extent arising from and after such succession to the extent of Lender’s, or such successor-in-interest’s, interest in the Property), (iii) any credits, claims, setoffs or defenses which any Tenant may have against Borrower, (iv) any obligation under such Sublease to maintain a fitness facility at the Property, (v) any obligation on Borrower’s part, pursuant to such Sublease, to perform any tenant improvement work or (vi) any obligation on Borrower’s part, pursuant to such Sublease, to pay any sum of money to any Tenant. Each such New Sublease shall also provide that, upon the reasonable request by Lender or such successor-in-interest, the Tenant shall execute and deliver an instrument or instruments confirming such attornment.

8.8.9 Non-Disturbance Agreements. Lender shall enter into, and, if required by applicable law to provide constructive notice or requested by a Tenant, record in the county where the subject Individual Property is located, a subordination, attornment and non-disturbance agreement, substantially in form and substance to the form attached hereto as Exhibit C (a “Non-Disturbance Agreement”), with any Tenant that is a subtenant under any new or existing Non-Disturbance Eligible Sublease, within ten (10) Business Days after written request therefor by Borrower; provided that the following conditions are satisfied:

(a) no Event of Default shall have occurred and be continuing;

(b) such new or existing Non-Disturbance Eligible Sublease complies with the Base Sublease Conditions;

(c) with respect to any new Non-Disturbance Eligible Sublease only, the “fixed” or “base” rent under such Non-Disturbance Eligible Sublease is at a substantially consistent or rising level throughout the term of such Sublease, other than for an initial “free rent” period complying with paragraph (d) below;

 

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(d) with respect to any new Non-Disturbance Eligible Sublease only, the rental rate, any “free rent” periods and other material terms of such new Non-Disturbance Eligible Sublease are market-rate, commercially reasonable and no less favorable to Master Lessee (as sublandlord) than those that would be available on an arm’s-length basis, as evidenced by a certificate from an Independent Leasing Broker; and

(e) such request is accompanied by (i) an Officer’s Certificate stating that such new or existing Non-Disturbance Eligible Sublease complies with the foregoing conditions and is otherwise in compliance with this Section 8.8, and (ii) payment of all reasonable out-of-pocket costs and expenses incurred by Lender in connection with the negotiation, preparation, execution and delivery of any Non-Disturbance Agreement, including, without limitation, reasonable attorneys’ fees and disbursements.

8.8.10 [Reserved]

8.8.11 Leaseable Building Pads. (a) Each of the Individual Properties described as containing a “Leaseable Building Pad” on Schedule X contains an unimproved building pad and unimproved land as preliminarily described on Schedule X (each, a “Leaseable Building Pad”), but, to Borrower’s knowledge, such Leaseable Building Pad cannot be subdivided from such Individual Property in accordance with Section 2.3.6(b). Borrower shall be permitted to cause each Leaseable Building Pad to be removed from the premises demised under the Master Lease, terminate the Master Lease with respect to such Leaseable Building Pad and ground lease such Leaseable Building Pad subject to the following:

(i) the Master Lease Base Rent shall not be reduced as a result of such removal and termination;

(ii) such Leaseable Building Pad (as finally described and determined) shall be demised pursuant to a ground lease that (A) requires the tenant under such ground lease to pay ground lease rent directly to the Holding Account, (B) may permit the granting of leasehold mortgages and contains customary leasehold mortgagee protections (including leasehold mortgagee protections customarily required by Lender when it is the leasehold mortgagee), (C) grants and reserves easements and rights of use over the Leaseable Building Pad and the remainder of the Individual Parcel as are reasonably necessary for the construction, use and operation of such Leaseable Building Pad and the remainder of such Individual Parcel, and (D) shall otherwise be in form and substance reasonably satisfactory to Lender; and

(iii) Lender shall have reasonably determined that the demise of such Leaseable Building Pad will not materially diminish the value of or impair in any material respect, or unreasonably interfere with the use or operation of, in any material respect, such Individual Property.

(iv) If any such Leaseable Building Pad is removed and terminated from the Master Lease and ground leased in accordance with the foregoing, then, at the request of Borrower, Lender shall enter into a Non-Disturbance Agreement with any such ground lease tenant and its leasehold mortgagee, with such changes thereto as may be reasonably requested by such tenant or its leasehold mortgagee to reflect recognition of any leasehold mortgagee protections contained in such ground lease.

 

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(b) In the event that Borrower determines that (i) any Outparcel described on Schedule X cannot be legally subdivided in accordance with the requirements of Section 2.3.6(b), as set forth in an Officer’s Certificate of Borrower, Borrower shall be entitled to treat such Outparcel as a Leaseable Building Pad and (ii) any Leaseable Building Pad may be legally subdivided in accordance with the requirements of Section 2.3.6(b), Borrower shall be entitled to release such Leaseable Building Pad from the Master Lease and the Lien of the applicable Security Instrument in accordance with Section 2.3.6(b).

(c) In addition, and notwithstanding anything herein to the contrary, Borrower shall be permitted to subject any Individual Parcel containing a Leaseable Building Pad to a condominium form of ownership in order to release such Leaseable Building Pad as an Outparcel hereunder, and Lender agrees that it shall consent to the creation of such condominium, the subordination of the applicable Security Instrument thereto and, thereafter, the release of such Leaseable Building Pad as an Outparcel as permitted hereunder, subject to the following:

(i) Lender shall have reasonably determined that the creation of the proposed Condominium Units shall not materially diminish the value of or impair, in any material respect, or unreasonably interfere with the use or operation of, in any material respect, such Individual Property.

(ii) the Condominium Units, Condominium Documents and Condominium Declaration and all other documents (including a Survey of the Condominium Units) reasonably requested by Lender in connection with the creation of such condominium shall be reasonably acceptable to Lender;

(iii) Borrower shall have provided Lender with any and all instruments necessary to subordinate the Master Lease and the applicable Security Instrument to the Condominium Documents and Condominium Declaration and with any other instruments and endorsements to the Title Policy and Title Policy (Owner) reasonably required by Lender in connection therewith, including a confirmation by Borrower and Master Lessee that such Individual Property shall constitute a Condominium Property upon the creation thereof, all of which shall be reasonably acceptable to Lender;

(iv) the Condominium Unit created from the Leaseable Building Pad and the Condominium Unit created from remainder of such Individual Property shall meet the requirements set forth in Section 2.3.6 applicable to “Outparcels” and “Remaining Property”; and

(v) after the creation of such condominium, the Condominium Unit created from the Leaseable Building Pad may be released and conveyed hereunder pursuant to and in accordance with the requirements set forth in of Section 2.3.6 applicable to Outparcels.

 

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(d) In the event that Lender fails to respond within ten (10) Business Days of receipt of any request for Lender’s approval or consent pursuant to this Section 8.8.11, Borrower may deliver to Lender a second request in an envelope or under cover of a letter marked “URGENT” and including a legend in bold typeface that Lender’s failure to grant or deny the requested consent within ten (10) Business Days of the receipt thereof will result in the requested consent being deemed to have been granted. If Lender fails to respond to such second request within ten (10) Business Days of its receipt thereof, Lender’s consent to such request shall be deemed granted.

IX. INTEREST RATE CAP AGREEMENT

9.1 Interest Rate Cap Agreement. Prior to or contemporaneously with the Closing Date, Borrower shall have obtained, and thereafter maintain in effect, the Interest Rate Cap Agreement satisfying the requirements set forth in the definition of “Interest Rate Cap Agreement” herein. The notional amount of the Interest Rate Cap Agreement may be reduced from time to time (and Lender shall authorize such reduction) in amounts equal to any prepayment of the principal amount of the Floating Rate Component made in accordance with this Agreement.

9.2 Pledge and Collateral Assignment. As security for the full and punctual payment and performance of the Obligations when due (whether upon stated maturity, by acceleration, early termination or otherwise), Borrower, as pledgor, hereby pledges, assigns, hypothecates, transfers and delivers to Lender as collateral and hereby grants to Lender a continuing first priority lien on and security interest in, to and under all of the following whether now owned or hereafter acquired and whether now existing or hereafter arising (the “Rate Cap Collateral”): all of the right, title and interest of Borrower in and to (i) the Interest Rate Cap Agreement (and any Replacement Interest Rate Cap Agreement); (ii) all payments, distributions, disbursements or proceeds due, owing, payable or required to be delivered to Borrower in respect of the Interest Rate Cap Agreement (or any Replacement Interest Rate Cap Agreement) or arising out of the Interest Rate Cap Agreement (or any Replacement Interest Rate Cap Agreement), whether as contractual obligations, damages or otherwise; and (iii) all of Borrower’s claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under or arising out of the Interest Rate Cap Agreement (or any Replacement Interest Rate Cap Agreement), in each case including all accessions and additions to, substitutions for and replacements, products and proceeds of any or all of the foregoing.

9.3 Covenants.

(a) Borrower shall comply with all of its obligations under the terms and provisions of the Interest Rate Cap Agreement. All amounts paid by the Counterparty under the Interest Rate Cap Agreement to Borrower or Lender shall be deposited immediately into the Holding Account pursuant to Section 3.1. Subject to terms hereof, provided no Event of Default has occurred and is continuing, Borrower shall be entitled to exercise all rights, powers and privileges of Borrower under, and to control the prosecution of all claims with respect to, the Interest Rate Cap Agreement and the other Rate Cap Collateral. Borrower shall take all actions reasonably requested by Lender to enforce Borrower’s rights under the Interest Rate Cap Agreement in the event of a default by the Counterparty thereunder and shall not waive, amend or otherwise modify any of its rights thereunder without the prior written consent of the Lender.

 

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(b) Borrower shall use commercially reasonable efforts to defend Lender’s right, title and interest in and to the Rate Cap Collateral pledged by Borrower pursuant hereto or in which it has granted a security interest pursuant hereto against the claims and demands of all other Persons.

(c)(i) In the event of any downgrade, withdrawal or qualification of the rating of the Counterparty such that it ceases to qualify as an “Approved Counterparty”, unless the Counterparty shall have posted collateral with Lender and obtained a Rating Agency Confirmation with respect thereto, Borrower shall replace the Interest Rate Cap Agreement with a Replacement Interest Rate Cap Agreement not later than thirty (30) calendar days following receipt of notice from Lender, Servicer or any other Person of such downgrade, withdrawal or qualification.

(ii) Provided that the outstanding principal balance of the Floating Rate Component has not previously been reduced to zero, no later than one (1) Business Day prior to the expiration of any Interest Rate Cap Agreement, Borrower shall obtain and deliver to Lender a Replacement Interest Rate Cap Agreement from an Approved Counterparty, which Replacement Interest Rate Cap Agreement shall be effective for the period commencing on the day immediately following the last day of the term of the Interest Rate Cap Agreement being replaced, and ending on the last day of (x) an Interest Period that ends no earlier than two (2) years after the effective date of such Replacement Interest Rate Cap Agreement, or (y) the Interest Period in which the Maturity Date occurs, whichever is earlier.

(d) In the event that Borrower fails to enter into and deliver to Lender the Interest Rate Cap Agreement as and when required hereunder, Lender may upon written notice to Borrower purchase the Interest Rate Cap Agreement on behalf of the Borrower and the actual cost incurred by Lender in purchasing the Interest Rate Cap Agreement shall upon written demand be paid by Borrower to Lender with interest thereon at the Default Rate from the date such cost was incurred by Lender and demand made until such cost is paid by Borrower to Lender. All amounts paid under such Interest Rate Cap Agreement shall be deposited in the Holding Account, and Borrower shall have the same rights hereunder with respect to such Interest Rate Cap Agreement that it had with respect to any Interest Rate Cap Agreement purchased directly by Borrower.

(e) Except as otherwise provided in this Agreement, Borrower shall not sell, assign, or otherwise dispose of, or mortgage, pledge or grant a security interest in, any of the Rate Cap Collateral or any interest therein, and any sale, assignment, mortgage, pledge or security interest whatsoever made in violation of this covenant shall be a nullity and of no force and effect, and upon demand of Lender, shall forthwith be cancelled or satisfied by an appropriate instrument in writing.

(f) Borrower shall not (i) without the prior written consent of Lender, modify, amend or supplement the terms of the Interest Rate Cap Agreement, (ii) without the prior written consent of Lender, except in accordance with the terms of the Interest Rate Cap Agreement, cause the termination of the Interest Rate Cap Agreement prior to its stated maturity date, (iii) without the prior written consent of Lender, except as aforesaid, waive or release any obligation of the Counterparty (or any successor or substitute party to the Interest Rate Cap

 

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Agreement) under the Interest Rate Cap Agreement, (iv) without the prior written consent of Lender, consent or agree to any act or omission to act on the part of the Counterparty (or any successor or substitute party to the Interest Rate Cap Agreement) which, without such consent or agreement, would constitute a default under the Interest Rate Cap Agreement, (v) fail to exercise promptly and diligently each and every material right which it may have under the Interest Rate Cap Agreement, (vi) take or intentionally omit to take any action or intentionally suffer or permit any action to be omitted or taken, the taking or omission of which would result in any right of offset against sums payable under the Interest Rate Cap Agreement or any defense by the Counterparty (or any successor or substitute party to the Interest Rate Cap Agreement) to payment or (vii) fail to give prompt notice to Lender of any notice of default given by or to Borrower under or with respect to the Interest Rate Cap Agreement, together with a complete copy of such notice. If Borrower shall have received written notice that the Securitization shall have occurred, no consent by Lender provided for in this Section 9.3(f) shall be given by Lender unless Lender shall have received a Rating Agency Confirmation.

(g) In connection with an Interest Rate Cap Agreement, Borrower shall obtain and deliver to Lender an Opinion of Counsel from counsel (which counsel may be in-house counsel for the Counterparty) for the Counterparty upon which Lender and its successors and assigns may rely (the “Counterparty Opinion”), under New York law and, if the Counterparty is a non-U.S. entity, the applicable foreign law, in a form approved by the Lender.

9.4 Powers of Borrower Prior to an Event of Default. Subject to the provisions of Section 9.3(a), provided no Event of Default has occurred and is continuing, Borrower shall be entitled to exercise all rights, powers and privileges of Borrower under, and to control the prosecution of all claims with respect to, the Interest Rate Cap Agreement and the other Rate Cap Collateral.

9.5 Representations and Warranties. Borrower hereby covenants with, and represents and warrants to, Lender as follows:

(a) The Interest Rate Cap Agreement constitutes the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, subject only to applicable bankruptcy, insolvency and similar laws generally affecting the enforcement of creditors’ rights and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(b) The Rate Cap Collateral is free and clear of all claims or security interests of every nature whatsoever, except such as are created pursuant to this Agreement and the other Loan Documents, and Borrower has the right to pledge and grant a security interest in the same as herein provided without the consent of any other Person other than any such consent that has been obtained and is in full force and effect.

(c) The Rate Cap Collateral has been duly and validly pledged hereunder. All consents and approvals required to be obtained by Borrower for the consummation of the transactions contemplated by this Agreement have been obtained.

 

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(d) Giving effect to the aforesaid grant and assignment to Lender, Lender has, as of the date of this Agreement, and as to Rate Cap Collateral acquired from time to time after such date, shall have, a valid, and upon proper filing, perfected and continuing first priority lien upon and security interest in the Rate Cap Collateral; provided that no representation or warranty is made with respect to the perfected status of the security interest of Lender in the proceeds of Rate Cap Collateral consisting of “cash proceeds” or “non-cash proceeds” as defined in the UCC except if, and to the extent, the provisions of Section 9-306 of the UCC shall be complied with.

(e) Except for financing statements filed or to be filed in favor of Lender as secured party, there are no financing statements under the UCC covering any or all of the Rate Cap Collateral and Borrower shall not, without the prior written consent of Lender, until payment in full of all of the Obligations, execute and file in any public office, any enforceable financing statement or statements covering any or all of the Rate Cap Collateral, except financing statements filed or to be filed in favor of Lender as secured party.

9.6 Payments. If Borrower at any time shall be entitled to receive any payments with respect to the Interest Rate Cap Agreement, such amounts shall, immediately upon becoming payable to Borrower, be deposited by Counterparty into the Holding Account.

9.7 Remedies. Subject to the provisions of the Interest Rate Cap Agreement, if an Event of Default shall occur and then be continuing:

(a) Lender, without obligation to resort to any other security, right or remedy granted under any other agreement or instrument, shall have the right to, in addition to all rights, powers and remedies of a secured party pursuant to the UCC, at any time and from time to time, sell, resell, assign and deliver, in its sole discretion, any or all of the Rate Cap Collateral (in one or more parcels and at the same or different times) and all right, title and interest, claim and demand therein and right of redemption thereof, at public or private sale, for cash, upon credit or for future delivery, and in connection therewith Lender may grant options and may impose reasonable conditions such as requiring any purchaser to represent that any “securities” constituting any part of the Rate Cap Collateral are being purchased for investment only, Borrower hereby waiving and releasing any and all equity or right of redemption to the fullest extent permitted by the UCC or applicable law. If all or any of the Rate Cap Collateral is sold by Lender upon credit or for future delivery, Lender shall not be liable for the failure of the purchaser to purchase or pay for the same and, in the event of any such failure, Lender may resell such Rate Cap Collateral. It is expressly agreed that Lender may exercise its rights with respect to less than all of the Rate Cap Collateral, leaving unexercised its rights with respect to the remainder of the Rate Cap Collateral, provided, however, that such partial exercise shall in no way restrict or jeopardize Lender’s right to exercise its rights with respect to all or any other portion of the Rate Cap Collateral at a later time or times.

(b) Lender may exercise, either by itself or by its nominee or designee, in the name of Borrower, all of Lender’s rights, powers and remedies in respect of the Rate Cap Collateral, hereunder and under law.

(c) Borrower hereby irrevocably, in the name of Borrower or otherwise, authorizes and empowers Lender and assigns and transfers unto Lender, and constitutes and appoints Lender

 

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its true and lawful attorney-in-fact, and as its agent, irrevocably, with full power of substitution for Borrower and in the name of Borrower, (i) to exercise and enforce every right, power, remedy, authority, option and privilege of Borrower under the Interest Rate Cap Agreement, including any power to subordinate or modify the Interest Rate Cap Agreement (but not, unless an Event of Default exists and is continuing, the right to terminate or cancel the Interest Rate Cap Agreement), or to give any notices, or to take any action resulting in such subordination, termination, cancellation or modification and (ii) in order to more fully vest in Lender the rights and remedies provided for herein, to exercise all of the rights, remedies and powers granted to Lender in this Agreement, and Borrower further authorizes and empowers Lender, as Borrower’s attorney-in-fact, and as its agent, irrevocably, with full power of substitution for Borrower and in the name of Borrower, to give any authorization, to furnish any information, to make any demands, to execute any instruments and to take any and all other action on behalf of and in the name of Borrower which in the opinion of Lender may be necessary or appropriate to be given, furnished, made, exercised or taken under the Interest Rate Cap Agreement, in order to comply therewith, to perform the conditions thereof or to prevent or remedy any default by Borrower thereunder or to enforce any of the rights of Borrower thereunder. These powers-of-attorney are irrevocable and coupled with an interest, and any similar or dissimilar powers heretofore given by Borrower in respect of the Rate Cap Collateral to any other Person are hereby revoked.

(d) Lender may, without notice to, or assent by, Borrower or any other Person (to the extent permitted by law), but without affecting any of the Obligations, in the name of Borrower or in the name of Lender, notify the Counterparty, or if applicable, any other counterparty to the Interest Rate Cap Agreement, to make payment and performance directly to Lender; extend the time of payment and performance of, compromise or settle for cash, credit or otherwise, and upon any terms and conditions, any obligations owing to Borrower, or claims of Borrower, under the Interest Rate Cap Agreement; file any claims, commence, maintain or discontinue any actions, suits or other proceedings deemed by Lender necessary or advisable for the purpose of collecting upon or enforcing the Interest Rate Cap Agreement; and execute any instrument and do all other things deemed necessary and proper by Lender to protect and preserve and realize upon the Rate Cap Collateral and the other rights contemplated hereby.

(e) Pursuant to the powers-of-attorney provided for above, Lender may take any action and exercise and execute any instrument which it may deem necessary or advisable to accomplish the purposes hereof; provided, however, that Lender shall not be permitted to take any action pursuant to said power-of-attorney that would conflict with any limitation on Lender’s rights with respect to the Rate Cap Collateral. Without limiting the generality of the foregoing, Lender, after the occurrence of an Event of Default, shall have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to Borrower representing: (i) any payment of obligations owed pursuant to the Interest Rate Cap Agreement, (ii) interest accruing on any of the Rate Cap Collateral or (iii) any other payment or distribution payable in respect of the Rate Cap Collateral or any part thereof, and for and in the name, place and stead of Borrower, to execute endorsements, assignments or other instruments of conveyance or transfer in respect of any property which is or may become a part of the Rate Cap Collateral hereunder.

 

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(f) Lender may exercise all of the rights and remedies of a secured party under the UCC.

(g) Without limiting any other provision of this Agreement or any of Borrower’s rights hereunder, and without waiving or releasing Borrower from any obligation or default hereunder, Lender shall have the right, but not the obligation, to perform any act or take any appropriate action, as it, in its reasonable judgment, may deem necessary to protect the security of this Agreement, to cure such Event of Default or to cause any term, covenant, condition or obligation required under this Agreement or the Interest Rate Cap Agreement to be performed or observed by Borrower to be promptly performed or observed on behalf of Borrower. All amounts advanced by, or on behalf of, Lender in exercising its rights under this Section 9.7(g) (including, but not limited to, reasonable legal expenses and disbursements incurred in connection therewith), together with interest thereon at the Default Rate from the date of each such advance, shall be payable by Borrower to Lender upon demand and shall be secured by this Agreement.

9.8 Sales of Rate Cap Collateral. No demand, advertisement or notice, all of which are, to the fullest extent permitted by law, hereby expressly waived by Borrower, shall be required in connection with any sale or other disposition of all or any part of the Rate Cap Collateral following and during the continuance of an Event of Default, except that Lender shall give Borrower at least thirty (30) Business Days’ prior written notice of the time and place of any public sale or of the time when and the place where any private sale or other disposition is to be made, which notice Borrower hereby agrees is reasonable, all other demands, advertisements and notices being hereby waived. To the extent permitted by law, Lender shall not be obligated to make any sale of the Rate Cap Collateral if it shall determine not to do so, regardless of the fact that notice of sale may have been given, and Lender may without notice or publication adjourn any public or private sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. Upon each private sale of the Rate Cap Collateral of a type customarily sold in a recognized market and upon each public sale, unless prohibited by any applicable statute which cannot be waived, Lender (or its nominee or designee) may purchase any or all of the Rate Cap Collateral being sold, free and discharged from any trusts, claims, equity or right of redemption of Borrower, all of which are hereby waived and released to the extent permitted by law, and may make payment therefor by credit against any of the Obligations in lieu of cash or any other obligations. In the case of all sales of the Rate Cap Collateral, public or private, Borrower shall pay all reasonable out-of-pocket costs and expenses of every kind for sale or delivery, including brokers’ and attorneys’ fees and disbursements and any tax imposed thereon. However, the proceeds of sale of Rate Cap Collateral shall be available to cover such costs and expenses, and, after deducting such costs and expenses from the proceeds of sale, Lender shall apply any residue to the payment of the Obligations in the order of priority as set forth in this Agreement.

9.9 Public Sales Not Possible. Borrower acknowledges that the terms of the Interest Rate Cap Agreement may prohibit public sales, that the Rate Cap Collateral may not be of the type appropriately sold at public sales, and that such sales may be prohibited by law. As a result, Borrower agrees that private sales of the Rate Cap Collateral shall not be deemed to have been made in a commercially unreasonably manner by mere virtue of having been made privately.

 

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9.10 Receipt of Sale Proceeds. Upon any sale of the Rate Cap Collateral by Lender hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt by Lender or the officer making the sale or the proceeds of such sale shall be a sufficient discharge to the purchaser or purchasers of the Rate Cap Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to Lender or such officer or be answerable in any way for the misapplication or non-application thereof.

X. MAINTENANCE OF PROPERTY; ALTERATIONS

10.1 Maintenance of Property. Borrower shall keep and maintain, or cause to be kept and maintained, the Property and every part thereof in good condition and repair, subject to ordinary wear and tear, and, subject to Excusable Delays and the provisions of this Agreement with respect to damage or destruction caused by casualty events or Takings, shall not permit or commit any waste of any portion of the Property in any material respect. Borrower shall not remove or demolish any Improvement on the Property except as the same may be necessary in connection with an Alteration, a restoration in connection with a Taking or casualty, or as otherwise permitted herein, in each case in accordance with the terms and conditions hereof.

10.2 Conditions to Alteration. Provided that no Event of Default shall have occurred and be continuing hereunder, Borrower or Master Lessee, if permitted pursuant to the terms of the Master Lease, shall have the right, without Lender’s consent, to undertake any alteration, improvement, demolition or removal of any Individual Property or any portion thereof (any such alteration, improvement, demolition or removal, an “Alteration”) so long as (i) Borrower provides Lender with prior written notice of any Material Alteration, and (ii) such Alteration is undertaken in accordance with the applicable provisions of this Agreement and the other Loan Documents, is not prohibited by any relevant Operating Agreements and shall not, upon completion (giving credit to rent and other charges attributable to Subleases executed upon such completion), have a Material Adverse Effect on the value, use or operation of such Individual Property taken as a whole. Any Material Alteration shall be conducted under the supervision of an Architect and, in connection with any Material Alteration, Borrower shall deliver to Lender, for information purposes only and not for approval by Lender, detailed plans and specifications prepared or approved by such Architect, and cost estimates therefor as set forth in an Officer’s Certificate. Such plans and specifications may be revised at any time and from time to time by such Architect provided that material revisions of such plans and specifications are filed with Lender, for information purposes only. All work done in connection with any Alteration shall be performed with due diligence in a good and workmanlike manner, all materials used in connection with any Alteration shall not be less than the standard of quality of the materials currently used at such Individual Property and all materials used shall be in accordance with all applicable Legal Requirements and Insurance Requirements. For avoidance of doubt, the foregoing provisions of this Section 10.2 shall be satisfied in connection with any Alteration, whether such Alteration is undertaken by Borrower or Master Lessee.

10.3 Costs of Alteration. Notwithstanding anything to the contrary contained in this Article X, no Material Alteration or Alteration which when aggregated with all other Alterations (other than Material Alterations) then being undertaken by Borrower (exclusive of Alterations being directly paid for by Master Lessee or Tenants at the Property) exceeds the Threshold

 

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Amount, shall be performed by or on behalf of Borrower unless Borrower shall have delivered to Lender Cash and Cash Equivalents and/or a Letter of Credit as security in an amount not less than the estimated cost of the Material Alteration or the Alterations minus the Threshold Amount (as set forth in the Architect’s written estimate referred to above). Borrower shall deliver to Lender any security deposited by the Master Lessee for any Alteration under the Master Lease. In addition to payment or reimbursement from time to time of Borrower’s expenses incurred in connection with any Material Alteration or any such Alteration, the amount of such security shall be reduced on any given date to the Architect’s written estimate of the cost to complete the Material Alteration or the Alterations (including any retainages), free and clear of Liens, other than Permitted Encumbrances. Costs which are subject to retainage (which in no event shall be less than 5% in the aggregate with respect to each trade contract) shall be treated as due and payable and unpaid from the date they would be due and payable but for their characterization as subject to retainage. In the event that any Material Alteration or Alteration shall be made in conjunction with any restoration with respect to which Borrower shall be entitled to withdraw Proceeds pursuant to Section 6.2, the amount of the Cash and Cash Equivalents and/or Letter of Credit to be furnished pursuant hereto need not exceed the aggregate cost of such restoration and such Material Alteration or Alteration (as estimated by the Architect), less the sum of the amount of any Proceeds which Borrower may be entitled to withdraw pursuant to Section 6.2 and which are held by Lender in accordance with Section 6.2. Payment or reimbursement of Borrower’s expenses incurred with respect to any Material Alteration or any such Alteration shall be accomplished upon the terms and conditions specified in Section 6.2.

At any time after substantial completion of any Material Alteration or any such Alteration in respect of which Cash and Cash Equivalents and/or a Letter of Credit is deposited pursuant hereto, the whole balance of any Cash and Cash Equivalents so deposited by Borrower with Lender and then remaining on deposit (together with earnings thereon), as well as all retainages, may be withdrawn by Borrower and shall be paid by Lender to Borrower, and any other Cash and Cash Equivalents and/or a Letter of Credit so deposited or delivered shall, to the extent it has not been called upon, reduced or theretofore released, be released to Borrower, within ten (10) days after receipt by Lender of an application for such withdrawal and/or release together with an Officer’s Certificate, and signed also (as to the following clause (a)) by the Architect, setting forth in substance as follows:

(a) that the Material Alteration or Alteration in respect of which such Cash and Cash Equivalents and/or a Letter of Credit was deposited has been substantially completed in all material respects substantially in accordance with any plans and specifications therefor previously filed with Lender under Section 10.2 and that, if applicable, a certificate of occupancy has been issued with respect to such Material Alteration or Alteration by the relevant Governmental Authority(ies) or, if not applicable, that a certificate of occupancy is not required; and

(b) that, to the knowledge of the certifying Person, all amounts which Borrower is or may become liable to pay in respect of such Material Alteration or Alteration through the date of the certification have been paid in full or adequately provided for or are being contested in accordance with Section 7.3 and that, except to the extent of such contests, lien waivers have been obtained from the general contractor and major subcontractors performing such Material Alterations or Alterations (or such waivers are not customary and reasonably obtainable by prudent owners in the area where the Property is located).

 

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XI. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION

11.1 Books and Records. Borrower shall keep and maintain on a fiscal year basis proper books and records separate from any other Person, in which accurate and complete entries shall be made of all dealings or transactions of or in relation to the Note, the Property and the business and affairs of Borrower relating to the Property which shall reflect all items of income and expense in connection with the operation of the Property and in connection with any services, equipment or furnishings provided by Borrower in connection with the operation of the Property, in accordance with GAAP and the requirements of Regulation AB. Lender and its authorized representatives shall have the right at reasonable times and upon reasonable notice to examine the books and records of Borrower relating to the operation of the Property and to make such copies or extracts thereof as Lender may reasonably require.

11.2 Financial Statements.

11.2.1 Monthly Reports. Commencing with the month ending April 30, 2012, not later than thirty (30) days following the end of such month and each calendar month thereafter, Borrower shall, or shall cause Master Lessee or Asset Manager to, deliver to Lender the following with respect to such month and each subsequent calendar month:

(A) Monthly income statements (including sales) and determinations of Portfolio Four-Wall EBITDAR in respect of all of the Individual Properties in the aggregate, as well as for each Concept and, to the extent available to Borrower, each Third Party Brand, for such month, for the corresponding month of the previous Fiscal Year and for the Fiscal Year to date and for the corresponding period of the prior Fiscal Year; and

(B) internally prepared, unaudited financial statements of Borrower for such month and, to the extent available, the Fiscal Year to date, which financial statements shall include, to the extent available, a comparison with the results for the corresponding month of the prior Fiscal Year and for the corresponding period of the prior Fiscal Year; and

(C) internally prepared, unaudited financial statements of Master Lease Guarantor for such month and the Fiscal Year to date, which financial statements shall include a comparison with the results for the corresponding month of the prior Fiscal Year and a comparison of the Fiscal Year to date results with the results for the same period of the prior Fiscal Year; and

(D) commencing with the first Annual Budget required to be delivered hereunder, monthly budget performance reports with respect to the Master Lease Annual Budget and the Asset Manager Annual Budget showing a comparison of performance of the Borrower and the Property to the Annual Budget for such month and the Fiscal Year to date, which budget performance reports shall include, to the extent an Annual Budget was delivered in respect of the prior Fiscal Year, a comparison with the results for the corresponding month of the prior Fiscal Year and a comparison of the Fiscal Year to date results with the results for the same period of the prior Fiscal Year; and

 

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(E) a calculation of the Lease Coverage Ratio, Master Lease Variable Additional Rent and Master Lease Scheduled Additional Rent for such month or as of the end of such month, as applicable.

Such statements and reports for each month shall be accompanied by an Officer’s Certificate (or, in the case of income statements and calculations of Portfolio Four-Wall EBITDAR, a Master Lessee Officer’s Certificate) certifying to the best of the signer’s knowledge, that (A) such statements fairly represent the financial condition and results of operations of Borrower or the Property, as applicable, (B) that as of the date of such Officer’s Certificate, no Event of Default exists under this Agreement, the Note or any other Loan Document or, if so, specifying the nature and status of each such Event of Default and the action then being taken or proposed to be taken to remedy such Event of Default, (C) that as of the date of each Officer’s Certificate, no litigation exists involving Borrower, Master Lessee or any Individual Property or Properties in which the amount involved not covered by insurance is greater than $500,000, or, if so, specifying such litigation and the actions being taking in relation thereto and (D) the amount by which actual operating expenses were greater than or less than the operating expenses anticipated in the applicable Annual Budget. Such financial statements shall contain such other information as shall be reasonably requested by Lender for purposes of calculations to be made by Lender pursuant to the terms hereof. Notwithstanding the foregoing, Borrower shall, or shall cause Master Lessee or Asset Manager to, deliver promptly to Lender reports detailing any non-recurring charges of Borrower or Master Lessee including, among other things, any charges assessed under any Operating Agreement.

11.2.2 Quarterly Reports. Commencing with the Fiscal Quarter ending June 30, 2012, not later than sixty (60) days following the end of such Fiscal Quarter and not later forty-five (45) days following the end of each subsequent Fiscal Quarter, Borrower shall, or shall cause Master Lessee or Asset Manager to, deliver to Lender the following:

(A) quarterly income statements (including sales) and determinations of Portfolio Four-Wall EBITDAR in respect of all of the Individual Properties in the aggregate, as well as for each Concept and, to the extent available to Borrower, each Third Party Brand, for such quarter, for the corresponding quarter of the previous Fiscal Year and for the Fiscal Year to date and for the corresponding period of the prior Fiscal Year; and

(B) internally prepared, unaudited financial statements of Borrower for such quarter and, to the extent available, the Fiscal Year to date, which financial statements shall include, to the extent available, a comparison with the results for the corresponding quarter of the prior Fiscal Year and for the corresponding period of the prior Fiscal Year; and

(C) internally prepared, unaudited financial statements of Master Lease Guarantor for such quarter and the Fiscal Year to date, which financial statements shall include a comparison with the results for the corresponding quarter of the prior Fiscal Year and a comparison of the Fiscal Year to date results with the results for the same period of the prior Fiscal Year; provided that such financial statements of the Master Lease Guarantor shall be required only in respect the first three (3) Fiscal Quarters of each Fiscal Year; and

 

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(D) commencing with the first Annual Budget required to be delivered hereunder, quarterly budget performance reports with respect to the Master Lease Annual Budget and the Asset Manager Annual Budget showing a comparison of performance of the Borrower and the Property to the Annual Budget for such quarter and the Fiscal Year to date, which budget performance reports shall include, to the extent an Annual Budget was delivered in respect of the prior Fiscal Year, a comparison with the results for the corresponding quarter of the prior Fiscal Year and a comparison of the Fiscal Year to date results with the results for the same period of the prior Fiscal Year; and

(E) a calculation of the Lease Coverage Ratio, Master Lease Variable Additional Rent and Master Lease Scheduled Additional Rent for such quarter or as of the end of such quarter, as applicable.

Such statements and reports for each quarter shall be accompanied by an Officer’s Certificate (or, in the case of income statements and calculations of Portfolio Four-Wall EBITDAR, a Master Lessee Officer’s Certificate) certifying to the best of the signer’s knowledge, that (A) such statements fairly represent the financial condition and results of operations of Borrower or the Property, as applicable, (B) that as of the date of such Officer’s Certificate, no Event of Default exists under this Agreement, the Note or any other Loan Document or, if so, specifying the nature and status of each such Event of Default and the action then being taken or proposed to be taken to remedy such Event of Default, (C) that as of the date of each Officer’s Certificate, no litigation exists involving Borrower, Master Lessee or any Individual Property or Properties in which the amount involved not covered by insurance is greater than $500,000, or, if so, specifying such litigation and the actions being taking in relation thereto and (D) the amount by which actual operating expenses were greater than or less than the operating expenses anticipated in the applicable Annual Budget. Such financial statements shall contain such other information as shall be reasonably requested by Lender for purposes of calculations to be made by Lender pursuant to the terms hereof.

11.2.3 Annual Reports. Not later than one-hundred twenty (120) days after the end of each Fiscal Year of Borrower’s operations (commencing with the Fiscal Year ending on December 31, 2012), Borrower shall, or shall cause Master Lessee or Asset Manager to, deliver to Lender:

(A) An income statement (including sales) and determination of Portfolio Four-Wall EBITDAR in respect of all of the Individual Properties in the aggregate, as well as for each Concept and, to the extent available to Borrower, each Third Party Brand, for such Fiscal Year and for the prior Fiscal Year; and

(B) audited financial statements for Borrower and audited financial statements for Master Lease Guarantor for such Fiscal Year certified by an Independent Accountant in accordance with GAAP and the requirements of Regulation AB, each accompanied by an opinion of the applicable Person’s auditors, which report and opinion shall be prepared in accordance with generally accepted auditing standards; and

 

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(C) an unaudited, internally prepared statement of Borrower’s net income for the Fiscal Year and for the fourth fiscal quarter thereof stating in comparative form the figures for the previous Fiscal Year (for each Fiscal Year after Fiscal Year 2013) and the fourth fiscal quarter of the previous Fiscal Year (for each Fiscal Year after Fiscal Year 2012); and

(D) a calculation of the Lease Coverage Ratio, Master Lease Variable Additional Rent and Master Lease Scheduled Additional Rent for such Fiscal Year.

Such annual financial statements and reports shall also be accompanied by an Officer’s Certificate (or in the case of income statements and calculations of Portfolio Four-Wall EBITDAR with respect to the Property, a Master Lessee Officer’s Certificate) in the form required pursuant to Section 11.2.1.

Notwithstanding the foregoing, the obligations in Section 11.2.2(C) and 11.2.3(B) with respect to delivery of Master Lease Guarantor financial statements may be satisfied by furnishing (A) the applicable financial statements of Guarantor (or any direct or indirect parent of Guarantor) or (B) Master Lease Guarantor’s or Guarantor’s (or any direct or indirect parent thereof), as applicable, Form 10-K or 10-Q, as applicable, filed with the SEC; provided that, with respect to each of the preceding clauses (A) and (B), (i) to the extent such information relates to Guarantor (or a parent thereof), such information is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to Guarantor (or such parent), on the one hand, and the information relating to Master Lease Guarantor on a stand-alone basis, on the other hand, and (ii) to the extent such information is in lieu of information required to be provided under Section 11.2.3(B), such materials are accompanied by a report and opinion of such Person’s auditors, which report and opinion shall be prepared in accordance with generally accepted auditing standards.

11.2.4 Disclosure Restrictions. Notwithstanding anything to the contrary contained in this Article XI, unless such information is otherwise disclosed publicly by Borrower, Borrower shall not be required to deliver financial information hereunder to Lender to the limited extent and only during any such period that any applicable federal or state securities laws or regulations promulgated thereunder (a) expressly prohibit such delivery or (b) permit such delivery to be made to Lender only when also disclosed publicly.

11.2.5 Capital Expenditures Summaries. Borrower shall, or shall cause Master Lessee to, within ninety (90) days after the end of each calendar year during the term of the Note, deliver to Lender an annual summary of any and all capital expenditures made at the Property during the prior twelve (12) month period.

11.2.6 Master Lease. Without duplication of any other provision of this Agreement or any other Loan Documents, Borrower shall or shall, cause Master Lessee to, deliver to Lender, within ten (10) Business Days of the receipt thereof by Borrower, a copy of all reports prepared by Master Lessee pursuant to the Master Lease, including, without limitation, the Master Lease Annual Budget and any inspection reports.

 

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11.2.7 Annual Budget; Operating Agreement Annual Budgets.

(a) Borrower shall or shall cause Master Lessee or Asset Manager to, deliver to Lender the Annual Budget for Lender’s review not more than ninety (90) days after the end of each Fiscal Year. Borrower shall or shall cause Master Lessee or Asset Manager to, deliver to Lender any proposed modifications to the Annual Budget for its review. The Master Lease Annual Budget and any proposed modifications thereto shall not be subject to Lender’s approval; provided, upon the occurrence and during the continuance of an Event of Default, Lender shall have the same right to exercise any right of approval that Borrower may have to approve the Master Lease Annual Budget under the Master Lease, subject to any constraints in the Master Lease, in its sole and absolute discretion. All line items of the Asset Manager Annual Budget (other than any costs or expenses relating to any Property to be paid by the Master Lessee under the Master Lease, or by the Tenant under any Affiliated Subleases, Unaffiliated Sublease, Specified Prior Sublease or Leaseable Building Pad) shall be subject to Lender’s review and approval, not to be unreasonably withheld, conditioned or delayed. Lender hereby acknowledges that it has approved the budget and asset management fees delivered prior to the Closing Date with respect to services performed under the Asset Management Agreement and agrees that until such time as it has reviewed and approved an Asset Manager Annual Budget, it shall not unreasonably withhold its consent to any costs or expenses being treated as Approved Expenses to the extent Lender’s approval hereunder would be required thereto as part of any Asset Manager Annual Budget (it being understood and agreed that Lender’s consent shall not be required for (i) payment of any costs or expenses not within the control of Borrower such as Real Estate Impositions, utility and fuel costs, franchise and other taxes or (ii) with respect to other recurring costs and expenses, up to the amount approved by Lender in the prior year’s Asset Manager Annual Budget).

(b) Borrower shall or shall cause Master Lessee to deliver to Lender the annual budget and any modifications thereto under any Operating Agreement for Lender’s review, but not approval, prior to Borrower’s or Master Lessee’s approval of any such annual budget or modification. Notwithstanding the foregoing, upon the occurrence and during the continuation of an Event of Default and if there is a Master Lease Tenant Default, Lender shall have the right to exercise any right of approval that Borrower may have to approve the annual budgets and any amendments thereto under any Operating Agreements subject to any constraints in the Operating Agreement in question, in its sole and absolute discretion.

(c) With respect to each Fiscal Year in which a Required Tax Distribution Amount is disbursed under clause (x) of Section 3.1.6(a), within five (5) Business Days following the filing of the federal income tax return of the Guarantor Group for such Fiscal Year, Borrower shall deliver to Lender an Officer’s Certificate reconciling the amount of such disbursement to the actual Required Tax Distribution Amount calculated based on such filed federal income tax return (and, in the event that such reconciliation shows that disbursements to Borrower under clause (x) of Section 3.1.6(a) exceeded the actual Required Tax Distribution Amount for such Fiscal Year, Borrower shall promptly deposit an amount equal to such excess disbursement in the Master Lease Rent Shortfall Reserve Account) together with a copy of the filed federal income tax return. With respect to each Fiscal Year in which a Required Tax Distribution Amount is not disbursed under clause (x) of Section 3.1.6(a), Borrower shall deliver to Lender copies of all filed federal income tax returns promptly upon request.

 

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(d) In the event that Lender fails to respond within ten (10) Business Days of receipt of any request for Lender’s approval or consent pursuant to this Section 11.2.7, Borrower may deliver to Lender a second request in an envelope or under cover of a letter marked “URGENT” and including a legend in bold typeface that Lender’s failure to grant or deny the requested consent within ten (10) Business Days of the receipt thereof will result in the requested consent being deemed to have been granted. If Lender fails to respond to such second request within ten (10) Business Days of its receipt thereof, Lender’s consent to such request shall be deemed granted.

11.2.8 Other Information. Borrower shall, promptly after written request by Lender or, if a Securitization shall have occurred, the Rating Agencies, furnish or cause to be furnished to Lender, in such manner and in such detail as may be reasonably requested by Lender, such reasonable additional information as may be reasonably requested with respect to the Property, Borrower, Master Lessee, Master Lease Guarantor or Guarantor.

Without limiting the generality of the foregoing, if reasonably request by the Lender, Borrower shall promptly provide Lender (or any issuer or sponsor of a Securitization) with any financial statements or financial, statistical, operating or other information as Lender shall reasonable determine to be required pursuant to Regulation AB or any amendment, modification or replacement thereto or any other Legal Requirements in connection with any offering circular or other disclosure document, any filing under the Exchange Act or any report required to be made “available” to holders of the Securities under Regulation AB or applicable Legal Requirements or as shall otherwise be reasonably requested by Lender (or any issuer or sponsor of a Securitization).

11.2.9 Confidentiality. Lender agrees to (i) use all sales reports and other financial performance and financial results information pertaining to any Individual Property delivered to Lender on or after the date hereof, and any other proprietary information delivered to Lender on or after the date hereof pursuant to this Agreement (provided that any such other proprietary information is clearly marked by Borrower as confidential or, if provided by the Master Lessee or its Affiliates under the Master Lease, marked by Master Lessee as confidential) (collectively, “Proprietary Information”) solely for purposes of its ownership of its interest in the Loan and shall not use such information obtained in its capacity as lender in a manner to compete with Borrower or Master Lessee or Master Lease Guarantor in the business of the ownership and operation of restaurant properties similar to the Property and (ii) keep confidential all Proprietary Information; provided that nothing herein shall prevent any Lender from disclosing any such information (a) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its Affiliates, (b) [reserved], (c) to any Rating Agency, underwriter or NRSRO; provided (i) each Rating Agency or underwriter to which such information is disclosed has executed its usual and customary confidentiality agreement and (ii) any NRSRO desiring access to any secured website containing such information shall, as a condition to its access to, have either furnished to the Securities and Exchange Commission the certification required under Rule 17g-5(e) of the Exchange Act or be required to agree to (or “click through”) such website’s confidentiality provisions, (d) to any actual or prospective investor in the Loan or any Mezzanine Loan, any actual or prospective assignee of the Loan or any Mezzanine Loan, or beneficial interests in the Loan or any Mezzanine Loan, including investors in Securities, any actual or prospective participant in the Loan or any Mezzanine Loan,

 

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subject to an agreement to comply with the provisions of this Section 11.2.9, (e) upon the request or demand of any Governmental Authority (including without limitation, any governmental agency, regulatory authority or self-regulatory authority (including, without limitation, bank and securities examiners) having or claiming to have authority to regulate or oversee any aspect of Lender’s business or that of its Affiliates in connection with the exercise of such authority or claimed authority) or as may otherwise be required pursuant to any Legal Requirement, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed, (h) that was already known to Lender or any of its Affiliates prior to Borrower’s disclosure to Lender; (i) that is independently developed, discovered or arrived at by Lender or any of its Affiliates without reference to the Proprietary Information, or (j) in connection with the exercise of any remedy hereunder or under any other Loan Document.

XII. ENVIRONMENTAL MATTERS

12.1 Representations. Borrower hereby represents and warrants that except as set forth in the environmental reports and studies delivered to Lender (the “Environmental Reports”), (i) Borrower has not engaged in or knowingly permitted any operations or activities upon, or any use or occupancy of the Property, or any portion thereof, for the purpose of or in any way involving the handling, manufacture, treatment, storage, use, generation, release, discharge, refining, dumping or disposal of any Hazardous Materials on, under, in or about the Property, or transported any Hazardous Materials to, from or across the Property, except in all cases in material compliance with Environmental Laws and only in the course of legitimate business operations at the Property; (ii) to Borrower’s knowledge, no tenant, occupant or user of the Property, or any other Person, has engaged in or permitted any operations or activities upon, or any use or occupancy of the Property, or any portion thereof, for the purpose of or in any material way involving the handling, manufacture, treatment, storage, use, generation, release, discharge, refining, dumping or disposal of any Hazardous Materials on, in or about the Property, or transported any Hazardous Materials to, from or across the Property, except in all cases in material compliance with Environmental Laws and only in the course of legitimate business operations at the Property; (iii) no Hazardous Materials are presently constructed, deposited, stored, or otherwise located on, under, in or about the Property except in material compliance with Environmental Laws; (iv) to Borrower’s knowledge, no Hazardous Materials have migrated from the Property upon or beneath other properties which would reasonably be expected to result in material liability for Borrower; and (v) to Borrower’s knowledge, no Hazardous Materials have migrated or threaten to migrate from other properties upon, about or beneath the Property which would reasonably be expected to result in material liability for Borrower.

12.2 Covenants.

12.2.1 Compliance with Environmental Laws. Subject to Borrower’s right to contest under Section 7.3, Borrower covenants and agrees with Lender that it shall comply with all Environmental Laws. If at any time during the continuance of the Lien of the Security Instrument, a Governmental Authority having jurisdiction over the Property requires remedial action to correct the presence of Hazardous Materials in, around, or under the Property (an “Environmental Event”), Borrower shall deliver prompt notice of the occurrence of such Environmental Event to Lender. Within thirty (30) days after Borrower has knowledge of the occurrence of an Environmental Event, Borrower shall deliver to Lender an Officer’s Certificate

 

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(an “Environmental Certificate”) explaining the Environmental Event in reasonable detail and setting forth the proposed remedial action, if any. Borrower shall promptly provide Lender with copies of all notices which allege or identify any actual or potential violation or noncompliance received by or prepared by or for Borrower in connection with any Environmental Law. For purposes of this paragraph, the term “notice” shall mean any summons, citation, directive, order, claim, pleading, letter, application, filing, report, findings, declarations or other materials pertinent to compliance of the Property and Borrower with such Environmental Laws. If the Security Instrument is foreclosed, Borrower shall deliver the Property in compliance with all applicable Environmental Laws.

12.2.2 Lead Based Paint, Asbestos and O&M Plans.

(a) If prior to the date hereof, it was determined that any Individual Property contains exposed paint containing more than 0.5% lead by dry weight (“Lead Based Paint”) in excess of de minimis quantities, Borrower shall prepare an assessment report describing the location and condition of the Lead Based Paint (a “Lead Based Paint Report”) if one does not already exist, or if at any time hereafter, exposed Lead Based Paint is identified as being present on the Property in excess of de minimis quantities, Borrower agrees, at its sole cost and expense and within twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by an expert, and in form, scope and substance, reasonably acceptable to Lender.

(b) If prior to the date hereof, it was determined that any Individual Property contains asbestos or asbestos-containing material (“Asbestos”), Borrower shall prepare an assessment report describing the location and condition of the Asbestos (an “Asbestos Report”) if one does not already exist, or if at any time hereafter, potentially Asbestos containing material is identified as being present on the Property, Borrower agrees, at its sole cost and expense and within twenty (20) days thereafter, to cause to be prepared an Asbestos Report prepared by an expert, and in form, scope and substance, acceptable to Lender.

(c) If it has been, or if at any time hereafter it is, determined that any Individual Property contains Lead Based Paint or Asbestos, on or before thirty (30) days following the date of such determination, Borrower shall, at its sole cost and expense, develop and implement, and thereafter diligently and continuously carry out (or cause to be developed and implemented and thereafter diligently and continually to be carried out), an operations and maintenance plan for the Lead Based Paint and/or Asbestos, as applicable, on such Individual Property, which plan shall be prepared by an expert, and be in form, scope and substance, acceptable to Lender (together with any Lead Based Paint Report and/or Asbestos Report, as applicable, the “O&M Plan”), and if an O&M Plan has been prepared prior to the date hereof, Borrower agrees to diligently carry out (or cause to be carried out) the provisions thereof, it being understood and agreed that compliance with the O&M Plan shall require or be deemed to require, without limitation, the proper preparation and maintenance of all records, papers and forms required under the Environmental Law.

12.3 Environmental Reports. Upon the occurrence and during the continuance of an Environmental Event with respect to the Property or any Event of Default, Lender shall have the right to have its consultants perform an environmental audit of the Property. Such audit shall be conducted by an environmental consultant chosen by Lender and may include a visual survey, a

 

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record review, an area reconnaissance assessing the presence of hazardous or toxic waste or substances, PCBs or storage tanks at the Property, an asbestos survey of the Property, which may include random sampling of the Improvements and air quality testing, and such further site assessments as Lender may reasonably require due to the results obtained from the foregoing. Borrower grants Lender, its agents, consultants and contractors the right to enter the Property as reasonable or appropriate for the circumstances for the purposes of performing such studies and the reasonable cost of such studies shall be due and payable by Borrower to Lender upon demand and shall be secured by the Lien of the Security Instrument. Lender shall not unreasonably interfere with, and Lender shall direct the environmental consultant to use its commercially reasonable efforts not to hinder, Borrower’s, Master Lessee’s, any Tenant’s or other occupant’s operations upon the Property when conducting such audit, sampling or inspections. By undertaking any of the measures identified in and pursuant to this Section 12.3, Lender shall not be deemed to be exercising any control over the operations of Borrower or the handling of any environmental matter or hazardous wastes or substances of Borrower for purposes of incurring or being subject to liability therefor.

12.4 Environmental Indemnification. Borrower shall protect, indemnify, save, defend, and hold harmless the Indemnified Parties from and against any and all liability, loss, damage, actions, causes of action, costs or out-of-pocket expenses whatsoever (including reasonable attorneys’ fees and expenses) and any and all claims, suits and judgments which any Indemnified Party may suffer, as a result of or with respect to: (a) any Environmental Claim relating to or arising from the Property; (b) the violation of any Environmental Law in connection with the Property; (c) any Release, Threat of Release or the presence of any Hazardous Materials affecting the Property; and (d) the presence at, in, on or under, or the Release or Threat of Release at or from, the Property of any Hazardous Materials, whether or not such condition was known or unknown to Borrower. If any such action or other proceeding shall be brought against Lender, upon written notice from Borrower to Lender (given reasonably promptly following Lender’s notice to Borrower of such action or proceeding), Borrower shall be entitled to assume the defense thereof, at Borrower’s expense, with counsel reasonably acceptable to Lender; provided, however, Lender may, at its own expense, retain separate counsel to participate in such defense, but such participation shall not be deemed to give Lender a right to control such defense, which right Borrower expressly retains. Notwithstanding the foregoing, each Indemnified Party shall have the right to employ separate counsel at Borrower’s expense if, in the reasonable opinion of legal counsel, a conflict or potential conflict exists between the Indemnified Party and Borrower that would make such separate representation advisable. Borrower shall have no obligation to indemnify an Indemnified Party for damage or loss resulting from any Indemnified Party’s gross negligence or willful misconduct.

12.5 Recourse Nature of Certain Indemnifications. Notwithstanding anything to the contrary provided in this Agreement or in any other Loan Document, the indemnification provided in Section 12.4 shall be fully recourse to Borrower and shall be independent of, and shall survive, the discharge of the Indebtedness, the release of the Lien created by the Security Instrument, and/or the conveyance of title to the Property to Lender or any purchaser or designee in connection with a foreclosure of the Security Instrument or conveyance in lieu of foreclosure.

 

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XIII. THE OPERATING AGREEMENTS

13.1 Operating Agreement Representations, Warranties. Borrower hereby represents and warrants as follows:

(a) the Operating Agreements to which Borrower is a party or is bound are in full force and effect and Borrower has not waived, canceled or surrendered any of its rights thereunder;

(b) none of the Contemplated Transactions in any case: (1) requires the consent or approval of or notice to any party to any Operating Agreement, other than consents obtained prior to the date hereof and notices delivered prior to or on the date hereof or (2) will constitute a default under any Operating Agreement;

(c) none of the Operating Agreements requires the continued use of any Individual Property (i) under any designated trade name or (ii) for any single designated required use (other than use categories such as restaurant uses consistent with a shopping center or similarly broad categories that would not have a Material Adverse Effect);

(d) all sums, charges, fees, costs, expenses, rent, additional rent, common charges, common area maintenance charges and other charges or assessments reserved in or payable under the Operating Agreements, including without limitation, all sums, charges, fees, assessments, costs, and expenses in connection with any taxes, site preparation and construction, non-shareholder contributions, and common area and other property management activities, are current (except for any of the same which are being contested in accordance with Section 7.3), and no Lien (other than the Permitted Encumbrances) with respect thereto has attached on any Individual Property (or threat thereof been made in writing) for failure to pay any of the foregoing;

(e) Borrower has not delivered or received any notices of default under any of the Operating Agreements and is not in default under any material terms of any of the Operating Agreements;

(f) To the best of Borrower’s knowledge, no party to any Operating Agreement is in default under any of the terms of any of the Operating Agreements and there are no circumstances which, with the passage of time or the giving of notice, or both, would constitute a default under any terms of any of the Operating Agreements by any such party that would have a Material Adverse Effect;

(g) Borrower has delivered to Lender a true, accurate and complete copy of each of the Operating Agreements;

(h) All material construction obligations of Borrower or its Affiliates under all Operating Agreements have been satisfied in all material respects; and

(i) To Borrower’s knowledge, all easements granted pursuant to any Operating Agreement which were to have survived the site preparation and completion of construction, remain in full force and effect and have not been released, terminated, extinguished or discharged by agreement or otherwise, except to the extent it would not be expected to result in a Material Adverse Effect.

 

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13.2 Cure by Lender. In the event of a default by Borrower in the performance of any of its obligations under any Operating Agreement beyond any applicable notice and cure periods therein, including, without limitation, any default in the payment of any sums payable thereunder, then, in each and every such case, Lender may, at its option, cause the default or defaults to be remedied and otherwise exercise any and all rights of Borrower thereunder in the name of and on behalf of Borrower. Borrower shall, on demand, reimburse Lender for all advances made and reasonable out-of-pocket expenses incurred by Lender in curing any such default (including, without limitation, reasonable attorneys’ fees and disbursements), together with interest thereon computed at the Default Rate from the tenth (10^th) day after that such advance is made to and including the date the same is paid to Lender.

13.3 [Reserved]

13.4 Operating Agreement Covenants.

13.4.1 Waiver of Interest In REAs. In the event any of the REAs shall be terminated by reason of a default thereunder by Borrower, and Lender shall require that the related parties to the REAs grant new easement rights and interests, Borrower hereby waives any right, title and interest in and to the new easement rights, waiving all rights of redemption now or hereafter operable under any law.

13.4.2 No Election to Terminate. Borrower shall not elect to treat any of the Operating Agreements as terminated, canceled or surrendered pursuant to the applicable provisions of the Bankruptcy Code (including, without limitation, Section 365(h)(1) thereof) without Lender’s prior written consent in the event a bankruptcy of any party to an Operating Agreement. In addition, to the extent not prohibited by applicable law, Borrower shall, in the event of a bankruptcy of any party to an Operating Agreement, reaffirm and ratify the legality, validity, binding effect and enforceability of such Operating Agreement and shall remain in possession of the Property and the other rights granted pursuant to the Operating Agreements, notwithstanding any rejection thereof by any party to any Operating Agreement, or any trustee, custodian or receiver.

13.4.3 Notice Prior to Rejection. Borrower shall give Lender not less than thirty (30) days prior written notice of the date on which Borrower shall apply to any court or other governmental authority for authority and permission to reject an Operating Agreement in the event that there shall be filed by or against Borrower any petition, action or proceeding under the Bankruptcy Code or under any other similar federal or state law now or hereafter in effect and if Borrower determines to reject an Operating Agreement. Lender shall have the right, but not the obligation, to serve upon Borrower within such thirty (30) day period a notice stating that (i) Lender demands that Borrower assume and assign such Operating Agreement to Lender subject to and in accordance with the Bankruptcy Code, and (ii) Lender covenants to cure or provide reasonably adequate assurance thereof with respect to all defaults reasonably susceptible of being cured by Lender and of future performance under such Operating Agreement. If Lender serves upon Borrower the notice described above, Borrower shall not seek to reject such Operating Agreement and shall comply with the demand provided for clause (i) above within fifteen (15) days after the notice shall have been given by Lender.

 

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13.4.4 Lender Right to Perform. During the continuance of an Event of Default, Lender shall have the right, but not the obligation, (i) to perform and comply with all obligations of Borrower under the Operating Agreements without relying on any grace period provided therein, (ii) to do and take, without any obligation to do so, such actions as Lender deems necessary or desirable to prevent or cure any default by Borrower under the Operating Agreements, including, without limitation, any act, deed, matter or thing whatsoever that Borrower may do in order to cure a default under the Operating Agreements and (iii) subject to the terms of the Operating Agreement, to enter in and upon the Property or any part thereof to such extent and as often as Lender deems necessary or desirable in order to prevent or cure any default of Borrower under the Operating Agreements. Borrower shall, within five (5) Business Days after written request is made therefor by Lender, execute and deliver to Lender or to any party designated by Lender, such further instruments, agreements, powers, assignments, conveyances or the like as may be reasonably necessary to complete or perfect the interest, rights or powers of Lender pursuant to this Section or as may otherwise be required by Lender.

13.4.5 Lender Attorney in Fact. In the event of any arbitration under or pursuant to any Operating Agreement in which Lender elects to participate, Borrower hereby irrevocably appoints Lender as its true and lawful attorney-in-fact (which appointment shall be deemed coupled with an interest) to exercise, during the continuance of an Event of Default, all right, title and interest of Borrower in connection with such arbitration, including, without limitation, the right to appoint arbitrators and to conduct arbitration proceedings on behalf of Borrower and Lender. All reasonable out-of-pocket costs and expenses incurred by Lender in connection with such arbitration and the settlement thereof shall be borne solely by Borrower, including, without limitation, reasonable attorneys’ fees and disbursements. Nothing contained in this Section shall obligate Lender to participate in any such arbitration.

13.4.6 Payment of Sums Due Under Operating Agreements. Subject to Section 7.3, Borrower shall pay all rent, additional rent, common charges, common area maintenance charges and other charges or assessments reserved in or payable by Borrower under the Operating Agreements on or prior to the due date thereof.

13.4.7 Performance of Covenants. Borrower shall promptly perform and observe in all material respects all of the terms, covenants and conditions required to be performed and observed by Borrower under the Operating Agreements, the breach of which by Borrower could permit any party to an Operating Agreement validly to terminate such Operating Agreement (including, without limitation, all payment obligations), shall do all things commercially reasonable to preserve and to keep unimpaired its rights under the Operating Agreements, shall not waive, excuse or discharge any of the material obligations of any party to the Operating Agreements without Lender’s prior written consent in each instance except as otherwise permitted herein, and shall diligently and continuously enforce the material obligations of the parties to the Operating Agreements to which Borrower is a party except in any such case where same would not have a Material Adverse Event.

13.4.8 Reserved.

 

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13.4.9 No Modification or Termination. (a) Borrower shall not, except with the prior written consent of Lender, not to be unreasonably withheld, (i) institute any action or proceeding for partition of any Individual Property or any common areas under any REA or the Common Elements or any Condominium Units under any Condominium Documents, (ii) materially modify or amend or vote for or consent to any material modification of or amendment to any Operating Agreement except in the case of an amendment or modification to an REA where the same would not have a Material Adverse Effect or except as otherwise expressly permitted herein, or, (iii) in the event of damage to or destruction of a Condominium Property, the Common Elements, or any of the Condominium Units, vote in opposition to a motion to repair, restore or rebuild the same unless and for so long as such Individual Property is the subject of a valid Property Release Notice which results in the release of such Individual Property.

(b) Borrower shall not vote for, agree to or acquiesce in any cancellation, termination or surrender of any Operating Agreement without the prior written consent of Lender except in the case of an REA to the extent it would not be expected to result in a Material Adverse Effect or except as otherwise expressly permitted herein. Any agreement to which Borrower or its Affiliates is a party whereby any of the Operating Agreements is terminated or the Property is withdrawn therefrom in violation of the immediately preceding sentence shall constitute a Transfer prohibited under this Agreement.

13.4.10 Notices of Default. Borrower shall deliver to Lender copies of any written notice of default by any party under the Operating Agreements, or of any written notice from any party to any of the Operating Agreements of its intention to terminate such Operating Agreement or to re-enter and take possession of any portion of the Property, immediately upon delivery or receipt of such notice, as the case may be.

13.4.11 Delivery of Information. Borrower shall promptly furnish to Lender copies of such information and evidence as Lender may reasonably request concerning Borrower’s due observance, performance and compliance with the terms, covenants and conditions of the Operating Agreements.

13.4.12 No Subordination. Borrower shall not consent to the subordination of the Operating Agreements to any mortgage or other lease of the fee interest in any portion of the Property unless it receives a recognition and non-disturbance agreement.

13.4.13 Further Assurances. Borrower, at its sole cost and expense, shall execute and deliver to Lender, within five (5) Business Days after request, such documents, instruments or agreements as may be reasonably required to permit Lender to cure any default under the Operating Agreements.

13.4.14 Estoppel Certificates. Borrower shall use commercially reasonable efforts to obtain and deliver to Lender within thirty (30) days after written demand by Lender, an estoppel certificate in the applicable form attached hereto from and parties to the Operating Agreements designated by Lender setting forth (i) the name of the parties thereunder, (ii) that the Operating Agreement is in full force and effect and has not been modified or, if it has been modified, the date of each modification (together with copies of each such modification), (iii) the

 

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date to which all rent, additional rent, common charges, common area maintenance charges and other charges or assessments reserved in or payable under the Operating Agreements have been paid thereunder, (iv) whether there are any alleged defaults of the lessee under the Operating Agreements and, if there are, setting forth the nature thereof in reasonable detail and (v) if any party under the Operating Agreements shall be in default, the default, provided, that unless an Event of Default exists, Lender shall not request an REA estoppel certificate prior to the first (1^st) anniversary of the Loan Closing and thereafter not more than once in any twelve (12) month period.

13.4.15 Common Area/Common Elements Insurance. Borrower shall use commercially reasonable efforts to cause the parties to the Operating Agreements to maintain the insurance required to be maintained by such parties thereunder and to deliver any insurance proceeds payable to Borrower under such Operating Agreements to be delivered to Lender. Without limitation of Borrower’s obligations under Section 6.1, in the event any party to any Operating Agreement fails to maintain any insurance coverage required in any Operating Agreement and the failure would reasonably be expected to have a Material Adverse Effect, Borrower shall obtain such insurance coverage to satisfy such requirement.

13.5 Lender Right to Participate. Lender shall have the right, but not the obligation, to proceed in respect of any claim, suit, action or proceeding relating to the rejection of the Operating Agreements by any party to any Operating Agreement, including, without limitation, the right to file and prosecute any and all proofs of claims, complaints, notices and other documents in any case in respect of or any party to any Operating Agreement under and pursuant to the Bankruptcy Code.

13.6 No Liability. Lender shall have no liability or obligation under the Operating Agreements by reason of its acceptance of the Security Instrument, this Agreement and the other Loan Documents. Lender shall be liable for the obligations of the lessee arising under the Operating Agreements for only that period of time during which Lender is in possession of the portion of the Property covered by said Operating Agreement or has acquired, by foreclosure or otherwise, and is holding all of Borrower’s right, title and interest therein.

XIV. SECURITIZATION AND PARTICIPATION

14.1 Sale of Note and Securitization. Lender may, at any time, sell, transfer or assign the Loan Documents, or grant participations therein (“Participations”), or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (“Securities”), secured by or evidencing ownership interests in the Note and this Agreement (such sale, issuance of Participations and/or issuance of Securities, a “Securitization”). At the request of Lender and, to the extent not already required to be provided by Borrower under this Agreement, Borrower shall use reasonable efforts to satisfy the market standards which may be reasonably required in the marketplace or by the Rating Agencies in connection with a Securitization, including using reasonable efforts to do (or cause to be done) the following, at Borrower’s sole cost and expense, but (i) Borrower shall not be required to incur, suffer or accept (except to a de minimis extent) any lesser rights or greater obligations or potential liabilities, or any more restrictive covenants, conditions or events of default, than as currently set forth in the Loan Documents except, after an Event of Default, any increase in the

 

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weighted average interest rate of the Note that may result after certain prepayments of the Loan have been made and applied in accordance with the terms hereof, and (ii) nothing contained in this Section 14.1, shall result in any economic change or other material adverse change in the transaction contemplated by the Security Instrument or the Loan Documents (unless Borrower is made whole by the holder of the Note) or result in any operational changes that are unduly burdensome to the Property or Borrower. In connection with this Section 14.1, Borrower shall:

(a) Provided Information. (i) Provide such financial and other information (but not projections) with respect to the Property, Borrower, Master Lessee, HoldCo, Guarantor and Master Lease Guarantor to the extent such information is reasonably available to Borrower, (ii) provide business plans (but not projections) and budgets relating to the Property, to the extent prepared by the Borrower or Master Lessee and (iii) cooperate with the holder of the Note (and its representatives) in obtaining such site inspection, appraisals, market studies, environmental reviews and reports, engineering reports and other due diligence investigations of the Property, as may be reasonably requested by the holder of the Note or reasonably requested by the Rating Agencies (all information provided pursuant to this Section 14.1 together with all other information heretofore provided to Lender in connection with the Loan, as such may be updated, at Lender’s request, in connection with a Securitization, or hereafter provided to Lender in connection with the Loan or a Securitization (including, without limitation, in connection with any ongoing reporting requirements imposed with respect to a Securitization or upon Lender (or any issuer or sponsor of a Securitization) by applicable Legal Requirements or in connection with the monitoring or maintenance of the ratings of any Securities by Rating Agencies), being herein collectively called the “Provided Information”);

(b) Opinions of Counsel. Cause to be rendered such customary updates or customary modifications to the Opinions of Counsel delivered at the closing of the Loan as may be reasonably requested by the holder of the Note or the Rating Agencies in connection with the Securitization, including without limitation, true lease, non-consolidation opinions and 10b-5 opinions. Borrower’s failure to deliver or cause to be delivered the opinion updates or modifications required hereby within twenty (20) Business Days after written request therefor shall constitute an “Event of Default” hereunder;

(c) Modifications to Loan Documents. Execute such amendments to the Security Instrument and Loan Documents as may be reasonably requested by Lender or the Rating Agencies in order to achieve the required rating or to effect the Securitization (including, without limitation, modifying the Payment Date and modifying the commencement and expiration of the Interest Period, in each case, to dates other than as originally set forth herein);

(d) Cooperation with Rating Agencies. (i) At Lender’s request, meet with representatives of the Rating Agencies at reasonable times to discuss the business and operations of the Property, and (ii) cooperate with the reasonable requests of the Rating Agencies in connection with the Property. Until the Obligations are paid in full, Borrower shall provide the Rating Agencies with all financial reports required hereunder and such other information as they shall reasonably request, including copies of any default notices or other material notices delivered to and received from Lender hereunder, to enable them to continuously monitor the creditworthiness of Borrower and to permit an annual surveillance of the implied credit rating of the Securities; and

 

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(e) Regulatory Compliance. Supply to Lender such documentation, financial statements and reports in form and substance required for Lender or any issuer or sponsor of a Securitization to comply with Regulations S-X and AB of the federal securities laws, if applicable.

14.2 Securitization Financial Statements. Borrower acknowledges that all Provided Information delivered by Borrower to Lender pursuant to Article XI may, at Lender’s option, be delivered to the Rating Agencies.

14.3 Regulation AB Information. Borrower shall furnish to Lender upon request the financial statements required under Item 1112(b)(2) of or otherwise by Regulation AB and meeting the requirements thereof. Such financial data or financial statements shall be furnished to Lender (a) within ten (10) Business Days after notice from Lender in connection with the preparation of disclosure documents for the securitization, (b) not later than forty-five (45) days after the end of each fiscal quarter of Borrower and (c) not later than one hundred twenty (120) days after the end of each fiscal year of Borrower; provided, however, that Borrower shall not be obligated to furnish financial data or financial statements pursuant to clauses (b) or (c) of this sentence with respect to any period for which a filing pursuant to the Exchange Act in connection with or relating to the securitization is not required. If requested by Lender, Borrower shall furnish, or shall cause Master Lessee and/or Master Lease Guarantor to furnish, to Lender financial data and/or financial statements in accordance with Regulation AB for Master Lessee and/or Master Lease Guarantor.

14.4 Retention of Servicer and other Parties; Trust Fund Expenses. Lender reserves the right to retain the Servicer (including primary, master and special), operating advisor, trustee, certificate administrator, trust advisor and other similar parties in connection with the origination and Securitization of the Loan; provided that Borrower shall have reasonable approval rights over the initial designation of such parties as of the Closing Date (but will not have any approval rights over any replacements or substitutions of any such parties occurring after the Closing Date). Borrower shall pay to Lender, or reimburse Lender for, all Trust Fund Expenses arising with respect to the related trust fund; provided, however, that Borrower shall not be liable to pay for Trust Fund Expenses to the extent they result from the gross negligence or willful misconduct of Lender, Servicer, or any special servicer, trustee, operating advisor or certificate administrator.

14.5 Information for an Issuer or Sponsor of a Securitization. Borrower acknowledges and agrees that any information that may be requested by Lender in order to comply with Legal Requirements applicable to the Securitization may also be requested by, and shall be provided to, the issuer or sponsor of such Securitization if such information is required by such issuer or sponsor to comply with Legal Requirements associated with such Securitization applicable to such issuer or sponsor.

XV. ASSIGNMENTS AND PARTICIPATIONS

15.1 Assignments and Participations. In addition to any other rights of Lender hereunder, the Loan, the Note, the Loan Documents and/or Lender’s rights, title, obligations and interests therein may be sold, assigned, participated or otherwise transferred by Lender and any

 

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of its successors and assigns to any Person at any time in its sole and absolute discretion, in whole or in part, whether by operation of law (pursuant to a merger or other successor in interest) or otherwise without notice to or consent from Borrower or any other Person. Upon such assignment, all references to Lender in this Loan Agreement and in any Loan Document shall be deemed to refer to such assignee or successor in interest and such assignee or successor in interest shall thereafter stand in the place of Lender in all respects. Except as expressly permitted herein, Borrower may not assign its rights, title, interests or obligations under this Loan Agreement or under any of the Loan Documents.

15.2 Register. Servicer (or in the case of assignments to participants, the applicable Lender), as non-fiduciary agent of Borrower, shall maintain a record within the meaning of U.S. Treasury Regulation 5f.103-1(c) that identifies each owner (including successors, assignees and participants) of an interest in the Loan, including the name and address of the owner, and each owner’s rights to principal and stated interest (the “Register”) and shall record all transfers of an interest in the Loan, including each assignment and participation, in the Register. The parties intend for the Loan to be in registered form for tax purposes and to the extent of any conflict with this Section 15.2, this Section 15.2 shall be construed in accordance with that intent.

XVI. RESERVE ACCOUNTS

16.1 Tax Reserve Account. On the Closing Date, Borrower shall deposit or cause to be deposited with or on behalf of Lender the amount set forth in Section 3.1.5 for deposit into the Tax Reserve Account. On each Payment Date, Borrower shall deposit or cause to be deposited into the Tax Reserve Account (which deposit may be effected by the transfers contemplated under Section 3.1.6(a) on or before such Payment Date) an amount equal to (a) one-twelfth of the annual Real Estate Impositions that Lender reasonably estimates (taking into account any prior to deposits in the Tax Reserve Account), based on the most recent tax bill for the Property, will be payable during the next ensuing twelve (12) months in order to accumulate with Lender sufficient funds to pay all such Real Estate Impositions at least thirty (30) days prior to the imposition of any interest, charges or expenses for the non-payment thereof and (b) one-twelfth of the annual Other Charges that Lender reasonably estimates will be payable during the next ensuing twelve (12) months (said monthly amounts in (a) and (b) above hereinafter called the “Monthly Tax Reserve Amount”, and the aggregate amount of funds held in the Tax Reserve Account being the “Tax Reserve Amount”). As of the Closing Date, the Monthly Tax Reserve Amount is $591,681.28, but such amount is subject to adjustment by Lender in its reasonable discretion upon notice to Borrower. Lender will apply the Monthly Tax Reserve Amount to payments of Real Estate Impositions and Other Charges required to be made by Borrower pursuant to Article V and Article VII and under the Security Instrument, subject to Borrower’s right to contest Real Estate Impositions in accordance with Section 7.3. In making any payment relating to the Tax Reserve Account, Lender may do so according to any bill, statement or estimate procured from the appropriate public office, without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof subject to Borrower’s right to contest. If the amount of funds in the Tax Reserve Account shall exceed the amounts due for Real Estate Impositions and Other Charges pursuant to Article V and Article VII, Lender shall credit such excess against future payments to be made to the Tax Reserve Account. If at any time Lender reasonably determines that the Tax Reserve Amount is not or will not be sufficient to pay Real Estate Impositions and Other

 

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Charges by the dates set forth above, Lender shall notify Borrower of such determination and Borrower shall increase its monthly payments to Lender by the amount that Lender reasonably estimates is sufficient to make up the deficiency at least thirty (30) days prior to the imposition of any interest, charges or expenses for the non-payment of the Real Estate Impositions and Other Charges. Upon payment of the Real Estate Impositions and Other Charges, Lender shall reassess the amount necessary to be deposited in the Tax Reserve Account for the succeeding period, which calculation shall take into account any excess amounts remaining in the Tax Reserve Account.

16.2 Insurance Reserve Account.

(a) Insurance Reserve. Subject to clause (b) below, Borrower shall, on each Payment Date, deposit or cause to be deposited into the Insurance Reserve Account (which deposit may be effected by the transfers contemplated under Section 3.1.6(a) on or before such Payment Date) an amount equal to one-twelfth of the insurance premiums that Lender reasonably estimates (taking into account any prior deposits in the Insurance Reserve Account), based on the most recent bill, will be payable for the renewal of the coverage afforded by the insurance policies upon the expiration thereof in order to accumulate with Lender sufficient funds to pay all such insurance premiums at least thirty (30) days prior to the expiration of the policies required to be maintained by Borrower pursuant to the terms hereof (said monthly amounts hereinafter called the “Monthly Insurance Reserve Amount,” and the aggregate amount of funds held in the Insurance Reserve Account being the “Insurance Reserve Amount”). The Monthly Insurance Reserve Amount shall be subject to adjustment by Lender upon notice to Borrower. Lender will apply the Monthly Insurance Reserve Amount to payments of insurance premiums required to be made by Borrower pursuant to Article VI and under the Security Instrument. In making any payment relating to the Insurance Reserve Account, Lender may do so according to any bill, statement or estimate procured from the insurer or agent, without inquiry into the accuracy of such bill, statement or estimate or into the validity thereof. If the amount of funds in the Insurance Reserve Account shall exceed the amounts due for insurance premiums pursuant to Article VI, Lender shall credit such excess against future payments to be made to the Insurance Reserve Account. If at any time Lender reasonably determines that the Insurance Reserve Amount is not or will not be sufficient to pay insurance premiums by the dates set forth above, Lender shall notify Borrower of such determination and Borrower shall increase its monthly payments to Lender by the amount that Lender reasonably estimates is sufficient to make up the deficiency at least thirty (30) days prior to expiration of the applicable insurance policies. Upon payment of such insurance premiums, Lender shall reassess the amount necessary to be deposited in the Insurance Reserve Account for the succeeding period, which calculation shall take into account any excess amounts remaining in the Insurance Reserve Account.

(b) Blanket Policies. Notwithstanding the foregoing, provided no Event of Default has occurred and is continuing, Borrower shall not be required to deposit funds into the Insurance Reserve Account at any time when the insurance required to be maintained pursuant to this Agreement is provided under a Blanket Policy that covers the Leased Premises and at least 75% of the other United States restaurant locations owned or ground leased and operated by Master Lease Guarantor and its wholly owned subsidiaries (including the Leased Premises) and additionally satisfies the requirements of Article VI hereof and either (i) Guarantor continues to Control Master Lease Guarantor, Master Lessee, HoldCo, PropCo, PRP, Mezzanine Borrowers, and Borrower, or (ii) the premium in respect of such Blanket Policy is prepaid on an annual basis at least one (1) months before such premium becomes due and payable.

 

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16.3 Required Repairs Reserve Account.

(a) Deposit of Required Repairs Funds. Borrower shall perform the repairs and other work at the Property as set forth on Schedule IX (such repairs and other work hereinafter referred to as “Required Repairs”) and shall complete each of the Required Repairs on or before the first anniversary of the Closing Date, subject to Excusable Delay. On the Closing Date, Borrower shall deposit or cause to be deposited with or on behalf of Lender the amount set forth in Section 3.1.5 for deposit into the Required Repairs Reserve Account (the “Required Repairs Funds”), which is equal to 125% of the estimated cost to complete the Required Repairs.

(b) Release of Required Repairs Funds. Provided no Event of Default is continuing, Lender shall disburse Required Repairs Funds to Borrower out of the Required Repairs Reserve Account within ten (10) days after the delivery by Borrower to Lender of a request therefor (but not more often than once per month), in increments of at least $10,000 (or a lesser amount if the total amount in the Required Repairs Reserve Account is less than $10,000, in which case only one disbursement of the amount remaining in the account shall be made), provided that: (i) such disbursement is for a Required Repair; (ii) the request for disbursement is accompanied by the following items (which items shall be in form and substance satisfactory to Lender): (A) an Officer’s Certificate from Borrower (1) stating that such disbursement is for a Required Repair, and a description thereof, (2) stating that all Required Repairs that are the subject of the requested disbursement have been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements, (3) identifying each Person that supplied materials or labor in connection with the Required Repairs that are the subject of the requested disbursement, (4) stating that each such Person has been paid in full the Required Repairs that are the subject of the requested disbursement, and (5) stating that the Required Repairs that are the subject of the requested disbursement have not been the subject of a previous disbursement, (B) a copy of any license, permit or other approval required by any Governmental Authority in connection with the Required Repairs and not previously delivered to Lender, (C) copies of appropriate lien waivers or other evidence of payment satisfactory to Lender, (D) at Lender’s option, a title search for the applicable Individual Property indicating that such Individual Property is free from all Liens, claims and other encumbrances not previously approved by Lender, and (E) such other evidence as Lender shall reasonably request to demonstrate that the Required Repairs that are the subject of the requested disbursement have been completed and fully paid for; and (iii) if such disbursement request is for $20,000 or more, Lender shall have (if it desires) verified (by an inspection conducted at Borrower’s expense) performance of the work associated with such Required Repairs. Upon Borrower’s completion of all Required Repairs in accordance with this Section 16.3, Lender shall deposit any remaining Required Repairs Funds into the Holding Account for application pursuant to Section 3.1.6(a).

16.4 Capital Expenditure Reserve Account.

(a) Deposit of Capital Expenditure Funds. On the Closing Date, Borrower shall deposit or cause to be deposited with or on behalf of Lender the amount set forth in Section 3.1.5 for deposit into the Capital Expenditure Reserve Account. Further, on each Payment Date,

 

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Borrower shall deposit or cause to be deposited into the Capital Expenditure Reserve Account (which deposit may be effected by the transfers contemplated under Section 3.1.6(a) on or before such Payment Date) an amount equal to (i) the aggregate square footage of all Property remaining subject to the Liens of the Security Instrument (as set forth on Schedule XIII attached hereto), multiplied by (ii) $0.20, and divided by (iii) twelve (12) (such monthly amount, the “Monthly Capital Expenditure Reserve Amount”). As of the Closing Date, the Monthly Capital Expenditure Reserve Amount is equal to $27,516.18 (based on an aggregate square footage of all Individual Properties equal to 1,650,971). Amounts deposited from time to time into the Capital Expenditure Reserve Account pursuant to this Section 16.4 are referred to herein as the “Capital Expenditure Funds.” Lender may reassess its estimate of the amount necessary for Qualified Capital Expenditures from time to time and may require Borrower to increase the monthly deposits required pursuant to this Section 16.4 upon thirty (30) days notice to Borrower if Lender determines in its reasonable discretion that an increase is necessary to maintain proper operation of the Property.

(b) Release of Capital Expenditure Funds. Provided no Event of Default is continuing, Lender shall disburse Capital Expenditure Funds to Borrower out of the Capital Expenditure Reserve Account within ten (10) days after the delivery by Borrower to Lender of a request therefor (but not more often than once per month), in increments of at least $10,000, provided that: (i) such disbursement is for Qualified Capital Expenditures; (ii) the request for disbursement is accompanied by the following items (which items shall be in form and substance satisfactory to Lender): (A) an Officer’s Certificate from Borrower (1) stating that such disbursement is for Qualified Capital Expenditures, and a description thereof, (2) stating that the work related to all Qualified Capital Expenditures that are the subject of the requested disbursement has been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements, (3) identifying each Person that supplied materials or labor in connection with the Qualified Capital Expenditures that are the subject of the requested disbursement, (4) stating that each such Person has been paid in full for the work related to the Qualified Capital Expenditures that are the subject of the requested disbursement, and (5) stating that the Qualified Capital Expenditures that are the subject of the requested disbursement have not been the subject of a previous disbursement, (B) a copy of any license, permit or other approval required by any Governmental Authority in connection with the Qualified Capital Expenditures and not previously delivered to Lender, (C) copies of appropriate lien waivers or other evidence of payment satisfactory to Lender, (D) at Lender’s option, a title search for the applicable Individual Property indicating that such Individual Property is free from all Liens, claims and other encumbrances not previously approved by Lender, and (E) such other evidence as Lender shall reasonably request to demonstrate that the work related to the Qualified Capital Expenditures that are the subject of the requested disbursement has been completed and fully paid for; and (iii) if such disbursement request is for $20,000 or more, Lender shall have (if it desires) verified (by an inspection conducted at Borrower’s expense) performance of the work associated with such Qualified Capital Expenditures.

 

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XVII. DEFAULTS

17.1 Event of Default.

(a) Each of the following events shall constitute an event of default hereunder (an “Event of Default”):

(i) if (A) the Indebtedness is not paid in full on the Maturity Date, (B) any regularly scheduled monthly payment of principal or interest due hereunder is not paid in full on the applicable Payment Date, (C) any prepayment of principal due under this Agreement or the Note is not paid when due, (D) the Yield Maintenance Premium or the Prepayment Premium is not paid when due, (E) any deposit to the Holding Account is not made on the required deposit date therefor; or (F) except as to any amount included in (A), (B), (C), (D) and/or (E) of this clause (i) or in clause (ii), any other amount payable pursuant to this Agreement, the Note or any other Loan Document is not paid in full when due and payable in accordance with the provisions of the applicable Loan Document, with such failure continuing for ten (10) Business Days after Lender delivers written notice thereof to Borrower;

(ii) subject to Borrower’s and Master Lessee’s right to contest as set forth in Section 7.3, if any of the Real Estate Impositions or Other Charges are not paid prior to the imposition of any interest, penalty, charge or expense for the nonpayment thereof, provided, that Borrower shall not be deemed to be in default hereunder in the event funds sufficient for a required payment of such Real Estate Imposition or Other Charge under Section 3.1.7(i) are held in the Tax Reserve Account and Lender or Cash Management Bank fails to timely make payment from such Sub-Account as contemplated by this Agreement unless due to the negligence or willful misconduct of Borrower;

(iii) if the insurance policies required by Section 6.1 are not kept in full force and effect or if Borrower fails to deliver to Lender evidence of the insurance required by Section 6.1 at the times required in such Section with such failure continuing for five (5) Business Days after the Lender delivers written notice thereof to Borrower, provided, that Borrower shall not be deemed to be in default hereunder in the event funds sufficient for a required payment under Section 3.1.7(ii) of the premiums required to keep the insurance policies in full force and effect are held in the Insurance Reserve Account and Lender or Cash Management Bank fails to timely make payment from such Sub-Account as contemplated by this Agreement unless due to the negligence or willful misconduct of Borrower;

(iv) if (a) any Transfer prohibited by Article VIII occurs, or (b) Borrower files a declaration of condominium with respect to the Property other than the Condominium Properties;

(v) if (i) any representation or warranty made by Borrower in Section 4.1.24 shall have been false or misleading in any material respect as of the date the representation or warranty was made which incorrect, false or misleading statement is not cured within thirty (30) days after receipt by Borrower of notice from Lender in writing of such breach or a longer period of time not to exceed thirty (30) additional days if Borrower has commenced to cure but cannot cure within the initial thirty (30) day period or (ii) if any other representation or warranty made

 

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by Borrower herein or by Borrower or any Affiliate of Borrower in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Lender shall have been false or misleading in any material respect as of the date the representation or warranty was made; provided, however, that if such representation or warranty which was false or misleading in any material respect is, by its nature, curable and is not reasonably likely to have a Material Adverse Effect, and such representation or warranty was not, to the best of Borrower’s knowledge, false or misleading in any material respect when made, then same shall not constitute an Event of Default unless Borrower has not cured same within ten (10) days after receipt by Borrower of notice from Lender in writing of such breach;

(vi) if Borrower, Master Lessee, Guarantor, Master Lease Guarantor or any SPE Component Entity shall make an assignment for the benefit of creditors;

(vii) if a receiver, liquidator or trustee shall be appointed for Borrower, Master Lessee, Guarantor, Master Lease Guarantor or any SPE Component Entity or Borrower, Master Lessee, Guarantor, Master Lease Guarantor or any SPE Component Entity shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, Borrower, Master Lessee, Guarantor, Master Lease Guarantor or any SPE Component Entity, or if any proceeding for the dissolution or liquidation of Borrower, Master Lessee, Guarantor, Master Lease Guarantor or any SPE Component Entity shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Borrower, Master Lessee, Guarantor, Master Lease Guarantor or any SPE Component Entity upon the same not being discharged, stayed or dismissed within ninety (90) days;

(viii) if Borrower, Master Lessee, Guarantor, Master Lease Guarantor or any SPE Component Entity, as applicable, attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;

(ix) if any of the assumptions contained in the Non-Consolidation Opinion, in any Additional Non-Consolidation Opinion or in any other non-consolidation opinion delivered to Lender in connection with the Loan, or in any other non-consolidation opinion delivered subsequent to the closing of the Loan, is untrue in any material respect;

(x) if any of the assumptions contained in the True Lease Opinion (other than any assumption that relies upon factual information provided by Cushman & Wakefield or any other third party) is untrue in any material respect;

(xi) if Borrower shall fail to comply in any material respect with any covenants set forth in Section 5.1.9, 5.3 or 5.4;

(xii) except as provided in clause (xi) above, if Borrower shall fail to comply with any covenants set forth in Article V (other than Section 5.1.1) or Article XI with such failure continuing for ten (10) Business Days after Lender delivers written notice thereof to Borrower;

 

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(xiii) if Borrower shall fail to comply with the covenants set forth in Section 3(d) or Section 8 of any Security Instrument with such failure continuing for ten (10) Business Days after Lender delivers written notice thereof to Borrower;

(xiv) if this Agreement or any other Loan Document or any Lien granted hereunder or thereunder, in whole or in part, shall terminate or shall cease to be effective or shall cease to be a legally valid, binding and enforceable obligation of Borrower or Guarantor, or any Lien securing the Indebtedness shall, in whole or in part, cease to be a perfected first priority Lien, subject to the Permitted Encumbrances (except in any of the foregoing cases in accordance with the terms hereof or under any other Loan Document or by reason of any affirmative act of Lender);

(xv) except as expressly permitted pursuant to the Loan Documents, if Borrower grants any easement, covenant or restriction (other than the Permitted Encumbrances) over the Property;

(xvi) if Borrower or Master Lessee shall permit any event within its control to occur that would cause any REA to terminate without notice or action by any party thereto or would entitle any party to terminate any REA and the term thereof by giving notice to Borrower or Master Lessee; or any REA shall be surrendered, terminated or canceled for any reason or under any circumstance whatsoever except as provided for in such REA; or any material term of any REA shall be modified or supplemented (other than in accordance with its terms) and such modification or supplementation is reasonably likely to have a Material Adverse Effect; or Borrower shall fail or shall permit Master Lessee to fail to exercise its option to renew or extend the term of any REA or shall fail or neglect to pursue diligently all actions necessary to exercise such renewal rights pursuant to such REA except as provided for in such REA, in all of the foregoing cases, where such surrender, termination, cancellation, modification, supplement or failure to renew or extend is not cured within ten (10) Business Days after receipt by Borrower of notice from Lender in writing;

(xvii) if Borrower, after actual notice, fails to use all commercially reasonable efforts to cause a Condominium Board to (x) take corrective action and (y) remedy its failure (A) to maintain the Common Elements in good condition and repair, and such failure is reasonably be expected to have a Material Adverse Effect, (B) to promptly comply with all laws, orders, and ordinances affecting the Common Elements, or the use thereof, the failure of which is reasonably expected to have a Material Adverse Effect, (C) to promptly repair, replace or rebuild any part of the Common Elements which may be damaged or destroyed by any casualty or which may be affected by any condemnation proceeding, the failure of which is reasonably expected to have a Material Adverse Effect, or (D) to complete and pay for, within a reasonable time, any construction or repair undertaken on the Common Elements, all to the extent that the Condominium Board is required to so maintain, comply, repair, replace, rebuild and complete the Common Elements by the Condominium Documents), the failure of which is reasonably expected to have a Material Adverse Effect and is not cured within ten (10) Business Days after receipt by Borrower of notice from Lender in writing;

(xviii) if Borrower fails to use commercially reasonable efforts to cause a Condominium Board to allow Lender to examine the records of the receipts and expenditures

 

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arising from the operation of a Condominium and such default shall continue for a period of ten (10) Business Days after written notice from Lender (with a copy to Borrower) thereof specifying such default and requiring the same to be remedied shall have been given to the person designated from time to time in accordance the provisions of the Condominium Declarations to receive service of process;

(xix) if withdrawal of the Property from a Condominium shall be authorized by, at the direction of or pursuant to the vote of Borrower or any Affiliate of Borrower;

(xx) if, without the prior written consent of Lender, any of the material terms or provisions of any Operating Agreement are modified or amended (in a manner prohibited by Article XIII);

(xxi) if a default by Borrower has occurred and continues beyond any applicable cure period under any Condominium Documents that would entitle any party to terminate any Condominium Document or the term thereof by giving notice to Borrower and is not cured within ten (10) Business Days after receipt by Borrower of notice from Lender in writing;

(xxii) if the Master Lease shall be materially modified without the prior written consent of Lender, except as expressly permitted hereunder or any other Loan Document (other than the Master Lease);

(xxiii) if Borrower shall be in default of any material obligation on the part of Borrower under the Master Lease, beyond any applicable notice periods and cure periods pursuant to the terms of the Master Lease;

(xxiv) if (A) Master Lessee shall fail to pay, as and when due under the Master Lease, any Master Lease Base Rent or other Master Lease Scheduled Rent, or any other amounts due and owing under the Master Lease for which no grace period is provided thereunder, or (B) Master Lessee shall be in default of any other monetary or material non-monetary obligation on the part of Master Lessee under the Master Lease, beyond any applicable notice periods and cure periods pursuant to the terms of the Master Lease; provided, however, that for purposes of this paragraph, any applicable cure periods that are triggered by written notice from Borrower to Master Lessee shall be deemed to have commenced upon the earlier to occur of (x) Borrower’s delivery of written notice to Master Lessee of the existence of such default by Master Lessee, or (y) the fifth (5^th) Business Day after Borrower or Guarantor first becomes aware of the action, inaction, circumstance, condition or event that gave rise to such default by Master Lessee;

(xxv) if at any time the number of Go Dark Restaurant Locations plus the number of Restaurant Locations that are being operated as one or more Unaffiliated Businesses (without duplication) exceeds the Go Dark/Sublease Limit and Borrower shall not have obtained a release of such Individual Property or Individual Properties as required in accordance with Section 2.3.7 within the time period specified therein

(xxvi) if Borrower shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement or of any Loan Document not specified in subsections (i) to (xxv) above, for thirty (30) days after notice from Lender; provided, however,

 

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that if such Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided further that Borrower shall have commenced to cure such Default within such thirty (30) day period and thereafter diligently proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed ninety (90) days.

(b) Unless waived in writing by Lender, upon the occurrence and during the continuance of an Event of Default (other than an Event of Default described in clauses (a)(vi), (vii) or (viii) above in respect of Borrower) Lender may, without notice or demand, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action that Lender deems advisable to protect and enforce its rights against Borrower and in the Property, including, without limitation, (i) declaring immediately due and payable the entire Principal Amount together with interest thereon and all other sums due by Borrower under the Loan Documents, (ii) collecting interest on the Principal Amount at the Default Rate whether or not Lender elects to accelerate the Note and (iii) enforcing or availing itself of any or all rights or remedies set forth in the Loan Documents against Borrower and the Property, including, without limitation, all rights or remedies available at law or in equity; and upon any Event of Default described in subsections (a)(vi) or (a)(vii) above in respect of Borrower, the Indebtedness and all other obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding. The foregoing provisions shall not be construed as a waiver by Lender of its right to pursue any other remedies available to it under this Agreement, the Security Instrument or any other Loan Document. Any payment hereunder may be enforced and recovered in whole or in part at such time by one or more of the remedies provided to Lender in the Loan Documents.

(c) Notwithstanding anything to the contrary contained herein, the execution or delivery of, or the performance of Borrower’s obligations under, the Indemnity Agreement shall not result in a Default or an Event of Default hereunder or any recourse liability to Borrower hereunder or any Guarantor under the Recourse Guaranty.

17.2 Remedies.

(a) Unless waived in writing by Lender, upon the occurrence and during the continuance of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Indebtedness shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to the Property. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting

 

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the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein or in the other Loan Documents. Without limiting the generality of the foregoing, Borrower agrees that if an Event of Default is continuing (i) Lender shall not be subject to any one action or election of remedies law or rule and (ii) all liens and other rights, remedies or privileges provided to Lender shall remain in full force and effect until Lender has exhausted all of its remedies against the Property and the Security Instrument has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Indebtedness or the Indebtedness has been paid in full.

(b) Upon the occurrence and during the continuance of an Event of Default, with respect to the Account Collateral, the Lender may:

(i) without notice to Borrower, except as required by law, and subject to Section 3.1.10, and at any time or from time to time, charge, set-off and otherwise apply all or any part of the Account Collateral against the Obligations, operating expenses and/or capital expenditures for the Property or any part thereof;

(ii) in Lender’s sole discretion, at any time and from time to time, exercise any and all rights and remedies available to it under this Agreement, and/or as a secured party under the UCC;

(iii) demand, collect, take possession of or receipt for, settle, compromise, adjust, sue for, foreclose or realize upon the Account Collateral (or any portion thereof) as Lender may determine in its sole discretion; and

(iv) take all other actions provided in, or contemplated by, this Agreement.

(c) With respect to Borrower, the Account Collateral, the Rate Cap Collateral and the Property, nothing contained herein or in any other Loan Document shall be construed as requiring Lender to resort to the Property for the satisfaction of any of the Indebtedness, and Lender may seek satisfaction out of the Property or any part thereof, in its absolute discretion in respect of the Indebtedness. In addition, Lender shall have the right from time to time to partially foreclose this Agreement and the Security Instrument in any manner and for any amounts secured by this Agreement or the Security Instrument then due and payable as determined by Lender in its sole discretion including, without limitation, the following circumstances: (i) in the event Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal or interest, Lender may foreclose this Agreement and the Security Instrument to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender may foreclose this Agreement and the Security Instrument to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by this Agreement or the Security Instrument as Lender may elect. Notwithstanding one or more partial foreclosures, the Property shall remain subject to this Agreement and the Security Instrument to secure payment of sums secured by this Agreement and the Security Instrument and not previously recovered.

 

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17.3 Remedies Cumulative; Waivers. The rights, powers and remedies of Lender under this Agreement and the Security Instrument shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s sole discretion. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower or Guarantor shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or Guarantor or to impair any remedy, right or power consequent thereon.

17.4 Costs of Collection. In the event that after an Event of Default: (i) the Note or any of the Loan Documents is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding; (ii) an attorney is retained to represent Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors’ rights and involving a claim under the Note or any of the Loan Documents; or (iii) an attorney is retained to protect or enforce the lien or any of the terms of this Agreement, the Security Instrument or any of the Loan Documents; then Borrower shall pay to Lender all reasonable attorney’s fees, costs and expenses actually incurred in connection therewith, including costs of appeal, together with interest on any judgment obtained by Lender at the Default Rate.

XVIII. SPECIAL PROVISIONS

18.1 Exculpation.

18.1.1 Exculpated Parties. Except as set forth in this Section 18.1, the Recourse Guaranty and/or the Environmental Indemnity, no personal liability shall be asserted, sought or obtained by Lender or enforceable against (i) Borrower, (ii) any Affiliate of Borrower, (iii) any Person owning, directly or indirectly, any legal or beneficial interest in Borrower or any Affiliate of Borrower or (iv) any direct or indirect partner, member, principal, officer, Controlling Person, beneficiary, trustee, advisor, shareholder, employee, agent, Affiliate or director of any Persons described in clauses (i) through (iii) above (collectively, the “Exculpated Parties”) and none of the Exculpated Parties shall have any personal liability (whether by suit deficiency judgment or otherwise) in respect of the Obligations, this Agreement, the Security Instrument, the Note, the Property or any other Loan Document, or the making, issuance or transfer thereof, all such liability, if any, being expressly waived by Lender. The foregoing limitation shall not in any way limit or affect Lender’s right to any of the following and Lender shall not be deemed to have waived any of the following:

(a) Foreclosure of the lien of this Agreement and the Security Instrument in accordance with the terms and provisions set forth herein and in the Security Instrument;

(b) Action against any other security at any time given to secure the payment of the Note and the other Obligations;

 

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(c) Exercise of any other remedy set forth in this Agreement or in any other Loan Document which is not inconsistent with the terms of this Section 18.1;

(d) Any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Indebtedness secured by this Agreement and the Security Instrument or to require that all collateral shall continue to secure all of the Indebtedness owing to Lender in accordance with the Loan Documents; or

(e) The liability of any given Exculpated Party with respect to any separate written guaranty or agreement given by any such Exculpated Party in connection with the Loan (including, without limitation, the Recourse Guaranty and the Environmental Indemnity).

18.1.2 Loss Carveouts From Non-Recourse Limitations. Notwithstanding the foregoing or anything in this Agreement or any of the Loan Documents to the contrary, there shall at no time be any limitation on Borrower’s or Guarantor’s liability for the payment, in accordance with the terms of this Agreement, the Note, the Security Instrument and the other Loan Documents, to Lender of any Losses incurred by or on behalf of Lender by reason of:

(a) any fraudulent acts, willful misconduct or intentional misrepresentations by Borrower or Guarantor;

(b) Proceeds which Borrower or Guarantor has received and to which Lender is entitled pursuant to the terms of this Agreement or any of the Loan Documents to the extent the same have not been applied toward payment of the Indebtedness or otherwise applied in a manner permitted by the Loan Documents, or not used for or in connection with the repair or replacement of the Property in accordance with the provisions of this Agreement;

(c) any misappropriation of Rents or security deposits by Borrower or Guarantor;

(d) Borrower’s failure to instruct Master Lessee to deposit Master Lease Rent directly into the Holding Account as and to the extent required under Section 3.1.9, or, if Borrower or any Affiliate of Borrower receives any Rents, then Borrower’s failure to deposit or cause to be deposited such amounts into the Holding Account in accordance with Section 3.1.9;

(e) any Rents collected by Borrower or Guarantor (other than Rents sent to the Holding Account or paid directly to Lender pursuant to any notice of direction delivered to tenants of the Property) and not applied to payment of the Obligations or used to pay normal and verifiable operating expenses of the Property or otherwise applied in a manner permitted under the Loan Documents;

(f) any physical damage to the Property caused by the willful misconduct of Borrower or Guarantor or by affirmative physical actions taken by Borrower or Guarantor constituting arson or waste;

(g) Borrower’s failure to return all Personal Property owned by Borrower (or to reimburse Lender for the value thereof), which is wrongfully and in violation of the Loan Documents taken from the Property by or on behalf of Borrower;

 

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(h) Borrower’s failure to comply with any of the provisions of Article XII;

(i) a breach by Borrower or any SPE Component Entity (if any) of any of the covenants set forth in Sections 5.3 or 5.4 hereof (other than any Excluded SPE Breach);

(j) Borrower’s failure to deliver to Lender the net sales proceeds of a Transfer of an Individual Property described in Section 5.1.9(b) together with any shortfall necessary to pay and/or defease in full the Release Price or Combined Release Price, as applicable, for such Individual Property, in accordance with the provisions of Section 5.1.9(b);

(k) Borrower’s failure to pay Taxes or Other Charges (except to the extent that (A) sums sufficient to pay such amounts have been deposited in escrow with Lender pursuant to the terms hereof and there exists no impediment to Lender’s utilization thereof or (B) there is insufficient cash flow from the operation of the Property);

(l) Borrower’s setting forth of any claim, counterclaim and/or defense in response to a proceeding instituted by Lender (whether judicial or otherwise) for the foreclosure of the Security Instrument or other enforcement action following an Event of Default which is found by a court of competent jurisdiction to have been raised by Borrower in bad faith;

(m) any Involuntary Lien, except to the extent that there is insufficient cash flow from the operation of the Property to pay the Person holding such Involuntary Lien;

(n) a breach by Borrower of Section 5.2.7 hereof; or

(o) reasonable attorney’s fees and expenses actually incurred by Lender in connection with any successful suit filed on account of any of the foregoing clauses (a) through (n) above.

18.1.3 Full Recourse Carveouts From Non-Recourse Limitations. Notwithstanding the foregoing or anything in this Agreement or any of the Loan Documents to the contrary, the agreement of Lender not to pursue recourse liability as set forth in Section 18.1.1 above SHALL BECOME NULL AND VOID and shall be of no further force and effect and the Indebtedness shall be fully recourse to Borrower and Guarantor on a joint and several basis in the event (i) of a breach by Borrower of any of the covenants set forth in Sections 5.3 or 5.4 hereof (other than any Excluded SPE Breach), and as a result thereof, Borrower is substantively consolidated with any other Person; (ii) of any voluntary Transfer by Borrower of Borrower’s interest in any Individual Property or any portion thereof in violation of Article VIII, (iii) any voluntary Transfer of an Equity Interest in any Restricted Party in violation of Article VIII, (iv) Borrower filing a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law, (v) Borrower, or any Affiliate, officer, director, or representative which Controls, directly or indirectly, Borrower, files, or joins in the filing of, an involuntary petition against Borrower under any Creditors Rights Laws, or solicits or causes to be solicited, or colludes with, petitioning creditors for any involuntary petition against Borrower from any Person; (vi) Borrower files an answer consenting to or joining in, or otherwise acquiesces to, any involuntary petition filed against it, by any other Person under any Creditors Rights Laws, provided that Borrower will be deemed to have acquiesced to an involuntary bankruptcy petition only if Borrower did not contest such petition notwithstanding that (A) Borrower had sufficient funds available for use to contest such petition, (B) there was a good

 

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faith basis to contest such petition and (C) contesting such petition would not violate the fiduciary duties owed to Borrower by the Persons that Control Borrower (which fiduciary duties shall not consider, to the maximum extent permissible by applicable law, the interests of any equity owners of Borrower or any other Affiliate of Borrower; provided, however, that if applicable law requires that such fiduciary duties consider the interests of the equity owners of Borrower, such interests shall be considered only to the extent of such equity owners’ respective economic interest in Borrower); (vii) any Affiliate, officer, director, or representative which Controls Borrower consents to or joins in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower or any portion of any Individual Property (except at the written request of Lender); (viii) Borrower incurs indebtedness for borrowed money in violation of the Loan Documents; or (ix) Borrower fails to obtain Lender’s prior written consent to any voluntary Lien encumbering all or any portion of the Property or any direct or indirect equity interests in Borrower, if such consent is required by the Loan Documents.

18.1.4 Limitation of Liability of Borrower.

(a) Notwithstanding anything to the contrary herein, in the event of:

(i) any foreclosure (or a transfer in lieu of foreclosure) by a Mezzanine Lender that is not Borrower or any Affiliate of Borrower, of the direct Equity Interests in Borrower or any SPE Component Entity or any Mezzanine Borrower pledged as collateral for a Mezzanine Loan pursuant to the Mezzanine Loan Documents (any such foreclosure or transfer-in-lieu thereof, a “Mezzanine Foreclosure Divestment”), with the result that neither Borrower nor any Affiliate of Borrower (excluding, however, any Loan Party who as a result of such Mezzanine Foreclosure Divestment is no longer Controlled by Borrower or any Affiliate of Borrower) shall hold any direct or indirect Equity Interests in, or Control, Borrower (Borrower in such case may be referred to as “Divested Borrower”);

(ii) any foreclosure (whether judicially or non-judicially by private sale or trustee’s sale) or deed in lieu of foreclosure or similar transfer under any Security Instrument (any such foreclosure, foreclosure sale or deed in lieu thereof, a “Foreclosure Divestment”), with the result that neither Borrower nor any Affiliate of Borrower shall hold any direct or indirect interest in, or the power to direct the management of, any Individual Property thereby foreclosed or transferred, excluding Guarantor’s, HoldCo’s or any Intermediate HoldCo Entity’s direct or indirect Equity Interests in Master Lessee (each such Individual Property, a “Divested Property”); or

(iii) the appointment of a receiver by a court of competent jurisdiction with respect to an Individual Property (any such appointment, a “Receivership Event”, and the period during which such Individual Property remains under a receivership, the “Receivership Period”), with the result that neither Borrower nor any Affiliate of Borrower shall have any possession of, or hold the power to direct the management of, such Individual Property that is subject to such Receivership Event during the Receivership Period, excluding Guarantor’s, HoldCo’s or any Intermediate HoldCo Entity’s direct or indirect Equity Interests in Master Lessee (each such Individual Property subject to a Receivership Event, a “Receivership Property”),

 

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then, in such cases, Borrower shall not have any liability for any obligations under Section 18.1.2 or Section 18.1.3 (collectively, the “Recourse Obligations”) (i) to the extent arising from: (A) any action taken by any Loan Party who as a result of such Mezzanine Foreclosure Divestment is no longer Controlled by Borrower or any Affiliate of Borrower, (B) any circumstance, condition, action or event with respect to the Property or any Loan Party first occurring after the date of such Mezzanine Foreclosure Divestment, (C) any action taken by any successor owner of such Divested Property, (D) any circumstance, condition, action or event with respect to such Divested Property first occurring after the date of such Foreclosure Divestment, (E) any action taken by any receiver for such Receivership Property during the Receivership Period, or (F) any circumstance, condition, action or event with respect to such Receivership Property first occurring after the occurrence of such Receivership Event and during the continuance of such Receivership Period; and (ii) not caused by Borrower or any Affiliate of Borrower (excluding any Loan Party who as a result of such Mezzanine Foreclosure Divestment is no longer Controlled by Borrower or any Affiliate of Borrower); provided that Borrower shall remain liable hereunder for any Recourse Obligations to the extent arising from any circumstance, condition, action or event occurring (x) with respect such Divested Borrower, prior to the date of such Mezzanine Foreclosure Divestment, even to the extent the applicable liability, loss, cost, or expense does not occur, or the occurrence of the applicable circumstance, condition, action or event is not discovered, until after the date of such Mezzanine Foreclosure Divestment, (y) with respect to such Divested Property, prior to the date of such Foreclosure Divestment, even to the extent the applicable liability, loss, cost, or expense does not occur, or the occurrence of the applicable circumstance, condition, action or event is not discovered, until after the date of such Foreclosure Divestment, and (z) with respect to such Receivership Property, prior to such Receivership Event or after the expiration of such Receivership Period, even to the extent the applicable liability, loss, cost, or expense occurs, or the occurrence of the applicable circumstance, condition, action or event is first discovered, during the Receivership Period.

(b) In the event that an “Event of Default” under a Mezzanine Loan shall exist with respect to a Mezzanine Loan and the related Mezzanine Lender is not Borrower or an Affiliate of Borrower and exercises, pursuant to the exercise of remedies under the Mezzanine Loan Documents, direct voting Control, by power of attorney or other exercise of voting power with respect to the Equity Interests of the applicable Borrower, SPE Component Entity or Mezzanine Borrower pledged to such Mezzanine Lender as collateral for its Mezzanine Loan under the related Mezzanine Loan Documents, of such Equity Interests in Borrower, SPE Component Entity or Mezzanine Borrower so pledged as collateral for such Mezzanine Loan (the “Direct Control Remedies”, and such Mezzanine Lender exercising such Direct Control Remedies, the “Controlling Mezzanine Lender”), Borrower shall not have liability hereunder for the actions that such Controlling Mezzanine Lender, in the exercise of its Direct Control Remedies, causes Borrower, any SPE Component Entity or any Mezzanine Borrower to take (“Mezzanine Lender Controlled Actions”) if such Mezzanine Lender Controlled Actions are taken without inducement, solicitation and/or consent from, or in collusion with, Borrower or any Affiliate of Borrower (other than Loan Parties to the extent Controlled by the Controlling Mezzanine Lender in the exercise of its Direct Control Remedies).

 

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XIX. MISCELLANEOUS

19.1 Survival. This Agreement and all covenants, indemnifications, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as all or any of the Indebtedness is outstanding and unpaid unless a longer period is expressly set forth herein or in the other Loan Documents. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the successors and assigns of Lender. If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder and under the other Loan Documents shall be joint and several.

19.2 Lender’s Discretion. Whenever pursuant to this Agreement, Lender exercises any right given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to approve or disapprove or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of Lender and shall be final and conclusive.

19.3 Governing Law.

(A) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

CT CORPORATION SYSTEM

111 8^TH AVENUE

NEW YORK, NEW YORK 10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY

 

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RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

19.4 Modification, Waiver in Writing. No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, or of the Note, or of any other Loan Document, or consent to any departure therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought (and, if a Securitization shall have occurred, a Rating Agency Confirmation is obtained), and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to or demand on Borrower shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.

19.5 Delay Not a Waiver. Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under the Note or under any other Loan Document, or any other instrument given as security therefor, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement, the Note or any other Loan Document, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement, the Note or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount.

19.6 Notices. All notices, consents, approvals and requests required or permitted hereunder or under any other Loan Document shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) certified or registered United States mail, postage prepaid, return receipt requested, (b) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery or (c) for notices other than notices of the occurrence of a Default or an Event of Default only, telecopier (with answer back acknowledged), addressed as follows (or at such other address and Person as shall be designated from time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for in this Section):

 

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If to Lender:

Bank of America, N.A.

Real Estate Structured Finance—Servicing

900 West Trade Street, Suite 650

Mail Code: NC1-026-06-01

Charlotte, North Carolina 28255

Attn: Servicing Manager

Telecopy No.: (704) 317-4501

Confirmation No.: (866) 531-0957

 

and to:

German American Capital Corporation

60 Wall Street, 10th floor

New York, NY 10005

Attention: John Beacham and General Counsel

Telecopy No.: (732) 578-4639

Confirmation No.: (212) 250-0164

 

With a copy to:

Sidley Austin LLP

One South Dearborn

Chicago, Illinois 60603

Attention: Charles Schrank, Esq.

Telecopy No.: (312) 853-7036

Confirmation No.: (312) 853-7000

 

If to Borrower:

New Private Restaurant Properties, LLC

c/o OSI Restaurant Partners, Inc.

2202 North West Shore Blvd., Suite 470C

Tampa, FL 33607

Attention: Vice President Real Estate

Telecopy No.: (813) 830-2497

Confirmation No.: (813) 387-8000

 

With a copy to:

Bain Capital Partners, LLC

John Hancock Tower

200 Clarendon Street

Boston, MA 02116

Attention: Dave Humphrey

Telecopy No.: (617) 652-3112

Confirmation No.: (617) 516-2112

 

With a copy to:

Ropes and Gray, LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199-3600

Attention: Richard E. Gordet, Esq.

Telecopy No.: (617) 951-7491

Confirmation No.: (617) 235-0480

 

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With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, N.Y. 10004-2498

Attention: Arthur Adler, Esq.

Telecopy No.: (212) 291-9001

Confirmation No.: (212) 558-3960

All notices, elections, requests and demands under this Agreement shall be effective and deemed received upon the earliest of (i) the actual receipt of the same by personal delivery or otherwise, (ii) one (1) Business Day after being deposited with a nationally recognized overnight courier service as required above, (iii) three (3) Business Days after being deposited in the United States mail as required above or (iv) on the day sent if sent by facsimile with confirmation on or before 5:00 p.m. New York time on any Business Day or on the next Business Day if so delivered after 5:00 p.m. New York time or on any day other than a Business Day. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as herein required shall be deemed to be receipt of the notice, election, request, or demand sent.

19.7 TRIAL BY JURY. BORROWER AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, THE SECURITY INSTRUMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE SECURITY INSTRUMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER HEREBY AGREES AND CONSENTS THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

19.8 Headings. The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

19.9 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

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19.10 Preferences. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.

19.11 Waiver of Notice. Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Lender to Borrower.

19.12 Expenses; Indemnity.

(a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender upon receipt of written notice from Lender for all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and disbursements), except as may be otherwise expressly provided in this Agreement or the Loan Documents, incurred by Lender in connection with (i) the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby and all the costs of furnishing all opinions by counsel for Borrower (including without limitation any opinions requested by Lender pursuant to this Agreement); (ii) Lender’s ongoing performance of and compliance with all agreements and conditions contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date; (iii) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters as required herein or under the other Loan Documents; (iv) securing Borrower’s compliance with any requests made pursuant to the provisions of this Agreement; (v) the filing and recording fees and expenses, mortgage recording taxes, title insurance and reasonable fees and expenses of counsel for providing to Lender all required legal opinions, and other similar expenses incurred in creating and perfecting the Lien in favor of Lender pursuant to this Agreement and the other Loan Documents; (vi) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the other Loan Documents, the Property, or any other security given for the Loan; (vii) enforcing any obligations of or collecting any payments due from Borrower under this Agreement, the other Loan Documents or with respect to the Property or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a work-out or of any insolvency or bankruptcy proceedings and (viii) procuring insurance policies

 

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pursuant to Section 6.1.11; provided, however, that Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender. Any cost and expenses due and payable to Lender may be paid from any amounts in the Holding Account subject to the provisions of Section 3.1.10(a).

(b) Subject to the non-recourse provisions of Section 18.1, Borrower shall protect, indemnify and save harmless Lender, and all officers, directors, stockholders, members, partners, employees, agents, successors and assigns thereof (collectively, the “Indemnified Parties”) from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including all reasonable attorneys’ fees and expenses actually incurred) imposed upon or incurred by or asserted against the Indemnified Parties or the Property or any part of its interest therein, by reason of the occurrence or existence of any of the following (to the extent Proceeds payable on account of the following shall be inadequate; it being understood that in no event will the Indemnified Parties be required to actually pay or incur any costs or expenses as a condition to the effectiveness of the foregoing indemnity) prior to (i) the acceptance by Lender or its designee of a deed-in-lieu of foreclosure with respect to the Property, or (ii) an Indemnified Party or its designee taking possession or control of the Property or (iii) the foreclosure of the Security Instrument, except to the extent caused by the actual willful misconduct or gross negligence of the Indemnified Parties (other than such willful misconduct or gross negligence imputed to the Indemnified Parties because of their interest in the Property): (1) ownership of Borrower’s interest in the Property, or any interest therein, or receipt of any Rents or other sum therefrom, (2) any accident, injury to or death of any persons or loss of or damage to property occurring on or about the Property or any Appurtenances thereto, (3) any design, construction, operation, repair, maintenance, use, non-use or condition of the Property or Appurtenances thereto, including claims or penalties arising from violation of any Legal Requirement or Insurance Requirement, as well as any claim based on any patent or latent defect, whether or not discoverable by Lender, any claim the insurance as to which is inadequate, and any Environmental Claim, (4) any Default under this Agreement or any of the other Loan Documents or any failure on the part of Borrower to perform or comply with any of the terms of any Operating Agreement within the applicable notice or grace periods, (5) any performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, (6) any negligence or tortious act or omission on the part of Borrower or any of its agents, contractors, servants, employees, sublessees, licensees or invitees, (7) any contest referred to in Section 7.3 hereof, (8) any obligation or undertaking relating to the performance or discharge of any of the terms, covenants and conditions of the landlord contained in the Subleases or the Master Lease, or (9) the presence at, in or under the Property or the Improvements of any Hazardous Materials in violation of any Environmental Law. Any amounts the Indemnified Parties are legally entitled to receive under this Section which are not paid within fifteen (15) Business Days after written demand therefor by the Indemnified Parties or Lender, setting forth in reasonable detail the amount of such demand and the basis therefor, shall bear interest from the date of demand at the Default Rate, and shall, together with such interest, be part of the Indebtedness and secured by the Security Instrument. In case any action, suit or proceeding is brought against the Indemnified Parties by reason of any such occurrence, Borrower shall at Borrower’s expense resist and defend such action, suit or proceeding or will cause the same to be resisted and defended by counsel at Borrower’s reasonable expense for the insurer of the liability or by counsel designated by Borrower (unless reasonably disapproved by

 

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Lender promptly after Lender has been notified of such counsel); provided, however, that nothing herein shall compromise the right of Lender (or any Indemnified Party) to appoint its own counsel at Borrower’s expense for its defense with respect to any action which in its reasonable opinion presents a conflict or potential conflict between Lender and Borrower that would make such separate representation advisable; provided further that if Lender shall have appointed separate counsel pursuant to the foregoing, Borrower shall not be responsible for the expense of additional separate counsel of any Indemnified Party unless in the reasonable opinion of Lender a conflict or potential conflict exists between such Indemnified Party and Lender. So long as Borrower is resisting and defending such action, suit or proceeding as provided above in a prudent and commercially reasonable manner, Lender and the Indemnified Parties shall not be entitled to settle such action, suit or proceeding without Borrower’s consent which shall not be unreasonably withheld or delayed, and claim the benefit of this Section with respect to such action, suit or proceeding and Lender agrees that it will not settle any such action, suit or proceeding without the consent of Borrower; provided, however, that if Borrower is not diligently defending such action, suit or proceeding in a prudent and commercially reasonable manner as provided above, and Lender has provided Borrower with thirty (30) days’ prior written notice, or shorter period if mandated by the requirements of applicable law, and opportunity to correct such determination, Lender may settle such action, suit or proceeding and claim the benefit of this Section 19.12 with respect to settlement of such action, suit or proceeding. Any Indemnified Party will give Borrower prompt notice after such Indemnified Party obtains actual knowledge of any potential claim by such Indemnified Party for indemnification hereunder. The Indemnified Parties shall not settle or compromise any action, proceeding or claim as to which it is indemnified under this Section 19.12 without notice to and reasonable consent of Borrower.

19.13 Exhibits and Schedules Incorporated. The Exhibits and Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.

19.14 Offsets, Counterclaims and Defenses. Any assignee of Lender’s interest in and to this Agreement, the Note and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

19.15 Liability of Assignees of Lender. No assignee of Lender shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any other Loan Document or any amendment or amendments hereto made at any time or times, heretofore or hereafter, any different than the liability of Lender hereunder. In addition, no assignee shall have at any time or times hereafter any personal liability, directly or indirectly, under or in connection with or secured by any agreement, lease, instrument, encumbrance, claim or right affecting or relating to the Property or to which the Property is now or hereafter subject any different than the liability of Lender hereunder. The limitation of liability provided in this Section 19.15 is (i) in addition to, and not in limitation of, any limitation of liability applicable to the assignee provided by law or by any other contract, agreement or instrument, and (ii) shall not apply to any assignee’s gross negligence or willful misconduct.

 

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19.16 No Joint Venture or Partnership; No Third Party Beneficiaries.

(a) Borrower and Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor to grant Lender any interest in the Property other than that of mortgagee, beneficiary or lender.

(b) This Agreement and the other Loan Documents are solely for the benefit of Lender and Borrower and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the benefit of Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable to do so.

19.17 Publicity. Each party shall endeavor to permit the other to review the initial press release relating to the Loan in order to provide the other with a reasonable opportunity to comment thereon.

19.18 Waiver of Marshalling of Assets. To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s members and others with interests in Borrower and of the Property, and agrees not to assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Property for the collection of the Indebtedness without any prior or different resort for collection or of the right of Lender to the payment of the Indebtedness out of the net proceeds of the Property in preference to every other claimant whatsoever.

19.19 Waiver of Counterclaim and other Actions. Borrower hereby expressly and unconditionally waives, in connection with any suit, action or proceeding brought by Lender on this Agreement, the Note, the Security Instrument or any Loan Document, any and every right it may have to (i) interpose any counterclaim therein (other than a counterclaim which can only be asserted in the suit, action or proceeding brought by Lender on this Agreement, the Note, the Security Instrument or any Loan Document and cannot be maintained in a separate action) and (ii) have any such suit, action or proceeding consolidated with any other or separate suit, action or proceeding.

 

Loan and Security Agreement

 

175

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19.20 Conflict; Construction of Documents; Reliance. In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies. Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

19.21 Prior Agreements. This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, are superseded by the terms of this Agreement and the other Loan Documents and unless specifically set forth in a writing contemporaneous herewith the terms, conditions and provisions of any and all such prior agreements do not survive execution of this Agreement.

19.22 Certain Additional Rights of Lender (VCOC). Notwithstanding anything to the contrary contained in this Agreement, to the extent Lender or any Person who Controls Lender is a “venture capital operating company” within the meaning of 29 C.F.R. Section 2510.3-101, Lender shall have:

(a) upon not less than fifteen (15) Business Days’ prior written notice to Borrower, the right to request and to hold a meeting at mutually agreeable times, and not more than four (4) times during any calendar year to consult with an officer of Borrower that is familiar with the financial condition of each Borrower and the operation of the Individual Properties and is otherwise reasonably acceptable to Lender regarding such significant business activities and business and financial developments of Borrower as are specified by Lender in writing in the request for such meeting; provided, however, that such consultations shall not include discussions of environmental compliance programs or disposal of hazardous substances; and provided further that neither the Borrower nor its designated representative shall be under any obligation to follow or implement any advice or recommendations of the Lender. The rights of Lender provided in this Agreement are expressly limited to consultation, and shall not include any other rights or obligations, including without limitation, any right or obligation to supervise or conduct any aspect of the Borrower’s business or operations; and

(b) the right, in accordance with the terms of Section 11.1 of this Agreement, to examine the books and records of Borrower at any reasonable times upon reasonable notice, provided that any such examination shall be conducted so as not to unreasonably interfere with the business of Borrower or any Tenants or other occupants of any Individual Property.

 

Loan and Security Agreement

 

176

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19.23 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which shall constitute one document.

19.24 Intercreditor Agreement. Lender and Mezzanine Lender are parties to a certain Intercreditor Agreement dated as of the date hereof (the “Intercreditor Agreement”) memorializing their relative rights and obligations with respect to the Loan, the Mezzanine Loan, Borrower, Mezzanine Borrower, the “Collateral” as defined in each Mezzanine Loan Agreement and the Property. Borrower hereby acknowledges and agrees that (i) such Intercreditor Agreement is intended solely for the benefit of Lender and Mezzanine Lender and (ii) Borrower is not an intended third-party beneficiary of any of the provisions therein and shall not be entitled to rely on any of the provisions contained therein. Lender and Mezzanine Lender shall have no obligation to disclose to Borrower the contents of the Intercreditor Agreement. Borrower’s obligations hereunder are independent of such Intercreditor Agreement and remain unmodified by the terms and provisions thereof.

[NO FURTHER TEXT ON THIS PAGE]

 

Loan and Security Agreement

 

177

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

 

[Lender’s signature appears on following page]

 

Loan and Security Agreement

 

Signature Page

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Loan and Security Agreement

 

Signature Page

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EXHIBIT A

BORROWER ORGANIZATIONAL STRUCTURE

 

 

Loan and Security Agreement

 

Exhibit A

---

 

 

Loan and Security Agreement

 

Exhibit B

---

EXHIBIT B

INTEREST RATE CAP AGREEMENT

SMBC DERIVATIVE PRODUCTS LIMITED

Sumitomo Mitsui Banking Corporation Group

CONFIRMATION

 

Date:		March 23, 2012
To:		New Private Restaurant Properties, LLC 2202 N. Westshore Blvd 5th Floor Tampa, Florida 33607
		Attention: Vice President Real Estate Phone: 813.387.8000 Fax: 813.830.2497
cc:		Chatham Financial Corporation Attention: Jen Kraft 235 Whitehorse Lane Kennett Square, Pennsylvania 19348 Phone: 484.731.0015 Fax: 610.925.3125
From:		SMBC Capital Markets, Inc. as Agent for SMBC Derivative Products Limited Derivative Products Group 277 Park Avenue, Fifth Floor New York, New York 10172
cc:		Documentation Contact: Raymond Ho Tel: 212-224-5088 Fax: 212-224-4959 Email: confirms@smbc-cm.com
Re:		USD 48,720,000.00 Rate Protection Transaction, dated as of March 23, 2012 between SMBC Derivative Products Limited (“Party A”) and New Private Restaurant Properties, LLC (“Party B”).
		Our Reference Number: DPB200407

The purpose of this letter agreement is to confirm the terms and conditions of the Interest Rate Cap Agreement entered into between Party A and Party B on the Trade Date specified below (the “Rate Protection Transaction”). This letter agreement constitutes a “Confirmation” as referred to in the ISDA Form specified below. This document supersedes all previous confirmations and amendments with respect to the above referenced transaction.

The parties agree that the Transaction to which this Confirmation relates shall be governed by an ISDA Master Agreement, in the pre-printed form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) published by ISDA (the ‘ISDA Form’), and that such ISDA Form, as amended, supplemented or modified by this Confirmation, is incorporated by reference herein and deemed to have been entered into by the parties on or prior to the Trade Date for the purpose of governing only the Transaction evidenced by this Confirmation. Copies of the ISDA Form are available upon request.

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 2				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

This Confirmation incorporates by reference the definitions and provisions contained in the 2006 ISDA Definitions (the “Definitions”) as published by the International Swaps and Derivatives Association, Inc. (“ISDA”), Such definitions and provisions are incorporated by reference herein. In the event of any inconsistency between this Confirmation and the Definitions or the ISDA Form, this Confirmation will govern.

1. Notice to Counterparty.

Party A is solely responsible for its contractual obligations and commitments; none of Sumitomo Mitsui Banking Corporation, SMBC Capital Markets, Inc., SMBC Nikko Capital Markets Limited, nor any other affiliate of Party A shall be responsible for the contractual obligations or commitments of Party A.

Party A is not a bank and is separate from any affiliated bank, and the obligations of Party A are not deposits, are not insured by the United States of America or any agency thereof, are not guaranteed by an affiliated bank, and are not otherwise an obligation of an affiliated bank.

Party A is regulated by Financial Services Authority. The time of execution of the transaction is available upon request.

2. Terms of Rate Protection Transaction.

 

Party A:		SMBC Derivative Products Limited
Party B:		New Private Restaurant Properties, LLC
Trade Date:		March 23, 2012
Effective Date:		March 27, 2012
Termination Date:		April 13, 2014, with No Adjustment to Period End Dates
Notional Amount:		USD 48,720,000.00
Floating Amounts:
Floating Rate Payer:		Party A
Initial Floating Rate Calculation Period:		The initial Floating Rate Calculation Period will be from and including the Effective Date up to but excluding April 13, 2012, with No Adjustment to Period End Dates
Floating Rate Calculation Periods:		The Floating Rate Calculation Periods will be the initial Floating Rate Calculation Period and thereafter from and including the thirteenth (13th) calendar day of each month to but excluding the thirteenth (13th) calendar day of the following month and continuing up to but excluding the Termination Date, with No Adjustment to Period End Dates
Floating Rate for initial Calculation Period:		0.24200 % (per cent) per annum

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 3				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

 

Floating Rate Payer Payment Dates:		The third (3rd) Business Day prior to the tenth (10th) calendar day of the month beginning with April 5, 2012, continuing up to and including April 7, 2014, subject to adjustment in accordance with the Preceding Business Day Convention
Floating Rate Option:		USD-LIBOR-BBA, (as necessary) round up to nearest l/1000th of 1%
Designated Maturity:		1 Month
Spread:		Inapplicable
Floating Rate Day Count Fraction:		Actual/360
Reset Dates:		The first (1st) day of each Floating Rate Calculation Period, with No Adjustment
Compounding:		Inapplicable
Cap Rate:		7.00000 % (per cent) per annum
Fixed Amounts:
Fixed Rate Payer:		Party B
Fixed Rate Payer Payment Date:		March 27, 2012
Fixed Amount:		USD 4,680,00
Business Days for Payments by both parties:		New York and Pittsburg, PA
Calculation Agent:		SMBC Capital Markets, Inc. (“SMBC-CM”), acting as Agent for Party A. unless otherwise specified in a Confirmation in relation to the
		relevant Transaction.

3. Additional Provisions.

(a) “Specified Entity” will not apply to Party A and will not apply to Party B.

(b) “Specified Transaction” will have the meaning specified in Section 14 of the ISDA Form; notwithstanding, it is agreed that “Specified Transaction” is not applicable for any purpose hereunder.

(c) The “Cross Default” provisions of Section 5(a)(vi) of the ISDA Form will not apply to Party A or Party B.

(d) The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the ISDA Form will not apply to Party A or Party B.

(e) The “Tax Event” provisions of Section 5(b)(ii) will not apply to Party A and will apply to Party B.

(f) The “Tax Event Upon Merger” provisions of Section 5(b)(iii) will not apply to Party A and will apply to Party B.

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 4				DPB200407

 

SMBC Derivative Products Limited and Party B nave agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

(g) The “Automatic Early Termination” provision of Section 6(a) of the ISDA Form will not apply to Party A or Party B.

(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA Form:

 

(i)

Market Quotation will apply; provided, however, if Market Quotation cannot be determined, then Loss will apply.

 

(ii)

The Second Method will apply.

(i) “Termination Currency” means U.S. Dollars.

(j) “Additional Termination Event” will apply to Party A and will not apply to Party B.

The following shall constitute an Additional Termination Event;

If Party A’s counterparty rating shall be downgraded below (i) a long term unsecured debt rating or counterparty rating of A3 by Moody’s Investors Service, Inc. (“Moody’s”) or a short term rating of P1 by Moody’s or if Party A does not have a short term rating by Moody’s, a long term unsecured debt rating or counterparty rating of A2 by Moody’s or (ii) (if rated) a long term unsecured debt rating or counterparty rating of A (middle) by Dominion Bund Rating Service, Ltd (“DBRS”) or a short term rating of Rl (middle) by DBRS or if Party A does not have a short term rating by DBRS, a long term unsecured debt rating or counterparty rating of A(high) by DBRS, then Party A must promptly give notice to Party B of such downgrade and within thirty (30) days of such notice, either:

 

(i)

enter into an arrangement to provide collateral to Party B; or

 

(ii)

at Party A’s sole cost and expense, obtain a replacement counterparty that meets the Required Ratings defined below and who shall enter into a transaction with Party B on substantially the same terms as contained in this Confirmation. Until such replacement counterparty is in place, Party A shall continue to perform its obligations under the Confirmation.

In each case such arrangement or such replacement counterparty must be reasonably acceptable to Party B, Moody’s and DBRS (if rated).

Party A’s failure to comply with this provision will constitute an Additional Termination Event in which case Party A shall be the sole Affected Party.

“Required Ratings”` means a long term unsecured debt rating or counterparty rating of A3 and a short term rating of P1 by Moody’s or if Party A does not have a short term rating by Moody’s, a long term unsecured debt rating or counterparty rating of A2 by Moody’s and (if rated) a long term unsecured debt rating or counterparty rating of A (middle) and a short term rating of R1 (middle) by DBRS or if Party A does not have a short term rating by DBRS, a long term unsecured debt rating or counterparty rating of A(high) by DBRS.

 

(k)	Tax Representations:

 

(a)

Payer Representation. For the purposes of Section 3(e) of the ISDA Form, Party A and Party B each make the following representation:

It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other

SMBC Derivative Products Limited and Party B have agreed that alter receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 5				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminals the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

than interest under Section 2(e), 6(d)(ii) or 6(e) of the ISDA Form) to be made by it to the other party under this Confirmation. In making this representation, it may rely on: (i) the accuracy of any representation made by the other party pursuant to Section 3(f) of the ISDA Form; (ii) the satisfaction of the agreement of the other party contained in Section 4(a)(i) or 4(a)(iii) of the ISDA Form and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the ISDA Form; and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the ISDA Form.

 

(b)

Payee Representation.

 

(i)

For the purposes of Section 3(f) of the ISDA Form, Party A and Party B each make the following representations:

 

(1)

The following representation will apply to Party A:

It is entering into the Transaction in the ordinary course of its trade as, and is, either (I) a recognized U.K. bank or (II) a recognized U.K. swaps dealer (in either case (I) or (II), for purposes of the United Kingdom Inland Revenue extra statutory concession C17 on interest and currency swaps dated March 14, 1989), and it will bring into account payments made and received in respect of the Transaction in computing its income for United Kingdom tax purposes.

 

(2)

The following representation will apply to Party B:

Party B is a limited liability company organized under the laws of the State of Delaware, with its principal place of business in the State of Florida and its Taxpayer ID Number is 37-1666111;

 

(ii)

Other Payee Representations: None.

 

(1)	Agreement to Deliver Documents.

For the purposes of Section 4(a)(i) and (ii) of the ISDA Form, each party agrees to deliver the following documents, as applicable:

(a) Tax forms, documents or certificates to be delivered are: as needed.

(b) Other documents to be delivered are:

 

Party Required to				Date By Which To		Covered
Deliver Document		Form / Document / Certificate		Be Delivered		by 3(d)
Party A & Party B		Certificate of signing authority and specimen signatures of each individual executing this Confirmation		Upon execution of and delivery of this Confirmation		Yes
Party A		Certified copies of all corporate resolutions authorizing the execution of this Confirmation		Upon execution of and delivery of this Confirmation		Yes
Party A		An opinion of counsel concerning this Confirmation		Upon execution and delivery of this Confirmation		No

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 6				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

 

(m)	Addresses for Notices.

Address for notices or communications to Party A:

For the purpose of Section 12(a) of the ISDA Form:

SMBC Derivative Products Limited

One New Change,

London EC4M 9AF

UK

Attention: Swaps Administration

Facsimile No.: (44 207) 786 1490

Telephone No.: (44 207) 786 1400

with a copy to:

SMBC Capital Markets, Inc.

277 Park Avenue, Fifth Floor

New York, New York 10172

USA

Attention: President

Tel: 212.224.5021

Fax: 212.224.4948,212.224.5111 (for payment and reset notices)

Address for notices or communications to Party B:

For all purposes:

 

To:	New Private Restaurant Properties, LLC

2202 N. Westshore Blvd

5th Floor

Tampa, Florida 33607

Attention: Vice President Real Estate

Phone: 813.387.8000

Fax: 813.830.2497

 

cc:	Chatham Financial Corporation

Attention: Jen Kraft

235 Whitehorse Lane

Kennett Square, Pennsylvania 19348

Phone: 484.731.0015

Fax: 610.925.3125

 

(n)	Process Agent. For the purpose of Section 13(c) of the ISDA Form:

Party A appoints as its Process Agent:

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 7				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

SMBC Capital Markets, Inc.

277 Park Avenue, Fifth Floor

New York, New York 10172

USA

Attention: President

Tel: 212.224.5020

Fax: 212.224.4948,212.224.5111 (for payment and reset notices)

Party B appoints as its Process Agent:

Not applicable

 

(o)	Offices. The provisions of Section 10(a) of the ISDA Form will not apply to this Confirmation.

 

(p)	Multibranch Party. For the purpose of Section 10(c) of the ISDA Form:

Party A is not a Multibranch Party.

Party B is not a Multibranch Party.

 

(q)	Credit Support Document. Details of any Credit Support Document:

With respect to Party A, Credit Support Document means: none.

With respect to Party B, Credit Support Document means: none.

 

(r)	Credit Support Provider,

With respect to Party A, Credit Support Provider means: none.

With respect to Party B, Credit Support Provider means: none.

 

(s)	Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York (without reference to choice of law doctrine).

 

(t)	Netting of Payments. Subparagraph (ii) of Section 2(c) of the ISDA Form will apply to this Transaction in each case starting from the date of this Confirmation.

 

(u)	“Affiliate” will have the meaning specified in Section 14 of the ISDA Form, provided that Party A and Party B shall have, or be deemed to have, no Affiliates for the purposes of this Confirmation.

 

(v)

Waiver of Jury Trial. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action, or proceeding relating to this Confirmation or any Credit Support Document. Each party (1) certifies that no representative, agent, or attorney of the other party or any Credit Support Provider has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (2) acknowledges that it and the other party have been induced to enter into this Confirmation and provide for any Credit Support Document, as applicable, by, among other things, the mutual waivers and certifications in this Section.

 

(w)	The parenthetical clause in Section 4(a)(iii) of the ISDA Form will not apply to either Party A or Party B.

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 8				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount. they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

 

(x)

For the purpose of Section 6(e), Set-off and counterclaim will not apply. Additionally, in consideration of the execution and delivery hereof by Party A, Party B waives, as it may apply to Party A only, any applicable right to Set-off or similar right to withhold payment set forth in the Interest Rate Currency Exchange Agreement or similar master agreement between Party B and SMBC Capital Markets, Inc.

 

(y)	Section 2(d)(i)(4) of the ISDA Form is amended by:

 

(i)

deleting the words “However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for;” and

 

(ii)

deleting subsections (A) and (B).

 

(z)	Section 2(d)(ii) of the ISDA Form will apply to Party A and will not apply to Party B.

 

(aa)	Section 4(e) of the ISDA Form will apply to Party A and will not apply to Party B.

 

(bb)	The definition of “Indemnifiable Tax” in Section 14 of the ISDA Form is hereby deleted and replaced with “Indemnifiable Tax” means any withholding tax.”

 

(cc)	The third line of Section 5(a)(i) of the ISDA Form “Failure to Pay or Deliver” is amended by replacing the word “third” with the word “second”.

 

(dd)	The fifth line of Section 5(a)(ii) of the ISDA Form “Breach of Agreement” is amended by replacing the word “thirtieth” with the word “fifteenth”.

 

(ee)	The twelfth line of Section 5(a)(vii) of the ISDA Form “Bankruptcy” is amended by replacing the number “30” with the number “15”.

 

(ff)	The twentieth line of Section 5(a)(vii) of the ISDA Form “Bankruptcy” is amended by replacing the number “30” with the number “15”.

 

(gg)	The “Default Under Specified Transaction” provisions of Section 5(a)(v) of the ISDA Form will not apply to Party A or Party B.

 

(hh)	Notification of Recording of Telephone Conversations. Each party hereby notifies the other that telephone conversations between the parties will be recorded, and each party consents to such recording and to such recording being produced in evidence in court proceedings.

 

(ii)	Fully-paid Transactions.

(i) The condition precedent in Section 2(a)(iii)( 1) of the ISDA Form does not apply to a payment and delivery owing by a party if the other party shall have satisfied in full all its payment or delivery obligations under Section 2(a)(i) of the ISDA Form and shall at the relevant time have no further payment or delivery obligations, whether absolute or contingent under Section 2(a)(i) of the ISDA Form.

(ii) Notwithstanding the terms of Section 5 and 6 of the ISDA Form if at any time and so long as one of the parties to this Confirmation (“X”) shall have satisfied in full all its payment and delivery obligations under Section 2(a)(i) of the ISDA Form and shall at the time have no future payment or delivery obligations, whether absolute or contingent under such Section, then unless the other party (“Y”) is required pursuant to appropriate proceedings to return to X or

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 9				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

otherwise returns to X upon demand of X any portion of any such payment or delivery, (a) the occurrence of an event described in Section 5(a) of the ISDA Form with respect to X any Credit Support Provider of X or any Specified Entity of X shall not constitute an Event of Default or a Potential Event of Default with respect to X as the Defaulting Party and (b) Y shall be entitled to designate an Early Termination Date pursuant to Section 6 of the ISDA Form only as a result of the occurrence of a Termination Event set forth in Section (5)(b)(i) of the ISDA Form with respect to Y as the Affected Party.

(iii) This agreement (including, without limitation, the ISDA Form incorporated herein for the purpose of governing only the Transaction evidenced by this Confirmation) shall govern only the Transaction evidenced by this Confirmation.

 

(jj)	Party B shall not be liable for and shall be precluded from payment of any out-of-pocket expenses required under Section 11 of the ISDA Form and incurred by Party A related to the enforcement and protection of Party A’s rights under this Confirmation.

 

(kk)

Party A covenants that it will not institute against or cause any other person to institute against or join any other person in instituting against Party B any reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any federal or state bankruptcy, dissolution, or similar law, for 365 days after the outstanding rated securities related to the Transaction that this Confirmation governs have been paid in full.

 

(ll)	Additional Representations. Section 3(a) of the ISDA Form is hereby amended by the deletion of “and” at the end of sub-clause (iv), the insertion of a semicolon in place at the end of sub-clause (v) thereof and the addition of the following new subclauses:

(vi) Agency. It is entering into this Confirmation and the Transaction as principal and not as agent of any person;

(vii) Non-Reliance. It is acting for its own account, and has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into the Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into the Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of the Transaction;

(viii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of the Transaction. It is also capable of assuming, and assumes, the risks of the Transaction;

(ix) Status of Parties. The other party is not acting as a fiduciary for or an advisor to it in respect of the Transaction; and

(x) Eligible Contract Participant. It is an “eligible contract participant” as defined in the U.S. Commodity Exchange Act.

 

(mm)	Collateral Assignment. Party A consents to a collateral assignment of this Confirmation and the transaction evidenced thereby (if requested) and agrees to execute separate consents as may be reasonably requested by the parties to such agreements.

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 10				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

 

(nn)	Assignment. Upon prepayment, in whole or in part, of the underlying financing, Party B can assign its position in the transaction (in whole or in part) to any other third party with Party A’s consent, which will not unreasonably be withheld or delayed.

4. Payment Instructions.

Payments to Party A of USD amounts:

 

Depository:		JPMorgan Chase Bank, N.A. New York Branch
ABA Routing No.:		021000021
Address:		New York, NY
In Favor Of:		SMBC Derivative Products Limited
Account No.:		400035413

Please contact Larry Weissblum of our Operations Group if you have any questions concerning SMBC Derivative Products Limited’s payment instructions referenced above (Tel: 212.224.5061; Fax: 212.224.5111).

Payments to Party B of USD amounts:

 

Depository:		Bank of America, N.A.
ABA Routing No.:		026-009-593
Address:		New York, NY
In Favor Of:		BAML-DB 2012-OSI Trust, Commercial Mortgage Pass-Through Certificates, Series 2012-OSI
Account No.:		12352-84246

 

5.	Counterparts. This Confirmation may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement and may be executed by facsimile.

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American

 

Exhibit B

---

Page 11				DPB200407

 

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America, N.A, or the current lender, as the case may be.

Please confirm that the foregoing correctly sets forth the terms of the agreement between you and us by executing this Confirmation and returning it to the documentation contact above.

Yours Sincerely,

Party A:

By: SMBC Derivative Products Limited

By: SMBC Capital Markets, Inc.

Its: Agent

 

		By:		/s/ Aala Shah
		Name: Aala Shah
		Title: Assistant Vice President

 

		By:		/s/ Danny Boodram
		Name: Danny Boodram
		Title: Vice President

Party B:

By: New Private Restaurant Properties, LLC

 

		By:		/s/ Dirk A. Montgomery
		Name: Dirk A. Montgomery
		Title: CFO

SMBC Derivative Products Limited and Party B have agreed that after receipt by SMBC Derivative Products Limited of the Fixed Amount, they shall not amend, modify, assign, or terminate the Rate Protection Transaction without the prior written consent of German American Capital Corporation and Bank of America. N.A, or the current lender, as the case may be.

 

Exhibit B

---

AUTHORIZATION

and

INCUMBENCY CERTIFICATE

for

New Private Restaurant Properties, LLC (the “Buyer”)

I hereby certify that the Buyer is permitted to enter into derivative transaction(s) including but not limited to interest rate swaps, caps and floors (“transactions”) for the purposes of hedging.

 

Name:		Title:		Signature:
Dirk Montgomery		Chief Financial Officer

IN WITNESS WHEREOF, the undersigned certifies that the person(s) signing above are authorized to transact and bind the Buyer in hedging transaction(s). Each of the persons listed above has been authorized to transact on behalf of the Buyer and is duly elected to and now holds the office set forth opposite his or her name and the signature of each person set forth opposite his or her respective name is a true and genuine signature.

 

				By:		Jor Haetartt
				Name:		Jor Haetartt
				Title:		Secretary (or other authorized individual; title must be provided in such case)*
						*       This individual cannot be included on the list above. Date: 3/26/12

 

Exhibit B

---

EXHIBIT C

FORM OF SUBORDINATION,

NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AGREEMENT (this “Agreement”) is made as of this         day of         201        , between GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation, having an address at 60 Wall Street, 10^th Floor, New York, New York 10005 and BANK OF AMERICA, N.A., a national banking association, having an address at Hearst Tower, 214 North Tryon Street, Charlotte, North Carolina 28255 (together with each of their respective successors and assigns, “Lender”), and             , a                     , having an address at                      (“Tenant”).

RECITALS:

WHEREAS, Lender has made a loan (the “Loan”) to New Private Restaurant Properties, LLC, a Delaware limited liability, having an address at 2202 North WestShore Boulevard, Suite 470C, Tampa, Florida (together with its successors or assigns, “Borrower” or “Master Lessor”), which loan is secured by, inter alia, that certain [Mortgage, Deed to Secure Debt and/or Deed of Trust with Security Agreement, Financing Statement, Fixture Filing and Assignment of Master Lease, Subleases, Rents and Security Deposits (Multistate Form)] (which mortgage or deed of trust, and all amendments, renewals, increases, modifications, replacements, substitutions, extensions, spreaders and consolidations thereof and all re-advances thereunder and additions thereto, is referred to as the “Security Instrument”) recorded in              in Reel             , Page          [ADD RECORDING DATA FOR SECURITY INSTRUMENT], on the property described in Schedule “A” annexed hereto and made a part hereof (the “Property”); and

WHEREAS, Borrower and Private Restaurant Master Lessee, LLC, a Delaware limited liability company (“Master Lessee”) have entered into that certain Amended and Restated Master Lease Agreement dated as of             , 2012 (the “Master Lease”) [, a memorandum of which Master Lease was recorded in              in Reel         , Page         ] [ADD RECORDING DATA FOR MEMO IF APPLICABLE], pursuant to which Master Lessee leases, inter alia, all or a portion of the Property; and

WHEREAS, Master Lessee and              [INSERT CONCEPT SUBSIDIARY] (“Landlord”) have entered into that certain Sublease effective June 14, 2007, as amended by that certain                      dated as of             , 2012 (as so amended, the “Concept Sublease”) [, a memorandum of which Concept Sublease was recorded in              in Reel             , Page         /is being recorded immediately prior hereto/contemporaneously herewith] [ADD RECORDING DATA FOR MEMO, IF APPLICABLE], pursuant to which Landlord subleases, inter alia, a portion of the Property; and

WHEREAS, by                      [INSERT TITLE OF LEASE] (the “Lease”) dated             , 201         between Landlord and Tenant, as tenant, [a memorandum of which Lease was recorded in              in Reel             , Page         /is being recorded immediately prior hereto/contemporaneously herewith] [ADD RECORDING DATA FOR MEMO, IF APPLICABLE], Landlord has sub-subleased to Tenant certain premises located in              as more particularly described in the Lease (the “Premises”), such Premises comprising all or a portion of the Property; and

 

Exhibit C

 

1

---

WHEREAS, Lender and Tenant desire to confirm their understanding and agreement with respect to the Lease and the Security Instrument.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, Lender and Tenant hereby agree and covenant as follows:

1. The Lease, and all of the terms, covenants, provisions and conditions thereof (including, without limitation, any right of first refusal, right of first offer, option or any similar right with respect to the sale or purchase of the Premises, or any portion thereof) is, shall be and shall at all times remain and continue to be subject and subordinate in all respects to the lien, terms, covenants, provisions and conditions of the Master Lease and the Security Instrument and to all advances and re-advances made thereunder and all sums secured thereby. This provision shall be self-operative but Tenant shall execute and deliver any additional instruments which Lender may reasonably require to effect such subordination.

2. So long as (i) Tenant is not in default (after the giving of any notice required to be given under the Lease and beyond any period given in the Lease to Tenant to cure such default) in the payment of rent, percentage rent or additional rent or in the performance or observance of any of the other terms, covenants, provisions or conditions of the Lease on Tenant’s part to be performed or observed, (ii) Tenant is not in default under this Agreement (after the giving of any notice required to be given under this Agreement and beyond any period given in this Agreement to Tenant to cure such default) and (iii) the Lease is in full force and effect: (a) Tenant’s possession of the Premises and Tenant’s leasehold interest, rights and privileges under the Lease, including any extensions or renewals thereof which may be effected in accordance with any option therefor which is contained in the Lease, shall not be diminished or interfered with by Lender, and Tenant’s occupancy of the Premises shall not be disturbed by Lender for any reason whatsoever during the term of the Lease or any such extensions or renewals thereof, and (b) Lender will not join Tenant as a party defendant in any action or proceeding to foreclose the Security Instrument or to enforce any rights or remedies of Lender under the Security Instrument which would cut-off, destroy, terminate or extinguish the Lease or Tenant’s interest and estate under the Lease (except to the extent required so that Tenant’s right to receive or set-off any monies or obligations owed or to be performed by any of Lender’s predecessors-in-interest shall not be enforceable thereafter against Lender or any of Lender’s successors-in-interest). Notwithstanding the foregoing provisions of this Paragraph 2, if it would be procedurally disadvantageous for Lender not to name or join Tenant as a party in a foreclosure proceeding with respect to the Security Instrument, Lender may so name or join Tenant without in any way diminishing or otherwise affecting the rights and privileges granted to, or inuring to the benefit of, Tenant under this Agreement

3. (A) After notice is given by Lender that the Security Instrument is in default and that the rentals under the Lease should be paid to Lender (“Direct Payment Notice”), Tenant will attorn to Lender and pay to Lender, or pay in accordance with the directions of Lender, all rentals and other monies due and to become due to Landlord under the Lease or otherwise in respect of the Premises. Such payments shall be made regardless of any right of set-off, counterclaim or other defense which Tenant may have against Landlord, whether as the tenant under the Lease or otherwise. Landlord hereby irrevocably directs Tenant to comply with any Direct Payment Notice regardless of any contrary direction, instruction or assertion by Landlord. Tenant shall be entitled to full credit under the Lease for any rentals paid to Lender pursuant to a Direct Payment Notice to the same extent as if such rent was paid directly to Landlord.

 

Exhibit C

 

2

---

(B) In addition, if Lender (or its nominee or designee) shall succeed to the rights of Master Lessor under the Master Lease and/or Landlord under the Lease, whether through possession or foreclosure action, delivery of a deed or otherwise (including after a default under the Master Lease), or another person purchases the Property or the portion thereof containing the Premises upon or following foreclosure of the Security Instrument or in connection with any bankruptcy case commenced by or against Landlord or Master Lessor, then at the request of Lender (or its nominee or designee) or such purchaser (Lender, its nominees and designees, and such purchaser, and their respective successors and assigns, each being a “Successor-Landlord”), Tenant shall attorn to and recognize Successor-Landlord as Tenant’s landlord under the Lease and shall promptly execute and deliver any instrument that Successor-Landlord may reasonably request to evidence such attornment. Upon such attornment, the Lease shall continue in full force and effect as, or as if it were, a direct lease between Successor-Landlord and Tenant upon all terms, conditions and covenants as are set forth in the Lease. If the Lease shall have terminated by operation of law or otherwise as a result of or in connection with a bankruptcy case commenced by or against Landlord or Master Lessor or a foreclosure action or proceeding or delivery of a deed in lieu or any other event or circumstance resulting in the termination of the Master Lease, upon request of Successor-Landlord, Tenant shall promptly execute and deliver a direct lease with Successor-Landlord which direct lease shall be on substantially the same terms and conditions as the Lease (subject, however, to the provisions of clauses (i)-(v) of this Paragraph 3(B)) and shall be effective as of the day the Lease shall have terminated as aforesaid. Notwithstanding the continuation of the Lease, the attornment of Tenant thereunder or the execution of a direct lease between Successor-Landlord and Tenant as aforesaid, Successor-Landlord shall not:

(i) be liable for any previous act or omission of Landlord under the Lease;

(ii) be subject to any off-set, defense or counterclaim which shall have theretofore accrued to Tenant against Landlord;

(iii) be bound by any modification of the Lease or by any previous prepayment of rent or additional rent made more than one (1) month prior to the date same was due which Tenant might have paid to Landlord, unless such modification or prepayment shall have been expressly approved in writing by Lender;

(iv) be liable for any security deposited under the Lease unless such security has been physically delivered to Lender or Successor-Landlord; and

(v) be liable or obligated to comply with or fulfill any of the obligations of Landlord under the Lease or any agreement relating thereto with respect to the construction of, or payment for, improvements on or above the Premises (or any portion thereof), leasehold improvements, tenant work letters and/or similar items.

4. Tenant agrees that without the prior written consent of Lender (to the extent Lender’s consent is required under the terms of the Master Lease), it shall not (a) amend, modify (in any material respects), terminate or cancel the Lease or any extensions or renewals thereof, (b) tender a surrender of the Lease, (c) make a prepayment of any rent or additional rent more than one (1) month in advance of the due date thereof, or (d) except to the extent required by the terms of the Lease, subordinate or permit the subordination of the Lease to any lien subordinate to the Security Instrument. Any such purported action without such consent shall be void as against the holder of the Security Instrument.

 

Exhibit C

 

3

---

5. (A) Tenant shall promptly notify Lender of any default by Landlord under the Lease and of any act or omission of Landlord which would give Tenant the right to cancel or terminate the Lease or to claim a partial or total eviction.

(B) In the event of a default by Landlord under the Lease which would give Tenant the right, immediately or after the lapse of a period of time, to cancel or terminate the Lease, to claim a partial or total eviction, or entitle Tenant to an offset against rent under the Lease, or in the event of any other act or omission of Landlord which would give Tenant the right to cancel or terminate the Lease, Tenant shall not exercise such right (i) until Tenant has given written notice of such default, act or omission to Lender and (ii) unless Lender has failed, within sixty (60) days after Lender receives such notice, to cure or remedy the default, act or omission or, if such default, act or omission shall be one which is not reasonably capable of being remedied by Lender within such sixty (60) day period, until a reasonable period for remedying such default, act or omission shall have elapsed following the giving of such notice and following the time when Lender shall have become entitled under the Security Instrument to remedy the same (which reasonable period shall in no event be less than the period to which Landlord would be entitled under the Lease or otherwise, after similar notice, to effect such remedy), provided that Lender shall with due diligence give Tenant written notice of its intention to and shall commence and continue to, remedy such default, act or omission. If Lender cannot reasonably remedy a default, act or omission of Landlord until after Lender obtains possession of the Premises, Tenant may not terminate or cancel the Lease or claim a partial or total eviction by reason of such default, act or omission until the expiration of a reasonable period necessary for the remedy after Lender secures possession of the Premises. To the extent Lender incurs any expenses or other costs in curing or remedying such default, act or omission, including, without limitation, attorneys’ fees and disbursements, Lender shall be subrogated to Tenant’s rights against Landlord.

(C) Notwithstanding the foregoing, Lender shall have no obligation hereunder to remedy such default, act or omission.

6. To the extent that the Lease shall entitle Tenant to notice of the existence of any mortgage and the identity of any mortgagee or any ground lessor, this Agreement shall constitute such notice to Tenant with respect to the Security Instrument and Lender.

7. Upon and during the continuance of a default under the Master Lease and/or the Security Instrument, which is not cured after any applicable notice and/or cure periods, Lender shall be entitled, but not obligated, to exercise the claims, rights, powers, privileges and remedies of Landlord under the Lease and shall be further entitled to the benefits of, and to receive and enforce performance of, all of the covenants to be performed by Tenant under the Lease as though Lender were named therein as Landlord.

8. Anything herein or in the Lease to the contrary notwithstanding, in the event that a Successor-Landlord shall acquire title to the Property or the portion thereof containing the Premises, Successor-Landlord shall have no obligation, nor incur any liability, beyond Successor-Landlord’s then interest, if any, in the Property, and Tenant shall look exclusively to such interest, if any, of Successor- Landlord in the Property for the payment and discharge of any obligations imposed upon Successor-Landlord hereunder or under the Lease, and Successor-Landlord is hereby released or relieved of any other liability hereunder and under the Lease. Tenant agrees that, with respect to any money judgment which may be obtained or secured by Tenant against Successor-Landlord, Tenant shall look solely to the

 

Exhibit C

 

4

---

estate or interest owned by Successor-Landlord in the Property (including, without limitation, the rents, issues and profits therefrom), and Tenant will not collect or attempt to collect any such judgment out of any other assets of Successor-Landlord.

9. [Intentionally Omitted]

10. If the Lease provides that Tenant is entitled to expansion space, Successor-Landlord shall have no obligation nor any liability for failure to provide such expansion space if a prior landlord (including, without limitation, Landlord), by reason of a lease or leases entered into by such prior landlord with other tenants of the Property, has precluded the availability of such expansion space.

11. Except as specifically provided in this Agreement, Lender shall not, by virtue of this Agreement, the Security Instrument or any other instrument to which Lender may be a party, be or become subject to any liability or obligation to Tenant under the Lease or otherwise.

12. (A) Tenant acknowledges and agrees that this Agreement satisfies and complies in all respects with the provisions of Article         of the Lease and that this Agreement supersedes (but only to the extent inconsistent with) the provisions of such Article and any other provision of the Lease relating to the priority or subordination of the Lease and the interests or estates created thereby to the Security Instrument.

(B) Tenant agrees to enter into a subordination, non-disturbance and attornment agreement with any lender which shall succeed Lender as lender with respect to the Property, or any portion thereof, provided such agreement is substantially similar to this Agreement.

13. (A) Any notice required or permitted to be given by Tenant to Landlord shall be simultaneously given also to Lender, and any right to Tenant dependent upon notice shall take effect only after notice is so given. Performance by Lender shall satisfy any conditions of the Lease requiring performance by Landlord, and Lender shall have a reasonable time to complete such performance as provided in Paragraph 5 hereof.

(B) All notices or other communications required or permitted to be given to Tenant or to Lender pursuant to the provisions of this Agreement shall be in writing and shall be deemed given only if mailed by United States registered mail, postage prepaid, or if sent by nationally recognized overnight delivery service (such as Federal Express or United States Postal Service Express Mail), addressed as follows: to Tenant, at the address first set forth above, Attention:                     ; to Lender, at the address first set forth above, Attention:                      and General Counsel; or to such other address or number as such party may hereafter designate by notice delivered in accordance herewith. All such notices shall be deemed given three (3) business days after delivery to the United States Post office registry clerk if given by registered mail, or on the next business day after delivery to an overnight delivery courier.

14. This Agreement may be modified only by an agreement in writing signed by the parties hereto, or their respective successors-in-interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto, and their respective successors and assigns. The term “Lender” shall mean the then holder of the Security Instrument. The term “Landlord” shall mean the then holder of the landlord’s interest in the Lease. The term “person” shall mean an individual, joint venture, corporation, partnership, trust, limited liability company, unincorporated association or other entity. All references

 

Exhibit C

 

5

---

herein to the Lease shall mean the Lease as modified by this Agreement and to any amendments or modifications to the Lease (provided that Lender shall not be bound by any such amendment or modification if Lender’s consent thereto is required under the Master Lease and such consent of Lender has not been obtained). Any inconsistency between the Lease and the provisions of this Agreement shall be resolved, to the extent of such inconsistency, in favor of this Agreement.

15. Tenant hereby represents to Lender as follows:

(A) The Lease is in full force and effect and has not been further amended.

(B) There has been no assignment of the Lease or subletting of any portion of the Premises demised under the Lease.

(C) There are no oral or written agreements or understandings between Landlord and Tenant relating to the Premises demised under the Lease or the Lease transaction except as set forth in the Lease and this Agreement.

(D) The execution of the Lease was duly authorized and the Lease is in full force and effect and to the best of Tenant’s knowledge there exists no default (beyond any applicable grace period) on the part of either Tenant or Landlord under the Lease.

(E) There has not been filed by or against nor to the best of the knowledge and belief of Tenant is there threatened against Tenant, any petition under the bankruptcy laws of the United States.

(F) To the best of Tenant’s knowledge, there has not been any assignment, hypothecation or pledge of the Lease or rents accruing under the Lease by Landlord, other than pursuant to the terms of the Lease and the Security Instrument.

16. Whenever, from time to time, reasonably requested by Lender (but not more than three (3) times during any calendar year), Tenant shall execute and deliver to or at the direction of Lender, and without charge to Lender, one or more written certifications, in a form acceptable to Tenant, of all of the matters set forth in Paragraph 15 above, and any other information the Lender may reasonably require to confirm the current status of the Lease.

17. BOTH TENANT AND LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located.

[SIGNATURE PAGE FOLLOWS]

 

Exhibit C

 

6

---

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

 

Exhibit C

 

7

---

AGREED AND CONSENTED TO:
LANDLORD:
[LANDLORD]
By:
Name:
Title:

 

Exhibit C

 

8

---

Schedule A

 

Exhibit C

 

9

---

S&C Draft of March 20, 2012

EXHIBIT D

FORM OF MASTER LEASE RENT PAYMENT DIRECTION LETTER

New Private Restaurant Properties, LLC

2202 N. West Shore Boulevard, Suite 470C

Tampa, FL 33607

Attention: Chief Financial Officer

Private Restaurant Master Lessee, LLC

2202 N. West Shore Boulevard, Suite 500

Tampa, FL 33607

Attention: Chief Financial Officer

March         , 2012

 

Re:

Amended and Restated Master Lease Agreement between New Private Restaurant Properties, LLC, as lessor (“Lessor”), and Private Restaurant Master Lessee, LLC, as lessee (“Lessee”), dated as of March          , 2012 (as the same may be further amended, supplemented or otherwise modified in accordance with the terms thereof the “Master Lease”)

Ladies and Gentlemen:

With reference to the above referenced Master Lease, please be advised that Lessor has obtained a loan (the “Loan”) from German American Capital Corporation, having an address at 60 Wall Street, New York, New York 10005, and Bank of America, N.A., having an address at Hearst Tower, 214 North Tryon Street, Charlotte, North Carolina 28255 (collectively, together with their respective successors and assigns, “Lender”) pursuant to that certain Loan and Security Agreement, dated of even date herewith, between Lessor and Lender (the “Loan Agreement”), which Loan is secured by, among other things, the fee and leasehold properties demised to Lessee by the Master Lease. Capitalized terms used but not otherwise defined herein shall have the meaning assigned to such terms in the Master Lease.

In connection with the Loan, from and after the date hereof and until notified otherwise by written instruction from Lender, you are hereby irrevocably instructed at all times during the term of the Loan: (a) to make payments of Base Rent, and (b) to the extent that any Additional Charges are payable by Lessee to Lessor under the Master Lease, to make payments of such Additional Charges, in each case by wire transfer directly to the following account:

 

 

Exhibit D

---

Bank:

Bank of America N.A.

ABA No.:

026-009-593

Account No.:

12352-84246

Credit to:

BAML-DB 2012-OSI Trust, Commercial Mortgage Pass-Through Certificates, Series 2012-OSI as Lender

If you have any questions regarding this letter, please contact Lessor at the address indicated above.

 

 

cc:	German American Capita1 Corporation

60 Wall Street, 10^th Floor

New York, New York 10005

Attention: John Beacham and General Counsel

Bank of America, N.A.

Real Estate Structured Finance - Servicing

900 West Trade Street, Suite 650

Mail Code: NC1 -026-06-01

Charlotte, North Carolina 28255

Attn: Servicing Manager

Sidley Austin LLP

One South Dearborn

Chicago, Illinois 60603

Attention: Charles Schrank, Esq.

 

 

Exhibit D

---

EXHIBIT E

COUNTERPARTY ACKNOWLEDGMENT

SMBC Derivative Products Limited (“Counterparty”) has entered into a [ Confirmation] (the “Interest Rate Cap Agreement”, dated as of March 23, 2012, between the Counterparty and New Private Restaurant Properties, LLC (“Borrower”). Attached hereto, is a true, correct and complete copy of the Interest Rate Cap Agreement. Counterparty acknowledges that it has been informed that Borrower, pursuant to that certain Loan and Security Agreement, dated March 27, 2012 (the “Loan Agreement”) has pledged and collaterally assigned its rights under the Interest Rate Cap Agreement to German American Capital Corporation, a Maryland corporation and Bank of America, N.A., a national banking association (together with their successors and assigns, “Lender”). Counterparty hereby consents to such pledge and assignment and agrees that it will make any payments to become payable under or pursuant to the Interest Rate Cap Agreement directly to an account at Bank of America, N.A. in the name of BAML-DB 2012-OSI Trust, Commercial Mortgage Pass-Through Certificates, Series 2012-OSI as Lender, Account Number 12352-84246, ABA #026-009-593, or to such other account designated in writing by Lender. Counterparty acknowledges that, in the event it shall fail to make such payments directly to such account, it shall be deemed to have not made such payment pursuant to the Interest Rate Cap Agreement. Counterparty also agrees that it will not modify, amend or terminate the Interest Rate Cap Agreement without Lender’s consent. Borrower and Lender agree that (i) Counterparty shall be entitled to conclusively rely (without any independent investigation) on any notice or instructions from Borrower in respect of this acknowledgement, (ii) without limitation on the immediately preceding clause, in the event of any inconsistency between any notice or instructions from Lender and any notice or instructions from Borrower, Counterparty shall be entitled to conclusively rely (without any independent investigation) on those from Lender and (iii) Counterparty shall be held harmless and shall be fully indemnified by Borrower from and against any and all claims, other than those ultimately determined to be proximately caused by the gross negligence or willful misconduct of Counterparty, and from and against any damages, penalties, judgments, liabilities, losses or expenses (including reasonable attorneys’ fees and disbursement) incurred by Counterparty as a result of the assertion of any claim, by any person or entity, arising out of, or otherwise related to, any actions taken or omitted to be taken by Counterparty in reliance upon any such instructions or notice provided by Lender.

 

				COUNTERPARTY:
				SMBC DERIVATIVE PRODUCTS LIMITED
REF: DPB200407				By:		/s/ Aala Shah
				Name: Aala Shah
				Title: Assistant Vice President
				Date: March 26, 2012
				By:		/s/ Danny Boodram
				Name: Danny Boodram
				Title: Vice President
				Date: March 26, 2012

 

 

Exhibit E

---

Month of Payment Date		Year		Principal
May		2012		$	631,747.39
June		2012		$	633,853.22
July		2012		$	635,966.06
August		2012		$	638,085.95
September		2012		$	640,212.90
October		2012		$	642,346.95
November		2012		$	644,488.10
December		2012		$	646,636.40
January		2013		$	648,791.85
February		2013		$	650,954.49
March		2013		$	653,124.34
April		2013		$	655,301.42
May		2013		$	657,485.76
June		2013		$	659,677.38
July		2013		$	661,876.30
August		2013		$	664,082.56
September		2013		$	666,296.16
October		2013		$	668,517.15
November		2013		$	670,745.54
December		2013		$	672,981.36
January		2014		$	675,224.63
February		2014		$	677,475.38
March		2014		$	679,733.63
April		2014		$	681,999.41
May		2014		$	684,272.74
June		2014		$	686,553.65
July		2014		$	688,842.16
August		2014		$	691,138.30
September		2014		$	693,442.10
October		2014		$	695,753.57
November		2014		$	698,072.75
December		2014		$	700,399.66
January		2015		$	702,734.32
February		2015		$	705,076.77
March		2015		$	707,427.03
April		2015		$	709,785.12
May		2015		$	712,151.07
June		2015		$	714,524.91
July		2015		$	716,906.65
August		2015		$	719,296.34
September		2015		$	721,694.00
October		2015		$	724,099.64
November		2015		$	726,513.31
December		2015		$	728,935.02

 

Schedule VII

---

January		2016		$	731 ,364.80
February		2016		$	733,802.69
March		2016		$	736,248.70
April		2016		$	738,702.86
May		2016		$	741,165.20
June		2016		$	743,635.75
July		2016		$	746,114.54
August		2016		$	748,601 .59
September		2016		$	751 ,096.93
October		2016		$	753,600.58
November		2016		$	756,112.58
December		2016		$	758,632.96
January		2017		$	761,161.74
February		2017		$	763,698.94
March		2017		$	766,244.60
April		2017		$	283,684,592.10

 

Schedule VII

---

[GRAPHIC APPEARS HERE]

 

217

---

SCHEDULE I

EXISTING SUBLEASES; RLP SUBLEASES; NON-DISTURBANCE ELIGIBLE

SUBLEASES; UNAFFILIATED SUBLEASES; EXCLUDED LICENSES, SUPERIOR

LEASES; DEFAULTS OR PREPAID RENT UNDER SUBLEASES

1. RLP Subleases

 

Store Number		Address		Sublease*
9407		190 Partner Circle Southern Pines, NC 28387		Amended and Restated Lease between Bonefish Grill, LLC and Bonefish/Carolinas, Limited Partnership, dated as of June 14, 2007.
3101		4650 Route 42 Turnersville, NJ 08012		Amended and Restated Lease between Carrabba’s Italian Grill, LLC and Outback/Carrabba’s Partnership (as successor-in-interest to Carrabba’s/Mid Atlantic-I, Limited Partnership), dated as of June 14, 2007.
7101		4430 Long Gate Parkway Ellicott City, MD 21043		Lease between Carrabba’s Italian Grill, LLC and Carrabba’s/DC-I, Limited Partnership, dated as of February 3, 1997.
8109		901 Route 73 Evesham Township, NJ 08053		Amended and Restated Lease, between Carrabba’s Italian Grill, LLC and OSF/CIGI of Evesham Partnership (as successor-in-interest to Carrabba’s/Mid Atlantic-I, Limited Partnership), dated as of June 14, 2007.
9301		324 N. Peter’s Road Knoxville, TN 37922		Lease, between Carrabba’s Italian Grill, LLC. and Carrabba’s/Rocky Top, Limited Partnership, dated as of April 16, 1999.
2001		4322 West Boy Scout Boulevard Tampa, FL 33607		Lease, between OS Prime, LLC and OSI/Fleming’s, LLC, effective June 14, 2007.
1715		233 S. Ridge Road Wichita, KS 67212		Lease, between Outback Steakhouse of Florida, LLC and Outback Kansas, LLC (as successor-in-interest to Heartland Outback-II, Limited Partnership), dated as of February 1, 1999.

 

Schedule I

---

1716		15430 South Rogers Road Olathe, KS 66062		Lease, between Outback Steakhouse of Florida, LLC and Outback Kansas, LLC (as successor-in-interest to Heartland Outback-II, Limited Partnership), dated as of December 12, 2002.
2134		3020 Crain Highway Waldorf, MD 20601		Lease, between Outback Steakhouse of Florida, LLC and Outback/Stone-II, Limited Partnership (as successor-in-interest to Outback of Waldorf, Inc.), dated as of August 31, 1994.
2139		4420 Long Gate Parkway Ellicott City, MD 21043		Lease, between Outback Steakhouse of Florida, LLC and Outback/Stone-II, Limited Partnership, dated as of February 3, 1997.
3116		4600 Route 42 Turnersville, NJ 08012		Amended and Restated Lease, between Outback Steakhouse of Florida, LLC and Outback/Carrabba’s Partnership (as successor-in-interest to Outback/Mid-Atlantic-I, Limited Partnership), dated as of June 14, 2007.
3122		901 Route 73 Evesham Township, NJ 08053		Amended and Restated Lease, between Outback Steakhouse of Florida, LLC and OSF/CIGI of Evesham Partnership (as successor-in-interest to Outback/Mid-Atlantic-I, Limited Partnership), dated as of June 14, 2007.
3713		3600 South Broadway Edmond, OK 73013		Lease, between Outback Steakhouse of Florida, Inc. and OSF Oklahoma, LLC (as successor-in-interest to Outback/Heartland Limited Partnership), dated as of January 2, 1996.
3715		860 N. Interstate Drive Norman, OK 73013		Lease, between Outback Steakhouse of Florida, Inc. and OSF Oklahoma, LLC (as successor-in-interest to Outback/Heartland-II, Limited Partnership), dated as of May 21, 1997.
3716		7206 Cache Road Lawton, OK 73505		Lease, between Outback Steakhouse of Florida, Inc. and OSF Oklahoma, LLC (as successor-in-interest to Outback/Heartland-II, Limited Partnership), dated as of January 29, 1999.
3002		4342 West Boy Scout Boulevard Tampa, FL 33607		Lease, between OS Pacific, LLC and Roy’s/Outback Joint Venture, LLC, effective June 14, 2007.
6402		2840 Dallas Parkway Plano, TX 42093		Amended and Restated Lease, between OS Pacific, LLC and Roy’s/Outback Joint Venture (as successor-in-interest to Roy’s/South Midwest-I, Limited Partnership), dated as of June 14, 2007.

 

*	Each Sublease is as from time to time amended, restated, supplemented and otherwise modified and in effect from time to time, together with any renewals, extensions, assignments or replacements thereof.

 

Schedule I

---

2. Non-Disturbance Eligible Subleases / Unaffiliated Subleases

 

Store Number		Address		Sublease*
4801		40 Geoffrey Drive Newark, DE 19713		Lease, between OS Tropical, LLC and Cheeseburger of Newark, LLC (as successor-in-interest to Cheeseburger-South Eastern Pennsylvania, Limited Partnership), effective June 14, 2007.
5501		4670 Southport Crossing Drive Indianapolis, IN 43237		Lease, between OS Tropical, LLC and Cheeseburger of Southport, LLC (as successor-in-interest to Cheeseburger-Ohio, Limited Partnership), effective June 14, 2007.
5502		9770 Crosspoint Boulevard Fisher, IN 46256		Lease, between OS Tropical, LLC and Cheeseburger of Fishers, LLC (as successor-in-interest to Cheeseburger-Ohio, Limited Partnership), effective June 14, 2007.
5505		3830 S US Highway 41 Terre Haute, IN 47802		Lease, between OS Tropical, LLC and Cheeseburger of Terre Haute, LLC (as successor-in-interest to Cheeseburger-Ohio, Limited Partnership), effective June 14, 2007.
5506		8301 Eagle Lake Drive Evansville, IN 47715		Lease, between OS Tropical, LLC and Cheeseburger of Evansville, LLC (as successor-in-interest to Cheeseburger-Ohio, Limited Partnership), effective June 14, 2007.
6302		13905 Lakeside Circle Sterling Heights, MI 48313		Lease, between OS Tropical, LLC and Cheeseburger of Sterling Heights, LLC (as successor-in-interest to Cheeseburger in Paradise, LLC), effective June 14, 2007.
8001		4302 West Boy Scout Boulevard Tampa, FL 33607		Lease, between OS Southern, LLC and MVP LRS, LLC (as successor by merger to Selmon’s/Florida-I, Limited Partnership), effective June 14, 2007.

 

Schedule I

---

8002		17508 Dona Michelle Drive Tampa, FL 33647		Lease, between OS Southern, LLC and MVP LRS, LLC (as successor by merger to Selmon’s/Florida-I, Limited Partnership), effective June 19, 2002.
8302		13905 Lakeside Circle Sterling Heights, MI 48313		Lease, between OS Tropical, LLC and Cheeseburger of Sterling Heights, LLC (as successor-in-interest to Cheeseburger in Paradise, LLC), effective June 14, 2007.
8705		1101 Seminole Trail Charlottesville, VA 22901		Lease, between OS Tropical, LLC and Cheeseburger of Charlottesville, LLC (as successor-in-interest to Cheeseburger-Northern Virginia, Limited Partnership), effective June 14, 2007.

 

*	Each Sublease is as from time to time amended, restated, supplemented and otherwise modified and in effect from time to time, together with any renewals, extensions, assignments or replacements thereof.

3. Excluded Licenses/Specified Prior Subleases

 

Store Number		Address		Excluded License/Specified Prior Subleases*
1028		4902 Commercial Way Spring Hill, FL 34608		Billboard leased pursuant to a Lease Renewal Agreement, dated July 22, 1999.
1036		861 W. 23rd Street Panama City, FL 32405		Billboard leased pursuant to a Renewal Lease, dated April 7, 1997.
1520		2315 Post Road Indianapolis, IN 46219		Billboard leased pursuant to a Renewal Lease Agreement, dated September 1, 1996.
3715		860 N. Interstate Drive Norman, OK 73013		Sign leased pursuant to a Sign Location Lease, dated May 1, 2007.
4801		40 Geoffrey Drive Newark, DE 19713		Space leased for use as a Dunkin Donuts retail location pursuant to a Lease, dated November 20, 2006.
8609		1320 Boardman Polland Road Boardman Township, OH 44514		Space leased for use as a Verizon Wireless telephone retail and service location pursuant to a Lease, dated May 10, 2007.
8609		1320 Boardman Polland Road Boardman Township, OH 44514		Space leased for use as an Aspen Dental office pursuant to a Lease, dated August 24, 2005.

 

*	Each license/sublease is as from time to time amended, restated, supplemented and otherwise modified and in effect from time to time, together with any renewals, extensions, assignments or replacements thereof.

 

Schedule I

---

4. Sublease Defaults

None.

5. Prepaid Rents More than One (1) in Advance

None.

 

Schedule I

---

SCHEDULE II

LITIGATION; CONDEMNATION; WORK STOPPAGES

1. Litigation

None.

2. Condemnation

 

Store Number		Address		Condemnation
3458		8280 Valley Boulevard Blowing Rock, NC 28605		Right of way easement and ongoing litigation to release right of way area to the State.
8705		1101 Seminole Trail Charlottesville, VA 22901		Notice of right of way taking and construction easement received.
4810		279 Junction Road Madison, WI 53717		Notice of potential transmission line easement taking

3. Work Stoppages

None.

 

Schedule II

---

SCHEDULE III

ALLOCATED LOAN AMOUNTS AND COMBINED ALLOCATED LOAN AMOUNTS

 

Unit #		Property Name		Allocated Mortgage Loan Amount				Combined Allocated Loan Amount
311		OSI Restaurant Portfolio-Outback Steakhouse		$	1,274,108			$	1,961,372
312		OSI Restaurant Portfolio-Outback Steakhouse		$	1,144,199			$	1,761,389
314		OSI Restaurant Portfolio-Outback Steakhouse		$	1,224,143			$	1,884,456
316		OSI Restaurant Portfolio-Outback Steakhouse		$	1,174,178			$	1,807,539
317		OSI Restaurant Portfolio-Outback Steakhouse		$	1,139,202			$	1,753,698
323		OSI Restaurant Portfolio-Outback Steakhouse		$	1,339,062			$	2,061,364
325		OSI Restaurant Portfolio-Outback Steakhouse		$	1,149,195			$	1,769,081
326		OSI Restaurant Portfolio-Outback Steakhouse		$	1,144,199			$	1,761,389
453		OSI Restaurant Portfolio-Outback Steakhouse		$	1,094,234			$	1,684,473
455		OSI Restaurant Portfolio-Outback Steakhouse		$	924,353			$	1,422,957
601		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	949,335			$	1,461,415
602		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	924,353			$	1,422,957
605		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	909,363			$	1,399,882
606		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,014,290			$	1,561,406
611		OSI Restaurant Portfolio-Outback Steakhouse		$	1,099,230			$	1,692,165
612		OSI Restaurant Portfolio-Outback Steakhouse		$	869,391			$	1,338,348
613		OSI Restaurant Portfolio-Outback Steakhouse		$	904,367			$	1,392,190
614		OSI Restaurant Portfolio-Outback Steakhouse		$	1,174,178			$	1,807,539
615		OSI Restaurant Portfolio-Outback Steakhouse		$	1,044,269			$	1,607,556
616		OSI Restaurant Portfolio-Outback Steakhouse		$	1,014,290			$	1,561,406
617		OSI Restaurant Portfolio-Outback Steakhouse		$	1,159,188			$	1,784,464
619		OSI Restaurant Portfolio-Outback Steakhouse		$	904,367			$	1,392,190
628		OSI Restaurant Portfolio-Outback Steakhouse		$	819,426			$	1,261,432
1001		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,748,775			$	2,692,080
1002		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	2,198,460			$	3,384,329
1006		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	899,370			$	1,384,498
1008		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,598,880			$	2,461,330
1022		OSI Restaurant Portfolio-Outback Steakhouse		$	1,349,055			$	2,076,747
1023		OSI Restaurant Portfolio-Outback Steakhouse		$	1,448,985			$	2,230,580
1024		OSI Restaurant Portfolio-Outback Steakhouse		$	1,698,810			$	2,615,163
1025		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
1026		OSI Restaurant Portfolio-Outback Steakhouse		$	1,698,810			$	2,615,163
1027		OSI Restaurant Portfolio-Outback Steakhouse		$	2,048,565			$	3,153,579
1028		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
1029		OSI Restaurant Portfolio-Outback Steakhouse		$	1,898,670			$	2,922,830
1030		OSI Restaurant Portfolio-Outback Steakhouse		$	1,448,985			$	2,230,580
1031		OSI Restaurant Portfolio-Outback Steakhouse		$	1,199,160			$	1,845,998
1033		OSI Restaurant Portfolio-Outback Steakhouse		$	1,448,985			$	2,230,580
1034		OSI Restaurant Portfolio-Outback Steakhouse		$	1,399,020			$	2,153,664
1035		OSI Restaurant Portfolio-Outback Steakhouse		$	1,898,670			$	2,922,830
1036		OSI Restaurant Portfolio-Outback Steakhouse		$	1,349,055			$	2,076,747

 

Schedule III

---

1060		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
1061		OSI Restaurant Portfolio-Outback Steakhouse		$	1,498,950			$	2,307,497
1063		OSI Restaurant Portfolio-Outback Steakhouse		$	1,149,195			$	1,769,081
1101		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,608,873			$	2,476,714
1102		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,419,006			$	2,184,431
1108		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,419,006			$	2,184,431
1116		OSI Restaurant Portfolio-Outback Steakhouse		$	1,404,017			$	2,161,356
1119		OSI Restaurant Portfolio-Outback Steakhouse		$	1,309,083			$	2,015,214
1120		OSI Restaurant Portfolio-Outback Steakhouse		$	1,144,199			$	1,761,389
1121		OSI Restaurant Portfolio-Outback Steakhouse		$	1,189,167			$	1,830,614
1122		OSI Restaurant Portfolio-Outback Steakhouse		$	1,399,020			$	2,153,664
1123		OSI Restaurant Portfolio-Outback Steakhouse		$	1,164,185			$	1,792,156
1124		OSI Restaurant Portfolio-Outback Steakhouse		$	1,074,248			$	1,653,706
1125		OSI Restaurant Portfolio-Outback Steakhouse		$	874,388			$	1,346,040
1133		OSI Restaurant Portfolio-Outback Steakhouse		$	1,164,185			$	1,792,156
1134		OSI Restaurant Portfolio-Outback Steakhouse		$	1,074,248			$	1,653,706
1135		OSI Restaurant Portfolio-Outback Steakhouse		$	1,054,262			$	1,622,940
1137		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
1201		OSI Restaurant Portfolio-Bonefish Grill		$	1,174,178			$	1,807,539
1264		OSI Restaurant Portfolio-Outback Steakhouse		$	1,199,160			$	1,845,998
1410		OSI Restaurant Portfolio-Outback Steakhouse		$	1,049,265			$	1,615,248
1411		OSI Restaurant Portfolio-Outback Steakhouse		$	999,300			$	1,538,331
1412		OSI Restaurant Portfolio-Outback Steakhouse		$	1,099,230			$	1,692,165
1414		OSI Restaurant Portfolio-Outback Steakhouse		$	1,249,125			$	1,922,914
1416		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
1418		OSI Restaurant Portfolio-Outback Steakhouse		$	1,049,265			$	1,615,248
1419		OSI Restaurant Portfolio-Outback Steakhouse		$	1,149,195			$	1,769,081
1424		OSI Restaurant Portfolio-Outback Steakhouse		$	1,004,297			$	1,546,023
1450		OSI Restaurant Portfolio-Outback Steakhouse		$	874,388			$	1,346,040
1452		OSI Restaurant Portfolio-Outback Steakhouse		$	874,388			$	1,346,040
1453		OSI Restaurant Portfolio-Outback Steakhouse		$	899,370			$	1,384,498
1516		OSI Restaurant Portfolio-Outback Steakhouse		$	1,229,139			$	1,892,148
1518		OSI Restaurant Portfolio-Outback Steakhouse		$	1,124,213			$	1,730,623
1519		OSI Restaurant Portfolio-Outback Steakhouse		$	1,284,101			$	1,976,756
1520		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
1521		OSI Restaurant Portfolio-Outback Steakhouse		$	874,388			$	1,346,040
1522		OSI Restaurant Portfolio-Outback Steakhouse		$	924,353			$	1,422,957
1550		OSI Restaurant Portfolio-Outback Steakhouse		$	1,424,003			$	2,192,122
1611		OSI Restaurant Portfolio-Outback Steakhouse		$	874,388			$	1,346,040
1614		OSI Restaurant Portfolio-Outback Steakhouse		$	839,412			$	1,292,198
1715		OSI Restaurant Portfolio-Outback Steakhouse		$	1,229,139			$	1,892,148
1716		OSI Restaurant Portfolio-Outback Steakhouse		$	914,360			$	1,407,573
1813		OSI Restaurant Portfolio-Outback Steakhouse		$	1,311,581			$	2,019,060
1851		OSI Restaurant Portfolio-Outback Steakhouse		$	1,174,178			$	1,807,539
1901		OSI Restaurant Portfolio-Outback Steakhouse		$	1,264,115			$	1,945,989
1912		OSI Restaurant Portfolio-Outback Steakhouse		$	1,379,034			$	2,122,897
1914		OSI Restaurant Portfolio-Outback Steakhouse		$	1,204,157			$	1,853,689
1921		OSI Restaurant Portfolio-Outback Steakhouse		$	1,369,041			$	2,107,514
1941		OSI Restaurant Portfolio-Outback Steakhouse		$	1,448,985			$	2,230,580
1951		OSI Restaurant Portfolio-Outback Steakhouse		$	1,468,971			$	2,261,347

 

Schedule III

---

1961		OSI Restaurant Portfolio-Outback Steakhouse		$	1,533,926			$	2,361,339
1971		OSI Restaurant Portfolio-Outback Steakhouse		$	1,463,975			$	2,253,655
2001		OSI Restaurant Portfolio-Fleming’s Prime Steakhouse and Wine Bar		$	2,548,215			$	3,922,745
2014		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
2015		OSI Restaurant Portfolio-Outback Steakhouse		$	1,149,195			$	1,769,081
2017		OSI Restaurant Portfolio-Outback Steakhouse		$	1,448,985			$	2,230,580
2134		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
2139		OSI Restaurant Portfolio-Outback Steakhouse		$	1,948,635			$	2,999,746
2315		OSI Restaurant Portfolio-Outback Steakhouse		$	999,300			$	1,538,331
2319		OSI Restaurant Portfolio-Outback Steakhouse		$	1,009,293			$	1,553,715
2320		OSI Restaurant Portfolio-Outback Steakhouse		$	1,134,206			$	1,746,006
2321		OSI Restaurant Portfolio-Outback Steakhouse		$	1,174,178			$	1,807,539
2325		OSI Restaurant Portfolio-Outback Steakhouse		$	1,034,276			$	1,592,173
2326		OSI Restaurant Portfolio-Outback Steakhouse		$	1,144,199			$	1,761,389
2411		OSI Restaurant Portfolio-Outback Steakhouse		$	1,099,230			$	1,692,165
2415		OSI Restaurant Portfolio-Outback Steakhouse		$	1,024,283			$	1,576,790
2420		OSI Restaurant Portfolio-Outback Steakhouse		$	849,405			$	1,307,582
2619		OSI Restaurant Portfolio-Outback Steakhouse		$	1,034,276			$	1,592,173
3002		OSI Restaurant Portfolio-Roy’s Restaurant		$	1,798,740			$	2,768,996
3101		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,161,686			$	1,788,310
3102		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,174,178			$	1,807,539
3110		OSI Restaurant Portfolio-Outback Steakhouse		$	1,211,651			$	1,865,227
3114		OSI Restaurant Portfolio-Outback Steakhouse		$	1,803,737			$	2,776,688
3116		OSI Restaurant Portfolio-Outback Steakhouse		$	1,099,230			$	1,692,165
3117		OSI Restaurant Portfolio-Outback Steakhouse		$	1,064,255			$	1,638,323
3120		OSI Restaurant Portfolio-Outback Steakhouse		$	1,064,255			$	1,638,323
3122		OSI Restaurant Portfolio-Outback Steakhouse		$	1,211,651			$	1,865,227
3211		OSI Restaurant Portfolio-Outback Steakhouse		$	1,014,290			$	1,561,406
3212		OSI Restaurant Portfolio-Outback Steakhouse		$	1,264,115			$	1,945,989
3213		OSI Restaurant Portfolio-Outback Steakhouse		$	1,319,076			$	2,030,597
3214		OSI Restaurant Portfolio-Outback Steakhouse		$	1,438,992			$	2,215,197
3215		OSI Restaurant Portfolio-Outback Steakhouse		$	759,468			$	1,169,132
3217		OSI Restaurant Portfolio-Outback Steakhouse		$	1,264,115			$	1,945,989
3220		OSI Restaurant Portfolio-Outback Steakhouse		$	2,763,065			$	4,253,486
3357		OSI Restaurant Portfolio-Outback Steakhouse		$	1,149,195			$	1,769,081
3402		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,174,178			$	1,807,539
3403		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,129,209			$	1,738,314
3420		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,019,286			$	1,569,098
3444		OSI Restaurant Portfolio-Outback Steakhouse		$	1,414,010			$	2,176,739
3446		OSI Restaurant Portfolio-Outback Steakhouse		$	1,493,954			$	2,299,805
3447		OSI Restaurant Portfolio-Outback Steakhouse		$	1,478,964			$	2,276,730
3448		OSI Restaurant Portfolio-Outback Steakhouse		$	1,443,989			$	2,222,889
3450		OSI Restaurant Portfolio-Outback Steakhouse		$	1,024,283			$	1,576,790
3451		OSI Restaurant Portfolio-Outback Steakhouse		$	1,309,083			$	2,015,214
3452		OSI Restaurant Portfolio-Outback Steakhouse		$	1,419,006			$	2,184,431
3453		OSI Restaurant Portfolio-Outback Steakhouse		$	1,349,055			$	2,076,747
3454		OSI Restaurant Portfolio-Outback Steakhouse		$	1,239,132			$	1,907,531
3455		OSI Restaurant Portfolio-Outback Steakhouse		$	1,169,181			$	1,799,848
3458		OSI Restaurant Portfolio-Outback Steakhouse		$	884,381			$	1,361,423
3460		OSI Restaurant Portfolio-Outback Steakhouse		$	1,214,150			$	1,869,073

 

Schedule III

---

3461		OSI Restaurant Portfolio-Outback Steakhouse		$	1,134,206			$	1,746,006
3462		OSI Restaurant Portfolio-Outback Steakhouse		$	974,318			$	1,499,873
3463		OSI Restaurant Portfolio-Outback Steakhouse		$	1,344,059			$	2,069,056
3464		OSI Restaurant Portfolio-Outback Steakhouse		$	1,244,129			$	1,915,223
3621		OSI Restaurant Portfolio-Outback Steakhouse		$	999,300			$	1,538,331
3633		OSI Restaurant Portfolio-Outback Steakhouse		$	1,384,031			$	2,130,589
3635		OSI Restaurant Portfolio-Outback Steakhouse		$	1,359,048			$	2,092,131
3636		OSI Restaurant Portfolio-Outback Steakhouse		$	1,009,293			$	1,553,715
3640		OSI Restaurant Portfolio-Outback Steakhouse		$	1,339,062			$	2,061,364
3658		OSI Restaurant Portfolio-Outback Steakhouse		$	1,061,756			$	1,634,477
3662		OSI Restaurant Portfolio-Outback Steakhouse		$	986,809			$	1,519,102
3663		OSI Restaurant Portfolio-Outback Steakhouse		$	1,261,616			$	1,942,143
3713		OSI Restaurant Portfolio-Outback Steakhouse		$	1,438,992			$	2,215,197
3715		OSI Restaurant Portfolio-Outback Steakhouse		$	1,309,083			$	2,015,214
3716		OSI Restaurant Portfolio-Outback Steakhouse		$	949,335			$	1,461,415
3915		OSI Restaurant Portfolio-Outback Steakhouse		$	1,124,213			$	1,730,623
3917		OSI Restaurant Portfolio-Outback Steakhouse		$	1,234,136			$	1,899,839
3951		OSI Restaurant Portfolio-Outback Steakhouse		$	1,249,125			$	1,922,914
3952		OSI Restaurant Portfolio-Outback Steakhouse		$	724,493			$	1,115,290
4117		OSI Restaurant Portfolio-Outback Steakhouse		$	1,399,020			$	2,153,664
4118		OSI Restaurant Portfolio-Outback Steakhouse		$	1,349,055			$	2,076,747
4119		OSI Restaurant Portfolio-Outback Steakhouse		$	1,419,006			$	2,184,431
4120		OSI Restaurant Portfolio-Outback Steakhouse		$	1,488,957			$	2,292,114
4121		OSI Restaurant Portfolio-Outback Steakhouse		$	874,388			$	1,346,040
4122		OSI Restaurant Portfolio-Outback Steakhouse		$	1,064,255			$	1,638,323
4123		OSI Restaurant Portfolio-Outback Steakhouse		$	1,453,982			$	2,238,272
4124		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
4127		OSI Restaurant Portfolio-Outback Steakhouse		$	1,359,048			$	2,092,131
4210		OSI Restaurant Portfolio-Outback Steakhouse		$	969,321			$	1,492,181
4314		OSI Restaurant Portfolio-Outback Steakhouse		$	1,493,954			$	2,299,805
4318		OSI Restaurant Portfolio-Outback Steakhouse		$	1,129,209			$	1,738,314
4319		OSI Restaurant Portfolio-Outback Steakhouse		$	1,394,024			$	2,145,972
4320		OSI Restaurant Portfolio-Outback Steakhouse		$	1,443,989			$	2,222,889
4324		OSI Restaurant Portfolio-Outback Steakhouse		$	939,342			$	1,446,031
4350		OSI Restaurant Portfolio-Outback Steakhouse		$	1,319,076			$	2,030,597
4401		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,978,614			$	3,045,896
4403		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,119,216			$	1,722,931
4404		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,693,814			$	2,607,472
4405		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,354,052			$	2,084,439
4406		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,493,954			$	2,299,805
4407		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,898,670			$	2,922,830
4416		OSI Restaurant Portfolio-Outback Steakhouse		$	1,199,160			$	1,845,998
4417		OSI Restaurant Portfolio-Outback Steakhouse		$	899,370			$	1,384,498
4418		OSI Restaurant Portfolio-Outback Steakhouse		$	949,335			$	1,461,415
4422		OSI Restaurant Portfolio-Outback Steakhouse		$	1,119,216			$	1,722,931
4423		OSI Restaurant Portfolio-Outback Steakhouse		$	1,149,195			$	1,769,081
4424		OSI Restaurant Portfolio-Outback Steakhouse		$	999,300			$	1,538,331
4426		OSI Restaurant Portfolio-Outback Steakhouse		$	899,370			$	1,384,498
4429		OSI Restaurant Portfolio-Outback Steakhouse		$	1,314,080			$	2,022,906
4454		OSI Restaurant Portfolio-Outback Steakhouse		$	994,304			$	1,530,640

 

Schedule III

---

4455		OSI Restaurant Portfolio-Outback Steakhouse		$	1,054,262			$	1,622,940
4456		OSI Restaurant Portfolio-Outback Steakhouse		$	804,437			$	1,238,357
4457		OSI Restaurant Portfolio-Outback Steakhouse		$	1,134,206			$	1,746,006
4458		OSI Restaurant Portfolio-Outback Steakhouse		$	1,074,248			$	1,653,706
4459		OSI Restaurant Portfolio-Outback Steakhouse		$	1,204,157			$	1,853,689
4461		OSI Restaurant Portfolio-Outback Steakhouse		$	1,184,171			$	1,822,923
4462		OSI Restaurant Portfolio-Outback Steakhouse		$	1,898,670			$	2,922,830
4463		OSI Restaurant Portfolio-Outback Steakhouse		$	1,538,922			$	2,369,030
4464		OSI Restaurant Portfolio-Outback Steakhouse		$	1,448,985			$	2,230,580
4466		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
4467		OSI Restaurant Portfolio-Outback Steakhouse		$	1,104,227			$	1,699,856
4468		OSI Restaurant Portfolio-Outback Steakhouse		$	984,311			$	1,515,256
4469		OSI Restaurant Portfolio-Outback Steakhouse		$	1,019,286			$	1,569,098
4470		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
4473		OSI Restaurant Portfolio-Outback Steakhouse		$	1,094,234			$	1,684,473
4474		OSI Restaurant Portfolio-Outback Steakhouse		$	969,321			$	1,492,181
4475		OSI Restaurant Portfolio-Outback Steakhouse		$	939,342			$	1,446,031
4476		OSI Restaurant Portfolio-Outback Steakhouse		$	1,074,248			$	1,653,706
4478		OSI Restaurant Portfolio-Outback Steakhouse		$	1,019,286			$	1,569,098
4510		OSI Restaurant Portfolio-Outback Steakhouse		$	1,199,160			$	1,845,998
4511		OSI Restaurant Portfolio-Outback Steakhouse		$	1,149,195			$	1,769,081
4716		OSI Restaurant Portfolio-Outback Steakhouse		$	1,848,705			$	2,845,913
4724		OSI Restaurant Portfolio-Outback Steakhouse		$	1,299,090			$	1,999,831
4728		OSI Restaurant Portfolio-Outback Steakhouse		$	1,249,125			$	1,922,914
4756		OSI Restaurant Portfolio-Outback Steakhouse		$	1,399,020			$	2,153,664
4758		OSI Restaurant Portfolio-Outback Steakhouse		$	1,389,027			$	2,138,281
4762		OSI Restaurant Portfolio-Outback Steakhouse		$	999,300			$	1,538,331
4801		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	1,194,164			$	1,838,306
4810		OSI Restaurant Portfolio-Outback Steakhouse		$	1,034,276			$	1,592,173
4813		OSI Restaurant Portfolio-Outback Steakhouse		$	1,049,265			$	1,615,248
4910		OSI Restaurant Portfolio-Outback Steakhouse		$	999,300			$	1,538,331
4961		OSI Restaurant Portfolio-Outback Steakhouse		$	924,353			$	1,422,957
5010		OSI Restaurant Portfolio-Outback Steakhouse		$	1,149,195			$	1,769,081
5113		OSI Restaurant Portfolio-Outback Steakhouse		$	1,194,164			$	1,838,306
5301		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,224,143			$	1,884,456
5302		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,124,213			$	1,730,623
5303		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,149,195			$	1,769,081
5501		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	1,389,027			$	2,138,281
5502		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	1,414,010			$	2,176,739
5505		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	984,311			$	1,515,256
5506		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	1,259,118			$	1,938,298
6006		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,299,090			$	1,999,831
6007		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,349,055			$	2,076,747
6013		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,149,195			$	1,769,081
6015		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,698,810			$	2,615,163
6020		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,998,600			$	3,076,663
6021		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,548,915			$	2,384,414
6029		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,299,090			$	1,999,831
6035		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,149,195			$	1,769,081
6048		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,349,055			$	2,076,747

 

Schedule III

---

6052		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,249,125			$	1,922,914
6116		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	944,339			$	1,453,723
6302		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	849,405			$	1,307,582
6402		OSI Restaurant Portfolio-Roy’s Restaurant		$	1,124,213			$	1,730,623
6502		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,419,006			$	2,184,431
6903		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,024,283			$	1,576,790
7101		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,948,635			$	2,999,746
8001		OSI Restaurant Portfolio-Lee Roy Selmon’s		$	2,698,110			$	4,153,495
8002		OSI Restaurant Portfolio-Lee Roy Selmon’s		$	1,399,020			$	2,153,664
8109		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,024,283			$	1,576,790
8302		OSI Restaurant Portfolio-Sterling’s Bistro		$	299,790			$	461,499
8609		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	2,213,450			$	3,407,404
8705		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	1,049,265			$	1,615,248
8908		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,149,195			$	1,769,081
9301		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,508,943			$	2,322,880
9407		OSI Restaurant Portfolio-Bonefish Grill		$	959,328			$	1,476,798
9410		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,488,957			$	2,292,114
9414		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,034,276			$	1,592,173
9704		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,249,125			$	1,922,914
9802		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	1,034,276			$	1,592,173

 

Schedule III

---

SCHEDULE IV

MAXIMUM MASTER LEASE BASE RENT REDUCTIONS FOR RELEASED

PROPERTIES

 

Unit #		Property Name		Master Lease Base Rent Reductions
311		OSI Restaurant Portfolio-Outback Steakhouse		$	213,724
312		OSI Restaurant Portfolio-Outback Steakhouse		$	191,933
314		OSI Restaurant Portfolio-Outback Steakhouse		$	205,343
316		OSI Restaurant Portfolio-Outback Steakhouse		$	196,962
317		OSI Restaurant Portfolio-Outback Steakhouse		$	191,095
323		OSI Restaurant Portfolio-Outback Steakhouse		$	224,620
325		OSI Restaurant Portfolio-Outback Steakhouse		$	192,771
326		OSI Restaurant Portfolio-Outback Steakhouse		$	191,933
453		OSI Restaurant Portfolio-Outback Steakhouse		$	183,552
455		OSI Restaurant Portfolio-Outback Steakhouse		$	155,055
601		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	159,246
602		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	155,055
605		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	152,541
606		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	170,141
611		OSI Restaurant Portfolio-Outback Steakhouse		$	184,390
612		OSI Restaurant Portfolio-Outback Steakhouse		$	145,835
613		OSI Restaurant Portfolio-Outback Steakhouse		$	151,702
614		OSI Restaurant Portfolio-Outback Steakhouse		$	196,962
615		OSI Restaurant Portfolio-Outback Steakhouse		$	175,170
616		OSI Restaurant Portfolio-Outback Steakhouse		$	170,141
617		OSI Restaurant Portfolio-Outback Steakhouse		$	194,447
619		OSI Restaurant Portfolio-Outback Steakhouse		$	151,702
628		OSI Restaurant Portfolio-Outback Steakhouse		$	137,454
1001		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	293,347
1002		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	368,779
1006		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	150,864
1008		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	268,203
1022		OSI Restaurant Portfolio-Outback Steakhouse		$	226,296
1023		OSI Restaurant Portfolio-Outback Steakhouse		$	243,059
1024		OSI Restaurant Portfolio-Outback Steakhouse		$	284,966
1025		OSI Restaurant Portfolio-Outback Steakhouse		$	217,915
1026		OSI Restaurant Portfolio-Outback Steakhouse		$	284,966
1027		OSI Restaurant Portfolio-Outback Steakhouse		$	343,635
1028		OSI Restaurant Portfolio-Outback Steakhouse		$	217,915
1029		OSI Restaurant Portfolio-Outback Steakhouse		$	318,491
1030		OSI Restaurant Portfolio-Outback Steakhouse		$	243,059
1031		OSI Restaurant Portfolio-Outback Steakhouse		$	201,152
1033		OSI Restaurant Portfolio-Outback Steakhouse		$	243,059
1034		OSI Restaurant Portfolio-Outback Steakhouse		$	234,678
1035		OSI Restaurant Portfolio-Outback Steakhouse		$	318,491

 

Schedule IV

---

1036		OSI Restaurant Portfolio-Outback Steakhouse		$226,296
1060		OSI Restaurant Portfolio-Outback Steakhouse		$217,915
1061		OSI Restaurant Portfolio-Outback Steakhouse		$251,440
1063		OSI Restaurant Portfolio-Outback Steakhouse		$192,771
1101		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$269,879
1102		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$238,030
1108		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$238,030
1116		OSI Restaurant Portfolio-Outback Steakhouse		$235,516
1119		OSI Restaurant Portfolio-Outback Steakhouse		$219,591
1120		OSI Restaurant Portfolio-Outback Steakhouse		$191,933
1121		OSI Restaurant Portfolio-Outback Steakhouse		$199,476
1122		OSI Restaurant Portfolio-Outback Steakhouse		$234,678
1123		OSI Restaurant Portfolio-Outback Steakhouse		$195,285
1124		OSI Restaurant Portfolio-Outback Steakhouse		$180,199
1125		OSI Restaurant Portfolio-Outback Steakhouse		$146,674
1133		OSI Restaurant Portfolio-Outback Steakhouse		$195,285
1134		OSI Restaurant Portfolio-Outback Steakhouse		$180,199
1135		OSI Restaurant Portfolio-Outback Steakhouse		$176,846
1137		OSI Restaurant Portfolio-Outback Steakhouse		$217,915
1201		OSI Restaurant Portfolio-Bonefish Grill		$196,962
1264		OSI Restaurant Portfolio-Outback Steakhouse		$201,152
1410		OSI Restaurant Portfolio-Outback Steakhouse		$176,008
1411		OSI Restaurant Portfolio-Outback Steakhouse		$167,627
1412		OSI Restaurant Portfolio-Outback Steakhouse		$184,390
1414		OSI Restaurant Portfolio-Outback Steakhouse		$209,534
1416		OSI Restaurant Portfolio-Outback Steakhouse		$217,915
1418		OSI Restaurant Portfolio-Outback Steakhouse		$176,008
1419		OSI Restaurant Portfolio-Outback Steakhouse		$192,771
1424		OSI Restaurant Portfolio-Outback Steakhouse		$168,465
1450		OSI Restaurant Portfolio-Outback Steakhouse		$146,674
1452		OSI Restaurant Portfolio-Outback Steakhouse		$146,674
1453		OSI Restaurant Portfolio-Outback Steakhouse		$150,864
1516		OSI Restaurant Portfolio-Outback Steakhouse		$206,181
1518		OSI Restaurant Portfolio-Outback Steakhouse		$188,580
1519		OSI Restaurant Portfolio-Outback Steakhouse		$215,401
1520		OSI Restaurant Portfolio-Outback Steakhouse		$217,915
1521		OSI Restaurant Portfolio-Outback Steakhouse		$146,674
1522		OSI Restaurant Portfolio-Outback Steakhouse		$155,055
1550		OSI Restaurant Portfolio-Outback Steakhouse		$238,868
1611		OSI Restaurant Portfolio-Outback Steakhouse		$146,674
1614		OSI Restaurant Portfolio-Outback Steakhouse		$140,807
1715		OSI Restaurant Portfolio-Outback Steakhouse		$206,181
1716		OSI Restaurant Portfolio-Outback Steakhouse		$153,379
1813		OSI Restaurant Portfolio-Outback Steakhouse		$220,010
1851		OSI Restaurant Portfolio-Outback Steakhouse		$196,962
1901		OSI Restaurant Portfolio-Outback Steakhouse		$212,048
1912		OSI Restaurant Portfolio-Outback Steakhouse		$231,325
1914		OSI Restaurant Portfolio-Outback Steakhouse		$201,990
1921		OSI Restaurant Portfolio-Outback Steakhouse		$229,649
1941		OSI Restaurant Portfolio-Outback Steakhouse		$243,059

 

Schedule IV

---

1951		OSI Restaurant Portfolio-Outback Steakhouse		$	246,412
1961		OSI Restaurant Portfolio-Outback Steakhouse		$	257,307
1971		OSI Restaurant Portfolio-Outback Steakhouse		$	245,574
2001		OSI Restaurant Portfolio-Fleming’s Prime Steakhouse and Wine Bar		$	427,449
2014		OSI Restaurant Portfolio-Outback Steakhouse		$	217,915
2015		OSI Restaurant Portfolio-Outback Steakhouse		$	192,771
2017		OSI Restaurant Portfolio-Outback Steakhouse		$	243,059
2134		OSI Restaurant Portfolio-Outback Steakhouse		$	217,915
2139		OSI Restaurant Portfolio-Outback Steakhouse		$	326,873
2315		OSI Restaurant Portfolio-Outback Steakhouse		$	167,627
2319		OSI Restaurant Portfolio-Outback Steakhouse		$	169,303
2320		OSI Restaurant Portfolio-Outback Steakhouse		$	190,257
2321		OSI Restaurant Portfolio-Outback Steakhouse		$	196,962
2325		OSI Restaurant Portfolio-Outback Steakhouse		$	173,494
2326		OSI Restaurant Portfolio-Outback Steakhouse		$	191,933
2411		OSI Restaurant Portfolio-Outback Steakhouse		$	184,390
2415		OSI Restaurant Portfolio-Outback Steakhouse		$	171,818
2420		OSI Restaurant Portfolio-Outback Steakhouse		$	142,483
2619		OSI Restaurant Portfolio-Outback Steakhouse		$	173,494
3002		OSI Restaurant Portfolio-Roy’s Restaurant		$	301,729
3101		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	194,866
3102		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	196,962
3110		OSI Restaurant Portfolio-Outback Steakhouse		$	203,248
3114		OSI Restaurant Portfolio-Outback Steakhouse		$	302,567
3116		OSI Restaurant Portfolio-Outback Steakhouse		$	184,390
3117		OSI Restaurant Portfolio-Outback Steakhouse		$	178,523
3120		OSI Restaurant Portfolio-Outback Steakhouse		$	178,523
3122		OSI Restaurant Portfolio-Outback Steakhouse		$	203,248
3211		OSI Restaurant Portfolio-Outback Steakhouse		$	170,141
3212		OSI Restaurant Portfolio-Outback Steakhouse		$	212,048
3213		OSI Restaurant Portfolio-Outback Steakhouse		$	221,268
3214		OSI Restaurant Portfolio-Outback Steakhouse		$	241,383
3215		OSI Restaurant Portfolio-Outback Steakhouse		$	127,396
3217		OSI Restaurant Portfolio-Outback Steakhouse		$	212,048
3220		OSI Restaurant Portfolio-Outback Steakhouse		$	463,489
3357		OSI Restaurant Portfolio-Outback Steakhouse		$	192,771
3402		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	196,962
3403		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	189,418
3420		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	170,980
3444		OSI Restaurant Portfolio-Outback Steakhouse		$	237,192
3446		OSI Restaurant Portfolio-Outback Steakhouse		$	250,602
3447		OSI Restaurant Portfolio-Outback Steakhouse		$	248,088
3448		OSI Restaurant Portfolio-Outback Steakhouse		$	242,221
3450		OSI Restaurant Portfolio-Outback Steakhouse		$	171,818
3451		OSI Restaurant Portfolio-Outback Steakhouse		$	219,591
3452		OSI Restaurant Portfolio-Outback Steakhouse		$	238,030
3453		OSI Restaurant Portfolio-Outback Steakhouse		$	226,296
3454		OSI Restaurant Portfolio-Outback Steakhouse		$	207,857
3455		OSI Restaurant Portfolio-Outback Steakhouse		$	196,124
3458		OSI Restaurant Portfolio-Outback Steakhouse		$	148,350

 

Schedule IV

---

3460		OSI Restaurant Portfolio-Outback Steakhouse		$	203,667
3461		OSI Restaurant Portfolio-Outback Steakhouse		$	190,257
3462		OSI Restaurant Portfolio-Outback Steakhouse		$	163,436
3463		OSI Restaurant Portfolio-Outback Steakhouse		$	225,458
3464		OSI Restaurant Portfolio-Outback Steakhouse		$	208,696
3621		OSI Restaurant Portfolio-Outback Steakhouse		$	167,627
3633		OSI Restaurant Portfolio-Outback Steakhouse		$	232,163
3635		OSI Restaurant Portfolio-Outback Steakhouse		$	227,973
3636		OSI Restaurant Portfolio-Outback Steakhouse		$	169,303
3640		OSI Restaurant Portfolio-Outback Steakhouse		$	224,620
3658		OSI Restaurant Portfolio-Outback Steakhouse		$	178,104
3662		OSI Restaurant Portfolio-Outback Steakhouse		$	165,532
3663		OSI Restaurant Portfolio-Outback Steakhouse		$	211,629
3713		OSI Restaurant Portfolio-Outback Steakhouse		$	241,383
3715		OSI Restaurant Portfolio-Outback Steakhouse		$	219,591
3716		OSI Restaurant Portfolio-Outback Steakhouse		$	159,246
3915		OSI Restaurant Portfolio-Outback Steakhouse		$	188,580
3917		OSI Restaurant Portfolio-Outback Steakhouse		$	207,019
3951		OSI Restaurant Portfolio-Outback Steakhouse		$	209,534
3952		OSI Restaurant Portfolio-Outback Steakhouse		$	121,530
4117		OSI Restaurant Portfolio-Outback Steakhouse		$	234,678
4118		OSI Restaurant Portfolio-Outback Steakhouse		$	226,296
4119		OSI Restaurant Portfolio-Outback Steakhouse		$	238,030
4120		OSI Restaurant Portfolio-Outback Steakhouse		$	249,764
4121		OSI Restaurant Portfolio-Outback Steakhouse		$	146,674
4122		OSI Restaurant Portfolio-Outback Steakhouse		$	178,523
4123		OSI Restaurant Portfolio-Outback Steakhouse		$	243,897
4124		OSI Restaurant Portfolio-Outback Steakhouse		$	217,915
4127		OSI Restaurant Portfolio-Outback Steakhouse		$	227,973
4210		OSI Restaurant Portfolio-Outback Steakhouse		$	162,598
4314		OSI Restaurant Portfolio-Outback Steakhouse		$	250,602
4318		OSI Restaurant Portfolio-Outback Steakhouse		$	189,418
4319		OSI Restaurant Portfolio-Outback Steakhouse		$	233,840
4320		OSI Restaurant Portfolio-Outback Steakhouse		$	242,221
4324		OSI Restaurant Portfolio-Outback Steakhouse		$	157,569
4350		OSI Restaurant Portfolio-Outback Steakhouse		$	221,268
4401		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	331,901
4403		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	187,742
4404		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	284,128
4405		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	227,135
4406		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	250,602
4407		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	318,491
4416		OSI Restaurant Portfolio-Outback Steakhouse		$	201,152
4417		OSI Restaurant Portfolio-Outback Steakhouse		$	150,864
4418		OSI Restaurant Portfolio-Outback Steakhouse		$	159,246
4422		OSI Restaurant Portfolio-Outback Steakhouse		$	187,742
4423		OSI Restaurant Portfolio-Outback Steakhouse		$	192,771
4424		OSI Restaurant Portfolio-Outback Steakhouse		$	167,627
4426		OSI Restaurant Portfolio-Outback Steakhouse		$	150,864
4429		OSI Restaurant Portfolio-Outback Steakhouse		$	220,429

 

Schedule IV

---

4454		OSI Restaurant Portfolio-Outback Steakhouse		$	166,789
4455		OSI Restaurant Portfolio-Outback Steakhouse		$	176,846
4456		OSI Restaurant Portfolio-Outback Steakhouse		$	134,940
4457		OSI Restaurant Portfolio-Outback Steakhouse		$	190,257
4458		OSI Restaurant Portfolio-Outback Steakhouse		$	180,199
4459		OSI Restaurant Portfolio-Outback Steakhouse		$	201,990
4461		OSI Restaurant Portfolio-Outback Steakhouse		$	198,638
4462		OSI Restaurant Portfolio-Outback Steakhouse		$	318,491
4463		OSI Restaurant Portfolio-Outback Steakhouse		$	258,146
4464		OSI Restaurant Portfolio-Outback Steakhouse		$	243,059
4466		OSI Restaurant Portfolio-Outback Steakhouse		$	217,915
4467		OSI Restaurant Portfolio-Outback Steakhouse		$	185,228
4468		OSI Restaurant Portfolio-Outback Steakhouse		$	165,113
4469		OSI Restaurant Portfolio-Outback Steakhouse		$	170,980
4470		OSI Restaurant Portfolio-Outback Steakhouse		$	217,915
4473		OSI Restaurant Portfolio-Outback Steakhouse		$	183,552
4474		OSI Restaurant Portfolio-Outback Steakhouse		$	162,598
4475		OSI Restaurant Portfolio-Outback Steakhouse		$	157,569
4476		OSI Restaurant Portfolio-Outback Steakhouse		$	180,199
4478		OSI Restaurant Portfolio-Outback Steakhouse		$	170,980
4510		OSI Restaurant Portfolio-Outback Steakhouse		$	201,152
4511		OSI Restaurant Portfolio-Outback Steakhouse		$	192,771
4716		OSI Restaurant Portfolio-Outback Steakhouse		$	310,110
4724		OSI Restaurant Portfolio-Outback Steakhouse		$	217,915
4728		OSI Restaurant Portfolio-Outback Steakhouse		$	209,534
4756		OSI Restaurant Portfolio-Outback Steakhouse		$	234,678
4758		OSI Restaurant Portfolio-Outback Steakhouse		$	233,001
4762		OSI Restaurant Portfolio-Outback Steakhouse		$	167,627
4801		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	200,314
4810		OSI Restaurant Portfolio-Outback Steakhouse		$	173,494
4813		OSI Restaurant Portfolio-Outback Steakhouse		$	176,008
4910		OSI Restaurant Portfolio-Outback Steakhouse		$	167,627
4961		OSI Restaurant Portfolio-Outback Steakhouse		$	155,055
5010		OSI Restaurant Portfolio-Outback Steakhouse		$	192,771
5113		OSI Restaurant Portfolio-Outback Steakhouse		$	200,314
5301		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	205,343
5302		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	188,580
5303		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	192,771
5501		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	233,001
5502		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	237,192
5505		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	165,113
5506		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	211,210
6006		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	217,915
6007		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	226,296
6013		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	192,771
6015		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	284,966
6020		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	335,254
6021		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	259,822
6029		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	217,915
6035		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	192,771

 

Schedule IV

---

6048		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	226,296
6052		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	209,534
6116		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	158,407
6302		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	142,483
6402		OSI Restaurant Portfolio-Roy’s Restaurant		$	188,580
6502		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	238,030
6903		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	171,818
7101		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	326,873
8001		OSI Restaurant Portfolio-Lee Roy Selmon’s		$	452,593
8002		OSI Restaurant Portfolio-Lee Roy Selmon’s		$	234,678
8109		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	171,818
8302		OSI Restaurant Portfolio-Sterling’s Bistro		$	50,288
8609		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	371,294
8705		OSI Restaurant Portfolio-Cheeseburger In Paradise		$	176,008
8908		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	192,771
9301		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	253,117
9407		OSI Restaurant Portfolio-Bonefish Grill		$	160,922
9410		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	249,764
9414		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	173,494
9704		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	209,534
9802		OSI Restaurant Portfolio-Carrabba’s Italian Grill		$	173,494

 

Schedule IV

---

SCHEDULE V

[INTENTIONALLY OMITTED]

 

Schedule V

---

SCHEDULE VI

RIGHTS OF FIRST REFUSAL OR RIGHTS OF FIRST OFFER (OR OTHER RIGHTS

OR OPTIONS) TO LEASE OR PURCHASE INDIVIDUAL PROPERTIES

 

Store Number		Address		Name of Document and Nature of Purchase Rights
1133		11196 Abercorn Expressway Savannah, GA 31419		Reciprocal Easement and Operation Agreement, dated as of April 15, 1994: The option holder has a right to purchase the related Individual Property on the terms and conditions of a bona fide offer that the owner of such Individual Property desires to accept, excepting an offer that contains a binding provision whereby the prospective purchaser will initially open and operate a restaurant on such Individual Property.
1412		216 East Golf Road Schaumburg, IL 60173		Reciprocal Easement Agreement, dated as of March 15, 1994: The option holder has a right to purchase the related Individual Property on the same terms and conditions as a bona fide offer that the owner of such Individual Property has received and desires to accept.
1418		6007 E. State Street Rockford, IL 61108		Covenants, Conditions and Restrictions Agreement, dated as of October 9, 1996: The option holder has a right of first refusal over any sale, lease, assignment, transfer, lien, pledge, encumbrance, alienation or conveyance (or agreement to do any of the foregoing) of the related Individual Property, or any portion thereof or interest therein, whether directly, indirectly, by operation of law or otherwise (excepting affiliate transfer, any mortgage or sale/leaseback for financing purposes, or a sale to a third party acquiring one or more additional restaurants of such owner) on the same terms and conditions as contained in a bona fide third party written offer proposed to be accepted by the owner of such Individual Property.

 

Schedule VI

---

1418		6007 E. State Street Rockford, IL 61108		Covenants, Conditions and Restrictions Agreement, dated as of October 9, 1996: The option holder has a right to purchase the related Property for a fair market value purchase price (determined in accordance with such Operating Agreement) if it “goes dark” (i.e., is vacated and no regular business is being conducted) for 120 or more consecutive days, other than for reasons beyond the control of the owner, including force majeure or closing due to alteration, remodeling or renovations.
1522		3401 N. Granville Ave. Muncie, IN 47303		Covenants, Conditions and Restrictions Agreement, dated as of April 29, 1997: The Option Holder has a right of first refusal over any sale, lease, assignment, transfer, lien, pledge, encumbrance, alienation or conveyance (or agreement to do any of the foregoing) of the related Property, or any portion thereof or interest therein, whether directly, indirectly, by operation of law or otherwise (excepting affiliate transfer, any mortgage or sale/leaseback for financing purposes, or a sale to a third party acquiring one or more additional restaurants of such owner) on the same terms and conditions as contained in a bona fide third party written offer accepted by the owner of such Property.
1522		3401 N. Granville Ave. Muncie, IN 47303		Covenants, Conditions and Restrictions Agreement, dated as of April 29, 1997: The option holder has a right to purchase the related Property for a fair market value purchase price (determined in accordance with such Operating Agreement) if it “goes dark” (i.e., is vacated and no regular business is being conducted) for 120 or more consecutive days, other than for reasons beyond the control of the owner, including force majeure or closing due to alteration, remodeling or renovations.
1813		6520 Signature Drive Louisville, KY 40213		Corporate Warranty Deed, dated November 22, 1994: The option holder has a right to purchase the related Individual Property at the price and on the terms equivalent to or better than the terms stated in a fully executed contract for a bona fide sale of such Individual Property to an unrelated third party.

 

Schedule VI

---

1851		3260 Scottsville Rd. Bowling Green, KY 42104		Easement and Restriction Agreement, September 4, 1997: The option holder has a right to purchase the related Individual Property at the price and on the substantive and economic terms and conditions specified in an offer that the owner of such Individual Property has received and desires to accept (excepting a transfer to an affiliate of Outback Steakhouse, Inc. or a sale to a third party of three or more restaurants).
1851		3260 Scottsville Rd. Bowling Green, KY 42104		Easement and Restriction Agreement, September 4, 1997: The Option Holder has a right to purchase the related Property for a fair market value purchase price (determined in accordance with the related Option Agreement) if the restaurant fails to operate (i.e., does not serve meals to the general public for a price) a sit-down restaurant on such Property for more than 120 consecutive days, other than for remodeling, implementing renovations or reconstructing due to casualty, so long as the owner is diligently pursuing and effecting such remodeling, renovation or reconstruction.
2320		1515 W. 14 Mile Road Madison Heights, MI 48071		Covenant Deed, dated September 11, 1995: The option holder has a right to purchase the related Individual Property on the same terms and conditions as a third party offer that the owner of such Property desires to accept (excepting a transfer to an affiliate of Outback Steakhouse of Florida, Inc., a franchisee of Outback Steakhouse Florida, Inc. or Outback Steakhouse, Inc., or a purchaser contemporaneously acquiring one or more additional restaurants of the current property owner).
2320		1515 W. 14 Mile Road Madison Heights, MI 48071		Covenant Deed, dated September 11, 1995: The option holder has a right to purchase the related Individual Property for a fair market value purchase price (determined in accordance with such Operating Agreement) if the building is deemed “closed” (i.e., if less than 3,000 square feet of the building is being operated as an Outback Steakhouse restaurant as same or typically operated in the Midwestern United States or for another permitted use) for 270 consecutive days, except in the event of a casualty or condemnation so long as the owner is diligently pursuing rebuilding or reopening.

 

Schedule VI

---

2420		4255 Haines Road Hermantown, MN 55811		Warranty Deed, dated September 23, 2005: The option holder has a right to purchase the related Individual Property for a fair market value purchase price (determined in accordance with such Operating Agreement) if the owner determines that it is going to sell such Individual Property to a third party unaffiliated purchaser (excepting a sale as part of a sale and leaseback transaction).
3110		230 Lake Drive East Cherry Hill, NJ 08002		Repurchase Agreement, dated as November 30, 1992: The option holder has a right to purchase the related Individual Property on terms no less favorable than those of a bona fide offer from a third party to acquire its interest in such Individual Property, or any portion thereof, that the owner of such Individual Property has received and wishes to accept (excepting transfer to an affiliate of Outback Steakhouse of Florida, Inc., a franchisee of Outback Steakhouse of Florida, Inc. or a third party purchaser contemporaneously acquiring one or more additional restaurant facilities of the “Outback Steakhouse” chain).
4405		12507 West IH-10 San Antonio, TX 78230		Special Warranty Deed, dated July 19, 1994: The option holder has a right to purchase the related Individual Property upon the terms of the owner’s third party sale in the event the owner elects to sell such Individual Property (excepting an affiliate transfer or sale of such Individual Property together with one or more other locations owned by the owner or its affiliates).
4423		12511 West IH-10 San Antonio, TX 78230		Special Warranty Deed, dated July 19, 1994: The option holder has a right to purchase the related Individual Property upon the terms of the owner’s third party sale in the event the owner elects to sell such Individual Property (excepting an affiliate transfer or sale of such Individual Property together with one or more other locations owned by the owner or its affiliates).

 

Schedule VI

---

4429		4205 South IH-35 San Marcos, TX 78666		Agreement of Repurchase and Right of First Refusal, dated March 30, 1998: The option holder has a right of refusal over any sale, transfer, lease for a period in excess of 35 years or other conveyance of the related Individual Property, including any portion thereof or interest therein, for the price and on the terms and conditions of a bona fide offer from an unrelated third party that the owner of such Individual Property received and desires to accept (excepting a transfer to an affiliate of Outback Steakhouse of Florida, Inc. that expressly assumes the obligations of owner under such Operating Agreement, a bona fide mortgage or bona fide sale leaseback transaction for financing purposes, as part of a package sale of six or more stores to an unaffiliated third party, or as part of a sale of substantially all of the assets used in connection with the operation of one or more other Outback Steakhouse restaurants).
4429		4205 South IH-35 San Marcos, TX 78666		Agreement of Repurchase and Right of First Refusal, dated March 30, 1998: The option holder has a right to purchase the related Property for a fair market price (determined in accordance with such Operating Agreement) if the improvements on such Individual Property are abandoned or permanently closed or the owner fails to use the improvements for a restaurant or other use compatible with the associated shopping center for more than 30 consecutive days, unless due to fire or other casualty or condemnation, temporary closure not longer than 180 days due to expansion, alteration or remodeling, or a change in the occupancy of such Individual Property.
4910		790 Foxcroft Avenue Martinsburg, WV 25401		Right of First Refusal, dated as of January 25, 1994: If the owner proposes to lease, sell or otherwise use or operate the related Individual Property as a supermarket under the name of “County Market”, the option holder has a right to lease, purchase or otherwise use or operate such Property on the same terms and conditions set forth in such Operating Agreement.

 

Schedule VI

---

6007		60 Palmetto Avenue Merritt Island, FL 32953		Indenture, dated July 22, 1957: The option holder has a right to purchase or lease the related Individual Property on the terms and conditions set forth in a bona fide written offer to purchase or lease such Individual Property or a portion thereof (excepting an offer received from the franchisor).
4801		40 Geoffrey Drive Newark, DE 19713		Lease, effective June 14, 2007: The tenant has an option to purchase the related Individual Property for a purchase price equal to the fair market value of such Individual Property (as determined in accordance with such Lease) upon the earlier to occur of the (x) expiration of the initial term of such Lease or (y) sale of the related Individual Property by the landlord.
5501		4670 Southport Crossing Drive Indianapolis, IN 43237		Lease, effective June 14, 2007: The tenant has an option to purchase the related Individual Property for a purchase price equal to the fair market value of such Individual Property (as determined in accordance with such Lease) upon the earlier to occur of the (x) expiration of the initial term of such Lease or (y) sale of the related Individual Property by the landlord.
5502		9770 Crosspoint Boulevard Fisher, IN 46256		Lease, effective June 14, 2007: The tenant has an option to purchase the related Individual Property for a purchase price equal to the fair market value of such Individual Property (as determined in accordance with such Lease) upon the earlier to occur of the (x) expiration of the initial term of such Lease or (y) sale of the related Individual Property by the landlord.
5505		3830 S US Highway 41 Terre Haute, IN 47802		Lease, effective June 14, 2007: The tenant has an option to purchase the related Individual Property for a purchase price equal to the fair market value of such Individual Property (as determined in accordance with such Lease) upon the earlier to occur of the (x) expiration of the initial term of such Lease or (y) sale of the related Individual Property by the landlord.

 

Schedule VI

---

5506		8301 Eagle Lake Drive Evansville, IN 47715		Lease, effective June 14, 2007: The tenant has an option to purchase the related Individual Property for a purchase price equal to the fair market value of such Individual Property (as determined in accordance with such Lease) upon the earlier to occur of the (x) expiration of the initial term of such Lease or (y) sale of the related Individual Property by the landlord.
6302		13905 Lakeside Circle Sterling Heights, MI 48313		Lease, effective June 14, 2007: The tenant has an option to purchase the related Individual Property for a purchase price equal to the fair market value of such Individual Property (as determined in accordance with such Lease) upon the earlier to occur of the (x) expiration of the initial term of such Lease or (y) sale of the related Individual Property by the landlord.
8302		13905 Lakeside Circle Sterling Heights, MI 48313		Lease, effective June 14, 2007: The tenant has an option to purchase the related Individual Property for a purchase price equal to the fair market value of such Individual Property (as determined in accordance with such Lease) upon the earlier to occur of the (x) expiration of the initial term of such Lease or (y) sale of the related Individual Property by the landlord.
8705		1101 Seminole Trail Charlottesville, VA 22901		Lease, effective June 14, 2007: The tenant has an option to purchase the related Individual Property for a purchase price equal to the fair market value of such Individual Property (as determined in accordance with such Lease) upon the earlier to occur of the (x) expiration of the initial term of such Lease or (y) sale of the related Individual Property by the landlord.

 

Schedule VI

---

SCHEDULE VII

AMORTIZATION SCHEDULE

(see attached)

 

Schedule VII

---

Month of Payment Date		Year				Principal
May			2012			$	631,747.39
June			2012			$	633,853.22
July			2012			$	635,966.06
August			2012			$	638,085.95
September			2012			$	640,212.90
October			2012			$	642,346.95
November			2012			$	644,488.10
December			2012			$	646,636.40
January			2013			$	648,791.85
February			2013			$	650,954.49
March			2013			$	653,124.34
April			2013			$	655,301.42
May			2013			$	657,485.76
June			2013			$	659,677.38
July			2013			$	661,876.30
August			2013			$	664,082.56
September			2013			$	666,296.16
October			2013			$	668,517.15
November			2013			$	670,745.54
December			2013			$	672,981.36
January			2014			$	675,224.63
February			2014			$	677,475.38
March			2014			$	679,733.63
April			2014			$	681,999.41
May			2014			$	684,272.74
June			2014			$	686,553.65
July			2014			$	688,842.16
August			2014			$	691,138.30
September			2014			$	693,442.10
October			2014			$	695,753.57
November			2014			$	698,072.75
December			2014			$	700,399.66
January			2015			$	702,734.32
February			2015			$	705,076.77
March			2015			$	707,427.03
April			2015			$	709,785.12
May			2015			$	712,151.07
June			2015			$	714,524.91
July			2015			$	716,906.65
August			2015			$	719,296.34
September			2015			$	721,694.00
October			2015			$	724,099.64
November			2015			$	726,513.31
December			2015			$	728,935.02

 

Schedule VII

---

January			2016			$	731,364.80
February			2016			$	733,802.69
March			2016			$	736,248.70
April			2016			$	738,702.86
May			2016			$	741,165.20
June			2016			$	743,635.75
July			2016			$	746,114.54
August			2016			$	748,601.59
September			2016			$	751,096.93
October			2016			$	753,600.58
November			2016			$	756,112.58
December			2016			$	758,632.96
January			2017			$	761,161.74
February			2017			$	763,698.94
March			2017			$	766,244.60
April			2017			$	283,684,592.10

 

Schedule VII

---

SCHEDULE VIII

PORTFOLIO FOUR-WALL EBITDAR HISTORICAL CALCULATIONS

 

2010

2009

2008

Sales

$

[***]

$

[***]

$

[***]

COGS

[***]

[***]

[***]

Labor, Taxes & Benefits

[***]

[***]

[***]

Other Controllable Expense

[***]

[***]

[***]

Other Operating Expense

[***]

[***]

[***]

Pre-Opening Expense

[***]

[***]

Merchandise Income/ (Expense)

[***]

[***]

[***]

Misc Income

[***]

[***]

[***]

Income Before Taxes

[***]

[***]

[***]

Addbacks:

(All items below in captured in Other Operating Expense)

Interest Expense

[***]

[***]

[***]

Depreciation Expense

[***]

[***]

[***]

Base Rent Expense

[***]

[***]

[***]

Excess Rent Expense

[***]

[***]

[***]

Gain/Loss On Disposal Of FA 717500-0000

[***]

[***]

[***]

Gain/Loss on Disposal—Renovations 717500-0001

[***]

[***]

[***]

Impaired Asset Expense 729500-0000

[***]

[***]

[***]

Pre-Opening Expense

[***]

[***]

[***]

Advertising Expense

[***]

[***]

[***]

Insurance Expense 716000-0000

[***]

[***]

[***]

Royalty Exp—Interco. 722000-0001

[***]

[***]

[***]

Accounting Fees 723000-0000

[***]

[***]

[***]

Supervision Fees 724000-0000

[***]

[***]

[***]

4-Wall EBITDAR

$

[***]

$

[***]

$

[***]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule VIII

---

SCHEDULE IX

REQUIRED REPAIRS

 

Store #		Property Name		Property Address		Item Description		Immediate Repair Total
4467		Outback Steakhouse-4467		501 East Loop 281 Longview TX 75605		Provide TPRV valve extension at water heater		$	50
4801		Cheeseburger In Paradise-4801		40 Geoffrey Drive Newark DE 19713		Re-stripe and Install and 2 ADA Parking Stalls		$	150
312		Outback Steakhouse-312		4871 East Grant Road Tucson AZ 85712		Van Accessible Sign		$	250
314		Outback Steakhouse-314		1650 South Clearview Avenue Mesa AZ 85208		Add one additional space which is van accessible		$	250
316		Outback Steakhouse-316		1080 North 54th Street Chandler AZ 85226		One additional space with Van Accessible Sign		$	250
326		Outback Steakhouse-326		1830 East McKellips Mesa AZ 85203		Van Accessible Sign		$	250
601		Carrabba’s Italian Grill-601		7401 West 92nd Avenue Westminster CO 80021		Provide ADA van-accessible parking space		$	250
2325		Outback Steakhouse-2325		6435 Dixie Highway Clarkston MI 48346		Crack fill areas of asphalt pavement cracks		$	250
3211		Outback Steakhouse-3211		4141 South Pecos Road Las Vegas NV 89121		Provide one additional ADA parking space		$	250
3212		Outback Steakhouse-3212		1950 North Rainbow Boulevard Las Vegas NV 89108		Provide a ADA van-accessible parking space		$	250
3451		Outback Steakhouse-3451		256 East Parris Avenue High Point NC 27262		Add One ADA Parking Spot		$	250
4511		Outback Steakhouse-4511		1664 North Heritage Park Boulevard Layton UT 84041		ADA Parking Space		$	250
3952		Outback Steakhouse-3952		100 Sheraton Drive Allegheny Township PA 16601		Add one ADA parking space		$	250
1419		Outback Steakhouse-1419		5652 Northridge Drive Gurnee IL 60031		Patch damaged drywall in electric/water utility closets.		$	250
1519		Outback Steakhouse-1519		7201 East Indiana Street Evansville IN 47715		Add 2 ADA parking standar spaces		$	250
1520		Outback Steakhouse-1520		2315 Post Road Indianapolis IN 46219		Add one standard ADA Accessible paking space		$	250
2134		Outback Steakhouse-2134		3020 Crain Highway Waldorf MD 20601		Pipe Insulation		$	400

 

Schedule IX

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4417		Outback Steakhouse-4417		16080 San Pedro Avenue San Antonio TX 78230		Add ADA van space and sign		$	275
						Reconfigure non-compliant spaces		$	200
611		Outback Steakhouse-611		9329 North Sheridan Boulevard Westminster CO 80031		Fire extinguishers		$	250
						Provide one ADA accessible parking space		$	250
4422		Outback Steakhouse-4422		11600 Research Boulevard Austin TX 78759		Add two standard ADA parking spaces		$	500
4429		Outback Steakhouse-4429		4205 Interstate Highway 35 South San Marcos TX 78666		Testing and inspection of the fire sprinkler system		$	500
4454		Outback Steakhouse-4454		3904 Towne Crossing Boulevard Mesquite TX 75150		Support exterior gas piping at enclosed patio		$	500
4314		Outback Steakhouse-4314		330 North Peters Road Knoxville TN 37922		Add ADA parking spaces ( 1 to be Van Accessible)		$	500
4758		Outback Steakhouse-4758		295 Peppers Ferry Road Christiansburg VA 24073		Locally repair concrete Sidewalk		$	600
614		Outback Steakhouse-614		15 West Springer Drive Highlands Ranch CO 80129		Provide ADA-accessible parking spaces		$	500
						Provide ADA van-accessible parking space		$	250
2420		Outback Steakhouse-2420		4255 Haines Road Hermantown MN 55811		Testing and inspection of the fire sprinkler system		$	500
						Add standard ADA parking space		$	250
3101		Carrabba’s Italian Grill-3101		4650 Route 42 Turnersville NJ 08012		Installtion and Re-Striping of Three ADA Parking		$	750
3102		Carrabba’s Italian Grill-3102		500 Route 38 Maple Shade NJ 08052		Remove and replace finishes affected by water intrusion and potential mold growth		$	750
3116		Outback Steakhouse-3116		4600 Route 42 Turnersville NJ 08012		Add 3 ADA Parking Spaces		$	750
4458		Outback Steakhouse-4458		15180 Addison Road Addison TX 75001		Concrete pavement		$	800
4476		Outback Steakhouse-4476		4902 President George Bush Turnpike Garland TX 75040		Exterior Paint		$	800
4478		Outback Steakhouse-4478		13265 South Freeway Fort Worth TX 76028		Concrete pavement		$	800
4762		Outback Steakhouse-4762		3121 Albert Lankford Drive Lynchburg VA 24073		Install Horn/strobes in restrooms		$	700
						Insulate lavatory traps		$	100
9414		Carrabba’s Italian Grill-9414		3400 North Central Expressway Plano TX 75074		Concrete pavement		$	800

 

Schedule IX

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3452		Outback Steakhouse-3452		100 Southern Road Southern Pines NC 28387		Overlay and Stripe Pavement		$	900
1411		Outback Steakhouse-1411		720 West Lake Cook Road Buffalo Grove IL 60089		Replace Sidewalk Sections		$	600
						Install Signage and Stripe Disabled Reserved Space		$	300
3446		Outback Steakhouse-3446		3550 Mount Moriah Road Durham NC 27707		Create One Additional ADA Parking Space		$	250
						Install ADA-Compliant Audible/Strobe Alarms in restrooms		$	700
2001		Fleming’s Prime Steakhouse and Wine Bar-2001		4322 West Boy Scout Boulevard Tampa FL 33607		Roof repairs as needed		$	1,000
3402		Carrabba’s Italian Grill-3402		10400 East Independence Boulevard Charlotte NC 28105		Create Four ADA Parking Spaces		$	1,000
1002		Carrabba’s Italian Grill-1002		4320 North Tamiami Trail Naples FL 34103		Concrete pavement		$	1,000
1108		Carrabba’s Italian Grill-1108		1887 Mount Zion Road Morrow GA 30260		Address uneven parking spaces		$	1,000
3713		Outback Steakhouse-3713		3600 South Broadway Edmond OK 73013		realign exteterior doors		$	200
						Repair tile grout		$	800
3917		Outback Steakhouse-3917		100 North Pointe Boulevard Lancaster PA 17601		Locally repair concrete Sidewalk		$	1,000
8908		Carrabba’s Italian Grill-8908		100 North Pointe Boulevard Lancaster PA 17601		Repair membrane roofing		$	1,000
1412		Outback Steakhouse-1412		216 East Golf Road Schaumburg IL 60173		Roof Repair		$	1,000
4210		Outback Steakhouse-4210		2411 South Carolyn Avenue Sioux Falls SD 57106		Concrete repair		$	1,000
1851		Outback Steakhouse-1851		3260 Scottsville Road Bowling Green KY 42104		Curbs		$	1,000
1516		Outback Steakhouse-1516		3201 West 3rd Street Bloomington IN 47404		Replace Sidewalk Sections		$	1,020
4468		Outback Steakhouse-4468		4500 Franklin Avenue Waco TX 76710		Seal-Coat , Stripe and Patch Pavement		$	1,050
4810		Outback Steakhouse-4810		279 Junction Road Madison WI 53717		Replace damaged concrete pad		$	1,200
3640		Outback Steakhouse-3640		8595 Market Street Mentor OH 44060		Replace Sidewalk Sections		$	1,200
3663		Outback Steakhouse-3663		2512 Kings Center Court Mason OH 45040		Curbs		$	1,200

 

Schedule IX

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2411		Outback Steakhouse-2411		8880 Springbrook Drive Northwest Coon Rapids MN 55433		Drywall repairs		$	500
						Close out open fire code violations		$	1,000
2415		Outback Steakhouse-2415		5723 Bishop Avenue Inver Grove Heights MN 55076		Repair mansard roof in southwest corner		$	1,000
						Testing and inspection of the fire sprinkler system		$	500
4416		Outback Steakhouse-4416		20455 Katy Freeway Katy TX 77450		Sectional replacement of concrete pavement along the side elevation of the building		$	1,000
						ADA issue: van-accessible parking		$	500
4461		Outback Steakhouse-4461		2211 South Stemmons Freeway Lewisville TX 75067		Repair/ replace centrifugal exhuast fan		$	1,500
3621		Outback Steakhouse-3621		401 West Dussel Road Maumee OH 43537		Replace fascia boards		$	1,500
4961		Outback Steakhouse-4961		111 Hylton Lane Beckley WV 25801		Replace Sidewalk Sections		$	1,500
4455		Outback Steakhouse-4455		1031 SH 114 West Grapevine TX 76051		Concrete pavement		$	1,600
1134		Outback Steakhouse-1134		823 North Westover Boulevard Albany GA 31707		Roof Membrane Repairs		$	1,600
4423		Outback Steakhouse-4423		12511 Interstate 10 W San Antonio TX 78230		Asphalt repair and seal adjacent to trash area		$	1,080
						Testing and inspection of the fire sprinkler system		$	500
						Add signage for van accessible parking space		$	100
1035		Outback Steakhouse-1035		1820 Raymond Diehl Road Tallahassee FL 32309		Roof Membrane Repairs		$	1,800
4457		Outback Steakhouse-4457		1509 North Central Expressway Plano TX 75075		Roof maintenance/repair		$	2,000
1133		Outback Steakhouse-1133		11196 Abercorn Expressway Savannah GA 31419		Seal rear area of roof w/ sealant to protect from grease staining		$	2,000
4405		Carrabba’s Italian Grill-4405		12507 Interstate 10 W San Antonio TX 78230		Repair and patch paving east of dumpster		$	720
						Drywall and door repairs in electrical room		$	1,200
						Add signage for van accessible parking space		$	100
4403		Carrabba’s Italian Grill-4403		11590 Research Boulevard Austin TX 78759		EIFS. repair		$	450
						Drywall repairs		$	500
						Inspection and testing of fire sprinkler (update tags)		$	500

 

Schedule IX

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						Add two standard ADA parking spaces		$	500
						Add signage for van accessible parking space		$	100
4724		Outback Steakhouse-4724		261 University Boulevard Harrisonburg VA 22801		Install Horn/Strobe Alarms		$	2,100
8705		Cheeseburger In Paradise-8705		1101 Seminole Trail Charlottesville VA 22901		Add Horn/Strobe alarms		$	2,100
4910		Outback Steakhouse-4910		790 Foxcroft Avenue Martinsburg WV 25401		Locally repair concrete Sidewalk		$	1,200
						Repair handrail at exterior steps		$	500
						Signage and striping for ADA parking spaces		$	500
4462		Outback Steakhouse-4462		2314 West Loop 250 North Midland TX 79705		Overlay and Stripe Pavement		$	2,250
3915		Outback Steakhouse-3915		3527 North Union Deposit Road Harrisburg PA 17109		Repair sidewalk differential areas		$	1,000
						Install vertical signage		$	1,250
3448		Outback Steakhouse-3448		501 North New Hope Road Gastonia NC 28054		Install ADA-Compliant Audible/Strobe Alarms		$	2,100
						Install One Additional ADA Parking Spot		$	250
4466		Outback Steakhouse-4466		300 South I-35 East Denton TX 76201		Concrete pavement		$	2,400
4463		Outback Steakhouse-4463		7101 West Interstate Highway 40 Amarillo TX 79106		Asphalt pavement - overlay		$	2,500
4475		Outback Steakhouse-4475		1101 North Beckley Avenue DeSoto TX 75115		Concrete walkways - repair		$	500
						Replace Hot Water Heater (120-gallon)		$	2,000
4510		Outback Steakhouse-4510		7770 South 1300 East Sandy UT 84094		Asphalt Repairs		$	1,000
						Concrete repair		$	1,000
						ADA Parking Spaces		$	500
1122		Outback Steakhouse-1122		145 Gwinco Boulevard Suwanee GA 30024		Drainage devices		$	2,500
613		Outback Steakhouse-613		807 East Harmony Road Fort Collins CO 80525		Repair CMU enclosure wall		$	1,039
						Replace Hot Water Heater (120-gallon)		$	1,500
4124		Outback Steakhouse-4124		2480 Broad Street Sumter SC 29150		Seal ~40% of roof surface		$	2,600
3117		Outback Steakhouse-3117		98 US Route 22 West Green Brook NJ 08812		Locally repair concrete Sidewalk		$	1,000
						Clean and paint light poles		$	1,000
						Add three ADA parking spaces		$	750

 

Schedule IX

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4121		Outback Steakhouse-4121		20 Hatton Place Hilton Head Island SC 29926		Locally repair concrete Sidewalk		$	750
						Seal rear area of roof with sealant to protect from grease staining		$	2,000
4127		Outback Steakhouse-4127		945 Factory Shops Boulevard Gaffney SC 29341		Seal rear areas of roof membrane with sealant		$	2,500
						Install one ADA parking space		$	250
4728		Outback Steakhouse-4728		6821 Chital Drive Midlothian VA 23112		Install new section of sidewalk		$	720
						Fire alarm, horn and strobe lights		$	2,100
3403		Carrabba’s Italian Grill-3403		16408 Northcross Drive Huntersville NC 28078		Asphalt pavement - overlay		$	500
						Install ADA-Compliant Audible/Strobe Alarms		$	2,100
						Add One ADA Parking Spot		$	250
4426		Outback Steakhouse-4426		5555 Northwest Loop 410 San Antonio TX 78230		Caulking and sealing		$	1,400
						Sprinkler system testing and inspection		$	500
						Ansul system testing and inspection		$	500
						Fire extinguisher testing and inspection		$	300
						Add ADA parking spoace		$	250
3951		Outback Steakhouse-3951		9395 McKnight Road Pittsburgh PA 15237		Locally repair concrete Sidewalk		$	1,500
						Clean and paint exterior light poles		$	1,000
						Install additional vertical signage		$	500
4716		Outback Steakhouse-4716		7917 West Broad Street Richmond VA 23294		Fire alarm, horn and strobe lights		$	2,800
						Add ADA Van Accessible parking space		$	250
1034		Outback Steakhouse-1034		245 State Road 312 Saint Augustine FL 32086		Roof repairs as needed; correct areas of standing water		$	1,000
						Install fire alarm audible/visible devices		$	2,100
4324		Outback Steakhouse-4324		1125 Franklin Road Lebanon TN 37090		Exterior Paint		$	3,200
3357		Outback Steakhouse-3357		3112 Erie Boulevard East Dewitt NY 13214		Asphalt patching		$	1,000
						Paint parking lot light poles		$	1,200
						Repair membrane roof leaks		$	1,000
9704		Carrabba’s Italian Grill-9704		5805 Trinty Parkway Centreville VA 20120		Locally repair concrete Sidewalk		$	600

 

Schedule IX

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						Install Horn/Strobe Alarms		$	2,100
						Provide van accessible parking spot		$	500
4119		Outback Steakhouse-4119		110 Dunbarton Drive Florence SC 29501		Apply protective sealant to rear area of roof membrane		$	3,000
						Add 1 ADA accessible parking space		$	250
4756		Outback Steakhouse-4756		3026 Richmond Road Williamsburg VA 23185		Locally repair concrete Sidewalk		$	1,200
						Strobe/Horn alarm installation		$	750
						Remove and replace water damaged finishes, address pipe leak		$	1,500
6052		Carrabba’s Italian Grill-6052		1205 Townsgate Court Plant City FL 33563		Seal-Coat , Stripe and Patch Pavement		$	3,750
1024		Outback Steakhouse-1024		6390 North Lockwood Ridge Road Sarasota FL 34243		Seal-Coat , Stripe and Patch Pavement		$	3,600
						Install additional ADA parking space		$	250
323		Outback Steakhouse-323		14225 West Grand Avenue Surprise AZ 85374		Seal-Coat , Stripe and Patch Pavement		$	3,624
						Van Accessible Sign		$	250
8302		Sterling’s Bistro-8302		13905 Lakeside Circle Sterling Heights MI 48313		Seal-Coat , Stripe and Patch Pavement		$	3,882
1030		Outback Steakhouse-1030		9773 San Jose Boulevard Jacksonville FL 32257		Asphalt pavement - full depth		$	1,000
						Stucco - seal cracks and paint		$	800
						Strobe/audible alarm units		$	2,100
2017		Outback Steakhouse-2017		11950 Sheldon Road Tampa FL 33626		Seal-Coat , Stripe and Patch Pavement		$	3,750
						Install additional ADA parking stall		$	250
1102		Carrabba’s Italian Grill-1102		1160 Ernest Barrett Parkway Kennesaw GA 30144		Concrete pavement		$	4,000
4123		Outback Steakhouse-4123		1721 Old Highway 17 N North Myrtle Beach SC 29582		Repair small roof leaks & seal the rear portion of roof membrane with sealant for protection		$	3,000
						Remove and replace finishes affected by water intrusion and potential mold growth		$	1,000
3213		Outback Steakhouse-3213		4423 East Sunset Road Henderson NV 89014		Seal-Coat , Stripe and Patch Pavement		$	4,080
1026		Outback Steakhouse-1026		1481 Tamiami Trail Port Charlotte FL 33903		Seal-Coat , Stripe and Patch Pavement		$	4,200
1023		Outback Steakhouse-1023		11308 North 56th Street Tampa FL 33617		Seal-Coat , Stripe and Patch Pavement		$	3,750

 

Schedule IX

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						Install two additional ADA parking spaces		$	500
3444		Outback Steakhouse-3444		302 South College Street Wilmington NC 27834		Provide One Van-Accessible Parking Space		$	250
						Provide Audible/Strobe Alarms		$	2,100
						Replace stained ceiling tiles, identify and resolve water intrusion source(s)		$	2,000
4469		Outback Steakhouse-4469		2701 East Central Texas Expressway Killeen TX 76540		Concrete pavement		$	4,500
3458		Outback Steakhouse-3458		8280 Valley Boulevard Blowing Rock NC 28605		Fill and Patch Settled Area		$	1,000
						Provide for Two Additional ADA Parking Spots		$	500
						Remove and replace water damaged finishes, identify and resolve water intrusion source		$	3,000
5010		Outback Steakhouse-5010		229 Miracle Road Evansville WY 82636		Asphalt Repairs		$	1,000
						Curb Repair		$	1,000
						ADA Parking Space		$	500
						Trip hazard repair		$	1,000
						Siding repair		$	1,000
1119		Outback Steakhouse-1119		810 Ernest Barrett Parkway Kennesaw GA 30144		Seal-Coat , Stripe and Patch Pavement		$	4,557
2320		Outback Steakhouse-2320		1515 W. 14 Mile Road Madison Heights MI 48071		Damaged paving area repairs		$	4,000
						Replace concrete at catch basin		$	600
606		Carrabba’s Italian Grill-606		2088 South Abilene Street Aurora CO 80014		Seal-Coat , Stripe and Patch Pavement		$	4,436
						Provide ADA van-accessible parking space		$	250
6302		Cheeseburger In Paradise-6302		13883 Lakeside Circle Sterling Heights MI 48313		Seal-Coat , Stripe and Patch Pavement		$	4,725
4350		Outback Steakhouse-4350		536 Paul Huff Parkway Cleveland TN 37312		Exterior Paint		$	3,200
						Replace rusted through door unit		$	1,500
						Strip parking to met ADA requirements		$	250
3454		Outback Steakhouse-3454		16400 Northcross Drive Charlotte NC 28078		Install audible/strobe alarms		$	2,100
						Install Two Additional ADA Parking Spots		$	500
						Remove and replace water damaged finishes, identify and resolve water intrusion source		$	2,500

 

Schedule IX

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4459		Outback Steakhouse-4459		1151 West IH-20 Arlington TX 76017		Concrete pavement		$	3,200
						Repair corroded light pole base		$	1,000
						Roof maintenance/repair		$	1,000
9410		Carrabba’s Italian Grill-9410		1550 I-10 South Beaumont TX 77707		Roof issue: paint gas piping to HVAC units, install scuppers and downspouts, and clean-up debris		$	2,000
						Testing of backflow prevention device		$	3,000
						ADA issue: van-accessible parking		$	250
3214		Outback Steakhouse-3214		8671 West Sahara Avenue Las Vegas NV 89117		Asphalt Pavement - crack seal, seal coat, restripe		$	5,040
						Provide one ADA compliant van-accessible parking space		$	250
3447		Outback Steakhouse-3447		505 Highland Oaks Drive Winston-Salem NC 27103		Overlay and Stripe Pavement		$	3,150
						Add one additional ADA parking spot		$	250
						Install six (6) ADA-compliant audible/strobe alarms		$	2,100
4120		Outback Steakhouse-4120		1319 River Point Road Rock Hill SC 29370		Seal rear portion of roof membrane to protect from grease staining		$	3,000
						Remove and replace water damaged finishes, identify and resolve source		$	2,500
1008		Carrabba’s Italian Grill-1008		2700 Southeast Federal Highway Stuart FL 34994		Seal-Coat, Stripe and Patch Pavement		$	5,565
6402		Roy’s Restaurant-6402		2840 Dallas Parkway Plano TX 75093		Re-coat cracked stucco		$	5,625
5303		Carrabba’s Italian Grill-5303		1060 North 54th Street Chandler AZ 85226		Seal-Coat , Stripe and Patch Pavement		$	5,580
						Add one additional space with van Accessible Sign		$	250
3463		Outback Steakhouse-3463		8338 Pineville-Matthews Road Pineville NC 28226		Curbs		$	1,280
						Asphalt pavement - overlay		$	1,500
						Roof membrane - Replace		$	750
						Install ADA-Compliant Audible/Strobe Alarms		$	2,100
						Install One ADA Parking Spot		$	250
6020		Carrabba’s Italian Grill-6020		3530 Tyrone Boulevard Saint Petersburg FL 33710		Seal-Coat, Stripe and Patch Pavement		$	6,000
5302		Carrabba’s Italian Grill-5302		5646 West Bell Road Glendale AZ 85308		Repair asphalt, sealcoat and restripe		$	4,788

 

Schedule IX

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						Repair fire alarm system in trouble mode		$	1,000
						Van Accessible Sign		$	250
615		Outback Steakhouse-615		497 120th Avenue Thornton CO 80233		Repair gutters and soffits		$	1,500
						Repair soffit at canopy		$	500
						Replace cracked quarry tile flooring		$	1,300
						Re-grout quarry tile floor		$	2,000
						Repair damaged gypsum board in fire sprinkler riser room		$	250
						Provide an additional ADA-accessible parking		$	250
						Provide an additional ADA van-accessible parking		$	250
6048		Carrabba’s Italian Grill-6048		11902 Sheldon Road Westchase FL 33626		Seal-Coat , Stripe and Patch Pavement		$	3,600
						Concrete pavement		$	1,200
						Complete roof repairs as needed		$	1,000
						Provide additional ADA parking space		$	250
2014		Outback Steakhouse-2014		1203 Townsgate Court Plant City FL 33563		Seal-Coat , Stripe and Patch Pavement		$	3,750
						Local concrete sidewalk repairs		$	250
						Install fire alarm audible/strobe devices		$	2,100
1061		Outback Steakhouse-1061		180 Hickman Drive Sanford FL 32771		Seal-Coat , Stripe and Patch Pavement		$	6,000
						Provide an additional ADA parking space		$	250
4456		Outback Steakhouse-4456		9049 Vantage Point Drive Dallas TX 75243		Concrete pavement		$	800
						Paint site signage pole		$	3,500
						Roof maintenance/repair		$	1,000
						Repair/ replace centrifugal exhuast fan		$	1,000
4118		Outback Steakhouse-4118		7611 Two Notch Road Columbia SC 29223		Seal-Coat , Stripe and Patch Pavement		$	6,038
						Install 2 ADA parking spaces and signs		$	500
602		Carrabba’s Italian Grill-602		2815 Geyser Drive Colorado Springs CO 80906		Repair damaged EIFS		$	500
						Paint coping		$	650
						Repair window frame and re-paint		$	1,000
						Repair broken quarry tile base		$	500
						Re-grout quarry tile floor		$	2,500

 

Schedule IX

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						Repair damaged gypsum board in fire sprinkler riser room		$	250
						Remove temporary storage structure		$	750
						ADA-accessible parking space		$	250
						ADA van-accessible parking space		$	250
4424		Outback Steakhouse-4424		2060 I-10 South Beaumont TX 77707		Sectional replacement of concrete along the rear of the building		$	1,500
						Replace Sidewalk Sections		$	1,000
						Exterior walls: paint, caulk, and maintenance		$	3,000
						Roof issue: paint gas piping to HVAC units and clean-up debris		$	1,000
						ADA issue: van-accessible parking		$	150
4319		Outback Steakhouse-4319		2790 Wilma Rudolph Boulevard Clarksville TN 37040		Exterior Paint		$	3,200
						Replace 2 rusted through door units		$	3,000
						Pole mounted sign electrical repair		$	300
						Van Accessible Parking Space		$	150
1125		Outback Steakhouse-1125		3 Reinhardt College Parkway Canton GA 30114		Seal-Coat , Stripe and Patch Pavement		$	6,682
617		Outback Steakhouse-617		2825 Geyser Drive Colorado Springs CO 80906		Replace Deteriorated wood siding		$	1,500
						Re-grout quarry tile floor		$	2,000
						Comb-out dented coil fins		$	1,250
						Inspect and test the fire sprinklers and fire alarm		$	1,500
						Provide additional ADA-accessible parking		$	250
						Provide additional ADA van-accessible parking		$	250
1025		Outback Steakhouse-1025		170 Cypress Gardens Boulevard Winter Haven FL 33880		Seal-Coat , Stripe and Patch Pavement		$	5,250
						Complete roof repairs as needed		$	1,500
4117		Outback Steakhouse-4117		110 Interstate Boulevard Anderson SC 29621		Patch, seal & stripe limited deterioration & seal		$	1,000
						Seal rear portion of roof membrane		$	3,000
						Install 1 ADA parking space & sign		$	250
						Remove and replace water damaged finishes, identify and resolve water intrusion source		$	2,500
8002		Lee Roy Selmon’s-8002		17508 Dona Michelle Drive Tampa FL 33647		Seal-Coat , Stripe and Patch Pavement		$	6,750

 

Schedule IX

---

4320		Outback Steakhouse-4320		1968 Old Fort Parkway Murfreesboro TN 37129		Exterior Paint		$	3,200
						Properly repair roof patches		$	1,500
						Replace rusted through door unit		$	1,500
						Replace rusted through interior door fames		$	600
1022		Outback Steakhouse-1022		3215 Southwest College Road Ocala FL 34474		Central alarm panel		$	5,000
						Fire alarm, horn and strobe lights		$	2,100
3215		Outback Steakhouse-3215		3645 South Virginia Street Reno NV 89502		Seal-Coat , Stripe and Patch Pavement		$	7,020
						Provide a ADA van-accessible parking space		$	250
1006		Carrabba’s Italian Grill-1006		2244 Palm Beach Lakes Boulevard West Palm Beach FL 33409		Seal-Coat , Stripe and Patch Pavement		$	7,402
						Replace Sidewalk Sections		$	96
2315		Outback Steakhouse-2315		3650 28th Street Southeast Kentwood MI 49512		Locally repair concrete Sidewalk		$	7,500
1060		Outback Steakhouse-1060		4845 South Kirkman Road Orlando FL 32811		Seal-Coat , Stripe and Patch Pavement		$	6,000
						Roofing repairs as needed; check areas of standing water		$	1,500
6013		Carrabba’s Italian Grill-6013		4829 South Florida Avenue Lakeland FL 33813		Seal-Coat , Stripe and Patch Pavement		$	7,500
4404		Carrabba’s Italian Grill-4404		2335 Highway 6 Sugar Land TX 77478		Sectional replacement of concrete pavement at entrance drive		$	5,000
						Sectional replacement of concrete curbing at entrance drive		$	1,000
						Correct Violations from 11/9/2011 Fire Inspection		$	1,000
						ADA issues: add van-accessible parking space, exterior signage at parking space		$	600
616		Outback Steakhouse-616		988 Dillon Road Louisville CO 80027		Seal-Coat , Stripe and Patch Pavement		$	5,250
						Water softening and filtration equipment		$	2,000
						Add 2 ADA parking spaces		$	500
317		Outback Steakhouse-317		2600 East Lucky Lane Flagstaff AZ 86004		Repairs, Seal-Coat and Stripe Pavement		$	6,624
						Repair and refresh property main sign		$	1,000
						Trap repairs to rooftop condensate drains		$	500
						A Van-accessible sign		$	100

 

Schedule IX

---

9407		Bonefish Grill-9407		190 Partner Circle Southern Pines NC 28387		Replace Single-Ply Membrane (flat roof)		$	8,750
3716		Outback Steakhouse-3716		7206 Cache Road Lawton OK 73505		Overlay and Stripe Pavement		$	9,000
8001		Lee Roy Selmon’s-8001		4302 West Boy Scout Boulevard Tampa FL 33607		Seal-Coat , Stripe and Patch Pavement		$	7,500
						Trim/fascia repairs as needed and paint		$	1,500
1521		Outback Steakhouse-1521		3730 South Reed Road Kokomo IN 46902		Asphalt pavement - overlay		$	9,000
						Add qty. 1 ADA parking space and sign		$	250
5301		Carrabba’s Italian Grill-5301		1740 South Clearview Mesa AZ 85208		Repair asphalt, sealcoat and restripe		$	9,009
						Add one additional space with van Accessible Sign		$	250
6015		Carrabba’s Italian Grill-6015		801 Providence Road Brandon FL 33511		Seal-Coat , Stripe and Patch Pavement		$	8,250
						Complete roof repairs as needed		$	1,500
5113		Outback Steakhouse-5113		2574 Camino Entrata Santa Fe NM 87507		Repair Cracks/Seal/Restripe		$	7,013
						Repair Cracks/Spalling/Expansion Joints		$	2,800
						Various Roof Repairs & Clean-up		$	1,000
1101		Carrabba’s Italian Grill-1101		3913 River Place Drive Macon GA 31210		Repair and/or Replace Damaged Concrete Curb Stops		$	3,500
						Exterior Paint		$	7,000
						EIFS. Repair		$	1,125
3114		Outback Steakhouse-3114		1397 US Route 9 North Old Bridge NJ 08857		Clean basement and assess for moisture intrusion		$	2,000
						Structural Engineering Assessment		$	4,000
						Repair structural framing based on structural assessment		$	0
						Exterior siding and trim repairs		$	1,000
						Mold investigation and clean up		$	5,000
4401		Carrabba’s Italian Grill-4401		11339 Katy Freeway Houston TX 77079		Sectional replacement along the rear of the building		$	2,000
						Exterior walls: paint, caulk, and maintenance		$	8,000
						Sand, prime, and paint metal coping; and clean debris from roof		$	1,000
						ADA issues: add parking space, interior signage, and audible/visual alarm devices		$	1,100

 

Schedule IX

---

3635		Outback Steakhouse-3635		24900 Sperry Drive Westlake OH 44145		Asphalt pavement - full depth		$	11,250
						ADA Parking -Provide pole signs		$	1,250
4406		Carrabba’s Italian Grill-4406		25665 Interstate 45 North The Woodlands TX 77380		Exterior wall minor repairs and painting		$	1,000
						Roof issues: painting, strainers, and flue		$	5,000
						Testing of sprinkler and life safety systems		$	5,000
						ADA issues: add parking spaces, interior signage, and audible/visual alarms		$	1,800
6029		Carrabba’s Italian Grill-6029		1285 US Highway 1 Vero Beach FL 32960		Exterior Paint		$	5,200
						Repair roof leaks		$	6,000
						Add one grab bar		$	150
						Remove and replace finishes affected by water intrusion and potential mold growth		$	1,500
4418		Outback Steakhouse-4418		2102 Texas Avenue College Station TX 77840		Asphalt Pavement - crack seal, seal coat, restripe		$	1,215
						Asphalt pavement - full depth		$	5,250
						Roof issue: paint gas piping to HVAC units and clean-up debris		$	1,000
						Sectional replacement of concrete pavement at front entrance patio		$	2,500
						Testing of backflow prevention device		$	3,000
						ADA issues: no interior signage and no audible/visual alarms		$	600
612		Outback Steakhouse-612		7065 Commerce Center Drive Colorado Springs CO 80919		Replace broken concrete drive apron		$	1,500
						Repair damaged EIFS		$	1,000
						Carpet		$	2,625
						Replace chipped quarry tile		$	2,600
						Re-grout quarry tile floor		$	2,000
						Comb-out RTU coil fins		$	1,000
						Inspect and test the fire sprinkler and fire alarm systems		$	1,500
						Inspect and test the Ansul system		$	1,000
						Provide ADA van-accessible parking		$	250
						Provide additional ADA-accessible parking		$	250

 

Schedule IX

---

1033		Outback Steakhouse-1033		1775 Wells Road Orange Park FL 32073		Seal-Coat , Stripe and Patch Pavement		$	8,250
						Repair anchorage at exterior roof access ladder		$	500
						Install fire alarm audible/visible devices		$	2,100
						Install fire alarm pull stations		$	2,100
						Remove areas of possible mold and patch drywall in mechanical closet		$	1,000
3002		Roy’s Restaurant-3002		4342 West Boy Scout Boulevard Tampa FL 33607		Seal-Coat , Stripe and Patch Pavement		$	12,000
						Install audible/visible fire alarm devices		$	2,800
4318		Outback Steakhouse-4318		1390 Interstate Drive Cookeville TN 38501		Asphalt repair		$	1,875
						Concrete pavement		$	1,200
						Seal-Coat , Stripe and Patch Pavement		$	6,300
						Install proper roof access ladder		$	2,500
						Replace damaged mechanical room door unit		$	1,500
						Replace damaged interior door frames		$	1,200
						Replace damaged emergency exit sign		$	200
						Fire extinguishers		$	250
						Service/Inspect Ansul system		$	200
						Additional ADA space		$	250
3217		Outback Steakhouse-3217		2625 W. Craig Road Las Vegas NV 89032		Seal-Coat , Stripe and Patch Pavement		$	13,797
						Gutters and downspouts		$	260
						Repace dismantled roof-mounted exhaust fan		$	1,300
						Provide two ADA compliant parking spaces		$	500
4407		Carrabba’s Italian Grill-4407		502 West Bay Area Boulevard Webster TX 77598		Concrete pavement repairs: sectional replacement and caulking construction joints		$	3,000
						Exterior walls: paint, caulk, and maintenance		$	9,000
						Roof issue: paint gas piping to HVAC units and paint parapet wall metal cap		$	3,000
						ADA issues: add ADA compliant parking space, and audible/visual alarm devices		$	1,000
1813		Outback Steakhouse-1813		6520 Signature Drive Louisville KY 40213		Curbs		$	400
						Seal-Coat , Stripe and Patch Pavement		$	8,250
						Replace dumpster pad sections		$	1,000
						Exterior Paint		$	3,200

 

Schedule IX

---

						Paint pole for store sign		$	2,000
						Paint or stain doors as appropiate		$	150
						Replace rusted through door unit		$	1,500
						Replace rusted through door fame		$	300
						Van Accessible Parking Space		$	300
9301		Carrabba’s Italian Grill-9301		324 North Peter’s Road Knoxville TN 37922		Replace Single-Ply Membrane (flat roof)		$	21,700
						Replace rusted through door unit		$	1,500
						Repair electrical conduit at the base of the pole mounted sign		$	300
						Van Accessible Parking Space		$	150
3110		Outback Steakhouse-3110		230 Lake Drive East Cherry Hill NJ 08002		Replace Single-Ply Membrane (flat roof)		$	22,750
						Remove and replace finishes affected by water intrusion and potential mold growth		$	3,000
3633		Outback Steakhouse-3633		6950 Ridge Road Parma OH 44129		Replace Sidewalk Sections		$	1,200
						Repair Sign Base		$	2,000
						Fascia board repairs		$	2,000
						Replace Single-Ply Membrane (flat roof)		$	22,050
3715		Outback Steakhouse-3715		860 North Interstate Drive Norman OK 73072		Overlay and Stripe Pavement		$	27,000
						Replace asphalt shingle portion of sloped roof with EPDM		$	3,500
2619		Outback Steakhouse-2619		3110 East 36th Street Joplin MO 64804		Asphalt pavement - full depth		$	33,000
453		Outback Steakhouse-453		2310 Sanders Street Conway AR 72032		Overlay and Stripe Pavement		$	27,000
						Replace Sidewalk Sections		$	720
						Repair rotted tim materials		$	450
						Exterior Paint		$	3,400
						Repair rotted tim materials		$	1,200
						Exterior Paint		$	250
						Additional ADA space		$	150
3658		Outback Steakhouse-3658		6800 Miller Lane Butler Township OH 45414		Overlay and Stripe Pavement		$	36,000
1518		Outback Steakhouse-1518		3660 State Road 26 Lafayette IN 47905		Overlay and Stripe Pavement		$	36,000
						Locally repair concrete Sidewalk		$	2,100
						Trash enclosure wall repair		$	1,000

 

Schedule IX

---

						Creat 2 new ADA accessible parking spaces		$	350
1416		Outback Steakhouse-1416		15608 South Harlem Avenue Orland Park IL 60462		Overlay and Stripe Pavement		$	17,100
						Replace Single-Ply Membrane (flat roof)		$	21,403
						Remove and replace finishes affected by water intrusion and potential mold growth		$	2,500
1614		Outback Steakhouse-1614		4500 Southern Hills Drive Sioux City IA 51106		Drainage devices		$	500
						Asphalt pavement - overlay		$	30,000
						Repair entrance damaged sidewalk areas		$	6,000
						Replace Single-Ply Membrane (flat roof)		$	7,000
4122		Outback Steakhouse-4122		454 Bypass 72 Northwest Greenwood SC 29649		Overlay and Stripe Pavement		$	38,745
						Seal rear portion of roof membrane to protect from grease hood residue		$	3,000
						Remove and replace water damaged finishes, identify and resolve water intrusion source		$	2,500
3636		Outback Steakhouse-3636		820 North Lexington Springmill Road Ontario OH 44906		Overlay and Stripe Pavement		$	42,300
						Replace Sidewalk Sections		$	3,000
1410		Outback Steakhouse-1410		2005 River Oaks Drive Calumet City IL 60409		Overlay and Stripe Pavement		$	24,300
						Replace Single-Ply Membrane (flat roof)		$	21,000
						Replace Asphalt Shingles (pitched roof)		$	2,695
						Install vertical signage for disabled reserved parking space		$	150
1031		Outback Steakhouse-1031		3760 South 3rd Street Jacksonville Beach FL 32250		Roof Leak Repairs		$	3,200
						Fire alarm panel with audible/visual alarms		$	15,000
						Install Fire Sprinkler System		$	27,040
						Van Accessible Parking-Stripe and Sign		$	350
						Reconstruct ramp		$	1,800
						Install handrails on ramp		$	2,880
						Replace Mold and Water Damaged Finishes		$	1,500
1001		Carrabba’s Italian Grill-1001		12990 South Cleveland Avenue Fort Myers FL 33907		Overlay and Stripe Pavement		$	36,000
						Complete roofing/parapet repairs as needed; replace cracked tiles		$	3,500

 

Schedule IX

---

						Install fire alarm system with audible/visible devices		$	15,000
						Remove mold & repair/replace drywall as needed in mechanical & electrical closets		$	2,500
1611		Outback Steakhouse-1611		3939 1st Avenue Southeast Cedar Rapids IA 52402		Asphalt pavement - overlay		$	35,000
						Replace Sidewalk Sections		$	6,000
						Wood siding		$	525
						Replace Single-Ply Membrane (flat roof)		$	28,000
						Wood stairs		$	1,500
						Ceiling tiles		$	625
						repair gypsum board walls		$	5,000
						Replace HVAC Package Units (6-10 tons)		$	8,000
Total		186		186				$	1,372,850

 

Schedule IX

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SCHEDULE X

OUTPARCELS, LEASEABLE BUILDING PADS

1. Outparcels*

 

Store Number		Address		Sq. Footage/ Acreage Available		Diagram of Outparcel
3122		901 Route 73 Evesham Township, NJ 08053		19,900 Square Feet +/-		See Diagram 1
3217		2625 West Craig Road North Las Vegas, NV 89032		0.88 Acres +/-		See Diagram 2

2. Leasable Building Pads*

 

Store Number		Address		Sq. Footage/ Acreage Available		Diagram of Building Pad
3002		4342 West Boy Scout Boulevard Tampa, FL 33607		12,730 Sq. Ft. +/-		See Diagram 3
3464**		223 Wintergreen Dr Lumberton, NC 28358		1.3 Acres +/-		See Diagram 4
5502		9770 Crosspoint Boulevard Fisher, IN 46256		8,790 Sq. Ft. +/-		See Diagram 5
5506		8301 Eagle Lake Drive Evansville, IN 47715		6,930 Sq. Ft. +/-		See Diagram 6

 

*

To the best of Borrower’s knowledge, the Outparcels are capable of being subdivided from the Individual Properties on which they are located and the Leasable Building Pads are not capable of being subdivided from the Individual Property on which they are located. In the event that it is later determined by Borrower as set forth in the Officer’s Certificate of Borrower that (i) any Outparcel is not capable of being subdivided from the Individual Property on which it is located, it will be treated as a Leasable Building Pad or (ii) any Leasable Building Pad is capable of being subdivided from the Individual Property on which it is located, it will be treated as an Outparcel.

**	Borrower believes it may be possible to a Condominium on the site and then sell the pad site as a Condominium.

 

Schedule X

---

SCHEDULE XI

[INTENTIONALLY OMITTED]

 

Schedule XI

---

SCHEDULE XII

SEPARATE TAX LOTS

 

Store Number		Address
1025		170 Cypress Gardens Boulevard Winter Haven, FL 33880
3120		Klockner Road @ Route 130 Hamilton, NJ 08619
2325		6435 Dixie Highway Clarkston, MI 48346

 

Schedule XII

---

SCHEDULE XIII

INDIVIDUAL PROPERTY SQUARE FOOTAGE

 

Unit #		Property Name		Units				Measurement Unit
311		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
312		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
314		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
316		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
317		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
323		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
325		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
326		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
453		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
455		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
601		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,163				SF
602		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,246				SF
605		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,415				SF
606		OSI Restaurant Portfolio-Carrabba’s Italian Grill			7,610				SF
611		OSI Restaurant Portfolio-Outback Steakhouse			6,000				SF
612		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
613		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
614		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
615		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
616		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
617		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
619		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
628		OSI Restaurant Portfolio-Outback Steakhouse			6,192				SF
1001		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,555				SF
1002		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
1006		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,238				SF
1008		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,238				SF
1022		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1023		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1024		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1025		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1026		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1027		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1028		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1029		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1030		OSI Restaurant Portfolio-Outback Steakhouse			6,000				SF
1031		OSI Restaurant Portfolio-Outback Steakhouse			6,000				SF
1033		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1034		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1035		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1036		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF

 

Schedule XIII

---

1060		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1061		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1063		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1101		OSI Restaurant Portfolio-Carrabba’s Italian Grill			7,210				SF
1102		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,361				SF
1108		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
1116		OSI Restaurant Portfolio-Outback Steakhouse			7,611				SF
1119		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1120		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1121		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1122		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1123		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1124		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1125		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1133		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1134		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1135		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1137		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1201		OSI Restaurant Portfolio-Bonefish Grill			6,124				SF
1264		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1410		OSI Restaurant Portfolio-Outback Steakhouse			7,078				SF
1411		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1412		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1414		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1416		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1418		OSI Restaurant Portfolio-Outback Steakhouse			6,389				SF
1419		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1424		OSI Restaurant Portfolio-Outback Steakhouse			6,192				SF
1450		OSI Restaurant Portfolio-Outback Steakhouse			6,090				SF
1452		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1453		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1516		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1518		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1519		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1520		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1521		OSI Restaurant Portfolio-Outback Steakhouse			6,363				SF
1522		OSI Restaurant Portfolio-Outback Steakhouse			6,405				SF
1550		OSI Restaurant Portfolio-Outback Steakhouse			7,797				SF
1611		OSI Restaurant Portfolio-Outback Steakhouse			7,329				SF
1614		OSI Restaurant Portfolio-Outback Steakhouse			6,227				SF
1715		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1716		OSI Restaurant Portfolio-Outback Steakhouse			6,192				SF
1813		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1851		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1901		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1912		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1914		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
1921		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1941		OSI Restaurant Portfolio-Outback Steakhouse			6,485				SF
1951		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF

 

Schedule XIII

---

1961		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
1971		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2001		OSI Restaurant Portfolio-Fleming’s Prime Steakhouse and Wine Bar			8,473				SF
2014		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2015		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2017		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2134		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2139		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
2315		OSI Restaurant Portfolio-Outback Steakhouse			6,522				SF
2319		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2320		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
2321		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2325		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
2326		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2411		OSI Restaurant Portfolio-Outback Steakhouse			6,571				SF
2415		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
2420		OSI Restaurant Portfolio-Outback Steakhouse			5,061				SF
2619		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3002		OSI Restaurant Portfolio-Roy’s Restaurant			7,425				SF
3101		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,500				SF
3102		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,163				SF
3110		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
3114		OSI Restaurant Portfolio-Outback Steakhouse			8,961				SF
3116		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3117		OSI Restaurant Portfolio-Outback Steakhouse			6,377				SF
3120		OSI Restaurant Portfolio-Outback Steakhouse			6,192				SF
3122		OSI Restaurant Portfolio-Outback Steakhouse			6,600				SF
3211		OSI Restaurant Portfolio-Outback Steakhouse			6,270				SF
3212		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3213		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3214		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
3215		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3217		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3220		OSI Restaurant Portfolio-Outback Steakhouse			6,205				SF
3357		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3402		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,807				SF
3403		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,547				SF
3420		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
3444		OSI Restaurant Portfolio-Outback Steakhouse			7,656				SF
3446		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3447		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
3448		OSI Restaurant Portfolio-Outback Steakhouse			7,172				SF
3450		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
3451		OSI Restaurant Portfolio-Outback Steakhouse			6,485				SF
3452		OSI Restaurant Portfolio-Outback Steakhouse			6,485				SF
3453		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3454		OSI Restaurant Portfolio-Outback Steakhouse			7,450				SF
3455		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3458		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3460		OSI Restaurant Portfolio-Outback Steakhouse			6,192				SF

 

Schedule XIII

---

3461		OSI Restaurant Portfolio-Outback Steakhouse			6,160				SF
3462		OSI Restaurant Portfolio-Outback Steakhouse			5,608				SF
3463		OSI Restaurant Portfolio-Outback Steakhouse			6,678				SF
3464		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3621		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3633		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3635		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
3636		OSI Restaurant Portfolio-Outback Steakhouse			6,200				SF
3640		OSI Restaurant Portfolio-Outback Steakhouse			7,540				SF
3658		OSI Restaurant Portfolio-Outback Steakhouse			6,159				SF
3662		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
3663		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
3713		OSI Restaurant Portfolio-Outback Steakhouse			6,087				SF
3715		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3716		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
3915		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
3917		OSI Restaurant Portfolio-Outback Steakhouse			6,300				SF
3951		OSI Restaurant Portfolio-Outback Steakhouse			7,940				SF
3952		OSI Restaurant Portfolio-Outback Steakhouse			6,200				SF
4117		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4118		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4119		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4120		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4121		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4122		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4123		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4124		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4127		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4210		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4314		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4318		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4319		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4320		OSI Restaurant Portfolio-Outback Steakhouse			6,485				SF
4324		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4350		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4401		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,552				SF
4403		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
4404		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,163				SF
4405		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,192				SF
4406		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
4407		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,288				SF
4416		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4417		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4418		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4422		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4423		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4424		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4426		OSI Restaurant Portfolio-Outback Steakhouse			6,484				SF
4429		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4454		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF

 

Schedule XIII

---

4455		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4456		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4457		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4458		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4459		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4461		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4462		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4463		OSI Restaurant Portfolio-Outback Steakhouse			6,495				SF
4464		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4466		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4467		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4468		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4469		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4470		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4473		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4474		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4475		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4476		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4478		OSI Restaurant Portfolio-Outback Steakhouse			6,192				SF
4510		OSI Restaurant Portfolio-Outback Steakhouse			6,111				SF
4511		OSI Restaurant Portfolio-Outback Steakhouse			6,674				SF
4716		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4724		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4728		OSI Restaurant Portfolio-Outback Steakhouse			6,192				SF
4756		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
4758		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4762		OSI Restaurant Portfolio-Outback Steakhouse			6,485				SF
4801		OSI Restaurant Portfolio-Cheeseburger In Paradise			6,950				SF
4810		OSI Restaurant Portfolio-Outback Steakhouse			7,160				SF
4813		OSI Restaurant Portfolio-Outback Steakhouse			6,163				SF
4910		OSI Restaurant Portfolio-Outback Steakhouse			6,200				SF
4961		OSI Restaurant Portfolio-Outback Steakhouse			6,200				SF
5010		OSI Restaurant Portfolio-Outback Steakhouse			6,115				SF
5113		OSI Restaurant Portfolio-Outback Steakhouse			6,301				SF
5301		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,192				SF
5302		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,200				SF
5303		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,417				SF
5501		OSI Restaurant Portfolio-Cheeseburger In Paradise			6,484				SF
5502		OSI Restaurant Portfolio-Cheeseburger In Paradise			6,163				SF
5505		OSI Restaurant Portfolio-Cheeseburger In Paradise			6,115				SF
5506		OSI Restaurant Portfolio-Cheeseburger In Paradise			6,297				SF
6006		OSI Restaurant Portfolio-Carrabba’s Italian Grill			8,533				SF
6007		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
6013		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,374				SF
6015		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
6020		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,192				SF
6021		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,692				SF
6029		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,339				SF
6035		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,340				SF
6048		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,420				SF

 

Schedule XIII

---

6052		OSI Restaurant Portfolio-Carrabba’s Italian Grill			5,796				SF
6116		OSI Restaurant Portfolio-Carrabba’s Italian Grill			5,976				SF
6302		OSI Restaurant Portfolio-Cheeseburger In Paradise			6,552				SF
6402		OSI Restaurant Portfolio-Roy’s Restaurant			7,105				SF
6502		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,692				SF
6903		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,790				SF
7101		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
8001		OSI Restaurant Portfolio-Lee Roy Selmon’s			9,843				SF
8002		OSI Restaurant Portfolio-Lee Roy Selmon’s			6,642				SF
8109		OSI Restaurant Portfolio-Carrabba’s Italian Grill			5,600				SF
8302		OSI Restaurant Portfolio-Sterling’s Bistro			6,163				SF
8609		OSI Restaurant Portfolio-Carrabba’s Italian Grill			12,132				SF
8705		OSI Restaurant Portfolio-Cheeseburger In Paradise			6,192				SF
8908		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,249				SF
9301		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,163				SF
9407		OSI Restaurant Portfolio-Bonefish Grill			6,115				SF
9410		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,163				SF
9414		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,115				SF
9704		OSI Restaurant Portfolio-Carrabba’s Italian Grill			6,189				SF
9802		OSI Restaurant Portfolio-Carrabba’s Italian Grill			5,990				SF

 

Schedule XIII

---

SCHEDULE XIV

EXCLUDED PERSONAL PROPERTY AND FIXTURES

 

Furniture and Fixtures - 7 Year Depreciation		Fixture Type
Water Filtration System		Fixture
Security System—Fire		Fixture
Security System—Burglar		Fixture
Parking Lot Lights		Fixture
Flood Lights		Fixture
Hurricane or Wood Shutters (not plastic ones)		Fixture
Front Door		Fixture
Rear Door		Fixture
Ceiling Tile & Grid		Fixture
Toilet Partitions and Screens		Fixture
Restroom Accessories {mirrors & doors)		Fixture
Electrical (can lights & vanity lanterns)		Fixture
Accessory Package (grab bars, etc.)		Fixture
HVAC new grills		Fixture
New Fixtures		Fixture
Auto Flush		Fixture
Sprinklers		Fixture
Awnings		Fixture
Flag poles		Fixture
Wainscoting		Fixture
Chain Link Fences		Fixture
Window Tinting		Fixture
Thermostat’s		Fixture
Sound System		Excluded Personal Property
Marlin Control Panel		Excluded Personal Property
Dry storage shelving		Excluded Personal Property
Plexiglass (Bar Partition)		Excluded Personal Property
Solid Surface Vanity w/under counter sinks		Excluded Personal Property
Millwork (Bars)		Excluded Personal Property
Signage		Excluded Personal Property
Neon Border & Neon Signs		Excluded Personal Property

 

Schedule XIV

---

Safe		Excluded Personal Property
Office Furniture		Excluded Personal Property
Phone System		Excluded Personal Property
Phone System Upgrades—equip & install		Excluded Personal Property
Stainless Fabrication/SS Paneling		Excluded Personal Property
Cocktail/Blender/Server Stations		Excluded Personal Property
Tin Bar Plating		Excluded Personal Property
Electric Heated Air Curtain		Excluded Personal Property
Blinds		Excluded Personal Property
Kitchen Exhaust System (Fans, curbs and Hoods)		Excluded Personal Property
Outdoor Patio Furniture		Excluded Personal Property
Furniture and Fixtures—5 Year Depreciation		Entity
Carpet		Fixture
Domestic Water Heater		Fixture
Water Softeners		Fixture
Chairs – Dining		Excluded Personal Property
Barstools		Excluded Personal Property
Projector TV (All TVs)		Excluded Personal Property
VCR’s		Excluded Personal Property
Machinery and Equipment—7 Year Depreciation		Fixture Type
HVAC Testing/HVAC System		Fixture
A/C Compressors		Fixture
Smallwares—Opening package		Excluded Personal Property
Equipment packages (bloom fryer GRD45, Chip Fryer GRD65, App Fryer GRD35, etc.)		Excluded Personal Property
Drink Machines		Excluded Personal Property
Cooler / Freezer		Excluded Personal Property

 

Schedule XIV

---

Beer System		Excluded Personal Property
Smoker		Excluded Personal Property
Alto Shaam		Excluded Personal Property
Chill Blaster		Excluded Personal Property
Tents for Special Events		Excluded Personal Property
Walk in Shelving		Excluded Personal Property
Treat Plate for walk in		Excluded Personal Property
Fry Filter		Excluded Personal Property
Event Trailers (and all accompanying supplies)		Excluded Personal Property
Dish Washer Motor		Excluded Personal Property
Booster Heaters		Excluded Personal Property
Grip Rock Mats		Excluded Personal Property
Make Up Air Blower or Exhaust		Excluded Personal Property
Grease Traps		Excluded Personal Property
Fry Reach-In (aka – Dual Temp Refrigerator #RFA-36-S7-HD)		Excluded Personal Property
Saute Reach-In (aka – counter top refrigerator #UR-27_SST)		Excluded Personal Property
Salad Spinner (aka – Vegetable Dryer or Greens Machine)		Excluded Personal Property
Salad Make-up unit (aka – Salad Prep Refrigerator)		Excluded Personal Property
Computer—3 Year Depreciation		Fixture Type
Posi Touch System (including Posi training books)/RDS Workstations/Aloha System		Excluded Personal Property
Handscanner		Excluded Personal Property
Office Computer		Excluded Personal Property
2 Way Radio System		Excluded Personal Property

 

Schedule XIV

---

Host Alert System				Excluded Personal Property
Pager System & Pagers				Excluded Personal Property
Fax Machines				Excluded Personal Property
Building Leasehold—20 Year Depreciation				Fixture Type
Construction Contract				Fixture
Owner Furnished, Contractor Installed				Fixture
Architects/Engineers				Fixture
Windows				Fixture
Building Permits & Licenses				Fixture
Utilities (prior to store opening)				Fixture
Hardwood Floors				Fixture
Landscaping – new stores only				Fixture
Fuse Box				Fixture
Less Landlord Allowance				Fixture
Floor Tile				Fixture
Blue Prints				Fixture
New Floor and Wall Tile				Fixture
Dry Wall and Plastering				Fixture
Carpentry (wood trim & installation)				Fixture
Painting (stucco, trim & doors)				Fixture
Plumbing				Fixture
FRP Paneling				Fixture
Fire Suppression/Fire Ansul System				Fixture
Brick Pizza Oven				Fixture
Décor—5 Year Depreciation				Fixture Type
Opening Décor Package				Excluded Personal Property
Landscaping for Patio addition				Fixture

 

 

Schedule XIV

---

SCHEDULE XV

MASTER OWNED PROPERTY SCHEDULE

 

Unit #		Concept		Property Address		Property City		State		Zip Code				Bldg Sq. Ftg. (feet)				Lot Size (Acres)				TTM_Sept_2011 Net Sales				TTM_Sept_2011 4- Wall EBITDAR
311		Outback Steakhouse		5605 West Bell Road		Glendale		AZ			85308				6,115				1.16			$	[***]			$	[***]
312		Outback Steakhouse		4871 East Grant Road		Tucson		AZ			85712				6,163				0.27			$	[***]			$	[***]
314		Outback Steakhouse		1650 South Clearview Avenue		Mesa		AZ			85208				6,163				1.53			$	[***]			$	[***]
316		Outback Steakhouse		1080 North 54th Street		Chandler		AZ			85226				6,163				1.47			$	[***]			$	[***]
317		Outback Steakhouse		2600 East Lucky Lane		Flagstaff		AZ			86004				6,163				1.69			$	[***]			$	[***]
323		Outback Steakhouse		14225 West Grand Avenue		Surprise		AZ			85374				6,163				1.17			$	[***]			$	[***]
325		Outback Steakhouse		99 South Highway 92		Sierra Vista		AZ			85635				6,163				0.55			$	[***]			$	[***]
326		Outback Steakhouse		1830 East McKellips Road		Mesa		AZ			85203				6,163				1.45			$	[***]			$	[***]
453		Outback Steakhouse		2310 Sanders Street		Conway		AR			72032				6,163				1.58			$	[***]			$	[***]
455		Outback Steakhouse		4509 West Poplar Street		Rogers		AR			72758				6,163				1.65			$	[***]			$	[***]
601		Carrabba’s Italian Grill		7401 West 92nd Avenue		Westminster		CO			80021				6,163				1.40			$	[***]			$	[***]
602		Carrabba’s Italian Grill		2815 Geyser Drive		Colorado Springs		CO			80906				6,246				1.87			$	[***]			$	[***]
605		Carrabba’s Italian Grill		1212 Oakridge Drive East		Fort Collins		CO			80525				6,415				1.41			$	[***]			$	[***]
606		Carrabba’s Italian Grill		2088 South Abilene Street		Aurora		CO			80014				7,610				1.96			$	[***]			$	[***]
611		Outback Steakhouse		9329 North Sheridan Boulevard		Westminster		CO			80031				6,000				0.98			$	[***]			$	[***]
612		Outback Steakhouse		7065 Commerce Center Drive		Colorado Springs		CO			80919				6,115				1.41			$	[***]			$	[***]
613		Outback Steakhouse		807 East Harmony Road		Fort Collins		CO			80525				6,115				1.26			$	[***]			$	[***]
614		Outback Steakhouse		15 West Springer Drive		Littleton		CO			80129				6,115				1.41			$	[***]			$	[***]
615		Outback Steakhouse		497 120th Avenue		Thornton		CO			80233				6,115				1.53			$	[***]			$	[***]
616		Outback Steakhouse		988 Dillon Road		Louisville		CO			80027				6,163				1.52			$	[***]			$	[***]
617		Outback Steakhouse		2825 Geyser Drive		Colorado Springs		CO			80906				6,115				1.83			$	[***]			$	[***]
619		Outback Steakhouse		2066 South Abilene Street		Aurora		CO			80014				6,115				1.57			$	[***]			$	[***]
628		Outback Steakhouse		1315 Dry Creek Road		Longmont		CO			80501				6,192				1.65			$	[***]			$	[***]
1001		Carrabba’s Italian Grill		12990 South Cleveland Avenue		Fort Myers		FL			33907				6,555				1.32			$	[***]			$	[***]
1002		Carrabba’s Italian Grill		4320 North Tamiami Trail		Naples		FL			34103				6,115				1.52			$	[***]			$	[***]
1006		Carrabba’s Italian Grill		2244 Palm Beach Lakes Boulevard		West Palm Beach		FL			33409				6,238				1.32			$	[***]			$	[***]
1008		Carrabba’s Italian Grill		2700 Southeast Federal Highway		Stuart		FL			34994				6,238				1.60			$	[***]			$	[***]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule XV

---

1022		Outback Steakhouse		3215 Southwest College Road		Ocala		FL			34474				6,163				1.19			$	[***]			$	[***]
1023		Outback Steakhouse		11308 North 56th Street		Temple Terrace		FL			33617				6,163				1.10			$	[***]			$	[***]
1024		Outback Steakhouse		6390 North Lockwood Ridge Road		Sarasota		FL			34243				6,163				1.66			$	[***]			$	[***]
1025		Outback Steakhouse		170 Cypress Gardens Boulevard		Winter Haven		FL			33880				6,115				1.50			$	[***]			$	[***]
1026		Outback Steakhouse		1481 Tamiami Trail		Port Charlotte		FL			33948				6,163				0.87			$	[***]			$	[***]
1027		Outback Steakhouse		1642 Northeast Pine Island Road		Cape Coral		FL			33903				6,115				1.58			$	[***]			$	[***]
1028		Outback Steakhouse		4902 Commercial Way		Spring Hill		FL			34608				6,163				1.95			$	[***]			$	[***]
1029		Outback Steakhouse		5710 Oakley Boulevard		Wesley Chapel		FL			33544				6,163				2.82			$	[***]			$	[***]
1030		Outback Steakhouse		9773 San Jose Boulevard		Jacksonville		FL			32257				6,000				0.67			$	[***]			$	[***]
1031		Outback Steakhouse		3760 South 3rd Street		Jacksonville Beach		FL			32250				6,000				1.25			$	[***]			$	[***]
1033		Outback Steakhouse		1775 Wells Road		Orange Park		FL			32073				6,163				2.75			$	[***]			$	[***]
1034		Outback Steakhouse		245 State Road 312		Saint Augustine		FL			32086				6,115				1.72			$	[***]			$	[***]
1035		Outback Steakhouse		1820 Raymond Diehl Road		Tallahassee		FL			32309				6,163				2.37			$	[***]			$	[***]
1036		Outback Steakhouse		861 West 23rd Street		Panama City		FL			32405				6,115				1.90			$	[***]			$	[***]
1060		Outback Steakhouse		4845 South Kirkman Road		Orlando		FL			32811				6,115				1.27			$	[***]			$	[***]
1061		Outback Steakhouse		180 Hickman Drive		Sanford		FL			32771				6,115				1.28			$	[***]			$	[***]
1063		Outback Steakhouse		9600 U.S. Highway 441		Leesburg		FL			34788				6,163				1.58			$	[***]			$	[***]
1101		Carrabba’s Italian Grill		3913 River Place Drive		Macon		GA			31210				7,210				2.03			$	[***]			$	[***]
1102		Carrabba’s Italian Grill		1160 Ernest Barrett Parkway		Kennesaw		GA			30144				6,361				1.50			$	[***]			$	[***]
1108		Carrabba’s Italian Grill		1887 Mount Zion Road		Morrow		GA			30260				6,115				1.16			$	[***]			$	[***]
1116		Outback Steakhouse		3585 Atlanta Highway		Athens		GA			30606				7,611				1.13			$	[***]			$	[***]
1119		Outback Steakhouse		810 Ernest Barrett Parkway		Kennesaw		GA			30144				6,115				0.84			$	[***]			$	[***]
1120		Outback Steakhouse		6331 Douglas Boulevard		Douglasville		GA			30135				6,115				1.47			$	[***]			$	[***]
1121		Outback Steakhouse		1188 Dogwood Drive		Conyers		GA			30012				6,115				1.68			$	[***]			$	[***]
1122		Outback Steakhouse		145 Gwinco Boulevard		Suwanee		GA			30024				6,163				2.26			$	[***]			$	[***]
1123		Outback Steakhouse		655 Douglasville Highway		Gainesville		GA			30501				6,163				1.51			$	[***]			$	[***]
1124		Outback Steakhouse		995 North Peachtree Parkway		Peachtree City		GA			30269				6,163				2.07			$	[***]			$	[***]
1125		Outback Steakhouse		3 Reinhardt College Parkway		Canton		GA			30114				6,115				1.50			$	[***]			$	[***]
1133		Outback Steakhouse		11196 Abercorn Expressway		Savannah		GA			31419				6,115				1.02			$	[***]			$	[***]
1134		Outback Steakhouse		823 North Westover Boulevard		Albany		GA			31707				6,163				1.90			$	[***]			$	[***]
1135		Outback Steakhouse		1824 Club House Drive		Valdosta		GA			31601				6,163				1.70			$	[***]			$	[***]
1137		Outback Steakhouse		3088 Watson Boulevard		Warner Robins		GA			31093				6,163				1.95			$	[***]			$	[***]
1201		Bonefish Grill		18375 Bluemound Road		Brookfield		WI			53045				6,124				1.84			$	[***]			$	[***]
1264		Outback Steakhouse		2925 Ross Clark Circle		Dothan		AL			36301				6,163				2.20			$	[***]			$	[***]
1410		Outback Steakhouse		2005 River Oaks Drive		Calumet City		IL			60409				7,078				1.97			$	[***]			$	[***]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule XV

---

1411		Outback Steakhouse		720 West Lake Cook Road		Buffalo Grove		IL			60089				6,115				1.11			$	[***]			$	[***]
1412		Outback Steakhouse		216 East Golf Road		Schaumburg		IL			60173				6,163				0.67			$	[***]			$	[***]
1414		Outback Steakhouse		2855 West Ogden Avenue		Naperville		IL			60540				6,115				0.25			$	[***]			$	[***]
1416		Outback Steakhouse		15608 South Harlem Avenue		Orland Park		IL			60462				6,115				1.93			$	[***]			$	[***]
1418		Outback Steakhouse		6007 East State Street		Rockford		IL			61108				6,389				1.27			$	[***]			$	[***]
1419		Outback Steakhouse		5652 Northridge Drive		Gurnee		IL			60031				6,163				1.80			$	[***]			$	[***]
1424		Outback Steakhouse		3241 Chicagoland Circle		Joliet		IL			60431				6,192				1.57			$	[***]			$	[***]
1450		Outback Steakhouse		4390 Illinois Street		Swansea		IL			62221				6,090				1.61			$	[***]			$	[***]
1452		Outback Steakhouse		2402 North Prospect Avenue		Champaign		IL			61822				6,163				1.38			$	[***]			$	[***]
1453		Outback Steakhouse		3201 Horizon Drive		Springfield		IL			62703				6,163				1.69			$	[***]			$	[***]
1516		Outback Steakhouse		3201 West 3rd Street		Bloomington		IN			47404				6,115				0.65			$	[***]			$	[***]
1518		Outback Steakhouse		3660 State Road 26		Lafayette		IN			47905				6,163				1.48			$	[***]			$	[***]
1519		Outback Steakhouse		7201 East Indiana Street		Evansville		IN			47715				6,115				1.36			$	[***]			$	[***]
1520		Outback Steakhouse		2315 Post Road		Indianapolis		IN			46219				6,115				1.95			$	[***]			$	[***]
1521		Outback Steakhouse		3730 South Reed Road		Kokomo		IN			46902				6,363				0.29			$	[***]			$	[***]
1522		Outback Steakhouse		3401 North Granville Avenue		Muncie		IN			47303				6,405				0.23			$	[***]			$	[***]
1550		Outback Steakhouse		8110 Georgia Street		Merrillville		IN			46410				7,797				1.75			$	[***]			$	[***]
1611		Outback Steakhouse		3939 1st Avenue Southeast		Cedar Rapids		IA			52402				7,329				1.63			$	[***]			$	[***]
1614		Outback Steakhouse		4500 Southern Hills Drive		Sioux City		IA			51106				6,227				1.65			$	[***]			$	[***]
1715		Outback Steakhouse		233 South Ridge Road		Wichita		KS			67212				6,115				1.58			$	[***]			$	[***]
1716		Outback Steakhouse		15430 South Rogers Road		Olathe		KS			66062				6,192				1.75			$	[***]			$	[***]
1813		Outback Steakhouse		6520 Signature Drive		Louisville		KY			40213				6,115				2.97			$	[***]			$	[***]
1851		Outback Steakhouse		3260 Scottsville Road		Bowling Green		KY			42104				6,163				1.20			$	[***]			$	[***]
1901		Outback Steakhouse		2415 South Acadian Thruway		Baton Rouge		LA			70808				6,115				1.56			$	[***]			$	[***]
1912		Outback Steakhouse		830 East I-10 Service Road		Slidell		LA			70461				6,163				1.99			$	[***]			$	[***]
1914		Outback Steakhouse		60 Park Place Drive		Covington		LA			70433				6,163				1.08			$	[***]			$	[***]
1921		Outback Steakhouse		1600 West Pinhook Drive		Lafayette		LA			70508				6,115				1.67			$	[***]			$	[***]
1941		Outback Steakhouse		2616 Derek Drive		Lake Charles		LA			70607				6,485				1.31			$	[***]			$	[***]
1951		Outback Steakhouse		305 West Constitution		West Monroe		LA			71292				6,115				1.53			$	[***]			$	[***]
1961		Outback Steakhouse		2715 Village Lane		Bossier City		LA			71112				6,115				1.50			$	[***]			$	[***]
1971		Outback Steakhouse		3217 South MacArthur Drive		Alexandria		LA			71301				6,163				1.54			$	[***]			$	[***]
2001		Fleming’s Prime Steakhouse and Wine Bar		4322 West Boy Scout Boulevard		Tampa		FL			33607				8,473				1.71			$	[***]			$	[***]
2014		Outback Steakhouse		1203 Townsgate Court		Plant City		FL			33563				6,163				2.61			$	[***]			$	[***]
2015		Outback Steakhouse		2225 Highway 44 West		Inverness		FL			34453				6,163				1.75			$	[***]			$	[***]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule XV

---

2017		Outback Steakhouse		11950 Sheldon Road		Tampa		FL			33626				6,163				1.54			$	[***]			$	[***]
2134		Outback Steakhouse		3020 Crain Highway		Waldorf		MD			20601				6,163				1.83			$	[***]			$	[***]
2139		Outback Steakhouse		4420 Long Gate Parkway		Ellicott City		MD			21043				6,115				1.98			$	[***]			$	[***]
2315		Outback Steakhouse		3650 28th Street Southeast		Kentwood		MI			49512				6,522				2.30			$	[***]			$	[***]
2319		Outback Steakhouse		2468 Tittabawassee Road		Saginaw		MI			48604				6,163				1.79			$	[***]			$	[***]
2320		Outback Steakhouse		1515 West 14 Mile Road		Madison Heights		MI			48071				6,115				0.24			$	[***]			$	[***]
2321		Outback Steakhouse		1501 Boardman Road		Jackson		MI			49202				6,163				1.16			$	[***]			$	[***]
2325		Outback Steakhouse		6435 Dixie Highway		Clarkston		MI			48346				6,115				2.10			$	[***]			$	[***]
2326		Outback Steakhouse		7873 Conference Center Drive		Brighton		MI			48114				6,163				2.49			$	[***]			$	[***]
2411		Outback Steakhouse		8880 Springbrook Drive Northwest		Coon Rapids		MN			55433				6,571				1.88			$	[***]			$	[***]
2415		Outback Steakhouse		5723 Bishop Avenue		Inver Grove Heights		MN			55076				6,163				1.75			$	[***]			$	[***]
2420		Outback Steakhouse		4255 Haines Road		Hermantown		MN			55811				5,061				1.38			$	[***]			$	[***]
2619		Outback Steakhouse		3110 East 36th Street		Joplin		MO			64804				6,163				1.52			$	[***]			$	[***]
3002		Roy’s Restaurant		4342 West Boy Scout Boulevard		Tampa		FL			33607				7,425				2.12			$	[***]			$	[***]
3101		Carrabba’s Italian Grill		4650 Route 42		Turnersville		NJ			08012				6,500				2.15			$	[***]			$	[***]
3102		Carrabba’s Italian Grill		500 Route 38 East		Maple Shade		NJ			08052				6,163				2.34			$	[***]			$	[***]
3110		Outback Steakhouse		230 Lake Drive East		Cherry Hill		NJ			08002				6,115				1.70			$	[***]			$	[***]
3114		Outback Steakhouse		1397 US Route 9 North		Old Bridge		NJ			08857				8,961				2.01			$	[***]			$	[***]
3116		Outback Steakhouse		4600 Route 42		Turnersville		NJ			08012				6,163				2.11			$	[***]			$	[***]
3117		Outback Steakhouse		98 US Route 22 West		Green Brook		NJ			08812				6,377				2.57			$	[***]			$	[***]
3120		Outback Steakhouse		Klockner Road at Route 130		Hamilton		NJ			08619				6,192				2.30			$	[***]			$	[***]
3122		Outback Steakhouse		901 Route 73		Evesham Township		NJ			08053				6,600				1.54			$	[***]			$	[***]
3211		Outback Steakhouse		4141 South Pecos Road		Las Vegas		NV			89121				6,270				1.38			$	[***]			$	[***]
3212		Outback Steakhouse		1950 North Rainbow Boulevard		Las Vegas		NV			89108				6,163				1.70			$	[***]			$	[***]
3213		Outback Steakhouse		4423 East Sunset Road		Henderson		NV			89014				6,163				1.03			$	[***]			$	[***]
3214		Outback Steakhouse		8671 West Sahara Avenue		Las Vegas		NV			89117				6,115				1.45			$	[***]			$	[***]
3215		Outback Steakhouse		3645 South Virginia Street		Reno		NV			89502				6,163				1.77			$	[***]			$	[***]
3217		Outback Steakhouse		2625 West Craig Road		North Las Vegas		NV			89032				6,163				2.34			$	[***]			$	[***]
3220		Outback Steakhouse		7380 South Las Vegas Boulevard		Las Vegas		NV			89123				6,205				0.76			$	[***]			$	[***]
3357		Outback Steakhouse		3112 Erie Boulevard East		Dewitt		NY			13214				6,163				0.94			$	[***]			$	[***]
3402		Carrabba’s Italian Grill		10400 East Independence Boulevard		Matthews		NC			28105				6,807				0.80			$	[***]			$	[***]
3403		Carrabba’s Italian Grill		16408 Northcross Drive		Huntersville		NC			28078				6,547				2.07			$	[***]			$	[***]
3420		Carrabba’s Italian Grill		4821 Capital Boulevard		Raleigh		NC			27616				6,115				0.79			$	[***]			$	[***]
3444		Outback Steakhouse		302 South College Street		Wilmington		NC			28403				7,656				1.26			$	[***]			$	[***]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule XV

---

3446		Outback Steakhouse		3550 Mount Moriah Road		Durham		NC			27707				6,163				1.37			$	[***]			$	[***]
3447		Outback Steakhouse		505 Highland Oaks Drive		Winston-Salem		NC			27103				6,115				1.70			$	[***]			$	[***]
3448		Outback Steakhouse		501 North New Hope Road		Gastonia		NC			28054				7,172				2.13			$	[***]			$	[***]
3450		Outback Steakhouse		606 Southwest Greenville Boulevard		Greenville		NC			27834				6,115				1.35			$	[***]			$	[***]
3451		Outback Steakhouse		256 East Parris Avenue		High Point		NC			27262				6,485				1.72			$	[***]			$	[***]
3452		Outback Steakhouse		100 Southern Road		Southern Pines		NC			28387				6,485				1.74			$	[***]			$	[***]
3453		Outback Steakhouse		210 Gateway Boulevard		Rocky Mount		NC			27804				6,163				1.68			$	[***]			$	[***]
3454		Outback Steakhouse		16400 Northcross Drive		Huntersville		NC			28078				7,450				2.43			$	[***]			$	[***]
3455		Outback Steakhouse		1235 Longpine Road		Burlington		NC			27215				6,163				1.62			$	[***]			$	[***]
3458		Outback Steakhouse		8280 Valley Boulevard		Blowing Rock		NC			28605				6,163				1.96			$	[***]			$	[***]
3460		Outback Steakhouse		250 Mitchelle Drive		Hendersonville		NC			28792				6,192				1.73			$	[***]			$	[***]
3461		Outback Steakhouse		1020 East Innes Street		Salisbury		NC			28144				6,160				1.83			$	[***]			$	[***]
3462		Outback Steakhouse		111 Howell Road		New Bern		NC			28562				5,608				1.83			$	[***]			$	[***]
3463		Outback Steakhouse		8338 Pineville-Matthews Road		Pineville		NC			28226				6,678				1.61			$	[***]			$	[***]
3464		Outback Steakhouse		223 Wintergreen Drive		Lumberton		NC			28358				6,163				3.06			$	[***]			$	[***]
3621		Outback Steakhouse		401 West Dussel Road		Maumee		OH			43537				6,163				1.83			$	[***]			$	[***]
3633		Outback Steakhouse		6950 Ridge Road		Parma		OH			44060				6,163				1.93			$	[***]			$	[***]
3635		Outback Steakhouse		24900 Sperry Drive		Westlake		OH			44145				6,115				2.00			$	[***]			$	[***]
3636		Outback Steakhouse		820 North Lexington Springmill Road		Ontario		OH			44906				6,200				1.58			$	[***]			$	[***]
3640		Outback Steakhouse		8595 Market Street		Mentor		OH			44060				7,540				3.09			$	[***]			$	[***]
3658		Outback Steakhouse		6800 Miller Lane		Butler Township		OH			45414				6,159				1.71			$	[***]			$	[***]
3662		Outback Steakhouse		930 Interstate Drive		Findlay		OH			45840				6,115				1.78			$	[***]			$	[***]
3663		Outback Steakhouse		2512 Kings Center Court		Mason		OH			45040				6,115				1.65			$	[***]			$	[***]
3713		Outback Steakhouse		3600 South Broadway		Edmond		OK			73013				6,087				1.96			$	[***]			$	[***]
3715		Outback Steakhouse		860 North Interstate Drive		Norman		OK			73013				6,163				1.70			$	[***]			$	[***]
3716		Outback Steakhouse		7206 Cache Road		Lawton		OK			73505				6,163				1.98			$	[***]			$	[***]
3915		Outback Steakhouse		3527 North Union Deposit Road		Harrisburg		PA			17109				6,115				1.62			$	[***]			$	[***]
3917		Outback Steakhouse		100 North Pointe Boulevard		Lancaster		PA			17601				6,300				2.79			$	[***]			$	[***]
3951		Outback Steakhouse		9395 McKnight Road		Pittsburgh		PA			15237				7,940				1.61			$	[***]			$	[***]
3952		Outback Steakhouse		100 Sheraton Drive		Altoona		PA			16601				6,200				1.80			$	[***]			$	[***]
4117		Outback Steakhouse		110 Interstate Boulevard		Anderson		SC			29621				6,115				1.92			$	[***]			$	[***]
4118		Outback Steakhouse		7611 Two Notch Road		Columbia		SC			29223				6,115				1.58			$	[***]			$	[***]
4119		Outback Steakhouse		110 Dunbarton Drive		Florence		SC			29501				6,163				1.67			$	[***]			$	[***]
4120		Outback Steakhouse		1319 River Point Road		Rock Hill		SC			29730				6,163				2.10			$	[***]			$	[***]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule XV

---

4121		Outback Steakhouse		20 Hatton Place		Hilton Head		SC			29926				6,163				1.44			$	[***]			$	[***]
4122		Outback Steakhouse		454 Bypass 72 Northwest		Greenwood		SC			29649				6,115				1.75			$	[***]			$	[***]
4123		Outback Steakhouse		1721 U.S. Highway 17 North		North Myrtle Beach		SC			29582				6,163				3.21			$	[***]			$	[***]
4124		Outback Steakhouse		2480 Broad Street		Sumter		SC			29150				6,163				1.93			$	[***]			$	[***]
4127		Outback Steakhouse		945 Factory Shops Boulevard		Gaffney		SC			29341				6,163				0.24			$	[***]			$	[***]
4210		Outback Steakhouse		2411 South Carolyn Avenue		Sioux Falls		SD			57106				6,115				1.69			$	[***]			$	[***]
4314		Outback Steakhouse		330 North Peters Road		Knoxville		TN			37922				6,115				1.73			$	[***]			$	[***]
4318		Outback Steakhouse		1390 Interstate Drive		Cookeville		TN			38501				6,163				1.60			$	[***]			$	[***]
4319		Outback Steakhouse		2790 Wilma Rudolph Boulevard		Clarksville		TN			37040				6,163				1.75			$	[***]			$	[***]
4320		Outback Steakhouse		1968 Old Fort Parkway		Murfreesboro		TN			37129				6,485				0.79			$	[***]			$	[***]
4324		Outback Steakhouse		1125 Franklin Road		Lebanon		TN			37087				6,163				2.00			$	[***]			$	[***]
4350		Outback Steakhouse		536 Paul Huff Parkway		Cleveland		TN			37312				6,163				1.47			$	[***]			$	[***]
4401		Carrabba’s Italian Grill		11339 Katy Freeway		Houston		TX			77079				6,552				1.38			$	[***]			$	[***]
4403		Carrabba’s Italian Grill		11590 Research Boulevard		Austin		TX			78759				6,115				1.88			$	[***]			$	[***]
4404		Carrabba’s Italian Grill		2335 Highway 6		Sugar Land		TX			77478				6,163				1.58			$	[***]			$	[***]
4405		Carrabba’s Italian Grill		12507 West IH-10		San Antonio		TX			78230				6,192				1.62			$	[***]			$	[***]
4406		Carrabba’s Italian Grill		25665 Interstate 45 North		The Woodlands		TX			77380				6,115				1.51			$	[***]			$	[***]
4407		Carrabba’s Italian Grill		502 West Bay Area Boulevard		Webster		TX			77598				6,288				1.81			$	[***]			$	[***]
4416		Outback Steakhouse		20455 Katy Freeway		Katy		TX			77450				6,115				1.43			$	[***]			$	[***]
4417		Outback Steakhouse		16080 San Pedro Avenue		San Antonio		TX			78230				6,163				1.99			$	[***]			$	[***]
4418		Outback Steakhouse		2102 South Texas Avenue		College Station		TX			77840				6,115				0.50			$	[***]			$	[***]
4422		Outback Steakhouse		11600 Research Boulevard		Austin		TX			78759				6,115				2.12			$	[***]			$	[***]
4423		Outback Steakhouse		12511 West IH-10		San Antonio		TX			78230				6,163				1.57			$	[***]			$	[***]
4424		Outback Steakhouse		2060 I-10 South		Beaumont		TX			77707				6,163				1.64			$	[***]			$	[***]
4426		Outback Steakhouse		5555 Northwest Loop 410		San Antonio		TX			78238				6,484				1.99			$	[***]			$	[***]
4429		Outback Steakhouse		4205 South IH-35		San Marcos		TX			78666				6,163				1.48			$	[***]			$	[***]
4454		Outback Steakhouse		3904 Towne Crossing Boulevard		Mesquite		TX			75150				6,163				1.69			$	[***]			$	[***]
4455		Outback Steakhouse		1031 SH 114 West		Grapevine		TX			76051				6,163				1.38			$	[***]			$	[***]
4456		Outback Steakhouse		9049 Vantage Point Drive		Dallas		TX			75243				6,163				1.38			$	[***]			$	[***]
4457		Outback Steakhouse		1509 North Central Expressway		Plano		TX			75075				6,163				2.25			$	[***]			$	[***]
4458		Outback Steakhouse		15180 Addison Road		Addison		TX			75001				6,163				1.38			$	[***]			$	[***]
4459		Outback Steakhouse		1151 West IH-20		Arlington		TX			76017				6,163				2.04			$	[***]			$	[***]
4461		Outback Steakhouse		2211 South Stemmons Freeway		Lewisville		TX			75067				6,163				1.31			$	[***]			$	[***]
4462		Outback Steakhouse		2314 West Loop 250 North		Midland		TX			79705				6,163				1.45			$	[***]			$	[***]
4463		Outback Steakhouse		7101 West Interstate Highway 40		Amarillo		TX			79106				6,495				1.13			$	[***]			$	[***]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule XV

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4464		Outback Steakhouse		4015 South Loop 289		Lubbock		TX			79423				6,115				1.38			$	[***]			$	[***]
4466		Outback Steakhouse		300 South I-35 East		Denton		TX			76201				6,115				1.72			$	[***]			$	[***]
4467		Outback Steakhouse		501 East Loop 281		Longview		TX			75605				6,163				0.80			$	[***]			$	[***]
4468		Outback Steakhouse		4500 Franklin Avenue		Waco		TX			76710				6,163				1.01			$	[***]			$	[***]
4469		Outback Steakhouse		2701 East Central Texas Expressway		Killeen		TX			76543				6,163				1.89			$	[***]			$	[***]
4470		Outback Steakhouse		11875 Gateway Boulevard		El Paso		TX			79936				6,163				1.14			$	[***]			$	[***]
4473		Outback Steakhouse		4505 Sherwood Way		San Angelo		TX			76901				6,163				1.20			$	[***]			$	[***]
4474		Outback Steakhouse		4142 Ridgemont Drive		Abilene		TX			79606				6,163				1.53			$	[***]			$	[***]
4475		Outback Steakhouse		1101 North Beckley Avenue		DeSoto		TX			75115				6,163				1.97			$	[***]			$	[***]
4476		Outback Steakhouse		4902 President George Bush Turnpike		Garland		TX			75040				6,163				1.78			$	[***]			$	[***]
4478		Outback Steakhouse		13265 South Freeway		Fort Worth		TX			76028				6,192				2.30			$	[***]			$	[***]
4510		Outback Steakhouse		7770 South 1300 East		Sandy		UT			84094				6,111				1.52			$	[***]			$	[***]
4511		Outback Steakhouse		1664 North Heritage Park Boulevard		Layton		UT			84041				6,674				1.35			$	[***]			$	[***]
4716		Outback Steakhouse		7917 West Broad Street		Richmond		VA			23294				6,115				2.09			$	[***]			$	[***]
4724		Outback Steakhouse		261 University Boulevard		Harrisonburg		VA			22801				6,163				2.00			$	[***]			$	[***]
4728		Outback Steakhouse		6821 Chital Drive		Midlothian		VA			23112				6,192				2.13			$	[***]			$	[***]
4756		Outback Steakhouse		3026 Richmond Road		Williamsburg		VA			23185				6,115				1.73			$	[***]			$	[***]
4758		Outback Steakhouse		295 Peppers Ferry Road		Christiansburg		VA			24073				6,163				1.67			$	[***]			$	[***]
4762		Outback Steakhouse		3121 Albert Lankford Drive		Lynchburg		VA			24501				6,485				3.08			$	[***]			$	[***]
4801		Cheeseburger In Paradise		40 Geoffrey Drive		Newark		DE			19713				6,950				2.95			$	[***]			$	[***]
4810		Outback Steakhouse		279 Junction Road		Madison		WI			53717				7,160				1.97			$	[***]			$	[***]
4813		Outback Steakhouse		311 Hampton Court		Onalaska		WI			54650				6,163				1.80			$	[***]			$	[***]
4910		Outback Steakhouse		790 Foxcroft Avenue		Martinsburg		WV			25401				6,200				1.50			$	[***]			$	[***]
4961		Outback Steakhouse		111 Hylton Lane		Beckley		WV			25801				6,200				1.13			$	[***]			$	[***]
5010		Outback Steakhouse		229 Miracle Road		Evansville		WY			82636				6,115				1.62			$	[***]			$	[***]
5113		Outback Steakhouse		2574 Camino Entrada		Santa Fe		NM			87507				6,301				1.00			$	[***]			$	[***]
5301		Carrabba’s Italian Grill		1740 South Clearview Avenue		Mesa		AZ			85208				6,192				1.52			$	[***]			$	[***]
5302		Carrabba’s Italian Grill		5646 West Bell Road		Glendale		AZ			85308				6,200				1.31			$	[***]			$	[***]
5303		Carrabba’s Italian Grill		1060 North 54th Street		Chandler		AZ			85226				6,417				1.53			$	[***]			$	[***]
5501		Cheeseburger In Paradise		4670 Southport Crossing Drive		Indianapolis		IN			46237				6,484				3.52			$	[***]			$	[***]
5502		Cheeseburger In Paradise		9770 Crosspoint Boulevard		Fisher		IN			46256				6,163				2.42			$	[***]			$	[***]
5505		Cheeseburger In Paradise		3830 S US Highway 41		Terre Haute		IN			47802				6,115				1.54			$	[***]			$	[***]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule XV

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5506		Cheeseburger In Paradise		8301 Eagle Lake Drive		Evansville		IN			47715				6,297				2.08			$	[***]			$	[***]
6006		Carrabba’s Italian Grill		2501 University Drive		Coral Springs		FL			33065				8,533				1.38			$	[***]			$	[***]
6007		Carrabba’s Italian Grill		60 Palmetto Avenue		Merritt Island		FL			32953				6,115				1.62			$	[***]			$	[***]
6013		Carrabba’s Italian Grill		4829 South Florida Avenue		Lakeland		FL			33813				6,374				1.57			$	[***]			$	[***]
6015		Carrabba’s Italian Grill		801 Providence Road		Brandon		FL			33511				6,115				2.11			$	[***]			$	[***]
6020		Carrabba’s Italian Grill		3530 Tyrone Boulevard North		Saint Petersburg		FL			33710				6,192				1.78			$	[***]			$	[***]
6021		Carrabba’s Italian Grill		2752 Capital Circle Northeast		Tallahassee		FL			32405				6,692				0.69			$	[***]			$	[***]
6029		Carrabba’s Italian Grill		1285 US Highway 1		Vero Beach		FL			32960				6,339				0.47			$	[***]			$	[***]
6035		Carrabba’s Italian Grill		270 Citi Center Street		Winter Haven		FL			33880				6,340				1.00			$	[***]			$	[***]
6048		Carrabba’s Italian Grill		11950 Sheldon Road		Citrus Park		FL			33626				6,420				1.54			$	[***]			$	[***]
6052		Carrabba’s Italian Grill		1203 Townsgate Court		Plant City		FL			33563				5,796				2.52			$	[***]			$	[***]
6116		Carrabba’s Italian Grill		2700 Chapel Hill Road		Douglasville		GA			30135				5,976				1.50			$	[***]			$	[***]
6302		Cheeseburger In Paradise		13905 Lakeside Circle		Sterling Heights		MI			48313				6,552				1.55			$	[***]			$	[***]
6402		Roy’s Restaurant		2840 Dallas Parkway		Plano		TX			75093				7,105				1.28			$	[***]			$	[***]
6502		Carrabba’s Italian Grill		4690 Southport Crossing		Indianapolis		IN			46237				6,692				3.52			$	[***]			$	[***]
6903		Carrabba’s Italian Grill		2010 Kaliste Saloon Road		Lafayette		LA			70508				6,790				1.28			$	[***]			$	[***]
7101		Carrabba’s Italian Grill		4430 Long Gate Parkway		Ellicott City		MD			21043				6,115				1.66			$	[***]			$	[***]
8001		Lee Roy Selmon’s		4302 West Boy Scout Boulevard		Tampa		FL			33607				9,843				2.46			$	[***]			$	[***]
8002		Lee Roy Selmon’s		17508 Dona Michelle Drive		Tampa		FL			33647				6,642				1.69			$	[***]			$	[***]
8109		Carrabba’s Italian Grill		901 Route 73		Evesham Township		NJ			08053				5,600				1.54			$	[***]			$	[***]
8302		Bonefish Grill		13905 Lakeside Circle		Sterling Heights		MI			48313				6,163				1.55			$	[***]			$	[***]
8609		Carrabba’s Italian Grill		1320 Boardman Polland Road		Boardman Township		OH			44514				12,132				1.30			$	[***]			$	[***]
8705		Cheeseburger In Paradise		1101 Seminole Trail		Charlottesville		VA			22901				6,192				1.48			$	[***]			$	[***]
8908		Carrabba’s Italian Grill		100 North Pointe Boulevard		Lancaster		PA			17601				6,249				2.79			$	[***]			$	[***]
9301		Carrabba’s Italian Grill		324 North Peters Road		Knoxville		TN			37922				6,163				1.70			$	[***]			$	[***]
9407		Bonefish Grill		190 Partners Circle		Southern Pines		NC			28387				6,115				1.33			$	[***]			$	[***]
9410		Carrabba’s Italian Grill		1550 I-10 South		Beaumont		TX			77707				6,163				1.59			$	[***]			$	[***]
9414		Carrabba’s Italian Grill		3400 North Central Expressway		Plano		TX			75074				6,115				1.50			$	[***]			$	[***]
9704		Carrabba’s Italian Grill		5805 Trinity Parkway		Centreville		VA			20120				6,189				1.81			$	[***]			$	[***]
9802		Carrabba’s Italian Grill		18375 Bluemound Road		Brookfield		WI			53045				5,990				1.84			$	[***]			$	[***]
															1,650,971				428.74			$	[***]			$	[***]

N/A - Not available from third party.

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule XV

Exhibit 10.26

AMENDED AND RESTATED

MASTER LEASE AGREEMENT

Dated as of March 27, 2012

Between

NEW PRIVATE RESTAURANT PROPERTIES, LLC,

as Landlord,

and

PRIVATE RESTAURANT MASTER LESSEE, LLC,

as Tenant

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

---

TABLE OF CONTENTS

 

		Page
ARTICLE I LEASED PROPERTY; TERM			2
Section 1.1 Leased Property			2
Section 1.2 Release of Outparcels			2
Section 1.3 [Reserved]			3
Section 1.4 [Reserved]			3
Section 1.5 Term			3
Section 1.6 No Merger of Landlord’s Interest			3
Section 1.7 [Reserved]			3
Section 1.8 Removed Properties			4
ARTICLE II DEFINITIONS			4
Section 2.1 Definitions			4
ARTICLE III RENT			29
Section 3.1 Rent			29
Section 3.2 Net Lease			32
ARTICLE IV TERMINATION; ABATEMENT			32
Section 4.1 No Termination, Abatement, etc.			32
ARTICLE V OWNERSHIP OF THE LEASED PROPERTIES			33
Section 5.1 Ownership of the Leased Properties			33
Section 5.2 Tenant’s Personalty			33
Section 5.3 Purchase Option			33
ARTICLE VI AFFIRMATIVE COVENANTS; PERMITTED USE			38
Section 6.1 Tenant Covenants			38
ARTICLE VII NEGATIVE COVENANTS			43
Section 7.1 Tenant’s Negative Covenants			43
ARTICLE VIII ALTERATIONS; LEASING			43
Section 8.1 Alterations			43
Section 8.2 Subletting and Transfers			46
ARTICLE IX MAINTENANCE AND REPAIR			54
Section 9.1 Maintenance and Repair			54

 

i

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ARTICLE X CASUALTY AND CONDEMNATION			56
Section 10.1 Insurance			56
Section 10.2 Casualty; Application of Proceeds			56
Section 10.3 Condemnation			58
ARTICLE XI ACCOUNTS AND RESERVES			59
Section 11.1 Cash Management Procedures			59
ARTICLE XII EVENTS OF DEFAULT AND REMEDIES			60
Section 12.1 Events of Default			60
Section 12.2 Certain Remedies			61
Section 12.3 Damages			61
Section 12.4 Application of Funds			62
Section 12.5 Limitations In Respect of Certain Events of Default			63
ARTICLE XIII LANDLORD’S SELF HELP RIGHTS; LANDLORD’S RIGHTS UPON LEASE REJECTION OR LEASE TERMINATION			63
Section 13.1 Landlord’s Right to Act Regarding Tenant’s Default			63
Section 13.2 Transition Services			63
Section 13.3 Cooperation			65
Section 13.4 Rights of Superior Parties			66
ARTICLE XIV HOLD-OVER			67
Section 14.1 Holding Over			67
ARTICLE XV SUBORDINATION			67
Section 15.1 Subordination			67
Section 15.2 Attornment			68
Section 15.3 [Reserved]			68
Section 15.4 Modifications to Secure Financing			68
Section 15.5 Delivery of Notices to Landlord’s Lender			68
Section 15.6 Right of Landlord’s Lender to Enforce Lease			69
Section 15.7 Exercise of Landlord’s Discretion			69
Section 15.8 Cure of Landlord Defaults			69
Section 15.9 Indemnification			69
ARTICLE XVI NO WAIVER			70
Section 16.1 No Waiver			70
ARTICLE XVII REMEDIES CUMULATIVE			70

 

Section 17.1 Remedies Cumulative			70

 

ii

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ARTICLE XVIII ACCEPTANCE OF SURRENDER			71
Section 18.1 Acceptance of Surrender			71
ARTICLE XIX NO MERGER OF TITLE			71
Section 19.1 No Merger of Title			71
ARTICLE XX CONVEYANCE BY LANDLORD			71
Section 20.1 Conveyance by Landlord			71
ARTICLE XXI QUIET ENJOYMENT			71
Section 21.1 Quiet Enjoyment			71
ARTICLE XXII NOTICES			72
Section 22.1 Notices			72
ARTICLE XXIII APPRAISERS			75
Section 23.1 Appraisers			75
ARTICLE XXIV CONFIDENTIALITY			76
Section 24.1 Confidentiality			76
Section 24.2 Safe Harbor			76
ARTICLE XXV ENVIRONMENTAL MATTERS			77
Section 25.1 Environmental Indemnity Provisions			77
Section 25.2 No Landlord Representations			78
ARTICLE XXVI MISCELLANEOUS			78
Section 26.1 Survival of Claims			78
Section 26.2 Severability			78
Section 26.3 Maximum Permissible Rate			78
Section 26.4 Headings			78
Section 26.5 Exculpation			78
Section 26.6 Exhibition of Leased Property			79
Section 26.7 Entire Agreement			80
Section 26.8 Governing Law			80
Section 26.9 No Waiver			80
Section 26.10 Successors and Assigns			80
Section 26.11 Modifications in Writing			80

 

iii

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Section 26.12 Delay Not a Waiver			81
Section 26.13 [Reserved]			81
Section 26.14 Third Party Beneficiaries			81
Section 26.15 Waiver of Landlord’s Lien			81
Section 26.16 Litigation Costs			81
Section 26.17 Letters of Credit			81
ARTICLE XXVII MEMORANDUM OF LEASE; ESTOPPELS			82
Section 27.1 Memorandum of Lease			82
Section 27.2 Estoppels			82
ARTICLE XXVIII TRUE LEASE			83
Section 28.1 True Lease			83
Section 28.2 Acknowledgment of Law			83

 

iv

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LIST OF EXHIBITS AND SCHEDULES

EXHIBIT A – Legal Description of the Land

EXHIBIT B – Guaranty

EXHIBIT C – Form of Removal Amendment

EXHIBIT D – Form of Non-Disturbance Agreement

EXHIBIT E – Master Lease SNDA

SCHEDULE 1.2 – Outparcels and Leasable Building Pads

SCHEDULE 1.3 – “Go Dark” Purchase Option Properties

SCHEDULE 2A – Landlord’s Loan Documents

SCHEDULE 2B – Certain Deemed Affiliates

SCHEDULE 2C – Classification of Certain Fixtures and Trade Fixtures

SCHEDULE 2D – Non-Disturbance Eligible Subleases/Unaffiliated Subleases

SCHEDULE 2E – Portfolio Four-Wall EBITDAR Calculation Examples

SCHEDULE 2F – Restaurant Locations

SCHEDULE 2G – RLP Subleases

SCHEDULE 2H – Specified Prior Subleases

SCHEDULE 6.1(h) – Reporting Requirements

SCHEDULE 8.2(a)(i) – Affiliated Subleases, Unaffiliated Subleases and Specified Prior Subleases

SCHEDULE 8.2(a)(ii) – Current Sublease Defaults

SCHEDULE 8.2(a)(iii) – Sublease Prepayments of Rent

SCHEDULE 10.1 – Insurance Requirements

SCHEDULE 15.4 – Arbitration Procedures

 

v

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AMENDED AND RESTATED MASTER LEASE AGREEMENT (this “Lease”), dated as of the 27th day of March, 2012, by and between New Private Restaurant Properties, LLC, a Delaware limited liability company (collectively with its successors and assigns, “Landlord”), having offices at 2202 North West Shore Boulevard, Suite No. 470C, Tampa, FL 33607 Attention: Chief Financial Officer, and Private Restaurant Master Lessee, LLC, a Delaware limited liability company (collectively with its successors and assigns, “Tenant”), having its principal offices at 2202 North West Shore Boulevard, Suite No. 500, Tampa, FL 33607, Attention: Chief Financial Officer.

STATEMENT OF INTENT

This Lease constitutes a single, unitary, indivisible, non-severable lease of all the Leased Property. This Lease does not constitute separate leases contained in one document each governed by similar terms. The use of the expression “unitary lease” to describe this Lease is not merely for convenient reference. It is the conscious choice of a substantive appellation to express the intent of the parties in regard to an integral part of this transaction. To accomplish the creation of an indivisible lease, the parties intend that from an economic point of view the portions of the property locations leased pursuant to this Lease constitute one economic unit and that the Base Rent and all other provisions of this Lease have been negotiated and agreed to based on a demise of all the portions of the property locations covered by this Lease as a single, composite, inseparable transaction. All provisions of this Lease, including definitions, commencement and expiration dates, rental provisions, use provisions, renewal provisions, removal provisions, breach, default, enforcement and termination provisions and assignment and subletting, shall apply equally and uniformly to all the Leased Property as one unit and are not severable. A default of any of the terms or conditions of this Lease occurring with respect to any Leased Property shall be a default under this Lease with respect to all the Leased Properties. The provisions of this Lease shall at all times be construed, interpreted and applied such that the intention of Landlord and Tenant to create a unitary lease shall be preserved and maintained. For the purposes of any assumption, rejection or assignment of this Lease under 11 U.S.C. Section 365 or any amendment or successor section thereof, this is one indivisible and non-severable lease dealing with and covering one legal and economic unit which must be assumed, rejected or assigned as a whole with respect to all (and only all) the Leased Properties covered hereby. The Lease is intended to be a true lease and not a secured financing for Tenant, and by entering into this Lease Landlord does not, and does not intend to, convey to Tenant any interest in the Leased Property except leasehold interests to the extend provided for hereunder, and Tenant does not, and does not intend to, obtain, hold or retain any interest in the Leased Property except leasehold interests to the extent provided for hereunder. Landlord and Tenant agree that this Lease shall not be construed in any manner to create any relationship between the parties thereto other than as landlord and tenant.

RECITALS

WHEREAS, Private Restaurant Properties, LLC (“Original Landlord”) and Tenant entered into that certain Master Lease Agreement, dated as of June 14, 2007 (as subsequently amended pursuant to that certain First Amendment to Master Lease Agreement, dated as of September 15, 2007, and as may have been further amended, supplemented, restated or otherwise modified from time to time prior to the date hereof, the “Original Lease”), pursuant to which Original Landlord agreed to let to Tenant, and Tenant agreed to lease from Landlord, certain parcels of real property and improvements described therein;

 

-1-

---

WHEREAS, on the date hereof, Original Landlord has conveyed all of its right, title and interest in and to the Leased Properties (as defined below) to Landlord and assigned to Landlord all of Original Landlord’s right, title and interest in the Original Lease as they relate to the Leased Properties; and

WHEREAS, Landlord and Tenant now wish to amend and restate the Original Lease to (i) extend the term of the Original Lease to March 27, 2027 and (ii) effect such other amendments thereto as are hereinafter provided.

NOW, THEREFORE, in consideration of the foregoing Statement of Intent, which is hereby incorporated by this reference, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

ARTICLE I

LEASED PROPERTY; TERM

Section 1.1 Leased Property. Upon and subject to the terms and conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord all of Landlord’s right, title and interest in and to all of the following (each, a “Leased Property” and collectively, the “Leased Properties”):

(i) those certain tracts, pieces and parcels of land, as more particularly described in Exhibit A attached hereto and made a part hereof (collectively, the “Land”);

(ii) all buildings, structures, and other improvements of every kind, including alleyways, sidewalks, utility pipes, conduits and lines, parking areas and roadways appurtenant to such buildings and structures presently or hereafter situated upon the Land (collectively, the “Leased Improvements”);

(iii) all easements, rights and appurtenances relating to the Land and the Leased Improvements; and

(iv) all Fixtures.

Section 1.2 Release of Outparcels. Notwithstanding anything herein to the contrary, Landlord shall have the right from time to time to remove from this Lease any Outparcel comprising a part of a Leased Property as well as grant in connection therewith in respect of the Leased Property remaining subject to this Lease reasonable easements, restrictions, covenants, reservations and rights of way for, among other things, traffic circulation, ingress, egress, parking, access, water and sewer lines, telephone and telegraph lines, electric lines or other utilities or for other similar purposes, including subjecting and/or converting such individual Leased Property and Outparcel to a condominium form of ownership (provided the related Condominium Documents do not materially increase Tenant’s obligations hereunder or require

 

-2-

---

Tenant or its Affiliates to modify the accounting treatment or classification of this Lease, as determined by Tenant’s or its Affiliates’ auditors), all at no cost to Tenant and with no adjustment in Rent (other than a reduction in Taxes and Other Charges as a result of the removal of such Outparcel from this Lease); provided, in each such case, (x) such Outparcel shall be used for the purpose of erecting, maintaining and operating other structures and improvements not inconsistent with the use of the related Leased Property, and (y) such removal will not materially adversely affect either the value of the remaining portion of the related Leased Property (as distinguished from the value of the entire applicable Leased Property) or the net operating income of the remaining portion of the Leased Property (taking into account, to the extent applicable, any potential loss of revenue resulting if the transfer and development of the Outparcel by Landlord were not to occur), as supported by the Officer’s Certificate of Landlord described below. As used herein, “Outparcel” shall mean those properties described as Outparcels and Leasable Building Pads on Schedule 1.2 hereto. In connection with any removal of an Outparcel permitted pursuant to this Section 1.2, Tenant agrees to execute and deliver any instrument reasonably necessary or appropriate to facilitate said action, including, if requested by Landlord, a cross easement agreement and a subordination of this lease to any Condominium Documents or other Property Documents created in connection therewith, subject to Tenant’s receipt of:

1. a plot plan identifying the location of the applicable Outparcel;

2. a metes and bounds description of such Outparcel;

3. an amendment to the legal description attached as an exhibit to this Lease implementing the proposed removal, including a metes and bounds description of the portion of the Land at the relevant Leased Property that will continue to be subject to this Lease after the proposed removal of such Outparcel; and

4. copies of all Property Documents or Condominium Documents created in connection with the release of such Outparcel that will affect the remaining Leased Property.

Section 1.3 [Reserved]

Section 1.4 [Reserved]

Section 1.5 Term. The term of this Lease (the “Term”) shall commence on the Commencement Date and shall expire at 11:59 p.m. (California time) on March 26, 2027 unless otherwise terminated as provided herein.

Section 1.6 No Merger of Landlord’s Interest. If Landlord or any Affiliate of Landlord shall purchase any fee or other interest in a Leased Property that is superior to the interest of Landlord, then the estate of Landlord and such superior interest shall not merge.

Section 1.7 [Reserved]

 

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Section 1.8 Removed Properties. In the event that any Leased Property is removed from this Lease pursuant to the terms hereof (each, a “Removed Property”) the date of removal (such date, the “Property Removal Date”) shall be (a) the date of Condemnation, in the case of any removal of a Leased Property as described in Section 10.3(a); (b) the Rent Payment Date specified in the applicable notice removing a Leased Property, in the case of a removal of a Leased Property from the Lease as described in Section 10.2, 10.3(b) or 12.1, and, except for any EOD Removed Property, all sums payable by Tenant hereunder, including the Rent with respect to such Leased Property to be released, shall be prorated through and including the Property Removal Date. As of and effective upon the applicable Property Removal Date, this Lease shall be automatically deemed amended to: (i) remove such Removed Property herefrom and all obligations of Tenant hereunder from and after the Property Removal Date with respect thereto (except for any such obligations that expressly survive such removal, and except with respect to any EOD Removed Property); (ii) exclude the applicable Removed Property from the definition of Leased Properties; (iii) (A) in the case of a removal of a Leased Property as described in Section 10.2, reduce the Base Rent in respect of each Lease Year by the Casualty Rent Reduction Amount (which reduction shall be effective as of the Rent Payment Date first occurring after the related Casualty and shall be prorated with respect to the Lease Year during which the related Casualty occurs), and reduce the amount of Additional Charges by the amounts thereof related and attributable to such Removed Property, and (B) in the case of a removal of a Leased Property as described in Section 10.3(a) or 10.3(b), reduce the Base Rent in respect of each Lease Year by the Condemnation Rent Reduction Amount (which reduction shall be effective as of the Rent Payment Date first occurring after the related Condemnation and shall be prorated with respect to the Lease Year during which the related Condemnation occurs), and reduce the amount of Additional Charges by the amounts thereof related and attributable to such Removed Property (with the parties hereby acknowledging that no reductions of Base Rent or Additional Charges shall occur by reason of any removal of an EOD Removed Property); and (iv) remove the information relevant to such Removed Property from each of the other schedules and exhibits hereto. With respect to any Removed Property, the terms of items (i) through (iv) above shall not limit the liability of Tenant for any obligations owed by Tenant to Landlord on account of such removal of the Removed Property for events occurring prior to the Property Removal Date. None of the terms of items (ii) or (iv) shall be deemed to limit Landlord’s remedies following the removal from this Lease of any EOD Removed Property. If requested by either party, Landlord and Tenant shall execute and enter into a confirmatory amendment to this Lease reflecting the removal of any Removed Property herefrom in the form attached hereto as Exhibit C, and the parties shall execute any such amendment promptly (and in any event within ten (10) Business Days) after the requesting party submits such amendment, properly filled out, to the other for execution; provided, however, that Tenant shall have no right to request, and Landlord shall have no obligation to execute, any such amendment following the removal from this Lease of any EOD Removed Property. For the avoidance of doubt, the parties acknowledge and agree that the provisions of this Section 1.8 shall not apply to the removal of any Outparcel from this Lease pursuant to Section 1.2.

ARTICLE II

DEFINITIONS

Section 2.1 Definitions. For all purposes of this Lease, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in this Article II have the meanings assigned to them in this Article II and include the plural as well as the

 

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singular, (ii) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as at the time applicable, (iii) all references in this Lease to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Lease, (iv) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or other subdivision, (v) the term “including” and words of similar import shall be deemed to be followed by the phrase “without limitation” (unless already followed by such phrase or a phrase of similar effect) (vi) the term “attorneys’ fees” and “attorneys’ fees and expenses” and words of similar import shall be deemed preceded with the word “reasonable” (unless already preceded by such word), (vii) the phrase “Leased Property” shall be deemed to be followed by the phrase “or any portion thereof” (unless already followed by such phrase or a phrase of similar effect) and (viii) where any party is required to not unreasonably withhold its consent or approval hereunder, such party shall be required to not unreasonably withhold, condition or delay such consent or approval.

AAA: As defined in Section 5.3(d).

Abandoned FF&E: As defined in Section 5.3(c).

Abandoned FF&E Sale Amounts: The amount of any cash proceeds received by Landlord as consideration for any sale of any Abandoned FF&E to a third party, in each case net of Landlord’s out of pocket expenses and taxes paid in connection with such sale.

Additional Charges: As defined in Section 3.1(d).

Affiliate: With respect to any specified Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with, or any general partner or managing member in, such specified Person. An Affiliate of a Person includes, without limitation, (i) any officer or director of such Person, and (ii) any Affiliate of the foregoing; provided, however, that no Sponsor Portfolio Company shall be deemed to be an Affiliate of Sponsors. Notwithstanding the above, for purposes of this definition, references to an Affiliate of Guarantor or its subsidiaries shall not include PropCo or its subsidiaries. In addition, for the purposes of this Lease, (x) Guarantor and its Controlled Affiliates (including Tenant) shall not be Affiliates of Landlord, and PropCo and its Controlled subsidiaries (including Landlord) shall not be Affiliates of Tenant and (y) the Persons listed on Schedule 2B shall be deemed to be Affiliates of Guarantor.

Affiliated Sublease: A Sublease under which the Subtenant is a Close Subsidiary of Guarantor. Affiliated Subleases shall include Concept Subleases, Pass-Through Subleases and RLP Subleases.

Allowed Claim: A claim against Tenant or Guarantor as a debtor in a Bankruptcy Proceeding for any amounts owed pursuant to the terms of this Lease, including, without limitation, any rejection damages arising from a Lease Rejection, to the extent such claim is: (a) scheduled by the debtor pursuant to the Bankruptcy Code and Bankruptcy Rules in a liquidated amount and not listed as contingent, unliquidated, zero, undetermined or disputed, and as to which (i) no objection has been filed, and (ii) no contrary proof of claim has been filed,

 

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(b) a claim proof of which has been timely filed, or deemed timely filed with the bankruptcy court pursuant to the Bankruptcy Code, the Bankruptcy Rules and/or any applicable Final Orders of the bankruptcy court, or late filed with leave of court, and not objected to within the period fixed by the Bankruptcy Code, the Bankruptcy Rules and/or applicable orders of the bankruptcy court, or (c) that has otherwise been allowed by a Final Order.

Alteration: As defined in Section 8.1.

Annual Budget: The variable operating expense budget for each Leased Property prepared by Tenant for the applicable Fiscal Year or other period setting forth, in reasonable detail, Tenant’s good faith estimates of the anticipated variable operating expenses for each Leased Property, including Variable Additional Charges, Scheduled Additional Charges, Base Rent, sales projections and planned capital expenditures.

Approved Bank: A bank or other financial institution which has a minimum long-term unsecured debt rating of at least “AA” and a minimum short-term unsecured debt rating of at least “A-1+” by each of the Rating Agencies, or if any such bank or other financial institution is not rated by all the Rating Agencies, then a minimum long-term rating of at least “AA” and a minimum short-term unsecured debt rating of at least “A-1+”, or their respective equivalents, by two of the Rating Agencies, but in any event one of the two Rating Agencies shall be S&P, it being understood that the AA and A-1+ benchmark ratings and other benchmark ratings in this Lease are intended to be the ratings, or the equivalent of ratings, issued by S&P.

Auctioneer: As defined in Section 5.3(d).

Auctioneer Appointment Notices: As defined in Section 5.3(d).

Award: Any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of any Leased Property.

Bankruptcy Code: Title 11, U.S.C.A., as amended from time to time and any successor statute thereto.

Bankruptcy Proceeding: Any proceeding under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law.

Bankruptcy Rules: The Federal Rules of Bankruptcy Procedure and the local rules of any bankruptcy court, as now in effect or hereafter amended.

Base Rent: As defined in Section 3.1(a).

Base Sublease Conditions: As defined in Section 8.2(c).

Base Transfer Conditions: With respect to any Transfer for which the Base Transfer Conditions are required to be satisfied pursuant to the terms of this Lease, the following conditions to such Transfer: (a) Landlord and Landlord’s Lender shall each receive no less than thirty (30) days prior written notice of such Transfer; and (b) immediately prior to such Transfer, no Event of Default shall have occurred and be continuing.

 

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Blanket Policy: As defined in Schedule 10.1.

Bonds: Appeal bonds, security bonds, payment and performance bonds or similar surety bonds issued by a surety reasonably acceptable to Landlord.

Building Equipment: The machinery, appliances, apparatus, equipment, fittings, Fixtures, materials, articles of personal property and goods of every kind and nature whatsoever used in connection with the Land and/or the Leased Improvements and all additions to and renewals, products and replacements thereof, and all substitutions therefor, now or hereafter affixed to, attached to, placed upon or located upon or in the Land and/or the Leased Improvements, or any part thereof, in each case used or usable or intended to be used in connection with the complete and comfortable use, ownership, management, maintenance, enjoyment or operation of the Land and/or the Leased Improvements in any present or future occupancy or use thereof, including, but without limiting the generality of the foregoing, all heating, lighting, laundry, cooking, incinerating, loading, unloading and power equipment, boilers, dynamos, engines, pipes, pumps, tanks, motors, conduits, switchboards, plumbing, lifting, cleaning, fire prevention, fire extinguishing, refrigerating, ventilating and communications apparatus, air cooling and air conditioning apparatus, building materials and equipment, elevators, escalators, carpeting, shades, draperies, awnings, screens, doors and windows, blinds, furnishings.

Business Day: Any day other than a Saturday, Sunday or any other day on which national banks in New York, New York are not open for business.

Calculation Date: As defined in Section 5.3(d).

Cash: Coin or currency of the United States of America or immediately available federal funds, including such funds delivered by wire transfer.

Cash and Cash Equivalents: Any one or a combination of the following: (i) Cash, and (ii) U.S. Securities.

Cash Management Procedures: As defined in Section 11.1.

Casualty: As defined in Section 10.2(a).

Casualty Rent Reduction Amount: With respect to a Leased Property removed from this Lease following a Casualty as provided in Section 10.2, the product of (i) 8.381%, multiplied by (ii) the sum of (A) the total amount of casualty insurance proceeds received by Landlord by reason of such Casualty (and not including any rental interruption proceeds), plus (B) the Post-Casualty Value.

Close Affiliate: With respect to any Person (the “First Person”) any other Person (each, a “Second Person”) which is an Affiliate of the First Person and in respect of which any of the following are true: (a) the Second Person owns, directly or indirectly, at least seventy-five percent (75%) of all of the legal, beneficial and/or equitable interest in such First Person, (b) the First Person owns, directly or indirectly, at least seventy-five percent (75%)of all of the legal, beneficial and/or equitable interest in such Second Person, or (c) a third Person owns, directly or indirectly, at least seventy-five percent (75%) of all of the legal, beneficial and/or equitable interest in both the First Person and the Second Person.

 

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Close Subsidiary: A “Close Subsidiary” of a Person shall mean a Subsidiary of such Person, no less than seventy-five percent (75%) of the outstanding Equity Interests of which (other than (x) director’s qualifying shares and (y) shares issued to foreign nationals to the extent required by Legal Requirements) are owned by such Person and/or by one or more wholly-owned Subsidiaries of such Person.

Commencement Date: The date of this Lease.

Concept: (a) Each of Bonefish Grill, Carrabba’s Italian Grill, Fleming’s Prime Steakhouse and Wine Bar, Outback Steakhouse and Roy’s Restaurant; provided, however, that any such restaurant brand shall constitute a Concept only for so long as such brand is owned by Guarantor or its Close Subsidiaries, and (b) any future restaurant brand owned by Guarantor or its Close Subsidiaries, so long as at the time that one or more Leased Properties are first opened for operation under such new restaurant brand, no less than twenty (20) restaurants in the United States (including, but not limited to, such Leased Properties) are open and operated by Guarantor or its Close Subsidiaries under such new restaurant brand.

Concept Sublease: Any Sublease entered into by a Concept Subsidiary and Tenant, together with any amendments thereto or replacements thereof, for all or any portion of the Leased Properties as and to the extent permitted under the terms and conditions of this Lease. As of the Commencement Date, the Concept Subleases are those certain Amended and Restated Subleases, each dated as of the Commencement Date, between Tenant, as sublandlord, and one of the following as subtenant: Outback Steakhouse of Florida, LLC, Carrabba’s Italian Grill, LLC, Bonefish Grill, LLC, OS Pacific, LLC or OS Prime, LLC.

Concept Subsidiary: Any direct or indirect Close Subsidiary of Guarantor that operates any Leased Property as a Concept Restaurant Location located thereon, either directly or indirectly through RLP Subleases, in accordance with the terms of this Lease. As of the Commencement Date, the Concept Subsidiaries are Carrabba’s Italian Grill, LLC, Outback Steakhouse of Florida, LLC, Bonefish Grill, LLC, OS Pacific, LLC and OS Prime, LLC.

Condemnation: As defined in Section 10.3(a).

Condemnation Rent Reduction Amount: With respect to a Leased Property removed from this Lease following a Condemnation as provided in Section 10.3(a) or 10.3(b), the product of (i) 8.381%, multiplied by (ii) the sum of (A) the total amount of the Award received by Landlord in connection with such Condemnation of such Leased Property, plus (B) the Post-Condemnation Value.

Condominium Documents: Condominium declarations; bylaws, covenants, conditions and restrictions relating to a condominium regime; and similar recorded agreements and instruments affecting any Leased Property and binding upon and/or benefiting Landlord or Tenant and other third parties as disclosed in the Title Policy or amendments thereto hereafter consented to by Tenant.

 

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Continuing Directors: The directors of HoldCo on the Commencement Date, and each other director of HoldCo if such other director’s nomination for election to the board of directors of HoldCo (or Guarantor after a Qualifying IPO of Guarantor) is recommended by a majority of the then Continuing Directors or such other director receives (i) the vote of one or more of the Permitted Holders or (ii) following a Transfer to one or more Permitted Transferees permitted under this Lease, the vote of one or more of such Permitted Transferees in such director’s election by the stockholders of HoldCo (or Guarantor after a Qualifying IPO of Guarantor).

Continuously Operate: With respect to any Restaurant Location, if such Restaurant Location is not a Go Dark Restaurant Location.

Control: The possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise, and Control shall not be deemed absent solely because another member, partner or other Person shall have a veto with respect to major decisions and shall not be deemed absent solely because such other member, partner or other Person has been granted such veto right, and the terms Controlled, Controlling and Common Control shall have correlative meanings.

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

Default: The occurrence of any event hereunder which, but for the giving of notice or passage of time, or both, would be an Event of Default hereunder.

Delinquent Party: As defined in Section 5.3(d).

Depositary: Landlord or, at Landlord’s election, Landlord’s Lender or a depositary selected by Landlord, it being agreed that different Persons may serve as Depositary at any one time and from time to time.

Discussion Period: As defined in Section 5.3(d).

Disqualified Transferee: Any Person that (i) has been convicted in a criminal proceeding of a felony or a crime involving moral turpitude or that is an organized crime figure or is reputed (as determined by Landlord and Landlord’s Lender in their sole discretion) to have substantial business or other affiliations with an organized crime figure; (ii) has at any time filed a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (iii) as to which an involuntary petition has at any time been filed under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law and which was not dismissed prior to the entry of an order for relief; (iv) has at any time filed an answer consenting to or acquiescing in any involuntary petition filed against it by any other person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (v) has at any time consented to or acquiesced in or joined in an application for the appointment of a custodian, receiver, trustee or

 

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examiner for itself or any of its property; or (vi) has at any time made an assignment for the benefit of creditors, or has at any time admitted its insolvency or inability to pay its debts as they become due; provided, however, with regard to any Person that would otherwise be a “Disqualified Transferee” by reason of any one or more of clauses (ii) through (vi) above, such Person shall not be a Disqualified Transferee if, at the time of determination, (A) such Person is solvent, such Person and such Person’s property is not subject to a custodian, receiver, trustee or examiner, and neither such Person nor its debts or assets are subject to any federal or state bankruptcy or insolvency proceeding, and (B) such Person has been reasonably approved by Landlord and Landlord’s Lender.

Eligible Collateral: U.S. Securities, Cash and Cash Equivalents, Bonds, Title Endorsements and Letters of Credit, or any combination of the foregoing.

Environmental Conditions: The conditions of Environmental Media and the conditions of any part of the Leased Properties, including building materials, that affect or may affect Environmental Media.

Environmental Laws: Any and all of the following as applicable to Tenant and/or any of the Leased Properties: present and future federal, state and local laws (whether under common law, statute, ordinance, rule, regulation or otherwise), court or administrative orders or decrees, requirements of permits issued with respect thereto, and other requirements of governmental authorities relating to any Hazardous Substances or Hazardous Substances activity (including the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §§9601, et seq.) as heretofore or hereafter amended from time to time).

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

EOD Removed Property: Any Leased Property removed from this Lease by Landlord as an exercise (without limitation) of its remedies under this Lease in connection with an Event of Default.

Equity Interests: (i) any ownership, management or membership interests in any limited liability company, (ii) any general or limited partnership interest in any partnership, (iii) any common, preferred or other stock interest in any corporation, (iv) any share, participation, unit or other interest in the property or enterprise of an issuer that evidences ownership rights therein, (v) any ownership or beneficial interest in any trust or, (vi) any option, warrant or other right to convert into or otherwise receive any of the foregoing.

ERISA: The United States Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and the rulings issued thereunder.

Escrow Account: As defined in Section 3.1(e).

Event of Default: As defined in Section 12.1.

 

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Exchange Act: The Securities and Exchange Act of 1934, as amended.

Excluded FF&E: As defined in Section 5.3(b).

Exercise Notice: As defined in Section 5.3(d).

Failing Party: As defined in Section 5.3(d).

Fair Market Rental: With respect to a particular Leased Property, the rental that a willing tenant not compelled to rent would pay a willing landlord not compelled to let for such Leased Property for the Primary Intended Use, excluding all capital improvements (as distinguished from necessary repairs and replacements) paid for by Tenant, determined in accordance with the appraisal procedures set forth in Section 23.1 or in such other manner as shall be mutually acceptable to Landlord and Tenant.

Fair Market Value: As defined in Section 5.3(d).

Final Order: An order or judgment of a bankruptcy court, as entered on the docket of the bankruptcy court, that has not been reversed, stayed, modified, or amended, and as to which: (a) the time to appeal, seek review or rehearing or petition for certiorari has expired and no timely filed appeal or petition for review, rehearing, remand or certiorari is pending; or (b) any appeal taken or petition for certiorari filed has been resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought, provided, however, that the possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules or other rules governing procedure in cases before the bankruptcy court, may be filed with respect to such order shall not cause such order not to be a Final Order.

Fiscal Year: Each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the term of this Lease or the portion of any such twelve (12) month period falling within the term of this Lease in the event that such a twelve (12) month period occurs partially before or after, or partially during, the term of this Lease.

Fixed Charge Coverage Ratio: As of any date, the ratio of the TTM EBITDAR of the Leased Properties to the Base Rent for the same twelve month period. For the first twelve months of the Term, the Fixed Charge Coverage Ratio shall be calculated based on notional Base Rent in respect of the relevant period prior to the Commencement Date equal to Base Rent for the applicable Leased Property. From and after the removal of any Leased Property from the Lease pursuant to Section 10.2, 10.3 or 12.1, (i) the calculation of the Fixed Charge Coverage Ratio shall exclude TTM EBITDAR for such Removed Property (for the entire applicable twelve (12) month period in such calculation, including any portion of such period prior to such removal), and (ii) Base Rent in the calculation of the Fixed Charge Coverage Ratio shall be reduced if and to the extent provided in Section 1.8 (for the entire applicable twelve-month period in such calculation, including any portion of such period prior to such removal).

Fixtures: “Fixtures” shall have the meaning set forth in the Uniform Commercial Code in effect in the State of New York, and, in addition, shall include the following: general, non-specialized building mechanical, electrical and plumbing and HVAC systems and equipment,

 

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elevators and escalators (together with all related controls equipment, parts and supplies used to service, repair, maintain and equip the foregoing), sprinkler systems, fire suppression/fire alarm systems, security system, awnings, ceiling tile and grids, restroom and utility plumbing fixtures, carpeting, hard wood flooring, domestic water heaters, brick pizza ovens, and general and emergency lighting, all of which, to the greatest extent permitted by law, are hereby deemed by the parties to constitute real estate, together with all replacements, modifications, alterations and additions thereto, but excluding all items included within Tenant’s Personalty. Without limiting the generality of the foregoing, with respect to any Concept restaurant, the term Fixtures shall specifically include the items set forth as “Fixtures” on Schedule 2C.

Founders: (i) Christopher T. Sullivan, Robert D. Basham and J. Timothy Gannon, or in the event of any such Person’s death such Person’s estate; (ii) any trust Controlled by any of the Persons described in clause (i) (or in the event of the death or incompetency of any such Person, such Person’s estate, executor, administrator or committee administering such estate) created for the benefit of any of the Persons described in clause (i) or any of (or any combination of) the spouses, ancestors, siblings, descendants (including children or grandchildren by adoption) and the descendants of any of the siblings of the Persons referred to in clause (i), or any trust for the benefit of such Person Controlled by any of the Persons described in clause (i) (or in the event of the death or incompetency of any such Person, such Person’s estate, executor, administrator or committee administering such estate); or (iii) any entity that both (a) is Controlled by any of the Persons described in clause (i) (or in the event of the death or incompetency of any such Person, such Person’s estate, executor, administrator or committee administering such estate) and (b) no less than fifty-one percent (51%) of the Equity Interests in which entity are owned by any of the Persons described in any of clauses (i) or (ii) above.

GAAP: Generally accepted accounting principles from time to time in effect and as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession, to the extent such principles are applicable to the facts and circumstances on the date of determination; provided, however, that if Tenant notifies Landlord that Tenant requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Commencement Date in GAAP or in the application thereof on the operation of such provision (or if Landlord notifies Tenant that Landlord requests an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

Go Dark: With respect to any Restaurant Location (a Restaurant Location that shall Go Dark is sometimes referred to herein as a “Go Dark Restaurant Location”) (a) if the Restaurant Location is not open for business to the public for a period of thirty (30) consecutive days, unless such closure (i) is a result of a condemnation or casualty or other damage or injury to such Leased Property, provided that, in the event Tenant elects to undertake the Restoration pursuant to Section 10.2(a)(i) or Section 10.3(b), only so long as Tenant (A) promptly and diligently

 

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pursues and completes repair or restoration of such Restaurant Location pursuant to the terms of this Lease, or takes other appropriate actions to resolve such closure, and (B) reopens such Restaurant Location to the public no later than two hundred seventy (270) days after the date of the initial closure, subject to an extension not to exceed an additional two hundred seventy (270) days in the event that such closure continues due to Unavoidable Delay, upon the expiration of which, such Restaurant Location shall be a Go Dark Restaurant Location; or (ii) subject to the proviso below, is temporary and is in connection with an Alteration permitted hereunder, so long as Tenant (A) promptly and diligently pursues and completes such Alteration pursuant to the terms of this Lease, and (B) reopens such Restaurant Location to the public no later than one hundred eighty (180) days after the date of the initial closure, subject to an extension not to exceed sixty (60) days in the event that such closure continues due to Unavoidable Delay, upon the expiration of which, such Restaurant Location shall be a Go Dark Restaurant Location; provided, however, that no greater than ten percent (10%) of all Restaurant Locations under this Lease at the time of determination (rounded up to the nearest whole number, which number as of the Commencement Date is 27 based on 261 Restaurant Locations under this Lease as of the Commencement Date) shall be permitted to be closed pursuant to this clause (a)(ii) at any one time; and (b) if the Restaurant Location is a Go Dark Purchase Option Property, if the Restaurant Location is not open for business to the public for any period of time, and such closure would constitute an event after which a purchase right, termination right, recapture right or option could be triggered (regardless of the applicability of the provisions of the foregoing clause (a) that would otherwise result in such Restaurant Location not being considered a Go Dark Restaurant Location).

Go Dark Leased Property: The meaning set forth in the definition of “Go Dark” above.

Go Dark Purchase Option Property: Any Restaurant Location having an Operating Agreement or other agreement of record (or off record and evidenced by a recorded memorandum) which contains a purchase right, termination right, recapture right or option that would be exercisable if such Restaurant Location is not open for business to the public for a period designated in such Operating Agreement or other agreement of record, including, but not limited to, the Restaurant Locations listed on Schedule 1.3 which are specifically designated as having such a purchase right, termination right, recapture right or option.

Go Dark Restaurant Location: As defined in the definition of “Go Dark”.

Go Dark/Sublease Limit: At any given time, fourteen percent (14%) of the Restaurant Locations that remain subject to this Lease at the time of determination (rounded up to the nearest whole number). As of the Commencement Date, the Go Dark/Sublease Limit is equal to 37 Restaurant Locations based on 261 Restaurant Locations being subject to this Lease as of the Commencement Date.

Governmental Authority: Any court, board, agency, commission, office or other authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

Guarantor: OSI Restaurant Partners, LLC, a Delaware limited liability company.

 

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Guarantor Asset Covenants: The following covenants pertaining to Guarantor, except to the extent such covenants are no longer complied with as a result of a foreclosure (or transfer in lieu thereof) of the Liens granted by HoldCo, Guarantor or any of Guarantor’s Subsidiaries resulting from the exercise of remedies as set forth in the Guarantor Facility: (i) Guarantor shall continue to own, directly or through Close Subsidiaries, the restaurant brands and related intellectual property and businesses known as “Outback Steakhouse” and “Carrabba’s Italian Grill”; (ii) Guarantor shall not dispose of all or substantially all of its assets, exclusive of transfers to and among Guarantor’s Close Subsidiaries; and (iii) Tenant shall continue to be a wholly owned Subsidiary of Guarantor and Guarantor shall not permit and shall not consent to any assignment by Tenant of its interest in this Lease or its rights and interests thereunder.

Guarantor Facility: The credit facilities provided under the Credit Agreement, dated as of June 14, 2007, by and among Guarantor, as borrower, HoldCo, Deutsche Bank AG, New York Branch, as Administrative Agent, and the other lenders from time to time party thereto, and any amendments, supplements, modifications, extensions, replacements, renewals, restatements, refundings or refinancings thereof and any one or more indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that extend, replace, refund, refinance, renew or defease any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof or adds additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders; provided, however, that in no event shall such credit facilities, or any amendments, supplements, modifications, extensions, replacements, renewals, restatements, refundings or refinancings thereof, be secured in whole or in part by the direct or indirect Equity Interests in Holdco Parent or any of its direct or indirect parent entities or in HoldCo or any Intermediate Holdco Entity.

Guaranty: The Guaranty of this Lease executed by Guarantor in favor of Landlord, a copy of which is attached hereto as Exhibit B.

Guaranty Event of Default: An “Event of Default” as defined in the Guaranty.

Hazardous Substances: Any of the following: (i) any chemical, compound, material, mixture or substance that is now or hereafter defined or listed in, or otherwise classified pursuant to, any Environmental Laws as a “hazardous substance”, “hazardous material”, “hazardous waste”, “extremely hazardous waste”, “infectious waste”, “toxic substance”, “toxic pollutant” or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, or “EP toxicity” and (ii) any petroleum, natural gas, natural gas liquid, liquefied natural gas, synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas), ash produced by a resource recovery facility utilizing a municipal solid waste stream, and drilling fluids, produced waters, and other wastes associated with the exploration, development or reduction of crude oil, natural gas, or geothermal resources. Without limiting the foregoing, Hazardous Substances shall also include asbestos and asbestos-containing materials and polychlorinated biphenyls.

HoldCo: OSI HoldCo, Inc., a Delaware corporation.

 

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HoldCo Parent: OSI HoldCo I, Inc., a Delaware corporation.

Holdings: Kangaroo Holdings, Inc., a Delaware corporation.

Indemnitee: As defined in Section 15.9.

Independent: When used with respect to any Person, a Person who: (i) does not have any direct financial interest or any material indirect financial interest in Landlord, any Affiliate of Landlord, Tenant, or any Affiliate of Tenant, (ii) is not connected with Landlord, any Affiliate of Landlord, Tenant, or any Affiliate of Tenant, as an officer, employee, promoter, underwriter, trustee, partner, member, manager, creditor, director, customer or supplier (other than a customer or supplier in the ordinary course of business on terms applicable generally to all customers and suppliers) or person performing similar functions and (iii) is not a member of the immediate family of a Person defined in clause (i) or (ii) above.

Independent Leasing Broker: (a) Cushman & Wakefield, or (b) such other Independent leasing broker which (i) is a reputable, nationally or regionally recognized leasing broker having at least five (5) years’ experience in the leasing of commercial restaurant properties, (ii) has, during the five (5) year period immediately prior to its engagement by Tenant to provide the certificate required under Section 8.2(j)(iv), acted as leasing broker for commercial properties with leasable square footage equal to at least the lesser of (A) 1,000,000 leasable square feet and (B) five (5) times the leasable square feet of the Leased Properties, and (iii) is not the subject of a bankruptcy or similar insolvency proceeding.

Institutional Lender: Any one or more of the following: a bank, investment bank, trust company, broker-dealer, insurance company, separate account, pension fund, retirement plan, governmental agency, real estate investment trust, investment company, investment company adviser or pension fund adviser, or any Affiliate of any of the foregoing, in each case, whether acting for its own account or as a trustee, fiduciary or agent of others.

Insurance Requirements: Collectively, (i) all material terms of any insurance policy required hereunder, (ii) all material regulations and then-current standards applicable to or affecting the Leased Properties or any part thereof or any use or condition thereof, which may, at any time, be recommended by the National Board of Fire Underwriters, if any, having jurisdiction over the Leased Property, or such other body exercising similar functions.

Interest Rate: The rate of interest, as of any date, equal to one month LIBOR, as reasonably determined by Landlord, plus one hundred seventy-five (175) basis points.

Intermediate HoldCo Entity: Any Person satisfying all of the following: (a) one hundred percent (100%) of the direct or indirect Equity Interests in such Person are owned by, and such Person is Controlled by, Holdco Parent, (b) such Person owns, directly or indirectly, one hundred percent (100%) of the Equity Interests in, and Controls, HoldCo, and (c) such Person does not own, directly or indirectly, any Equity Interest in any Person other than another Intermediate HoldCo Entity (if any) and, indirectly by virtue of its direct or indirect Equity Interests in HoldCo, the Persons in which HoldCo owns a direct or indirect Equity Interest. As of the Commencement Date, there are no Intermediate HoldCo Entities.

 

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Inventory: As defined in and subject to the provisions of the Uniform Commercial Code as in effect in the State of New York.

IP Removal Costs: Any reasonable out-of-pocket costs incurred by Tenant, Guarantor and any of Guarantor’s Subsidiaries in connection with the removal, destruction or concealment of any Tenant Proprietary/IP Material from any tangible Personal Property or Trade Fixtures as to which Landlord has exercised the Purchase Option.

IPO Entity: Any Lower Tier Entity or Upper Tier Entity.

Land: As defined in Section 1.1.

Landlord: As defined in the first paragraph hereof.

Landlord Liens: Liens on or against the Leased Property or this Lease or any payment of Rent (i) in favor of any taxing authority by reason of any tax excluded from the definition of “Taxes” hereunder owed by Landlord, (ii) any easements, rights of way, restrictions or other similar encumbrances encumbering any Leased Property and entered into by Landlord after the Commencement Date (including any amendments entered into by Landlord after the date hereof to any easements, rights of way, restrictions or other similar encumbrances encumbering any Leased Property and existing on the Commencement Date), unless Tenant shall have consented thereto (such consent not to be unreasonably withheld), or (iii) securing Landlord’s Debt.

Landlord’s Debt: The loan in the aggregate principal amount of $324,800,000 made to Landlord pursuant to that certain Loan and Security Agreement, dated as of March 27, 2012, as the same may be modified, increased or reinstated from time to time.

Landlord’s Lender: Collectively, German American Capital Corporation, a Maryland corporation, and Bank of America, N.A., a national banking association, together with their respective successors and assigns and any other lender in respect of Landlord’s Debt.

Landlord’s Loan Documents: The instruments and agreements evidencing, establishing and securing Landlord’s Debt as of the date hereof as set forth on Schedule 2A, as such instruments and agreements may be amended, restated, or supplemented from time to time. In any instance in this Lease in which Tenant (and any Person claiming by, through or under Tenant) is obligated to comply with or perform in accordance with or subject to Landlord’s Loan Documents, Tenant (and such Person) shall not be so obligated to the extent that any Landlord’s Loan Documents entered into after the date hereof, or amendment to any existing Landlord’s Loan Documents, impose any additional obligation, duty or liability on Tenant (or such Person) or diminish any right of Tenant (or such Person) provided for hereunder or would require Tenant or its Affiliates to modify the accounting treatment or classification of this Lease, as determined by Tenant’s or its Affiliates’ auditors.

LC Expiration Date: As defined in the definition of “Letter of Credit”.

Lease: As defined in the first paragraph hereof.

Lease Rejection: As defined in Section 5.3(a).

 

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Lease Termination: Any termination of this Lease by Landlord with respect to one or more Leased Properties due to an Event of Default as described in Section 12.1.

Lease Year: The period beginning on the Commencement Date, or any anniversary thereof, and ending on the day immediately preceding the next succeeding anniversary of the Commencement Date, provided that the final Lease Year shall end on the last day of the Term.

Leased Improvements: As defined in Section 1.1.

Leased Property: As defined in Section 1.1.

Legal Requirements: All federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Landlord, Tenant or the Leased Property, or the construction, use, alteration or operation thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Tenant, at any time in force affecting the Leased Property (other than any subleases, this Lease, and service contracts and other similar agreements now in effect or hereafter entered into in the ordinary course of Tenant’s or any Subtenant’s business), including any which may (i) require repairs, modifications or alterations in or to the Leased Property, or (ii) in any way limit the use and enjoyment thereof.

Letter of Credit: An irrevocable, unconditional, transferable, clean sight draft letter of credit (either an evergreen letter of credit or one which does not expire until at least sixty (60) days after the maturity date of Landlord’s Debt (the “LC Expiration Date”)), in favor of Landlord (or, at Landlord’s Lender’s request, Landlord’s Lender) and entitling Landlord (or, at Landlord’s Lender’s request, Landlord’s Lender) to draw thereon in New York, New York, based solely on a statement executed by an officer or authorized signatory of Landlord (or Landlord’s Lender, as applicable) and issued by an Approved Bank. With respect to any Letter of Credit provided under this Lease, if at any time (a) the institution issuing any such Letter of Credit shall cease to be an Approved Bank or (b) the Letter of Credit is due to expire prior to the LC Expiration Date, Landlord (or at Landlord’s Lender’s request, Landlord’s Lender) shall have the right immediately to draw down ( as Eligible Collateral) the same in full and hold the proceeds thereof in accordance with the provisions of this Lease, unless Tenant shall deliver a replacement Letter of Credit from an Approved Bank within (i) as to (a) above, twenty (20) days after Landlord or Landlord’s Lender delivers written notice to Tenant that the institution issuing the Letter of Credit has ceased to be an Approved Bank or (ii) as to (b) above, at least twenty (20) days prior to the expiration date of said Letter of Credit.

LIBOR: The rate (expressed as a percentage per annum rounded upwards, if necessary, to the nearest one one-hundredth (1/100) of one percent (1%)) for deposits in U.S. Dollars in an amount equal to One Million Dollars ($1,000,000) for a one (1) month period that appears on Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on the date of determination or, if such rate does not appear, as reasonably determined by Landlord.

 

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Lien: Any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance or charge on or affecting the Leased Property or Tenant, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and the filing of mechanics’, materialmen’s and other similar liens and encumbrances, in each case excluding any such items filed against and solely affecting Tenant or Tenant’s Personalty or other Personal Property of Tenant; provided, however, that such exclusion of such items does not extend to, and the term “Lien” shall include, for the avoidance of doubt, any of such items encumbering either Tenant’s leasehold estate created under this Lease or the Leased Property.

Limited Default Event: An Event of Default arising out of or resulting from breach of the following provisions of this Lease: (i) Section 8.2(l) (except Section 8.2(l)(i)(A)), or (ii) Section 12.1(g)) (but only if the event or circumstance resulting in such breach is not also an Event of Default under another provision of this Lease).

Litigation Costs: All costs reasonably incurred by Landlord, as applicable, in connection with the enforcement by Landlord against Tenant of any provision of this Lease, including attorneys’ fees and expenses, court costs and reasonable consultants’ fees and expenses.

Losing Party: As defined in Section 5.3(d).

Lower Tier Entity: Any of Guarantor, HoldCo or any Intermediate HoldCo Entity.

Management Fee: As defined in Section 13.2(c).

Management Stockholders: The bona fide members of management of Guarantor or its Subsidiaries (excluding the Founders) who are as of the relevant date of determination both (i) actively involved in the management of Guarantor or its Subsidiaries and (ii) investors in Holdco Parent or any direct or indirect parent thereof.

Master Lease SNDA: As defined in Section 15.1.

Material Adverse Effect: Any event or condition that has a material adverse effect on (i) the Leased Properties taken as a whole, (ii) the use, operation, or value of any Leased Property, (iii) the business, profits, operations or financial condition of Tenant, or (iv) the ability of Tenant to satisfy any of Tenant’s material obligations under this Lease.

Material Alteration: Any Alteration the cost of which is reasonably anticipated to exceed the Threshold Amount.

Mezzanine Debt: Collectively and individually as the context may require, each of (i) the senior mezzanine loan in the aggregate principal amount of $87,600,000 made to New PRP Mezz 1, LLC (Landlord’s direct equity holder) pursuant to that certain Mezzanine Loan and Security Agreement (First Mezzanine), dated as of March 27, 2012, and (ii) the junior mezzanine loan in the aggregate principal amount of $87,600,000 made to New PRP Mezz 2, LLC (Landlord’s indirect equity holder) pursuant to that certain Mezzanine Loan and Security Agreement (Second Mezzanine), dated as of March 27, 2012, each as the same may be modified, increased or reinstated from time to time.

 

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Minimum Ownership/Control Requirements: As defined in Section 8.2(l)(ii)(D)(2).

New Sublease: As defined in Section 8.2(c).

Non-Disturbance Agreement: As defined in Section 8.2(j).

Non-Disturbance Eligible Sublease: Any existing Sublease, or any new Sublease entered into in accordance with this Lease, in each case, where neither Guarantor nor any of its Affiliates owns any direct or indirect Equity Interests in, or Controls, the Subtenant that is the party thereto; provided, however, that as of the Commencement Date, no Specified Prior Subleases are Non-Disturbance Eligible Subleases. All Non-Disturbance Eligible Subleases as of the Commencement Date are listed on Schedule 2D attached hereto.

Notices and notices: As defined in Section 22.1.

NRSRO: As defined in Section 24.2.

Occurrence Date: As defined in Section 12.5.

Officer’s Certificate: (i) With respect to Landlord, a certificate executed by an authorized signatory of Landlord, and (ii) with respect to Tenant, a certificate executed by an authorized signatory of Tenant that is familiar with the financial condition of Tenant and the operation of the Leased Properties.

Operating Agreements: Reciprocal easement and/or operating agreements; recorded covenants, conditions and restrictions; and similar recorded agreements affecting any Leased Property and binding upon and/or benefiting Landlord or Tenant and other third parties as disclosed in the Title Policy or hereafter consented to by Tenant, such consent not to be unreasonably withheld.

Option FF&E: As defined in Section 5.3(a).

Option FF&E Purchase Price: The sum of (a) Fair Market Value, plus (b) any IP Removal Costs.

Option Notice Date: As defined in Section 5.3(d).

Original Landlord: As defined in the Recitals.

Original Lease: As defined in the Recitals.

Other Charges: All governmental impositions other than Taxes, and any other governmental or quasi-governmental charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining a Leased Property, now or hereafter levied or assessed or imposed against any Leased Property or any part thereof by any Governmental Authority.

 

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Outparcel: As defined in Section 1.2.

Overdue Rate: On any date, a rate equal to the Interest Rate plus three percent (3%), but in no event greater than the maximum rate then permitted under applicable law.

Partner Equity Program: The Outback Steakhouse, Inc. Partner Equity Plan and OSI Restaurant Partners, LLC Partner Ownership Account Plan, each as may be modified, amended, extended, supplemented, restated or replaced from time to time.

Pass-Through Sublease: Any Sublease entered into by a Pass-Through Subsidiary and Tenant, together with any amendments thereto or replacements thereof, for all or any portion of the Leased Properties as and to the extent permitted under the terms and conditions of this Lease. As of the Commencement Date, the Pass-Through Subleases are those certain Amended and Restated Subleases, each dated as of the Commencement Date, between Tenant, as sublandlord, and either OS Southern, LLC or OS Tropical, LLC, as Subtenant.

Pass-Through Subsidiary: Any direct or indirect wholly-owned Subsidiary of Guarantor that subleases from Tenant any Leased Property at which an Unaffiliated Business is being operated. As of the Commencement Date, the Pass-Through Subsidiaries are OS Southern, LLC and OS Tropical, LLC.

Permits: As defined in Section 13.3(a).

Permitted Encumbrances: Collectively, (a) all Liens, encumbrances and other matters disclosed in the Title Policy; (b) Liens, if any, for Taxes or Other Charges imposed by any Governmental Authority not yet due or delinquent; (c) Liens which are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted in accordance with the terms of this Lease; (d) statutory Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens arising by operation of law, which are incurred in the ordinary course of business or permitted Alterations under this Lease for sums which are not more than thirty (30) days past due or being contested in good faith in accordance with the terms of this Lease; (e) Subleases, easements, licenses, restrictions, covenants, reservations, rights of way and other Transfers permitted pursuant to this Lease; (f) the Specified Prior Subleases; and (g) such other Liens as each of Landlord and Landlord’s Lender may approve in writing in its sole discretion. In addition, “Permitted Encumbrances” shall include any Landlord Liens, but not for purposes of determining Tenant’s obligations and, except where the terms of this Lease expressly require Tenant to comply with or perform the covenants and obligations of Landlord’s Loan Documents, Tenant shall not be deemed to have agreed to comply with or perform said covenants or obligations of Landlord’s Loan Documents, notwithstanding that Tenant is obligated to observe or perform the Permitted Encumbrances or Property Documents.

Permitted Holders: The Sponsors, the Founders and the Management Stockholders; provided that for purposes of determining under the provisions of this Lease the percentage of stock or ownership interests directly or indirectly owned by the Permitted Holders at any time, (i) if the Management Stockholders own beneficially or of record more than ten percent (10%) of

 

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the outstanding Equity Interests of any Person in the aggregate, they shall be treated as Permitted Holders of only ten percent (10%) of the outstanding Equity Interests of such Person at such time; and (ii) if the Founders own beneficially or of record more than fifteen percent (15%) of the outstanding Equity Interests of any Person in the aggregate, they shall be treated as Permitted Holders of only fifteen percent (15%) of the outstanding Equity Interests of such Person at such time.

Permitted Transferee: Any Person that, immediately prior to the applicable Transfer, satisfies the following: (a) such Person, together with its Close Affiliates, has (or at least 51% of the Equity Interests in such Person are owned, directly or indirectly, by and such Person is Controlled, directly or indirectly, by one or more Persons that each, together with its Close Affiliates, has) a net worth of at least $1 Billion, and (b) neither such Person, nor any Person directly or indirectly Controlling such Person is, a Disqualified Transferee.

Person: Any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

Personal Property: All tangible and intangible personal property of any kind or character, Inventory, equipment, furniture, furnishings, objects of art, goods, tools, supplies, appliances, general intangibles, investment property, contract rights, accounts, accounts receivable, intellectual property, franchises and licenses, certificates and permits obtained by Tenant, Guarantor and its Affiliates or any Subtenant for its own business, in each case, of any kind or character whatsoever (as defined in and subject to the provisions of the Uniform Commercial Code as in effect in the State of New York) which are located within or about the Leased Property, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof.

Portfolio Four-Wall EBITDAR: With respect to any Leased Property or Leased Properties, as the case may be, earnings from restaurant and related operations conducted thereon (after deducting compensation payable directly or indirectly to restaurant employees in the nature of regular salaries, wages and bonuses but prior to deductions, without duplication, for payment of management services fees to any management partnerships owned by employees or other partners which are based upon earnings or cash flow, elimination of minority partner interests or distributions payable to partners and joint venturers) plus, to the extent deducted in determining such earnings:

i. interest expense,

ii. income taxes,

iii. depreciation and amortization,

iv. any rental expense on real property,

 

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v. regional office allocation and corporate-level overhead expense (including marketing, insurance, accounting and supervision expense allocable to the restaurant-level for internal accounting purposes),

vi. royalty charges from affiliates,

vii. pre-opening expenses and restructuring expenses,

viii. provisions for impairments, closings and disposals, and

ix. any non-cash charges (whether positive or negative, including, but not limited to, gains/losses on sales of assets, provisions for restatement of prior periods and non-cash compensation expense, including Partner Equity Program expense).

Portfolio Four-Wall EBITDAR shall be calculated consistently with past practice, as reflected in past periods pursuant to the past period calculations and associated financial statements attached hereto as Schedule 2E.

Post-Casualty Value: With respect to a Leased Property removed from this Lease following a Casualty as provided in Section 10.2, the price that a willing buyer not compelled to buy would pay a willing seller not compelled to sell for such Leased Property, determined in accordance with the appraisal procedures set forth in Section 23.1 or in such other manner as shall be mutually acceptable to Landlord and Tenant.

Post-Condemnation Value: With respect to a Leased Property removed from this Lease following a Condemnation as provided in Section 10.3, the price that a willing buyer not compelled to buy would pay a willing seller not compelled to sell for the portion of such Leased Property that is not subject to such Condemnation, determined in accordance with the appraisal procedures set forth in Section 23.1 or in such other manner as shall be mutually acceptable to Landlord and Tenant.

Post-IPO Change of Control: In the event of a Qualifying IPO of any IPO Entity, that the Post-IPO Control Requirements are no longer satisfied.

Post-IPO Control Requirements: In the event of a Qualifying IPO of an IPO Entity, that either (i) Permitted Holders or, following a Transfer to a Permitted Transferee permitted under this Lease, such Permitted Transferee (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders), shall own, directly or indirectly, of record and beneficially, no less than fifty-one percent (51%) of the voting stock of such IPO Entity, and have the right, directly or indirectly, to designate (and do so designate) a majority of the board of directors of such IPO Entity, or (ii) both of the following criteria are satisfied: (A) no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person and its subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than one or more Permitted Holders or, following a Transfer to a Permitted Transferee permitted under this Lease, such Permitted Transferee, shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than the greater of (x) thirty-five percent (35%) of the shares outstanding of such IPO Entity, and (y) the

 

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percentage of the then outstanding voting stock of such IPO Entity owned, directly or indirectly, beneficially by the Permitted Holders or, following a Transfer to a Permitted Transferee permitted under this Lease, such Permitted Transferee (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders), and (B) the majority of the board of directors of such IPO Entity consist of Continuing Directors.

Primary Intended Use: As defined in Section 6.1(a).

PropCo: PRP Holdings, LLC, a Delaware limited liability company.

Property Documents: Collectively, any documents that are included within the definition of “Permitted Encumbrances,” “Operating Agreements” and “Condominium Documents”.

Property Removal Date: As defined in Section 1.8.

Proprietary Information: As defined in Section 24.1.

PRP Entity: Any of the following: PropCo; Private Restaurant Properties, LLC, a Delaware limited liability company; New PRP Mezz 2, LLC, a Delaware limited liability company; and New PRP Mezz 1, LLC, a Delaware limited liability company.

Purchase Option: As defined in Section 5.3(a).

Qualified Architect: Any experienced architect, engineer or construction manager, which may be an employee of Tenant or one of its Affiliates, licensed or registered in the jurisdiction where the applicable Leased Property is located, if required by the laws of such jurisdiction, and has at least five (5) years of relevant architectural experience.

Qualifying IPO: With respect to any IPO Entity, the issuance by such IPO Entity of its common equity interests in an underwritten public offering (other than a public offering pursuant to a registration statement on Form S-8), satisfying the following conditions: (a) such public offering is made pursuant to an effective registration statement filed with the SEC in accordance with the Securities Act, (b) the publicly-offered common equity interests of such IPO Entity are listed and traded on the New York Stock Exchange, the NASDAQ Global Market or other nationally or internationally recognized stock exchange or automated quotation system, and (c) after giving effect to such public offering, the Post-IPO Control Requirements are satisfied.

Rating Agencies: Each nationally-recognized statistical rating agency organization which has rated the securities in any securitization.

Regulation AB: Regulation AB under the Securities Act and the Exchange Act, as such Regulation may be amended from time to time.

Rejected Leased Properties: As defined in Section 5.3(a).

Related Holding Entity: As defined in Section 8.2(l)(ii)(D).

Removed Property: As defined in Section 1.8.

 

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Rent: Collectively, (i) the Base Rent and (ii) Additional Charges.

Rent Payment Date: As defined in Section 3.1(a).

Rental Period: As defined in Section 3.1(a).

Required Alteration: As defined in Section 8.1.

Restaurant Locations: The restaurants listed on Schedule 2F attached hereto located at the corresponding street addresses set forth therein. Where only a single restaurant is operated at a Leased Property, then Restaurant Location with respect to such restaurant shall mean such Leased Property. Where two or more restaurants are operated at a Leased Property, then (a) Restaurant Location with respect to each such restaurant shall mean the portion of such Leased Property related to the use and operation of such restaurant, and (b) all such Restaurant Locations shall in the aggregate mean such Leased Property.

Restoration: As defined in Section 10.2(a).

Restricted Party: HoldCo, Holdco Parent, Guarantor, any Intermediate Holdco Entity, Tenant, or any shareholder, partner, member or non-member manager, or direct or indirect legal or beneficial owner of HoldCo, Holdco Parent, Guarantor, any Intermediate Holdco Entity, or Tenant.

Reuters Screen LIBOR01 Page: The display page currently so designated on the Reuters Monitor Money Rates (or such other page as may replace that page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying comparable rates or prices).

RLP Subleases: The Subleases listed on Schedule 2G between a Concept Subsidiary, as sub-sublandlord, and the entities that are parties thereto as sub-subtenants, for all or any portion of a Leased Property, and any amendments or modifications thereto or replacements thereof; provided, however, that if Guarantor’s direct or indirect ownership percentage of any such entity decreases below seventy-five percent (75%) or its ownership percentage as of the Commencement Date, whichever is lower, or if Guarantor no longer Controls such entity, then the Sublease to which such entity is a party shall no longer be an RLP Sublease, and shall become an Unaffiliated Sublease.

Scheduled Additional Charges: As defined in Section 3.1(c).

Scheduled Lease Payments: As defined in Section 3.1(c).

Securities: As defined in the definition of “Securitization”.

Securities Act: The Securities Act of 1933, as amended.

Securitization: Any sale, transfer, or assignment of Landlord’s Loan Documents, or granting of participations therein, or issuance of mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (“Securities”), secured by or evidencing ownership interests in Landlord’s Loan Documents.

 

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Specified Prior Subleases: Those leases listed on Schedule 2H attached hereto.

Sponsor Portfolio Company: A company and the related business in which any Sponsor, or any investment fund advised or managed by any Sponsor, is invested, so long as such company is not otherwise an Affiliate of Landlord, any PRP Entity, HoldCo, Holdco Parent, Tenant, Guarantor or any of their respective Subsidiaries.

Sponsors: Bain Capital Partners, LLC, Catterton Partners and any investment funds advised or managed by either of them, but not including, however, any Sponsor Portfolio Companies.

State: The State or Commonwealth in which the particular Leased Property is located.

Sublease: Any lease (other than this Lease), sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect), pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in any Leased Property, and every modification, amendment or other agreement relating to such lease, sublease, subsublease, letting, license, concession or other agreement entered into in connection with such lease, sublease, subsublease, letting, license, concession or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

Sublease Modification: As defined in Section 8.2(c).

Subsidiary: A “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise Controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.

Subtenant: A subtenant, licensee, occupant or other party being granted a right to occupy or use all or any portion of any Leased Property pursuant to a Sublease.

Superior Interests: As defined in Section 15.1.

Superior Party: As defined in Section 15.1.

Taxes: All real estate and personal property taxes, assessments, fees, taxes on rents or rentals, water rates or sewer rents and other governmental charges now or hereafter levied or assessed or imposed against Landlord, Tenant or any Leased Property or rents therefrom or which may become Liens on Tenant’s Personalty, provided that Taxes shall not include any income, franchise, estate, inheritance or gift taxes, or any other tax imposed on or measured by the net income of Landlord, except to the extent that the same is in direct substitution for a tax that would otherwise be included within the definition of “Taxes” hereunder.

 

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Tenant: As defined in the first paragraph hereof.

Tenant Proprietary/IP Material: The trade names, trademarks, service marks, trade dress, proprietary marks, proprietary information, proprietary technology, proprietary equipment, branded equipment and other intellectual property of any kind (including recipes, product specifications or other trade secrets) of any Concept Subtenant, Tenant, Guarantor or their respective Affiliates or of any third party under license to any of such parties. Whether a mark, information, technology, equipment or other matter is “proprietary” shall be determined by Guarantor in its reasonable good-faith discretion.

Tenant Security Period: Any period (a) commencing on the Rent Payment Date following the conclusion of any two (2) consecutive months for which the Fixed Charge Coverage Ratio is less than ninety percent (90%) of the Fixed Charge Coverage Ratio on the Commencement Date and (b) ending on the day immediately preceding the Rent Payment Date following the conclusion of any two (2) consecutive months for which the Fixed Charge Coverage Ratio exceeds ninety percent (90%) of the Fixed Charge Coverage Ratio on the Commencement Date.

Tenant’s Personalty: Collectively, (a) all of the Personal Property and Trade Fixtures (but excluding any other Fixtures) owned by Tenant, Guarantor or their Affiliates, (b) any licenses or other intellectual property (i) of Tenant, Guarantor and its Affiliates or any Subtenant or (ii) relating to the Concepts or the business of Tenant, Guarantor and its Affiliates or any Subtenant, and (c) any Personal Property or Trade Fixtures owned by third-party Subtenants, in all cases now owned or hereafter acquired, provided that (except as may be included and labeled in the attached Schedule 2C as “Excluded Personal Property”), Tenant’s Personalty shall not include any portion of a Leased Property that is real property. Without limiting the generality of the foregoing, with respect to any Concept restaurant, Tenant’s Personalty includes all items labeled as “Excluded Personal Property” on Schedule 2C, but expressly excludes all items labeled as “Fixtures” on Schedule 2C.

Term: As defined in Section 1.5.

Third-Party Brand: Any restaurant brand operated at a Leased Property where such restaurant brand is not owned by Guarantor or its Close Subsidiaries (regardless of whether such Leased Property is subleased by a Pass-Through Subsidiary). As of the Commencement Date, the Third-Party Brands are Cheeseburger in Paradise, Lee Roy Selmon’s and Sterling’s Bistro.

Threshold Amount: With respect to each Leased Property, $500,000.

Title Endorsement: An endorsement to the Title Policy and any corresponding title insurance policy insuring the lien of Landlord’s Loan Documents in form reasonably acceptable to Landlord and Landlord’s Lender and insuring Landlord and Landlord’s Lender against any loss, cost or damage incurred by such Person as a result of the foreclosure of the lien or execution of judgment specified in such endorsement or the failure of such other assurance set forth therein.

 

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Title Policy: The ALTA (or equivalent) title insurance policy acquired by Landlord or Landlord’s predecessor-in-interest most recently prior to the date hereof (i) naming Landlord or Landlord’s predecessor-in-interest as the insured and (ii) insuring Landlord’s or Landlord’s predecessor-in-interest’s ownership of any Leased Property subject to the exceptions and exclusions set forth therein.

Trade Fixtures: Any furniture, furnishings, signs, machinery, equipment or improvements installed, placed or made on or to any Leased Property by Tenant or its Affiliates or any Subtenant, whether or not affixed to any Leased Property, and either (i) used for the specific purposes of the business being conducted by Tenant or any Subtenant thereon or (ii) that contains or displays the trade name or proprietary marks or intellectual property of any Concept or Subtenant, including electronic data-processing and other office equipment, refrigerators, refrigeration units, freezers, coolers, stoves, ovens, fryers, kitchen exhaust, dishwashers, bars, bar sinks and bar equipment, booths, serving stations, phone systems, computer systems, decorative lighting and chandeliers (as opposed to general, primary or emergency lighting) and trade signage, and any and all additions, substitutions and replacements of any of the foregoing; provided, however, that with respect to any Concept restaurant, the term Trade Fixtures expressly excludes any items set forth as “Fixtures” on Schedule 2C; and in no event shall the term Trade Fixtures include any capital improvements, or additions, Alterations or replacements thereof.

Transfer: To, directly or indirectly, sell, assign, convey, mortgage, transfer, pledge, hypothecate, encumber, grant a security interest in, exchange or otherwise dispose of any legal or beneficial interest or grant any option or warrant with respect to, or where used as a noun, a direct or indirect sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of any legal or beneficial interest by any means whatsoever whether voluntary, involuntary, by operation of law or otherwise. A “Transfer” shall include, but not be limited to, (a) an installment sales agreement wherein Tenant agrees to sell its interest in any Leased Property or any part thereof for a price to be paid in installments; (b) an agreement by Tenant to sublease all or any part of any Leased Property other than pursuant to Subleases in accordance with the terms of this Lease, or a sale, assignment or other transfer of, or the grant of a security interest in, Tenant’s right, title and interest in and to this Lease, any Subleases or any rents; (c) if a Restricted Party is a corporation, any merger or consolidation, or any sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of such corporation’s stock, or the creation or issuance of new stock in one or a series of transactions; (d) if a Restricted Party is a limited or general partnership or joint venture, any merger or consolidation, or any sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of the partnership interest of any general or limited partner or any profits or proceeds relating to such partnership interests, or the change, removal, resignation or addition of a general partner, or the creation or issuance of new partnership interests; (e) if a Restricted Party is a limited liability company, any merger or consolidation, or any sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of the membership interest of any member or any profits or proceeds relating to such membership interest, or the change, removal, resignation or addition of a managing member or non-member manager (or if no managing member, any member); or (f) if a Restricted Party is a trust or nominee trust, any merger or consolidation, or sale, assignment, conveyance, mortgage, transfer, pledge, hypothecation, encumbrance, exchange or other disposition of the legal or beneficial interest in such Restricted Party, or the creation or issuance of new legal or beneficial interests.

 

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Transition Period: As defined in Section 13.2(b).

Transition Properties: As defined in Section 13.2(a).

Transition Services: As defined in Section 13.2(a).

Transition Services Notice: As defined in Section 13.2(b).

TTM EBITDAR: As of any date, on a trailing twelve (12) months basis, Portfolio Four-Wall EBITDAR at the Leased Properties.

Unaffiliated Business: A business being operated at a Leased Property where either or both of the following conditions are satisfied: (a) such business is a Third-Party Brand restaurant or is any other business that is not a Concept restaurant; and/or (b) the Subtenant operating such business is the Subtenant under an Unaffiliated Sublease.

Unaffiliated Sublease: (a) any Sublease (other than the Specified Prior Subleases) under which the Subtenant is not a Close Subsidiary of Guarantor; or (b) any RLP Sublease that becomes an Unaffiliated Sublease pursuant to the definition of RLP Sublease, it being agreed that no RLP Sublease shall be deemed to be an Unaffiliated Sublease unless and until such RLP Sublease becomes an Unaffiliated Sublease pursuant to the definition of RLP Sublease. All Unaffiliated Subleases as of the Commencement Date are listed on Schedule 2D attached hereto.

Unavoidable Delays: Delays due to strikes, lockouts, inability to procure materials, power failure, acts of God, governmental restrictions, enemy action, civil commotion, fire, unavoidable casualty or other causes beyond the control of the party responsible for performing an obligation hereunder, provided that lack of funds shall not be deemed a cause beyond the control of either party hereto unless such lack of funds is caused by the failure of the other party hereto to perform any obligations of such party under this Lease.

Unresponsive Party: As defined in Section 8.2(c).

Upper Tier Entity: Any of Holdco Parent or any direct or indirect parent of Holdco Parent.

U.S. Securities: Obligations or securities not subject to prepayment, call or early redemption which are (a) obligations of, or obligations fully guaranteed as to timely payment by, the United States of America or (b) obligations of any agency or instrumentality of the United States of America that qualify as “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, in each case, that are acceptable to Landlord.

Variable Additional Charges: As defined in Section 3.1(d).

Winning Party: As defined in Section 5.3(d).

 

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ARTICLE III

RENT

Section 3.1 Rent. Tenant will pay to Landlord, in lawful money of the United States of America by wire transfer or other immediately available funds which shall be legal tender for the payment of public and private debts, at Landlord’s address set forth above or at such other place or to such other Person, firms or corporations as Landlord may designate in writing from time to time Base Rent (as defined below). In addition, Tenant will pay to Landlord or the Person otherwise entitled thereto all Additional Charges during the Term on or before the same are delinquent.

(a) Base Rent:

Subject to the terms of this Section 3.1(a) and Section 1.8, base rent for each Lease Year is as follows (“Base Rent”):

 

Lease Year		Base Rent
1		$	54,483,373
2		$	54,483,373
3		$	54,483,373
4		$	54,483,373
5		$	54,483,373
6		$	59,931,710
7		$	59,931,710
8		$	59,931,710
9		$	59,931,710
10		$	59,931,710
11		$	65,924,881
12		$	65,924,881
13		$	65,924,881
14		$	65,924,881
15		$	65,924,881

Base Rent for each Lease Year shall be payable in twelve (12) equal monthly installments, in advance, two (2) Business Days prior to the tenth (10^th) calendar day of each calendar month during the Term (such date when a monthly installment of Base Rent is due, the “Rent Payment Date”), and each such payment shall be for the period from and after the ninth (9^th) calendar day of such calendar month through and including the eighth (8^th) calendar day of the immediately succeeding calendar month during the Term (each, a “Rental Period”), provided that the last installment of Base Rent shall be prorated, based on the number of days within the Term during such Rental Period and the number of days in such Rental Period. Tenant hereby agrees to make any reasonable changes with respect to the definitions of “Rent Payment Date” or “Rental Period,” including changing the Rent Payment Date and Rental Period, as may be requested in connection with any Landlord’s Debt. The first Rent Payment Date shall be, and the first monthly installment payment of Base Rent under this Lease shall be payable on, the date

 

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that is two (2) Business Days prior to April 10, 2012, which payment shall be for the Rental Period from and after April 9, 2012 through and including May 9, 2012. Landlord and Tenant acknowledge and agree that Base Rent through and including April 8, 2012 has been paid by Tenant to Landlord pursuant to the Original Lease.

(b) Survival. The obligations of Tenant and Landlord contained in this Section 3.1 shall survive the expiration or earlier termination of this Lease.

(c) Scheduled Additional Charges. In addition to the Base Rent payable with respect to the Leased Properties, Tenant shall pay and discharge as and when due and payable: Taxes and Other Charges as provided in Section 6.1(b), insurance premiums as required pursuant to Article X and all fixed charges due under the Property Documents in respect of the Leased Properties (collectively, “Scheduled Additional Charges” and, together with Base Rent, “Scheduled Lease Payments”). As and to the extent required under Section 3.1(e), Tenant shall pay Scheduled Additional Charges to Landlord, on a monthly installment basis on each Rent Payment Date as follows:

(i) Taxes and Other Charges. Tenant shall pay all Taxes and Other Charges as set forth in Section 6.1(b) herein, in advance in equal monthly installments.

(ii) Insurance Premiums. During any period that a Blanket Policy satisfying the requirements of Schedule 10.1 hereto is not in full force and effect, Tenant shall pay on each Rent Payment Date one twelfth (1/12) of the annual amount of all premiums for the insurance coverage required to be maintained pursuant to Section 10.1 hereof (without regard to the Blanket Policy).

(iii) Fixed Charges Under Property Documents. Tenant shall pay all fixed charges and other fixed or scheduled amounts due under the Property Documents. For such amounts as are payable on a monthly basis, Tenant shall pay on each Rent Payment Date the amount next coming due. For such amounts as are payable on some other basis, Tenant shall pay on each Rent Payment Date, the portion of the amount next coming due.

(d) Variable Additional Charges. In addition to the Scheduled Lease Payments payable with respect to the Leased Properties, Tenant shall pay and discharge as and when due and payable the following (collectively, “Variable Additional Charges” and, together with Scheduled Additional Charges, “Additional Charges”):

(i) Utility Charges. Tenant shall pay all charges for electricity, power, gas, oil, water, sanitary and storm sewer, refuse collection, security, common area or association charges, dues or assessments, variable charges under the Operating Agreements and other utilities used or consumed in connection with the applicable Leased Property during the Term.

(ii) Other Amounts. Tenant shall pay, as Variable Additional Charges, all other amounts, liabilities and obligations that Tenant (i) assumes, (ii) is liable or (iii) obligated to pay (or otherwise agrees to become liable for or obligated to pay) under this Lease, including all of its indemnification obligations set forth herein.

 

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(iii) Late Payment of Base Rent. If any Base Rent shall not be paid on its due date, Tenant will pay to Landlord on demand, as Variable Additional Charges, a late charge (to the extent permitted by law) computed at the Overdue Rate (or at the maximum rate permitted by law, whichever is the lesser) on the amount of such Scheduled Lease Payment, from the due date of such Scheduled Lease Payment to the date of payment thereof.

(iv) Late Payment of Additional Charges. If any payment of Additional Charges (but with respect to Variable Additional Charges, only those Variable Additional Charges which are payable directly to Landlord, if any) shall not be paid within five (5) Business Days after such payments are due and payable, Tenant will pay to Landlord on demand, as Variable Additional Charges, a late charge (to the extent permitted by law) computed at the Overdue Rate (or at the maximum rate permitted by law, whichever is the lesser) on the amount of such payment, from the due date of such payment to the date of payment thereof.

(e) Additional Charge; Escrow of Scheduled Lease Payments. If Tenant timely pays specified Additional Charges to Landlord pursuant to any requirement of this Lease and specifies in writing the purpose of such payments, and provided such payments are in an amount equal to or in excess of the entire payment that is due, then Tenant shall be relieved of its obligation to pay such specific Additional Charges to the entity to which they would otherwise be due. If and to the extent required by Landlord’s Loan Documents, Tenant shall deposit by wire transfer or other immediately available funds each Scheduled Lease Payment (to the extent required to be paid to Landlord hereunder) into an escrow account (the “Escrow Account”) designated by Landlord (which designation shall be irrevocable without the consent of Landlord’s Lender) under the sole dominion and control of Landlord or, if required under Landlord’s Loan Documents, Landlord’s Lender, on the Rent Payment Date on which such Scheduled Lease Payment is due hereunder. Landlord or Landlord’s Lender, as the case may be, shall apply the amounts so deposited to the payment of Scheduled Lease Payments, and, upon an Event of Default under this Lease, to such other amounts due and owing to Landlord from Tenant as Landlord or, if required under Landlord’s Loan Documents, Landlord’s Lender, shall, in its sole discretion, elect. In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost that may be added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Lease or by statute or otherwise in the case of non-payment of the Rent. Landlord shall have the right to have the Escrow Account held with a Depositary. Notwithstanding the foregoing, provided no Event of Default has occurred and is continuing and pursuant to the terms of Schedule 10.1 hereto, Tenant shall not be required to pay any amounts to Landlord in respect of insurance premiums for insurance required to be maintained hereunder that is maintained under Blanket Policies satisfying the requirements of Schedule 10.1 hereto and, with respect to any other policies required to be maintained hereunder, so long as Landlord’s Lender does not require Tenant to pay such amounts to Landlord.

 

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(f) [Reserved].

(g) [Reserved].

Section 3.2 Net Lease. The Base Rent, as well as such Additional Charges as are due and payable to Landlord, shall be paid absolutely net to Landlord of any expenses, costs, charges, or other payments relating to the Leased Properties, so that this Lease shall throughout the Term yield to Landlord the full amount of the installments of Base Rent, as well as any payments of Additional Charges payable to Landlord, subject to any other provisions of this Lease which expressly provide for adjustment or abatement of Rent or other charges. Base Rent, Additional Charges and all other sums payable by Tenant hereunder shall continue to be payable in all events, and the obligations of Tenant hereunder shall continue unaffected, unless the obligations to pay or perform the same shall be terminated or abated pursuant to the express provisions of this Lease. This is a net Lease and Base Rent, Additional Charges and all other sums payable hereunder by Tenant shall be paid without notice or demand, and without any counterclaim, abatement, deduction, deferment, setoff, recoupment, suspension, diminution, reduction or defense except as otherwise expressly provided herein.

ARTICLE IV

TERMINATION; ABATEMENT

Section 4.1 No Termination, Abatement, etc. Except as otherwise specifically provided herein, Tenant, to the extent permitted by law, shall remain bound by this Lease in accordance with its terms and shall neither take any action without the consent of Landlord to modify, surrender or terminate the same, nor seek nor be entitled to any abatement, deduction, deferment or reduction of Rent, or set-off against the Rent, nor shall the respective obligations of Landlord and Tenant be otherwise affected by reason of (a) any damage to, or destruction of, any Leased Property from whatever cause or any taking of any Leased Property, (b) the interruption or discontinuance of any service or utility servicing the applicable Leased Property, (c) any claim which Tenant has or might have against Landlord or by reason of any default or breach of any warranty by Landlord under this Lease or any other agreement between Landlord and Tenant, or to which Landlord and Tenant are parties or are subject, (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Landlord or any assignee or transferee of Landlord, or (e) for any other cause whether similar or dissimilar to any of the foregoing other than a discharge of Tenant from any such obligations as a matter of law. Except as otherwise specifically provided herein, Tenant hereby specifically waives all rights, arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law to (i) modify, surrender or terminate this Lease, in whole or in part, or quit or surrender any Leased Property, or (ii) entitle Tenant to any abatement, reduction, suspension or deferment of the Rent or other sums payable by Tenant hereunder. The obligations hereunder of Landlord, on the one hand, and Tenant, on the other hand, shall be separate and independent covenants and agreements and the Rent and all other sums payable by Tenant hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the express provisions this Lease.

 

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ARTICLE V

OWNERSHIP OF THE LEASED PROPERTIES

Section 5.1 Ownership of the Leased Properties. Tenant acknowledges that the Leased Properties are the property of Landlord and that Tenant has only the right to the exclusive possession and use of the Leased Properties upon the terms and conditions of this Lease, provided that, until the expiration or earlier termination of this Lease, all capital improvements and additions, Alterations and replacements thereof made by Tenant, at Tenant’s expense, to any Leased Property shall be the property of Tenant and, upon the expiration or earlier termination of this Lease, title to the same shall automatically and immediately vest in Landlord.

Section 5.2 Tenant’s Personalty. Tenant may (and shall as provided hereinafter), at its expense, assemble or place on any parcels of the Land or in any of the Leased Improvements any items of Tenant’s Personalty, and Tenant may, subject to the conditions set forth below, remove the same upon the expiration or any prior termination of the Term, or, with respect to any Leased Property, the removal of such Leased Property from this Lease pursuant to the terms of this Lease. Tenant shall cause its Concept Subsidiaries and any Subtenant that is an Affiliate of Tenant, and shall use commercially reasonable efforts to cause all other Subtenants (through the prudent exercise of its rights and remedies, as sublandlord, under the Subleases), to provide and maintain during the entire Term all such Tenant’s Personalty as shall be necessary to operate each Leased Property in compliance with all applicable Legal Requirements and Insurance Requirements and otherwise in accordance with customary practice in the industry for the Primary Intended Use. All of Tenant’s Personalty not removed by Tenant from any Leased Property within the earlier of (a) thirty (30) days following the expiration or earlier termination of this Lease, or (b) thirty (30) days following the removal of such Leased Property from this Lease pursuant to the terms of this Lease, shall be considered abandoned by Tenant and may be stored, appropriated, sold, destroyed or otherwise disposed of by Landlord, at Tenant’s sole cost and expense, without first giving notice thereof to Tenant and without any payment to Tenant and without any obligation to account therefor, provided that such thirty (30) day time periods shall be tolled (i) with respect to any Tenant’s Personalty that is subject to Landlord’s rights under Section 5.3, for so long as Landlord is exercising its rights under Section 5.3 and (ii) with respect to Tenant’s Personalty that is required to remain on the applicable Transition Properties in order for Tenant to provide the Transition Services that Landlord elects under Section 13.2 to require Tenant to provide, for so long as Tenant is providing such Transition Services.

Section 5.3 Purchase Option.

(a) Within sixty (60) days after any rejection of this Lease in a Bankruptcy Proceeding (“Lease Rejection”) or Lease Termination, Landlord shall have the option (“Purchase Option”), exercised pursuant to Section 5.3(d), with respect to all Leased Properties in the event of Lease Rejection (collectively, “Rejected Leased Properties”), or with respect to any EOD Removed Property, to purchase from Tenant, Guarantor and any of Guarantor’s Subsidiaries at the Option FF&E Purchase Price, on an “as is, where is” basis, with all its faults, without representation or warranty and subject to any purchase-money liens, security interests and other third-party claims (but not subject to any security interests or other encumbrances securing the Guarantor Facility), not less than all of the tangible Personal Property and Trade Fixtures that

 

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(1) are physically located at the Rejected Leased Properties or EOD Removed Properties (as applicable), at the time of such Lease Rejection or Lease Termination (as applicable); (2) are owned by Tenant, Guarantor or any of Guarantor’s Subsidiaries, and (3) are no longer used or useful in the conduct of the business of Tenant, Guarantor or any of Guarantor’s Subsidiaries in the ordinary course (as determined by Tenant, in its reasonable good faith discretion, taking into consideration the costs of removal) (such tangible Personal Property and Trade Fixtures, collectively, “Option FF&E”); provided that the “Option FF&E” shall not include, and none of Tenant, Guarantor and any of Guarantor’s Subsidiaries shall be under any obligation to sell to Landlord, and Landlord shall not be entitled or obligated to purchase from any of Tenant, Guarantor and any of Guarantor’s Subsidiaries, any of Tenant’s Personalty that constitutes, uses, contains or displays any Tenant Proprietary/IP Material, except if (in connection with such use, containment or display) such Tenant Proprietary/IP Material can be removed from such items of Tenant’s Personalty, or, if applicable, destroyed or concealed from public view prior to such sale through Tenant’s commercially reasonable efforts. Tenant shall use commercially reasonable efforts to remove, destroy or conceal from public view any such Tenant Proprietary/IP Material from any tangible Personal Property or Trade Fixtures regarding which Landlord has exercised the Purchase Option, promptly following the Option Notice Date.

(b) Excluded FF&E. With respect to any items of Tenant’s Personalty that are not Option FF&E (collectively, “Excluded FF&E”), (i) Tenant may not remove the same until (A) the end of the Transition Period (in the case of Excluded FF&E located at a Leased Property with respect to which the Transition Period is in effect), or (B) the date of the applicable Lease Rejection or Lease Termination (in the case of all other Excluded FF&E), and (ii) Tenant shall be required to remove the same not later than sixty (60) days after the applicable date specified in clause (i)(A) or (B) of this sentence, and Landlord shall permit Tenant to remove the same at any time during such sixty (60) day period.

(c) Abandoned FF&E. If Tenant elects not to remove from a Leased Property any Excluded FF&E, then the same shall be deemed abandoned (“Abandoned FF&E”) and Landlord shall have full rights to use the same in the ordinary course of its business, or destroy, sell or otherwise discard same in its sole discretion, provided that (i) Landlord shall remove, destroy and/or conceal from public view any Tenant Proprietary/IP Material to the extent the same can be accomplished at no or nominal expense, or Tenant provides Landlord with the funds necessary to accomplish the same, and (ii) unless Tenant fails to provide Landlord with necessary funds as described in clause (i) of this sentence, at no time may Landlord utilize any such Abandoned FF&E with Tenant Proprietary/IP Material so as to suggest that any Leased Property is operated by or on behalf of, or pursuant to a franchise or similar arrangement from, Tenant. If Landlord sells any Abandoned FF&E to a third party, Landlord shall pay to Tenant, or credit against amounts otherwise due to Landlord from Tenant or Guarantor, any Abandoned FF&E Sale Amounts.

(d) Exercise of Option and Fair Market Value. Landlord may exercise the Purchase Option by delivering written notice thereof (an “Exercise Notice”) to Tenant (the date such notice is delivered to Tenant is referred to herein as the “Option Notice Date”). Landlord and Tenant shall attempt for a ten (10) day period following the Option Notice Date (the “Discussion Period”) to agree on the fair market value of the Option FF&E to be purchased by Landlord, assuming the Option FF&E was fully removed from the Leased Properties, and sold at

 

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a commercial auction, properly administered in accordance with generally accepted commercial standards by a reputable commercial auctioneer who has been active over the previous ten (10) year period in the auction sales of personal property and trade fixtures similar to the Option FF&E, and excluding Landlord and any Affiliate thereof as possible purchasers at such auction (collectively, “Fair Market Value”). If Landlord and Tenant do not agree, in writing, as to Fair Market Value by the end of the Discussion Period (and Landlord has not withdrawn its Exercise Notice as described below), Fair Market Value shall be determined by the following arbitration procedure:

(i) Submission of Fair Market Value. Within fifteen (15) days after the last date of the Discussion Period (the last day of such fifteen (15) day period is referred to in this Section 5.3 as the “Calculation Date”), each of Landlord and Tenant shall deliver to the other party its calculation of the Fair Market Value. If either party (as referred to this Section 5.3, a “Failing Party”) fails to deliver its calculation to the other party on or before the Calculation Date, but the other party delivers its calculation to the Failing Party on or before the Calculation Date, such other party’s calculation shall be binding on both parties as the Fair Market Value, and the arbitration shall be deemed concluded as of the first day following the Calculation Date.

(ii) Appointment and Qualifications of Auctioneers. If the arbitration is not deemed concluded pursuant to subsection (i), above, then within thirty (30) days after the Calculation Date, Landlord and Tenant shall each appoint a reputable commercial auctioneer who has been active over the previous ten (10) year period in the auction sales of furniture, fixtures and equipment similar to the Option FF&E (each such auctioneer chosen pursuant to this subsection (ii), an “Auctioneer”). Each of Landlord and Tenant shall notify the other party, in writing, of the identity of its Auctioneer (and the business address thereof) within two (2) Business Days after the appointment thereof (collectively, “Auctioneer Appointment Notices”). Each of Landlord and Tenant agree that any Auctioneer may be (but is not required to be) an auctioneer who assisted either party in determining such party’s calculation of the Fair Market Value pursuant to subsection (i), above.

(iii) Appointment of Third Auctioneer. If each party appoints an Auctioneer and notifies the other party in accordance with subsection (ii) above, then the two Auctioneers shall, within ten (10) days after delivery of the later of the two Auctioneer Appointment Notices, agree on and appoint a third Auctioneer (who shall be an auctioneer with all other qualifications for the initial two Auctioneers chosen by the parties as set forth in subsection (ii), above) and provide prompt written notice to Landlord and Tenant of such third Auctioneer and the business address thereof. If the two Auctioneers fail to agree on and appoint a third Auctioneer within such ten (10) day period, then either party may elect to have the third Auctioneer selected by the American Arbitration Association or any successor thereto (“AAA”) by delivering written notice thereof to the other party. In such event, the electing party shall petition the AAA (with a copy to the other party) to so determine the third Auctioneer and the parties shall

 

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cooperate reasonably with each other and the AAA (including by responding promptly to any requests for information made by the AAA) in connection with such determination. The decision of the AAA shall be final and conclusive as to the identity of the third Auctioneer. If any fees of the third Auctioneer or the AAA are required to be paid in advance (prior to the completion of the arbitration procedure described in this Section 5.3(d)) in order for such Auctioneer, or the AAA, as the case may be, to commence or continue its work in connection with the arbitration described in this Section 5.3(d), each party shall promptly pay one-half of such fees as and when due, and if either Landlord or Tenant fails to pay its one-half share of any such fees as and when due (such party is referred to in this Section 5.3 as the “Delinquent Party”), and the other party does pay its one-half share of any such fees as and when due, then if the Delinquent Party fails to pay its one-half share of all such fees within ten (10) days after written notice from the other party, such other party’s calculation of the Fair Market Value described in subsection (i) shall be binding on both parties, and the arbitration shall be deemed concluded as of the first day following the expiration of such ten (10) day period.

(iv) Auctioneers’ Decision. If the arbitration is not previously deemed concluded pursuant to subsection (iii), above, then within thirty (30) days after the appointment of the third Auctioneer, each of the three Auctioneers shall determine whether the Fair Market Value as proposed by Landlord or Tenant pursuant to subsection (i), above, is closer to the Fair Market Value as determined by such Auctioneer, and shall notify Landlord and Tenant of such determination. The decision of the majority of the three Auctioneers shall be binding on Landlord and Tenant (subject to subsection (v) below). The determination of each Auctioneer shall be limited to the sole issue of, and each Auctioneer shall have neither the right nor the power to determine any issue other than, whether the Fair Market Value as proposed by Landlord or Tenant pursuant to subsection (i) above, is closer to the actual Fair Market Value as determined by such Auctioneer. The Fair Market Value as proposed by Landlord or Tenant that is determined by the majority of the Auctioneers to be closer to the actual Fair Market Value shall be binding on Landlord and Tenant, and the arbitration shall be deemed concluded upon delivery of notice of such determination to Landlord and Tenant.

(v) If Only One Auctioneer Is Appointed. If the arbitration is not previously deemed concluded pursuant to subsection (i) above, then if either Landlord or Tenant fails to appoint an Auctioneer within thirty (30) days after the Calculation Date or fails to deliver an Auctioneer Appointment Notice in accordance with subsection (ii) above, and the other party does appoint an Auctioneer within such thirty (30) day period and delivers an Auctioneer Appointment Notice in accordance with subsection (ii) above, then the Auctioneer timely appointed by such other party shall decide whether the Fair Market Value as proposed by Landlord or Tenant pursuant to subsection (i) above, is closer to the actual Fair Market Value as determined by such Auctioneer, and notify Landlord and Tenant of that decision within thirty (30) days after such Auctioneer’s appointment. The Fair Market Value as proposed by Landlord or Tenant that is determined by the such Auctioneer to be closer to the actual Fair Market Value shall be binding on Landlord and Tenant, and the arbitration shall be deemed concluded upon delivery of notice of such determination to Landlord and Tenant.

 

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(vi) Cost of Arbitration. If the Auctioneers (or Auctioneer, pursuant to subsection (v) above) determine that Tenant’s proposed Fair Market Value is closer to the actual Fair Market Value, then Tenant shall be deemed the “Winning Party” under this subsection (vi), and Landlord shall be deemed the “Losing Party” under this subsection (vi), and if the Auctioneers (or Auctioneer, pursuant to subsection (v) above) determine that Landlord’s proposed Fair Market Value is closer to the actual Fair Market Value, then Landlord shall be deemed the “Winning Party” under this subsection (vi), and Tenant shall be deemed the “Losing Party” under this subsection (vi). In addition, in the event the arbitration is deemed concluded due to a Failing Party not timely delivering its calculation of Fair Market Value as described in subsection (i), or a Delinquent Party failing to pay its share of fees after written notice as described in subsection (iii), such Failing Party or Delinquent Party (as the case may be) shall be deemed the “Losing Party” under this subsection (vi), and the party that is not the Failing Party or Delinquent Party (as the case may be) shall be deemed the “Winning Party” under this subsection (vi). Each party shall initially pay the fees and expenses of its legal counsel, appointed auctioneer, any written reports prepared by any auctioneer in connection with its duties under this Section 5.3(d), one-half of the fees of the third auctioneer, and one-half the fees of the AAA (if applicable), provided, however, that the Losing Party shall be obligated to reimburse the Winning Party for all such fees and expenses of the arbitration paid by the Winning Party promptly upon the completion of the arbitration procedure described in this Section 5.3(d).

Notwithstanding the foregoing, at any time from and after the Option Notice Date until the time that the applicable Option FF&E is actually purchased by Landlord, Landlord may withdraw any Exercise Notice upon delivery to Tenant of written notice thereof, in which event the Exercise Notice shall be deemed void and of no further force or effect, Landlord shall not be obligated to purchase any of the Option FF&E in connection with such Exercise Notice, and each of Landlord and Tenant shall be responsible for all of its fees and expenses incurred in connection with the delivery of such Exercise Notice by Landlord, including in connection with any arbitration proceedings under subsections (i) through (vi) of this Section 5.3(d); provided, however, that (x) if an arbitration has been completed under subsections (i) through (vi) of this Section 5.3(d), and if Tenant was the Winning Party (as defined above in subsection (vi)), then Landlord shall remain obligated to reimburse Tenant for the fees and expenses of such arbitration, and (y) if Landlord failed to withdraw its Exercise Notice prior to delivering to Tenant Landlord’s calculation of the Fair Market Value under subsection (i) of this Section 5.3(d), then Landlord shall pay to Tenant any IP Removal Costs actually incurred by Tenant up to the date of withdrawal of the Exercise Notice. Landlord shall permit Tenant to remove the Option FF&E for a period of not less than sixty (60) days following any withdrawal by Landlord of its Exercise Notice regarding such Option FF&E.

 

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(e) Closing of Option FF&E Purchase. Subject to the terms of this Section 5.3, Landlord’s purchase of the Option FF&E shall close not more than thirty (30) days after the Option Notice Date or such earlier date as the applicable Transition Period in effect with respect to the related Leased Properties shall expire or be terminated, unless there is an arbitration to determine Fair Market Value as described in Section 5.3(d), in which event Landlord’s purchase of the Option FF&E shall close not more than ten (10) days following the conclusion of such arbitration. The Option FF&E Purchase Price shall be paid in Cash at such closing.

ARTICLE VI

AFFIRMATIVE COVENANTS; PERMITTED USE

Section 6.1 Tenant Covenants. Tenant hereby covenants and agrees with Landlord that:

(a) Existence; Use of Leased Property; Legal Compliance; Insurance.

(i) Tenant shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its (and shall cause each Concept Subsidiary and any Affiliate of Tenant to keep their) existence, rights, licenses, permits and franchises as necessary in the conduct of its (or any Concept Subsidiary’s or Affiliate of Tenant’s) business on the Leased Properties and comply (and cause compliance by each Concept Subsidiary and Affiliate of Tenant) in all material respects with all applicable Legal Requirements and all Property Documents in connection therewith. Subject to Landlord’s obligations under Articles X and XI, Tenant shall at all times maintain and preserve the Leased Properties and shall keep the Leased Properties in good working order and repair, reasonable wear and tear excepted, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals and replacements. Tenant will operate, maintain and repair the Leased Properties in material compliance with all Legal Requirements and all Property Documents, and will not cause or allow the same to be misused or wasted or to deteriorate, reasonable wear and tear excepted.

(ii) Subject to the terms of this Lease (including clause (iii) of this Section 6.1(a)), Tenant shall use the applicable Leased Property and the Leased Improvements thereof solely (x) for their current purpose as a full service restaurant (including any of the Concepts) and, provided the same are permitted pursuant to the terms of the applicable Property Documents and Insurance Requirements, for such other uses as may be necessary or incidental to such use (such use, the “Primary Intended Use”), (y) for such other current uses of such Leased Property as of the date hereof ancillary to the Primary Intended Use that are not prohibited by Legal Requirements, Insurance Requirements, the applicable Property Documents or other provisions hereof, and (z) in connection with any Sublease of any Leased Property (or portion thereof, including pursuant to the Specified Prior Subleases), any other use not prohibited by Legal Requirements, Insurance Requirements, or the applicable Property Documents so long as the

 

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remainder of such Leased Property is used for the Primary Intended Use. Tenant shall not use the applicable Leased Property for any other use without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. No use shall be made or permitted to be made of a Leased Property, and no acts shall be done, that will cause the cancellation of any insurance policy covering such Leased Property, nor shall Tenant sell or otherwise provide, or permit to be kept, used or sold in or about such Leased Property any article which may be prohibited by applicable law or by Insurance Requirements. Tenant shall, at its sole cost, comply with all of the requirements pertaining to the Leased Properties or other improvements of any insurance board, association, organization or company necessary for the maintenance of insurance, as herein provided, covering the Leased Properties.

(iii) Tenant shall Continuously Operate each Restaurant Location for the Primary Intended Use. Notwithstanding the immediately preceding sentence, at any one time and from time to time, Tenant may allow Restaurant Locations to Go Dark, provided that (A) the number of Go Dark Restaurant Locations plus the number of Restaurant Locations that are being operated as one or more Unaffiliated Businesses (without duplication) does not exceed the Go Dark/Sublease Limit at any time, and (B) in no event may Tenant allow any Go Dark Purchase Option Property to Go Dark unless the holder of the purchase right, termination right, recapture right, option or similar right has irrevocably waived in writing (in form and substance acceptable to Landlord and Landlord’s Lender in their sole discretion) such rights with respect to the period during which such Go Dark Purchase Option Property continues to be a Go Dark Restaurant Location. If any Restaurant Location shall Go Dark, Tenant shall promptly send written notice thereof to Landlord. If any Restaurant Location shall Go Dark, the full payment of Base Rent and Additional Charges as and when, and to the extent, required under this Lease with respect to all Restaurant Locations that are leased pursuant to this Lease shall nonetheless be required to be paid to Landlord without reduction.

(b) Taxes and Other Charges; Contest for Taxes and Other Charges, Legal Requirements and Liens.

(i) Subject to the provisions of Section 6.1(b)(ii) and Section 3.1(e), Tenant shall pay all Taxes and Other Charges now or hereafter levied or assessed or imposed against the Leased Properties prior to the date on which such sums become delinquent. Tenant will deliver to Landlord, upon request, receipts for payment or other evidence satisfactory to Landlord that the Taxes and Other Charges have been so paid (provided Tenant shall not be required to furnish such receipts for payment of Taxes in the event such Taxes have been (or were to have been) paid by Landlord, pursuant to Section 3.1(e). Subject to the provisions of Section 6.1(b)(ii), Tenant shall not suffer (other than Permitted Encumbrances) and shall promptly cause to be paid and discharged any lien or charge whatsoever which may be or become a lien or charge against the Leased Properties (other than liens and charges under the Landlord Liens), and shall promptly pay for all

 

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utility services provided to the Leased Properties. Subject to Section 6.1(b)(ii), Tenant shall pay, bond or otherwise discharge, from time to time when the same shall become due, all claims and demands of mechanics, materialmen, laborers and others that, if unpaid, might result in, or permit the creation of, a lien or encumbrance on any Leased Property, or on the rents arising therefrom.

(ii) After prior written notice to Landlord, Tenant, at its own expense, may contest by appropriate legal, administrative or other proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any Taxes or Other Charges or Lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Leased Properties (other than this Lease or Landlord’s Loan Documents) or any claims or judgments of mechanics, materialmen, suppliers, vendors or other Persons or any Lien therefor, and may withhold payment of the same pending such proceedings if permitted by law; provided that (A) no Event of Default has occurred and remains uncured, except for an Event of Default caused by the matter being contested, (B) such proceeding shall suspend any collection of the contested Taxes, Other Charges or Liens from the Leased Properties, Tenant or Landlord, or adequate time shall at all times remain prior to such collection, (C) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Tenant is subject and shall not constitute a default thereunder, (D) neither any Leased Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost, (E) (x) with respect to any contested Taxes or Other Charges or Liens where the failure to pay the same, if the contest is determined adversely to Tenant, would result in a Lien senior to the Lien of Landlord’s Lender or the interest of Tenant hereunder (excluding, however, any “CAM” or common area maintenance or similar charges payable under Property Documents), then Tenant shall have furnished Landlord with Eligible Collateral as security (in an amount reasonably approved by Landlord and required by Landlord’s Loan Documents) to insure the payment of any such Taxes or Other Charges, in each case together with all reasonably anticipated interest and penalties thereon, and (y) with respect to other matters contested under this clause (ii), including “CAM” or common area maintenance and similar charges payable under Property Documents, Tenant shall have made adequate reserves on its financial statements for such contests; provided that, to the extent matters contested under this clause (y) exceed $15 million in the aggregate, then Tenant shall furnish Landlord with Eligible Collateral as security in the amount of such excess, (F) in the case of an Insurance Requirement, the failure of Tenant to comply therewith shall not impair the validity of any insurance required to be maintained by Tenant hereunder or the right to full payment of any claims thereunder, (G) in the case of any essential or significant service with respect to any Leased Property, any contest or failure to pay will not result in a discontinuance of any such service without replacement thereof, (H) in the case of any instrument of record affecting any Leased Property or any part thereof, the contest or failure to perform under any such instrument shall not result in the placing of any Lien on any Leased Property or any part thereof (except if such

 

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Lien would be removed upon completion of such proceedings and the compliance by the parties with the terms of the resulting order, decision or determination and the removal costs for such Lien have been escrowed with Landlord or in the proceedings or bonded or otherwise deposited or paid in connection with such proceedings), (I) Tenant shall promptly upon final determination thereof pay the amount of any such Taxes, Other Charges or Liens, together with all costs, interest and penalties which may be payable in connection therewith, (J) Tenant shall keep Landlord and Landlord’s Lender informed of the status of such contest at reasonable intervals, and (K) Tenant shall otherwise comply with any applicable requirements of Landlord’s Loan Documents to the extent the same do not impose any additional material condition on Tenant’s ability to conduct such contest, compared to the conditions imposed under this Lease. Landlord may pay over any Eligible Collateral (or the proceeds thereof, if the Eligible Collateral is not Cash) or part thereof held by or on behalf of Landlord to the claimant entitled thereto at any time when, in the judgment of Landlord, the entitlement of such claimant is finally established, and Landlord shall otherwise remit any remaining such amounts to Tenant. Landlord shall give Tenant written notice of any such payments promptly following the making thereof. Subject to the foregoing, at Tenant’s timely request, Landlord shall not pay and shall not cause to be paid from any tax or insurance escrow account that may be maintained in connection with Landlord’s Debt the Taxes or Other Charges being contested.

(c) Litigation. Tenant shall give prompt written notice to Landlord of any litigation or governmental proceeding pending or threatened in writing against Tenant or against or affecting any Leased Property of which it is aware and where the uninsured damages claimed or asserted are in excess of (i) $500,000 for any Leased Property or (ii) $5,000,000 in the aggregate.

(d) Inspection. Tenant shall permit agents, representatives and employees of Landlord and/or Landlord’s Lender (including any servicer or special servicer on behalf of Landlord’s Lender) to inspect any Leased Property on any Business Day at reasonable hours upon reasonable advance notice.

(e) Notice of Downgrade. Tenant shall give Landlord reasonably prompt notice of any downgrade in the credit ratings from any Rating Agency of the corporate family of the Guarantor.

(f) Cooperate in Legal Proceedings. Tenant shall cooperate fully with Landlord (and with Landlord’s Lender) with respect to any proceedings before any court, board or other Governmental Authority brought by a third party or Governmental Authority against Tenant or any Leased Property which may in any way affect the rights of Landlord (or Landlord’s Lender, as the case may be) hereunder or in respect of any Leased Property and, in connection therewith, permit Landlord (and Landlord’s Lender, as applicable), at its election, to participate in any such proceedings.

 

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(g) Insurance Benefits. Tenant shall cooperate with Landlord (and Landlord’s Lender) in obtaining for Landlord (and Landlord’s Lender, as applicable) the benefits of any insurance proceeds lawfully or equitably payable in connection with any Leased Property, and Landlord (and Landlord’s Lender, as applicable) shall be reimbursed for any out-of-pocket expenses reasonably incurred in connection therewith (including attorneys’ fees and disbursements, and, if reasonably necessary to collect such proceeds, the expense of an appraisal on behalf of Landlord in case of a fire or other casualty affecting any Leased Property) out of such insurance proceeds.

(h) Financial Reporting and Other Information.

(i) Generally. Tenant will keep and maintain or will cause to be kept and maintained on a Fiscal Year basis books, records and accounts as necessary to calculate the Fixed Charge Coverage Ratio in accordance with the terms hereof and to comply with applicable reporting requirements under this Lease and shall make such books and records available to Landlord and Landlord’s accountants and consultants at reasonable times upon reasonable notice. Tenant will prepare and maintain books, records and accounts throughout the Term that are separate from those of Landlord.

(ii) Reporting Requirements. So long as Landlord’s Debt and the Mezzanine Debt have not been repaid in full, Tenant shall comply with the information keeping and reporting requirements set forth on Schedule 6.1(h) hereto, subject in all instances to the confidentiality provisions of Article XXIV hereof.

(iii) Governmental Notices. Tenant shall furnish to Landlord, promptly after receipt, a copy of any notice received by or on behalf of Tenant from any Governmental Authority having jurisdiction over any Leased Property as to the commencement or proposed commencement of (i) any Condemnation proceedings with respect to any Leased Property or (ii) any other proceedings, which, if determined adversely to Tenant or any Leased Property, could reasonably be expected to result in uninsured losses, costs or damages to Tenant in excess of $500,000.

(i) Business and Operations. Tenant will qualify to do business (and will require all Subtenants to qualify to do business) and will remain (and will require all Subtenants to remain) in good standing under the laws of each jurisdiction as and to the extent the same are required for the conduct of its business at any Leased Property. In addition to and without limiting the foregoing, Tenant represents (1) that it has observed, and covenants and agrees that it will continue to observe, in all material respects, and that it has complied, and covenants and agrees that it will continue to comply, in all material respects, with its organizational documents and the Delaware Limited Liability Company Act, as applicable; (2) that it has maintained, and covenants and agrees that it will continue to maintain, its existence and good standing under the laws of its state of formation or organization; and (3) that it has qualified, and covenants and agrees that it will continue to qualify, to do business in each state in which the conduct of its business so requires.

 

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(j) Property Documents. Tenant shall observe and perform all of the obligations of Landlord under each Property Document; provided, however, that Landlord and not Tenant shall retain, observe and perform all administrative, enforcement and other rights and obligations, if any, of Landlord as the “Declarant” (as opposed to any such rights or obligations of Landlord in its capacity as the owner of a parcel of real estate subject to such Operating Agreement) under any Operating Agreement.

ARTICLE VII

NEGATIVE COVENANTS

Section 7.1 Tenant’s Negative Covenants. Tenant covenants and agrees with Landlord that it will not do, directly or indirectly, any of the following:

(a) Liens. Subject to Section 6.1(b)(ii), Tenant shall not, without the prior written consent of Landlord, create, incur, assume, permit or suffer to exist any Lien on any portion of any Leased Property (or any of them) or any other portion of any Leased Property or any expansions or alterations that remain Tenant’s property during the Term, except (i) Permitted Encumbrances, (ii) Liens created by or permitted pursuant to Landlord’s Loan Documents and (iii) Liens for Taxes or Other Charges not yet delinquent.

(b) Zoning and Uses. Tenant shall not (i) initiate or support any limiting change in the permitted uses of any Leased Property (or to the extent applicable, limiting zoning reclassification of any Leased Property), (ii) seek any variance under existing land use restrictions, laws, rules or regulations (or, to the extent applicable, zoning ordinances) applicable to any Leased Property or use or permit the use of any Leased Property in each case in a manner that would result in the existing use becoming a non-conforming use under applicable land-use restrictions (and, if any, zoning ordinances) with any materially adverse effect on the value of any Leased Property or that would violate the terms of any Legal Requirements or any Property Document, (iii) modify, amend or supplement any of the terms of any Property Document in a manner adverse in any material respect to the interests of Landlord, (iv) other than Permitted Encumbrances, impose or permit or suffer the imposition of any restrictive covenants, easements or encumbrances upon any Leased Property in any manner that adversely affects in any material respect the value or utility of any Leased Property, (v) execute or file any subdivision plat affecting any Leased Property, institute, or permit the institution of, proceedings to alter any tax lot comprising any Leased Property, or (vi) other than Permitted Encumbrances, permit or suffer any Leased Property to be used by the public or any Person in such manner as might make possible a claim of adverse usage or possession or of any implied dedication or easement.

ARTICLE VIII

ALTERATIONS; LEASING

Section 8.1 Alterations. Tenant will, at Tenant’s expense, make any demolition, alteration, installation, improvement, expansion, reduction or decoration (each, an “Alteration”) of or to any Leased Property or any part thereof to the extent required to cause such Leased Property to comply with Legal Requirements, any Property Document or any provision of this

 

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Lease (each, a “Required Alteration”). Tenant shall comply with the provisions of clauses (a), (d), (e), (f) and (g) of this Section 8.1 in connection with any Required Alteration. Tenant will not make any Alteration (other than Required Alterations), except in accordance with the following terms and conditions:

(a) The Alteration shall be undertaken in accordance with the applicable provisions of this Lease, Landlord’s Loan Documents, the Property Documents and all Legal Requirements.

(b) No Event of Default shall have occurred and be continuing and no Default shall occur as a result of such action.

(c) The Alteration shall not materially adversely affect the (i) Primary Intended Use or (ii) fair market value of the Leased Property in question (it being understood and agreed that Alterations undertaken to conform, upgrade or comply with then applicable Concept system standards shall be in compliance with this clause (c)).

(d) A Material Alteration shall be conducted under the supervision of a Qualified Architect and shall not be undertaken until ten (10) Business Days after there shall have been delivered to Landlord, for information purposes only and not for approval by Landlord, detailed plans and specifications and cost estimates therefor, prepared and approved in writing by such Qualified Architect. Such plans and specifications may be revised at any time and from time to time, provided that material revisions of such plans and specifications shall be delivered to Landlord in accordance with this Section 8.1(d) for information purposes only.

(e) All work done in connection with any Alteration shall be performed with due diligence in a good and workmanlike manner, all materials used in connection with any Alteration shall be not less than the standard of quality of the materials generally used at the applicable Leased Property as of the date hereof and all work shall be performed and all materials used in accordance with all applicable Legal Requirements and Insurance Requirements.

(f) The cost of any Alteration shall be promptly and fully paid for by Tenant. Unless otherwise consented to by Landlord, such consent not to be unreasonably withheld, conditioned or delayed, construction contracts for Material Alterations shall require at least five percent (5%) retainage until substantial completion and, thereafter, retainage of one hundred five percent (105%) of the cost to complete the work. During a Tenant Security Period, no Alteration the cost of which exceeds the Threshold Amount shall be performed by or on behalf of Tenant unless Tenant shall have delivered to Landlord Eligible Collateral as security in an amount not less than the amount by which the estimated cost (as set forth in the Qualified Architect’s written estimate referred to above) of such Alteration exceeds the Threshold Amount. In addition to payment or reimbursement from time to time of Tenant’s expenses incurred in connection with any such Alteration, the amount of the security required by reason of the estimated cost of such Alteration exceeding the Threshold Amount shall be reduced, dollar for dollar, if and to the extent that the Qualified Architect’s written estimate of the cost to complete such Alteration (including any retainages being withheld by Tenant from its contractors), free and clear of Liens, other than Permitted Encumbrances, is less than the previous estimate regarding such cost from a

 

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Qualified Architect. Eligible Collateral provided by Tenant pursuant to this Section 8.1(f) shall be held and paid by Landlord solely as provided in this Section 8.1(f) and Section 8.1(g) and shall serve as security for funding the costs of completion of the applicable Material Alteration and shall not otherwise be available to secure any other obligations of Tenant under this Lease.

(g) With respect to security required by reason of the estimated cost of an Alteration exceeding the Threshold Amount, at any time after substantial completion of such Alteration in respect of which Eligible Collateral is deposited pursuant hereto, the whole balance of any Eligible Collateral so deposited by Tenant with Landlord and then remaining on deposit (together with earnings thereon) may be withdrawn by Tenant and shall be paid by Landlord to Tenant, and any other Eligible Collateral so deposited or delivered shall, to the extent it has not been called upon, reduced or theretofore released, be released to Tenant, within ten (10) days after receipt by Landlord of an application for such withdrawal and/or release together with an officer’s certificate from Tenant, and signed also (as to the following clause (i)) by the Qualified Architect, setting forth in substance as follows:

(i) that the Alteration in respect of which such Eligible Collateral was deposited has been substantially completed in all material respects substantially in accordance with any plans and specifications therefor previously filed with Landlord under Section 8.1 and that, if applicable, a certificate of occupancy has been issued with respect to such Alteration by the relevant governmental authority(ies) or, if not applicable, that a certificate of occupancy is not required; and

(ii) that, to the knowledge of the certifying person, all amounts which Tenant is or may become liable to pay in respect of such Alteration through the date of the certification have been paid in full or adequately provided for or are being contested in accordance with the terms of this Lease and that, except to the extent of such contests, lien waivers have been obtained from the general contractor and major subcontractors performing such Alterations (or such waivers are not customary and reasonably obtainable by prudent owners in the area where the applicable Leased Property is located).

(h) Tenant shall obtain Landlord’s prior written approval (which approval shall not be unreasonably withheld) for any Alteration (i) which would, after completion of the Alteration, have a material adverse effect on the value or utility of the applicable Leased Property (it being understood and agreed that Alterations undertaken to conform, upgrade or comply with then applicable Concept system standards shall be deemed not to have a material adverse effect on the value or utility of such Leased Property), provided that Landlord shall approve such Alteration if Tenant covenants with Landlord to restore the applicable Leased Property at the expiration or earlier termination of this Lease to its state prior to such alteration and Landlord is reasonably assured of Tenant’s ability to do so and (ii) during a Tenant Security Period, which would affect the material structural elements or systems of the applicable Leased Property.

 

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Section 8.2 Subletting and Transfers.

(a) Current Subleases. Tenant hereby represents, warrants and covenants to Landlord as follows: (i) none of the Leased Properties is subject to any Subleases other than the Affiliated Subleases, Unaffiliated Subleases and the Specified Prior Subleases, in each case as set forth on Schedule 8.2(a)(i); (ii) the current Subleases are in full force and effect and to Tenant’s knowledge, there are no material defaults thereunder by any party thereto (other than as expressly disclosed on Schedule 8.2(a)(ii)); (iii) no rent under any Sublease has been paid more than one (1) month in advance of its due date, except as set forth on Schedule 8.2(a)(iii); and (d) there has been no prior sale, transfer or assignment, hypothecation or pledge by Tenant of this Lease or any Sublease or of the rents received therein.

(b) Current Operations. Tenant represents and warrants to Landlord that each Leased Property is currently operated as one or more Restaurant Locations under a Concept or a Third-Party Brand, and is occupied and operated pursuant to a Concept Sublease, an RLP Sublease or an Unaffiliated Sublease.

(c) Subleasing Conditions. Except as otherwise provided in this Section 8.2, neither Tenant nor any Subtenant shall (i) enter into any Sublease (a “New Sublease”) or (ii) modify any Sublease (including, without limitation, accept a surrender of any portion of any Leased Property subject to a Sublease (unless otherwise required by law), allow a reduction in the term of any Sublease or a reduction in the rent or other amounts payable under any Sublease, change any renewal provisions of any Sublease, materially increase the obligations of the sublandlord or materially decrease the obligations of any Subtenant, or terminate any Sublease unless the Subtenant under such Sublease is in default (any such action referred to in clause (ii) being referred to herein as a “Sublease Modification”) without the prior written consent of Landlord which consent shall not be unreasonably withheld or delayed; provided, however, that Tenant, or any Subtenant or Affiliate of Tenant, may terminate a Sublease (x) that is an Affiliated Sublease, (y) for Tenant or a Concept Subsidiary to use the property formerly subleased for itself as a Concept, or (z) subject to compliance with Section 6.1(a)(iii), in connection with the decision to have the applicable store Go Dark. Any New Sublease or Sublease Modification that requires Landlord’s consent shall be delivered to Landlord and Landlord’s Lender for approval not less than ten (10) Business Days prior to the effective date of such New Sublease or Sublease Modification. If any of Landlord and Landlord’s Lender (either, an “Unresponsive Party”) fails to respond to a request for its consent pursuant to this Section 8.2(c) within ten (10) Business Days after its receipt of Tenant’s request therefor, Tenant may deliver to the Unresponsive Party a second request in an envelope or under cover of a letter marked URGENT and including a legend in bold typeface that such Unresponsive Party’s failure to grant or deny the requested consent within ten (10) Business Days after the receipt thereof will result in the requested consent being deemed to have been granted. If the Unresponsive Party fails to respond to such second request within ten (10) Business Days after its receipt thereof, such Unresponsive Party’s consent shall be deemed granted; provided, however, that unless each of Landlord and Landlord’s Lender has granted its consent, or is deemed to have granted its consent pursuant to the terms hereof, to any New Sublease or Sublease Modification, such New Sublease or Sublease Modification shall not be permitted hereunder, and Tenant agrees that if either Landlord or Landlord’s Lender withholds its consent to any New Sublease or Sublease Modification, such New Sublease or Sublease Modification shall not be permitted hereunder,

 

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even if one of Landlord or Landlord’s Lender grants (or is deemed to have granted pursuant to the terms hereof) its consent to such New Sublease or Sublease Modification. Notwithstanding the foregoing, provided no Event of Default shall have occurred and be continuing, Tenant and/or any Subtenant may enter into a New Sublease or a Sublease Modification, without Landlord or Landlord’s Lender’s prior written consent, that satisfies each of the following conditions (collectively, the “Base Sublease Conditions”):

(i) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, will not result in the number of Go Dark Restaurant Locations plus the number of Restaurant Locations that are being operated as one or more Unaffiliated Businesses (without duplication) exceeding the Go Dark/Sublease Limit;

(ii) the term of such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, including any and all renewal options, does not exceed the remaining Term;

(iii) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, shall not include the payment by Tenant of any tenant improvement allowances or leasing commissions, or similar sublandlord monetary obligations, unless such Sublease expressly provides that such obligations will not be binding upon Landlord or its successors or assigns upon the termination of this Lease, and shall not be binding upon Landlord’s Lender or its successors or assigns upon foreclosure (or transfer in lieu thereof) of Landlord’s Lender’s lien;

(iv) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, does not trigger any of the rights or obligations set forth on Schedule 1.3, and does not grant to the Subtenant thereunder any new purchase option, right of first refusal or other preferential rights with respect to the applicable Leased Property or any other Leased Property;

(v) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, provides that the premises demised thereby can only be used for operation of a Concept restaurant (or, so long as paragraph (i) above is satisfied, an Unaffiliated Business), but cannot be used for any of the following uses: any pornographic or obscene purposes, any commercial sex establishment, any pornographic, obscene, nude or semi-nude performances, modeling, obscene materials, activities or sexual conduct or any other use that has or could reasonably be expected to have a Material Adverse Effect;

(vi) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, does not prevent casualty insurance proceeds or the proceeds of any condemnation award from being held and disbursed by Landlord’s Lender in accordance with the terms of Landlord’s Loan Documents;

 

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(vii) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, does not conflict with any Legal Requirement, Property Document, Insurance Requirement or any of the terms of this Lease;

(viii) (A) the Subtenant under such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, shall not have the benefit of the Master Lease SNDA, and (B) except for a new or existing Non-Disturbance Eligible Sublease with respect to which Landlord’s Lender has executed a Non-Disturbance Agreement pursuant to Section 8.2(j) below, such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, shall not provide for non-disturbance of the Subtenant thereunder, and shall, by its express terms, terminate upon the expiration or termination of this Lease; and

(ix) such New Sublease or existing Sublease (as modified by the Sublease Modification), as applicable, satisfies the requirements of Section 8.2(h) and Section 8.2(i).

Notwithstanding the terms of this Section 8.2, and without limiting any sublease rights of Tenant under this Lease, any Affiliate of Tenant that has entered into a Concept Sublease for a Leased Property shall be permitted to subsublease such Leased Property to an Affiliate of Tenant provided such subsublease complies with the Base Sublease Conditions, and such subsublease shall not limit or release Guarantor’s obligations under the Guaranty.

Notwithstanding the terms of this Section 8.2, and without limiting any sublease rights of Tenant under this Lease, without the consent of Landlord, Tenant may sublet a portion of any one or more Leased Properties operated as a Concept to one or more concessionaires or other similar licensees of portions of the Leased Property in conjunction with the operation of the Leased Property for its Primary Intended Use, provided that such concessions and similar licenses shall be entered into in conjunction with and without in any material respect interfering with the operation of such Leased Property as a Concept.

(d) Delivery of New Sublease or Sublease Modification. Upon the execution of any New Sublease or Sublease Modification, as applicable, Tenant shall deliver to Landlord an executed copy of the Sublease or Sublease Modification, as the case may be. In addition, Tenant shall, from time to time, at the advance written request of Landlord, but not more than one (1) time per calendar year unless an Event of Default has occurred and is continuing, deliver to Landlord a list of (a) each and every Sublease then affecting all or any part of the Leased Properties, and (b) all sublicenses or other grants of possessory interests in any portion of the Leased Properties to which Tenant has given its consent or of which Tenant otherwise has knowledge, said list to be certified by an Officer’s Certificate of Tenant as true, complete and correct in all material respects.

 

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(e) Sublease Amendments. Tenant agrees that it shall not have the right or power, as against Landlord without its consent (which consent shall not be unreasonably withheld or delayed except as provided herein), to cancel, abridge, amend or otherwise modify any Sublease, unless such modification complies with this Section 8.2.

(f) [Reserved].

(g) No Default Under Subleases. Tenant shall or shall cause each Subtenant to (i) promptly perform and observe all of the material terms, covenants and conditions required to be performed and observed by Tenant or Subtenant under the Subleases, if the failure to perform or observe the same would have a Material Adverse Effect; (ii) exercise, within eight (8) Business Days after a written request by Landlord, any right to request from the Subtenant under any Sublease a certificate with respect to the status thereof and (iii) not collect any of the rents under any Sublease more than one (1) month in advance (except that Tenant may collect such security deposits and last month’s rents as are permitted by Legal Requirements and are commercially reasonable in the prevailing market and collect other charges in accordance with the terms of each Sublease).

(h) Subordination. All Sublease Modifications and New Subleases entered into by Tenant or any Subtenant after the date hereof shall be expressly subject and subordinate to Landlord’s Loan Documents and this Lease (either through a subordination provision contained in such Sublease or Sublease Modification or, at Landlord’s option, in a separate subordination agreement in form reasonably satisfactory to Landlord and Landlord’s Lender).

(i) Attornment. Each New Sublease entered into from and after the date hereof shall provide that in the event of the enforcement by Landlord of any remedy under this Lease, or Landlord’s Lender of any remedy under Landlord’s Loan Documents, the Subtenant under such Sublease shall, at the option of Landlord or Landlord’s Lender or of any other Person succeeding to the interest of Landlord’s Lender as a result of any such enforcement, as applicable, attorn to Landlord, Landlord’s Lender or to such other Person, as applicable, and shall recognize Landlord, Landlords’ Lender or such successor-in-interest, as applicable, as sublandlord under such Sublease without change in the provisions thereof; provided, however, none of Landlord, Landlord’s Lender or such successor-in-interest shall be liable for or bound by (i) any payment of an installment of rent or additional rent made more than thirty (30) days before the due date of such installment, (ii) any act or omission of or default by any sublandlord under any such Sublease (but Landlord, Landlord’s Lender, or such successor-in-interest, as applicable, shall be subject to the continuing obligations of the sublandlord to the extent arising from and after such succession to the extent of Landlord’s, Landlord Lender’s, or such successor-in-interest’s, as applicable, interest in the applicable Leased Property), (iii) any credits, claims, setoffs or defenses which any Subtenant may have against any sublandlord, (iv) any obligation under such Sublease to maintain a fitness facility at the applicable Leased Property, (v) any obligation on sublandlord’s part, pursuant to such Sublease, to perform any tenant improvement work, or (vi) any obligation on sublandlord’s part, pursuant to such Sublease, to pay any sum of money to any Subtenant. Each such New Sublease shall also provide that, upon the reasonable request by Landlord, Landlord’s Lender or such successor-in-interest, the Subtenant shall execute and deliver an instrument or instruments confirming such attornment.

 

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(j) Non-Disturbance Agreements. Landlord agrees that Landlord’s Lender shall enter into, and, if required by applicable law to provide constructive notice or requested by a Subtenant, record in the county where the subject Leased Property is located, a subordination, attornment and non-disturbance agreement, substantially in form and substance to the form attached hereto as Exhibit D (a “Non-Disturbance Agreement”), with any Subtenant under any new or existing Non-Disturbance Eligible Sublease, within twelve (12) Business Days after written request therefor by Subtenant; provided that the following conditions are satisfied:

(i) no Event of Default shall have occurred and be continuing;

(ii) such new or existing Non-Disturbance Eligible Sublease complies with the Base Sublease Conditions;

(iii) with respect to any new Non-Disturbance Eligible Sublease only, the “fixed” or “base” rent under such Non-Disturbance Eligible Sublease is at a substantially consistent or rising level throughout the term of such Sublease, other than for an initial “free rent” period complying with clause (iv) below;

(iv) with respect to any new Non-Disturbance Eligible Sublease only, the rental rate, any “free rent” periods and other material terms of such new Non-Disturbance Eligible Sublease are market-rate, commercially reasonable and no less favorable to the sublandlord than those that would be available on an arm’s-length basis, as evidenced by a certificate from an Independent Leasing Broker; and

(v) such request is accompanied by (i) an Officer’s Certificate stating that such new or existing Non-Disturbance Eligible Sublease complies with the foregoing conditions and is otherwise in compliance with this Section 8.2, and (ii) payment of all reasonable out-of-pocket costs and expenses incurred by Landlord and Landlord’s Lender in connection with the negotiation, preparation, execution and delivery of such Non-Disturbance Agreement, including, without limitation, reasonable attorneys’ fees and disbursements.

(k) Default Under Landlord’s Loan Documents; Additional Required New Sublease Provisions. Notwithstanding the foregoing, Tenant shall not sublet all or any portion of one or more Leased Properties if and to the extent such subletting would cause a default or breach under Landlord’s Loan Documents, in which case Landlord shall use reasonable and good faith efforts, at Tenant’s expense, to obtain any consents or approvals required under Landlord’s Loan Documents in connection with such subletting. In addition to the other requirements set forth herein, each New Sublease entered into from and after the date hereof shall provide that (i) Subtenant shall not further sublet all or any part of the applicable Leased Property or assign its Sublease except insofar as the same would be permitted if it were a Sublease by Tenant under this Lease (excluding Section 8.2(c)(i), but without limiting Tenant’s obligations under Section 6.1(a)(iii)), and (ii) in the event the Subtenant receives a written notice from Landlord stating that this Lease has been cancelled, surrendered or terminated, or that the applicable Leased Property has been removed from this Lease pursuant to the terms hereof, the Subtenant shall thereafter be obligated to pay all rentals accruing under said sublease directly to Landlord (or Landlord’s Lender if Landlord or Landlord’s Lender shall so direct) (and all rentals received from the Subtenant by Landlord shall be credited against the amounts owing by Tenant under this Lease).

 

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(l) Transfers.

(i) General Restrictions. Unless otherwise expressly permitted under the provisions of this Section 8.2, Tenant shall not cause, suffer or permit, and in no event shall there be permitted to occur, regardless of whether Tenant shall have or have not caused, suffered to permitted the same to occur:

(A) any assignment or other Transfer of this Lease by Tenant, or any Transfer of any interest of Tenant in any Leased Property or any part thereof or any legal or beneficial interest therein, other than Permitted Encumbrances;

(B) any Transfer of an Equity Interest in any Restricted Party;

(C) any failure, prior to a Qualifying IPO of the Minimum Ownership/Control Requirements set forth in clause (x) of the definition thereof set forth in Section 8.2(l)(ii)(D)(2) to continue to be satisfied;

(D) in the event a Qualifying IPO, permitted under Section 8.2(l)(ii) occurs, any Post-IPO Change of Control; or

(E) any failure of Guarantor to satisfy the Guarantor Asset Covenants.

(ii) Permitted Equity Transfers. Notwithstanding anything herein to the contrary, the following Transfers shall not require the prior written consent of Landlord or Landlord’s Lender:

(A) the pledge of the Equity Interests in Guarantor or any of its Subsidiaries pursuant to the terms of the Guarantor Facility or a foreclosure (or transfer in lieu thereof) of such Equity Interests in Guarantor or any of its Subsidiaries resulting from the exercise of remedies as set forth in the Guarantor Facility;

(B) a Transfer (but not a pledge or encumbrance) by Holdco Parent or any then-existing Intermediate HoldCo Entity of one hundred percent (100%) (and not less than one hundred percent (100%)) of its direct Equity Interests in HoldCo or any then-existing Intermediate HoldCo Entity to a new Intermediate HoldCo Entity, provided that the Base Transfer Conditions have been satisfied;

 

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(C) a Transfer of direct or indirect Equity Interests in any Sponsor;

(D) a Qualifying IPO of any IPO Entity, or any other Transfer (but not a pledge or encumbrance) of the direct or indirect Equity Interests in Holdco Parent, Guarantor, HoldCo, or any Intermediate Holdco Entity (such Person in which such Equity Interests are transferred by means other than a Qualifying IPO, a “Related Holding Entity”), provided that the following conditions have been satisfied:

(1) the Base Transfer Conditions have been satisfied; and

(2) with respect to (x) any such Transfer other than a Qualifying IPO, subsequent to such Transfer, Permitted Holders or in the case of a Transfer to a Permitted Transferee, the related Permitted Transferee (or any combination of one or more of them, subject to the limitations in the definition of Permitted Holders), directly or indirectly own no less than fifty-one percent (51%) percent of the Equity Interests in, and Control, the Related Holding Entity (and, through ownership of the Related Holding Entity, in each direct or indirect Subsidiary of the Related Holding Entity), and (y) with respect to any Qualifying IPO, following such Qualifying IPO, the Post-IPO Control Requirements shall be satisfied (the foregoing requirements of (x) and (y) above, as applicable, the “Minimum Ownership/Control Requirements”);

(E) upon and subsequent to a Qualifying IPO of any IPO Entity, Transfers (whether direct or indirect and whether in open market transactions or otherwise) of the shares in such IPO Entity, provided that no Post-IPO Change of Control occurs;

(F) a Transfer (but not a pledge or encumbrance) of direct or indirect Equity Interests in any Permitted Transferee, provided that, subsequent to such Transfer, such Person shall continue to satisfy the criteria for a Permitted Transferee set forth in the definition thereof; or

(G) upon and subsequent to a Qualifying IPO of an Upper Tier Entity, Transfers of direct or indirect Equity Interests in such Upper Tier Entity, provided that no Post-IPO Change of Control occurs.

 

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(iii) Deliveries to Landlord. Tenant shall deliver to Landlord (A) with respect to any Transfer to which the Base Transfer Conditions apply, not less than thirty-five (35) days prior to the closing of such Transfer, an Officer’s Certificate describing the proposed transaction and stating that such transaction is permitted by this Section 8.2(l) together with any appraisal or other documents upon which such Officer’s Certificate is based, (B) an Officer’s Certificate promptly following the realization or foreclosure (or transfer in lieu thereof) upon any pledge or encumbrance described in Section 8.2(l)(ii), and (C) copies of executed deeds or other similar closing documents within eight (8) Business Days after the closing of any Transfer described in clauses (A) or (B) of this sentence.

(iv) Tenant shall be responsible for the payment of and shall pay or reimburse Landlord and Landlord’s Lender for all of Landlord’s and Landlord’s Lender’s reasonable out-of-pocket fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and costs and any Rating Agency fees and expenses, actually incurred by Landlord or Landlord’s Lender in connection with the review, negotiation and implementation of the provisions and documentation provided for in this Section 8.2(l).

(v) Nothing in this Section 8.2(l) shall prohibit the grant of a Lien by Tenant, Guarantor, any direct or indirect Subsidiary of Guarantor, or any Subtenant on Tenant’s Personalty.

(m) Landlord’s Right to Collect from Assignees and Subtenants. Without limiting any other provisions of this Lease, if this Lease is assigned or the applicable Leased Property or any part thereof is sublet (or occupied by any entity other than Tenant and its employees), Landlord, (i) after an Event of Default occurs and so long as it is continuing, may collect the rents from such assignee, and (ii) after the termination, cancellation or surrender of this Lease, or removal of the applicable Leased Property from this Lease, may collect the rents from such Subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed (A) a waiver of any obligations of Tenant, or rights of Landlord, under this Lease, (B) the acceptance by Landlord of such assignee, Subtenant or occupant, as the case may be, as a tenant or (C) release of Tenant from the future performance of its covenants, agreements or obligations contained in this Lease.

(n) No Release; Affirmance of Guaranty. No subletting or assignment or other Transfer shall in any way impair or release the continuing primary liability hereunder of Tenant named herein, as well as of each subsequent Tenant, and no consent to any subletting or assignment or other Transfer in any particular instance shall be deemed a waiver of the prohibition set forth in this Section 8.2. Any subletting, assignment or other Transfer in contravention of this Section 8.2 shall be void at Landlord’s option.

(o) Reimbursement of Landlord’s Costs. Tenant shall pay to Landlord, within ten (10) Business Days after request therefor, all costs and expenses, including reasonable attorneys’ fees, incurred by Landlord (including, to the extent Landlord is liable for the same, by Landlord’s Lender) in connection with any request made by Tenant to Landlord to assign this Lease or sublet any Leased Property, or with respect to any other Transfer.

 

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ARTICLE IX

MAINTENANCE AND REPAIR

Section 9.1 Maintenance and Repair.

(a) Subject to Articles X and XI and any Unavoidable Delays, Tenant, at its expense, shall, or shall cause, each Leased Property, including all areas that are part of such Leased Property outside of any buildings (including all roadways, sidewalks, driveways, landscaping, trash enclosures, trash compacting and loading areas, parking areas and curbs), and including portions to be maintained by non-governmental third parties under any Property Document, to be maintained in a safe condition and good order and repair, reasonable wear and tear excepted (whether or not the need for such repairs occurs as a result of Tenant’s use, any prior use, the elements or the age of such Leased Property) and shall promptly make all necessary and appropriate repairs and replacements thereto, of every kind and nature, whether interior or exterior, structural (including any roof on any Leased Improvements) or non-structural, ordinary or extraordinary, foreseen or unforeseen, arising by reason of a condition (concealed or otherwise) occurring subsequent or prior to the Commencement Date. All work, maintenance and repairs shall be made in a good and workmanlike manner, in accordance with all applicable Legal Requirements, Insurance Requirements, any applicable repair standards and requirements promulgated by Tenant or its Affiliates for Tenant’s properties (or applicable to any Concept operated at the applicable Leased Property), and safe practices. Tenant will not take or omit to take any action the taking or omission of which might materially impair the operation, use, value or utility of the Leased Property or any part thereof for the Primary Intended Use. Without limitation, (i) no work, maintenance and repairs by Tenant shall result in any structural damage to any Leased Properties or any injury to any persons, and (ii) Tenant shall ensure that the quality of materials and workmanship of any work, maintenance or repairs meets or exceeds the quality of materials and workmanship of the Leased Property prior to the need for such work, maintenance or repairs. To the extent any portion of the Leased Property, including any roadways, sidewalks, driveways, landscaping, trash enclosures, trash compacting and loading areas, parking areas and curbs, are to be maintained by non-governmental third parties under any Property Document, Tenant’s obligations hereunder shall be to use its best efforts to enforce such third party obligations under the Property Documents, and Landlord agrees to cooperate, at Tenant’s sole cost and expense, with any such efforts.

(b) Except as otherwise expressly provided herein, Landlord shall not be required to build or rebuild any improvements on the Leased Property, or to make any repairs, replacements, alterations, restorations or renewals of any nature or description to the Leased Property, whether ordinary or extraordinary, structural or non-structural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, or to maintain the Leased Property in any way. Tenant hereby waives, to the extent permitted by law, the right to make repairs at the expense of Landlord pursuant to any law in effect at the time of the execution of this Lease or thereafter enacted.

(c) Nothing contained herein and no action or inaction by Landlord shall be construed as (i) constituting the consent or request of Landlord, expressed or implied, to any contractor, subcontractor, laborer, materialman or vendor to or for the performance of any labor

 

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or services or the furnishing of any materials or other property for the construction, alteration, addition, repair or demolition of or to the Leased Property, or (ii) giving Tenant any right, power or permission to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord in respect thereof or to make any agreement that may create, or in any way be the basis for, any right, title, interest, lien, claim or other encumbrance upon the estate of Landlord in the Leased Property.

Tenant will, upon the expiration or prior termination of the Term with respect to any Leased Property, or removal of a Leased Property from this Lease pursuant to the terms hereof, immediately vacate and surrender the same to Landlord (i) in compliance with all Legal Requirements, (ii) in safe condition and (iii) in all other respects in the condition in which the same was originally received from Landlord, except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Lease and except for ordinary wear and tear (subject to the obligation of Tenant to maintain the Leased Property in good order and repair during the Term). In addition, if Tenant so elects, Tenant may remove Tenant’s Personalty from the Leased Property. To the extent that any damage is caused by Tenant or its employees, agents or contractors to any portion of the Leased Property as a result of such removal or in connection with Tenant vacating the Leased Property, Tenant shall be responsible for the repair of such damage (or, at Landlord’s option, Tenant shall reimburse or pay Landlord for all costs and expenses incurred by Landlord in repairing such damage). Tenant shall surrender to Landlord all keys, any key cards or other devices permitting access to the Leased Improvements or the Leased Property, and shall advise Landlord as to the combination of any locks or vaults then remaining in the Leased Property. All Tenant’s Personalty shall be and remain the property of Tenant, provided that any of Tenant’s Personalty not removed by Tenant within thirty (30) days after the expiration or termination of this Lease, or removal of the applicable Leased Property from this Lease pursuant to the terms hereof, shall be considered abandoned by Tenant and may be appropriated, sold, destroyed or otherwise disposed of by Landlord, at Tenant’s expense, without obligation to account therefor or to reimburse or compensate Tenant for the value therefor. Tenant shall have the right during such 30-day period to enter upon the Leased Property and remove all or any part of Tenant’s Personalty and will pay all costs and expenses incurred in removing or disposing of Tenant’s Personalty. Tenant will repair, at its expense, all damage to the Leased Property caused by the removal of Tenant’s Personalty, whether effected by Tenant or Landlord. Landlord shall not be responsible for any loss or damage to Tenant’s Personalty during the Term or such thirty (30) day period except to the extent such loss or damage is caused by the gross negligence or willful misconduct of Landlord, and Landlord shall not be responsible for any loss or damage to Tenant’s personalty in any event (and regardless of Landlord’s gross negligence or willful misconduct) after the expiration of such thirty (30) day period.

 

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ARTICLE X

CASUALTY AND CONDEMNATION

Section 10.1 Insurance.

(a) Tenant shall keep the applicable Leased Properties, and all property located in or on the applicable Leased Properties, including Tenant’s Personalty, insured at Tenant’s sole cost and expense with the kinds and amounts of insurance, and issued by such insurance companies, as set forth on Schedule 10.1 hereto.

(b) If Tenant does not furnish the certificates as required pursuant to Schedule 10.1 hereto, Landlord may procure, but shall not be obligated to procure, such replacement policy or policies and pay the insurance premiums therefor, and Tenant agrees to reimburse Landlord for the cost of such insurance premiums promptly on demand, which unpaid amounts shall bear interest until paid to Landlord at the lesser of (x) the maximum interest rate permitted by applicable law, and (y) the Overdue Rate.

Section 10.2 Casualty; Application of Proceeds.

(a) Right to Adjust.

(i) If any Leased Property is damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Tenant shall give prompt written notice thereof to Landlord generally describing the nature and extent of such Casualty. Subject to Section 10.2(c), following the occurrence of a Casualty, Landlord, to the extent sufficient insurance proceeds and other amounts made available by Tenant pursuant to Section 10.2(b) are available for restoration, and subject to Unavoidable Delays, shall in a reasonably prompt manner proceed to restore, repair, replace or rebuild the affected Leased Property (a “Restoration”) to the extent practicable to be of substantially the same character and quality as prior to the Casualty. If elected by Tenant, Tenant shall undertake such Restoration in which case Landlord shall make available all insurance proceeds in respect of such Casualty, subject to the requirements of Landlord’s Loan Documents. The party undertaking such Restoration hereunder shall restore all Leased Improvements such that when they are fully restored and/or repaired, such Leased Improvements and their contemplated use fully comply with all applicable material Legal Requirements. Notwithstanding anything herein to the contrary, subject to Unavoidable Delays, available insurance proceeds and any delays caused by Tenant, if Landlord does not complete any such Restoration within eighteen (18) months after the date of the final settlement of all applicable insurance claims, Tenant may thereafter remove the affected Leased Property from this Lease upon not less than thirty (30) days prior written notice, whereupon the affected Leased Property shall be removed from this Lease on the Rent Payment Date specified in Tenant’s notice unless such Restoration is completed prior to such date specified by Tenant for termination. The immediately preceding sentence shall not apply if Tenant elects to undertake such

 

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Restoration. Landlord shall not be obligated to restore or replace Tenant’s Personalty or any alterations or additions to the Leased Property made by Tenant, unless, with respect to such alterations or additions, the same were Required Alterations. Landlord may settle and adjust the insurance claim in respect of any Casualty; provided that such adjustment is carried out in a reasonable and timely manner and that Tenant shall be entitled, at its own expense, to participate in any such adjustment.

(b) Landlord’s Right to Proceeds. In the case of a Casualty, Tenant shall make available to Landlord all proceeds from insurance policies that are required to be maintained pursuant to Section 10.1 (but excluding proceeds in respect of Tenant’s business interruption insurance, and Tenant’s Personalty) to apply to the cost of the Restoration, plus an amount equal to any applicable deductibles or other self-retained risks. If Tenant shall have defaulted upon its obligation to maintain insurance in the amounts and of the types required under this Lease, and such default results in insufficient proceeds to restore or pay Rent owed to Landlord, then Tenant shall pay Landlord such insufficiency.

(c) No Obligation to Restore in Certain Circumstances.

(i) Notwithstanding the provisions clauses (a) and (b) above, Landlord shall not be required to restore, repair, replace or rebuild a Leased Property affected by a Casualty if Landlord determines in good faith that:

(A) the Restoration, if diligently prosecuted, could not reasonably be completed within the eighteen (18) month period required in Section 10.2(a), or

(B) the Casualty destroyed more than fifty percent (50%) (by value) of the Leased Improvements with respect to such Leased Property, or

(C) there are insufficient proceeds to complete the Restoration and Tenant has not made an election to complete the Restoration pursuant to Section 10.2(c)(ii) (provided that the foregoing shall not limit Tenant’s liability for any default under its obligation to maintain insurance).

(ii) Landlord shall notify Tenant of its election not to restore within sixty (60) days after final settlement of all insurance claims arising from the Casualty, in which case (subject to Tenant’s right in the immediately following sentence), the affected Leased Property shall be removed from this Lease on a Rent Payment Date specified in said notice not later than the thirtieth (30^th) day after such notice. Notwithstanding Landlord’s notice of its election not to restore, then, Tenant, by written notice to Landlord and Landlord’s Lender within thirty (30) days after the notice received from Landlord as set forth above in this Section 10.2(c)(ii), may elect, but shall not be required, to undertake and complete the Restoration, and in doing so, make use of the related proceeds, in which event the affected Leased Property shall not be removed from this Lease.

 

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(d) Abatement of Rent. To the extent and for the time that a Casualty renders a Leased Property unusable for the Primary Intended Use, Base Rent and Additional Charges shall abate by an amount up to the Fair Market Rental for such Leased Property, but only to the extent Landlord is reimbursed for such amounts from Landlord’s rental interruption insurance.

(e) Surplus. Any surplus which may remain out of proceeds received pursuant to a Casualty (other than proceeds in respect of Tenant’s Personalty) shall be paid to Landlord after payment of such costs of Restoration.

Section 10.3 Condemnation.

(a) Tenant shall promptly give Landlord written notice of the actual or threatened commencement of any condemnation or eminent domain proceeding affecting any Leased Property (a “Condemnation”) of which it receives written notice and shall deliver to Landlord copies of any and all papers served in connection with such Condemnation. The affected Leased Property shall be removed from this Lease upon the Condemnation of all or substantially all of such Leased Property. A Condemnation of substantially all of a Leased Property shall be deemed to have occurred if (i) fifty percent (50%) or more of the improved portion of such Leased Property shall have been subject to a Condemnation or Tenant is unable to use the Leased Property for the Primary Intended Use for a period in excess of twelve (12) months as a result of a Condemnation, (ii) there shall have been a loss of access or egress, parking capacity or any other appurtenance necessary for the operation of such Leased Property substantially in the manner in which it had previously been operated and there is no reasonably equivalent replacement therefor, or (iii) the net Condemnation proceeds available are insufficient to permit the Restoration of such Leased Property to an economically viable operation in accordance with the Primary Intended Use.

(b) If a portion of a Leased Property is the subject of a Condemnation and the affected Leased Property is not removed from this Lease pursuant to clause (a) above, then Landlord shall promptly proceed to restore, repair, replace or rebuild the same to the extent practicable to be of substantially the same character as prior to such Condemnation, provided that Landlord shall not be obligated to expend in such Restoration more than the net Condemnation proceeds paid to Landlord in connection with such Condemnation. If elected by Tenant, Tenant shall undertake such Restoration in which case Landlord shall make available all condemnation proceeds in respect of such Condemnation, subject to the requirements of Landlord’s Loan Documents. The party undertaking such restoration hereunder shall restore all Leased Improvements such that when they are fully restored and/or repaired, such Leased Improvements and their contemplated use fully comply with all applicable material Legal Requirements. Notwithstanding anything herein to the contrary, unless Tenant has elected to undertake such restoration, and subject to Unavoidable Delays, available Condemnation and insurance proceeds and any delays caused by Tenant, if Landlord does not complete any such Restoration within eighteen (18) months after the date of settlement of all applicable insurance and Condemnation claims, Tenant may thereafter remove the affected Leased Property from this Lease upon not less than thirty (30) days’ prior written notice, whereupon the affected Leased Property shall be removed from this Lease on the Rent Payment Date specified in Tenant’s notice unless such Restoration is completed prior to such specified date.

 

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(c) For the period of time that a Condemnation renders a Leased Property unusable for the Primary Intended Use, the Base Rent shall be reduced by the Fair Market Rental for such Leased Property for such period, and the Additional Charges in respect of such Leased Property shall abate for such period; provided, however, that if Tenant has elected to perform the Restoration as provided in Section 10.3(b), then the Base Rent reduction and abatement of Additional Charges as provided in this clause (c) shall end (and Base Rent and Additional Charges shall return to their respective amounts as otherwise provided for in this Lease) upon the earlier of (i) the date when the Restoration is sufficiently completed such that the Leased Property is again usable for the Primary Intended Use or (ii) twelve (12) months after the date of such Condemnation, even if at the end of such twelve (12) month period the Restoration has not been completed and regardless of whether the Leased Property is then usable or unusable for the Primary Intended Use.

(d) Landlord is hereby irrevocably appointed as Tenant’s attorney-in-fact, coupled with an interest, with exclusive power to collect, receive and retain any proceeds in respect of a Condemnation and to make any compromise or settlement in connection with such Condemnation, subject to the provisions of this Section 10.3, and such power shall include the power to substitute Landlord’s Lender in Landlord’s discretion. Tenant hereby irrevocably assigns to Landlord any award or payment to which Tenant is or may be entitled by reason of any Condemnation, whether the same shall be paid or payable for Tenant’s leasehold interest hereunder or otherwise; but nothing in this Lease shall impair Tenant’s right to any award or payment on account of (i) Tenant’s Personalty, (ii) moving expenses, (iii) business dislocation damages or (iv) such other claims that Tenant is entitled or permitted to pursue under applicable law in respect of such Condemnation, so long as in each case any such claim does not in any way reduce the amount of the award otherwise payable to Landlord for the Condemnation of Landlord’s right, title and/or interest in the applicable Leased Property.

(e) Any surplus which may remain out of proceeds or awards received pursuant to a Condemnation in respect of the Leased Property (and not Tenant’s Personalty or other permitted claims of Tenant) after payment of such costs of Restoration shall be paid over to and belong to Landlord.

ARTICLE XI

ACCOUNTS AND RESERVES

Section 11.1 Cash Management Procedures. Tenant hereby agrees to cooperate with Landlord and to execute any and all instruments reasonably requested by Landlord (including, if necessary, the execution of an amendment to this Lease), in the establishment and maintenance of cash management procedures reasonably requested by any Landlord’s Lender in connection with Landlord’s Loan Documents (the “Cash Management Procedures”) with respect to payment of Base Rent and other amounts payable by Tenant directly to Landlord as and when the same are due and payable hereunder; provided that such do not (A) increase the obligations of Tenant hereunder or adversely affect Tenant’s rights under this Lease or (B) require Tenant or its Affiliates to modify the accounting treatment or classification of this Lease (as reasonably determined by Tenant’s or its Affiliates’ auditors).

 

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ARTICLE XII

EVENTS OF DEFAULT AND REMEDIES

Section 12.1 Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder:

(a) if Tenant shall fail to pay any Scheduled Lease Payment on the date the same is due and payable hereunder, or

(b) Subject to Tenant’s rights under Section 6.1(b), if Tenant shall fail to pay any item of Variable Additional Charges when due and payable and such default shall continue for ten (10) Business Days after receipt of notice thereof from Landlord or the party to whom such payment is required to be made, or

(c) if Tenant shall fail to observe or perform any term, covenant or condition of this Lease not specifically provided for in this Section 12.1 and such failure is not cured within a period of thirty (30) days after receipt of notice from Landlord, unless such failure is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided, further, that Tenant shall have commenced to cure such failure within such thirty (30) day period and thereafter diligently proceeds to cure the same, such cure period shall be extended for such time as is reasonably necessary for Tenant in the exercise of due diligence to cure such failure, such additional period not to exceed one hundred eighty (180) days, or

(d) if Tenant or Guarantor shall admit in writing its inability to pay its debts generally as they become due; file a petition in bankruptcy or a petition to take advantage of any insolvency act; make an assignment for the benefit of its creditors; consent to the appointment of a receiver of itself or of the whole or any substantial part of its property; or file a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any State thereof, or

(e) any petition shall be filed by or against Tenant or Guarantor under Federal bankruptcy laws, or any other proceeding shall be instituted by or against Tenant or Guarantor or such subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for Tenant or Guarantor, or for any substantial part of the property of Tenant or Guarantor, and such proceeding is not dismissed within ninety (90) days after institution thereof, or Tenant or Guarantor shall take any action to authorize or effect any of the actions set forth above in this paragraph (e), or

(f) if the estate or interest of Tenant in any Leased Property shall be levied upon or attached in any proceeding and the same shall not be vacated or discharged within the later of ninety (90) days after commencement thereof or thirty (30) days after receipt by Tenant of notice thereof from Landlord (unless Tenant shall be contesting such lien or attachment in good faith in accordance with the terms of this Lease), or

 

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(g) the occurrence of a Guaranty Event of Default, or

(h) any breach by Tenant under Section 6.1(a)(iii) and such breach continues uncured for thirty (30) days;

and in any such event, Landlord may terminate this Lease on a Rent Payment Date with respect to one or more, or all of the Leased Properties by giving notice of such termination and upon the expiration of the time fixed in such notice, if any, and the failure of the applicable Event of Default to be cured prior to the expiration of such period, the Term shall terminate with respect to the Leased Properties on the Rent Payment Date specified in such notice and all rights of Tenant under this Lease with respect to such Leased Properties shall cease. Landlord shall have all rights at law and in equity available to Landlord as a result of Tenant’s breach of this Lease. Tenant shall, to the maximum extent permitted by law, pay as Additional Charges all Litigation Costs as a result of any Event of Default hereunder.

Section 12.2 Certain Remedies. During the continuance of an Event of Default, Landlord shall have the right to terminate this Lease, and otherwise exercise remedies, at any time and from time to time, with respect to one or more, or all, of the Leased Properties, and the termination of this Lease or other exercise of remedies with respect to one or more Leased Properties shall in no way constitute a waiver on the part of Landlord or an election to terminate this Lease on account of such Event of Default, or otherwise exercise remedies, at any time and from time to time, in one or more other instances, with respect to the balance of the Leased Properties. Without limitation, and subject to applicable law, Landlord shall have the right during the continuance of any Event of Default (a) to terminate Tenant’s possession of any of the Leased Properties with the intention of preparing the same for re-letting without terminating this Lease as to such Leased Properties, and (b) following any termination by Landlord of Tenant’s possession of any of the Leased Properties, or abandonment by Tenant of any of the Leased Properties, in each case where Landlord does not terminate this Lease as to such Leased Properties, to enforce all of Landlord’s rights and remedies under this Lease, including the right to collect Rent as it comes due under this Lease.

Section 12.3 Damages. Neither (a) the termination of this Lease pursuant to Section 12.1 with respect to any or all of the Leased Properties, (b) the repossession of the applicable Leased Property, (c) the failure of Landlord, notwithstanding reasonable good faith efforts, to relet the applicable Leased Property, (d) the reletting of all or any portion thereof, nor (e) the failure of Landlord to collect or receive any rentals due upon any such reletting, shall relieve Tenant of its liability and obligations hereunder, all of which shall survive any such termination, repossession or reletting. In the event of any such termination, Tenant shall forthwith pay to Landlord all Rent due and payable with respect to the applicable Leased Property to and including the date of such termination. Thereafter, Tenant, until the end of what would have been the Term in the absence of such termination, and whether or not the applicable Leased Property shall have been re-let, shall be liable to Landlord for, and shall pay to Landlord, as current damages, the Rent and other charges which would be payable hereunder for the remainder of the Term had such termination not occurred, less the net proceeds, if any, of any re-letting

 

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of the applicable Leased Property, after deducting all expenses in connection with such re-letting, including all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising costs, expenses of employees, alteration costs and expenses of preparation of the applicable Leased Property for such re-letting. Tenant shall pay such current damages to Landlord monthly on the days on which the Base Rent would have been payable hereunder if this Lease had not been terminated. Upon Landlord’s repossession of any Leased Property, Landlord shall use reasonable efforts to mitigate its damages by re-letting such Leased Property and, without limitation of the foregoing, shall consider in good faith re-letting opportunities presented to Landlord by Tenant or third parties.

At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages and in lieu of all such current damages beyond the date of such termination, at Landlord’s election, Tenant shall pay to Landlord an amount equal to the net present value (using a discount rate of five percent (5%)) of the excess, if any, of the Rent (assuming, with respect to items of Rent that are not fixed or determinable, that the amounts payable by Tenant in respect of such items of Rent during the preceding Lease Year would remain constant throughout the Term) which would be payable hereunder from the date of such termination for what would be the then unexpired term of this Lease if the same remained in effect (with respect to the applicable Leased Property), over the Fair Market Rental (including, for the avoidance of doubt, items of additional rent that would be paid by a third party tenant which shall, to the extent not fixed or determinable, be based on the amounts payable by Tenant in respect of Variable Additional Charges during the preceding Lease Year, without increase) for the same period. Nothing contained herein shall, however, limit or prejudice the right of Landlord to prove and obtain in any Bankruptcy Proceeding, or other proceeding for insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the applicable Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may, at Landlord’s option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) make such alterations, repairs and decorations in the applicable Leased Property as Landlord, in its sole judgment, considers advisable and necessary for the purpose of reletting the applicable Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid.

Section 12.4 Application of Funds . Any payments received by Landlord under any of the provisions of this Lease during the existence or continuance of any Event of Default (and such payment is made to Landlord rather than Tenant due to the existence of an Event of Default) shall be applied to Tenant’s obligations in the order which Landlord may determine or as may be prescribed by the laws of the State where the applicable Leased Property is located.

 

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Section 12.5 Limitations In Respect of Certain Events of Default. Notwithstanding anything to the contrary herein contained, in lieu of or in addition to any of the foregoing remedies and damages, Landlord may exercise any remedies and collect any damages available to it at law or in equity; provided, however, with respect to a Limited Default Event, the maximum aggregate amount Tenant shall be required to pay to Landlord from and after the date of the occurrence of such Limited Default Event (the “Occurrence Date”) shall be limited to the sum of (i) the present value as of the Occurrence Date, discounted at the annual rate of 8.38%, of all Base Rent reserved hereunder for the unexpired portion after the Occurrence Date of the Term devised herein as if this Lease had not expired or been terminated and (ii) any amounts of Additional Charges which are due and payable or have accrued under this Lease after the Occurrence Date while Tenant remains in possession of any Leased Property after any Limited Default Event that relates to Taxes, Other Charges, and other Scheduled Additional Charges, Variable Additional Charges, repairs, maintenance, environmental maintenance, remediation and compliance and other routine and customary costs and expenses of operating and maintaining the Leased Properties. Nothing contained in this Section 12.5 shall limit any amounts payable by Tenant with respect to Base Rent if any Event of Default that is not a Limited Default Event has occurred (notwithstanding that a Limited Event of Default also has occurred).

ARTICLE XIII

LANDLORD’S SELF HELP RIGHTS; LANDLORD’S RIGHTS UPON LEASE REJECTION OR LEASE TERMINATION

Section 13.1 Landlord’s Right to Act Regarding Tenant’s Default. If an Event of Default shall have occurred and be continuing, Landlord, without waiving or releasing any obligation or Event of Default, may (but shall be under no obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of Tenant, and may, to the extent permitted by law, enter upon the applicable Leased Property or any portion thereof for such purpose and take all such action thereon as, in Landlord’s opinion, may be necessary or appropriate therefor, including, without limitation, to the fullest extent permitted by law, repossessing the Leased Property and ejecting any Person or property thereon. No such entry shall be deemed an eviction of Tenant. All reasonable sums so paid by Landlord and all costs and expenses (including attorneys’ fees and expenses, in each case, to the extent permitted by law) so incurred, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date on which such sums or expenses are paid or incurred by Landlord, shall be paid by Tenant to Landlord on demand. The obligations of Tenant and the rights of Landlord contained in this Article XIII shall survive the expiration or earlier termination of this Lease.

Section 13.2 Transition Services.

(a) In the event of a Lease Rejection or a Lease Termination, Landlord shall have the option, exercised pursuant to Section 13.2(b), to cause Tenant to provide Transition Services on the terms set forth in this Section 13.2 with respect to any or all of the Rejected Leased Properties or the EOD Removed Properties, respectively, as Landlord shall elect (such Leased Properties, the “Transition Properties”), for the duration of the Transition Period. As used herein, “Transition Services” shall mean all of the services of Tenant (i) that were provided by Tenant or its Affiliate with respect to the Transition Properties immediately prior to the

 

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commencement of the Transition Period, (ii) that are required to operate the Transition Properties in substantially the same manner as such Transition Properties were operated by Tenant and its Affiliates immediately prior to the commencement of the Transition Period, and (iii) the performance of which would not breach or otherwise violate applicable law or any contractual agreements to which Tenant or such Affiliate is a party or by which it is bound.

(b) Landlord may elect to cause Tenant to provide Transition Services by delivering written notice (a “Transition Services Notice”) to Tenant, no later than ten (10) Business Days after the occurrence of a Lease Rejection or Lease Termination, specifying (i) the identity of the Transition Properties and (ii) the duration of the period during which Transition Services are to be provided, not to exceed ninety (90) days from the occurrence of the Lease Rejection or Lease Termination, as applicable (the “Transition Period”), which Transition Period shall be the same for all of the Transition Properties; provided, that after delivery of the initial Transition Services Notice, Landlord may shorten the Transition Period by delivering written notice to Tenant at least five (5) Business Days in advance of the new termination date of the Transition Period.

(c) As compensation for providing Transition Services, Landlord shall pay Tenant a fee (the “Management Fee”) equal to four and one-half percent (4.5%) of aggregate gross collected revenues derived from the operation of the Transition Properties (but not any sums which, under GAAP, are attributable to capital) during the Transition Period, payable on a monthly basis for the applicable monthly accounting period. For purposes of this Lease, an “applicable monthly accounting period” shall mean the period encompassing a full fiscal month as designated by Tenant. For example, if the applicable monthly accounting period is the twenty-first (21^st) of the previous month through the twentieth (20^th) day of the current month, the applicable monthly accounting period for the month of June would be May 21^st through June 20^th. Landlord shall pay the Management Fee monthly on the first day of each month following a month for which any portion of the Management Fee is payable. Tenant shall send monthly to Landlord a calculation of the Management Fee, which shall be subject to Landlord’s approval, not to be unreasonably withheld, delayed or conditioned. The Management Fee for any partial month shall be appropriately prorated. Notwithstanding the foregoing, Landlord may offset against any Management Fee owing to Tenant the amount of any damages owing hereunder on account of termination but not to exceed, in any bankruptcy of Tenant, the amount of any Allowed Claim.

(d) All revenues from operation of the Transition Properties during the Transition Period shall be the sole property of Landlord and shall be held by Tenant in trust for Landlord’s benefit. Notwithstanding the foregoing, Tenant may reimburse itself directly from the revenues of the Transition Properties for any out-of-pocket costs and expenses of operating the Transition Properties or of providing Transition Services that are advanced, accrued or suffered by Tenant or its Affiliate (including any payments to Affiliates of Tenant for advertising, insurance and other expenses incurred by such Affiliate on behalf of Tenant, provided that such expenses are charged to Tenant on the same basis as similar expenses are charged to other “company-owned” stores operated by Tenant’s Affiliates). In no event shall Tenant or any Affiliate be required to pay, advance, accrue or suffer any out-of-pocket costs or expenses of operating the Transition Properties or of providing Transition Services unless there are sufficient revenues available from the Transition Properties (after provision for a sufficient

 

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reserve to pay any Management Fee for the then-current monthly accounting period) to reimburse Tenant or its Affiliate for such costs and expenses or unless Landlord shall advance funds to Tenant or its Affiliate to pay such costs and expenses.

(e) Tenant’s obligation to provide Transition Services to Landlord is subject to the following limitations:

(i) Tenant shall not be required to provide Transition Services with respect to, or to reopen or re-operate, any Leased Property that was, as of the date of Lease Rejection or Lease Termination, a Go Dark Leased Property or otherwise not in operation by Tenant or its Affiliate (including by reason of a Sublease).

(ii) Tenant shall perform Transition Services in the capacity of a third-party property manager. Tenant’s performance of Transition Services shall not create any agency or fiduciary relationship among, or any duty owed by, Tenant, Landlord and their respective Affiliates, officers, employees and agents, apart from contractual duties expressly set forth in this Lease.

(iii) Tenant shall have no obligation to pay Base Rent or Additional Charges with respect to any Transition Property or any other sum to Landlord in consideration of Tenant’s or its Affiliates’ use and occupancy of any Transition Property during the Transition Period; provided, however, that this provision shall not abrogate or impede any rights or remedies otherwise available to Landlord under Article XII hereof as a result of an Event of Default.

(iv) Upon the expiration of the Transition Period, Tenant shall have the absolute right, without notice to or consent of Landlord, to (i) remove, destroy or conceal from public view all Tenant Proprietary/IP Material contained, used or displayed on any Fixture or Trade Fixture located at the Transition Properties (or any Leased Property subject to Lease Rejection or Lease Termination that is not a Transition Property), and (ii) remove from such Leased Properties any of Tenant’s Personalty that constitutes, uses, contains or displays any Tenant Proprietary/IP Material, except if (in connection with such use, containment or display) such Tenant Proprietary/IP Material can be removed from such items of Tenant’s Personalty, or destroyed or concealed from public view, through Tenant’s commercially reasonable efforts. Landlord shall have no ownership, franchise or other right to own or use any Tenant Proprietary/IP Material or any interest therein.

(v) Tenant and its Affiliates shall not be required to disclose to Landlord any proprietary technology or trade secrets constituting Tenant Proprietary/IP Material.

Section 13.3 Cooperation.

Upon the occurrence of a Lease Rejection or a Lease Termination and until the date that is ninety (90) days after such Lease Rejection or Lease Termination, and whether or not Landlord has delivered a Transition Services Notice to Tenant, Tenant shall (in each case, at no out-of-pocket cost or expense to Tenant), to the extent permitted by applicable law and contractual agreements:

 

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(a) Cooperate, upon Landlord’s reasonable request, with Landlord’s efforts to identify, apply for and obtain any governmental permits or licenses required to operate any Leased Property (“Permits”); provided, that Tenant shall not be obligated to assign or transfer any Permit to Landlord, or to cooperate with Landlord in applying for or obtaining a replacement for any Permit, if Tenant or its Affiliate intends to use such Permit or to sell, license, assign or transfer such Permit to another Person;

(b) Cooperate, upon Landlord’s reasonable request, with Landlord’s efforts to obtain replacement software relating to the operation of the Leased Properties; provided, that Tenant and its Affiliates shall have no obligation at any time to disclose to Landlord any proprietary technology or trade secrets constituting Tenant Proprietary/IP Material;

(c) Provide Landlord reasonable access during reasonable business hours to employees of Tenant or its Affiliate employed on-site at the Leased Properties that are subject to Lease Rejection or Lease Termination, and to such employees’ salary, pay history, personal contact information and other employee data in Tenant’s or its Affiliate’s possession or control, in each case, for the purpose of enabling Landlord to offer employment to such employees; provided, that the foregoing shall not prohibit Tenant or its Affiliate from offering employment to such employees at other locations or in other positions; and

(d) Provide Landlord with all store-level operational data and information in its possession or control (including lists of vendors and supply contracts) for the period from and after the date that is twelve (12) months prior to Lease Rejection or Lease Termination with respect to all Leased Properties that are subject to Lease Rejection or Lease Termination, except to the extent such information constitutes Tenant Proprietary/IP Material.

Section 13.4 Rights of Superior Parties.

In addition to, but not in limitation of, the rights of any purchaser, assignee or Superior Party under Section 15.2, if Landlord notifies Tenant in writing of any pledge or assignment of its rights hereunder to a Superior Party, then the rights of Landlord provided in this Article XIII and in Section 5.3 may be exercised by such Superior Party. Tenant, its Affiliates, and any other Persons (including any court) shall be entitled to rely on any and all communications or acts of such Superior Party, or of any party claiming to be such Superior Party’s agent or representative (but shall not be required to rely if Tenant, its Affiliates or such other Person questions in good faith the authority of the Person claiming to be such Superior Party’s agent or representative), with respect to the exercise of any rights or options or the giving of any notice or direction under this Article XIII or Section 5.3 on behalf of Landlord, without the necessity of making any inquiry of as to the authority of such Person with respect to such matter and notwithstanding any conflicting instructions from Landlord, and Landlord shall hold Tenant and its Affiliates harmless for any damages suffered by Landlord or any Affiliate of Landlord incurred because of such reliance by Tenant or its Affiliates.

 

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ARTICLE XIV

HOLD-OVER

Section 14.1 Holding Over. Subject to the terms of Section 13.2 hereof with respect to the applicable Transition Properties in the event and to the extent Landlord elects under Section 13.2 to require Tenant to provide Transition Services at such Transition Properties and Tenant remains in possession of such Transition Properties solely as required to provide such Transition Services on Landlord’s behalf pursuant to Section 13.2, if Tenant shall for any reason remain in possession of all or any portion of any Leased Property after the expiration of the Term or earlier termination of the Term, or removal of such Leased Property from this Lease as provided herein, such possession shall be as a month-to-month tenant, during which time Tenant shall pay as rental each month, one and one-half times the aggregate of (i) one-twelfth (1/12) of the Base Rent payable with respect to the last Lease Year of the Term; (ii) all Additional Charges accruing during the month and (iii) all other sums, if any, payable by Tenant pursuant to the provisions of this Lease, in all cases with respect to the applicable Leased Property. During such period of month-to-month tenancy, Tenant shall be obligated to perform and observe all of the terms, covenants and conditions of this Lease, but shall have no rights hereunder other than the right, to the extent given by law to month-to-month tenancies, to continue its occupancy and use of the applicable Leased Property. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Lease, or removal of the applicable Leased Property from this Lease. The foregoing provisions shall not be deemed to limit or constitute a waiver by Landlord of any rights of immediate re-entry or other rights or remedies of Landlord provided herein or at law or in equity and shall not serve as permission for Tenant to hold over, nor serve to extend the Term (although after commencement of said holdover Tenant shall remain bound to comply with all provisions of this Lease until Tenant vacates all of the Leased Properties in accordance with the terms of this Lease), it being understood that any such holdover shall constitute an immediate Event of Default under this Lease.

ARTICLE XV

SUBORDINATION

Section 15.1 Subordination. This Lease and all rights of Tenant hereunder are subject and subordinate to the Lien affecting the Leased Properties created pursuant to Landlord’s Loan Documents, whether now or hereafter existing, or the interest of any landlord under a lease senior in title to this Lease, whether now or hereafter existing and to all Property Documents (all such Liens and interests, collectively, the “Superior Interests”), and to all renewals, modifications, consolidations, replacements and extensions of Superior Interests, provided that the holder of such Superior Interest shall have executed and delivered to Tenant a “subordination, non-disturbance and attornment agreement” in favor of Tenant substantially on the same terms and conditions as are contained in the form attached hereto as Exhibit E or such other terms and conditions upon which the parties may agree (a “Master Lease SNDA”). Subject to the immediately preceding sentence, this Section 15.1 shall be self-operative and no further instrument of subordination shall be required. Tenant agrees to execute and deliver promptly an agreement in the form attached as Exhibit E hereto or any commercially reasonable form of instrument (in recordable form, if requested) that Landlord or the holder of any Superior Interest (each, a “Superior Party”) shall request.

 

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Section 15.2 Attornment. If the interests of Landlord under this Lease are transferred by reason of, or assigned in lieu of, foreclosure or other proceedings for enforcement of any such Superior Interest, then Tenant shall, at the option of such purchaser, assignee or any Superior Party, as the case may be, (x) attorn to such party and perform for its benefit all the terms, covenants and conditions of this Lease on Tenant’s part to be performed with the same force and effect as if such party were the Landlord originally named in this Lease and this Lease shall continue as a direct lease between Tenant and such assignee or Superior Party, as the case may be, on all of the terms, covenants and conditions herein contained, or (y) enter into a new lease with such party, as Landlord, for the remaining Term and otherwise on the same terms and conditions of this Lease except that in the case of either clause (x) or (y) such successor Landlord shall not be (i) liable for any previous act, omission or negligence of Landlord under this Lease; (ii) bound by any previous modification or amendment of this Lease or by any previous prepayment of more than one month’s rent in advance of its due date, unless such modification, amendment or prepayment shall have been approved in writing by the Superior Party through or by reason of which such successor Landlord shall have succeeded to the rights of Landlord under this Lease; or (iii) liable for any security (if any) deposited pursuant to this Lease unless such security has actually been delivered to such successor Landlord. Nothing contained in this Section 15.2 shall be construed to impair any right otherwise exercisable by any such owner, holder or Tenant.

Section 15.3 [Reserved].

Section 15.4 Modifications to Secure Financing. If any Superior Party or prospective Superior Party shall request modifications of this Lease as a condition to the provision, continuance or renewal of any such financing, Tenant will not unreasonably withhold its consent thereto and shall consider and review all such requests in good faith, provided that such modifications (A) do not increase the obligations of Tenant hereunder or materially adversely affect Tenant’s rights under this Lease, and (B) do not require Tenant or its Affiliates to modify the accounting treatment or classification of this Lease (as determined by Tenant’s or its Affiliates’ auditors). Disputes as between Landlord and Tenant regarding whether a proposed modification would increase the obligations of Tenant hereunder or adversely affect Tenant’s rights under this Lease, and the compensation that would be payable to Tenant as a result thereof shall be determined by arbitration in accordance with the terms of Schedule 15.4 hereto.

Section 15.5 Delivery of Notices to Landlord’s Lender. Subsequent to the receipt by Tenant of Notice from Landlord as to the identity and address of any Superior Party, no Notice from Tenant to Landlord shall be effective unless and until a duplicate original of such Notice shall be given to such Superior Party at the address set forth in the above described Notice. The curing of any of Landlord’s defaults by such Superior Party shall be treated as performance by Landlord.

 

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Section 15.6 Right of Landlord’s Lender to Enforce Lease. To the extent permitted under Landlord’s Loan Documents, Landlord’s Lender may exercise the rights of Landlord hereunder, including the right on the part of Landlord to obtain insurance in the circumstances set forth in Section 10.1(b) hereof.

Section 15.7 Exercise of Landlord’s Discretion. In any instance hereunder in which Landlord is required to be reasonable in making a request or granting or withholding an approval or consent, Tenant acknowledges and agrees that Landlord may take into account the reasonable objections of Landlord’s Lender.

Section 15.8 Cure of Landlord Defaults. No Landlord default under this Lease shall be deemed to exist as long as any Landlord’s Lender, in good faith, (i) shall have commenced promptly to cure the default in question and prosecutes the same to completion with reasonable diligence and continuity, or (ii) if possession of the Leased Property is required in order to cure the default in question, such Landlord’s Lender (x) shall have entered into possession of the Leased Property with the permission of Tenant for such purpose or (y) shall have notified Tenant of its intention to institute foreclosure proceedings to obtain possession of Landlord’s interest directly or through a receiver and thereafter prosecutes such proceedings with reasonable diligence and continuity.

Section 15.9 Indemnification. Notwithstanding the existence of any insurance required to be provided hereunder, and without regard to the policy limits of any such insurance, but subject to the other terms and conditions hereof, Tenant will protect, indemnify, save harmless and defend Landlord and Landlord’s Lender and their respective partners, shareholders, officers, directors and employees (each, an “Indemnitee”) from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including Litigation Costs), to the maximum extent permitted by law, imposed upon or incurred by or asserted against such Indemnitee by reason of any of the following: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about any Leased Property while Tenant is in possession of the applicable Leased Property, including any claims made by employees at any Leased Property, (b) any use, misuse, non-use, condition, maintenance or repair by Tenant or anyone claiming by, through or under Tenant, including agents, contractors, invitees or visitors, of the applicable Leased Property or Tenant’s Personalty, (c) any Taxes or Other Charges, (d) any failure on the part of Tenant or anyone claiming by, through or under Tenant to perform or comply with any of the terms of this Lease, (e) any failure by Tenant to perform its obligations under any Sublease and any claims made thereunder, and (f) any contest of any Legal Requirement or Insurance Requirement, regardless of whether the same is conducted in accordance with the terms hereof. Any amounts which become payable by Tenant under this Section 15.9 shall be paid within ten (10) days after liability therefor on the part of Tenant is determined by litigation or otherwise, and if not timely paid, shall bear interest (to the extent permitted by law) at the Overdue Rate from the date of such determination to the date of payment. Tenant, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Indemnitee or may compromise or otherwise dispose of the same as Tenant sees fit; provided that any such actions of Tenant do not create any cost, expense, liability or obligation for any Indemnitee. Nothing herein shall be construed as indemnifying an Indemnitee against its own grossly negligent acts or omissions, bad faith or willful misconduct. If at any time an Indemnitee shall have notice of a claim, such Indemnitee shall give reasonably prompt written notice of such claim to Tenant; provided that (i) such Indemnitee shall have no liability for a failure to give notice of any claim of which Tenant has

 

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otherwise been notified or has knowledge and (ii) the failure of such Indemnitee to give such a notice to Tenant shall not limit the rights of such Indemnitee or the obligations of Tenant with respect to such claim except to the extent that Tenant incurs actual expenses or suffers actual monetary loss as a result of such failure. Tenant shall have the right to control the defense or settlement of any Claim, provided that (A) if the compromise or settlement of any such claim shall not result in the complete release of such Indemnitee from the claim so compromised or settled, the compromise or settlement shall require the prior written approval of such Indemnitee and (B) no such compromise or settlement shall include any admission of wrongdoing on the part of such Indemnitee. An Indemnitee shall have the right to approve counsel engaged to defend such claim (such approval not to be unreasonably withheld) and, at its election and sole cost and expense, shall have the right, but not the obligation, to participate in the defense of any claim. Tenant’s liability under this Article XV with respect to matters arising or accruing during the Term hereof shall survive any termination of this Lease, and with respect to any Leased Property shall survive the removal of such Leased Property from this Lease pursuant to the terms hereof.

The parties hereto agree that this Article XV shall not apply to those matters specifically covered by the provisions of Article XXV hereof.

ARTICLE XVI

NO WAIVER

Section 16.1 No Waiver. No failure by Landlord or Tenant to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term. To the extent permitted by law, no waiver of any breach shall affect or alter this Lease, which shall continue in full force and effect with respect to any other then existing or subsequent breach.

ARTICLE XVII

REMEDIES CUMULATIVE

Section 17.1 Remedies Cumulative. Except as otherwise expressly provided herein, to the extent permitted by law, each legal, equitable or contractual right, power and remedy of Landlord or Tenant now or hereafter provided either in this Lease or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power and remedy; and the exercise or beginning of the exercise by Landlord or Tenant of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Landlord or Tenant of any or all of such other rights, powers and remedies.

 

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ARTICLE XVIII

ACCEPTANCE OF SURRENDER

Section 18.1 Acceptance of Surrender. No surrender to Landlord of this Lease or of any Leased Property, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Landlord and Landlord’s Lender (if any) and no act by Landlord or any representative or agent of Landlord, other than such a written acceptance by Landlord and Landlord’s Lender (if any), shall constitute an acceptance of any such surrender.

ARTICLE XIX

NO MERGER OF TITLE

Section 19.1 No Merger of Title. There shall be no merger of this Lease or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold estate created thereby or any interest herein or in such leasehold estate and (b) the fee estate in the applicable Leased Property.

ARTICLE XX

CONVEYANCE BY LANDLORD

Section 20.1 Conveyance by Landlord. If Landlord or any successor owner of the applicable Leased Property shall convey such Leased Property other than as security for a debt, and the grantee or transferee of the Leased Property shall expressly assume all obligations of Landlord hereunder arising or accruing from and after the date of such conveyance or transfer, Landlord or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of Landlord under this Lease arising or accruing from and after the date of such conveyance or other transfer as to the Leased Property and all such future liabilities and obligations shall thereupon be binding upon the new owner.

ARTICLE XXI

QUIET ENJOYMENT

Section 21.1 Quiet Enjoyment. So long as Tenant shall pay all Rent as the same becomes due and no Event of Default shall have occurred and be continuing, Tenant shall peaceably and quietly have, hold and enjoy the Leased Properties for the Term hereof, free of any claim or other action by Landlord or anyone claiming by, through or under Landlord, but subject to the terms of the Property Documents or liens and encumbrances otherwise permitted to be created by Landlord hereunder and liens hereafter consented to by Tenant, including any Liens created under Landlord’s Loan Documents.

 

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ARTICLE XXII

NOTICES

Section 22.1 Notices. All notices, demands, requests, consents, approvals and other communications required or permitted to be given hereunder (collectively, “Notices” or “notices”) shall be in writing and delivered by hand or mailed (by registered or certified mail, return receipt requested or reputable nationally recognized overnight courier service and postage prepaid), addressed to the respective parties, as follows:

 

If to Tenant:		PRIVATE RESTAURANT MASTER LESSEE, LLC
		2202 North West Shore Boulevard, Suite 500
		Tampa, FL 33607
		Attention: Chief Financial Officer
		Telecopy No.: (813) 282-1225
		Confirmation No.: (813) 281-2114
With a copy to:		PRIVATE RESTAURANT MASTER LESSEE, LLC
		2202 North West Shore Boulevard, Suite 500
		Tampa, FL 33607
		Attention: VP – Real Estate
		Telecopy No.: (813) 282-1225
		Confirmation No.: (813) 281-2114
With copies of any default notices (or		OSI Restaurant Partners, LLC
correspondence related to any default) or		2202 North West Shore Boulevard, 5th Floor
notices given during the continuance of		Tampa, FL 33607
any Event of Default to:		Attention: General Counsel
		Telecopy No.: (813) 282-1225
		Confirmation No.: (813) 281-2114
		Bain Capital Partners, LLC
		John Hancock Tower
		200 Clarendon Street
		Boston, MA 02116
		Attention: Mr. David Humphrey
		Telecopy No.: (617) 652-3112
		Confirmation No.: (617) 516-2112
		Sullivan & Cromwell LLP
		125 Broad Street
		New York, NY 10004-2498
		Attention: Arthur Adler, Esq.
		Telecopy No.: (212) 291-9001
		Confirmation No.: (212) 558-3960

 

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		Ropes & Gray LLP
		Prudential Tower
		800 Boylston Street
		Boston, MA 02199-3600
		Attention: Richard E. Gordet, Esq.
		Telecopy No.: (617) 951-7050
		Confirmation No.: (617) 951-7491
If to Landlord:		NEW PRIVATE RESTAURANT PROPERTIES, LLC
		2202 North West Shore Boulevard, Suite 470C
		Tampa, FL 33607
		Attention: Chief Financial Officer
		Telecopy No.: (813) 387-8000
		Confirmation No.: (813) 830-2497
With a copy to:		NEW PRIVATE RESTAURANT PROPERTIES, LLC
		2202 North West Shore Boulevard, Suite 470C
		Tampa, FL 33607
		Attention: VP – Real Estate
		Telecopy No.: (813) 387-8000
		Confirmation No.: (813) 830-2497
With copies of any default notices (or		Bain Capital Partners, LLC
correspondence related to any default) or		John Hancock Tower
notices given during the continuance of any		200 Clarendon Street
Event of Default to:		Boston, MA 02116
		Attention: Mr. David Humphrey
		Telecopy No.: (617) 652-3112
		Confirmation No.: (617) 516-2112
		Sullivan & Cromwell LLP
		125 Broad Street
		New York, NY 10004-2498
		Attention: Arthur Adler, Esq.
		Telecopy No.: (212) 291-9001
		Confirmation No.: (212) 558-3960
		Ropes & Gray LLP
		Prudential Tower
		800 Boylston Street
		Boston, MA 02199-3600
		Attention: Richard E. Gordet, Esq.
		Telecopy No.: (617) 951-7050 Confirmation No.: (617) 951-7491

 

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if required pursuant to Section 15.5 hereof, to Landlord’s Lender, in accordance with the terms of said Section 15.5 as follows:

 

		Bank of America, N.A.
		Real Estate Structured Finance – Servicing
		900 West Trade Street, Suite 650
		Mail Code: NC1-026-06-01
		Charlotte, North Carolina 28255 Telecopy No.: (704) 317-4501 Confirmation No.: (866) 531-0957
		Attention: Servicing Manager
		And to:
		Bank of America, N.A.
		Real Estate Structured Finance
		214 North Tryon Street
		Mail Code: NC1-027-15-01
		Charlotte, North Carolina 28255
		Telecopy No.: (704) 602-3726
		Confirmation No.: (980) 386-8154
		Attention: Steven Wasser
With copies to:		German American Capital Corporation 60 Wall Street, 10th floor New York, NY 10005 Attention: John Beacham and General Counsel Telecopy No.: (732) 578-4639 Confirmation No.: (212) 250-0164
		Sidley Austin LLP One South Dearborn Chicago, Illinois 60603 Attention: Charles Schrank, Esq. Telecopy No.: (312) 853-7036 Confirmation No.: (312) 853-7000

or to such other address as either party may hereunder designate, and shall be effective upon receipt.

 

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ARTICLE XXIII

APPRAISERS

Section 23.1 Appraisers. In the event that it becomes necessary to determine the Fair Market Rental , Post-Casualty Value or Post-Condemnation Value of any property for any purpose of this Lease, and the parties cannot agree amongst themselves regarding same within twenty (20) days after the first request made by one of the parties to do so, then the parties shall engage the Valuation Services Division of the Capital Markets Group of Cushman & Wakefield in New York, New York to determine the Fair Market Rental, Post-Casualty Value or Post-Condemnation Value, as applicable, as of the relevant date in accordance with the procedures herein contained. The appraiser employed by Cushman & Wakefield must be a member of The Appraisal Institute/American Institute of Real Estate Appraisers (or any successor organization thereto), and shall, within forty-five (45) days after engagement of Cushman & Wakefield proceed to appraise the applicable Leased Property to determine the Fair Market Rental thereof , Post-Casualty Value or Post-Condemnation Value thereof, as applicable, as of the relevant date.

If Cushman & Wakefield shall decline such engagement (or it shall no longer exist), then the following procedures shall apply. Either party may notify the other of a Person selected to act as appraiser on its behalf (which Person, if selected by Landlord, shall be subject to the approval of Landlord’s Lender). Within fifteen (15) days after receipt of any such notice, the other party shall by notice to the first party appoint a second Person as appraiser on its behalf. Any appraiser thus appointed must be a member of The Appraisal Institute/American Institute of Real Estate Appraisers (or any successor organization thereto), and shall, within forty-five (45) days after the notice appointing the first appraiser, as applicable, proceed to appraise the applicable Leased Property to determine the Fair Market Rental, Post-Casualty Value or Post-Condemnation Value thereof, as applicable, as of the relevant date. If one appraiser shall have been so appointed, or if two appraisers shall have been so appointed but only one such appraiser shall have made such determination within fifty (50) days after the making of the initial appointment, then the determination of such appraiser shall be final and binding upon the parties. If two appraisers shall have been appointed and shall have made their determinations within the respective requisite periods set forth above and if the difference between the amounts so determined shall not exceed ten percent (10%) of the lesser of such amounts, then the Fair Market Rental, Post-Casualty Value or Post-Condemnation Value, as applicable, shall be an amount equal to fifty percent (50%) of the sum of the amounts so determined. If the difference between the amounts so determined shall exceed ten percent (10%) of the lesser of such amounts, then such two appraisers shall have twenty (20) days to appoint a third appraiser, but if such appraisers fail to do so within such twenty (20) day period, then either party may request the AAA to appoint an appraiser within twenty (20) days of such request, and both parties shall be bound by any appointment so made within such twenty (20) day period. If no such appraiser shall have been appointed within such twenty (20) days or within ninety (90) days of the original request for a determination of Fair Market Rental, Post-Casualty Value or Post-Condemnation Value, as applicable, whichever is earlier, either Landlord or Tenant may apply to any court having jurisdiction to have such appointment made by such court. Any appraiser appointed by the original appraisers, by the AAA or by such court shall be instructed to determine the Fair Market Rental , Post-Casualty Value or Post-Condemnation Value, as applicable, within thirty (30) days after appointment of such Appraiser. The determination of the appraiser which differs

 

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most in terms of dollar amount from the determination of the other two appraisers shall be excluded, and fifty percent (50%) of the sum of the remaining two determinations shall be final and binding upon Landlord and Tenant as the Fair Market Rental, Post-Casualty Value or Post-Condemnation Value, as applicable.

This provision for determination by appraisal shall be specifically enforceable to the extent such remedy is available under applicable law, and any determination hereunder shall be final and binding upon the parties except as otherwise provided by applicable law. Landlord and Tenant shall share equally the fees and expenses of Cushman & Wakefield. If Cushman & Wakefield declines such engagement (or it no longer exists), then Landlord and Tenant shall each pay the fees and expenses of the appraiser appointed by it and their own legal fees, and each shall pay one-half of the fees and expenses of the third appraiser and one-half of all other costs and expenses incurred in connection with each appraisal; provided, however, that from and after any Event of Default, or breach by Tenant under this Section 23.1, Tenant shall pay all fees and expenses otherwise payable by Landlord under this Section 23.1 (and if Tenant fails to pay same, and Landlord pays same, Tenant shall promptly reimburse Landlord for any and all such amounts paid by Landlord, together with interest at the Overdue Rate from the date incurred by Landlord until reimbursed to Landlord by Tenant). If Cushman & Wakefield is not engaged, then any consent or agreement by Landlord as to Fair Market Rental , Post-Casualty Value or Post-Condemnation Value, as applicable, shall be subject to the approval of Landlord’s Lender.

ARTICLE XXIV

CONFIDENTIALITY

Section 24.1 Confidentiality. Landlord (and Landlord’s Lender) shall keep confidential all sales reports and other financial performance and financial results information pertaining to any Leased Property delivered to Landlord and any other proprietary information delivered after the date hereof pursuant to this Lease (provided that any such other proprietary information is clearly marked by Tenant as confidential) (collectively, “Proprietary Information”), and Landlord, Landlord’s direct or indirect equity holders, Landlord’s Lender and any holders of the Mezzanine Debt shall use any Proprietary Information solely for purposes of this Lease (and in the case of Landlord’s Lender and holders of the Mezzanine Debt, solely for their ownership of Landlord’s Debt or the Mezzanine Debt, as applicable) and shall not use such Proprietary Information in a manner to compete with Tenant, Guarantor or any Concept Subsidiary in the business of the ownership and operation of restaurant properties similar to the Leased Properties.

Section 24.2 Safe Harbor. Notwithstanding the foregoing Section 24.1,

(a) (i) Landlord shall be permitted to disclose any such Proprietary Information to any of its direct or indirect equity holders; (ii) such equity holders shall be permitted to disclose such Proprietary Information to holders of the Mezzanine Debt (or, upon foreclosure of the applicable Mezzanine Debt, any actual or prospective investors or transferees of a direct or indirect interest in the Leased Property) in accordance with and subject to the provisions of the loan documents governing the applicable Mezzanine Debt (irrespective of whether the applicable Mezzanine Debt is still outstanding, and references therein to “Lender” or “holder of an interest in the Loan” shall, for purposes hereof, be deemed to include any actual or

 

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prospective investors or transferees of a direct or indirect interest in the Leased Property); and (iii) the holders of the such Mezzanine Debt (or such investors or transferees) shall be permitted to disclose such Proprietary Information to such other Persons permitted pursuant to, and in accordance with, the provisions of the loan documents governing the applicable Mezzanine Debt (irrespective of whether the applicable Mezzanine Debt is still outstanding, and references therein to “Lender” or “holder of an interest in the Loan” shall, for purposes hereof, be deemed to include any actual or prospective investors or transferees of a direct or indirect interest in the Leased Property); and

(b) (i) Landlord shall be permitted to disclose any such Proprietary Information Landlord’s Lender (or, upon foreclosure of Landlord’s Debt, any actual or prospective investors or transferees of a direct or indirect interest in the Leased Property, subject to an agreement to comply with the confidentiality provisions contained in Landlord’s Loan Documents); and (ii) Landlord’s Lender (or such investors or transferees) shall be permitted to disclose such Proprietary Information (A) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its Affiliates, (B) to any Rating Agency, underwriter or any other credit rating agency that has elected to be treated as a nationally recognized statistical rating organization for purposes of Section 15E of the Exchange Act (each an “NRSRO”), provided that (x) each Rating Agency or underwriter to which such information is disclosed has executed its usual and customary confidentiality agreement and (y) any NRSRO desiring access to any secured website containing such information shall, as a condition to its access to such secured website, have either furnished to the Securities and Exchange Commission the certification required under Rule 17g-5(e) of the Exchange Act or be required to agree to (or “click through”) such website’s confidentiality provisions, (C) to any actual or prospective investor in Landlord’s Debt, any actual or prospective assignee of Landlord’s Debt or beneficial interests in Landlord’s Debt, including investors in Securities, and any actual or prospective participant in Landlord’s Debt, subject to an agreement to comply with the confidentiality provisions contained in Landlord’s Loan Documents, (D) upon the request or demand of any Governmental Authority (including, without limitation, any governmental agency, regulatory authority or self-regulatory authority (including, without limitation, bank and securities examiners) having or claiming to have authority to regulate or oversee any aspect of Landlord’s Lender’s business or that of its Affiliates in connection with the exercise of such authority or claimed authority) or as may otherwise be required pursuant to any Legal Requirement, (E) if requested or required to do so in connection with any litigation or similar proceeding, (F) that has been publicly disclosed, (G) that was already known to Landlord’s Lender or any of its Affiliates prior to Landlord’s disclosure to Landlord’s Lender, (H) that is independently developed, discovered or arrived at by Landlord’s Lender or any of its Affiliates without reference to the Proprietary Information, or (J) in connection with the exercise of any remedy under Landlord’s Loan Documents.

ARTICLE XXV

ENVIRONMENTAL MATTERS

Section 25.1 Environmental Indemnity Provisions. Tenant shall protect, indemnify, save harmless and defend each Indemnitee from and against all claims, demands, causes of action (including causes of action in tort), losses, damages (including consequential damages),

 

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penalties, fines, liabilities (including strict liability), costs (including cleanup and recovery costs) and expenses (including reasonable attorneys’ fees and court costs, including Litigation Costs) of any and every kind or character, to the maximum extent permitted by law, incurred by such Indemnitee by virtue of any claim or lien by any governmental or quasi-governmental unit, body, or agency, or any third party, for cleanup costs or other costs pursuant to any Environmental Laws, but only to the extent that the same relate to or arise from activities or events occurring from and after the date of the Original Lease through the expiration of the Term. Tenant’s indemnity shall survive the termination of this Lease and any removal of any Leased Property from this Lease as provided herein; provided, however, Tenant shall have no indemnity obligation with respect to (a) Hazardous Substances first introduced to the Leased Property subsequent to the date that Tenant’s occupancy of the Leased Property shall have fully ceased, or (b) Hazardous Substances introduced to the Leased Property by Landlord, its successors and assigns.

Section 25.2 No Landlord Representations. Tenant acknowledges that Landlord makes no warranties or representations of any kind, or in any manner or in any form whatsoever, as to any Hazardous Substances at any of the Leased Properties. Tenant shall conduct, at its own expense, any and all investigations regarding Environmental Conditions of the Leased Properties and will satisfy itself as to the absence or existence of Hazardous Substances contamination of the Leased Properties. Tenant’s entry into this Lease shall be made at its sole risk.

ARTICLE XXVI

MISCELLANEOUS

Section 26.1 Survival of Claims. Anything contained in this Lease to the contrary notwithstanding, all claims against, and liabilities of, Tenant or Landlord arising prior to (a) any date of termination of this Lease, or (b) with respect to any Leased Property, the removal of such Leased Property from this Lease as provided herein, shall survive such termination or removal (as the case may be).

Section 26.2 Severability. If any term or provision of this Lease or any application thereof shall be invalid or unenforceable, the remainder of this Lease and any other application of such term or provision shall not be affected thereby.

Section 26.3 Maximum Permissible Rate. If any late charges provided for in any provision of this Lease are based upon a rate in excess of the maximum rate permitted by applicable law, the parties agree that such charges shall be determined at the maximum permissible rate.

Section 26.4 Headings. The headings in this Lease are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

Section 26.5 Exculpation. Landlord’s liability hereunder shall be limited solely to its interest in the Leased Properties, and no recourse under or in respect of this Lease shall be had against any other assets of Landlord whatsoever. In addition, to the extent not prohibited by applicable law, none of the Indemnitees shall be liable for, under any circumstances, and Tenant

 

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hereby releases all Indemnitees from, any loss, injury, death or damage to person or property (including any business or any loss of income or profit therefrom) of Tenant, Tenant’s members, officers, directors, shareholders, agents, employees, contractors, customers, invitees, or any other Person in or about any of the Leased Properties, whether the same are caused by (a) fire, explosion, falling plaster, steam, dampness, electricity, gas, water, rain; (b) breakage, leakage or other defects of any equipment, sprinklers, wires, appliances, plumbing fixtures, water or gas pipes, roof, air conditioning, lighting fixtures, street improvements, or subsurface improvements; (c) theft, acts of God, acts of the public enemy, riot, strike, insurrection, civil unrest, war, court order, requisition or order of governmental body or authority; (d) any act or omission of any other occupant of any of the Leased Properties; (e) operations in construction of any private, public or quasi-public work; (f) Landlord’s reentering and taking possession of any of the Leased Properties in accordance with the provisions of this Lease or removing and storing the property of Tenant as herein provided; or (g) any other cause, including damage or injury that arises from the condition of any of the Leased Properties, from occupants of adjacent property, from the public, or from any other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same are inaccessible to Tenant, or that may arise through repair, alteration or maintenance of any part of any of the Leased Properties or failure to make any such repair (except where any such repair is the express obligation of Landlord), from any condition or defect in, on or about any of the Leased Properties, including the presence of any Hazardous Substances or mold at any of the Leased Properties, or from any other condition or cause whatsoever; provided, however, that the foregoing release set forth in this Section 26.5 shall not be applicable to any claim against an Indemnitee to the extent, and only to the extent, that such claim is directly attributable to the gross negligence or willful misconduct of such Indemnitee, as determined by a final nonappealable judgment (or by a judgment that such Indemnitee elects not to appeal) by a court of competent jurisdiction. Without limiting the foregoing, Tenant hereby waives any right to any consequential, indirect or punitive damages against any Indemnitees arising out of any claim in connection with or related to this Lease or the Leased Properties. In no event under this Section 26.5, or any other provision of this Lease that references the “gross negligence” of Landlord, or otherwise, shall gross negligence be imputed as a matter of law to Landlord solely by reason of its interest in the Leased Properties or the failure to act by Landlord or anyone acting under its direction or control or on its behalf, in respect of matters that are or were the obligation of Tenant under this Lease.

Section 26.6 Exhibition of Leased Property. Landlord and Landlord’s agent shall have the right to enter any Leased Property at all reasonable times during usual business hours after reasonable notice for the purpose of exhibiting such Leased Property to others. Without limiting the generality of the foregoing, for purposes of satisfying the requirements of Landlord’s Loan Documents or any refinancing, sale or appraisal process, Landlord shall have the right (but not the obligation) to conduct such inspections and audits of any Leased Property as Landlord may desire, and for such purposes Tenant shall provide to Landlord and its representatives access to the Leased Properties and Tenant’s books and records with respect to the Leased Properties, subject to Article XXIV, at Tenant’s corporate offices (or such other locations as such books and records are kept) as reasonably necessary to audit Tenant’s compliance with its obligations hereunder. Such access shall be provided to Landlord during normal business hours upon reasonable notice. No such inspection or audit conducted by Landlord or its representatives or any report resulting therefrom shall modify or reduce in any way Tenant’s obligations under this Lease.

 

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Section 26.7 Entire Agreement. This Lease contains the entire agreement between Landlord and Tenant with respect to the subject matter hereof.

Section 26.8 Governing Law.

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

(b) Tenant and Landlord each hereby consents to the exclusive jurisdiction of any state or federal court located within the County of New York, State of New York, and each irrevocably agrees that all actions or proceedings arising out of or relating to this Lease shall be litigated in such courts (except for forcible entry and detainer actions, or similar proceedings, which shall be litigated in courts located within the county and state in which the applicable Leased Property is located). Tenant and Landlord each accepts, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts (except as provided above in this Section 26.8(b)) and waives any defense of forum non-conveniens, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Lease.

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

(d) Tenant and Landlord each acknowledges that the provisions of this Section 26.8 are a material inducement to the other party’s entering into this Lease.

Section 26.9 No Waiver. No waiver of any condition or covenant herein contained, or of any breach of any such condition or covenant, shall be held or taken to be a waiver of any subsequent breach of such covenant or condition, or to permit or excuse its continuance or any future breach thereof or of any condition or covenant herein construed as a waiver of such default, or of Landlord’s right to terminate this Lease or exercise any other remedy granted herein on account of such existing default.

Section 26.10 Successors and Assigns. This Lease shall be binding upon and shall inure to the benefit of the heirs, successors, personal representatives, and permitted assigns of Landlord and Tenant.

Section 26.11 Modifications in Writing. This Lease may only be modified by a writing signed by both Landlord and Tenant and, unless expressly permitted by Landlord’s Loan Documents, any such modification shall not be effective until it is consented to by Landlord’s Lender.

 

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Section 26.12 Delay Not a Waiver. No delay or omission by either party hereto to exercise any right or power accruing upon any noncompliance or default by the other party with respect to any of the terms hereof shall impair any such right or power or be construed to be a waiver thereof.

Section 26.13 [Reserved].

Section 26.14 Third Party Beneficiaries. Nothing in this Lease shall be deemed to create any right in any Person (other than Landlord’s Lender to the extent provided herein) not a party hereto, and this Lease shall not be construed in any respect to be a contract in whole or in part, for the benefit of any third Person (other than Landlord’s Lender to the extent provided herein). It is expressly understood and agreed that Landlord’s Lender is and shall be a third party beneficiary of this Lease.

Section 26.15 Waiver of Landlord’s Lien. Landlord hereby waives any statutory or common-law “landlord’s lien” or other lien or security interest on or in Tenant’s Personalty to secure Tenant’s obligations under this Lease. Landlord agrees to execute and deliver to Tenant or Tenant’s lender reasonable documentation confirming that (i) Landlord has not and will not claim a lien on any such property and (ii) Landlord will permit such lender access to the Leased Properties in order to secure any such property Tenant may have offered as collateral, provided that any such documentation shall be on commercially reasonable terms and shall include provisions with respect to the length of time that Landlord must make the Leased Properties available for such entry and with respect to Tenant’s lender’s obligation to repair any damage to the Leased Properties resulting from the removal of any such Tenant’s Personalty from the Leased Properties by Tenant’s lender.

Section 26.16 Litigation Costs. If either Landlord or Tenant commences any action or other proceeding to enforce such party’s rights hereunder, the party substantially prevailing in such action or proceeding shall be entitled, in addition to any award for damages or costs hereunder, to an award of its Litigation Costs.

Section 26.17 Letters of Credit. With respect to any Letter of Credit delivered by Tenant to Landlord as Eligible Collateral hereunder, if at any time (a) the institution issuing any Letter of Credit shall cease to be an Approved Bank, or (b) the Letter of Credit is due to expire prior to Tenant being entitled to the return thereof, Landlord or Landlord’s Lender shall have the right immediately to draw down the same in full and hold the proceeds thereof in accordance with the provisions of this Lease as Eligible Collateral, unless Tenant shall deliver a replacement Letter of Credit from an Approved Bank within (i) as to (a) above, twenty (20) days after Landlord or Landlord’s Lender delivers written notice to Tenant that the institution issuing the Letter of Credit has ceased to be an Approved Bank or (ii) as to (b) above, at least twenty (20) days prior to the expiration date of said Letter of Credit.

 

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ARTICLE XXVII

MEMORANDUM OF LEASE; ESTOPPELS

Section 27.1 Memorandum of Lease. Landlord and Tenant shall, promptly upon the request of either, enter into a short form memorandum of this Lease, in form suitable for recording under the laws of the state in which the applicable Leased Property is located, in which reference to this Lease, and all options contained therein, shall be made. Tenant shall pay all costs and expenses of recording such Memorandum of Lease.

Section 27.2 Estoppels.

(a) Tenant Estoppels. Tenant agrees that it shall, at any time and from time to time (but not more than four (4) times in any calendar year) upon not less than ten (10) Business Days’ prior notice by Landlord, execute, acknowledge and deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been any modifications, that this Lease is in full force and effect as modified and stating the modifications), the Base Rent and Additional Charges payable directly to Landlord hereunder and the dates to which the Base Rent and Scheduled Additional Charges payable to Landlord have been paid, that the address for notices to be sent to Tenant is as set forth in this Lease, stating whether or not Landlord is, to Tenant’s knowledge, in default in keeping, observing or performing any term, covenant, agreement, provision, condition or limitation contained in this Lease and, if in default, specifying each such default, the commencement date and expiration date for the current term, that Tenant is in possession of the Leased Properties, and any other matters reasonably requested by Landlord; it being intended that any such statement delivered pursuant to this Section 27.2(a) may be relied upon by Landlord, Landlord’s Lender, or any prospective purchaser of the Leased Properties, any mortgagee thereof and/or any assignee of any mortgagee upon the Leased Properties.

(b) Landlord Estoppels. Landlord agrees that it shall, at any time and from time to time (but not more than four (4) times in any calendar year) upon not less than ten (10) Business Days’ prior notice by Tenant, execute, acknowledge and deliver to Tenant a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been any modifications, that this Lease is in full force and effect as modified and stating the modifications), the Base Rent and Additional Charges payable directly to Landlord hereunder and the dates to which the Base Rent and such Additional Charges have been paid, that the address for notices to be sent to Landlord is as set forth in this Lease, stating whether or not, to Landlord’s knowledge, Tenant is in default in keeping, observing or performing any term, covenant, agreement, provision, condition or limitation contained in this Lease and, if in default, specifying each such default, the commencement date and expiration date for the current term, that Tenant is in possession of the Leased Properties, and any other matters reasonably requested by Tenant; it being intended that any such statement delivered pursuant to this Section 27.2(b) may be relied upon by Tenant, Tenant’s lender, and/or any prospective assignee, subtenant or Transferee of Tenant.

 

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ARTICLE XXVIII

TRUE LEASE

Section 28.1 True Lease. Landlord and Tenant intend that this Lease be a true lease that affords the parties hereto the rights and remedies of landlord and tenant hereunder and does not represent a financing arrangement.

Section 28.2 Acknowledgment of Law. This Lease is not an attempt by Landlord or Tenant to evade the operation of any aspect of the law applicable to any of the Leased Properties.

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly executed as of the day and year first written above.

 

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Witness #1 as to Leased Property in CT:		LANDLORD:
/s/ Margaret Hannay		NEW PRIVATE RESTAURANT PROPERTIES, LLC,
Name: Margaret Hannay				a Delaware limited liability company
		By:		/s/ Karen Bremer
Witness #2 as to Leased Property in CT:				Name: Karen Bremer
				Title: Vice President of Real Estate
/s/ Julia Geykhman
Name: Julia Geykhman
		TENANT:
Acknowledgement:
		PRIVATE RESTAURANT MASTER, LESSEE, LLC,
For the Tenant:				a Delaware limited liability company
State of New York
County of New York
		By:		/s/ Karen Bremer
The foregoing instrument was acknowledged before me this 20th, day of March, 2012 by Karen Bremer of Private Restaurant Master Lessee, LLC, a Delaware limited liability company, on behalf of the limited liability company, as the free act and deed of the limited liability company and his/her free act and deed as VP of Real Estate.				Name: Karen Bremer Title: Vice President of Real Estate
/s/ Stephanie R. Dini
Notary Public

 

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For the Landlord:
State of New York
County of New York

 

The foregoing instrument was acknowledged before me this 20th, day of March, 2012 by Karen Bremer of New Private Restaurant Properties, LLC, a Delaware limited liability company, on behalf of the limited liability company, as the free act and deed of the limited liability company and his/her free act and deed as VP of Real Estate.
/s/ Stephanie R. Dini
Notary Public

 

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EXHIBIT A

LEGAL DESCRIPTION OF THE LAND

EXHIBIT A

INDIVIDUAL PARCELS – LEGAL DESCRIPTIONS

 

1.	FEE PARCEL DESCRIPTION: UNIT 0311

Parcel No. 1:

Lot 4, Talavi Towne Centre II, according to Book 448 of Maps, page 36, records of Maricopa County, Arizona.

Parcel No. 2:

An easement for ingress and egress, parking and utilities as created in Declaration of Reciprocal Easements and Declaration of Covenants, Conditions and Restrictions recorded November 16, 1993, in Recording No. 93-0789859 and Declaration of Amendment recorded in Recording No. 95-0447535.

 

2.	FEE PARCEL DESCRIPTION: UNIT 0312

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF PIMA, STATE OF ARIZONA AND IS DESCRIBED AS FOLLOWS:

Parcel No. 1:

The East 101.08 feet of the South 118.00 feet of Lot 8, THE CROSSROADS FESTIVAL, as recorded in Book 41 of Maps, Page 77, records of Pima County, Arizona.

Parcel No. 2:

A perpetual non-exclusive easement on, over and across the following described property of Grantor and adjacent to Parcel No. 1, above, for the installation and maintenance of a loading dock and of a dumpster or trash receptacle adjacent to Parcel No. 1, above: The East 101.08 feet of the North 62 feet of the South 180.00 feet of Lot 8, THE CROSSROADS FESTIVAL, as recorded in Book 41 of Maps, Page 77, records of Pima County, Arizona.

Parcel No. 3:

Easements for maintenance, parking, access, ingress and egress and landscaping as set forth in the Declarations of Covenants, Conditions and Restrictions for The Crossroads Festival recorded Docket 8155, Page 2074, First Amendment recorded in Docket 8281, Page 1417, Second

 

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Amendment recorded in Docket 8373, Page 1608, Third Amendment recorded in Docket 8754, Page 1763, Fourth Amendment recorded in Docket 9977, Page 467, Fifth Amendment recorded in Docket 13725, Page 406 and Sixth Amendment recorded in Docket 13728, Page 783.

Parcel No. 4:

A non-exclusive easement and right-of-way of ingress and egress as set forth in Declaration of Easement and Covenants and Abandonment recorded in Docket 8153, Page 1205.

Parcel No. 5:

An easement for a detention basin as set forth in Declaration of Easements, Development and Use Restrictions recorded in Docket 9932, Page 1523.

 

3.	FEE PARCEL DESCRIPTION: UNIT 0314

Lot 2, HARKINS SUPERSTITION SPRINGS, according to Book 424 of Maps, Page 26, records of Maricopa County, Arizona.

 

4.	FEE PARCEL DESCRIPTION: UNIT 0316

Lot 2, CHANDLER GATEWAY WEST, according to Book 474 of Maps, Page 2, records of Maricopa County, Arizona.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitation of the following: All matters contained in Declaration of Covenants, Conditions, Restrictions and Easements recorded in Instrument No. 98-0622586A and Property Owner’s Agreement recorded in Instrument No, 00-0096265

 

5.	FEE PARCEL DESCRIPTION: UNIT 0317

Lot 1, PINE CREEK VILLAGE UNIT ONE, according to Case 7, Map 75, records of Coconino County, Arizona.

 

6.	FEE PARCEL DESCRIPTION: UNIT 0323

PARCEL I:

Lot 3, Replat of Lot 3, Grand Village Center South, according to Book 712 of Maps, page 15, records of Maricopa County, Arizona.

Being the same property as that described as that portion of Lot 3 Grand Village Center South, according to Book 565 of Maps, page 21, record of Maricopa County, Arizona, located in a portion of the Northwest quarter of Section 33, Township 4 North, Range 1 West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona, and being more particularly described as follows:

 

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BEGINNING at the most easterly corner of said Lot 3;

Thence South 43° 45’ 50” West, along the southeasterly line of said Lot 3, a distance of 250.22

Thence North 46° 14’ 10” West, parallel with the northeasterly line of said Lot 3, a distance of 203.18 feet;

Thence North 43° 45’ 50” East, parallel with said southeasterly line of Lot 3, a distance of 250.22 feet to a point on said northeasterly line of said Lot 3;

Thence South 46° 14’ 10” East along said northeasterly line, a distance of 203.18 feet to the POINT OF BEGINNING;

PARCEL II:

Easement rights as set forth in instrument recorded April 1, 1999, in Instrument No, 99-0311415.

 

7.	FEE PARCEL DESCRIPTION: UNIT 0325

Parcel I:

Lot 14, INDIAN HILLS PLAZA, according to Book 11 of Maps, page 53, records of Cochise County, Arizona;

EXCEPT all gas, oil, minerals and other hydrocarbon substances lying 500 feet below the surface of the land but without the right to use the surface of the land to remove, drill or prospect for same as granted in Deed recorded in Docket 1400, page 107.

Parcel II:

Easements as granted by that certain “Declaration of Establishment of Protective Covenants, Conditions and Restrictions and Grants of Easements recorded in Docket 1554, page 212, records of Cochise County, Arizona.

 

8.	FEE PARCEL DESCRIPTION: UNIT 0326

That portion of the Southwest quarter of the Southeast quarter of the Southeast quarter of Section 1, Township 1 North, Range 5 East of the Gila and Salt River Base and Meridian, Maricopa County, Arizona, more particularly described as follows;

COMMENCING at the Southeast corner of said Section 1;

THENCE South 88 degrees 33 minutes 10 seconds West along the South line of the Southeast quarter of said Section 1, a distance of 657.72 feet to the Southeast corner of said Southwest quarter;

 

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THENCE North 00 degrees 05 minutes 29 seconds East along the East line of said Southwest quarter, a distance of 65.02 feet to a point on the North line of the South 65 feet of said Southeast quarter, said point being the TRUE POINT OF BEGINNING;

THENCE South 88 degrees 33 minutes 10 seconds West along said North line, a distance of 244.03 feet;

THENCE North 01 degrees 26 minutes 50 seconds West, perpendicular to said North line, a distance of 257.98 feet;

THENCE North 88 degrees 33 minutes 10 seconds East, 250.96 feet to a point on the East line of said Southwest quarter;

THENCE South 00 degrees 05 minutes 29 seconds West along said East line, a distance of 258.07 feet to the TRUE POINT OF BEGINNING;

EXCEPT that portion described as follows:

COMMENCING at the Southeast corner of said Section 1;

THENCE South 88 degrees 33 minutes 10 seconds West along the South line of the Southeast quarter of Section 1, a distance of 667.00 feet;

THENCE North 00 degrees 33 minutes 11 seconds West, a distance of 108.15 feet to the TRUE POINT OF BEGINNING;

THENCE North, a distance of 3.00 feet;

THENCE North 21 degrees 30 minutes 09 seconds East, a distance of 3.24 feet;

THENCE North, a distance of 3.00 feet;

THENCE West, a distance of 3.03 feet;

THENCE North 00 degrees 01 minutes 14 seconds East, a distance of 26.94 feet;

THENCE North 89 degrees 32 minutes 12 seconds West, a distance of 25.25 feet;

THENCE South 00 degrees 51 minutes 26 seconds West, a distance of 21.87 feet;

THENCE West, a distance of 3.08 feet;

THENCE South, a distance of 3.00 feet;

THENCE East, a distance of 3.03 feet;

 

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THENCE South 00 degrees 51 minutes 26 seconds West, a distance of 5.23 feet;

THENCE South 89 degrees 45 minutes 03 seconds East, a distance of 24.53 feet;

THENCE South, a distance of 5.98 feet;

THENCE East, a distance of 3.00 feet to the TRUE POINT OF BEGINNING.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitation of the following: All matters contained in Non-Exclusive Access and Parking Easement Agreement recorded in Instrument No. 2003-0491948 and re-recorded in Instrument No. 2003-0543283. (EASEMENT BEING SEARCHED)

 

9.	FEE PARCEL DESCRIPTION: UNIT 0453

The land referred to herein below is situated in the county of Faulkner, State of Arkansas, and is described as follows:

Lot 5, Meadows Commercial Subdivision to the City of Conway, Arkansas, as shown on plat of record in Plat Book J, page 276, records of Faulkner County, Arkansas.

Also, an access and utility easement described as the Southern 45 feet of Lot 4, Meadows Commercial Subdivision to the City of Conway, Arkansas, as filed in instrument No 2001-14013 on August 3, 2001, and shown on plat of record in Plat Book J, page 276, records of Faulkner County, Arkansas.

 

10.	FEE PARCEL DESCRIPTION: UNIT 0455

The land referred to herein below is situated in the county of Benton, State of Arkansas, and is described as follows:

All that tract or parcel of land lying and being in Benton County, Arkansas, and begin more particularly described as follows: A part of the NE  ¹/4 of the SW  ¹/4 of Section 9, Township 19 North, Range 30 West, City of Rogers, Benton County, Arkansas, shown as Tract 1 of Plat Book 2004, page 690, and being more particularly described as follows:

Commencing at the SE corner of the SE  ¹/4 of the SW  ¹/4 of said Section 9; thence along the East line of said SW  ¹/4 North 02º29’06” East 1979.02 feet; Thence leaving said East line North 86º47’47” West 857.89 feet to the Point of Beginning; Thence South 03º12’36” West 349.67 feet to the North right of way line of Poplar Street; Thence along said right of way the following courses, North 86º46’50” West 18.86 feet; Thence along a curve to the right, said curve having a radius of 25.31 feet, a central angle of 47º32’22”, and an arc length of 21.00 feet; Thence along a curve to the left, said curve having a radius of 50.00 feet, a central angle of 71º17’58”, and an arc length of 62.22 feet; Thence North 86º47’47” West 200.62 feet to the Easterly right of way line of Interstate Highway No. 540, thence along said easterly right of way line to the following courses, North 33º07’17” East 64.14 feet; Thence North 33º13’15” East 65.63 feet; Thence

 

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North 22º13’58” East 228.67 feet to a found rebar, thence leaving said easterly right of way line South 86º47’47” East 155.80 feet to the Point of Beginning, containing 72,014.4 sq. ft. or 1.6532 acres more or less, and subject to all rights of way easements and restrictive covenants of record or fact.

Together with those easements shown in Declaration of Protective Covenants for certain lands in Benton County, Arkansas known as the Five Forty Property, recorded August 24, 2004 in Benton County, Arkansas, Deed Book 2004 at Page 39090.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitation of the following:

Beneficial Easements arising from the Declaration of Protective Covenants dated August 24, 2004 recorded August 24, 2004 in Book 2004 page 39090 of the aforesaid records.

 

11.	FEE PARCEL DESCRIPTION: UNIT 0601

Parcel A:

Lot 3,

MEADOW POINTE COMMERCIAL SUBDIVISION, CITY OF WESTMINSTER, County of Jefferson, State of Colorado.

Parcel B:

Non-exclusive easements for ingress and egress by vehicular and pedestrian traffic as described in Declaration of Covenants, Conditions and Restrictions for Meadow Pointe recorded September 22, 1995 at Reception No. F0119551, County of Jefferson, State of Colorado.

 

12.	FEE PARCEL DESCRIPTION: UNIT 0602

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF EL PASO, STATE OF COLORADO, AND IS DESCRIBED AS FOLLOWS: CHEYENNE MOUNTAIN CENTER SUBDIVISION, FILING NO. 4, according to the plat recorded December 26, 1995 at Reception No. 95138535, County of El Paso, State of Colorado.

Being the same property described as follows:

A parcel of land located in the NE1/4 of Section 32, Township 14 South, Range 66 West of the 6th Principal Meridian, County of El Paso and State of Colorado, described as follows:

Commencing at the E1/4 corner of said Section 32, from which the NE corner of said Section 32 bears N00° 18’ 24” W a distance of 1773.48 feet to a point on the Westerly right of way line of Interstate Highway No. 25;

 

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Thence along said right of way for the following five courses:

1. Thence S24° 01’ 28” E a distance of 37.93 feet;

2. Thence S23° 01’ 57” E a distance of 116.48 feet;

3. Thence S33° 19’ 03” E a distance of 210.61 feet to the point of beginning;

4. Thence continuing S33° 19’ 03” E a distance of 87.95 feet to a point of curve to the right, whose radius is 55,880.00 feet and central angle is 00° 20’ 17”;

5. Thence along the arc of said curve a distance of 329.57 feet;

Thence S60° 49’ 07” W a distance of 322.50 feet;

Thence S47° 23’ 00” W a distance of 106.20 feet to a point on the Easterly right of way of proposed Geyser Drive;

Thence N19° 56’ 13” W along said right of way a distance of 419.55 feet to a point of curve to the left, whose radius is 331.00 feet and central angle is 02° 59’ 42”;

Thence along the arc of said curve a distance of 17.30 feet;

Thence departing from said curve radially N67° 04’ 05” E a distance of 84.99 feet;

Thence N56° 40’ 57” E a distance of 275.19 feet to the point of beginning.

 

13.	FEE PARCEL DESCRIPTION: UNIT 0605

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF LARIMER, STATE OF COLORADO, AND IS DESCRIBED AS FOLLOWS:

Parcel A:

Lot 2, Oakridge Block One P.U.D., Third Filing, according to the plat recorded March 10, 1995 at Reception No. 95013926, County of Larimer, State of Colorado.

Parcel B:

Together With access and parking easements as set forth in Declaration of Easements recorded June 30, 1995 at Reception No. 95038279 and in First Amendment to Declaration of Easements recorded June 6, 1996 at Reception No. 96040349, County of Larimer, State of Colorado.

 

14.	FEE PARCEL DESCRIPTION: UNIT 0606

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF ARAPAHOE, STATE OF COLORADO, AND IS DESCRIBED AS FOLLOWS:

Parcel I:

Lot 1,

Block 1,

SOUTHEAST COMMONS SUBDIVISION FILING NO. 5,

County of Arapahoe, State of Colorado.

Parcel II:

Tract A and Tract B,

Southeast Commons Subdivision Filing No. 1,

County of Arapahoe,

State of Colorado.

 

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Except those portions of the above tracts conveyed by Warranty Deed recorded November 14, 1995 at Reception No. A5120678 and Warranty Deed recorded June 21, 1996 at Reception No. A6078907, County of Arapahoe, State of Colorado.

 

15.	FEE PARCEL DESCRIPTION: UNIT 0611

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF JEFFERSON, STATE OF COLORADO, AND IS DESCRIBED AS FOLLOWS:

Parcel A:

Lot 6,

WESTFIELD SUBDIVISION FILING NO. 1, County of Jefferson, State of Colorado.

Parcel B:

Together With those benefits of a nonexclusive easement for roadways, walkways, ingress and egress as described in Easements with Covenants and Restrictions affecting Land (“E.C.R.”) recorded September 16, 1993 at Reception No. 93144727, First Amendment recorded February 3, 1994 at Reception No. 94024287, Second Amendment recorded March 24, 1994 at Reception No. 94055605, Third Amendment recorded April 15, 1994 at Reception No. 94069655 and

Fourth Amendment recorded June 24, 1994 at Reception No. 94110765., County of Jefferson, State of Colorado.

 

16.	FEE PARCEL DESCRIPTION: UNIT 0612

Parcel A:

Lot 2,

MONUMENT CREEK COMMERCE CENTER FILING NO. 5, according to the plat recorded September 16, 1994 in plat Book G5 at Page 18, County of El Paso, State of Colorado.

Parcel B:

Non-exclusive access easement as described in Easement Agreement recorded October 31, 1985 in Book 5082 at Page 1213, County of El Paso, State of Colorado.

Parcel C:

Together with the benefits and burdens contained in that certain declaration recorded April 28, 1994 in Book 6434 at Page 1198, County of El Paso, State of Colorado

 

17.	FEE PARCEL DESCRIPTION: UNIT 0613

Parcel A:

Lot 1,

OUTBACK STEAKHOUSE AT HARMONY MARKET 8TH FILING, County of Larimer, State of Colorado.

 

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Parcel B:

Non-exclusive easements for access, parking and storm drainage as described in the Amended and Restated Declaration recorded December 7, 1992 at Reception No. 92078372 and Amendment recorded March 1, 1994 at Reception No. 94018270, County of Larimer, State of Colorado.

 

18.	FEE PARCEL DESCRIPTION: UNIT 0614

Lot 1A,

HIGHLANDS RANCH—FILING NO. 57-A—5TH. AMENDMENT, and Resolution No. R-995-020 recorded February 8, 1995 at Reception No. 9506529, County of Douglas, State of Colorado.

Easement Parcel:

Together with that certain access easement as contained in The Planned Community District Development Guide for the new Town of Highlands Ranch, as adopted by the Board of County Commissioners of Douglas County, Colorado, on September 17, 1979, recorded October, 25 1979, in Book 373 at Page 187

 

19.	FEE PARCEL DESCRIPTION: UNIT 0615

Block 1,

WASHINGTON SQUARE SUBDIVISION FILING NO. 6, according to the Plat filed in Plat File 17 at Map 362, County of Adams, State of Colorado.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitations as contained in that certain Declaration of Restrictions and Grant of Easements recorded April 26, 1995 in Book 4502 at Page 556.

 

20.	FEE PARCEL DESCRIPTION: UNIT 0616

Parcel A:

Lot 6A,

CENTENNIAL VALLEY, PARCEL H, SECOND FILING, County of Boulder, State of Colorado.

Parcel B:

Together With those rights of a non-exclusive easement for ingress, egress and passage of vehicles and persons as described in Declaration of Covenants, Restrictions and Easements recorded September 25, 1995 at Reception No. 01549767, County of Boulder, State of Colorado.

 

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Parcel C:

Non-exclusive easement and other rights as more particularly described in that certain Declaration of Easements, Covenants, Conditions and Restrictions recorded September 22, 1995 at Reception No. 01549444, County of Boulder, State of Colorado.

 

21.	FEE PARCEL DESCRIPTION: UNIT 0617

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF EL PASO, STATE OF COLORADO, AND IS DESCRIBED AS FOLLOWS: CHEYENNE MOUNTAIN CENTER SUBDIVISION, FILING NO. 4, according to the plat recorded December 26, 1995 at Reception No. 95138535, County of El Paso, State of Colorado.

Being the same property described as follows:

A parcel of land located in the NE1/4 of Section 32, Township 14 South, Range 66 West of the 6th Principal Meridian, County of El Paso and State of Colorado, described as follows:

Commencing at the E1/4 corner of said Section 32, from which the NE corner of said Section 32 bears N00° 18’ 24” W a distance of 1773.48 feet to a point on the Westerly right of way line of Interstate Highway No. 25;

Thence along said right of way for the following five courses:

1. Thence S24° 01’ 28” E a distance of 37.93 feet;

2. Thence S23° 01’ 57” E a distance of 116.48 feet;

3. Thence S33° 19’ 03” E a distance of 210.61 feet to the point of beginning;

4. Thence continuing S33° 19’ 03” E a distance of 87.95 feet to a point of curve to the right, whose radius is 55,880.00 feet and central angle is 00° 20’ 17”;

5. Thence along the arc of said curve a distance of 329.57 feet;

Thence S60° 49’ 07” W a distance of 322.50 feet;

Thence S47° 23’ 00” W a distance of 106.20 feet to a point on the Easterly right of way of proposed Geyser Drive;

Thence N19° 56’ 13” W along said right of way a distance of 419.55 feet to a point of curve to the left, whose radius is 331.00 feet and central angle is 02° 59’ 42”;

Thence along the arc of said curve a distance of 17.30 feet;

Thence departing from said curve radially N67° 04’ 05” E a distance of 84.99 feet;

Thence N56° 40’ 57” E a distance of 275.19 feet to the point of beginning.

 

22.	FEE PARCEL DESCRIPTION: UNIT 0619

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF ARAPAHOE, STATE OF COLORADO, AND IS DESCRIBED AS FOLLOWS:

Parcel I:

Lot 1,

Block 1,

SOUTHEAST COMMONS SUBDIVISION FILING NO. 5,

 

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County of Arapahoe, State of Colorado.

Parcel II:

Tract A and Tract B,

Southeast Commons Subdivision Filing No. 1,

County of Arapahoe,

State of Colorado.

Except those portions of the above tracts conveyed by Warranty Deed recorded November 14, 1995 at Reception No. A5120678 and Warranty Deed recorded June 21, 1996 at Reception No. A6078907, County of Arapahoe, State of Colorado.

23. FEE PARCEL DESCRIPTION: UNIT 0628

Parcel One:

Lot 12A, Longmont Business Center Replat F, as per the plat thereof recorded December 12, 2006 at Reception No. 2823527, County of Boulder, State of Colorado.

Parcel Two:

Non-exclusive rights as more particularly described in that certain Declaration of Access Easement recorded April 28, 2003 at Reception No. 2432533, County of Boulder, State of Colorado.

Parcel Three:

Non-exclusive easements for vehicular and pedestrian access over Outlot 1 as shown on the plat for Longmont Business Center Replat F recorded December 12, 2006 at Reception No. 2823527, County of Boulder, State of Colorado.

24. FEE PARCEL DESCRIPTION: UNIT 1001

A parcel of land in Section 23, Township 45 South, Range 24 East, Lee County, Florida, more particularly described as follows:

Commence at the Northeast corner of Section 23, Township 45 South, Range 24 East; thence South 89 ° 11’ 50” West along the North line of said section 23 for 132.18 feet to an intersection with the Westerly right of way line of State Road 45 (Tamiami Trail); thence South 01 ° 16’ 00” East along said Westerly right of way line for 210.00 feet to the Point of Beginning of the herein described parcel of land; thence continue South 01° 16’ 00” East along said Westerly right of way line for 175.95 feet; thence South 89 ° 08’20” West for 324.11 feet to an intersection with the Easterly line of that certain parcel of land as described in O.R. Book 1388 at Page 822, of the Public Records of Lee County, Florida; thence North 01 ° 16’ 00” West along said Easterly line for 108.40 feet to the Northeast corner of said parcel; thence South 88 ° 44’ 00” West along the Northerly line of said parcel for 3.00 feet; thence North 01° 16’ 00” West for 67.58 feet; thence North 89° 08’ 20” East for 329.11 feet to the Point of Beginning. Said parcel of land situate, lying and being in Lee County, Florida.

 

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TOGETHER WITH a nonexclusive easement for drainage purposes over the following described parcel:

A parcel of land in Section 23, Township 45 South, Range 24 East, Lee County, Florida, more particularly described as follows:

Commence at the Northeast corner of Section 23, Township 45 South, Range 24 East; thence South 89° 11’ 50” West along the North line of said Section 23 for 132.18 feet to an intersection with the Westerly right of way line of State Road 45 (Tamiami Trail); thence South 01° 16’ 00” East along said Westerly right of way line for 385.95 feet; thence South 89° 08’ 20” West for 292.11 feet; thence North 01° 16’ 00” West for 133.91 feet; thence South 88° 44’ 00” West for 37.00 feet to the Point of Beginning of the herein described parcel of land; thence continue South 88° 44’ 00” West for 25.00 feet; thence North 01° 16’ 00” West for 10.00 feet; thence North 88° 44’ 00” East for 25.00 feet; thence South 01° 16’ 00” East for 10.00 feet to the Point of Beginning. Said parcel of land situate, lying and being in Lee County, Florida.

Together with rights of ingress and egress over and across the following described parcels by virtue of easements reserved in Warranty Deeds recorded in O.R. Book 1600, Page 1465, O.R. Book 1621, Page 173, and in O.R. Book 1651, Page 671, of the Public Records of Lee County, Florida.

Parcel I:

A parcel of land in Section 23, Township 45 South, Range 24 East, Lee County, Florida, more particularly described as follows:

Commence at the Northeast corner of Section 23, Township 45 South, Range 24 East; thence South 89° 11’ 50” West along the North line of said Section 23 for 132.10 feet to an intersection with the Westerly right of way line of S.R. 45 (Tamiami Trail); thence continue South 89° 11’ 50” West for 20.00 feet to the Point of Beginning of the herein described parcel of land; thence South 01° 16’ 00” East for 411.11 feet to the point of curvature of circular curve concave to the Northwest; thence Southwesterly along the arc of said curve, having for its elements a radius of 103.16 feet and a central angle of 45° 00’ 00” for 81.02 feet to the point of tangency; thence South 43° 44’ 00” West for 6.80 feet to the point of curvature of a circular curve concave to the Southeast; thence southwesterly along the arc of said curve having for its elements a radius of 102.34 feet and a central angle of 44° 35’ 40” for 79.65 feet to the point of tangency and an intersection with the Northerly line of a roadway easement 64.00 feet wide as described in O.R. Book 654, Page 747 and 748 of the Public Records of Lee County, Florida; thence South 89° 00’ 20” West along said Northerly line for 20.00 feet to the point of curvature of a circular curve concave to the Southeast; thence Northerly and northeasterly along the arc of said curve having for its elements a radius of 122.34 feet and a central angle of 44° 35’ 40” for 95.22 feet to the point of tangency; thence North 43° 44’ 00” East for 6.00 feet to the point of curvature of a circular curve concave to the Northwest; thence Northeasterly along the arc of said curve having for its elements a radius of 83.16 feet and a central angle of 45° 00’ 00” for 65.32 feet to the point of tangency; thence North 01° 16’ 00” West for 411.27 feet to an intersection with the North line of the aforementioned Section 23; thence North 89° 11’ 60” East along said North line for 20.00 feet to the Point of Beginning.

 

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Parcel II:

A parcel of land in Section 23, Township 45 South, Range 24 East, Lee County, Florida, more particularly described as follows:

Commence at the Northeast corner of Section 23, Township 45 South, Range 24 East; thence South 89° 11’ 50” West along the North line of said Section 23 for 132.10 feet to an intersection with the Westerly right of way line of S.R. 45 (Tamiami Trail); thence South 01° 16’ 00” East for 210.00 feet; thence South 89° 08’ 20” West for 5.00 feet to the Point of Beginning of the herein described parcel of land; thence continue South 89° 08’ 20” West for 40.00 feet; thence South 01° 16’ 00” East for 175.95 feet; thence North 89° 08’ 20” East for 40.00 feet; thence North 01° 16’ 00” West for 175.95 feet to the Point of Beginning.

Parcel III:

A parcel of land in Section 23, Township 45 South, Range 24 East, Lee County, Florida, more particularly described as follows:

Commence at the Northeast corner of Section 23, Township 45 South, Range 24 East; thence South 89° 11’ 50” West along the North line of said Section 23 for 132.10 feet to an intersection with the Westerly right of way line of S.R. 45 (Tamiami Trail); thence South 01° 16’ 00” East along said westerly right of way line for 305.95 feet; thence South 89° 08’ 20” West for 10.00 feet to the Point of Beginning of the herein described parcel of land; thence continue South 89° 08’ 20” West for 40.00 feet; thence South 01° 16’ 00” East for 25.35 feet to the point of curvature of a circular curve concave to the Northwest; thence Southwesterly along the arc of said curve having for its elements a radius of 73.16 feet and a central angle of 45° 00’ 00” for 57.46 feet to the point of tangency; thence South 43° 44’ 00” West for 6.80 feet to the point of curvature of a circular curve concave to the northeast; thence southwesterly along the arc of said curve having for its elements a radius of 132.34 feet and a central angle of 37° 39’ 54” for 117.00 feet; thence South 44° 08’ 20” West for 22.58 feet to an intersection with the northerly line of a roadway easement 64.00 feet wide as described in O.R. Book 654, Page 747 and 748 of the Public Records of Lee County, Florida; thence North 89° 08’ 20” East along said northerly line for 75.00 feet ; thence North 45° 51’ 40” West for 25.72 feet to an intersection with the arc of a circular curve concave to the southeast, said Point bearing North 79° 29’ 59” West from the radius point of said curve; thence northeasterly along the arc of said curve having for its elements a radius of 92.34 feet and a central angle of 33° 13’ 59” for 53.56 feet to the point of tangency; thence North 43° 44’ 00” East for 6.00 feet to the point of curvature of a circular curve concave to the northwest; thence Northeasterly along the arc of said curve having for its elements a radius of 113.16 feet and a central angle of 45° 00’ 00” for 88.88 feet to the point of tangency; thence North 01° 16’ 00” West for 25.07 feet to the point of beginning.

Together with a non-exclusive easement for ingress and egress over and across that parcel of land in Lee County, Florida, commonly known as Seven Lakes Blvd., and more particularly described as follows:

 

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A parcel of land in Section 23, Township 45 South, Range 24 East, Lee County, Florida, more particularly described as follows:

From the Northeast corner of said Section 23, run S 89° 11’ 50” W for 132.18 feet to the West right of way line of State Road 45 (Tamiami Trail); thence run S 01° 16’ 00” E along said right of way for 592.95 feet to the Point of Beginning of the herein described centerline. From said point of beginning run S 89° 08’ 20” W along the centerline of a roadway easement 64 feet in width for 175.00 feet to a point of curvature; thence run southwesterly along the arc of a curve to the left of radius 278.68 feet along the centerline of a roadway easement 64 feet in width (chord bearing S 64° 38’ 20” W, chord distance 231.13 feet) for 238.33 feet to a point of reverse curvature; thence run southwesterly along the arc of a curve to the right of radius 244.67 feet along the centerline of a roadway easement 64 feet in width (chord bearing S 64° 38’ 20” W, chord distance 202.93 feet) for 209.24 feet to a point of tangency; thence run S 89° 08’ 20” W along the centerline of a roadway easement 64 feet in width for 148.50 to a point of curvature; thence run northwesterly along the arc of a curve to the right of radius 653.42 feet along the centerline of a roadway easement 64 feet in width (chord bearing N 86° 29’ 10” W, chord distance 99.71 feet) for 99.80 feet to the point of tangency, thence run N 82° 06’ 34” W along the centerline of a roadway easement 64 feet in width for 100.43 feet to a point; thence run N 82° 06’ 34” W along the centerline of a roadway easement 30 feet in width for 33.60 feet; thence run N 01° 16’ 00” W along the centerline of a roadway easement 30 feet in width for 696.97 feet; thence run S 88° 52’ 20” W along the centerline of a roadway easement 30 feet in width for 183.81 feet; thence run S 89° 11’ 50” W along the centerline of a roadway easement 30 feet in width for 569.84 feet to the westerly terminus and the end of the herein above right of way easement.

 

25.	FEE PARCEL DESCRIPTION: UNIT 1002

The North 200 feet of the West 330 feet of Lot 63, Naples Improvement Company’s Little Farms, according to the Plat thereof which plat is recorded in Plat Book 2, at Page 2, of the Public Records of Collier County, Florida.

 

26.	FEE PARCEL DESCRIPTION: UNIT 1006

Lots 4 and 5, Block 38-A, of Replat of Block 38 & Block 39, Plat No. 3, PALM BEACH LAKES SOUTH, according to the Plat thereof, as recorded in Plat Book 28, Page 180, of the Public Records of Palm Beach County, Florida.

 

27.	FEE PARCEL DESCRIPTION: UNIT 1008

All Lot 1 and a Portion of Lot 2 according to the Plat of MARTIN SQUARE CORPORATE PARK, as recorded in Plat Book 13, Page 55, of the Public Records of Martin County, Florida, and being more particularly described as follows:

Begin at the Northeast Corner of said Lot 2; thence South 66°30’56” West along the North line of said Lot 2, a distance of 86.34 feet; thence South 23°29’04” East, parallel with and 86.34 feet Westerly of, as measured at right angles, with the East line of said Lot 2, a distance of 223.74 feet to a point in a non-tangent curve concave to the Southeast having a radius of 150.00 feet, the chord of which bears North 57°53’41” East and being the Northerly right-of-way line of Martin

 

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Square Corporate Parkway, thence Northeasterly along the arc of said curve, and said Northerly right-of-way line, a distance of 45.14 feet through a central angle of 17°14’29”; thence North 66°30’56” East, a distance of 41.88 feet to the East line of said Lot 2; thence North 23°29’04” West along the said East line a distance of 217.00 feet to the POINT OF BEGINNING.

 

28.	FEE PARCEL DESCRIPTION: UNIT 1022

PARCEL I:

Commencing at the most Southerly corner of Lot 2, Block N, College Park Second Addition, according to plat thereof as recorded in Plat Book H, pages 36 and 36A, Public Records of Marion County, Florida, said point being on the Northwesterly right of way line of S.R. 200 (100 feet wide); thence North 41° 07’ 55” East along said right of way line 30.00 feet to the point of beginning; thence departing from said right of way line North 48° 52’ 05” West parallel to the Southwesterly boundary of said Lot, 400.28 feet to an intersection with the Northwesterly boundary of said lot; thence North 41° 02’ 21” East along said Northwesterly boundary 100.00 feet; thence departing from said Northwesterly boundary South 48° 52’ 05” East, 400.4 feet to an intersection with aforesaid right of way line; thence South 41° 07’ 55” West along said right of way line 100.00 feet to the point of beginning.

PARCEL II:

Beginning at the most Southerly corner of Lot 2, Block N, College Park Second Addition, according to the plat thereof as recorded in Plat Book H, pages 36 and 36A, Public Records of Marion County, Florida, said point being on the Northwesterly right of way line of S.R. 200 (100 feet wide); thence North 48° 52’ 05” West along the Southwesterly boundary of said Lot, 400.23 feet to the most Westerly corner of said Lot; thence North 41° 02’ 21” East along the Northwesterly boundary of said Lot, 30.00 feet; thence departing from said Northwesterly boundary South 48° 52’ 05” East, 400.28 feet to an intersection with aforesaid right of way line; thence South 41° 07’ 55” West along said right of way line 30.00 feet to the point of beginning.

 

29.	FEE PARCEL DESCRIPTION: UNIT 1023

Lots H and J of Block 9 of TEMPLE TERRACES, according to the plat thereof, as recorded in Plat Book 25, Page 62, of the Public Records of Hillsborough County, Florida. LESS that part of said lots deeded to the State of Florida as recorded in Official Records Book 824, Page 663 and also LESS that part of Lot J, Block 9 of TEMPLE TERRACES as recorded in Plat Book 25, Page 62 of the Public Records of Hillsborough County, Florida deeded to the State of Florida in Official Records Book 824, Page 681 of the aforementioned public records.

 

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30.	FEE PARCEL DESCRIPTION: UNIT 1024

PARCEL 1:

A parcel of land lying in the Northwest 1/4 of the Northeast 1/4 of Section 4, Township 36 South, Range 18 East, Sarasota County, Florida and being more particularly described as follows:

Commence at the Northwest corner of the Northwest 1/4 of the Northeast 1/4 of said Section 4; thence along the West line of said Northwest 1/4 of the Northeast l/4, being the centerline of Lockwood Ridge Road, South 00°21’41” West (measured), South 00°21’52” West (Department of Transportation), 37.94 feet; thence South 89°38’19” East, 45.00 feet to the East right-of-way line of Lockwood Ridge Road, according to Road Plat Book 3, Page 16D, of the Public Records of Sarasota County, Florida and the Southwesterly right-of-way line of State Road No. 610, now known as University Parkway, according to the Florida Department of Transportation right-of-way map, as recorded in Road Plat Book 2, Page 40-E, of the aforementioned public records and to the intersection with a curve to the right, whose center bears, South 03°04’20” West; thence along the Southwesterly right-of-way of said State Road No. 610, now known as University Parkway and

the arc of said curve, having a radius of 5626.58 feet, a central angle of 04°49’28”, for an arc distance of 473.78 feet to the Point of Tangency; thence continue along said right-of-way line, South 82°06’12” East, 524.21 feet for a Point of Beginning; thence continue along said right-of-way line, South 82°06’12” East, 42.19 feet to the Point of Curvature of a curve to the left; thence continue along said right-of-way line and the arc of said curve, having a radius of 5832.58 feet, a central angle of 02°35’30”, for an arc distance of 263.82 feet to the East line of the Northwest 1/4 of the Northeast 1/4 of said Section 4; thence leaving said right-of-way line and along said East line, South 00°15’18” West, 219.67 feet; thence North 89°44’42” West, 304.00 feet; thence North 00°15’18” East 254.44 feet to the Point of Beginning.

PARCEL 2:

Together with the non-exclusive easements as defined in the Declaration of Easements, Restrictions and Reservations recorded in Official Records Book 2170, Page 1540, Public Records of Sarasota County, Florida, over the following property:

Outparcel A:

A parcel of land lying in the Northwest 1/4 of the Northeast 1/4 of Section 4, Township 36 South, Range 18 East, Sarasota County, Florida and being more particularly described as follows:

Commence at the Northwest corner of the Northwest 1/4 of the Northeast 1/4 of said Section 4; thence along the West line of said Northwest 1/4 of the Northeast 1/4, being the centerline of Lockwood Ridge Road, South 00°21’41” West, 37.94 feet; thence South 89°38’19” East, 45.00 feet to the East aright-of-way line of Lockwood Ridge Road and the Southwesterly right-of-way line of State Road No. 610 (University Parkway), according to the Florida Department of Transportation right-of-way map as recorded in Road Plat Book 2, Page 40-E, of the public records of Sarasota County, Florida and to the intersection with a curve to the right, whose center bears, South 03°04’20” West, and for a Point of Beginning; thence along the Southwesterly right-of-way line of said State Road No. 610 (University Parkway) and the arc of said curve having a

 

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radius of 5626.58 feet; a central angle of 02°26’04”, for an arc distance of 239.08 feet; thence leaving said right-of-way line, South 00°21’41” West, 211.69 feet; thence North 89°38’19” West, 238.50 feet to the East right-of-way line of said Lockwood Ridge Road; thence along said right-of-way, North 00°21’41” East (measured), North 00°21’52” East (Department of Transportation), 228.07 feet to the Point of Beginning.

Outparcel B:

A parcel of land lying in the Northwest 1/4 of the Northeast 1/4 of Section 4, Township 36, South, Range 18 East, Sarasota County, Florida and being more particularly described as follows:

Commence at the Northwest corner of the Northwest 1/4 of the Northeast 1/4 of said Section 4; thence along the West line of said Northwest 1/4 of the Northeast l/4, being the centerline of Lockwood Ridge Road, South 00°21’41” West, 296.01 feet; thence South 89°88’l9” East, 45.00 feet to the East right-of-way line of Lockwood Ridge Road for a Point of Beginning; thence South 89°38’19” East, 238.50 feet; thence South 00°21’41” West, 203.00 feet; thence North 89°38’19” West, 238.50 feet to the East right-or-way line of said Lockwood Ridge Road; thence along said right-of-way line, North 00°2l’4l” East, 203.00 feet to the Point of Beginning.

PARCEL 3:

Together with the non-exclusive easements as defined in the Declaration of Easements, Restrictions and Reservations for Outparcel C recorded November 5, 1990 in Official Records Book 2253, Page 1360, as amended by First Amendment to Declaration of Easements, Restrictions And Reservations For Outparcel C recorded in Official Records Instrument No. 2007133947, and Consents thereto recorded in Official Records Instrument Nos. 2007133948, 2007133949 and 2007133950, all of the Public Records of Sarasota Cover the following property:

A parcel of land lying in the Northwest 1/4 of the Northeast 1/4 of Section 4, Township 36 South, Range 18 East, Sarasota County, Florida and being more particularly described as follows:

Commence at the Northwest corner of the Northwest 1/4 of the Northeast 1/4 of said Section 4; thence along the West line of said Northwest 1/4 of the Northeast 1/4, being the centerline of Lockwood Ridge Road, South 00°21’41” West, 37.94 feet; thence South 89°38’19” East, 45.00 feet to the East right-of-way line of Lockwood Ridge Road and the Southwesterly right-of-way line of State Road No. 610 (University Parkway), according to the Florida Department of Transportation right-of-way map as recorded in Road Plat Book 2, Page 40-E, of the public records of Sarasota County, Florida and to the intersection with a curve to the right, whose center bears, South 03°04’20” West; thence along the Southwesterly right-of-way line of said State Road No. 610 (University Parkway) and the arc of said curve having a radius of 5626.58 feet; a central angle of 04°49’28”, for an arc distance of 473.78 feet to the Point of Tangency; thence continue along said right-of-way line, South 82°06’12” East, 224.04 feet for a Point of Beginning; thence continue along said right-of-way line, South 82°06’12” East 209.36 feet; thence leaving said right-of-way line, South 00°l5’18” West, 157.80 feet; thence North 89°44’42” West, 207.50 feet; thence North 00°15’18” East, 185.64 feet to the Point of Beginning.

 

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PARCEL 4:

Together with the non-exclusive easements as defined in the Declaration of Easements, Restrictions and Reservations for Outparcel D by Lancaster Partners VII, Ltd., a Florida limited partnership, recorded May 31, 1994 in Official Records Book 2636, Page 2019, as amended by Amendment thereto recorded in Official Records Instrument No. 200848635, of the Public Records Sarasota County, Florida.

 

31.	FEE PARCEL DESCRIPTION: UNIT 1025

PARCEL A:

Lot 1, TAMPOSI WILLIAMS COMPANY SUBDIVISION, according to the map or plat thereof as recorded in Plat Book 102, Page 23, of the Public Records of Polk County, Florida; also being described as:

Starting at the Northwest corner of the Southwest 1/4 of Section 33, Township 28 South, Range 26 East, Polk County, Florida, also being the Northwest corner of U.S. Government Lot 4; thence Southerly along the West boundary of said Southwest 1/4, a distance of 40 feet to the South right-of-way line of State Road 540, also known as Cypress Gardens Boulevard; thence South 90°00’00” East along said South right-of-way line, 223.21 feet to the POINT OF BEGINNING; thence continue South 90°00’00” East along said South right-of-way line, 140.00 feet; thence South 00°01’00” West, 25.00 feet; thence South 90°00’00” East, 10.00 feet; thence North 00°01’00” East, 20.00 feet; thence South 90°00’00” East, 40.00 feet; thence South 00°01’00” West, 193.50 feet; thence North 90°00’00” West, 60.04 feet; thence South 00°01’00” West, 19.58 feet; thence North 90°00’00” West, 99.97 feet; thence South 00°01’00” West 360.78 feet; thence South 90°00’00” East, 48.00 feet; thence North 00°01’00” East, 11.06 feet; thence South 90°00’00” East, 40.67 feet; thence South 00°01’00” West, 19.39 feet; thence South 90°00’00” East, 12.86 feet; thence North 00°01’00” East, 19.36 feet; thence South 90°00’00” East, 69.78 feet; thence South 00°01’00” West, 16.96 feet; thence South 90°00’00” East, 33.60 feet; thence South 00°01’00” West, 89.07 feet; thence North 90°00’00” West, 234.90 feet; thence North 00°01’00” East, 673.86 feet to the Point of Beginning;

LESS AND EXCEPT that part of Lot 1, TAMPOSI WILLIAMS COMPANY SUBDIVISION, according to the map or plat thereof as recorded in Plat Book 102, Page 23, of the Public Records of Polk County, Florida; more particularly described as follows:

Begin at the Southwest corner of said Lot 1; thence North 00°01’00” East, along the West boundary thereof a distance of 356.78 feet; thence South 90°00’00” East, 20.00 feet; thence South 00°01’00” West, 18.00 feet; thence South 90°00’00” East, 9.99 feet to a point on the common boundary between Lots 1 and 2 of said Tamposi Williams Subdivision; thence along said common boundary the following 12 courses: 1) South 00°01’00” West, 243.78 feet; thence 2) South 90°00’00” East, 48.00 feet; thence 3) North 00°01’00” East, 11.06 feet; thence 4) South

 

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90°00’00” East, 40.67 feet; thence 5) South 00°01’00” West, 19.39 feet; thence 6) South 90°00’00” East, 12.86 feet; thence 7) North 00°01’00” East, 19.36 feet; thence 8) South 90°00’00” East, 69.78 feet; thence 9) South 00°01’00” West, 16.96 feet; thence 10) South 90°00’00” East, 33.60 feet; thence 11) South 00°01’00” West, 89.07 feet; thence 12) North 90°00’00” West, 234.90 feet to the Point of Beginning.

PARCEL B:

That part of Lot 2, TAMPOSI WILLIAMS COMPANY SUBDIVISION, according to the map or plat thereof as recorded in Plat Book 102, Page 23, of the Public Records of Polk County, Florida; more particularly described as follows:

Commence at the Southeast corner of said Lot 2; thence North 00°01’00” East, along the East boundary thereof a distance of 130.00 feet; thence North 90°00’00” West, 45.00 feet; thence South 00°01’00” West, 50.00 feet; thence North 90°00’00” West, 85.00 feet; thence North 00°01’00” East, 50.00 feet; thence North 90°00’00” West, 103.70 feet; thence North 45°00’00” West, 58.45 feet; thence North 00°01’00” East, 172.45 feet to the POINT OF BEGINNING; thence North 90°00’00” West, 129.97 feet to a point on the common boundary between Lots 1 and 2 of said TAMPOSI WILLIAMS COMPANY SUBDIVISION; thence along said common boundary the following 4 courses: 1) North 00°01’00” East, 117.00 feet; thence 2) South 90°00’00” East, 99.97 feet; thence 3) North 00°01’00” East, 19.58 feet; thence 4) South 90°00’00” East, 30.00 feet; thence departing said common boundary, South 00°01’00” West, 136.58 feet to the Point of Beginning.

PARCEL C:

That part of Lot 2, TAMPOSI WILLIAMS COMPANY SUBDIVISION, according to the map or plat thereof as recorded in Plat Book 102, Page 23, of the Public Records of Polk County, Florida; more particularly described as follows:

Commence at the Southeast corner of said Lot 2; thence North 00°01’00” East, along the East boundary thereof a distance of 130.00 feet; thence North 90°00’00” West, 45.00 feet; thence South 00°01’00” West, 50.00 feet; thence North 90°00’00” West, 85.00 feet; thence North 00°01’00” East, 50.00 feet; thence North 90°00’00” West, 103.70 feet; thence North 45°00’00” West, 58.45 feet; thence North 00°01’00” East, 172.45 feet to the POINT OF BEGINNING; thence continue North 00°01’00” East, 136.58 feet to a point on the common boundary between Lots 1 and 2 of said TAMPOSI WILLIAMS COMPANY SUBDIVISION; thence South 90°00’00” East along said common boundary a distance of 30.04 feet; thence departing said common boundary, South 00°01’00” West, 45.00 feet; thence North 90°00’00” West, 20.04 feet; thence South 00°01’00” West, 91.58 feet; thence North 90°00’00” West, 10.00 feet to the Point of Beginning.

 

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PARCEL D:(Easement)

Together with a 24 foot easement and right-of-way which benefits the insured property as created by and set forth in Easement recorded in Official Records Book 3534, Page 1716, located within the following area:

The South 65 feet of the following described property:

Commence at the Northwest corner of Government Lot 4 in Section 33, Township 28 South, Range 26 East, Polk County, Florida, and run South 00°09’16” East, 40 feet; thence North 89°58’11” East, 50 feet; thence South 00°09’16” East, 200 feet to the POINT OF BEGINNING; thence North 89°58’11” East, 172.64 feet; thence South 00°00’31” West, 124 feet; thence North 89°59’29” West, 27.50 feet; thence North 82°04’17” West, 156.34 feet; thence South 89°50’44” West, 29.84 feet; thence North 11°53’37” East, 104.66 feet; thence North 89°58’11” East, 18 feet to the Point of Beginning.

PARCEL E: (Easement)

Together with those easements which benefit the insured property as created by and set forth in Reciprocal Easement Agreement recorded in Official Records Book 3628, Page 1608, Public Records of Polk County, Florida.

PARCEL F: (ACCESS AND UTILITY EASEMENT)

Together with Non-exclusive easements as created by and set forth in Access and Utility Easement recorded in Official Records Book 6795, Page 1892, Public Records of Polk County, Florida.

 

32.	FEE PARCEL DESCRIPTION: UNIT 1026

Parcel 1:

A parcel of land lying in Section 7, Township 40 South, Range 22 East, Charlotte County, Florida, described as follows:

Commencing at the Southwest corner of said Section 7, run North 00°05’44” East, along the West line of said Section 7, a distance of 40.00 feet to a point on the Northerly right-of-way line of Toledo Blade Boulevard, the same as shown and described in Official Records Book 251, Pages 106 thru 109 and on the Plat of “Port Charlotte Subdivision, Section Ninety”, recorded in Plat Book 7, Pages 59-A thru 59-B of the Public Records of Charlotte County, Florida; thence South 89°58’20” East, along the right-of-way line, a distance of 1,559.93 feet to the Point of Curvature of a circular curve, concave Northerly, having a radius of 1,602.15 feet and a central angle of 13°44’34”; thence Easterly along the arc of said curve, a distance of 384.29 feet to the Point of Reverse Curvature of a circular curve, concave Southerly, having a radius of 1,681.38 feet and a central angle of 13°44’34”, thence Easterly along the arc of said curve, a distance of 403.29 feet to the Point of Tangency of said curve; thence South 89°58’20” East, along said Northerly right-of-way line, a distance of 49.73 feet to a point lying on the Northerly extension of the centerline of Courtland Waterway, as shown on said Plat of “Port Charlotte Subdivision,

 

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Section Ninety”; thence North 00°09’16” West, along the centerline of said Courtland Waterway extended Northerly, a distance of 1,120.00 feet to a point on the Northerly right-of-way of Murdock Circle (150 feet wide); thence along said Northerly line, North 89°50’44” East, a distance of 179.06 feet to a point; thence along said Northerly right-of-way line, a distance of 1,601.78 feet along an arc to the left, having a radius of 2,200.00 feet and a central angle of 41°42’58” to a point; thence continuing along said Northern line, North 48°07’46” East, a distance of 679.46 feet to the Point of Curvature of a circular curve concave to the left, having as elements a central angle of 21°00’00”, a radius of 900.00 feet, and a chord bearing of North 37°37’46” East; thence Northeasterly along the arc of said curve, a distance of 329.87 feet to a point of compound curvature of a circular curve concave to the left, having as elements a central angle of 90°00’00”, a radius of 25.00 feet, and a chord bearing of North 17°52’14” West; thence Northwesterly along said right-of-way line and the arc of said curve, a distance of 39.27 feet to the Southerly right-of-way line of U.S. 41 (S.R. 45; 200 feet wide); thence North 62°52’14” West, along said right-of-way line, a distance of 333.82 feet to the POINT OF BEGINNING;

Thence from said POINT OF BEGINNING continue North 62°52’14” West, along said right-of-way line, a distance of 200.78 feet; thence South 27°07’46” West, a distance of 186.88 feet; thence South 62°52’14” East, a distance of 186.75 feet; thence North 27°07’46” East, a distance of 69.89 feet; thence South 62°52’14” East, a distance of 33.00 feet; thence North 27°07’46” East, a distance of 73.00 feet; thence North 51°39’20” West, a distance of 19.34 feet; thence North 27°07’46” East, a distance of 40.23 feet to the POINT OF BEGINNING.

Parcel 2:

TOGETHER with Easements for the benefit of the above described parcel as set forth in Easement Agreement dated May 29, 1996 and recorded in Official Records Book 1467, Page 1236, of the Public Records of Charlotte County, Florida.

Parcel 3:

TOGETHER with Easements for the benefit of the above described parcel as set forth in Easement Agreement and Declaration of Restrictions dated May 24, 1996 and recorded in Official Records Book 1467, Page 1246, of the Public Records of Charlotte County, Florida.

Parcel 4:

TOGETHER with Easements for the benefit of the above described parcel as set forth in Access Easement dated May 30, 1996 and recorded in Official Records Book 1467, Page 1271, of the Public Records of Charlotte County, Florida.

 

33.	FEE PARCEL DESCRIPTION: UNIT 1027

Tract “B”, EAGLE SUBDIVISION I, according to the plat thereof, as recorded in Plat Book 66, Page 16 and 17, of the Public Records of Lee County, Florida.

 

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TOGETHER WITH

A non-exclusive easement for ingress and egress over Tract A and Tract C of Eagle Subdivision I, according to the plat thereof, recorded in Plat Book 66, Page 16 and 17, of the Public Records of Lee County, Florida.

TOGETHER WITH

Perpetual non-exclusive easements for roadways, walkways, ingress and egress, and the use of facilities for the benefit of the above described parcel as created by and set forth in that certain Declaration of Covenants, Conditions and Restrictions recorded in Official Records Book 3243, Page 0144 and as amended in Official Records Instrument No. 2009000158329, of the Public Records of Lee County, Florida.

 

34.	FEE PARCEL DESCRIPTION: UNIT 1028

Lots 4 and 5, Hernando Square Plaza North—Phase 2, according to the map or plat thereof, as recorded in Plat Book 32, Pages 10 and 11, inclusive, of the Public Records of Hernando County, Florida.

TOGETHER WITH all easements appurtenant thereto as described and created in that certain Declaration of Covenants, Conditions and Restrictions recorded in the Official Records of Hernando County, Florida, recorded in Official Records Book 1087, Page 570 and as amended by First Amendment to Declaration of Covenants, Conditions and Restrictions for Hernando Square, recorded in Official Records Book 1110, Page 545, and as further amended by Second Amendment to Declaration of Covenants, Conditions and Restrictions for Hernando Square Annexing Property recorded in Official Records Book 1359, Page 1950, all of the Public Records of Hernando County, Florida.

 

35.	FEE PARCEL DESCRIPTION: UNIT 1029

PARCEL 1:

A parcel of land lying in part in the NE 1/4 of Section 12, Township 26 South, Range 19 East and lying in part in the NW 1/4 of Section 7, Township 26 South, Range 20 East, Pasco County, Florida, and being more particularly described as follows:

Commence at the Southeast corner of the NE 1/4 of the SE 1/4 of Section 12, Township 26 South, Range 19 East, Pasco County, Florida, thence run N00°17’43”E, 1336.37’ on the East boundary of said Section 12 to the point of intersection with the Northerly right-of-way line of State Road 54 West; thence run N77°28’17”W, 1325.17’ along said R/W line to the Point of Intersection with the Easterly R/W line of Oakley Boulevard, said Point being the P.C. of a curve to the right, said curve having a radius of 25.00’, chord of 35.36’, chord bearing of N32°28’17”W; thence run along said curve and Easterly R/W line an arc distance of 39.27’ to the P.T. of said curve; thence run N12°31°43”E, along said R/W line, 655.00’ thence run S77°28’17”E, 15.00’, thence run N12°31’43”E, 254.01’; thence leaving said Easterly R/W line run S80°18’30”E, 615.00’; thence run N09°41’30”E, 165.02’ for a POINT OF BEGINNING; thence continue

 

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N09°41’30”E, 119.14’; thence run S87°28’33”E, 747.36’ to a point on the Westerly R/W line of Interstate 75; thence run S33°54’42”W, along said R/W line, 267.65’; thence leaving said R/W line, run N77°26’08”W, 632.51 feet to the POINT OF BEGINNING.

LESS AND EXCEPT

Those lands described and set forth in Special Warranty Deed, from Private Restaurant Properties, LLC to Kazwell Realty Partners, LLC, dated July 31, 2008 and recorded August 1, 2008 in Official Records Book 7896, Page 1553, of the public records of Pasco County, Florida.

PARCEL 2:

Non-Exclusive EASEMENT FOR INGRESS AND EGRESS over and across the following described parcel:

Commence at the Southeast corner of the NE 1/4 of the SE 1/4 of Section 12, Township 26 South, Range 19 East, Pasco County, Florida, thence run N00°17’43”E, 1336.37’ on the East boundary of said Section 12 to the point of intersection with the Northerly right-of-way line of State Road 54 West; thence run N77°28’17”W, 1325.17’ along said R/W line to the Point of Intersection with the Easterly R/W line of Oakley Boulevard, said Point being the P.C. of a curve to the right, said curve having a radius of 25.00’, chord of 35.36’, chord bearing of N32°28’17”W; thence run along said curve and Easterly R/W line an arc distance of 39.27’ to the P.T. of said curve; thence run N12°31°43”E, along said R/W line 542.36’ for a POINT OF BEGINNING; thence continue N12°31’43”E, along said R/W line 60.00’; thence run S77°28’17”E, 230.35’; thence S77°26’08”E, 305.02’ to the P.C. of a curve to the left, said curve having a radius of 220.00’, Delta of 90°, chord of 311.13’; thence run along said curve an arc distance of 345.58’ to the P.T. of said curve; thence run N12°33’52”E, 60.91’; thence run N12°23’47”E, 369.48’; thence run S87°28’33”E, 60.90’; thence S12°23’47”W, 380.01’; thence run S12°33’52”W, 61.00’ to the P.C. of a curve to the right, said curve having a radius of 280.00’, delta of 90°, chord of 395.98’; thence run along said curve an arc distance of 439.82’ to the P.T. of said curve; thence run N77°26’08”W, 305.00’; thence run N77°28’17”W, 230.33’ to the POINT OF BEGINNING, as created and described in EXHIBIT “A” attached to that certain Warranty Deed recorded in Official Records Book 3289, Page 646, as re-recorded in Official Records Book 3304, Page 462, and as contained in subsequent deeds in the chain of title recorded in Official Records Book 4057, Page 73, Official Records Book 4463, Page 1418, Official Records Book 7556, Page 1393 and Official Records Book 7896, Page 1553, of the public records of Pasco County, Florida.

PARCEL 3:

Easements benefiting the above described land described and set forth in Access, Utility and Drainage Easement Agreement, by and among Kazwell Realty Partners, LLC, Oakley Grove Development LLC and Private Restaurant Properties, LLC, dated July 31, 2008 and recorded August 1, 2008 in Official Records Book 7896, Page 1578, of the public records of Pasco County, Florida.

 

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36.	FEE PARCEL DESCRIPTION: UNIT 1030

PARCEL I:

A part of the Southeast 1/4 of the Northwest 1/4 of Section 32, Township 3 South, Range 27 East, Duval County, Florida, being more particularly described as follows:

Commence at the intersection of the South line of the Southeast 1/4 of the Northwest 1/4 of Section 32, with the Easterly right of way line of State Road No. 13 (a 174.00 foot right of way as now established); thence North 34°08’50” East along said Easterly right of way line of said State Road No. 13, a distance of 424.02 feet to a point of change in width of said right of way line; thence South 55°51’10” East, a distance of 10.00 feet; thence continue North 34°08’50” East along the Easterly right of way of said State Road No. 13, a distance of 154.00 feet to the Point of Beginning for this description.

From the Point of Beginning thus described, continue North 34°08’50” East along said Easterly right of way line of State Road No. 13, a distance of 138.00 feet; thence South 55°30’25” East departing from said right of way line a distance of 210.00 feet; thence South 34°08’50” West, a distance of 138.00 feet; thence North 55°30’25” West, a distance of 210.00 feet to the Point of Beginning.

PARCEL II:

Together with a Non Exclusive Easement for access, ingress, egress and parking, as disclosed in Warranty Deed dated 10/16/84, recorded 10/31/84, in Official Records Book 5871, page 1362, Public Records of Duval County, Florida.

PARCEL III:

Together with a Non Exclusive Easement for utilities as set forth in and granted by Warranty Deed dated 10/16/84, recorded 10/31/84, in Official Records Book 5871, page 1362, Public Records of Duval County, Florida.

 

37.	FEE PARCEL DESCRIPTION: UNIT 1031

PARCEL I:

Lot 3 (Out Parcel), SOUTH BEACH REGIONAL SHOPPING CENTER, according to plat thereof recorded in Plat Book 46, Pages 88, 88A and 88B, Public Records of Duval County, Florida.

PARCEL II:

A Non-Exclusive Easement and other rights of the insured as disclosed by Reciprocal Easement Agreement between South Beach Regional Associates, a Florida joint venture composed of (i) Gerald M. Smalley (a.k.a. Jerry M. Smalley), an individual, and (ii) Jacksonville Beach Southern

 

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Properties, a Delaware general partnership, which is composed of Norpet (Swain) Inc., a Delaware corporation, Lynro Florida, Inc., a Delaware corporation, and Robert Rouleau, an individual, Sand Castle Associates, a Florida joint venture composed of (i) Gerald M. Smalley (a.k.a Jerry M. Smalley), an individual, and (ii) Jacksonville Beach Southern Properties, a Delaware general partnership, which is composed of Norpet (Swain) Inc., a Delaware corporation, Lynro Florida, Inc., a Delaware corporation, and Robert Rouleau, an individual and South Beach Office Tower Partnership, a Florida general partnership, dated as of August 2, 1989, recorded August 3, 1989 in Official Records Book 6743, Page 851; as affected by First Amendment, dated as of December 28, 1989, recorded July 13, 1990 in Official Records Book 6931, Page 595; Second Amendment, dated as of July 20, 1990, recorded August 1, 1990 in Official Records Book 6940, Page 1199; Third Amendment, dated as of November 13, 1990, recorded November 14, 1990 in Official Records Book 6997, Page 1795; Fourth Amendment, dated as of January 6, 1992, recorded January 23, 1992 in Official Records Book 7255, Page 1757; and Fifth Amendment, dated as of November 30, 1992, recorded December 3, 1992 in Official Records Book 7468, Page 1246, of the Public Records of Duval County, Florida.

 

38.	FEE PARCEL DESCRIPTION: UNIT 1033

ALL THOSE CERTAIN PIECES, PARCELS OR TRACTS OF LAND SITUATE, LYING AND BEING IN THE COUNTY OF CLAY AND STATE OF FLORIDA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL A:

a parcel of land situated in Section 5, Township 4 South, Range 26 East, Clay County, Florida; said parcel being more particularly described as follows: Commence at the intersection of the former Easterly line of Blanding Boulevard (State Road No. 21 as formerly established as a 100 foot right of way) with the centerline of Wells Road (a 100 foot wide County Road according to Official Records Book 157, pages 539-544 of the Public Records of said County); thence on said centerline run South 88° 36’ 30” East, 2329.90 feet; thence North 01° 23’ 30” East, 50.00 feet to the North line of said Wells Road; thence on last said line run the following five courses: (1) on the arc of a curve concave Southwesterly and having a radius of 4347.18 feet, a chord distance of 327.95 feet, the bearing of said chord being South 86° 26’ 48” East; (2) continue on last said arc, a chord distance of 200.98 feet, the bearing of said chord being South 82° 57’ 37” East; (3) continue on last said arc, a chord distance of 158.04 feet to the point of beginning. The bearing of said chord being South 80° 35’ 38” East; (4) continue on last said arc, a chord distance of 71.62 feet, the bearing of last chord being South 79° 04’ 49” East to the point of tangency of said curve; (5) thence continue along said North right of way line, South 78° 36’ 30” East, 170.25 feet; thence North 01° 23’ 30” East, 304.63 feet; thence North 78° 36’ 30” West, 117.35 feet to the point of curvature of a curve concave Southwesterly and having a radius of 4647.18 feet; thence Westerly around and along the arc of said curve, an arc distance of 111.93 feet, said arc having a chord bearing and distance of North 79° 17’ 54” West, 111.92 feet; thence South 10° 00’ 42” West, 48.96 feet; thence North 80° 00’ 00” West, 5.00 feet; thence South 01° 23’ 30” West, 254.03 feet to the point of beginning.

and

 

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PARCEL B:

A parcel of land situated in Section 5, Township 4 South, Range 26 East, Clay County, Florida; said parcel being more particularly described as follows: Commence at the intersection of the former Easterly line of Blanding Boulevard ( State Road No. 21 as formerly established as a 100 foot right of way) with the centerline of Wells Road ( a 100 foot wide County Road according to Official Records Book 157, pages 539-544 of the Public Records of said County); thence on said centerline run South 88° 36’ 30” East, 2329.90 feet; thence North 01° 23’ 30” East, 50.00 feet to the North line of said Wells Road; thence on last said line run the following three courses; (1) on the arc of a curve concave Southwesterly and having a radius of 4347.18 feet, a chord distance of 327.95 feet, the bearing of said chord being South 86° 26’ 48” East; (2) continue on last said arc, a chord distance of 200.98 feet to the point of beginning, the bearing of last said chord being South 82° 57’ 37” East; (3) continue on last said arc, a distance of 158.05 feet, said arc having a chord distance of 158.04 feet, the bearing of last said chord being South 80° 35’ 38” East; thence North 01° 23’ 30” East, 254.03 feet; thence South 80° 00’ 00” East 5.00 feet; thence North 10° 00’ 42” East, 48.96 feet to a point situate in a curve concave Southwesterly and having a radius of 4647.18 feet; thence Westerly around and along the arc of said curve, 170.28 feet; said arc being subtended by a chord bearing and distance of North 81° 02’ 17” West, 170.27 feet; thence South 01° 23’ 30” West, 302.09 feet to the point of beginning.

LESS AND EXCEPT that portion conveyed by Warranty Deed to JP Car Wash Investments, LLC, a Florida limited liability company recorded in Official Records Book 2712, page 350, of the Public Records of Clay County, Florida.

and

PARCEL C:

Together with easement in Official Records Book 1337, page 345 of the Public Records of Clay County, Florida.

and

PARCEL D:

Together with a perpetual non-exclusive Easement for the benefit of Parcel A and B as created by Declaration of Covenants, Conditions, Restrictions and Easements recorded in Official Records Book 2712, page 330, for the purpose described therein over, under and across the lands described therein.

 

39.	FEE PARCEL DESCRIPTION: UNIT 1034

PARCEL I

A part of the G.W. Perpall Grant, Section 41, Township 7 South, Range 30 East, St. Johns County, Florida, and being more particularly described as follows:

 

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For a Point of Reference, commence at a Florida, D.O.T. nail and washer at the intersection of the centerline of the Southbound lane, U.S. Highway No. 1, and the centerline of State Road No. 312, as shown on Florida D.O.T. Right-of-way Map, Section No. 78002-2502, Sheet 3 of 13 (Said Point of Intersection lying 98.0 feet East of the Westerly Right-of-Way line of said U.S. Highway No. 1); thence South 89°54’15” East, along said centerline of State Road No. 312, a distance of 123.98 feet; thence at right angles to said centerline, South 00°05’45” West, a distance of 100.00 feet to the Southerly line of said State Road No. 312; thence along the Southerly Right-of-Way line of said State Road No. 312 as shown on said D.O.T. Right-of-Way Map and as recorded O.R. Volume 234, Page 623, of the Public Records of said County, South 89°54’15” East, a distance of 704.00 feet to the Point of Beginning; thence continue South 89°54’15” East, along said Right-of-Way line, a distance of 225.24 feet; thence South 00°08’00” West, a distance of 333.28 feet; thence North 89°52’00” West, a distance of 225.24 feet; thence a North 00°08’00” East, a distance of 333.13 feet to the Point of Beginning.

PARCEL II

A Non-Exclusive Easement for passage and use for the purpose of walking upon and driving vehicles upon, over and across all those sidewalks, entrances and drives on the driveway area as disclosed in Cross Easement Agreement between Scotty’s, Inc., a Florida corporation, New America Properties, Inc., a Delaware corporation, and Wal-Mart Properties, Inc., a Delaware corporation, dated as of March 22, 1983, recorded March 24, 1983 in O.R. Book 577, Pages 96 through 124; as affected by Supplement to Cross Easement Agreement, dated as of March 23, 1993, recorded March 26, 1993 in O.R. Book 984, Pages 1169 through 1183, St. Johns County Records.

PARCEL III

A Non-Exclusive Easement for pedestrian and vehicular ingress and egress over and across all those sidewalks, driveways passageways as may exist from time to time on that certain real property described in Easement for Ingress and Egress granted to Southern Centers Associates, a Florida general partnership, from Apple South, Inc., a Georgia corporation, dated March 23, 1993, recorded March 26, 1993 in O.R. Book 984, Pages 1193 through 1196, St. Johns County Records.

PARCEL IV

A Non-Exclusive Easement for pedestrian and vehicular ingress and egress over and across the service road, as disclosed in Easement Agreement between Southern Center Associates, a Florida general partnership, and Connerty, Inc., a Florida corporation, dated November 30, 1993, recorded December 6, 1993 in O.R. Book 1024, Pages 1549 through 1562, St. Johns County Records.

PARCEL V

A Non-Exclusive Easement for the purpose of using a surface and storm water retention pond system as disclosed in Easement Agreement between Southern Center Associates, a Florida general partnership, and Connerty, Inc., a Florida corporation, dated November 30, 1993, recorded December 6, 1993 in O.R. Book 1024, Pages 1549 through 1562, St. Johns County Records.

 

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PARCEL VI

A Non-Exclusive Easement for drainage of surface waters, storm water and for the construction, installation, operations and maintenance of drainage improvements and structures over, under and across that certain property described in Easement Agreement dated November 30, 1993, recorded December 6, 1993 in O.R. Book 1024, Pages 1549 through 1562, St. Johns County Records.

PARCEL VII

A Non-Exclusive Easement for pedestrian or vehicular, or both, ingress, egress and regress, as set forth in that certain Agreement by and between Staug Properties, Inc., a Florida corporation and Scotty’s, Inc., a Florida corporation recorded in Official Records Book 398, Page 164, and as affected by Amendment to Easement recorded in Official Records Book 481, Page 288, St. Johns County Records.

 

40.	FEE PARCEL DESCRIPTION: UNIT 1035

Commence at the Department of Transportation from Pin on the Southerly Right-of-Way boundary of State Road No. 8 (Interstate 10), set iron pipe being North 89 degrees 23 minutes 03 seconds West 604.28 feet from the Easterly boundary of Section 8, Township 1 North, Range 1 East, Leon County, Florida, and run thence South 86 degrees 07 minutes 58 seconds West 135.97 feet to the POINT OF BEGINNING. From said POINT OF BEGINNING leaving said Southerly Right-of-Way run South 00 degrees 58 minutes 58 seconds West 378.71 feet to a point on the Northerly Right-of-Way of Raymond Diehl Road, thence run North 83 degrees 44 minutes 30 seconds West along said Northerly Right-of-Way 157.71 feet, thence North 04 degrees 18 minutes 58 seconds East 15.06 feet, thence North 82 degrees 57 minutes 27 seconds West along said Northerly Right-of-Way 128.81 feet, thence leaving said Northerly Right-of-Way run North 07 degrees 02 minutes 33 seconds East 114.14 feet, thence North 15 degrees 23 minutes 55 seconds West 131.30 feet, thence North 60 degrees 53 minutes 19 seconds West 14.63 feet, thence North 15 degrees 31 minutes 47 seconds West 78.80 feet to a point on the Southerly Right-of-Way of said State Road No. 8, thence run South 88 degrees 53 minutes 50 seconds East along said Southerly Right-of-Way 179.19 feet, thence North 86 degrees 07 minutes 58 seconds East 165.95 feet to the POINT OF BEGINNING.

Together with Grant of Access and Parking Easements from McKibbon Hotel Group of Tallahassee Florida, L.P., a Georgia limited partnership to Outback Steakhouse of Florida, Inc., a Florida corporation as set forth in that certain Agreement Imposing Restrictive Covenants, Granting Easements, and Creating Parking, Signage and Maintenance Obligations by and between McKibbon Hotel Group of Tallahassee Florida, L.P., a Georgia limited partnership and Outback Steakhouse of Florida, Inc., a Florida corporation recorded in Official Records Book 1803, Page 1510.

 

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41.	FEE PARCEL DESCRIPTION: UNIT 1036

COMMENCE AT THE NORTHWEST CORNER OF SECTION 32, TOWNSHIP 03 SOUTH, RANGE 14 WEST, BAY COUNTY, FLORIDA, THENCE SOUTH ALONG THE WEST LINE OF SAID SECTION 32 FOR 50.00 FEET TO THE SOUTH RIGHT OF WAY LINE OF 23RD STREET; THENCE SOUTH 89°19’39” EAST ALONG SAID SOUTH RIGHT OF WAY LINE FOR 254.92 FEET TO THE POINT OF BEGINNING; THENCE CONTINUE SOUTH 89°19’39” EAST ALONG SAID SOUTH RIGHT OF WAY LINE FOR 200.00 FEET; THENCE SOUTH 01°05’48” WEST FOR 464.34 FEET TO THE NORTHERLY LINE OF LOT 5, EDGEWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 8, PAGE 68A, IN THE PUBLIC RECORDS OF BAY COUNTY, FLORIDA; THENCE NORTH 62°08’12” WEST ALONG SAID NORTHERLY LINE OF LOT 5, FOR 0.76 FEET; THENCE NORTH 62°17’23” WEST ALONG THE NORTHERLY LINE OF LOT 3, EDGEWOOD, ACCORDING TO SAID PLAT, FOR 171.96 FEET; THENCE NORTH 62°27’44” WEST ALONG THE NORTHERLY LINE OF LOT 3, EDGEWOOD, ACCORDING TO SAID PLAT, FOR 50.91 FEET; THENCE NORTH 01°05’48” EAST FOR 362.82 FEET TO THE POINT OF BEGINNING.

TOGETHER WITH A NON-EXCLUSIVE DRAINAGE EASEMENT FOR THE BENEFIT OF PARCEL 1 AS SET FORTH IN THAT CERTAIN DECLARATION OF STORM DRAINAGE EASEMENT BY BARKLEY DEVELOPMENT COMPANY RECORDED SEPTEMBER 5, 1991 IN OFFICIAL RECORDS BOOK 1334, PAGE 1482 OF THE PUBLIC RECORDS OF BAY COUNTY, FLORIDA.

 

42.	FEE PARCEL DESCRIPTION: UNIT 1060

Parcel 1

Lot 1, Florida Center Turnpike—Cypress Creek Golf Course Residential & Commercial Area Plat No. 8, according to the plat thereof as recorded in Plat Book 34, Page 58, Public Records of Orange County, Florida.

Parcel 2

Together with those certain Non-Exclusive Easements for the benefit of Parcel 1 created by Non-Exclusive Reciprocal Easement Agreement recorded in Official Records Book 4875, Page 3323, Public Records of Orange County, Florida.

Parcel 3

Together with Easements for the benefit of Parcel 1 created by Lawing Lane Declaration of Covenants, Conditions and Restrictions recorded in Official Records Book 3870, page 2729, Public Records of Orange County, Florida.

 

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43.	FEE PARCEL DESCRIPTION: UNIT 1061

Parcel A:

A parcel of land lying in Section 29, Township 19 South, Range 30 East, being more particularly described as follows:

Beginning at the Northwest corner of the Southwest 1/4 of the Northeast 1/4 of the Northeast 1/4 of said Section 29; run North 89°38’09” East along the North line of the Southwest 1/4 of the Northeast 1/4 of the Northeast 1/4 of said Section 29 for a distance of 242.76 feet to the Westerly right of way line of Hickman Drive as shown on the plat of I-4 Industrial Park as filed in Plat Book 16 at Page 59 of the Public Records of Seminole County, Florida; thence run South 00°16’14” East along said last mentioned Westerly line for a distance of 289.81 feet; thence run South 89°55’33” West for a distance of 242.76 feet to the West line of the Northeast 1/4 of the Northeast 1/4 of said Section 29, thence run North 00°16’14” West along said last mentioned West line for a distance of 288.58 feet to the point of beginning, Less the West 10 feet thereof, all in the Public Records of Seminole County, Florida.

Parcel B:

Commencing at the Northeast corner of the Northeast 1/4 of Section 29, Township 19 South, Range 30 East, Seminole County, Florida, run South 00°18’16” East along the East line of said Northeast 1/4, 660.44 feet; thence South 89°38’03” West, 1298.40 feet for a point of beginning; thence run North 00°16’14” West, 49.77 feet; thence South 89°38’03” West, 345.92 feet to the Easterly right of way of State Road 400 (I-4); thence South 23°52’49” West along said right of way, 54.58 feet; thence North 89°38’03” East, 40.00 feet; thence North 00°16’14” West, 25.00 feet; thence North 89°41’12” East, 70.00 feet; thence South 00°16’14” East, 15.00 feet; thence North 89°38’03” East, 248.24 feet; thence South 00°16’14” East, 10.00 feet; thence North 89°38’03” East, 10 feet to the point of beginning and also being described as follows:

Commencing at the Northwest corner of the Southwest 1/4 of the Northeast 1/4 of the Northeast 1/4 of Section 29, Township 19 South, Range 30 East, according to the Plat of I-4 Industrial Park, as recorded in Plat Book 16, Pages 59 and 60, of the Public Records of Seminole County, Florida, run thence North 89°38’03” East more or less, 10.00 feet for a point of beginning; thence continue North 89°38’03” East, 10.00 feet; thence North 00°16’14” West, 49.77 feet; thence South 89°38’03” West, 345.92 feet to the Easterly right of way of State Road 400 (I-4); thence South 23°52’49” West along said right of way, 54.50 feet; thence North 89°38’03” East, 40.00 feet; thence North 00°16’14” West, 25.00 feet; thence North 89°41’12” East, 70.00 feet; thence South 00°16’14” East, 15.00 feet; thence North 89°38’03” East, 248.22 feet; thence South 00°16’14” East, 10.00 feet to the point of beginning.

Parcel C:

Together with Non-Exclusive Easement for the benefit of Parcel B as created in Easement Agreement recorded in Official Records Book 3020, Page 452, for the purpose described therein over, under and across lands described therein.

 

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44.	FEE PARCEL DESCRIPTION: UNIT 1063

That portion of Lot 2, Block 46 of the revised and corrected plat of Re-Subdivision of Subdivision of Silver Lakes Estates, according to the plat thereof as recorded in Plat Book 10, Pages 66 through 69, Public Records of Lake County, Florida, described as follows:

Commence at the Northwest corner of Lot 1, Block 46, of the above said revised and corrected plat of Re-Subdivision of Subdivision of Silver Lake Estates, (said point of commencement being a 6” x 6” concrete monument); thence run North 00°44’58’ East along the West line of Lot 4, of Block 45 of said subdivision a distance of 146.50 feet to the Southwesterly right of way line of State Road 500, U.S. Highway 441; thence run South 71°26’06” East along said right of way line a distance of 476.58 feet to the point of beginning; thence continue South 71°26’06” East along said right of way line a distance of 207.00 feet to the intersection with the East line of Lot 2, Block 46; thence departing said right of way line run South 00°19’45” East along said East line a distance of 302.23 feet; thence departing the East line of Lot 2, run North 89°37’35” West, a distance of 175.08 feet to the point of curvature of a curve concave Northeasterly and having a radius of 33.00 feet; thence run Northwesterly along the arc of said curve through a central angle of 90°00’00” a distance of 51.84 feet to the point of tangency thereof; thence run North 00°22’25” East, a distance of 307.72 feet to the point of curvature of a curve concave Southeasterly and having a radius of 48.00 feet; thence run Northeasterly along the arc of said curve through a central angle of 32°56’36” a distance of 27.60 feet to the abovementioned Southwesterly right of way line of State Road 500, U.S. Highway 441 and the point of beginning.

Together with:

Non-exclusive and perpetual Easements as reserved in Declaration of Covenants, Conditions and Restrictions recorded in Official Records Book 1660, Page 1002; as re-recorded in Official Records Book 1662, Page 2431, as amended by First Amendment to Declaration recorded in Official Records Book 1827, Page 276, Public Records of Lake County, Florida.

 

45.	FEE PARCEL DESCRIPTION: UNIT 1101

All that tract or parcel of land lying and being in Land Lot 345 of the 13th Land District of Bibb County, Georgia, being more particularly described as follows: BEGINNING AT A POINT where the North margin of the right-of-way of Riverplace Drive (variable right-of-way) intersects with the East margin of the right-of-way of Arkwright Road (variable right-of-way) and from said POINT run north 81 degrees 30 minutes 21 seconds east along the North margin of the right-of-way of Riverplace Drive a distance of 67.74 feet to a point; thence run in a Northeasterly direction along the North margin of the right-of-way of Riverplace Drive an arc distance of 82.73 feet (which arc has a radius of 359.92 feet, a delta angle of 13 degrees 10 minutes 11 seconds, a chord course of north 88 degrees 05 minutes 15 seconds east and a chord distance of 82.55) feet to a point marked by a Nail set in asphalt which is the TRUE POINT OF BEGINNING; thence leaving the North margin of the right-of-way of Riverplace Drive and from said TRUE POINT OF BEGINNING run north 21 degrees 34 minutes 15 seconds east a distance of 170.27 feet to a point marked by an iron pin; thence run north 03 degrees 24 minutes 58 seconds east a distance of 110.0 feet to a point marked by a one-half inch Rebar; thence run north 03 degrees 24 minutes 58 seconds east a distance of 7.60 feet to a point marked by an iron

 

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pin; thence run north 64 degrees 45 minutes 28 seconds east a distance of 137.66 feet to a point marked by an iron pin; thence run south 68 degrees 25 minutes 45 seconds east a distance of 154.96 feet to a point marked by an iron pin; thence run south 24 degrees 19 minutes 06 seconds west a distance of 115.47 feet to a point marked by an iron pin; thence run south 24 degrees 19 minutes 06 seconds west a distance of 24.73 feet to a point marked by an iron pin; thence run south 08 degrees 28 minutes 32 seconds east a distance of 91.56 feet to a point marked by an iron pin; thence run south 06 degrees 39 minutes 55 seconds west a distance of 56.87 feet to a point marked by an iron pin; thence run south 29 degrees 22 minutes 26 seconds west a distance of 123.93 feet to a point on the North margin of the right-of-way of River Place Drive marked by an iron pin; thence run north 46 degrees 50 minutes 25 seconds west along the North margin of the right-of-way of Riverplace Drive 13.36 feet to a point marked by an iron pin; thence run in a Northwesterly direction along the North margin of the right-of-way of Riverplace Drive an arc distance of 241.75 feet (which arc has a radius of 359.92 feet, a delta angle of 38 degrees 29 minutes 06 seconds, a chord course of north 66 degrees 04 minutes 38 seconds west and a chord distance of 237.23 feet) to a point marked by a Nail set in asphalt and the TRUE POINT OF BEGINNING. Said property is shown as TRACT “A”, containing 2.0377 acres, on a certain map or plat of survey entitled “Boundary Survey for Carrabba’s Restaurant”, prepared by Donaldson, Garrett & Associates, Inc. (James P. Garrett, Georgia Registered Surveyor No. 2466), dated October 22, 1994, revised November 22, 1994, and recorded in Plat Book 87, Pages 992 and 993, Bibb County, Georgia Records, to which map or plat of survey and the record thereof reference is hereby made for all purposes in aid of the description of said property.

TOGETHER WITH, as appurtenance, all those real property rights which benefit the property as contained in the Easement from Southeast Timberlands, Inc. to J. Gordon Bennett, III, filed May 2, 1991 at Deed Book 1987, Page 270, aforesaid records.

 

46.	FEE PARCEL DESCRIPTION: UNIT 1102

ALL THAT TRACT or parcel of land lying and being in Land Lot 208 of the 20th District, 2nd Section, Cobb County, Georgia, and being more particularly described as follows:

BEGINNING at an iron pin set (1/2-inch rebar) at the intersection of the northwest right-of-way of Ernest Barrett Parkway (right-of-way varies) with the northeast right-of-way of Cobb Place Drive (right-of-way varies); thence along the northeast right-of-way of Cobb Place Drive South 73 degrees 40 minutes 36 seconds West 45.78 feet to an iron pin set; thence North 75 degrees 30 minutes 22 seconds West 33.92 feet to an iron pin set; thence North 35 degrees 33 minutes 35 seconds West 277.43 feet to an iron pin set (1/2-inch rebar); thence leaving said right-of-way North 54 degrees 26 minutes 25 seconds East 207.70 feet to an iron pin set; thence along an arc 29.02 feet subtended by a chord bearing North 56 degrees 13 minutes 43 seconds East and a chord distance of 29.01 feet with a radius of 465.04 feet to an iron pin set; thence South 35 degrees 33 minutes 35 seconds East 309.11 feet to an iron pin set on the northwest right-of-way of Earnest Barrett Parkway; thence along said right-of-way South 54 degrees 26 minutes 25 seconds West 55.61 feet to an iron pin set; thence South 35 degrees 33 minutes 35 seconds East 8.50 feet to an iron pin set; thence South 54 degrees 26 minutes 25 seconds West 116.09 feet to the POINT OF BEGINNING. Said tract being 1.687 acres (73,973.06 square feet) more or less.

 

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47.	FEE PARCEL DESCRIPTION: UNIT 1108

ALL THAT TRACT or parcel of land lying and being in Land Lot 110 of the 12th District of Clayton County, Georgia, being more particularly described as follows:

Commence at a point at the intersection of the southwesterly right-of-way line of Mt. Zion Road (variable right-of-way) with the northwesterly right-of-way line of Mt. Zion Circle (50-foot right-of-way); proceed thence northwesterly along the right-of-way of Mt. Zion Road a distance of 1504.23 feet to a point, said point being the TRUE POINT OF BEGINNING; proceed thence South 43 degrees 14 minutes 51 seconds West a distance of 261.11 feet to a point; proceed thence North 46 degrees 45 minutes 09 seconds West a distance of 193.00 feet to point; proceed thence North 43 degrees 14 minutes 51 seconds East a distance of 260.90 feet to point; proceed thence South 46 degrees 48 minutes 52 seconds East a distance of 193.00 feet to a point, said point being the TRUE POINT OF BEGINNING; containing 1.16 acres more or less and being shown on ALTA/ACSM Survey for: Fourth Quarter Properties XI, LLC, SouthTrust Bank of Georgia, N.A., Carrabba’s Italian Grill, Inc., Baker & Hostetler, L.P. and First American Title Insurance Company, made by Travis Pruitt & Associates, P.C., bearing the seal of Travis N. Puritt, Sr., GA R.L.S. No. 1729, dated April 19, 1997, last revised April 29, 1997, which survey is incorporated herein by this reference and made a part hereof.

TOGETHER WITH the rights, privileges, easements and burdens granted under that certain Declaration of Operations, Easements, Covenants and Restrictions by Fourth Quarter Properties XI, LLC, a Georgia limited liability company dated April 29, 1997, recorded in Deed Book 3033, Page 4, Clayton County, Georgia records.

 

48.	FEE PARCEL DESCRIPTION: UNIT 1116

ALL THAT TRACT OR PARCEL OF LAND lying and being in the 241^st District, G.M., Clarke County, Georgia, and being more particularly described as follows:

To find the TRUE POINT OF BEGINNING, commence at a point located at the Southwest corner of the intersection of the Southwesterly right-of-way line of Timothy Road (which right-of-way is 100 feet) and the Southerly right-of-way line of Athens-Atlanta Highway (U.S. 78, a 200 foot right-of-way); running thence Southwesterly along the Southerly line of the right-of-way of said Athens-Atlanta Highway and along the arc of a curve (which arc has a radius of 2,944.79 feet and a chord distance of 53.85 feet on a bearing of South 81 degrees 03 minutes 35 seconds West), a distance of 53.85 feet to a point, which point is the TRUE POINT OF BEGINNING; from said TRUE POINT OF BEGINNING and leaving the southerly right-of-way line of said Athens-Atlanta Highway, running thence South 01 degrees 02 minutes 30 seconds East a distance of 285.07 feet to a point; running thence South 89 degrees 50 minutes 10 seconds West a distance of 180.00 feet to a point; running thence North 01 degrees 02 minutes 31 seconds West a distance of 264.63 feet to a point located on the southerly right-of-way line of said Athens-Atlanta Highway; running thence Northeasterly along the Southerly right-of-way line of said Athens-Atlanta Highway and along the arc of the curve to the left (which arc has a radius of 2,944.79 feet and a chord distance of 180.5 feet on a bearing of North 83 degrees 20 minutes 56 seconds East) a distance of 180.87 feet to a point; which point is the TRUE POINT OF BEGINNING, according to a plat of survey for ShowBiz Pizza Place, Inc., dated September 15, 1982, by Ben McLeroy, Georgia Registered Land Surveyor #1184.

 

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Tax Map Reference Number 074C A056D

 

49.	FEE PARCEL DESCRIPTION: UNIT 1119

ALL THAT TRACT or parcel of land lying and being in Land Lot 649 of the 16th District, 2nd Section of Cobb County, Georgia, and being more particularly described as follows:

TO FIND THE TRUE POINT OF BEGINNING, commence at a point located on the eastern side of the land lot line being common to Land Lots 719 and 720 of the aforesaid district, section and county and the northwestern right-of-way line of Barrett Parkway (formerly known as New Roberts Road and having a 120-foot right-of-way width); thence leaving the eastern side of the land lot line being common to Land Lots 719 and 720, run in a southwesterly direction along the northwestern right-of-way line of Barrett Parkway South 54 degrees 26 minutes 25 seconds West a distance of 674.89 feet to a point located on the southwestern right-of-way line of a private road known as Cobb Place Parkway (formerly known as New Street B) and having a variable right-of-way width); thence leaving the northwestern right-of-way line of Barrett Parkway, run along the southwestern, northwestern and western right-of-way lines of Cobb Place Parkway the following four (4) courses and distances and following the curvature thereof: (1) along the arc of a 72.444-foot radius curve to the left having an arc distance of 113.80 feet to a point (said arc being subtended by a chord lying to the west thereof bearing North 09 degrees 26 minutes 44 seconds East and being 102.45 feet in length); (2) along the arc of a 177.405-foot radius curve to the right having an arc distance of 239.38 feet to a point (said arc being subtended by a chord lying to the east thereof bearing North 03 degrees 05 minutes 43 seconds East and being 221.62 feet in length); (3) North 41 degrees 45 minutes 00 seconds East a distance of 213.30 feet to a point; and (4) along the arc of a curve of a 139.60-foot radius curve to the left having an arc distance of 99.29 feet to a point (said arc being subtended by a chord lying to the west thereof bearing North 21 degrees 22 minutes 30 seconds East and being 97.21 feet in length); thence leaving the western right-of-way line of Cobb Place Parkway, run South 89 degrees 00 minutes 00 seconds East, a distance of 25.00 feet to a point; said point being the centerline of Cobb Place Parkway and the eastern boundary line of Grantor’s property; thence along the centerline of Cobb Place Parkway and the eastern boundary line of Grantor’s property, run North 01 degree 00 minutes 00 seconds East, a distance of 486.58 feet to a point; thence leaving the centerline of Cobb Place Parkway and the eastern boundary line of Grantor’s property, run the following two (2) courses and distances: (1) North 89 degrees 00 minutes 00 seconds West a distance of 279.00 feet to a point; and (2) South 01 degree 00 minutes 00 seconds West, a distance of 197.69 feet to an iron pin placed, said iron pin placed being the TRUE POINT OF BEGINNING; from the TRUE POINT OF BEGINNING, as thus established, run the following four (4) courses and distances: (1) South 89 degrees 00 minutes 00 seconds East a distance of 244.00 feet to an iron pin placed; (2) South 01 degree 00 minutes 00 seconds West a distance of 151.05 feet to an iron pin placed; (3) North 89 degrees 00 minutes 00 seconds West a distance of 244.00 feet to a nail in cap placed; and (4) North 01 degree 00 minutes 00 seconds East a distance of 151.05 feet to an iron pin placed, said iron pin placed being the TRUE POINT OF BEGINNING.

 

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The above described property contains 0.846 acres more or less, and is shown on and described according to that certain survey prepared for Outback Steakhouse of Florida, Inc., Andrew Weiss, P.C. and Chicago Title Insurance Company by Watts & Browning Engineers, Inc., (G.M. Gillespie, Georgia Registered Land Surveyor No. 2121), dated May 23, 1994, last revised July 7, 1994, which survey is incorporated herein by this reference and made a part of this description.

TOGETHER WITH the rights, privileges and easements granted under that certain Limited Warranty Deed recorded in Deed Book 3548, Page 367, Cobb County, Georgia records.

TOGETHER WITH the rights, privileges and easements granted under that certain Cobb Place Reciprocal Easement Agreement dated August 14, 1985, recorded in Deed Book 3607, Page 23, Cobb County, Georgia records; as assigned by that certain Assignment and Assumption Agreement from CA Cobb Retail Investors, Ltd. to Cobb Retail Associates, a Georgia general partnership, dated February 11, 1986, filed for record March 10, 1986, recorded in Deed Book 3851, Page 171, aforesaid county records; as amended by that certain Amendment to Cobb Place Reciprocal Easement Agreement dated November 28, 1990, filed for record December 7, 1990, recorded in Deed Book 5949, Page 516, aforesaid county records; as affected by that certain Easement and Indemnity Agreement dated August 8, 1991, filed of record August 9, 1991, recorded in Deed Book 6223, Page 433, aforesaid county records; as further amended in deed Book 8494, Page 552, aforesaid county records.

TOGETHER WITH the rights arising from that certain Easement and Indemnity Agreement dated August 8, 1991, filed of record August 9, 1991, recorded in Deed Book 6223, Page 433, aforesaid county records.

TOGETHER WITH the rights, privileges and easements granted under that certain Amendment and Restatement of Easement Agreement by and between Senior Corp. and Cobb Retail Associates, et al., dated August 20, 1986, filed for record November 6, 1986, recorded in Deed Book 4195, Page 316, Cobb County, Georgia records and in Deed Book 4195, Page 376, aforesaid county records.

TOGETHER WITH the rights, privileges and easements granted under that certain Easement Agreement by and between Jose Manuel Lomelin, et al., and Cobb Retail Associates, et al., dated August 22, 1986, filed for record November 6, 1986, recorded in Deed Book 4195, Page 435, Cobb County, Georgia records and in Deed Book 4195, Page 458, aforesaid county records.

 

50.	FEE PARCEL DESCRIPTION: UNIT 1120

ALL THAT TRACT or parcel of land lying and being in Land Lot 23 of the 1st District, 5th Section, City of Douglasville, Douglas County, Georgia, said tract or parcel further described as follows:

To find the Point of Beginning commence at a concrete right-of-way monument found at the intersection of the westerly right-of-way line of Chapel Hill Road (r/w varies) and the northerly right-of-way line of Douglas Boulevard (100 ft r/w); thence the following courses and distances along the northerly right-of-way line of Douglas Boulevard to the Point of Beginning: North 87

 

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degrees 28 minutes 24 seconds West for a distance of 56.11 feet to a point; thence along a curve to the right having a radius of 522.96 feet and an arc length of 126.25 feet, being subtended by a chord of North 80 degrees 47 minutes 54 seconds West for a distance of 125.94 feet to an iron pin found on the northerly right-of-way line of Douglas Boulevard said iron pin found being the Point of Beginning; thence the following courses and distances along the northerly right-of-way line of Douglas Boulevard along the arc of a curve to the right having a radius of 522.96 feet and an arc length of 75.56 feet, being subtended by a chord of North 69 degrees 44 minutes 36 seconds West for a distance of 75.49 feet to a point; thence North 65 degrees 36 minutes 15 seconds West for a distance of 166.95 feet to a point; thence along a curve to the left having a radius of 622.96 feet and an arc length of 67.35 feet, being subtended by a chord of North 68 degrees 42 minutes 05 seconds West for a distance of 67.32 feet to an iron pin found; thence North 18 degrees 12 minutes 05 seconds East for a distance of 186.89 feet leaving the northerly right-of-way line of Douglas Boulevard to an iron pin found; thence North 77 degrees 01 minute 09 seconds East for a distance of 167.34 feet to an iron pin found; thence South 27 degrees 21 minutes 53 seconds East for a distance of 134.90 feet to an iron pin found; thence South 00 degrees 34 minutes 12 seconds East for a distance of 214.88 feet to an iron pin found on the northerly right-of-way line of Douglas Boulevard said iron pin found being the Point of Beginning. Together with and subject to covenants, easements and restrictions of record. Said parcel contains 1.471 acres, more or less.

TOGETHER WITH A 50 FOOT ACCESS EASEMENT being more particularly described as ALL THAT TRACT or parcel of land lying and being in Land Lot 23 of the 1st District, 5th Section, City of Douglasville, Douglas County, Georgia, said tract or parcel further described as follows:

To find the Point of Beginning commence at a concrete right-of-way monument found at the intersection of the westerly right-of-way lien of Chapel Hill Road (r/w varies) and the northerly right-of-way line of Douglas Boulevard (100 ft r/w); thence the following courses and distances along the northerly right-of-way line of Douglas Boulevard: North 87 degrees 28 minutes 24 seconds West for a distance of 56.11 feet to a point; thence along a curve to the right having a radius of 522.96 feet and an arc length of 126.25 feet, being subtended by a chord of North 80 degrees 47 minutes 54 seconds for a distance of 125.94 feet to an iron pin found; thence North 00 degrees 34 minutes 12 seconds West for a distance of 214.88 feet leaving the northerly right-of-way line of Douglas Boulevard to an iron pin found; thence North 27 degrees 21 minutes 53 seconds West for a distance of 134.90 feet to an iron pin found at the Point of Beginning; thence South 77 degrees 01 minute 09 seconds West for a distance of 167.34 feet to an iron pin found; thence North 18 degrees 12 minutes 05 seconds East for a distance of 58.73 feet to an iron pin set on the southerly right-of-way line of Interstate I-20; thence North 77 degrees 00 minutes 22 seconds East for a distance of 168.68 feet along the southerly right-of-way line of Interstate I-20 to an iron pin set; thence South 12 degrees 59 minutes 38 seconds East for a distance of 50.28 feet leaving the southerly right-of-way line of Interstate I-20 to an iron pin set; thence South 77 degrees 01 minute 09 seconds West for a distance of 31.75 feet to an iron pin found and the Point of Beginning.

 

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TOGETHER WITH the rights, privileges, easements and burdens contained in that certain Perpetual Easement as contained in that certain General Warranty Deed from Benchmark United, Inc. to J.R. Morgan Oil Company, Inc., dated September 8, 1993, filed of record September 13, 1993, recorded in Deed Book 833, Page 527, aforesaid county records.

TOGETHER WITH the rights, privileges, easements and burdens contained in that certain Mutual Access, Non-Exclusive Parking and Sewer and Utility Easement Agreement by and between Benchmark United, Inc. and Outback Steakhouse of Florida, Inc., dated Nov. 2, 1995, filed of record Nov. 11, 1995, as recorded in Deed Book 971, page 489, aforesaid county records. Easement Agreement and Amendment to Mutual Access, Non-Exclusive Parking and Sewer and Utility Easement Agreement by and between Benchmark United, Inc. and Outback Steakhouse of Florida, Inc., dated Sept. 13, 1999, filed of record Sept. 15, 1999, as recorded in Deed Book 1281, page 467, aforesaid county records.

 

51.	FEE PARCEL DESCRIPTION: UNIT 1121

ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lot 229 of the 16^th District of Rockdale County, Georgia, and being more particularly described as follows:

TO FIND THE TRUE POINT OF BEGINNING, commence at a concrete monument found at the intersection of the southern right of way line of Old Covington Highway (Old S.R. 12) (50 foot right of way) and the western right of way line of Old Covington Access Road; run thence South 18 degrees 23 minutes 22 seconds West for a distance of 101.18 feet to an iron pin found; thence South 44 degrees 25 minutes 23 seconds West for a distance of 81.50 feet, to a point; thence along a curve to the left having a radius of 192.00 feet for an arc length of 100.57 feet , being subtended by a chord of South 58 degrees 00 minutes 57 seconds West having a chord distance of 99.43 feet; thence along a curve to the left having a radius of 193.00 feet and an arc length of 13.36 feet, being subtended by a chord of South 46 degrees 22 minutes 32 seconds West having a chord distance of 13.35 feet to a concrete monument found and the TRUE POINT OF BEGINNING; from the true point of beginning thus established, run thence South 43 degrees 54 minutes 54 seconds West for a distance of 343.52 feet to a concrete monument found; thence South 64 degrees 07 minutes 57 seconds West for a distance of 53.00 feet to a point; thence North 11 degrees 58 minutes 22 seconds West for a distance of 309.56 feet to a point; thence North 38 degrees 11 minutes 13 seconds East for a distance of 61.40 feet to a point; thence South 89 degrees 20 minutes 21 seconds East for a distance of 231.39 feet to a point; thence South 46 degrees 05 minutes 06 seconds East for a distance of 112.22 feet to a concrete monument found and the TRUE POINT OF BEGINNING, containing 1.68 acres and shown on that certain site Exhibit for Hugh W. Cheek prepared by Patrick & Associates, Inc., dated June 19, 1995, last revised November 7, 1995.

Tax Map Reference Number 072-0-01-014B

TOGETHER WITH the rights, privileges, easements and burdens granted under that certain Easement Agreement by and among Hugh W. Cheek, The Estate of Georgie D. Cheek, and Chatto Fields, II Limited Partnership, and Cracker Barrel Old Country Store, Inc., dated November 15, 1995, filed for record November 15, 1995, recorded in Deed Book 1174, Page 108, aforesaid Records, as amended by Amended Easement Agreement by and among Chatto Fields II, Limited Partnership, Hugh W. Cheek, individually and Hugh W. Cheek, as Executor under the Last Will and Testament of Georgie E. Cheek, a/k/a Mrs. Omar R. Cheek, and Cracker Barrel, dated December 4, 1995, filed for record December 21, 1995 at 3:29 p.m., recorded in Deed Book 1187, Page 1, aforesaid records, as supplemented by Supplement to Easement Agreement by and amount Hugh W. Cheek, The Estate of Georgie D. Cheek, and Chatto Fields II Limited Partnership, a Georgia limited partnership, dated October 21, 1996, filed for records October 23, 1996 at 4:58 p.m., recorded in Deed Book 1290, Page 192, aforesaid records.

 

52.	FEE PARCEL DESCRIPTION: UNIT 1122

AS TO THE 2.268 ACRES:

TRACT 1

ALL THAT TRACT or parcel of land lying and being in Land Lot 152 of the 7th Land District of Gwinnett County, Georgia and being more particularly described as follows:

BEGINNING at a point formed by the intersection of the northwest 90 foot right-of-way of Old Peachtree Road and the southwest 80 foot right-of-way of Gwinco Boulevard if extended; thence in a northerly direction along the 80 foot right-of-way of Gwinco Boulevard for a distance of 1197.01 feet to a 1/2” rebar set, said point being the TRUE POINT OF BEGINNING; thence leaving said right-of-way North 40 degrees 14 minutes 20 seconds West for a distance of 240.00 feet to a 1/2” rebar set; thence North 51 degrees 26 minutes 50 seconds East for a distance of 280.00 feet to a 1/2” rebar set; thence South 40 degrees 14 minutes 20 seconds East for a distance of 240.00 feet to a 1/2” rebar set on the northwest right-of-way of Gwinco Boulevard; thence along said right-of-way South 51 degrees 26 minutes 50 seconds West for a distance of 251.25 feet to a point; thence leaving said right-of-way North 35 degrees 11 minutes 32 seconds West for a distance of 115.48 feet to a point; thence South 00 degrees 14 minutes 34 seconds for a distance of 19.69 feet to a point; thence South 51 degrees 26 minutes 50 seconds West for a distance of 17.45 feet to a point; said point being the POINT OF BEGINNING; sold property contains 1.540 acres more or less.

 

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TRACT 2

ALL THAT TRACT or parcel of land lying and being in Land Lot 152 of the 7th Land District of Gwinnett County, Georgia and being more particularly described as follows:

BEGINNING at a point formed by the intersection of the northwest 90 foot right-of-way of Old Peachtree Road and the southwest 80 foot right-of-way of Gwinco Boulevard if extended; thence in a northerly direction along the 80 foot right-of-way of Gwinco Boulevard for a distance of 1197.01 feet to a 1/2” rebar set; thence leaving said right-of-way North 40 degrees 14 minutes 20 seconds West for a distance of 240.00 feet to a 1/2” rebar set; thence North 51 degrees 26 minutes 50 seconds East for a distance of 53.14 feet to a 1/2” rebar set, said point being the TRUE POINT OF BEGINNING; thence North 35 degrees 00 minutes 55 seconds West for a distance of 100.60 feet to a 1/2” rebar set; thence South 54 degrees 59 minutes 05 seconds West for a distance of 50.00 feet to a 1/2” rebar set; thence North 35 degrees 00 minutes 55 seconds West for a distance of 55.09 feet to a 1/2” rebar set on the southeast right-of-way of Interstate 85; thence along said right-of-way North 45 degrees 17 minutes 55 seconds East for a distance of 215.97 feet to a 1/2” rebar set; thence leaving said right-of-way South 36 degrees 53 minutes 10 seconds East for a distance of 181.69 feet to a 1/2” rebar set; thence South 51 degrees 26 minutes 50 seconds West for a distance of 169.14 feet to a 1/2” rebar set, said point being the POINT OF BEGINNING; said property contains 0.728 acres more or less.

AS TO THE 0.028 ACRES:

TRACT 3

ALL THAT TRACT or parcel of land lying and being in Land Lot 152 of the 7th Land District, Gwinnett County, Georgia and being more particularly described as follows:

To find the point of beginning, commence at the intersection of the centerline of Old Peachtree Road and the centerline of Lawrenceville-Suwanee Road; thence leaving said point and traveling in a northwesterly direction along said centerline of Lawrenceville-Suwanee Road 775.27 feet to a point on said centerline; thence leaving said centerline and traveling South 49 degrees 24 minutes 58 seconds West for a distance of 50.40 feet to a point at the intersection of the southwesterly right-of-way of Lawrenceville-Suwanee Road (right-of-way varies) and the northwesterly right-of-way of Gwinco Boulevard (80-foot right-of-way), said point being the TRUE POINT OF BEGINNING; thence from said point as thus established, continuing along said right-of-way of Gwinco Boulevard, South 49 degrees 24 minutes 58 seconds West for a distance of 45.00 feet to a point; thence leaving said right-of-way, North 40 degrees 35 minutes 02 seconds West for a distance of 26.71 feet to a point; thence North 49 degrees 24 minutes 59 seconds East for a distance of 45.44 feet to a point on the aforesaid southwesterly right-of-way of Lawrenceville-Suwanee Road; thence continuing along said right-of-way, South 39 degrees 38 minutes 33 seconds East for a distance of 26.71 feet to a point, said point being the TRUE POINT OF BEGINNING.

 

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Said property contains 0.028 acres, as disclosed on that ALTA/ACSM Land Title Survey for Outback Steakhouse of Florida, Inc., prepared by Precision Planning, Inc., dated December 10, 2003, bearing the stamp and seal of Lee Jay Johnson, Georgia Registered Land Surveyor No. 2845, said survey being incorporated herein by reference.

 

53.	FEE PARCEL DESCRIPTION: UNIT 1123

ALL THAT TRACT or parcel of land lying and being in Land Lot 171 of the 9th Land District, City of Gainesville, Hall County, Georgia said tract or parcel being more particularly described as follows:

To find the Point of Beginning commence at the intersection of the southerly right-of-way line of Georgia State Route 53 (r/w varies) and the easterly right-of-way line of relocated Green Hill Circle (r/w varies) if said right-of-way lines were extended to form an intersection instead of a miter. Thence South 48 degrees 54 minutes 00 seconds East for a distance of 23.86 feet along the extension of the right-of-way line of Georgia State Route 53 to an iron pin set at the intersection of the southerly right-of-way line of Georgia State Route 53 and the easterly right-of-way line of relocated Green Hill Circle; thence the following courses and distances along the southerly right-of-way line of Georgia State Route 53 to the Point of Beginning; thence South 48 degrees 54 minutes 00 seconds East for a distance of 223.00 feet to an iron pin set; thence South 48 degrees 54 minutes 00 seconds East for a distance of 53.22 feet to an iron pin set; thence along a curve to the left having a radius of 1513.34 feet and an arc length of 103.87 feet, being subtended by a chord of South 50 degrees 51 minutes 58 seconds East for a distance of 103.85 feet to an iron pin set, said iron pin set being the Point of Beginning; thence along a curve to the left having a radius of 1513.34 feet and an arc length of 150.48 feet, being subtended by a chord of South 55 degrees 40 minutes 52 seconds East for a distance of 150.42 feet continuing along the southerly right-of-way line of Georgia State Route53 to an iron pin set; thence South 41 degrees 06 minutes 00 seconds West for a distance of 76.02 feet leaving said southerly right-of-way line of Georgia State Route 53 to an iron pin set; thence South 48 degrees 54 minutes 00 seconds East for a distance of 37.63 feet to an iron pin set; thence South 41 degrees 06 minutes 00 seconds West for a distance of 299.78 feet to an iron pin set on the northerly right-of-way line of relocated Green Hill Circle; thence the following courses and distance along the northerly right-of-way line of relocated Green Hill Circle: North 04 degrees 18 minutes 40 seconds East for a distance of 40.42 feet to a hub and tac found; thence South 86 degrees 47 minutes 24 seconds West for a distance of 57.33 feet to a hub and tac found; thence North 48 degrees 52 minutes 22 seconds West for a distance of 121.77 feet to an iron pin set; thence North 41 degrees 06 minutes 00 seconds East for a distance of 365.66 feet leaving said northerly right-of-way line of relocated Green Hill Circle to an iron pin set on the southerly right-of-way line of Georgia State Route 53, said iron pin set being the Point of Beginning. Said tract or parcel containing 1.514 acres more or less or 65,932 square feet more or less as per plat of survey for Outback Steakhouse of Florida, Inc. and First American Title Insurance Company dated January 8, 1997, revised January 16, 1997 and January 22, 1997, by Glenn A. Valentino, Georgia Registered Land Surveyor No. 2528 of Valentino & Associates, Inc. which plat of survey is by this reference incorporated herein. Said property being 1.514 acres (65,932 square feet) more or less.

 

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TOGETHER WITH the rights, privileges, easements and burdens contained in that certain Declaration of Restrictive Covenants and Grant of Easements by Stafford Properties, Inc., dated February 14, 1997, filed of record February 18, 1997, recorded in Deed Book 2806, Page 218, Hall County, Georgia records; as amended by that certain Amended Declaration of Restrictive Covenants and Grant of Easements by Stafford Properties, Inc., Party City of America, Inc., AEI Net Lease Income & Growth Fund XIX, Brinker Georgia, Inc., Outback Steakhouse of Florida, Inc., BV Rentals of Georgia, L.L.C., AmSouth Bank of Alabama, B&W Restaurants, LLC, Lancy W. Gotfredson, and Community Bank & Trust, dated September 4, 1997, filed of record September 5, 1997, recorded in Deed Book 2962, Page 237, aforesaid county records.

 

54.	FEE PARCEL DESCRIPTION: UNIT 1124

ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lot 135 of the 7^th Land District, Fayette County, Georgia, and being more particularly describes as follows:

BEGIN at an iron pin found on the southerly right of way line of Peachtree Parkway (130 foot right of way), which point lies South 84 degrees 8 minutes 43 seconds East a distance of 315.27 feet from the intersection of said right of way line of Peachtree Parkway with the southeasterly right of way line of Georgia State Route No. 74 (right of way varies), and run thence along said right of way line of Peachtree Parkway South 84 degrees 8 minutes 43 seconds East a distance of 347.80 feet to an iron pin found; run thence South 39 degrees 8 minutes 43 seconds East a distance of 70.71 feet to an iron pin found; run thence South 5 degrees 51 minutes 17 seconds West a distance of 180 feet to an iron pin found; run thence North 84 degrees 8 minutes 43 seconds West a distance of 397.80 feet to an iron pin found; run thence North 5 degrees 51 minutes 17 seconds East a distance of 230 feet to an iron pin found at the POINT OF BEGINNING as established above; being shown and described as Outlot #4 and Outlot #5, a total of 2.072 acres, containing 90, 244 square feet, on that certain boundary and topographic survey prepared for Outback Steakhouse of Florida, Inc., and First American Title Insurance Company, by Armstrong Land Surveying, Inc., Robert T. Armstrong, Georgia Registered Land Surveyor #1901, dated October 31, 1996, last revised January 6, 1997.

TOGETHER WITH the easement rights applicable to said property and SUBJECT TO those matters contained in that certain Restriction, Operating and Easement Agreement by and between Sofran Peachtree City, L.L.C., and Peachtree City Holdings, L.L.C., dated December 1, 1995, recorded in Deed Book 1028, Page 145, Fayette County, Georgia Records; as amended by that certain First Amendment to Restriction, Operating and Easement Agreement, dated March 14, 1996, recorded in Deed Book 1052, Page 491, aforesaid records; as further amended by that certain Second Amendment to Restriction, Operating and easement Agreement, dated September 4, 1996, recorded in Deed Book 1106, Page 378, aforesaid records; as further amended by that certain Third Amendment to Restriction, Operating and Easement Agreement, dated January 22, 1997, recorded in Deed Book 1122, Page 399, aforesaid records; as further amended by that certain Fourth Amendment to Restriction, Operating and Easement Agreement, dated January 24, 1997, recorded in Deed Book 1122, Page 403, aforesaid records; as further amended by that certain Fifth Amendment to Restriction, Operating and Easement Agreement, dated December 30, 1999, and recorded December 30, 1999, at Deed Book 1461, Page 399, aforesaid records; and as further amended by Sixth Amendment to Restriction, Operating and Easement Agreement, dated January 20, 2005, and recorded January 21, 2005, in Deed Book 2693, Page 1, aforesaid records; and as further amended by Seventh Amendment to Restriction, Operating and Easement Agreement, dated March 15, 2006, and recorded March 15, 2006, in Deed Book 2974, Page 469, aforesaid records.

Tax Map Reference Number 0736 078

 

55.	FEE PARCEL DESCRIPTION: UNIT 1125

ALL THAT TRACT or parcel of land lying and being in Land Lots 193 and 204 of the 14th District, 2nd Section, Cherokee County, Georgia and being more particularly described as follows:

 

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TO FIND THE POINT OF BEGINNING, commence at the intersection of Land Lots 192, 193, 204 and 205; thence travel along the land lot line common to Land Lots 193 and 204, South 01 degree 29 minutes 17 seconds West for a distance of 130.00 feet to a point, said point being the intersection of said land lot line and the westerly right-of-way of State Route 140; thence leaving said land lot line and traveling along said right-of-way along a curve to the left having a radius of 800.00 feet and an arc length of 30.94 feet, being subtended by a chord of South 34 degrees 14 minute 53 seconds East for a distance or 30.94 feet to a point, said point marked by a 1/2 inch rebar pin set, said point being the TRUE POINT OF BEGINNING. Thence along a curve to the left having a radius of 800.00 feet and an arc length of 19.30 feet, being subtended by a chord of South 36 degrees 02 minutes 50 seconds East for a distance of 19.30 feet to a 1/2 inch rebar set; thence South 36 degrees 10 minutes 36 seconds East for a distance of 197.53 feet to a 1/2 inch rebar set; thence South 17 degrees 26 minutes 20 seconds West for a distance of 47.20 feet to a 1/2 inch rebar set; thence South 36 degrees 10 minutes 35 seconds East for a distance of 29.79 feet to a 1/2 inch rebar set; thence leaving said right-of-way South 54 degrees 05 minutes 45 seconds West for a distance of 222.32 feet to a 1/2 inch rebar set; thence North 35 degrees 53 minutes 15 seconds West for a distance of 273.49 feet to a 1/2 inch rebar set; thence North 53 degrees 49 minutes 24 seconds East for a distance of 258.98 feet to a 1/2 inch rebar set; said point being the TRUE POINT OF BEGINNING. Said property contains 1.596 acres, more or less.

TOGETHER WITH the rights, privileges, easements and burdens granted under that certain Declaration of Restrictions, Covenants and Conditions and Grant of Easements by Bright-Sasser Canton, L.L.C, a Georgia limited liability company dated December 19, 1997, filed for record December 31, 1997, recorded in Deed Book 2939, Page 168, Cherokee County, Georgia records; as amended by that certain First Amendment to Declaration of Restrictions, Covenants and Grant of Easement dated July XX, 1998, filed for record August 14, 1998, recorded in Deed Book 3242, Page 255, aforesaid county records.

 

56.	FEE PARCEL DESCRIPTION: UNIT 1133

Parcel 1 according to the plat of subdivision for Home Depot U.S.A., Inc., being the eastern one-half of Lot 4 of the Estate of Dorothy Salfner, 6^th G.M. District, Savannah, Chatham County, Georgia, certified by William H. Saussy, Jr., GA. Reg. L.S. No 1216, dated November 23, 1993, and recorded in Subdivision Map Book 13-S, Folio 98, Chatham County, Georgia records.

TOGETHER WITH the perpetual easements granted under that certain Declaration of Joint Reciprocal Easement dated July 2, 1993 at Record Book 160-W, Folio 495, Chatham County, Georgia Records.

TOGETHER WITH the perpetual easements granted under that certain Reciprocal Easement and Operation Agreement, dated April 15, 1994 at Record Book 166-S, Folio 256, Chatham County, Georgia Records.

TOGETHER WITH and subject to (1) Easements with Covenants and Restrictions affecting Land, by and between SS Partnership and Lowe’s Home Centers, Inc., dated April 3, 1992, and recorded April 8, 1992, in Deed Book 153-P, page 448, Chatham County, Georgia Records; and (2) Declaration of Covenants, Conditions and Restrictions for Southcase Shopping Center, by SS Partnership (and affirmed by Gladys B. Boykin and Paula B. Dewitt, Trustee under the Will of Paul R. Boykin, as Lessors), dated April 3, 1992, and recorded in Deed Book 153-P, page 483, Chatham County, Georgia Records.

Tax Map Reference Number 2-0695-01-021

LESS AND EXCEPT the property conveyed to the Georgia Department of Transportation by Quit Claim Deed at Deed Book 339-B, Page 324, and by Right of Way Deed from Private Restaurants Properties, LLC to the Department of Transportation, dated March 7, 2008, and recorded March 27, 2008, in Deed Book 339-B, Page 319, aforesaid records.

 

57.	FEE PARCEL DESCRIPTION: UNIT 1134

All that tract or parcel of land lying and being in Land Lot 2 of the Second Land District in the City of Albany, Dougherty County, Georgia, and being Lot 4-A, Albany Square Subdivision and being a re-combination of Lot 4 and Lot 5, Albany Square Subdivision, as more fully shown on plant of survey of the property of Owen Aronov, Jake Aronov, Frank M. Johnston, Rand Warren Aronov, Jane Aronov Nafel, Freddi Lynn Aronov, and the Thelma A. Mendel Lifetime Trust, dated August 8, 1995 by Ritchey Marbury, III, Registered Land Surveyor No. 1495, and a copy of which is recorded in Plat Cabinet No. 1, Slide No. C-20, in the Office of the Clerk of the Superior Court of Dougherty County, Georgia, which plat and the recorded copy thereof is incorporated herein by reference for all purposes, and being more particularly described as follows:

 

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COMMENCE at a point where the extension of the north right of way of Dawson Road intersects the extension of the west right of way of Westover Boulevard, which point would be the extended northwest corner of Dawson Road and Westover Boulevard; from this point run north 36 degrees 36 minutes 56 seconds east along the west right of way of Westover Boulevard for a distance of 386.54 feet to a point, continue along the west right-of-way of Westover Blvd., around a curve to the left which has an arc of 263.64 feet and a radius of 495.00 feet, the chord being north 21 degrees 21 minutes 28 seconds east for a distance of 260.54 feet to a point, thence continue along the west right of way of Westover Boulevard north 06 degrees 06 minutes 00 seconds east for a distance of 42.68 feet to a point, thence continue along the west right of way of Westover Boulevard north 52 degrees 45 minutes 00 seconds west for a distance of 8.19 feet to a point; thence continue along the west right of way of Westover Boulevard north 06 degrees 06 minutes 00 seconds east for a distance of 103.41 feet to the POINT OF BEGINNING; from the POINT OF BEGINNING run south 71 degrees 00 minutes 34 seconds west for a distance of 28.26 feet to a point; thence run north 52 degrees 45 minutes 00 seconds west for a distance of 143.33 feet to a point; thence run north 10 degrees 11 minutes 55 seconds west for a distance of 144.52 feet to a point; thence run 37 degrees 15 minutes 00 seconds east for a distance of 299.91 feet to a point; thence run south 72 degrees 05 minutes 15 seconds east for a distance of 203.39 feet to a point which is on the west right of way of Westover Boulevard; thence run along the west right of way of Westover Boulevard around a curve to the left which has an arc of 282.74 feet and a radius of 580.00 feet, the chord being south 34 degrees 47 minutes 00 seconds west for a distance of 279.95 feet to a point; thence continue along the west right of way of Westover Boulevard north 69 degrees 10 minutes 56 seconds west for a distance of 12.00 feet to a point; thence continue along the west right of way Westover Boulevard around a curve to the left which has an arc of 152.07 feet and a radius of 592.00 feet, the chord being south 13 degrees 27 minutes 32 seconds west for a distance of 151.65 feet to a point; thence continue along the west right of way of Westover Boulevard south 06 degrees 06 minutes 00 seconds west for a distance of 22.95 feet to the POINT OF BEGINNING.

SAID plat is further shown and included on a plat of the property of Albany Square Subdivision by Ritchey M. Barbury, Registered Land Surveyor No. 1495, dated December 24, 1991, and recorded in Plat Cabinet No. 1, Slide No. B-100, aforesaid records.

TOGETHER with and subject to (1) Easements with Covenants and Restrictions Affecting Land dated April 29, 1992, filed for record May 29, 1992 and recorded in Deed Book 1203, Page 161, aforesaid records, and ratified pursuant to Ratification of Easements with Covenants and Restrictions Affecting Land filed for record August 20, 1993 and recorded in Deed Book 1314, Page 308; as modified by Modification Agreement dated September 22, 1995, recorded in Deed Book 1527, Page 282, permitting Lots 4 and 5 to be replatted as one lot; aforesaid records; (2) that certain Cross-Easement Agreement among Sears, Roebuck & Company; Belk’s Department Store of Albany, Georgia; Monumental-Albany, Inc.; Aaron Aronov; Perry Mendel; Aaron Aronov, as Executor and Trustee under the Will of Herman Aronov, deceased; C. N. Spence, as Administrator of Will Annexed of Last Will and Testament of Herman Aronov, deceased, under Ancillary Probate Proceedings in Dougherty County, Georgia; John N. Beisel; Jake Aronov; and David R. Stambaugh, dated December 3, 1976, recorded in Deed Book 574, beginning at Page 8, Dougherty County Land Records, as amended by Amendment to Cross-Easement Agreement, dated April 24, 1981, recorded in Deed Book 678, beginning at Page 364, Dougherty County Land Records, as amended by Second Amendment to Cross-Easement Agreement, executed in two counterparts, dated June 1, 1987, recorded in Deed Book 885, beginning at Page 100 and ending at Page 142, Dougherty County Land Records, and as further amended by Third Amendment to Cross-Easement Agreement, dated May 9, 1988, recorded in Deed Book 922, Page 153, Dougherty County Land Records; and (3) that certain Cross-Easement Agreement for ingress and egress among Sears, Roebuck and Company; Belk’s Department Store of Albany, Georgia; The Equitable Life Assurance Society of the United States; McDonald’s Corporation; Rex Radio and Television, Inc., Aaron Aronov, Perry Mendel, Aaron Aronov as Trustee of Trust B and Trust E under Item 4 of the Last Will and Testament of Herman Aronov, deceased, John N. Beisel, Jake Aronov and David R. Stambaugh, dated April 24, 1981, recorded in Deed Book 678, beginning at Page 364, Dougherty County Land Records, as amended by Agreements amending Easements for Ingress and Egress executed in two counterparts, dated June 1, 1987, and June 21, 1987, recorded in Deed Book 885, Page 143, and Deed Book 885, Page 171, Dougherty County Land Records, and as further amended by Second Amendment to Easement for Ingress and Egress, dated May 9, 1988, recorded in Deed Book 922, Page 168, Dougherty County Land Records, from Aaron Aronov, Perry Mendel, Jake Aronov, David R. Stambaugh, Rand Warren Aronov, Jane A. Naftel, Freddi Lynn Aronov, Owen Aronov, and Teri A. Diamond, to The Equitable Life Assurance Society of the United States, Aaron Aronov, as Trustee of the trust under Item IV of the Last Will and Testament of Herman Aronov, deceased, Aaron Aronov, Perry Mendel, Jake Aronov, David R. Stambaugh, Rand Warren Aronov, Jane A. Naftel, Freddi Lynn Aronov, Owen Aronov and Teri A. Diamond, Sears, Roebuck & Co., Belk’s Department Store of Albany, Georgia, J.C. Penny Properties, Inc., and J.C. Penny Company, Inc., McDonald’s Corporation and Rex Radio and Television, Inc., dated October 31, 1989, recorded in Deed Book 1020, beginning on Page 159, aforesaid Dougherty County, Georgia, Records.

Parcel 2-6J on tax Map 352

 

58.	FEE PARCEL DESCRIPTION: UNIT 1135

All that tract or parcel of land situate, lying and being in Land Lot 15 of the 12^th District of Lowndes County, Georgia, containing 1.710 acres, designated as Tract No. 2 on a map or play of survey prepared by Transportation Systems Design, Inc. Engineers & Surveyors, dated December 11, 1996, and being more particularly described as follows: To find the TRUE POINT OF BEGINNING, commence at the intersection of southerly right of way of Georgia Highway No. 94 (84 foot right of way) and the westerly right of way of Club House Drive (60 foot right of way), said point being a concrete monument; thence south 25 degrees 56 minutes 06 seconds west for a distance of 189.22 feet along said right of way of Club House Drive to a  ¹/2 inch rebar; thence south 26 degrees 48 minutes 27 seconds west for a distance of 99.17 feet along said right of way to a  ¹/2 inch rebar; thence south 25 degrees 16 minutes 24 seconds west for a distance of 140.91 feet along said right of way to a  ¹/2 inch rebar; thence south 25 degrees 17 minutes 56 seconds west for a distance of 60.02 feet along said right of way to a  ¹/2 inch rebar, said point being

 

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the TRUE POINT OF BEGINNING; thence south 25 degrees 16 minutes 16 seconds west for a distance of 256.76 feet along said right of way to a  ¹/2 inch rebar; thence, leaving said right of way north 64 degrees 44 minutes 04 seconds west for a distance of 259.93 feet to a  ¹/2 inch rebar; thence north 87 degrees 54 minutes 48 seconds west for a distance of 197.51 feet to a concrete monument; thence north 65 degrees 06 minutes 53 seconds west for a distance of 98.87 feet to a  ¹/2 inch rebar; thence north 07 degrees 20 minutes 03 seconds east for a distance of 32.57 feet to a  ¹/2 inch rebar; thence north 82 degrees 39 minutes 57 seconds east for a distance of 35.30 feet to a  ¹/2 inch rebar; thence south 07 degrees 20 minutes 03 seconds east for a distance of 30.00 feet to a  ¹/2 inch rebar; thence south 82 degrees 39 minutes 57 seconds west for a distance of 30.00 feet to a  ¹/2 inch rebar; thence 65 degrees 06 minutes 53 seconds east for a distance of 95.05 feet to a  ¹/2 inch rebar; thence north 78 degrees 09 minutes 30 seconds east for a distance of 145.15 feet to a  ¹/2 inch rebar; thence 56 degrees 31 minutes 16 seconds east for a distance of 88.95 feet to a  ¹/2 inch rebar; thence north 55 degrees 20 minutes 53 seconds east for a distance of 79.82 feet to a  ¹/2 inch rebar; thence north 25 degrees 16 minutes 16 seconds east for a distance of 96.85 feet to a  ¹/2 inch rebar; thence 64 degrees 43 minutes 44 seconds east for a distance of 240.33 feet to the TRUE POINT OF BEGINNING. Said property is the same as that designated at TRACT 2 on map or play of survey entitled “Jenkins & Roberts Property Subdivision” recorded in Plat Cabinet A, Page/Folio 151, in the Lowndes County, Georgia deed records.

TOGETHER with and subject to (1) Reciprocal Easement Agreement by and between JDN Acquisitions, Inc. and James F. Roberts and R.F. Jenkins, dated July 10, 1984, recorded at Deed Book 442, page 655, Lowndes County, Georgia Records; (2) Cross Easement Agreement by and between Robert D. Jenkins and James D. Roberts and Outback Steakhouse of Florida, Inc, dated February 12, 1997, recorded at Deed Book 1385, page 314, Lowndes County, Georgia Records; and (3) Reciprocal Easement by and between Robert D. Jenkins and James D. Roberts, and Outback Steakhouse of Florida, Inc., dated February 12, 1977, recorded at Deed Book 1385, page 321, and re-recorded at Deed Book 1397, page 42, Lowndes County, Georgia Records.

Parcel 0009 on Tax Map 083B

 

59.	FEE PARCEL DESCRIPTION: UNIT 1137

ALL that tract of land situate lying and being in Land Lot 95 of the Fifth District, Houston County, Warner Robins, Georgia being more particularly described as follows:

FROM an iron pin at the corner common to the easterly right of way of Willie Lee Parkway and the northerly right of way of State Route No. 247 Connector, proceed north 75 degrees 30 minutes 20 seconds east, along the northerly right of way of State Route 247 Connector for 300.00 ft. to the point of beginning.

FROM the point of beginning, proceed north 14 degrees 29 minutes 40 seconds west for 250.00 ft. to an iron pin; thence north 75 degrees 30 minutes 20 seconds east for 340.03 ft. to an iron pin on the westerly right of way of a proposed public street having a 70 ft. right of way; thence along the westerly right of way of the proposed public street south 14 degrees 29 minutes 40 seconds east for 250.00 ft. to an iron pin on the northerly right of way of State Route 247 Connector thence south 75 degrees 30 minutes 20 seconds west, along the northerly right of way of the 247 Connector, 340.03 ft. to an iron pin at the point of beginning.

SAID property contains 1.951 acres and is more particularly described as 1.951 acres on that ALTA/ACSM Land Title Survey for First American Title Insurance Company, Outback Steakhouse of Florida, Inc., a Florida corporation and Blymen Corporation, Inc., a Delaware Corporation, dated 6-18-2001 prepared by Scarborough Land Surveys, Inc., bearing the stamp and seal of Terry M. Scarborough, Georgia Registered Land Surveyor No. 2223, said survey being incorporated herein by reference.

TOGETHER with as an appurtenance: all those real property rights which benefit the property as contained in that ingress and egress easement agreement by and between Blymen Corporation, Inc. and Outback Steakhouse of Florida, Inc., dated 6-22-2001, filed 6-27-2001 and recorded at Deed Book 1796, page 212, aforesaid records.

Tax Account Numbers 24532R and 1393IP

 

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60.	FEE PARCEL DESCRIPTION: UNIT 1201

Parcel 1 of Certified Survey Map No. 1925, recorded on August 21, 1973 in Volume 13 of Certified Survey Maps, at Pages 191, 192 and 193, as Document No. 860635, being a part of the Southwest  ¹/4 of Section 28, Township 7 North, Range 20 East, in the City of Brookfield, County of Waukesha, State of Wisconsin;

AND a parcel of land in said Southwest  ¹/4, both of which are bounded and described as follows:

COMMENCING at the West 1/4 corner of said Section 28; thence South 00°34’51” East a distance of 1203.12 feet along the West line of said Section 28; thence North 83°56’ 09” East, a distance of 1147.58 feet; thence South 00° 02’ 25” East, a distance of 85.48 feet; thence North 83° 56’ 09” East, a distance of 190.07 feet along the South right-of-way line of Bluemound Road, 170 feet wide, to THE POINT OF BEGINNING of this description, said point being the Northwest corner of Parcel 1 of the aforementioned Certified Survey Map; thence North 83° 56’ 09” East, a distance of 380.23 feet along the South right-of-way line of Bluemound Road; thence South 87°49’18” East, a distance of 34.85 feet; thence South 00° 02’ 25” East, a distance of 383.47 feet; thence South 83° 56’ 09” West, a distance of 415.24 feet; thence North 00° 02’ 25” West a distance 388.49 feet to the POINT OF BEGINNING.

 

61.	FEE PARCEL DESCRIPTION: UNIT 1264

All that tract or parcel of land lying and being in the Houston County, Alabama, and being more particularly described as follows:

One lot or parcel of land in the City of Dothan, Houston County, Alabama as surveyed by Branton Land Surveyors as per plat dated May 2, 1997 and being more particularly described as follows: Commencing at the Southwest corner of Section 22, T3N, R26E and from said point run North 00 degrees 01 minutes East along the West line of said section a distance of 780.27 feet to the Easterly R/W of Honeysuckle Road (80’ R/W); thence run in a Northerly direction along the East R/W of said Honeysuckle Road a distance of 371.43 feet; thence North 87 degrees 56 minutes 47 seconds East a distance of 342.25 feet; thence North 01 decrees 52 minutes 35 seconds West a distance of 471.28 feet; thence North 87 degrees 50 minutes 16 seconds East a distance of 49.56 feet to a set iron pipe and the POINT OF BEGINNING; thence continue North 87 degrees 50 minutes 16 seconds East a distance of 474.44 feet to an existing nail in pavement on the West R/W of Ross Clark Traffic Circle {250’ R/W); thence South 16 degrees 38 minutes 54 seconds East along said R/W a distance of 199.18 feet to an existing iron pipe and the Northeast comer of the Big 10 Tire Store; thence South 87 degrees 53 minutes 46 seconds West along the North line of said Big 10 Tire Store a distance of 524.97 feet to an existing iron pipe and the Northwest comer thereof; thence North 01 degrees 57 minutes 01 seconds West a distance of 192.31 feet to the POINT OF BEGINNING.

Said land being located in the NW 1/4 of the SW 1/4 of the above mentioned section and containing 2.20 acres.

 

 

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Being the same property conveyed to Private Restaurant Properties, LLC, a Delaware limited liability company by Quit Claim Deed from Outback Steakhouse of Florida, Inc., a Florida corporation, dated June 14, 2007, recorded July 06, 2007, in Deed Book 656, Page 171, Houston County, Alabama Records.

 

62.	FEE PARCEL DESCRIPTION: UNIT 1410

PARCEL 1:

That part of Lot 1 in River Oaks West Unit Number 1, being a subdivision of part of the Northwest 1/4 of Section 24 and that part of Lot 1 lying north of the center of the Little Calumet River in the subdivision of the Southwest 1/4 of said Section 24, Township 36 North, Range 14, East of the Third Principal Meridian, described as follows:

BEGINNING at the intersection of the new south right-of-way line of 159th street, as dedicated by document no. 25546780, and the west line of Park Avenue, as dedicated by document no. 24296287; thence due south 205 feet along last said west line; thence due West 400 feet; thence north 11 degrees 33 minutes 37 seconds west 203.08 feet to said new south right-of-way line; thence north 87 degrees 08 minutes 15 seconds east 120.99 feet along said right-of-way line; thence continuing due east 319.82 feet along last said line to THE PLACE OF BEGINNING, all in Cook County, Illinois.

PARCEL 2:

Easements for benefit of Parcel 1 pursuant to Declaration of Easements and Maintenance dated December 21, 1964 and recorded November 15, 1971 as document # 21721313.

PARCEL 3:

Easements for Storm Sewer and Flood Control for the benefit of Parcel 1 pursuant to Grant of Easement recorded December 13, 1982 as document # 26437720.

 

63.	FEE PARCEL DESCRIPTION: UNIT 1411

PARCEL 1:

Lot 1 in Buffalo Grove Business Park Unit 8, being a Subdivision in the North  ¹/2 of Section 5, Township 42 North, Range 11, East of the Third Principal Meridian, In Cook County, Illinois.

PARCEL 2:

Easement for the Benefit of Parcel 1 for Ingress, Egress and Driveway Purposes through Lot 2 in Buffalo Grove Business Park Unit 9 as created by Second Amendment to Buffalo Grove Business Park Declaration of Road Easement dated January 27, 1994 and recorded February 2, 1994 as Document 94110519 by and among The Riggs National Bank of Washington D.C.; Freedom I Limited Partnership, an Illinois Limited Partnership; Freedom Two Limited Partnership, an Illinois Limited Partnership; and American National Bank and Trust Company of

 

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Chicago, as Trustee under Trust Agreement dated February 15, 1992 and known as Trust No. 115180-08 and State Street Bank And Trust Company, a Massachusetts Banking Corporation, as Trustee under that certain Pooling And Servicing Agreement dated as Of December 1, 1993 for CBA Mortgage Pass-Through Certificate Series 1993-C1 as Assignee of CBA Conduit, Inc., a Delaware Corporation (such Document amending the Buffalo Grove Business Park Declaration of Road Easement, dated August 8, 1989 and recorded December 4, 1989 as Document 89576281 as amended by Amendment to Buffalo Grove Business Park Declaration of Road Easement, dated November 12, 1992 and recorded as Document 93797080).

PARCEL 3:

Exclusive Easement (subject only to equal rights of usage for Grantor) for the benefit of Parcel 1 for the sole purpose of constructing and maintaining 30 parking spaces for restaurant patrons of Grantee’s successor to park their automobiles and a Non-Exclusive Easement for the sole purpose of permitting restaurant patrons to park their automobiles in not more than 11 parking spaces as created by Easement Agreement dated January 27, 1994 and recorded February 2, 1994 as Document 94110518 by and between Riggs National Bank of Washington D.C. and Freedom I Limited Partnership, an Illinois Limited Partnership.

PARCEL 4:

Non-Exclusive Easement for the benefit of Parcel 1 to use 9 parking spaces as created by Easement Agreement made by and between Freedom Two Limited Partnership, an Illinois Limited Partnership, and Outback Steakhouse of Florida, Inc. a Florida Corporation dated January 27, 1994 and Recorded February 2, 1994 as Document 94110521, over Lot 1 in Buffalo Grove Business Park Unit 10, being a Subdivision in The North  ¹/2 of Section 5, Township 42 North, Range 11, East of the Third Principal Meridian, in Cook County, Illinois.

PARCEL 5:

Non-Exclusive Easement for the benefit of Parcel 1 as created by Declaration of Easements, Covenants and Restrictions for the Buffalo Grove Business Park, as Amended by First Amendment to Declaration of Easements, Covenants and Restrictions for the Buffalo Grove Business Park, Second Amendment to Declaration of Easements, Covenants and Restrictions for the Buffalo Grove Business Park and Third Amendment to Declaration of Easements, Covenants and Restrictions for the Buffalo Grove Business Park, which Declaration and Amendments were recorded in Cook County, Illinois as Document Number 89576281, and in Lake County, Illinois as Document Numbers 2251413, 2268766, 2286521 and 2856803, for ingress, egress and driveway purposes, over the following described Land:

 

(a)

That portion of Lot 2 in Buffalo Grove Business Park Unit 9 recorded as Document Number 88504177 described in said Third Amendment to Declaration as Easement Premises “A.”

 

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(b)

That portion of Lot 1 in Buffalo Grove Business Park Unit 10 recorded as Document Number 88504178 described in said Third Amendment to Declaration as Easement Premises “B.”

 

64.	FEE PARCEL DESCRIPTION: UNIT 1412

PARCEL 1:

Lot 11 in Golf-Roselle Development Unit 4, being a Subdivision of Lot 1 in Golf-Roselle Development Unit 1, being A resubdivision of Lots 11 and 12 in Golf-Roselle Development in the Southeast  ¹/4 of Section 10, Township 41 North, Range 10, East of the Third Principal Meridian, in Cook County, Illinois.

PARCEL 2:

Non-Exclusive, Perpetual Easement for Pedestrian and Vehicular Traffic for the benefit of Parcel 1, as created in the Reciprocal Easement Agreement made March 15, 1994 by and between Chicago Title and Trust Company as Trustee under Trust Agreement dated February 21, 1989 and known as Trust Number 1092773 and Outback Steakhouse of Florida, Inc., recorded March 16, 1994 as Document 94236803.

PARCEL 3:

Non-Exclusive Easement to share driveway access to Golf Road as created in that Agreement for Reciprocal Easement of Ingress and Egress dated November 22, 1988 and recorded March 22, 1989 as Document 89125394 made by and between Berkshire Life Insurance Company, LaSalle National Bank, as trustee under Trust Agreement dated May 13, 1987 and known as Trust Number 112307 and Chicago Title and Trust Company, as Trustee under Trust Agreement dated June 19, 1968 and known as Trust Number 52271.

 

65.	FEE PARCEL DESCRIPTION: UNIT 1414

PARCEL 1:

That portion of Lot 1 in Fox River Commons, being a subdivision of those parts of Sections 22 and 27, Township 38 North, Range 9, East of the Third Principal Meridian, recorded January 29, 1990 as Document R90-012324, In DuPage County, Illinois, described as follows:

COMMENCING at the Southernmost Corner of said Lot 1; thence North 67 Degrees, 07Minutes, 55 Seconds East along the Southeasterly Line of said Lot 1, a distance of 441.70 Feet; thence North 69 Degrees, 28 Minutes, 36 Seconds East along said Southeasterly Line of Lot 1, a distance of 49.82 Feet; thence North 20 Degrees, 31 Minutes, 24 Seconds West, perpendicular to said Southeasterly Line of said Lot 1, a distance of 74.10 Feet to THE POINT OF BEGINNING;

 

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Thence North 22 Degrees, 52 Minutes, 05 Seconds West, a distance of 111.50 Feet; thence North 67 Degrees, 07 Minutes, 55 Seconds East, a distance of 64.00 Feet; thence North 22 Degrees, 52 Minutes, 05 Seconds West, a distance of 11.50 Feet; thence North 67 Degrees 07 Minutes, 55 Seconds East, a distance of 19.00 Feet; thence South 22 Degrees, 52 Minutes, 05 Seconds East, a distance of 11.50 Feet; thence North 67 Degrees, 07 Minutes 55 Seconds East, a distance of 12.00 Feet; thence South 22 Degrees, 52 Minutes, 05 Seconds East, a distance of 111.50 Feet; thence South 67 Degrees, 07 Minutes, 55 Seconds West, a distance of 95.00 Feet to THE POINT OF BEGINNING;

ALSO KNOWN AS:

Lot 2 in Fox River Commons Assessment Plat No. 2, being a subdivision of those parts of Sections 22 and 27, Township 38 North, Range 9, East of the Third Principal Meridian, according to the Plat thereof recorded December 11, 1996 as Document R96-198444, all In Dupage County, Illinois.

PARCEL 2:

Non-Exclusive Easement rights for the benefit of Parcel 1 as created by Easements with Covenants and Restriction Affecting Land (“ECR”) recorded May 16, 1989 as Document R89-057392; First Amendment recorded September 22, 1994 as Document R94-192656; Second Amendment recorded May 30, 2002 as Document R2002-142271.

PARCEL 3:

Non-Exclusive Easement rights for the benefit of Parcel 1 as created by Access and Parking Easement Agreement dated September 8, 1994 and recorded September 22, 1994 as Document R94-192657, made by and between American National Bank and Trust Company of Chicago, as trustee under Trust Agreement dated May 10, 1988 and known as Trust Number 10093 and Outback Steakhouse of Florida, Inc.

 

66.	FEE PARCEL DESCRIPTION: UNIT 1416

PARCEL 1:

The East 370.66 Feet of Lot 2 in Metidiero’s Subdivision of Lot 1 in Clearview Gardens, a subdivision of part of the Northeast  ¹/4 of the Southeast  ¹/4 of Section 13, Township 36 North, Range 12, East of the Third Principal Meridian, in Cook County, Illinois.

PARCEL 2:

The West 35 Feet and the South 20 Feet of Lot 1 in Silver Lake Gardens Unit 9 of part of the North  ¹/2 of the Northeast  ¹/4 of the Southeast  ¹/4 of Section 13, Township 36 North, Range 12 East of the Third Principal Meridian in Cook County, Illinois.

 

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PARCEL 3:

Easement for Ingress, Egress, Parking, Construction and Maintenance created in the Declaration recorded October 10, 1995 as Document 95687034 made by and between Outback Steakhouse of Florida, Inc., a Florida Corporation and Gordon Food Service, Inc., a Michigan Corporation over, upon, and across the land described in Exhibits B-1 and B-2 attached thereto.

PARCEL 4:

Non-Exclusive Easement for Ingress and Egress created in the Declaration of Easements, Covenants and Restrictions recorded October 14, 1988 as Document 88473551 and Certificate of Correction recorded February 21, 1989 as Document 89077237 made by South Holland Trust and Savings Bank as Trustee under Trust Agreement dated September 1, 1987 known As Trust Number 8704.

 

67.	FEE PARCEL DESCRIPTION: UNIT 1418

PARCEL 1:

Lot One (1) as designated upon Plat No. 4 of Forest Plaza, being a Re-subdivision of Lot One (1) of Plat No. 1 of Forest Plaza, part of Section 27, Township 44 North, Range 2 East of the Third Principal Meridian, the Plat of which first named Subdivision is recorded in Book 40 of Plats on Page 199B in the Recorder’s Office of Winnebago County, Illinois; situated in the County of Winnebago and State of Illinois.

PARCEL 2:

Easements created in that Declaration of Easement recorded November 24, 1987 on Microfilm No. 8741-1335 as Document No. 1776878

PARCEL 3:

Easements created in Section 4(b) and (c) in that certain Covenants, Conditions and Restrictions Agreement dated October 9, 1996 by and between Simon Property Group (Illinois), L.P., an Illinois limited partnership and Outback Steakhouse of Florida, Inc., a Florida Corporation recorded October 17, 1996 as Document No. 9652496

 

68.	FEE PARCEL DESCRIPTION: UNIT 1419

PARCEL 1:

Lot 5 in Northridge Plaza, being a subdivision of part of Sections 15 and 16, both in Township 45 North, Range 11, East of the Third Principal Meridian, according to the plat thereof recorded September 9, 1992 as Document No. 3209739, In Lake County, Illinois.

 

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PARCEL 2:

Non-Exclusive Easements created by that certain Declaration of Covenants, Easements and Restrictions for Northridge Plaza dated September 4, 1992 and recorded September 9, 1992 as Document 3209740, and the Addendum thereto recorded as Document 3209741 and amended by Instrument recorded as Document 3352623 and Addendum recorded June 22, 1993 as Document 3352624, by MidTown Bank And Trust Company of Chicago, as Trustee Under Trust Agreement dated July 10, 1989 and known as Trust Number 1719.

 

69.	FEE PARCEL DESCRIPTION: UNIT 1424

PARCEL 1:

Lot 5 and the Southwesterly 54.00 Feet of Lot 8 running parallel with and measured perpendicular to the Southerly Line of said Lot 8 in ChicagoLand Center, being a subdivision of part of the East half of the Southeast Quarter of Section 23, Township 36 North, Range 9 East of the Third Principal Meridian, according to the Plat thereof recorded March 25, 2003 as Document No. R2003068026, in Will County, Illinois.

PARCEL 2:

Non-Exclusive Drainage easement created by Paragraph 4(b) of that certain Declaration of Covenants, Restrictions and Easements for Chicagoland Center Association dated March 12, 2004 and recorded March 22, 2004 as Document No. R2004-047069; First Amendment dated April 21, 2005 and recorded April 26, 2005 as Document Number R-2005-068371.

 

70.	FEE PARCEL DESCRIPTION: UNIT 1450

PARCEL 1:

Lot No. 4 of “1st Addition to 159 Commerce Center, being a part of Lot 4 of U.S. Survey 368; also part of Lots 1 and 2 of Garden Forest; also Part Of Lot 6 in the Northwest Quarter of Section 3, T. 1 N. R. 8 W. of 3rd P.M.; Also part of the Northeast Quarter Section 3, T. 1 N. R. 8 W. of 3rd P.M., all situated in St. Clair County, Illinois”; reference being had to the Plat thereof recorded in the Recorder’s Office of St. Clair County, Illinois, in Book of Plats “92” On Page 97.

Except the Coal, Oil, Gas and Other Minerals underlying the surface of said Land and all rights and easements in favor of the Estate of said Coal, Oil, Gas and Other Minerals.

PARCEL 2:

Easement for the benefit of Parcel 1 as contained in Detention Easement and Maintenance Agreement made by and between Daniel A. Grimmig, As Trustee of the Daniel A. Grimmig Revocable trust dated February 22, 2001 and Outback Steakhouse of Florida, Inc., recorded September 26, 2005 as Document No. A01936334 in book 4240 on page 913.

 

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71.	FEE PARCEL DESCRIPTION: UNIT 1452

Tract 1:

Lot 408 in Champaign Town Center Fourth Subdivision, as per plat recorded July 16, 1997 as Document Number 97R 16313, in Champaign County, Illinois.

Tract 2:

A non-exclusive easement for the benefit of Tract 1 as created by the Easement Agreement dated July 15, 1997 and recorded July 17, 1997 as Document Number 97R 16545 from Champaign-Prospect Limited Partnership, an Illinois limited partnership, and Outback Steakhouse of Florida, Inc., a Florida corporation, (as amended by instrument recorded October 8, 1999 as Document NO. 99R 30073) for the purpose of parking of automobiles over the following described land:

Lot 407 of Champaign Town Center Fourth Subdivision as per plat recorded July 16, 1997 as Document Number 97R 16313, in Champaign County, Illinois.

Tract 3:

A non-exclusive easement for the benefit of Tract 1 as created by Covenants, Conditions, Restrictions, Easements and Reciprocal Rights Agreement dated August 15, 1996 and recorded August 15, 1996 as Document Number 96R 20422, as modified by an Amendment recorded July 16, 1997 as Document Number 97R 16316, and further modified by an Amendment recorded November 21, 2003 as Document Number 2003R 51895.

 

72.	FEE PARCEL DESCRIPTION: UNIT 1453

Lot 2 and Lot 3 of BI-PETRO OFFICE PARK SUBDIVISION, PLAT 2, to the City of Springfield, Illinois, recorded July 24, 1998 as Document Number 98-38113 in the Office of the Recorder of Sangamon County, Illinois.

Except all coal, minerals and mining rights heretofore conveyed or reserved of record.

 

73.	FEE PARCEL DESCRIPTION: UNIT 1516

TRACT I:

A part of the Northeast quarter of Section 1, Township 8 North, Range 2 West, Monroe County, Indiana, being more particularly described as follows:

Commencing at the Northeast corner of said Northeast quarter; thence North 89 degrees 27 minutes 38 seconds West on and along the North line of said Section 366.36 feet; thence leaving said Section line South 00 degrees 23 minutes 08 seconds East 100.00 feet to the Point of Beginning; thence continuing South 00 degrees 23 minutes 08 seconds East along the West line of a tract of land owned by Whitehall Associates 205.15 feet; thence North 89 degrees 27

 

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minutes 38 seconds West along the North line of Whitehall Associates 136.37 feet; thence North 00 degrees 23 minutes 08 seconds West along the East line of Bob Evans Farms, Inc., 217.37 feet to a point on the South right of way of State Road 48; thence South 79 degrees 44 minutes 19 seconds East, along the South right of way line of State Road 48, 72.35 feet; thence South 89 degrees 27 minutes 38 seconds East, along the South right of way line of State Road 48, 65.25 feet and to the Point of Beginning.

TRACT II:

Easement rights limited to utilities as set forth in Roadway and Utility Easement dated May 22, 1979 and recorded August 21, 1979 in Deed Record 270, pages 89-92, in the Office of the Recorder of Monroe County, Indiana.

TRACT III:

Easement rights and privileges as set forth in Covenants For Operation, Maintenance and Reciprocal Easements dated May 27, 1980 and recorded September 11, 1980 in Miscellaneous Record 117, pages 439-463, and Modification of Covenants For Operation, Maintenance and Reciprocal Easements recorded June 19, 1990 in Miscellaneous Record 200, pages 350-361, in the Office of the Recorder of Monroe County, Indiana.

TRACT IV:

Easement rights and privileges as set forth in Easement Agreement dated August 23, 1979 and recorded August 28, 1979 in Deed Record 270, pages 245-248, in the Office of the Recorder of Monroe County, Indiana.

 

74.	FEE PARCEL DESCRIPTION: UNIT 1518

Lot 1 in Commerce Place Subdivision, Phase 1, an Addition in Fairfield Township, Tippecanoe County, Indiana, the plat of which was recorded February 6, 1995 as Instrument No. 9501895 in Plat Cabinet E, Slide E-44, in the Office of the Recorder of Tippecanoe County, Indiana.

 

75.	FEE PARCEL DESCRIPTION: UNIT 1519

Lot A2 and the adjoining West 38.28 feet of Lot A4 in Cross Pointe, Section 1, Subdivision of part of the Southwest quarter of Fractional Section 19, Township 6 South, Range 9 West in Vanderburgh County, Indiana, as per plat thereof as recorded in Plat Book O, Page 17, in the Office of the Recorder of Vanderburgh County, Indiana, and being more particularly described as follows:

Beginning at the Southwest corner of Lot A2; thence along the West line thereof North 00 degrees 32 minutes 33 seconds East 258.89 feet to the Northwest corner; thence along the North line of said Lot A2 and Lot A4, North 89 degrees 27 minutes 55 seconds East 228.28 feet; thence South 00 degrees 32 minutes 33 seconds West, parallel with the West line of said Lot A2, 258.86 feet to a point on the South line of Lot A4; thence along the South line of said Lot A4 and A2, South 89 degrees 27 minutes 24 seconds West 228.28 feet to the POINT OF BEGINNING.

 

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ALSO,

An easement for parking and other rights over the following described real estate located in Vanderburgh County, Indiana, and pursuant to Access and Parking Easement Agreement dated July 7, 1995 and recorded July 13, 1995 in Deed Drawer 9, Card 5652, in the Office of the Recorder of Vanderburgh County, Indiana:

Part of the Southwest quarter of Section 19, Township 6 South, Range 9 West, in Vanderburgh County, Indiana, more particularly described as follows:

Commencing at the Southwest corner of said quarter section; thence along the South line of said quarter section, North 89 degrees 26 minutes 35 seconds East 2154.38 feet to the extended West line of Cross Pointe Section 1, as recorded in Plat Book O, page 17, in the Office of the Recorder of Vanderburgh County, Indiana; thence along said extended West line, North 00 degrees 32 minutes 33 seconds East, 110.48 feet to the Southwest corner of said Cross Pointe Section 1 and also the North right of way line of SR 66 (Lloyd Expressway), said point being the POINT OF BEGINNING;

thence along said North right of way line, South 89 degrees 27 minutes 24 seconds West, 73.00 feet; thence North 00 degrees 32 minutes 31 seconds West, 258.86 feet to the extended South right of way line of Indiana Street as platted in said Cross Pointe Section 1; thence along said extended South right of way line, North 89 degrees 27 minutes 55 seconds East, 77.90 feet to the West line of said Cross Pointe, Section 1; thence along said West line, South 00 degrees 32 minutes 33 seconds West, 258.89 feet to the POINT OF BEGINNING.

 

76.	FEE PARCEL DESCRIPTION: UNIT 1520

Part of the East Half of the Southeast Quarter of Section 30, Township 16 North, Range 5 East of the Second Principal Meridian in Marion County, Indiana described as follows:

COMMENCING at the Northeast corner of said Half-Quarter Section; thence on an assumed bearing of South 89 degrees 52 minutes 44 seconds West along the North line of said Half-Quarter Section a distance of 1336.21 feet to the Northwest corner of said Half-Quarter Section; thence South 00 degrees 09 minutes 54 seconds East along the West line of said Half-Quarter Section a distance of 846.93 feet to the Point of Beginning; thence North 89 degrees 52 minutes 44 seconds East a distance of 189.47 feet; thence South 00 degrees 07 minutes 16 seconds East a distance of 19.01 feet; thence South 25 degrees 43 minutes 37 seconds East a distance of 296.71 feet to the North limited access right of way line of Interstate 70 per Indiana State Highway plans for Project #I-70-3(47)86, 1964 (sheet 34 of 218); thence South 69 degrees 31 minutes 59 seconds West along said North limited access right of way line a distance of 141.49 feet; thence South 85 degrees 45 minutes 29 seconds West along said North limited access right of way line a distance of 185.25 feet to the West line of said Half-Quarter Section; thence North 00 degrees 09 minutes 54 seconds West along said West line a distance of 349.08 feet to the POINT OF BEGINNING.

 

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TOGETHER WITH

All rights and non-exclusive easements for ingress, egress, utilities and access granted in that certain Declaration of Covenants and Restrictions for Post 70 Commerce Park recorded August 28, 1992 as Instrument No. 92-113250. Amended by First Addendum to Declaration of Covenants and Restrictions for Post 70 Commerce Park recorded August 28, 1992 as Instrument No. 92-113251. Further amended by Second Addendum to Declaration of Covenants and Restrictions for Post 70 Commerce Park recorded August 28, 1992 as Instrument No. 92-993256, further amended by Third Addendum to Declaration of Covenants and Restrictions for Post 70 Commerce Park recorded October 8, 1992 as Instrument No. 92-134042 and lastly amended by Fourth Addendum to Declaration of Covenants and Restrictions for Post 70 Commerce Park recorded February 13, 1995 as Instrument No. 95-16369.

 

77.	FEE PARCEL DESCRIPTION: UNIT 1521

TRACT I:

Part of Lot number 3, Section 1 in Terrace Meadows Subdivision, City of Kokomo, Center Township, Howard County, Indiana, and part of vacated Garden Place, West of and adjacent to said Lot 3 as recorded in Recorder’s Plat Book 5, page 207, being part of the Northwest quarter of Section 18, Township 23 North, Range 4 East, Center Township, Howard County, Indiana, described as follows, to-wit:

COMMENCING at the Southwest corner of said quarter; thence North 89 degrees 49 minutes 00 seconds East (assumed bearing) 414.12 feet; thence North 18 degrees 24 minutes 00 seconds East 37.92 feet; thence North 51 degrees 33 minutes 00 seconds West 64.00 feet to a concrete right of way marker (found 0.55’ South 0.30’ East); thence Northeast 606.81 feet along the East right of way of US 31 and a 6052.83 foot radius curve to the right, the radius point of which bears South 70 degrees 39 minutes 02 seconds East 6052.83 feet through a clockwise central angle of 5 degrees 44 minutes 38 seconds; thence South 64 degrees 30 minutes 43 seconds East 28.48 feet to the Point of Beginning marked by a railroad spike; thence Northeast 46.94 feet along a non tangent 135.00 foot radius curve to the right, the radius point of which bears South 84 degrees 26 minutes 02 seconds East 135.00 feet, through a clockwise central angle of 19 degrees 55 minutes 13 seconds; thence North 25 degrees 29 minutes 17 seconds East 47.00 feet; thence South 64 degrees 30 minutes 43 seconds East 136.00 feet; thence South 25 degrees 29 minutes 17 seconds West 93.00 feet; thence North 64 degrees 30 minutes 43 seconds West 127.92 feet to the POINT OF BEGINNING.

TRACT II:

A non-exclusive easement described in Grant of Easement Agreement dated August 13, 1987, recorded August 18, 1987 in Deed Record 251, Page 2517.

 

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78.	FEE PARCEL DESCRIPTION: UNIT 1522

TRACT I:

A part of the Southeast Quarter of Section 34, Township 21 North, Range 10 East, more particularly described as follows, to-wit:

Commencing at the Southwest corner of the Southeast Quarter of Section 34, Township 21 North, Range 10 East; thence North 00 degrees 00 minutes 21 seconds West and on the West line of the said Southeast Quarter 50.0 feet to the North right-of-way line of McGalliard Road; thence North 89 degrees 50 minutes 51 seconds East and on said North right-of-way line 805.48 feet to its intersection with the Westerly right-of-way line of Granville Avenue; thence North 33 degrees 17 minutes 11 seconds East and on said Westerly right-of-way line 508.86 feet; thence continuing North 20 degrees 40 minutes 15 seconds East and on said right-of-way line 65.99 feet; thence North 69 degrees 19 minutes 45 seconds West 42.94 feet to a point, which point, is the point of beginning for the land herein described; thence continuing North 69 degrees 19 minutes 45 seconds West 23.48 feet; thence South 20 degrees 40 minutes 18 seconds West 22.15 feet; thence North 69 degrees 22 minutes 37 seconds West 20.06 feet; thence North 20 degrees 47 minutes 35 seconds East 18.62 feet; thence North 69 degrees 19 minutes 35 seconds West 59.46 feet; thence North 20 degrees 32 minutes 59 seconds East 93.76 feet; thence South 69 degrees 23 minutes 30 seconds East 104.96 feet; thence South 20 degrees 30 minutes 27 seconds West 29.85 feet; thence North 69 degrees 29 minutes 33 seconds West 1.89 feet; thence South 20 degrees 40 minutes 15 seconds West 60.48 feet to the point of beginning.

TRACT II:

Non-exclusive Easement rights for parking and ingress and egress for the benefit of TRACT I as set forth in that certain Covenants, Conditions and Restrictions Agreement by and between Simon Property Group, L.P. and Outback Steakhouse of Florida, Inc., dated April 29, 1997 and recorded May 7, 1997 in Miscellaneous Record 1997, pages 1717-1740.

 

79.	FEE PARCEL DESCRIPTION: UNIT 1550

TRACT I:

Part of parcel described to Whiteco Industries, Inc., in a Trustee’s Deed recorded on January 14, 1991 as Document No. 91002056, said part described as follows: Part of Block “D”, Lincoln Square, Merrillville, Indiana, as shown in Plat Book 43 Page 137 in Lake County, Indiana, more particularly described as follows:

COMMENCING at a point on the Southwesterly line of said Block “D” and 386.09 feet Southeasterly from the Northwest corner thereof; thence South 30 degrees 48 minutes 05 seconds East 233.70 feet; thence North 59 degrees 11 minutes 55 seconds West 364.00 feet, more or less, to the Northeasterly line of said Block “D”; thence Northwesterly along a curve to the left with a radius of 666.2 feet for a distance of 253.00 feet; thence South 59 degrees 11 minutes 55 seconds West 271.15 feet to the POINT OF BEGINNING, in Lake County, Indiana.

 

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TRACT II:

A Non-Exclusive Easement for the construction, operation and maintenance of a goal-post type Pylon Sign, created in Sign Easement Agreement dated July 19, 2002 and recorded October 7, 2002 as Document No. 2002-090345, made by and between Whiteco Industries, Inc. and Outback Steakhouse of Florida, Inc., a Florida corporation, described as follows:

A parcel of land being a part of the land described to Whiteco Industries, Inc., in a Trustee’s Deed recorded on January 14, 1991 as Document No. 91002056, in the Office of the Recorder of Lake County, Indiana, said parcel also being part of Lot 1, Resubdivision of Part of Block “D”, Lincoln Square, as shown in Plat Book 65 Page 8, in said Recorder’s Office, said parcel also being Part of Lot 1, Final Plat C. S. Subdivision, as shown in Plat Book 93 Page 86, in said Recorder’s Office, said parcel being more particularly described as follows:

COMMENCING at a point on the Southwesterly line of Block “D” (as shown in Plat Book 43 Page 137 in said Recorder’s Office) and 386.09 feet Southeasterly from the Northwest corner thereof; thence South 30 degrees 48 minutes 05 seconds East, 233.70 feet along the Westerly line of said Block “D”; thence North 59 degrees 11 minutes 55 seconds East 313.03 feet to a point that is 50.00 feet by radial measurement from the Northeasterly line of said Block “D” and being the point of beginning; thence continuing North 59 degrees 11 minutes 55 seconds East 35.00 feet; thence South 30 degrees 48 minutes 05 seconds East, 35 feet; thence South 59 degrees 11 minutes 55 seconds West, 70 feet; thence North 30 degrees 48 minutes 05 seconds West, 35.00 feet; thence North 59 degrees 11 minutes 55 seconds East, 35.00 feet to the POINT OF BEGINNING, all in Lake County, Indiana.

 

80.	FEE PARCEL DESCRIPTION: UNIT 1611

All that part of Lot Sixteen (16), Irregular Survey of the Northeast Quarter (NE 1/4) of the Northwest Quarter (NW 1/4) of Section Eleven (11), lying Southeasterly of the Southeasterly line of First Avenue, Kenwood Road, now known as First Avenue East in the City of Cedar Rapids, Iowa, said line being parallel with and Sixty (60) feet Southeasterly from the center line of said First Avenue East, as now used and monumented, and Northeasterly of the following described line: Beginning at a point on the Southeasterly line of said First Avenue East, and Seven Hundred Thirty-five and Three Tenths (735.3) feet Southwesterly from the intersection of the North line of the Northeast Quarter (NE 1/4) of the Northwest Quarter (NW 1/4) of said Section Eleven (11) with the Southeasterly line of said First Avenue East and measured along the Southeasterly line of said First Avenue East; thence Southeasterly Three Hundred Seventy-four and Seven Tenths (374.7) feet along a line drawn at right angles to the Southeasterly line of said First Avenue East to its intersection with the Northwesterly line of the right-of-way of the Chicago, Milwaukee, St. Paul and Pacific Railroad Company, excepting therefrom the premises described in Warranty Deed recorded in Volume 890 at Page 244 of the Records of the County Recorder, Linn County, Iowa, and also excepting therefrom the premises described in Quit Claim Deed recorded in Volume 1143 at Page 141 of the Records of the County Recorder of Linn County, Iowa, all in Township Eighty-three (83) North, Range Seven (7) West of the 5th P.M., Linn County, Iowa.

 

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ALSO DESCRIBED AS:

Part of Lot 16, Irregular Survey in the Northeast Quarter of the Northwest Quarter of Section II, Township 83 North, Range 7 West of the 5th Princiapl Meridian, City of Cedar Rapids, Linn County, Iowa, as recorded in Irregular Plat Book Volume 3 at Page 90, more particularly described as follows:

Commencing at the intersection of the southeasterly right of way line of First Avenue East and the north line of said Northeast Quarter of the Northwest Quarter; thence South 32 degrees 00 minutes 00 seconds West along said southeasterly right of way line, a distance of 735.30 feet to the POINT OF BEGINNING as marked by a found “PK” nail; thence South 58 degrees 00 minutes 000 seconds East, a distance of 374.68 feet to a found #5 rebar on the northwesterly right of way line of a former railroad; thence North 41 degrees 47 minutes 58 seconds East along said northwesterly line, a distance of 177.67 feet to a set #4 rebar at the most southerly corner of the property formerly owned by the Iowa Electric Light and Power Company; thence North 48 degrees 12 minutes 02 seconds West, a distance of 50 feet to a set #4 rebar; thence North 41 degrees 47 minutes 58 seconds East, a distance of 42.34 feet to a sawed “X’ on a concrete sidewalk at the intersection with the southwesterly right of way line of 40th Street Drive SE; thence North 67 degrees 40 minutes 00 seconds West along said southwesterly right of way line, a distance of 368.08 feet to a sawed “X” on a concrete sidewalk at the intersection with said southeasterly right of way line of First Avenue East; thence South 32 degrees 00 minutes 00 seconds West, a distance of 163. 50 feet to the POINT OF BEGINNING; said described tract containing 75, 254 square feet (1.73 acres), more or less.

 

81.	FEE PARCEL DESCRIPTION: UNIT 1614

A parcel of land described as Lot Two (2) and the Northwesterly Thirty-seven and Eighty Hundredths feet (37.80’) of Lot Three (3) along with the Westerly portion of the Northerly 20 feet of Lot 1, lying immediately adjacent to and South of Lot 2 and the Northwesterly 37.80 feet of said Lot 3 of Lakeport Park 1st Filing, Replat 1, being a replat of Lot One (1) and Lot Two (2), Lakeport Park 1st Filing, a subdivision located in the Northwest Quarter (NW 1/4) Northwest Quarter (NW 1/4) and the Southwest Quarter (SW 1/4) Northwest Quarter (NW 1/4) of Section Seventeen (17), Township Eighty-eight (88) North, Range Forty-seven (47) West of the Fifth Principal Meridian, City of Sioux City, Woodbury County, Iowa.

Said parcel being more particularly described as follows:

Commencing at the Southwest corner of the Northwest Quarter (NW 1/4 ) Northwest Quarter (NW 1/4): thence Northerly along the West line of said Quarter-Quarter (1/4 1/4) on an assumed bearing of North one degree fifty-three minutes twelve seconds (N 01 53 12) East (with all subsequent bearings referenced therefrom) for a distance of Two Hundred and Ninety-two Hundredths feet (200.92’) to a point on the Southerly right-of-way of Southern Hills Drive;

 

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thence Easterly along said right-of-way line and along a cure concave Northeasterly, with a radius of One Thousand Eighty-one and Thirty Hundredths feet (1081.30’) and a central angle of ten degrees thirty-two minutes nine seconds (10 32 09) for a distance along said curve of One Hundred Ninety-eight and Eighty-two hundredths feet (198.82’) to the Northwest corner of said Lot Two (2) and the POINT OF BEGINNING; thence continuing Easterly along said street right-of-way and along said curve, having a radius of One Thousand Eighty-one and Thirty Hundredths feet (1081.30’) and a central angle of ten degrees twenty minutes thirty-four seconds (10 20 34) for a distance along the curve of One Hundred Ninety-five and Nineteen Hundredths feet (195.19’) to the Northeast corner of the Northwesterly Thirty-seven and Eighty Hundredths feet (37.80’) of Lot three (3); thence South Sixteen degrees six minutes eight seconds (S 16 06 08) West along a line parallel with and Thirty-seven and Eighty Hundredths feet (37.80’) equal distance to the Southeasterly line of Lot Two (2) for a distance of 316.23 feet to a point on the South line of the Northerly 20 feet of said Lot 1; thence North seventy-five degrees forty-two minutes thirty-seven seconds (N75 42 37) West along a line parallel with and 20 feet equal-distance to the Northerly line of Lot 1 for a distance of Two Hundred Twenty-nine and Twenty-seven Hundredths feet (229.27’) to a point on the East right-of-way line of South Lancelot Lane; thence North one degree fifty-one minutes thirty seconds (01 51 30) East along said right-a -way for a distance of 61.30 feet; thence continuing Northerly along said right-of-way line and along a curve, concave Easterly with a radius of 150.00 feet and a central angle of forty degrees 42 minutes 25 seconds (40 42 25) for a distance along said curve of 106.57 feet; thence North forty-two degrees 33 minutes 55 seconds (42 33 55) East along said right-of-way line for a distance of 26.83 feet; thence continuing Northerly along said right-or-way line and along a curve, concave Northwesterly, having a radius of 261.55 feel and a central angle of twenty-eight degrees 20 minutes 00 seconds (28 20 00) for a distance along said curve of 129.34 feet; thence North fourteen degrees 13 minutes 55 seconds (N 14 13 55) East along said right-of way line for a distance of 21.99 feet to the Northwest corner of said Lot 2 and the POINT OF BEGINNING. Woodbury County. Iowa.

 

82.	FEE PARCEL DESCRIPTION: UNIT 1715

Lot 1, Westview 3rd Addition, Wichita, Sedgwick County, Kansas,

EXCEPT that part described as BEGINNING at the Southwest corner of said Lot 1; thence North 00° East along the West line of said Lot 1 a distance of 188 feet; thence N 89°19’30” East, parallel with the West 62 feet of the South line of said Lot 1, 137 feet; thence North 00° East, 22 feet; thence North 89°19’30” East 49 feet; thence South 00° West 10 feet to a point on the North line of Lot 2 in said Addition; thence South 89°19’30” West along the North line of said Lot 2, 24 feet to the Northwest corner of said Lot 2; thence South 00° West 175 feet to the Southerly most corner common to said Lots 1 and 2; thence South 75°19’45” West along the Southerly line of said Lot 1 103.36 feet to the point of intersection in the South line of said Lot 1; thence South 89°19’30” West along the South line of said Lot 1, 62 feet to the PLACE OF BEGINNING.

 

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83.	FEE PARCEL DESCRIPTION: UNIT 1716

TRACT 1:

Lot 7, Southgate Retail Center, a subdivision in the City of Olathe, Johnson County, Kansas, as recorded in Plat Book 125, Page 28, except that part of said Lot 7 replated as part of Lot 6, Southgate Retail Center, Second Plat, as recorded in Plat Book 200605, Page 001353, a subdivision in the City Of Olathe, Johnson County, Kansas.

TRACT 2:

Non-Exclusive Appurtenant Easements for Access, Utilities, Storm Drainage and Detention as established by the Reciprocal Easement and Operating Agreement recorded in Book 7882, Page 54 (Supplemental Agreement filed in Book 200607, Page 009204).

TRACT 3:

Non-Exclusive Appurtenant Easement for Signage, as established by Signage Easement Agreement recorded in Book 200607, Page 009204.

 

84.	FEE PARCEL DESCRIPTION: UNIT 1813

BEING Lot 3, as shown on plat of Signature Inn. of record in Plat and Subdivision Book 36, Page 18, in the Office of the Clerk of Jefferson County, Kentucky.

BEING the same property conveyed to Insured by Quit Claim Deed from Outback Steakhouse of Florida, Inc., dated June 14, 2007, recorded June 28, 2007, in Deed Book 9061, Page 401, Jefferson County, Kentucky, Records.

 

85.	FEE PARCEL DESCRIPTION: UNIT 1851

Lot No. 2-1 of the Amendment No. 1 of the Major Subdivision- Drury Inn Subdivision as shown on a plat as said Amendment No. 1 of said subdivision of record in Plat Book 29, Page 78, in the Warren County Court of Clerk’s Office.

Being the same property conveyed to Private Restaurant Properties, LLC, a Delaware limited liability company by Quit Claim Deed from Outback Steakhouse of Florida, Inc., a Florida corporation, dated June 14, 2007, recorded July 19, 2007, in Book 954, Page 241, Warren County, Kentucky Records.

Together with the non-exclusive access rights, and subject to the terms, conditions and provisions and limitations of the following:

Easement and Restriction Agreement by and between Outback Steakhouse of Florida, Inc., a Florida corporation, and Druco, Inc., a Missouri corporation, dated September 4, 1997, and recorded in Deed Book 749, Page 741, aforesaid records. Statement of Binding Elements, dated August 3, 1995, and recorded September 21, 1995, in Book 713, Page 264, aforesaid records.

 

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86.	FEE PARCEL DESCRIPTION: UNIT 1901

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE PARISH OF EAST BATON ROUGE, STATE OF LOUISIANA, AND IS DESCRIBED AS FOLLOWS:

FEE PARCEL

A CERTAIN TRACT OR PARCEL OF GROUND, situated in the Parish of East Baton Rouge, State of Louisiana, in Section 94, Township 7 South, Range 1 East, and being designated as TRACT A-1 on a survey by Ferris & Associates Engineering, Inc., entitled “Map Showing Subdivision of Tract A of a Portion of Lot 38, Richland Plantation, Located in Section 94, T7S, R1E, Greensburg Land District, East Baton Rouge Parish, Louisiana, into Tract A-1 and A-2, . . .”, a copy of which is on file and of record in Original 927, Bundle 10224 of the official records of this Parish and State, said tract having such size, shape and dimensions and being subject to such servitudes as are shown on said map.

SERVITUDE PARCEL I

THAT CERTAIN SERVITUDE created in Agreement by The City of Baton Rouge, The Parish of East Baton Rouge and Acadian Place, Ltd., dated June 7, 1978, recorded as Original 242, Bundle 9265, COB 2656, folio 410 on June 9, 1978; as amended by Agreement by The City of Baton Rouge, The Parish of East Baton Rouge and Joseph T. Spinosa, Jr. dated April 26, 1979, recorded as Original 189, Bundle 9318, COB 2720, folio 876, MOB 3061, folio 352 on May 3, 1979; as supplemented by Supplemental Agreement by The City of Baton Rouge, The Parish of East Baton Rouge and Joseph T. Spinosa, Jr., dated June 1, 1983, recorded as Original 269, Bundle 9577, on June 2, 1983 of the conveyance records; as further supplemented and amended by Servitude Agreement by Joseph T. Spinosa, Jr., Chanda Jan Covington Spinosa, The City of Baton Rouge, The Parish of East Baton Rouge, and Acadian Centre Partnership in Commendam, dated June 16, 1986, recorded as Original 961, Bundle 9852, on July 29, 1986 of the conveyance records; and as corrected by Notarial Act of Correction dated August 5, 1986, recorded as Original 29, Bundle 9855, on August 6, 1986 of the conveyance records; which servitude area is more fully described as follows:

A CERTAIN PARCEL OF LAND containing .0708 acres (3,083 square feet) being a portion of property located in Section 94, Township 7 South, Range 1 East, Greensburg Land District, Baton Rouge, Louisiana, formerly being a portion of Lot 36 of the Richland Plantation:

Commencing at a point being the intersection of the Eastern right of way line of Acadian Thruway and the Northern right of way line of the Kansas City Southern Railroad Right of way; thence proceed along the Eastern right of way of Acadian Thruway North 28 degrees, 06 minutes, 38 seconds East along a line a distance of 100.37 feet to the point of beginning. Thence proceed North 28 degrees, 06 minutes, 38 seconds East a distance of 56.91 feet to a point; thence proceed South 44 degrees, 02 minutes, 35 seconds East a distance of 88.13 feet to a point; thence

 

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proceed South 28 degrees 37 minutes, 44 seconds West a distance of 31.43 feet to a point; thence proceed North 44 degrees, 02 minutes, 35 seconds West a distance of 31.92 feet to a point; thence proceed along the arc of a curve to the left having a radius of 60.00 feet a distance of 55.85 feet to the point of beginning.

SERVITUDE PARCEL II

THAT CERTAIN SERVITUDE created in Servitude Agreement by Joseph T. Spinosa, Jr., Chanda Jan Covington Spinosa and Acadian Centre Partnership in Commendam, dated August 6, 1986, recorded as Original 30, Bundle 9855, on August 6, 1986 of the conveyance records, which servitude area is more fully described as follows:

A CERTAIN PARCEL OF LAND containing .0978 acres (4,258 square feet) being a portion of Tract B located in Section 94, Township 7 South, Range 1 East, Greensburg Land District, Baton Rouge, Louisiana, formerly being a portion of Lot 38 of the Richland Plantation:

Commencing at a point being the intersection of the Eastern right of way line of Acadian Thruway and the Northern right of way line of the Kansas City Southern Railroad right of way; thence proceed along the Northerly right of way line of Kansas City Southern Railroad South 56 degrees, 29 minutes, 22 seconds East a distance of 83.01 feet to a point; thence proceed along a line North 28 degrees, 37 minutes, 44 seconds East a distance of 106.66 feet to the point of beginning. Thence proceed North 28 degrees, 37 minutes, 44 seconds East a distance of 31.43 feet to a point; thence proceed South 44 degrees, 02 minutes, 35 seconds East a distance of 13.57 feet to a point; thence proceed North 82 degrees, 17 minutes, 35 seconds East a distance of 11.85 feet to a point; thence proceed North 28 degrees, 37 minutes 44 seconds East a distance of 62.28 feet to a point; thence proceed South 34 degrees, 00 minutes, 00 seconds East a distance of 39.41 feet to a point; thence proceed South 28 degrees, 37 minutes, 44 seconds West a distance of 96.50 feet to a point; thence proceed North 44 degrees, 02 minutes 35 seconds West a distance of 60.23 feet to the point of beginning.

 

87.	FEE PARCEL DESCRIPTION: UNIT 1912

THE LAND REFERRED TO HEREINBELOWIS SITUATED IN THE PARISH OF ST. TAMMANY, STATE OF LOUISIANA, AND IS DESCRIBED AS FOLLOWS:

FEE PARCEL

A certain tract or parcel of land containing 1.99 acres located in Section 1, T-9-S, R-14-E, Greensburg Land District, St. Tammany Parish, Louisiana, and being more particularly described as follows:

Commence at the southeast corner of the southeast quarter of the southwest quarter of Section 1, T-9-S, R-14-E, thence proceed N 01°08’00” W, a distance of 96.15 feet to a point and corner; thence S 89°05’56” W, a distance of 333.46 feet to a point and a corner; thence proceed S 87°37’52” W, a distance of 90.42 feet to a point and a corner; thence proceed N 22°22’18” W, a distance of 99.83 feet to the POINT OF BEGINNING;

 

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THENCE from the POINT OF BEGINNING PROCEED S 85°43’06’ W, a distance of 141.78 feet to a point and a corner; THENCE PROCEED N 01°08’00” W, a distance of 305.34 feet to a point and a corner; THENCE PROCEED N 88°52’00” E, a distance of 396.70 feet to a point and a corner; THENCE PROCEED S 01°08’00” E, a distance of 173.17 feet to a point and a corner; THENCE PROCEED S 89°05’56” W, a distance of 252.65 feet to a point and a corner; THENCE PROCEED S 00°00’00” W, a distance of 125.43 feet to the POINT OF BEGINNING.

Said tract of land contains 86,878.68 square feet and is designated as “Parcel 2” on the “Map showing Subdivision of the Racetrac Petroleum, Inc. Property” by Ferris Engineering & Surveying, Inc., dated September 7, 1993, approved by the Slidell Planning Commission on October 18, 1993, recorded as Map File No. 1170 in the records of St. Tammany Parish, and according to a plat of survey by Ronald K. Ferris, Land Surveyor, dated October 28, 1993, recorded as Map File No. E1571, said parcel has the same dimensions and measurements.

LESS AND EXCEPT

A certain tract or parcel of land containing 0.53 acres located in Section 1, T-9-S, R-14-E, Greensburg Land District, St. Tammany Parish, Louisiana, and being more particularly described as follows:

Commence at the southeast corner of the southeast quarter of the southwest quarter of Section 1, T-9-S,R-14-E, then proceed N 01°08’00” W, a distance of 96.15 feet to a point and corner, thence S 89°05’58” W, a distance of 204.89 feet to a point and corner, thence N 01°08’00” W, a distance of 216.00 feet to the POINT OF BEGINNING. THENCE, from the POINT OF BEGINNING, PROCEED S 89°05’56” W, a distance of 132.50 feet to a point and a corner; THENCE PROCEED N 01°06’00” W, a distance of 172.63 feet to a point and a corner; THENCE PROCEED N 88°52’00” E, a distance of 132.50 feet to a point and a corner; THENCE PROCEED S 01°06’00” E, a distance of 173.17 feet to the POINT OF BEGINNING.

SERVITUDE PARCEL

A non-exclusive perpetual servitude of ingress and egress over and across a portion of property which is more particularly described as the “Access Road” in Act Establishing Servitudes, recorded November 28, 1990, under Instrument No. 767690, COB 1443, folio 838, MOB 1407, folio 80.

 

88.	FEE PARCEL DESCRIPTION: UNIT 1914

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE PARISH OF ST. TAMMANY, STATE OF LOUISIANA, AND IS DESCRIBED AS FOLLOWS:

 

 

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FEE PARCEL

ALL THAT CERTAIN PIECE OR PORTION OF GROUND, together with all buildings and improvements thereon, situated in Section 15, Township 7 South, Range 11 East, ST. TAMMANY Parish, Louisiana, being LOT 3, ST. TAMMANY OAKS SUBDIVISION, St. Tammany Parish, Louisiana which lot is created by the official subdivision plat of Dufrene Surveying & Engineering, Inc., Tildon J. Dufrene, Jr. Professional Land Surveyor dated November 16, 1994 revised on various dates through March 21, 1995, approved by the necessary parish authorities and recorded with the Clerk of Court, St. Tammany Parish as Map File No. 1313.

SERVITUDE PARCEL I

Non-exclusive servitude created pursuant to that certain Declaration of Restrictive Use by St. Tammany Oaks, L.L.C. and BVI St. Tammany Oaks, L.L.C., dated March 19, 1997, recorded under Instrument No. 1045645 on May 8, 1997 in the conveyance records.

SERVITUDE PARCEL II

Non-exclusive servitude created pursuant to that certain Agreement for Water and Service by and between St. Tammany Oaks, L.L.C. and Utilities Inc. of Louisiana, dated March 30, 1995, recorded under Instrument No. 944791 on April 7, 1995 in the conveyance records.

 

89.	FEE PARCEL DESCRIPTION: UNIT 1921

THAT CERTAIN TRACT OR PARCEL OF GROUND containing approximately 72,650 square feet and designated as “Lot 1” on the Plat of Survey dated February 19, 1993, prepared by Domingue, Szabo & Associates, Inc., located in Section 46, Township 10 South, Range 4 East, City of Lafayette, Louisiana, more particularly described as follows:

Commencing at an “x” in concrete, being the northeast corner of Lot 1—Building “A,” 1602 West Pinhook Road, shown as Point “H” on plat prepared by Roland W. Laurent titled “A Map of Survey Showing Property and Improvements of Building Site ‘A’ and Building Site ‘B’ Number of Lots ‘2’ belonging to PNB Securities Corp” dated May 21, 1992, which Map of Survey is recorded as part of File No. 9241346 of the records of the Clerk of Court for Lafayette Parish, Louisiana, said point being the Point of Beginning; thence South 75 degrees 59 minutes 50 seconds West a distance of 185.54 feet to a nail in asphalt; thence South 75 degrees 59 minutes 50 seconds West a distance of 30.80 feet to an iron rod; thence North 14 degrees 19 minutes 21 seconds West a distance of 314.35 feet to the approximate Mean Low Water Line of the Vermilion River; thence along the Mean Low Water Line of the Vermilion River approximated by the following courses:

North 56 degrees 52 minutes 06 seconds East a distance of 54.43 feet; thence North 76 degrees 49 minutes 04 seconds East a distance of 63.14 feet; thence North 57 degrees 39 minutes 45 seconds East a distance of 43.71 feet; thence North 68 degrees 00 minutes 50 seconds East a distance of 56.41 feet thence North 69 degrees 17 minutes 13 seconds East a distance of 4.24 feet; thence South 14 degrees 19 minutes 22 seconds East along the westerly right-of-way of La.

 

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Highway 182 (Pinhook Road) a distance of 66.35 feet to an iron rod; thence South 14 degrees 19 minutes 22 seconds East along the westerly right-of-way of La. Highway 182 (Pinhook Road) a distance of 287.01 feet to an “x” in concrete, the Point of Beginning; said property containing approximately 1.668 acres.

Said property is bounded to the North by the Vermillion River, to the South by property owned, now or formerly, by William Mills, et ux, to the East by the right of way Pinhook Road, and to the West by property owned now or formerly by The Becnel Company, et al.

 

90.	FEE PARCEL DESCRIPTION: UNIT 1941

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE PARISH OF CALCASIEU, STATE OF LOUISIANA, AND IS DESCRIBED AS FOLLOWS:

A CERTAIN TRACT OF LAND containing 1.306 acres, located in the Northwest Quarter of Section 15, Township 10 South, Range 8 West, City of Lake Charles, Calcasieu Parish, Louisiana, being more fully described as follows:

Commencing at the Southwest corner of the Northwest Quarter of Section 15, Township 10 South, Range 8 East, proceed along the southern line of said Northwest Quarter a bearing of South 89° 20’ 36” East a distance of 55.00 feet to a point on the easterly right of way of Louisiana Highway No. 14, said right of way established for State Project No. 193-06-15; thence proceed along said right of way of Louisiana Highway No. 14 a bearing of North 00° 14’ 31” East a distance of 350.00 feet to a point; thence continue along said right of way of Louisiana Highway No. 14 a bearing of South 89° 20’ 36” East a distance of 10.00 feet to a point; thence continue along said right of way of Louisiana Highway No. 14 a bearing of North 00° 14’ 31” East a distance of 596.80 feet to a point; thence continue along said right of way of Louisiana Highway No. 14 a bearing of North 89° 12’ 33” West a distance of 10.00 feet to a point; thence continue along said right of way of Louisiana Highway No. 14 a bearing of North 00° 14’ 31” East a distance of 393.50 feet to a point; thence continue along said right of way of Louisiana Highway No. 14 a bearing of South 89° 12’ 33” East a distance of 15.00 feet to a point; thence continue along said right of way of Louisiana Highway No. 14 a bearing of North 00° 14’ 31” East a distance of 50.00 feet to a point; thence proceed along a bearing of South 89° 12’ 33” East a distance of 185.00 feet to a point; said point hereinafter to be known as the Point of Beginning; thence proceed along a bearing of South 89° 12’ 33” East a distance of 210.00 feet to a point; thence proceed along a bearing of South 00° 14’ 31” West a distance of 257.80 feet to a point on the northerly right of way of the proposed Derek Drive; thence proceed along said right of way of the proposed Derek Drive along a curve to the left having a radius of 460.81 feet, an arc length of 20.66 feet, a delta angle of 03° 48’ 46”, a chord bearing of South 85° 01’ 57” West and a chord distance of 30.66 feet to a point; thence continue along said right of way of the proposed Derek Drive a bearing of South 83° 07’ 34” West a distance of 150.00 feet to a point; thence continue along said right of way of the proposed Derek Drive along a curve to the right having a radius of 496.36 feet, an arc length of 30.76 feet, a delta angle of 03° 33’ 05”, a chord bearing of South 84° 54’ 07” West and a chord distance of 30.76 feet to a point; thence proceed along a bearing of North 00° 14’ 31” East a distance of 284.04 feet to the Point of Beginning.

 

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91.	FEE PARCEL DESCRIPTION: UNIT 1951

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE PARISH OF OUACHITA, STATE OF LOUISIANA, AND IS DESCRIBED AS FOLLOWS:

A certain tract or parcel of land situated in Lot 2, Unit No. 1, Constitution Centre, SE  ¹/4 of the NE  ¹/4 of Section 33, T18N, R3E, District North of the Red River, Ouachita Parish, Louisiana, being more particularly described as follows:

Commence at the intersection of the Southerly right-of-way Line of Interstate 20 Highway with the West line of the NE  ¹/4 of the NE  ¹/4 of Section 33, TI8N, R3E, and run South 00°18’29.7” East along the West line of the NE  ¹/4 of the NE  ¹/4 of Section 33, TI8N, R3E, for a distance of 72.96 feet to the Southerly right-of-way line of the service road known as Constitution Drive; thence continue South 00°18’29.7” East along said West line for a distance of 597.85 feet to the NW corner of the SE  ¹/4 of NE  ¹/4 of Section 33; thence run South 00°18’29.7” East along the West line of the SE  ¹/4 of the NE  ¹/4 of Section 33, TI8N, R3E, for a distance of 62.02 feet; thence run South 89°50’39.6” East for a distance of 188.22 feet to the POINT OF BEGINNING; thence run North 00°18’29.7” West for a distance of 255.37 feet; thence run North 36°30’21.0” East for a distance of 224.88 feet to the Southerly right-of-way line of the service road known as Constitution Drive; thence run South 53°29’39.0” East along said right-of-way line for a distance of 190.00 feet; thence run South 36°30’21.0” West for a distance of 324.21 feet; thence run South 00°00’31.6” West for a distance of 62.74 feet; thence run North 89°50’39.6” West for a distance of 92.24 feet to the POINT OF BEGINNING containing 66,878.91 square feet or 1.535 acres.

 

92.	FEE PARCEL DESCRIPTION: UNIT 1961

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE PARISH OF BOSSIER, STATE OF LOUISIANA, AND IS DESCRIBED AS FOLLOWS:

A tract located in the Northwest Quarter (NW/4) of Section 27, Township 18 North, Range 13 West, Bossier City, Bossier Parish, Louisiana, being more particularly described as follows:

From the Southwest corner of the Northwest Quarter (NW/4) of said Section 27, run North 0°08’ East along the West line thereof, a distance of 477.10 feet, thence South 83°41’ East, a distance of 543.73 feet, thence South 83°17’ East, a distance of 299.20 feet, to a point on the West right-of-way line of Village Lane; thence run North 0°11’ East along said right-of-way line a distance of 272.70 feet; thence run North 85°34’ East, with the North right-of-way line of Village Lane, a distance of 462.01 feet, to the point of beginning of the tract herein described; thence run North 4°26’ West a distance of 360.46 feet to a point on the South right-of-way line of the Illinois Central Railroad; thence run North 85°05’40” East along said right-of-way line a distance of 361.05 feet; thence run South 4°26’ East a distance of 363.44 feet to a point on the North right-of-way line of Village Lane; thence run South 85°34’ West along said right-of-way line, a distance of 361.04 feet, to the point of beginning.

 

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LESS AND EXCEPT:

A TRACT OF LAND in the NW/4 of said Section 27, Township 18 North, Range 13 West, Bossier Parish, Louisiana. Said tract more fully described as follows:

From the Southwest corner of the NW/4 of said Section 27, Run North 0 degrees 8’ East along the West line thereof, a distance of 477.10 feet, thence run South 83 degrees 41’ East, a distance of 543.73 feet, thence run South 83 degrees 17’ East a distance of 299.20 feet to a point on the West right-of-way line of Village Lane. Thence run North 0 degrees 11’ East along said right-of-way line a distance of 272.70 feet. Thence run North 85 degrees 34’ East with the North right-of-way line of Village Lane a distance of 462.01 feet to the point of beginning. From the point of beginning, run North 4 degrees 26’ West a distance of 360.70 feet to a found iron pipe, thence run North 85 degrees 5’45” East a distance of 173.32 feet to a found iron pipe. Thence run South 4 degrees 23’22” East a distance of 362.12 feet to a found iron pipe. Thence run South 85 degrees 33’55” West a distance of 173.04 feet to the point of beginning.

Said Tract containing 1.44 acres more or less.

 

93.	FEE PARCEL DESCRIPTION: UNIT 1971

A CERTAIN PARCEL OF GROUND known as the Easterly 144.61 feet of Lot 4 and all of Lot 5, formerly being a portion of Lot 2 of eight subdivision; and also, formerly being a portion of Lots 13 & 14 of Evergreen Plantation. Located in the City of Alexandria, Rapides Parish, Louisiana, Section 47, Township 3 North, Range 1 West, being more particularly described as follows:

Commencing at the intersection of the westerly right-of-way line of Sterkx Road and the northerly right-of-way line of MacArthur Drive; thence, along the northerly right-of-way of MacArthur Drive; N51°41’00” W—159.15 feet to a point, said point being the Point-of-Beginning.

Thence, along the Northerly right-of-way of MacArthur Drive, N51°41’00” W—144.61 feet to a point; thence, departing said right-of-way, N38°19’12” E—329.45 feet to a point; thence S60°49’00”E—262.38 feet to a point and corner, said point being on the Westerly right-of-way of Sterkx Road; thence, along the Westerly right-of-way of Sterkx Road, S16°55’00” W—92.35 feet to a point and corner; thence, S36°04’00”W—52.92 feet to a point and corner; thence, departing said right-of-way, N51°41’00” W—151.38 feet to a point and corner; thence S38°02’00” W—232.24 feet to the Point-of-Beginning. Being more particularly described as Lot 4-A and Lot 5 of a plat of survey by David L. Patterson, Registered Land Surveyor, dated June 6, 1997, a copy of which is recorded in conveyance Book 1508, Page 632.

 

94.	FEE PARCEL DESCRIPTION: UNIT 2001

Lot 2 of CORNERSTONE PLAZA, according to the map or plat thereof as recorded in Plat Book 88, Page 22 of the Public Records of Hillsborough County, Florida.

TOGETHER WITH those certain easements as set forth in Declaration of Covenants, Restrictions and Easements recorded in Official Records Book 10225, Page 596, of the Public Records of Hillsborough County, Florida.

 

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95.	FEE PARCEL DESCRIPTION: UNIT 2014

PARCEL 1:

Lot 1, TOWNSGATE WEST, according to map or plat thereof recorded in Plat Book 73, page 44, of the public records of Hillsborough County, Florida; LESS that portion as taken by the State of Florida Department of Transportation in Stipulated Final Judgment in Official Records Book 8159, page 512.

PARCEL 2:

TOGETHER WITH those certain non-exclusive easements for drainage and retention areas for the benefit of the above described parcel as created by and set forth in Exhibit D of that certain Easement Agreement executed by and between Whitestone Plant City Partners, a Florida general partnership, Inland Southern Development Corporation, a Florida corporation, and Inland Townsgate Limited Partnership, a Florida limited partnership recorded in Official Records Book 5295, page 1857, of the public records of Hillsborough County, Florida, LESS AND EXCEPT that part described in Order of Taking recorded in Official Records Book 7936, page 234, public records of Hillsborough County, Florida; ALSO LESS AND EXCEPT that part described in Stipulated Order of Taking recorded in Official Records Book 7917, page 491, public records of Hillsborough County, Florida, ALSO LESS AND EXCEPT that part described in Final Judgment recorded in Official Records Book 8159, page 512, public records of Hillsborough County, Florida.

PARCEL 3:

TOGETHER with those certain non-exclusive easements for drainage, ingress/egress and utilities for the benefit of Parcel 1 above as created by and set forth in that certain Declaration of Easements and Maintenance Agreement executed by and between Northlake Development, Inc., a Florida corporation and Northlake Drainage Association, Inc., a Florida not-for-profit corporation recorded in Official Records Book 7371, page 670, public records of Hillsborough County, Florida; LESS AND EXCEPT that part described in Stipulated Order of Taking recorded in Official Records Book 7917, page 491, public records of Hillsborough County, Florida and Stipulated Final Judgment recorded in Official Records Book 8159, page 512, public records of Hillsborough County, Florida.

 

96.	CONDOMINIUM PARCEL DESCRIPTION: UNIT 2015

All that part of Lot 39 lying East of the Seaboard Airline Railroad right-of-way of FLETCHER HEIGHTS, according to the plat thereof, as recorded in Plat Book 1, Page 41, of the Public Records of Citrus County, Florida.

 

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LESS and EXCEPT right-of-way for State Road Number 44, as described in Deed Book 96, Page 326, and Order of Taking recorded in Official Records Book 1028, Page 1388, of the Public Records of Citrus County, Florida.

LESS Limric Unit of OS Inverness Land Condominium, recorded August 16, 2006, in Official Records Book 2039, Page 2443, of the Public Records of Citrus County, Florida, as amended and/or supplemented from time to time, being more particularly described as follows:

A parcel of land lying in and being a part of Section 13, Township 19 South, Range 19 East, Citrus County, Florida being further described as follows:

Begin at the Southeast corner of Lot 39 of FLETCHER HEIGHTS SUBDIVISION as recorded in Plat Book 1, Page 41 of the Public Records of Citrus County, Florida; thence North 87°28’43” West, a distance of 213.00 feet; thence North 01°47’52” East, a distance of 233.81 feet; thence South 83°07’02” East, a distance of 159.33 feet; thence South 87°28’43” East, a distance of 68.50 feet; thence South 01°47’52” West, a distance of 168.00 feet to the POINT OF BEGINNING.

All of the above described lands being also described as follows:

OS Unit of the OS Inverness Land Condominium, recorded August 16, 2006, in Official Records Book 2039, Page 2443, of the Public Records of Citrus County, Florida, as amended and/or supplemented from time to time, being more particularly described as follows:

A parcel of land lying in and being a part of Section 13, Township 19 South, Range 19 South, Citrus County, Florida being further described as follows:

Commence at the Southeast corner of Lot 39 of FLETCHER HEIGHTS SUBDIVISION as recorded in Plat Book 1, Page 41 of the Public Records of Citrus County, Florida; thence North 87°28’43” West, a distance of 213.00 feet to the POINT OF BEGINNING; thence North 87°28’43” West, a distance of 281.15 feet; thence North 34°13’49” East, a distance of 760.07 feet to a point on the Southwesterly right-of-way line of S.R. 44; thence South 54°58’00” East, a distance of 103.40 feet; thence South 01°47’52” West, a distance of 423.09 feet; thence North 87°28’43” West, a distance of 68.50 feet; thence North 63°07’02” West, a distance of 159.53 feet; thence South 01°47’52” West, a distance of 233.81 feet to the POINT OF BEGINNING.

TOGETHER with the non-exclusive easements set forth in that certain Declaration of Land Condominium of OS Inverness Land Condominium, recorded in Official Records Book 2039, Page 2443, of the Public Records of Citrus County, Florida.

 

97.	FEE PARCEL DESCRIPTION: UNIT 2017

PARCEL I: (Fee Simple)

A portion of the Southeast 1/4 of Section 10, Township 28 South, Range 17 East, including a portion of Tract F shown on the Condominium Plat of SHELDON WEST, a condominium filed in Condominium Plat Book 2, Page 25, Public Records of Hillsborough County, Florida, and all of said land being more particularly described as follows:

 

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From the Southeast corner of Section 10, Township 28 South, Range 17 East, Hillsborough County, Florida; run thence North 00°21’33” East, 535.61 feet along the East boundary of said Section 10; thence North 89°40’49” West, 88.00 feet to the West right-of-way line of Sheldon Road for a POINT OF BEGINNING; thence North 89°40’49” West, 2.00 feet to the Northeast corner of Lot 1, of SHELDON WEST, a condominium filed in Condominium Plat Book 2, Page 25, Public Records of Hillsborough County, Florida; thence North 89°40’49” West, 274.96 feet along the North boundary of Lots 1 through 6 inclusive of said SHELDON WEST; thence South 84°52’59” West, 155.06 feet along the North boundary of Lots 6, 7 and 8 of SHELDON WEST; thence North 89°54’05” West, 110.68 feet along the North boundary of Lots 8, 9 and 10 of said SHELDON WEST; thence North 00°21’33” East, 506.79 feet along the West boundary of the East 630.00 feet of the Southeast 1/4 of said Section 10, (also being along the East boundary of CYPRESS PARK GARDEN HOMES, a Condominium filed in Condominium Plat Book 5, Page 33, Public Records of Hillsborough County, Florida) to the South boundary of an access easement as recorded in Official Records Book 9135, Page 931, Public Records of Hillsborough County, Florida; thence South 89°10’19” East, 542.01 feet along the South boundary of said easement to the West right-of-way line of Sheldon Road; thence South 00°21’33” West, 486.87 feet along said West right-of-way line to the Point of Beginning;

LESS AND EXCEPT the following parcel described as a portion of the Southeast 1/4 of Section 10, Township 28 South, Range 17 East, including a portion of Tract F shown on the Condominium Plat of SHELDON WEST, a condominium filed in Condominium Plat Book 2, Page 25, Public Records of Hillsborough County, Florida, and all of said land being more particularly described as follows:

From the Southeast corner of Section 10, Township 28 South, Range 17 East, Hillsborough County, Florida; run thence North 00°21’33” East, 535.61 feet along the East boundary of said Section 10; thence North 89°40’49” West, 88.00 feet to the West right-of-way line of Sheldon Road for a POINT OF BEGINNING; thence North 89°40’49” West, 2.00 feet to the Northeast corner of Lot 1, of SHELDON WEST, a condominium filed in Condominium Plat Book 2, Page 25, Public Records of Hillsborough County, Florida; thence North 89°40’49” West, 219.00 feet along the North boundary of Lots 1 through 5 inclusive of said SHELDON WEST for a POINT OF BEGINNING; thence continue North 89°40’49” West, 55.96 feet along the North boundary of Lot 5 of said SHELDON WEST; thence South 84°52’59” West, 155.06 feet along the North boundary of Lots 6, 7 and 8 of SHELDON WEST; thence North 89°54’05” West, 110.68 feet along the North boundary of Lots 8, 9 and 10 of said SHELDON WEST; thence North 00°21’33” East, 506.79 feet along the West boundary of the East 630.00 feet of the Southeast 1/4 of said Section 10, (in part along the East boundary of CYPRESS PARK GARDEN HOMES, a Condominium filed in Condominium Plat Book 5, Page 33, Public Records of Hillsborough County, Florida) to the South boundary of an access easement as recorded in Official Records Book 9135, Page 931, Public Records of Hillsborough County, Florida; thence South 89°10’19” East, 294.00 feet along the South boundary of said easement; thence South 00°21’33” West, 42.54 feet to a point of curvature; thence Southerly 52.56 feet along the arc of a curve to the left having a radius of 100.00 feet, a central angle of 30°07’02” and a chord bearing and distance of

 

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South 14°41’58” East, 51.96 feet to a point of reverse curvature; thence Southerly 52.56 feet along the arc of a curve to the right having a radius of 100.00 feet, a central angle of 30°07’02” and a chord bearing and distance of South 14°41’58” East, 51.96 feet to a point of tangency; thence South 00°21’33” West, 346.15 feet to the Point of Beginning;

PARCEL II: (Easement)

Non-exclusive easement for access contained in the Access Easement Agreement recorded in Official Records Book 9135, Page 931, as amended by the Amendment thereto recorded in Official Records Book 10548, Page 1946, re-recorded in Official Records Book 10594, Page 1849, Public Records of Hillsborough County, Florida.

PARCEL III: (Easement)

Non-exclusive easement for drainage contained in Drainage Easement recorded in Official Records Book 3898, Page 559; as assigned to Outback Steakhouse of Florida, Inc., a Florida corporation, by Assignment of Drainage Easement recorded in Official Records Book 11130, Page 612, Public Records of Hillsborough County, Florida.

PARCEL IV: (Easement)

Non-exclusive easement for drainage contained in the Drainage Easement recorded in Official Records Book 11130, Page 615, Public Records of Hillsborough County, Florida.

PARCEL V: (Easement)

Non-exclusive easement for drainage contained in the following instruments: (i) Parcel 6 Drainage Easement recorded in Official Records Book 9489, Page 1554; (ii) the Amendment thereto recorded in Official Records Book 9696, Page 1946; and (iii) the Second Amendment thereto recorded in Official Records Book 10995, Page 263, all in the Public Records of Hillsborough County, Florida.

PARCEL VI: (Easement)

Non-exclusive easement for drainage contained in the Drainage Easement recorded in Official Records Book 11130, Page 623, Public Records of Hillsborough County, Florida.

PARCEL VII: (Easement)

Easements which benefit the insured property as created by and set forth in Declaration of Covenants, Restrictions and Easements for “Outback Plaza at Citrus Park” recorded in Official Records Book 13513, Page 1374, Public Records of Hillsborough County, Florida.

 

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98.	FEE PARCEL DESCRIPTION: UNIT 2134

BEING KNOWN AND DESIGNATED as Lots Numbered Thirty (30) and Thirty-One (31) in the Tidewater Subdivision situate at or near the Village of Waldorf in the Sixth Election District of Charles County, Maryland.

TOGETHER WITH rights of ingress and egress on the adjoining streets and alleys including Waldorf Avenue, Naylor Avenue and a 15 foot alley which lie adjacent to said Lots 30 and 31.

Tax ID No. 06-035043

 

99.	FEE PARCEL DESCRIPTION: UNIT 2139

BEGINNING FOR THE SAME at a point on the southern right of way line of Maryland Route 103, where it intersects the western right of way line of Long Gate Parkway, thence running with the said western right of way line the following five courses and distances, viz:

1) South 32 degrees 22 minutes 52 seconds West 32.14 feet to a point,

2) South 09 degrees 31 minutes 44 seconds East 32.99 feet to a point,

3) South 38 degrees 16 minutes 17 seconds West 131.54 feet to a point,

4) 50.70 feet along the arc of a curve to the right, which curve is subtended by a chord bearing South 39 degrees 01 minutes 13 seconds West 50.70 feet, the curve being of radius 1940.00 feet, and

5) South 39 degrees 46 minute 08 seconds West 67.73 feet to the point, thence departing the said western right of way line and running with the line of division between Parcel K and Parcel J as shown on the Plat entitled “Long Gate Center, Parcels I, J & K” and recorded among the Land Records of Howard County, Maryland as Plat No. 12357, the following course and distances, viz:

6) North 50 degrees 13 minutes 52 seconds West 300.00 feet to a point, thence leaving said line and running for the following two courses and distances, viz:

7) North 39 degrees 46 minutes 08 seconds East 89.15 feet, thence

8) North 38 degrees 16 minutes 17 seconds East 187.53 feet to a point in the southern right of way line of the said Route 103, thence with the right of way line the following two courses and distances, viz:

9) 59.19 feet along the arc of a curve to the right, which curve is subtended by a chord bearing South 56 degrees 23 minutes 05 seconds East 59.19 feet, the curve being a radius of 2,435.00 feet and

10) South 55 degrees 41 minutes 19 seconds East 213.78 feet to the point of beginning encompassing 86,364 square feet or 1.983 acres of land, more or less.

BEING all that parcel known as Parcel K on a Plat entitled “Long Gate Center, Parcels I, J & K” and recorded among the Land Records of Howard County, Maryland as Plat No. 12357.

TOGETHER WITH EASEMENTS APPURTENANT to the above described property as defined in Article VI, Shopping Center Easements” in that certain Declaration of Covenants recorded among the Land Records of Howard County, Maryland in Liber 3645, folio 105, as amended by First Amendment to Declaration of Covenants, Conditions and Restrictions and Grant of Easement recorded among the aforesaid Land Records in Liber 3645, folio 176.

Tax ID No. 02-381710

 

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100.	FEE PARCEL DESCRIPTION: UNIT 2315

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF KENTWOOD, KENT COUNTY, STATE OF MICHIGAN, AND IS DESCRIBED AS FOLLOWS:

Part of the Northeast 1/4 of Section 14, Town 6 North, Range 11 West, City of Kentwood, Kent County, Michigan, described as:

Beginning at a point on the North line of said Section 14 a distance of 165.00 feet South 87°04’10” East of the North 1/4 corner of said Section 14; thence continuing South 87°04’10” East on said North Section line 165.00 feet; thence South 00°17’50” West parallel with the North—South 1/4 line of said Section 14 a distance of 660.00 feet; thence North 87°04’10” West parallel with the North line of said Section 14 a distance of 165.00 feet; thence North 00°17’50” East parallel with said 1/4 line 660.00 feet to the point of beginning.

EXCEPT THEREFROM the following described property:

Part of the Northeast 1/4 of Section 14, Town 6 North, Range 11 West, City of Kentwood, Kent County,

Michigan, described as: Commencing at the North 1/4 corner of said Section 14; thence South 87°04’10” East on the North line of said Section 14 a distance of 330.00 feet; thence South 00°17’50” West parallel with the North-South 1/4 line of said Section 14 a distance of 392.97 feet to the point of beginning of the land herein described; thence continuing South 00°17’50” West parallel with said 1/4 line 267.03 feet to a point that is 660.00 feet South 00°17’50” West of the North line of said Section 14; thence North 87°04’10” West parallel with said North Section line 165.00 feet to a point that is 165.00 feet South 87°04’10” East of the North-South 1/4 line of said Section 14; thence North 00°17’50” East parallel with said 1/4 line 266.73 feet to a point that is 393.27 feet South 00°17’50” West of said North Section line; thence South 87°10’10” East (Deeded South 87°10’25” East) 164.98 feet to the point of beginning.

TOGETHER WITH the non-exclusive rights, and subject to the terms, conditions and limitations contained in the Reciprocal Parking Easement Agreement dated September 9, 1994 recorded in Liber 3451, page 26.

Parcel ID: 41-18-14-201-051

Street Address: 3650 28th St. SE, Kentwood

 

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101.	FEE PARCEL DESCRIPTION: UNIT 2319

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE TOWNSHIP OF KOCHVILLE, SAGINAW COUNTY, STATE OF MICHIGAN, AND IS DESCRIBED AS FOLLOWS:

A parcel of land in the Southeast  ¹/4 of Section 35, Township 13 North, Range 4 East, Kochville Township, Saginaw County, Michigan, described as follows:

Commencing at a point on the North and South  ¹/4 line of said Section 240.63 feet, North 05 degrees 19 minutes 21 seconds East, from the South  ¹/4 corner of said Section 35; thence North 05 degrees 19 minutes 21 seconds East on said North and South  ¹/4 line, 97.32 feet; thence South 89 degrees 22 minutes 54 seconds East, parallel with the South line of the Southwest  ¹/4 of said Section 372.78 feet; thence South 00 degrees 37 minutes 06 seconds West, perpendicular to the South line of said Southwest  ¹/4, 280.70 feet; thence North 88 degrees 49 minutes 29 seconds West, parallel with and 60.00 feet, measured at right angles, North of the South line of the Southeast  ¹/4 of said Section, said line being the North right-of-way line of so-called Tittabawassee Road, 234.92 feet; thence North 05 degrees 19 minutes 21 seconds East, parallel with and 160.25 feet, measured at right angles, East of the North and South  ¹/4 line of said Section, 180.47 feet; thence North 88 degrees 49 minutes 29 seconds West, parallel with and 240.00 feet, measured at right angles, North of the South line of said Southeast  ¹/4, 160.67 feet to the Point of Beginning.

TOGETHER WITH the non-exclusive rights, and subject to the terms, conditions and limitations contained in the Declaration of Easements and Restrictions recorded in Liber 1749, page 249, and as further amended in Liber 1750, page 1990, Liber 1879, page 494, Liber 1898, page 1527, and Liber 1898, page 1552.

Tax Number: 18-13-4-35-3005-006

Tax Number: 18-13-4-35-3005-011

Street Address: 2468 Tittabawassee, Saginaw

 

102.	FEE PARCEL DESCRIPTION: UNIT 2320

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF MADISON HEIGHTS, OAKLAND COUNTY, STATE OF MICHIGAN, AND IS DESCRIBED AS FOLLOWS:

A parcel of land located in the West 1/2 of the Northwest 1/4 of Section 2, Town 1 North, Range 11 East, City of Madison Heights, Oakland County, Michigan, more particularly described as:

Beginning at a point South 00 degrees 05 minutes 30 seconds West, 60.00 feet, South 89 degrees 02 minutes 50 seconds East, 60.00 feet, South 00 degrees 05 minutes 30 seconds West, 81.64 feet and South 89 degrees 02 minutes 50 seconds East, 55.32 feet from the Northwest corner of said Section 2; thence South 89 degrees 02 minutes 50 seconds East, 93.17 feet; thence South 00 degrees 57 minutes 10 seconds West, 86.00 feet; thence South 89 degrees 02 minutes 50 seconds East, 9.00 feet; thence South 00 degrees 57 minutes 10 seconds West, 24.33 feet; thence North 89 degrees 02 minutes 50 seconds West, 102.17 feet; thence North 00 degrees 57 minutes 10 seconds East, 110.33 feet to the Point of Beginning.

 

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TOGETHER WITH the non-exclusive rights, and subject to the terms, conditions and limitations contained in the Easement Agreement by and between Campbell Corners Limited Partnership and Outback Steakhouse of Florida, In. dated September 11, 1995, recorded on September 18, 1995 in Liber 15682, page 252.

Parcel ID: 25-02-101-063

Street Address: 1515 W. Fourteen Mile, Madison Heights

 

103.	FEE PARCEL DESCRIPTION: UNIT 2321

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE TOWNSHIP OF BLACKMAN, JACKSON COUNTY, STATE OF MICHIGAN, AND IS DESCRIBED AS FOLLOWS:

Parcel I—Fee Parcel:

Part of Section 28, Township 2 South, Range 1 West, Jackson County, Michigan, more particularly described as follows:

Commencing at the center of Section 28; thence along the North-South  ¹/4 line of said Section 28, North 01’47’00” 275.37 feet to the Southerly right-of-way line of Boardman Road as defined by the Michigan Department of Transportation; thence along the Southerly right-of-way line of said Boardman Road, South 70’48’00” West, 135.97 feet to the Point of Beginning; thence South 00’47’00” East, 205.05 feet; thence South 89’13’00” West, 338.92 feet; thence North 00’47’00” West, 92.20 feet to the Southerly right-of-way line of said Boardman Road; thence along the Southerly right-of-way line of said Boardman Road, North 70’48’00” East, 357.22 feet to the Point of Beginning.

Parcel II—Easement Parcels:

Together with a non-exclusive easement to be used, if at all, solely for vehicular and pedestrian access to and from the Fee Parcel described above to Wisner Street and Boardman Street over the following described parcel (“Roadway”):

Part of Section 28, Township 2 South, Range 1 West, Jackson County, Michigan, more particularly described as follows:

Commencing at the center of Section 28; thence along the North-South  ¹/4 line of said Section 28, South 00’47’00” East, 21.39 feet to the Point of Beginning; said point being the point of intersection with a non-tangent curve, thence 8.38 feet along a curve to the right, radius 25.00 feet, central angle 19°12’03”, chord bearing South 79°34’32” West, 8.34 feet to the curve’s end; thence South

 

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89’10’33” West, 49.15 feet; thence North 66°50’12” West, 74.25 feet; thence South 89°13’00” West, 347.50 feet; thence North 00°47’00” West, 112.20 feet; thence South 70°48’00” West, 37.94 feet; thence South 00’47’00” East, 130.21 feet; thence North 89’13’00” East, 377.14 feet; thence South 66°50’12” East, 74.26 feet; thence North 89°10’33” East, 55.53 feet to a curve; thence 8.35 feet along a curve to the right, radius 25.00 feet, central angle 19’08’50”, chord bearing South 81°15’02” East, 8.32 feet to a non-tangent line; thence North 00°47’00” West, 32.77 feet to the Point of Beginning.

And together with a non-exclusive easement to be used, if at all, solely for vehicular parking purposes over the automobile parking spaces located upon the following described parcel:

Part of Section 28, Township 2 South, Range 1 West, Jackson County, Michigan, more particularly described as follows:

Commencing at the Center of Section 28; thence along the North-South  ¹/4 line of said Section 28, North 01 °47’00” West, 275.37 feet to the Southerly right of way line of Boardman Road as defined by the Michigan Department of Transportation; thence along the Southerly right-of-way line of said Boardman Road, South 70’48’00” West, 135.97 feet; thence South 00°47’00” East, 205.05 feet to the Point of Beginning; thence North 89’13’00” East, 27.41 feet; thence South 00’47’00” East, 8.67 feet; thence South 66°50’12” East, 57.82 feet; thence North 89°10’34”, East 30.00 feet; thence South 00°49’26” East, 18.87 feet; thence South 89’10’34” West, 34.01 feet; thence North 66°50’12” West, 73.93 feet; thence South 89°13’00” West, 347.61 feet; thence North 00°47’00” West, 21.00 feet; thence North 89°13’00” East, 338.92 feet to the Point of Beginning.

And together with a easement to be used, if at all, solely for activities associated with the construction, maintenance and repair of a paved parking area upon and for vehicular parking purposes over the automobile parking spaces located or to be constructed upon the following described parcel:

Part of Section 28, Township 2 South, Range 1 West, Jackson County, Michigan, more particularly described as follows:

Commencing at the Center of Section 28; thence along the North-South  ¹/4 line of said Section 28, North 01 ‘47’00” West, 275.37 feet to the Southerly right of way line of Boardman Road as defined by the Michigan Department of Transportation; thence along the Southerly right of way line of said Boardman Road, South 70°48’00” West, 135.97 feet; thence South 00°47’00” East, 34.05 feet to the Point of Beginning; thence North 89°13’00” East, 27.41 feet; thence South 00°47’00” East, 171.00 feet; thence South 89°13’00” West, 27.41 feet; thence North 00°47’00” West, 171.00 feet to the Point of Beginning.

 

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And together with a easement to be used, if at all, solely for activities associated with the construction, maintenance and repair of a trash corral and for the use thereof for a trash dumpster to service solely the business being conducted from the Fee Parcel described above, upon the following described parcel:

Part of Section 28, Township 2 South, Range 1 West, Jackson County, Michigan, more particularly described as follows:

Commencing at the Center of Section 28; thence along the North-South  ¹/4 line of said Section 28, North 01 °47’00” West, 275.37 feet to the Southerly right-of-way line of Boardman Road as defined by the Michigan Department of Transportation; thence along the Southerly right-of-way line of said Boardman Road, South 70°48’00” West, 135.97 feet; thence South 00°47’00” East, 167.05 feet to the Point of Beginning; thence North 89°13’00” East, 27.41 feet; thence South 00°47’00” East, 22.00 feet; thence South 89°13’00” West, 27.41 feet; thence North 00°47’00” West 22.00 feet to the Point of Beginning.

And together with a non-exclusive easement to be used, if at all, solely for activities associated with construction, maintenance and repair of an underground storm water drainage pipe, over the following described parcel:

Part of Section 28, Township 2 South, Range 1 West, Jackson County, Michigan, more particularly described as follows:

Commencing at the Center of Section 28; thence along the North-South  ¹/4 line of said Section 28, North 01 °47’00” West, 275.37 feet to the Southerly right-of-way line of Boardman Road as defined by the Michigan Department of Transportation; thence along the southerly right-of-way line of said Boardman Road, South 70°48’00” West, 135.97 feet; thence South 00°47’00” East, 90.05 feet to the Point of Beginning; thence North 89°13’00” East, 40.00 feet; thence South 00°47’00” East, 15.00 feet; thence South 89°13’00” West, 40.00; thence North 00°47’00” West, 15.00 feet to the Point of Beginning.

And for the use of such pipe for the drainage of storm water from the Fee Parcel described above into the storm water detention pond, together with any outfall pipe contained within such pond, located upon the following described parcel, and together with the right to use such pond and such outfall pipe on a non-exclusive basis for such storm water drainage purposes:

Part of Section 28, Township 2 South, Range 1 West, Jackson County, Michigan, more particularly described as follows:

Commencing at the Center of Section 28; thence along the North-South  ¹/4 line of said Section 28, North 01 °47’00” West, 275.37 feet to the Southerly right-of-way line of Boardman Road as defined by the Michigan Department of Transportation; thence along the southerly right-of-way line of said Boardman Road, South 70°48’00” West, 135.97 feet; thence South 00°47’00” East, 109.29 feet to the Point of Beginning; thence North 25°09’20” East, 44.84 feet; thence East, 31.35 feet; thence South, 20.00 feet; thence West, 18.65 feet; thence South 25°09’20” West, 73.26 feet; thence North 00°47’00” West, 45.72 feet to the Point of Beginning.

 

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And together with a non-exclusive easement to have the lines supplying electric power to the Fee Parcel described above tap into and use the electric power transformer located upon the following described parcel:

Part of Section 28, Township 2 South, Range 1 West, Jackson County, Michigan, more particularly described as follows:

Commencing at the Center of Section 28; thence along the North-South  ¹/4 line of said Section 28, North 01 °47’00” West, 275.37 feet to the southerly right-of-way line of Boardman Road as defined by the Michigan Department of Transportation; thence along the southerly right-of-way line of said Boardman Road, South 70°48’00” West, 135.97 feet; thence South 00°47’00” East, 189.05 feet to the Point of Beginning; thence North 89°13’00” East, 10.00 feet; thence South 00°47’00” East, 16.00 feet; thence South 89°13’00” West, 10.00 feet; thence North 00°47’00” West, 16.00 feet to the Point of Beginning.

Parcel lD: 000-08-28-177-001-00

Street Address: 1501 Boardman, Jackson

 

104.	FEE PARCEL DESCRIPTION: UNIT 2325

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE TOWNSHIP OF INDEPENDENCE, OAKLAND COUNTY, STATE OF MICHIGAN, AND IS DESCRIBED AS FOLLOWS:

Parcel 1:

Parcel (B) North:

Part of the East  ¹/2 of Section 32, Town 4 North, Range 9 East, Independence Township, Oakland County, Michigan, described as:

Beginning at a point on the Southwesterly Right-of-Way line of Dixie Highway, located South 89 degrees 51 minutes 15 seconds East 23.97 feet and North 33 degrees 21 minutes 47 seconds West 349.89 feet and South 49 degrees 31 minutes 48 seconds West 60.46 feet and North 33 degrees 21 minutes 47 seconds West 291.96 feet from the East  ¹/4 corner of Section 32, Town 4 North, Range 9 East; thence from said Point of Beginning South 58 degrees 05 minutes 24 seconds West 197.01 feet; thence South 83 degrees 15 minutes 05 seconds West 115.11 feet (as recorded), South 83 degrees 05 minutes 57 seconds West, 115.11 feet (as measured); thence North 33 degrees 21 minutes 47 seconds West 360.10 feet; thence East 359.19 feet to the Southwesterly Right-of-Way line of Dixie Highway; thence South 33 degrees 21 minutes 47 seconds East 218.86 feet along said Right-of-Way line to the Point of Beginning, EXCEPT that part of the East  ¹/2 of Section 32, Town 4 North, Range 9 East, Independence Township, Oakland County, Michigan, described as:

 

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Beginning at a point on the Southwesterly Right-of-Way line of Dixie Highway, located South 89 degrees 51 minutes 15 seconds East 23.97 feet and North 33 degrees 21 minutes 47 seconds West 349.89 feet and South 49 degrees 31 minutes 48 seconds West 60.46 feet and North 33 degrees 21 minutes 47 seconds West 291.96 feet from the East  ¹/4 corner of Section 32, Town 4 North, Range 9 East; thence from said Point of Beginning South 58 degrees 05 minutes 24 seconds West 197.01 feet; thence South 83 degrees 15 minutes 57 seconds West 115.11 feet; thence North 33 degrees 21 minutes 47 seconds West 32.47 feet; thence on a curve to the left (Radius = 210.00 feet, Long Chord = North 85 degrees 37 seconds East 123.53) an arc distance of 125.38 feet; thence North 43 degrees 53 minutes 30 seconds East 70.58 feet; thence North 56 degrees 39 minutes 20 seconds East 123.00 feet to the Southerly Right-of-Way line of Dixie Highway; thence South 33 degrees 21 minutes 47 seconds East 45.00 feet along said Right-of-Way line to the Point of Beginning.

PARCEL 2:

TOGETHER WITH the non-exclusive rights, and subject to the terms, conditions and limitations contained in the Declaration of Easements, Covenants, Conditions and Restrictions for the Clarkston Bluffs Community, recorded in Liber 10090, page 139.

Parcel ID: PART OF 08-32-277-111

Street Address: 6435 Dixie Hwy, Clarkson

 

105.	FEE PARCEL DESCRIPTION: UNIT 2326

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE TOWNSHIP OF GENOA, LIVINGSTON COUNTY, STATE OF MICHIGAN, AND IS DESCRIBED AS FOLLOWS:

Part of the Northeast  ¹/4 of Section 24, Town 2 North, Range 5 East, Genoa Township, Livingston County, Michigan, being more particularly described as follows:

Commencing at the East  ¹/4 corner of said Section 24; thence North 00 degrees 29 minutes 54 seconds West, along the East line of said Section and the Township line, 90.27 feet to the West  ¹/4 corner of Section 19, Town 2 North, Range 6 East; thence continuing North 00 degrees 29 minutes 54 seconds West, along the East line of said Section 24 and the Township line, 566.06 feet to the South line of “Grand Ravines” Subdivision, as recorded in Liber 25 of Plats, page 7, Livingston County Records; thence South 88 degrees 40 minutes 31 seconds West along the South line of said Subdivision, 314.16 feet to the Point of Beginning; thence South 18 degrees 18 minutes 40 seconds West, 518.24 feet to the North right of way line of I-96 Expressway (300 feet wide limited access right of way); thence along a non tangent curve to the left along said Northerly right of way line, radius of 3,061.79 feet, through a central angle of 04 degrees 12 minutes 55 seconds, arc distance of 225.26 feet, chord bearing North 74 degrees 10 minutes 04

 

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seconds West 225.21 feet; thence North 18 degrees 18 minutes 40 seconds East 447.70 feet to the South line of said subdivision; thence North 88 degrees 40 minutes 31 seconds East, along said Subdivision line, 238.89 feet to the Point of Beginning, containing 2.488 acres.

TOGETHER WITH and subject to a 66 foot wide easement for ingress, egress, public and private utilities, being part of the Southwest  ¹/4 of Section 19, Town 2 North, Range 6 East, Brighton Township and part of the East  ¹/2 of Section 24, Town 2 North, Range 5 East, Genoa Township, Livingston County, Michigan, more particularly described as:

Commencing at the Southeast corner of said Section 24; thence North 00 degrees 19 minutes 55 seconds West, along the East line of said Section 24 and Township line, 2,599.29 feet to the Point of Beginning; thence along a non-tangent curve to the right, radius of 533.00 feet, through a central angle of 20 degrees 44 minutes 10 seconds, an arc distance of 192.90 feet, chord bearing North 76 degrees 29 minutes 41 seconds West, 191.85 feet to the Northerly right-of-way line of I-96 expressway (300 feet wide limited access) and point of reverse curve; thence along said right-of-way line along a curve to the left, radius a 3,061.79 feet; through a central angle of 16 degrees 40 minutes 35 seconds, an arc distance of 891.16 feet, chord bearing North 74 degrees 27 minutes 53 seconds West 888.02 feet; thence North 07 degrees 11 minutes 49 seconds East 66.00 feet; thence along a non-tangent curve to the right, radius of 3,127.79 feet, through a central angle of 16 degrees 40 minutes 35 seconds, an arc distance of 910.37 feet, chord bearing South 74 degrees 27 minutes 53 seconds East 907.16 feet to a point of reverse curve; thence along a curve to the left, radius of 467.00 feet; through a central angle of 20 degrees 13 minutes 18 seconds, an arc distance of 164.82 feet, chord bearing South 76 degrees 14 minutes 15 seconds East 163.97 feet to the East line of said Section 24 and Township line; thence continuing along a curve to the left, radius of 467.00 feet, through a central angle of 14 degrees 34 minutes 37 seconds, an arc distance of 118.81 feet, chord bearing North 86 degrees 21 minutes 47 seconds East 118.49 feet to a point of reverse curve; thence along a curve to the right, radius of 533.00 feet, through a central angle of 11 degrees 28 minutes 08 seconds, an arc distance of 106.69 feet, chord bearing North 84 degrees 48 minutes 33 seconds East 106.51 feet; thence South 89 degrees 27 minutes 23 seconds East 50.00 feet to a point of curve; thence along a curve to the right, radius of 533.00 feet, through a central angle of 10 degrees 13 minutes 23 seconds, an arc distance of 95.10 feet; chord bearing South 84 degrees 20 minutes 41 seconds East 94.98 feet to a point of reverse curve; thence along a curve to the left, radius of 467.00 feet; through a central angle of 11 degrees 08 minutes 11 seconds, an arc distance of 90.77 feet, chord bearing South 84 degrees 48 minutes 05 seconds East 90.63 feet; thence North 89 degrees 37 minutes 49 seconds East 582.51 feet to the Westerly right-of-way line of Grand River Avenue (100 feet wide); thence along said right-of-way line along a non-tangent curve to the right, radius of 2,241.88 feet, through a central angle of 01 degrees 42 minutes 17 seconds, an arc distance of 66.70 feet, chord bearing South 08 degrees 39 minutes 20 seconds East 66.70 feet; thence South 89 degrees 37 minutes 49 seconds West 592.13 feet to a point of curve; thence along a curve to the right, radius of 533.00 feet, through a central angle of 11 degrees 08 minutes 11 seconds, an arc distance of 103.60 feet, chord bearing North 84 degrees 48 minutes 05 seconds West 103.44 feet to a point of reverse curve; thence along a curve to the left, radius of 467.00 feet, through a central angle of 10 degrees 13 minutes 23 seconds, an arc distance of 83.33 feet, chord bearing North 84 degrees 20 minutes 41 seconds West 83.22 feet; thence North 89 degrees 27 minutes 23 seconds West 50.00 feet to a point of curve; thence along a curve to the left, radius of 467.00

 

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feet; through a central angle of 11 degrees 28 minutes 08 seconds, an arc distance of 93.48 feet, chord bearing South 84 degrees 48 minutes 33 seconds West, 93.32 feet to a point of reverse curve; thence along a curve to the right, radius of 533.00 feet, through a central angle of 14 degrees 03 minutes 46 seconds, an arc distance of 130.82 feet, chord bearing South 86 degrees 06 minutes 21 seconds West, 130.49 feet to the Point of Beginning.

TOGETHER WITH the non-exclusive rights, and subject to the terms, conditions and limitations contained in the Sign Easement recorded in Liber 2026, page 819.

Parcel ID: 4711-24-200-063

Street Address: 7873 Conference Center Dr., Brighton

 

106.	FEE PARCEL DESCRIPTION: UNIT 2411

Parcel 1:

Tract A, Registered Land Survey No. 178, Anoka County, Minnesota.

Parcel 2:

Together with the benefits for a perpetual non-exclusive easement for ingress and egress purposes over that part of Tract B, Registered Land Survey No. 178, Anoka County, Minnesota, described as commencing at the Southwest corner of Tract A, said Registered Land Survey No. 178; thence east along the South line of said Tract A for a distance of 79 feet to the actual Point of Beginning of the easement to be hereby described; thence south at right angles a distance of 30.00 feet; thence east parallel with said South line of Tract A to intersect the east line of said Tract B; thence northerly along said east line of Tract B to the Southeast corner of said Tract A; thence west along said South line of Tract A to the Point of Beginning, as described in Easement and Maintenance Agreement dated April 7, 1997, filed June 11, 1997 as Document No. 297317.

 

107.	FEE PARCEL DESCRIPTION: UNIT 2415

Parcel 1:

All of Lot 5, Block 1, Bishop Heights, Dakota County, Minnesota.

AND

That part of Lot 4, Block 1, Bishop Heights, Dakota County, Minnesota lying Southerly of the following described line: Commencing at the Northwest corner of said Lot 4; thence Southeasterly along the Westerly line of said Lot 4 on an assumed bearing of South 21 degrees 15 minutes 20 seconds East, a distance of 107.57 feet to the point of beginning of the line to be described: thence North 68 degrees 44 minutes 40 seconds East, a distance of 80.50 feet; thence South 21 degrees 15 minutes 20 seconds East, a distance of 17.04 feet; thence South 18 degrees 58 minutes 24 seconds East a distance of 65.59 feet; thence North 89 degrees 59 minutes 25 seconds East, a distance of 216.22 feet: thence North 37 degrees 12 minutes 54 seconds East, a distance of 28.52 feet: thence North 89 degrees 25 minutes 20 seconds East a distance of 47.10 feet more or less to the Easterly line of said Lot 4 and there terminating.

 

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Parcel 2:

The benefit of easements as set forth in Declaration of Reciprocal Easements and Restrictive Covenants dated April 15, 1997 filed April 24, 1997, as Document No. 1417203, Office of County Recorder, Dakota County, Minnesota; as amended by that certain Amended and Restated Declaration of Reciprocal Easements and Restrictive Covenants, dated May 27, 1998 filed May 29, 1998, as Document No. 1503592, Office of County Recorder, Dakota County, Minnesota.

 

108.	FEE PARCEL DESCRIPTION: UNIT 2420

Lot Five (5) and the Southerly 61.00 feet of Lot Six (6), Ronding Acre Tracts, County of St. Louis, Minnesota.

Torrens Property

Certificate of Title No. 305711

TOGETHER WITH drainage and parking easements contained in Easement Agreement recorded April 11, 2006 as Document No. 815880.

 

109.	FEE PARCEL DESCRIPTION: UNIT 2619

All of a tract located in the Southwest Quarter (SW1/4) of the Northwest Quarter (NW1/4) of Section 19, Township 27 North, Range 32 West, further described as follows:

A tract of land in DRURY FIRST SUBDIVISION in Section 19, Township 27 North, Range 32 West, in the City of Joplin, Newton County, Missouri, designated as a future parcel on the recorded Plat thereof, being more particularly described as follows:

Beginning at a cross in a manhole lid at the Northeast comer of Parcel 2 in DRURY FIRST SUBDIVISION in Section 19, Township 27 North, Range 32 West, Newton County, Missouri, thence South 89°05’14” East 220.50 feet along the South right-of-way line of 36th Street to an iron pin set at the Northeast corner of the tract, thence South 01°15’02” West 300.00 feet to an iron pin found at the Southeast corner of the tract, thence North 89°04’40” West 220.50 feet to an iron pin set at the Southwest corner of the tract, thence North 01°15’02” East 299.96 feet to the point of beginning.

 

110.	FEE PARCEL DESCRIPTION: UNIT 3002

Lot 3 of CORNERSTONE PLAZA, according to the map or plat thereof as recorded in Plat Book 88, Page 22 of the Public Records of Hillsborough County, Florida.

 

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TOGETHER WITH those certain easements as set forth in Declaration of Covenants, Restrictions and Easements recorded in Official Records Book 10225, Page 596, of the Public Records of Hillsborough County, Florida.

 

111.	FEE PARCEL DESCRIPTION: UNIT 3101

PARCEL I:

BEGINNING at a point on the Eastern right of way line of Black Horse Pike, said point referenced as North 11 degrees 23 minutes 38 seconds East a distance of 92.53 feet east of an iron pin on the southern right of way line of Vacated Border Avenue; thence from said point of beginning, the following fourteen courses and distance

 

1.

North 11 degrees 23 minutes 38 seconds East a distance of 334.20 feet to a point; thence

 

2.

South 78 degrees 36 minutes 22 seconds East a distance of 229.00 feet to a point; thence

 

3.

North 11 degrees 23 minutes 38 seconds East a distance of 312.88 feet to a point; thence

 

4.

South 78 degrees 36 minutes 22 seconds east a distance of 171.00 feet to a point; thence

 

5.

South 11 degrees 23 minutes 38 seconds West a distance of 47.26 feet to a point; thence

 

6.

South 64 degrees 31 minutes 26 seconds West a distance of 25.00 feet to a point; thence

 

7.

South 11 degrees 23 minutes 38 seconds West a distance of 113.46 feet to a point; thence

 

8.

South 01 degrees 45 minutes 44 seconds east a distance of 87.87 feet to a point; thence

 

9.

South 11 degrees 23 minutes 38 seconds West a distance of 201.13 feet to a point; thence

 

10.

North 78 degrees 36 minutes 22 seconds West a distance 5.00 feet to a point; thence

 

11.

South 11 degrees 23 minutes 38 seconds West a distance of 100.00 feet to a point; thence

 

12.

South 78 degrees 36 minutes 22 seconds a distance of 5.00 feet to a point; thence

 

13.

South 11 degrees 23 minutes 38 seconds West a distance of 96.42 feet to a point; thence

 

14.

North 76 degrees 55 minutes 22 seconds West a distance of 400.17 feet to a point, said point being the point of BEGINNING.

 

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PARCEL II:

Together with an easement 80.03 feet in width along the southerly side of the fourteenth course herein and further described as follows:

BEGINNING at a point in the easterly right of way line of Route 42, said point being the intersection of the Centerline of Border Avenue Vacated) with the easterly right of way line of New Jersey State Highway Route 42 shown on Sheet 21 of the official tax map of Washington Township, Gloucester County, revised October 1989; thence

Along said right of way line of said Route 42 North 11 degrees 23 minutes 38 seconds East, a distance of 80.03 feet to the point of beginning of the above described Deed; thence

Along the final course of said Deed South 76 degrees 55 minutes 22 seconds East, a distance of 400.17 feet to the point of termination of the thirteenth course of said Deed; thence

Cont……

Extending the said thirteenth course in a southerly direction South 11 degrees 23 minutes 38 seconds West, a distance of 80.03 feet to a point in the aforesaid centerline of Border Avenue; thence

Along said centerline of Border Avenue South 76 degrees 55 minutes 22 seconds West, a distance of 400.17 feet to the point of BEGINNING.

PARCEL III:

Together with a right-of-way of ingress and egress as set forth in Mutual Access Non-Exclusive Agreement in Deed Book 2647, page 67.

PARCEL IV:

Together with a right-of-way of ingress and egress as set forth in Easement Agreement in Deed Book 4304, page 5.

FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 1.01 Block 118 on the Tax Map of the Township of Washington, Gloucester County, NJ

 

112.	FEE PARCEL DESCRIPTION: UNIT 3102

BEGINNING at a point in the southerly right of way line of New Jersey State Highway Route 38, said point being 1513.13 feet easterly along said right of way line from its intersection with the easterly right o way line of Rudderow Avenue; thence

1. Along said right of way line North 84 degrees 27 minutes 00 seconds East, a distance of 98.30 feet to an angle point therein; thence

 

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2. Along the same South 05 degrees 33 minutes 36 seconds East a distance of 3.00 feet to the beginning of an offset portion in said right of way line; thence

3. Along said Right of way offset North 845 degrees 42 minutes 24 seconds East a distance of 197.80 feet to a point therein; thence

4. Along the northwesterly line of Lot 2.05 in Block 173.01 shown on the Official Tax Map of Maple Shade Township South 21 degrees 08 minutes 00 seconds West, a distance of 726.20 feet to a point in the southwesterly bank of the Pennsauken Creek; thence

5. Partially along the said stream bank and partially along the stream roper North 58 degrees 19 minutes 00 seconds West, a distance of 116.60 feet to an angle point therein; thence

6. Along the stream proper and close to the southwesterly bank of said stream North 43 degrees 30 minutes 00 seconds West, a distance of 150.00 feet to a point in the approximate centerline of said creek, said point being the southeasterly corner of Lot 2 in Block 173.01 feet; thence

7. Along the southeasterly line of Lot 2 North 19 degrees 10 minutes 00 seconds East, a distance of 514.50 feet to the point of BEGINNING.

FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 2.04 Block 173.01 on the Tax Map of the Township of Maple Shade, Burlington County, NJ

 

113.	FEE PARCEL DESCRIPTION: UNIT 3110

PARCEL I:

BEGINNING at a point in the southerly line of New Jersey State Highway Route 38 (90.00 feet wide), where the same is intersected by the easterly line of Block 284-A, Lot 20-BB as illustrated on a plan entitled “Major Subdivision, Woodland Falls Corporation Park,” prepared by Taylor, Wiseman and Taylor (DWG No. 316-17058), dated March 1985, revised to November 01, 1985 and filed in the Camden County Clerk’s Office on November 14, 1985 as Map No. 398-9 (Duplicate #709-9) and from said beginning point extends; thence, along New Jersey State Highway Route 38.

1. North 84 degrees 34 minutes 40 seconds East, 39.00 feet to a point of curvature, being a connecting curve between the southerly line of New Jersey Highway Route 38 with the westerly line of Lake Drive East ( 50.00 feet wide); thence on a curve to the right, having a radius of 80.00 feet

2. Southeastwardly, an arc distance of 125.66 feet to a point of tangency; thence, along said westerly line

3. South 05 degrees 25 minutes 20 seconds East, 196.88 feet (erroneously shown as 226.88 feet on said plan) to a point of curvature; thence still along the same, on curve to the left having a radius of 175.00 feet

 

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4. Southeastwardly, an arc distance of 106.95 feet to a point in the same; thence along Block 284-A, Lot 4

5. South 49 degrees 33 minutes 38 seconds West, 53.26 feet to a point; thence still along same

6. North 76 degrees 54 minutes 46 seconds West, 231.00 feet to a point in line of Block 284-A, Lot 20-BCA; thence , along same and further along aforementioned Lot 20-BB

7. North 13 degrees 05 minutes 14 seconds Eat, 352.78 feet to the point and place of BEGINNING.

PARCEL II:

Together with rights under Declaration of Restrictions, Covenants and Easements recorded in Deed Book 4092, page 25; and as amended by as amended by First Amendment as set forth in Deed Book 4221, page 897 and as further amended by Second Amendment as set forth in Deed Book 4392, page 539; and as further amended by Third Amendment as set forth in Deed Book 4608, page 765

FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 12 (XLot: 6) Block 284.02 on the Tax Map of the Township of Cherry Hill, Camden County, NJ

 

114.	FEE PARCEL DESCRIPTION: UNIT 3114

BEGINNING at a point and concrete monument in the westerly right of way line of New Jersey State Highway No. 34 (80 feet wide), said point being the southeasterly most corner of Lot 1 Block 10.257 as depicted on the current tax assessment map of the Township of Old Bridge and running thence,

1. North 88 degrees 38 minutes 00 seconds West, a distance of 253.34 feet to a point: thence,

2. North 59 degrees 05 minutes 30 seconds West, a distance of 69.75 feet to a point; thence,

3. North 20 degrees 46 minutes 50 seconds West, a distance of 49.24 feet to a concrete monument in the easterly right of way line of New Jersey State Highway No. 9 (140 feet wide); thence,

4. North 30 degrees 45 minutes 16 seconds East, along said easterly right of way, a distance of 43.76 feet to a concrete monument; thence,

5. North 36 degrees 13 minutes 52 seconds East, still along said easterly right of way, a distance of 409.70 feet to a concrete monument and point of curvature; thence,

6. Along a non-tangent curve to the right, having a radius of 30.00 feet, an arc length of 64.29 feet, chord bearing of South 57 degrees 39 minutes 03 seconds East and a chord length of 52.67 feet to a concrete monument in the westerly right of way of New Jersey State Highway No. 34; thence,

 

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7. South 03 degrees 44 minutes 20 seconds West, along said westerly right of way, a distance of 68.60 feet to a railroad spike and point of curvature; thence,

8. Still along said westerly right of way line and a curve tangent to the left, having a radius of 1,313.57 feet, an arc length of 361.43 feet to the point of BEGINNING.

FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 1 Block 10257 on the Tax Map of the Township of Old Bridge, Middlesex County, NJ

 

115.	FEE PARCEL DESCRIPTION: UNIT 3116

PARCEL I:

BEGINNING at a point on the Eastern right of way line of Black Horse Pike, said point referenced as North 11 degrees 23 minutes 38 seconds East a distance of 92.53 feet east of an iron pin on the southern right of way line of Vacated Border Avenue; thence from said point of beginning, the following fourteen courses and distance

 

1.

North 11 degrees 23 minutes 38 seconds East a distance of 334.20 feet to a point; thence

 

2.

South 78 degrees 36 minutes 22 seconds East a distance of 229.00 feet to a point; thence

 

3.

North 11 degrees 23 minutes 38 seconds East a distance of 312.88 feet to a point; thence

 

4.

South 78 degrees 36 minutes 22 seconds east a distance of 171.00 feet to a point; thence

 

5.

South 11 degrees 23 minutes 38 seconds West a distance of 47.26 feet to a point; thence

 

6.

South 64 degrees 31 minutes 26 seconds West a distance of 25.00 feet to a point; thence

 

7.

South 11 degrees 23 minutes 38 seconds West a distance of 113.46 feet to a point; thence

 

8.

South 01 degrees 45 minutes 44 seconds east a distance of 87.87 feet to a point; thence

 

9.

South 11 degrees 23 minutes 38 seconds West a distance of 201.13 feet to a point; thence

 

10.

North 78 degrees 36 minutes 22 seconds West a distance 5.00 feet to a point; thence

 

11.

South 11 degrees 23 minutes 38 seconds West a distance of 100.00 feet to a point; thence

 

12.

South 78 degrees 36 minutes 22 seconds a distance of 5.00 feet to a point; thence

 

13.

South 11 degrees 23 minutes 38 seconds West a distance of 96.42 feet to a point; thence

 

14.

North 76 degrees 55 minutes 22 seconds West a distance of 400.17 feet to a point, said point being the point of BEGINNING.

 

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PARCEL II:

Together with an easement 80.03 feet in width along the southerly side of the fourteenth course herein and further described as follows:

BEGINNING at a point in the easterly right of way line of Route 42, said point being the intersection of the Centerline of Border Avenue Vacated) with the easterly right of way line of New Jersey State Highway Route 42 shown on Sheet 21 of the official tax map of Washington Township, Gloucester County, revised October 1989; thence

Along said right of way line of said Route 42 North 11 degrees 23 minutes 38 seconds East, a distance of 80.03 feet to the point of beginning of the above described Deed; thence

Along the final course of said Deed South 76 degrees 55 minutes 22 seconds East, a distance of 400.17 feet to the point of termination of the thirteenth course of said Deed; thence

Cont……

Extending the said thirteenth course in a southerly direction South 11 degrees 23 minutes 38 seconds West, a distance of 80.03 feet to a point in the aforesaid centerline of Border Avenue; thence

Along said centerline of Border Avenue South 76 degrees 55 minutes 22 seconds West, a distance of 400.17 feet to the point of BEGINNING.

PARCEL III:

Together with a right-of-way of ingress and egress as set forth in Mutual Access Non-Exclusive Agreement in Deed Book 2647, page 67.

PARCEL IV:

Together with a right-of-way of ingress and egress as set forth in Easement Agreement in Deed Book 4304, page 5.

FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 1.01 Block 118 on the Tax Map of the Township of Washington, Gloucester County, NJ

 

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116.	FEE PARCEL DESCRIPTION: UNIT 3117

All that certain lot, piece or parcel of land, with the buildings and improvements thereon erected, situated and lying in Green Brook Township, County of Somerset, State of New Jersey, more particularly described as follows:

BEGINNING at a monument set at the intersection of the westerly sideline of Jefferson Avenue with the northerly sideline of New Jersey State Highway Route #22 and running; thence

1. along said northerly sideline of New Jersey State Highway Route #22, South 52 degrees 34 minutes West, a distance of 264.16 feet to a monument set at the beginning of a curve; thence

2. along said New Jersey State Highway #22 and curving to the right on a regular radius of 11409.19 feet, an arc distance of 169.36 feet to an iron pipe and the southeasterly corner of lands now or formerly Duraladd Products Corporation; thence

3. along the line of said lands, North 33 degrees 26 minutes West, a distance of 300.00 feet to a point; thence

4. North 52 degrees 52 minutes East, a distance of 233.56 feet to a point and corner of lands now or formerly Samuel Garboos; thence

5. along the line of said lands, South 33 degrees 26 minutes East, a distance of 100.23 feet to a point and corner; thence

6. continuing along said lands, North 52 degrees 34 minutes East, a distance of 200.00 feet to a point and corner in the westerly sideline of Jefferson Avenue; thence

7. along said line of Jefferson Avenue, South 33 degrees 26 minutes East, a distance of 200.49 feet to a monument being the point and place of BEGINNING.

The above description is drawn in accordance with a survey made by Lippincott, Jacobs and Gouda, dated June 4, 1996.

FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 15.01 Block 82 on the Tax Map of the Township of Green Brook, Somerset County, NJ

 

117.	FEE PARCEL DESCRIPTION: UNIT 3120

BEGINNING at a point in the northeasterly Right-of-Way line of Klockner Road (width varies) as located North 30 degrees 52 minutes 08 seconds West, a distance of 23.78 feet from the northerly end of a curve, with a radius of 25.00 feet connecting the said Northeasterly Right-of-Way line of Klockner Road with the Northerly Right-of-Way line of Jug Handle of U.S. Route 130; Thence

1. North 30 degrees 52 minutes 08 seconds West, along the said Northeasterly Right-of-Way line of Klockner Road, a distance of 423.17 feet to a point for a corner; Thence

 

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2. North 59 degrees 07 minutes 52 seconds East, leaving the Northeasterly Right-of-Way line of Klockner, a distance of 107.00 feet to a point of curvature; Thence

3. Along the arc of a circle curving to the right with a radius of 140.00 feet, an arc length of 219.91 feet and a central angle of 90 degrees, to a point of tangency; Thence

4. South 30 degrees 52 minutes 08 seconds East, a distance of 283.17 feet to a point for a corner; Thence

5. South 59 degrees 07 minutes 52 seconds West, a distance of 247.00 feet to the point of BEGINNING.

Together with the use and benefit of the non-exclusive easements and rights as set forth in Reciprocal Easement and Operation Agreement by and between Outback Steakhouse of Florida, Inc., and HD Development of Maryland, Inc., dated December 29, 2006, recorded January 1, 2007 in Deed Book 5549, page 001.

FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 5.09 Block 2612 on the Tax Map of the Township of Hamilton, Mercer County, NJ

 

118.	FEE PARCEL DESCRIPTION: UNIT 3122

PARCEL I:

ALL that certain lot, parcel or tract of land, situate and lying in the Township of Evesham, County of Burlington, State of New Jersey, and being more particularly described as follows:

BEGINNING at a point in the Westerly line of New Jersey State Highway Route 73 (126 feet wide) a distance of 618.92 feet Southwardly from a monument corner to lands now or formerly of Theodore Plaska (Block 36, Lot 4, Evesham Township Tax Map) said point also being in the division line between Lots 4.02 and 4.05, Block 36 on the Plan hereinafter mentioned and extending; thence

(1) South 89 degrees 07 minutes 43 seconds West along said division line a distance of 480.18 feet to a point said point being in the Township dividing line of the Township of Evesham (Burlington County) from the Township of Voorhees (Camden County); thence

(2) North 12 degrees 41 minutes 15 seconds West along said Township line a distance of 605.95 feet to a point in the line of lands now or formerly of Theodore Plaska (Lot 4, Block 36, Tax Map); thence

(3) North 86 degrees 42 minutes 36 seconds East along said lands of Plaska, a distance of 610.91 feet to a point in the Westerly line of New Jersey State Highway Route 73; thence

(4) South 00 degrees 18 minutes 23 seconds East along the Westerly line of New Jersey State Highway Route 73, a distance of 618.92 feet to the first mentioned point and place of beginning.

 

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PARCEL II:

Together with rights under the Declaration of Cross Easements as set forth in Deed Book 3888 page 264; Amended & Restated Declaration of Cross Easement as set forth in Deed Book 6352, page 230; Supplement to Amended and Restated Declaration of Cross Easements as set forth in Deed Book 6352, page 259; First Amendment to Supplement to Amended and Restated Declaration of Cross Easements in Deed Book 6399, page 960 and First Amendment to Amended and Restated Declaration of Cross Easements as set forth in Deed Book 6399, page 968.

BEING shown and designated as Lot 4-BA, Block 36, on Plan of Minor Subdivision, Plate 6, Block 36, Lot 4, Evesham Township, Burlington County, prepared by Korab, McConnell & Dougherty Assoc., PA, dated 11/20/1985 and last revised 12/09/1987 and duly filed in the Burlington County Clerk’s Office on 10/12/1988 as Map #04807.

FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 4.05 Block 36 on the Tax Map of the Township of Evesham, Burlington County, NJ

 

119.	FEE PARCEL DESCRIPTION: UNIT 3211

Parcel I:

That portion of the Northeast Quarter (NE 1/4) of the Northeast Quarter (NE 1/4) of Section 24, Township 21 South, Range 61 East, M.D. B. & M., according to the official plat of said land on file in the Office of the Bureau of Land Management, Clark County, Nevada, described as follows:

Parcel Two (2) of that certain Parcel Map in File 78 of Parcel Maps, Page 91, in the Office of the County Recorder of

Clark County, Nevada, and recorded April 11, 1994 in Book 940411 as Instrument No. 00901, Official Records.

Parcel II:

A non-exclusive right for ingress, egress and access as set forth in that certain document entitled “Grant of Easement (Landscape Improvements) and Rights of Ingress and Egress”, recorded November 18, 1993, Instrument No. 00656, Book 931118, Official Records and amended by that “Amended and Restated Grant of Easement and Rights of Ingress and Egress” recorded November 21, 2000, Instrument No. 00781, Book 20001121, of Official Records.

APN: 162-24-503-006

 

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120.	FEE PARCEL DESCRIPTION: UNIT 3212

That portion of the Northwest Quarter (NW 1/4) of the Southwest Quarter (SW 1/4) of Section 23, Township 20 South, Range 60 East, MDM, described as follows:

Lot Two (2) of that certain Parcel Map in File 71 of Parcel Maps, Page 92 in the Office of the County Recorder of Clark County, Nevada, and recorded March 18, 1992 in Book 920318 as Instrument No. 00799, Official Records.

 

121.	FEE PARCEL DESCRIPTION: UNIT 3213

Parcel One (1):

That portion of the North Half (N  ¹/2) of the Northwest Quarter (NW  ¹/4) of Section 5, Township 22 South, Range 62 East, MDM, described as follows:

Parcel One-Two (1-2) of that certain Parcel Map in File 79 of Parcel Maps, Page 81, in the Office of the County Recorder of Clark County, Nevada, and recorded July 28, 1994 in Book 940728 as Instrument No. 01640, Official Records.

Parcel Two (2):

Non-exclusive easements over Lot One-One (1-1) of Parcel Map in File 79 of Parcel Maps, Page 81, in the Office of the County Recorder of Clark County, Nevada, and as created by Mutual Easement Agreements recorded May 31, 1989 in Book 890531 as Instrument No’s 00561 and 00564, Official Records.

 

122.	FEE PARCEL DESCRIPTION: UNIT 3214

Parcel One (1):

That portion of Lot One (1), Block One (1) of “Lakeside Plaza”, a Commercial Subdivision on file in the Office of the County Recorder, in Book 38 of Plats, at Page 09 and that portion of Common Area Lot “AS” as shown on said plat of “Lakeside Plaza” situated in the Northeast Quarter (NE 1/4) of the Northeast Quarter (NE  ¹/4) of Section 8, Township 21 South, Range 60 East, M.D.M., City of Las Vegas, Clark County, Nevada, more particularly described as follows:

COMMENCING at the Northeast corner of the Northeast Quarter (NE 1/4) of the Northeast Quarter (NE  ¹/4) of said Section 8, being the centerline intersection of Sahara Avenue (150 feet wide) and Durango Drive (100 feet wide); Thence South 89°50’13” West, along the North line of said Section 8, coincident with the centerline of said Sahara Avenue, 472.00 feet; Thence South 00°09’47” East, departing said North line of said centerline, 75.00 feet to the South right-of-way of said Sahara Avenue, being the North boundary of said Common Area Lot “AS”, also being the POINT OF BEGINNING;

Thence continuing South 00°09’47” East, departing the South right-of-way of said Sahara Avenue and the North boundary of said Common Area Lot “AS”, 332.00 feet; Thence South 89°50’13”West, 141.06 feet to the beginning of a curve concave Northeasterly having a radius of

 

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16.50 feet; Thence Northwesterly, 11.35 feet along said curve, through a central angle of 39°25’28” to the beginning of a reverse curve concave Southwesterly, having a radius of 70.50 feet, to which beginning a radial line bears North 39°15’41” East; Thence Northwesterly, 48.51 feet along said curve, through a central angle of 39°25”28”; Thence South 89°50’13” West, 7.19 feet; Thence North 00°09’47”West, 312.20 feet to the South right-of-way of Sahara Avenue and the North boundary of said Common Area Lot “AS”; Thence North 89°50’13” East, along said South right-of-way and said North boundary, 203.50 feet, to the POINT OF BEGINNING.

Said land further described as Lot 1-3 on Record of Survey recorded August 2, 1995 in File 77 of Surveys, Page 85, Official Records.

Parcel Two (2):

A perpetual, non-exclusive easement for vehicular and pedestrian ingress and egress, parking and deliveries as provided for in and subject to that certain Declaration of Covenants, Conditions and Restrictions recorded February 15, 1995 in Book 950215 as Instrument No. 00044, Official Records.

APN: 163-08-510-006

 

123.	FEE PARCEL DESCRIPTION: UNIT 3215

PARCEL ONE (1):

Parcel Two (2) of Parcel Map No. 3256 filed in the office of the County Recorder of Washoe County, State of Nevada, on October 9,1997, as File No. 2143323, Official Records.

PARCEL TWO (2):

Easements as set forth and for the purposes stated therein as contained in that certain Agreement, Establishment of Restrictions and Grant of Reciprocal Easements recorded October 10, 1989 as File No. 1354798, of Official Records; Amendment recorded March 9, 1994 as File No. 1773777 of Official Records and Amendment recorded October 9,1997 as File No. 2143321, of Official Records.

 

124.	FEE PARCEL DESCRIPTION: UNIT 3217

Parcel I:

That portion of the Northwest Quarter (NW 1/4) of the Southeast Quarter (SE 1/4) of Section 5, Township 20 South, Range 61 East, MDM, described as follows:

Parcel One-One (1-1) as shown by map thereof on file in File 115 of Parcel Maps, Page 39 in the Office of the County Recorder, Clark County, Nevada

 

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Parcel II:

A non-exclusive right for ingress, egress and access as set forth in that certain document entitled “Declaration of Cross Easements and Restrictions” dated July 10, 2006, and recorded July 11, 2006, as Instrument No. 04204, Book 20060711, Official Records.

 

125.	FEE PARCEL DESCRIPTION: UNIT 3220

Parcel One (1):

A description of a portion of Lot One (1) of Belz Commercial Subdivision Outlot 1, A Commercial Subdivision, file in Plat Book 80, Page 7, of Clark County, Nevada, Plat Records, situate in the Northwest Quarter of Section 9, Township 22 South, Range 61 East, M.D.M., Clark County, Nevada and being more particularly described as follows:

Commencing at the Southwest Corner of said Lot One (1), on the East line of Las Vegas Boulevard, a public right-of-way;

Thence North 00°00’22” West, along the East line of Las Vegas Boulevard and the West line of said Lot 1, 195.28 feet to the Southwest Corner and the Point of Beginning hereof;

Thence continuing North 00°00’22” West along the East line of Las Vegas Boulevard and the East line of said Lot 1, 127.71 feet to the Northwest corner hereof at the Southwest corner of Lot 1B shown on a map recorded in File 132 of Surveys at Page 54 of the Clark County, Nevada, Survey Records;

Thence North 89°49’31” East, departing said East line of Las Vegas Boulevard and along the South line of said Lot 1B, 260.00 feet to the East line of said Lot 1 for the Northeast corner hereof;

Thence South 00°00’22” East, along the East line of said Lot 1, 128.47 feet to the Southeast corner hereof;

Thence South 89°59’38” West, 260.00 feet to the Point of Beginning Also known as Lot 1C as shown on that certain Record of Survey recorded July 6, 2004 in Book 20040706, as Instrument No. 02073 of Official Records, and filed in File 139 of Surveys, Page 28, in the Office of the County Recorder, Clark County, Nevada.

Parcel Two (2):

A non-exclusive easement for vehicular and pedestrian ingress and egress as contained in and limited to that Declaration of Covenants and Covenants and Easements recorded March 2, 1994 in Book 940302 of Official Records, Instrument No. 00074.

 

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Parcel Three (3):

A non-exclusive easement for vehicular and pedestrian ingress and egress as contained in and limited to that certain Reciprocal Shopping Center Easement Agreement recorded August 7, 1997, in Book 970807 of Official Records, as Instrument No. 01270.

Parcel Four (4):

A non-exclusive easement and right to use entrances, exits and driveways as contained in and limited to that certain Declaration of Restrictions recorded August 19, 2003, in Book 20030819, of Official Records, as Instrument No. 02854.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitations of the following:

Access and Parking Easement Agreement dated November 19, 2004 recorded November 22, 2004, Instrument No. 03647, Book 20041122, Official Records

 

126.	FEE PARCEL DESCRIPTION: UNIT 3357

PARCEL I:

ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Dewitt, County of Onondaga and State of New York, being part of Military Lot No. 50 in said Town, and being more particularly described as follows:

BEGINNING at a point in the southerly boundary of Erie Boulevard East, said point being the intersection of the easterly boundary of lands conveyed by Eileen R. Clifford to James G. Clifford and Raymond V. Grimaldi, Trustees of the Eileen R. Clifford Retained Annuity Trust by deed dated July 5, 1995 and recorded in Onondaga County Clerk’s Office November 20, 1995 in Book 4042 of Deeds at Page 77 with said southerly boundary of Erie Boulevard East, said point also being 329.92 feet distant easterly, measured along said southerly boundary of Erie Boulevard East and its westerly prolongation, from the centerline of Thompson Road; running thence N 87° 28’ 30” E along said southerly boundary of Erie Boulevard East, a distance of 243 .98 feet to an angle point therein; thence N 88° 41’ 50” E continuing along said southerly boundary of Erie Boulevard East, a distance of 14.90 feet to the westerly boundary of lands conveyed by Martin N. Berry to The Berry Third Family Limited Partnership by deed dated February 13, 1992 and recorded in Onondaga County Clerk’s Office March 20, 1992 in Book 3756 of Deeds at page 147; thence S 05° 38’ 20” E along said westerly boundary of lands conveyed to The Berry Third Family Limited Partnership, a distance of 119.70 feet to the northeasterly corner of lands conveyed by Richard A. Gerharz to John Herlosky by deed dated May 2, 1986 and recorded in Onondaga County Clerk’s Office May 6, 1986 in Book 3254 of Deeds at page 27; thence S 78° 36’ 30” W along the northerly boundary of said lands conveyed by Gerharz to Herlosky and along the northerly boundary of lands conveyed by OnBank & Trust Co., f/k/a The Merchants National Bank and Trust Company of Syracuse to Emeka C. Anumba, M.D. by deed dated March 15, 1995 and recorded in Onondaga County Clerk’s Office March 17, 1995 in Book 3989 of Deeds at page 168, a distance of 441.47 feet to the easterly boundary of the aforementioned Thompson Road; thence N 31 ° 20’ 30” W along said easterly boundary of Thompson Road, a distance of 17.57 feet to the southerly boundary of the aforementioned lands conveyed to Clifford and Grimaldi, Trustees; thence N 78° 36’ 30” E along said southerly boundary of land conveyed to Clifford and Grimaldi, Trustees, a distance of 186.35 feet to the southeasterly corner thereof; thence N 04° 27’ 10” W along the aforementioned easterly boundary of lands conveyed to Clifford and Grimaldi, Trustees, a distance of 143.85 feet to the POINT OF BEGINNING.

 

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PARCEL II:

ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Dewitt, County of Onondaga and State of New York, being part of Military Lot No. 50 in said Town and being more particularly described as follows:

BEGINNING at the northeasterly corner of lands conveyed by OnBank & Trust Co., f/k/a The Merchants National Bank and Trust Company of Syracuse to Emeka C. Anumba, M.D. by deed dated March 15, 1995 and recorded in Onondaga County Clerk’s Office March 17, 1995 in Book 3989 of Deeds at page 168, said northeasterly corner being 179.96 feet distant easterly, measured along said northerly boundary of lands conveyed to Anumba, M.D., from the easterly boundary of Thompson Road; running thence N78° 36’ 30”E along the southerly boundary of lands conveyed by John Herlowski, a/k/a John Herlosky to Olga Herlowski, Frank Herloski and John Herlosky in Trust for Helen Reidor, et al by deed dated February 22, 1965 and recorded in Onondaga County Clerk’s Office March 17, 1965 in Book 2239 of Deeds at page 516, a distance of 261.51 feet to the westerly boundary of lands conveyed by Martin N. Berry to The Berry Third Family Limited Partnership by deed dated February 13, 1992 and recorded in Onondaga County Clerk’s Office March 20, 1992 in Book 3756 of Deeds at page 147; thence S05°38’20”E along said westerly boundary of lands conveyed to The Berry Third Family Limited Partnership, a distance of 151.95 feet to the northeasterly comer of lands conveyed by Angelo Dellomorte to Harris and Shirley Sarkin by deed dated March 17, 1966 and recorded in Onondaga County Clerk’s Office March 18, 1966 in Book 2291 of Deeds at page 357; thence S 78° 36’ 30” W along the northerly boundary of said lands conveyed to Sarkin, a distance of 191.40 feet to the northeasterly boundary of said lands conveyed to Anumba, M.D.; thence N 31 ° 20’ 30” W along said northeasterly boundary of lands conveyed to Anumba, M.D., a distance of 160.84 feet to the POINT OF BEGINNING.

 

127.	FEE PARCEL DESCRIPTION: UNIT 3402

COMMENCING at an existing iron rebar in the original southwest boundary of East Independence Boulevard (U.S. Highway 74), said point being the most northeasterly corner of a parcel of land acquired by the Department of Transportation for highway purposes and being more particularly described in Deed Book 7126, Page 292 recorded in the Mecklenburg County Public Registry; thence N 40-13-35 W along said southwesterly boundary, passing through an existing iron rebar at a distance of 10.05 feet, a total distance of 197.85 feet to a point of curvature; thence continuing along said southwesterly highway boundary following a curve to the right having a radius of 6711.05 feet which subtends a chord bearing N 37-38-54 W a distance of 603.81 feet, an arc distance of 604.01 feet to a set punch hold in concrete curb “THE TRUE POINT OF BEGINNING”, running thence from said “TRUE POINT OF BEGINNING” along the common boundaries between said lands of High Equity Partners L.P.-Series 86 and part of lands conveyed to CK-Charlotte Retail #2(A) Limited Partnership and described in Deed Book 5985, Page 441 the following seven (7) courses:

 

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1.	S 54-51-06 W a distance of 189.07 feet to a new iron rebar;

 

2.	N 35-08-54 W a distance of 180.00 feet to a set P.K. nail;

 

3.	N 54-51-06 a distance of 148.00 feet to a set P.K. nail;

 

4.	N 35-08-54 W a distance of 29.00 feet to a new iron rebar;

 

5.	N 50-05-17 E a distance of 24.08 feet to a new iron rebar;

 

6.	S 35-08-54 E a distance of 31.00 feet to a new iron rebar;

 

7.	N 54-51-06 E a distance of 17.94 feet to a new iron rebar in the southwesterly right-of-way boundary of East Independence Boulevard

Thence along said right-of-way boundary the following two (2) courses:

 

1.	S 34-51-23 E a distance of 154.99 feet to a point of curvature marked by a punch hole in the concrete curb;

 

2.	following a curve to the left, having a radius of 6711.05 feet which subtends a chord bearing S 34-57-50 E a distance of 25.01 feet, an arc distance of 25.01 feet to the “TRUE POINT OF BEGINNING”, continuing 0.7999 acres, more or less.

TOGETHER WITH those easements appurtenant to the above-described real property contained in the Declaration of Easements and Restrictive Covenants recorded in Book 5560, Page 230, as amended by First Amendment to Declaration of Easements and Restrictive Covenants and Declaration of Additional Restrictions recorded in Book 8741, Page 140; Declaration of Easements and Restrictive Covenants recorded in Book 5653, Page 703, as amended by First Amendment to Declaration of Easements an Restrictive Covenants and Modification of Purchase Option recorded in Book 8741, Page 124; and Declaration of Easements recorded in Book 5705, Page 541, as amended by Amendment to Declaration Easements and Restrictive Covenants recorded in Book 6977, Page 641, Mecklenburg County Registry.

 

128.	FEE PARCEL DESCRIPTION: UNIT 3403

BEING all of Lot 18-A of NORTHCROSS CORPORATE CENTER, Phase 1-Map 7, as the same is shown on a map thereof recorded in Map Book 28, at Page 979 in the Mecklenburg Public Registry; said map being a division of Lot 18 as originally shown on a map thereof recorded in Map Book 28, Page 511 in the Mecklenburg Public Registry.

Together with the non-exclusive easement, if any, and subject to the terms, conditions, provisions and limitations of the following: Declaration of Covenants, conditions and easements recorded in Book 6229, Page 610; as supplemented and amended in Book 6959, Page 250; as supplemented and amended in Book 7071, Page 803; Book 8845, Page 260; Book 7659, Page 569; Book 8325, Page 365 and Ratification and Consent in Book 8899, Page 267.

 

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129.	FEE PARCEL DESCRIPTION: UNIT 3420

BEING Lot 30 as shown on Map entitled “Survey for Home Depot” dated November 21, 1994, and recorded in Book of Maps 1994, Page 1954 and re-recorded in Book of Maps 2004, Page 1904, Wake County Registry.

TOGETHER WITH easements appurtenant to the above-described real property contained in that Declaration of Cross Access recorded in Book 7468, Page 55, and in that Restrictive Covenants and Easement Agreement recorded in Book 11338, Page 2226, Wake County Registry.

 

130.	FEE PARCEL DESCRIPTION: UNIT 3444

Known as 302 South College Road, Wilmington, New Hanover County, North Carolina. Beginning at an iron pipe in the western right-of-way line of N.C. Highway #132 (200 foot right-of-way), said pipe being North 33-19 East 177.71 feet and North 31-31 East 180 feet (chord distance) from the intersection of the northern right-of-way line of New Centre Drive (75.0 foot right-of-way) and the western right-of-way line of said N.C. Highway 132. Running thence from said point of beginning North 55-46 West 307.40 feet to an iron pipe; thence North 34-14 East 172.50 feet to an iron pipe; thence South 55-46 East 288.50 feet to an iron pipe in the western right-of-way line of said N.C. Highway #132; thence with said western right-of-way line South 27-58-45 West 173.53 feet (chord distance) to the point of beginning and containing 1.18 acres.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitations of the following: Non-Exclusive Easement for parking, ingress and egress as set forth in document recorded July 26, 1977 in Book 1106, Page 734, New Hanover County Registry.

 

131.	FEE PARCEL DESCRIPTION: UNIT 3446

BEGINNING at an existing iron pipe located in the southern right-of-way of US Highway 15-501, said iron pipe being a Control Corner having NC Grid Coordinates of N=801,559.951 and E=2,001,558.859; thence along a curve to the right having a radius of 19.30 feet and a chord bearing North 82-55-53 East, an arc distance of 14.06 feet to an existing iron pipe located in the western right-of-way of Mt. Moriah Road’ thence running with the western right-of-way of Mt. Moriah Road South 00-03-23 East 328.56 feet to an existing iron pipe; thence South 00-11-56 East 2.01 feet to an existing iron pipe; thence with a curve to the right having a radius of 25 feet and a chord bearing of South 44-48-04 West, an arc distance of 39.27 feet to an existing iron pipe in the northern right-of-way of Ladle Drive; thence continuing with the right-of-way of Ladle Drive South 89-48-04 West 16.87 feet to an existing iron pipe; thence along a curve to the right having a radius of 100 feet and a chord bearing of North 59-31-53 West, an arc distance of 107.05 feet to an existing iron pipe; thence North 28-51-49 West 183.86 feet to an existing iron pipe; thence along a curve to the right having a radius of 25 feet and a chord bearing of North 16-08-01 East, an arc distance of 39.27 feet to an existing iron pipe located in the southern right-of-way of US Highway 15-501; thence with the southern right-of-way of US Highway 15-501

 

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North 61-07-52 East 222.28 feet to the POINT AND PLACE OF BEGINNING, and being all of Tract A, containing 1.371 acres, as shown on plat entitled “Final Plat for P&S Properties Ltd. Partnership,” prepared by Triangle Surveyors, dated May 10, 1993, recorded in Book of Maps 129, Page 175, Durham County Registry.

TOGETHER WITH all rights, title and interest in the easements created pursuant to the certain Dedication of Easement dated May 27, 1993 and recorded in Book 1852, Page 404, Durham County Registry.

 

132.	FEE PARCEL DESCRIPTION: UNIT 3447

BEGINNING at a point in the center line of Highland Oaks Drive said point being the southeastern corner of property described in Book 1721, Page 1171, Forsyth County Registry; thence with the center line of Highland Oaks Drive North 60-07-54 East 10.44 feet to a point; thence continuing with said center line along a curve to the left having a chord bearing and distance of North 09-05-53 East 112.27 feet and a radius of 72.20 feet and an arc length of 128.62 feet to a point; thence continuing with said center line North 41-56-08 West 27.27 feet to a point; thence leaving said center line North 52-26-21 East 20.06 feet to a point in the eastern right-of-way line of Highland Oaks Drive; thence continuing North 52-26-21 East 200.00 feet to a point marked by an iron; thence South 37-33-39 East 280.00 feet to a point marked by an iron; thence South 52-26-21 West 223.54 feet to a point marked by an iron located in the northern line of property described in Book 1745, Page 4563; thence North 81-03-24 West 117.44 feet to a point marked by an iron; thence North 41-00-48 West 92.12 feet to the point and place of BEGINNING, containing 1.701 acres, more or less, as shown on survey prepared for Outback Steak House by United, LTD., dated May 17, 1993.

JOINT DRIVE

Together with the benefits as set for in that certain Joint Drive Agreement:

BEGINNING at a point in the center of Highland Oaks Drive as described in description for Highland Oaks Drive attached to this instrument, said point being the northernmost northwestern corner of the Property; running thence with the northernmost northwestern boundary line of the Property; running thence with said northernmost northwestern boundary line of the Property North 52-26-21 East 220.06 feet to a point marked by an iron at the northernmost corner of the Property. The line thus described is the center line of the Joint Drive, the northwesternmost line is 20 feet northwestwardly from the parallel to the center line; the southeasterly boundary thereof lies within the Property and is southeastwardly 20 feet from and parallel to said line; the southwestern boundary of the joint driveway is the northeastern right-of-way line of Highland Oaks Drive and the northeastern boundary of the Joint Drive is the northwesternmost 20 feet of the northeastern line of the Property and an extension of said line North 37-33-39 West 20 feet.

SIGHT EASEMENT

BEGINNING at a point in the center line of Highland Oaks Drive, said point being the intersection of the center line of Highland Oaks Drive with the southwestward extension of the northwestern line of the 40 foot easement described as the Joint Drive in this instrument, said point being located North 41-56-08 West 20.00 feet along the center line of Highland Oaks Drive

 

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from the northwestern corner of the Property; thence leaving the center line of said Highland Oaks Drive and running along a line 20 feet northwestward from and parallel to the center line of the Joint Drive North 52-26-21 East approximately 220.00 feet to a point located North 37-33-39 West 20 feet from the northeastern corner of the Property; thence from said point North 32-55-45 West 20 feet more or less to a point in the southeastern right-of-way line of Interstate 40; thence along the southeastern right-of-way line of Interstate 40 South 57-04-15 West 52.78 feet to a monument; thence continuing with said right-of-way line along a curve to the right having a chord bearing and distance of South 43-57-31 West 131.70 feet and a radius of 918.51 feet to a point in said right-of-way line; thence along a line 25 feet northwest of and parallel to the northern line of the Property South 52-26-21 West approximately 42.23 feet to a point in the center line of Highland Oaks Drive; thence with the center line of Highland Oaks Drive South 41-56-08 East 5.00 feet more or less to the point and place of BEGINNING.

DESCRIPTION FOR HIGHLAND OAKS DRIVE

BEGINNING at a point at the eastern terminus of the center line of Highland Oaks Drive as described in a deed recorded in Book 1721, Pages 1173 and 1174; thence North 65-22-39 West 6.15 feet to a point; thence North 26-52-17 West 15.01 feet to a point at the eastern terminus of the northwestern right-of-way line of Highland Oaks Drive as described in the deed referred to; thence North 60-07-54 East 13.23 feet to a point; thence along a curve to the left having a chord bearing and distance of North 09-05-53 East 81.17 feet, a radius of 52.20 feet and an arc length of 92.99 feet to a point; thence North 41-56-08 West 111.05 feet to a point in the southern right-of-way line of Hanes Mall Boulevard; thence along the southern right-of-way line of Hanes Mall Boulevard on a curve to the left having a chord bearing and distance of North 51-30-34 East 20.03 feet to a point; thence continuing along the southern right-of-way line of Hanes Mall Boulevard along a curve to the left having a chord bearing and distance of North 50-10-23 East 20.03 feet to a point; thence South 41-56-08 East 110.05 feet to a point; thence along a curve to the right having a chord bearing and distance of South 09-05-53 West 143-37 feet, a radius of 92.20 feet and arc length of 164.25 feet to a point; thence South 60-07-54 West 6.50 feet to a point; thence North 41-00-48 West 20.38 feet to the point and place of BEGINNING, Being an eastwardly and northerly extension of Highland Oaks Drive, as delineated on survey prepared for Outback Steak House by United, LTD., dated May 17, 1993.

PROPOSED PARKING EASEMENT

BEGINNING at an iron located in the easternmost corner of the Property; thence South 37-33-39 East 81.83 feet to a point; thence South 52-26-21 West 114.32 feet to a point; thence North 82-33-39 West 115.73 feet to a point in the corner line of the Property, said point being North 52-26-21 East 27.39 from an iron at the southernmost boundary line of the Property; thence North 52-26-21 East 196.15 feet to the point and place of BEGINNING, containing 12,702.90 square feet, as shown on survey prepared for Outback Steak House by United, LTD., dated May 17, 1993.

 

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Together with the non-exclusive rights, if any, and subject to the terms, conditions, provisions and limitations of the following:

That certain storm drainage easement as set forth in Grant of Easement recorded in Book 1789, Page 240, Forsyth County Registry.

 

133.	FEE PARCEL DESCRIPTION: UNIT 3448

Lying and being in Gaston County, North Carolina and being more particularly described as follows:

BEGINNING at an established iron pin situate on the southernmost margin of the right of way of Burt Avenue (formerly known as Goforth Avenue), a 60 foot right of way, at the northwesternmost corner of the property of Laurinburg KFC Take Home, Inc., now or formerly, as described in Deed Book 1424 at Page 842 in the Gaston County Public Registry: running thence from said point of BEGINNING with the division line of Laurinburg KFC Take Home, Inc., now or formerly, the following two courses and distances: (1) South 05°56’40” East 134.06 feet to an existing iron pin; and (2) North 84°01’25” East 183.96 feet to an existing iron pin situate on the westernmost margin of the right of way of N. New Hope Road (NC #279): thence with the westernmost margin of the right of way of N. New Hope Road the following four courses and distances: (1) South 03°43’20” West 57.80 feet to a concrete monument; (2) North 83°36’10” West 14.55 feet to an iron pin set; (3) South 03°44’48” West 35.73 feet to an iron pin set; and (4) South 51°11’40” West 109.84 feet to a concrete monument situate at the point where the westernmost margin of the right of way of N. New Hope Road intersects with the northernmost margin of the right of way for Interstate Highway #85; thence with the northernmost margin of the right of way of Interstate Highway #85, the following seven courses and distances: (1) North 74°41’32” West 61.59 Feet to an existing iron pin; (2) North 74°33’04” West 47.58 feet to an existing iron pin: (3) North 74°37’22” West 52.38 feet to an existing iron pin: (4) North 72°47’13” West 100.17 feet to an existing iron pin; (5) North 70°59’03” West 100.88 feet to an existing iron pin; (6) North 68°17’09” West 99.29 feet to an existing iron pin; and (7) North 66°17’31” West 109.55 feet to an existing iron pin; thence leaving the northernmost margin of the right of way of Interstate Highway #85, North 08°28’28” West 41.12 feet to an existing iron pin situate on the southernmost margin of the right of way of Burt Avenue (formerly known as Goforth Avenue); thence with the southernmost margin of the right of way of Burt Avenue, North 83°59’12” East 457.25 feet to the point and place of Beginning, containing 2.134 acres.

 

134.	FEE PARCEL DESCRIPTION: UNIT 3450

All that tract designated as Lots Eleven (11) and Twelve (12) in Block “C” of that certain Subdivision known as “South Side Commercial Center”, in the City of Greenville, Pitt County, North Carolina as shown on a map of said subdivision prepared by Rivers and Associates, Inc., dated April 27, 1965, which map is recorded in Map Book 15, Page 22, in the office of the Register of Deeds of Pitt County, North Carolina, reference to which is hereby made for a more specific description.

TOGETHER with an easement for drainage as described in that certain Grant Easement dated November 16, 1966, executed by Harry H. Lowry and wife, Marion T. Lowry to Maola Properties, Inc., recorded in Book O-36, at Page 478, Pitt County Register of Deeds, said drainage easement extending from the above described property across the northern portion of Lot No. 13 and being more particularly described as follows:

 

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The northern 5 feet only of Lot No. 13 of the South Side Commercial Center, as shown on map of same made by Rivers & Associates, Inc., dated April 27, 1965, which duly appears of record in Map Book 15, page 22, of the Pitt County Register of Deeds, and which 5 foot strip of land abuts the common boundary line between Lot Nos. 13 and 18 in the aforesaid Subdivision. The easement herein granted is limited solely to the installation and maintenance of an underground pipe or tile for the drainage of surface water only from the lands owned by the grantor to the drainage easement as shown on the aforesaid map of South Side Commercial Center and for no other purpose.

BEING all of that property conveyed to Maola Milk and Ice Cream Company from Regional Properties Co., by deed dated March 28, 1994, identified as Tract One in that certain deed recorded in Deed Book 504, Page 499 in the Pitt County Register of Deeds.

 

135.	FEE PARCEL DESCRIPTION: UNIT 3451

New Tract Z of the Final Plat for Outback Steakhouse, a plat of which is recorded in Plat Book 117, Page 121, in the Office of the Register of Deeds, Guilford County, North Carolina.

 

136.	FEE PARCEL DESCRIPTION: UNIT 3452

That certain parcel or tract of land lying and being in Sandhills Township, Moore County, North Carolina. Bounded on the north by W M Pinehurst Associates Limited Partnership, on the east by Southern Road, on the south by W M Pinehurst Associates Limited Partnership, on the west by Sandhills Area Land Trust conservation easement and being more particularly described as follows:

BEGINNING at a new iron rod in an east line of the 3.25 acre conservation easement area #2 as shown on a plat recorded in Plat Cabinet 6, Slide 252, Moore County Registry, said rod being located North 04-04-17 West 359.57 feet from an existing concrete monument, the most southwesterly corner of Lot #2, W M Pinehurst Associates Limited Partnership, as shown on said plat; thence continuing as said conservation East line the following courses: North 20-13-59 West 106.76 feet to a new iron rod, South 44-11-42 West 55.43 feet to a new iron rod, North 18-24-28 W. 249.94 feet to a new iron rod; thence leaving said conservation line, North 18-24-28 West 34.81 feet to a new iron rod; thence North 27-21-27 East 74.99 feet to a new iron rod; thence North 71-25-25 East 90.00 feet to a new iron rod in the west R/W (60 foot R/W) of Southern Road; thence as said R/W South 28-18-00 East 93.31 feet to an existing iron rod, the P.C. of a curve to the left having a radius of 294.00 feet, a delta angle of 55-24-07, an arc length of 284.28 feet, a chord bearing and distance of South 56-00-04 East 273.34 feet to an existing iron rod, a P.O.C. of said curve; thence leaving said R/W South 12-22-28 West 127.35 feet to a new iron rod; thence South 71-25-25 West 208.72 feet to the beginning containing 1.98 acres, more or less, as computed by coordinates and being all of Lot 2, Parcel A, of W M Pinehurst Associates Limited Partnership as shown in Plat Cabinet 6, Slide 252, Moore County Registry. Bearings herein are to above said reference and distances are horizontal ground.

TOGETHER WITH those easements appurtenant to the above-described real property provided in that Reciprocal Easement Agreement recorded in Book 1199, Page 325, Moore County Registry.

 

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137.	FEE PARCEL DESCRIPTION: UNIT 3453

Situated on the north side of Gateway Boulevard, Rocky Mount, Nash County, North Carolina.

BEGINNING at a point located by extending a line from a Concrete Monument in the northeastern property line of Curtis Ellis Drive at its intersection with the sight distance line between the northeastern property line of Curtis Ellis Drive and the southeastern property line of Winstead Avenue Extension, South 44-47-24 East 127.12 feet to a stake, North 68-27-10 East 418.22 feet to an existing pipe and South 68-00-00 East 209.76 feet to an existing iron pipe, a southeast corner with Rocky Mount Tectel I, LLC (Comfort Inn) in the northern property line of Gateway Boulevard, the point of beginning, and from such beginning point running thence along the northern property line of Gateway Boulevard, South 68-00-00 East 160.28 feet to an iron pipe set, a new corner with Harry William Hull, Jr.; thence along a new line with Hull, North 45-12-36 East 323.58 feet to an iron pipe set in the southern property line of U.S. Highway 64 Bypass; thence along the southern property line of U.S. Highway 64 Bypass, North 51-53-17 West 29.55 feet to a right of way monument and North 60-44-56 West 261.50 feet to an existing iron pipe, a northeast corner of Rocky Mount Tectel I, LLC; thence along the line of Rocky Mount Tectel I, LLC, South 22-00-00 West 338.60 feet to an existing iron pipe in the northern property line of Gateway Boulevard, the point of beginning, containing 1.68 acres according to Map of Survey for Outback Steakhouse by Mack Gay Associates, P.A., dated October 31, 1996, revised December 13, 1996, and being Lot 2, Block A of Property of Harry William Hull, Jr. and further being a portion of that property conveyed by Murveree F. Deans, et al, to Michael V. Barnhill and Harry William Hull, Jr. by deed dated August 1, 1988, recorded in Book 1259, Page 28, Nash County Registry. See also those deeds from Michael V. Barnhill to Harry William Hull, Jr. dated September 3, 1992, recorded in Book 1389, Page 66, Nash County Registry, and from Carol L. Barnhill to Harry William Hull, Jr. dated December 22, 1992, recorded in Book 1396, Page 3, Nash County Registry.

 

138.	FEE PARCEL DESCRIPTION: UNIT 3454

BEING known and designated as Lot 18-B of NORTHCROSS CORPORATE CENTER, Phase 1-Map 7, as the same is shown on a map thereof recorded in Map Book 28, at Page 979 in the Mecklenburg Public Registry.

Together with the non-exclusive easement, if any, and subject to the terms, conditions, provisions and limitations of the following: Declaration of Covenants, conditions and easements recorded in Book 6229, page 610; as supplemented and amended in Book 6959, Page 250; Book 7071, Page 803; Book 7659, Page 569; Book 8325, Page 365; Book 8421, Page 491; Book 8845, Page 260 and Book 8899, Page 267.

 

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139.	FEE PARCEL DESCRIPTION: UNIT 3455

A tract of land in Boone Station Township, City of Burlington, Alamance County, North Carolina, adjoining Longpine Road, and BEING ALL OF LOT ONE (1), Final Plat, Re-division of property of HOLT MANUFACTURING COMPANY, INC., as the same is recorded in Plat Book 58, Page 175 of the Alamance County Registry, to which reference is hereby made for a more complete and accurate description of the same.

Together with a non-exclusive easement for underground sanitary sewer line as described in Deed Book 1106, Page 94.

 

140.	FEE PARCEL DESCRIPTION: UNIT 3458

COMMENCING at North Carolina Geodetic Station “Ransom”, NAD 83 grid coordinates of North 874,973.5795 East 1,211,216.7508, North 11-29-25 West 556.14 feet (grid bearing and grid distance, combined factor .09998233) to the point and place of beginning, said beginning point being a new iron pipe and having NAD 83 grid coordinates of North 875,518.5736 East; 1,211,105.9668, said beginning point also being in the proposed new northern property line of (now or formerly) Northwest Construction, Inc., Tract II, said line also being the proposed new southern boundary line of (now or formerly) Northwest Construction, Inc., Tract I Deed Book 199, Page 805; thence South 83-36-48 West 158.58 feet (horizontal ground distances given from here forth) to a new iron pipe; thence continuing with proposed new property line South 83-40-42 West 155.44 feet to a new iron pipe, said iron pipe being in the western line of (now or formerly) Northwest Construction, Inc., Tract II Deed Book 199, Page 805, said point also being in the eastern line of (now or formerly) Pitts Oil Company, Inc., Deed Book 84, Page 164 further describing said point as being located North 04-32-03 East 40.73 feet of northwest corner of (now or formerly) Northwest Construction, Inc., Tract II Deed Book 199, Page 805; thence with the eastern line of (now or formerly) Pitts Oil Company, Inc. Deed Book 84, Page 164, same line being the previous western boundary of (now or formerly) Northwest Construction, Inc., Tract II Deed Book 199, Page 805, North 04-32-03 East 9.18 feet to a point, said point being the northwest corner of (now or formerly) Northwest Construction, Inc., Tract II Deed Book 199, Page 805, said point also being the southwest corner of (now or formerly) Northwest Construction, Inc., Tract I Deed Book 199, Page 805; thence continuing with the eastern line of (now or formerly) Pitts Oil Company, Inc., Deed Book 84, Page 164 and (now or formerly) Velma J. Hayes, Deed Book 95, Page 584 eastern property line North 04-32-03 East 300.00 feet to an existing iron pipe, said point being the southwest corner of (now or formerly) David G. Cox (Deed Book 204, Page 941); thence with the southern line of (now or formerly) David G. Cox North 88-16-23 East 266.53 feet to a new iron pipe, said point being the southeast corner of (now or formerly) David G. Cox; thence continuing North 88-16-23 East 50.05 feet to a point in the centerline of US Highway 321; thence with the centerline of US Highway 321 South 04-18-57 East 278.22 feet to a point; thence leaving the centerline of US Highway 321 South 83-36-48 West 50.03 feet to the point and place of beginning. The above described property contains 2.279 acres, more or less, (area including right of way, area excluding right of way is 1.957 acres, more or less, DMD.

 

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Together with a 40 foot easement for ingress, egress and regress over the Grantors’ property located South of the above described tract consisting of 12,689 square feet, more or less, acquired under deed recorded in Book 1296, Page 190, Watauga County Registry, and more particularly described as follows:

COMMENCING at NCGS Monument Ransom which has NC grid NAD 83 coordinates of North 874,973.5795 East 1,211,216.7508 North 11-29-25 West (NC NAD 83 grid meridian) 556.14 feet (average combined grid factor is 0.9998233) to the point and place of beginning, a new iron pipe which has coordinates of North 875,518.5736 East 1,211,105.9668, said point being in the western right of way of US Highway 321, said point also being the southeast corner of proposed Tract 1; thence with the western right of way of US Highway 321 South 04-18-57 East 17.48 feet to a point; thence continuing South 05-02-06 East 22.54 feet to a point; thence with the proposed southern line of 40’ ingress, egress and regress easement South 83-36-48 West 157.46 feet to an existing iron pipe; thence continuing South 83-40-42 West 163.11 feet to an existing iron pipe, said point being a southwest corner of proposed 40’ ingress, egress and regress easement, said point also being the southeast corner of (now or formerly) Pitt Oil Company, Inc. (Deed Book 84, Page 164); thence with the eastern line of (now or formerly) Pitt Oil Company, Inc. North 04-32-03 East 40.73 feet to a new iron pipe, said point being the southwest corner of proposed Tract 1; thence with the southern line of proposed Tract 1 North 83-40-42 East 155.44 feet to a new iron pipe; thence continuing North 83-36-48 East 158.58 feet to the point and place of beginning. The above described property contains 12,289 square feet, more or less, DMD.

 

141.	FEE PARCEL DESCRIPTION: UNIT 3460

Lying in the City of Hendersonville, in Henderson County, North Carolina and being a portion of the properties of Ken-Ken Corp. as described in Deed Book 976, Pages 96 and 99 of the Henderson County Records and being a portion of that sixty-foot wide right of way for Mitchell Drive (SR 1896) as approved for abandonment by the State of North Carolina Department of Transportation (NCDOT) on December 3, 1999 (reference: Petition No. 44091, dated October 8, 1999). Being more particularly described as follows:

BEGINNING at an iron rod with a cap set on the northern edge of the existing sixty-foot wide right of way for Mitchell Drive, said point being located South 27-58-24 East for a distance of 744.77 feet from the NCGS Monument “Hendersonville”;

THENCE along a curve to the right having a radius of 656.94 feet and an arc length of 193.12 feet, being subtended by a chord of South 56-02-35 East for a distance of 192.42 feet to an iron rod with a cap set on the edge of the controlled access right of way for Interstate Highway 26;

THENCE along a curve to the right having a radius of 205.21 feet and an arc length of 80.31 feet, being subtended by a chord of South 36-24-36 East for a distance of 79.80 feet to an iron rod with a cap set on the edge of the controlled access right of way for Interstate Highway 26;

THENCE South 05-23-48 West for a distance of 71.44 feet to an iron rod with a cap set, formerly a  ³/4 inch iron pipe found as shown on slide 3217 of the Henderson County Records, on the edge of the controlled access right of way for Interstate Highway 26;

 

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THENCE South 07-45-15 West for a distance of 35.14 feet to an iron rod with a cap set on the edge of the controlled access right of way for Interstate Highway 26;

THENCE South 83-55-00 East for a distance of 28.43 feet to an iron rod with a cap set, formerly a concrete monument found as shown on slide 3217 of the Henderson County Records, on the edge of the controlled access right of way for Interstate Highway 26;

THENCE South 31-57-25 East for a distance of 99.43 feet to an iron rod with a cap set, formerly a concrete monument found as shown on slide 3217 of the Henderson County Records, on the edge of the controlled access right of way for Interstate Highway 26;

THENCE South 31-49-08 East for a distance of 36.40 feet to an iron rod with a cap set on the edge of the controlled access right of way for Interstate Highway 26;

THENCE North 83-07-38 West for a distance of 338.66 feet to an iron rod with a cap set on the eastern edge of the new fifty-foot wide right of way for Mitchell Drive;

THENCE North 06-31-13 East for a distance of 357.73 feet to an iron rod with a cap set on the eastern edge of the new fifty foot wide right of way for Mitchell Drive which intersects the existing sixty-foot wide right of way for Mitchell Drive, being the Point of Beginning, and being as shown on survey by G. Marcus Brittain, Job No. 99062R1, dated October 1999, and last revised December 18, 1999.

Appurtenant Easement:

TOGETHER WITH AN EASEMENT FOR ACCESS AND UTILITES over a portion of the right-of-way known as Mitchell Drive as described in Declaration of Restrictions recorded in Book 1013, Page 483, Henderson County Registry, said easement being more particularly described as follows:

BEGINNING at a point where the eastern edge of the new fifty-foot wide right of way for Mitchell Drive intersects the southern edge of the existing sixty-foot wide right of way for Mitchell Drive. Said point being located South 06-31-13 West for a distance of 63.86 feet from the Point of Beginning of the parcel described;

THENCE South 06-31-13 West for a distance of 293.89 feet to an iron rod with a cap set on the eastern edge of the new fifty-foot wide right of way for Mitchell Drive and at the southwest corner of the parcel shown;

THENCE South 06-31-13 West for a distance of 15.27 feet to a point on the edge of the new fifty-foot wide right of way for Mitchell Drive;

THENCE along a curve to the left having a radius of 25.00 feet and an arc length of 21.03 feet, being subtended by a chord of South 17-34-29 East for a distance of 20.41 feet to a point of the edge of the new fifty-foot wide right of way for Mitchell Drive;

THENCE along a curve to the right having a radius of 50.00 feet and an arc length of 241.19 feet, being subtended by a chord of North 83-28-47 West for a distance of 66.67 feet to a point on the edge of the new fifty-foot wide right of way for Mitchell Drive;

 

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THENCE along a curve to the left having a radius of 25.00 feet and arc length of 21.03 feet, being subtended by a chord of North 30-36-54 East for a distance of 20.41 feet to a point of the edge of the new fifty-foot wide right of way for Mitchell Drive;

THENCE North 06-31-13 East for a distance of 256.24 feet to a point on the edge of the new fifty-foot wide right of way for Mitchell Drive;

THENCE North 83-28-47 West for a distance of 5.00 feet to a point on the edge of the new fifty-foot wide right of way for Mitchell Drive;

THENCE along a curve to the left having a radius of 90.60 feet and an arc length of 123.07 feet, being subtended by a chord of North 32-23-43 West for a distance of 113.82 feet to a point of the edge of the new fifty-foot wide right of way for Mitchell Drive where it intersects the Southern edge of the existing sixty-foot wide right of way for Mitchell Drive;

THENCE along a curve to the right having a radius of 1313.99 feet and an arc length of 72.24 feet, being subtended by a chord of South 69-44-09 East for a distance of 72.23 feet to a point on the Southern edge of the existing sixty-foot wide right of way for Mitchell Drive;

THENCE along a curve to the right having a radius of 596.94 feet and an arc length of 59.32 feet, being subtended by a chord of South 65-18-51 East for a distance of 59.29 feet to a point where the eastern edge of the new fifty-foot wide right of way for Mitchell Drive intersects the southern edge of the existing sixty-foot wide right of way for Mitchell Drive, being the Point of Beginning, and being as shown on survey by G. Marcus Brittain, Job No. 99062R1, dated October 1999, and last revised December 18, 1999.

 

142.	FEE PARCEL DESCRIPTION: UNIT 3461

BEGINNING at a found railroad spike located North 23-26-47 West 562.72 feet from NCGS monument “Innes” (per survey for Towne Creek Commons, LP and Regency Land Corporation, GP, by Donald J. Moore, RLS-3482, dated 1-18-96, revised 5-8-96: “Innes” x = 1,566,543.57 Y = 697,443.04 NAD 83; CG factor 0.9998692); said spike also being the southeastern corner of Quality Oil (now or formerly; Deed Book 610, Page 491); hereinafter all references to the Rowan County Registry of Deeds; thence from said point of Beginning, with the common line of Quality Oil, North 35-47-06 West 134.99 feet to a found railroad spike, the northeastern corner of Quality Oil; thence with four (4) new lines the following calls and distances: (1) North 32-37-33 East 110.76 feet to a point; (2) with the arc of circular curve to the left having a radius of 223.00 feet for an arc distance of 283.70 feet (chord: North 86-00-48 East 264.95 feet) to a point; (3) with the arc of a circular curve to the right having a radius of 235.00 feet for an arc distance of 10.70 feet (chord: North 50-52-19 East 10.70 feet) to a point; and (4) South 35-37-10 East 210.66 feet to a point on the right of way of Interstate 85; thence with the right of way of Interstate 85, South 54-22-50 West 272.57 to a found iron; thence North 35-48-16 West 172.89 feet to a found nail; thence South 54-09-13 West 65.50 feet to the POINT AND PLACE OF BEGINNING, containing 1.830 acres and being a portion of Tract A of ALTA/ASCM Land Title Survey of Towne Creek Commons by Lucas-Forman, Inc. (Matthew J. Lucas, PLS, License #L-3246) dated 9-8-98, revised 9-29-98.

 

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Appurtenant Easement:

TOGETHER WITH an easement for access over that Roadway Easement Area described in the Declaration of Covenants, Conditions and Restrictions/Towne Creek Commons recorded in Book 837, Page 59, Rowan County Registry.

 

143.	FEE PARCEL DESCRIPTION: UNIT 3462

BEING all of Lot 4 as same is shown and delineated on a map entitled Final Plat of Bridge Pointe Plaza, said map being recorded in Plat Cabinet G, Slide 104-H, in the Office of the Register of Deeds of Craven County, reference to said map being hereby made for a more perfect description of said property.

TOGETHER WITH a non-exclusive reciprocal easement for the purposes of ingress, egress, access and driveways, said easement being 35 feet in width, the eastern line of said easement being more particularly descried as follows:

BEGINNING at a point in the eastern line of Lot No. 4 of the western right of way line of NCSR 1004 (Madame Moore’s Lane) which said point of beginning lies South 17-17-30 West 166.20 feet from the northeastern corner of Lot No. 4; thence from this point of beginning so located North 17-17-30 East 166.20 feet to a point; thence continuing North 17-17-30 East 93.80 feet to the northern terminus of said easement.

ALSO TOGETHER WITH a non-exclusive easement for the purposes of draining storm water from the property hereinabove described and conveyed, said easement being 10 feet in width, as described in instrument recorded in Book 2618, Page 390, Craven County Registry, and being more particularly described by metes and bounds as follows:

BEGINNING at a point in the northern line of Lot No. 4, which said point of beginning lies the following courses and distances from an iron pipe marking the northwestern corner of Lot No. 4 South 89-42-10 East 100.07 feet to an iron pipe and South 72-42-30 East 46.73 feet to the point of beginning; thence from this point of beginning so located continuing along the northern line of Lot No. 4 South 72-42-30 East 20.48 feet to a point; thence North 78-3-26 East 65.80 feet to a point; thence North 11-59-0 West 10 feet to a point; thence South 78-3-26 West 83.66 feet to the POINT OF BEGINNING.

 

144.	FEE PARCEL DESCRIPTION: UNIT 3463

BEGINNING at an existing iron pin in the North right-of-way line of Matthews-Pineville Road (N.C. Highway 51) at the Southwest corner of the land owned by CNC Centers, a Florida General Partnership (now or formerly) (see Deed Book 4925, Page 837, Mecklenburg County Registry); running thence with the North right-of-way line of the Matthews-Pineville Road,

 

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North 87-15-29 West 181.40 feet to a set iron pin; running thence on a curve to the right the radius of said curve being 2,814.79 feet, a chord call and distance of North 86-24-26 West 83.60 feet to an existing iron pin; running thence North 24-06-30 West 68.97 feet to an existing iron pin in the East right-of-way line of Kettering Drive; running thence with said right of way line, North 11-16-00 East 189.00 feet to an existing iron pin, the Southwest corner of Robert K. Lee (see Deed Book 5764, Page 535, Mecklenburg County Registry); running thence with Lee’s South line, South 87-19-30 East 267.83 feet to an existing iron pin in the West line of CNC Centers’ property; running thence with the West line of CNC Centers, South 02-40-30 West 250.00 feet to the point and place of Beginning. Containing 1.6138 acres, more or less.

TOGETHER WITH a 15’ sanitary sewer easement created by agreement recorded in Book 4732, Page 395, over property described as follows:

BEGINNING at a point in the northerly boundary of that certain 1.6227 acre tract of land conveyed by deed recorded in the Mecklenburg County Public Registry, from Park Cedar Associates, Ltd., to General Mills Restaurant Group, Inc., in Book 4731, Page 524, which point is located South 87-19-30 East 12.1 feet with said northerly boundary from the northwesterly corner of said 1.6227 acre tract; and runs thence from the Beginning North 21-00-28 East 226.95 feet to a point in the center of a manhole; thence North 15-32-40 East 409.43 feet to a point in the centerline of that certain right-of-way described in Book 4405, Page 992, Mecklenburg County Public Registry, which point in said centerline is located North 75-25-00 East 61.25 feet from the terminus of the first course described in said right-of-way described in Book 4405, Page 992, Mecklenburg County Public Registry.

 

145.	FEE PARCEL DESCRIPTION: UNIT 3464

Being known and designated as Lot 4 as shown on the map entitled “Northwoods Subdivision, Section 3” recorded at Book of Maps 31, Page 43, Robeson County Registry.

Also being further described as follows: Lying in Lumberton Township, Robeson County, North Carolina, being all of Lot 4 of a subdivision entitled “Northwoods Subdivision, Section 3” recorded at Book of Maps 31, Page 43, Robeson County Registry, being bounded by the City of Lumberton (Deed Book 742, Page 635) to the north, Wintergreen Drive (60.00 foot right of way) to the east, Vyshamin of NC, Inc. (Deed Book 740, Page 001) to the South, and bounded to the west by Interstate 95 (right of way varies). This parcel being more particularly described to wit:

BEGINNING at an existing iron rod at the point of intersection of the western right of way of Wintergreen Drive with the northern right of way of Corporate Drive (60 foot right of way), said rod being North 54 degrees 34 minutes 43 seconds East 1095.48 feet from NCGS grid monument “Lakewood 2” (NAD 83 Coordinates Z=334740.3213 and Y=1998280.8359) and runs thence with the western margin of Wintergreen Drive South 14 degrees 24 minutes 30 seconds West 191.53 feet to a set Mag Nail in the concrete curb and gutter of the northern entrance to the lot belonging to Vyshamin of NC, Inc., thence with the most northern line of Vyshamin of NC, Inc. North 82 degrees 11 minutes 25 seconds West 536.77 feet to an existing iron rod at the controlled access fence for the eastern margin of Interstate 95; thence with the controlled access fence the following courses and distances: North 02 degrees 54 minutes 03 seconds West 101.44

 

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feet to a set iron rod beside a power pole: thence North 01 degrees 09 minutes 36 seconds West 100.06 feet to an existing iron rod; thence North 03 degrees 41 minutes 24 seconds East 78.98 feet to an existing iron rod; thence leaving the eastern margin of Interstate 95 and with the most southern line of the City of Lumberton’s parcel South 73 degrees 55 minutes 20 seconds East 605.19 feet to the point of beginning and containing 3.06 acres more or less, by the coordinate method. The above described tract is subject to a water main easement belonging to the City of Lumberton along the western boundary. All described distances are horizontal ground distances.

Together with an easement for drainage as described in Reciprocal Easement Agreement recorded in Book 1176, Page 397, Robeson County Registry.

 

146.	FEE PARCEL DESCRIPTION: UNIT 3621

A parcel of land being part of Lot twenty-five (25) in ARROWHEAD PLAT THREE in the City of Maumee, Lucas County, Ohio, as recorded in Volume 81 of Plats, Pages 14, 15 and 16, Lucas County Records, said parcel being bounded and described as follows:

Commencing at the Southwest corner of said Lot twenty-five (25);

Thence North 34 degrees 27’ 23” West along the Southwest line of said Lot twenty-five (25), a distance of 445.84 feet, more or less, to a point on a line that is 320.00 feet, by rectangular measurement, Southeasterly of and parallel with the Northwest line of said Lot twenty-five (25);

Thence North 56 degrees 40’ 38” East along said line that is 320.00 feet, by rectangular measurement, Southeasterly of and parallel with the Northwesterly line of Lot twenty-five (25), a distance of 230.55 feet to a point that is 230.50 feet, by rectangular measurement, Northeasterly of the Southwest line of said Lot twenty-five (25) and the POINT OF BEGINNING of the parcel hereinafter described;

Thence South 34 degrees 27’ 23” East along a line that is 230.50 feet, by rectangular measurement, Northeasterly of and parallel with the Southwest line of said Lot twenty-five (25), a distance of 441.29 feet, more or less, to a point on the Southeast line of said Lot twenty-five (25), said Southeast line of Lot twenty-five (25) also being the Northwest right of way line of Dussel Drive;

Thence North 55 degrees 32’ 37” East along the Southeast line of said Lot twenty-five (25), a distance of 125.00 feet to a point;

Thence North 10 degrees 32’ 37” East and continuing along the southeast line of said Lot twenty-five (25), a distance of 84.85 feet to the most Southerly corner of a parcel of land conveyed to the City of Maumee, Lucas county, Ohio by Deed Number 84-374-E11, Lucas County Ohio Deed Records;

 

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Thence North 34 degrees 27’ 23” West along the Southwesterly line of said parcel conveyed by Deed number 84-374-E11 and its extension Northwesterly, a distance of 377.63 feet, more or less, to a point on a line that is 320.00 feet, by rectangular measurement, Southeasterly of and parallel with the Northwest line of said Lot twenty-five (25);

Thence south 56 degrees 40’ 38” West along said line that is 320.00 feet, by rectangular measurement, Southeasterly of and parallel with the Northwesterly line of said Lot twenty-five (25), a distance of 185.03 feet, more or less, to the POINT OF BEGINNING.

Being the same property as conveyed to Outback Steakhouse of Florida Inc., a Florida corporation by virtue of a Special Warranty Deed from Maumee Associates, an Ohio general partnership, dated September 4, 1996, recorded September 6, 1996, by Microfiche No. 96-440-D02, as affected by that certain Declaration Regarding Merger recorded on November 23, 2011 as Instrument No. 201111230049284, Lucas County, OH Deed Records

 

147.	FEE PARCEL DESCRIPTION: UNIT 3633

Situated in the City of Parma, County of Cuyahoga and State of Ohio and known as being Parcel 1A in the Parmatown South Parcel 1 & 4 Map of Vacation, Consolidation and Lot Split of part of Original Parma Township Lot 18, Ely Tract, as recorded in Volume 268, Page 84 of Cuyahoga County Map Records, and bounded and described as follows:

Beginning at an iron monument at an angle point in the centerline of Ridge Road, 100 feet wide, at the Northeast corner of said Original Lot No. 18;

Thence South 89 degrees 48 minutes 30 seconds West, 50.00 feet to an iron pin set at an angle point in the westerly line of Ridge Road;

Thence South 0 degrees 22 minutes 42 seconds East along the westerly line of Ridge Road, 405.87 feet to the principal place of beginning of the parcel herein described;

Thence South 0 degrees 22 minutes 42 seconds East continuing along the westerly line of Ridge Road, 183.74 feet to a point;

Thence North 80 degrees 50 minutes 43 seconds West, 89.03 feet to a point;

Thence South 89 degrees 27 minutes 18 seconds West, 80.00 feet to a point;

Thence South 0 degrees 22 minutes 42 seconds East, 32.00 feet to an angle point in the northerly line of the remainder of a parcel of land conveyed to The Parma Christian Church by deed recorded in Volume 13188, Page 789 of Cuyahoga County Records, from which point an iron pin founds bears South 0.24 feet, East 1.04 feet;

Thence South 89 degrees 27 minutes 18 seconds West along the northerly line of said land conveyed to The Parma Christian Church, 200.00 feet to an iron pin set at its intersection with the easterly line of Parmatown Estates Subdivision No. 3 as shown by the recorded plat in Volume 219, Page 23 of Cuyahoga County Map Records;

 

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Thence North 0 degrees 22 minutes 42 seconds West along the easterly line of said Parmatown Estates Subdivision No. 3, 79.99 feet to an iron pin set at the northeasterly corner thereof Thence North 32 degrees 05 minutes 27 seconds West, 92.14 feet;

Thence northeasterly along the arc of a curve deflecting to the left, 47.90 feet to a point of reverse curvature, said arc having a radius of 335.00 feet and a chord which bears North 53 degrees 48 minutes 45 seconds East, 47.86 feet;

Thence northeasterly along the arc of a curve deflecting to the right, 130.41 feet to a point of compound curvature, said arc having a radius of 220.00 feet and a chord which bears North 66 degrees 41 minutes 50 seconds East, 128.50 feet;

Thence northeasterly along the arc of a curve deflecting to the right, 103.73 feet to a point of tangency, said arc having a radius of 1000.00 feet and a chord which bears North 86 degrees 39 minutes 00 seconds East, 103.68 feet;

Thence North 89 degrees 37 minutes 18 seconds East, 115.52 feet to a point of curvature;

Thence southeasterly along the arc of a curve deflecting to the right, 62.83 feet to the principal place of beginning, said arc having a radius of 40.00 feet and a chord which bears South 45 degrees 22 minutes 42 seconds East, 56.57 feet and containing 1.9271 acres of land as described in May, 1994, according to a survey by Donald G. Bohning & Associates, Inc., dated December, 1992.

The courses used in this description are referenced to an assumed meridian and are used to indicate angles only.

Together with the easement rights over the property more particularly described as follows:

Easement Parcel 1:

Parcel 1B

Thence South 0 degrees 22 minutes 42 seconds East continuing along the westerly line of Ridge Road, 175.00 feet to an iron pin set at its intersection with the northerly line of the remainder of a parcel of land conveyed to The Parma Christian Church by deed recorded in Volume 13188, Page 789 of Cuyahoga County Records;

Thence South 89 degrees 27 minutes 18 seconds West along the northerly line of said land conveyed to The Parma Christian Church, 167.80 feet to an angle point therein, from which point an iron pin found bears South 0.12 feet, East 0.02 feet;

Thence North 0 degrees 22 minutes 42 seconds West continuing along the northerly line of said land conveyed to The Parma Christian church, and the northerly prolongation thereof, 190.00 feet to a point;

Thence North 89 degrees 27 minutes 18 seconds East, 80.00 feet to a point;

 

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Thence South 80 degrees 50 minutes 43 seconds East, 89.03 feet to the principal place of beginning and containing 0.7168 acres of land as described in March, 1994 according to the survey by Donald G. Bohning & Associates, Inc., dated December, 1992.

The courses used in this description are referenced to an assumed meridian and are used to indicate angles only.

Such parcel is also known as being Parcel 1B in the Parmatown South—Parcel 1 & 4 Map of Vacation, Consolidation and Lot Split of part of Original Parma Township Lot 18, Ely Tract, as recorded in Volume 268, Page 84 of Cuyahoga County Map Records.

BEING the same property conveyed to Outback Steakhouse of Florida Inc., a Florida corporation by virtue of Warranty Deed from Granite Development Partners, L.P., a Delaware limited partnership, dated July 20, 1994, recorded July 22, 1994, in Volume 94-07080, Page 52, as affected by that that certain Declaration regarding Merger recorded November 23, 2011 in Instrument No. 201111230491, Cuyahoga County, Ohio Deed Records.

Easement Parcel 2

Easement Parcel No. TWO:

Non-Exclusive Easement for Ingress and Egress as created in Reciprocal Easement Agreement by and among Federated Department Stores, Inc., Pick-N-Pay Supermarkets, Inc., Albert B. Ratner, Trustee and Paul Lipman, Trustee, filed for record April 5, 1978 and recorded in Volume 14685, Page 341 of Cuyahoga County Records.

Note: The above Easement has been amended and restated in an Amended and Restated Cross-Easement Agreement by and among Dayton Hudson Corporation, Kohl’s Department Stores, Inc., Western Reserve Restaurant Management, Inc., Outback Steakhouse of Florida, Inc., Sunrise Land Co., Parmatown South Association, Granite Development Partners, L.P. and Forest City Rental Properties, filed for record on May 8, 1995 and recorded in Volume 95-03420,Page 32 of Cuyahoga County Records and refiled on August 29, 1995 in Volume 95-07171, Page 6 of Cuyahoga County Records and further amended in a First Amendment to Amended and Restated Cross-Easement Agreement recorded on January 31, 1996 in Volume 96-00833, page 57 of Cuyahoga County Records. Permanent Parcel Nos. 455-10-004, 005, 006, 007, 008 and 009

 

148.	FEE PARCEL DESCRIPTION: UNIT 3635

Situated in the City of Westlake, County of Cuyahoga and State of Ohio and known as being Parcel “C” on the Map of Survey, Consolidation and Partition for William L. Lake and Patricia M. Lake of part of Original Dover Township Lot No. 78, as shown by the recorded plat in Volume 269 of Plats, Pages 46 and 47 of Cuyahoga County Records, and further bounded and described as follows:

 

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Beginning at the intersection of the center line of Columbia Road (variable width) with the center line of Sperry Drive (variable width);

Thence South 73 deg. 23’ 36” East, along said center line of Sperry Drive, a distance of 420.59 feet to a point of curvature therein;

Thence Southeasterly, continuing along said center line of Sperry Drive, along the arc of a curve deflecting to the left, a distance of 367.80 feet to the point of tangency therein, said arc having a radius of 716.20 feet and a chord which bears South 08 deg. 06’ 19” East, a distance of 363.77 feet;

Thence North 77 deg. 10’ 58” East, continuing along said center line of Sperry Driver a distance of 475.92 feet to the Southerly prolongation of the Easterly line of Sublot No. 4 in the Lot Split for Lakewood Manufacturing Co. as shown by the recorded plat in Volume 257 of maps, Page 48 of Cuyahoga County Records;

Thence North 1 deg. 36’ 24” East, along said Southerly prolongation, a distance of 30.98 feet to the Southeasterly corner of said Sublot No. 4 and the Northerly line of said Sperry Drive;

Thence North 77 deg. 10’ 58” East, along said Northerly line of Sperry Drive, a distance of 268.77 feet to the principal place of beginning of the land herein described;

Course No. 1: Thence North 1 deg. 36’ 24” East, parallel with said Easterly line of Sublot No. 4, a distance of 424.36 feet to a point;

Course No. 2: Thence North 77 deg. 10’ 58” East, parallel with the Northerly line of Sperry Drive, as aforesaid, a distance of 212.44 feet to the Westerly line of a parcel of land conveyed to Kane Partners, L.P. by deed recorded in Volume 92-10416, Page 48 of Cuyahoga County Records;

Course No. 3: Thence South 1 deg. 43’ 38” West, along said Westerly line of land so conveyed to Kane Partners, L.P., a distance of 424.59 feet to said Northerly line of Sperry Drive;

Course No. 4: Thence South 77 deg. 10’ 58” West, along said Northerly Use of Sperry Drive, a distance of 211.52 feet to the principal place of beginning, and containing 2 acres of land, according to a survey made by Thomas J. Neff, Jr., Registered Surveyor No. 7065-Ohio in June of 1994.

Permanent Parcel No. 213-08-029

 

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149.	FEE PARCEL DESCRIPTION: UNIT 3636

Fee Parcel:

Situated in the Village of Ontario, County of Richland and State of Ohio, and known as being more particularly described as follows:

Being part of the Southwest quarter of Section 13, Township 21, Range 19, and being the Garland Hunt and Brenda Hunt parcel, as recorded in Volume 124 at Page 787, and part of the Garland Hunt and Brenda Joyce Hunt parcel, as recorded in Volume 37 at Page 637, and beginning at a 1-inch iron pin in a monument box found in the centerline of Lexington-Springmill Road (C.H. 133) as recorded in Plat Book 23 at Page 57 (centerline station 360+96.92), said point marking the Northwest corner of the said Southwest quarter of Section 13;

Thence with the said centerline of Lexington-Springmill Road, South 00 deg. 51’ 11” West, 557.96 feet to a point;

Thence leaving the said centerline of Lexington-Springmill Road, South 89 deg. 13’ 49” East, 40.00 feet to a 5/8-inch rebar found in the East right-of-way line of said Lexington-Springmill Road said point marking the Southwest corner of the Ontario Realty LLC parcel as recorded in Volume 374 at Page 478, said point being the True Point of beginning of the herein described parcel;

Thence leaving the said right-of-way of Lexington-Springmill Road and with the South line of the said Ontario Realty LLC parcel, South 89 deg. 13’ 49” East, 335.80 feet to a 1-inch o.d. iron pipe with id. cap set;

Thence South 00 deg. 51’ 11” West, 205.00 feet to a 1-inch o.d. iron pipe with id. cap set;

Thence through the said Garland Hunt and Brenda Joyce Hunt parcel as recorded in Volume 37 at Page 637 and parallel with the North line of the herein described parcel, North 89 deg. 13’ 49” West, 331.77 feet to 5/8-inch rebar found in the said East right-of-way line of Lexington-Springmill Road;

Thence with the said right-of-way line of Lexington-Springmill Road, North 01 deg. 03’ 21” West, 121.10 feet to a 1-inch o.d. iron pipe with id. cap set;

Thence continuing with the said right-of-way of Lexington-Springmill Road, North 00 deg. 51’ 11” East, 83.96 feet to the true point of beginning. Containing 1.575 acres of land.

Aforesaid references recorded among the land records of Richland County, Ohio.

Bearings oriented to the said centerline of Lexington-Springmill Road as recorded in Plat Book 23 at Page 57.

 

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EASEMENT PARCELS

PARCEL 1:

TOGETHER WITH THOSE RIGHTS ESTABLISHED IN Joint Easement Agreement by and between Garland and Brenda Hunt, and Ontario Realty LLC, dated August 10, 1995, filed for record August 29, 1995 and recorded in Volume 384, Page 623 of Richland County Records.

PARCEL 2:

TOGETHER WITH THOSE RIGHTS ESTABLISHED IN Slope Easement to Outback Steakhouse of Florida, Inc. dated May 28, 1996 and recorded June 30, 1996 in Volume 436, page 754, of the Richland County Records.

PARCEL 3:

TOGETHER WITH THOSE RIGHTS ESTABLISHED IN Easement Agreement between POI Associates, Inc. and Outback Steakhouse of Florida, Inc. recorded March 15, 1999 in Volume 689, Page 507, of the Richland County Records.

 

150.	FEE PARCEL DESCRIPTION: UNIT 3640

Situated in the City of Mentor, County of Lake and State of Ohio: And known as being a part of Original Mentor Township, Lot No.5, Tract No. 8, and is further bounded and described as follows:

Beginning in the curved Westerly line of Market Street, 60 feet wide, at the Southeasterly corner of land conveyed to M.E. Osborne Properties Corp., as recorded in Volume 469, Page 929 of Lake County Deed Records;

Thence Westerly along the Southerly line of said M.E. Osborne Properties Corp., parcel, by a line bearing North 89 deg. 43’ 47” West, a distance of 670.14 feet to a point;

Thence Northerly by a line bearing North 00 deg. 15’ 53” West, a distance of 189.94 feet to a point;

Thence Easterly by a line bearing South 89 deg. 44’ 07” East, a distance of 708.41 feet to point in the Westerly line of Market Street, 60 feet wide;

Thence Southerly along the Westerly line of said Market Street by a line bearing South 00 deg. 40’ 41” West, a distance of 55.75 feet to a point of curvature;

Thence Southerly along the arc of a curve reflecting to the right 141.18 feet to the principal place of beginning, said curve having a radius of 263.69 feet and a chord which bears South 16 deg. 00’ 59” West, 139.51 feet.

 

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Being the same property as conveyed to Outback Steakhouse of Florida Inc., a Florida corporation by virtue of a Special Warranty Deed from Philip Pace (aka Phillip Pace) and Phyllis Pace, husband and wife, dated October 29, 1999, recorded January 4, 2000, by Instrument No. 200000383, as affected by that certain Declaration Regarding Merger recorded on November 23, 2011 as Instrument No. 2011R027360, Lucas County, OH Deed Records

 

151.	FEE PARCEL DESCRIPTION: UNIT 3658

Situated in the Township of Butler, County of Montgomery and State of Ohio:

And known as being Lot Numbered Four (4) in York Commons, Section Three, as the same is recorded in Plat Book 167, Page 39 of the Plat Records of Montgomery County, Ohio.

LESS AND EXCEPT:

Situate in Section 34, Township 3, Range 6 East, in the Township of Butler, Montgomery County, Ohio, and being part of Lot Four of York Commons Subdivision. Section Three, as recorded in Plat Book 167, Page 39 as conveyed to Outback Steakhouse of Florida, Inc., by instrument as recorded in Microfiche Number 97-0301 C08 of the deed records of said County, and being more particularly bounded and described, per a survey performed by Lockwood, Jones and Beals, Inc. in 1998 with bearings based on State Plane Coordinates, South Zone (NAD 83), as follows:

Beginning for reference at an iron pin to be set in the existing West limited access right of way line of Interstate 75 (as acquired by Deed Book 966, Page 303 of the deed records of said County), at the Southeast corner of said lot and plat, and the Northeast corner of the York Commons Subdivision, Section Five, as recorded in Plat Book 172, Page 9 of the plat records of said County 30.596 meters left of Station 6+917.258 of the centerline of construction of Interstate 75, reference a 5/8-inch iron pipe found with cap stamped “M.L.OXNER” bearing North 87 deg. 36’ 39” East a distance of 0.215 meters (0.70 feet) at 30.381 meters left of Station 6+917.268 of the centerline of construction of Interstate 75;

Parcel 16WL

Thence with the South line of the said lot and the North line of said Lot No. 7 North 89 deg. 51’ 55” West a distance of 15.410 meters (50.56 feet) to an iron pin to be set on the new West limited access right of way line of Interstate 75, 46.007 meters left of Station 6+917275 of the centerline of construction of interstate 75;

Thence with the said new West limited access right of way line for the following four courses:

1) North 6 deg. 31’ 29” East a distance of 2.023 meters (6.64 feet) to an iron pin to be set 45.779 meters left of Station 6+919.285 of the centerline of construction of Interstate 75;

 

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2) Thence North 79 deg. 54’ 39” East a distance of 6.887 meters (22.60 feet) to an iron pin to be set 39.000 meters left of Station 6+920.500 of the centerline of construction of Interstate 75;

3) Thence North 00 deg. 39’ 17” East a distance of 39.502 meters (129.60 feet) to an iron pin to be set 38.600 meters left of Station 6+960.000 of the centerline of construction of interstate 75;

4) Thence North 33 deg. 53’ 48” East a distance of 3.472 meters (I 1.39 feet) to an iron pin to be set on the North line of said lot and the South line of Lot Three of the said York Commons Subdivision, Section Three, 36.668 meters left of Station 6+962.884 of the centerline of construction of Interstate 75;

Thence with the North line of said Lot and the South line of said Lot Three South 89 deg. 51’ 55” East a distance of 6.107 meters (20.04 feet) to an iron pin to be set at the Northeast corner of said lot, the Southeast corner of said Lot Three, and in the said existing West limited access right of way line 30.560 meters left of Station 6+962.878 of the centerline of construction of Interstate 75, reference a 5/8-inch iron pin with cap found bearing North 57 deg. 13’ 16” East a distance of 0.151 meters (0.50 feet);

Thence with the said West limited access right of way line and the East line of said lot South 0 deg. 07’ 09” West a distance of 45.620 meters (149.67 feet) to the true point of beginning containing 0.0390 hectares (0.096 acres), more or less, subject to all legal easements and restrictions of record.

The description for Parcel Number 16WL above was calculated and derived from a survey made under the supervision of John J. Beals, Registered Surveyor Number 5312.

Note: Iron pins and railroad spikes referred to as “to be set” shall be set by Lockwood, Jones and Beals, Inc. upon the completion of construction. Iron pins set in the above description are 3/4-inch by 30 inch reinforcing rod with an aluminum cap stamped “ODOT R/W LJB INC”.

The above described area is contained within the Montgomery County Auditor’s Permanent Parcel Number A01-213-6-2. Within said bounds is 0.096 of an acre, more or less, inclusive of the present road which occupies 0.000 of an acre, more or less.

BEING the same property conveyed to Outback Steakhouse of Florida Inc., a Florida corporation by virtue of Warranty Deed from Harson Investments, LTD., a Florida limited partnership, dated March 10, 1997, recorded May 5, 1997, by Volume 97-0301, Page C08, as affected by that that certain Declaration regarding Merger recorded November 28, 2011 in Instrument No. 11-071137, Montgomery County, Ohio Deed Records.

PPN: A01-21306-0002

 

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152.	FEE PARCEL DESCRIPTION: UNIT 3662

Situated in the City of Findlay, County of Hancock and State of Ohio:

Lot Number Fourteen (14), a replat of Lot Number Eight (8) of Interstate Subdivision 2nd Addition of the City of Findlay, County of Hancock, State of Ohio, as set forth on the Plat of the replat of Lot Number Eight (8), Interstate Subdivision 2nd Addition, recorded on August 28, 1998, in Plat Volume 20, Page 86, Hancock County, Ohio Recorder’s Office.

Being the same property as conveyed to Outback Steakhouse of Florida Inc., a Florida corporation by virtue of a Special Warranty Deed from George M. Whitson, dated September 16, 1998, recorded September 17, 1998by volume 1643, Page 30, as affected by that certain Declaration Regarding Merger recorded on November 23, 2011 in Volume 2408, Page 2037, Lucas County, OH Deed Records

 

153.	FEE PARCEL DESCRIPTION: UNIT 3663

Being all of Lot 11 of Kings Island Commercial Center Section B-Phase III of part of Section 18, Town 4, Range 2, Deerfield Township, Warren County, Ohio, as the same is recorded in Plat Volume 44, Pages 73 and 74 of the Warren County, Ohio Records.

Being the same property as conveyed to Outback Steakhouse of Florida Inc., a Florida corporation by virtue of a Special Warranty Deed from Great American Life Insurance Company, an Ohio corporation dated May 19, 1999, recorded May 21, 1999, by Volume 1761 Page 844 ,as affected by that certain Declaration Regarding Merger recorded on November 28, 2011 as Doc. No. 845599, Warren County, OH Deed Records

 

154.	FEE PARCEL DESCRIPTION: UNIT 3713

A tract of land lying in the Northwest Quarter (NW/4), Section Eleven (11), Township Thirteen (13) North, Range Three (3) West of the Indian Meridian, Edmond, Oklahoma County, Oklahoma, being more particularly described as follows:

COMMENCING at the Northeast Corner of said Northwest Quarter (NW/4); Thence South 00°10’37” East along the East line of said Northwest Quarter (NW/4) a distance of 1148.27 feet to the Point of Beginning; Thence continuing South 00°10’37” East along the East line of said Northwest Quarter (NW/4) a distance of 185.00 feet; Thence South 89°49’23” West a distance of 517.22 feet to the East Right-of-Way of Highway No. 77; Thence North 30°32’45” East along said Right-of-Way a distance of 215.61 feet; Thence North 89°49’23” East a distance of 407.02 feet to the POINT OF BEGINNING.

TOGETHER WITH easement rights as set out in that certain Declaration of Mutual Access Easement dated December 30, 1994, by OB-Real Estate, Inc., filed of record January 4, 1995, in Book 6695, Page 629, over and across the following described property:

 

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A tract of land lying in the Northwest Quarter Section 11, Township 13 North, Range 3 West of the Indian Meridian, Edmond, Oklahoma County, Oklahoma, being more particularly described as follows:

COMMENCING at the Northeast corner of said Northwest Quarter; Thence South 00°10’37” East along the East line of said Northwest Quarter a distance of 1333.27 feet; Thence South 89°49’23” West a distance of 517.22 feet to the Point of Beginning, also being a point in the East right-of-way of Highway No. 77; Thence North 89°49’23” East a distance of 114.88 feet; Thence South 00°10’37” East a distance of 33.86 feet; Thence South 89°49’23” West a distance of 135.00 feet to the East right-of-way of Highway

No. 77; Thence North 30°32’45” East along said right-of-way a distance of 39.39 feet to the POINT OF BEGINNING.

 

155.	FEE PARCEL DESCRIPTION: UNIT 3715

Lot Six (6), Block One (1) and a portion of Lot Five (5), Lot Seven (7) and Lot Eight (8), in Block One (1), of the Replat of Lots 1 thru 8, Block 1 and Lots 1 thru 4, Block 2 of SPRING BROOK ADDITION SECTION 9, which is a part of the Northwest Quarter (NW/4) of Section Twenty-six (26), Township Nine (9) North, Range Three (3) West of the I.M., Norman, Cleveland County, Oklahoma, and said tract being more particularly described as follows:

COMMENCING at the Southeast Corner of said Northwest Quarter of Section 26, Township 9 North, Range 3 West, I.M.; Thence South 89°46’53” West, and along the South line of said Northwest Quarter, a distance of 150.00 feet to a point on the West right-of-way line of North Interstate Drive; Thence North 00°01’16” West, and along said West right-of-way line of North Interstate Drive, a distance of 1205.26 feet to the POINT OR PLACE OF BEGINNING.

Thence continuing North 00°01’16” West, and along said West right-of-way line of North Interstate Drive, a distance of 199.74 feet; Thence North 45°01’15” West a distance of 35.36 feet to a point on the South right-of-way line of Northwest Boulevard; Thence South 89°58’45” West, and along said South right-of-way line of Northwest Boulevard, a distance of 302.30 feet; Thence South 00°01’16” East a distance of 224.74 feet; Thence North 89°58’44” East a distance of 327.30 feet to the POINT OR PLACE OF BEGINNING.

 

156.	FEE PARCEL DESCRIPTION: UNIT 3716

A tract of land located in the Northeast Quarter (NE/4) of Section Twenty-nine (29), Township Two (2) North, Range Twelve (12) West, I.M., Comanche County, Oklahoma, according to the U.S. Government survey thereof, described as follows:

COMMENCING at the Northeast Corner of said Northeast Quarter; THENCE N89°33’36”W on the North line of said Northeast Quarter a distance of 1481.27 feet for a POINT OF BEGINNING; THENCE S00°27’09”W a distance of 420 feet; THENCE N89°33’36”W and parallel with the North line of said Northeast Quarter a distance of 205 feet; THENCE N00°27’09”E a distance of 420 feet; THENCE S89°33’36”E and parallel with the North line of said Northeast Quarter a distance of 205 feet to the POINT OF BEGINNING.

 

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157.	FEE PARCEL DESCRIPTION: UNIT 3915

ALL THAT CERTAIN tract of land situate in the Susquehanna Township, Dauphin County, Pennsylvania, more particularly bounded and described as follows:

BEGINNING at a point at the intersection of the Southern right of way line of Union Deposit Road (S.R. 22008) and the Western right of way line of Powers Avenue; thence South five degrees twenty-eight minutes two seconds East (S 05° 28’ 02” E) a distance of two hundred thirty-seven and ninety-two hundredths feet (237.92’) to a point at the dividing line between lands now or formerly of the Upper Dauphin Industrial Development Authority and Lot No. 1 on the hereinafter mentioned Preliminary/Final Re-Subdivision Plan; thence along the dividing line between lands now or formerly of the Upper Dauphin Industrial Development Authority and Lot No. 1 South eighty-three degrees twenty-eight minutes twenty-six seconds West (S 83° 28’ 26” W) a distance of two hundred ninety-three and seventy one hundredths feet (293.71’) to a point at the dividing line between Lot No. 2 and Lot No. 1; thence along the dividing line between Lot No. 2 and Lot No. 1 North six degrees thirty-seven minutes thirty-one seconds West (N 06° 37’ 31” W) a distance of two hundred thirty-eight and nine hundredths feet (238.09’) to a point on the Southern right of way line of Union Deposit Road; thence along the Southern right of way line of Union Deposit Road North eighty-three degrees thirty minutes fifty-two seconds East (N 83° 30’ 52” E) a distance of two hundred ninety-eight and fifty-two hundredths feet (298.52’) to a point, the place of BEGINNING.

CONTAINING 70,653.31 square feet or 1.62 acres, more or less.

BEING Lot No. 1 in accordance with a Preliminary/Final Resubdivision Plan for Bernard I. Zeliger dated February 9, 1989, prepared by Whittock-Hartman Engineers and recorded in the Office of the Recorder of Deeds in and for Dauphin County, Pennsylvania, in Plan Book “U”, Volume 4, Page 6.

TOGETHER with an easement and right of way in common with the owners of Lot No. 2, now or formerly Bruce Goodman and Barbara Goodman, their heirs, executors, administrators, and assigns, and the owners of Lot 3 and 4, formerly Grantors, their heirs, successors and assigns, over the driveway access from Union Deposit Road, along the Eastern boundary of Lot No. 2 for ingress, egress and regress to Union Deposit Road, which right of way is and shall be connected to the 34-foot driveway access easement along the Southern boundary of Lot 1.

TOGETHER with the privilege of in common use of the improved storm water drainage easement, as is, partially shown in the Preliminary/Final Subdivision Plan for Bernard I. Zeliger recorded in Plan Book “U”, Volume 4, Page 6.

BEING the same premises which Bernard I. Zeliger and Sandra T. Zeliger, his wife, by Deed dated 4/5/1994 and recorded 4/11/1994 in Dauphin County in Record Book 2196 page 614 unto Outback Steakhouse of Florida, Inc., a Florida corporation, in fee; and also BEING the same premises which Outback Steakhouse of Florida, Inc., a Florida corporation, by Deed dated 4/11/2007 and recorded 6/29/2007 in Dauphin County in Instrument No. 20070025897 conveyed unto Private Restaurant Properties, LLC, a Delaware limited liability company, in fee.

 

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158.	FEE PARCEL DESCRIPTION: UNIT 3917

ALL THAT CERTAIN lot or tract of ground being known as Lot No. 2 as shown on a Final Plan of North Pointe Center, as prepared by Rettew Associates, Inc., for High Associates, Ltd. on a drawing dated April 27, 1988, being drawing No. 87-204-03FF, said plan being recorded in the Recorder of Deeds Office in and for Lancaster County, Pennsylvania in Plan Book J-160, page 30, situate in the Township of Manheim, County of Lancaster and Commonwealth of Pennsylvania, being more fully bounded and described as follows, to wit:

BEGINNING at a point at the Southern right of way line of North Pointe Boulevard at the common property corner of Lots 2 and 3; thence, from said point of beginning the following sixteen (16) courses and distances: (1) along said right of way of North Pointe Boulevard by a curve to the left, having a radius of 175.00 feet and an arc length of 82.36 feet to a point; thence (2) along said right of way of North Pointe Boulevard South 82 degrees 19 minutes 20 seconds East, a distance of 26.05 feet to a point; thence (3) along said right of way of North Pointe Boulevard by a curve to the right; having a radius of 180.00 feet and an arc length of 85.34 feet to a point; thence, (4) along said right of way of North Pointe Boulevard South 55 degrees 09 minutes 30 seconds East, a distance of 119.33 feet to a point; thence (5) by a curve, curving to the right, having a radius of 17.00 feet and a length of 26.70 feet to a point on the Western right of way of the Oregon Pike; thence (6) along said right of way of the Oregon Pike, South 34 degrees 50 minutes 30 seconds West, a distance of 113.27 feet to a point; thence (7) along said right of way line of the Oregon Pike, North 55 degrees 09 minutes 30 seconds West, a distance of 24.00 feet to a point; thence (8) along said right of way of the Oregon Pike, South 34 degrees 50 minutes 30 seconds West, a distance of 132.25 feet to a point; thence (9) along said right of way of the Oregon Pike, North 55 degrees 18 minutes 46 seconds West, a distance of 2.58 feet to a point; thence (10) along said right of way of the Oregon Pike on a curve, curving to the right, with a radius of 428.34 feet and a length of 360.40 feet to a point on the Northern right of way of a ramp leading to Route 30 West; thence (11) along said right of way of the ramp leading to Route 30 West, South 83 degrees 03 minutes 38 seconds West, a distance of 298.26 feet to a point; thence (12) along said right of way of the ramp leading to Route 30 West, North 76 degrees 08 minutes 03 seconds West, a distance of 268.61 feet to a point; thence (13) along the Southern boundary of Beverly Estates, North 79 degrees 31 minutes 40 seconds East, a distance of 317.39 feet to an iron pin; thence (14) along the Eastern Boundary of Beverly Estates, North 07 degrees 40 minutes 40 seconds East, a distance of 264.82 feet to a point; thence (15) South 82 degrees 19 minutes 20 seconds East, a distance of 247.66 feet to a point, thence (16) North 34 degrees 38 minutes 38 seconds East, a distance of 251.36 feet to a point, said point being the place of beginning.

CONTAINING 242,586.37 square feet or 5.5690 acres.

Together with all common use and interest in Easements as set forth in Declaration of Covenants, Easements, Conditions and Restrictions of The North Pointe Center dated November 7, 1990 by Oregon Pike Associates and recorded in Book 3033, Page 393. Together with all common use and interest in Easements as set forth in Cross Easement Agreement dated June 28, 1999 between Outback Steakhouse of Florida, Inc. and 120 North Pointe Associates recorded in Book 6308, Page 294.

 

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Being the same premises Oregon Pike Associates and High Associates, Ltd. by Deed dated 02-23-1998 and recorded 02-25-1998 in Lancaster County in Instrument Number                      conveyed unto Outback Steakhouse of Florida, Inc., a Florida Corporation, in fee.

Being the same premises which Outback Steakhouse of Florida, Inc., a Florida Corporation by Deed dated 4-11-2007 and recorded 7-5-2007 in Lancaster County in Instrument Number 5632567 conveyed unto Private Restaurant Properties, LLC, a Delaware limited liability company, in fee.

 

159.	FEE PARCEL DESCRIPTION: UNIT 3951

ALL THAT CERTAIN parcel of ground being known as Parcel C-1 in the Arcadia Center Plan of Lots No. 3 as recorded in Plan Book Volume 192, pages 33 and 34, and situate in the Town of McCandless, County of Allegheny and Commonwealth of Pennsylvania, being bounded and described as follows:

BEGINNING on the westerly right of way of McKnight Road, 120-feet in width, at the northeasterly corner of Parcel A2 in the Arcadia Center Plan of Lots No. 2, as recorded in the Recorder’s Office of Allegheny County, PA, in Plan Book Volume 186, pages 46 and 47; thence along the northerly line of said Parcel A2, in a westwardly direction South 63 degrees 19 minutes 00 seconds West, a distance of 24-feet to the centerline of a 45-foot private road; thence along the centerline of said 45-foot private road, the following courses and distances: North 26 degrees 41 minutes 00 seconds West 20.50 feet; thence by the arc of a circle deflecting to the left having a radius of 100-feet, an arc distance of 82.06 feet; thence North 73 degrees 42 minutes 00 seconds West, 171.15 feet; thence by a curve deflecting to the right having a radius of 130 feet, an arc distance of 109.82 feet to a point; thence North 25 degrees 18 minutes 00 seconds West, 87.93 feet; thence by a curve deflecting to the right having a radius of 150 feet, an arc distance of 104.23 feet to a point, thence North 14 degrees 30 minutes 45 seconds East, 3.64 feet, to the Southerly right of way line of West Arcadia Drive, a 50 foot public street; thence in an eastwardly direction along the southerly right of way line of West Arcadia Drive, by an arc of a circle deflecting to the left, having a radius of 205 feet, an arc distance of 147.40 feet to a point; thence continuing the Southerly right of way line of West Arcadia Drive North 63 degrees 19 minutes 03 seconds East, 20.73 feet to a point; thence by a curve deflecting to the right, having a radius of 25 feet, an arc distance of 39.27 feet to a point on the westerly right of way of McKnight Road, aforesaid; thence along the westerly right of way line of McKnight Road, in a southwardly direction, south 26 degrees 41 minutes 00 seconds East, a distance of 418.66 feet to the point at the place of BEGINNING.

CONTAINING an area of 1.61 acres, more or less.

 

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TOGETHER WITH all common use and interest in Easements as set forth in Declaration of Development and Maintenance Obligations, Easements and Restrictive Covenants between Ralph A. Pannier, et ux., et al., dated April 7, 1994 and recorded in Deed Book Volume 9202, page 300.

TOGETHER WITH all common use and interest in Parking Easement and License Agreement between the Estate of Alfred E. Thomson, III and Outback Steakhouse of Florida, Inc. dated June 10, 1996 and recorded in Deed Book 9718, page 518.

Being the same premises which Outback Steakhouse of Florida, Inc., a Florida corporation by Deed dated as of June 14, 2007 and recorded July 2, 2007 in Allegheny County in Deed Book Volume 13289, Page 465 conveyed unto Private Restaurant Properties, LLC, a Delaware limited liability company, in fee.

 

160.	FEE PARCEL DESCRIPTION: UNIT 3952

ALL that certain piece or parcel of land lying, being and situate in Allegheny Township, Blair County, Pennsylvania:

Beginning at a point on the westerly most legal right of way of S.R. 1001 (Old Route 0220, Plank Road), said point being 76.49 feet in a northeasterly direction from the intersection of the westerly most legal right of way line of S.R. 1001 and the southerly most property line of lands of the grantor; thence from said point running through the lands of the grantor the following six (6) courses and distances:

Along a curve deflecting to the right, having a radius of 50.00 feet, an arc length of 45.41 feet, a chord bearing of South 41 degrees 32 minutes 06 seconds West, and a chord distance of 43.87 feet to a point; thence North 72 degrees 48 minutes 48 seconds West, a distance of 195.96 feet to a point; thence North 21 degrees 15 minutes 01 second East, a distance of 326.82 feet to a point; thence North 59 degrees 22 minutes 49 seconds East, a distance of 51.85 feet to a point; thence North 52 degrees 26 minutes 39 seconds East, a distance of 71.66 feet to a point; thence South 74 degrees 29 minutes 00 seconds East, a distance of 103.48 feet to a point along the westerly most legal right of way line of S.R. 1001; thence from said point running along and with S.R. 1001 South 15 degrees 31 minutes 00 seconds West, a distance of 386.15 feet to the Point and Place of Beginning.

Together with the right unto the Grantee, its successors and assigns, to the use for access, ingress, egress, and regress to and from the said premises, as well as for general utility purposes, in common with “Grantor”, and its successors and assigns, and others lawfully entitled to the use of the same, of the rights of way referred to in deed dated November 20th, 1972, recorded December 1, 1972, in D.B.V. 943, p. 57, which rights were described therein as specifically including but not limited to the:

..right to the use of a proposed roadway fifty (50) feet wide along the South and Southwesterly sides of the property here conveyed; twenty-five (25) feet of which roadway is upon the property here conveyed and twenty-five (25) feet of which is on remaining property of

 

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Grantors. This road may be used by Grantors and Grantees, their heirs, successors and assigns in common as an access road, and for general utility purposes and to be located as shown on draft of premises prepared by P. Joseph Lehman, Inc., dated November 7, 1972, Project No. 939; neither party, however, to be obligated to maintain said roadway.

Further, together with the right unto the Grantee and its successors and assigns, to the use for access, ingress, egress, and regress to and from the said premises over a 25 foot common access easement as well as access through and over Sheraton Drive, a private right of way shown on the Minor Subdivision Plan for Joseph L. Haller approved by the Allegheny Township Supervisors on September 9, 1997, and recorded in Blair County Plat Book 18, at Page 17.

Being the same premises which Outback Steakhouse of Florida Inc., a Florida corporation by Quit Claim Deed dated 6/4/2007 and recorded 6/29/2007 in Blair County in Instrument # 200712759 conveyed unto Private Restaurant Properties, LLC, a Delaware limited liability company, in fee.

 

161.	FEE PARCEL DESCRIPTION: UNIT 4117

All that certain piece, parcel or lot of land, lying and being in Anderson County, State of South Carolina, containing 1.92 acres, more or less, and being shown and designated as Lot Nos. 1 and 2 on a survey of Anderson Surveying Associates, Inc., by Don M. Kelly, RLS 9318, entitled “BOUNDARY SURVEY AT THE REQUEST OF OUTBACK STEAKHOUSE OF FLORIDA, INC.” dated August 18, 1994 of recorded in the Anderson County Records in Plat Slide 534 at page 9-B and having the following metes and bounds, to wit:

BEGINNING at a  ¹/2” rebar, old on the right of way of Interstate Boulevard that is approximately 827’ from the intersection of US hwy 76 and SC Hwy 28; thence along the right of way South 38-39-24 East 131.39’ (chord) to a  ¹/2” rebar, old; thence South 54-51-18 East 74.71 (chord) to a  ¹/2” rebar, old; thence leaving the right of way South 17-34-34 West 282.68’ to a  ¹/2 “ rebar, old on the right of way of US Hwy 76 and SC Hwy 28; thence along the right if way North 78-15-46 West 44.00 to a concrete monument, old; thence North 58-04-42 West 160.64’ (chord) to a  ¹/2” rebar, old; thence North 30-13-54 West 64.28’ (chord) to a concrete monument, old; thence North 22-33-53 West 143.46’ to a concrete monument, old; thence leaving the right of way North 67-33-51 East 149.58’ to a  ¹/2” rebar, old; thence North 42-55-53 East 103.93’ to the point of beginning.

Being bounded on the North by Interstate Boulevard; on the East by Lot 3; on the South by US Hwy 76 and SC Hwy 28; on the West by Waffle House and Detention Area No. 1.

DERIVATION: Deed of Outback Steakhouse of Florida, Inc. to OSF Real Estate, LLC, dated June 14, 2007, and recorded June 26, 2007 in Book 8096 at page 120; Affidavit Change of Corporate Name recorded on June 26, 2007 in Book 8096 at page 130, Anderson County Records.

 

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AS MORE RECENTLY SHOWN on an ALTA/ACSM Land Title Survey of 1.92 acres prepared for Outback Steakhouse of Florida by Freeland-Clinkscales & Associates, Inc. of NC, dated October 7, 2011, the metes and bounds of which are as follows:

BEGINNING at a 5/8” rebar, old on the right of way of Interstate Boulevard that is approximately 827’ from the intersection of US hwy. 76 and SC Hwy. 28; thence along the right of way South 38-25-35 East 131.46’ (chord)(R=366.00; L=132.18’) to a 1/2” rebar, set; thence South 54-44-12 East 74.63 (chord)(R=366.00; L=74.76’) to a 1/2” rebar, old; thence leaving the right of way South 17-34-34 West 282.40’ to a 1/2” rebar, old on the right of way of US Hwy. 76 and SC Hwy. 28; thence along the right of way North 78-28-25 West 44.34 to a concrete monument, old; thence North 57-54-55 West 160.67’ (chord)(R=235.00; L=163.97’) to a 1/2” rebar, old; thence North 30-05-59 West 64.11’ (chord)(R=235.00; L=64.32’) to a concrete monument, old; thence North 22-28-48 West 143.49’ to a concrete monument, old; thence leaving the right of way North 67-39-11 East 149.33’ to a 3/4” open top pipe, old; thence North 43-00-12 East 104.27’ to the point of beginning.

Being bounded on the North by Interstate Boulevard; on the East by Lot No. 3; on the South by US Hwy. 76 and SC Hwy. 28; on the West by Waffle House and Detention Area No. 1.

Tax Map No: 093-15-01-005

 

162.	FEE PARCEL DESCRIPTION: UNIT 4118

All that certain piece, parcel or lot of land, lying and being near the City of Columbia, County of Richland, State of South Carolina, being located on the northern side of US Highway #1, consisting of approximately 1.58 acres, designated as Outparcel 2B, as shown on a plat prepared by Landtech, Inc. for Outback Steakhouse of Florida, Inc. dated December 2, 1994, last revised on December 7, 1994 and recorded in Plat Book 55 at page 5782, Richland County Records.

DERIVATION: Deed of Outback Steakhouse of Florida, Inc. to OSF Real Estate, Inc., dated June 14, 2007 and recorded June 26, 2007 in Record Book 1328 at page 3636, Richland County Records; Affidavit Change of Corporate Name filed on June 26, 2007 in Record Book 1328 at page 3662, aforementioned records.

 

163.	FEE PARCEL DESCRIPTION: UNIT 4119

All that certain piece, parcel or tract of land situated, lying and being in the City of Florence, County of Florence, State of South Carolina, said tract being designated as a portion of Tract V shown to contain 1.67 acres, as per plat of Outparcel Property of Florence Commons, prepared by Engineering consultants, Inc. bearing the certification of Clyde S. Bryce, Jr. PE/RLS SC 3607, dated December 18, 1990, and recorded in the Florence County Recorders in Plat Book 39 at Page 33, and being more particularly described as follows:

 

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Point of Commencement begins at a spindle located at the intersection of the north right of way of Frontage Road (Dunbarton Drive) and the west right of way of the roadway easement leading to Magnolia Mall, said point being located approximately 220 feet westerly from the west side of the main entrance to Magnolia Mall; running thence S03°08’E, a distance of 18.7 feet to a point; running thence N83°19’E, a distance of 30.0 feet to a point; running thence N04°32’W, a distance of 39.2 feet to a point, which point marks the TRUE POINT OF BEGINNING; FROM SAID TRUE POINT OF BEGINNING AS THUS ESTABLISHED, running thence N04°32’00”W, a distance of 138.80 feet to a point running thence N05°02’00”W, a distance of 218.77 feet to a point; running thence N23°52’21”E, a distance of 42.78 feet to a point; running thence N71°58’27”E, a distance of 38.29 feet to a point ; running thence S66°01’00”E, a distance of 28.28 feet to a point; running thence S21°01’00”E, a distance of 184.06 feet to a point; running thence S51°37’00”E, a distance of 162.00 feet to a point; running thence S13°38’00”E, a distance of 43.10 feet to a point; running thence S31°34’00”W, a distance of 115.40 feet to a point on the north right of way of Frontage Road (Dunbarton Drive); running thence in a westerly direction along said right of way S83°19’00”W, a distance of 169.70 feet to a point; running thence N27°11’25”E, a distance of 36.00 feet to a point; running thence N59°44”22”W, a distance of 23.58 feet to a point; running thence S27°11’25”W, a distance of 28.00 feet to a point, running thence N21°22’00”W, a distance of 18090 feet to a point, which point marks the TRUE POINT OF BEGINNING.

LESS AND EXCEPTING THEREFROM that certain property for the erected sign for the Florence Commons Shopping Center as shown on a plat prepared by Ervin Engineering Co., Inc. for Outback Steakhouse of Florida, Inc., dated October 24, 1995 and recorded in the Florence County Records in Plat Book 59 at page 299.

DERIVATION: Deed of Outback Steakhouse of Florida, Inc. to OSF Real Estate, LLC dated June 14, 2007 and recorded June 27, 2007 in Book B-112 at page 114; Affidavit Change of Corporate Name filed on June 27, 2007 in Book B-112 at page 125, Florence County Records.

ALL THAT CERTAIN PARCEL OF LAND CONTAINING 71,853 SQUARE FEET OR 1.65 ACRES, MORE OR LESS, THE SAME BEING SHOWN AS OF TAX PARCEL 099-01-083 IN THE OFFICE OF ASSESSOR FOR FLORENCE COUNTY, SOUTH CAROLINA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS TO WIT; BEGINNING AT A #4 REBAR ON THE EASTERN EDGE OF A 30 FOOT EASEMENT, SAID POINT BEING REACHED BY COMING FROM A COTTON SPINDLE AT THE INTERSECTION OF THE NORTH RIGHT OF WAY OF DUNBARTON DRIVE (S21-1184) AND THE WESTERN EDGE OF A 30 FOOT EASEMENT SAID POINT BEING LOCATED APPROXIMATELY 220 FEET WEST OF THE MAIN ENTRANCE TO MAGNOLIA MALL AND BEING THE POINT OF COMMENCEMENT LABELED P.O.C. ON SURVEY; THENCE, S07°-21’-57”E A DISTANCE OF 18.70 FEET; THENCE, N79°-05’-03”E A DISTANCE OF 30.00 FEET; THENCE, N08°-45’-57”W A DISTANCE OF 39.20 FEET TO THE POINT OF BEGINNING LABELED P.O.B. ON SURVEY; THENCE, N08°-46’-38”W A DISTANCE OF 138.78 FEET TO A NAIL; THENCE, N09°-15’-53”W A DISTANCE OF 218.76 FEET TO A POINT IN A CURB; THENCE, N19°-34’-31”E A DISTANCE OF 42.78 FEET TO A  ³/4” PIPE; THENCE, N67°-46’-40”E A DISTANCE OF 38.34 FEET TO A  ³/4” PIPE; THENCE, S70°-16’-25”E A DISTANCE OF 28.27 FEET; THENCE, S25°-14’-26”E A DISTANCE OF 184.05 FEET TO A #4 REBAR; THENCE, S55°-51’-43”E A DISTANCE OF 162.01 FEET TO A  ¹/2” PIPE; THENCE, S17°-54’-02”E A DISTANCE OF 43.11 FEET TO A  ¹/2” PIPE; THENCE, S27°-20’-44”W A DISTANCE OF 115.42 FEET TO A  ³/4” PIPE; THENCE, S 79°-04’-46”W A

 

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DISTANCE OF 169.73 FEET TO A #5 REBAR; THENCE N23°-00’-08”E A DISTANCE OF 36.01 FEET TO A NAIL; THENCE N63°-58’-44”W A DISTANCE OF 23.58 FEET TO A #4 REBAR; THENCE, S22°-59’-22”W A DISTANCE OF 27.98 FEET TO A #5 REBAR; THENCE, N25°-34’-25”W A DISTANCE OF 18.88 FEET TO THE POINT OF BEGINNING.

Tax Map No. 00099-01-083

END OF DESCRIPTION.

 

164.	FEE PARCEL DESCRIPTION: UNIT 4120

All that certain piece, parcel or tract of land lying and being situate in the City of Rock Hill, York County, South Carolina, bounded by the rights of way of Interstate 77, Highway 161 -Celanese By-Pass, Riverchase Boulevard, and River Point Court, and being more particularly described according to “Boundary and Topographic Survey for Outback Steakhouse of Florida, Inc.”, prepared by Cardan International Ltd., dated January 5, 1996, revised January 15, 1996, and further revised January 30, 1996, recorded in Plat Book A-75 at Page 8, Office of the Clerk of Court for York County, South Carolina, the metes and bounds of which are as follows:

BEGINNING at an old concrete monument found in the northern right of way of Hwy 161, said point being at the northwestern right of way intersection of 1-77 and Hwy 161—Celanese By-Pass; thence, from said concrete monument found in the northern right of way of Hwy 161 N 88° 05’ 54” W 160.03 feet to an old concrete monument; thence, continuing with said right of way N 88° 06’ 03” W 32.41 feet to a pk nail set in said right of way, also being the northeastern right of way intersection of Riverchase Blvd. and Hwy 161; thence, with a curve to the right having a radius of 20.00 feet, an arc length of 29.57 feet and a chord bearing and distance of N 45° 44’ 20” W 26.95 feet to an iron pin set in the eastern right of way of Riverchase Blvd.; thence, with said right of way N 03° 22’ 37” W 111.13 feet to an iron pin set; thence continuing with said right of way with a curve to the left having a radius of 542.00 feet, an arc length of 84.24 feet, and a chord bearing and distance of N 07” 49’ 47” W 84.16 feet to a point at the southeastern right-of way intersection of River Point Court and Riverchase Blvd.; thence continuing with the right of way of River Point Court along a curve to the right having a radius of 20.00 feet, an arc length of 30.48 feet and a chord bearing and distance of N 31° 22’ 17” E 27.61 feet; thence continuing with a curve to the right having a radius of 40 00 feet, an arc length of 32.52 feet, a chord bearing and distance of S 81° 40’ 56” E 31.63 feet; thence with a curve to the left having a radius of 55.00 feet, an arc length of 131.13 feet and a chord bearing and distance of N 53° 18’ 19” E 102.21 feet to an iron pin set; thence leaving said right of way S 80° 30’ 29” E 60.93 feet to an existing right of way monument in the western right of way of 1-77; thence with said right of way S 09° 52’ 53” W 253.14 feet to an old concrete monument; thence continuing with said right of way S 51° 06’ 26” W 149.97 feet to the POINT OF BEGINNING.

Being the same property conveyed to Outback Steakhouse of Florida, Inc. by Deed of Record February 15, 1996 in Book 1452, Page 50, Registers Office of York County, South Carolina.

 

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LESS AND EXCEPTING THEREFROM all that certain property conveyed to the South Carolina Department of Transportation by Outback Steakhouse of Florida. Inc dated September 9 1999 and recorded January 20, 2000 in Book 2997 at page 170, York County Records DERIVATION: Deed of Outback Steakhouse of Florida, Inc. to OSF Real Estate, LLC, dated June 14, 2007 and recorded June 26, 2007 in Book 9205 at page 281; Affidavit Change of Corporate Name Change recorded on June 26. 2007 in Book 9205 at page 291, York County

 

165.	FEE PARCEL DESCRIPTION: UNIT 4121

All that certain condominium unit lying and being on Hilton Head Island, Beaufort County, South Carolina, being known as Unit A (The Restaurant Unit), Barnes & Noble Center Horizontal Property Regime (also know as 35 Hatton Place, Suite 300) and being more particularly shown and described by reference to the Master Deed of EPIPD-lndigo Run, L.P., establishing said Barnes & Noble Center Horizontal Property Regime, said Master Deed being dated April 6, 1999 and recorded April 23, 1999 in the Beaufort County Records in Deed Book 1162 at page 2066 and Plat Book 69 at page 159, and any further Amendments thereto. For a more-detailed description as to the courses and distances, metes and bounds of the above-mentioned Unit, reference is had to the aforementioned plat of record.

TOGETHER WITH all of the rights, privileges and common elements appertaining to the above described Unit as set forth in the Master Deed and any further amendments to the Master Deed and By-Laws of the Barnes & Noble Center Horizontal Property Regime referred to hereinabove.

TOGETHER WITH the non-exclusive ingress, egress, utility and drainage easements benefiting a portion of the insured property, as granted in Declaration of Easements dated December 2, 1992, recorded in Book 613 at page 2208, Beaufort County Records.

DERIVATION: Deed of Outback Steakhouse of Florida, Inc. to OSF Real Estate, LLC, dated June 14, 2007 and recorded June 27, 2007 in Deed Book 2589 at page 1338, Beaufort County Records: and, Change of Corporate Name Affidavit filed on June 27, 2007 in Deed Book 2589 at page 1338, aforesaid records.

TAX MAP NO.: R510-008-000-0458-0001

 

166.	FEE PARCEL DESCRIPTION: UNIT 4122

All that certain piece, parcel or tract of land, situate, lying and being in Greenwood County, State of South Carolina, and designated as Tract “B”, containing 1.75 acres, as shown on plat of survey entitled “Plat Made At The Request of Outback Steakhouse of Florida, Inc.” dated June 22, 1998 and recorded in the Office of the Clerk of Court for Greenwood County, SC in Plat Book 107 at Page 93, reference to said plat is herein made for the metes and bounds description as shown thereon.

Being the same property conveyed to Outback Steakhouse of Florida, Inc. by Deed of Record August 17, 1998 in Book 532, Page 333, Register’s Office of Greenwood County, South Carolina.

 

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167.	FEE PARCEL DESCRIPTION: UNIT 4123

All and singular, that certain tract of land, situate in Tilghman Estates Section, North Myrtle Beach, Horry County, South Carolina, containing 3.21 Acres of land as shown on a plat prepared by Terry M. Watson RLS Land Surveying, Inc., dated Dec. 8, 1987, and recorded in the Horry County records in Plat Book 99 at Page 38.

DERIVATION: Deed of Outback Steakhouse of Florida, Inc. to OSF Real Estate, LLC, dated April 11, 2007 and recorded June 26, 2007 in Deed Book 3255 at page 2558, Horry County Records; and Affidavit Change of Corporation Name recorded June 26, 2007 in Deed Book 3255 at page 2567, aforesaid records.

Surveyor’s Description

All that certain tract of land, situate in Tilghman Estates Section, North Myrtle Beach, Horry County, South Carolina and being more particularly described as follows:

Beginning at a found iron pin on the Northern right-of-way line of U.S. Highway 17 North (100’ right-of-way); thence from said Point of Beginning with the line of now or formerly Allred Investment Company, LLC the following two (2) courses to wit: (1) N35°56’32”W for 316.51 feet to found iron pin; (2) N35°56’48”W for 226.33 feet to a found iron pin (bent) on the Southern right-of-way line of S.C. Highway 20 (75’ right-of-way); thence with said Southern right-of-way line N48°16’23”E for 228.18 feet to a found iron pin; thence with the line of now or formerly Loris Community Hospital District the following three (3) courses to wit: (1) S35°58”31”E for 249.22 feet to a found iron pin; (2) S35°57’37”E for 23.69 feet to a found iron pin; (3) N53°54’00”E for 20.04 feet to a found iron pin; thence with the line of now or formerly Shiv of NMB LLC S35°59’05”E for 356.84 feet to a found iron pin on the Northern right-of-way of U.S. Highway 17 North; thence with said Northern right-of-way line S68°31’09”W for 255.64 feet to the Point of Beginning, containing 3.21 acres, more or less.

 

168.	FEE PARCEL DESCRIPTION: UNIT 4124

All that certain piece, parcel or tract of land, together with improvements thereon, situate, lying and being in the City of Sumter, County of Sumter, State of South Carolina, and being more fully shown and designated as Parcel B Containing 1.925 acres on a plat prepared for Outback Steakhouse of Florida, Inc. by Edwards Land Surveyors, Inc., dated January 28, 1999, and recorded in the Office of the Register of Deeds for Sumter County in Plat Book 99 at Page 322 (hereinafter the “Referenced Plat”), the metes and bounds of which are as follows:

BEGINNING at the point of commencement (POC), being the centerline of the intersection of U.S. Highways 76 and 378 and Wilson Hall Road (S-43-692); thence S44°05’19”E for a distance of 621.61’ to a #4 rebar found at the northeast corner of Lot “B” on the southern right of way of U.S. Highway Nos. 76 and 378, known as the Point of Beginning (POB); thence S49° 26’ 28”E along said right of way for a distance of 25.19’ to a 1” pinch top found; thence S49° 32’ 54”E along the southern right of way of U.S. Highway Nos. 76 and 378 for a distance of 149.84 feet to a tie rod found; thence S40°54’55”W along the common line of Kelly & Kohen Appliance, Inc. for a distance of 300.32’ to a tie rod found; thence S40°51’01”W along said common line for a

 

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distance of 179.12 feet to a tie rod found: thence N49° 22’ 25”W along the common line of Sumter County School District No. 2 for a distance of 174.96 feet to a #4 rebar found; thence N40°52’57”E along the common line of Lot “A” owned by W.R. Sanford for a distance of 478.66 feet to a #4 rebar found and designated as the Point of Beginning (POB). This it contains 1.925 acres.

Derivation: Deed of Outback Steakhouse of Florida, Inc. to OSF Real Estate, LLC, dated June 14, 2007 and recorded June 26, 2007 in Deed Book 1083 at page 1288; and, Affidavit Change of Corporate Name recorded June 26, 2007 in Deed Book 1083 at page 1304, Sumter County Records.

ALL THAT CERTAIN PARCEL OF LAND CONTAINING 83,790 SQUARE FEET OR 1.924 ACRES, MORE OR LESS, THE SAME BEING SHOWN AS TAX PARCEL 2030702005 IN THE OFFICE OF ASSESSOR FOR SUMTER COUNTY, SOUTH CAROLINA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS TO WIT; BEGINNING AT A #4 REBAR ON THE WESTERN RIGHT OF WAY OF U.S. HIGHWAY NUMBERS 76 AND 378, SAID POINT BEING REACHED BY COMING FROM A #4 REBAR AT THE INTERSECTION OF THE WESTERN RIGHT OF WAY OF SAID U.S. 76 & 378 AND THE SOUTHERN RIGHT OF WAY OF WILSON HALL ROAD (S43-692); THENCE ALONG SAID WESTERN RIGHT OF WAY OF U.S. 76&378 IN A SOUTHEASTERLY DIRECTION S.53°34’00”E., A DISTANCE OF 580.19 FEET TO A #4 REBAR AT THE POINT OF BEGINNING, LABELED P.O.B. ON DRAWING; THENCE CONTINUING ALONG SAID WESTERN RIGHT OF WAY OF U.S. 76&378, S.53°45’33”E., A DISTANCE OF 25.19 FEET TO A #4 REBAR; THENCE S.53°51’59”E., A DISTANCE OF 149.79 FEET TO A TIE ROD; THENCE DEPARTING SAID WESTERN RIGHT OF WAY OF U.S. 76&378 S.36°35’50”W., A DISTANCE OF 300.02 FEET TO A #4 REBAR; THENCE S.36°35’46”W., A DISTANCE OF 179.18 FEET TO A TIE ROD; THENCE N.53°39’53”W., A DISTANCE OF 174.96 FEET TO A #4 REBAR; THENCE N.36°35’42”E., A DISTANCE OF 478.64 FEET TO THE POINT OF BEGINNING.

TAX MAP NO.: 203-07-02-005

END OF DESCRIPTION.

 

169.	FEE PARCEL DESCRIPTION: UNIT 4127

All that certain piece, parcel or lot of land with improvements thereon, situate, lying and being in the State of South Carolina, County of Cherokee, in the City of Gaffney, and being shown on a plat entitled Outback Steakhouse, Gaffney, SC, by B.P. Barber & Associates, Inc., dated November 6, 2002, and recorded in Plat Book C-80 at page 3 & 4, said plat having the following metes and bounds, to wit: Commencing at a 5/8” rebar, being the southwestemmost comer of Parcel A of Carolina Factory Shops and proceeding in a direction of N 69° 57’ 42” E for a distance of 727.58 feet to a drill hole in concrete, this being the point of beginning; thence turning and proceeding through the property of Cherokee County (Carolina Factory Shops) the following courses and distances: in a

 

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direction of N 10° 15’ 05” W for a distance of 113.58 feet to a 5/8” rebar; thence in a direction of N 79° 44’ 55” E for a distance of 92.33 feet to a steel spike; thence in a direction of S 10° 15’ 05” E for a distance of 113.53 feet to a drill hole in concrete, and thence in a direction of S 79° 43’ 09” W for a distance of 92 33 feet to a drill hole in concrete, this being the point of beginning. This parcel contains 0.241 acre (10,485 square feet).

Being the same property conveyed to Outback Steakhouse of Florida, Inc. by Deed of Record March 7, 2003 in Book 143, Page 326, Registers Office of Cherokee County, South Carolina.

 

170.	FEE PARCEL DESCRIPTION: UNIT 4210

Lot B1 of Mott’s Addition to the City of Sioux Falls, Minnehaha County, South Dakota, according to the recorded plat thereof.

 

171.	FEE PARCEL DESCRIPTION: UNIT 4314

All that tract or parcel of land lying and being in Knox County, Tennessee, and being more particularly described as follows:

SITUATED in the Sixth Civil District of Knox County, Tennessee and within the 47th Ward of the City of Knoxville, Tennessee, and being designated as Parcel 3.00, CLT Tax Map 132 and being all of Lot 1R3R, of the Market Place Subdivision record in Plat Cabinet N, Slide 40D in the Register’s Office for Knox County, Tennessee, and being more particularly described as follows:

BEGINNING at an existing iron rod located in the Northerly right of way line of North Peters Road being South 77 deg. 31 min. 46 sec. West, 227.71 feet from the centerline intersection of North Peters Road and Market Place Boulevard;

THENCE, continuing on the Northerly right of way of Northern Peters Road 235.17 feet along a curve to the right having a radius of 1,410.00 feet and a chord bearing and distance of South 72 deg. 33 min. 53 sec. West, 234.90 feet to an existing iron spike located in the centerline of Peregrine Lane;

THENCE, leaving said right of way along the centerline of Peregrine Lane, North 12 deg. 46 min. 15 sec. West, 323.52 feet along the common line with Lot 1R2 of the Market Place Subdivision to an existing iron rod;

THENCE, leaving said centerline North 77 deg. 05 min. 05 sec. East, 233.94 feet along the common line with Lot 1R4R of the Market Place Subdivision to an existing iron rod;

THENCE, continuing along said common line North 12 deg. 37 min. 00 sec. West, 400.16 feet to an existing iron rod;

THENCE, South 76 deg. 12 min. 48 sec. West, 14.00 feet to an existing iron rod;

 

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THENCE, North 12 deg. 37 min. 00 sec. West, 35.00 feet to an existing iron rod;

THENCE, North 76 deg. 12 min. 48 sec. East, 15.00 feet to an existing iron rod;

THENCE, South 12 deg. 37 min. 00 sec. East, 740.18 along the common line of Lots 2R2 and 2R1 of the Market Place Subdivision to the point of beginning.

CONTAINING, 75,392 square feet or 1.731 acres as shown on the map prepared by Barge Waggoner, Sumner and Cannon, Inc., bearing drawing No. 8897-63, and signed by Gary C. Clark, RLS NO. 1329.

BEING the same property conveyed to Outback Steakhouse of Florida Inc., a Florida corporation by virtue Special Warranty Deed from DFT Partners, a Tennessee general partnership, dated February 28, 1996, recorded March 12, 1996, in Book 2205, Page 264, Knox County, Tennessee Records.

Together with the non-exclusive access rights, if any, and subject to the terms, conditions, provisions and limitations of the following:

PARCEL II

Joint Permanent Access Easement by Waterwheel Development dated July 9, 1993, and recorded July 20, 1993, in Deed Book 2112, Page 111.

PARCEL III

Perpetual Easement Agreement by and between Waterwheel Development Company and DFT Partners, dated September 20, 1993 and recorded September 21, 1993, in Deed Book 2118, Page 530, aforesaid records.

Being the same property conveyed to Private Restaurant Properties, LLC, a Delaware limited liability company by Quit Claim Deed from Outback Steakhouse of Florida Inc., a Florida corporation, dated April 11, 2007, recorded June 29, 2007, in Instrument No. 200706290107258, Knox County, Tennessee Records.

 

172.	FEE PARCEL DESCRIPTION: UNIT 4318

Being a 1.6 acre tract of land lying in the 1st Civil District of Putnam County, Tennessee, lying between Bunkerhill Road and Interstate Drive, and being more particularly identified as Lot No. 1 of the Jimmy Wright Division, as depicted on the Plat of record in Note Book 19, page 64, and in Plat Cabinet B, Slide 166, in the Register’s Office for Putnam County, Tennessee. Being the same property conveyed to Private Restaurant Properties, LLC by Quit Claim Deed of record in Book 404, Page 79, Register’s office for Putnam County, Tennessee.

 

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173.	FEE PARCEL DESCRIPTION: UNIT 4319

All that tract or parcel of land lying and being in Montgomery County, Tennessee, and being more particularly described as follows:

TRACT ONE:

Being a tract of land situated in the Sixth Civil District in Montgomery County, Tennessee, said tract being a portion of the Gary Mathews Family Limited Partnership Property and a portion of Official Record Volume 528, page 1477, as recorded in the Register’s Office of Montgomery County, Tennessee and being more fully described as follows:

BEGINNING at point in the west right of way of Wilma Rudolph Boulevard, (U.S. Highway 79), Said point also being in the south line of a private forty (40) foot casement, said point also being the northeast corner of said Tract II;

THENCE leaving said Wilma Rudolph Boulevard and with said south line of said casement and north line of said Tract II, North, 87 degrees 41 minutes 00 seconds West, 40.00 feet to a point;

THENCE continuing with said line, North 02 Degrees 19 Minutes 00 Seconds East, 5.00 feet to a point;

THENCE continuing with said line, North 87 degrees 41 minutes 00 seconds West, 386.79 feet to point, said point being the northwest corner of said Tract II and the northeast corner or Tract III;

THENCE leaving said easement and with the west line of said Tract II and the East line of Tract III, South 02 Degrees 19 Minutes 05 Seconds West, 162.79 feet to a point, said point being the new southwest corner of the said Tract II and the new southeast corner of said Tract III, said point also being the north line of a portion of Tract I;

THENCE on a now severance line and with said north line of portion of said Tract I and the south line of said Tract III, North 87 degrees 43 minutes 44 seconds west, 395.41 feet to a point, said point being the new southwest corner of said Tract III;

THENCE on a new severance line and with the new west line of said Tract II and the new east line of a portion of Tract I, North 19 degrees 01 minutes 00 seconds East, 191.26 feet to a point, said point being the northwest corner of said Tract III, said point also being in the centerline of said private casement and the south line of Tract I;

THENCE with said north line of Tract III and the south line of Tract I and the centerline of said casement, South 87 degrees 41 minutes 00 seconds East, 774.77 feet to a point, said point being in said west right of way of said Wilma Rudolph;

THENCE with said Wilma Rudolph, South 19 degrees 01 minutes 00 seconds west, 26.20 feet to the point of beginning.

 

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Said tract containing 1.75 acres more or less.

Said tract being subject to all casements, right of ways, conveyances and restrictions of record.

Being the same property conveyed being conveyed to Outback Steakhouse of Florida, Inc., a Florida Corporation by Warranty Deed from Gary Mathews Family Limited partnership, dated March 21, 1997 and recorded March 21, 1997, in Volume 618, page 2250, Montgomery County, Tennessee Records.

TRACT TWO: A non-exclusive easement granted to Outback Steakhouse of Florida, Inc., pursuant to a Sewer Easement Agreement dated the 21st of March, 1997, of record in Official Record Book Volume 618, page 2258, Register’s Office, Montgomery County, Tennessee.

TRACT THREE: Easement granted to Outback Steakhouse of Florida, Inc., pursuant to a Drainage Easement Agreement dated the 21st of March, 1997, of record in Official Record Book Volume 618, page 2253, Register’s Office, Montgomery County, Tennessee.

 

174.	FEE PARCEL DESCRIPTION: UNIT 4320

Fee Parcel

All that tract or parcel of land lying and being in the District of Rutherford County, Tennessee, and being more particularly described as follows:

LAND in Rutherford County, Tennessee, being Lot No, 4, on the Plan of 3rd Resubdivision of Lot 3, Market Place Center, as shown on plat of record in Plat Book 18, page 180, the Register’s Office of Rutherford County, Tennessee, to which plat reference is hereby made for a more particular description.

BEING the same property conveyed to Private Restaurant Properties, LLC by Quitclaim Deed of Record in Book 761, page 1804, Register’s Office for Rutherford County, Tennessee.

TOGETHER with an exclusive easement for access and pedestrian and vehicle traffic as described by Deed of Record in Book 596, Page 285.

TOGETHER with those non-exclusive easement rights granted to the insured pursuant to that certain Reciprocal Easement Agreement with Covenants of record in Book 596, page 292.

Located in the 13th Civil District of Rutherford County, Tennessee, Bound on the north by the remaining property of Lot 3, Market Place Centre; on the east by proposed Lot 4, Market Place Centre; on the south by a 38’x27’ public access easement; and on the west by Walmart (Deed Book 539, Page 148).

 

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Beginning at a point on the north right-of-way of the 38’ x 27’ public access easement, said point being in the east line of Walmart and being the southwest corner of this access easement; thence with the east line of Walmart N-07°31’40”-E 277.00 feet to a point, being the northwest corner of this easement; thence with the south line of the remaining property of Lot 3, Market Place Centre S-82°28’20”-E 27 feet to an iron pin set, being the northwest corner of proposed Lot 4, Market Place Centre and the northeast corner of this access easement; thence with the west line of proposed Lot 4, Market Place Centre S-07°31 ‘40”- W 277.03 feet to an iron pin set, being the southwest corner of proposed Lot 4, Market Place Centre and the southeast corner of this access easement; thence with the north right-of-way of a 38’ x 27’ public access easement N-82°23’50”-W27 feet to the point at the beginning; containing 0.17 acre, more or less.

Easement Parcels

1. Together with an access easement providing for ingress/egress as shown on plat recorded at Plat Book 18, Page 180, aforesaid records.

2. Together with easements contained in that Cross Access Easement Agreement dated December 13, 1995, by and between Howard D. Wall and Sally S. Wall d/b/a W & O Investments, and Marketplace Centre Associates, L.L.C., a Tennessee limited liability company, recorded on December 15, 1995, in Book 563, Page 168, aforesaid records.

175. FEE PARCEL DESCRIPTION: UNIT 4324

All that tract or parcel of land lying and being in the Wilson County, Tennessee, and being more particularly described as follows:

TRACT 1 (MARTIN PROPERTY)

BEGINNING AT THE NORTHWEST CORNER OF THE W.W. VANHOOK LAND; THENCE IN A WESTERLY DIRECTION WITH THE SOUTH MARGIN OF THE FRANKLIN ROAD 150 FEET, MORE OR LESS, TO AN IRON STAKE DRIVEN IN THE GROUND; THENCE IN SOUTHERLY DIRECTION 515 FEET, MORE OR LESS, TO AN IRON STAKE DRIVEN TO THE GROUND; THENCE IN AN EASTERLY DIRECTION 150 FEET, MORE OR LESS, TO AN IRON PIN DRIVEN IN THE GROUND IN W.W.VANHOOK’S SOUTHEAST CORNER’ THENCE IN A NORTHERLY DIRECTION WITH THE W.W. VANHOOK’S WEST BOUNDARY AND A WIRE FENCE, 515 FEET, MORE OR LESS TO THE POINT OF BEGINNING.

AND

TRACT 2 (CITY OF LEBANON PROPERTY)

BEGINNING ON AN IRON PIN IN THE SOUTH MARGIN OF FRANKLIN ROAD, SAID PIN BEING THE NORTHEAST CORNER OF THE REMAINING LANDS OF THE CITY OF LEBANON AND THE NORTHWEST CORNER OF THE TRACT HEREIN DESCRBIED, THENCE WITH SAID MARGIN OF SAID ROAD AS FOLLOWS: ALONG A CURVE, SAID CURVE HAVING A CENTERAL ANGLE OF 19 DEGS. 55 MINS. 02 SECS, A RADIUS OF 622.97 FEET, A CHORD OF SOUTH 78 DEGS. 42 MINS. 28 SECS, EAST 215.47 FEET, AN

 

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ARC DISTANCE OF 216.56 FEET TO A POINT, THENCE ALONG A CURVE, SAID CURVE HAVING A CENTRAL ANGLE OF 05 DEGS. 09 MINS. 33 SECS., A RADIUS OF 622.97 FEET, A CHORD OF NORTH 88 DEGS. 45 MINS. 15 SECS. EAST 56.08 FEET, AN ARC DISTANCE OF 56.10 FEET TO AN IRON PIN, THENCE SOUTH 03 DEGS. 49 MINS. 31 SECS. EAST 8.50 FEET TO AN IRON PIN IN THE NORTH BOUNDARY LINE OF THE EDDIE REED PROPERTY, THENCE LEAVING SOUTH MARGIN OF FRANKLIN ROAD AND RUNNING WITH SAID REED PROPERTY SOUTH 57 DEGS. 58 MINS. 38 SECS. WEST 54.72 FEET TO AN IRON PIN, SAID PIN BEING THE NORTHWEST CORNER OF THE REED PROEPRTY AND THE NORTHEAST CORNER OF THE PERRY MARTIN PROPERTY, THENCE WITH THE NORTH BOUNDARY LINE OF THE SAID MARTIN PROPERTY SOUTH 59 DEGS. 47 MINS. 43 SECS. WEST 178.05 FEET TO AN IRON PIN, THENCE WITH THE WEST BOUNDARY LINE OF THE PERRY MARTIN PROPERTY SOUTH 21 DEGS. 55 MINS. 50 SECS. EAST 235.36 FEET TO A CONCRETE MONUMENT IN THE NORTH MARGIN OF INTERSTATE I-40, SAID PIN BEING THE SOUTHWEST CORNER OF THE MARTIN PROPERTY, THENCE WITH INTERSTATE I-40 OFF RAMP NORTH 52 DEGS. 07 MINS. 37 SECS. WEST 261.15 FEET TO A CONCRETE MONUMENT, SAID MONUMENT BEING THE SOUTHEAST CORNER OF REMAINING LANDS OF THE CITY OF LEBANON AND THE SOUTHWEST CORNER OF THE TRACT HEREIN DESCRIBED, THENCE NORTH 12 DEGS. 36 MINS. 50 SECS. EAST 231.64 FEET TO THE POINT OF BEGINNING.

Being the same property conveyed to Private Restaurant Properties, LLC, a limited liability company by Quit Claim Deed from Outback Steakhouse of Florida, Inc., a Florida corporation, dated April 11, 2007, recorded July 06, 2007, in Book 1258, Page 207, Wilson County, Tennessee Records.

176. FEE PARCEL DESCRIPTION: UNIT 4350

All that tract or parcel of land situated in Third Civil District of Bradley County, Tennessee, more particularly described as Outparcel C. Final Subdivision Plat for Home Depot U.S.A., Inc. according to the plat thereof recorded on September 17, 2003, in Plat Book 16, Page 52, in the Register’s Office of Bradley County, Tennessee.

TOGETHER WITH rights and benefits for access as set forth in Declaration of Restrictions and Grant of Easements by Home Depot U.S.A., Inc. a Delaware corporation, recorded September 22, 2003, in Book 1370, Page 1, aforesaid records.

Being the same properties conveyed to Private Restaurant Properties, LLC, a Delaware limited liability company by Quit Claim Deed from Outback Steakhouse of Florida, Inc., a Florida corporation, dated April 11, 2007, recorded July 06, 2007, in Book 1762, Page 648, Bradley County, Tennessee Records.

Map/Parcel ID: 034 05204 000

 

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177.	FEE PARCEL DESCRIPTION: UNIT 4401

Being that certain 1.3774 acres of land out of Reserve “C” of Wilchester West, a subdivision in Harris County according to a map or plat thereof recorded in Volume 132, Page 40 of the Map Records of Harris County, Texas, said 1.3774 acres being more particularly described as following:

COMMENCING at a 5/8 inch iron rod found for the most northerly northwest corner of said Reserve “C” and being the most northerly point of a cutback corner at the southeast corner of the intersection of Interstate Highway 10 (a.k.a. Katy Freeway), 275 feet wide, and Patchester Drive, 60 feet wide;

THENCE, S 89° 57’ 21” E, along the north line of said Reserve “C” and the south right-of-way line of said Interstate Highway 10, at 123.02 feet pass a 5/8 inch iron rod set for the common north corner of a 39,948 square foot tract and a 50,000 square foot tract, in all a distance of 248.02 feet to a 5/8 inch iron rod set for the northeast corner of said 50,000 square foot tract and the POINT OF BEGINNING of the herein described tract;

THENCE S 89° 57’ 21” E, continuing along said north line and said south right-of-way line, a distance of 149.99 feet to a 5/8 inch iron rod set in said north line and said south right-of-way line for corner;

THENCE, S 00° 03’ 32” W, parallel with the west line of said Reserve “C”, a distance of 400.02 feet to a 5/8 inch iron rod set in the south line of said Reserve “C” and the north right-of-way line of Britoak Lane, 60 feet wide;

THENCE, N 89° 57’ 07” W, along said south line and said north right-of-way line, a distance of 149.99 feet to a 5/8 inch iron rod set in said south line and said north right-of-way line for the southeast corner of said 50,000 square foot tract;

THENCE, N 00° 03’ 32” E, along the east line of said 50,000 square foot tract and parallel with the west line of said Reserve “C”, a distance of 400.01 feet to the POINT OF BEGINNING and containing 60,000 square feet or 1,3774 acre of land.

 

178.	FEE PARCEL DESCRIPTION: UNIT 4403

All that certain lot, tract or parcel of land lying and situated in Travis County, Texas and Being Lot 2, Block A, THE OUTBACK SUBDIVISION, according to the map or plat thereof recorded in Volume 93, Pages 27 and 28, of the Plat Records of Travis County, Texas, said Lot containing 1.883 acres of land and is more particularly described by metes and bounds as follows:

BEGINNING at a nail found on the West margin of U.S. Highway #183 (A.K.A. Research Boulevard), said nail is the common East corner of Lots 2 and 3 of the above said subdivision, and is the Southeast corner of this tract and is the PLACE OF BEGINNING hereof;

 

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THENCE along the dividing line of Lots 2 and 3, S 79° 24’ 27” W, 322.36 ft. to an iron rod found at the common West corner of said Lots, said rod is in the East margin of Jollyville Road for the Southwest corner hereof;

THENCE along the West line of said Lot 2, same being the East margin of Jollyville Road, the following two calls:

1.) N 13° 15’ 41” W, 60.09 ft. to an iron rod found at a point of curvature hereof

2.) Along the above said curve, to the left, the radius of which is 1005.52 ft. the arc distance is 175.27 ft. the chord of which bears N 18° 13’ 16” W, 175.05 ft., to a nail set at the common West corner of Lots 1 and 2, of the above said Subdivision for the Northwest corner hereof

THENCE along the dividing line of said Lots 1 and 2, the following four calls:

1.) N 79° 27’ 04” E, 65.29 ft. to a nail set

2.) N 10° 32’ 56” W, 20.00 ft. to a nail set

3.) N 79° 26’ 58” E, 258.29 ft., to an “X” engraved into concrete

4.) S 27° 06’ 06” E, 87.48 ft. to an iron rod found at the common East corner of said Lots 1 and 2, said rod is in the West margin of Research Boulevard, for an angle point hereof

THENCE along the East line of said Lot 2 and the West margin of Research Boulevard, S 10° 34’ 24” E, 169.66 ft. to the PLACE OF BEGINNING and containing 1.883 acres or 82,023 square ft. of land, more or less.

 

179.	FEE PARCEL DESCRIPTION: UNIT 4404

TRACT I:

Reserve “A” of Creekside At Town Center, a subdivision in Fort Bend County, Texas according to the map or plat thereof recorded under Slide No. 1281/B of the Plat Records of Fort Bend County, Texas.

TRACT II

Easement rights appurtenant to Tract I created in Reciprocal Easement Agreement by and between Sugarland Properties Incorporated, a Texas corporation and Team Bank, a federally insured banking institution, dated February 5, 1990, recorded under Fort Bend County Clerk’s File No. 9052538.

TRACT III:

Easement rights appurtenant to Tract 1 created in Reciprocal Easement Agreement by and between Sugarland Properties Incorporated, a Texas corporation and Frank Liu and Lisa Liu, dated December 16, 1993, recorded under Fort Bend County Clerk’s File No. 9383887.

 

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180.	FEE PARCEL DESCRIPTION: UNIT 4405

Tract 1:

A 1.617 acre tract of land situated in the corporate limits of the City of San Antonio, Bexar County, Texas, being a portion of Lot 15, New City Block 14857, I-10 NORTH OUTBACK STEAKHOUSE SUBDIVISION, as shown by plat recorded in Volume 9531, Page 52, Bexar County Deed and Plat Records, and being all that same land conveyed unto Outback/Carrabba, Inc. by special warranty deed executed July 20, 1994 and recorded in Volume 6177, Page 1467, Bexar County Real Property Records, in all said 1.617 acre tract being more particularly described as follows:

BEGINNING at a 1/2” iron rod found on the east right of way line of Interstate Highway 10, at the southwest corner of said Lot 15 for the southwest corner of this tract and being on a curve concave to the east having a radius of 5,729.65 feet;

THENCE, Northwesterly along the east right of way line of Interstate Highway 10 and with the arc of said curve, having a chord bearing and distance of North 20° 43’ 05” West 140.91 feet, through a central angle of 01° 24’ 33”, an arc distance of 140.92 feet to a point from whence a 1/2” iron rod found bears North 81° 28’ 29” West, 0.41 feet, at the southwest corner of a 1.572 acre tract conveyed unto Outback Steakhouse of Florida, Inc. by special warranty deed executed July 20, 1994 and recorded in Volume 6177, Page 1480, said Real Property Records, for the northwest corner of this tract;

THENCE, across said Lot 15, N 70° 08’ 05” East, 440.15 feet (cited on plat as 440.42’) to a 12” iron rod found on the common west line of a 34.299 acre tract described in Volume 10335, Page 2040, said Real Property Records, and the east line of said Lot 15, at the southeast corner of said 1.572 acre tract for the north corner of this tract;

THENCE, along said common line South 19° 56’ 51” East, 179.92 feet (cited in deed as South 19° 51’ 55” East, 179.81 feet) to a 1/2” iron rod found at the southeast corner of said Lot 15, same being an interior corner of said 34.299 acre tract;

THENCE, along the common south line of said Lot 15 and a north line of said 34.299 acre tract, South 75° 13’ 20” West (bearing basis from Volume 9531, Page 52), 440.05 feet to the POINT OF BEGINNING.

CONTAINING in all 1.618 acres or 70,474 square feet of land, more or less.

Tract 2:

Easement Estate, for a reciprocal, mutual, non-exclusive right of access for ingress and egress, granted by Special Warranty Deed recorded in Volume 6141, Page 1080 and in Volume 6177, Page 1467, Real Property Records, Bexar County, Texas.

 

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181.	FEE PARCEL DESCRIPTION: UNIT 4406

TRACT 1

BEING 1.5083 ACRES (65,614 SQUARE FEET) OUT OF AND A PART OF RESERVE “B” OF BOROUGH PARK SUBDIVISION SITUATED IN THE CHARLES EISTERWALL SURVEY, A-191, MONTGOMERY COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT THEREOF RECORDED IN CABINET C, SHEET 116-B OF THE MAP RECORDS OF MONTGOMERY COUNTY, TEXAS, SAID PARCEL OF LAND MORE FULLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:

COMMENCING AT A NORTHEAST CORNER OF A CALLED 1.6290 ACRE TRACT AT THE INTERSECTION OF THE SOUTHERLY RIGHT-OF-WAY LINE OF VALLEYWOOD ROAD (60 FOOT RIGHT-OF-WAY) AND THE WESTERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY NO. 45, BEING THE SOUTHERLY NORTHEAST CORNER OF A SAVE AND EXCEPT 0.1227 OF ONE ACRE (5344 SQUARE FEET) PARCEL OF LAND CONVEYED TO THE STATE OF TEXAS FOR CONTROLLED ACCESS HIGHWAY FACILITY, DATED OCTOBER 13, 1995 FILLED UNDER COUNTY CLERK’S FILE NO. 9563157 OF THE OFFICIAL RECORDS OF MONTGOMERY COUNTY, TEXAS;

THENCE NORTH 56 DEGREES 36 MINUTES 00 SECONDS WEST WITH THE NORTH LINE OF SAID 0.1227 ACRE STATE OF TEXAS TRACT A DISTANCE OF 14.15 FEET TO A POINT IN THE SOUTH LINE OF SAID VALLEYWOOD ROAD;

THENCE IN A WESTERLY DIRECTION WITH THE NORTH LINE OF SAID 0.1227 ACRE STATE OF TEXAS TRACT ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 359.05 FEET, A CENTRAL ANGLE OF 07 DEG. 20 MIN. 45 SEC. AN ARC LENGTH OF 46.03 FEET AND HAVING A CHORD BEARING AND DISTANCE OF SOUTH 82 DEG. 05 MIN. 02 SEC. WEST, 46.03 FEET TO A 5/8 INCH CHAPPED IRON ROD SET FOR THE NORTHWEST CORNER OF SAID 0.1227 ACRE STATE OF TEXAS TRACT, AND THE NORTHEAST CORNER AND POINT OF BEGINNING OF THE HEREIN DESCRIBED TRACT;

THENCE SOUTH 53 DEGREES 42 MINUTES 42 SECONDS EAST ALONG THE WEST RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY NO. 45 (VARIABLE WIDTH), THE WEST LINE OF SAID 0.1227 ACRE STATE OF TEXAS TRACT A DISTANCE OF 29.67 FEET TO A 5/8 INCH IRON ROD SET FOR CORNER;

THENCE SOUTH 11 DEGREES 35 MINUTES 54 SECONDS EAT CONTINUING ALONG THE WEST RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY NO. 45, THE WEST LINE OF SAID 0.1227 ACRE STATE OF TEXAS TRACT A DISTANCE OF 124.97 FEET TO A 5/8 INCH IRON ROD SET FOR THE SOUTHEAST CORNER OF THE HEREIN DESCRIBED TRACT;

 

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THENCE SOUTH 78 DEGREES 22 MINUTES 55 SECONDS WEST A DISTANCE OF 415.92 FEET TO AN “X” SET IN CONCRETE FOR THE SOUTHWEST CORNER OF THE HEREIN DESCRIBED TRACT ON THE EASTERLY RIGHT-OF-WAY LINE OF BOROUGH PARK DRIVE (60 FOOT RIGHT-OF-WAY);

THENCE NORTH 06 DEGREES 38 MINUTES 56 SECONDS WEST ALONG THE EASTERLY LINE OF SAID BOROUGH PARK DRIVE (60 FOOT RIGHT-OF-WAY) A DISTANCE OF 158.98 FEET TO A 5/8 INCH IRON ROD FOUND FOR A POINT OF CURVATURE TO THE RIGHT;

THENCE IN A NORTHERLY DIRECTION FOLLOWING SAID CURVE TO THE RIGHT, HAVING A CENTRAL ANGLE OF 94 DEGREES 28 MINUTES 47 SECONDS, A RADIUS OF 25.00 FEET, A CHORD BEARING OF NORTH 40 DEGREES 35 MINUTES 28 SECONDS EAST, A CHORD DISTANCE OF 38.71 FEET, AN ARC LENGTH OF 41.22 FEET TO A 5/8 INCH IRON ROD FOUND FOR A POINT OF REVERSE CURVATURE TO THE LEFT ON THE SOUTHERLY LINE OF SAID VALLEYWOOD ROAD (60 FOOT RIGHT-OF-WAY);

THENCE IN AN EASTERLY DIRECTION FOLLOWING SAID CURVE TO THE LEFT, HAVING A CENTRAL ANGLE OF 09 DEGREES 25 MINUTES 11 SECONDS, A RADIUS OF 1830.00 FEET, A CHORD BEARING OF NORTH 83 DEGREES 07 MINUTES 16 SECONDS EAST, A CHORD DISTANCE OF 300.52 FEET, AN ARC LENGTH OF 300.88 FEET ALONG THE SOUTHERLY LINE OF SAID VALLEYWOOD ROAD (60 FOOT RIGHT-OF-WAY) TO A 5/8 INCH CHAPPED IRON ROD SET FOR CORNER;

THENCE NORTH 78 DEGREES 24 MINUTES 40 SECONDS EAST, CONTINUING ALONG THE SOUTHERLY LINE OF SAID VALLEYWOOD ROAD (60 FOOT RIGHT-OF-WAY) 10.00 FEET TO A 5/8 INCH CHAPPED IRON ROD SET FOR A POINT OF CURVATURE TO THE RIGHT;

THENCE IN AN EASTERLY DIRECTION FOLLOWING SAID CURVE TO THE RIGHT, HAVING A CENTRAL ANGLE OF 12 DEGREES 41 MINUTES 42 SECONDS, A RADIUS OF 50.00 FEET, A CHORD BEARING OF NORTH 84 DEGREES 45 MINUTES 31 SECONDS EAST, A CHORD DISTANCE OF 11.08 FEET, AN ARC LENGTH OF 11.08 FEET ALONG THE SOUTHERLY LINE OF SAID VALLEYWOOD (60 FOOT RIGHT-OF-WAY) TO A 5/8 INCH CHAPPED IRON ROD SET FOR A POINT OF REVERSE CURVATURE TO THE LEFT;

THENCE CONTINUING IN AN EASTERLY DIRECTION FOLLOWING SAID CURVE TO THE LEFT, HAVING A CENTRAL ANGLE OF 05 DEGREES 20 MINUTES 57 SECONDS, A RADIUS OF 359.05 FEET, A CHORD BEARING OF NORTH 88 DEGREES 25 MINUTES 53 SECONDS EAST, A CHORD DISTANCE OF 33.51 FEET, AN ARC LENGTH OF 33.52 FEET ALONG THE SOUTHERLY LINE OF SAID VALLEYWOOD ROAD (60 FOOT RIGHT-OF-WAY) TO THE POINT OF BEGINNING AND CONTAINING 1.5083 ACRES (65,614 SQUARE FEET) OF LAND.

 

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TRACT 2

EASEMENT RIGHTS CREATED BY PERPETUAL EASEMENT AND RESTRICTION DECLARATION BY OAKLEIGH INVESTMENTS, LTD AND OMERO DELPAPA DATED AUGUST 2, 1994, RECORDED AUGUST 5, 1994, RECORDED UNDER COUNTY CLERK’S FILE NO. 9444582, REAL PROPERTY RECORDS OF MONTGOMERY COUNTY, TEXAS.

TRACT I:

 

182.	FEE PARCEL DESCRIPTION: UNIT 4407

All of Reserve “F”, containing 1.855 acres more or less, Baybrook Park—Section One (1), a subdivision in Robert Wilson Survey, Abstract 88, according to the map or plat thereof recorded in Film Code 365053 Map Records of Harris County, Texas, and being the same property as being described in Special Warranty Deed R262273.

TRACT II:

Non-Exclusive Reciprocal Access Easement Agreement executed by and between BC Webster Land, L.P. and Outback/Carrabba, Inc., as described by instrument dated February 2, 1995, and filed for record under Harris County Clerk’s File Number R262274.

 

183.	FEE PARCEL DESCRIPTION: UNIT 4416

1.4115 ACRES (61,484 SQUARE FEET) OF LAND OUT OF AND A PART OF RESTRICTED RESERVE “A” OF KATY FREEWAY OUTBACK STEAKHOUSE, A SUBDIVISION IN HARRIS COUNTY, TEXAS ACCORDING TO THE MAP OR PLAT THEREOF RECORDED UNDER FILM CODE NO. 357027 OF THE MAP RECORDS OF HARRIS COUNTY, TEXAS, SAID 1.4115 OF AN ACRE BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:

BEGINNING AT A 5/8 INCH IRON ROD FOUND ON THE EXISTING EAST RIGHT-OF-WAY LINE OF DOMINION DRIVE (100 FEET WIDE), AS SHOWN ON LAT RECORDED IN VOLUME 219, PAGE 74 OF THE HARRIS COUNTY MAP RECORDS NAD BEING THE SOUTHWEST CORNER OF SAID RESTRICTED RESERVE “A” AND THE HEREIN DESCRIBED TRACT;

THENCE NORTH 00 DEGREES 26 MINUTES 18 SECONDS EAST, ALONG THE EAST RIGHT-OF-WAY LINE OF SAID DOMINION DRIVE, A DISTANCE OF 327.85 FEET TO A 5/8” IRON ROD WITH TXDOT ALUMINUM CAP FOUND ON THE PROPOSED SOUTH RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 10 (IH 10), VARIABLE WIDTH) AND BEING THE SOUTH CORNER OF A 0.0199 OF AN ACRE TRACT OF LAND AWARDED TO THE STATE OF TEXAS IN JUDGMENT RECORDED UNDER HARRIS COUNTY CLERK’S FILE NO. X213228, FOR AN ANGLE POINT IN THE WEST LINE OF THE HEREIN DESCRIBED TRACT;

 

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THENCE NORTH 18 DEGREES 04 MINUTES 51 SECONDS EAST ALONG THE EAST LINE OF SAID DOMINION DRIVE, THE WEST LINE OF SAID 0.0199 ACRE TRACT A DISTANCE OF 45.95 FEET TO A 5/8 INCH CAPPED IRON ROD SET FOR AN ANGLE POINT IN THE EAST LINE OF SAID DOMINION DRIVE, AND THE WEST LIEN OF SAID 0.0199 ACRE TRACT;

THENCE NORTH 28 DEG. 33 MIN. 55 SEC. EAST, CONTINUING ALONG THE EAST LINE OF SAID DOMINION DRIVE, THE WEST LINE OF SAID 0.0199 ACRE TRACT A DISTANCE OF 32.16 FEET TO THE NORTHEAST CORNER OF SAID 0.0199 ACRE TRACT IN THE SOUTH RIGHT-OF-WAY LINE OF SAID IH 10, (SAID RIGHT- OF-WAY DETERMINED BY OTHERS AND PROVIDED BY TXDOT);

THENCE SOUTH 89 DEGREES 33 MINUTES 42 SECONDS EAST, ALONG THE EXISTING SOUTHERLY RIGHT- OF-WAY-LINE OF SAID IH 10, A DISTANCE OF 126.91 FEET TO A 5/8 INCH CAPPED IRON ROD CAPPED SET FOR THE NORTHEAST CORNER OF THE HEREIN DESCRIBED TRACT AND SAID RESTRICTED RESERVE “A”;

THENCE SOUTH 00 DEGREES 26 MINUTES 18 SECONDS WEST ALONG THE EAST LINE OF RESTRICTED RESERVE “A” A DISTANCE OF 400.00 FEET TO A 5/8 INCH IRON ROD FOUND FOR THE SOUTHEAST CORNER OF SAID RESTRICTED RESERVE “A” AND THE HEREIN DESCRIBED TRACT;

THENCE NORTH 89 DEG. 33 MIN. 42 SEC. WEST ALONG THE SOUTH LINE OF SAID RESTRICTED RESERVE “A” AND THE HEREIN DESCRIBED TRACT A DISTANCE OF 156.00 FEET TO THE POINT OF BEGINNING AND CONTAINING 1.4115 OF ONE ACR (61,484 SQUARE FEET) OF LAND.

184. FEE PARCEL DESCRIPTION: UNIT 4417

Tract 1: A. Being all of Lot 344, New City Block 15674, OUTBACK STEAKHOUSE U. S. 281 NORTH, as shown by plat recorded in Volume 9527, Page 103, Bexar County Deed and Plat Records.

Tract 2: Easement Estate, created and granted by Article V, Section 5.1 and Section 5.2 that one certain Declaration And Reciprocal Easement Agreement-Quail Meadows, recorded in Volume 3672, Page 931, Real Property Records, Bexar County, Texas.

185. FEE PARCEL DESCRIPTION: UNIT 4418

TRACT 1

All that certain lot, tract or parcel of land lying and being situated in Brazos County, Texas, out of the Crawford Burnett League, Abstract No. 7, and being Lot Three (3) of the Replat of the Kapchinski Hill, 19.1861 acres tract, as recorded in Volume 1600, Page 221, of the Brazos County Deed Records, and more particularly described as follows:

COMMENCING at a 5/8 inch iron rod found at the east corner of the said 19.1861 acres tract, also being on the southwest right-of-way line of Texas Avenue, for a point of reference;

 

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THENCE North 46 degrees 22 minutes 53 seconds West, a distance of 125.25 feet, along the said southwest right-of-way line of Texas Avenue, to the point of beginning, said point being marked by a “X” etched in concrete at the east corner of this tract;

THENCE 36.53 feet along the arc of a curve to the right, having a radius of 35.00 feet, a central angle of 57 degrees 46 minutes 09 seconds, a chord bearing of South 57 minutes 19 seconds West, a chord length of 35.00 feet to a nail in pavement for a point of tangency of this curve;

THENCE South 43 degrees 37 minutes 07 seconds West, a distance of 110.00 feet to a point of curvature, a “X” etched in face of curb;

THENCE 15.71 feet, along the arc of a curve to the right, having a radius of 10.00 feet, a central angle of 90 degrees 00 minutes 00 seconds, a chord bearing a of South 88 degrees 37 minutes 07 seconds West, and a chord length of 14.14 feet to a “X” etched in the face of curb at the point of tangency of this curve;

THENCE North 46 degrees 22 minutes 53 seconds West, a distance of 134.00 feet to a nail in pavement set for the west corner of this tract;

THENCE North 43 degrees 37 minutes 07 seconds East, a distance of 151.00 feet to a 5/8 inch iron rod set at the north corner of this tract, on the southwest right-of-way line of Texas Avenue;

THENCE South 46 degrees 22 minutes 53 seconds East, a distance of 127.75 feet along said right-of-way line, to the Point of Beginning, and containing 0.4954 acres (21,581 square feet) of land.

TRACT 2:

A non-exclusive easement for the passage of pedestrians and the passage and parking of vehicles over and across the Common Area Parking, Walkway and Driveway areas of Replat of Kapchinski Hill, College Station, Texas, recorded on plat Volume 1600, Page 221 of the Official Records of Brazos County, Texas, as described in Article 2.1 of the Operation and Easement Agreement recorded in Volume 1309, Page 190 of the Official Records of Brazos County, Texas; and a non-ingress and egress of vehicles to and from Texas Avenue, to and from the tracts bordering, adjoining or being a part of said easement(s), as described in Article 2.2 of the Operation and Easement Agreement recorded in Volume 1309, Page 190 of the Official Records of Brazos County, Texas, and common drive way easements being more particularly described as follows:

Common Driveway Easement

Described as all that parcel of land being situated within the “Target Tract”, known as Lot Two (2) of the Replat of Kapchinski Hill plat Volume 1600, Page 221 of the Official Records of Brazos County, Texas, College Station, Brazos County, Texas, with easement boundaries further described as follows:

 

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BEGINNING at a point within the Texas Avenue right-of-way line with such point being the most easterly property corner of the “Pad Tract”,

THENCE South 49 degrees 48 minutes 34 seconds East, a distance of 75.50 feet along and on the Texas Avenue right-of-way line to an easement corner;

THENCE South 67 degrees 51 minutes 03 seconds West, a distance of 35.00 feet to an easement corner;

THENCE South 40 degrees 11 minutes 26 seconds West, a distance of 49.50 feet to an easement corner;

THENCE South 04 degrees 48 minutes 34 seconds East, a distance of 21.21 feet to an easement corner;

THENCE South 49 degrees 48 minutes 34 seconds East, a distance of 42.93 feet to intersection with the “Target Tract” property line for an easement corner;

THENCE South 45 degrees 01 minutes 04 seconds West, a distance of 26.80 feet along and on the property line to an easement corner;

THENCE North 49 degrees 48 minutes 34 seconds West, a distance of 59.18 feet to an easement corner;

THENCE South 85 degrees 11 minutes 26 seconds West, a distance of 9.90 feet to an easement corner;

THENCE South 40 degrees 11 minutes 26 seconds West, a distance of 47.00 feet to an easement corner;

THENCE North 49 degrees 48 minutes 34 seconds West, a distance of 176.50 feet to an easement corner;

THENCE North 40 degrees 11 minutes 26 seconds East, a distance of 25.20 feet to the most westerly property corner of the “Pad Tract” and an easement corner;

THENCE South 49 degrees 48 minutes 34 seconds East, a distance of 134.00 feet along and on the “Pad Tract” property line to a property corner and an easement corner;

THENCE North 85 degrees 11 minutes 26 seconds East, a distance of 14.14 feet along and on the “Pad Tract” property line chord to a property corner and an easement corner;

THENCE North 40 degrees 11 minutes 26 seconds East, a distance of 110.00 feet along and on the “Pad Tract” property line to property corner and an easement corner;

 

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THENCE North 12 degrees 31 minutes 49 seconds East, a distance of 35.00 feet along and on the “Pad Tract” property line chord to a property corner within The Texas Avenue right-of-way line with such point being the most easterly property corner of the “Pad Tract” and the Point of Beginning

Common Drive Easement

Described as all that parcel of land being situated along and either side of the common property line between the “Developer Tract” and the “Target Tract”, both of which are described as Lots One (1) and Two (2) in the Replat of Kapchinski Hill in College Station, plat Volume 1600, Page 221, of the Official Records of Brazos County, Texas, College Station, Brazos County, Texas, with easement boundaries further described as follows:

BEGINNING at a point within the southwest right-of-way line of Texas Avenue with such point being the intersection point of the common property line between the “Developer Tract” and the “Target Tract” of Kapchinski Hill;

THENCE South 49 degrees 48 minutes 34 seconds East, a distance of 47.50 feet along and on the right-of-way line to an easement corner;

THENCE South 85 degrees 48 minutes 34 seconds West, a distance of 35.36 feet to an intersection with the city building setback line, twenty-five (25) feet from the Texas Avenue right-of-way line, for an easement corner;

THENCE South 40 degrees 11 minutes 26 seconds West, a distance of 305.00 feet to an easement corner;

THENCE South 04 degrees 48 minutes 34 seconds East, a distance of 23.02 feet to an easement corner;

THENCE South 79 degrees 48 minutes 34 seconds East, a distance of 59.15 feet to an easement corner;

THENCE South 40 degrees 11 minutes 26 seconds West, a distance of 43.30 feet to a property corner;

THENCE South 40 degrees 11 minutes 26 seconds West, a distance of 307.13 feet along and a joint property line to a joint property corner;

THENCE North 39 degrees 28 minutes 57 seconds West, a distance of 26.41 feet along and on the west property line of the “Developer Tract” to an easement corner;

THENCE North 40 degrees 11 minutes 26 seconds East, a distance of 287.57 feet to an easement corner;

 

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THENCE North 04 degrees 48 minutes 34 seconds West, a distance of 21.21 feet to an easement corner located a distance of 20.00 feet from a 90.00 foot joint property line segment;

THENCE North 49 degrees 48 minutes 34 seconds West, a distance of 90.00 feet to an easement corner;

THENCE North 40 degrees 11 minutes 26 seconds East, a distance of 30.00 feet to an easement corner;

THENCE North 85 degrees 48 minutes 34 seconds East, a distance of 28.28 feet to an easement corner located 20.00 feet from a joint property line;

THENCE North 40 degrees 11 minutes 26 seconds East, a distance of 305.00 feet to an easement corner;

THENCE North 04 degrees 48 minutes 34 seconds West, a distance of 35.36 feet to an intersection with the Texas Avenue right-of-way line for an easement corner;

THENCE South 49 degrees 48 minutes 34 seconds East, a distance of 45.00 feet to the Point of Beginning.

SAVE AND EXCEPT:

Being 0.022 hectare (0.053) acre of land, in the C. Burnett League, Abstract No. 7, Brazos County, Texas, being part of and out of that certain 0.4954 acre tract of land, conveyed from Culpepper Realty Company to Outback Steakhouse of Florida, Inc., by deed dated June 17, 1993, and recorded in the Official Records of Brazos County, in Volume 1828, Page 164, and under Clerk’s File No. 524126, being all of Lot 3, Replat of Kapchinski Hill Subdivision, as shown on map thereof recorded in Volume 1600, Page 221, Official Records of Brazos County, Texas, said 0.022 hectare of land being more particularly described as follows:

COMMENCING at a P.K. nail set for the most westerly corner of said Lot 3 and an interior corner of Lot 2 of said subdivision, thence as follows:

North 43 degrees 37 minutes 07 seconds East, with a common line of said Lot 3 and Lot 2, of said Replat of Kapchinski Hill Subdivision, a distance of 41.241 meters (135.31 feet) to a 16mm (5/8 inch) iron rod with aluminum TXDOT disk set in the proposed southwesterly right of way line of BS 6-R (width varies), and being the POINT OF BEGINNING of the herein described parcel having surface coordinates of X=1085415.681 and Y=3112021.122 (all bearings and coordinates are based on the Texas State Plane Coordinate System, Central Zone, NAD 1927, coordinates are converted to metric and provided by TXDOT. All distances and coordinates shown are surface, and may be converted to grid by multiplying by a combined adjustment factor of 0.99988, having a station of 21+166.696, and an offset of 19.750 meters (64.80 feet) right of the proposed baseline of BS 6-R.

 

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1. THENCE, North 43 degrees 37 minutes 07 seconds East, with a common line of said Lot 2 and Lot 3, a distance of 4.784 meters (15.69 feet) to the existing southwesterly right of way line of BS 6-R, bases on a width of 130.480 meters (100 feet), a prescriptive road);

2. THENCE, South 46 degrees 22 minutes 53 seconds East, with the existing southwesterly right of way line of BS 6-R, a distance of 38.938 meters (127.75 feet) to a point of curvature;

3. THENCE, in a southerly direction, with a curve to the right, having a central angle of 56 degrees 17 minutes 29 seconds”, a radius of 10.668 meters (35.00 feet), and an arc length of 10.481 meters (34.39 feet), a chord bearing of South 18 degrees 14 minutes 06 seconds East, a distance of 10.065 meters (33.02 feet), to a P.K. nail set in the proposed southwesterly right of way line of BS 6-R, having a station of 21=214.509, and an offset of 19.750 meters (64.80 feet) right of the proposed baseline of BS 6-R;

4. THENCE, North 46 degrees 25 minutes 27 seconds West, with the said existing southwesterly right of way line of BS-6-R, a distance of 47.813 meters (156.86 feet) to the Point of Beginning and Containing 0.022 Hectare (0.053 acre) of land, more or less.

 

186.	FEE PARCEL DESCRIPTION: UNIT 4422

ALL THAT CERTAIN TWO TRACTS OF LAND, THE FIRST TRACT BEING LOT 1 BLOCK A, THE OUTBACK SUBDIVISION, A SUBDIVISION IN TRAVIS COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT THEREOF RECORDED IN VOLUME 93, PAGES 27 AND 28, PLAT RECORDS OF TRAVIS COUNTY, TEXAS, THE SECOND TRACT BEING A PORTION OF TRACT 2, PANNELL AND GAFFIELD SUBDIVISION, A SUBDIVISION IN TRAVIS COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT THEREOF, RECORDED IN VOLUME 12, PAGE 84, PLAT RECORDS OF TRAVIS COUNTY, TEXAS, SAID LOT 1 AND A PORTION OF TRACT 2 BEING COMBINED FOR THE PURPOSES OF THIS DESCRIPTION AND THE PERIMETER OF THE TWO TRACTS COMBINED IS MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:

BEGINNING at an iron pipe found at the West common corner of Tracts 1 and 2 of the above said Pannell and Gaffield Subdivision, said pipe is in the North line of Lot 2, Block A, of the above said the Outback Subdivision, said pipe is an ell corner of the herein described tract and is the PLACE OF BEGINNING hereof;

THENCE over and across the above said Tract 2, N 52° 52’ 41” W, 99.91 ft. to an iron rod set in the Northwest line of Tract 2, same being the Southeast line of the Amended Plat of Lots A, B and C, Duval Oaks Subdivision, a Subdivision in Travis County, Texas, according to the Map or Plat thereof recorded in Volume 89, Page 189, Plat Records of Travis County, Texas, said rod is the Northwest corner hereof;

THENCE along the dividing line of the said Pannell and Gaffield Subdivision, and the Amended Plat of Lots A, B and C, Duval Oaks Subdivision, (herein after referred to as Duval Oaks) N 37° 07’ 21” E, 321.30 ft. to an iron pipe found at the Southeast corner of Lot A of said Duval Oaks, said pipe is in the South line of Lot 1, Block A, of the Jack Izard Subdivision, a Subdivision in Travis County, Texas, according to the Map or Plat thereof recorded in Book 93 Pages 3 and 4, of the Plat Records of Travis County, Texas, said pipe is in the Northeast corner hereof;

 

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THENCE along the South line of said Lot 1, Block A, Jack Izard Subdivision, the following two calls:

1.) S 62° 43’ 23” E, 101.31 ft. to an iron rod found;

2.) N 53° 46’ 09” E, 16.16 ft. to an iron rod found at the Northeast corner of the above said Lot 1 Block A, the Outback Subdivision, said rod is in the West margin of Research Boulevard, and is the most Easterly Northeast corner hereof;

THENCE along the East line of said Lot 1, same being the West margin of Research Boulevard S 10° 34’ 24” E, 399.80 ft. to an iron rod found at the common East corner of Lots 1 and 2, Block A, The Outback Subdivision for the Southeast corner hereof;

THENCE along the dividing line of said Lots 1 and 2, Block A, The Outback Subdivision, the following four calls:

1.) N 27° 06’ 06” W, 87.48 ft. to an “X” engraved into concrete;

2.) S 79° 26’ 58” W, 258.29 ft. to a nail set;

3.) S 10° 32’ 56” E, 20.00 ft. to a nail set;

4.) S 79° 27’ 04” W, 65.29 ft. to a nail set at the common West corner of said Lots 1 and 2, said nail is in the East margin of Jollyville Road, and is the Southwest corner hereof;

THENCE along the West line of said Lot 1 same being the East margin of Jollyville Road, along a curve to the left, which has a radius of 1005.52 ft., an arc distance of 20.92 ft. the chord of which bears N 24° 41’ 56” W, 20.91 ft. to an iron rod set at the common West corner of said Lot 1 and said Tract 1 of the Pannell and Gaffield Subdivision, said rod is an ell corner hereof;

THENCE along the dividing line of the above said Lot 1 and Tract 1, N 37° 10’ 08” E, 119.75 ft. to the PLACE OF BEGINNING and containing 2.118 acres (or 92,260 square feet) of land, more or less.

 

187.	FEE PARCEL DESCRIPTION: UNIT 4423

Tract 1: A 1.572 acre tract of land in the City of San Antonio, Bexar County, Texas, being a portion of Lot 15, New City Block 14857, I-10 NORTH OUTBACK STEAKHOUSE SUBDIVISION, as shown by plat recorded in Volume 9531, Page 52, Deed and Plat Records, Bexar County, Texas, being more particularly described as follows:

BEGINNING at a 1/2” iron rod found on the east right of way line of Interstate Highway 10, at the northwest corner of said Lot 15 for the northwest corner of this tract, same being at the southwest corner of a 4.107 acre tract, conveyed unto Weingarten Realty Investors by special warranty deed recorded in Volume 10335, Page 2063, Bexar County Real Property Records.

 

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THENCE, North 75° 13’ 20” East, (bearing basis from Volume 9531, Page 52) 439.92 feet (cited on plat as 440.00 feet) to a mag nail set in he side of a curb at the northeast corner of said Lot 15 for the northeast corner of this tract same being on the northwest line of the remainder of a 34.299 acre tract described in Volume 10335, page 2040, said Real Property Records.

THENCE, along the west line of said 34.299 acre tract and with the east line of said Lot 15, South 19° 45’ 24” East, 136.13 feet (cited on plat as South 19° 51’ 55” East, 136.19 feet) to a 1/2 “ iron rod found at the southeast corner of this tract, same being the northeast corner of a 1.617 acre tract conveyed unto Outback/Carrabba, Inc. by special warranty deed, executed July 20, 1994 and recorded in Volume 6177, Page 1467, said Real Property Records.

THENCE, across said Lot 15, South 70° 08’ 05” West, 440.15 feet (cited on said plat as 440.42 feet) to a point from which a 1/2” iron rod found bears North 81° 28’ 29” West, 0.41 feet, on said east right of way line of Interstate Highway 10, at the southwest corner of this tract, same being the northwest corner of said 1.617 acre tract and being on a curve whose radius point bears North 69° 59’ 11” East, 5.729.65 feet.

THENCE, Northerly, along said east right of way line and with the arc of said curve, having a chord bearing and distance of North 19° 08’ 16” West, 175.16 feet, through a central angle of 01° 45’ 06”, an arc distance of 175.16 feet (cited on said plat as 175.23 feet ) to the POINT OF BEGINNING.

CONTAINING in all 1.572 acres or 68,453 square feet of land, more or less.

TRACT 2:

EASEMENT ESTATE as created in Special Warranty Deed dated July 19, 1994, executed by Fiesta Trails Limited Partnership to Outback Steakhouse of Florida, Inc., recorded in Volume 6141, Page 1069, refiled in Volume 6177, Page 1480, Bexar County Real Property Records.

 

188.	FEE PARCEL DESCRIPTION: UNIT 4424

BEING a 1.6363 acres (71,278 square feet) tract or parcel of land situated in the David Brown Survey, Abstract No. 5, Jefferson County, Texas and being out of and part of that certain 3.70 acre tract conveyed by Deed from The Malja Corporation to Victor J. Patrizi, dated December 17, 1974 and recorded in Volume 1865, Page 50 of the Deed Records of Jefferson County, Texas, said 1.6363 acre tract also being the same property as conveyed by Allstatr Inns Operating, L.P., a Delaware Limited Partnership, to John Calvin Modica, dated October 12, 1992, and recorded in Film Code No. 104-48-0794 of the Official Public Records of Jefferson County, Texas, said 1.6363 acre tract being more particularly described by metes and bounds as follows:

BEGINNING at a 5/8 inch iron rod found for the southeasterly right-of-way line of the relocated Hillebrandt Bayou (a 200 foot right-of-way), and the most westerly corner of said 3.70 acre tract;

 

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THENCE North 41 degrees 37 minutes 00 seconds East (called North 41 degrees 37 minutes 14 seconds East) along and with the southeasterly right-of-way line of the relocated Hillebrandt Bayou and the northwesterly line of said 3.70 acre tract for a distance of 263.07 feet (called 263.02 feet) to a set nail in asphalt for corner;

THENCE South 48 degrees 22 minutes 23 seconds East (called South 48 degrees 21 minutes 05 seconds East) for a distance of 286.77 feet (called 286.78 feet) to a 5/8 inch iron rod found for corner in the northwesterly right-of-way line of Interstate Highway 10 and the southeasterly line of said 3.70 acre tract;

THENCE South 48 degrees 33 minutes 00 seconds West (called South 48 degrees 31 minutes 43 seconds West) along and with the northwesterly right-of-way line of Interstate Highway 10 and the southeasterly line of said 3.70 acre tract for a distance of 265.36 feet (called 265.31 feet) to a Texas Department of Transportation concrete marker found for corner, same being the most southerly corner of said 3.70 acre tract;

THENCE North 48 degrees 17 minutes 32 seconds West (called North 48 degrees 15 minutes 54 seconds West) along and with the southwesterly line of said 3.70 acre tract for a distance of 254.74 feet (called 254.87 feet) to the Point of Beginning, and Containing 1.6363 acres (71,278 square feet) of land, more or less.

 

189.	FEE PARCEL DESCRIPTION: UNIT 4426

A 1.435 acre tract situated in the corporate limits of the City of San Antonio, Bexar County, Texas and being all of Lot 2, Block 1, New City Block 14347, SAN ANTONIO / 410, as shown by plat recorded in Volume 9533, Page 102, Bexar County Deed and Plat Records.

 

190.	FEE PARCEL DESCRIPTION: UNIT 4429

Tract 1:

Lot 1B, REPLAT OF LOT 1 OF TANGER FACTORY OUTLET, a subdivision in Hays County, Texas, according to the map or plat thereof recorded in Volume 8, Page 105-106, Plat Records of Hays County, Texas.

Tract 2:

Easement rights as created in Declaration and Agreement dated March 30, 1998, executed by Tanger Properties Limited Partnership to Outback Steakhouse of Florida, Inc., recorded in Volume 1398, Page 323, Official Public Records of Hays County, Texas.

 

191.	FEE PARCEL DESCRIPTION: UNIT 4454

TRACT I: FEE SIMPLE

BEING Lot 2G, Block B, TOWN CROSSING ADDITION, an addition to the City of Mesquite, DALLAS County, Texas, according to the plat thereof recorded under CC# 201000058743, Real Property Records, Dallas County, Texas, SAVE AND EXCEPT all that portion of Lot “2G” conveyed by deed dated January 6, 2007, filed April 27, 2007, executed by Outback Steakhouse of Florida, Inc. to the State of Texas, as recorded under CC# 20070151197, Real Property Records, Dallas County, Texas.

 

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TRACT II: EASEMENT ESTATE

Easements and appurtenant rights created in Collateral Agreement executed by and between Majestic Joint Venture IX and Flagship, Inc., dated as of November 28, 1983, filed for record on February 3, 1984 and recorded in Volume 84024, Page 0288, Deed Records, Dallas County, Texas.

TRACT III: EASEMENT ESTATE

Easements and appurtenant rights created in Collateral Agreement executed by and between Majestic Joint Venture IX and Steak & Ale of Texas, Inc., dated as of July 12, 1983, filed for record on September 21, 1983 and recorded in Volume 83186, Page 5641, Deed Records, Dallas County, Texas.

 

192.	FEE PARCEL DESCRIPTION: UNIT 4455

Tract 1

Lot 1, Block 1, The Crossroads of D.F.W., an Addition to the City of Grapevine, Tarrant County, Texas, according to plat recorded in Cabinet A, Slide 1142, Deed Records of Tarrant County, Texas.

Tract 2

Non exclusive easement for pedestrian and vehicular access as crested in Mutual Access Easement by and between James F. Mason Trustee and Outback Steakhouse of Florida Intl. recorded in Volume 10782, Page 459, Deed Records, Tarrant County, Texas.

 

193.	FEE PARCEL DESCRIPTION: UNIT 4456

TRACT 1:

A tract of land being a part of Lot 1, Block C/8408, of HIGH POINT CENTER III, an addition to the City of Dallas, Dallas County, Texas, according to the map or plat filed for record in Volume 93061, Page 126, of the Plat Records of Dallas County, Texas. SAVE AND EXCEPT a 0.0771 acre tract of land acquired by the State of Texas for Interstate Highway No. 635 as described in RELEASE AND DISCHARGE OF LIS PENDENS as recorded in County Clerk’s File No. 20070092033 being more particularly described as follows:

BEGINNING at the most westerly corner of said Lot 1, said point being a set mag nail with RPLS 5735TX tag;

 

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THENCE North 40°35’00” East, along the northwesterly line of said Lot 1, a distance of 339.55 feet to a found TXDOT brass cap, said point being on the southwesterly line of the area conveyed to the State of Texas in RELEASE AND DISCHARGE OF LIS PENDENS recorded in County Clerk’s File No. 20070092033;

THENCE along the said south line the following two calls:

1) South 60°49’22” East a distance of 1.43 feet to a set 1/2” iron pin with RPLS 5735TX cap;

2) South 57°15’15” East a distance of 162.15 feet to a found TXDOT brass cap being on the east line of said Lot 1;

THENCE South 40°35’00” West, along the southeasterly line of said Lot 1, a distance of 359.45 feet to a set 1/2” iron pin with RPLS 5735TX cap, said point being the most southerly corner of said Lot 1;

THENCE North 50°18’00” West, along the southwesterly line of said Lot 1 and the northeasterly right of way line of Vantage Point Drive, a distance of 162.06 feet to the POINT OF BEGINNING.

Said described tract of land contains 56,639 square feet or 1.3003 acres more or less.

TRACT 2: ( Easement Estate)

Easement Rights as created in ACCESS EASEMENT AGREEMENT filed for record in Volume 92229, Page 3230, of the County Clerk’s Official Records of Dallas County, Texas.

 

194.	FEE PARCEL DESCRIPTION: UNIT 4457

TRACT 1 (FEE SIMPLE)

LOT 3R, BLOCK 1 OF RESTAURANTS OF SPRING CREEK ADDITION, an addition to the City of Plano, Collin County, Texas, according to the plat thereof recorded in Cabinet H, Page 584, Land Records, Collin County, Texas.

TRACT 2 (EASEMENT ESTATE)

THAT area crosshatched on “Exhibit C” of that certain Declaration of Non-Exclusive Easement for Ingress and Egress executed by Land Owners, L.P., dated May 28, 1992, filed for record June 2, 1992 and recorded under Clerk’s File No. 92-0036320, Land Records, Collin County, Texas; SAVE AND EXCEPT that portion located within the boundaries of Tract 1 above.

 

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TRACT 3 (EASEMENT ESTATE)

Sign Easement created in Declaration of Sign Easement, Construction and Joint Maintenance Plan executed by and between Land Owners, L.P. and future owners, dated May 29, 1992, filed for record on June 2, 1992 and recorded under Clerk’s File No. 92-0036319, Land Records, Collin County, Texas.

TRACT 4 (EASEMENT ESTATE)

Sight Easement granted by Land Owners, LA’. to Outback Steakhouse of Florida, lnc., dated January 21, 1993, filed for record on February 16, 1003 and recorded under Clerk’s File No. 93-0011312, Land Records, Collin County, Texas.

 

195.	FEE PARCEL DESCRIPTION: UNIT 4458

TRACT 1:

Lot 1 of ADDISON ROAD—QUORUM ADDITION, an addition to the Town of Addison, Dallas County, Texas, according to the plat thereof recorded in Volume 93041, Page 2824, Map Records, Dallas County, Texas.

TRACT 2:

Easement Interest over an adjacent 1,177 square foot tract of land created pursuant to that certain Easement dated March 5, 1993, recorded in Volume 93046, Page 1223, Deed Records of Dallas County, Texas, and

TRACT 3:

Mutual Access Easement over the adjacent 1.2007 acres as created pursuant to that certain Mutual Access Easement by and between International Guaranty Corporation and Outback Steakhouse of Florida, Inc., dated March 5, 1993, recorded in Volume 93055, Page 1864, Deed Records of Dallas, County, Texas.

 

196.	FEE PARCEL DESCRIPTION: UNIT 4459

TRACT 1:

BEING a tract of land situated in A. STEPHENS SURVEY, Abstract No. 1426 and J. W. LANE SURVEY, Abstract No. 950 and being all of Lot 2, Block A of the Parks Retail Center, an addition to the City of Arlington as recorded in Cabinet A, Slide 1410 of the Plat Records of Tarrant County, Texas (MRTCT) and being more particularly described as follows:

BEGINNING at a point found at the intersection of INTERSTATE HIGHWAY NO. 20 (ACCESS ROAD) (Variable width Right-of-Way) and a PRIVATE ACCESS ROAD;

 

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THENCE departing the northerly line of said INTERSTATE HIGHWAY NO. 20 and along the easterly line of said PRIVATE ACCESS ROAD as follows:

North 00 deg 03 min 44 sec West a distance of 71.50 feet to a 1/2 inch iron rod with red plastic capped stamped “W.A.I.” set for corner;

North 01 deg 10 min 03 sec West a distance of 56.87 feet to a 1/2 inch iron rod with red plastic capped stamped “W.A.I.” set for corner;

North a distance of 305.00 feet to a 1/2 inch iron rod with red plastic capped stamped “W.A.I.” set for the northwesterly corner of said Lot 2;

THENCE departing the easterly line of said PRIVATE ACCESS ROAD East a distance of 245.55 feet to a “X” found for the northeasterly corner of said Lot 2; said point being the northwesterly corner of Lot 3, Block A of the Parks Retail Center, an addition to the City of Arlington as recorded in Cabinet A, Slide 1410 of the Plat Records of Tarrant County, Texas (MRTCT);

THENCE along the westerly line of said Lot 3 as follows:

South 18 deg 20 min 14 sec West, a distance of 136.84 feet to a 1/2 inch iron rod with red plastic capped stamped “W.A.I.” set for corner;

South a distance of 57.05 feet to a 1/2 inch iron rod with red plastic capped stamped “W.A.I.” set for corner;

South 12 deg 33 min 00 sec East, a distance of 196.80 feet to a 1/2 inch iron rod with red plastic capped stamped “W.A.I.” set for corner, said point being in the northerly line of said INTERSTATE HIGHWAY 20;

THENCE along the northerly Right-of-Way line of said INTERSTATE HIGHWAY NO. 20 South 77 deg 27 min 00 sec West, a distance of 250.00 feet to the POINT OF BEGINNING.

Containing within these metes and bounds 2.068 acres or 90,086 square feet of land more or less.

TRACT 2:

Non-exclusive easements as created in Easement Agreement dated 18th Day June 1985 by and between The Craigievar Corporation Kelton-Dimension #1, C.I. Confirming and Franchising Limited, Highpoint Professional Building #1 Associates, Kelton-Mathus Development Corporation and The City of Arlington filed for record July 15, 1985 and recorded in Volume 8244, Page 704, Page 736, Page 768, and Page 800, Deed Records of Tarrant County, Texas.

TRACT 3:

Non-exclusive easement for ingress and egress as created by Reciprocal Agreement dated September 2, 1993, recorded in Volume 11221, Page 887, Deed Records, Tarrant County, Texas, in and to the land contained within that certain 32 feet access, drainage and utility easement area as shown on the plat of Parks Retail Center, an Addition to the City of Arlington, Texas, according to the plat recorded in Cabinet A, Slide 1410, Plat Records, Tarrant County, Texas.

 

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TRACT 4:

BEING a temporary non-exclusive easement for parking as created by Reciprocal Agreement dated September 2, 1993, recorded in Volume 11221, Page 887, Deed Records, Tarrant County Texas.

TRACT 5:

Non-exclusive easement estate dated December 3, 1986 by and between Homart Development Co. and Sears, Roebuck and Co. recorded in Volume 8866, Page 1411, Deed Records, Tarrant County, Texas.

 

197.	FEE PARCEL DESCRIPTION: UNIT 4461

TRACT 1:

BEING a tract of land situated in the JUAN ARMENDARIS SURVEY, Abstract No. 28, and LUC BURGEOIS Survey Denton County, Texas and being all of Lot 5A, of Block A of the VISTA RIDGE VILLAGE ADDITION LOTS 4, 5A, 5B and 5C, Block A Phases Two and Four, an addition to the City of Lewisville as recorded in Cabinet I, Slide 396 of the Plat Records of Denton County, Texas (PRDCT) and being more particularly described as follows:

BEGINNING at a 1/2 inch iron rod with a red plastic cap stamped W.A.I. set for the most northerly corner of Lot 5B, of said Block A; said point being in the southerly Right-of-Way line of INTERSTATE HIGHWAY NO. 35E FRONTAGE ROAD (variable width Right-of-Way);

THENCE departing the southerly Right-of-Way line of said INTERSTATE HIGHWAY NO. 35E and along the northwesterly line of said Lot 5B as follows:

South 42 deg 52 min 08 sec West a distance of 37.88 feet to a 1/2 inch iron rod with a red plastic cap stamped W.A.I. set for corner;

North 47 deg 09 min 19 sec West a distance of 4.39 feet to a 1/2 inch iron rod with a red plastic cap stamped W.A.I. set for corner;

South 42 deg 52 min 32 sec West a distance of 193.25 feet to a 1/2 inch iron rod with a red plastic cap stamped W.A.I. set for the westerly corner of said Lot 5B; said point being the beginning of a curve to the left having a radius of 377.50 feet, a chord bearing North 54 deg 52 min 40 sec West and a chord distance of 32.17 feet;

 

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THENCE departing the westerly line of said Lot 5B and along the northerly Right-of-Way line of OAKBEND DRIVE (variable width Right-of-Way line) as follows:

Continuing along said curve to the left through a central angle of 4° 53’ 03” for an arc length of 32.18 feet to a X found in concrete for the beginning of a curve to the right having a radius of 249.50 feet, a chord bearing North 53 deg 18 min 47 sec West and a chord distance of 34.86 feet;

THENCE along said curve to the right through a central angle of 8° 00’ 43” for an arc length of 34.89 feet to 5/8 inch iron rod found for the beginning of a curve to the left having a radius of 250.50 feet, a chord bearing North 54 deg 39 min 18 sec West and a chord distance of 46.70 feet;

THENCE along said curve to the left through a central angle of 10° 41’ 49” for an arc length of 46.77 feet to 5/8 inch iron rod found for corner;

THENCE North 60 deg 00 min 11 sec West a distance of 38.78 feet to a 5/8 inch iron rod found for the beginning of a curve to the right having a radius of 69.50 feet, a chord bearing North 39 deg 57 min 48 sec West and a chord distance of 47.63 feet;

THENCE along said curve to the left through a central angle of 40° 04’ 42” for an arc length of 48.62 feet to a 5/8 inch iron rod found for corner;

THENCE North 19 deg 55 min 27 sec West a distance of 24.47 feet to the beginning of a curve to the right having a radius of 24.50 feet, a chord bearing North 05 deg 59 min 45 sec west and a chord distance of 11.80 feet;

THENCE along said curve to the right through a central angle of 27° 52’ 09” for an arc length of 11.92 feet to a 1/2 inch iron rod with a red plastic cap stamped W.A.I. set for the beginning of a curve to the left having a radius of 600.00 feet, a chord bearing North 57 deg 32 min 03 sec East and a chord distance of 195.11 feet; said point being at the intersection of the northeasterly Right-of-Way line of OAKBEND DRIVE (variable width Right-of-Way) and southwesterly Right-of-Way line OAKBEND DRIVE (60’ Right-of-Way);

THENCE along the southwesterly Right-of-Way line of OAKBEND DRIVE (60’ Right-of-Way line) as follows;

THENCE along said curve to the left through a central angle of 18° 42’ 55” for an arc length of 195.98 feet to a 1/2 inch iron rod with a red plastic cap stamped W.A.I. set for corner;

North 48 deg 10 min 34 sec East a distance of 33.07 feet to a 1/2 inch iron rod with a red plastic cap stamped W.A.I. set for the beginning of a corner clip;

THENCE departing the southwesterly line of said OAKBEND DRIVE and along said corner clip South 89 deg 27 min 58 sec East a distance of 11.08 feet to a 1/2 inch iron rod with a red plastic cap stamped W.A.I. set for corner in the southeasterly line of said INTERSTATE HIGHWAY NO. 35E;

THENCE along the line of said INTERSTATE HIGHWAY NO. 35E South 47 deg 06 min 31 sec East a distance of 172.31 feet to the POINT OF BEGINNING;

 

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Containing within these metes and bounds 1.102 acres or 48,017 square feet, of land more or less.

TRACT 2: (EASEMENT)

NON-EXCLUSIVE easement as created in Operation and Easement Agreement dated May 12, 1993, by and between Dayton Hudson Corporation and Dal-Mac Vista Ridge, Inc., filed May 12, 1993 under cc# 93-R0029534 of the Real Property Records of Denton county, Texas, and First Amendment to Operation and Easement Agreement dated November 4, 1993, by and among Dayton Hudson Corporation, Dal-Mac Vista Ridge, Inc. and Circuit City Stores, Inc., filed November 8, 1993 recorded under cc# 93-R0079956 of the Real Property Records of Denton County, Texas

TRACT 3: (EASEMENT)

NON-EXCLUSIVE easement as created in Declaration of Easements and Restrictions dated December 22, 1993, by Dal-Mac Vista Ridge, Inc, filed December 30, 1993, recorded under cc# 93-R0094351, of the Real Property Records, Denton County, Texas.

 

198.	FEE PARCEL DESCRIPTION: UNIT 4462

TRACT ONE:

Being ALL OF LOT THREE (3), BLOCK TWENTY EIGHT (28), FINAL PLAT PLANTATION HILLS, SECTION 15, an addition to the City of Midland, Midland County, Texas, according to the map or plat thereof, recorded in Cabinet F, Page 57, Plat Records, Midland County, Texas.

TRACT TWO:

Reciprocal Easement dated April 4, 1994, executed by and between Office Depot, Inc., a Delaware corporation to Outback Steakhouse of Florida, Inc., a Florida Corporation recorded in Volume 1214, Page 418, Official Records, Midland County, Texas.

 

199.	FEE PARCEL DESCRIPTION: UNIT 4463

A 49,244 SQUARE FOOT TRACT OF LAND BEING A PORTION OF LOT 20-A, BLOCK 76, BELMAR ADDITION UNIT NO. 41, AN ADDITION TO THE CITY OF AMARILLO, POTTER COUNTY, TEXAS, AS FILED OF RECORD DECEMBER 17, 1979, IN VOLUME 1200, PAGE 945 OF THE POTTER COUNTY PLAT RECORDS. SAID TRACT OF LAND BEING OUT OF SECTION 27, BLOCK 9, BS&F SURVEY, AND BEING DESCRIBED BY METES AND BOUNDS AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 20-A, SAME BEING THE MOST NORTHERLY NORTHWEST CORNER OF LOT 21-A, BLOCK 76, BELMAR ADDITION UNIT NO. 41, ALSO BEING A POINT ON THE DIVISION LINE BETWEEN LOT 20A AND 21A OF THE AFORESAID PLAT WHERE SAID DIVISION LINE IS INTERSECTED BY THE SOUTHEASTERLY RIGHT OF WAY LINE OF INTERSTATE HIGHWAY NO. 40.

 

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THENCE S. 10° 58’ 34” E., 300.57 FEET ALONG THE EAST LINE OF SAID LOT 20-A. TO A 1/2” IRON ROD FOUND;

THENCE S. 82° 17’ 36” W., 123.50 FEET ALONG THE NORTH LINE OF A 40.0 FOOT PRIVATE INGRESS/EGRESS EASEMENT TO A 1/2” IRON ROD FOUND IN THE EAST RIGHT-OF-WAY LINE OF WALDORF DRIVE;

THENCE NORTHWESTERLY ALONG SAID EAST RIGHT-OF-WAY LINE OF WALDORF DRIVE ON A CURVE TO THE LEFT, SAID CURVE HAVING A CENTRAL ANGLE OF 16° 03’ 05” AND A RADIUS OF 490.02 FEET, AN ARC DISTANCE OF 137.28 FEET TO A POINT OF REVERSE CURVE;

THENCE CONTINUING ALONG THE EAST RIGHT-OF-WAY LINE OF WALDORF DRIVE ON A CURVE TO THE RIGHT, SAID CURVE HAVING A CENTRAL ANGLE OF 27° 45’ 16” AND A RADIUS OF 364.36 FEEL AN ARC DISTANCE OF 176.50 FEET;

THENCE N. 06° 43’ 00” W., 4.16 FEET TO A 1/2” IRON ROD FOUND AT THE INTERSECTION OF THE EAST RIGHT OF WAY LINE OF WALDORF DRIVE AND IN THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY NO. 40;

THENCE NORTHEASTERLY ALONG SAID SOUTH RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY NO. 40 ALONG A CURVE TO THE LEFT, SAID CURVE HAVING A CENTRAL ANGLE OF 1° 50’ 39” AND A RADIUS OF 5879.58 FEET, AN ARC DISTANCE OF 189.26 FEET TO THE POINT AND PLACE BEGINNING AN CONTAINING 49,244 SQUARE FEET OF LAND, MORE OR LESS.

 

200.	FEE PARCEL DESCRIPTION: UNIT 4464

Tract I:

Tract “G”, West Chase, an Addition to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof recorded in Volume 4564, Page 231 of the Real Property Records of Lubbock County, Texas.

Tract II:

A portion of Tract “H”, West Chase, an Addition to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof recorded in Volume 4810, Page 330, of the Real Property Records of Lubbock County, Texas, said portion of Tract “H” being described as follows:

 

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BEGINNING at a point in the South line of a 1.380 acre tract surveyed by Hugo Reed and Associates, Inc. March 15, 1994 from which a 1/2” rod set with cap for the Southwest corner of said 1.380 acre tract bears West 106.00 feet, said beginning point bears N 00° 02’ 46” E, 3097.43 feet and S 89° 58’ 50” E, 1449.02 feet from the Southwest corner of Section 11, Block E-2, Lubbock County, Texas;

THENCE East, along the South line of said 1.380 acre tract, a distance of 109.00 feet to a 1/2” rod set with cap for the Southeast corner of said 1.380 acre tract;

THENCE North, along the East line of said 1.380 acre tract, a distance of 58.71 feet;

THENCE East a distance of 42.00 feet;

THENCE South a distance of 100.71 feet;

THENCE West a distance of 109.00 feet;

THENCE South a distance of 76.00 feet;

THENCE West a distance of 42.00 feet;

THENCE North a distance of 118.00 feet to the Point of Beginning.

 

201.	FEE PARCEL DESCRIPTION: UNIT 4466

TRACT 1

LOT 1, BLOCK A, OUTBACK STEAKHOUSE NO. 1 ADDITION, an addition to the City of Denton, Denton County, Texas, according to the plat recorded in Cabinet L, Page 153, Plat Records, Denton County, Texas.

TRACT 2 (EASEMENT ESTATE)

Easements together with appurtenant rights created in Mutual Access Easement Agreement, executed by Quinn Harris Investment Company, Inc. to Outback Steakhouse of Florida, Inc., a Florida corporation, dated June 14, 1995, filed for record on June 14, 1995 and recorded in under Clerk’s File No. 95-R0034762, Real Property Records, Denton County, Texas, and being described as follows:

BEING a tract of land situated in the Alexander Hill Survey, Abstract No. 623, in the City of Denton, Denton County, Texas, and being more particularly described by metes and bounds as follows:

COMMENCING at a 1/2” iron rod found for corner in the Southerly line of Interstate Highway No. 35E at the intersection of the Easterly line of Sam Bass Boulevard (at the Easterly end of a corner radius clip);

 

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THENCE South 76° 36’ 00” East along the said Southerly line of Interstate Highway No. 35E for a distance of 197.28 feet to a 1/2” iron rod set for corner at the POINT OF BEGINNING; same point being the Northeast corner of Lot 1, Block A of Outback Steakhouse No. 1 Addition;

THENCE South 76° 36’ 00” East continuing along the said Southerly line of Interstate Highway No. 35E for a distance of 35.00 feet to a point for corner;

THENCE South 13° 24’ 00” West departing the said Southerly line of Interstate Highway No. 35E for a distance of 84.50 feet to a point for corner;

THENCE North 76° 36’ 00” West for a distance of 35.00 feet to a point for corner in the East line of said Lot 1;

THENCE North 13° 24’ 00” East along the said East line of Lot 1 for a distance of 84.50 feet to the POINT OF BEGINNING.

 

202.	FEE PARCEL DESCRIPTION: UNIT 4467

TRACT ONE:

Lot 1, Block 1, REPLAT of Lot 1, Block 1 Ciudad Fuerte Unit 2, situated in the P.P. Rains Survey, A-258, City of Longview, Gregg County, Texas, as shown on plat recorded in Volume 2861, Page 265, Public Official Records, Gregg County, Texas.

TRACT TWO:

Easements as granted in Modification to Cross-Access Agreement and Additional Easement Agreement dated July 14, 1995, between Wal-Mart Stores, Inc., John N. Thomas, Trustee and Outback Steakhouse of Florida, Inc. filed in Volume 2844, Page 64, Public Official Records, Gregg County, Texas, granting easements over the following two tracts of land:

EASEMENT TRACT A:

Being 0.721 acre, more or less, of land in the P.P. RAINS SURVEY, A-258, Gregg County, Texas said 0.721 acre being a part of LOT 3 and LOT 4, BLOCK 1, CIUDAD FUERTE UNIT 2, a subdivision of Longview, Gregg County, Texas, recorded in Volume 2592, Page 627, Deed Records, Gregg County, Texas, said 0.721 acre being more particularly described as follows:

COMMENCING at a 1/2 inch iron rod for the most southern Southwest corner of above mentioned lot 3 of Ciudad Fuerte Unit 2, subdivision, same being the South East corner of Lot 2 of said subdivision, said point also being on the North right-of-way (ROW) line of State Highway Loop No. 281;

 

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THENCE along said Loop 281 North ROW line, same being the South boundary line of said Lot 3, S 66 deg. 38’ 40” E, 10.50 feet to the most southerly southwest corner of the herein described 0.721 acre tract;

THENCE N 23 deg. 21’ 20” E, 194.50 feet to the beginning of a curve to the left;

THENCE 31.42 feet along said curve, said curve having a delta of 90 deg. 00’ 00”, radius of 20.00 feet, and chord N 21 deg. 38’ 40” W, 28.28 feet;

THENCE N 66 deg. 38’ 40” W, 202.95 feet to a point for corner;

THENCE N 05 deg. 18’ 33” E, 47.33 feet to a point for corner;

THENCE N 00 deg. 25’ 33” W, 306.47 feet to the beginning of a curve to the left;

THENCE 23.97 feet along said curve, said curve having a delta of 105 deg. 35’ 30”, radius of 13.00 feet, a chord N 51 deg. 31’ 13” W, 20.72 feet;

THENCE S 75 deg. 41’ 02” W, 127.89 feet to the beginning of a curve to the right;

THENCE 8.26 feet along said curve, said curve having a delta of 15 deg. 46’ 27”, radius of 30.00 feet, a chord S 83 deg. 34’ 16” W, 8.23 feet to the beginning of a curve to the left;

THENCE 19.54 feet along said curve, said curve having a delta of 37 deg. 19’ 20”, radius of 30.00 feet, a chord S 72 deg. 47’ 49” W, 19.20 feet to a point in the West boundary line of said Lot 3 of Ciudad Fuerte Unit 2, said point also being on the east ROW line of Fourth Street;

THENCE along said east ROW line of Fourth Street, same being the west boundary line of said Lot 3, N 00 deg. 00’ W, 18.92 feet to the north west corner of Lot 3, same being the south west corner of said Lot 4, and continuing for a total of 49.00 feet to a point for the beginning of a curve to the left;

THENCE 26.08 feet along said curve, said curve having a delta of 49 deg. 48’ 52”, radius of 30.00 feet, and chord S 79 deg. 24’ 32” E, 25.27 feet;

THENCE N 75 deg. 41’ 02” E, 75.50 feet to a point in the west boundary line of said Lot 3 and continuing for a total distance of 178.91 feet to a point for corner;

THENCE S 00 deg. 25’ 33” E, 384.80 feet to the beginning of a curve to the left;

THENCE 34.67 feet along said curve, said curve having a delta of 66 deg. 13’ 07”, radius of 30.00 feet, and chord S 33 deg. 32’ 06” E, 32.77 feet;

THENCE S 66 deg. 38’ 40” E, 200.71 feet to a point for corner;

 

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THENCE S 23 deg. 21’ 20” W, 240.50 feet to a point in the south boundary line of said Lot 3, same being the north ROW line of said State Highway Loop No. 281;

THENCE with said ROW line and said south boundary line of said Lot 3 N 66 deg. 38’ 40” W, 26.00 feet to the PLACE OF BEGINNING and containing 0.721 acre of land, more or less.

EASEMENT TRACT B:

BEING a portion LOT 2, in BLOCK 1 of CIUDAD FUERTE UNIT 2, an Addition to the City of Longview, Gregg County, Texas, according to the Amended Plat dated July 6, 1994, and recorded in Volume 2705, Page 454, of the Public Official Records of Gregg County, Texas, and being more particularly described by metes and bounds as follows:

BEGINNING at a point for corner at the Northwest corner of the above mentioned Lot 2, same point being the Northeast corner of Lot 1, Block 1 of CIUDAD FUERTE UNIT 2;

THENCE South 66 degrees 38 minutes 40 seconds East along the Northeasterly line of said Lot 2 for a distance of 18.00 feet to a point for corner;

THENCE South 23 degrees 24 minutes 13 seconds West for a distance of 157.88 feet to a point for corner;

THENCE North 66 degrees 38 minutes 40 seconds West for a distance of 17.87 feet to a point for corner in the common lot line of said Lots 1 and 2;

THENCE North 23 degrees 21 minutes 20 seconds East along said common line of Lots 1 and 2 for a distance of 157.88 feet to the POINT OF BEGINNING, CONTAINING 2,831 square feet of land, more or less.

 

203.	FEE PARCEL DESCRIPTION: UNIT 4468

TRACT 1:

Lot Two (2), Block One (1) FRANKLIN VILLAGE ADDITION, to the City of Waco, McLennan County, Texas, (being a resubdivision of a portion of Tract No. 76 West Waco Industrial District, Part One of record in Volume 517, Page 75 and a portion of Tract A, West Waco Industrial District, Part Two of record in Volume 786, Page 588 of the McLennan County, Texas, Deed Records) according to the Final Plat of said Addition recorded in Volume 33, Page 812 of the Official Public Records of McLennan County, Texas.

TRACT 2:

Reciprocal Easements rights as created in Reciprocal Easement and Operation Agreement recorded in Volume 18, Page 46 of the Official Public Records of McLennan County, Texas.

 

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204.	FEE PARCEL DESCRIPTION: UNIT 4469

Lot Two (2), in Block One (1), of Anthony Addition, Being a Replat of Lot 1, Block 2, Fox Creek Commercial, Phase One, in the City of Killeen, Bell County, Texas, according to the plat of record in Cabinet C, Slide 153-D, Plat Records of Bell County, Texas.

 

205.	FEE PARCEL DESCRIPTION: UNIT 4470

PARCEL 1:

A portion of Lot 1, Block 337, VISTA DEL SOL UNIT SIXTY NINE REPLAT E, an addition to the City of El Paso, El Paso County, Texas, according to the plat thereof on file in Volume 71, Pages 70 and 70A, Real Property Records, El Paso County, Texas, said portion being more particularly described as follows:

Being a 1.144 acre tract of land being a portion of Lot 1, Block 337, Vista Del Sol, Unit Sixty-Nine, Replat “E”, City of El Paso, El Paso County, Texas recorded in Volume 3478, Page 75, Real Property Records, El Paso County, Texas, and being more particularly described as follows:

Beginning at a point found at the easterly property corner of herein described tract from which a city monument at the intersection of Rojas Drive and Trudy Elaine Drive bears north 46° 31’ 49” for a distance of 1,335.89 feet;

THENCE South 48° 24’ 59” West for a distance of 238.14 feet to a point;

THENCE North 41° 35’ 091” West for a distance of 209.33 feet to an “X” found in concrete;

THENCE North 48° 24’ 59” East for a distance of 238.14 feet to a 1/2-inch iron rod found;

THENCE South 41° 35’ 01” East for a distance of 209.33 feet to the POINT OF BEGINNING; said property contains 49,850 square feet or 1.144 acres, more or less.

PARCEL 2:

Easement rights as created by unrecorded Agreement between the EL PASO ELECTRIC COMPANY and FRED HERVEY dated 5/21/70, further assigned to successors in title, last being conveyed by DE LA VEGA CORPORATION to OUTBACK STEAKHOUSE OF FLORIDA, INC, in Volume 3478, Page 81, Real Property Records, El Paso County, Texas.

PARCEL 3:

Easement rights as created by Reciprocal Easement Agreement dated 10-15-86, by and between A.D.D. HOLDINGS, L.P., a Texas limited partnership, as Developer and CINEMARK USA, INC., a Texas corporation, in Volume 3122, Page 12, Real Property Records, El Paso County, Texas.

 

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PARCEL 4:

Easement rights as created by Easement Agreement by and between A.D.D. HOLDINGS, L.P., a Texas limited partnership, and OUTBACK STEAKHOUSE of FLORIDA, INC., a Florida corporation, in Volume 3478, Page 86, Real Property Records, El Paso County, Texas.

 

206.	FEE PARCEL DESCRIPTION: UNIT 4473

Tract 1:

Lot 5, Block 1, Section 2B, Rowyer Subdivision to the City of San Angelo, Tom Green County, Texas, according to the map or plat of said subdivision of record in Plat Cabinet “E” at Slide #150 of the records of Tom Green County, Texas.

Tract 2:

Easement rights as set out in Reciprocal Parking and Operating Agreement between Best-Star Development Partners, L.P., a limited partnership, and Outback Steakhouse of Florida, Inc., a Florida corporation as described and recorded in Volume 687, Page 362 and in Volume 691, Page 110, of the Official Public Records of Real Property of Tom Green County.

 

207.	FEE PARCEL DESCRIPTION: UNIT 4474

Tract One:

Lot 402, a Replat of part of Lot 102, a Replat of Lots 1 and 2, Block D, Section 1, CURRY PARK ADDITION to the City of Abilene, Taylor County, Texas, according to the map or plat thereof recorded in Cabinet 3, Slide 27, Plat Records of Taylor County, Texas.

Tract Two:

BEING a portion of Lot 102, Block D, of a Replat of Lots 1 and 2,Block D, Section 1, CURRY PARK ADDITION, an addition to the City of Abilene, Taylor County, Texas, according to the plat recorded in Cabinet 1, Slide 247, Plat Records of Taylor County, Texas;

BEGINNING at a point for corner at the Southwest corner of Lot 402, Block D of Lot 402, a Replat of a portion of Lot 102, a replat of Lots 1 and 2, Block D, Section 1, CURRY PARK ADDITION, an addition to the City of Abilene, Taylor County, Texas, according to the plat recorded in Cabinet 3, Slide 27, Plat Records of Taylor County, Texas;

THENCE South 89 degrees 40 minutes 35 seconds West for a distance of 91.00 feet to a 1/2 inch iron rod set for corner in the East line of Lot 201, Block D, of a Replat of Lot 101 and a portion of Lot 102, a replat of Lots 1 and 2, Block D, Section 1, CURRY PARK ADDITION, an addition to the City of Abilene, Taylor County, Texas according to the plat recorded in Cabinet 3, Slide 162 of the Plat Records of Taylor County, Texas;

THENCE North 00 degrees 19 minutes 25 seconds West along the said East line of said Lot 201, Block D for a distance of 205.00 feet to a “X” cut found for corner, same point being an interior corner of said Lot 201;

 

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THENCE North 89 degrees 40 minutes 35 seconds East along the South line of said Lot 201, for a distance of 91.00 feet to a point for corner, same point being the Northwest corner of said Lot 402;

THENCE South 00 degrees 19 minutes 25 seconds East along the West line of said Lot 402 for a distance of 205.00 feet to the POINT OF BEGINNING, containing 18,655 square feet or 0.4283 acres of land, more or less.

 

208.	FEE PARCEL DESCRIPTION: UNIT 4475

Being Lot 1A, of Replat of Tract One of DeSoto Plaza, an addition to the City of DeSoto, Dallas County, Texas, according to the Map thereof recorded in Volume 94135, Page 1402, Map Records, Dallas County, Texas.

 

209.	FEE PARCEL DESCRIPTION: UNIT 4476

TRACT 1: FEE SIMPLE

Lot 2, Block 1, of REPLAT OF LOT 1, BLOCK 1, BRAND/190 ADDITION, an addition to the City of Garland, DALLAS County, Texas, according to the map or plat filed in Volume 2001025, Page 6, of the Plat Records of Dallas County, Texas.

TRACT 2: EASEMENT ESTATE

Easements and all appurtenant rights thereto as created in Declaration of Easements, Covenants and Restrictions as recorded in Volume 2001025, Page 459, and amended in Volume 2003207, Page 232, Real Property Records, Dallas County, Texas.

TRACT 3: EASEMENT ESTATE

Easements and all appurtenant rights as created in Use Restrictions and Access Easement Declaration as recorded in Volume 2003207, Page 245, Real Property Records, Dallas County, Texas.

 

210.	FEE PARCEL DESCRIPTION: UNIT 4478

Lot 3, Block 1, PACE-ALSBURY VILLAGE, an Addition to the City of Fort Worth, Tarrant County, Texas, according to plat recorded in Cabinet A, Slide 6859, Deed Records of Tarrant County, Texas.

 

211.	FEE PARCEL DESCRIPTION: UNIT 4510

Parcel 8, HIGH POINT SHOPPING CENTER, according to the Official Plat thereof, recorded February 3, 1994 as Entry No. 5730624 in Book 94-2 at Page 32 in the office of the County Recorder of Salt Lake County.

 

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Together with the non-exclusive easements as described in the following documents:

a. Covenants, Conditions, Restrictions and/or Easements and the terms, conditions and limitations contained therein in instrument:

Dated:             June 25, 1991

Recorded:       July 3, 1991

Entry No:        5093223

Book/Page:    6334/65

Said Declaration was re-recorded on September 20, 1991, as Entry No. 5128886, in Book 6358, at Page 14 of Official Records.

b. Amendment to said Covenants:

Dated:             September 10, 1992

Recorded:       September 22, 1992

Entry No.:       5336121

Book/Page:     6522/1285

c. Amendment to said Covenants:

Dated:             October 2, 1992

Recorded:       October 16, 1992

Entry No.:       5352943

Book/Page:     6537/898

d. Amendment to said Covenants:

Dated:             September 10, 1992

Recorded:       May 17, 1993

Entry No.:       5504282

Book/Page:     666312588

e. Declaration of Restrictions and Grant of Easements and the terms, conditions and limitations contained therein in instrument:

Recorded:         September 22, 1992

Entry No.:         5336122

Book/Page:       652211305

 

212.	FEE PARCEL DESCRIPTION: UNIT 4511

Lot 203, WOODLAND PARK COMMERCIAL SUBDIVISION PHASE II, in Layton City, Davis County, Utah, according to the Official Plat thereof recorded October 12, 1995 as Entry No. 1204917 in Book 1925 at Page 1084 of Official Records.

Together with a non-exclusive 26 foot Access Easement described as follows:

A part of the Northwest Quarter of Section 17, Township 4 North, Range 1 West, Salt Lake Base and Meridian, U.S. Survey; BEGINNING at a point on the East line of Interstate 15 frontage road (1200 West Street), the Northwest corner of Lot 203 said point being 2,180.74 feet West

 

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and 1,125.13 feet North of the center of said Section 17 (basis of bearing: South 00°09’50” West from the center of Section 17, along the Quarter Section line to the South Quarter Corner); North 34°49’22” West 26.00 feet along the East line of said Street; thence North 55°10’38” East 223.66 feet; thence South 34°49’22” East 26.00 feet to the North corner of Lot 203; thence South 55°10’38” West 223.66 feet to the POINT OF BEGINNING.

 

213.	FEE PARCEL DESCRIPTION: UNIT 4716

All that certain lot, piece or parcel of land, lying and being in Henrico County, Virginia, containing 2.09 acres as more particularly shown on a plat of survey prepared by Charles C. Townes & Associates, P.C., entitled “PLAT OF 2.09 ACRES OF LAND SITUATED ON BROAD STREET ROAD – U.S. ROUTE #250, THREE CHOPT DISTRICT, HENRICO COUNTY, VIRGINIA FOR OUTBACK STEAKHOUSE, INC.” dated July 6, l993, last revised September 14, l993, a copy of which is attached to a deed recorded in Deed Book 2459, page 1988 among the Land Records of Henrico County, Virginia.

TOGETHER WITH perpetual, non –exclusive easements, for (i) access, (ii) parking and (iii) drainage on and across the adjoining property to the east (described as the “Retained Property”), all as more fully described as Parcel B, containing 0.367 acres in that certain Deed, Restrictive Covenants, Easements, Parking, Signage and Maintenance Agreement dated September 15, l993, between Southwest Investment Corporation and Outback Steakhouse of Florida, Inc., and recorded in the Clerk’s Office, Circuit Court, Henrico County, Virginia, in Deed Book 2459, page 1988.

TOGETHER WITH a permanent, non-exclusive sixteen (16) foot easement for drainage of surface and underground storm water and for the construction, maintenance, repair, replacement, use and operation of below-ground drainage facilities now or hereafter located within such sixteen (16) feet as more particularly described in that certain Deed of Bargain and Sale dated April 27, 1993, between Southeast Investment Corporation and Schall and Hutchings, Inc., recorded in the Clerk’s Office, Circuit Court, Henrico County, Virginia, in Deed Book 2425, page 2156 and more particularly shown as the “16’ Drainage Easement” on property designated as Parcel B on Exhibit B attached to the aforesaid deed recorded in Deed Book 2425, page 2156.

AND TOGETHER WITH perpetual, non-exclusive right, easement and privilege sixteen (16) feet in width for underground storm water service over and across a strip of land as more particularly shown and described in that certain Deed of Easement, Maintenance and Subordination Agreement from Pyramid Company, et al., dated September 13, l993, and recorded in the aforesaid Clerk’s Office in Deed Book 2459, page 2001, connecting to permanent non-exclusive Easement of right of way to construct, operate and maintain drainage facilities dedicated to the County of Henrico, Virginia, by Deed from the Southland Corporation dated December 4, l970, and duly recorded in the aforesaid clerk’s office in Deed Book 1440, page 550.

SUBJECT TO a perpetual non-exclusive right, easement and privilege reserved for the benefit of the Retained Property for parking and passage and use of driveways and passageways now or hereafter constructed on the land for vehicular and pedestrian ingress and egress between Broad Street and the Retained Property over that portion of the insured land described in Exhibit C to the Deed recorded in Deed Book 2459, page 1988.

 

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SUBJECT TO a reserved perpetual non-exclusive right, easement and privilege for the benefit of the Retained Property over, under and across the area designated as “Sanitary Sewer Easement within the Variable Width Parking Area” described in Exhibit C to the Deed recorded in Deed Book 2459, page 1988.

BEING the same property conveyed to Private Restaurant Properties, LLC, a Delaware limited liability company, by virtue of Deed Dated June 14, 2007, and recorded April 2, 2008, in Deed Book 4494 at page 329.

NOTE FOR INFORMATIONAL PURPOSES ONLY:

Tax Map No. 764-751-1479

 

214.	FEE PARCEL DESCRIPTION: UNIT 4724

All those certain tracts or parcels of land lying and being in the City of Harrisonburg, Virginia, more particularly described as Lots 1 and 2, each containing 1.000 acre, on the Final Plat Neff Properties, Section15, made by Copper & Smith, P.C., dated December 6, 1985, recorded in the Clerk’s Office of the Circuit Court of Rockingham County, Virginia in Deed Book 772, Page 462. The property herein is further described according to that certain plat entitled “Plat of Combined Lots 1 and 2, Neff Properties, Section 15”, dated June 25, 1998, made by David Lee Ingram, L.S., of record in Deed Book 1607, page 765.

BEING the same property conveyed to Private Restaurant Properties, LLC by deed dated June 14th, 2007 and recorded as Instrument No. 200800009892 or Deed Book 3295 at page 266 on April 3, 2008, in the Clerk’s office of the Circuit Court of Rockingham County, Virginia.

Tax Map No.: 79-E-7

 

215.	FEE PARCEL DESCRIPTION: UNIT 4728

All that certain lot, piece or parcel of land, lying, situate and being in the Matoaca District, Chesterfield County, Virginia, containing 2.128 acres or 92,677.5 square feet, more or less, as shown on a plat entitled “ALTA/ACSM Land Title Survey 2.128 Acres of Land Lying Along the East Line of Chital Drive, Matoaca District, Chesterfield County, Virginia”, prepared by Balzer and Associates, Inc., dated December 18, 2003, last revised January 23, 2004, to be recorded in the Clerk’s Office, Circuit Court, County of Chesterfield, Virginia, and being further described by metes and bounds as follows:

BEGINNING at a nail set along the east line of Chital Drive, 176.73 feet from the south line of Hull Street extended;

Thence departing the east line of Chital Drive, North 58 Degrees 50 minutes 40 seconds East, 359.23 feet to a nail set;

Thence South 31 degrees 09 minutes 20 seconds East, 259.10 feet to a rod found;

Thence South 58 degrees 50 minutes 40 seconds West, 107.91 feet to a rod found;

 

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Thence North 31 degrees 09 minutes 20 seconds West, 23.50 feet to a rod found;

Thence South 58 degrees 50 minutes 40 seconds West, 209.69 feet to a nail set;

Thence South 31 degrees 09 minutes 20 seconds East, 23.50 feet to a nail found;

Thence South 58 degrees 50 minutes 40 seconds West, 82.61 feet to a rod found along the east line of Chital Drive;

Thence continuing along the east line of Chital Drive along a curve to the left having a radius of 1931.54 feet, an arc length of 262.52 feet, and a chord of North 22 degrees 10 minutes 05 seconds West, 262.32 feet to a nail set being the PLACE and POINT OF BEGINNING containing 2.128 acres or 92,677.5 square feet.

TOGETHER WITH a permanent non-exclusive easement for ingress and egress, parking as well as other beneficial rights, as more particularly described in the Declaration of Easements and Maintenance Agreement by Deer Run Associates Limited Partnership, dated October 30, l990, recorded November 2, l990, in Deed Book 2121, page 549, and First Amendment recorded in Deed Book 2145, page 1755, in the Clerk’s Office, Circuit Court, County of Chesterfield, Virginia.

ALSO TOGETHER WITH a permanent, exclusive easement to install and maintain a two-sided panel on the Deer Run Village Shopping Center pylon sign located at the southwest corner of U.S. Route 360 and Chital Drive to identify Grantee’s business on the property hereby conveyed subject to the following conditions: (i) Grantee’s rights shall be subject to Grantee’s compliance with all requirements of Chesterfield County, Virginia for use of such sign in connection with the property hereby conveyed; (ii) Grantee’s rights shall be subject to the rights of other tenants and owners with the Deer Run Shopping Village; (iii) Grantee’s panel shall be the fourth from the top or bottom panel, the three other panels being allocated to and use by Food Lion, Import Autohaus and Dollar General as of the date of this deed; (iv) Grantee shall be responsible for all costs associated with the installation and maintenance of the sign panels and agrees to keep the panels in good condition with repair at all times and (v) Grantee shall be responsible for twenty-five percent (25%) of costs incurred by Grantor in operating, maintaining, repairing and/or replacing the pylon sign.

BEING the same property conveyed by Special Warranty Deed to Private Restaurant Properties, LLC, from Outback Steakhouse of Florida, Inc., dated as of June 14, 2007, and recorded April 2, 2008, in Deed Book 8261 at page 856.

NOTE FOR INFORMATIONAL PURPOSES ONLY:

Tax Map No. 726-672-8603-00000

 

216.	FEE PARCEL DESCRIPTION: UNIT 4756

TAX ID No. 282-07-00-A

PARCELS 1 AND 2:

ALL those certain lots, pieces or parcels of land and the improvements thereon and the appurtenances thereunto belonging, situate, lying and being in the City of Williamsburg, Virginia, known and designated as “PARCEL 1” and “PARCEL 2” as shown on that certain plat (the “Plat”) entitled, “PLAT OF BOUNDARY LINE ADJUSTMENT AND LOT LINE VACATION. PARCELS 1-4, CONTAINING 1.744 +/- ACRES, TO BE CONVEYED TO

 

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AUSSIES OF WILLIAMSBURG HOLDINGS, LLC, PARCEL 5 DEDICATED TO THE CITY of WILLIAMSBURG”, dated March 21, 1995, made by AES Consulting Engineers, which plat was recorded in the Office of the Clerk of the Circuit Court of the City of Williamsburg, Virginia, in M.B. 61, at Page 58.

Parcels 1 and 2 are more specifically shown on the “Plat” as follows:

Beginning at an iron pipe on the westerly right-of-way line of U.S. Route 60 where said right-of-way line intersects the southerly right-of-way line of Waltz Farm Drive (being labeled as “New Property Line” on the “Plat”); thence proceeding S. 19º 15’ 0” E. along the westerly right-of-way line of U.S. Route 60 140.24 feet to an iron pipe thence S. 75º 58’ 30” W. 269.29 feet to an iron pipe; thence N. 20º 8’ 22” W. 142.35 to the southerly right-of-way line of Waltz Farm Drive; thence along said right-of-way line N. 77º 36’ 39” E. 99.09 feet to an iron pipe; thence N. 75º 39’ 43” E. 172.65 feet to the iron pipe which marks the point of beginning.

PARCEL 3:

That certain lot, piece or parcel of land, together with the improvements thereon and the appurtenances thereunto belonging, situate, lying and being in the City of Williamsburg, Virginia, known and designated as “PARCEL 3” containing 0.458 acre, more or less, on a certain plat entitled “PLAT OF BOUNDARY LINE ADJUSTMENT AND LOT LINE VACATION, PARCELS 1-4, CONTAINING 1.744 +/- ACRES, TO BE CONVEYED TO AUSSIES OF WILLIAMSBURG HOLDINGS, L.L.C., PARCEL 5 DEDICATED TO THE CITY OF WILLIAMSBURG”, dated March 21, 1995, made by AES Consulting Engineers, which plat was recorded in the Office of the Clerk of the Circuit Court of the City of Williamsburg, Virginia in M.B. 61, at Page 58.

PARCEL 4:

That certain lot, piece or parcel of land, together with the improvements thereon and the appurtenances thereunto belonging, situate, lying and being in the City of Williamsburg, Virginia, known and designated as “PARCEL 4” containing 0.420 acre, more or less, on a certain plat entitled “PLAT OF BOUNDARY LINE ADJUSTMENT AND LOT LINE VACATION, PARCELS 1-4 CONTAINING 1.744 +/- ACRES, TO BE CONVEYED TO AUSSIES OF WILLIAMSBURG HOLDINGS, L.L.C., PARCEL 5 DEDICATED TO THE CITY OF WILLIAMSBURG”, dated March 21, 1995, made by AES Consulting Engineer, which plat was recorded in the Office of the Clerk of the Circuit Court of the City of Williamsburg, Virginia, in M.B. 61, at Page 58.

Together with that certain perpetual non-exclusive right-of-way and easement for vehicular and pedestrian ingress, egress and regress contained in II(8) and III (10) of that certain Reciprocal Easement Agreement, dated April 20, 1995, and recorded in the Clerk’s Office, in Deed Book 113, at Page 483, on April 23, 1995 and further together with that certain perpetual non-exclusive easement for pedestrian ingress and egress set out in that certain Reciprocal Easement Agreement dated April 24, 1995, recorded in the Clerk’s Office in Deed Book 113, at Page 506, on April 25, 1995.

 

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BEING the same real estate conveyed to Private Restaurant Properties, LLC, a Delaware limited liability company, by deed from Outback Steakhouse of Florida, Inc., a Florida corporation, dated June 14, 2007, recorded April 4, 2008, in the Clerk’s Office, Circuit Court, City of Williamsburg, Virginia, as Instrument Number 080697.

 

217.	FEE PARCEL DESCRIPTION: UNIT 4758

All that certain lot or parcel of land situate, lying and being in the Town of Christiansburg, Shawsville Magisterial District, Montgomery County, Virginia, and being Lot Number Thirty-Six (36) containing 1.6660 acres, as shown on a plat (the “Plat”) entitled “FINAL SUBDIVISION PLAT ARBOR VIEW PLANTATION, PHASE XIII”, prepared by Draper Aden Associates, dated 02, JAN 1996, revised 5 FEBRUARY 1996, designated as Plat No. T-4885-29S, a copy of which plat is of record in the Clerk’s Office of the Circuit Court of Montgomery County, Virginia (the “Clerk’s Office”), in Plat Book 16 at Page 508.

Less and except that portion of subject property conveyed to the Commonwealth of Virginia for improvements to Route 460 by deed dated November 23, 1998 and recorded in the aforesaid Clerk’s Office in Deed Book 1044 at page 117.

BEING the same real estate conveyed to Private Restaurant Properties, LLC, a Delaware limited liability company, by deed from Outback Steakhouse of Florida, Inc., a Florida corporation, dated June 14, 2007, recorded April 4, 2008 as Instrument Number 08003272 in the Clerk’s Office, Circuit Court of Montgomery County, Virginia.

And further being known as Tax Map No. 436-636.

 

218.	FEE PARCEL DESCRIPTION: UNIT 4762

All that certain lot or parcel of land lying and being in the City of Lynchburg, Virginia, on the northwesterly side of Albert Lankford Drive, known as 2131 Albert Lankford Drive, as shown and designated as Lot 1, containing 3.083 acres, more or less, upon a plat titled “Division of the Property of Center Point, L.L.C., City of Lynchburg, Virginia” dated May 6, 1997, revised July 7, 1997, made by Hurt & Proffitt, Inc., and being described with reference to said plat as follows:

Beginning at an iron pipe found in the southeasterly line of Lynchburg, Expressway, Rte. 29, corner to property shown on said plat as “Gateway XIV” and running thence with said line of Lynchburg Expressway in a northeasterly direction along a curve having a radius of 3199.05 feet, a length of 59.18 feet to iron pipe found and north 68 degs. 06’ 40” east 219.69 feet to iron pipe set; thence with a new line south 31 degs. 33’ 15” east 435.53 feet to iron pipe set in the northwesterly line of Albert Lankford Drive; thence with said line of Albert Lankford Drive south 44 degs. 57’ 00” west 150.00 to iron pipe found and along a curve to the right having a radius of 386.00 feet, a length of 130.05 feet to an iron pipe found; thence north 31 degs. 33’ 15” west 525.49 feet to the beginning; Being the same property conveyed to Private Restaurant Properties LLC, a Delaware limited liability company by Deed from Outback Steakhouse of Florida, Inc., a Florida corporation dated June 14, 2007 and recorded April 4, 2008 as Instrument Number 080002869 in the Clerk’s Office of the Circuit Court of Lynchburg City, Virginia.

Tax Map ID No. 051-03-003

 

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219.	FEE PARCEL DESCRIPTION: UNIT 4801

ALL that certain lot, piece or parcel of land situate in White Clay Creek Hundred, New Castle County and State of Delaware, being Lot No. 3, as shown on the Record Major Land Development Plan of METRO CENTER, prepared by Edward H. Richardson Associates, Inc., Engineers of Newark, Delaware, dated March 30, 1984, and of record in the Office of the Recorder of Deeds in and for New Castle County, Delaware, in Microfilm No. 7135, and more particularly bounded and described as follows, to-wit:

Beginning at a point at the northeasterly end of a corner cut joining the easterly side of Wilmington-Christiana Turnpike (Delaware Route 7) with the southerly side of Churchmans Road; thence from the point of Beginning along the southerly side of Churchmans Road South seventy-seven degrees, twenty-five minutes, thirteen seconds East two hundred ninety-six feet to a point, a corner for Lots Nos. 2 and 3; thence along the division line for Lots Nos. 2 and 3, South twelve degrees, thirty-four minutes, thirty-two seconds West two hundred fifty-eight and forty-three one-hundredths feet to a point in the northerly side of a private right-of-way, known as Geoffrey Drive, as shown on said Plan; thence thereby by the arc of a circle curving to the left having a radius of one hundred thirty-seven and fifty-one hundredths feet, an arc distance one hundred seventeen and forty-three one-hundredths feet to a point, a corner for Lots Nos. 3 and 4; thence along the division line for Lots Nos. 3 and 4; South seventy-four degrees, thirty-nine minutes, twenty-five seconds East three hundred forty-seven and forty-five one-hundredths feet to a point in the southeasterly side of the Wilmington-Christiana Turnpike (Delaware Route7); thence thereby by the arc of a circle curving to the right having a radius of two thousand seven hundred eighty-four and seventy-nine one-hundredths feet, an arc distance of two hundred sixty and six one-hundredths feet to a point, said point being the southwesterly end of aforesaid corner cut; thence along said corner cut North sixty-three degrees, twenty minutes, five seconds East one hundred fourteen and forty-three one- hundredths feet to the point and place of Beginning. Be the contents thereof what they may.

TOGETHER with the perpetual nonexclusive easement and right of use appurtenant to and for the benefit of the herein insured premises to and from adjacent public roads in and over Geoffrey Drive shown on the above recorded Plan of Metro Center, and the Joint Parking Area for the purpose of pedestrian and vehicular ingress, egress, passage and delivery to and from the herein insured premises and parking on the Joint Parking Area, and the installation, operation, maintenance, repair, relocation and removal of sewers and sewer lines, water and gas mains, electric power lines, telephone lines and other underground utility lines and related facilities including manholes, meters,, pipelines valves, hydrants, sprinklers controls, conduits, sewage facilities, and facilities to provide for drainage into the Storm Water Detention Area all as set forth in the Reciprocal Easement and Operating Agreement, dated June 14, 1984, of record in the Recorder of Deeds in and for New Castle County, Delaware, in Deed Record M, Volume 127, Page 182; as modified by First Modification to Agreement as set forth in Document No. 200412030130466.

 

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220.	FEE PARCEL DESCRIPTION: UNIT 4810

Lot One (1) of Certified Survey Map No. 8664 recorded in the Dane County, Wisconsin Register of Deeds Office in Volume 47 of Certified Survey Maps, page 298, as Document No. 2878586, in the City of Madison, Dane County, Wisconsin.

 

221.	FEE PARCEL DESCRIPTION: UNIT 4813

Part of Lot 3 of Certified Survey Map filed March 4, 1997 in Volume 7 of Certified Survey Maps, page 113 & 113A, as Document No. 1168757, being part of Lot 3 of Elmwood Business Center, City of Onalaska, LaCrosse County, Wisconsin, described as follows:

COMMENCING at the Northwest corner of said Lot 3 and THE POINT OF BEGINNING of this description: Thence South 87 degrees 52 minutes 11 seconds East, along the North line thereof, 214.30 feet to the Northeast corner thereof; thence South 02 degrees 07 minutes 49 seconds West, along the East line thereof, 354.18 feet to the Southeast corner thereof; thence North 89 degrees 16 minutes 00 seconds West, along the South line of said Lot 3, a distance of 219.36 feet to a line which is parallel with and 25.01 feet from the West line of said Lot 3; thence along said parallel line North 02 degrees 07 minutes 49 seconds East 258.00 feet; thence North 32 degrees 36 minutes 36 seconds West 43.87 feet to the arc of a 50 foot radius cul-de-sac curve on the right-of-way line of Hampton Court; thence 57.96 feet along the arc of said curve, the chord of which bears North 35 degrees 20 minutes 28.5 seconds East 54.77 feet to the end of said curve; thence continue along the East right-of-way line of said Hampton Court, North 02 degrees 07 minutes 49 seconds East 19.65 feet to the POINT OF BEGINNING.

 

222.	FEE PARCEL DESCRIPTION: UNIT 4910

ALL THAT CERTAIN lot of parcel of real estate, with the improvements thereon and the appurtenance thereunto belonging, situate in Martinsburg District, Berkeley County, West Virginia, being more particularly bounded and described as follows:

BEGINNING at point on the eastern dedicated right of way line of Foxcroft Avenue, thence along with eastern right of way line of Foxcroft Avenue North with a curve to the right having a central angle of 08’ 33 36, a radius of 1858.86 feet, a length of 277.72 feet and a chord bearing and distance of:

1. N 06°45’37” E 277.46 to a point, thence along Lot D-2B as shown on a Final Plat of subdivision, Parcel “D”, Martinsburg Mall;

2. S 88°30’12” E 220.49’ to a point, thence along Remainder Parcel D as shown on the aforesaid plat;

3. S 01 °29’48” W 275.86’ to a point, thence along lands now or formerly of Supervalue, Inc.;

4. N 88°36’12” W 245.94’ to the place of beginning containing 1.5000 acres of land, more or less.

 

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Said parcel being Lot D-2A as shown on the aforesaid Final Plat of Subdivision, Parcel “D”, Martinsburg Mall, which was approved by Martinsburg Planning Commission on September 14, 1995, recorded in the office of the Clerk of the County Commission of Berkeley County, West Virginia in Plat Cabinet 6, Slide 112.

TOGETHER WITH a non-exclusive right-of-way or easement of the purpose of vehicular and pedestrian access, ingress and egress and vehicle parking over, along and upon all driving lanes, common driveways and parking areas as may exist from time to time lying within Lot D-2B, Lot D-2C, Lot D-2D and Remainder Parcel D all as shown on the aforesaid Final Plat of Subdivision, Parcel “D”, Martinsburg Mall recorded in the aforesaid Clerk’s Office in Plat Cabinet No.6, at Slide 112.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitations of the following:

Reciprocal Easement Agreement between Supervalu Operations, Inc. and Leamac Development, L.C., dated 11128/95, and recorded in Deed Book 555, at page 528.

 

223.	FEE PARCEL DESCRIPTION: UNIT 4961

PARCEL NO.1:

All that certain lot or parcel of real estate, with the improvements thereon and the appurtenances thereunto belonging, situate in the City of Beckley District, Raleigh County, West Virginia, being more particularly bounded and described as follows:

Beginning at a rebar (set) on the eastern R/W line of Pikeview Drive and a common corner to Tracts “D” and “E”; thence leaving said Pikeview and with the boundary of said tracts N. 29° 32’ E. 95.31 feet to a point a common corner to said tracts and on the boundary line of a 50’ street designated as Tract “A”; thence leaving Tract “E” and with said Street, S. 29° 28’ W. 235.00 feet to a point a common corner to Tracts “C” and “D”; thence leaving said streets and with said Tracts N. 60° 32’ W. 210.32 feet to a point on said Pikeview and a common corner to said tracts thence leaving Tract “C” and with said Pikeview N. 29° 32’ E. 139.69 feet to the POINT OF BEGINNING and containing 1.134 acres, more or less.

Tract “D” is shown upon a map entitled Outback Steakhouse Second Draft—Site Plan and Property Information Proposed Harper Road Location, Beckley, West Virginia, Scale: 1” = 2-’ Contour Interval: l’ Prepared by Engineering Services, Inc., Airport Road, Beckley, West Virginia, ESI DEG Number: 70UI0002, Date: May 23, 1997, herein referred to as the “Plat”

 

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PARCEL NO.2:

There is also granted and conveyed an exclusive perpetual PARKING EASEMENT, more particularly described as follows:

Being that certain tract of land located in the City of Beckley, Town District, Raleigh County, West Virginia, situated along the Western side of Hylton Lane and shown on a map prepared by Engineering Services, Inc., and dated June 1, 1997, and made part of these descriptions. Being a party of the 6.197 acre property owned by CYBWV, LLC, a West Virginia Corporation, and known as “Tract E.” Bounded and described as follows:

Beginning at a point, said point being 24.59 feet S. 29° 28’ 00” W. from a point, said point being the north western most point of the right-of-way of Hylton Lane (Tract A) and the boundary of the 6.197 acre tract of land thence with said boundary line of the following call: S. 29° 17’ 00” W. 180 feet to a point, thence leaving N. 60° 32’ 00” W. 43.95 feet to a point, thence; N. 60° 32’ 13” W 152.93 feet to a point, thence; N. 29° 27’ 47” E. 17.56 feet to a point, thence; with a curve to the left with a chord bearing of N. 15° 32’ 13’W. and a chord length of 3.42 feet and a radius of 2.42 feet to a point, thence; N. 60° 32’ 13”W. 9.29 feet to a point, thence with a curve to the left with a chord bearing S. 74° 27’ 47’ W, and a chord length of 6.25 feet and a radius of 4.42 feet to a point, thence; S. 29° 25’ 56” E. 91.16 feet to a point, thence; S, 60° 32’ 13” E. 15.58 feet to a point, thence; with a curve to the left with a chord bearing N. 74° 27’ 47” E. and a chord length of 6.25 feet and a radius of 4.42 feet to a point, thence; N.29° 27’ 47” W. 18.58 feet to a point, thence; S. 58° 02’ 37” E. 58.82 feet to a point, thence S. 29° 27” 47” W. 18.58 feet to a point, thence; S. 58° 02’ 37” E. 183.39 feet to a point, thence; S. 60° 32’ 00” E. 34.19 feet to a point of beginning and containing 0.270 acres, more or less.

PARCEL NO.3:

There is further granted and conveyed a STORM WATER EASEMENT, which is more particularly described as follows:

Being that certain tract of land located in the City of Beckley, Town District, Raleigh County, West Virginia, situated along the Western side of Hylton Lane and shown on a map prepared by Engineering Services, Inc., and dated June 19, 1997, and made a part of these descriptions. Being a party of the 6.197 acre property owned by CYBWV, LLC, a West Virginia Corporation, and known as “Tract E.” Bounded and described as follows:

Beginning at a point being 23.09 feet N. 60° 32’ 00” W. from a point, said point being the common corner of Tract A, Tract D, and Tract E, thence with the boundary of the 6.197 acre tract of land and Tract D the following call; N. 60° 32’ 00” W. 10.00 feet to a point, thence leaving said boundary and with a new line through the said 6.197 acre tract of land, the following three calls: N. 29° 19’ 53” E. 22.20 feet to a point, thence N. 60° 20’ 06” W. 122.73 feet to a point, thence; N. 65° 43’ 39” W. 131.66 feet to a point, said point being on the boundary of Tract E and the Right of Way of Pikeview Drive, thence with said boundary the following two calls; with a curve to the left with a chord bearing of N. 27° 12’ 52” W. and a chord length of 15.77

 

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feet and a radius of 270.00 feet to a point, said point being a common corner between Tract E and the Right of Way of Pikeview Drive, thence; N. 28° 54’ 00” W. 0.30 feet to a point, thence leaving said boundary and with a new line through the said 6.197 acre tract of land, the following three calls: S. 65° 43’ 39” E. 144.71 feet to a point, thence; S. 60° 20’ 06” E. 133.14 feet to a point, thence; S. 29° 19’ 53” W. 32.16 feet to the POINT OF BEGINNING containing 0.067 acres, more or less.

 

224.	FEE PARCEL DESCRIPTION: UNIT 5010

Lot 1, “Lierd & Miracle Addition No.2” to the Town of Evansville, Natrona County, Wyoming. Being a replat of a portion of Lot 3, Block 2, Lierd & Miracle Addition to the Town of Evansville, Wyoming and a subdivision of a portion of the NW  ¹/4 SE  ¹/4, Section 1, T33N, R79W, 6^th principal Meridian, Natrona County, Wyoming.

TOGETHER WITH easement rights contained in Pole Sign Easement Agreement recorded October 23, 1998 as Instrument No. 623411.

 

225.	FEE PARCEL DESCRIPTION: UNIT 5113

Lot 14, as shown on plat entitled “Lot Line Adjustment Plat prepared for Santa Fe Business Park L.L.C., Lots 13 and 14 within Santa Fe Business Park” as shown on Plat filed in the Office of the County Clerk of Santa Fe County, New Mexico recorded on February 16, 2000, in Plat Book 435, page 048, as Document No. 1106,562.

Together with the non-exclusive Access and Easement Agreement, dated March 24, 2000, file March 28, 2000, in Book 1749, page 426, records of Santa Fe County, New Mexico.

 

226.	FEE PARCEL DESCRIPTION: UNIT 5301

Lot 1, of Harkins Superstition Springs, according to the plat of record in the Office of the County Recorder of Maricopa County, Arizona, recorded in book 424 of Maps, page 26.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitations of the following:

Declaration of Cross-Easement and Restrictive covenants recorded October 3, 1996 in Instrument No. 96-0706423.

 

227.	FEE PARCEL DESCRIPTION: UNIT 5302

Parcel No. 1:

That portion of land situated in the Southwest quarter of Section 32, Township 4 North, Range 2 East, of the Gila and Salt River Base and Meridian, Maricopa County, Arizona, more particularly described as follows:

 

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COMMENCING at the South quarter corner of said Section 32;

THENCE South 89 degrees, 05 minutes, 01 seconds West, along the South line of said Southwest quarter of Section 32 and the centedine of Bell Road, as distance of 1238.65 feet;

THENCE North 00 degrees, 54 minutes, 59 seconds West, a distance of 65.00 feet to a point on the North line of Bell Road;

THENCE North 89 degrees, 05 minutes, 01 seconds East, along the North lien of Bell Road, being 65.00 feet North of and parallel to South line of said Section 32, a distance of 249.03 feet to the TRUE POINT OF BEGINNING;

THENCE North 00 degrees, 54 minutes, 59 seconds West, a distance of 297.00 feet;

THENCE North 89 degrees, 05 minutes, 01 seconds East, a distance of 166.80 feet;

THENCE south 61 degrees, 53 minutes, 33 seconds East, a distance of 30.53 feet;

THENCE South 00 degrees, 54 minutes, 59 seconds East, a distance of 282.19 feet to a point on the North line of Bell Road, which is parallel with and 65.00 feet North of said South line of Section 32;

THENCE South 89 degrees, 05 minutes, 01 second West, along said North line, a distance of 193.50 feet to the TRUE POINT OF BEGINNING.

Parcel No. 2:

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitations of the following;

Declaration of Restrictions and Grant of Easements recorded as Instrument No* 95-0589676 and amended by Instrument No. 97-0257170.

Parcel No, 3:

Easements, terms, conditions, and obligations as set forth in Grant of Easement for Ingress and Egress and Public Utilities, recorded September 27, 1995 in Instrument No. 95-0589678.

 

228.	FEE PARCEL DESCRIPTION: UNIT 5303

Lot 2, CHANDLER GATEWAY WEST, according to Book 474 of Maps, Page 2, records of Maricopa County, Arizona.

Together with the non-exclusive rights, and subject to the terms, conditions, provisions and limitation of the following: All matters contained in Declaration of Covenants, Conditions, Restrictions and Easements recorded in Instrument No. 98-0622586A and Property Owner’s Agreement recorded in Instrument No, 00-0096265

 

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229.	FEE PARCEL DESCRIPTION: UNIT 5501

Part of the Northeast Quarter and part of the Northwest Quarter of Section 16, Township 14 North, Range 4 East of the Second Principal Meridian in Marion County, Indiana, more particularly described as follows:

COMMENCING at the Southeast corner of the Northeast Quarter of Section 16; thence North 00 degrees 37 minutes 45 seconds East (assumed bearing) (570.79 feet deed) 637.35 feet measured along the East line of said Quarter Section; thence North 89 degrees 22 minutes 15 seconds West 25.00 feet to the Westerly right of way line of Interstate Highway Number 65 as conveyed to the State of Indiana recorded as Instrument No. 70-56508, in the Office of the Recorder of Marion County, Indiana; thence North 48 degrees 01 minute 15 seconds West 1827.00 feet along the said Westerly right of way line to the POINT OF BEGINNING, which point is the Northerly most corner of a parcel of land conveyed to Edward Rose of Indiana recorded as Instrument No. 89-23352, in the said Recorder’s Office;

Thence South 34 degrees 54 minutes 56 seconds West along the Northern line of said described parcel of land 532.67 feet; thence North 71 degrees 48 minutes 15 seconds West along said Northerly line 348.92 feet; thence North 00 degrees 58 minutes 57 seconds East 623.26 feet to the Westerly right of way line of Interstate Highway Number 65 as conveyed to the State of Indiana recorded as Instrument No. 70-56507 in said Recorder’s Office; thence South 85 degrees 57 minutes 28 seconds East along said right of way line 166.80 feet; thence South 58 degrees 18 minutes 26 seconds East along said Westerly line 539.78 feet to the POINT OF BEGINNING.

 

230.	FEE PARCEL DESCRIPTION: UNIT 5502

A part of the Southwest Quarter of Section 12, Township 17 North, Range 4 East, Delaware Township, Hamilton County, Indiana, being more particularly described as follows:

COMMENCING at the Southwest corner of the Southwest Quarter of Section 12, Township 17 North, Range 4 East, Hamilton County, Indiana; thence North 00 degrees 07 minutes 30 seconds West on the West line of said Southwest Quarter 175.36 feet; thence North 89 degrees 52 minutes 30 seconds East 16.50 feet to a point on the Northerly limited access right of way line of East 96th Street; thence South 78 degrees 00 minutes 13 seconds East on said right of way line 331.20 feet to a point on the Westerly limited access right of way line of Interstate Route 69; thence the following four calls on said right of way line: 1) North 34 degrees 38 minutes 31 seconds East 473.09 feet; 2) North 58 degrees 43 minutes 24 seconds East 331.66 feet to the POINT OF BEGINNING of the herein described real estate, said point also being on the Easterly line of Instrument No. 95-8541 in the Office of the Recorder of Hamilton County, Indiana;

3) continuing North 58 degrees 43 minutes 24 seconds East 329.94 feet to a curve having a radius of 1372.39 feet, the radius point of which bears North 44 degrees 24 minutes 19 seconds West; 4) Northeasterly on said curve an arc distance of 40.97 feet to a point which bears South

 

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46 degrees 06 minutes 57 seconds East from said radius point, said point also being a corner of the real estate described in Instrument No. 98-58860 in said Recorder’s Office; thence North 51 degrees 38 minutes 20 seconds West on the Southwesterly line of said real estate 432.86 feet to a point on the 35 foot Southeasterly right of way line of Crosspoint Boulevard, said point being on a non-tangent curve having a radius of 607.96 feet, the radius point of which bears North 36 degrees 44 minutes 12 seconds West; thence Southwesterly on said curve an arc distance of 134.66 feet to a point which bears South 24 degrees 02 minutes 44 seconds East from said radius point, said point also being a corner of said real estate described in Instrument No. 95-8541; thence South 19 degrees 48 minutes 54 seconds East on the Easterly line of said real estate 426.29 feet to the POINT OF BEGINNING.

Also known as Cheeseburger in Paradise Subdivision Lot One as per plat thereof recorded December 21, 2004 in Plat Cabinet 3 Slide 545, Instrument No. 200400085635.

 

231.	FEE PARCEL DESCRIPTION: UNIT 5505

TRACT I:

A part of the Southeast Quarter of Section 4, Township 11 North, Range 9 West, Honey Creek Township, Vigo County, within the corporate limits of the City of Terre Haute, Indiana, more particularly described as follows:

BEGINNING at a found iron pin, with aluminum cap, on the East right-of-way line of U.S. Route 41 which is S 0°-08’ E a distance of 1039.81 feet from the intersection of the East right-of-way line of US Route 41 with the centerline of Johnson Avenue as extended Eastward; thence N 0°-08’ W, along and with the East right-of-way line of U.S. Route 41, a distance of 75.00 feet to an iron pin, with aluminum cap, set this survey; thence East a distance of 190.00 feet to an iron pin, with aluminum cap, set this survey; thence S 0°-08’ E. a distance of 75.00 feet to a found iron pin, with aluminum cap; thence continuing S 0°-08’ E a distance of 286.90 feet to a found iron pin, with aluminum cap, on the North right-of-way line of McCalister Lane, a public road; thence S 89°-32.2’ W, along and with the North right-of-way line of McCalister Lane, a distance of 111.28 feet to a found iron pin, with aluminum cap, on the East right-of-way line of US Route 41; thence N 58°-49’ W, along and with the East right-of-way line of U.S Route 41, a distance of 92.15 feet to a found iron pin, with aluminum cap; thence N 0°-08’ W, along and with the East right-of-way line of U.S. Route 41, a distance of 240.09 feet to the POINT OF BEGINNING.

TRACT II:

Also together with all rights and appurtenances appertaining in and to that certain easement between Showbiz Pizza Place, Inc. and Morris Landsbaum, dated November 23, 1983 and recorded November 28, 1983, in Deed Record 395, Page 329-1.

Also together with all rights and appurtenances appertaining in and to that certain easement between Towne South Plaza Associates, a New York Limited Partnership and Morris Landsbaum, dated February 14, 1984 and recorded April 5, 1984, in Deed Record 396, Page 461-1.

 

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Also together with all rights and appurtenances appertaining in and to that certain easement between Towne South Plaza Associates, a New York Limited Partnership and Morris Landsbaum, dated February 14, 1984 and recorded April 5, 1984, in Deed Record 396, Page 462-1.

 

232.	FEE PARCEL DESCRIPTION: UNIT 5506

Lot 14 and Lot 15 in Eagle Crest Subdivision, Section 2, as per plat thereof, recorded in Plat Book O, page 152, in the Office of the Recorder of Vanderburgh County, Indiana, EXCEPTING, however the following part of Lot 15:

BEGINNING at the South most corner of Lot 15; thence along the Southwesterly line of said Lot 15, North 49 degrees 35 minutes 54 seconds West a distance of 64.98 feet; thence North 47 degrees 58 minutes 06 seconds East a distance of 112.85 feet to a point; thence South 49 degrees 43 minutes 47 seconds East a distance of 65 feet to a point; thence South 47 degrees 58 minutes 06 seconds West a distance 113.00 feet to the POINT OF BEGINNING.

 

233.	FEE PARCEL DESCRIPTION: UNIT 6006

Parcel 1 (Fee):

A parcel of land being portions of Lots 4 to 6, Block J, and Lots 27 to 29, Block K, and that certain 20-foot abandoned alley lying between said Blocks J and K as all are shown on the Plat of Coral Springs University Drive Subdivision, as recorded in Plat Book 60, Page 42, of the Public Records of Broward County, Florida, and being more particularly described as follows:

Commencing at the Southwest corner of Lot 10 of said Block J; thence North 01° 06’ 25” West, along the West line of Lots 6 to 10, a distance of 238.12 feet to the POINT OF BEGINNING; thence continue along the West line of said Lots 4 to 6, North 01° 06’ 25” West, 111.88 feet to the Northwest corner of said Lot 4; thence South 89° 38’ 29” East along the North line and Easterly extension of said Lot 4, 457.00 feet, to a point on the East line of said Lot 29; thence South 01° 06’ 25” East, along the East line of Lots 28 to 29, 149.94 feet; thence South 88° 53’ 35” West, 159.95 feet; thence North 01° 06’ 25” West, 49.75 feet; thence South 88° 53’ 35” West, 296.90 feet to the POINT OF BEGINNING.

Parcel 2 (Easement):

Together with the uses and benefits of the ingress, egress and parking easements described at paragraph 3.1 of that certain Declaration of Restrictions and Grant of Easement, recorded March 5, 1996, in Official Records Book 24568, Page 440, of the Public Records of Broward County, Florida.

Parcel 3 (Easement):

Together with those easements which benefit the Insured property as created by and set forth in Declaration of Easement recorded in Official Records Book 21061, Page 481, Public Records of Broward County, Florida.

 

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Parcel 4 (Easement):

Together with those easements which benefit the insured property as created by and set forth in Reciprocal Easement Agreement recorded in Official Records Book 13911, Page 32, Public Records of Broward County, Florida.

 

234.	FEE PARCEL DESCRIPTION: UNIT 6007

Parcel I:

A parcel of land lying in Section 35, Township 24 South, Range 36 East, Brevard County, Florida and being more fully described as follows:

Commence at the North 1/4 corner of said Section 35; thence North 89°19’10” East, along the North line of the Northeast 1/4 of said Section 35, a distance of 63.24 feet to an intersection with the Easterly Right-of-Way line of State Road No. 3 (a 100.00 foot Right-of-Way per S.R.D. Right-of-Way Map Section 70140-2505); thence South 00°32’50” East, along said Easterly Right-of-Way Line, a distance of 1197.68 feet to a point 190.30 feet Northerly, as measured along said Easterly Right-of-Way Line, of the Northwest corner of an additional Right-of-Way Parcel as described in Official Records Book 851, Page 216, of the Public Records of Brevard County, Florida, said point being the POINT OF BEGINNING of the lands herein described; thence departing said Easterly Right-of-Way Line, North 89°27’10” East, a distance of 25.92 feet to a Point-of-Curvature of a 95.00 foot radius concave to the Northwest; thence Northeasterly, along an arc of said curve, through a central angle of 50°27’10”, an arc distance of 83.65 feet to a Point-of-Reverse curvature of a 25.00 foot radius curve concave to the Southeast; thence Northeasterly, along an arc of said curve, through a central angle of 35°34’07”, an arc distance of 15.52 feet to a Point-of-Tangency; thence North 74°34’08” East, a distance of 302.98 feet to a Point-of-Curvature of a 25.00 foot radius curve concave to the Southwest; thence Southeasterly along an arc of said curve, through a central angle of 66°13’33”, an arc distance of 28.90 feet to a Point-of-Tangency; thence South 39°12’19” East, a distance of 38.22 feet to a point on the Northerly Right-of-Way line of Palmetto Avenue, a 50.00 foot wide Right-of-Way per the “Replat of Hopewell Farms and Merritt Park No 2” per Plat Book 8, Page 28, of said Public Records; thence South 50°47’41” West, along said Northerly Right-of-Way line, a distance of 436.21 feet to the Northeast corner of said lands per Official Records Book 851, Page 216; thence South 89°27’10” West, along the North line of said lands, a distance of 114.03 feet to a point on said Easterly Right-of-Way line of State Road No 3; thence North 00°32’50” West, along said Easterly Right-of-Way line, a distance of 190.30 feet to the POINT OF BEGINNING.

Parcel II:

Non-exclusive easements for ingress, egress, and parking as described in Reciprocal Easement and Operation Agreement, dated January 7, 1993, recorded June 22, 1993 in Official Records Book 3299, Page 4653; as affected by:

 

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First Amendment to Reciprocal Easement and Operation Agreement dated April 13, 1994, recorded April 20, 1994 in Official Records Book 3385, Page 1303, and re-recorded June 24, 1994, in Official Records Book 3402, Page 1765, Brevard County, Florida.

 

235.	FEE PARCEL DESCRIPTION: UNIT 6013

That part of the North 312.80 feet of the South 862.80 feet of the Southeast 1/4 of the Northeast 1/4 of Section 12, Township 29 South, Range 23 East, Polk County, Florida, lying West of State Road No. 37 (South Florida Avenue) and being further described as follows:

Commence at the Southwest corner of the Southeast 1/4 of the Northeast 1/4 of said Section 12, thence N.00°14’17”W., 718.30 feet, along the West line of the Southeast 1/4 of the Northeast 1/4 of said Section 12,; thence leaving said line, N.89°42’34”E., 37.65 feet to the POINT OF BEGINNING; thence N.00°14’l7”W., 144.50 feet; thence N 89°42’34”E., 510.53 feet to the West Right-of-Way line of State Road No. 37 (South Florida Avenue); thence, along said Right-of-Way line, S.28°24’00”W., 185.32 feet; thence, leaving said line, N.61°36’00”W., 37.63 feet; thence S.89°42’34”W., 388.68 feet to the POINT OF BEGINNING.

TOGETHER WITH Non-exclusive appurtenant easements as created by that certain Reciprocal Easement Agreement between Carrabba’s Italian Grill, Inc., a Florida corporation and Casual Restaurant Concepts, Inc., a Florida corporation recorded in Official Records Book 3828, page 593.

 

236.	FEE PARCEL DESCRIPTION: UNIT 6015

A parcel of land lying in the Southwest 1/4 of Section 28, Township 29 South, Range 20 East, Hillsborough County, Florida, explicitly described as follows:

Commence at the Southeast corner of said Section 28; thence on the East boundary thereof North 00°55’08” West, a distance of 135.00 feet; thence departing said East boundary and on the North right-of-way line of Lumsden Road the following three (3) courses: (1) South 89°07’43” West, a distance of 2635.08 feet; thence (2) South 88°36’ 48” West, a distance of 1341.56 feet; thence (3) South 88°39’15” West, a distance of 44.72 feet; thence departing said right-of-way line North 01°20’45” West, a distance of 377.08 feet to the Point of Beginning; thence South 88°39’15” West, a distance of 50.00 feet; thence North 45°55’08” West, a distance of 373.70 feet to the Easterly right-of-way line of Providence Road; thence on said right-of-way line the following three (3) courses: (1) North 44°04’52” East, a distance of 242.57 feet; (2) thence North 45°55’52” West, a distance of 18.48 feet; (3) thence North 44°04’08” East, a distance of 70.02 feet; thence departing said right- of-way line, South 45°55’52” East, a distance of 215.02 feet; thence South 44°04’08” West a distance of 67.91 feet; thence South 01°20’45” East, a distance of 297.98 feet to the Point of Beginning.

Together with those easements and rights of way set forth in the Declaration of Restrictions and Easements set forth in that certain instrument, recorded in Official Records Book 8293, Page 501, amended by instrument recorded in Official Records Book 8437, Page 1514, Official Records Book 8542, Page 1868, Official Records Book 8711, Page 545 and Official Records Book 9484, Page 1804, of the public records of Hillsborough County, Florida.

 

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Together with non-exclusive appurtenant easement as created by that certain Sign Easement recorded in Official Records Book 9651, Page 567, amended by instrument recorded in Official Records Book 9938, Page 797, of the public records of Hillsborough County, Florida.

 

237.	FEE PARCEL DESCRIPTION: UNIT 6020

Lot 1, CARRABBA’S ITALIAN GRILL SUBDIVISION, according to the plat thereof, as recorded in Plat Book 119, page 39, of the Public Records of Pinellas County, Florida.

 

238.	FEE PARCEL DESCRIPTION: UNIT 6021

PARCEL I:

A tract of land lying in Section 16, Township 1 North, Range 1 East, Leon County, Florida, more particularly described as follows:

Commence at a concrete monument #1254 marking the Northeast corner of the Northwest Quarter of said Section 16 and run North 89 degrees 49 minutes 06 seconds West 1025.47 feet, thence South 00 degrees 10 minutes 54 seconds West 667.88 feet to a wrench marking the Northwest corner of property described in Official Records Book 1191, Page 1785, also marking the Northeast corner of property described in Official Records Book 1569, Page 601, both of the Public Records of Leon County, Florida, thence North 89 degrees 35 minutes 41 seconds West along the North boundary of said property described in Official Records Book 1569, Page 601, a distance of 594.99 feet to a concrete monument #1254 marking the Northeast corner of property described in Official Records Book 1145, Page 2266, of the Public Records of Leon County, Florida; thence South 02 degrees 15 minutes 20 seconds East along the Easterly boundary of said property 119.00 feet to a concrete monument marking the most Northerly corner of property described in Official Records Book 1208, Page 2100, of the Public Records of Leon County, Florida; thence South 38 degrees 59 minutes 58 seconds East 104.39 feet to a concrete monument LB #732 marking the most Northerly corner of property described in Official Records Book 1208, Page 2103, of the Public Records of Leon County, Florida for the POINT OF BEGINNING. From said POINT OF BEGINNING run South 51 degrees 00 minutes 02 seconds West along the Northerly boundary of said property 194.81 feet to a concrete monument on the Easterly Right-of-Way boundary of Capital Circle N.E. (State Road No. 261), thence South 38 degrees 07 minutes 18 seconds East along said Right-of-Way boundary 69.61 feet to a Department of Transportation iron pin, thence South 38 degrees 59 minutes 58 seconds East along said Right-of-Way boundary 84.95 feet to an iron pin #LB 732, thence leaving said Right-of-Way boundary run North 51 degrees 00 minutes 02 seconds East 195.87 feet to a nail and cap #LB 732, thence North 38 degrees 59 minutes 58 seconds West 154.56 feet to the POINT OF BEGINNING.

 

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PARCEL II:

Non-exclusive easements for parking, access and dumpster area contained in the Agreement for Access, Parking and Dumpster Easements Together with Restrictive Covenants by and between Dominic F. Esposito & Sons, Inc., a Florida corporation and Carrabba’s Italian Grill, Inc., a Florida corporation recorded in Official Records Book 2368, Page 819.

 

239.	FEE PARCEL DESCRIPTION: UNIT 6029

Lot 2, VERO MALL, PD, A PLANNED DEVELOPMENT, according to the plat recorded in Plat Book 16, Page 78, of the Public Records of Indian River County, Florida.

TOGETHER WITH easements in favor of Lot 2 as set forth in the Declaration of Restrictions, Covenants and Conditions and Grant of Easements recorded April 18, 2002, in Official Records Book 1482, Page 2696, and as affected by First Amendment recorded in Official Records Book 1519, Page 2746, and Second Amendment recorded in Official Records Book 2088, Page 1085, all in the Public Records of Indian River County, Florida.

 

240.	FEE PARCEL DESCRIPTION: UNIT 6035

Parcel I (a/k/a Parcel “A”):

That portion of Grove No. 1 of the 2nd Replat of Blocks 9-16 inclusive, of Overstreet’s Subdivision, Winter Haven, Florida, recorded in Plat Book 30, Page 5, Public Records of Polk County, Florida, being described as below:

Commence at the Southeast corner of Section 29, Township 28 South, Range 26 East, Polk County, Florida; thence North 00°16’00” West, along the East line of the Southeast 1/4 of the Southeast 1/4 of said Section 29, a distance of 30.00 feet; thence along the South and West lines of a parcel recorded in O.R. Book 4058, Page 889, Public Records of Polk County, Florida, the following six courses (1) North 89°59’41” West, along the South line of said Grove No. 1, a distance of 1221.33 feet to the point of curvature of a curve to the right having a radius of 47.00 feet, a central angle of 72°00’50” a chord bearing of North 54°00’40” West, and a chord distance of 55.26 feet; (2) Northwesterly along the arc of said curve 59.07 feet to a point of compound curvature of a curve to the right having a radius of 195.00 feet, a central angle of 17°38’10” a chord bearing of North 09°11’10” West, and a chord distance of 59.79 feet; (3) Northwesterly along the arc of said curve 60.02 feet; (4) North 00°22’05” West, 109.50 feet (5) South 89°37’55” West, 13.00 feet to the West line of aforesaid Grove No. 1; (6) North 00°22’05” West, along said West line of Grove No. 1, and the West line of a parcel recorded in O.R. Book 4191, Page 45, Public Records of Polk County, Florida, 868.28 feet to the North line of said parcel recorded in O.R. Book 4191, page 45; thence along said North line of a parcel recorded in O.R. Book 4191, Page 45; the following two courses (1) South 89°31’56” East, 4.00 feet to the Point of Beginning; (2) South 89°31’56” East, 191.00 feet; thence South 00°22’05” East, parallel with the aforesaid West line of a parcel recorded in O.R. Book 4191, Page 45, a distance of 229.25 feet; thence North 89°59’41” West, parallel with aforesaid South line of a parcel recorded in O.R. Book 4058, Page 889, a distance of 165.67 feet; thence North 54°46’37” West, 16.37 feet; thence North 00°22’05” West, parallel with aforesaid West line of a parcel recorded in O.R. Book 4191, Page 45, a distance of 15.39 feet; thence North 89°59’41” West, parallel with aforesaid South line of a parcel recorded in O.R. Book 4058, Page 889, a distance of 12.00 feet; thence North 00°22’05” West, parallel, with aforesaid West line of a parcel recorded in O.R. Book 4191, Page 45, a distance of 205.96 feet to the Point of Beginning.

 

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Parcel II:

Non-Exclusive easements for the benefit of Parcel I a/k/a Parcel “A” as created by Declaration of Covenants, Conditions and Restrictions dated March 23, 2000, by and between Faison-Winter Haven LLC, a North Carolina limited liability company and Lowe’s Home Centers, Inc., a North Carolina corporation, recorded March 24, 2000 in O.R. Book 4425, Page 1026, and Amendment to Declaration of Covenants, Conditions and Restrictions recorded in O.R. Book 4677, Page 2131, and Second Amendment to Declaration of Covenants, Conditions and Restrictions recorded in O.R. Book 5839, Page 832, Public Records of Polk County, Florida.

 

241.	FEE PARCEL DESCRIPTION: UNIT 6048

PARCEL I: (Fee Simple)

A portion of the Southeast 1/4 of Section 10, Township 28 South, Range 17 East, including a portion of Tract F shown on the Condominium Plat of SHELDON WEST, a condominium filed in Condominium Plat Book 2, Page 25, Public Records of Hillsborough County, Florida, and all of said land being more particularly described as follows:

From the Southeast corner of Section 10, Township 28 South, Range 17 East, Hillsborough County, Florida; run thence North 00°21’33” East, 535.61 feet along the East boundary of said Section 10; thence North 89°40’49” West, 88.00 feet to the West right-of-way line of Sheldon Road for a POINT OF BEGINNING; thence North 89°40’49” West, 2.00 feet to the Northeast corner of Lot 1, of SHELDON WEST, a condominium filed in Condominium Plat Book 2, Page 25, Public Records of Hillsborough County, Florida; thence North 89°40’49” West, 274.96 feet along the North boundary of Lots 1 through 6 inclusive of said SHELDON WEST; thence South 84°52’59” West, 155.06 feet along the North boundary of Lots 6, 7 and 8 of SHELDON WEST; thence North 89°54’05” West, 110.68 feet along the North boundary of Lots 8, 9 and 10 of said SHELDON WEST; thence North 00°21’33” East, 506.79 feet along the West boundary of the East 630.00 feet of the Southeast 1/4 of said Section 10, (also being along the East boundary of CYPRESS PARK GARDEN HOMES, a Condominium filed in Condominium Plat Book 5, Page 33, Public Records of Hillsborough County, Florida) to the South boundary of an access easement as recorded in Official Records Book 9135, Page 931, Public Records of Hillsborough County, Florida; thence South 89°10’19” East, 542.01 feet along the South boundary of said easement to the West right-of-way line of Sheldon Road; thence South 00°21’33” West, 486.87 feet along said West right-of-way line to the Point of Beginning;

LESS AND EXCEPT the following parcel described as a portion of the Southeast 1/4 of Section 10, Township 28 South, Range 17 East, including a portion of Tract F shown on the Condominium Plat of SHELDON WEST, a condominium filed in Condominium Plat Book 2, Page 25, Public Records of Hillsborough County, Florida, and all of said land being more particularly described as follows:

 

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From the Southeast corner of Section 10, Township 28 South, Range 17 East, Hillsborough County, Florida; run thence North 00°21’33” East, 535.61 feet along the East boundary of said Section 10; thence North 89°40’49” West, 88.00 feet to the West right-of-way line of Sheldon Road for a POINT OF BEGINNING; thence North 89°40’49” West, 2.00 feet to the Northeast corner of Lot 1, of SHELDON WEST, a condominium filed in Condominium Plat Book 2, Page 25, Public Records of Hillsborough County, Florida; thence North 89°40’49” West, 219.00 feet along the North boundary of Lots 1 through 5 inclusive of said SHELDON WEST for a POINT OF BEGINNING; thence continue North 89°40’49” West, 55.96 feet along the North boundary of Lot 5 of said SHELDON WEST; thence South 84°52’59” West, 155.06 feet along the North boundary of Lots 6, 7 and 8 of SHELDON WEST; thence North 89°54’05” West, 110.68 feet along the North boundary of Lots 8, 9 and 10 of said SHELDON WEST; thence North 00°21’33” East, 506.79 feet along the West boundary of the East 630.00 feet of the Southeast 1/4 of said Section 10, (in part along the East boundary of CYPRESS PARK GARDEN HOMES, a Condominium filed in Condominium Plat Book 5, Page 33, Public Records of Hillsborough County, Florida) to the South boundary of an access easement as recorded in Official Records Book 9135, Page 931, Public Records of Hillsborough County, Florida; thence South 89°10’19” East, 294.00 feet along the South boundary of said easement; thence South 00°21’33” West, 42.54 feet to a point of curvature; thence Southerly 52.56 feet along the arc of a curve to the left having a radius of 100.00 feet, a central angle of 30°07’02” and a chord bearing and distance of South 14°41’58” East, 51.96 feet to a point of reverse curvature; thence Southerly 52.56 feet along the arc of a curve to the right having a radius of 100.00 feet, a central angle of 30°07’02” and a chord bearing and distance of South 14°41’58” East, 51.96 feet to a point of tangency; thence South 00°21’33” West, 346.15 feet to the Point of Beginning;

PARCEL II: (Easement)

Non-exclusive easement for access contained in the Access Easement Agreement recorded in Official Records Book 9135, Page 931, as amended by the Amendment thereto recorded in Official Records Book 10548, Page 1946, re-recorded in Official Records Book 10594, Page 1849, Public Records of Hillsborough County, Florida.

PARCEL III: (Easement)

Non-exclusive easement for drainage contained in Drainage Easement recorded in Official Records Book 3898, Page 559; as assigned to Outback Steakhouse of Florida, Inc., a Florida corporation, by Assignment of Drainage Easement recorded in Official Records Book 11130, Page 612, Public Records of Hillsborough County, Florida.

PARCEL IV: (Easement)

Non-exclusive easement for drainage contained in the Drainage Easement recorded in Official Records Book 11130, Page 615, Public Records of Hillsborough County, Florida.

 

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PARCEL V: (Easement)

Non-exclusive easement for drainage contained in the following instruments: (i) Parcel 6 Drainage Easement recorded in Official Records Book 9489, Page 1554; (ii) the Amendment thereto recorded in Official Records Book 9696, Page 1946; and (iii) the Second Amendment thereto recorded in Official Records Book 10995, Page 263, all in the Public Records of Hillsborough County, Florida.

PARCEL VI: (Easement)

Non-exclusive easement for drainage contained in the Drainage Easement recorded in Official Records Book 11130, Page 623, Public Records of Hillsborough County, Florida.

PARCEL VII: (Easement)

Easements which benefit the insured property as created by and set forth in Declaration of Covenants, Restrictions and Easements for “Outback Plaza at Citrus Park” recorded in Official Records Book 13513, Page 1374, Public Records of Hillsborough County, Florida.

 

242.	FEE PARCEL DESCRIPTION: UNIT 6052

PARCEL 1:

Lot 1, TOWNSGATE WEST, according to map or plat thereof recorded in Plat Book 73, page 44, of the public records of Hillsborough County, Florida; LESS that portion as taken by the State of Florida Department of Transportation in Stipulated Final Judgment in Official Records Book 8159, page 512.

PARCEL 2:

TOGETHER WITH those certain non-exclusive easements for drainage and retention areas for the benefit of the above described parcel as created by and set forth in Exhibit D of that certain Easement Agreement executed by and between Whitestone Plant City Partners, a Florida general partnership, Inland Southern Development Corporation, a Florida corporation, and Inland Townsgate Limited Partnership, a Florida limited partnership recorded in Official Records Book 5295, page 1857, of the public records of Hillsborough County, Florida, LESS AND EXCEPT that part described in Order of Taking recorded in Official Records Book 7936, page 234, public records of Hillsborough County, Florida; ALSO LESS AND EXCEPT that part described in Stipulated Order of Taking recorded in Official Records Book 7917, page 491, public records of Hillsborough County, Florida, ALSO LESS AND EXCEPT that part described in Final Judgment recorded in Official Records Book 8159, page 512, public records of Hillsborough County, Florida.

PARCEL 3:

TOGETHER with those certain non-exclusive easements for drainage, ingress/egress and utilities for the benefit of Parcel 1 above as created by and set forth in that certain Declaration of Easements and Maintenance Agreement executed by and between Northlake Development, Inc.,

 

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a Florida corporation and Northlake Drainage Association, Inc., a Florida not-for-profit corporation recorded in Official Records Book 7371, page 670, public records of Hillsborough County, Florida; LESS AND EXCEPT that part described in Stipulated Order of Taking recorded in Official Records Book 7917, page 491, public records of Hillsborough County, Florida and Stipulated Final Judgment recorded in Official Records Book 8159, page 512, public records of Hillsborough County, Florida.

 

243.	FEE PARCEL DESCRIPTION: UNIT 6116

ALL THAT TRACT or parcel of land lying and being in Land Lot 23 of the 1st District, 5th Section, City of Douglasville, Douglas County, Georgia, according to a survey for Carrabba’s Italian Grill and First American Title Insurance Company, prepared by Armstrong Land Surveying, Inc. by Robert T. Armstrong (GRL 1901) dated February 7, 2006, and being more particularly described according to said survey as follows:

Commencing at a one-half inch rebar found at the northeast corner of Land Lot 23; run thence southwesterly along the southeasterly right-of-way of the I-20 east bound On-Ramp (right-of-way varies) South 52 degrees 41 minutes 44 seconds West, a distance of 297.77 feet to a one-half inch rebar found; run thence along said right-of-way line South 52 degrees 44 minutes 24 seconds West, a distance of 61.61 feet; said point being the TRUE PLACE OR POINT OF BEGINNING. FROM THE TRUE PLACE OR POINT OF BEGINNING AS THUS ESTABLISHED, run thence along said right-of-way line North 52 degrees 44 minutes 24 seconds East, a distance of 48.81 feet to a five-eights inch rebar set; leaving aforesaid right-of-way line, run thence South 87 degrees 08 minutes 54 seconds East, a distance of 69.65 feet to a five-eights inch rebar set; run thence South 03 degrees 06 minutes 43 seconds West, a distance of 10.57 feet to a five-eighths inch rebar set; run thence South 87 degrees 14 minutes 04 seconds East, a distance of 160.30 feet to a five-eighths inch rebar set; run thence South 00 degrees 57 minutes 39 seconds West, a distance of 132.02 feet to a concrete monument found; run thence South 00 degrees 11 minutes 18 seconds East, a distance of 146.85 feet to a one-half inch rebar set; run thence South 00 degrees 12 minutes 02 seconds East, a distance of 20.66 feet to a five-eighths inch rebar set; run thence South 88 degrees 55 minutes 05 seconds West, a distance of 194.85 feet to a five-eighths inch rebar set; run thence North 01 degree 05 minutes 24 seconds West, a distance of 205.91 feet to a five-eighths inch rebar set; run thence North 37 degrees 02 minutes 36 seconds West, a distance of 112.15 feet to a five-eighths inch rebar set; said point being the TRUE PLACE OR POINT OF BEGINNING. Said tract or parcel containing 65,341 square feet or 1.5 acres, more or less.

TOGETHER WITH the rights, privileges and easements granted under that certain Declaration of Restrictive Covenants, Conditions and Easements by Douglasville Day Centre (consented to by McDonald’s USA, LLC), dated August 31, 2005, filed of record September 2, 2005, recorded in Deed Book 2217, Page 858, Douglas County, Georgia records; as amended by Amendment to the Declaration of Restrictive Covenants, Conditions and Easements for Douglasville Day Centre, dated May 23, 2006, filed of record May 25, 2006, recorded in Deed Book 2365, Page 21, aforesaid county records; as further amended by that certain Second Amendment to Declaration of restrictive Covenants, Conditions and easements for Douglasville Day Centre by Douglasville Day Centre, LLC, as consented to by McDonald’s USA, LLC, Carrabba’s Italian Grill, Inc. and Texas Roadhouse Holdings, LLC, dated May X, 2007, filed of record May 14, 2007, as recorded in Deed Book 2560, Page 835, aforesaid county records.

 

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TOGETHER WITH the rights, privileges and easements granted under that certain Right of way Easement in favor of Greystone Power Corporation from Douglasville Day Centre, LLC, dated Dec. 14, 2005, filed of record Jan. 24, 2006, as recorded in Deed Book 2298, page 440, aforesaid county records.

TOGETHER WITH the rights, privileges and easements granted under that certain Access easement from Douglasville day Centre LLC and Day Retail, LLC, dated May 4, 2007, filed of record May 7, 2007, as recorded in Deed Book 2556, page 889, aforesaid county records.

 

244.	FEE PARCEL DESCRIPTION: UNIT 6302

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF STERLING HEIGHTS, MACOMB COUNTY, STATE OF MICHIGAN, AND IS DESCRIBED AS FOLLOWS:

Parcel 1:

Part of the East 131.00 feet of Lot 44, Lakeside Subdivision No. 6, according to the recorded plat thereof, as recorded in Liber 73 of Plats, pages 15 and 16, Macomb County Records, described as that part of Lot 44:

Commencing at the Northwest corner of Lot 44; thence along the North lot line North 87°50’31” East, 49.00 feet to the Point of Beginning; thence continuing along said North lot line North 87°50’31” East, 75.00 feet; thence South 02°09’29” East, 439.50 feet to a point on the South lot line of said Lot 44; thence along said lot line South 87°50’31” West, 75.00 feet; thence North 02°09’29” West, 439.50 feet to the Point of Beginning.

Parcel 2:

All of Lot 43 and that part of Lot 44 described as follows:

Beginning at the Northwest corner of Lot 44; thence along the North lot line North 87 degrees 50 minutes 31 seconds East, 49.00 feet; thence South 02 degrees 09 minutes 29 seconds East, 439.50 feet to the Southerly line of said Lot 44; thence South 87 degrees 50 minutes 31 seconds West, 4.00 feet; thence 45.02 feet along a curve to the left, said curve having a radius of 763.34 feet and central angle of 03 degrees 22 minutes 50 seconds and a chord bearing and distance of South 86 degrees 09 minutes 06 seconds West, 45.01 feet to the Southwest corner of said Lot 44; thence North 02 degrees 09 minutes 29 seconds West, 440.83 feet to the Point of Beginning, included in the plat of Lakeside Subdivision No. 6, according to the plat thereof, as recorded in Liber 73, pages 15 and 16 of Plats, Macomb County Records.

 

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TOGETHER WITH the non-exclusive rights, and subject to the terms, conditions, provisions and limitations contained in the Operating Agreement recorded in Liber 2507, page 550, as affected by Affidavit recorded in Liber 2614, page 845, and as amended by First Amendment to Operating Agreement recorded in Liber 2627, page 952 and Second Amendment to Operating Agreement recorded in Liber 2793, page 209 and Supplemental Agreement recorded in Liber 2861, page 346.

Parcel ID: 10-01-102-008

Street Address: 13905 Lakeside Circle, Sterling Heights

 

245.	FEE PARCEL DESCRIPTION: UNIT 6402

Lot 8R, Block A of 2nd Replat of Lot 8R and revised conveyance of Lots 9 & 10, Block A, Parkway Hills Addition, an addition to the City of Plano, Collin County, Texas, according to the plat thereof recorded in Volume N, Page 909, Map Records, Collin County, Texas.

 

246.	FEE PARCEL DESCRIPTION: UNIT 6502

Part of the Northeast Quarter and part of the Northwest Quarter of Section 16, Township 14 North, Range 4 East of the Second Principal Meridian in Marion County, Indiana, more particularly described as follows:

COMMENCING at the Southeast corner of the Northeast Quarter of Section 16; thence North 00 degrees 37 minutes 45 seconds East (assumed bearing) (570.79 feet deed) 637.35 feet measured along the East line of said Quarter Section; thence North 89 degrees 22 minutes 15 seconds West 25.00 feet to the Westerly right of way line of Interstate Highway Number 65 as conveyed to the State of Indiana recorded as Instrument No. 70-56508, in the Office of the Recorder of Marion County, Indiana; thence North 48 degrees 01 minute 15 seconds West 1827.00 feet along the said Westerly right of way line to the POINT OF BEGINNING, which point is the Northerly most corner of a parcel of land conveyed to Edward Rose of Indiana recorded as Instrument No. 89-23352, in the said Recorder’s Office;

Thence South 34 degrees 54 minutes 56 seconds West along the Northern line of said described parcel of land 532.67 feet; thence North 71 degrees 48 minutes 15 seconds West along said Northerly line 348.92 feet; thence North 00 degrees 58 minutes 57 seconds East 623.26 feet to the Westerly right of way line of Interstate Highway Number 65 as conveyed to the State of Indiana recorded as Instrument No. 70-56507 in said Recorder’s Office; thence South 85 degrees 57 minutes 28 seconds East along said right of way line 166.80 feet; thence South 58 degrees 18 minutes 26 seconds East along said Westerly line 539.78 feet to the POINT OF BEGINNING.

 

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247.	FEE PARCEL DESCRIPTION: UNIT 6903

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE PARISH OF LAFAYETTE, STATE OF LOUISIANA, AND IS DESCRIBED AS FOLLOWS:

FEE PARCEL

That certain tract of land containing 1.280 acres, located in Section 62, Township 10 South, Range 4 East, City of Lafayette, Lafayette Parish, Louisiana being more fully described as follows:

Commencing at the intersection of the northerly right of way of Kaliste Saloom Road and the westerly right of way of Camellia Boulevard (POC); thence proceed along the northerly right of way of Kaliste Saloom Road a bearing of South 40°39’03” West a distance of 153.94 feet to a point; thence continue along the northerly right of way of Kaliste Saloom Road along a curve to the right having a radius of 34,337.50 feet, an arc length of 122.30 feet, a delta angle of 00°12’15”, a chord bearing of South 51°38’57” West and a chord distance of 122.30 feet to a point; thence continue along the northerly right of way of Kaliste Saloom Road a bearing of South 51°44’11” West a distance of 15.94 feet to a point, said point hereinafter to be known as the Point of Beginning (POB); thence proceed along the northerly right of way of Kaliste Saloom Road a bearing of South 51°44’11” West a distance of 172.90 feet to a point; thence proceed along a bearing of North 45°50’00” West a distance of 319.80 feet to a point, thence proceed along a bearing of North 48°00’28” East a distance of 171.78 feet to a point; thence proceed along a bearing of South 45°50’50” East a distance of 331.07 feet to the Point of Beginning.

SERVITUDE PARCEL

Together with rights granted in Non-Exclusive Access and Parking Easements pursuant to Non-Exclusive Access and Parking Easement Agreement by RR Company of America, L.L.C. to Carrabba’s Italian Grill, Inc. dated October 28, 2005, recorded under File No. 2005-00049221 on November 2, 2005, in the conveyance records.

 

248.	FEE PARCEL DESCRIPTION: UNIT 7101

BEGINNING FOR THE SAME at a point on the northwest right of way line of Long Gate Parkway, said point being on and distant 67.73 feet from the end of the North 39 degrees 46 minutes 08 seconds East 717.67 feet plat line as shown on a Plat entitled “Long Gate Center, Parcels I, J & K” and recorded among the Land Records of Howard County, Maryland as Plat No. 12357, thence running reversely with a portion of said plat line and with the right of way line of Long Gate Parkway the following course and distance, viz:

 

1)

South 39 degrees 46 minutes 08 seconds West 241.09 feet, thence leaving said plat line and running with the division line between Parcels J and I now shown on the above mentioned plat the following course and distance,

 

2)

North 50 degrees 13 minutes 52 seconds West 300.00 feet, thence leaving said division line and running with the outline of the above mentioned plat the following course and distance, viz;

 

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3)

North 39 degrees 46 minutes 08 seconds East 241.10 feet to a point, thence running with the division line between Parcels J and K as shown on the abovementioned plat the following course and distance, viz;

 

4)

South 50 degrees 13 minutes 52 seconds East 300.00 feet to the point of beginning encompassing 72,329 square feet or 1.660 acres of land, more or less.

BEING all that parcel known as Parcel J on a Plat entitled “Long Gate Center, Parcels I, J & K” and recorded among the Land Records of Howard County, Maryland as Plat No. 12357.

TOGETHER WITH EASEMENTS APPURTENANT to the above described property as defined in Article VI, Shopping Center Easements” in that certain Declaration of Covenants recorded among the Land Records of Howard County, Maryland in Liber 3645, folio 105, as amended by First Amendment to Declaration of Covenants, Conditions and Restrictions and Grant of Easement recorded among the aforesaid Land Records in Liber 3645, folio 176.

TOGETHER WITH the beneficial easements set forth in the following:

 

(a)

Easement Agreement dated September 22, 1994 and recorded among the Land Records of Howard County in Liber 3354, folio 384 by and between 103-29 Limited Partnership, Woodberry Corporation, the Long Gate Parkway Limited Partnership; and

 

(b)

Declaration of Maintenance Obligation for Use-In Common Access Area dated September 27, 1995 and recorded among the Land Records of Howard County in Liber 3589, folio 161 by 103-29 Limited Partnership and The Long Gate Parkway Limited Partnership.

Tax ID No. 02-381702

 

249.	FEE PARCEL DESCRIPTION: UNIT 8001

Lot 1 of CORNERSTONE PLAZA, according to the map or plat thereof as recorded in Plat Book 88, Page 22 of the Public Records of Hillsborough County, Florida.

TOGETHER WITH those certain easements as set forth in Declaration of Covenants, Restrictions and Easements recorded in Official Records Book 10225, Page 596, of the Public Records of Hillsborough County, Florida.

 

250.	FEE PARCEL DESCRIPTION: UNIT 8002

Parcel “A” Fee Parcel:

Lots 2 and 3 of BIG BEAR COMMERCIAL PARK PHASE 1, according to the map or plat thereof as recorded in Plat Book 93, Page 20 of the Public Records of Hillsborough County, Florida, LESS AND EXCEPT that part of Lot 3 described as follows:

 

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Begin at the Easternmost corner of Lot 4 of Big Bear Commercial Park Phase 1, according to a map or plat thereof, as recorded in Plat Book 93, Page 20 of the Public Records of Hillsborough County, Florida and run thence South 41°45’28” West, along the Southeasterly boundary of said Lot 4, a distance of 239.75 feet to the Southernmost corner of said Lot 4; thence departing said Southeasterly boundary, North 48°20’08” West, along the Southwesterly boundary of said Lot 4, a distance of 162.69 feet to a point of intersection with the Southerly right of way line of Dona Michelle Drive according to said map or plat of Big Bear Commercial Park Phase 1; thence departing said Southwesterly boundary, North 01°11’48” West, along said southerly right of way line, a distance of 93.30 feet to the beginning of a curve, said curve being concave to the Southeast and having a radius of 200.00 feet; thence Northerly, along the arc of said curve and said Southerly right of way line, a distance of 161.31 feet, said curve having a chord bearing of North 21°54’33” East and chord distance of 156.97 feet to a point of tangency; thence continue along said Southerly right of way line, North 45°00’53” East, a distance of 118.15 feet to a point of intersection with a line lying and being 94.32 feet East of and parallel with the common boundary between Lots 3 and 4 according to said map or plat of Big Bear Commercial Park Phase 1; thence departing said Southerly right of way line, South 48°20’08” East, along said parallel line, a distance of 272.85 feet to a point of intersection with the Southeasterly boundary of said Lot 3; thence departing said parallel line, South 41°45’28” West, along said Southeasterly boundary of Lot 3, a distance of 94.32 feet to the point of beginning.

Parcel “B” Easement Parcel

TOGETHER WITH non-exclusive easements, rights and interests appurtenant to Parcel “A” created and described in that certain Drainage Declaration (Including Covenants, Conditions, Restrictions and Easements) recorded June 6, 2002, in Official Records Book 11691, at Page 1738 of the Public Records of Hillsborough County, Florida, over, under, and across the lands described therein, LESS AND EXCEPT any portion thereof lying within hereinabove described Parcel “A”:

Parcel “C” Easement Parcel:

TOGETHER WITH all easement rights appurtenant to Parcel A as described in that Easement Agreement recorded in Official Records Book 8986, at Page 1098 as supplemented by that Supplement to Easement Agreement recorded in Official Records Book 9783, page 468 both recorded in the Public Records of Hillsborough County, Florida.

Parcel “D” Easement Parcel:

TOGETHER WITH all easement rights appurtenant to Parcel A as described in that Grant of Easement recorded in Official Records Book 11723, page 1929 of the Public Records of Hillsborough County, Florida.

 

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Parcel “E” Easement Parcel:

TOGETHER WITH all easement rights appurtenant to Parcel A as described in that Grant of Easement recorded in Official Records Book 11723, page 1943 of the Public Records of Hillsborough County, Florida.

Parcel “F” Easement Parcel:

TOGETHER WITH all easement rights appurtenant to Parcel A as described in that Declaration of Covenants, Conditions, Restrictions and Easements recorded in Official Records Book 12033, page 1202 of the Public Records of Hillsborough County, Florida.

 

251.	FEE PARCEL DESCRIPTION: UNIT 8109

PARCEL I:

ALL that certain lot, parcel or tract of land, situate and lying in the Township of Evesham, County of Burlington, State of New Jersey, and being more particularly described as follows:

BEG1NNNG at a point in the Westerly line of New Jersey State Highway Route 73 (126 feet wide) a distance of 618.92 feet Southwardly from a monument corner to lands now or formerly of Theodore Plaska (Block 36, Lot 4, Evesham Township Tax Map) said point also being in the division line between Lots 4.02 and 4.05, Block 36 on the Plan hereinafter mentioned and extending; thence

(1) South 89 degrees 07 minutes 43 seconds West along said division line a distance of 480.18 feet to a point said point being in the Township dividing line of the Township of Evesham (Burlington County) from the Township of Voorhees (Camden County); thence

(2) North 12 degrees 41 minutes 15 seconds West along said Township line a distance of 605.95 feet to a point in the line of lands now or formerly of Theodore Plaska (Lot 4, Block 36, Tax Map); thence

(3) North 86 degrees 42 minutes 36 seconds East along said lands of Plaska, a distance of 610.91 feet to a point in the Westerly line of New Jersey State Highway Route 73; thence

(4) South 00 degrees 18 minutes 23 seconds East along the Westerly line of New Jersey State Highway Route 73, a distance of 618.92 feet to the first mentioned point and place of beginning.

PARCEL II:

Together with rights under the Declaration of Cross Easements as set forth in Deed Book 3888 page 264; Amended & Restated Declaration of Cross Easement as set forth in Deed Book 6352, page 230; Supplement to Amended and Restated Declaration of Cross Easements as set forth in Deed Book 6352, page 259; First Amendment to Supplement to Amended and Restated Declaration of Cross Easements in Deed Book 6399, page 960 and First Amendment to Amended and Restated Declaration of Cross Easements as set forth in Deed Book 6399, page 968.

BEING shown and designated as Lot 4-BA, Block 36, on Plan of Minor Subdivision, Plate 6, Block 36, Lot 4, Evesham Township, Burlington County, prepared by Korab, McConnell & Dougherty Assoc., PA, dated 11/20/1985 and last revised 12/09/1987 and duly filed in the Burlington County Clerk’s Office on 10/12/1988 as Map #04807.

 

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FOR INFORMATIONAL PURPOSES ONLY:

Premises described herein is designated as Lot 4.05 Block 36 on the Tax Map of the Township of Evesham, Burlington County, NJ

 

252.	FEE PARCEL DESCRIPTION: UNIT 8302

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF STERLING HEIGHTS, MACOMB COUNTY, STATE OF MICHIGAN, AND IS DESCRIBED AS FOLLOWS:

Parcel 1:

Part of the East 131.00 feet of Lot 44, Lakeside Subdivision No. 6, according to the recorded plat thereof, as recorded in Liber 73 of Plats, pages 15 and 16, Macomb County Records, described as that part of Lot 44:

Commencing at the Northwest corner of Lot 44; thence along the North lot line North 87°50’31” East, 49.00 feet to the Point of Beginning; thence continuing along said North lot line North 87°50’31” East, 75.00 feet; thence South 02°09’29” East, 439.50 feet to a point on the South lot line of said Lot 44; thence along said lot line South 87°50’31” West, 75.00 feet; thence North 02°09’29” West, 439.50 feet to the Point of Beginning.

Parcel 2:

All of Lot 43 and that part of Lot 44 described as follows:

Beginning at the Northwest corner of Lot 44; thence along the North lot line North 87 degrees 50 minutes 31 seconds East, 49.00 feet; thence South 02 degrees 09 minutes 29 seconds East, 439.50 feet to the Southerly line of said Lot 44; thence South 87 degrees 50 minutes 31 seconds West, 4.00 feet; thence 45.02 feet along a curve to the left, said curve having a radius of 763.34 feet and central angle of 03 degrees 22 minutes 50 seconds and a chord bearing and distance of South 86 degrees 09 minutes 06 seconds West, 45.01 feet to the Southwest corner of said Lot 44; thence North 02 degrees 09 minutes 29 seconds West, 440.83 feet to the Point of Beginning, included in the plat of Lakeside Subdivision No. 6, according to the plat thereof, as recorded in Liber 73, pages 15 and 16 of Plats, Macomb County Records.

TOGETHER WITH the non-exclusive rights, and subject to the terms, conditions, provisions and limitations contained in the Operating Agreement recorded in Liber 2507, page 550, as affected by Affidavit recorded in Liber 2614, page 845, and as amended by First Amendment to Operating Agreement recorded in Liber 2627, page 952 and Second Amendment to Operating Agreement recorded in Liber 2793, page 209 and Supplemental Agreement recorded in Liber 2861, page 346.

Parcel ID: 10-01-102-008

Street Address: 13905 Lakeside Circle, Sterling Heights

 

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253.	FEE PARCEL DESCRIPTION: UNIT 8609

Situated in the Township of Boardman, County of Mahoning and State of Ohio: And known as being Sublot No. 4, in Tiffany Plat No. 4, a subdivision of a part of original Boardman Township Great Lot No. 30—3rd division, as shown by the recorded plat of said subdivision in Map Volume 74, Page 249, of the Mahoning County Records; together with two perpetual non-exclusive easements of ingress and egress, granted by Deed dated August 25, 1983, and filed for record on September 6, 1983, in Deed Volume 1498, Page 649, and Volume 1498, Page 653, of the Mahoning County Records of Deeds, respectively.

Being the same property as conveyed to Outback Steakhouse of Florida Inc., a Florida corporation by virtue of a Quit Claim Deed from Chi Chi’s Inc, a corporation organized and existing under the laws of Delaware dated February 22, 2005, recorded March 1, 2005, by Instrument No. 200500006621, as affected by that certain Declaration Regarding Merger recorded on November 23, 2011 as Volume 5933, Page 2136, Mahoning County, OH Deed Records

 

254.	FEE PARCEL DESCRIPTION: UNIT 8705

All that certain tract or parcel of land situated in the City of Charlottesville, Virginia, at the northeasterly intersection of U.S. Route 29 and Seminole Court, more particularly described as Lot 1, Block C of Seminole Square, containing 1.482 acres, more or less, as shown and described on plat of William S. Roudabush, Inc., dated April 26, 1984, last revised July 30, 1984, and recorded in the Clerk’s Office of the Circuit Court of the City of Charlottesville in Deed Book 454, Pages 678 and 679.

TOGETHER WITH an appurtenant non-exclusive easement for access and parking across and on the property shown on the aforesaid plat in the shaded area adjoining the above lot and labeled “Parking Easement”, said easement being more particularly described in deed of record in the aforesaid Clerk’s Office in Deed Book 454, Page 674.

BEING the same property conveyed to Private Restaurant Properties, LLC, by deed dated June 14, 2007 and recorded April 7, 2008 in Deed Book 1183, Page 45.

Tax Map No. 41C003200

 

255.	FEE PARCEL DESCRIPTION: UNIT 8908

ALL THAT CERTAIN lot or tract of ground being known as Lot No. 2 as shown on a Final Plan of North Pointe Center, as prepared by Rettew Associates, Inc., for High Associates, Ltd. on a drawing dated April 27, 1988, being drawing No. 87-204-03FF, said plan being recorded in the Recorder of Deeds Office in and for Lancaster County, Pennsylvania in Plan Book J-160, page 30, situate in the Township of Manheim, County of Lancaster and Commonwealth of Pennsylvania, being more fully bounded and described as follows, to wit:

 

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BEGINNING at a point at the Southern right of way line of North Pointe Boulevard at the common property corner of Lots 2 and 3; thence, from said point of beginning the following sixteen (16) courses and distances: (1) along said right of way of North Pointe Boulevard by a curve to the left, having a radius of 175.00 feet and an arc length of 82.36 feet to a point; thence (2) along said right of way of North Pointe Boulevard South 82 degrees 19 minutes 20 seconds East, a distance of 26.05 feet to a point; thence (3) along said right of way of North Pointe Boulevard by a curve to the right; having a radius of 180.00 feet and an arc length of 85.34 feet to a point; thence, (4) along said right of way of North Pointe Boulevard South 55 degrees 09 minutes 30 seconds East, a distance of 119.33 feet to a point; thence (5) by a curve, curving to the right, having a radius of 17.00 feet and a length of 26.70 feet to a point on the Western right of way of the Oregon Pike; thence (6) along said right of way of the Oregon Pike, South 34 degrees 50 minutes 30 seconds West, a distance of 113.27 feet to a point; thence (7) along said right of way line of the Oregon Pike, North 55 degrees 09 minutes 30 seconds West, a distance of 24.00 feet to a point; thence (8) along said right of way of the Oregon Pike, South 34 degrees 50 minutes 30 seconds West, a distance of 132.25 feet to a point; thence (9) along said right of way of the Oregon Pike, North 55 degrees 18 minutes 46 seconds West, a distance of 2.58 feet to a point; thence (10) along said right of way of the Oregon Pike on a curve, curving to the right, with a radius of 428.34 feet and a length of 360.40 feet to a point on the Northern right of way of a ramp leading to Route 30 West; thence (11) along said right of way of the ramp leading to Route 30 West, South 83 degrees 03 minutes 38 seconds West, a distance of 298.26 feet to a point; thence (12) along said right of way of the ramp leading to Route 30 West, North 76 degrees 08 minutes 03 seconds West, a distance of 268.61 feet to a point; thence (13) along the Southern boundary of Beverly Estates, North 79 degrees 31 minutes 40 seconds East, a distance of 317.39 feet to an iron pin; thence (14) along the Eastern Boundary of Beverly Estates, North 07 degrees 40 minutes 40 seconds East, a distance of 264.82 feet to a point; thence (15) South 82 degrees 19 minutes 20 seconds East, a distance of 247.66 feet to a point, thence (16) North 34 degrees 38 minutes 38 seconds East, a distance of 251.36 feet to a point, said point being the place of beginning.

CONTAINING 242,586.37 square feet or 5.5690 acres.

Together with all common use and interest in Easements as set forth in Declaration of Covenants, Easements, Conditions and Restrictions of The North Pointe Center dated November 7, 1990 by Oregon Pike Associates and recorded in Book 3033, Page 393. Together with all common use and interest in Easements as set forth in Cross Easement Agreement dated June 28, 1999 between Outback Steakhouse of Florida, Inc. and 120 North Pointe Associates recorded in Book 6308, Page 294.

Being the same premises Oregon Pike Associates and High Associates, Ltd. by Deed dated 02-23-1998 and recorded 02-25-1998 in Lancaster County in Instrument Number                  conveyed unto Outback Steakhouse of Florida, Inc., a Florida Corporation, in fee.

Being the same premises which Outback Steakhouse of Florida, Inc., a Florida Corporation by Deed dated 4-11-2007 and recorded 7-5-2007 in Lancaster County in Instrument Number 5632567 conveyed unto Private Restaurant Properties, LLC, a Delaware limited liability company, in fee.

 

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256. FEE PARCEL DESCRIPTION: UNIT 9301

All that tract or parcel of land lying and being in the District of Knox County, Tennessee, and being more particularly described as follows:

SITUATED In District Six of Knox County, Tennessee, and within the 47th Ward of the City of Knoxville, Tennessee and being designated as Lot 2R1 of The Market Place Subdivision, as shown by plat titled “Resubdivision of Lot Number 2 of The Market Place Subdivision”, of record in Cabinet L, Slide 248-B, In the Office of the Register of Deeds for Knox County, Tennessee, and being more particularly described as follows:

BEGINNING at an iron rod set in the northerly right-of-way line of N. Peters Road at the point of curvature of the westerly right-of-way line of Market Place Boulevard, said point also being North 82 deg. 09 min. 35 sec. West, 81.90 feet from the centerline intersection of N. Peters Road and The Market Place Subdivision; thence along the northerly right-of-way line of N. Peters Road the following three (3) calls, 39.04 feet along a curve to the left having a radius of 2040.00 feet, a chord bearing of South 67 deg. 02 min. 49 sec. West, and a chord distance of 39.03 feet to an iron rod set; thence South 66 deg. 30 min. 00 sec. West, 80.76 feet to an Iron rod set; thence 31.67 feet along a curve to the right having a radius of 1410.00 feet, a chord bearing of South 67 deg. 08 min. 35 sec. West, and a chord distance of 31.67 feet to an Iron rod set at the common corner with Lot 1R3R of The Market Place Subdivision; thence, leaving the northerly right-of-way line of N. Peters Road along the common line with Lot 1R3R, North 12 deg, 37 min. 00 sec, West, 359.84 feet to an Iron rod set at the common line with Lot 2R2 of The Market Place Subdivision; thence leaving the common line of Lot 1R3R along the common line of Lot 2R2, said common line also being the centerline of a 25 foot wide joint permanent easement, North 76 deg. 10 min. 40 sec. East, 248.68 feet to a spike found in the westerly right-of-way line of Market Place Boulevard; thence leaving the common line with Lot 2R2 along the westerly right-of-way line of Market Place Boulevard the following six (6) calls, South 13 deg. 49 min. 20 sec. East, 12.50 feet to a spike found; thence South 58 deg. 49 min. 20 sec. East, 17.68 feet to a punch point in a concrete curb; thence 64.01 feet along a curve to the right having a radius of 170.79 feet, a chord bearing of South 02 deg. 43 min. 57 sec. West, and a chord distance of 63.64 feet to an Iron rod found; thence South 13 deg. 33 min. 12 sec, West, 50.00 feet to an iron rod found; thence 159.69 feet along a curve to the left having a radius of 317.89 feet a chord bearing of South 00 deg. 50 min. 17 sec. East, and a chord distance of 158.02 feet to an iron rod found; thence 72.28 feet along a curve to the right having a radius of 50.00 feet, a chord bearing of South 26 deg. 11 min. 01 sec. West, and a chord distance of 66.15 feet to the Point of Beginning.

BEING the same property conveyed to Private Restaurant Properties, LLC by Quit Claim Deed dated June 14, 2007, recorded in Instrument No. 200706290107530, in the Register’s Office for Knox County, Tennessee.

Easement Parcel

Together with those easements contained in that Declaration of Permanent Access Easement dated April 6, 1988, of record in Deed Book 1943, page 148, corrected and restated in Deed Book 1952, page 999, in the Register’s Office for Knox County, Tennessee and as shown centered inside northern lot line.

 

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257.	FEE PARCEL DESCRIPTION: UNIT 9407

Parcel One

Being all of Lot 2-R containing 1.33 acres, more or less, as shown on a map entitled “Replat of Lots 1 & 2, Voncannon Property, Property of Barrel Boys, LLC, Sandhills Township, Moore County, North Carolina”, dated July 15, 2004, prepared by Stephen R. Sheffield & Associates P.A. which map was recorded in Plat Cabinet 11 at Slide 727 of the Moore County Public Registry, to which map and its recordation reference is hereby made for a more complete, accurate and particular description of said lot.

Parcel Two

Together with the non-exclusive rights, if any, and subject to the terms, conditions, provisions and limitations of that certain Cross Parking and Access Agreement recorded September 23, 2004 in Book 2650, Page 471, Moore County Registry.

 

258.	FEE PARCEL DESCRIPTION: UNIT 9410

BEING a 1.5872 acre tract of land, more or less out of and a part of Lot “D”, Block Thirty-Six (36) of the CARTWRIGHT AND ROBERTS SUBDIVISION “A”, being more particularly described by metes and bounds as follows:

COMMENCING at a 5/8 inch iron rod found for the northeast corner of said 3.5 acre tract of land and the northeast corner of a 0.608 of an acre tract of land conveyed to Snowden-Clark Company by Edward Snowden by deed dated July 20, 1981, and recorded in Volume 2327 at Page 238 of the Deed Records of Jefferson County, Texas, in the west right of way line of Interstate Highway No. 10, 300 foot right of way, from this corner a Texas Highway Department concrete monument found for the point of curvature in the west right of way line of Interstate Highway No. 10 bears North 00 degrees 32 minutes 46 seconds East, 22.52 feet;

THENCE South 89 degrees 29 minutes 17 seconds West with the north line of said 3.5 acre tract of land and the North line of said 0.608 of an acre tract of land, a distance of 203.93 feet to a 1/2 inch iron rod found for the northwest corner of said 3.5 acre tract of land and the northwest corner of said 0.608 of an acre tract of land and in the east right of way of Hillebrandt Bayou, 150 foot right of way;

THENCE South 07 degrees 27 minutes 25 seconds East with the west line of said 3.5 acre tract of land, the west line of said 0.608 of an acre tract of land and the east right of way line of Hillebrandt Bayou, a distance of 252.55 feet to a 5/8 inch iron rod found for the northwest corner of this tract of land and the Place of Beginning and the southwest corner of a 0.646 of an acre tract of land conveyed to Edward Snowden by Willard W. Clark Sr. by deed recorded at Film Code No. 100-13-1178 of the Official Public Records of Real Property of Jefferson County, Texas;

 

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THENCE North 89 degrees 30 minutes 38 seconds East with the north line of this tract and with the south line of said 0.646 of an acre tract of land, a distance of 230.05 feet to a 1/2 inch iron rod set for the northeast corner of this tract of land and the southeast corner of said 0.646 of an acre tract of land in the east line of said 3.5 acre tract and in the west right of way line of Interstate Highway No. 10 and in a curve to the right in the right of way line of Interstate Highway No. 10 a radial bearing of North 86 degrees 29 minutes 13 seconds West;

THENCE in a southerly direction with the east line of this tract, the east line of said 3.5 acre tract and a curve to the right in the west right of way line of Interstate Highway No. 10, having a central angle of 04 degrees 33 minutes 45 seconds, a radius of 3694.76 feet and a length of 294.21 feet and a chord bearing and distance of South 05 degrees 47 minutes 40 seconds West, 294.13 feet to a 1/2 inch iron rod set for the southeast corner of this tract of land a radial bearing of North 81 degrees 55 minutes 28 seconds West;

THENCE South 89 degrees 30 minutes 38 seconds West with the south line of this tract of land, a distance of 238.98 feet to a 1/2 inch iron rod found for the southwest corner of this tract of land and in the west line of said 3.5 acre tract of land and in the east right of way line of Hillebrandt Bayou;

THENCE North 07 degrees 31 minutes 02 seconds East with the west line of this tract, the west line of said 3.5 acre tract and the east right of way line of Hillebrandt Bayou, a distance of 295.24 feet to the Place of Beginning containing within said boundaries, 1.5872 acres of land, more or less.

 

259.	FEE PARCEL DESCRIPTION: UNIT 9414

TRACT I: FEE SIMPLE

Lot 6, Block A of Fairview Farm Marketplace, an addition to the City of Plano, Collin County, Texas, according to the plat thereof recorded in Cabinet N, Page 22, Map Records, Collin County, Texas.

TRACT II (EASEMENT ESTATE)

Those easement rights created in that certain Construction, Operation and Reciprocal Easement Agreement executed by and between Fairview Farm Land Company, Ltd. and Costco Wholesale Corporation, dated February 2, 2000, filed for record February 3, 2000 and recorded in Volume 4596, Page 19, Land Records, Collin County, Texas.

TRACT III (EASEMENT ESTATE)

Those easement rights created in that certain Non-Exclusive Parking Easement Agreement executed by and between Cypress/UE Plano I, L.P. and Fairview Farm Land Co., Ltd. dated September 21, 2001, filed for record September 24, 2001 and recorded in Volume 5009, Page 1449, Land Records, Collin County, Texas.

 

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TRACT IV (EASEMENT ESTATE)

Those easement rights created in that certain Reciprocal Easement Agreement and Restrictions executed by and between Landry’s Crab Shack, Inc. and Fairview Farm Development Co., Ltd. dated September 9, 1997, filed for record September 12, 1997 and recorded in Volume 3996, Page 1582, Land Records, Collin County, Texas.

 

260.	FEE PARCEL DESCRIPTION: UNIT 9704

Being all of Parcel 1-B, Trinity Centre as recorded in Deed Book 11662 at Page 1559 among the Land Records of Fairfax County, Virginia and being more particularly described as follows:

Beginning for the same at a point on the northerly right-of-way line of Lee Highway – Route 29 (r-o-w varies), said point also being the southwesterly corner of Parcel 1-C, Trinity Centre as recorded in Deed Book 11662 at Page 1559 among the aforementioned Land Records; thence running with said northerly right-of-way line of Lee Highway the following:

1. South 87°57’29” West, 62.21m (204.10’) to a point being the southerly corner of Parcel 13-B, Trinity Centre as recorded in Deed Book 11662 at Page 1559 among the aforementioned Land Records; thence leaving Lee Highway – Route 29 and running with said Parcel 13-B, Trinity Centre the following six (6) courses and distances;

 

2.	North 29°54’13” West, 6.816m (22.36’) to a point; thence

 

3.	North 00°42’33” West, 8.230m (27.00’) to a point; thence

 

4.	North 16°12’12” West, 37.231m (122.15’) to a point; thence

 

5.	North 29°14’29” West, 36.851m (120.90’) to a point; thence

 

6.	North 60°45’11” East, 31.207m (102.38’) to a point, thence

 

7.	North 87°57’29” East, 65.012m (213.30’) to a point being the northwesterly corner of the aforementioned Parcel 1-C Trinity Centre; thence running leaving Parcel 13-B Trinity Centre and running with Parcel 1-C the following three (3) courses and distances;

 

8.	South 02°02’31” East, 39.999m (131.23’) to a point; thence

 

9.	South 87°57’29” West, 1.600m (5.25’) to a point; thence

 

10.	South 02°02’31” East, 57.395m (188.30’) to the point of beginning and containing 7,318.8 square meters (78,779 sq. ft.) or 0.73188 hectares (1.80852 acres), more or less.

TOGETHER WITH AND SUBJECT TO those non-exclusive easements set forth in the Declaration of Trinity Centre as recorded in Deed Book 10489 at Page 1262, as supplemented by the Supplementary Declaration for Trinity Centre Restaurant Park and Amendment to Declaration for Trinity Centre as recorded in Deed Book 13582 at Page 716, among the aforesaid Land Records.

TOGETHER WITH those non-exclusive easements set for in the Reciprocal Easement Agreement dated June 6, 1990 and recorded among the land Records on June 7, 1990 in Deed Book 7605 at Page 808, as amended by the First Amendment to Reciprocal Easement Agreement dated August 24, 1995 and recorded among the Land Records on September 27, 1995 in Deed Book 9517 at Page 505.

 

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TOGETHER WITH Easements as set forth in the Easement Agreement dated April 20, 1998 and recorded among the Land Records on May 18, 1995 in Deed Book 9411 at Page 1962.

NOTE FOR INFORMATIONAL PURPOSES ONLY: Tax Map No. 054-3-21-0001B

 

261.	FEE PARCEL DESCRIPTION: UNIT 9802

Parcel 1 of Certified Survey Map No. 1925, recorded on August 21, 1973 in Volume 13 of Certified Survey Maps, at Pages 191, 192 and 193, as Document No. 860635, being a part of the Southwest  ¹/4 of Section 28, Township 7 North, Range 20 East, in the City of Brookfield, County of Waukesha, State of Wisconsin;

AND a parcel of land in said Southwest  ¹/4, both of which are bounded and described as follows:

COMMENCING at the West 1/4 corner of said Section 28; thence South 00°34’51” East a distance of 1203.12 feet along the West line of said Section 28; thence North 83°56’ 09” East, a distance of 1147.58 feet; thence South 00° 02’ 25” East, a distance of 85.48 feet; thence North 83° 56’ 09” East, a distance of 190.07 feet along the South right-of-way line of Bluemound Road, 170 feet wide, to THE POINT OF BEGINNING of this description, said point being the Northwest corner of Parcel 1 of the aforementioned Certified Survey Map; thence North 83° 56’ 09” East, a distance of 380.23 feet along the South right-of-way line of Bluemound Road; thence South 87°49’18” East, a distance of 34.85 feet; thence South 00° 02’ 25” East, a distance of 383.47 feet; thence South 83° 56’ 09” West, a distance of 415.24 feet; thence North 00° 02’ 25” West a distance 388.49 feet to the POINT OF BEGINNING.

 

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EXHIBIT B

GUARANTY

AMENDED AND RESTATED GUARANTY

This AMENDED AND RESTATED GUARANTY (this “Guaranty”), dated as of the 27th day of March, 2012, is made by OSI RESTAURANT PARTNERS, LLC, a Delaware limited liability company (“Guarantor”), to and for the benefit of NEW PRIVATE RESTAURANT PROPERTIES, LLC, a Delaware limited liability company (“Landlord”).

W I T N E S S E T H :

WHEREAS, Private Restaurant Properties, LLC (“Original Landlord”), as lessor, and Private Restaurant Master Lessee, LLC, a Delaware limited liability company (“Tenant”), as lessee, entered into that certain Master Lease Agreement, dated as of June 14, 2007 (as subsequently amended pursuant to that certain First Amendment to Master Lease Agreement, dated as of September 15, 2007, and as may have been further amended, supplemented, restated or otherwise modified from time to time prior to the date hereof, the “Original Lease”), pursuant to which Original Landlord leased to Tenant the premises described therein;

WHEREAS, all of the membership interests in Tenant are owned by Guarantor;

WHEREAS, as a material inducement to Original Landlord entering into the Original Lease, Guarantor executed and delivered that certain Guaranty, dated as of June 14, 2007 (the “Original Guaranty”), guaranteeing Tenant’s obligations under the Original Lease;

WHEREAS, on the date hereof, Original Landlord has conveyed all of its right, title and interest in and to the Leased Properties (as hereinafter defined) to Landlord and Landlord and Tenant have amended the Original Lease pursuant to that certain Amended and Restated Master Lease Agreement, dated of even date herewith, a copy of which is attached hereto as Exhibit A (as the same may be further amended, assigned, supplemented or modified in accordance with the terms thereof and this Guaranty, the “Lease”), pursuant to which Landlord leases to Tenant the properties described therein (the “Leased Properties”). Capitalized terms used but not defined herein shall have the meaning assigned to such terms in the Lease; and

WHEREAS, Guarantor and Landlord have agreed to amend and restate the Original Guaranty in its entirety pursuant the terms of this Guaranty, the execution and delivery by Guarantor of this Guaranty is a material inducement to Landlord entering into the Lease, and Guarantor expects to derive financial benefit from the Lease.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledged by Guarantor, and intending to be legally bound, Guarantor hereby agrees as follows:

 

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ARTICLE I

GUARANTEE

Section 1.01. Guaranteed Obligations. Guarantor hereby absolutely unconditionally and irrevocably guarantees to Landlord and its successors and assigns the due, punctual and full payment, performance and observance of the following (collectively, the “Guaranteed Obligations”):

(a) the full and timely payment of all Rent and all other amounts due or to become due to Landlord from Tenant under the Lease (collectively, the “Monetary Obligations”); and

(b) all covenants, agreements, terms, obligations and conditions, undertakings and duties contained in the Lease required to be observed, performed by or imposed upon Tenant under the Lease, including, but not limited to, those contained in Section 5.3 and Article XIII thereof (collectively, the “Performance Obligations”),

as and when such payment, performance or observance shall become due (whether by acceleration or otherwise) in accordance with the terms of the Lease. If for any reason any Monetary Obligation shall not be paid promptly when due, Guarantor shall, within five (5) Business Days after written demand, pay the same to Landlord or the person or entity to whom such amounts are to be paid under the Lease. If for any reason Tenant shall fail to perform or observe any Performance Obligation, Guarantor shall upon written demand, perform and observe the same or cause the same to be performed or observed prior to the expiration of any applicable cure period available to Tenant under the Lease with respect thereto. The notice and cure periods afforded to Guarantor under this Guaranty may be triggered by Landlord and may run concurrently with any similar notice and cure period, if any, afforded under the terms of the Lease.

Section 1.02. Guarantee Unconditional. The obligations of Guarantor hereunder are continuing, absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, discharged, abated, impaired or in any way affected by:

(a) any amendment, modification, extension, renewal or supplement to the Lease or any termination of the Lease as to all or any portion of the Leased Properties either pursuant to Article I or X thereof or otherwise;

(b) any assumption by any party of Tenant’s obligations under, or Tenant’s assignment of any of its interest in, the Lease;

(c) any exercise or nonexercise of or delay in exercising any right, remedy, power or privilege under or in respect of this Guaranty or the Lease or pursuant to applicable law, including, without limitation, any so-called self-help remedies, or any waiver, consent, compromise, settlement, indulgence or other action or inaction in respect thereof;

(d) any change in the financial condition of Tenant, the voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the assets, marshalling of assets and liabilities, receivership, conservatorship, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting Tenant or Guarantor or any of their assets or any impairment, modification, release or limitation of liability of Tenant or Guarantor or their respective estates in bankruptcy or of any remedy for the enforcement of such liability resulting from the operation of any present or future provision of the United States Bankruptcy Code or other similar statute or from the decision of any court;

 

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(e) any extension of time for payment or performance of the Guaranteed Obligations or any part thereof;

(f) except to the extent that Tenant is released from certain obligations and liabilities under the provisions of Article I or Article X of the Lease expressly providing for such release (and then only to such extent as is provided therein with respect to the circumstances giving rise thereto), the release or discharge of or accord and satisfaction with Tenant from performance or observance of any of the agreements, covenants, terms or conditions contained in the Lease by operation of law;

(g) the failure of Landlord to keep Guarantor advised of Tenant’s financial condition, regardless of the existence of any duty to do so;

(h) any assignment by Landlord of all of Landlord’s right, title and interest in, to and under the Lease and/or this Guaranty as collateral security for Landlord’s Debt;

(i) any present or future law or order of any government (de jure or de facto) or of any agency thereof purporting to reduce, amend or otherwise affect the Guaranteed Obligations or any or all of the obligations, covenants or agreements of Tenant under the Lease (except by payment and performance in full of all Guaranteed Obligations) or Guarantor under this Guaranty (except by payment and performance in full of all Guaranteed Obligations);

(j) the default or failure of Guarantor fully to perform any of its obligations set forth in this Guaranty;

(k) any actual, purported or attempted sale, assignment or other transfer by Landlord of the Lease or the Leased Properties or any part thereof or of any of its rights, interests or obligations thereunder;

(l) any merger or consolidation of Tenant into or with any other entity, or any sale, lease, transfer or other disposition of any or all of Tenant’s assets or any sale, transfer or other disposition of any or all of the shares of capital stock or other securities of or ownership interests in Tenant or any affiliate of Tenant to any other person or entity; or

(m) Tenant’s failure to obtain, protect, preserve or enforce any rights in or to the Lease or the Leased Properties or any interest therein against any party or the invalidity or unenforceability of any such rights;

all of which may be given or done without notice to, or consent of, Guarantor, except as to demands upon Guarantor hereunder, as expressly provided in the portion of Section 1.01 hereof following Section 1.01(b) hereof.

No setoff, claim, reduction or diminution of any obligation, or any defense of any kind or nature (except the Tenant’s performance of such obligations) which Tenant or Guarantor now has or hereafter may have against Landlord shall be available hereunder to Guarantor against Landlord.

 

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Section 1.03. Disaffirmance of Lease. Guarantor agrees that, in the event of rejection or disaffirmance of the Lease by Tenant or Tenant’s trustee in bankruptcy pursuant to the United States Bankruptcy Code or any other law affecting creditors’ rights, Guarantor will, if Landlord so requests, assume all obligations and liabilities of Tenant under the Lease, to the same extent as if Guarantor had been originally named instead of Tenant as a party to the Lease and there had been no rejection or disaffirmance; and Guarantor will confirm such assumption in writing at the request of Landlord on or after such rejection or disaffirmance. Guarantor, upon such assumption, shall have all rights of Tenant under the Lease (to the extent permitted by law).

Section 1.04. Preferential Payment. Guarantor further agrees that to the extent Tenant or Guarantor makes any payment to Landlord in connection with the Guaranteed Obligations and all or any part of such payment is subsequent invalidated, declared to be fraudulent or preferential, set aside or required to be repaid by Landlord or paid over to a trustee, receiver or any other entity, whether under any bankruptcy act or otherwise (any such payment is hereinafter referred to as a “Preferential Payment”), then this Guaranty shall continue to be effective or shall be reinstated, as the case may be, and, to the extent of such payment or repayment by Landlord, Tenant’s Obligations or part thereof intended to be satisfied by such Preferential Payment shall be revived and continued in full force and effect as if such Preferential Payment had not been made.

Section 1.05. No Notice or Duty to Exhaust Remedies. Guarantor hereby waives notice of any default in the payment or non-performance of any of the Guaranteed Obligations (except as expressly required hereunder), diligence, presentment, demand, protest and all notices of any kind. Subject only to the notice and cure periods afforded to Guarantor as provided in the portion of Section 1.01 hereof following Section 1.01(b) hereof, Guarantor agrees that liability under this Guaranty shall be primary and hereby waives any requirement that Landlord exhaust any right or remedy, or proceed first or at any time, against Tenant or any other guarantor of, or any security for, any of the Guaranteed Obligations. Landlord may pursue its rights and remedies under this Guaranty and under the Lease in whatever order it chooses, or collectively. This Guaranty is a guaranty of payment and performance and not merely of collection.

Landlord may pursue its rights and remedies under this Guaranty notwithstanding any other guarantor of or security for the Guaranteed Obligations or any part thereof. Guarantor authorizes Landlord, at its sole option, without notice or demand and without affecting the liability of Guarantor under this Guaranty, to terminate the Lease, either in whole or in part, in accordance with its terms.

Each default with regard to any of the Guaranteed Obligations shall give rise to a separate cause of action and separate suits may be brought hereunder as each cause of action arises or, at the option of Landlord, any and all causes or action which arise prior to or after any suit is commenced hereunder may be included in such suit.

Section 1.06. Waiver of Defenses. To the fullest extent permitted by law, Guarantor waives (a) any right to require Landlord to (i) proceed against Tenant or any other person or entity; (ii) proceed against or exhaust any security held from Tenant; (iii) pursue any other remedy in Landlord’s power against Tenant which Guarantor cannot itself pursue, and which would lighten its burden; (b) all statutes of limitation as a defense to any action brought against Guarantor by

 

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Landlord to the fullest extent permitted by law; (c) any defense based upon the bankruptcy, reorganization, receivership, insolvency, or debtor-relief proceeding of Tenant; and (d) presentment, demand, protest and notice of any kind (except, as to demands upon Guarantor hereunder, as expressly provided in the portion of Section 1.01 hereof following Section 1.01(b) hereof). Except as required hereunder, Guarantor waives all demand and notices, including demands for performance, notices of non-performance, notices of non-payment and notice of acceptance of this Guaranty.

Section 1.07. Subrogation. Notwithstanding any other provision of this Guaranty to the contrary, until the Guaranteed Obligations are fully performed and paid, Guarantor hereby waives any claims or other rights which Guarantor may now have or hereafter acquire against Tenant or any other guarantor of all or any of the Guaranteed Obligations, which claims or other rights arise from the existence or performance of Guarantor’s obligations under this Guaranty (all such claims and rights are referred to as “Guarantor’s Conditional Rights”), including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, or indemnification, any right to participate in any claim or remedy of Landlord against Tenant or any collateral which Landlord now has or hereafter acquires, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, by any payment made hereunder or otherwise, including without limitation, the right to take or receive from Tenant, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or security on account of such claim or other right. If, notwithstanding the foregoing provision, any amount shall be paid to Guarantor on account of any Guarantor’s Conditional Rights and either (i) such amount is paid to Guarantor at any time when the Guaranteed Obligations shall not have been paid or performed in full, or (ii) regardless of when such amount is paid to Guarantor, any payment made by Tenant to Landlord is at any time determined to be a Preferential Payment, then such amount paid to Guarantor shall be held in trust for the benefit of Landlord and shall forthwith be paid to Landlord to be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, in such order as Landlord, in its sole and absolute discretion, shall determine.

To the extent that any of the provisions of this Section 1.07 shall not be enforceable, Guarantor agrees that until such time as the Guaranteed Obligations have been paid and performed in full and the period of time has expired during which any payment made by Tenant or Guarantor to Landlord may be determined to be a Preferential Payment, Guarantor’s Conditional Rights to the extent not validly waived shall be subordinate to Landlord’s right to full payment and performance of the Guaranteed Obligations, and Guarantor shall not enforce Guarantor’s Conditional Rights during such period.

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01. Representations and Warranties. Guarantor hereby represents and warrants to Landlord as follows:

(a) Organization and Qualification. Guarantor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware

 

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(b) Authority and Authorization. Guarantor has full power, authority and legal right to execute and deliver the Guaranty and to perform its obligations hereunder, and all such action has been duly and validly authorized by all necessary limited liability company proceedings on its part.

(c) Execution and Binding Effect. The Guaranty has been duly and validly executed and delivered by Guarantor and constitutes a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors’ rights generally.

(d) Absence of Conflicts. Except as would not reasonably be expected to have a material adverse effect on the ability of Guarantor to perform its obligations under this Guaranty, neither the execution and delivery of this Guaranty nor performance of or compliance with the terms and conditions hereof will (i) violate any law, rule or regulation, (ii) conflict with or result in a breach of or a default under the certificate of formation or limited liability company agreement of Guarantor or any agreement or instrument to which Guarantor is a party or by which it or any of its assets (now owned or hereafter acquired) may be subject or bound, or (iii) result in the creation or imposition of any lien, charge, security interest or encumbrance upon any asset (now owned or hereafter acquired) of Guarantor.

(e) Authorizations and Filings. Except as would not reasonably be expected to have a material adverse effect on the ability of Guarantor to perform its obligations under this Guaranty, no authorization, consent, approval, license, exemption or other action by, and no registration, qualification, designation, declaration or filing with, any Governmental Authority is required in connection with the execution and delivery of the Guaranty or performance of or compliance with the terms hereof.

(f) Litigation. There are no actions, suits or proceedings pending or, to the best of Guarantor’s knowledge, threatened against or affecting Guarantor at law or in equity by or before any court or administrative office or agency which if adversely decided would have a material adverse effect on the ability of Guarantor to perform its obligations under this Guaranty.

Section 2.02. Notice of Certain Events. Promptly upon becoming aware thereof, Guarantor shall give Landlord notice of any downgrade in the corporate family and credit ratings from Moody’s Investor Service Inc. and Standard & Poor’s, respectively, of Guarantor; provided, that no such notice shall be required to the extent that a press release of any such downgrade is issued by Moody’s Investor Service Inc. and Standard & Poor’s, as applicable.

Section 2.03. Estoppel Certificates.

(a) Guarantor shall, at any time upon not less than ten (10) days’ prior written request by Landlord or Landlord’s Lender (but not more than four (4) times in any calendar year), deliver to the party requesting the same a statement in writing, executed by a duly authorized officer of Guarantor, certifying, as of the date thereof, (i) that, except as otherwise specified, this Guaranty is unmodified and in full force in effect, (ii) that, except as otherwise specified, Guarantor is not in default hereunder and that no event has occurred or condition exists which,

 

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with the giving of notice or the passage of time or both, would constitute a default hereunder, (iii) that, except as otherwise specified, Guarantor has no knowledge of any defense, setoff or counterclaim against Landlord arising out of or in any way related to this Guaranty, and (iv) as to such other matters as Landlord or Landlord’s Lender may reasonably request.

(b) Landlord shall, at any time upon not less that ten (10) days’ prior written request by Tenant or Guarantor (but not more than four (4) times in any calendar year), deliver to Guarantor a statement in writing, executed by a duly authorized officer of Landlord, certifying, as of the date thereof, (i) that, except as otherwise specified, this Guaranty is unmodified and in full force and effect, (ii) that, except as otherwise specified, Guarantor is not in default hereunder and that no event has occurred or condition exists which, with the giving of notice or the passage of time or both, would constitute a default hereunder, (iii) that, except as otherwise specified, Landlord has no knowledge of any claim against Guarantor arising out of or in any way related to this Guaranty, for the Guaranteed Obligations or otherwise, and (iv) as to such other matters as Guarantor may reasonably request.

Section 2.04. Acknowledgement of Transition Covenant. Guarantor covenants and agrees that it shall, and shall cause its Subsidiaries and Affiliates to, comply with the provisions of Section 5.3 of the Lease and perform any Transition Services that may be required from time to time under the terms of Section 13.2 of the Lease and any obligations of Tenant under Section 13.3 of the Lease, in each case as a primary and not secondary obligation and to the same extent as if Guarantor were the “Tenant” under the Lease. Guarantor acknowledges and agrees that, in accordance with the terms of Section 13.4 of the Lease, the rights of Landlord provided in Sections 5.3, 13.2 and 13.3 of the Lease may be exercised directly by Landlord’s Lender as a Superior Party, and Guarantor agrees accordingly that Landlord’s Lender shall be entitled to act on behalf of Landlord in enforcing any right, exercising any option or giving any notices or directions under Sections 5.3, 13.2 and 13.3 of the Lease and any corresponding obligation of Guarantor under this Guaranty (including this Section 2.04). Each of Landlord and Tenant agree that Guarantor shall be entitled to rely on any and all communications or acts of Landlord’s Lender, or of any party claiming to be Landlord’s Lender’s agent or representative (but shall not be required to rely if Tenant, Guarantor or any of their respective Affiliates questions in good faith the authority of the Person claiming to be the agent or representative of Landlord’s Lender), with respect to the exercise of any such rights or the giving of any such notice or direction, without the necessity of making any inquiry as to the authority of such Person with respect to such matter and notwithstanding any conflicting instructions from Landlord, and Landlord shall hold Guarantor and its Affiliates harmless for any damages suffered by Guarantor or any such Affiliate incurred because of such reliance by Guarantor or its Affiliates.

Section 2.05. Amendments/Assignments Not Effective. By execution of this Guaranty, Landlord and Tenant hereby affirm and agree that no amendment to or assignment of the Lease shall be effective unless Guarantor shall have affirmed in writing that this Guaranty continues in full force and effect notwithstanding such amendment or assignment.

 

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ARTICLE III

EVENTS OF DEFAULT

Section 3.01. Events of Default. The occurrence of any one or more of the following shall constitute an “Event of Default” under this Guaranty:

(a) a failure by Guarantor to pay when due any Monetary Obligation required to be paid by Guarantor pursuant to the terms of this Guaranty;

(b) a failure by Guarantor duly to perform and observe, or a violation or breach of, any other provision hereof not otherwise specifically mentioned in this Section 3.01;

(c) any representation or warranty made by Guarantor herein proves to be untrue or incorrect when made, in any material respect;

(d) Guarantor shall (i) voluntarily be adjudicated a bankrupt or insolvent, (ii) seek or consent to the appointment of a receiver for itself or its assets, (iii) file a petition seeking relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, (iv) make a general assignment for the benefit of creditors, or (v) be unable to pay its debts as they mature;

(e) a court shall enter an order, judgment or decree appointing, without the consent of Guarantor, a receiver or trustee for it or approving a petition filed against Guarantor which seeks relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, and such order, judgment or decree shall remain undischarged or unstayed sixty (60) days after it is entered; or

(f) Guarantor shall be liquidated or dissolved or shall begin proceedings towards its liquidation or dissolution.

ARTICLE IV

MISCELLANEOUS

Section 4.01. Further Assurances. From time to time upon the request of Landlord, Guarantor shall promptly and duly execute, acknowledge and deliver any and all such further instruments and documents necessary for the continuing effectiveness of this Guaranty. In no event shall Guarantor be required to execute any such instrument or document which would modify, amend or change any term or provision hereof.

Section 4.02. Amendments, Waivers, Etc. This Guaranty cannot be amended, modified, waived, changed, discharged or terminated except by an instrument in writing signed by the party against whom enforcement of such amendment, modification, waiver, change, discharge or termination is sought.

Section 4.03. No Implied Waiver; Cumulative Remedies. No course of dealing and no delay or failure of Landlord in exercising any right, power or privilege under this Guaranty or the Lease shall affect any other or future exercise thereof or exercise of any other right, power or privilege; nor shall any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, power or privilege preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies of Landlord under this Guaranty are cumulative and not exclusive of any rights or remedies which Landlord would otherwise have under the Lease, at law or in equity.

 

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Section 4.04. Notices. All notices, requests, demands, directions and other communications (collectively “notices”) under the provisions of this Guaranty shall be in writing unless otherwise expressly permitted hereunder and shall be sent by (a) first-class or first-class express mail, (b) national overnight courier (e.g., Federal Express, UPS), or (c) for notices other than notices of the occurrence of an Event of Default or the request for payments of the Guaranteed Obligations only, facsimile with confirmation of receipt, in all cases with charges prepaid, and any such properly given notice shall be effective when received or when delivery is refused. All notices shall be sent to the applicable party addressed, if to Landlord, at the address set forth in the Lease with copies thereof to the parties designated to receive copies of notices to Landlord under the Lease, and, if to Guarantor, to the following parties:

 

		Guarantor:		OSI Restaurant Partners, LLC
				2202 North West Shore Boulevard, 5th Floor
				Tampa, FL 33607
				Attention: Chief Financial Officer
				Telecopy No.: (813) 282-9195
				Telephone No.: (813) 282-1225
		With a copy to:		Bain Capital Partners, LLC
				John Hancock Tower
				200 Clarendon Street
				Boston, MA 02116
				Attention: Dave Humphrey
				Telecopy No.: (617) 652-3112
				Telephone No.: (617) 516-2112
		With a copy to:		Sullivan & Cromwell LLP
				125 Broad Street
				New York, N.Y. 10004-2498
				Attention: Arthur Adler, Esq.
				Telecopy No.: (212) 291-9001
				Telephone No.: (212) 558-3960
		With a copy to:		Ropes & Gray LLP
				Prudential Tower
				800 Boylston Street
				Boston, MA 02199-3600
				Attention: Richard E. Gordet, Esq.
				Telecopy No.: (617) 951-7050
				Telephone No.: (617) 951-7491

or in accordance with the last unrevoked written direction from such party to the other party.

 

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Section 4.05. Expenses. Guarantor agrees to pay or cause to be paid and to save Landlord harmless against liability for the payment of all reasonable out-of-pocket expenses, including 310 fees and expenses of counsel for Landlord, incurred by Landlord from time to time arising in connection with Landlord’s enforcement or preservation of rights under this Guaranty, including but not limited to, such expenses as may be incurred by Landlord in connection with any default by Guarantor of any of its obligations hereunder. Such obligation of Guarantor to indemnify Landlord shall survive the payment and performance in full of the Guaranteed Obligations.

Section 4.06. Severability. If any term or provision of this Guaranty or the application thereof to any Person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Guaranty, or the application of such term or provision to Persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Guaranty shall be valid and enforceable to the fullest extent permitted by law.

Section 4.07. Counterparts. This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.

Section 4.08. Governing Law.

(a) This Guaranty shall be construed in accordance with, and this Guaranty and all matters arising out of or relating to this Guaranty shall be governed by, the law of the State of New York without regard to conflicts of law principles.

(b) The parties hereto each hereby consent to the exclusive jurisdiction of any state or federal court located within the County of New York, State of New York, and each irrevocably agrees that all actions or proceedings arising out of or relating to this Guaranty shall be litigated in such courts. The parties hereto each accepts, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts and waives any defense of forum non-conveniens, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Guaranty.

(a) (c) EACH OF THE PARTIES HERETO, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS GUARANTY.

(c) Guarantor acknowledges that the provisions of this Section 4.08 are a material inducement to Landlord’s accepting this Guaranty and entering into the Lease.

Section 4.09. Successors and Assigns. This Guaranty shall bind Guarantor and its successors and assigns, and shall inure to the benefit of Landlord and its successors and assigns.

Section 4.10. Incorporation of Recitals. The recitals set forth in the WHEREAS clauses of this Guaranty are hereby specifically incorporated into the operative terms of this Guaranty as if fully set forth in the body of this Guaranty.

 

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Section 4.11. Rights of Landlord’s Lender. Guarantor acknowledges that if the rights of Landlord under this Guaranty are assigned to Landlord’s Lender, Landlord’s Lender shall have all of the rights and benefits of Landlord hereunder; provided, however, in no event shall Guarantor be liable to Landlord’s Lender or Landlord for any payment or performance of any Guaranteed Obligation by Guarantor to the other (i.e., if Guarantor pays or performs a Guaranteed Obligation in accordance with the terms of this Guaranty to either Landlord or Landlord’s Lender, Guarantor shall not retain the obligation to pay or perform the same Guaranteed Obligation thereafter to the other such party).

Section 4.12. Termination of Original Guaranty. The parties hereto agree that, upon execution and delivery of this Guaranty, the Original Guaranty shall be superseded in its entirety by this Guaranty and be of no further force and effect and Guarantor shall not have any obligation or liability thereunder.

[Remainder of the page intentionally left blank]

 

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IN WITNESS WHEREOF, Guarantor has duly executed and delivered this Guaranty as of the date first above written.

 

NEW PRIVATE RESTAURANT PROPERTIES, LLC, a Delaware limited liability company, hereby accepts this Guaranty and agrees to the terms hereof.

 

For purposes of Sections 2.04 and 2.05 hereof only, PRIVATE RESTAURANT MASTER LESSEE, LLC, a Delaware limited liability company, hereby accepts this Guaranty and agrees to the terms hereof.

 

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EXHIBIT C

FORM OF REMOVAL AMENDMENT

CONFIRMATORY LEASE AMENDMENT FOR REMOVED PROPERTY

This Confirmatory Lease Amendment for Removed Property (this “Amendment”), dated                     , is entered into between NEW PRIVATE RESTAURANT PROPERTIES, LLC (“Landlord”) and PRIVATE RESTAURANT MASTER LESSEE, LLC (“Tenant”) and shall be effective as of              (the “Property Removal Date”).

RECITALS:

WHEREAS, Landlord and Tenant have entered into that certain Amended and Restated Master Lease Agreement dated as of March 27, 2012 [ADD amendments if/as necessary] ([as so amended,)] the “Lease”), pursuant to which Landlord leases to Tenant certain parcels of real property (the “Leased Property”); and

WHEREAS, Landlord and Tenant have terminated and released the Lease as to that certain Leased Property listed on Schedule 1 to this Amendment (the “Removed Property”), and wish to amend the Lease to confirm such termination and release.

AGREEMENT:

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.	Definitions. Capitalized terms defined in the Lease that are used but not defined herein are used herein as so defined in the Lease.

 

2.	Removed Property.

 

(a)

In accordance with Section 1.8 of the Lease, effective as of the Property Removal Date, Landlord and Tenant have terminated and released the Removed Property from the Lease, and Landlord and Tenant have separated and removed the Removed Property from the Leased Property as of the Property Removal Date.

 

(b)

The Base Rent under the Lease has been reduced by $            , such that from and after the Property Removal Date the Base Rent due under the Lease is $            .

 

(c)

The amount of Additional Charges due under the Lease has been reduced by $            , such that from and after the Property Removal Date the amount of Additional Charges due under the Lease is $            .

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3.	Amendments. The Lease is amended, effective as of the Property Removal Date, to:

 

(a)

delete and eliminate the Removed Property from the Lease and all obligations of Tenant thereunder with respect thereto (except for any such obligations that expressly survive the termination of the Lease);

 

(b)

exclude the Removed Property from the definition of Leased Property;

 

(c)

reduce the Base Rent and Additional Charges per Sections 2(b)-(c) hereof; and

 

(d)

remove the information relevant to such Removed Property from each of the other schedules and exhibits to the Lease.

 

4.

Continuing Obligations. With respect to the Removed Property, the terms of Sections 2 and 3 above shall not limit the liability of Tenant for any obligations owed by Tenant to Landlord on account of such termination and release of the Removed Property for events occurring prior to the Property Removal Date. Notwithstanding the foregoing, the parties hereto acknowledge that all sums payable by Tenant under the Lease with respect to the Removed Property, including the Rent, have been prorated through and including the Property Removal Date and such amounts have been paid by Tenant as of the Property Removal Date, in full and complete satisfaction of all monetary obligations owed by Tenant under the Lease with respect to the Removed Property.

 

5.	Confirmation. Except as amended hereby, the Lease remains unmodified. As amended hereby, the Lease is hereby ratified and confirmed and continues in full force and effect.

 

6.	Counterparts. This Amendment may be executed in one or more counterparts each of which shall constitute an original but all of which, taken together, shall constitute one instrument.

[Signatures appear on following page.]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first written above.

 

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EXHIBIT D

FORM OF NON-DISTURBANCE AGREEMENT

FORM OF SUBORDINATION,

NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AGREEMENT (this “Agreement”) is made as of this          day of              201    , between GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation, having an address at 60 Wall Street, 10^th Floor, New York, New York 10005 and BANK OF AMERICA, N.A., a national banking association, having an address at Hearst Tower, 214 North Tryon Street, Charlotte, North Carolina 28255 (together with each of their respective successors and assigns, “Lender”), and                        , a                                     , having an address at                                          (“Tenant”).

RECITALS:

WHEREAS, Lender has made a loan (the “Loan”) to New Private Restaurant Properties, LLC, a Delaware limited liability, having an address at 2202 North WestShore Boulevard, Suite 470C, Tampa, Florida (together with its successors or assigns, “Borrower” or “Master Lessor”), which loan is secured by, inter alia, that certain [Mortgage, Deed to Secure Debt and/or Deed of Trust with Security Agreement, Financing Statement, Fixture Filing and Assignment of Master Lease, Subleases, Rents and Security Deposits (Multistate Form)] (which mortgage or deed of trust, and all amendments, renewals, increases, modifications, replacements, substitutions, extensions, spreaders and consolidations thereof and all re-advances thereunder and additions thereto, is referred to as the “Security Instrument”) recorded in                  in Reel                     , Page              [ADD RECORDING DATA FOR SECURITY INSTRUMENT], on the property described in Schedule “A” annexed hereto and made a part hereof (the “Property”); and

WHEREAS, Borrower and Private Restaurant Master Lessee, LLC, a Delaware limited liability company (“Master Lessee”) have entered into that certain Amended and Restated Master Lease Agreement dated as of                     , 2012 (the “Master Lease”) [, a memorandum of which Master Lease was recorded in                          in Reel             , Page                 ] [ADD RECORDING DATA FOR MEMO IF APPLICABLE], pursuant to which Master Lessee leases, inter alia, all or a portion of the Property; and

WHEREAS, Master Lessee and                                      [INSERT CONCEPT SUBSIDIARY] (“Landlord”) have entered into that certain Sublease effective June 14, 2007, as amended by that certain                                  dated as of                     , 2012 (as so amended, the “Concept Sublease”) [, a memorandum of which Concept Sublease was recorded in                             in Reel                     , Page         /is being recorded immediately prior hereto/contemporaneously herewith] [ADD RECORDING DATA FOR MEMO, IF APPLICABLE], pursuant to which Landlord subleases, inter alia, a portion of the Property; and

WHEREAS, by                                  [INSERT TITLE OF LEASE] (the “Lease”) dated                     , 201         between Landlord and Tenant, as tenant, [a memorandum of which Lease was recorded in                         in Reel                     , Page         /is being recorded immediately prior hereto/contemporaneously herewith] [ADD RECORDING DATA FOR MEMO, IF APPLICABLE], Landlord has sub-subleased to Tenant certain premises located in                          as more particularly described in the Lease (the “Premises”), such Premises comprising all or a portion of the Property; and

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WHEREAS, Lender and Tenant desire to confirm their understanding and agreement with respect to the Lease and the Security Instrument.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, Lender and Tenant hereby agree and covenant as follows:

1. The Lease, and all of the terms, covenants, provisions and conditions thereof (including, without limitation, any right of first refusal, right of first offer, option or any similar right with respect to the sale or purchase of the Premises, or any portion thereof) is, shall be and shall at all times remain and continue to be subject and subordinate in all respects to the lien, terms, covenants, provisions and conditions of the Master Lease and the Security Instrument and to all advances and re-advances made thereunder and all sums secured thereby. This provision shall be self-operative but Tenant shall execute and deliver any additional instruments which Lender may reasonably require to effect such subordination.

2. So long as (i) Tenant is not in default (after the giving of any notice required to be given under the Lease and beyond any period given in the Lease to Tenant to cure such default) in the payment of rent, percentage rent or additional rent or in the performance or observance of any of the other terms, covenants, provisions or conditions of the Lease on Tenant’s part to be performed or observed, (ii) Tenant is not in default under this Agreement (after the giving of any notice required to be given under this Agreement and beyond any period given in this Agreement to Tenant to cure such default) and (iii) the Lease is in full force and effect: (a) Tenant’s possession of the Premises and Tenant’s leasehold interest, rights and privileges under the Lease, including any extensions or renewals thereof which may be effected in accordance with any option therefor which is contained in the Lease, shall not be diminished or interfered with by Lender, and Tenant’s occupancy of the Premises shall not be disturbed by Lender for any reason whatsoever during the term of the Lease or any such extensions or renewals thereof, and (b) Lender will not join Tenant as a party defendant in any action or proceeding to foreclose the Security Instrument or to enforce any rights or remedies of Lender under the Security Instrument which would cut-off, destroy, terminate or extinguish the Lease or Tenant’s interest and estate under the Lease (except to the extent required so that Tenant’s right to receive or set-off any monies or obligations owed or to be performed by any of Lender’s predecessors-in-interest shall not be enforceable thereafter against Lender or any of Lender’s successors-in-interest). Notwithstanding the foregoing provisions of this Paragraph 2, if it would be procedurally disadvantageous for Lender not to name or join Tenant as a party in a foreclosure proceeding with respect to the Security Instrument, Lender may so name or join Tenant without in any way diminishing or otherwise affecting the rights and privileges granted to, or inuring to the benefit of, Tenant under this Agreement

3. (A)After notice is given by Lender that the Security Instrument is in default and that the rentals under the Lease should be paid to Lender (“Direct Payment Notice”), Tenant will attorn to Lender and pay to Lender, or pay in accordance with the directions of Lender, all rentals and other monies due and to become due to Landlord under the Lease or otherwise in respect of the Premises. Such payments shall be made regardless of any right of set-off, counterclaim or other defense which Tenant may have against Landlord, whether as the tenant

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under the Lease or otherwise. Landlord hereby irrevocably directs Tenant to comply with any Direct Payment Notice regardless of any contrary direction, instruction or assertion by Landlord. Tenant shall be entitled to full credit under the Lease for any rentals paid to Lender pursuant to a Direct Payment Notice to the same extent as if such rent was paid directly to Landlord.

(B) In addition, if Lender (or its nominee or designee) shall succeed to the rights of Master Lessor under the Master Lease and/or Landlord under the Lease, whether through possession or foreclosure action, delivery of a deed or otherwise (including after a default under the Master Lease), or another person purchases the Property or the portion thereof containing the Premises upon or following foreclosure of the Security Instrument or in connection with any bankruptcy case commenced by or against Landlord or Master Lessor, then at the request of Lender (or its nominee or designee) or such purchaser (Lender, its nominees and designees, and such purchaser, and their respective successors and assigns, each being a “Successor-Landlord”), Tenant shall attorn to and recognize Successor-Landlord as Tenant’s landlord under the Lease and shall promptly execute and deliver any instrument that Successor-Landlord may reasonably request to evidence such attornment. Upon such attornment, the Lease shall continue in full force and effect as, or as if it were, a direct lease between Successor-Landlord and Tenant upon all terms, conditions and covenants as are set forth in the Lease. If the Lease shall have terminated by operation of law or otherwise as a result of or in connection with a bankruptcy case commenced by or against Landlord or Master Lessor or a foreclosure action or proceeding or delivery of a deed in lieu or any other event or circumstance resulting in the termination of the Master Lease, upon request of Successor-Landlord, Tenant shall promptly execute and deliver a direct lease with Successor-Landlord which direct lease shall be on substantially the same terms and conditions as the Lease (subject, however, to the provisions of clauses (i)-(v) of this Paragraph 3(B)) and shall be effective as of the day the Lease shall have terminated as aforesaid. Notwithstanding the continuation of the Lease, the attornment of Tenant thereunder or the execution of a direct lease between Successor-Landlord and Tenant as aforesaid, Successor-Landlord shall not:

(i) be liable for any previous act or omission of Landlord under the Lease;

(ii) be subject to any off-set, defense or counterclaim which shall have theretofore accrued to Tenant against Landlord;

(iii) be bound by any modification of the Lease or by any previous prepayment of rent or additional rent made more than one (1) month prior to the date same was due which Tenant might have paid to Landlord, unless such modification or prepayment shall have been expressly approved in writing by Lender;

(iv) be liable for any security deposited under the Lease unless such security has been physically delivered to Lender or Successor-Landlord; and

(v) be liable or obligated to comply with or fulfill any of the obligations of Landlord under the Lease or any agreement relating thereto with respect to the construction of, or payment for, improvements on or above the Premises (or any portion thereof), leasehold improvements, tenant work letters and/or similar items.

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4. Tenant agrees that without the prior written consent of Lender (to the extent Lender’s consent is required under the terms of the Master Lease), it shall not (a) amend, modify (in any material respects), terminate or cancel the Lease or any extensions or renewals thereof, (b) tender a surrender of the Lease, (c) make a prepayment of any rent or additional rent more than one (1) month in advance of the due date thereof, or (d) except to the extent required by the terms of the Lease, subordinate or permit the subordination of the Lease to any lien subordinate to the Security Instrument. Any such purported action without such consent shall be void as against the holder of the Security Instrument.

5. (A)Tenant shall promptly notify Lender of any default by Landlord under the Lease and of any act or omission of Landlord which would give Tenant the right to cancel or terminate the Lease or to claim a partial or total eviction.

(B) In the event of a default by Landlord under the Lease which would give Tenant the right, immediately or after the lapse of a period of time, to cancel or terminate the Lease, to claim a partial or total eviction, or entitle Tenant to an offset against rent under the Lease, or in the event of any other act or omission of Landlord which would give Tenant the right to cancel or terminate the Lease, Tenant shall not exercise such right (i) until Tenant has given written notice of such default, act or omission to Lender and (ii) unless Lender has failed, within sixty (60) days after Lender receives such notice, to cure or remedy the default, act or omission or, if such default, act or omission shall be one which is not reasonably capable of being remedied by Lender within such sixty (60) day period, until a reasonable period for remedying such default, act or omission shall have elapsed following the giving of such notice and following the time when Lender shall have become entitled under the Security Instrument to remedy the same (which reasonable period shall in no event be less than the period to which Landlord would be entitled under the Lease or otherwise, after similar notice, to effect such remedy), provided that Lender shall with due diligence give Tenant written notice of its intention to and shall commence and continue to, remedy such default, act or omission. If Lender cannot reasonably remedy a default, act or omission of Landlord until after Lender obtains possession of the Premises, Tenant may not terminate or cancel the Lease or claim a partial or total eviction by reason of such default, act or omission until the expiration of a reasonable period necessary for the remedy after Lender secures possession of the Premises. To the extent Lender incurs any expenses or other costs in curing or remedying such default, act or omission, including, without limitation, attorneys’ fees and disbursements, Lender shall be subrogated to Tenant’s rights against Landlord.

(C) Notwithstanding the foregoing, Lender shall have no obligation hereunder to remedy such default, act or omission.

6. To the extent that the Lease shall entitle Tenant to notice of the existence of any mortgage and the identity of any mortgagee or any ground lessor, this Agreement shall constitute such notice to Tenant with respect to the Security Instrument and Lender.

7. Upon and during the continuance of a default under the Master Lease and/or the Security Instrument, which is not cured after any applicable notice and/or cure periods, Lender shall be entitled, but not obligated, to exercise the claims, rights, powers, privileges and remedies of Landlord under the Lease and shall be further entitled to the benefits of, and to receive and enforce performance of, all of the covenants to be performed by Tenant under the Lease as though Lender were named therein as Landlord.

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8. Anything herein or in the Lease to the contrary notwithstanding, in the event that a Successor-Landlord shall acquire title to the Property or the portion thereof containing the Premises, Successor-Landlord shall have no obligation, nor incur any liability, beyond Successor-Landlord’s then interest, if any, in the Property, and Tenant shall look exclusively to such interest, if any, of Successor-Landlord in the Property for the payment and discharge of any obligations imposed upon Successor-Landlord hereunder or under the Lease, and Successor-Landlord is hereby released or relieved of any other liability hereunder and under the Lease. Tenant agrees that, with respect to any money judgment which may be obtained or secured by Tenant against Successor-Landlord, Tenant shall look solely to the estate or interest owned by Successor-Landlord in the Property (including, without limitation, the rents, issues and profits therefrom), and Tenant will not collect or attempt to collect any such judgment out of any other assets of Successor-Landlord.

9. [Intentionally Omitted]

10. If the Lease provides that Tenant is entitled to expansion space, Successor-Landlord shall have no obligation nor any liability for failure to provide such expansion space if a prior landlord (including, without limitation, Landlord), by reason of a lease or leases entered into by such prior landlord with other tenants of the Property, has precluded the availability of such expansion space.

11. Except as specifically provided in this Agreement, Lender shall not, by virtue of this Agreement, the Security Instrument or any other instrument to which Lender may be a party, be or become subject to any liability or obligation to Tenant under the Lease or otherwise.

12. (A)Tenant acknowledges and agrees that this Agreement satisfies and complies in all respects with the provisions of Article          of the Lease and that this Agreement supersedes (but only to the extent inconsistent with) the provisions of such Article and any other provision of the Lease relating to the priority or subordination of the Lease and the interests or estates created thereby to the Security Instrument.

(B) Tenant agrees to enter into a subordination, non-disturbance and attornment agreement with any lender which shall succeed Lender as lender with respect to the Property, or any portion thereof, provided such agreement is substantially similar to this Agreement.

13. (A)Any notice required or permitted to be given by Tenant to Landlord shall be simultaneously given also to Lender, and any right to Tenant dependent upon notice shall take effect only after notice is so given. Performance by Lender shall satisfy any conditions of the Lease requiring performance by Landlord, and Lender shall have a reasonable time to complete such performance as provided in Paragraph 5 hereof.

(B) All notices or other communications required or permitted to be given to Tenant or to Lender pursuant to the provisions of this Agreement shall be in writing and shall be deemed given only if mailed by United States registered mail, postage prepaid, or if sent by

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nationally recognized overnight delivery service (such as Federal Express or United States Postal Service Express Mail), addressed as follows: to Tenant, at the address first set forth above, Attention:                             ; to Lender, at the address first set forth above, Attention:                                  and General Counsel; or to such other address or number as such party may hereafter designate by notice delivered in accordance herewith. All such notices shall be deemed given three (3) business days after delivery to the United States Post office registry clerk if given by registered mail, or on the next business day after delivery to an overnight delivery courier.

14. This Agreement may be modified only by an agreement in writing signed by the parties hereto, or their respective successors-in-interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto, and their respective successors and assigns. The term “Lender” shall mean the then holder of the Security Instrument. The term “Landlord” shall mean the then holder of the landlord’s interest in the Lease. The term “person” shall mean an individual, joint venture, corporation, partnership, trust, limited liability company, unincorporated association or other entity. All references herein to the Lease shall mean the Lease as modified by this Agreement and to any amendments or modifications to the Lease (provided that Lender shall not be bound by any such amendment or modification if Lender’s consent thereto is required under the Master Lease and such consent of Lender has not been obtained). Any inconsistency between the Lease and the provisions of this Agreement shall be resolved, to the extent of such inconsistency, in favor of this Agreement.

15. Tenant hereby represents to Lender as follows:

(A) The Lease is in full force and effect and has not been further amended.

(B) There has been no assignment of the Lease or subletting of any portion of the Premises demised under the Lease.

(C) There are no oral or written agreements or understandings between Landlord and Tenant relating to the Premises demised under the Lease or the Lease transaction except as set forth in the Lease and this Agreement.

(D) The execution of the Lease was duly authorized and the Lease is in full force and effect and to the best of Tenant’s knowledge there exists no default (beyond any applicable grace period) on the part of either Tenant or Landlord under the Lease.

(E) There has not been filed by or against nor to the best of the knowledge and belief of Tenant is there threatened against Tenant, any petition under the bankruptcy laws of the United States.

(F) To the best of Tenant’s knowledge, there has not been any assignment, hypothecation or pledge of the Lease or rents accruing under the Lease by Landlord, other than pursuant to the terms of the Lease and the Security Instrument.

16. Whenever, from time to time, reasonably requested by Lender (but not more than three (3) times during any calendar year), Tenant shall execute and deliver to or at the direction of Lender, and without charge to Lender, one or more written certifications, in a form acceptable to Tenant, of all of the matters set forth in Paragraph 15 above, and any other information the Lender may reasonably require to confirm the current status of the Lease.

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17. BOTH TENANT AND LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

 

 

 

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AGREED AND CONSENTED TO: LANDLORD:
[LANDLORD]
By:
Name:
Title:

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EXHIBIT E

MASTER LEASE SNDA

[Attached]

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SCHEDULE 1.2

OUTPARCELS AND LEASABLE BUILDING PADS

 

1.	Outparcels*

 

Store Number		Address		Sq. Footage/ Acreage Available		Diagram of Outparcel
3122		901 Route 73 Evesham Township, NJ 08053		19,900 Square Feet+/-		See Diagram 1
3217		2625 West Craig Road North Las Vegas, NV 89032		0.88 Acres +/-		See Diagram 2

 

2.	Leasable Building Pads*

 

Store Number		Address		Sq. Footage/ Acreage Available		Diagram of Building Pad
3002		4342 West Boy Scout Boulevard Tampa, FL 33607		12,730 Sq. Ft. +/-		See Diagram 3
3464**		223 Wintergreen Dr Lumberton, NC 28358		1.3 Acres +/-		See Diagram 4
5502		9770 Crosspoint Boulevard Fisher, IN 46256		8,790 Sq. Ft. +/-		See Diagram 5
5506		8301 Eagle Lake Drive Evansville, IN 47715		6,930 Sq. Ft. +/-		See Diagram 6

 

*

To the best of Tenant’s knowledge, the Outparcels are capable of being subdivided from the Leased Properties on which they are located and the Leasable Building Pads are not capable of being subdivided from the Leased Property on which they are located. In the event that it is later determined by Tenant as set forth in the Officer’s Certificate of Tenant that (i) any Outparcel is not capable of being subdivided from the Leased Property on which it is located, it will be treated as a Leasable Building Pad or (ii) any Leasable Building Pad is capable of being subdivided from the Leased Property on which it is located, it will be treated as an Outparcel.

 

**	Tenant believes it may be possible to create a Condominium on the site and then sell the pad site as a Condominium.

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SCHEDULE 1.3

“GO DARK” PURCHASE OPTION PROPERTIES

 

Store Number		Address		Name of Document and Nature of Purchase Rights
1133		11196 Abercorn Expressway Savannah, GA 31419		Reciprocal Easement and Operation Agreement, dated as of April 15, 1994: The option holder has a right to purchase the related Leased Property on the terms and conditions of a bona fide offer that the owner of such Leased Property desires to accept, excepting an offer that contains a binding provision whereby the prospective purchaser will initially open and operate a restaurant on such Leased Property.
1412		216 East Golf Road Schaumburg, IL 60173		Reciprocal Easement Agreement, dated as of March 15, 1994: The option holder has a right to purchase the related Leased Property on the same terms and conditions as a bona fide offer that the owner of such Leased Property has received and desires to accept.
1418		6007 E. State Street Rockford, IL 61108		Covenants, Conditions and Restrictions Agreement, dated as of October 9, 1996: The option holder has a right of first refusal over any sale, lease, assignment, transfer, lien, pledge, encumbrance, alienation or conveyance (or agreement to do any of the foregoing) of the related Leased Property, or any portion thereof or interest therein, whether directly, indirectly, by operation of law or otherwise (excepting affiliate transfer, any mortgage or sale/leaseback for financing purposes, or a sale to a third party acquiring one or more additional restaurants of such owner) on the same terms and conditions as contained in a bona fide third party written offer proposed to be accepted by the owner of such Leased Property.

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1418		6007 E. State Street Rockford, IL 61108		Covenants, Conditions and Restrictions Agreement, dated as of October 9, 1996: The option holder has a right to purchase the related Property for a fair market value purchase price (determined in accordance with such Operating Agreement) if it “goes dark” (i.e., is vacated and no regular business is being conducted) for 120 or more consecutive days, other than for reasons beyond the control of the owner, including force majeure or closing due to alteration, remodeling or renovations.
1522		3401 N. Granville Ave. Muncie, IN 47303		Covenants, Conditions and Restrictions Agreement, dated as of April 29, 1997: The Option Holder has a right of first refusal over any sale, lease, assignment, transfer, lien, pledge, encumbrance, alienation or conveyance (or agreement to do any of the foregoing) of the related Property, or any portion thereof or interest therein, whether directly, indirectly, by operation of law or otherwise (excepting affiliate transfer, any mortgage or sale/leaseback for financing purposes, or a sale to a third party acquiring one or more additional restaurants of such owner) on the same terms and conditions as contained in a bona fide third party written offer accepted by the owner of such Property.
1522		3401 N. Granville Ave. Muncie, IN 47303		Covenants, Conditions and Restrictions Agreement, dated as of April 29, 1997: The option holder has a right to purchase the related Property for a fair market value purchase price (determined in accordance with such Operating Agreement) if it “goes dark” (i.e., is vacated and no regular business is being conducted) for 120 or more consecutive days, other than for reasons beyond the control of the owner, including force majeure or closing due to alteration, remodeling or renovations.
1813		6520 Signature Drive Louisville, KY 40213		Corporate Warranty Deed, dated November 22, 1994: The option holder has a right to purchase the related Leased Property at the price and on the terms equivalent to or better than the terms stated in a fully executed contract for a bona fide sale of such Leased Property to an unrelated third party.

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1851		3260 Scottsville Rd. Bowling Green, KY 42104		Easement and Restriction Agreement, September 4, 1997: The option holder has a right to purchase the related Leased Property at the price and on the substantive and economic terms and conditions specified in an offer that the owner of such Leased Property has received and desires to accept (excepting a transfer to an affiliate of Outback Steakhouse, Inc. or a sale to a third party of three or more restaurants).
1851		3260 Scottsville Rd. Bowling Green, KY 42104		Easement and Restriction Agreement, September 4, 1997: The Option Holder has a right to purchase the related Property for a fair market value purchase price (determined in accordance with the related Option Agreement) if the restaurant fails to operate (i.e., does not serve meals to the general public for a price) a sit-down restaurant on such Property for more than 120 consecutive days, other than for remodeling, implementing renovations or reconstructing due to casualty, so long as the owner is diligently pursuing and effecting such remodeling, renovation or reconstruction.
2320		1515 W. 14 Mile Road Madison Heights, MI 48071		Covenant Deed, dated September 11, 1995: The option holder has a right to purchase the related Leased Property on the same terms and conditions as a third party offer that the owner of such Property desires to accept (excepting a transfer to an affiliate of Outback Steakhouse of Florida, Inc., a franchisee of Outback Steakhouse Florida, Inc. or Outback Steakhouse, Inc., or a purchaser contemporaneously acquiring one or more additional restaurants of the current property owner).
2320		1515 W. 14 Mile Road Madison Heights, MI 48071		Covenant Deed, dated September 11, 1995: The option holder has a right to purchase the related Leased Property for a fair market value purchase price (determined in accordance with such Operating Agreement) if the building is deemed “closed” (i.e., if less than 3,000 square feet of the building is being operated as an Outback Steakhouse restaurant as same or typically operated in the Midwestern United States or for another permitted use) for 270 consecutive days, except in the event of a casualty or condemnation so long as the owner is diligently pursuing rebuilding or reopening.

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2420		4255 Haines Road Hermantown, MN 55811		Warranty Deed, dated September 23, 2005: The option holder has a right to purchase the related Leased Property for a fair market value purchase price (determined in accordance with such Operating Agreement) if the owner determines that it is going to sell such Leased Property to a third party unaffiliated purchaser (excepting a sale as part of a sale and leaseback transaction).
3110		230 Lake Drive East Cherry Hill, NJ 08002		Repurchase Agreement, dated as November 30, 1992: The option holder has a right to purchase the related Leased Property on terms no less favorable than those of a bona fide offer from a third party to acquire its interest in such Leased Property, or any portion thereof, that the owner of such Leased Property has received and wishes to accept (excepting transfer to an affiliate of Outback Steakhouse of Florida, Inc., a franchisee of Outback Steakhouse of Florida, Inc. or a third party purchaser contemporaneously acquiring one or more additional restaurant facilities of the “Outback Steakhouse” chain).
4405		12507 West IH-10 San Antonio, TX 78230		Special Warranty Deed, dated July 19, 1994: The option holder has a right to purchase the related Leased Property upon the terms of the owner’s third party sale in the event the owner elects to sell such Leased Property (excepting an affiliate transfer or sale of such Leased Property together with one or more other locations owned by the owner or its affiliates).
4423		12511 West IH-10 San Antonio, TX 78230		Special Warranty Deed, dated July 19, 1994: The option holder has a right to purchase the related Leased Property upon the terms of the owner’s third party sale in the event the owner elects to sell such Leased Property (excepting an affiliate transfer or sale of such Leased Property together with one or more other locations owned by the owner or its affiliates).

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4429		4205 South IH-35 San Marcos, TX 78666		Agreement of Repurchase and Right of First Refusal, dated March 30, 1998: The option holder has a right of refusal over any sale, transfer, lease for a period in excess of 35 years or other conveyance of the related Leased Property, including any portion thereof or interest therein, for the price and on the terms and conditions of a bona fide offer from an unrelated third party that the owner of such Leased Property received and desires to accept (excepting a transfer to an affiliate of Outback Steakhouse of Florida, Inc. that expressly assumes the obligations of owner under such Operating Agreement, a bona fide mortgage or bona fide sale leaseback transaction for financing purposes, as part of a package sale of six or more stores to an unaffiliated third party, or as part of a sale of substantially all of the assets used in connection with the operation of one or more other Outback Steakhouse restaurants).
4429		4205 South IH-35 San Marcos, TX 78666		Agreement of Repurchase and Right of First Refusal, dated March 30, 1998: The option holder has a right to purchase the related Property for a fair market price (determined in accordance with such Operating Agreement) if the improvements on such Leased Property are abandoned or permanently closed or the owner fails to use the improvements for a restaurant or other use compatible with the associated shopping center for more than 30 consecutive days, unless due to fire or other casualty or condemnation, temporary closure not longer than 180 days due to expansion, alteration or remodeling, or a change in the occupancy of such Leased Property.
4910		790 Foxcroft Avenue Martinsburg, WV 25401		Right of First Refusal, dated as of January 25, 1994: If the owner proposes to lease, sell or otherwise use or operate the related Leased Property as a supermarket under the name of “County Market”, the option holder has a right to lease, purchase or otherwise use or operate such Property on the same terms and conditions set forth in such Operating Agreement.

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6007		60 Palmetto Avenue Merritt Island, FL 32953		Indenture, dated July 22, 1957: The option holder has a right to purchase or lease the related Leased Property on the terms and conditions set forth in a bona fide written offer to purchase or lease such Leased Property or a portion thereof (excepting an offer received from the franchisor).
4801		40 Geoffrey Drive Newark, DE 19713		Lease, effective June 14, 2007: The tenant has an option to purchase the related Leased Property for a purchase price equal to the fair market value of such Leased Property (as determined in accordance with such lease) upon the earlier to occur of the (x) expiration of the initial term of such lease or (y) sale of the related Leased Property by the landlord.
5501		4670 Southport Crossing Drive Indianapolis, IN 43237		Lease, effective June 14, 2007: The tenant has an option to purchase the related Leased Property for a purchase price equal to the fair market value of such Leased Property (as determined in accordance with such lease) upon the earlier to occur of the (x) expiration of the initial term of such lease or (y) sale of the related Leased Property by the landlord.
5502		9770 Crosspoint Boulevard Fisher, IN 46256		Lease, effective June 14, 2007: The tenant has an option to purchase the related Leased Property for a purchase price equal to the fair market value of such Leased Property (as determined in accordance with such lease) upon the earlier to occur of the (x) expiration of the initial term of such lease or (y) sale of the related Leased Property by the landlord.
5505		3830 S US Highway 41 Terre Haute, IN 47802		Lease, effective June 14, 2007: The tenant has an option to purchase the related Leased Property for a purchase price equal to the fair market value of such Leased Property (as determined in accordance with such lease) upon the earlier to occur of the (x) expiration of the initial term of such lease or (y) sale of the related Leased Property by the landlord.
5506		8301 Eagle Lake Drive Evansville, IN 47715		Lease, effective June 14, 2007: The tenant has an option to purchase the related Leased Property for a purchase price equal to the fair market value of such Leased Property (as determined in accordance with such lease) upon the earlier to occur of the (x) expiration of the initial term of such lease or (y) sale of the related Leased Property by the landlord.

---

6302		13905 Lakeside Circle Sterling Heights, MI 48313		Lease, effective June 14, 2007: The tenant has an option to purchase the related Leased Property for a purchase price equal to the fair market value of such Leased Property (as determined in accordance with such lease) upon the earlier to occur of the (x) expiration of the initial term of such lease or (y) sale of the related Leased Property by the landlord.
8302		13905 Lakeside Circle Sterling Heights, MI 48313		Lease, effective June 14, 2007: The tenant has an option to purchase the related Leased Property for a purchase price equal to the fair market value of such Leased Property (as determined in accordance with such lease) upon the earlier to occur of the (x) expiration of the initial term of such lease or (y) sale of the related Leased Property by the landlord.
8705		1101 Seminole Trail Charlottesville, VA 22901		Lease, effective June 14, 2007: The tenant has an option to purchase the related Leased Property for a purchase price equal to the fair market value of such Leased Property (as determined in accordance with such lease) upon the earlier to occur of the (x) expiration of the initial term of such lease or (y) sale of the related Leased Property by the landlord.

---

SCHEDULE 2A

LANDLORD’S LOAN DOCUMENTS

Each of the following is dated as of the date hereof and includes all amendments, amendments and restatements, modifications or supplements made thereto from time to time:

 

•

Loan and Security Agreement, between Landlord and Landlord’s Lender

 

•

Note, made by Landlord, as maker, in favor of Landlord’s Lender, as payee, in the principal amount of $324,800,000

 

•

Mortgages, Deeds to Secure Debt and/or Deeds of Trust, with Security Agreement, Financing Statement, Fixture Filing and Assignment of Master Lease, Subleases, Rents and Security Deposits (and/or those certain first priority Mortgages with respect to Leased Properties located in Michigan), each executed and delivered by Landlord to Landlord’s Lender (or to a trustee for the benefit of Landlord’s Lender, as applicable)

 

•

Assignments of Master Lease, Subleases, Rents and Security Deposits, each dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee

 

•

Environmental Indemnities, one executed by PropCo, one executed by HoldCo and one executed by Guarantor and Tenant, and each in favor of Landlord’s Lender, and any Replacement Indemnity

 

•

Master Lease SNDA

 

•

Guaranty of Recourse Obligations of Landlord, by HoldCo in favor of Landlord’s Lender

 

•

Asset Manager’s Consent and Subordination of Asset Management Agreement, among Landlord, Landlord’s Lender and OS Management, Inc., as asset manager

 

•

All other documents executed and/or delivered by Landlord, Tenant or HoldCo for the benefit of Landlord’s Lender in connection with Landlord’s Loan, including any opinion certificates or other certifications or representations delivered by or on behalf of Landlord or any Affiliate of Landlord for the benefit of Landlord’s Lender, but, for the avoidance of doubt, specifically excluding that certain Indemnification Certificate and Agreement made by Landlord for the benefit of German American Capital Corporation, Bank of America, N.A, Banc of America Merrill Lynch Large Loan, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

---

SCHEDULE 2B

CERTAIN DEEMED AFFILIATES

Bonefish/Carolinas, Limited Partnership, a Florida limited partnership

Carrabba’s/Rocky Top, Limited Partnership, a Florida limited partnership

Carrabba’s Designated Partner, LLC, a Florida limited liability company

Carraba’s/DC-I, Limited Partnership, a Florida limited partnership

OSF/CIGI of Evesham Partnership, a Florida general partnership

Outback/Carrabba’s Partnership, a Florida general partnership

Outback Designated Partner, LLC, a Florida limited partnership

Outback/Carraba’s Partnership, a Florida general partnership

Outback/Stone-II, Limited Partnership, a Florida limited partnership

Outback/Fleming’s, LLC, a Florida limited liability company

Outback Kansas LLC, a Kansas limited liability company

OSF Oklahoma, Inc., a Florida corporation

Roy’s/Outback Joint Venture, a Florida joint venture

---

SCHEDULE 2C

CLASSIFICATION OF CERTAIN FIXTURES AND TRADE FIXTURES

 

Furniture and Fixtures—7 Year Depreciation		Fixture Type
Water Filtration System		Fixture
Security System—Fire		Fixture
Security System—Burglar		Fixture
Parking Lot Lights		Fixture
Flood Lights		Fixture
Hurricane or Wood Shutters (not plastic ones)		Fixture
Front Door		Fixture
Rear Door		Fixture
Ceiling Tile & Grid		Fixture
Toilet Partitions and Screens		Fixture
Restroom Accessories {mirrors & doors)		Fixture
Electrical (can lights & vanity lanterns)		Fixture
Accessory Package (grab bars, etc.)		Fixture
HVAC new grills		Fixture
New Fixtures		Fixture
Auto Flush		Fixture
Sprinklers		Fixture
Awnings		Fixture
Flag poles		Fixture
Wainscoting		Fixture
Chain Link Fences		Fixture
Window Tinting		Fixture
Thermostat’s		Fixture
Sound System		Excluded Personal Property
Marlin Control Panel		Excluded Personal Property
Dry storage shelving		Excluded Personal Property
Plexiglass (Bar Partition)		Excluded Personal Property
Solid Surface Vanity w/under counter sinks		Excluded Personal Property
Millwork (Bars)		Excluded Personal Property
Signage		Excluded Personal Property
Neon Border & Neon Signs		Excluded Personal Property

---

Safe		Excluded Personal Property
Office Furniture		Excluded Personal Property
Phone System		Excluded Personal Property
Phone System Upgrades—equip & install		Excluded Personal Property
Stainless Fabrication/SS Paneling		Excluded Personal Property
Cocktail/Blender/Server Stations		Excluded Personal Property
Tin Bar Plating		Excluded Personal Property
Electric Heated Air Curtain		Excluded Personal Property
Blinds		Excluded Personal Property
Kitchen Exhaust System (Fans, curbs and Hoods)		Excluded Personal Property
Outdoor Patio Furniture		Excluded Personal Property

 

Furniture and Fixtures—5 Year Depreciation		Entity
Carpet		Fixture
Domestic Water Heater		Fixture
Water Softeners		Fixture
Chairs – Dining		Excluded Personal Property
Barstools		Excluded Personal Property
Projector TV (All TVs)		Excluded Personal Property
VCR’s		Excluded Personal Property

 

Machinery and Equipment—7 Year Depreciation		Fixture Type
HVAC Testing/HVAC System		Fixture
A/C Compressors		Fixture
Smallwares—Opening package		Excluded Personal Property
Equipment packages (bloom fryer GRD45, Chip Fryer GRD65, App Fryer GRD35, etc.)		Excluded Personal Property
Drink Machines		Excluded Personal Property
Cooler / Freezer		Excluded Personal Property

---

Beer System		Excluded Personal Property
Smoker		Excluded Personal Property
Alto Shaam		Excluded Personal Property
Chill Blaster		Excluded Personal Property
Tents for Special Events		Excluded Personal Property
Walk in Shelving		Excluded Personal Property
Treat Plate for walk in		Excluded Personal Property
Fry Filter		Excluded Personal Property
Event Trailers (and all accompanying supplies)		Excluded Personal Property
Dish Washer Motor		Excluded Personal Property
Booster Heaters		Excluded Personal Property
Grip Rock Mats		Excluded Personal Property
Make Up Air Blower or Exhaust		Excluded Personal Property
Grease Traps		Excluded Personal Property
Fry Reach-In (aka – Dual Temp Refrigerator #RFA-36-S7-HD)		Excluded Personal Property
Saute Reach-In (aka – counter top refrigerator #UR-27_SST)		Excluded Personal Property
Salad Spinner (aka – Vegetable Dryer or Greens Machine)		Excluded Personal Property
Salad Make-up unit (aka – Salad Prep Refrigerator)		Excluded Personal Property

 

Computer—3 Year Depreciation		Fixture Type
Posi Touch System (including Posi training books)/RDS Workstations/Aloha System		Excluded Personal Property
Handscanner		Excluded Personal Property
Office Computer		Excluded Personal Property
2 Way Radio System		Excluded Personal Property
Host Alert System		Excluded Personal Property
Pager System & Pagers		Excluded Personal Property
Fax Machines		Excluded Personal Property

---

Building Leasehold—20 Year Depreciation				Fixture Type
Construction Contract				Fixture
Owner Furnished, Contractor Installed				Fixture
Architects/Engineers				Fixture
Windows				Fixture
Building Permits & Licenses				Fixture
Utilities (prior to store opening)				Fixture
Hardwood Floors				Fixture
Landscaping – new stores only				Fixture
Fuse Box				Fixture
Less Landlord Allowance				Fixture
Floor Tile				Fixture
Blue Prints				Fixture
New Floor and Wall Tile				Fixture
Dry Wall and Plastering				Fixture
Carpentry (wood trim & installation)				Fixture
Painting (stucco, trim & doors)				Fixture
Plumbing				Fixture
FRP Paneling				Fixture
Fire Suppression/Fire Ansul System				Fixture
Brick Pizza Oven				Fixture

 

Décor—5 Year Depreciation				Fixture Type
Opening Décor Package				Excluded Personal Property
Landscaping for Patio addition				Fixture

---

SCHEDULE 2D

NON-DISTURBANCE ELIGIBLE SUBLEASES / UNAFFILIATED SUBLEASES

 

Store Number		Address		Sublease*
4801		40 Geoffrey Drive Newark, DE 19713		Lease, between OS Tropical, LLC and Cheeseburger of Newark, LLC (as successor-in-interest to Cheeseburger-South Eastern Pennsylvania, Limited Partnership), effective June 14, 2007.
5501		4670 Southport Crossing Drive Indianapolis, IN 43237		Lease, between OS Tropical, LLC and Cheeseburger of Southport, LLC (as successor-in-interest to Cheeseburger-Ohio, Limited Partnership), effective June 14, 2007.
5502		9770 Crosspoint Boulevard Fisher, IN 46256		Lease, between OS Tropical, LLC and Cheeseburger of Fishers, LLC (as successor-in-interest to Cheeseburger-Ohio, Limited Partnership), effective June 14, 2007.
5505		3830 S US Highway 41 Terre Haute, IN 47802		Lease, between OS Tropical, LLC and Cheeseburger of Terre Haute, LLC (as successor-in-interest to Cheeseburger-Ohio, Limited Partnership), effective June 14, 2007.
5506		8301 Eagle Lake Drive Evansville, IN 47715		Lease, between OS Tropical, LLC and Cheeseburger of Evansville, LLC (as successor-in-interest to Cheeseburger-Ohio, Limited Partnership), effective June 14, 2007.
6302		13905 Lakeside Circle Sterling Heights, MI 48313		Lease, between OS Tropical, LLC and Cheeseburger of Sterling Heights, LLC (as successor-in-interest to Cheeseburger in Paradise, LLC), effective June 14, 2007.
8001		4302 West Boy Scout Boulevard Tampa, FL 33607		Lease, between OS Southern, LLC and MVP LRS, LLC (as successor by merger to Selmon’s/Florida-I, Limited Partnership), effective June 14, 2007.

---

8002		17508 Dona Michelle Drive Tampa, FL 33647		Lease, between OS Southern, LLC and MVP LRS, LLC (as successor by merger to Selmon’s/Florida-I, Limited Partnership), effective June 19, 2002.
8302		13905 Lakeside Circle Sterling Heights, MI 48313		Lease, between OS Tropical, LLC and Cheeseburger of Sterling Heights, LLC (as successor-in-interest to Cheeseburger in Paradise, LLC), effective June 14, 2007.
8705		1101 Seminole Trail Charlottesville, VA 22901		Lease, between OS Tropical, LLC and Cheeseburger of Charlottesville, LLC (as successor-in-interest to Cheeseburger-Northern Virginia, Limited Partnership), effective June 14, 2007.

 

*	Each Sublease is as from time to time amended, restated, supplemented and otherwise modified and in effect from time to time, together with any renewals, extensions, assignments or replacements thereof.

---

SCHEDULE 2E

PORTFOLIO FOUR-WALL EBITDAR CALCULATION EXAMPLES

 

2010

2009

2008

Sales

$

[***

]

$

[***

]

$

[***

]

COGS

[***

]

[***

]

[***

]

Labor, Taxes & Benefits

[***

]

[***

]

[***

]

Other Controllable Expense

[***

]

[***

]

[***

]

Other Operating Expense

[***

]

[***

]

[***

]

Pre-Opening Expense

[***

]

[***

]

[***

]

Merchandise Income/ (Expense)

[***

]

[***

]

[***

]

Misc Income

[***

]

[***

]

[***

]

Income Before Taxes

[***

]

[***

]

[***

]

Addbacks (All items below in captured in Other Operating Expense):

Interest Expense

[***

]

[***

]

[***

]

Depreciation Expense

[***

]

[***

]

[***

]

Base Rent Expense

[***

]

[***

]

[***

]

Excess Rent Expense

[***

]

[***

]

[***

]

Gain/Loss On Disposal Of FA 717500-0000

[***

]

[***

]

[***

]

Gain/Loss on Disposal—Renovations 717500-0001

[***

]

[***

]

[***

]

Impaired Asset Expense 729500-0000

[***

]

[***

]

[***

]

Pre-Opening Expense

[***

]

[***

]

[***

]

Advertising Expense

[***

]

[***

]

[***

]

Insurance Expense 716000-0000

[***

]

[***

]

[***

]

Royalty Exp—Interco. 722000-0001

[***

]

[***

]

[***

]

Accounting Fees 723000-0000

[***

]

[***

]

[***

]

Supervision Fees 724000-0000

[***

]

[***

]

[***

]

4-Wall EBITDAR

$

[***

]

$

[***

]

$

[***

]

PORTIONS OF THIS EXHIBIT MARKED BY [***] HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

---

SCHEDULE 2F

RESTAURANT LOCATIONS

 

Unit #

Concept

Property Address

Property City

State

Zip Code

311

Outback Steakhouse

5605 West Bell Road

Glendale

AZ

85308

312

Outback Steakhouse

4871 East Grant Road

Tucson

AZ

85712

314

Outback Steakhouse

1650 South Clearview Avenue

Mesa

AZ

85208

316

Outback Steakhouse

1080 North 54th Street

Chandler

AZ

85226

317

Outback Steakhouse

2600 East Lucky Lane

Flagstaff

AZ

86004

323

Outback Steakhouse

14225 West Grand Avenue

Surprise

AZ

85374

325

Outback Steakhouse

99 South Highway 92

Sierra Vista

AZ

85635

326

Outback Steakhouse

1830 East McKellips Road

Mesa

AZ

85203

453

Outback Steakhouse

2310 Sanders Street

Conway

AR

72032

455

Outback Steakhouse

4509 West Poplar Street

Rogers

AR

72758

601

Carrabba’s Italian Grill

7401 West 92nd Avenue

Westminster

CO

80021

602

Carrabba’s Italian Grill

2815 Geyser Drive

Colorado Springs

CO

80906

605

Carrabba’s Italian Grill

1212 Oakridge Drive East

Fort Collins

CO

80525

606

Carrabba’s Italian Grill

2088 South Abilene Street

Aurora

CO

80014

611

Outback Steakhouse

9329 North Sheridan Boulevard

Westminster

CO

80031

612

Outback Steakhouse

7065 Commerce Center Drive

Colorado Springs

CO

80919

613

Outback Steakhouse

807 East Harmony Road

Fort Collins

CO

80525

614

Outback Steakhouse

15 West Springer Drive

Littleton

CO

80129

615

Outback Steakhouse

497 120th Avenue

Thornton

CO

80233

616

Outback Steakhouse

988 Dillon Road

Louisville

CO

80027

617

Outback Steakhouse

2825 Geyser Drive

Colorado Springs

CO

80906

619

Outback Steakhouse

2066 South Abilene Street

Aurora

CO

80014

628

Outback Steakhouse

1315 Dry Creek Road

Longmont

CO

80501

1001

Carrabba’s Italian Grill

12990 South Cleveland Avenue

Fort Myers

FL

33907

1002

Carrabba’s Italian Grill

4320 North Tamiami Trail

Naples

FL

34103

1006

Carrabba’s Italian Grill

2244 Palm Beach Lakes Boulevard

West Palm Beach

FL

33409

1008

Carrabba’s Italian Grill

2700 Southeast Federal Highway

Stuart

FL

34994

1022

Outback Steakhouse

3215 Southwest College Road

Ocala

FL

34474

1023

Outback Steakhouse

11308 North 56th Street

Temple Terrace

FL

33617

1024

Outback Steakhouse

6390 North Lockwood Ridge Road

Sarasota

FL

34243

1025

Outback Steakhouse

170 Cypress Gardens Boulevard

Winter Haven

FL

33880

1026

Outback Steakhouse

1481 Tamiami Trail

Port Charlotte

FL

33948

1027

Outback Steakhouse

1642 Northeast Pine Island Road

Cape Coral

FL

33903

1028

Outback Steakhouse

4902 Commercial Way

Spring Hill

FL

34608

1029

Outback Steakhouse

5710 Oakley Boulevard

Wesley Chapel

FL

33544

1030

Outback Steakhouse

9773 San Jose Boulevard

Jacksonville

FL

32257

1031

Outback Steakhouse

3760 South 3rd Street

Jacksonville Beach

FL

32250

1033

Outback Steakhouse

1775 Wells Road

Orange Park

FL

32073

1034

Outback Steakhouse

245 State Road 312

Saint Augustine

FL

32086

1035

Outback Steakhouse

1820 Raymond Diehl Road

Tallahassee

FL

32309

1036

Outback Steakhouse

861 West 23rd Street

Panama City

FL

32405

---

1060

Outback Steakhouse

4845 South Kirkman Road

Orlando

FL

32811

1061

Outback Steakhouse

180 Hickman Drive

Sanford

FL

32771

1063

Outback Steakhouse

9600 U.S. Highway 441

Leesburg

FL

34788

1101

Carrabba’s Italian Grill

3913 River Place Drive

Macon

GA

31210

1102

Carrabba’s Italian Grill

1160 Ernest Barrett Parkway

Kennesaw

GA

30144

1108

Carrabba’s Italian Grill

1887 Mount Zion Road

Morrow

GA

30260

1116

Outback Steakhouse

3585 Atlanta Highway

Athens

GA

30606

1119

Outback Steakhouse

810 Ernest Barrett Parkway

Kennesaw

GA

30144

1120

Outback Steakhouse

6331 Douglas Boulevard

Douglasville

GA

30135

1121

Outback Steakhouse

1188 Dogwood Drive

Conyers

GA

30012

1122

Outback Steakhouse

145 Gwinco Boulevard

Suwanee

GA

30024

1123

Outback Steakhouse

655 Douglasville Highway

Gainesville

GA

30501

1124

Outback Steakhouse

995 North Peachtree Parkway

Peachtree City

GA

30269

1125

Outback Steakhouse

3 Reinhardt College Parkway

Canton

GA

30114

1133

Outback Steakhouse

11196 Abercorn Expressway

Savannah

GA

31419

1134

Outback Steakhouse

823 North Westover Boulevard

Albany

GA

31707

1135

Outback Steakhouse

1824 Club House Drive

Valdosta

GA

31601

1137

Outback Steakhouse

3088 Watson Boulevard

Warner Robins

GA

31093

1201

Bonefish Grill

18375 Bluemound Road

Brookfield

WI

53045

1264

Outback Steakhouse

2925 Ross Clark Circle

Dothan

AL

36301

1410

Outback Steakhouse

2005 River Oaks Drive

Calumet City

IL

60409

1411

Outback Steakhouse

720 West Lake Cook Road

Buffalo Grove

IL

60089

1412

Outback Steakhouse

216 East Golf Road

Schaumburg

IL

60173

1414

Outback Steakhouse

2855 West Ogden Avenue

Naperville

IL

60540

1416

Outback Steakhouse

15608 South Harlem Avenue

Orland Park

IL

60462

1418

Outback Steakhouse

6007 East State Street

Rockford

IL

61108

1419

Outback Steakhouse

5652 Northridge Drive

Gurnee

IL

60031

1424

Outback Steakhouse

3241 Chicagoland Circle

Joliet

IL

60431

1450

Outback Steakhouse

4390 Illinois Street

Swansea

IL

62221

1452

Outback Steakhouse

2402 North Prospect Avenue

Champaign

IL

61822

1453

Outback Steakhouse

3201 Horizon Drive

Springfield

IL

62703

1516

Outback Steakhouse

3201 West 3rd Street

Bloomington

IN

47404

1518

Outback Steakhouse

3660 State Road 26

Lafayette

IN

47905

1519

Outback Steakhouse

7201 East Indiana Street

Evansville

IN

47715

1520

Outback Steakhouse

2315 Post Road

Indianapolis

IN

46219

1521

Outback Steakhouse

3730 South Reed Road

Kokomo

IN

46902

1522

Outback Steakhouse

3401 North Granville Avenue

Muncie

IN

47303

1550

Outback Steakhouse

8110 Georgia Street

Merrillville

IN

46410

1611

Outback Steakhouse

3939 1st Avenue Southeast

Cedar Rapids

IA

52402

1614

Outback Steakhouse

4500 Southern Hills Drive

Sioux City

IA

51106

1715

Outback Steakhouse

233 South Ridge Road

Wichita

KS

67212

1716

Outback Steakhouse

15430 South Rogers Road

Olathe

KS

66062

1813

Outback Steakhouse

6520 Signature Drive

Louisville

KY

40213

1851

Outback Steakhouse

3260 Scottsville Road

Bowling Green

KY

42104

1901

Outback Steakhouse

2415 South Acadian Thruway

Baton Rouge

LA

70808

1912

Outback Steakhouse

830 East I-10 Service Road

Slidell

LA

70461

1914

Outback Steakhouse

60 Park Place Drive

Covington

LA

70433

1921

Outback Steakhouse

1600 West Pinhook Drive

Lafayette

LA

70508

---

1941

Outback Steakhouse

2616 Derek Drive

Lake Charles

LA

70607

1951

Outback Steakhouse

305 West Constitution

West Monroe

LA

71292

1961

Outback Steakhouse

2715 Village Lane

Bossier City

LA

71112

1971

Outback Steakhouse

3217 South MacArthur Drive

Alexandria

LA

71301

2001

Fleming’s Prime Steakhouse and Wine Bar

4322 West Boy Scout Boulevard

Tampa

FL

33607

2014

Outback Steakhouse

1203 Townsgate Court

Plant City

FL

33563

2015

Outback Steakhouse

2225 Highway 44 West

Inverness

FL

34453

2017

Outback Steakhouse

11950 Sheldon Road

Tampa

FL

33626

2134

Outback Steakhouse

3020 Crain Highway

Waldorf

MD

20601

2139

Outback Steakhouse

4420 Long Gate Parkway

Ellicott City

MD

21043

2315

Outback Steakhouse

3650 28th Street Southeast

Kentwood

MI

49512

2319

Outback Steakhouse

2468 Tittabawassee Road

Saginaw

MI

48604

2320

Outback Steakhouse

1515 West 14 Mile Road

Madison Heights

MI

48071

2321

Outback Steakhouse

1501 Boardman Road

Jackson

MI

49202

2325

Outback Steakhouse

6435 Dixie Highway

Clarkston

MI

48346

2326

Outback Steakhouse

7873 Conference Center Drive

Brighton

MI

48114

2411

Outback Steakhouse

8880 Springbrook Drive Northwest

Coon Rapids

MN

55433

2415

Outback Steakhouse

5723 Bishop Avenue

Inver Grove Heights

MN

55076

2420

Outback Steakhouse

4255 Haines Road

Hermantown

MN

55811

2619

Outback Steakhouse

3110 East 36th Street

Joplin

MO

64804

3002

Roy’s Restaurant

4342 West Boy Scout Boulevard

Tampa

FL

33607

3101

Carrabba’s Italian Grill

4650 Route 42

Turnersville

NJ

08012

3102

Carrabba’s Italian Grill

500 Route 38 East

Maple Shade

NJ

08052

3110

Outback Steakhouse

230 Lake Drive East

Cherry Hill

NJ

08002

3114

Outback Steakhouse

1397 US Route 9 North

Old Bridge

NJ

08857

3116

Outback Steakhouse

4600 Route 42

Turnersville

NJ

08012

3117

Outback Steakhouse

98 US Route 22 West

Green Brook

NJ

08812

3120

Outback Steakhouse

Klockner Road at Route 130

Hamilton

NJ

08619

3122

Outback Steakhouse

901 Route 73

Evesham Township

NJ

08053

3211

Outback Steakhouse

4141 South Pecos Road

Las Vegas

NV

89121

3212

Outback Steakhouse

1950 North Rainbow Boulevard

Las Vegas

NV

89108

3213

Outback Steakhouse

4423 East Sunset Road

Henderson

NV

89014

3214

Outback Steakhouse

8671 West Sahara Avenue

Las Vegas

NV

89117

3215

Outback Steakhouse

3645 South Virginia Street

Reno

NV

89502

3217

Outback Steakhouse

2625 West Craig Road

North Las Vegas

NV

89032

3220

Outback Steakhouse

7380 South Las Vegas Boulevard

Las Vegas

NV

89123

3357

Outback Steakhouse

3112 Erie Boulevard East

Dewitt

NY

13214

3402

Carrabba’s Italian Grill

10400 East Independence Boulevard

Matthews

NC

28105

3403

Carrabba’s Italian Grill

16408 Northcross Drive

Huntersville

NC

28078

3420

Carrabba’s Italian Grill

4821 Capital Boulevard

Raleigh

NC

27616

3444

Outback Steakhouse

302 South College Street

Wilmington

NC

28403

3446

Outback Steakhouse

3550 Mount Moriah Road

Durham

NC

27707

3447

Outback Steakhouse

505 Highland Oaks Drive

Winston-Salem

NC

27103

3448

Outback Steakhouse

501 North New Hope Road

Gastonia

NC

28054

3450

Outback Steakhouse

606 Southwest Greenville Boulevard

Greenville

NC

27834

3451

Outback Steakhouse

256 East Parris Avenue

High Point

NC

27262

3452

Outback Steakhouse

100 Southern Road

Southern Pines

NC

28387

3453

Outback Steakhouse

210 Gateway Boulevard

Rocky Mount

NC

27804

---

3454

Outback Steakhouse

16400 Northcross Drive

Huntersville

NC

28078

3455

Outback Steakhouse

1235 Longpine Road

Burlington

NC

27215

3458

Outback Steakhouse

8280 Valley Boulevard

Blowing Rock

NC

28605

3460

Outback Steakhouse

250 Mitchelle Drive

Hendersonville

NC

28792

3461

Outback Steakhouse

1020 East Innes Street

Salisbury

NC

28144

3462

Outback Steakhouse

111 Howell Road

New Bern

NC

28562

3463

Outback Steakhouse

8338 Pineville-Matthews Road

Pineville

NC

28226

3464

Outback Steakhouse

223 Wintergreen Drive

Lumberton

NC

28358

3621

Outback Steakhouse

401 West Dussel Road

Maumee

OH

43537

3633

Outback Steakhouse

6950 Ridge Road

Parma

OH

44060

3635

Outback Steakhouse

24900 Sperry Drive

Westlake

OH

44145

3636

Outback Steakhouse

820 North Lexington Springmill Road

Ontario

OH

44906

3640

Outback Steakhouse

8595 Market Street

Mentor

OH

44060

3658

Outback Steakhouse

6800 Miller Lane

Butler Township

OH

45414

3662

Outback Steakhouse

930 Interstate Drive

Findlay

OH

45840

3663

Outback Steakhouse

2512 Kings Center Court

Mason

OH

45040

3713

Outback Steakhouse

3600 South Broadway

Edmond

OK

73013

3715

Outback Steakhouse

860 North Interstate Drive

Norman

OK

73013

3716

Outback Steakhouse

7206 Cache Road

Lawton

OK

73505

3915

Outback Steakhouse

3527 North Union Deposit Road

Harrisburg

PA

17109

3917

Outback Steakhouse

100 North Pointe Boulevard

Lancaster

PA

17601

3951

Outback Steakhouse

9395 McKnight Road

Pittsburgh

PA

15237

3952

Outback Steakhouse

100 Sheraton Drive

Altoona

PA

16601

4117

Outback Steakhouse

110 Interstate Boulevard

Anderson

SC

29621

4118

Outback Steakhouse

7611 Two Notch Road

Columbia

SC

29223

4119

Outback Steakhouse

110 Dunbarton Drive

Florence

SC

29501

4120

Outback Steakhouse

1319 River Point Road

Rock Hill

SC

29730

4121

Outback Steakhouse

20 Hatton Place

Hilton Head

SC

29926

4122

Outback Steakhouse

454 Bypass 72 Northwest

Greenwood

SC

29649

4123

Outback Steakhouse

1721 U.S. Highway 17 North

North Myrtle Beach

SC

29582

4124

Outback Steakhouse

2480 Broad Street

Sumter

SC

29150

4127

Outback Steakhouse

945 Factory Shops Boulevard

Gaffney

SC

29341

4210

Outback Steakhouse

2411 South Carolyn Avenue

Sioux Falls

SD

57106

4314

Outback Steakhouse

330 North Peters Road

Knoxville

TN

37922

4318

Outback Steakhouse

1390 Interstate Drive

Cookeville

TN

38501

4319

Outback Steakhouse

2790 Wilma Rudolph Boulevard

Clarksville

TN

37040

4320

Outback Steakhouse

1968 Old Fort Parkway

Murfreesboro

TN

37129

4324

Outback Steakhouse

1125 Franklin Road

Lebanon

TN

37087

4350

Outback Steakhouse

536 Paul Huff Parkway

Cleveland

TN

37312

4401

Carrabba’s Italian Grill

11339 Katy Freeway

Houston

TX

77079

4403

Carrabba’s Italian Grill

11590 Research Boulevard

Austin

TX

78759

4404

Carrabba’s Italian Grill

2335 Highway 6

Sugar Land

TX

77478

4405

Carrabba’s Italian Grill

12507 West IH-10

San Antonio

TX

78230

4406

Carrabba’s Italian Grill

25665 Interstate 45 North

The Woodlands

TX

77380

4407

Carrabba’s Italian Grill

502 West Bay Area Boulevard

Webster

TX

77598

4416

Outback Steakhouse

20455 Katy Freeway

Katy

TX

77450

4417

Outback Steakhouse

16080 San Pedro Avenue

San Antonio

TX

78230

4418

Outback Steakhouse

2102 South Texas Avenue

College Station

TX

77840

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4422

Outback Steakhouse

11600 Research Boulevard

Austin

TX

78759

4423

Outback Steakhouse

12511 West IH-10

San Antonio

TX

78230

4424

Outback Steakhouse

2060 I-10 South

Beaumont

TX

77707

4426

Outback Steakhouse

5555 Northwest Loop 410

San Antonio

TX

78238

4429

Outback Steakhouse

4205 South IH-35

San Marcos

TX

78666

4454

Outback Steakhouse

3904 Towne Crossing Boulevard

Mesquite

TX

75150

4455

Outback Steakhouse

1031 SH 114 West

Grapevine

TX

76051

4456

Outback Steakhouse

9049 Vantage Point Drive

Dallas

TX

75243

4457

Outback Steakhouse

1509 North Central Expressway

Plano

TX

75075

4458

Outback Steakhouse

15180 Addison Road

Addison

TX

75001

4459

Outback Steakhouse

1151 West IH-20

Arlington

TX

76017

4461

Outback Steakhouse

2211 South Stemmons Freeway

Lewisville

TX

75067

4462

Outback Steakhouse

2314 West Loop 250 North

Midland

TX

79705

4463

Outback Steakhouse

7101 West Interstate Highway 40

Amarillo

TX

79106

4464

Outback Steakhouse

4015 South Loop 289

Lubbock

TX

79423

4466

Outback Steakhouse

300 South I-35 East

Denton

TX

76201

4467

Outback Steakhouse

501 East Loop 281

Longview

TX

75605

4468

Outback Steakhouse

4500 Franklin Avenue

Waco

TX

76710

4469

Outback Steakhouse

2701 East Central Texas Expressway

Killeen

TX

76543

4470

Outback Steakhouse

11875 Gateway Boulevard

El Paso

TX

79936

4473

Outback Steakhouse

4505 Sherwood Way

San Angelo

TX

76901

4474

Outback Steakhouse

4142 Ridgemont Drive

Abilene

TX

79606

4475

Outback Steakhouse

1101 North Beckley Avenue

DeSoto

TX

75115

4476

Outback Steakhouse

4902 President George Bush Turnpike

Garland

TX

75040

4478

Outback Steakhouse

13265 South Freeway

Fort Worth

TX

76028

4510

Outback Steakhouse

7770 South 1300 East

Sandy

UT

84094

4511

Outback Steakhouse

1664 North Heritage Park Boulevard

Layton

UT

84041

4716

Outback Steakhouse

7917 West Broad Street

Richmond

VA

23294

4724

Outback Steakhouse

261 University Boulevard

Harrisonburg

VA

22801

4728

Outback Steakhouse

6821 Chital Drive

Midlothian

VA

23112

4756

Outback Steakhouse

3026 Richmond Road

Williamsburg

VA

23185

4758

Outback Steakhouse

295 Peppers Ferry Road

Christiansburg

VA

24073

4762

Outback Steakhouse

3121 Albert Lankford Drive

Lynchburg

VA

24501

4801

Cheeseburger In Paradise

40 Geoffrey Drive

Newark

DE

19713

4810

Outback Steakhouse

279 Junction Road

Madison

WI

53717

4813

Outback Steakhouse

311 Hampton Court

Onalaska

WI

54650

4910

Outback Steakhouse

790 Foxcroft Avenue

Martinsburg

WV

25401

4961

Outback Steakhouse

111 Hylton Lane

Beckley

WV

25801

5010

Outback Steakhouse

229 Miracle Road

Evansville

WY

82636

5113

Outback Steakhouse

2574 Camino Entrada

Santa Fe

NM

87507

5301

Carrabba’s Italian Grill

1740 South Clearview Avenue

Mesa

AZ

85208

5302

Carrabba’s Italian Grill

5646 West Bell Road

Glendale

AZ

85308

5303

Carrabba’s Italian Grill

1060 North 54th Street

Chandler

AZ

85226

5501

Cheeseburger In Paradise

4670 Southport Crossing Drive

Indianapolis

IN

46237

5502

Cheeseburger In Paradise

9770 Crosspoint Boulevard

Fisher

IN

46256

5505

Cheeseburger In Paradise

3830 S US Highway 41

Terre Haute

IN

47802

5506

Cheeseburger In Paradise

8301 Eagle Lake Drive

Evansville

IN

47715

6006

Carrabba’s Italian Grill

2501 University Drive

Coral Springs

FL

33065

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6007

Carrabba’s Italian Grill

60 Palmetto Avenue

Merritt Island

FL

32953

6013

Carrabba’s Italian Grill

4829 South Florida Avenue

Lakeland

FL

33813

6015

Carrabba’s Italian Grill

801 Providence Road

Brandon

FL

33511

6020

Carrabba’s Italian Grill

3530 Tyrone Boulevard North

Saint Petersburg

FL

33710

6021

Carrabba’s Italian Grill

2752 Capital Circle Northeast

Tallahassee

FL

32405

6029

Carrabba’s Italian Grill

1285 US Highway 1

Vero Beach

FL

32960

6035

Carrabba’s Italian Grill

270 Citi Center Street

Winter Haven

FL

33880

6048

Carrabba’s Italian Grill

11950 Sheldon Road

Citrus Park

FL

33626

6052

Carrabba’s Italian Grill

1203 Townsgate Court

Plant City

FL

33563

6116

Carrabba’s Italian Grill

2700 Chapel Hill Road

Douglasville

GA

30135

6302

Cheeseburger In Paradise

13905 Lakeside Circle

Sterling Heights

MI

48313

6402

Roy’s Restaurant

2840 Dallas Parkway

Plano

TX

75093

6502

Carrabba’s Italian Grill

4690 Southport Crossing

Indianapolis

IN

46237

6903

Carrabba’s Italian Grill

2010 Kaliste Saloon Road

Lafayette

LA

70508

7101

Carrabba’s Italian Grill

4430 Long Gate Parkway

Ellicott City

MD

21043

8001

Lee Roy Selmon’s

4302 West Boy Scout Boulevard

Tampa

FL

33607

8002

Lee Roy Selmon’s

17508 Dona Michelle Drive

Tampa

FL

33647

8109

Carrabba’s Italian Grill

901 Route 73

Evesham Township

NJ

08053

8302

Bonefish Grill

13905 Lakeside Circle

Sterling Heights

MI

48313

8609

Carrabba’s Italian Grill

1320 Boardman Polland Road

Boardman Township

OH

44514

8705

Cheeseburger In Paradise

1101 Seminole Trail

Charlottesville

VA

22901

8908

Carrabba’s Italian Grill

100 North Pointe Boulevard

Lancaster

PA

17601

9301

Carrabba’s Italian Grill

324 North Peters Road

Knoxville

TN

37922

9407

Bonefish Grill

190 Partners Circle

Southern Pines

NC

28387

9410

Carrabba’s Italian Grill

1550 I-10 South

Beaumont

TX

77707

9414

Carrabba’s Italian Grill

3400 North Central Expressway

Plano

TX

75074

9704

Carrabba’s Italian Grill

5805 Trinity Parkway

Centreville

VA

20120

9802

Carrabba’s Italian Grill

18375 Bluemound Road

Brookfield

WI

53045

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SCHEDULE 2G

RLP SUBLEASES

 

Store Number		Address		Sublease*
9407		190 Partner Circle Southern Pines, NC 28387		Amended and Restated Lease between Bonefish Grill, LLC and Bonefish/Carolinas, Limited Partnership, dated as of June 14, 2007.
3101		4650 Route 42 Turnersville, NJ 08012		Amended and Restated Lease between Carrabba’s Italian Grill, LLC and Outback/Carrabba’s Partnership (as successor-in-interest to Carrabba’s/Mid Atlantic-I, Limited Partnership), dated as of June 14, 2007.
7101		4430 Long Gate Parkway Ellicott City, MD 21043		Lease between Carrabba’s Italian Grill, LLC and Carrabba’s/DC-I, Limited Partnership, dated as of February 3, 1997.
8109		901 Route 73 Evesham Township, NJ 08053		Amended and Restated Lease, between Carrabba’s Italian Grill, LLC and OSF/CIGI of Evesham Partnership (as successor-in-interest to Carrabba’s/Mid Atlantic-I, Limited Partnership), dated as of June 14, 2007.
9301		324 N. Peter’s Road Knoxville, TN 37922		Lease, between Carrabba’s Italian Grill, LLC. and Carrabba’s/Rocky Top, Limited Partnership, dated as of April 16, 1999.
2001		4322 West Boy Scout Boulevard Tampa, FL 33607		Lease, between OS Prime, LLC and OSI/Fleming’s, LLC, effective June 14, 2007.
1715		233 S. Ridge Road Wichita, KS 67212		Lease, between Outback Steakhouse of Florida, LLC and Outback Kansas, LLC (as successor-in-interest to Heartland Outback-II, Limited Partnership), dated as of February 1, 1999.
1716		15430 South Rogers Road Olathe, KS 66062		Lease, between Outback Steakhouse of Florida, LLC and Outback Kansas, LLC (as successor-in-interest to Heartland Outback-II, Limited Partnership), dated as of December 12, 2002.

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2134		3020 Crain Highway Waldorf, MD 20601		Lease, between Outback Steakhouse of Florida, LLC and Outback/Stone-II, Limited Partnership (as successor-in-interest to Outback of Waldorf, Inc.), dated as of August 31, 1994.
2139		4420 Long Gate Parkway Ellicott City, MD 21043		Lease, between Outback Steakhouse of Florida, LLC and Outback/Stone-II, Limited Partnership, dated as of February 3, 1997.
3116		4600 Route 42 Turnersville, NJ 08012		Amended and Restated Lease, between Outback Steakhouse of Florida, LLC and Outback/Carrabba’s Partnership (as successor-in-interest to Outback/Mid-Atlantic-I, Limited Partnership), dated as of June 14, 2007.
3122		901 Route 73 Evesham Township, NJ 08053		Amended and Restated Lease, between Outback Steakhouse of Florida, LLC and OSF/CIGI of Evesham Partnership (as successor-in-interest to Outback/Mid-Atlantic-I, Limited Partnership), dated as of June 14, 2007.
3713		3600 South Broadway Edmond, OK 73013		Lease, between Outback Steakhouse of Florida, Inc. and OSF Oklahoma, LLC (as successor-in-interest to Outback/Heartland Limited Partnership), dated as of January 2, 1996.
3715		860 N. Interstate Drive Norman, OK 73013		Lease, between Outback Steakhouse of Florida, Inc. and OSF Oklahoma, LLC (as successor-in-interest to Outback/Heartland-II, Limited Partnership), dated as of May 21, 1997.
3716		7206 Cache Road Lawton, OK 73505		Lease, between Outback Steakhouse of Florida, Inc. and OSF Oklahoma, LLC (as successor-in-interest to Outback/Heartland-II, Limited Partnership), dated as of January 29, 1999.
3002		4342 West Boy Scout Boulevard Tampa, FL 33607		Lease, between OS Pacific, LLC and Roy’s/Outback Joint Venture, LLC, effective June 14, 2007.
6402		2840 Dallas Parkway Plano, TX 42093		Amended and Restated Lease, between OS Pacific, LLC and Roy’s/Outback Joint Venture (as successor-in-interest to Roy’s/South Midwest-I, Limited Partnership), dated as of June 14, 2007.

 

*	Each Sublease is as from time to time amended, restated, supplemented and otherwise modified and in effect from time to time, together with any renewals, extensions, assignments or replacements thereof.

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SCHEDULE 2H

SPECIFIED PRIOR SUBLEASES

 

Store Number		Address		Excluded License/Specified Prior Subleases*
1028		4902 Commercial Way Spring Hill, FL 34608		Billboard leased pursuant to a Lease Renewal Agreement, dated July 22, 1999.
1036		861 W. 23rd Street Panama City, FL 32405		Billboard leased pursuant to a Renewal Lease, dated April 7, 1997.
1520		2315 Post Road Indianapolis, IN 46219		Billboard leased pursuant to a Renewal Lease Agreement, dated September 1, 1996.
3715		860 N. Interstate Drive Norman, OK 73013		Sign leased pursuant to a Sign Location Lease, dated May 1, 2007.
4801		40 Geoffrey Drive Newark, DE 19713		Space leased for use as a Dunkin Donuts retail location pursuant to a Lease, dated November 20, 2006.
8609		1320 Boardman Polland Road Boardman Township, OH 44514		Space leased for use as a Verizon Wireless telephone retail and service location pursuant to a Lease, dated May 10, 2007.
8609		1320 Boardman Polland Road Boardman Township, OH 44514		Space leased for use as an Aspen Dental office pursuant to a Lease, dated August 24, 2005.

 

*	Each license/sublease is as from time to time amended, restated, supplemented and otherwise modified and in effect from time to time, together with any renewals, extensions, assignments or replacements thereof.

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SCHEDULE 6.1(h)

REPORTING REQUIREMENTS

(1) Monthly Reports. Commencing with the month ending April 30, 2012, not later than thirty (30) days following the end of such month and each calendar month thereafter, Tenant shall deliver to Landlord and Landlord’s Lender the following with respect to such month and each subsequent calendar month:

(a) Monthly income statements (including sales) and determinations of Portfolio Four-Wall EBITDAR in respect of (i) each individual Leased Property (except that for individual Leased Properties where a Restaurant Location is being operated as a Third-Party Brand, such information will only be required to the extent it is available to Tenant or any Affiliate of Tenant), (ii) for all Leased Properties in the aggregate, and (iii) for each Concept (and, to the extent available to Tenant or any Affiliate of Tenant, each Third Party Brand), in each case, for such month, for the corresponding month of the previous Fiscal Year and for the Fiscal Year to date and for the corresponding period of the prior Fiscal Year; and

(b) internally prepared, unaudited financial statements of Guarantor for such month and the Fiscal Year to date, which financial statements shall include a comparison with the results for the corresponding month of the prior Fiscal Year and a comparison of the Fiscal Year to date results with the results for the same period of the prior Fiscal Year; and

(c) commencing with the first Annual Budget required to be delivered hereunder, monthly budget performance reports with respect to the Annual Budget showing a comparison of performance of the Leased Property to the Annual Budget for such month and the Fiscal Year to date, which budget performance reports shall include, to the extent an Annual Budget was delivered in respect of the prior Fiscal Year, a comparison with the results for the corresponding month of the prior Fiscal Year and a comparison of the Fiscal Year to date results with the results for the same period of the prior Fiscal Year; and

(d) a calculation of the Fixed Charge Coverage Ratio, Variable Additional Charges and Scheduled Additional Charges for such month or as of the end of such month, as applicable.

Such statements and reports for each month shall be accompanied by an Officer’s Certificate certifying to the best of the signer’s knowledge, that (i) such statements fairly represent the financial condition and results of operations of Guarantor and the Leased Property, as applicable, (ii) that as of the date of such Officer’s Certificate, no Event of Default exists under this Agreement or, if so, specifying the nature and status of each such Event of Default and the action then being taken or proposed to be taken to remedy such Event of Default, (iii) that as of the date of each Officer’s Certificate, no litigation exists involving Tenant or any individual Leased Property or Properties in which the amount involved not covered by insurance is greater than $500,000, or, if so, specifying such litigation and the actions being taking in relation thereto and (iv) the amount by which actual operating expenses were greater than or less than the operating expenses anticipated in the applicable Annual Budget. Such financial statements shall contain such other information as shall be reasonably requested by Landlord’s Lender. Notwithstanding the foregoing, Tenant shall promptly deliver to Landlord and Landlord’s Lender reports detailing any non-recurring charges of Tenant in respect of the Leased Property including, among other things, any charges assessed under any Operating Agreement.

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(2) Quarterly Reports. Commencing with the Fiscal Quarter ending June 30, 2012, not later than sixty (60) days following the end of such Fiscal Quarter and not later than forty-five (45) days following the end of each subsequent Fiscal Quarter, Tenant shall deliver to Landlord and Landlord’s Lender the following:

(a) quarterly income statements (including sales) and determinations of Portfolio Four-Wall EBITDAR (i) each individual Leased Property (except that for individual Leased Properties where a Restaurant Location is being operated as a Third-Party Brand, such information will only be required to the extent it is available to Tenant or any Affiliate of Tenant), (ii) for all Leased Properties in the aggregate, and (iii) for each Concept (and, to the extent available to Tenant or any Affiliate of Tenant, each Third Party Brand), in each case, for such quarter, for the corresponding quarter of the previous Fiscal Year and for the Fiscal Year to date and for the corresponding period of the prior Fiscal Year;

(b) internally prepared, unaudited financial statements of Guarantor for such quarter and the Fiscal Year to date, which financial statements shall include a comparison with the results for the corresponding quarter of the prior Fiscal Year and a comparison of the Fiscal Year to date results with the results for the same period of the prior Fiscal Year; provided that such financial statements of Guarantor shall be required only in respect of the first three (3) Fiscal Quarters of each Fiscal Year;

(c) commencing with the first Annual Budget required to be delivered hereunder, quarterly budget performance reports with respect to the Annual Budget showing a comparison of performance of the Leased Property to the Annual Budget for such quarter and the Fiscal Year to date, which budget performance reports shall include, to the extent an Annual Budget was delivered in respect of the prior Fiscal Year, a comparison with the results for the corresponding quarter of the prior Fiscal Year and a comparison of the Fiscal Year to date results with the results for the same period of the prior Fiscal Year; and

(d) a calculation of the Fixed Charge Coverage Ratio, Variable Additional Charges and Scheduled Additional Charges Rent for such quarter or as of the end of such quarter, as applicable.

Such statements and reports for each quarter shall be accompanied by an Officer’s Certificate certifying to the best of the signer’s knowledge, that (i) such statements fairly represent the financial condition and results of operations of Guarantor or the Leased Property, as applicable, (ii) that as of the date of such Officer’s Certificate, no Event of Default exists under this Agreement or, if so, specifying the nature and status of each such Event of Default and the action then being taken or proposed to be taken to remedy such Event of Default, (iii) that as of the date of each Officer’s Certificate, no litigation exists involving Tenant or any individual Leased Property or Properties in which the amount involved not covered by insurance is greater than $500,000, or, if so, specifying such litigation and the actions being taken in relation thereto and (iv) the amount by which actual operating expenses were greater than or less than the operating expenses anticipated in the applicable Annual Budget. Such financial statements shall contain such other information as shall be reasonably requested by Landlord’s Lender.

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(3) Annual Reports. Not later than one-hundred twenty (120) days after the end of each Fiscal Year (commencing with the Fiscal Year ending on December 31, 2012), Tenant shall deliver to Landlord and Landlord’s Lender:

(a) An income statement (including sales) and determination of Portfolio Four­Wall EBITDAR in respect of (i) each individual Leased Property (except that for individual Leased Properties where a Restaurant Location is being operated as a Third-Party Brand, such information will only be required to the extent it is available to Tenant or any Affiliate of Tenant), (ii) for all Leased Properties in the aggregate, and (iii) for each Concept (and, to the extent available to Tenant or any Affiliate of Tenant, each Third Party Brand), in each case, for such Fiscal Year and for the prior Fiscal Year; and

(b) audited financial statements for Guarantor for such Fiscal Year certified by an Independent Accountant in accordance with GAAP and the requirements of Regulation AB, accompanied by an opinion of Guarantor’s auditors, which report and opinion shall be prepared in accordance with generally accepted auditing standards; and

(c) a calculation of the Fixed Charge Coverage Ratio, Variable Additional Charges and Scheduled Additional Charges for such Fiscal Year.

Such annual financial statements and reports shall also be accompanied by an Officer’s Certificate in the form required pursuant to Section (1) of this Schedule 6.1(h).

Notwithstanding the foregoing Sections (1)-(3) of this Schedule 6.1(h), the obligations to deliver Guarantor financial statements may be satisfied by furnishing (A) the applicable financial statements of Holdco (or any direct or indirect parent of Holdco) or (B) Guarantor’s or Holdco’s (or any direct or indirect parent thereof), as applicable, Form 10-K or 10-Q, as applicable, filed with the SEC; provided that with respect to each of preceding clauses (A) and (B), (i) to the extent such information relates to Holdco (or a parent thereof), such information is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to Holdco (or such parent), on the one hand, and the information relating to Guarantor on a stand­alone basis, on the other hand, and (ii) to the extent such information is in lieu of audited financials of Guarantor, such materials are accompanied by a report and opinion of such Person’s auditors, which report and opinion shall be prepared in accordance with generally accepted auditing standards.

(4) Capital Expenditures Summaries. Tenant shall, within ninety (90) days after the end of each calendar year, deliver to Landlord’s Lender an annual summary of any and all capital expenditures made at the Leased Property during the prior twelve (12) month period.

(5) Annual Budget; Operating Agreement Annual Budgets.

(a) Tenant shall deliver to Landlord and Landlord’s Lender the Annual Budget for Landlord’s Lender’s review, but not approval, not more than ninety (90) days after the end of each Fiscal Year. Any proposed modifications to such Annual Budget shall be delivered to Landlord’s Lender for its review, but not approval.

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(b) Tenant shall deliver to Landlord’s Lender the annual budget (if any) and any modifications thereto under any Operating Agreement for Landlord’s Lender’s review, but not approval, prior to Landlord’s or Tenant’s approval of any such annual budget or modification.

(6) Other Information. Tenant shall, promptly after written request by Landlord or Landlord’s Lender or, if a Securitization shall have occurred, the Rating Agencies, furnish or cause to be furnished to Landlord or Landlord’s Lender, in such manner and in such detail as may be reasonably requested by Landlord or Landlord’s Lender, as applicable, such reasonable additional information as may be reasonably requested with respect to the Leased Property, Tenant or Guarantor.

Without limiting the generality of the foregoing, if reasonably requested by Landlord or Landlord’s Lender, Tenant shall promptly provide Landlord or Landlord’s Lender, as applicable (or any issuer or sponsor of a Securitization) with any financial statements or financial, statistical, operating or other information as Landlord or Landlord’s Lender shall reasonably determine to be required pursuant to Regulation AB or any amendment, modification or replacement thereto or any other Legal Requirements in connection with any offering circular or other disclosure document, any filing under the Exchange Act or any report required to be made “available” to holders of the Securities under Regulation AB or applicable Legal Requirements or as shall otherwise be reasonably requested by Lender (or any issuer or sponsor of a Securitization).

(7) Taxes and Other Charges. Tenant shall deliver to Landlord and Landlord’s Lender annually, no later than fifteen (15) Business Days after the first day of each fiscal year of Landlord, and shall update as new information is received, a schedule describing all Taxes and, as requested by Landlord and Landlord’s Lender, other Scheduled Additional Charges, payable or estimated to be payable during such fiscal year attributable to or affecting the Leased Property.

(8) Limitations on Disclosure. Notwithstanding anything to the contrary contained in this Master Lease or Landlord’s Loan Documents, unless such information is otherwise disclosed publicly by Tenant or its Affiliates, Tenant shall not be required to deliver financial information hereunder to Landlord or Landlord’s Lender to the limited extent and only during any such period that any applicable federal or state securities laws or regulations promulgated thereunder (a) expressly prohibit such delivery or (b) permit such delivery to be made to Landlord or Landlord’s Lender only when also disclosed publicly.

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SCHEDULE 8.2(a)(i)

AFFILIATED SUBLEASES, UNAFFILIATED SUBLEASES

AND SPECIFIED PRIOR SUBLEASES

Affiliated Subleases:

Amended and Restated Sublease, dated as of the Commencement Date, between Tenant and Outback Steakhouse of Florida, LLC.

Amended and Restated Sublease, dated as of the Commencement Date, between Tenant and Carrabba’s Italian Grill, LLC.

Amended and Restated Sublease, dated as of the Commencement Date, between Tenant and Bonefish Grill, LLC.

Amended and Restated Sublease, dated as of the Commencement Date, between Tenant and OS Pacific, LLC.

Amended and Restated Sublease, dated as of the Commencement Date, between Tenant and OS Prime, LLC.

Amended and Restated Sublease, dated as of the Commencement Date, between Tenant and OS Tropical, LLC.

Amended and Restated Sublease, dated as of the Commencement Date, between Tenant and OS Southern, LLC.

The RLP Subleases set forth on Schedule 2G.

Unaffiliated Subleases:

As set forth on Schedule 2D.

Specified Prior Subleases:

As set forth on Schedule 2H.

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SCHEDULE 8.2(a)(ii)

CURRENT SUBLEASE DEFAULTS

None.

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SCHEDULE 8.2(a)(iii)

SUBLEASE PREPAYMENTS OF RENT

None.

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SCHEDULE 10.1

INSURANCE REQUIREMENTS

Tenant shall, at its sole cost and expense, keep in full force and effect, or cause, to the extent within Tenant’s control, the applicable party to the Operating Agreements to keep in full force and effect, insurance coverage of the types and minimum limits as follows during the Term:

(b) Property Insurance. Insurance against loss customarily included under so called “All Risk” policies, including flood, earthquake, windstorm, vandalism, and malicious mischief, boiler and machinery, and such other insurable hazards as, under good insurance practices, from time to time are insured against for other property and buildings similar to the Leased Improvements, the Building Equipment and Tenant’s Personalty in nature, use, location, height, and type of construction. Such insurance policy shall also insure (subject to normal and customary sublimits as reasonably approved by Landlord and Landlord’s Lender) the additional expense of demolition and if any of the Leased Improvements or the use of the Leased Property shall at any time constitute legal non-conforming structures or uses, provide coverage for contingent liability from Operation of Building Laws, Demolition Costs and Increased Cost of Construction and containing “Ordinance or Law Coverage” or “Enforcement” coverage. The amount of such “All Risk” insurance shall be not less than one hundred percent (100%) of the replacement cost value of the Leased Improvements, the Building Equipment and Tenant’s Personalty. Each such insurance policy shall contain an agreed amount (coinsurance waiver) and replacement cost value endorsement and shall cover, without limitation, all tenant improvements and betterments which Tenant is required to insure in accordance with any Sublease. If the insurance required under this paragraph (a) of this Schedule 10.1 is not obtained by blanket insurance policies, the insurance policy shall be endorsed to also provide guaranteed building replacement cost. Landlord and Landlord’s Lender shall be named “Loss Payee” on a “Standard Mortgagee Endorsement” and be provided not less than thirty (30) days advance written notice of change in coverage, cancellation or non-renewal.

(c) Liability Insurance. “General Public Liability” insurance, including, without limitation, “Commercial General Liability” insurance; “Owned” (if any), “Liquor Liability” insurance; “Hired” and “Non Owned Auto Liability”; and “Umbrella Liability” coverage for “Personal Injury”, “Bodily Injury”, “Death, Accident and Property Damage”, providing, in combination, no less than $100,000,000 per occurrence and in the annual aggregate. The policies described in this paragraph (b) shall not exclude, without limitation: elevators, escalators, independent contractors, “Contractual Liability” (covering, to the maximum extent permitted by law, Tenant’s obligation to indemnify Landlord and Landlord’s Lender as required under this Lease, but subject to the terms and conditions of such policies) and “Products and Completed Operations Liability” coverage. All public liability insurance shall name Landlord’s Lender as “Additional Insured” either on a specific endorsement or under a blanket endorsement satisfactory to Landlord’s Lender.

(d) Workers’ Compensation Insurance. Workers compensation and disability insurance as required by law.

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(e) Commercial Rents Insurance. “Commercial rents” insurance plus a 180-day extended period of indemnity endorsement and with a limit of liability sufficient to avoid any co-insurance penalty and to provide proceeds which will cover the actual loss of profits and rents sustained following the date of casualty. Such policies of insurance shall be subject only to exclusions that are reasonably acceptable to Landlord’s Lender; provided, however, that such exclusions are reasonably consistent with those required for loans similar to the Landlord’s Debt provided herein. Such insurance shall be deemed to include “loss of rental value” insurance, where applicable. The term “rental value” means the sum of (A) the total then ascertainable Rent payable under this Lease and (B) the total ascertainable amount of all other amounts to be received by Tenant from third parties which are the legal obligation of third parties, reduced to the extent such amounts would not be received because of operating expenses not incurred during a period of non-occupancy of that portion of such Leased Property then not being occupied.

(f) Builder’s All-Risk Insurance. During any period of repair or restoration, builder’s risk insurance in an amount equal to not less than the full insurable value of the Leased Property against such risks (including so called “All Risk” perils coverage and collapse of the Leased Improvements to agreed limits as Landlord and Landlord’s Lender may reasonably request, in form and substance reasonably acceptable to Landlord and Landlord’s Lender); provided, however, that no such builder’s risk insurance shall be required if the property insurance required to be maintained as to the applicable Leased Property under paragraph (a) of this Schedule 10.1 includes coverage for the Leased Improvements located thereon while in the course of construction.

(g) Boiler and Machinery Insurance. Comprehensive boiler and machinery insurance (without exclusion for explosion) covering all mechanical and electrical equipment against physical damage, rent loss and improvements loss and covering, without limitation, all tenant improvements and betterments that Tenant is required to insure pursuant to this Lease or any Sublease on a replacement cost basis. The minimum amount of limits to be provided shall be $10,000,000 per accident.

(h) Flood Insurance; Windstorm Insurance.

 

(1)

If any portion of the Leased Improvements is located within an area designated as “flood prone” or a “special flood hazard area” (as defined under the regulations adopted under the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973), flood insurance shall be provided, in an amount not less than the maximum limit of coverage available under the Federal Flood Insurance plan with respect to the relevant Leased Property. Landlord reserves the right to require flood insurance in excess of that available under the Federal Flood Insurance plan.

 

(2)

If any Leased Property is in an area prone to hurricanes and windstorms, as reasonably determined by Landlord or Landlord’s Lender, Tenant shall provide, to the extent commercially available, windstorm insurance (including coverage for windstorm, cyclone, hurricane or tornado (including rain or wind driven rain which enters the covered building or structure through an opening

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created by the force of windstorm)) in an amount equal to the lesser of (i) one hundred percent (100%) of the replacement cost value of the Leased Improvements and the Building Equipment, with a maximum deductible no greater than five percent (5%) of the insured amount (subject to a $500,000 minimum), plus business interruption coverage, (ii) the release price set forth in Landlord’s Loan Documents with respect to the subject Leased Property, and (iii) and the Probable Maximum Loss (“PML”) as identified in a Windstorm PML study with such study to be based upon a 500-year return period using current windstorm modeling software, inclusive of demand surge and storm surge, with total insurable values inclusive of building replacement cost, contents and rental value each acceptable to Landlord and Landlord’s Lender.

(i) Earthquake Insurance. If earthquake insurance limits and aggregates are shared with locations other than the Leased Properties insured on the same policy as any of the Leased Properties or, if the amount of earthquake insurance provided is less than one hundred percent (100%) of the insurable values of the building and rental income combined, then the amount of earthquake coverage shall be based on a PML study for the applicable Leased Property, which must be conducted by a seismic engineering company reasonably satisfactory to Landlord and Landlord’s Lender. The results of the PML study, on an individual Leased Property basis and for all locations insured in the same earthquake insurance policies, shall be used to determine the amount of earthquake coverage to be provided by Tenant. The amount of insurance shall be determined by adding the total expected damage to all Leased Improvements subject to a single earthquake event in a given region together along with the expected loss of rents and other income from the applicable Leased Properties. Earthquake insurance shall provide a limit inclusive of rent loss for “Very High,” “High,” and “Moderate” Hazard Earthquake Risk ratings at twice the annual rental amount. Other lower risk-rated buildings shall provide a limit inclusive of rent loss at one times the annual rental loss. The total amount of earthquake insurance in limits shall be the sum of expected property damage, reconstruction cost and rental income loss calculation. Amounts of insurance required by this paragraph (h) shall be solely for the protection of the Leased Improvements. If the amounts of earthquake coverage required by any Property Documents is greater than the amounts required herein, then Tenant shall maintain such higher amounts of insurance. If the earthquake insurance and associated aggregate limits are shared among other locations, the risks associated with other locations also insured in the same policy shall be taken into consideration in determining the amount of insurance to be provided herein.

(j) Terrorism Insurance. Tenant shall be required to carry insurance with respect to the Leased Improvements and Building Equipment covering acts of sabotage or acts by terrorist groups or individuals (“Terrorism Insurance”) throughout the Term in an amount equal to $10,000,000 and having a deductible not greater than $100,000, or such lesser coverage amount or such greater deductible, on a blanket basis, that is acceptable to Landlord and Landlord’s Lender. The Terrorism Insurance shall also include eighteen (18) months of business interruption coverage. Tenant agrees that if any property insurance policy covering any of the Leased Properties provides for any exclusions of coverage for acts of terrorism, then a separate Terrorism Insurance policy in the coverage amount required under this paragraph (i) and in form and substance acceptable to Landlord and Landlord’s Lender will be obtained by Tenant for such

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Leased Property. Landlord and Landlord’s Lender agree that Terrorism Insurance coverage may be provided under a blanket policy that is acceptable to Landlord and Landlord’s Lender. Notwithstanding anything to the contrary in this paragraph (i), Tenant shall not be obligated to maintain Terrorism Insurance (a) in an amount more than that which can be purchased for a sum equal to $100,000 per annum and (b) except to the extent commercially available.

(k) Other Insurance. At Landlord or Landlord’s Lender’s reasonable request, such other insurance with respect to the Leased Property against loss or damage of the kinds from time to time customarily insured against and in such amounts as are generally required by institutional lenders on loans of similar amounts and secured by properties comparable to, and in the general vicinity of, the Leased Property; provided, however, that Directors and Officers (D&O) Liability Insurance shall not be subject to the lien of Landlord’s Loan Documents and shall be paid directly to Persons covered thereby.

(l) Ratings of Insurers. Tenant shall maintain the insurance coverage described in paragraphs (b) through (j) above, in all cases, with one or more primary insurers reasonably acceptable to Landlord and Landlord’s Lender, having both claims-paying-ability and financial strength ratings by S&P of not less than “A” and its equivalent by the other Rating Agencies required to rate the same pursuant to Landlord’s Loan Documents. Tenant will maintain the insurance coverage described in paragraph (a) of this Schedule 10.1 with one or more primary insurers reasonably acceptable to Landlord and Landlord’s Lender, (a) having a claims-paying-ability and financial strength ratings by S&P of not less than “A” and its equivalent by the other Rating Agencies with respect to the first $50,000,000 of coverage and (b) having a claims-paying-ability and financial strength ratings by S&P of not less than “BBB” and its equivalent by the other Rating Agencies (or, if not rated by any of the Rating Agencies, an Alfred M. Best Company, Inc. rating of “A-” or better and a financial size category of not less than “VII”) with respect to the balance of coverage. All insurers providing insurance required by this Lease shall be authorized to issue insurance in the relevant State(s) or shall be an admitted or approved non-admitted insurer.

(m) Form of Insurance Policies; Endorsements. All insurance policies shall be in such form and with such endorsements as are satisfactory to Landlord and Landlord’s Lender (and Landlord and Landlord’s Lender shall have the right, subject to the provisions of this Lease, to approve amounts, form, risk coverage, deductibles, loss payees and insureds). A certificate of insurance with respect to all of the above-mentioned insurance policies has been delivered to Landlord and Landlord’s Lender and copies of all such policies shall be delivered to Landlord and Landlord’s Lender when the same are available (but no later than one hundred twenty (120) days after the Commencement Date) and shall be held by Landlord and Landlord’s Lender. All policies shall name Landlord and Landlord’s Lender as loss payees (except for general liability, liquor liability and automobile liability policies, which shall name Landlord and Landlord’s Lender as additional insureds, and workers’ compensation policies and any insurance policies to the extent exclusively covering Tenant’s Personalty, which shall not name Landlord or Landlord’s Lender as additional insureds or loss payees), shall provide that all proceeds (except with respect to proceeds of general liability, workers’ compensation, liquor liability and automobile liability insurance and proceeds of any insurance covering Tenant’s Personalty to the extent exclusively attributable to loss or damage thereof) be payable to Landlord and Landlord’s Lender as and to the extent set forth in Section 10.2 of the Lease (with respect to Landlord) and

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in Landlord’s Loan Documents (with respect to Landlord’s Lender) and shall contain: (i) with respect to property policies, a standard “non-contributory mortgagee” endorsement or its equivalent relating, inter alia, to recovery by Landlord and Landlord’s Lender notwithstanding the negligent or willful acts or omissions of Tenant; (ii) a waiver of subrogation endorsement in favor of Landlord and Landlord’s Lender; (iii) except with respect to general liability, workers’ compensation, liquor liability and automobile liability insurance and any insurance to the extent exclusively covering Tenant’s Personalty, an endorsement providing that no policy shall be impaired or invalidated by virtue of any act, failure to act, negligence of, or violation of declarations, warranties or conditions contained in such policy by Tenant, Landlord, Landlord’s Lender or any other named insured, additional insured or loss payee, except for the willful misconduct of Landlord or Landlord’s Lender knowingly in violation of the conditions of such policy; (iv) an endorsement providing for a deductible per loss of an amount not more than that which is customarily maintained by prudent owners of properties with a standard of operation and maintenance comparable to and in the general vicinity of the Leased Property, but in no event in excess of an amount reasonably acceptable to Landlord and Landlord’s Lender (and except as provided in paragraph (g)(2) of this Schedule 10.1, in no event shall Tenant be required to obtain deductibles lower than $500,000 on property insurance policies, $1,500,000 on worker’s compensation policies, $1,500,000 self-insured retention on liquor liability policies and $500,000 on automobile liability policies); and (v) a provision that such policies shall not be canceled, terminated or expire without at least thirty (30) days’ prior written notice to Landlord and Landlord’s Lender, in each instance. Each insurance policy shall contain a provision whereby the insurer: (i) agrees that such policy shall not be canceled or terminated and such policy shall not be canceled or fail to be renewed, without in each case, at least thirty (30) days prior written notice to Landlord and Landlord’s Lender, and (ii) provides that Landlord or Landlord’s Lender, at its option, shall be permitted to make payments to effect the continuation of such policy upon notice of cancellation due to non-payment of premiums. In the event any insurance policy (except for general public and other liability and workers compensation insurance and any insurance to the extent exclusively covering Tenant’s Personalty) shall contain breach of warranty provisions, such policy shall provide that, with respect to the interest of Landlord and Landlord’s Lender, such insurance policy shall not be invalidated by and shall insure Landlord and Landlord’s Lender regardless of (A) any act, failure to act or negligence of or violation of warranties, declarations or conditions contained in such policy by any named insured, (B) the occupancy or use of the Leased Property for purposes more hazardous than permitted by the terms thereof, or (C) any foreclosure or other action or proceeding taken by Landlord or Landlord’s Lender pursuant to any provision of this Lease or the Landlord’s Loan Documents. Landlord and Landlord’s Lender hereby confirm and acknowledge that Tenant has delivered to Landlord and Landlord’s Lender certificates of insurance with respect to Tenant’s insurance program, in amount, form and content so as to satisfy the requirements of this Schedule 10.1 in all material respects as of the Commencement Date, and that any renewals or modifications that comply with paragraph (k) of this Schedule 10.1 and are otherwise not, in substance, materially different from the approved program in place on the Commencement Date shall be deemed to be in compliance.

 

(n)

Certificates.

 

(1)

Certificates of insurance with respect to all replacement policies shall be delivered to Landlord and Landlord’s Lender prior to the expiration date of

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any of the insurance policies required to be maintained hereunder, and upon demand by Landlord or Landlord’s Lender, replacement insurance policies shall be delivered to Landlord and Landlord’s Lender within one hundred twenty (120) days of the expiration of the insurance policies required to be maintained hereunder. If Tenant fails to maintain and deliver to Landlord and Landlord’s Lender the certificates of insurance and certified copies or originals required by this Lease, upon five (5) Business Days’ prior notice to Tenant, Landlord or Landlord’s Lender may procure such insurance, and all costs thereof (and interest thereon at the Overdue Rate) shall be added to the Base Rent. Landlord and Landlord’s Lender shall not, by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any insurance, incur any liability for or with respect to the amount of insurance carried, the form or legal sufficiency of insurance contracts, solvency of insurance companies, or payment or defense of lawsuits, and Tenant hereby expressly assumes full responsibility therefor and all liability, if any, with respect to such matters.

 

(2)

Concurrently with the delivery of each replacement policy or a binding commitment for the same pursuant to paragraph (m)(1) above, Tenant shall deliver to Landlord and Landlord’s Lender a letter from a reputable and experienced insurance broker or from the insurer, stating that the insurance obtained by Tenant through such broker or from such insurer pursuant to this Schedule 10.1, as applicable, meets the minimum requirements of this Schedule 10.1, that all insurance premiums then due thereon have been paid in full to the applicable insurers and that such insurance policies are in full force and effect (or if such letter shall not be available after Tenant shall have used its reasonable efforts to provide the same, Tenant will deliver to Landlord an Officer’s Certificate executed by an authorized signatory of Tenant who is familiar with the financial condition of Tenant and the operation of the Leased Property containing the information to be provided in such letter), and Tenant shall deliver to Landlord an Officer’s Certificate stating that such insurance otherwise complies in all material respects with the requirements of this Schedule 10.1.

(o) Separate Insurances. Tenant shall not take out separate insurance contributing in the event of loss with that required to be maintained pursuant to this Schedule 10.1 unless such insurance complies with this Schedule 10.1.

(p) Blanket Policies. The insurance coverage required under this Schedule 10.1 may be effected under a blanket policy or policies covering the Leased Properties and other properties and assets not constituting a part of the Leased Properties (a “Blanket Policy”); provided that any such Blanket Policy shall specify, except in the case of public liability, workers’ compensation, liquor liability, automobile liability and umbrella liability insurance, the portion of the total coverage of such policy that is allocated to the Leased Properties, and any sublimits in such Blanket Policy applicable to the Leased Properties, which amounts shall not be less than the amounts required pursuant to this Schedule 10.1 and which shall in any case comply in all other respects with the requirements of this Schedule 10.1. In addition, Tenant shall

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provide internal allocated premiums for the Leased Properties in a manner that is reasonably satisfactory to Landlord and Landlord’s Lender. If no such allocation is available, Landlord shall have the right to increase the amount required to be deposited into the Escrow Account in an amount sufficient to purchase a non-blanket policy covering the applicable Leased Property or Leased Properties from insurance companies which qualify under this Lease. Upon Landlord’s or Landlord’s Lender’s request, Tenant shall deliver to Landlord and Landlord’s Lender an Officer’s Certificate setting forth (i) the number of properties covered by any such Blanket Policy, (ii) the location by city (if available, otherwise, county) and state of the properties, (iii) the average square footage of the properties (or the aggregate square footage), (iv) a brief description of the typical construction type included in the Blanket Policy and (v) such other information as Landlord and Landlord’s Lender may reasonably request.

(q) Assignment of Proceeds. Tenant hereby assigns to Landlord all proceeds of insurance required to be maintained by Tenant pursuant to paragraphs (a), (d), (e), (f), (g), (h) and (i) of this Schedule 10.1 (other than, in each case, any proceeds of any insurance covering Tenant’s Personalty to the extent exclusively attributable to loss or damage thereto), and hereby consents to the collateral assignment of such proceeds by Landlord to Landlord’s Lender pursuant to Landlord’s Loan Documents.

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SCHEDULE 15.4

ARBITRATION PROCEDURES

Arbitration shall be held in the State and County of New York in accordance with the rules of the AAA then in effect. There shall be one arbitrator appointed in accordance with those rules. As part of the award, the arbitrator shall make a fair allocation between the parties of the fee and expenses of the AAA and the cost of any transcript, taking into account the merits of their claims and defenses. The arbitration shall commence within thirty (30) days after demand for arbitration is made by a party hereto. The arbitrator shall render his/her award within thirty (30) days after the completion of the arbitration and the arbitration shall be held on consecutive Business Days. Failure by either party to submit to arbitration as required under this Lease shall result in the arbitrator ruling in favor of the other party if such other party has submitted to arbitration under this Lease. Judgment may be entered on the arbitrator’s award in any court having jurisdiction, and the parties irrevocably consent to the jurisdiction of any court competent of the subject matter and sitting in the State and County of New York for that purpose. The arbitrator may grant injunctive or other equitable relief.

Exhibit 10.51

Lease

between

OS Southern, LLC

(“Landlord”)

and

Selmon’s/Florida-I, Limited Partnership

(“Tenant”)

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THIS LEASE (this “Lease”) is made and entered into by and between CS Southern, LLC, a Florida limited liability company (“Landlord”) and Selmon’s/Florida-I, Limited Partnership, a Florida limited partnership (“Tenant”) and is made for the purpose of amending and restating that certain lease effective June 14, 2007, (the “Original Lease”), by and between Landlord and Tenant (or their respective predecessors in interest prior to the Effective Date) and shall be effective on June 14, 2007 (the “Effective Date”). The parties further acknowledge that Landlord is the sub-tenant under that certain sublease agreement effective June 14, 2007 (the “Sublease”), with Private Restaurant Master Lessee, LLC (“PRML”) as sub-landlord, which Sublease is subordinate to that certain master lease agreement dated June 14, 2007, (the “Master Lease”) between PRML as tenant and Private- Restaurant Properties, LLC (“PRP”), as master landlord, and that this Lease is subordinate to both the Sublease and the Master Lease.

ARTICLE I - GRANT AND TERM

1.1 GRANT. In consideration of the rents, covenants and agreements set forth herein, Landlord hereby leases and conveys to Tenant and Tenant hereby rents from Landlord the following described leased premises (the “Premises”):

A. Description of Premises. The Premises contains approximately 73,616 square feet of land together with any building (the “Building”) and other improvements located thereon (the Building and other improvements, collectively, the “Improvements”) which is designated as Lot 4 of the Big Bear Commercial Park (the “Project”) in Tampa, Florida, The Premises is depicted on the site plan (the “Site Plan”) attached to this Lease as Exhibit “A”. A legal description of the Premises and a survey of the Project are attached to this Lease as Exhibit “A-I”.

B. Appurtenant Easements and Use Rights. Landlord hereby grants and conveys to Tenant the following additional use rights, each as a right and easement appurtenant to the Premises (the “Appurtenant Use Rights”):

(a) Tenant acknowledges that the Project is subject to that certain Declaration of Covenants, Restrictions and Easements recorded October 21, 2002 in Book 12033, at Page 1202, in the Office of the Clerk of Court of Hillsborough County, Florida, (the “Declaration”), to which this Lease is subject and subordinate. Landlord agrees not to amend or consent to an amendment of the Declaration, (or grant any consent under the Declaration), which would place any additional restrictions, requirements or other obligations on Tenant or the Premises or is inconsistent with or adversely affects Tenant’s rights under this Lease, without first obtaining Tenant’s prior written consent, such consent to be deemed granted if not otherwise denied in writing within fifteen (15) business days after request therefore; provided that such request is sent pursuant to the notice provisions of this Lease and states in conspicuous type that a failure by Tenant to respond in fifteen (15) business days shall constitute Tenant’s approval of such amendment.

(b) Patio Area. Tenant shall have the exclusive right to the use of an area immediately adjacent to the building located on the Premises as may be proposed by Tenant and approved by Landlord (the “Patio Area”) for customer seating and the service of food and beverages customarily served in Tenant’s restaurant operation. Tenant will comply with the

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following in its use of the Patio Area: (i) Tenant shall be responsible to secure all permits and approvals of all governmental authorities required for the use and operation of the Patio Area; (ii) Tenant’s liability insurance provided for in Section 7.1 will cover occurrences within the Patio Area during Tenant’s use of the Patio Area; and (iii) Tenant shall maintain the Patio Area in a clean and attractive condition and shall repair any damage to the Patio Area caused by its use.

1.2 QUIET ENJOYMENT. On and subject to the terms, covenants and conditions of this Lease, Landlord warrants and covenants that Tenant shall peacefully and quietly have, hold and enjoy the Premises for the entire Term of this Lease.

1.3 TERM. The “Initial Term” of this Lease shall commence as of June 19, 2002 and shall expire June 30, 2012. The phrase “Term” shall mean, collectively, Initial Term and any Renewal Term for which an option has been exercised by Tenant.

A. Renewal Options. Tenant shall have the option (each, a “Renewal Option”) to renew this Lease for one (1) consecutive renewal term (each, a “Renewal Term”) of five (5) years and one (1) renewal term of four (4) years and eleven (11) months and thirteen days, commencing on the first day following the expiration of the Initial Term or the then current Renewal Term (so that, except as may be agreed upon by Landlord and Tenant, the outside expiration of the Lease shall be June 13, 2022). Tenant shall exercise each Renewal Option by notice to Landlord (each, a “Renewal Notice”) given at least one hundred eighty (180) days prior to the expiration of the then current Term. It is the intention of the parties to avoid forfeiture of Tenant’s Renewal Options through inadvertent failure to give a timely Renewal Notice. Accordingly, if Tenant should fail to timely give the Renewal Notice for any Renewal Term, Tenant shall not be deemed to forfeit its Renewal Option until such time as Landlord gives ten (10) days written notice to Tenant that Tenant’s Renewal Notice is past due, and only upon Tenant’s failure to give its Renewal Notice within the additional ten-day period shall Tenant’s Renewal Option expire.

B. Lease Year. For purposes of this Lease, a “Lease Year” shall mean each successive twelve (12) calendar month period during the Initial Term or any Renewal Term commencing on the Commencement Date; provided, however, that if the Commencement Date is a day other than the first day of a calendar month, then the first Lease Year shall include the partial calendar month during which the Commencement Date falls and the following twelve (12) full calendar months.

1.4 SURRENDER OF PREMISES. Within thirty (30) days after the expiration of the Term or earlier termination of this Lease (the “Surrender Date”), Tenant shall surrender the Premises in a broom clean condition, subject to (i) reasonable wear and tear; (ii) damage as a result of casualty or condemnation; (iii) alterations, additions and improvements made pursuant to the terms of or otherwise permitted under this Lease; and (iv) items which are the responsibility of Landlord or which result from Landlord’s failure to comply with its obligations under this Lease. On or prior to the Surrender Date, Tenant shall remove from the Premises its trade fixtures, furniture, equipment and other personal property, including, but not limited to, all bars, booths, decorative light fixtures, stoves, ovens and other restaurant equipment (“Tenant’s Personal Property”). The base building plumbing, electric and HVAC systems (other than any

 

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proprietary, specialty or supplemental fixtures or equipment) are not part of Tenant’s Personal Property and shall remain at the Premises. Tenant agrees to repair any damage to the Premises caused by the removal of Tenant’s Personal Property. Any of Tenant’s Personal Property which Tenant has failed to remove from the Premises on or prior to the Surrender Date shall become the property of Landlord and may be disposed of by Landlord as Landlord deems appropriate.

1.5 HOLDING OVER. This Lease and the tenancy created by this Lease shall expire and terminate at the expiration of the Term without the necessity of any additional notice from Landlord to Tenant of from Tenant to Landlord. If Tenant remains in possession of the Premises after the expiration of the Term, without the consent of Landlord the Term will not be extended and Tenant will be occupying the Premises under a tenancy at will, under all the terms, covenants and conditions of this Lease, except that Rent for the holdover period will be calculated on a daily basis, at a rate equal to one hundred fifty percent (150%) of Base Rent due for the last month of the Term divided by thirty (30) and shall be due and payable to Landlord periodically upon demand. If Tenant remains in possession of the Premises after the expiration of the Term with the consent of Landlord, the Term will be extended as a month to month tenancy, under all the terms, covenants and conditions of this Lease, and monthly Base Rent will continue at the monthly Base Rent due for the last month of the Term.

ARTICLE II - RENT

2.1 BASE RENT. Tenant agrees to pay to Landlord in equal monthly installments, the annual Base Rent as set forth in the Base Rent Schedule attached hereto as Exhibit “B”. Base Rent shall be due and payable each month, in advance, on the first day of each calendar month without demand, setoff, or deduction, except as otherwise set out in this Lease or as provided under applicable law or by court order.

2.2 ADDITIONAL RENT. Tenant shall pay as “Additional Rent” Tenant’s applicable share of certain costs and expenses, as more fully set forth in this Section and its pro-rata share (as set forth in the Declaration) of any expenses payable by Landlord with respect to the Premises pursuant to the terms of the Declaration. Additional Rent shall also include all other sums and charges required to be paid by Tenant to Landlord pursuant to the terms of this Lease.

A. Real Estate Taxes.

(a) Definition, Payment by Landlord and Calculation. The term “Real Estate Taxes” as used herein means all real property taxes and assessments that are levied or assessed against the Premises by any lawful governmental authority for each calendar year or portion thereof commencing on the Commencement Date. Landlord shall be obligated to pay all Real Estate Taxes and all other taxes and assessments assessed against the Premises (except for taxes on the personal property of individual tenants which are paid by such tenants) to the applicable taxing authority before delinquent. The amount of Real Estate Taxes shall be calculated as if: (i) Landlord elected the longest installment payment plan available from the taxing authority for non-recurring taxes and assessments and only those installments coming due during the Initial Term or any Renewal Term of this Lease shall be included in Real Estate Taxes, and (ii) Landlord had taken advantage of the maximum available discount available for

 

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early payment of Real Estate Taxes. Real Estate Taxes are to be prorated for any tax year only a portion of which is included within the Initial Term or any Renewal Term.

(b) Contest of Real Estate Taxes. Landlord agrees to use reasonable efforts to minimize Real Estate Taxes. “Reasonable efforts” shall include the obligation to seek a reduction in Real Estate Taxes from the taxing authority if the value of the Premises assessed by the taxing authority would be considered excessive as compared to similar property in the county where the Premises is located.

(c) Exclusions from Real Estate Taxes. The following are specifically excluded from Real Estate Taxes: penalties or interest or other charges for late payments of Real Estate Taxes, any income, personal property, excess profits, gross receipts, margin, estate, single business, inheritance, succession, transfer, franchise, corporate, capital or other tax or assessment levied or assessed against Landlord or the Rent payable under this Lease or any connection, capacity, turn-on, impact or other similar fees, assessments or charges incurred in connection with the initial construction or any subsequent improvements or renovation of or to the Project. All unpaid, unassessed or other Real Estate Taxes, including, but not limited to so called “rollback taxes”, which relate to the period prior to the Commencement Date (collectively, “Pre-Commencement Date Taxes”) shall not be included in Real Estate Taxes payable by Tenant under this Lease. This Sub-Section is not intended as an exclusive list of items excluded from Real Estate Taxes. In the event of a conflict or inconsistency between this Sub-Section and Sub-Section (a) above this Sub-Section controls.

(d) Pro-rata Share of Real Estate Taxes. Tenant’s share of Real Estate Taxes is One Hundred percent (100%) of the Real Estate Taxes assessed against the Premises.

B. Taxes on Tenant’s Personal Property. Tenant shall be responsible for and shall pay directly to the taxing authority and before delinquency all municipal, county, state and federal personal property taxes assessed during the Term of this Lease against Tenant’s personal property at or used in connection with the Premises.

C. Monthly Installments. Tenant shall pay, in equal monthly installments, together with its installment of monthly Base Rent, one-twelfth (1/12) of the estimated amount of its pro-rata share of Real Estate Taxes for each calendar year. Landlord may adjust Tenant’s monthly estimated installment of Real Estate Taxes annually. Any sums due by Tenant with respect to the Declaration shall be due and payable within 30 days of Tenant’s receipt of a statement and any applicable documents as to such charges from Landlord.

D. Annual Reconciliation.

(a) Annual Statement. Within one hundred twenty (120) days following the end of each calendar year (“Accounting Year”), Landlord shall deliver to Tenant an itemized breakdown certified as true and correct by an authorized representative of Landlord showing the actual costs for Real Estate Taxes, together with copies of all bills for Real Estate Taxes for the current year (the “Annual Statement”). Tenant will continue to make monthly payments based upon its estimated installment of Real Estate Taxes for the prior Accounting

 

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Year, until the installment due at least thirty (30) days after Tenant receives the Annual Statement with its new estimated installment of Real Estate Taxes.

(b) Request for Back-Up Materials. Within ten (10) days following a request from Tenant, Landlord will deliver to Tenant such additional materials and documentation as Tenant may reasonably request to support the Real Estate Taxes as reflected on the Annual Statement (a “Back-up Request”).

(c) Annual Adjustment. If the actual costs for Real Estate Taxes exceeds the amount paid by Tenant in any Accounting Year (an “Underpayment”), then within thirty (30) days after receipt of the Annual Statement and any additional information that was the subject of a Back-up Request by Tenant, Tenant shall pay to Landlord the amount of the Underpayment. If the actual costs for Real Estate Taxes is less than Tenant’s payments for any Accounting Year (an “Overpayment”), then Landlord shall pay to Tenant the amount of the Overpayment concurrently with the delivery of the Annual Statement.

(d) Dispute over Annual Statement. Subject to Tenant’s right to request and receive additional information pursuant to a Back-up Request and Tenant’s audit rights provided for below, if Tenant disputes the accuracy of the Annual Statement, Tenant shall still pay the amount shown owing.

E. Audits.

(a) Right to Audit and Reconciliation. Tenant, its agents and accountants, shall have the right to examine and audit Landlord’s books, records and related supporting materials (“Landlord’s Books and Records”) relating to any Real Estate Taxes paid by Tenant under this Lease, upon not less than twenty (20) days prior written notice to Landlord. If Tenant’s audit of Landlord’s Books and Records confirms that the amounts shown on the Annual Statement or other invoice or bill from Landlord are five percent (5%) or more higher than the actual amount owed by Tenant under this Lease, Landlord shall, within twenty (20) days of Tenant’s demand, reimburse Tenant for all reasonable costs and expenses of the audit, unless the results of the audit are disputed in good faith by Landlord in which case the following sentence shall apply. Any overpayment or underpayment of Real Estate Taxes shall be adjusted by the parties (by payment) within twenty (20) days after the audit is completed, unless the audit results are disputed in good faith by Landlord in which event the adjustment will occur and, if Tenant is entitled under the preceding sentence, Tenant’s costs and expenses for the audit will be reimbursed, within twenty (20) days of the resolution of the dispute.

(b) Conditions of Audit. Tenant’s right to audit shall be subject to the following restrictions: (i) any audit shall be conducted, during normal business hours, at Landlord’s business offices (in the continental United States) where the hooks and records are customarily kept; (ii) Tenant’s right to initiate an audit for any Accounting Year shall expire thirty-six (36) months after Tenant’s receipt of Landlord’s Annual Statement for such Accounting Year; provided that if a discrepancy of more than five percent (5%) is found in any audit Tenant may audit the prior Accounting Year, notwithstanding the expiration of such thirty-six (36) month period; and (iii) except as provided for above, the audit shall be at Tenant’s cost.

 

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(c) Books and Records. Landlord’s Books and Records shall be complete and accurate and kept in accordance with generally accepted accounting principles consistently applied, and shall be made available to Tenant as provided for in this Section.

2.3 SALES AND SIMILAR TAXES ON RENT. Tenant shall pay to Landlord all sales, excise, rental and use taxes imposed by law on the monthly Base Rent and Additional Rent provided for in this Lease, which are customarily paid by tenants in the state in which the Premises are located.

2.4 COMMENCEMENT AND PRORATION OF RENT. Tenant’s obligation to pay Base Rent and Real Estate Taxes (sometimes collectively referred to in this Lease as “Rent”) shall not commence until the Commencement Date. When any Rent due hereunder is calculated based upon a period (e.g., a month, calendar year, or tax year), only a portion of which falls within the Initial Term or any Renewal Term, the amount will be prorated based upon the number of days in such period that fall within the Initial Term or any Renewal Term compared to the total number of days in such period.

2.6 PLACE FOR PAYMENT OF RENT. Base Rent and the Additional Rent provided for in this Lease shall be sent by Tenant to Landlord at the address set out in Section 16.1 or to such other address as Landlord may designate to Tenant by at least twenty (20) days prior written notice to Tenant.

ARTICLE III - UTILITIES

3.1 UTILITY SERVICE.

A. Tenant’s Utilities. Tenant shall contract in its own name with the utility provider for electric service, gas service, cable television service, sewer and water service and telephone service for the Premises (collectively the “Tenant Paid Utilities”).

ARTICLE IV - USE AND OPERATION

4.1 USE OF LEASED PREMISES.

A. Permitted Use. The Premises may be used by Tenant for the purpose of a table service restaurant and all uses ancillary thereto (which may include, at Tenant’s option, all or any number of the following: a bar area, the sale of alcoholic beverages, ancillary merchandise sales, or live entertainment), or with Landlord’s prior written consent, for any other use permitted by law (the “Permitted Use”). For purposes of this Lease, a “table service” restaurant shall mean any restaurant where (i) food or drink orders are taken from customers at the customers’ table; (ii) a check is delivered to customers at the customers’ table; or (iii) food or drinks are delivered to customers at the customers’ table.

B. Initial Permitted Use. Tenant intends to initially open at the Premises as a “LeeRoy Selmon’s” (the “Intended Use”), but Tenant has the right to change the operating format at the Premises as provided in the following Section.

 

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C. Change in Operating Concept. Tenant hereby reserves the right to change, from time to time, its restaurant concept (a “Concept Change”) and/or operating format at the Premises.

D. Concept Change Notice. At least thirty (30) days prior to a Concept Change, Tenant will provide written notice to Landlord (a “Concept Change Notice”) of the Concept Change.

E. Operation. While in operation, Tenant shall operate its business in an efficient, high class and reputable manner. Subject to the provisions of Section 4.5, Tenant shall have the right to cease operations at the Premises, provided that during any closure Tenant will continue (regardless of whether or not it is operating) to fulfill its obligations under this Lease, including the payment of Rent and the performance of Tenant’s maintenance obligations.

4.2 RULES RELATING TO TENANT’S OPERATION.

A. Use of the Premises. Tenant agrees (i) to keep the Premises neat, clean, sanitary and reasonably free from dirt, rubbish, insects and pests at all times; (ii) not to operate an incinerator or burn trash or garbage within the Premises; (iii) not to use or maintain the Premises in such a manner as to constitute an actionable legal nuisance against Landlord, or which in a manner that produces noise, vibrations or odors (other than restaurant odors) that violate the quiet enjoyment of other tenants of the Project; (iv) not to commit or permit waste of the Premises; and (v) to maintain the inside of the Premises at a temperature sufficiently high to prevent freezing of water pipes and fixtures inside the Premises.

B. Use Restrictions. Tenant agrees (i) not to solicit business in the parking area, or distribute handbills or other advertising material upon automobiles parked in the parking area (“Solicitations”); and (ii) to keep the areas as to which Tenant has an exclusive use right pursuant to its Appurtenant Use Rights, in a neat, clean, and sanitary condition, given the applicable use.

C. Satellite Equipment. Tenant shall have the right to install a satellite dish or antenna and other voice or data transmission and receiving devices and related facilities (collectively, the “Satellite Equipment”) on the exterior wall or the roof of the Premises. In connection with the Satellite Equipment, Tenant agrees as follows: (i) the location of the Satellite Equipment shall be subject to Landlord’s approval; (ii) Landlord may require that any installation or maintenance work for the Satellite Equipment that involves the penetration of the roof be done by a contractor selected by Landlord, so long as the contractor is available at a reasonable and competitive price and can meet Tenant’s installation schedule; and (iii) Tenant will operate the Satellite Equipment in compliance with applicable Laws (as defined in Sub-Section 4.2B) and Tenant will be responsible for obtaining any permits and licenses required for the operation of the Satellite Equipment.

D. Music System. Tenant may install and operate a music and intercom system on the exterior of the Premises (the “Music System”). In connection with the Music System, Tenant agrees that: (i) the Music System will be operated only at reasonable volume

 

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levels so as not to unreasonably disturb others and (ii) songs with lyrics generally considered offensive will not be played from the Music System.

4.3 GOVERNMENTAL LAWS AND REGULATIONS.

A. Compliance by Tenant. ‘Tenant shall comply with all Federal, State and local laws, ordinances, codes, orders and regulations (collectively, “Laws”) relating to (i) Tenant’s business operations within the Premises; (ii) any work performed by Tenant; and (iii) the areas to be maintained or repaired by Tenant under this Lease.

B. Compliance by Landlord. Landlord shall comply with all Laws relating to (i) Landlord’s ownership or operation of the Premises, (ii) any work performed by Landlord, and (iii) any areas to be maintained or repaired by Landlord under this Lease. Landlord represents and warrants to Tenant that it has not received any notice of any violation of Laws with respect to the Premises and that, to the best of its knowledge, the Premises is in compliance with all Laws.

C. Fines and Penalties. Each of Landlord and Tenant shall he responsible for and defend the other against any penalties or fines imposed and any related claims asserted as a result of its violation of applicable Laws.

D. Trespassing. At the request of Tenant and to the extent permitted under applicable Laws, Landlord agrees to take commercially reasonable measures to remove from the Premises any person engaging in picketing, hand billing, solicitation of Tenant’s employees, or other demonstrations.

4.4 LIENS.

A. Tenant Liens. Tenant shall have no power or authority to subject Landlord’s interest in the Premises to any construction, mechanic’s or materialmen’s liens of any kind (each, a “Construction Lien”). If any Construction Lien is filed against Landlord’s interest in the Premises as a result of work performed by Tenant or materials or services provided to Tenant, Tenant shall, within thirty (30) days of a demand from Landlord discharge the Construction Lien by payment, transferring the lien to a bond or ether security, or by such other method as may be available under applicable Laws.

B. Landlord Liens. Landlord shall have no power or authority to subject Tenant’s interest in the Premises or Tenant’s Personal Property to any Construction Lien. If any Construction Lien is filed against Tenant’s interest in the Premises or Tenant’s Personal Property as a result of work performed by Landlord or materials or services provided to Landlord, Landlord shall, within thirty (30) days of a demand from Tenant discharge the Construction Lien by payment, transferring the lien to a bond or other security, or by such other method as may be available under applicable Laws.

C. Failure to Discharge. If either Landlord or Tenant fails to comply with its lien discharge obligations under this Section, the other may discharge the subject Constriction Lien(s) and the reasonable costs and expenses incurred in connection therewith shall be due from

 

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the other party to the discharging party within ten (10) days of demand for payment accompanied by reasonable evidence of the cost and expenses incurred to accomplish such discharge.

4.5 RECAPTURE FOR FAILURE TO OPERATE.

A. Right of Recapture. In the event that Tenant ceases to operate in the Premises for more than thirty (30) consecutive days (a “Closure”), Tenant shall, within ninety (90) days after the Closure, provide written notice to Landlord (a “Closure Notice”) that either (i) the Closure is temporary and Tenant (or an assignee or subtenant to whom this Lease may be assigned or the Premises sublet without Landlord’s consent pursuant to Section 8.3 of this Lease) intends to reopen in the Premises (a “Temporary Closing”); or (ii) Tenant intends to attempt to assign this Lease or to sublet the Premises to an unaffiliated third party (a “Permanent Closing”). If (a) Tenant gives the notice of a Temporary Closing and the Premises has still not reopened by the date which is Three Hundred (300) days from the Closure Notice provided that Tenant shall be granted two (2) thirty (30) day extensions so long as Tenant (or a assignee or subtenant to whom the Premises may have been assigned or sublet) has commenced the renovation or remodeling of the Premises and is diligently pursuing the same to completion (the “Reopening Period”), (b) Tenant gives notice of a Permanent Closing, or (c) Tenant fails to give the Closure Notice, in any such event, Landlord shall have the right (the “Recapture Right”) to terminate Tenant’s interest in the Lease in accordance with the provisions set out below.

B. Exercise of Recapture Right. Landlord shall exercise the Recapture Right by written notice to Tenant (the “Exercise Notice”) given within thirty (30) days of (i) Landlord’s receipt of the Closure Notice in the event of a Permanent Closing or (ii) the end of the Reopening Period in the event of a Temporary Closing, or (iii) Tenant’s failure to deliver the Closure Notice when required hereunder and such failure continues for ten (10) days following written notice from Landlord to Tenant of such failure, whichever is applicable. This Lease shall terminate on the thirtieth (30^th) day following receipt of the Exercise Notice (the “Recapture Date”) and Rent shall be prorated as of the Recapture Date. Tenant agrees to remove its proprietary signage and any of its personal property which this Lease requires be removed upon the expiration of the Term of this Lease prior to the Recapture Date. Tenant may also remove all other property of Tenant that this Lease allows Tenant to remove upon the expiration of the Term of this Lease. Following the Recapture Date neither Landlord nor Tenant shall have any further liability under this Lease, except for (i) obligations which accrued prior to the Recapture Date and (ii) Tenant’s obligation to repair any damage to the Premises caused by the removal of its property as provided for above. If Landlord fails to exercise the Recapture Right as set forth herein, this Lease shall continue in full force and effect and Landlord shall have no further rights under this Section 4.5, as to such Closure.

In the event Landlord has not elected to recapture the Premises as set forth herein, and if the Premises have not reopened and no assignment or sublease has occurred on or before the date which is three hundred sixty (360) days from the expiration of such 30-day period, Landlord shall again have a Recapture Right to be exercised by giving an Exercise Notice within the thirty (30) day period following the 360-day period. Thereafter, so long as the Premises have not reopened and no assignment or sublease has occurred, Landlord shall have a Recapture Right after each successive 360-day period to be exercised by giving an Exercise Notice within the thirty (30) days period following each 360-day period. Notwithstanding Landlord’s right to

 

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exercise its Recapture Right every 360 days as provided for above, if Landlord provides the Exercise Notice, Tenant shall have the right to nullify the Exercise Note by providing to Landlord evidence that Tenant is in active negotiations to assign this Lease or sublease the Premises (which may be evidenced either by ongoing negotiations or a signed Letter of Intent), in which event the Exercise Notice shall be rendered void and of no effect. Once this Lease is assigned or the Premises subleased to a third party, Landlord shall have the Recapture Right if the assignee or subleasee does not open for business within three hundred sixty (360) days from the effective date of the assignment or sublease, to be exercised by giving an Exercise Notice within the thirty (30) day period following the 360-day period; provided that the foregoing three hundred sixty day period shall be extended by periods that would constitute a Permitted Closure under Section 4.5C.

C. Permitted Closures. For purposes of this Section, the following shall be “Permitted Closures” and shall not constitute a “Closure” or be counted toward the Reopening Period: (i) any period during which the normal operation of business at the Premises is not practical as a result of damage by fire or other casualty; (ii) any period during which the normal operation of business at the Premises is not practical as a result of a taking by eminent domain or other governmental action; (iii) reasonable periods for remodeling, alterations and repairs, including related permitting time; and (iv) any period during which Landlord is not in compliance with its obligations under this Lease, beyond any applicable notice and cure period.

D. Interpretation. Time is of the essence as to all time periods in this Section. A failure to operate is not a default under this Lease and this Section sets out Landlord’s sole remedies for a failure of Tenant to operate at the Premises.

ARTICLE V - IMPROVEMENTS

5.1 LANDLORD’S WORK. The Premises is tendered to Tenant in an “as-is” condition.

5.2 TENANT’S WORK. This Section sets out work to be performed by Tenant, at Tenant’s sole cost and expense. The term “Tenant’s Work” means all the work to the Premises required to prepare the Premises for Tenant’s use (“Tenant’s Work”).

A. Tenant’s Approved Plans. Tenant shall prepare and submit to Landlord plans and specifications for Tenant’s Work, to include Tenant’s floor plan and elevation electrical panel schedules, load calculations, HVAC equipment specifications, system diagrams (ductwork diffusers), a reflective ceiling plan or plans for any other work requiring Landlord’s approval (“Tenant’s Preliminary Plans”). Landlord and Tenant will act in a good faith and responsive manner to agree upon plans and specifications for the Tenant’s Work (as agreed upon by Landlord and Tenant, “Tenant’s Approved Plans”).

B. Third Party Approvals. If Tenant’s plans and specifications or any portion of Tenant’s Work (including, but not limited to, Tenant’s signage) requires the consent or approval of any third party (a “Third Party Approval”), other than the applicable governmental authorities (e.g., another tenant, another owner, an association or an architectural review committee or board), Tenant shall be responsible to obtain each required Third Party Approval.

 

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C. Performance of Work. All of Tenant’s Work will be performed (i) in a good and workman-like manner using first quality new materials and labor; (ii) in substantial accordance with Tenant’s Approved Plans; and (iii) in accordance with all applicable Laws.

D. Insurance. Tenant agrees to carry (or cause to be carried) during the performance of Tenant’s Work: (i) liability insurance in an amount of not less than one million dollars (11,000,000) covering claims for personal injury and property damage arising out of Tenant’s Work and naming Landlord as an additional insured, (ii) and worker’s compensation insurance as required by Law.

E. Initial Exterior Appearance. Attached to this Lease as Exhibit “C” is a conceptual elevation of the Premises (the “Conceptual Elevations”), which Landlord has approved.

F. Signage. Tenant is hereby granted, for the entire Term, the right (the “Signage Rights”) to install and maintain the signage (“Tenant’s Signage”) as set out below in this Section.

(a) Building Signage. Tenant shall have the right to install and maintain upon the exterior of the Premises the maximum signage that Tenant is entitled to under applicable code (with any available variance or other special approvals); provided that if Tenant intends to install building signs other than on the exterior of the Premises itself, Landlord’s approval of the location shall be required.

(b) Free Standing Sign. Subject to Tenant obtaining all applicable governmental permits and approvals, Tenant shall have the right to install and maintain a free standing sign for its exclusive use on the Premises or such other location as may, from time to time, be proposed by Tenant and approved by Landlord.

(c) Other Signs. Tenant shall have the right to place its proprietor, credit card, hours of operation, and its other standard informational signage on the front entrance or windows of the Premises,

(d) Sign Approval and Standards. All of Tenant’s Signage shall be subject to Landlord’s approval. All of Tenant’s Signage shall be in kept in a well maintained and attractive condition and in compliance with all applicable Laws.

5.3 ALTERATIONS, ADDITIONS AND IMPROVEMENTS. During the Term of this Lease, Tenant shall have the right to make alterations, additions and improvements to the interior or exterior of the Premises; provided that, except as otherwise expressly provided for in this Lease, any alterations, additions or improvements (i) to the exterior of the Premises; (ii) to the structural portions of the Premises; and (iii) which involve the alteration of the base building plumbing, electric or HVAC systems shall not be made by Tenant without the prior written consent of Landlord.

5.4 OWNERSHIP OF IMPROVEMENTS. During the Term of this Lease, Tenant shall be considered for all purposes to be the owner of the improvements constructed at the Premises by Tenant (“Tenant’s Improvements”) and Tenant alone shall be entitled to all

 

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available tax deduction on its Federal and State income tax returns for the depreciation and other expenses related to the Tenant’s Improvements. Upon the expiration of the Term or termination of this Lease, the Tenant’s Improvements shall become the property of Landlord. The Improvements do not include Tenant’s Personal Property.

ARTICLE VI - MAINTENANCE OBLIGATIONS

6.1 MAINTENANCE BY TENANT.

A. General Maintenance Obligation. Tenant shall at Tenant’s sole cost and expense (except as herein below provided) at all times keep and maintain (or cause to be kept and maintained) the Premises, including the Improvements located thereon, in good order, condition and repair (including needed replacements) and in a neat, clean and attractive condition. Tenant’s maintenance obligations shall include any Patio Area, exterior painting and other exterior maintenance of the Building including the roof, all glass and windows, all interior maintenance, including lighting, electrical equipment, plumbing fixtures and equipment, Tenant’s grease trap, and all Common Areas located within the Premises including the utilities and plumbing system up to and including the connections to the Premises, landscaping, sprinkler systems, pavement and striping of parking areas, and adequate lighting in the Common Areas located within the Premises. Landlord shall, whenever possible, extend to Tenant the benefit of any available manufacturer’s or other warranties. Any replacements shall be made using materials and equipment of similar or superior quality as the original.

B. Service Contracts. Unless Tenant has established its own internal program, Tenant shall obtain service contracts to provide for (i) the regular maintenance of the heating, ventilating and air conditioning system exclusively serving the Premises; and (ii) regular pest inspections and treatment, as needed.

C. Trash Removal. Tenant shall contract for the pick-up and disposal, at regular intervals, of the trash produced at the Premises, so that there is no accumulation of trash that cannot be accommodated by Tenant’s dumpster or other trash containers.

D. Access for Maintenance. Tenant shall have the ongoing right of access for the repair, maintenance and replacement of any Support Installations or other items located outside the Premises which Tenant is obligated to maintain under this Lease. Tenant agrees to conduct its access in a manner so as not to unreasonably disturb other tenants of the Project or interfere with their business operations. Except in an emergency situation, if Tenant requires access to another tenant’s premises, Tenant agrees to obtain the prior consent of Landlord or the applicable tenant.

6.2 ADDITIONAL CONSTRUCTION. On and after the Commencement Date Landlord shall not during Tenant’s business hours, except to the extent required for emergency repairs, engage in or allow any construction activities or utilize any area for construction staging that would adversely impact ingress and egress to and from the Premises; disturb customers; create an unsightly condition; or otherwise interfere with the operation of Tenant’s business at the Premises in some material respect. All such work, including emergency repairs, shall be

 

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conducted (i) in a manner to minimize any interference with Tenant’s business operations and its customers’ and (ii) to the extent practical, outside Tenant’s business hours.

ARTICLE VII - INSURANCE AND INDEMNITY

7.1 TENANT’S INSURANCE. Tenant shall, during the Term of this Lease, maintain insurance coverage in accordance with this Section.

A. Tenant’s Liability Insurance. Tenant will keep in force, throughout the Term of this Lease, commercial general liability insurance (or substantially equivalent liability insurance or another type of comprehensive liability insurance policy then in common use) with respect to the Premises and the business operated by Tenant at the Premises. Tenant’s liability insurance will (i) be in an amount of not less than Two Million Dollars ($2,000,000), which may include primary, excess and umbrella policies, and (ii) name Landlord as an additional insured, as to occurrences in the Premises.

B. Tenant’s Property Insurance. Tenant will keep in force, commencing on the date Tenant actually lakes possession of the Premises and continuing throughout the Term of this Lease, special form (formerly known as “all risk”) property insurance (or substantially equivalent property insurance or another type of broad form property insurance policy then in common use) with respect to the Premises (including the Improvements), Tenant’s Improvements and Tenant’s Personal Property in the Premises. Tenant’s property insurance will be in at least an amount as is required to avoid the application of any co-insurance provision that its property insurance may be subject to. Tenant’s property insurance policies will show Landlord as a loss payee, as its interest may appear.

C. Tenant’s Employers’ Liability Insurance. Tenant shall. throughout the Term of this Lease, maintain such workers compensation or employer’s liability insurance as may be required by applicable Laws.

D. General Insurance Requirements. Tenant’s required liability insurance and property insurance shall (i) be issued by companies licensed to do business in the State in which the Premises are located and rated A- / VII or better in the then most current issue of Best’s Insurance Reports, and (ii) provide for at least ten (10) days notice to Landlord before cancellation. Tenant is not required to carry separate insurance policies for the Premises, and all of Tenant’s insurance may be under polices which cover multiple locations.

E. Certificates of Insurance. Tenant will furnish Landlord with certificates of the insurance Tenant is required to carry within ten (10) days after a written request by Landlord.

F. Deductibles and Self-Insurance. Tenant’s insurance may include a self-insured retention or deductible (a “Self-Insured Amount”), which will be of a commercially reasonable amount given the size and financial strength of Tenant and the affiliated group of entities of which Tenant is a part that are covered under the same insurance program; provided that if Tenant elects to totally self-insure, Tenant and the affiliated group of entities of which Tenant is a part must have a combined tangible net worth of at least twenty-five (25) times the

 

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amount required under this Lease that is self-insured (i.e., $25,000,000 for each $1,000,000 of insurance required under this Lease which is within the Self-Insured Amount).

7.2 TENANT INDEMNITY. Tenant shall indemnify, hold harmless and defend Landlord from and against any and all suits, claims, actions, damages, liabilities and expenses, including reasonable attorneys’ fees (collectively, “Claims and Damages”) arising out of (i) any loss of life, personal injury and/or damage to property occurring within the Premises or resulting from the wrongful or negligent acts or omissions of Tenant, its officers, contractors, agents or employees (acting within the scope of their office, contract, agency or employment), (ii) Tenant’s breach of any representation or warranty of Tenant under Article XIII, or (iii) Tenant’s failure to maintain the Premises in accordance with applicable Laws to the extent within its obligations under this Lease.

ARTICLE VIII - ASSIGNMENT AND SUBLETTING

8.1 ASSIGNMENT.

A. Consent of Landlord. Except as specifically provided in this Article, Tenant may not assign this Lease without the prior written consent of Landlord. Any transfer of Tenant’s interest in this Lease by operation of law, regardless of whether the same is characterized as voluntary or involuntary, shall be construed as an “assignment” governed by this Article. Landlord’s consent to any one assignment shall not act as a waiver of the requirements of Landlord’s consent with respect to any subsequent assignment.

B. Assumption of Lease. In connection with any assignment of this Lease, the assignee shall be entitled to all the rights and shall assume all the obligations of Tenant under this Lease pursuant to an assumption agreement in a form reasonably acceptable to Landlord.

C. Consent Criteria. Landlord shall not withhold its consent to a proposed assignment by Tenant so long as the proposed assignee (i) agrees in writing to be bound by all of the terms and conditions of this Lease; (ii) intends a use of the Premises which is within the Permitted Use; (iii) demonstrates, to Landlord’s reasonable satisfaction, prior experience in operating the Permitted Use; and (iv) demonstrates, to Landlord’s reasonable satisfaction, adequate financial resources to meet the obligations of Tenant under this Lease.

D. Assignment Prior to a Closure. In the event that Tenant requests Landlord’s consent to an assignment of this Lease to an unaffiliated third party (excluding any entity described in Section 8.3 below) and, at the time the consent is requested, Tenant is still operating within the Premises (or, if closed, and Tenant has not provided Landlord with a Closure Notice pursuant to Section 4.5), Landlord may require. by notice to Tenant given within twenty (20) days of receipt of Tenant’s request (the “Closure Notice Request”), that Tenant deliver a Closure Notice pursuant to Section 4.5. If Landlord delivers a Closure Notice Request, Tenant shall, within twenty (20) days after receipt thereof, either (a) withdraw its request for an assignment or (b) deliver a Closure Notice pursuant to Section 4.5. If Tenant delivers the Closure Notice, Landlord shall have the right to exercise the Recapture Right for the period and otherwise in accordance with the terms provided for in Section 4.5. If Landlord requests and Tenant provides a Closure Notice pursuant to this Section, no Closure Notice shall be required as

 

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to any Closure that may occur between the time Tenant ceases business operations and the assignee opens for business.

8.2 SUBLETTING.

A. Consent of Landlord. Except as specifically provided in this Article, Tenant may not sublet all or any portion of the Premises, without the prior written consent of Landlord. Any subletting will be subject to all the terms of this Lease and no subletting will release Tenant from the primary responsibility for the performance of the obligations of the Tenant under this Lease. Landlord’s consent to any one subletting shall not act as a waiver of the requirements of Landlord’s consent with respect to any subsequent subletting.

B. Consent Criteria. Landlord shall not withhold its consent to an proposed assignment by Tenant so long as the proposed assignee (i) agrees in writing to be bound by all of the terms and conditions of this Lease; (ii) intends a use of the Premises which is within the Permitted Use; and (iii) demonstrates, to Landlord’s reasonable satisfaction, prior experience in operating the Permitted Use.

C. Sublease Rent. All rent and other consideration payable under any sublease shall be solely the property of Tenant.

8.3 PROCEDURE FOR ASSIGNMENT OR SUBLETTING. If Tenant desires to assign this Lease or sublet all or any portion of the Premises to a third party that requires Landlord’s consent under this Lease, Tenant shall provide notice of the proposed assignment or subletting to Landlord (the “Request Notice”). The Request Notice shall include the name of the proposed assignee or subtenant and information based upon which Landlord can evaluate the proposed assignee or subtenant under the applicable consent criteria set out in this Article. Landlord shall have a period of ten (10) days from receipt of the Request Notice to request such additional reasonable information as may be reasonably required to evaluate the proposed assignee or subtenant under the applicable consent criteria set out in this Article (the “Information Request”). Landlord shall, within fifteen (15) days following the later of (i) the Request Notice, and (ii) its receipt of the additional information, if any, requested in a timely Information Request, to consent or deny (which denial shall include Landlord’s basis for such denial) the proposed assignment or subletting, If the proposed assignment or subletting is denied, Tenant may submit a supplemental request for Landlord’s consent, including information responding to Landlord’s basis for the denial and Landlord shall similarly respond to any supplemental request for its consent within fifteen (15) days following Landlord’s receipt thereof. If a proposed assignment is approved, Landlord agrees to execute a consent to such assignment within ten (10) days following its receipt of a proposed assignment document.

8.4 TRANSFER OF LANDLORD’S INTEREST. Landlord shall be entitled to sell or otherwise transfer the Project or portions of the Project without the consent of Tenant. Landlord shall not transfer only a portion of the Project, unless the portion transferred remains subject to the terms, covenants, conditions and restrictions of this Lease, including, but not limited to, Tenant’s Appurtenant Use Rights and the Use Restrictions by a recorded document, subject to no superior liens or interests which could result in its termination, which is directly enforceable by Tenant and which is otherwise in a form acceptable to Tenant.

 

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8.5 RELEASE UPON TRANSFER.

A. Transfer by Landlord. The term “Landlord” shall mean the owner, for the time being, of the Premises, and in the event of the transfer by such owner of its interest in the Premises and the assumption of Landlord’s obligations hereunder by the transferee, then notwithstanding anything to the contrary contained herein, such transferring Landlord shall thereupon automatically be released and discharged from all covenants and obligations of the Landlord thereafter accruing under this Lease from and after the date of the transfer, but shall not be released from any liability that has accrued prior to the date of the transfer.

B. Transfer by Tenant. The term “Tenant” shall mean the holder, for the time being, of the leasehold interest created by this Lease, and in the event of the assignment of this Lease permitted by this Article VIII and the assumption of Tenant’s obligations hereunder by the assignee, then notwithstanding anything to the contrary contained herein, such transferring Tenant shall thereupon automatically be released and discharged from all covenants and obligations of the Tenant thereafter accruing under this Lease from and after the date of the transfer, but shall not be released from any liability that has accrued prior to the date of the transfer.

ARTICLE IX - DEFAULT

9.1 DEFAULT OF TENANT. Tenant shall be deemed to be in default under this Lease (a “Tenant Default”) upon the occurrence of any of the following: (i) Tenants failure to pay Rent or any other sums due to Landlord under this Lease when due, if the failure continues for more than ten (10) days following written notice from Landlord to Tenant of such failure; (ii) Tenant’s failure to perform any material covenant, promise or obligation contained in this Lease, if the failure continues for more than thirty (30) days following written notice from Landlord to Tenant of such failure, provided that if the failure cannot be cured within the thirty (30) day period, the thirty (30) day period shall be extended for such additional time as is needed to cure the failure using due diligence and all commercially reasonable measures; or (iii) Tenant’s voluntary petition for relief under any bankruptcy or insolvency law, the sale of Tenant’s interest under this Lease to satisfy a debt of Tenant by execution or other legal process, or the filing against Tenant of an involuntarily petition for relief under any bankruptcy or insolvency law which is not discharged within ninety (90) days after filing.

9.2 LANDLORD’S REMEDIES. Upon a Tenant Default Landlord may exercise the rights and remedies set out below.

A. Termination of Possession. Landlord may terminate Tenant’s right to possession under this Lease and reenter and retake possession of the Premises. Following the taking of possession, Landlord shall use commercially reasonable efforts to re-let the Premises on behalf of Tenant, at such rental and upon such terms and conditions as Landlord may, in the exercise of Landlord’s commercially reasonable discretion, deem best under the circumstances. Taking possession of the Premises by Landlord, as provided for in this Section, shall not be deemed a termination of this Lease or of Tenant’s obligations under this Lease and Tenant shall continue to make the Rent payments as they become due under the Lease. Following any re-letting of the Premises, Tenant shall pay to Landlord on a monthly basis the sum equal to: (i) the

 

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Rent payable under this Lease for such month, plus the monthly amortization (over the term of the re-letting) of the cost of any brokerage commissions for the re-letting and the cost of any reasonable alterations made to accommodate the new tenant, less (ii) the rent received from the new tenant; provided that if the new tenant receives a rent abatement or substantially lower rent at the beginning of the re-letting, the rent for the re-letting shall be averaged over the term of the re-letting for purposes of the foregoing calculation. Tenant shall not be entitled to any of the excess of the rent from the re-letting over the Rent payable under this Lease, except as a credit against the sums due to Landlord.

B. Termination of Lease. Landlord may declare this Lease to be terminated, and reenter upon and take possession of the Premises by any lawful means, whereupon the term hereby granted and all right, title, and interest of Tenant in the Premises shall terminate. Following the termination of this Lease, Tenant shall have no further liability under this Lease, except that Landlord shall be entitled to recover from Tenant, as final and liquidated damages, the sum obtained by adding together all of the following: (i) all Rent which is accrued but unpaid under this Lease through the date of termination; (ii) the reasonable cost of making any repairs to the Premises needed on the date of termination, which were Tenant’s responsibility to make under this Lease, but which Tenant failed to make; (iii) attorneys’ fees and costs recoverable under Section 16.12; (iv) any unamortized (determined over the Initial Term) portion of any brokerage commission paid by Landlord in connection with this Lease; and (v) the present value (discounted using an annual rate equal to the annual yield on the United States Treasury Issue with a maturity date most closely matching the expiration date of the then Term of this Lease) at the time of termination, of the difference between the Base Rent for the then remaining Term of this Lease (the “Lease Base Rent”) and the fair market base rental value (assuming an Operating Expense and Real Estate Tax reimbursement equivalent to that provided for in this Lease) of the Premises for the then remaining Term of this Lease (the “Fair Market Base Rent”). The Fair Market Base Rent shall assume that the Premises is leased in its “as is” condition, as of the termination date, but after the repairs provided for in item (ii) above.

C. Remedies Cumulative and Non-Exclusive. The rights and remedies of Landlord set forth in this Section 9.2 and elsewhere in this Lease are cumulative and not exclusive and, except to the extent inconsistent with the express provisions of this Lease, are in addition to any remedies that Landlord may have under applicable law or in equity, including the right to injunctive relief, except that under no circumstances shall Landlord be entitled to accelerate payment of any Rent due hereunder except as set forth in Sub-Section B above.

9.3 DEFAULT OF LANDLORD. Landlord shall be deemed to be in default under this Lease (a “Landlord Default”) upon the occurrence of any of the following: (i) Landlord’s failure to pay any sums due to Tenant under this Lease when due, if the failure continues for more than ten (10) days following written notice from Tenant to Landlord of such failure; (ii) Landlord’s failure to perform any covenant, promise or obligation contained in this Lease if the failure continues for more than thirty (30) days following written notice from Landlord to Tenant of such failure, provided that if the failure cannot be cured within the thirty (30) day period and the failure does not prevent Tenant’s ordinary business operations at the Premises or cause the Premises not to be in compliance with applicable Laws and is not a violation of Section 1.4, the thirty (30) day period shall be extended for such additional time as is needed to cure the failure using due diligence and all commercially reasonable measures; or (iii) Landlord’s voluntary

 

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petition for relief under any bankruptcy or insolvency law, the sale of Landlord’s interest under this Lease to satisfy a debt of Landlord by execution or other legal process, or the filing against Landlord of an involuntary petition for relief under any bankruptcy or insolvency law which is not discharged within ninety (90) days after filing.

9.4 TENANT’S REMEDIES.

A. General Remedies. Upon a Landlord Default, in addition to the remedies set out below, Tenant may exercise all the rights and remedies provided to Tenant under applicable law or in equity, including the right to injunctive relief.

B. Offset Against Rent. If the Landlord Default is the result of the failure to pay any sum due to Tenant from Landlord under or in connection with this Lease, Tenant may offset the sum due from the Rent due under this Lease; provided that prior to offsetting any amount against Rent under this Lease, Tenant shall give written notice to Landlord (the “Offset Notice”), which shall include the amount of the offset claimed and the basis for the offset claimed. Landlord shall have the right to dispute, in accordance with this Section, any offset claimed by Tenant, except for an offset of a monetary judgment or an offset otherwise pursuant to a court order or an arbitration award. To contest an offset Landlord must, within ten (10) days of the Offset Notice, provide notice to Tenant that Landlord disputes all or a portion of the offset (the “Offset Dispute Notice”). Landlord may only give the Offset Dispute Notice if Landlord, in good faith, believes that Tenant is not entitled to all or any part of the offset claimed in the Offset Notice. Any Offset Dispute Notice shall outline the specific items of the offset objected to by Landlord (the “Disputed Charges”) and the specific reasons for the objection. To be effective, the Offset Dispute Notice must be accompanied by Landlord’s payment of the portion of the offset not disputed or include an authorization for Tenant to offset against Rent the portion of the offset not disputed. As to the Disputed Charges, the parties shall, within the thirty (30) day period following the Offset Dispute Notice, attempt to reach agreement upon the amount owed. During the dispute resolution period, including any arbitration, Tenant shall, subject to the other terms of this Lease, continue to pay the Rent otherwise due under this Lease. If the parties are unable to reach an agreement within the thirty (30) day period, the matter shall be settled by binding arbitration by an arbitrator agreed upon by the parties or, if the parties are unable to agree, by a neutral (i.e. having no prior association with either party) arbitrator appointed by the American Arbitration Association or local arbitration association. Any arbitrator shall be a licensed attorney with substantial experience in commercial leases. Landlord and Tenant agree to use diligent good faith efforts to have the arbitrator appointed within sixty (60) days following the Offset Dispute Notice and to complete the arbitration within one hundred twenty (120) days following the Offset Dispute Notice. All costs of the arbitration (including the fees of the arbitrator, but not attorneys’ fees) shall be paid by the non-prevailing party (as determined by the arbitrator). If the arbitrator does not make a determination that one party, or the other, is a “non-prevailing party”, then the costs of the arbitration shall be paid half by Tenant and half by Landlord. The amount finally agreed upon or found to be due Tenant by arbitration, together with any Late Fee and interest as provided for by Section 9.6, shall be paid within ten (10) business days of such agreement or finding, failing which Tenant may thereafter begin to offset all Rent due under this Lease until the entire amount due has been recovered.

 

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C. Payment of Rent into Escrow. During the period (i) of any Landlord Default or (ii) following notice from Tenant of a failure of Landlord to comply with this Lease (even if not yet a Landlord Default) until the cure of the failure, if such failure is having any material adverse impact on Tenant’s business at the Premises, Tenant shall have the right to pay the Base Rent and Additional Rent due under this Lease into escrow (the “Default Escrow”) with a national title insurance company (the “Escrow Holder”). The Default Escrow will be a “joint order” escrow with disbursements requiring the consent of both Landlord and Tenant or a Court order or arbitration award. Tenant shall be deemed to have a lien against the sums in the Default Escrow to secure any claim for damages arising out of a Landlord Default and shall be entitled to apply the funds in the Default Escrow against any judgment or arbitration award obtained by Tenant. The payment of any Base Rent or Additional Rent into the Default Escrow shall be the equivalent of the payment of the Base Rent or Additional Rent to the Landlord for purposes of crediting Tenant with the payment under the Lease.

D. Monetary Judgment. Tenant shall have the right to offset the amount of any final judgment or arbitration award obtained against Landlord against all the Base Rent and Additional Rent due under this Lease until the full amount of such judgment or award has been satisfied.

E. Remedies Cumulative and Non-Exclusive. The rights and remedies of Tenant set forth in this Section 9.4 and elsewhere in this Lease are cumulative and not exclusive and, except to the extent inconsistent with the express provisions of this Lease, are in addition to any remedies that Landlord may have under applicable law or in equity, including the right to injunctive relief.

9.5 SELF HELP.

A. Landlord’s Self Help Right. If (i) Tenant is in breach of any of the terms, covenants or conditions of this Lease and the breach is, in any material respect, as reasonably determined by Landlord; (ii) Landlord has served upon Tenant written notice of the breach; and (iii) Tenant has failed to promptly commence or once commenced has failed to diligently pursue to completion, using all commercially reasonable efforts, the cure of the breach, Landlord may, following written notice to Tenant, itself take such action as Landlord deems reasonably necessary to cure or mitigate the impact of the breach. Tenant shall reimburse Landlord for all reasonably documented costs and expenses incurred by Landlord in connection therewith (“Landlord Cure Costs”), within thirty (30) days of a demand from Landlord accompanied by reasonable documentation of the Landlord Cure Costs. Landlord’s exercise of its remedy under this Sub-Section does not require that the failure constitute a Tenant Default, but may only be exercised by Landlord if Tenant is not pursuing the cure of the breach in the manner required by item (iii) above following the notice required by item (ii) above.

B. Tenant Self Help Right. If (i) Landlord is in breach of any of the terms, covenants or conditions of this Lease and the breach is, in any material respect, adversely impacting Tenant’s business, business operations, as reasonably determined by Tenant; (ii) Tenant has served upon Landlord written notice of the breach; and (iii) Landlord has failed to promptly commence or once commenced has failed to diligently pursue to completion, using all commercially reasonable efforts, the cure of the breach, Tenant may, following written notice to

 

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Landlord, itself take such action as Tenant deems reasonably necessary to cure or mitigate the impact of the breach. Landlord shall reimburse Tenant for all reasonably documented costs and expenses incurred by Tenant in connection therewith (“Tenant Cure Costs”), within thirty (30) days of a demand from Tenant accompanied by reasonable documentation of the Tenant Cure Costs. Tenant’s exercise of its remedy under this Sub-Section does not require that the failure constitute a Landlord Default, but may only be exercised by Tenant if Landlord is not pursuing the cure of the breach in the manner required by item (iii) above following the notice required by item (ii) above.

9.6 LATE FEES AND INTEREST.

A. Late Fees and Administrative Fees. If any sum due to Landlord or Tenant from the other is not paid within ten (10) days after its due date, a late fee (the “Late Fee”) equal to two and one-half percent (2 ¹/2%) of the late amount will be added to the amount due. In addition to any Late Fee due, an administrative fee (the “Administrative Fee”) of One Hundred Dollars ($100.00) shall be due from any party which gives to the other a check for the payment of sums due under this Lease which is returned for insufficient funds.

B. Interest. Interest, at the Default Rate (defined below), shall accrue on any amount due and owing from either Landlord or Tenant to the other under this Lease, that is not paid within ten (10) days after notice from the party entitled to payment to the other that the amount is past due (which notice may be a default notice provided under this Lease). Following such ten (10) day period, interest, at the “Default Rate”, shall accrue, beginning retroactively as of the due date, on any amount remaining unpaid until paid. The Default Rate is an annual interest rate equal to the lesser of (a) the maximum rate permitted by law, or (b) the Prime Rate of interest (or the average thereof, if more than one) as published in the Money Rates section (or successor section) of the Wall Street Journal on the date such payment was due (or, if not a business day, the prior business day) plus five percent (5%). The same rights and remedies shall apply to the collection of any interest which accrues under this Section as apply to the collection of underlying amount due.

9.7 DELAY IN ENFORCEMENT. Any delay in the enforcement of the rights and remedies of Landlord or Tenant under this Lease following a default by the other, for whatever reason, shall not be deemed a waiver of, or otherwise prevent the later exercise of rights and remedies under this Lease at any time while the default is continuing, except to the extent such default was specifically waived in writing.

9.8 LIMITATIONS ON LANDLORD’S LIABILITY. Tenant agrees to look solely to Landlord’s interest in the Premises and the rents, profits and insurance, condemnation and other proceeds from the Premises for the satisfaction of any monetary judgment (or any other monetary obligation of Landlord to Tenant) and no other property or assets of Landlord shall be subject to levy, execution, or other judicial procedures for satisfaction of such monetary obligations. The foregoing limitation of liability shall not apply to claims by Tenant resulting from (i) Landlord’s failure to carry the insurance required under this Lease; (ii) Landlord’s misappropriation or misapplication of insurance or condemnation proceeds; or (iii) Landlord’s fraud or willful breach of this Lease. This Section is not intended to in any way limit Tenant’s right to obtain injunctive or other equitable relief.

 

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ARTICLE X - ACCESS BY LANDLORD

10.1 RIGHT TO ENTER. Landlord or Landlord’s agents shall have the right to enter the Premises upon reasonable notice to Tenant (except to the extent required by emergency circumstances) and during Tenant’s non-business hours, accompanied by Tenant’s representative, to show the Premises to prospective purchasers of the Project and to make such reasonable repairs to the Premises as Landlord may deem necessary and which are Landlords responsibility (or Landlord is entitled to perform) under this Lease. During the ninety (90) day period immediately preceding the expiration of the Term, Landlord may show the Premises to prospective tenants during normal business hours, upon reasonable notice to Tenant and accompanied by Tenant’s representative.

10.2 CONDITIONS OF ENTRY. Any entry by Landlord within the Premises shall be subject to the following additional conditions: (i) Landlord’s entry (and any work within the Premises) shall be performed (except to the extent required by emergency circumstances) during Tenant’s non-business hours, excluding the hour before opening and after closing; (ii) Landlord’s entry (and any work within the Premises) shall be performed (except to the extent required by emergency circumstances) in a manner so as to minimize any adverse impact on Tenant’s business operations; (iii) Landlord shall promptly repair any damage to the Premises caused by its entry or work to Tenant’s reasonable satisfaction; (iv) Landlord shall (except to the extent required by emergency circumstances) complete any work in the Premises and have the area restored to its prior condition, to the extent possible, at least one hour prior to Tenant beginning business operations for the day; (v) any installation within the Premises shall be subject to Tenant’s approval, which may be withheld for (without limitation) aesthetic or operational concerns; (vi) Landlord shall otherwise conduct any entry and perform any work in a manner to minimize any adverse impact to Tenant’s use and enjoyment of the Premises; and (vii) to the extent Tenant is unable to conduct normal business operations as a result of any such entry, Tenant shall be entitled to a day for day abatement of all Rent due under this Lease.

ARTICLE XI - CONDEMNATION

11.1 CONDEMNATION.

A. Total Taking. If during the Term of this Lease, the whole of the Premises is taken or condemned, this Lease shall terminate on the date of such taking or condemnation and Landlord and Tenant shall be released from liability accruing after the date of termination. As used in this Article, a taking or condemnation includes a deed given or transfer made in lieu thereof

B. Partial Taking / Termination by Tenant. If a portion of the Premises is condemned or taken in any manner or degree that, in any material respect, adversely impacts Tenant’s business or business operations (as determined by Tenant in its sole business judgment, not, however, to be arbitrarily exercised), then Tenant may elect to terminate this Lease as of the date of the vesting of title in the condemning authority, by written notice to Landlord given within sixty (60) days of the condemnation or taking.

 

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C. Partial Taking / Termination by Landlord. If (i) more than thirty-five percent (35%) of the land area of the Premises is condemned or taken, rendering the Premises no longer viable (in Landlord’s reasonable business judgment); and (ii) as a result of such condemnation, Landlord intends to raze the Premises and replace it with a development that would not accommodate a replacement for the Premises, then Landlord may elect to terminate this Lease as of the date of the vesting of title in the condemning authority, by written notice to Tenant given within sixty (60) days of the condemnation or taking.

11.2 AWARD. Landlord shall be entitled to that portion of the condemnation award attributable to Landlords fee interest. Tenant shall be entitled to that portion of the condemnation award attributable to Tenant’s leasehold interest, Tenant’s Improvements to the Premises, all business damages, and relocation costs. Landlord and Tenant shall fully cooperate with each other to accomplish the division provided for in the preceding sentence. Landlord and Tenant shall use good faith efforts to obtain separate awards from the condemning authority (or a judicial allocation of a single award) for their respective interests, consistent with this Section.

11.3 RESTORATION. If there is a condemnation or taking and neither Tenant nor Landlord elects to (or neither is entitled to) terminate this Lease, then Tenant shall commence restoring the Premises and Improvements to the same condition as existed prior to such taking as soon as reasonably possible using due diligence and commercially reasonable efforts. Landlord shall make available to Tenant any portion of the award applicable to the Improvements located on the Premises. During the time period of such restoration work, Tenant shall receive an equitable reduction in Base Rent and Additional Rent until the restoration is completed, unless Tenant is unable, as determined in its reasonable discretion, to continue operating its business in the Premises, in which event all Base Rent and Additional Rent shall abate until Tenant reopens for business.

ARTICLE XII - DESTRUCTION OF PREMISES

12.1 TERMINATION.

A. Termination by Tenant. If the Premises is totally or partially damaged or destroyed by fire or other casualty (i) in the last twenty-four (24) months of the Term, to an extent that the Premises is required to be closed for more than seven (7) days, or (ii) in the last thirty-six (36) months of the Term, to an extent that the cost of Tenant’s restoration work exceeds filly percent (50%) of the total original cost of Tenant’s Improvements within the Premises (as reasonably documented to Landlord by Tenant), then Tenant shall have the option of terminating this Lease upon written notice to Landlord within sixty (60) days after such casualty, in which event Rent and all other obligations herein shall cease as of the date of such casualty, and neither Landlord nor Tenant shall have any further obligations or rights hereunder, except for liability for events occurring prior to the termination of this Lease.

B. Termination by Landlord - Last Twelve Months. If, during the last twelve (12) months of the Term, the Premises is damaged or destroyed by fire or other casualty to an extent that Tenant’s business operations cease, for more than sixty (60) days, then Landlord shall have the option of terminating this Lease upon written notice to Tenant given within thirty (30) days after such casualty and prior to Tenant reopening for business in the Premises, in

 

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which event Rent and all other obligations herein shall cease as of the date of such casualty, and neither Landlord nor Tenant shall have any further obligations or rights hereunder, except for liability for events occurring prior to the termination of this Lease; provided, however, that if Tenant has an unexercised Renewal Option remaining, Tenant may, by written notice to Landlord given within thirty (30) days of Tenant’s receipt of Landlord’s termination notice, exercise the Renewal Option and render Landlord’s termination null and void, and, in that event, this Lease shall continue as if Landlord had not elected to terminate as a result of the casualty.

12.2 RESTORATION. If there is a fire or other casualty and neither Tenant nor Landlord elects to (or neither is entitled to) terminate this Lease, then Tenant shall commence restoring the Premises to the same condition as existed prior to such casualty as soon as reasonably possible using due diligence and commercially reasonable efforts. During the time period of such restoration work Tenant shall receive an equitable reduction in Base Rent and Additional Rent until the restoration is completed, unless Tenant is unable, as determined in its reasonable discretion, to continue operating its business in the Premises, in which event all Base Rent and Additional Rent shall abate until Tenant reopens for business.

ARTICLE XIII - REPRESENTATIONS AND WARRANTIES

13.1 AUTHORITY. Tenant hereby represents and warrants to Landlord that (i) Tenant is a duly authorized and validly existing Florida limited partnership qualified to do business in the State in which the Premises are located; (ii) Tenant has the full right and authority to enter into this Lease; (iii) each of the persons executing this Lease on behalf of Tenant is authorized to do so; and (iv) this Lease constitutes a valid and legally binding obligation of Tenant, enforceable in accordance with its terms. Landlord represents and warrants to Tenant that (i) Landlord is a duly authorized and validly existing Florida limited liability company qualified to do business in the State in which the Premises are located; (ii) Landlord has the full right and authority to enter into this Lease; (iii) each of the persons executing this Lease on behalf of Landlord is authorized to do so; and (iv) this Lease constitutes a valid and legally binding obligation of Landlord, enforceable in accordance with its terms.

13.2 PATRIOT ACT. Tenant represents and warrants to Landlord, that Landlord is not restricted farm entering into this Lease or otherwise dealing with Tenant under Executive Order No. 13224 on Terrorist Financing (the “Executive Order”) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) or any other law, regulation or order restricting certain dealings with parties known or suspected to engage in or support terrorism (collectively, “Terrorism Laws”). Landlord represents and warrants to Tenant, that Tenant is not restricted from entering into this Lease or otherwise dealing with Landlord under Terrorism Laws. A party shall be in default under this Lease if its acts, omissions or status would cause the other to be in violation of any Terrorism Laws.

ARTICLE XIV - ESTOPPEL CERTIFICATES AND SUBORDINATION

14.1 ESTOPPEL CERTIFICATE. At any time and from time to time either party, upon request of the other party, will execute, acknowledge and deliver an instrument, stating, if the same be true, that this Lease is a true and exact copy of the Lease between the parties hereto,

 

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that there are no amendments hereto (or stating what amendments there may be), that the same is then in full force and effect and that, to the best of its knowledge, there are no offsets, defenses or counterclaims with respect to the payment of Rent hereunder or in the performance of the other terms, covenants and conditions hereof on the part of Tenant or Landlord, as the case may be, to be performed, and that as of such date no default has been declared hereunder by either party or if so, specifying the same. Such instrument will be executed by the other party and delivered to the requesting party within fifteen (15) days of receipt of a request.

14.2 TENANT SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT FOR FUTURE MORTGAGES. Tenant agrees to subordinate its interest in this Lease and attorn to any existing mortgage, deed to secure debt or deed of trust (a “Mortgage”) encumbering the Premises by the execution of an SNDA in a form as may be approved by such lender, which SNDA shall also be executed by such mortgagee. Without limiting the generality of the foregoing, Tenant agrees to attorn to PRP’s existing lender as provided in Section 3 of the form of SNDA attached hereto as Exhibit D (which Section 3 is incorporated herein by reference) and to execute and deliver such form of SNDA to PRP’s existing Lender. Tenant’s interest in this Lease shall not be subordinate to any future Mortgage except as expressly provided in such fully executed SNDA.

14.3 LANDLORD SUBORDINATION. Landlord hereby expressly subordinates any and all claim, right, lien (including, without limitation, any common law or statutory Landlord’s lien), title and security interest in and to all of Tenant’s Improvements or Personal Property to the security interest of Tenant’s lender, if any, either existing as of the Effective Date of this Lease or under any future loan. Landlord further agrees to promptly execute any subordination or waiver agreement reasonably requested of Landlord by Tenant’s lender.

ARTICLE XV - HAZARDOUS SUBSTANCES

15.1 TENANT’S COVENANT. Tenant shall not cause or permit any Hazardous Substance to be used, stored, generated, or disposed of on, in or about the Premises (except those commonly or properly used in connection with the operation of a restaurant and which are used in accordance with all applicable governmental laws and regulations), without obtaining Landlord’s prior written consent. If the Premises become contaminated in any manner as a result of any breach of the foregoing covenant or any act or omission of Tenant or any of its agents, employees or contractors, Tenant shall indemnify, defend and hold harmless Landlord from any and all claims, demands, actions, damages, fines, judgments, penalties, costs (including attorneys’, consultants’, and experts’ fees), liabilities, losses and expenses arising during or after the term of this Lease and arising as a result of such contamination. This indemnification includes any and all costs incurred due to any investigation of the site or any cleanup, removal, or restoration mandated by a federal, state, or local agency or political subdivision. Without limitation of the foregoing, if Tenant causes or permits the presence of any Hazardous Substance on, in, or about the Premises that results in contamination, Tenant, at its sole expense, shall complete all required clean up, removal and remediation. Tenant shall first obtain Landlord’s approval for any such remedial action. Notwithstanding the foregoing, this indemnification shall only apply to contamination by a Hazardous Substance resulting from Tenant’s use and operation of the Premises. Nothing herein contained shall be held to indemnify Landlord from liability or to create any liability on Tenant for Hazardous Substance contamination resulting

 

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from Landlord’s ownership, use or operation, or the use or operation by any third party in, on or under the Premises or the Project.

15.2 LANDLORD’S COVENANT. Landlord represents and warrants that to the best of its knowledge, no leak, spill, discharge, emission or disposal of any Hazardous Substance has occurred on the Premises and that the soil, groundwater, soil vapor on or under the Premises is free of Hazardous Substances as of the Effective Date. Landlord agrees to provide to Tenant a copy of all environmental audits and reports with respect to the Premises within its possession or available to it within five (5) days of the Effective Date. Landlord covenants and agrees, at its sole cost and expense, to indemnify, protect, defend and save Tenant harmless against and from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses (including, without limitation, attorneys’ and experts’ reasonable fees and disbursements) of any kind or nature whatsoever which may at any time be imposed upon, incurred by or asserted or awarded against Tenant and arising from or out of any Hazardous Substance on, in, under or affecting all or any portion of the Premises, which Hazardous Substance is not the result of Tenant’s use or operation of the Premises.

15.3 DEFINITIONS. As used herein, the term “Hazardous Substance” means any substance which is toxic, ignitable, reactive, or corrosive and which is regulated by any local government, the State in which the Premises are located, or the United States government. “Hazardous Substance” includes any and all materials or substances which are defined as “pollutant”, “contaminant”, “hazardous waste”, “extremely hazardous waste” or a “hazardous substance” pursuant to state, federal or local governmental law. “Hazardous Substance” includes asbestos, polychlorinated biphenyls (PCBs) and petroleum. The provisions under this entire Article shall survive the expiration or earlier termination of this Lease.

ARTICLE XVI - MISCELLANEOUS

16.1 NOTICE. Any notice, demand, request or other instrument which may be or is required to be given under this Lease, whether by a party hereto or an behalf of such party by its legal representative, shall be deemed to be delivered (i) when received (or when receipt is refused) if deposited in the United States mail, postage prepaid, certified or registered mail, return receipt requested, or (ii) when received (or when receipt is refused) if delivered personally or sent by a nationally recognized overnight courier, all charges prepaid, at the addresses of Landlord and Tenant as set forth in this Section. Such address may be changed by written notice to the other party in accordance with this Section. The parties acknowledge that copies of any notice sent by facsimile or e-mail are for convenience only, and shall not be deemed to be proper notice required hereunder.

 

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If to Landlord: OS Southern, LLC, c/o OSI Restaurant Partners, LLC 2202 N. West Shore Blvd., 5th Floor Tampa, FL 33607 Attention: Vice President of Real Estate (813) 282-1225 Phone (818) 282-9195 Fax		If to Tenant: Selman’s/Florida-I, Limited Partnership c/o OS1 Restaurant Partners, LLC 2202 N. West Shore Blvd., 5th Floor Tampa, FL 33607 Attention: Vice President of Real Estate (813) 282-1225 Phone (813) 282-9195 Fax   and   OSI Restaurant Partners, LLC 2202 N. West Shore Blvd., 51 Floor Tampa, FL 33607 Attention: Director of Real Estate (813) 282-1223 Phone (813) 282-9195 Fax

16.2 WAIVER. The waiver by Landlord or Tenant of any breach or default of any term, covenant or condition shall not be deemed to be a waiver of any subsequent breach or default of the same or any other term, covenant or condition, nor shall the acceptance or payment of Rent or other payment be deemed to be a waiver of any such breach or default. No term, covenant or condition of this Lease shall be deemed to have been waived by Landlord or Tenant, unless such waiver is in writing.

16.3 CAPTIONS AND SECTION NUMBERS. The captions and section numbers appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such sections.

16.4 ENTIRE AGREEMENT. This Lease and any attachments hereto and forming a part hereof set forth all the covenants, promises, agreements, conditions, and understandings between Landlord and Tenant concerning the Premises and there are no covenants, promises, agreements, conditions or understandings, either oral or written, other than as herein set forth.

16.5 AMENDMENTS. No subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant until reduced to writing and signed by Landlord and Tenant. Local and regional managers and partners do not have authority to agree to amend this Lease or waive any of its terms on behalf of Tenant. Landlord should direct any request to amend this Lease or to waive any of its terms to Tenant’s corporate offices at the address set out in Section 16.1 above.

16.6 INTERPRETATION. The words “Tenant” and “Landlord” shall mean each party mentioned as Tenant or Landlord herein, whether one or more, and their respective heirs, executors, administrators, successors, and assigns. If there is more than one party, any notice required or permitted may be given to any one thereof, and such notice to one shall be deemed notice to all, unless multiple notices are required by Section 16.1. The use of the singular pronoun to refer to Tenant or Landlord shall he deemed proper regardless of the number of

 

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parties. When the word “including” (or some derivation thereof, such as “includes”) is used in this Lease to refer to something that, in that context, may be part of a larger group of similar items, the reference is without limitation, and it should be interpreted as if followed by “but not limited to”, “without limitation”, or appropriate equivalent language for the context.

16.7 NO PARTNERSHIP. Landlord and Tenant shall have no business relationship as a result of this Lease other than Landlord and Tenant. No provision of this Lease shall be construed as creating any other business relationship between Landlord and Tenant, including the relationships of partners or parties to a joint venture.

16.8 CONFIDENTIALITY. Landlord agrees not to disclose the provisions of or provide a copy of this Lease to any third party, except in the ordinary course of business to agents, attorneys, accountants and employees who need to know of its content in the performance of their services to Landlord, to prospective purchasers and lenders for the Project and in connection with any dispute with Tenant

16.9 PARTIAL INVALIDITY. If any term, covenant or condition of this Lease, or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease or the application of such term, covenant, or condition to persons or circumstances other than those as to which it was held invalid or unenforceable, shall not be affected thereby and each term, covenant, or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law.

16.10 APPLICABLE LAW. This Lease shall be construed according to the laws of the State in which the Premises are located.

16.11 RECORDING. Within fifteen (15) days written request by Landlord or Tenant to the other, the other party shall execute a Memorandum of this Lease in a form reasonable approved by Landlord and Tenant, to be recorded by Landlord or Tenant in the public records at the recording party’s expense.

16.12 COSTS OF ENFORCEMENT. In the event that Landlord or Tenant shall bring an action to recover any sum due hereunder or for any breach hereunder and shall obtain a judgment in its favor, or in the event that Landlord or Tenant retains an attorney for the purpose of collecting any sum due hereunder or construing or enforcing any of the terms or conditions hereof or protecting their interest in any bankruptcy, receivership, or insolvency proceeding or otherwise against the other, the prevailing party shall be entitled to recover all reasonable costs and expenses incurred, including reasonable attorneys’ and legal assistants’ fees prior to trial, at trial, and on appeal and for post judgment proceedings.

16.13 SUCCESSORS. The covenants and restriction of this Lease are covenants and restrictions running with the land. The provisions of this Lease shall inure to the benefit of and be binding upon the respective heirs, executors, administrators, successors, and assigns of Landlord and Tenant.

16.14 FORCE MAJEURE. In the event that either party hereto shall be delayed or hindered in or prevented from the performance required hereunder by reason of fire or other casualty, strikes, lockouts, labor troubles or shortages, material shortages, any moratorium or

 

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other governmental or court imposed restrictions, riots, criminal acts, food borne illness, insurrection, war, adverse and unusual weather conditions, vandalism, defective materials or work by third party contractors, jobsite accidents, the breach of the other party of its obligations under this Lease, or other reason of like nature beyond the reasonable control of the party delayed in such performance (each a “Force Majeure Event”), then (a) the period for performance shall be extended by the period of time equivalent to the delay caused by such Force Majeure Event or (b) performance shall be excused during the period of non-performance caused by such Force Majeure Event, as applicable. Notwithstanding the foregoing, (i) any extension of time for a Force Majeure Event shall be conditioned upon the party seeking an extension of time delivering written notice of such Force Majeure Event to the other party within ten (10) days of the commencement of the delay caused by the Force Majeure Event. This Section shall not apply to any obligation to pay any sums due under this Lease and the lack of the financial ability to perform shall not constitute a Force Majeure Event.

16.15 BROKERS. Tenant and Landlord represent and warrant to each other that they have not consulted or contacted any agent, broker, or finder in connection with this Lease. Landlord and Tenant agree to defend, indemnify and hold the other harmless from any and all claims for compensation or commission in connection with this Lease by any broker, agent, or finder (other than Broker) claiming to have dealt with such PITY.

16.16 LANDLORD’S RIGHTS. All rights reserved to Landlord under this Lease shall be exercised in a reasonable manner and in a manner so as to minimize any adverse impact to Tenant’s business or Tenant’s use or enjoyment of the Premises.

16.17 CONSENT. Except as expressly set forth in this Lease, whenever Landlord’s consent or approval is requested under or in connection with this Lease, such consent or approval shall not be unreasonably withheld, delayed or conditioned.

16.18 TIME REQUIREMENTS. For purposes of all time requirements and limits hereunder, any time requirement reference to days other than “business days” shall mean actual “calendar days” which shall include each day after the day from which the period commences. All time requirements referenced as “business days” shall include each day after the day from which the period commences excluding any Saturday, Sunday or legal holiday. If the final day of any such time period falls on a Saturday, Sunday or legal holiday in the jurisdiction where the Premises is located or the jurisdiction to which notices to Landlord or Tenant are to be sent, such period shall extend to the first business day thereafter.

16.19 SURVIVAL OF OBLIGATIONS. Notwithstanding any provisions contained in this Lease to the contrary, the monetary obligations of Landlord and Tenant that relate to the period prior to the termination or expiration of this Lease (for example, the payment of accrued Rent or the reconciliation of Operating Expenses or Real Estate Taxes) shall survive the termination or expiration of this Lease.

16.20 Radon Gas. Radon is a naturally occurring radioactive gas, that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found

 

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in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county health department.

ARTICLE XVII - REQUIRED LENDER PROVISIONS

17.1 Required Assignment and Subletting Provisions. The parties agree that:

 

(i)

This Lease shall be subject and subordinate to all of the terms and conditions of the Sublease, the Master Lease and the Master Landlord’s (PRP) loan documents;

 

(ii)

The use of the Premises shall not conflict with any Legal Requirement, Property Document. Insurance Requirement or any other provision of the Sublease or Master Lease;

 

(iii)

That except as otherwise provided herein, no further subletting or assignment of this Lease or all or a part of the Premises shall be permitted except insofar as the same would be permitted if it were a sublease by Landlord under the Sublease or Master Lease;

 

(iv)

That in the event of cancellation or termination of the Sublease for any reason whatsoever or of the surrender of the Sublease, whether voluntary, involuntary or by operation of law) prior to the expiration date of this Lease, including extensions and renewals granted thereunder, then, at the option of PRML, the Tenant shall make full and complete Attornment to PRML for the balance of the term of the Lease, which Attornment shall be evidenced by an agreement in form and substance satisfactory to PRML and which the Tenant shall execute and deliver with five (5) days after request by PRML, and the Tenant shall waive the provisions of any law now or hereafter in effect which may give the Tenant any right of election to terminate the Lease or to surrender possession of the Premises in the event any proceeding is brought to terminate the Sublease, and;

 

(v)

That in the event the Tenant receives a written notice from PRML stating that the Sublease has been cancelled, surrendered or terminated, the Tenant shall thereafter be obligated to pay all rentals accruing under said sublease directly to PRML (or Master Landlord’s lender if PRML shall so direct); all rentals received from the Tenant by PRML shall be credited against the amounts owing by Landlord under the Sublease.

17.2 Required Use Restrictions. Tenant agrees that the Premises cannot be used for any of the following uses: any pornographic or obscene purposes, any commercial sex establishment, any pornographic, obscene, nude or semi-nude performances, modeling, obscene materials, activities or sexual conduct or any other use that has or could reasonably be expected to have a material adverse effect on the use, operation, or value of the Premises.

(remainder of page intentionally left blank)

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease effective as of the Effective Date.

 

WITNESSES:				“Landlord”
/s/ Kim Dummett				OS Southern, LLC
				a Florida limited liability company
/s/ Danielle Nielson				By:		/s/ Karen C. Bremer
				Name:		Karen C. Bremer
				Title:		Authorized Agent
				“Tenant”
				Selmon’s/Florida-I, Limited Partnership a Florida partnership
/s/ Kim Dummett
				By:		/s/ Karen C. Bremer
				Name:		Karen C. Bremer
/s/ Danielle Nielson				Title:		Authorized Agent

 

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Exhibit 10.52

AMENDMENT TO LEASE

THIS AMENDMENT TO LEASE (“Amendment”) is made and entered into by and between OS Southern, LLC, a Florida limited liability company (“Landlord”) and MVP LRS, LLC, a Florida limited liability company (successor-in-interest to Selmon’s/Florida-I, Limited Partnership, a Florida limited partnership) (“Tenant”) and is effective on the date executed by the last of Landlord and Tenant (the “Effective Date”).

W I T N E S S E T H:

WHEREAS, Landlord and Tenant are parties to that certain restated lease agreement effective June 14, 2007 (the “Lease”), pursuant to which Tenant is in possession of certain demised premises containing approximately 2.46 acres, as more particularly described in the Lease (the “Premises”), which are located at 4302 Boy Scout Blvd, Tampa, FL 33607; and

WHEREAS, Landlord and Tenant desire to amend the Lease.

NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.

Tenant hereby elects to renew the Lease for a Renewal Term (as set forth in Section 1.3 of the Lease), and Landlord hereby accepts Tenant’s election to renew the Lease for an additional Renewal Term of five (5) years, commencing July 1, 2012 and ending June 30, 2017. For purposes of this renewal, Tenant shall not be required to further notify Landlord of its intention to elect to renew; however, in the event Tenant intends to elect to renew the Lease for an additional Renewal Term, then Tenant shall be required to so notify Landlord as set forth in the Lease.

 

2.	Section 2.1 and Exhibit “B” of the Lease are hereby revised to provide that the Base Rent shall be as follows:

 

June 1, 2010 – June 30, 2012		$325,500.00 per annum
July 1, 2012 – June 30, 2017		$358,050.00 per annum

 

3.	Except as herein provided, all of the terms, covenants, conditions and stipulations contained in the Lease, as amended, shall continue with like force and effect and to all legal intents and purposes and Landlord and Tenant shall be bound by the Lease.

 

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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the Effective Date.

 

				“Landlord”
WITNESSES:				OS Southern, LLC,
				a Florida limited liability company
/s/ Karen Anderson				By:		/s/ Karen C. Bremer
				Name:		Karen C. Bremer
				Title:		Authorized Agent
/s/ Kim Dummett				Date:		5/27/10
				“Tenant”
				MVP LRS, LLC,
				a Florida limited liability company
/s/ Robin Ahlquist				By:		/s/ Nicholas Reader
				Name:		Nicholas Reader
				Title:		Principal
/s/ Ava Forney				Date:		5/20/10

 

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CONSENT OF PRIVATE RESTAURANT PROPERTIES, LLC AND PRIVATE

RESTAURANT MASTER LESSEE, LLC

The undersigned hereby consents to the Amendment between Landlord and Tenant dated May 27, 2010.

 

				Private Restaurant Properties, LLC
				a Delaware limited liability company
/s/ Kim Dummett				By:		/s/ Karen C. Bremer
				Name:		Karen C. Bremer
				Title:		Vice President of Real Estate
/s/ Karen Anderson				Date:		5/27/10
				Private Restaurant Master Lessee, LLC,
				a Delaware limited liability company
/s/ Kim Dummett				By:		/s/ Karen C. Bremer
				Name:		Karen C. Bremer
				Title:		Vice President of Real Estate
/s/ Karen Anderson				Date:		5/27/10

 

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Lease

between

OS Southern, LLC

(“Landlord”)

and

Selmon’s/Florida-I, Limited Partnership

(“Tenant”)

---

THIS LEASE (this “Lease”) is made and entered into by and between OS Southern, LLC, a Florida limited liability company (“Landlord”) and Selmon’s/Florida-I, Limited Partnership, a Florida limited partnership (“Tenant”) and is made for the purpose of amending and restating that certain lease effective June 14, 2007, (the “Original Lease”), by and between Landlord and Tenant (or their respective predecessors in interest prior to the Effective Date) and shall be effective on June 14, 2007 (the “Effective Date”). The parties further acknowledge that Landlord is the sub-tenant under that certain sublease agreement effective June 14, 2007 (the “Sublease”), with Private Restaurant Master Lessee, LLC (“PRML”) as sub-landlord, which Sublease is subordinate to that certain master lease agreement dated June 14, 2007, (the “Master Lease”) between PRML as tenant and Private Restaurant Properties, LLC (“PRP”), as master landlord, and that this Lease is subordinate to both the Sublease and the Master Lease.

ARTICLE I - GRANT AND TERM

1.1 GRANT. In consideration of the rents, covenants and agreements set forth herein, Landlord hereby leases and conveys to Tenant and Tenant hereby rents from Landlord the following described leased premises (the “Premises”):

A. Description of Premises. The Premises contains approximately 2.46 acres of land together with any building (the “Building”) and other improvements located thereon (the Building and other improvements, collectively, the “Improvements”) which is designated as Lot 1 located within the parcel of land consisting of approximately 5.52 acres and designated as Lots 1, 2, and 3 (the “Project”), which Project is located in and a portion of the Cornerstone Plaza development (the “Development”), and is designated as 4302 Boy Scout Blvd., Tampa, Florida, 33607, The Premises, the Project and the Development are depicted on the site plan (the “Site Plan”) attached to this Lease as Exhibit “A”. A legal description of the Premises and a Plat of the Development is attached to this Lease as Exhibit “A-1”.

B. Appurtenant Easements and Use Rights. Landlord hereby grants and conveys to Tenant the following additional use rights, each as a right and easement appurtenant to Premises (the “Appurtenant Use Rights”):

(a) Declaration. Tenant acknowledges that the Premises and the Project is subject to that certain Declaration of Covenants, Restrictions and Easement recorded June 12, 2000 in Book 10225, at Page 0596, in the Office of the Clerk of Court of Hillsborough County, Florida, (the “Declaration”), to which this Lease is subject and subordinate, Landlord agrees not to amend or consent to an amendment of the Declaration, (or grant any consent under the Declaration), which would place any additional restrictions, requirements or other obligations on Tenant or the Premises or is inconsistent with or adversely affects Tenant’s rights under this Lease, without first obtaining Tenant’s prior written consent, such consent to be deemed granted if not otherwise denied in writing within fifteen (15) business days after request therefore; provided that such, request is sent pursuant to the notice provisions of this Lease and states in conspicuous type that a failure by Tenant to respond in fifteen (15) business days shall constitute Tenant’s approval of such amendment. Tenant and its subtenants and their respective agents, customers, employees, contractors and invitees shall have the non-exclusive right (except as specifically set forth herein), in common with the Landlord and other tenants of the Project (and to the extent available to Landlord), to use, without fee or charge (except as may be specifically

 

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set forth in this Lease), all walkways, driveways and access areas (including curb cuts), sidewalks, common parking areas, and other areas as may be designated for common use in the Declaration. Tenant agrees that it shall instruct its employees not to park in those portions of the Common Parking Area (as such term is defined in the Declaration) as shown on the Site Plan.

(b) Staging Area. Tenant shall have the right to utilize those portions of the Premises as are reasonably required in connection with improvements, alterations or renovations to the Premises. The area to be utilized by Tenant under this Sub-Section shall be located so as not to unreasonably interfere with the business operations of other tenants within the Project and shall be subject to Landlord’s prior approval. Following its use by Tenant, Tenant shall remove all of its construction materials from the Staging Area and repair any damage caused to the Staging Area by its use.

(c) Utility Lines and Equipment. Tenant shall have the right to install, operate, maintain, repair and replace utility lines and related installations, roof-top and other equipment and other installations serving the Premises (collectively, the “Support Installations”), including a suitable area within the Premises for the installation and maintenance of Tenant’s grease trap; provided that (i) the location of and plans for any Support Installations installed by Tenant shall be subject to Landlord’s prior approval and (ii) Tenant shall exercise such rights in a manner so as to avoid any unreasonable interference with the business operations of other tenants of the Project.

(d) Signage Rights. Tenant shall have the right to install and maintain Tenant’s Signage (as defined in Sub-Section 5.2G), subject to the provisions of the Declaration.

(e) Patio Area. Tenant shall have the exclusive right to the use of an area immediately adjacent to the building located on the Premises as may be proposed by Tenant and approved by Landlord (the “Patio Area”) for customer seating and the service of food and beverages customarily served in Tenant’s restaurant operation. Tenant will comply with the following in its use of the Patio Area: (i) Tenant shall be responsible to secure all permits and approvals of all governmental authorities required for the use and operation of the Patio Area (ii) Tenant’s liability insurance provided for in Section 7.1 will cover occurrences within the Patio Area during Tenant’s use of the Patio Area and (iii) Tenant shall maintain the Patio Area in a clean and attractive condition and shall repair any damage to the Patio Area caused by its use.

(f) Service Areas. Tenant shall have the right to use (i) a reasonably convenient and serviceable area within the Premises (the “Dumpster Area”) for the installation and maintenance of a trash dumpster by Tenant, together with the right to run electric and water service to the Dumpster Area and (ii) a service area or areas located within the Premises, in a location or locations to be proposed by Tenant and approved by Landlord, which Tenant may utilize for the pick-up, drop-off and storage of linens, the wood used in connection with its food preparation, and other items used in connection with the operation of the Premises (the “Service Area”). Tenant shall, maintain any Dumpster Area and any Service Area in a reasonably clean and attractive condition given its location and use.

(g) Valet Parking. Tenant may establish and operate a valet parking service (the “Valet Service”) for the Premises. In connection with the Valet Service, Tenant shall

 

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have the right to establish a valet drop-off and pick-up area (the “Valet Station”) within the Premises. Any improvements installed in connection with the Valet Station shall be subject to Landlord’s prior approval. Tenant will operate (or require the third party operator to operate) the Valet Service in a high quality manner consistent with the class and character of the Project and in a manner that does not unreasonably interfere with other tenants of the Project. Tenant may, but is not required to, charge for the Valet Service.

1.2 QUIET ENJOYMENT. On and subject to the terms, covenants and conditions of this Lease, Landlord warrants and covenants that Tenant shall peacefully and quietly have, hold and enjoy the Premises for the entire Term of this Lease.

1.3 TERM. The “Initial Term” of this Lease shall commence as of June 14, 2007 and shall expire June 30, 2012. The phrase “Term” shall mean, collectively, Initial Term and any Renewal Term for which an option has been exercised by Tenant.

A. Renewal Options. Tenant shall have the option (each, a “Renewal Option”) to renew this Lease for one (1) consecutive renewal term (each, a “Renewal Term”) of five (5) years and, one (1) Renewal Term of four (4) years, eleven (11) months and thirteen (13) days, commencing on the first day following the expiration of the Initial Term, or then Renewal Term (so that, except as may be agreed upon by Landlord and Tenant, the outside expiration of the Lease shall be June 13, 2022). Tenant shall exercise each. Renewal Option by notice to Landlord (each, a “Renewal Notice”) given at least one hundred eighty (180) days prior to the expiration of the then current Term. It is the intention of the parties to avoid forfeiture of Tenant’s Renewal Options through inadvertent failure to give a timely Renewal Notice. Accordingly, if Tenant should fail to timely give the Renewal Notice for any Renewal Term, Tenant shall not be deemed to forfeit its Renewal Option until such time as Landlord gives ten (10), days written notice to Tenant that Tenant’s Renewal Notice is past due, and only upon Tenants failure to give its Renewal Notice within the additional ten-day period shall Tenant’s Renewal Option expire.

B. Lease Year. For purposes of this Lease, a “Lease Year” shall mean each successive twelve (12) calendar month period during the Initial Term or any Renewal Term commencing on the Commencement Date; provided, however, that if the Commencement Date is a day other than the first day of a calendar month, then the first Lease Year shall include the partial calendar month during which the Commencement Date falls and the following twelve (12) full calendar months.

1.4 CERTAIN TENANT PROTECTIONS.

A. Prohibited Changes. The current design, layout and configuration of the Premises is a material consideration for Tenant entering into this Lease. Unless approved in writing by Tenant or otherwise set forth herein, no change, alteration or addition shall be made to the Premises, including but not limited to, the configuration of the parking areas, methods of ingress and egress, lighting, curbing, the building locations, the landscaping (which would affect the visibility of the Premises), or parking areas. Tenant may withhold such approval if Tenant believes such change, alteration or addition would in any material respect, adversely impact

 

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(i) its business being conducted in the Premises; (ii) the visibility of, or access to, for the Premises; or (iii) Tenant’s use and enjoyment of the Premises or Appurtenant Use Rights.

B. Permitted Changes. Section 1.4A. above does not restrict: (i) Landlord’s ability to perform necessary maintenance and repairs within the Project; (ii) Landlord’s ability to make changes or alterations required to comply with applicable laws or codes of general application and unrelated to any act or request of Landlord or any other tenant or occupant (for example, the designation of handicapped parking spaces); or (iii) Landlord’s ability to make minor de minimis changes, including, for example: replacement or minor reconfiguration of curbing, installation or replacement of landscaping, the installation of convenience facilities such as mail boxes, bike racks, benches and cart corrals, or the installation of light poles or directional signage; provided that all work permitted under this Sub-Section shall be conducted in a manner so as not to adversely impact the Premises and shall be accomplished at such times and in such manner so as to minimize interference with Tenant’s (or its employees’ and invitees’) use of or access to the Premises and Appurtenant Use Rights.

C. Landlord’s Permitted Development.

Landlord reserves the right to develop and use that portion of the Project designated on the Site Plan as the “Permitted Building Area” and “Staging Area” in reasonable proximity thereto, but only in compliance with the provisions of this Section. Landlord shall, prior to commencement of construction on the Permitted Building Area maintain such area in a good and attractive condition, fully grassed or otherwise landscaped, mowed, and free of litter, garbage, debris, and or dirt or other matter which could be blown onto such area.

Landlord covenants and agrees that any building constructed on the Permitted Building Area will be (i) no more than twenty five (25) feet in height, and (ii) no more than 7,060 square feet. Except as expressly provided in Sub-Section 1.4A. and B. above, the shape, design, building materials, and related plans and specifications for any building within the Permitted Building Area is subject to change without the necessity of obtaining Tenant’s approval. Notwithstanding the foregoing, construction on the Permitted Building Area should be in compliance with the following:

(a) Landlord shall provide notice of its intent to commence construction, at least thirty (30) days prior to the commencement of any construction, a construction schedule and contact information for the person responsible for the construction.

(b) Landlord shall not be entitled to use any portion of the Project (excluding the Permitted Building Area and designated Staging Area) for or in connection with the construction.

(c) Landlord shall erect a six foot (6’) opaque construction fence around the Permitted Building Area and shall not allow any trash, dirt, sand, debris or construction materials to enter the Project (excluding the Permitted Building Area and Staging Area) and shall each evening before 4:30 p.m., remove any such materials that may have inadvertently entered upon the Project (excluding the Permitted Building Area and Staging Area)

 

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and leave the Project in a neat, clean and attractive condition prior to the completion of work each day.

(d) No work which results in noise, dust or other event that might annoy, disturb or bother Tenant’s customers shall be permitted after 4:30 p.m. on any day that Tenant is operating at the Premises.

(e) All work on the Permitted Building Area shall otherwise be done in a manner to minimize any adverse impact on Tenant use of the Premises and the operation of its business thereon.

In the event Landlord violates any of the provisions of this subsection 1.4C, Tenant shall have, in addition to any rights and remedies available to Tenant at law, in equity, or under this Lease, the right to cure such the violation and invoice Landlord for all costs and expenses incurred in connection therewith, together with a 10% administrative fee. In the event that Landlord fails to pay such amount to Tenant within thirty (30) days of the invoice, Tenant may deduct such amount against the Rent payable under this Lease.

D. Prohibited Uses. In recognition (i) of Landlord’s and, Tenant’s agreement that certain uses are inconsistent with the desired class and character of the Project and (ii) of Landlord’s agreement to provide to Tenant an exclusive for Tenant’s use, Landlord and Tenant have agreed to the use restrictions set out below.

(a) High Parking Uses. Landlord covenants and agrees that it will not operate, or permit any other tenant or occupant to operate any of the following in any portion of the Project: (i) a movie theater, auditorium or other place of public assembly; (ii) school or other place of instruction; (iii) bowling alley or skating rink; (iv) book store in excess of 10,000 square feet; (v) grocery store; (vi) pool hall; (vii) video store; (viii) children’s entertainment complex or facility; (ix) game room or arcade; (x) health club or gym, martial arts, yoga, aerobics or fitness studio, provided that this does not prohibit a physical therapy facility under 2,000 square feet where patrons exercise under the supervision of licensed physical therapists, or a health and fitness facility under 2,000 square feet that features supervised exercise and weight loss or weight management services as its primary business, provided that neither may have group classes or sessions of any kind after 5:00 p.m.; (xi) medical clinic; (xii) governmental offices providing on-site services to the general public; or (xiii) church, mosque, synagogue or other place of worship.

(b) Other Prohibited Uses. Landlord covenants and agrees that it will not operate, or permit any other tenant or occupant to operate any of the following in any portion of the Project, or to the extent Landlord has approval rights, in any portion of the Project: (i) an adult entertainment facility, including, but not limited to an adult bookstore, adult video store, nude or semi-nude entertainment facility, massage parlor, strip show, lingerie exhibition or shop (excluding a Victoria’s Secret or similar high quality national retailer), establishment for the sale, rental, display, viewing or exhibition of pornographic or “adult only” materials (including, without limitation, magazines, books, movies, videos and photographs), so called “gentlemen’s” club or facility, or any establishment for the sale of items or paraphernalia that are intended to be or commonly are utilized in connection with the use of illegal drugs, provided that this item does

 

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not prohibit the sale or rental of “adult” videos or books in connection with a full line national video or book store or the operation of a business providing bonafide massage therapy; (ii) a telemarketing or similar operation, off-track betting, gaming or bingo establishment; (iii) a flea market or second hand store; (iv) any use which is a public or private nuisance, any use which produces noise or sound that is objectionable due to intermittence, beat, frequency, shrillness or loudness, any use which produces obnoxious odors (excluding typical restaurant odors), any use which produces an excessive quantity of dust dirt, or fly ash, any use which produces fire, explosion or other damaging or dangerous hazard, including the storage, display or sale of explosives or fireworks, any use which produces noxious, toxic, caustic or corrosive fuel or gas, any industrial, distillation, refining, smelting, recycling, agriculture, manufacturing, assembling, drilling, mining or subsurface operations; (v) any mobile home or trailer court, junkyard, stock yard or animal raising operation; provided that this item shall not prohibit pet shops or veterinary offices located at least 150 feet from the Premises; (vi) any place of gathering for temporary or day labor; (vii) any convenience market that sells beer or wine; (viii) any paycheck advance, check cashing or similar establishment open past 6:00 p.m.; (ix) any dumping of garbage, junk, recyclable materials or refuse, other than that produced in connection with the Project and disposed of in enclosed receptacles intended for such purpose; or (x) any cemetery, crematorium, mausoleum, mortuary, funeral parlor or similar service establishment.

(c) Exclusive. Landlord covenants and agrees that it will not operate or permit any other e ant or occupant to operate any of the following in any portion of the Project:

 

(i)

any “barbeque” restaurants. A “barbeque” restaurant shall mean any restaurant (i) with the word “barbeque”, “ribs”, or any variation thereof, or any other words that give a connotation of a barbeque theme or atmosphere in its name, or (ii) where barbeque or ribs are specified in its advertising or marketing efforts, or (iii) where barbeque and ribs collectively constitute twenty percent (20%) or more of its entree items or twenty percent (20%) or more of its entrée sales computed on a dollar basis;

 

(ii)

any “sports” themed restaurant. A “sports themed” restaurant shall mean any restaurant (a) with the word “sports” or any variation thereof, or any other words that give a connotation of a sports theme or atmosphere in its name or (b) any restaurant utilizing multiple televisions or other screens to show sporting events, or any other broadcast, promotion or event featuring sports or sporting events (other than isolated promotions).

(d) Anti-Duplication. In the event that the restaurant operating at the Premises closes, and Tenant proposes to open a new restaurant concept at the Premises with a new predominate or primary featured food type (such as but not limited to steaks {i.e., a steakhouse} or seafood) or ethnic cuisine (such as, but not limited to Mexican, Asian, Japanese, or Chinese) consistent with the Permitted Use under Section 4.1 (a “New Restaurant Concept”), Landlord covenants and agrees (the “Anti-Duplication Covenant”) that it shall not operate or permit the operation of any restaurant within the Project which duplicates the New Restaurant Concept (the “New Exclusive”). The New Exclusive shall become effective upon Tenant’s delivery to Landlord of a Concept Change Notice, as defined and provided for in

 

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Sub-Section 4.1D, identifying the New Restaurant Concept and its predominate or primary featured food type or ethnic cuisine; provided that this New Exclusive shall not apply to (i) any tenant that is permitted to operate such use without the consent or approval of Landlord, under any lease existing at the time the Concept Change Notice is given to Landlord (an “Exempted Tenant”); or (ii) any tenant that Landlord is at the time of the Concept Change Notice, in active discussions or active lease negotiations with which contemplates a permitted use that would include the New Exclusive within its scope (a “Pending Tenant”). Landlord will provide to Tenant a list of any Exempted Tenants and Pending Tenants, within fifteen (15) days following Tenant’s Concept Change Notice, which shall be accompanied by copies of the use provisions from the leases of any Exempted Tenants and reasonably evidence of the discussions or negotiations with any Pending Tenants. The continued effectiveness of the New Exclusive is dependent upon Tenant, in good faith, promptly commencing and thereafter pursuing, with commercially reasonable efforts; the opening of (and then opening to the public for business) the New Restaurant Concept.

(e) Existing Tenants. The use restrictions set out in Sub-Sections (a), (b), (c), and (d) above (the “Use Restrictions”) shall not apply to any tenant under any lease which exists as of Effective Date (each, as it may be renewed or extended, an “Existing Lease”) to the extent that uses prohibited by the Use Restrictions are permitted (without the approval or consent of Landlord) under an Existing Lease. A list of the Existing Leases, if any, which permit any of the uses restricted by the Use Restrictions and a copy of the corresponding permitted use clauses, are set out on Exhibit “A-2”. Any uses restricted by the Use Restrictions that are currently operating in the Project under an Existing Lease (“Existing Prohibited Uses”) are shown on Exhibit “A-2”. To the extent that Landlord has the ability to withhold approval or consent, under an Existing Lease, to or in connection with any change of use which would allow a use which is prohibited by the Use Restrictions, Landlord agrees to withhold such approval or consent. Subject to the terms of this Sub-Section as to Existing Leases, Landlord covenants represents and warrants to Tenant that all tenants of the Project shall be bound by the Use Restrictions.

1.5 SURRENDER OF PREMISES. Within thirty (30) days after the expiration of the Term or earlier termination of this Lease (the “Surrender Date”), Tenant shall surrender the Premises in a broom clean condition, subject to (i) reasonable wear and tear; (ii) damage as a result of casualty or condemnation; (iii) alterations; additions and improvements made pursuant to the terms of or otherwise permitted under this Lease; and (iv) items which are the responsibility of Landlord or which result from Landlord’s failure to comply with its obligations under this Lease. On or prior to the Surrender Date, Tenant shall remove from the Premises its trade fixtures, furniture, equipment and other personal property, including, but not limited to all bars, booths, decorative light fixture stoves, ovens and other restaurant equipment (“Tenant’s Personal Property”). The base building plumbing, electric and HVAC systems (other than any proprietary, specialty or supplemental fixtures or equipment) are not part of Tenant’s Personal Property and shall remain at the Premises. Tenant agrees to repair any damage to the Premises caused by the removal of Tenant’s Personal Property. Any of Tenant’s Personal Property which Tenant has failed to remove from the Premises on or prior to the Surrender Date shall become the property of Landlord and may be disposed of by Landlord as Landlord deems appropriate.

 

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1.6 HOLDING OVER. This Lease and the tenancy created by this Lease shall expire and terminate at the expiration of the Term, without the necessity of any additional notice from Landlord to Tenant of from Tenant to Landlord. If Tenant remains in possession of the Premises after the expiration of the Term, without the consent of Landlord, the Term will not be extended and Tenant will be occupying the Premises under a tenancy at will, under all the terms, covenants and conditions of this Lease, except that Rent for the holdover period will be calculated on a daily basis, at a rate equal to one hundred fifty percent (150%) of Base Rent due for the last month of the Term divided by thirty (30) and shall be due and payable to Landlord periodically upon demand. If Tenant remains in possession of the Premises after the expiration of the Term with the consent of Landlord, the Term will be extended as a month to month tenancy, under all the terms, covenants and conditions of this Lease, and monthly Base Rent will continue at the monthly Base Rent due for the last month of the Term.

ARTICLE II - RENT

2.1 BASE RENT. Tenant agrees to pay to Landlord in equal monthly installments, the annual Base Rent as set forth in the Base Rent Schedule attached hereto as Exhibit “B”. Base Rent shall be due and payable each month, in advance, on the first day of each calendar month without demand, setoff, or deduction, except as otherwise set out in this Lease or as provided under applicable law or by court order.

2.2 ADDITIONAL RENT. Tenant shall pay as “Additional Rent” Tenant’s applicable share of certain costs and expenses, as more fully set forth in this Section and its pro-rata share (based on the total land area of the Premises as compared to the total land area of the Project) of any expenses payable by Landlord pursuant to the terms of the Declaration. Additional Rent shall also include all other sums and charges required to be paid by Tenant to Landlord pursuant to the terms of this Lease.

A. Real Estate Taxes.

(a) Definition, Payment by Landlord and Calculation. The term “Real Estate Taxes” as used herein means all real property taxes and assessments that are levied or assessed against the Premises by any lawful governmental authority for each calendar year or portion thereof commencing on the Commencement Date. Landlord shall be obligated to pay all Real Estate Taxes and all other taxes and assessments assessed against the Premises (except for taxes on the personal property of individual tenants which are paid by such tenants) to the applicable taxing authority before delinquent. The amount of Real Estate Taxes shall be calculated as if: (i) Landlord elected the longest installment payment plan available from the taxing authority for non-recurring taxes and assessments and only those installments coming due during the Initial Term or any Renewal Term of this Lease shall be included in Real Estate Taxes, and (ii) Landlord had taken advantage of the maximum available discount available for early payment of Real Estate Taxes. Real Estate Taxes are to be prorated for any tax year only a portion of which is included within the Initial Term or any Renewal Term.

(b) Contest of Real Estate Taxes. Landlord agrees to use reasonable efforts to minimize Real Estate Taxes. “Reasonable efforts” shall include the obligation to seek a

 

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reduction in Real Estate Taxes from the taxing authority if the value of the Premises assessed by the taxing authority would be considered excessive as compared to similar property in the county where the Premises is located.

(c) Exclusions from Real Estate Taxes. The following are specifically excluded from Real Estate Taxes: penalties or interest or other charges for late payments of Real Estate Taxes, any income, personal property, excess profits, gross receipts, margin, estate, single business, inheritance, succession, transfer, franchise, corporate, capital or other tax or assessment levied or assessed against Landlord or the Rent payable under this Lease or any connection, capacity, turn-on, impact or other similar fees, assessments or charges incurred in connection with the initial construction or any subsequent improvements or renovation of or to the Project. All unpaid, unassessed or other Real Estate Taxes, including, but not limited to so called “rollback taxes”, which relate to the period prior to the Commencement Date (collectively, “Pre-Commencement Date Taxes”) shall not be included in Real Estate Taxes, payable by Tenant under this Lease. This Sub-Section is not intended as an exclusive list of items excluded from Real Estate Taxes In the event of a conflict or inconsistency between this Sub-Section and Sub-Section (a) above this Sub-Section controls.

(d) Pro-rata Share of Real Estate Taxes. Tenant share of Real Estate Taxes is One Hundred percent (100%) of the Real Estate Taxes assessed against the Premises.

B. Taxes on Tenant’s Personal Property. Tenant shall be responsible for and shall pay directly to the taxing authority and before delinquency all municipal, county, state and federal personal property taxes assessed during the Term of this Lease against Tenant’s personal property at or used in connection with the Premises.

C. Monthly Installments. Tenant shall pay, in equal monthly installments, together with its installment of monthly Base Rent one-twelfth (1/12) of the estimated amount of its pro-rata share of Real Estate Taxes for each calendar year. Landlord may adjust Tenant’s monthly estimated installment of Real Estate Taxes annually. Any payments due by Tenant with respect to the Declaration shall be due and payable within 30 days of Tenant’s receipt of a statement and any applicable documentation as to such charges from Landlord.

D. Annual Reconciliation.

(a) Annual Statement. Within one hundred twenty (120) days following the end of each calendar year (“Accounting Year”), Landlord shall deliver to Tenant an itemized breakdown certified as true and correct by an authorized representative of Landlord showing the actual costs for Real Estate Taxes, together with copies of all bills for Real Estate Taxes for the current year (the “Annual Statement”). Tenant will continue to make monthly payments based upon its estimated installment of Real Estate Taxes for the prior Accounting Year, until the installment due at least thirty (30) days after Tenant receives the Annual Statement with its new estimated installment of Real Estate Taxes.

(b) Request for Back-Up Materials. Within ten (10) days following a request from Tenant, Landlord will deliver to Tenant such additional materials and

 

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documentation as Tenant may reasonably request to support the Real Estate Taxes as reflected on the Annual Statement (a “Back-up Request”).

(c) Annual Adjustment. If the actual costs for Real Estate Taxes exceeds the amount paid by Tenant in any Accounting Year (an “Underpayment”), then within thirty (30) days after receipt of the Annual Statement and any additional information that was the subject of a Back-up Request by Tenant, Tenant shall pay to Landlord the amount of the Underpayment. If the actual costs for Real Estate Taxes is less than Tenant’s payments for any Accounting Year (an “Overpayment”), then Landlord shall pay to Tenant the amount of the Overpayment concurrently with the delivery of the Annual Statement.

(d) Dispute over Annual Statement. Subject to Tenant’s right to request and receive additional information pursuant to a Back-up Request and Tenant’s audit rights provided for below, if Tenant disputes the accuracy of the Annual Statement, Tenant shall still pay the amount shown owing.

E. Audits.

(a) Right to Audit and Reconciliation. Tenant, its agents and accountants, shall have the right to examine and audit Landlord’s books, records and related supporting materials (“Landlord’s Books and Records”) relating to any Real Estate Taxes paid by Tenant under this Lease, upon not less than twenty (20) days prior written notice to Landlord. If Tenant’s audit of Landlord’s Books and Records confirms that the amounts shown on the Annual Statement or other invoice or bill from Landlord are five percent (5%) or more higher than the actual amount owed by, Tenant under this Lease, Landlord shall, within twenty (20) days of Tenant’s demand, reimburse Tenant for all reasonable costs and expenses of the audit, less the results of the audit are disputed in good faith by Landlord in which case the following sentence shall apply. Any overpayment or underpayment of Real Estate Taxes shall be adjusted by the parties (by payment) within twenty (20) days after the audit is completed, unless the audit results are disputed in good faith by Landlord in which event the adjustment will occur and, if Tenant is entitled under the preceding sentence, Tenant’s costs and expenses for the audit will be reimbursed, within twenty (20) days of the resolution of the dispute.

(b) Conditions of Audit. Tenant’s right to audit shall be subject to the following restrictions: (i) any audit shall be conducted, during normal business hours, at Landlord’s business offices (in the continental United States) where the books and records are customarily kept; (ii) Tenant’s right to initiate an audit for any Accounting Year shall expire thirty-six (36) months after Tenant’s receipt of Landlord’s Annual Statement for such Accounting Year; provided that if a discrepancy of more than five percent (5%) is found in any audit Tenant may audit the prior Accounting Year, notwithstanding the expiration of such thirty-six (36) month period; and (iii) except as provided for above, the audit shall be at Tenant’s cost.

(c) Books and Records. Landlord’s Books and Records shall be complete and accurate and kept in accordance with generally accepted accounting principles consistently applied, and shall be made available to Tenant as provided for in this Section.

 

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2.3 SALES AND SIMILAR TAXES ON RENT. Tenant shall pay to Landlord all,sales, excise, rental and use taxes imposed by law on the monthly Base Rent and Additional Rent provided for in this Lease, which are customarily paid by tenants in the state in which the Premises are located.

2.4 COMMENCEMENT AND PRORATION OF RENT. Tenant’s obligation to pay Base Rent and Real Estate Taxes (sometimes collectively referred to in this Lease as “Rent”) shall not commence until the Commencement Date, When any Rent due hereunder is calculated based upon a period (e.g., a month, calendar year or tax year), only a portion of which falls within the Initial Term or any Renewal Term, the amount will be prorated based upon the number of days in such period that fall within the Initial Term or any Renewal Term compared to the total number of days in such period.

2.5 PLACE FOR PAYMENT OF RENT. Base Rent and the Additional Rent provided for in this Lease shall be sent by Tenant to Landlord at the address set out in Section 16.1 or to such other address as Landlord may designate to Tenant by at least twenty (20) days prior written notice to Tenant.

ARTICLE III - UTILITIES

3.1 UTILITY SERVICE.

A. Tenant’s Utilities. Tenant shall contract in its own name with the utility provider for electric service, gas service, cable television service, sewer and water service and telephone service for the Premises (collectively the “Tenant Paid Utilities”).

ARTICLE IV - USE AND OPERATION

4.1 USE OF LEASED PREMISES.

A. Permitted Use. The Premises may be used by Tenant for the purpose of a table service restaurant and all uses ancillary thereto (which may include, at Tenant’s option, all or any number of the following: a bar area, the sale of alcoholic beverages, ancillary merchandise sales, or live entertainment), or with Landlord’s prior written consent, for any other use permitted by law (the “Permitted Use”). For purposes of this Lease, a “table service” restaurant shall mean any restaurant where (i) food or drink orders are taken from customers at the customers’ table; (ii) a check is delivered to customers at the customers’ table; or (iii) food or drinks are delivered to customers at the customers’ table.

B. Initial Permitted Use. Tenant intends to initially open at the Premises as a “LeeRoy Selmon’s” (the “Intended Use”), but Tenant has the right to change the operating format at the Premises as provided in the following Section.

C. Change in Operating Concept. Tenant hereby reserves the right to change, from time to time its restaurant concept (a “Concept Change”) and/or operating format at the Premises, so long as (i) the Premises shall continue to be used for the Permitted Use: (ii) Tenant does not operate a restaurant which duplicates the predominate or primary featured food type or ethnic cuisine (as more particularly described in Paragraph 1.4D(d) of a restaurant

 

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existing in the Project at the time of Tenant’s Concept Change Notice (as defined below); (iii) Tenant does not operate a restaurant which violates one of the exclusives (the “Existing Exclusives”) currently existing in favor of another tenant of the Project to the extent then still in effect and (iv) Tenant does not violate an exclusive then in existence in favor of a non-food facility. The Existing Exclusives are listed on Exhibit “A-3.” Duplication of a primary featured food concept will only be deemed to exist if both restaurants would be generally identified by the public as having the same predominate or primary featured food type or ethnic cuisine. Examples of restaurants which have a predominate or primary featured food type or ethnic cuisine include restaurants clearly identifiable as Italian restaurants, Mexican restaurants, French restaurants, seafood restaurants, and steakhouses Varied menu themed restaurants, such as Chili’s, Friday’s and Applebee’s do not have a predominate or primary featured food type or ethnic cuisine.

D. Concept Change Notice. At least thirty (30) days prior to a Concept Change, Tenant will provide written notice to Landlord (a “Concept Change Notice”) of the Concept Change. Landlord shall within ten (10) days of its receipt of a Concept Change Notice notify Tenant if the proposed use would violate Section 4.1C, above. If no such notice is given, the proposed use shall be deemed not to violate Section 4.1C above. In no event will changes to an existing restaurant format (for example menu modifications or a change in the trade name) be deemed to be a Concept Change; a Concept Change is intended to include only a change from one restaurant concept to another (for example, from a steakhouse to an Italian restaurant).

E. Operation. While in operation, Tenant shall operate its business in an efficient, high class and reputable manner. Subject to the provisions of Section 4.5, Tenant shall have the right to cease operations at the Premises, provided that during any closure Tenant will continue (regardless of whether or not it is operating) to fulfill its obligations under this Lease, including the payment of Rent and the performance of Tenant’s maintenance obligations.

4.2 RULES RELATING TO TENANT’S OPERATION.

A. Use of the Premises. Tenant agrees (i) to keep the Premises neat, clean, sanitary and reasonably free from dirt, rubbish, insects and pests at all times; (ii) not to operate an incinerator or burn trash or garbage within the Premises; (iii) not to use or maintain the Premises in such a manner as to constitute an actionable legal nuisance against Landlord, or which in a manner that produces noise, vibrations or odors (other than restaurant odors) that violate the quiet enjoyment of other tenants of the Project; (iv) not to commit or permit waste of the Premises; and (v) to maintain the inside of the Premises at a temperature sufficiently high to prevent freezing of water pipes and fixtures inside the Premises.

B. Use Restrictions. Tenant agrees (i) not to solicit business in the parking area or distribute handbills or other advertising material upon automobiles parked in the parking area (“Solicitations”); (ii) to keep the areas as to which Tenant has an exclusive use right pursuant to its Appurtenant Use Rights, in a neat, clean, and sanitary condition, given the applicable use; and (iii) not to store or keep trash and garbage or property of Tenant, except pursuant to this Lease or the Appurtenant Use Rights.

C. Satellite Equipment. Tenant shall have the right to install a satellite dish or antenna and other voice or data transmission and receiving devices and related facilities

 

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(collectively, the “Satellite Equipment”) on the exterior wall or the roof of the Premises. In connection with the Satellite Equipment, Tenant agrees as follows: (i) the location of the Satellite Equipment shall be subject to Landlord’s approval; (ii) Landlord may require that any installation or maintenance work for the Satellite Equipment that involves the penetration of the roof be done by a contractor selected by Landlord, so long as the contractor is available at a reasonable and competitive price and can meet Tenant’s installation schedule; and (iii) Tenant will operate the Satellite Equipment in compliance with applicable Laws (as defined in Sub-Section 4.2B) and Tenant will be responsible for obtaining any permits and licenses required for the operation of the Satellite Equipment. Tenant also agrees to take commercially reasonable steps to insure that its operation of the Satellite Equipment will not interfere with other similar equipment operated by Landlord or other tenants of the Project and Landlord agrees to take commercially reasonable steps to ensure that other similar equipment operated by Landlord or other tenants of the Project will not interfere with the operation of the Satellite Equipment.

D. Music System. Tenant may install and operate a music and intercom system on the exterior of the Premises (the “Music System”). In connection with the Music System, Tenant agrees that (i) the Music System will be operated only at reasonable volume levels so as not to unreasonably disturb other tenants and occupants of the Project and (ii) songs with lyrics generally considered offensive will not be played from the Music System.

4.3 GOVERNMENTAL LAWS AND REGULATIONS.

A. Compliance by Tenant. Tenant shall comply with all Federal, State and local laws, ordinances, codes, orders and regulations (collectively, “Laws”) relating to (i) Tenant’s business operations within the Premises; (ii) any work performed by Tenant; and (iii) the areas to be maintained or repaired by Tenant under this Lease.

B. Compliance by Landlord. Landlord shall comply with all Laws relating to (i) Landlord’s ownership or operation of the Project, (ii) any work performed by Landlord, and (iii) any areas to be maintained or repaired by Landlord under this Lease. Landlord represents and warrants to Tenant that it has not received any notice of any violation of Laws with respect to the Project and that, to the best of its knowledge, the Project is in compliance with all Laws.

C. Fines and Penalties. Each of Landlord and Tenant shall be responsible for and defend the other against any penalties or fines imposed and any related claims asserted as a result of its violation of applicable Laws.

D. Trespassing. At the request of Tenant and to the extent permitted under applicable Laws, Landlord agrees to take commercially reasonable measures to remove from the Project any person engaging in picketing, hand billing, solicitation of Tenant’s employees, or other demonstrations.

4.4 LIENS.

A. Tenant Liens. Tenant shall have no power or authority to subject Landlords interest in the Premises or any other portion of the Project to any construction,

 

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mechanic’s or materialmen’s liens of any kind (each, a “Construction Lien”). If any Construction Lien is filed against Landlord’s interest in the Premises or any other portion of the Project as a result of work performed by Tenant or materials or services provided to Tenant, Tenant shall, within thirty (30) days of a demand from Landlord discharge the Construction Lien by payment, transferring the lien to a bond or other security, or by such other method as may be available under applicable Laws.

B. Landlord Liens. Landlord shall have no power or authority to subject Tenant’s interest in the Premises or Tenant’s Personal Property to any Construction Lien. If any Construction Lien is filed against Tenant’s interest in the Premises or Tenant’s Personal Property as a result of work performed by Landlord or materials or services provided to Landlord, Landlord shall, within thirty (30) days of a demand from Tenant discharge the Construction Lien by payment, transferring the lien to a bond or other security, or by such other method as may be available under applicable Laws.

C. Failure to Discharge. If either Landlord or Tenant fails to comply with its lien discharge obligations under this Section, the other may discharge the subject Construction Lien(s) and the reasonable costs and expenses incurred in connection therewith shall be due from the other party to the discharging party within ten (10) days of demand for payment accompanied by reasonable evidence of the cost and expenses incurred to accomplish such discharge.

4.5 RECAPTURE FOR FAILURE TO OPERATE.

A. Right of Recapture. In the event that Tenant ceases to operate in the Premises for more than thirty (30) consecutive days (a “Closure”), Tenant shall, within ninety (90) days after the Closure, provide written notice to Landlord (a “Closure Notice”) that either (i) the Closure is temporary and Tenant (or an assignee or subtenant to whom this Lease may be assigned or the Premises sublet without Landlord’s consent pursuant to Section 8.3 of this Lease) intends to reopen in the Premises (a “Temporary Closing”); or (ii) Tenant intends to attempt to assign this Lease or to sublet the Premises to an unaffiliated third party (a “Permanent Closing”). If (a) Tenant gives the notice of a Temporary Closing and the Premises has still not reopened by the date which is Three Hundred (300) days from the Closure Notice provided that Tenant shall be granted two (2) thirty (30) day extensions so long as Tenant (or a assignee or subtenant to whom the Premises may have been assigned or sublet) has commenced the renovation or remodeling of the Premises and is diligently pursuing the same to completion (the “Reopening Period”), (b) Tenant gives notice of a Permanent Closing, or (c) Tenant fails to give the Closure Notice, in any such event, Landlord shall have the right (the “Recapture Right”) to terminate Tenant’s interest in the Lease in accordance with the provisions set out below.

B. Exercise of Recapture Right. Landlord shall exercise the Recapture Right by written notice to Tenant (the “Exercise Notice”) given within thirty (30) days of (i) Landlord’s receipt of the Closure Notice in the event of a Permanent Closing or (ii) the end of the Reopening Period in the event of a Temporary Closing, or (iii) Tenant’s failure to deliver the Closure Notice when required hereunder and such failure continues for ten (10) days following written notice from Landlord to Tenant of such failure, whichever is applicable. This Lease shall terminate on the thirtieth (30th) day following receipt of the Exercise Notice (the “Recapture Date”) and Rent shall be prorated as of the Recapture Date. Tenant agrees to remove its

 

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proprietary signage and any of its personal property which this Lease requires be removed upon the expiration of the Term of this Lease prior to the Recapture Date. Tenant may also remove all other property of Tenant that this Lease allows Tenant to remove upon the expiration of the Term of this Lease. Following the Recapture Date neither Landlord nor Tenant shall have any further liability under this Lease, except for (i) obligations winch accrued prior to the Recapture Date and (ii) Tenant’s obligation to repair any damage to the Premises caused by the removal of its property as provided for above. If Landlord fails to exercise the Recapture Right as set forth herein, this Lease shall continue in full force and effect and Landlord shall have no further rights under this Section 4.5, as to such Closure.

In the event Landlord has not elected to recapture the Premises as set forth herein, and if the Premises have not reopened and no assignment or sublease has occurred on or before the date which is three hundred sixty (360) days from the expiration of such 30-day period, Landlord shall again have a Recapture Right to be exercised by giving an Exercise Notice within the thirty (30) day period following the 360-day period. Thereafter, so long as the Premises have not reopened and no assignment or sublease has occurred, Landlord shall have a Recapture Right after each successive 360-day period to be exercised by giving an Exercise Notice within the thirty (30) days period following each 360-day period. Notwithstanding Landlords right to exercise its Recapture Right every 360 days as provided for above, if Landlord provides the Exercise Notice, Tenant shall have the right to nullify the Exercise Note by providing to Landlord evidence that Tenant is in active negotiations to assign this Lease or sublease the Premises (which may be evidenced either by ongoing negotiations or a signed Letter of Intent), in which event the Exercise Notice shall be rendered void and of no effect. Once this Lease is assigned or the Premises subleased to a third party, Landlord shall have the Recapture Right if the assignee or subleasee does not open for business within three hundred sixty day (360) days from the effective date of the assignment or sublease, to be exercised by giving an Exercise Notice within the thirty (30) day period following the 360-day period; provided that the foregoing three hundred sixty day period shall be extended by periods that would constitute a Permitted Closure under Section 4.5C.

C. Permitted Closures. For purposes of this Section, the following shall be “Permitted Closures” and shall not constitute a “Closure” or be counted toward the Reopening Period: (i) any period during which the normal operation of business at the Premises is not practical as a result of damage by fire or other casualty; (ii) any period during which the normal operation of business at the Premises is not practical as a result of a taking by eminent domain or other governmental action; (iii) reasonable periods for remodeling, alterations and repairs, including related permitting time; and (iv) any period during which Landlord is not in compliance with its obligations under this Lease, beyond any applicable notice and cure period.

D. Interpretation. Time is of the essence as to all time periods in this Section. A failure to operate is not a default under this Lease and this Section sets out Landlord’s sole remedies for a failure of Tenant to operate at the Premises.

ARTICLE V - IMPROVEMENTS

5.1 LANDLORD’S WORK. The Premises is tendered to Tenant in an “as-is” condition.

 

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5.2 TENANT’S WORK. This Section sets out work to be performed by Tenant, at Tenant’s sole cost and expense. The term “Tenant’s Work” means all the work to the Premises required to prepare the Premises for Tenant’s use (“Tenant’s Work”).

A. Tenant’s Approved Plans. Tenant shall prepare and submit to Landlord plans and specifications for Tenant’s Work, to include Tenant’s floor plan and elevation electrical panel schedules, load calculations, HVAC equipment specifications, system diagrams (ductwork diffusers), a reflective ceiling plan or plans for any other work requiring Landlord’s approval (“Tenant’s Preliminary Plans”). Landlord and Tenant will act in a good faith and responsive manner to agree upon plans and specifications for the Tenant’s Work (as agreed upon by Landlord and Tenant, “Tenant’s Approved Plans”).

B. Third Party Approvals. If Tenant’s plans and specifications or any portion of Tenant’s Work (including, but not limited to, Tenant’s signage) requires the consent or approval of any third party (a “Third Party Approval”), other than the applicable governmental authorities (e.g., another tenant, another owner, an association or an architectural review committee or board), Tenant shall be responsible to obtain each required Third Party Approval.

C. Performance of Work. All of Tenant’s Work will be performed (i) in a good and workman-like manner using first quality new materials and labor; (ii) in substantial accordance with Tenant’s Approved Plans; and (iii) in accordance with all applicable Laws.

D. Insurance. Tenant agrees to carry (or cause to be carried) during the performance of Tenant’s Work: (i) liability insurance in an amount of not less than one million dollars ($1,000,000) covering claims for personal injury and property damage arising out of Tenant’s Work and naming Landlord as an additional insured, (ii) and worker’s compensation insurance as required by Law.

E. Construction Rules. In connection with the Tenant’s Work, Tenant agrees (i) not to erect or maintain any barricade or scaffolding which obscures the signs, entrances or show windows of any other tenant in the Project; (ii) not to unreasonably interfere with access to any such other tenant’s business; (iii) not to allow Tenant’s construction materials or debris to obstruct the walkways of the Project; and (iv) to remove any of Tenant’s construction debris that may be blown or otherwise deposited in the parking or landscapes areas of the Project (other than within Tenant’s Staging Area).

F. Initial Exterior Appearance. Attached to this Lease as Exhibit “C” is a conceptual elevation of the Premises (the “Conceptual Elevations”), which Landlord has approved.

G. Signage. Tenant is hereby granted, for the entire Term, the right (the “Signage Rights”) to install and maintain the signage (“Tenant’s Signage”) as set out below in this Section.

(a) Building Signage. Tenant shall have the right to install and maintain upon the exterior of the Premises the maximum signage that Tenant is entitled to under applicable code (with any available variance or other special approvals); provided that if Tenant

 

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intends to install building signs other than on the exterior, of the Premises itself, Landlord’s approval of the location shall be required.

(b) Free Standing Sign. Subject to Tenant obtaining all applicable governmental permits and approvals, Tenant shall have the right to install and maintain a free standing sign for its exclusive use on the Premises or such other location as may, from time to time, be proposed by Tenant and approved by Landlord.

(c) Multi-Tenant Sign. Tenant shall have the right to install and maintain a panel on each side of the Project multi-tenant sign (the “Multi-Tenant Sign”).

(d) Other Signs. Tenant shall have the right to place its proprietor, credit card, hours of operation, and its other standard informational signage on the front entrance or windows of the Premises.

(e) Sign Approval and Standards. All of Tenant’s Signage shall be subject to Landlord’s approval. All of Tenant’s Signage shall be in kept in a well maintained and attractive condition and in compliance with all applicable Laws.

5.3 ALTERATIONS, ADDITIONS AND IMPROVEMENTS. During the Term of this Lease, Tenant shall have the right to make alterations, additions and improvements to the interior or exterior of the Premises; provided that, except as otherwise expressly provided for in this Lease, any alterations, additions or improvements (i) to the exterior of the Premises; (ii) to the structural portions of the Premises; and (iii) which involve the alteration of the base building plumbing, electric or HVAC systems which serve, in addition to Tenant, other tenants of the Project, shall not be made by Tenant without the prior written consent of Landlord.

5.4 OWNERSHIP OF IMPROVEMENTS. During the Term of this Lease, Tenant shall be considered for all purposes to be the owner of the improvements constructed at the Premises by Tenant (“Tenant’s Improvements”) and Tenant alone shall be entitled to all available tax deductions on its Federal and State income tax returns for the depreciation and other expenses related to the Tenant’s Improvements. Upon the expiration of the Term or termination of this Lease, the Tenant’s Improvements shall become the property of Landlord. The Improvements do not include Tenant’s Personal Property.

ARTICLE VI - MAINTENANCE OBLIGATIONS

6.1 MAINTENANCE BY TENANT.

A. General Maintenance Obligation. Tenant shall at Tenant’s sole cost and expense (except as hereinbelow provided) at all times keep and maintain (or cause to be kept and maintained) the Premises, including the Improvements located thereon, in good order, condition and repair (including needed replacements) and in a neat, clean and attractive condition. Tenant’s maintenance obligations shall include any Patio Area, exterior painting and other exterior maintenance of the Building including the roof, all glass and windows, all interior maintenance, including lighting, electrical equipment plumbing fixtures and equipment, Tenant’s grease trap, including the utilities and plumbing system up to and including the connections to the Premises,

 

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landscaping, sprinkler systems, pavement and striping of parking areas, and adequate lighting in the parking areas located within the Premises. Landlord shall, whenever possible, extend to Tenant the benefit of any available manufacturer’s or other warranties. Any replacements shall be made using materials and equipment of similar or superior quality as the original.

B. Service Contracts. Unless Tenant has established its own internal program, Tenant shall obtain service contracts to provide for (i) the regular maintenance of the heating, ventilating and air conditioning system exclusively serving the Premises; and (ii) regular pest inspections and treatment, as needed.

C. Trash Removal. Tenant shall contract for the pick-up and disposal, at regular intervals, of the trash produced at the Premises, so that there is no accumulation of trash that cannot be accommodated by Tenant’s dumpster or other trash containers.

D. Access for Maintenance. Tenant shall have the ongoing right of access for the repair, maintenance and replacement of any Support Installations or other items located outside the Premises which Tenant is obligated to maintain under this Lease. Tenant agrees to conduct its access in a manner so as not to unreasonably disturb other tenants of the Project or interfere with their business operations. Except in an emergency situation, if Tenant requires access to another tenant’s premises, Tenant agrees to obtain the prior consent of Landlord or the applicable tenant.

6.2 ADDITIONAL CONSTRUCTION. On and after the Commencement Date, except for any work by Landlord (or on Landlord’s behalf) in the Permitted Building Area as provided in Section 1.4C, Landlord shall not during Tenant’s business hours, except to the extent required for emergency repairs, engage in or allow any construction activities or utilize any area for construction staging that would adversely impact ingress and egress to and from the Premises; disturb customers; create an unsightly condition; or otherwise interfere with the operation of Tenant’s business at the Premises in some material respect. All such work, including emergency repairs, shall be conducted (i) in a manner to minimize any interference with Tenant’s business operations and its customers’ and employees’ use of the Premises or Tenant’s Appurtenant Use Rights, and (ii) to the extent practical, outside Tenant’s business hours.

ARTICLE VII - INSURANCE AND INDEMNITY

7.1 TENANT’S INSURANCE. Tenant shall, during the Term of this Lease, maintain insurance coverage in accordance with this Section.

A. Tenant’s Liability Insurance. Tenant will keep in force, throughout the Term of this Lease, commercial general liability insurance (or substantially equivalent liability insurance or another type of comprehensive liability insurance policy then in common use) with respect to the Premises and the business operated by Tenant at the Premises. Tenant’s liability insurance will (i) be in an amount of not less than Two Million Dollars ($2,000,000), which may include primary, excess and umbrella policies, and (ii) name Landlord as an additional insured, as to occurrences in the Premises.

 

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B. Tenant’s Property Insurance. Tenant will keep in force, commencing on the date Tenant actually takes possession of the Premises and continuing throughout the Term of this Lease; special form (formerly known as “all risk”) property insurance (or substantially equivalent property insurance or another type of broad form property insurance policy then in common use) with respect to the Premises (including the Improvements), Tenant’s Improvements and Tenant’s Personal Property in the Premises. Tenant’s property insurance will be in at least an amount as is required to avoid the application of any co-insurance provision that its property insurance may be subject to. Tenant’s property insurance policies will show Landlord as a loss payee, as its interest may appear.

C. Tenant’s Employers’ Liability Insurance. Tenant shall, throughout the Term of this Leasemaintain such workers compensation or employer’s liability insurance as may be required by applicable Laws

D. General Insurance Requirements. Tenant’s required liability insurance and property insurance shall (i) be issued by companies licensed to do business in the State in which the Premises are located and rated A- / VII or better in the then most current issue of Best’s Insurance Reports, and (ii) provide for at least ten (10) days notice to Landlord before cancellation. Tenant is not required to carry separate insurance policies for the Premises, and all of Tenant’s insurance may be under polices which cover multiple locations.

E. Certificates of Insurance. Tenant will furnish Landlord with certificates of the insurance Tenant is required to carry within ten (10) days after written request by Landlord.

F. Deductibles and Self-Insurance. Tenant’s insurance may include a self-insured retention or deductible (a “Self-Insured Amount”), which will be of a commercially reasonable amount given the size and financial strength of Tenant and the affiliated group of entities of which Tenant is a part that are covered under the same insurance program; provided that if Tenant elects to totally self-insure, Tenant and the affiliated group of entities of which Tenant is a part must have a combined tangible net worth of at least twenty-five (25) times the amount required under this Lease that is self-insured (i.e., $25,000,000 for each $1,000,000 of insurance required under this Lease which is within the Self-Insured Amount).

7.2 LANDLORD’S INSURANCE COVERAGE. Landlord shall, during the Term of this Lease, maintain insurance coverage in accordance with this Section.

A. Landlord’s Liability Insurance. Landlord will keep in force, throughout the Term of this Lease, commercial general liability insurance (or substantially equivalent liability insurance or another type of comprehensive liability insurance policy then in common use) with respect to the Project and its operation. Landlord’s liability insurance will (i) be in an amount of not less than Two Million Dollars ($2,000,000), which may include primary, excess and umbrella policies.

B. Landlord’s Employers’ Liability Insurance. Landlord shall, throughout the Term of this Lease, maintain such workers’ compensation or employers’ liability insurance as may be required by applicable Laws.

 

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C. General Insurance Requirements. Landlord’s required liability insurance and property insurance shall (i) be issued by companies licensed to do business in the State in which the Premises are located and rated A- / VII or better in the then most current issue of Best’s Insurance Reports, and (ii) provide for at least ten (10) days notice to Tenant before cancellation. Landlord is not required to carry separate insurance policies for the Project, and all of Landlord’s insurance may be under polices which cover multiple locations.

D. Deductibles and Self-Insurance. Landlord’s insurance may include a Self-Insured Amount, which will be of a commercially reasonable amount given the size and financial strength of Landlord and the affiliated group of entities of which Landlord is a part that are covered under the same insurance program provided that if Landlord elects to totally self-insure, Landlord and the affiliated group of entities of which Landlord is a part must have a combined tangible net worth of at least twenty-five (25) times the amount required under this Lease that is self-insured (i.e., $25,000,000 for each $1,000,000 of insurance required under this Lease which is within the Self-Insured Amount).

7.3 INDEMNITY.

A. Tenant Indemnity. Tenant shall indemnify, hold harmless and defend Landlord from and against any and all suits, claims, actions, damages, liabilities and expenses, including reasonable attorneys’ fees (collectively, “Claims and Damages”) arising out of (i) any loss of life, personal injury and/or damage to property occurring within the Premises or resulting from the wrongful or negligent acts or omissions of Tenant, its officers, contractors, agents or employees (acting within the scope of their office, contract, agency or employment), (ii) Tenant’s breach of any representation or warranty of Tenant under Article XIII, or (iii) Tenant’s failure to maintain the Premises in accordance with applicable Laws to the extent within its obligations under this Lease.

B. Landlord Indemnity. Landlord shall indemnify, hold harmless and defend Tenant from and against any and all Claims and Damages arising out of (i) any loss of life, personal injury and/or damage to property resulting from the wrongful or negligent acts or omissions of Landlord, its officers, contractors, agents or employees (acting within the scope of their office, contract, agency or employment); (ii) Landlord’s breach of any representation or warranty of Landlord under Article XIII; or (iii) Landlord’s failure to maintain the Project in accordance with applicable Laws to the extent within its obligations under this Lease.

C. Limitation on Indemnity. The obligation of each party to indemnify, hold harmless and defend the other will not apply to the extent of any Claims or Damages which are the direct result of such other party’s negligence or willful misconduct or that of its agents, employees or contractors.

ARTICLE VIII - ASSIGNMENT AND SUBLETTING

8.1 ASSIGNMENT.

A. Consent of Landlord. Except as specifically provided in this Article, Tenant may not assign this Lease without the prior written consent of Landlord. Any transfer of Tenant’s interest in this Lease by operation of law, regardless of whether the same is

 

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characterized as voluntary or involuntary, shall be construed as an “assignment” governed by this Article. Landlord’s consent to any one assignment shall not act as a waiver of the requirements of Landlord’s consent with respect to any subsequent assignment.

B. Assumption of Lease. In connection with any assignment of this Lease, the assignee shall be entitled to all the rights and shall assume all the obligations of Tenant under this Lease pursuant to an assumption agreement in a form reasonably acceptable to Landlord.

C. Consent Criteria. Landlord shall not withhold its consent to a proposed assignment by Tenant so long as the proposed assignee (i) agrees in writing to be bound by all of the terms and conditions of this Lease; (ii) intends a use of the Premises which is within the Permitted Use; (iii) demonstrates, to Landlord’s reasonable satisfaction, prior experience in operating the Permitted Use; and (iv) demonstrates, to Landlord’s reasonable satisfaction, adequate financial resources to meet the obligations of Tenant under this Lease.

D. Assignment Prior to a Closure. In the event that Tenant requests Landlord’s consent to an assignment of this Lease to an unaffiliated third party (excluding any entity described in Section 8.3 below) and at the time the consent is requested, Tenant is still operating within the Premises (or if closed, and Tenant has not provided Landlord with a Closure Notice pursuant to Section 4.5), Landlord may require, by notice to Tenant given within twenty (20) days of receipt of Tenant’s request (the “Closure Notice Request”), that Tenant deliver a Closure Notice pursuant to Section 4.5. If Landlord delivers a Closure Notice Request, Tenant shall, within twenty (20) days after receipt thereof, either (a) withdraw its request for an assignment or (b) deliver a Closure Notice pursuant to Section 4.5, If Tenant delivers the Closure Notice, Landlord shall have the right to exercise the Recapture Right for the period and otherwise in accordance with the terms provided for in Section 4.5. If Landlord requests and Tenant provides a Closure Notice pursuant to this Section, no Closure Notice shall be required as to any Closure that may occur between the time Tenant ceases business operations and the assignee opens for business.

8.2 SUBLETTING.

A. Consent of Landlord. Except as specifically provided in this Article, Tenant may not sublet all or any portion of the Premises, without the prior written consent of Landlord. Any subletting will be subject to all the terms of this Lease and no subletting will release Tenant from the primary responsibility for the performance of the obligations of the Tenant under this Lease. Landlord’s consent to any one subletting shall not act as a waiver of the requirements of Landlord’s consent with respect to any subsequent subletting.

B. Consent Criteria. Landlord shall not withhold its consent to an proposed assignment by Tenant so long as the proposed assignee (i) agrees in writing to be bound by all of the terms and conditions of this Lease; (ii) intends a use of the Premises which is within the Permitted Use; and (iii) demonstrates, to Landlord’s reasonable satisfaction, prior experience in operating the Permitted Use.

C. Sublease Rent. All rent and other consideration payable under any sublease shall be solely the property of Tenant.

 

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8.3 PROCEDURE FOR ASSIGNMENT OR SUBLETTING. If Tenant desires to assign this Lease or sublet all or any portion of the Premises to a third party that requires Landlord’s consent under this Lease, Tenant shall provide notice of the proposed assignment or subletting to Landlord (the “Request Notice”). The Request Notice shall include the name of the proposed assignee or subtenant and information based upon which Landlord can evaluate the proposed assignee or subtenant under the applicable consent criteria set out in this Article. Landlord shall have a period of ten (10) days from receipt of the Request Notice to request such additional reasonable information as may be reasonably required to evaluate the proposed assignee or subtenant under the applicable consent criteria set out in this Article (the “Information Request”). Landlord shall, within fifteen (15) days following the later of (i) the Request Notice, and (ii) its receipt of the additional information, if any, requested in a timely Information Request, to consent or deny (which denial shall include Landlord’s basis for such denial) the proposed assignment or subletting. If the proposed assignment or subletting is denied, Tenant may submit a supplemental request for Landlord’s consent, including information responding to Landlord’s basis for the denial and Landlord shall similarly respond to any supplemental request for its consent within fifteen (15) days following Landlord’s receipt thereof. If a proposed assignment is approved, Landlord agrees to execute a consent to such assignment within ten (10) days following its receipt of a proposed assignment document.

8.4 TRANSFER OF LANDLORD’S INTEREST. Landlord shall be entitled to sell or otherwise transfer the Project or portions of the Project without the consent of Tenant. Landlord shall not transfer only a portion of the Project, unless the portion transferred remains subject to the terms, covenants, conditions and restrictions of this Lease, including, but not limited to, Tenant’s Appurtenant Use Rights and the Use Restrictions by a recorded document, subject to no superior liens or interests which could result in its termination, which is directly enforceable by Tenant and which is otherwise in a form acceptable to Tenant.

8.5 RELEASE UPON TRANSFER.

A. Transfer by Landlord. The term “Landlord” shall mean the owner, for the time being, of the Premises, and in the event of the transfer by such owner of its interest in the Premises and the assumption of Landlord’s obligations hereunder by the transferee, then notwithstanding anything to the contrary contained herein, such transferring Landlord shall thereupon automatically be released and discharged from all covenants and obligations of the Landlord thereafter accruing under this Lease from and after the date of the transfer, but shall not be released from any liability that has accrued prior to the date of the transfer.

B. Transfer by Tenant. The term “Tenant” shall mean the holder, for the time being, of the leasehold interest created by this Lease, and in the event of the assignment of this Lease permitted by this Article VIII and the assumption of Tenant’s obligations hereunder by the assignee, then notwithstanding anything to the contrary contained herein such transferring Tenant shall thereupon automatically be released and discharged from all covenants and obligations of the Tenant thereafter accruing under this Lease from and after the date of the transfer, but shall not be released from any liability that has accrued prior to the date of the transfer.

 

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ARTICLE IX - DEFAULT

9.1 DEFAULT OF TENANT. Tenant shall be deemed to be in default under this Lease (a “Tenant Default”) upon the occurrence of any of the following: (i) Tenant’s failure to pay Rent or any other sums due to Landlord under this Lease when due, if the failure continues for more than ten (10) days following written notice from Landlord to Tenant of such failure; (ii) Tenant’s failure to perform any material covenant, promise or obligation contained in this Lease, if the failure continues for more than thirty (30) days following written notice from Landlord to Tenant of such failure, provided that if the failure cannot be cured within the thirty (30) day period, the thirty (30) day period shall be extended for such additional time as is needed to cure the failure using due diligence and all commercially reasonable measures; or (iii) Tenant’s voluntary petition for relief under any bankruptcy or insolvency law, the sale of Tenant’s interest under this Lease to satisfy a debt of Tenant by execution or other legal process, or the filing against Tenant of an involuntarily petition for relief under any bankruptcy or insolvency law which is not discharged within ninety (90) days after filing.

9.2 LANDLORD’S REMEDIES. Upon a Tenant Default Landlord may exercise the rights and remedies set out below.

A. Termination of Possession. Landlord may terminate Tenant’s right to possession under this Lease and reenter and retake possession of the Premises. Following the taking of possession, Landlord shall use commercially reasonable efforts to re-let the Premises on behalf of Tenant, at such rental and upon such terms and conditions as Landlord may, in the exercise of Landlord’s commercially reasonable discretion, deem best under the circumstances. Taking possession of the Premises by Landlord, as provided for in this Section, shall not be deemed a termination of this Lease or of Tenant’s obligations under this Lease and Tenant shall continue to make the Rent payments as they become due under the Lease. Following any re-letting of the Premises, Tenant shall pay to Landlord on a monthly basis the sum equal to (i) the Rent payable under this Lease for such month, plus the monthly amortization (over the term of the re-letting) of the cost of any brokerage commissions for the re-letting and the cost of any reasonable alterations made to accommodate the new tenant, less (ii) the rent received from the new tenant; provided that if the new tenant receives a rent abatement or substantially lower rent at the beginning of the re-letting, the rent for the re-letting shall be averaged over the term of the re-letting for purposes of the foregoing calculation. Tenant shall not be entitled to any of the excess of the rent from the re-letting over the Rent payable under this Lease, except as a credit against the sums due to Landlord.

B. Termination of Lease. Landlord may declare this Lease to be terminated, and reenter upon and take possession of the Premises by any lawful means, whereupon the term hereby granted and all right, title, and interest of Tenant in the Premises shall terminate. Following the termination of this Lease, Tenant shall have no further liability under this Lease, except that Landlord shall be entitled to recover from Tenant, as final and liquidated damages, the sum obtained by adding together all of the following: (i) all Rent which is accrued but unpaid under this Lease through the date of termination; (ii) the reasonable cost of making any repairs to the Premises needed on the date of termination, which were Tenant’s responsibility to make under this Lease, but which Tenant failed to make; (iii) attorneys’ fees and costs recoverable

 

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under Section 16.12; (iv) any unamortized (determined over the Initial Term) portion of any brokerage commission paid by Landlord in connection with this Lease; and (v) the present value (discounted using an annual rate equal to the annual yield on the United States Treasury Issue with a maturity date most closely matching the expiration date of the then Term of this Lease) at the time of termination, of the difference between the Base Rent for the then remaining Term of this Lease (the “Lease Base Rent”) and the fair market base rental value (assuming an Operating Expense and Real Estate Tax reimbursement equivalent to that provided for in this Lease) of the Premises for the then remaining Term of this Lease (the “Fair Market Base Rent”). The Fair Market Base Rent shall assume that the Premises is leased in its “as is” condition, as of the termination date, but after the repairs provided for in item (ii) above.

C. Remedies Cumulative and Non-Exclusive. The rights and remedies of Landlord set forth in this Section 9.2 and elsewhere in this Lease are cumulative and not exclusive and, except to the extent inconsistent with the express provisions of this Lease, are in addition to any remedies that Landlord may have under applicable law or in equity, including the right to injunctive relief, except that under no circumstances shall Landlord be entitled to accelerate payment of any Rent due hereunder except as set forth in Sub-Section B above.

9.3 DEFAULT OF LANDLORD. Landlord shall be deemed to be in default under this Lease (a “Landlord Default”) upon the occurrence of any of the following: (i) Landlord’s failure to pay any sums due to Tenant under this Lease when due, if the failure continues for more than ten (10) days following written notice from Tenant to Landlord of such failure; (ii) failure to perform any covenant, promise or obligation contained in this Lease if the failure continues for more than thirty (30) days following written notice from Landlord to Tenant of such failure, provided that if the failure cannot be cured within the thirty (30) day period and the failure does not prevent Tenant’s ordinary business operations at the Premises or cause the Premises not to be in compliance with applicable Laws and is not a violation of Section 1.4. the thirty (30) day period shall be extended for such additional time as is needed to cure the failure using due diligence and all commercially reasonable measures; or (iii) Landlord’s voluntary petition for relief under any bankruptcy or insolvency law, the sale of Landlord’s interest under this Lease to satisfy a debt of Landlord by execution or other legal process, or the filing against Landlord of an involuntary petition for relief under any bankruptcy or insolvency law which is not discharged within ninety (90) days after filing.

9.4 TENANT’S REMEDIES.

A. General Remedies. Upon a Landlord Default, in addition to the remedies set out below, Tenant may exercise all the rights and remedies provided to Tenant under applicable law or in equity, including the right to injunctive relief.

B. Offset Against Rent. If the Landlord Default is the result of the failure to pay any sum due to Tenant from Landlord under or in connection with this Lease, Tenant may offset the sum due from the Rent due under this Lease; provided that prior to offsetting any amount against Rent under this Lease, Tenant shall give written notice to Landlord (the “Offset Notice”), which shall include the amount of the offset claimed and the basis for the offset claimed. Landlord shall have the right to dispute, in accordance with this Section, any offset

 

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claimed by Tenant, except for an offset of a monetary judgment or an offset otherwise pursuant to a court order or an arbitration award. To contest an offset Landlord must, within ten (10) days of the Offset Notice, provide notice to Tenant that Landlord disputes all or a portion of the offset (the “Offset Dispute Notice”). Landlord may only give the Offset Dispute Notice if Landlord, in good faith, believes that Tenant is not entitled to all or any part of the offset claimed in the Offset Notice. Any Offset Dispute Notice shall outline the specific items of the offset objected to by Landlord (the “Disputed Charges”) and the specific reasons for the objection. To be effective, the Offset Dispute Notice must be accompanied by Landlord’s payment of the portion of the offset not disputed or include an authorization for Tenant to offset against Rent the portion of the offset not disputed. As to the Disputed Charges, the parties shall, within the thirty (30) day period following the Offset Dispute Notice, attempt to reach agreement upon the amount owed. During the dispute resolution period, including any arbitration, Tenant shall, subject to the other terms of this Lease, continue to pay the Rent otherwise due under this Lease. If the parties are unable to reach an agreement within the thirty (30) day period, the matter shall be settled by binding arbitration by an arbitrator agreed upon by the parties or, if the parties are unable to agree, by a neutral (i.e. having no prior association with either party) arbitrator appointed by the American Arbitration Association or local arbitration association. Any arbitrator shall be a licensed attorney with substantial experience in commercial leases. Landlord and Tenant agree to use diligent good faith efforts to have the arbitrator appointed within sixty (60) days following the Offset Dispute Notice and to complete the arbitration within one hundred twenty (120) days following the Offset Dispute Notice. All costs of the arbitration (including the fees of the arbitrator, but not attorneys’ fees) shall be paid by the non-prevailing party (as determined by the arbitrator). If the arbitrator does not make a determination that one party, or the other, is a “non-prevailing party”, then the costs of the arbitration shall be paid half by Tenant and half by Landlord. The amount finally agreed upon or found to be due Tenant by arbitration, together with any Late Fee and interest as provided for by Section 9.6, shall be paid within ten (10) business days of such agreement or finding, failing which Tenant may thereafter begin to offset all Rent due under this Lease until the entire amount due has been recovered.

C. Payment of Rent into Escrow. During the period (i) of any Landlord Default or (ii) following notice from Tenant of a failure of Landlord to comply with this Lease (even if not yet a Landlord Default) until the cure of the failure, if such failure is having any material adverse impact on Tenant’s business at the Premises, Tenant shall have the right to pay the Base Rent and Additional Rent due under this Lease into escrow (the “Default Escrow”) with a national title insurance company (the “Escrow Holder”). The Default Escrow will be a “joint order” escrow with disbursements requiring the consent of both Landlord and Tenant or a Court order or arbitration award. Tenant shall be deemed to have a lien against the sums in the Default Escrow to secure any claim for damages arising out of a Landlord Default and shall be entitled to apply the funds in the Default Escrow against any judgment or arbitration award obtained by Tenant. The payment of any Base Rent or Additional Rent into the Default Escrow shall be the equivalent of the payment of the Base Rent or Additional Rent to the Landlord for purposes of crediting Tenant with the payment under the Lease.

D. Monetary Judgment. Tenant shall have the right to offset the amount of any final judgment or arbitration award obtained against Landlord against all the Base Rent and Additional Rent due under this Lease until the full amount of such judgment or award has been satisfied.

 

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E. Remedies Cumulative and Non-Exclusive. The rights and remedies of Tenant set forth in this Section 9.4 and elsewhere in this Lease are cumulative and not exclusive and, except to the extent inconsistent with the express provisions of this Lease, are in addition to any remedies that Landlord may have under applicable law or in equity, including the right to injunctive relief.

9.5 SELF HELP.

A. Landlord’s Self Help Right. If (i) Tenant is in breach of any of the terms, covenants or conditions of this Lease and the breach is, in any material respect, adversely impacting the businesses or business operations of other tenants of the Project or their use of their Appurtenant Use Rights, as reasonably determined by Landlord; (ii) Landlord has served upon Tenant written notice of the breach; and (iii) Tenant has failed to promptly commence or once commenced has failed to diligently pursue to completion, using all commercially reasonable efforts, the cure of the breach, Landlord may following written notice to Tenant, itself take such action as Landlord deems reasonably necessary to cure or mitigate the impact of the breach. Tenant shall reimburse Landlord for all reasonably documented costs and expenses incurred by Landlord in connection therewith (“Landlord Cure Costs”), within thirty (30) days of a demand from Landlord accompanied by reasonable documentation of the Landlord Cure Costs. Landlord’s exercise of its remedy under this Sub-Section does not require that the failure constitute a Tenant Default, but may only be exercised by Landlord if Tenant is not pursuing the cure of the breach in the manner required by item (iii) above following the notice required by item (ii) above.

B. Tenant Self Help Right. If (i) Landlord is in breach of any of the terms, covenants or conditions of this Lease and the breach is, in any material respect, adversely impacting Tenant’s business, business operations or use of the Premises or Tenant’s Appurtenant Use Rights, as reasonably determined by Tenant (ii) Tenant has served upon Landlord written notice of the breach; and (iii) Landlord has failed to promptly commence or once commenced has failed to diligently pursue to completion, using all commercially reasonable efforts, the cure of the breach, Tenant may, following written notice to Landlord, itself take such action as Tenant deems reasonably necessary to cure or mitigate the impact of the breach. Landlord shall reimburse Tenant for all reasonably documented costs and expenses incurred by Tenant in connection therewith (“Tenant Cure Costs”), within thirty (30) days of a demand from Tenant accompanied by reasonable documentation of the Tenant Cure Costs. Tenant’s exercise of its remedy under this Sub-Section does not require that the failure constitute a Landlord Default, but may only be exercised by Tenant if Landlord is not pursuing the cure of the breach in the manner required by item (iii) above following the notice required by item (ii) above.

9.6 LATE FEES AND INTEREST.

A. Late Fees and Administrative Fees. If any sum due to Landlord or Tenant from the other is not paid within ten (10) days after its due date, a late fee (the “Late Fee”) equal to two and one-half percent (2  ¹/2%) of the late amount will be added to the amount due. In addition to any Late Fee due, an administrative fee (the “Administrative Fee”) of One Hundred Dollars ($100.00) shall be due from any party which gives to the other a check for the payment of sums due under this Lease which is returned for insufficient funds.

 

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B. Interest. Interest, at the Default Rate (defined below), shall accrue on any amount due and owing from either Landlord or Tenant to the other under this Lease, that is not paid within ten (10) days after notice from the party entitled to payment to the other that the amount is past due (which notice may be a default notice provided under this Lease). Following such ten (10) day period, interest, at the “Default Rate”, shall accrue, beginning retroactively as of the due date, on any amount remaining unpaid until paid. The Default Rate is an annual interest rate equal to the lesser of (a) the maximum rate permitted by law, or (b) the Prime Rate of interest (or the average thereof, if more than one) as published in the Money Rates section (or successor section) of the Wall Street Journal on the date such payment was due (or, if not a business day, the prior business day) plus five percent (5%). The same rights and remedies shall apply to the collection of any interest which accrues under this Section as apply to the collection of underlying amount due.

9.7 DELAY IN ENFORCEMENT. Any delay in the enforcement of the rights and remedies of Landlord or Tenant under this Lease following a default by the other, for whatever reason, shall not be deemed a waiver of, or otherwise prevent the later exercise of rights and remedies under this Lease at any time while the default is continuing, except to the extent such default was specifically waived in writing.

9.8 LIMITATIONS ON LANDLORD’S LIABILITY. Tenant agrees to look solely to Landlord’s interest in the Project and the rents, profits and insurance, condemnation and other proceeds from the Project for the satisfaction of any monetary judgment (or any other monetary obligation of Landlord to Tenant) and no other property or assets of Landlord shall be subject to levy, execution, or other judicial procedures for satisfaction of such monetary obligation. The foregoing limitation of liability shall not apply to claims by Tenant resulting from (i) Landlord’s failure to carry the insurance required under this Lease; (ii) Landlord’s misappropriation or misapplication of insurance or condemnation proceeds; or (iii) Landlord’s fraud or willful breach of this Lease. This Section is not intended to in any way limit Tenant’s right to obtain injunctive or other equitable relief.

ARTICLE X - ACCESS BY LANDLORD

10.1 RIGHT TO ENTER. Landlord or Landlord’s agents shall have the right to enter the Premises upon reasonable notice to Tenant (except to the extent required by emergency circumstances) and during Tenant’s non-business hours, accompanied by Tenant’s representative, to show the Premises to prospective purchasers of the Project and to make such reasonable repairs to the Premises as Landlord may deem necessary and which are Landlord’s responsibility (or Landlord is entitled to perform) under this Lease. During the ninety (90) day period immediately preceding the expiration of the Term, Landlord may show the Premises to prospective tenants during normal business hours, upon reasonable notice to Tenant and accompanied by Tenant’s representative.

10.2 CONDITIONS OF ENTRY. Any entry by Landlord within the Premises shall be subject to the following additional conditions: (i) Landlord’s entry (and any work within the Premises) shall be performed (except to the extent required by emergency circumstances) during Tenant’s non-business hours, excluding the hour before opening and after closing;

 

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(ii) Landlord’s entry (and any work within the Premises) shall be performed (except to the extent required by emergency circumstances) in a manner so as to minimize any adverse impact on Tenant’s business operations; (iii) Landlord shall promptly repair any damage to the Premises caused by its entry or work to Tenant’s reasonable satisfaction; (iv) Landlord shall (except to the extent required by emergency circumstances) complete any work in the Premises and have the area restored to its prior condition, to the extent possible, at least one hour prior to Tenant beginning business operations for the day; (v) any installation within the Premises shall be subject to Tenant’s approval, which may be withheld for (without limitation) aesthetic or operational concerns; (vi) Landlord shall otherwise conduct any entry and perform any work in a manner to minimize any adverse impact to Tenant’s use and enjoyment of the Premises; and (vii) to the extent Tenant is unable to conduct normal business operations as a result of any such entry, Tenant shall be entitled to a day for day abatement of all Rent due under this Lease.

ARTICLE XI - CONDEMNATION

11.1 CONDEMNATION.

A. Total Taking. If during the Term of this Lease, the whole of the Premises is taken or condemned, this Lease shall terminate on the date of such taking or condemnation and Landlord and Tenant shall be released from liability accruing after the date of termination. As used in this Article, a taking or condemnation includes a deed given or transfer made in lieu thereof.

B. Partial Taking / Termination by Tenant. If a portion of the Premises is condemned or taken in any manner or degree that, in any material respect, adversely impacts Tenant’s business or business operations (as determined by Tenant in its sole business judgment, not, however, to be arbitrarily exercised), then Tenant may elect to terminate this Lease as of the date of the vesting of title in the condemning authority, by written notice to Landlord given within sixty (60) days of the condemnation or taking.

C. Partial Taking / Termination by Landlord. If (i) more than twenty-five percent (25%) of the land area of the Project is condemned or taken, rendering the Project no longer viable (in Landlord’s reasonable business judgment); (ii) Landlord terminates all other leases in the Project, without the intent to enter into a new lease with any tenant; and (iii) as a result of such condemnation, Landlord intends to raze the Project and replace it with a development that would not accommodate a replacement for the Premises, then Landlord may elect to terminate this Lease as of the date of the vesting of title in the condemning authority, by written notice to Tenant given within sixty (60) days of the condemnation or taking.

11.2 AWARD. Landlord shall be entitled to that portion of the condemnation award attributable to Landlord’s fee interest. Tenant shall be entitled to that portion of the condemnation award attributable to Tenant’s leasehold interest, Tenant’s Improvements to the Premises, all business damages, and relocation costs. Landlord and Tenant shall fully cooperate with each other to accomplish the division provided for in the preceding sentence. Landlord and Tenant shall use good faith efforts to obtain separate awards from the condemning authority (or a judicial allocation of a single award) for their respective interests, consistent with this Section.

 

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11.3 RESTORATION. If there is a condemnation or taking and neither Tenant nor Landlord elects to (or neither is entitled to) terminate this Lease, then Tenant shall commence restoring the Premises (excluding the portion taken) and other Improvements to the same condition as existed prior to such taking as soon as reasonably possible using due diligence and commercially reasonable efforts. Landlord shall make available to Tenant any portion of the award applicable to the Improvements located on the Premises. During the time period of such restoration work, Tenant shall receive an equitable reduction in Base Rent and Additional Rent until the restoration is completed, unless Tenant is unable, as determined in its reasonable discretion, to continue operating its business in the Premises, in which event all Base Rent and Additional Rent shall abate until Tenant reopens for business.

ARTICLE XII - DESTRUCTION OF PREMISES

12.1 TERMINATION.

A. Termination by Tenant. If the Premises is totally or partially damaged or destroyed by fire or other casualty (i) in the last twenty-four (24) months of the Term, to an extent that the Premises is required to be closed for more than seven (7) days, or (ii) in the last thirty-six (36) months of the Term, to an extent that the cost of Tenant’s restoration work exceeds fifty percent (50%) of the total original cost of Tenant’s Improvements within the Premises (as reasonably documented to Landlord by Tenant), then Tenant shall have the option of terminating this Lease upon written nonce to Landlord within sixty (60) days after such casualty, in which event Rent and all other obligations herein shall cease as of the date of such casualty, and neither Landlord nor Tenant shall have any further obligations or rights hereunder, except for liability for events occurring prior to the termination of this Lease.

B. Termination by Landlord - Last Twelve Months. If, during the last twelve (12) months of the Term, the Premises is damaged or destroyed by fire or other casualty to an extent that Tenant’s business operations cease, for more than sixty (60) days, then Landlord shall have the option of terminating this Lease upon written notice to Tenant given within thirty (30) days after such casualty and prior to Tenant reopening for business in the Premises, in which event Rent and all other obligations herein shall cease as of the date of such casualty, and neither Landlord nor Tenant shall have any further obligations or rights hereunder, except for liability for events occurring prior to the termination of this Lease; provided, however, that if Tenant has an unexercised Renewal Option remaining, Tenant may by written notice to Landlord given within thirty (30) days of Tenant’s receipt of Landlord’s termination notice, exercise the Renewal Option and render Landlord’s termination null and void, and, in that event, this Lease shall continue as if Landlord had not elected to terminate as a result of the casualty.

C. Termination by Landlord - Destruction of the Project. Landlord shall have the right to terminate this Lease, by written notice to Tenant, given within thirty (30) days after the casualty, if (i) the casualty destroys the Project to an extent that the cost of restoration exceeds fifty percent (50%) of the then value of the Project, and (ii) as a result thereof, Landlord intends to raze all the Project buildings and does not intend to replace them with a building or buildings that could (or with reasonable modifications could) accommodate a replacement Premises for Tenant’s Permitted Use. To be valid, the termination notice must be accompanied by (a) reasonable evidence that the foregoing condition (i) has been satisfied (which shall

 

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include, but is not limited to, a contractor’s estimate of the cost of the restoration and replacement certified, by the applicable contractor, as a reasonable good faith estimate); and (b) an affidavit of a senior officer of Landlord certifying, under oath, that the foregoing condition (ii) has been satisfied. In the event Landlord terminates this Lease, Rent and all other obligations herein shall cease as of the date of such casualty, and neither Landlord nor Tenant shall have any further obligations or rights hereunder, except for liability (y) for events occurring prior to the termination of this Lease and (z) for Landlord misrepresenting the satisfaction of the conditions under this Section in order to terminate this Lease.]

12.2 RESTORATION. If there is a fire or other casualty and neither Tenant nor Landlord elects to (or neither is entitled to) terminate this Lease, then Tenant shall commence restoring the Premises to the same condition as existed prior to such casualty as soon as reasonably possible using due diligence and commercially reasonable efforts. During the time period of such restoration work Tenant shall receive an equitable reduction in Base Rent and Additional Rent until the restoration is completed, unless Tenant is unable, as determined in its reasonable discretion, to continue operating its business in the Premises, in which event all Base Rent and Additional Rent shall abate until Tenant reopens for business.

ARTICLE XIII - REPRESENTATIONS AND WARRANTIES

13.1 AUTHORITY. Tenant hereby represents and warrants to Landlord that (i) is a duly authorized and validly existing Florida limited partnership qualified to do business in the State in which the Premises are located; (ii) Tenant has the full right and authority to enter into this Lease; (iii) each of the persons executing this Lease on behalf of Tenant is authorized to do so; and (iv) this Lease constitutes a valid and legally binding obligation of Tenant, enforceable in accordance with its terms. Landlord represents and warrants to Tenant that (i) Landlord is a duly authorized and validly existing Florida limited liability company qualified to do business in the State in which the Premises are located; (ii) Landlord has the full right and authority to enter into this Lease; (iii) each of the persons executing this Lease on behalf of Landlord is authorized to do so; and (iv) this Lease constitutes a valid and legally binding obligation of Landlord, enforceable in accordance with its terms.

13.2 PATRIOT ACT. Tenant represents and warrants to Landlord, that Landlord is not restricted from entering into this Lease or otherwise dealing with Tenant under Executive Order No. 13224 on Terrorist Financing (the “Executive Order”) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) or any other law, regulation or order restricting certain dealings with parties known or suspected to engage in or support terrorism (collectively, “Terrorism Laws”). Landlord represents and warrants to Tenant, that Tenant is not restricted from entering into this Lease or otherwise dealing with Landlord under Terrorism Laws. A party shall be in default under this Lease if its acts, omissions or status would cause the other to be in violation of any Terrorism Laws.

ARTICLE XIV - ESTOPPEL CERTIFICATES AND SUBORDINATION

14.1 ESTOPPEL CERTIFICATE. At any time and from time to time either party, upon request of the other party, will execute, acknowledge and deliver an instrument, stating, if

 

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the same be true, that this Lease is a true and exact copy of the Lease between the parties hereto, that there are no amendments hereto (or stating what amendments there may be), that the same is then in full force and effect and that, to the best of its knowledge, there are no offsets, defenses or counterclaims with respect to the payment of Rent hereunder or in the performance of the other terms, covenants and conditions hereof on the part of Tenant or Landlord, as the case may be, to be performed, and that as of such date no default has been declared hereunder by either party or if so, specifying the same. Such instrument will be executed by the other party and delivered to the requesting party within fifteen (15) days of receipt of a request.

14.2 TENANT SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT FOR FUTURE MORTGAGES. Tenant agrees to subordinate its interest in this Lease and attorn to any existing mortgage, deed to secure debt or deed of trust (a “Mortgage”) encumbering the Premises by the execution of an SNDA in a form as may be approved by such lender, which SNDA shall also be executed by such mortgagee. Without limiting the generality of the foregoing, Tenant agrees to attorn to PRP’s existing lender as provided in Section 3 of the form of SNDA attached hereto as Exhibit D (which Section 3 is incorporated herein by reference) and to execute and deliver such form of SNDA to PRP’s existing Lender. Tenant’s interest in this Lease shall not be subordinate to any future Mortgage except as expressly provided in such fully executed SNDA.

14.3 LANDLORD SUBORDINATION. Landlord hereby expressly subordinates any and all claim, right, lien (including, without limitation, any common law or statutory Landlord’s lien), title and security interest in and to all of Tenant’s Improvements or Personal Property to the security interest of Tenant’s lender, if any, either existing as of the Effective Date of this Lease or under any future loan. Landlord further agrees to promptly execute any subordination or waiver agreement reasonably requested of Landlord by Tenant’s lender.

ARTICLE XV - HAZARDOUS SUBSTANCES

15.1 TENANT’S COVENANT. Tenant shall not cause or permit any Hazardous Substance to be used, stored, generated, or disposed of on, in or about the Premises (except those commonly or properly used in connection with the operation of a restaurant and which are used in accordance with all applicable governmental laws and regulations), without obtaining Landlord’s prior written consent. If the Premises become contaminated in any manner as a result of any breach of the foregoing covenant or any act or omission of Tenant or any of its agents, employees or contractors, Tenant shall indemnify, defend and hold harmless Landlord from any and all claims, demands, actions, damages, fines, judgments, penalties, costs (including attorneys’, consultants’, and experts’ fees), liabilities, losses and expenses arising during or after the term of this Lease and arising as a result of such contamination. This indemnification includes any and all costs incurred due to any investigation of the site or any cleanup, removal, or restoration mandated by a federal, state, or local agency or political subdivision. Without limitation of the foregoing, if Tenant causes or permits the presence of any Hazardous Substance on, in or about the Premises that results in contamination, Tenant, at its sole expense, shall complete all required clean up, removal and remediation. Tenant shall first obtain Landlord’s approval for any such remedial action. Notwithstanding the foregoing, this indemnification shall only apply to contamination by a Hazardous Substance resulting from Tenant’s use and operation of the Premises. Nothing herein contained shall be held to indemnify Landlord from

 

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liability or to create any liability on Tenant for Hazardous Substance contamination resulting from Landlord’s ownership, use or operation, or the use or operation by any third party in, on or under the Premises or the Project.

15.2 LANDLORD’S COVENANT. Landlord represents and warrants that to the best of its knowledge, no leak, spill, discharge, emission or disposal of any Hazardous Substance has occurred on the Premises or Project and that the soil, groundwater, soil vapor on or under the Premises and Project is free of Hazardous Substances as of the Effective Date Landlord agrees to provide to Tenant a copy of all environmental audits and reports with respect to the Project within its possession or available to it within five (5) days of the Effective Date. Landlord covenants and agrees, at its sole cost and expense, to indemnify, protect, defend and save Tenant harmless against and from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses (including, without limitation, attorneys’ and experts’ reasonable fees and disbursements) of any kind or nature whatsoever which may at any time be imposed upon, incurred by or asserted or awarded against Tenant and arising from or out of any Hazardous Substance on in under or affecting all or any portion of the Premises, which Hazardous Substance is not the result of Tenant’s use or operation of the Premises.

15.3 DEFINITIONS. As used herein, the term “Hazardous Substance” means any substance which is toxic, ignitable, reactive, or corrosive and which is regulated by any local government, the State in which the Premises are located, or the United States government, “Hazardous Substance” includes any and all materials or substances which are defined as “pollutant”, “contaminant”, “hazardous waste”, “extremely hazardous waste” or a “hazardous substance” pursuant to state, federal or local governmental law. “Hazardous Substance” includes asbestos, polychlorinated biphenyls (PCBs) and petroleum The provisions under this entire Article shall survive the expiration or earlier termination of this Lease.

ARTICLE XVI - MISCELLANEOUS

16.1 NOTICE. Any notice, demand, request or other instrument which may be or is required to be given under this Lease, whether by a party hereto or on behalf of such party by its legal representative, shall be deemed to be delivered (i) when received (or when receipt is refused) if deposited in the United States mail, postage prepaid, certified or registered mail, return receipt requested, or (ii) when received (or when receipt is refused) if delivered personally or sent by a nationally recognized overnight courier, all charges prepaid, at the addresses of Landlord and Tenant as set forth in this Section. Such address may be changed by written notice to the other party in accordance with this Section. The parties acknowledge that copies of any notice sent by facsimile or e-mail are for convenience only, and shall not be deemed to be proper notice required hereunder.

 

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If to Landlord: OS Southern, LLC, c/o OSI Restaurant Partners, LLC 2202 N. West Shore Blvd., 5th Floor Tampa, FL 33607 Attention: Vice President of Real Estate (813) 282-1225 Phone (818) 282-9195 Fax		If to Tenant: Selmon’s/Florida-I, Limited Partnership c/o OSI Restaurant Partners, LLC 2202 N. West Shore Blvd., 5th Floor Tampa, FL 33607 Attention: Vice President of Real Estate (813) 282-1225 Phone (813) 282-9195 Fax
		And
		OSI Restaurant Partners, LLC 2202 N. West Shore Blvd., 5th Floor Tampa, FL 33607 Attention: Director of Lease Administration (813) 282-1225 Phone (813) 282-9195 Fax

16.2 WAIVER. The waiver by Landlord or Tenant of any breach or default of any term, covenant or condition shall not be deemed to be a waiver of any subsequent breach or default of the same or any other term, covenant or condition, nor shall the acceptance or payment of Rent or other payment be deemed to be a Waiver of any such breach or default. No term, covenant or condition of this Lease shall be deemed to have been waived by Landlord or Tenant, unless such waiver is in writing,

16.3 CAPTIONS AND SECTION NUMBERS. The captions and section numbers appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such sections.

16.4 ENTIRE AGREEMENT. This Lease and any attachments hereto and forming a part hereof set forth all the covenants, promises, agreements, condition, and understandings between Landlord and Tenant concerning the Premises and there are no covenants, promises, agreements, conditions or understandings, either oral or written, other than as herein set forth.

16.5 AMENDMENTS. No subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant until reduced to writing and signed by Landlord and Tenant. Local and regional managers and partners do not have authority to agree to amend this Lease or waive any of its terms on behalf of Tenant. Landlord should direct any request to amend this Lease or to waive any of its terms to Tenant’s corporate offices at the address set out in Section 16.1 above.

16.6 INTERPRETATION. The words “Tenant” and “Landlord” shall mean each party mentioned as Tenant or Landlord herein, whether one or more, and their respective heirs, executors, administrator successors, and assigns. If there is more than one party, any notice required or permitted may be given to any one thereof, and such notice to one shall be deemed notice to all, unless multiple notices are required by Section 16.1. The use of the singular pronoun to refer to Tenant or Landlord shall be deemed proper regardless of the number of parties. When the word “including” (or some derivation thereof, such as “includes”) is used in this Lease to refer to something that in that context, may be part of a larger group of similar

 

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items, the reference is without limitation, and it should be interpreted as if followed by “but not limited to”, “without limitation”, or appropriate equivalent language for the context.

16.7 NO PARTNERSHIP. Landlord and Tenant shall have no business relationship as a result of this Lease other than Landlord and Tenant. No provision of this Lease shall be construed as creating any other business relationship between Landlord and Tenant, including the relationships of partners or parties to a joint venture.

16.8 CONFIDENTIALITY. Landlord agrees not to disclose the provisions of or provide a copy of this Lease to any third party, except in the ordinary course of business to agents, attorneys, accountants and employees who need to know of its content in the performance of their services to Landlord, to prospective purchasers and lenders for the Project and in connection with any dispute with Tenant.

16.9 PARTIAL INVALIDITY. If any term, covenant or condition of this Lease, or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease or the application of such term, covenant, or condition to persons or circumstances other than those as to which it was held invalid or unenforceable, shall not be affected thereby and each term, covenant, or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law.

16.10 APPLICABLE LAW. This Lease shall be construed according to the laws of the State in which the Premises are located.

16.11 RECORDING. Within fifteen (15) days written request by Landlord or Tenant to the other, the other party shall execute a Memorandum of this Lease in a form reasonable approved by Landlord and Tenant, to be recorded by Landlord or Tenant in the public records at the recording party’s expense.

16.12 COSTS OF ENFORCEMENT. In the event that Landlord or Tenant shall bring an action to recover any sum due hereunder or for any breach hereunder and shall obtain a judgment in its favor, or in the event that Landlord or Tenant retains an attorney for the purpose of collecting any sum due hereunder or construing or enforcing any of the terms or conditions hereof or protecting their interest in any bankruptcy, receivership, or insolvency proceeding or otherwise against the other, the prevailing party shall be entitled to recover all reasonable costs and expenses incurred, including reasonable attorneys’ and legal assistants’ fees prior to trial, at trial, and on appeal and for post-judgment proceedings.

16.13 SUCCESSORS. The covenants and restriction of this Lease are covenants and restrictions running with the land. The provisions of this Lease shall inure to the benefit of and be binding upon the respective heirs, executors, administrators, successors, and assigns of Landlord and Tenant.

16.14 FORCE MAJEURE. In the event that either party hereto shall be delayed or hindered in or prevented from the performance required hereunder by reason of fire or other casualty, strikes, lockouts, labor troubles or shortages, material shortages, any moratorium or other governmental or court imposed restrictions, riots, criminal acts, food borne illness,

 

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insurrection, war, adverse and unusual weather conditions, vandalism, defective materials or work by third party contractors, jobsite accidents, the breach of the other party of its obligations under this Lease, or other reason of like nature beyond the reasonable control of the party delayed in such performance (each a “Force Majeure. Event”), then (a) the period for performance shall be extended by the period of time equivalent to the delay caused by such Force Majeure Event or (b) performance shall be excused during the period of non-performance caused by such Force Majeure Event, as applicable. Notwithstanding the foregoing, (i) any extension of time for a Force Majeure Event shall be conditioned upon the party seeking an extension of time delivering written notice of such Force Majeure Event to the other party within ten (10) days of the commencement of the delay caused by the Force Majeure Event. This Section shall not apply to any obligation to pay any sums due under. this Lease and the lack of the financial ability to perform shall not constitute a Force Majeure Event.

16.15 BROKERS. Tenant and Landlord represent and warrant to each other that they have not consulted or contacted any agent, broker, or finder in connection with this Lease. Landlord and Tenant agree to defend, indemnify and hold the other harmless from any and all claims for compensation or commission in connection with this Lease by any broker, agent, or finder (other than Broker) claiming to have dealt with such party.

16.16 LANDLORD’S RIGHTS. All rights reserved to Landlord under this Lease shall be exercised in a reasonable manner and in a manner so as to minimize any adverse impact to Tenant’s business or Tenant’s use or enjoyment of the Premises.

16.17 CONSENT. Except as expressly set forth in this Lease, whenever Landlord’s consent or approval is requested under or in connection with this Lease, such consent or approval shall not be unreasonably withheld, delayed or conditioned.

16.18 TIME REQUIREMENTS. For purposes of all time requirements and limits hereunder, any time requirement reference to days other than “business days” shall mean actual “calendar days” which shall include each day after the day from which the period commences. All time requirements referenced as “business days” shall include each day after the day from which the period commences excluding any Saturday, Sunday or legal holiday. If the final day of any such time period falls on a Saturday, Sunday or legal holiday in the jurisdiction where the Premises is located or the jurisdiction to which notices to Landlord or Tenant are to be sent, such period shall extend to the first business day thereafter.

16.19 SURVIVAL OF OBLIGATIONS. Notwithstanding any provisions contained in this Lease to the contrary, the monetary obligations of Landlord and Tenant that relate to the period prior to the termination or expiration of this Lease (for example, the payment of accrued Rent or the reconciliation of Operating Expenses or Real Estate Taxes) shall survive the termination or expiration of this Lease.

16.20 Radon Gas. Radon is a naturally occurring radioactive gas, that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county health department.

 

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ARTICLE XVII - REQUIRED LENDER PROVISIONS

17.1 Required Assignment and Subletting Provisions. The parties agree that:

 

(i)

This Lease shall be subject and subordinate to all of the terms and conditions of the Sublease, the Master Lease and the master landlord’s (PRP) loan documents;

 

(ii)

The use of the Premises shall not conflict with any Legal Requirement, Property Document, Insurance Requirement or any other provision of the Sublease or Master Lease;

 

(iii)

That except as otherwise provided herein, no further subletting or assignment of this Lease or all or a part of the Premises shall be permitted except insofar as the same would be permitted if it were a sublease by Landlord under the Sublease or Master Lease;

 

(iv)

That in the event of cancellation or termination of the Sublease for any reason whatsoever or of the surrender of the Sublease, whether voluntary, involuntary or by operation of law) prior to the expiration date of this Lease, including extensions and renewals granted thereunder, then, at the option of PRML, the Tenant shall make full and complete Attornment to PRML for the balance of the term of the Lease, which Attornment shall be evidenced by an agreement in form and substance satisfactory to PRML and which the Tenant shall execute and deliver with five (5) days after request by PRML, and the Tenant shall waive the provisions of any law now or hereafter in effect which may give the Tenant any right of election to terminate the Lease or to surrender possession of the Premises in the event any proceeding is brought to terminate the Sublease, and;

 

(v)

That in the event the Tenant receives a written notice from PRML stating that the Sublease has been cancelled, surrendered or terminated, the Tenant shall thereafter be obligated to pay all rentals accruing under said sublease directly to PRML (or Master Landlord’s lender if PRML shall so direct); all rentals received from the Tenant by PRML shall be credited against the amounts owing by Landlord under the Sublease.

17.2 Required Use Restrictions. Tenant agrees that the Premises cannot be used for any of the following uses: any pornographic or obscene purposes, any commercial sex establishment, any pornographic, obscene, nude or semi-nude performances, modeling, obscene materials, activities or sexual conduct or any other use that has or could reasonably be expected to have a material adverse effect on the use, operation, or value of the Premises.

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease effective as of the Effective Date.

 

WITNESSES:				“Landlord”
/s/ Tracy Delatore				OS Southern, LLC,
				a Florida limited liability company
/s/ Kathryn A. Davis				By:		/s/ Karen C. Bremer
				Name:		Karen C. Bremer
				Title:		Authorized Agent
				“Tenant”
/s/ Tracy Delatore				Selmon’s/Florida-I, Limited Partnership
				a Florida limited partnership
/s/ Kathryn A. Davis				By:		/s/ Karen C. Bremer
				Name:		Karen C. Bremer
				Title:		Authorized Agent

 

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Exhibit 10.53

Confidential Property of OSI Restaurant Partners, LLC

David Deno

OSI RESTAURANT PARTNERS, LLC

Officer Employment Agreement

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective May 07, 2012, by and among DAVID DENO (hereinafter referred to as “Employee”) and OSI RESTAURANT PARTNERS, LLC, a Delaware limited liability company having its principal office at 2202 N. West Shore Boulevard, 5^th Floor, Tampa, Florida 33607 (the “Employer”).

W I T N E S S E T H:

This Agreement is made and entered into under the following circumstances:

A. WHEREAS, the Employer is engaged in the business of owning and operating, either directly and/or through its subsidiaries and their affiliates, restaurants utilizing a restaurant operating system and trademarks (“Trademarks”) owned by or licensed to the Employer and/or such operating subsidiary or affiliate; and

B. WHEREAS, the Employer desires, on the terms and conditions stated herein, to employ the Employee as Executive Vice President and Chief Financial Officer of the Employer; and

C. WHEREAS, the Employee desires, on the terms and conditions stated herein, to be employed by the Employer as Executive Vice President and Chief Financial Officer.

NOW, THEREFORE, in consideration of the foregoing recitals, and of the premises, covenants, terms and conditions contained herein, the parties hereto agree as follows:

1. Employment and Term. Subject to earlier termination as provided for in Section 8 hereof, the Employer hereby employs the Employee, and the Employee hereby accepts employment with the Employer as Executive Vice President and Chief Financial Officer of the Employer for a term commencing on May 07, 2012 and expiring five (5) years thereafter (“Term of Employment”). Such Term of Employment shall be automatically renewed for successive renewal terms of one (1) year each unless either party elects not to renew by giving written notice to the other party not less than sixty (60) days prior to the start of any renewal term.

2. Representations and Warranties. The Employee hereby represents and warrants to the Employer that (a) the Employee (i) is not subject to any written nonsolicitation or noncompetition agreement affecting the Employee’s employment with the Employer or its Affiliates (other than any prior agreement with the Employer or its Affiliates), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting the Employee’s employment with the Employer or its Affiliates (other than any prior agreement with the Employer or its Affiliates), and (iii) has brought to the Employer and its Affiliates no trade secrets, confidential business information, documents, or other personal property of a prior employer, and (b) the execution of this Agreement and the performance of the Employee’s obligations hereunder will not breach or be in conflict with any other agreement to which the Employee is a party or is bound or any order, decree, judgment, ruling, determination or injunction of any federal, state, local or foreign governmental, administrative or regulatory court, agency or body or any arbitrator.

3. Duties. As Executive Vice President and Chief Financial Officer of the Employer, the Employee shall:

(a) diligently, competently, and faithfully perform all of the duties and functions as may be assigned to the Employee hereunder commensurate with the position of Executive Vice President and Chief Financial Officer of the Employer;

 

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David Deno

 

(b) devote one hundred percent (100%) of the Employee’s full business time, attention, energies, and effort to the business affairs of the Employer;

(c) achieve the results and other goals required by the Employer;

(d) conduct all of Employee’s activities in a manner so as to maintain and promote the business and reputation of the Employer; and

(e) not create a situation that results in termination for Cause (as that term is defined in Section 8 hereof).

Notwithstanding the foregoing, the Employee shall be permitted to invest the Employee’s personal assets and manage the Employee’s personal investment portfolio in such a form and manner as will not require any business services on the Employee’s part to any third party, and provided it does not conflict with the Employee’s duties and responsibilities to the Employer or the provisions of Section 9 or Section 10 hereof, or conflict with any material published policy of the Employer or its Affiliates, including, but not limited to, the insider trading policy of the Employer or its Affiliates.

Notwithstanding the foregoing, the Employee shall also be permitted to participate in customary civic, nonprofit, religious, welfare, social and professional activities that will not materially affect the Employee’s performance of duties hereunder. The Employee may continue to serve on any board of directors and advisory committees of companies on which the Employee currently serves, as long as the business of such companies is not competitive with that of the Employer or any of its Affiliates. The Employee shall not serve on the board of directors or advisory committee of any other company without the prior consent of the Employer, which consent shall not be unreasonably withheld.

Notwithstanding anything to the contrary herein, the parties acknowledge and agree that the Employee shall, during the term of this Agreement and at the request of the Employer, also serve as an officer of any Affiliate of the Employer as the Employer shall reasonably request. In such capacity, the Employee shall be responsible generally for all aspects of such office. All terms, conditions, rights and obligations of this Agreement shall be applicable to the Employee while serving in such office as though the Employee and such Affiliate of the Employer had separately entered into this Agreement, except that the Employee shall not be entitled to any compensation, vacation, fringe benefits, automobile allowance or other remuneration of any kind whatsoever from such Affiliate of the Employer.

4. Compensation. During the Term of Employment, subject to the Employee’s performance in accordance with this Agreement, the Employee shall be entitled to the following:

a. Base Salary. During the Term of Employment, the Employee shall be entitled to an annual base salary equal to Six Hundred Thousand Dollars ($600,000), payable in equal biweekly installments by the Employer, to be reviewed annually.

b. OSI Bonus Program. During the Term of Employment, the Employee shall be entitled to discretionary bonuses pursuant to a bonus plan developed by the Compensation Committee of the Employer (the “OSI Bonus Program”). Employee’s bonus target under the OSI Bonus Program is 85% of the base salary paid to the Employee in the calendar year for which the bonus is awarded; provided however, so long as Employee remains employed by Employer through the end of the 2012 calendar year, the Employee’s bonus under the OSI Bonus Program for the calendar year 2012 shall be a guaranteed minimum of Five Hundred Thousand and Ten Thousand Dollars ($510,000). The OSI Bonus Program and the Employee’s bonus percentage are subject to increase, decrease, change or elimination in the discretion of the Employer.

c. Relocation Costs. Employee shall be entitled to benefits under the Employer’s standard relocation policy.

d. Signing Bonus. Employee shall be entitled to a one-time signing bonus of Four Hundred Twenty-five Thousand Dollars ($425,000) payable one half in Employee’s first paycheck and one half on or before November 7, 2012. In the event that Employee resigns or is terminated pursuant to Section 8(c) hereof within twelve months of either signing bonus payment, Employee shall repay such payment to the Employer.

 

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David Deno

 

e. Other Bonuses. In addition, as part of the Employee’s compensation during the Term of Employment, the Employee shall be eligible to participate in any bonus program or bonus arrangement which the Employer may establish from time to time for employees with the same title; provided that such program or arrangement applies generally to employees with the same title and with the functional job responsibilities of such title, and that the Employer may modify the terms and conditions of any such bonus or arrangement and may discontinue or otherwise terminate any such program or arrangement from time to time in its sole discretion.

f. General Rules Regarding Bonuses. Unless otherwise specified herein or in Employer policies or other governing documents regarding executive compensation and bonus plans, any bonus awarded to the Employee by the Employer shall be paid in a single lump sum within ninety (90) days after the performance period.

5. Paid Time Off. Employee shall be entitled to vacation time or other paid time off (collectively “PTO”) to be accrued in accordance with the Employer’s PTO Policy as may be in effect from time to time. PTO scheduling is selected by the Employee, but subject to the reasonable business requirements of the Employer as determined by Employee’s supervisor. Unless required by applicable law which cannot be waived, PTO granted but not used in any year shall be forfeited at the end of such one-year period and may not be carried over to any subsequent year.

6. Fringe Benefits. In addition to any other rights the Employee may have hereunder, the Employee shall also be entitled to participate in those employee benefit plans, programs and arrangements, including, but not limited to life insurance, medical benefits, etc., if any, as may be provided by the Employer to similar employees of the Employer. In each case as such plans, programs and arrangements may be in effect from time to time, all subject to the terms of such plans, programs or arrangements and applicable policies of the Employer. Any taxable welfare benefits provided to the Employee pursuant to this Section 6 that are not ‘disability pay’ or ‘death benefits’ within the meaning of Treasury Regulations Section 1.409A-1(a)(5) (collectively, the ‘Applicable Benefits’) shall be subject to the following requirements in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The amount of any Applicable Benefits provided during one taxable year shall not affect the amount of the Applicable Benefits provided in any other taxable year, except that with respect to any Applicable Benefits that consist of the reimbursement of expenses referred to in Code Section 105(b), a limitation may be imposed on the amount of such reimbursements as described in Treasury Regulations Section 1.409A-3(i)(iv)(B). To the extent that any Applicable Benefits consist of the reimbursement of eligible expenses, such reimbursement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and Employer shall not be obligated to reimburse any expense for which the Employee fails to submit an invoice or other documented reimbursement request at least thirty (30) business days before the end of the calendar year next following the calendar year in which the expense for any such reimbursement was incurred. Further, no Applicable Benefits may be liquidated or exchanged for another benefit.

7. Expenses. Subject to compliance with the Employer’s policies as in effect from time to time, the Employee may incur and be reimbursed by the Employer for reasonable expenses on behalf of and in furtherance of the business of the Employer. If any reimbursements under this provision are taxable to the Employee, such reimbursements shall be paid on or before the end of the calendar year following the calendar year in which the reimbursable expense was incurred, and the Employer shall not be obligated to pay any such reimbursement amount for which Employee fails to submit an invoice or other documented reimbursement request at least thirty (30) business days before the end of the calendar year next following the calendar year in which the expense was incurred. Such expenses shall be reimbursable only to the extent they were incurred during the term of the Agreement. In addition, the amount of such reimbursements that the Employer is obligated to pay in any given calendar year shall not affect the amount the Employer is obligated to pay in any other calendar year. Further, Employee may not liquidate or exchange the right to reimbursement of such expenses for any other benefits.

 

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David Deno

 

8. Termination. Notwithstanding the provisions of Section 1 hereof, the Term of Employment shall terminate prior to the end of the period of time specified in Section 1 hereof, immediately upon:

(a) The death of the Employee; or

(b) At the election of the Employer in the event of the Employee’s Disability during the Term of Employment. For purposes of this Agreement, the term “Disability” shall mean the inability of the Employee, arising out of any medically determinable physical or mental impairment, to perform the services required of the Employee hereunder for a period of (i) ninety (90) consecutive days or (ii) one hundred and twenty (120) total days during any period of three hundred and sixty-five (365) consecutive calendar days; or

(c) The existence of Cause. For purposes of this Agreement, the term “Cause” shall be defined as:

(i) Failure of the Employee to perform the duties required of the Employee in this Agreement in a manner satisfactory to the Employer, in its sole discretion; provided, however, that the Term of Employment shall not be terminated pursuant to this subparagraph (i) unless the Employer first gives the Employee a written notice (“Notice of Deficiency”). The Notice of Deficiency shall specify the deficiencies in the Employee’s performance of the Employee’s duties. The Employee shall have a period of thirty (30) days, commencing on receipt of the Notice of Deficiency, in which to cure the deficiencies contained in the Notice of Deficiency. In the event the Employee does not cure the deficiencies to the satisfaction of the Employer, in its sole discretion, within such thirty (30) day period (or if during such thirty (30) day period the Employer determines that the Employee is not making reasonable, good faith efforts to cure the deficiencies to the satisfaction of the Employer), the Employer shall have the right to immediately terminate the Term of Employment. The provisions of this subparagraph (i) may be invoked by the Employer any number of times and cure of deficiencies contained in any Notice of Deficiency shall not be construed as a waiver of this subparagraph (i) nor prevent the Employer from issuing any subsequent Notices of Deficiency; or

(ii) Any dishonesty by the Employee in the Employee’s dealings with the Employer or its Affiliates, the commission of fraud by the Employee, negligence in the performance of the duties of the Employee, insubordination, willful misconduct, or the conviction (or plea of guilty or nolo contendere) of the Employee of, or indictment or charge with respect to, any felony, or any other crime involving dishonesty or moral turpitude; or

(iii) Any violation of any covenant or restriction contained in Section 10, Section 11 or Section 13 hereof; or

(iv) Any violation of any current or future material published policy of the Employer or its Affiliates (material published policies include, but are not limited to, the Employer’s discrimination and harassment policy, management dating policy, responsible alcohol policy, insider trading policy and security policy); or

(d) At the election of the Employer, upon the determination by the Employer to cease the Employer’s business operations; or

(e) At the election of the Employee from time to time no later than thirty (30) days following the occurrence of Good Reason (as defined in Section 33); or

 

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David Deno

 

(f) At the election of the Employer in its sole discretion, for any reason or no reason.

Termination of Employment for all purposes under this Agreement will be determined to have occurred in accordance with the ‘separation from service’ requirements of Code Section 409A and the Treasury Regulations and other guidance issued thereunder, and based on whether the facts and circumstances indicate that Employer and Employee reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services Employee would perform after such date (as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed over the immediately preceding 36-month period (or actual period of service, if less).

For all purposes of this Agreement, termination for Cause shall be deemed to have occurred in the event of the Employee’s resignation when, because of existing facts and circumstances, subsequent termination for Cause can be reasonably foreseen.

9. Severance.

(a) General. Except as otherwise provided in Section 9(b), in the event of termination of this Agreement pursuant to Section 8, the Employee or the Employee’s estate, as appropriate, shall be entitled to receive (in addition to any fringe benefits payable upon death in the case of the Employee’s death) the base salary provided for herein up to and including the effective date of termination, prorated on a daily basis.

(b) Severance. In the event of termination of this Agreement pursuant to Section 8(e) or 8(f), the Employee shall be entitled to receive as full and complete severance compensation, the base salary provided for herein for a period of twelve (12) months from the effective date of such termination (the “Severance”). Severance shall be payable in bi-weekly installments. The Employee acknowledges and agrees that in the event of termination of this Agreement pursuant to Section 8(e) or 8(f) the Severance provided in this Section 9(b) shall be the only obligation that the Employer or any of its Affiliates shall have to the Employee (except for any vested benefits in tax-qualified pension plans maintained by the Employer). Payment of Severance shall be contingent on Employee’s continued compliance with Section 10(b) and Section 11 of this Agreement.

10. Noncompetition.

(a) During Term. Except with the prior written consent of the Employer, during the Employee’s employment with the Employer, the Employee shall not, individually or jointly with others, directly or indirectly, whether for the Employee’s own account or for that of any other person or entity, engage in or own or hold any ownership interest in any person or entity engaged in a full service restaurant business, and the Employee shall not act as an officer, director, employee, partner, independent contractor, consultant, principal, agent, proprietor or in any other capacity for, nor lend any assistance (financial or otherwise) or cooperation to, any such person or entity.

(b) Post Term. For a continuous period of two (2) years commencing on termination of the Employee’s employment with the Employer, regardless of any termination pursuant to Section 8 hereof or any voluntary termination or resignation by the Employee, the Employee shall not, individually or jointly with others, directly or indirectly, whether for the Employee’s own account or for that of any other person or entity, engage in or own or hold any ownership interest in any person or entity engaged in a full service restaurant business that is located or intended to be located anywhere within a radius of

 

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Confidential Property of OSI Restaurant Partners, LLC

David Deno

 

thirty (30) miles of any restaurant owned or operated by the Employer or any of its Affiliates, or any proposed full service restaurant to be owned or operated by any of the foregoing, and the Employee shall not act as an officer, director, employee, partner, independent contractor, consultant, principal, agent, proprietor or in any other capacity for, nor lend any assistance (financial or otherwise) or cooperation to, any such person or entity. For purposes of this Section 10(b), full service restaurants owned or operated by the Employer or any of its Affiliates shall include any entity in which the Employer, or any of its Affiliates has an interest, including, but not limited to, an interest as a franchisor, but shall not include any entities to whose exclusion the Employer consents. The term “proposed full service restaurant” shall include all locations for which the Employer or any of its franchisees or Affiliates is conducting active, bona fide negotiations to secure a fee or leasehold interest with the intention of establishing a full service restaurant thereon.

(c) Limitation. Notwithstanding subsections (a) and (b) immediately above, it shall not be a violation of this Section 10 for Employee to own a one percent (1%) or smaller interest in any corporation required to file periodic reports with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, or successor statute.

11. Nondisclosure; Nonsolicitation; Nonpiracy. Except in the performance of the Employee’s duties hereunder, at no time during the Term of Employment, or at any time thereafter, shall the Employee, individually or jointly with others, for the benefit of the Employee or any third party, publish, disclose, use or authorize anyone else to publish, disclose or use any secret or confidential material or information relating to any aspect of the business or operations of the Employer or any of its Affiliates, including, without limitation, any secret or confidential information relating to the business, customers, trade or industrial practices, trade secrets, technology, recipes, product specifications, restaurant operating techniques and procedures, marketing techniques and procedures, financial data, processes, vendors and other information or know-how of the Employer or any of its Affiliates, except (i) to the extent required by law, regulation or valid subpoena, or (ii) to the extent that such information or material becomes publicly known or available through no fault of the Employee. Moreover, during the Employee’s employment with the Employer and for two (2) years thereafter, except as is the result of a broad solicitation that is not targeting employees of the Employer or any of its franchisees or Affiliates, the Employee shall not offer employment to, or hire, any employee of the Employer or any of its franchisees or Affiliates, or otherwise directly or indirectly solicit or induce any employee of the Employer or any of its franchisees or Affiliates to terminate his or her employment with the Employer or any of its franchisees or Affiliates; nor shall the Employee act as an officer, director, employee, partner, independent contractor, consultant, principal, agent, proprietor, owner or part owner, or in any other capacity, of or for any person or entity that solicits or otherwise induces any employee of the Employer or any of its franchisees or Affiliates to terminate his or her employment with the Employer or any of its franchisees or Affiliates.

12. Employer Property: Employee Duty to Return. All Employer property and assets, including but not limited to products, recipes, product specifications, training materials, employee selection and testing materials, marketing and advertising materials, special event, charitable and community activity materials, customer correspondence, internal memoranda, products and designs, sales information, project files, price lists, customer and vendor lists, prospectus reports, customer or vendor information, sales literature, territory printouts, call books, notebooks, textbooks, and all other like information or products, including but not limited to all copies, duplications, replications, and derivatives of such information or products, now in the possession of Employee or acquired by Employee while in the employ of the Employer, shall be the exclusive property of the Employer and shall be returned to the Employer no later than the date of Employee’s last day of work with the Employer.

13. Inventions, Ideas, Processes, and Designs. All inventions, ideas, recipes, processes, programs, software and designs (including all improvements) related to the business of the Employer shall be disclosed in writing promptly to the Employer, and shall be the sole and exclusive property of the Employer, if either (i) conceived, made or used by the Employee during the course of the Employee’s employment with the

 

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Confidential Property of OSI Restaurant Partners, LLC

David Deno

 

Employer (whether or not actually conceived during regular business hours) or (ii) made or used by the Employee for a period of six (6) months subsequent to the termination or expiration of such employment. Any invention, idea, recipe, process, program, software or design (including an improvement) shall be deemed “related to the business of the Employer” if (i) it was made with equipment, facilities or confidential information of the Employer, (ii) results from work performed by the Employee for the Employer or (iii) pertains to the current business or demonstrably anticipated research or development work of the Employer. The Employee shall cooperate with the Employer and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, recipes, processes and designs to the Employer. The decision to file for patent or copyright protection or to maintain such development as a trade secret shall be in the sole discretion of the Employer, and the Employee shall be bound by such decision. The Employee shall provide, on the back of this Agreement, a complete list of all inventions, ideas, recipes, processes and designs if any, patented or unpatented, copyrighted or non-copyrighted, including a brief description, that the Employee made or conceived prior to the Employee’s employment with the Employer, and that, therefore, are excluded from the scope of this Agreement.

14. Restrictive Covenants: Consideration; Non-Estoppel; Independent Agreements; and Non-Executory Agreements. The restrictive covenants of Section 10, Section 11 and Section 13 of this Agreement are given and made by Employee to induce the Employer to employ the Employee and to enter into this Agreement with the Employee, and Employee hereby acknowledges that employment with the Employer is sufficient consideration for these restrictive covenants.

The restrictive covenants of Section 10, Section 11 and Section 13 of this Agreement shall be construed as agreements independent of any other provision in this Agreement, and the existence of any claim or cause of action of Employee against the Employer, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement of any restrictive covenant.

The refusal or failure of the Employer to enforce any restrictive covenant of Section 10, Section 11 or Section 13 of this Agreement (or any similar agreement) against any other employee, agent, or independent contractor, for any reason, shall not constitute a defense to the enforcement by the Employer of any such restrictive covenant, nor shall it give rise to any claim or cause of action by Employee against the Employer.

15. Reasonableness of Restrictions; Reformation; Enforcement. The parties hereto recognize and acknowledge that the geographical and time limitations contained in Section 10, Section 11 and Section 13 hereof are reasonable and properly required for the adequate protection of the Employer’s interests. Employee acknowledges that the Employer or its Affiliate is the owner or the licensee of the Trademarks, and the owner or the licensee of the restaurant operating systems. It is agreed by the parties hereto that if any portion of the restrictions contained in Section 10, Section 11 or Section 13 are held to be unreasonable, arbitrary, or against public policy, then the restrictions shall be considered divisible, both as to the time and to the geographical area, with each month of the specified period being deemed a separate period of time and each radius mile of the restricted territory being deemed a separate geographical area, so that the lesser period of time or geographical area shall remain effective so long as the same is not unreasonable, arbitrary, or against public policy. The parties hereto agree that in the event any court of competent jurisdiction determines the specified period or the specified geographical area of the restricted territory to be unreasonable, arbitrary, or against public policy, a lesser time period or geographical area that is determined to be reasonable, nonarbitrary, and not against public policy may be enforced against Employee. If Employee shall violate any of the covenants contained herein and if any court action is instituted by the Employer to prevent or enjoin such violation, then the period of time during which the Employee’s business activities shall be restricted, as provided in this Agreement, shall be lengthened by a period of time equal to the period between the date of the Employee’s breach of the terms or covenants contained in this Agreement and the date on which the decree of the court disposing of the issues upon the merits shall become final and not subject to further appeal.

 

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In the event it is necessary for the Employer to initiate legal proceedings to enforce, interpret or construe any of the covenants contained in Section 10, Section 11 or Section 13 hereof, each party shall pay its own legal fees, and the prevailing party in such proceedings shall be entitled to receive from the non-prevailing party, in addition to all other remedies, all costs of such proceedings including appellate proceedings.

16. Specific Performance. Employee agrees that a breach of any of the covenants contained in Section 10, Section 11 or Section 13 hereof will cause irreparable injury to the Employer for which the remedy at law will be inadequate and would be difficult to ascertain and therefore, in the event of the breach or threatened breach of any such covenants, the Employer shall be entitled, in addition to any other rights and remedies it may have at law or in equity, to obtain an injunction to restrain Employee from any threatened or actual activities in violation of any such covenants. Employee hereby consents and agrees that temporary and permanent injunctive relief may be granted in any proceedings that might be brought to enforce any such covenants without the necessity of proof of actual damages, and in the event the Employer does apply for such an injunction, Employee shall not raise as a defense thereto that the Employer has an adequate remedy at law.

17. Assignability. This Agreement and the rights and duties created hereunder, shall not be assignable or delegable by Employee. The Employer shall have the right, without Employee’s knowledge or consent, to assign this Agreement, in whole or in part and any or all of the rights and duties hereunder, including but not limited to the restrictive covenants of Section 10, Section 11 and Section 13 hereof to any person, including but not limited to any Affiliate of the Employer, or any successor to the Employer’s interest in the restaurants, and Employee shall be bound by such assignment. Any assignee or successor may enforce any restrictive covenant of this Agreement.

18. Effect of Termination. For the avoidance of doubt, the termination of this Agreement or expiration of the Term of Employment, for any reason, shall not extinguish those obligations of the Employee specified in Section 10, Section 11, Section 13 and Section 28 hereof.

19. Captions; Terms. The captions of this Agreement are for convenience only, and shall not be construed to limit, define, or modify the substantive terms hereof.

20. Acknowledgments. Employee hereby acknowledges, that the Employee has been provided with a copy of this Agreement for review prior to signing it, that the Employee has been given a full and sufficient opportunity to consider this Agreement and has been given the opportunity to have this Agreement reviewed by Employee’s attorney prior to signing it, that the Employee understands the purposes and effects of this Agreement; and that in agreeing to be bound by this Agreement the Employee has not relied on any promises or representations, express or implied, that are not set forth expressly in this Agreement; and that the Employee has been given a signed copy of this Agreement for Employee’s own records.

21. Notices. All notices or other communications provided for herein to be given or sent to a party by another party shall be deemed validly given or sent if in writing mailed, postage prepaid, by certified United States mail, return receipt requested, or delivered by hand or consigned to a nationally recognized overnight courier, and addressed to the parties at their addresses hereinabove set forth or at their last known address. Any party may give notice to the other party at any time, by the method specified above, of a change in the address at which, or the person to whom, notice is to be addressed, which change of address shall be effective if notice thereof is actually received.

22. Severability. Each section, subsection, and lesser section of this Agreement constitutes a separate and distinct undertaking, covenant, or provision hereof. In the event that any provision of this Agreement shall be determined to be invalid or unenforceable, such provision shall be deemed limited by construction in scope and effect to the minimum extent necessary to render the same valid and enforceable, and, in the event such a limiting construction is impossible, such invalid or unenforceable provision shall be deemed severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect.

 

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23. Waiver. The failure of a party to enforce any term, provision, or condition of this Agreement or failure to insist on strict performance of a covenant hereunder or any obligation hereunder, at any time or times shall not be deemed a waiver of that term, provision, or condition for the future, nor shall any specific waiver of a term, provision, or condition at one time be deemed a deemed a waiver of such term, provision, or condition for any future time or times.

24. Parties. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto, their legal representatives, executors, administrators, heirs, and proper successors or permitted assigns, as the case may be.

25. Governing Law. This Agreement takes effect upon its acceptance and execution by the Employer. The validity, interpretation, and performance of this Agreement shall be governed, interpreted, and construed in accordance with the laws of the State of Florida without giving effect to the principles of comity or conflicts of laws thereof.

26. Consent to Personal Jurisdiction and Venue. Employee hereby consents to personal jurisdiction and venue, for any action brought by the Employer arising out of a breach or threatened breach of this Agreement or out of the relationship established by this Agreement, exclusively in the United States District Court for the Middle District of Florida, Tampa Division, or in the Circuit Court in and for Hillsborough County, Florida; and, if applicable, the federal and state courts in any jurisdiction where the Employee is employed or resides; the Employee hereby agrees that any action brought by Employee, alone or in combination with others, against the Employer, whether arising out of this Agreement or otherwise, shall be brought exclusively in the United States District Court for the Middle District of Florida, Tampa Division, or in the Circuit Court in and for Hillsborough County, Florida.

27. Affiliate. Whenever used in this Agreement, the term “Affiliate” shall mean, with respect to any entity, all persons or entities directly or indirectly controlled by OSI Restaurant Partners, LLC, where control may be by management authority, contract or equity interest.

28. Cooperation. Employee shall cooperate fully with all reasonable requests for information and participation by the Employer, its agents, or its attorneys, in prosecuting or defending claims, suits, and disputes brought on behalf of or against the Employer and in which Employee is involved or about which Employee has knowledge.

29 Internal Revenue Code Section 409A Compliance.

a. Unless otherwise expressly provided, any payment of compensation by Employer to the Employee, whether pursuant to this Agreement or otherwise, shall be made within two and one-half months (2 ¹/2 months) after the end of the later of the calendar year or the Employer’s fiscal year in which the Employee’s right to such payment vests (i.e., is not subject to a substantial risk of forfeiture for purposes of Internal Revenue Code Section 409A (“Code Section 409A”)). Such amounts shall not be subject to the requirements of subsection (b) below applicable to “nonqualified deferred compensation.”

b. All payments of “nonqualified deferred compensation” (within the meaning of Code Section 409A are intended to comply with the requirements of Code Section 409A, and shall be interpreted in accordance therewith. No party individually or in combination may accelerate, offset or assign any such deferred payment, except in compliance with Code Section 409A. No amount shall be paid prior to the earliest date on which it is permitted to be paid under Code Section 409A and Employee shall have no discretion with respect to the timing of payments except as permitted under Section 409A. In the event that the Employee is determined to be a “specified employee” (as defined and determined under Code Section 409A) of Employer or any of its affiliates at a time when its stock is deemed to be publicly

 

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traded on an established securities market, payments determined to be “nonqualified deferred compensation” payable by reason of separation from service shall be paid no earlier than (i) the first day of the seventh (7th) calendar month commencing after such termination of employment, or (ii) the Employee’s death, consistent with and to the extent necessary to meet the requirements Code Section 409A without the imposition of excise taxes. Any payment delayed by reason of the prior sentence shall be paid out in a single lump sum on the earliest date permitted under Code Section 409A in order to catch up to the original payment schedule. Notwithstanding anything herein to the contrary, no amendment may be made to this Agreement if it would cause the Agreement or any payment hereunder not to be in compliance with Code Section 409A.

c. The Employee shall be responsible for the payment of all taxes applicable to payments or benefits received from the Employer. It is the intent of the Employer that the provisions of this Agreement and all other plans and programs sponsored by the Employer be interpreted to comply in all respects with Code Section 409A, however, the Employer shall have no liability to the Employee, or any successor or beneficiary thereof, in the event taxes, penalties or excise taxes may ultimately be determined to be applicable to any payment or benefit received by the Employee or any successor or beneficiary thereof.

30. Amendments. No change, modification, or termination of any of the terms, provisions, or conditions of this Agreement shall be effective unless made in writing and signed or initialed by all signatories to this Agreement.

31. WAIVER OF JURY TRIAL. ALL PARTIES TO THIS AGREEMENT KNOW AND UNDERSTAND THAT THEY HAVE A CONSTITUTIONAL RIGHT TO A JURY TRIAL. THE PARTIES ACKNOWLEDGE THAT ANY DISPUTE OR CONTROVERSY THAT MAY ARISE OUT OF THIS AGREEMENT WILL INVOLVE COMPLICATED AND DIFFICULT FACTUAL AND LEGAL ISSUES.

THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

THE PARTIES INTEND THAT THIS WAIVER OF THE RIGHT TO A JURY TRIAL BE AS BROAD AS POSSIBLE. BY THEIR SIGNATURES BELOW, THE PARTIES PROMISE, WARRANT AND REPRESENT THAT THEY WILL NOT PLEAD FOR, REQUEST OR OTHERWISE SEEK TO HAVE A JURY TO RESOLVE ANY AND ALL DISPUTES THAT MAY ARISE BY, BETWEEN OR AMONG THEM.

32. Entire Agreement; Counterparts. This Agreement constitutes the entire agreement between the parties hereto concerning the subject matter hereof, and supersedes all prior memoranda, correspondence, conversations, negotiations and agreements. This Agreement may be executed in several identical counterparts that together shall constitute but one and the same Agreement.

33. Definitions. “Good Reason” means any of the following: (a) the assignment to Employee of any duties inconsistent in any respect with Employee’s position (including status, offices, titles, and reporting requirements), authority, duties or responsibilities as in effect on the date hereof, any diminution in such position,

 

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authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Employer promptly after receipt of notice thereof given by Employee, (b) a reduction by the Employer in Employee’s base salary or benefits as in on the date hereof, unless a similar reduction is made in salary and benefits of all similarly situated employees, or (c) the Employer requires Employee to be based at or generally work from any location more than fifty miles from the location at which Employee was based or generally worked on the date hereof.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

 

						“EMPLOYEE”
						/s/ David Deno
Witness						DAVID DENO
Printed name of witness
Witness
Printed name of witness
						“EMPLOYER”
Attest:						OSI RESTAURANT PARTNERS, LLC, a Delaware limited liability company
By:		/s/ Kelly Lefferts				By:		/s/ Joseph Kadow
		KELLY LEFFERTS, Assistant Secretary						JOSEPH J. KADOW, Chief Legal Officer

 

11

Exhibit 10.54

MANAGEMENT AGREEMENT

This MANAGEMENT AGREEMENT (this “Agreement”) is entered into as of June 14, 2007 by and among (i) Kangaroo Management Company I, LLC (the “Manager”), (ii) Kangaroo Holdings, Inc. (the “Company”) and (iii) each of the Company’s subsidiaries that executes a counterpart signature page hereto (the “Subsidiaries”).

RECITALS

WHEREAS, the Company and its subsidiary, Kangaroo Acquisition, Inc. (“MergerCo”), have been formed for the purpose of effecting the acquisition of OSI Restaurant Partners, Inc. (“OSI”) (the “Transaction”) pursuant to an Agreement and Plan of Merger, dated as of November 5, 2006 (as amended or otherwise modified, the “Merger Agreement”), among the Company, MergerCo and OSI;

WHEREAS, it is contemplated that on or about the date hereof, as part of the Transaction, MergerCo will merge with and into OSI (the “Merger”) on the terms and subject to the conditions of the Merger Agreement; and

WHEREAS, the Company desires to retain the Manager to provide management, consulting and other advisory services (“Services”) to the Company and its Subsidiaries (collectively, the “Companies”), and the Manager is willing to provide such services on the terms set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Services. The Manager hereby agrees that it will provide the following Services to the Companies:

(a) financial, managerial and operational advice in connection with day-to-day operations, including, without limitation, advice with respect to the development and implementation of strategies for improving the operating, marketing and financial performance of the Companies as the Manager and the Company may from time to time agree to; and

(b) such other services (which may include financial and strategic planning and analysis, consulting services, human resources and executive recruitment services and other services) as the Manager and the Company may from time to time agree to in writing.

The Manager will devote, in its discretion, such time and efforts to the performance of services contemplated hereby as the Manager deems reasonably necessary or appropriate; provided, however, that no minimum number of hours is required to be devoted by the Manager on a weekly, monthly, annual or other basis. The Companies acknowledge that the Manager’s

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services are not exclusive to the Companies and that the Manager and each of its members, managers and officers may render similar services to other persons and entities. The Manager and the Companies understand that the Companies may, at times, engage one or more investment bankers or financial advisers to provide services in addition to, but not in lieu of, services provided by the Manager under this Agreement. In providing services to the Companies, the Manager will act as an independent contractor, and it is expressly understood and agreed that this Agreement is not intended to create, and does not create, any partnership, agency, joint venture or similar relationship, and that no party has the right or ability to contract for or on behalf of any other party or to effect any transaction for the account of any other party.

2. Payment of Fees. During the Term, the Companies will pay to the Manager (or such affiliates as it may designate), an aggregate annual periodic fee (the “Periodic Fee”) of $9,100,000 in exchange for the ongoing Services provided by the Manager under this Agreement, such fee being payable by the Companies quarterly in advance on or before the start of each calendar quarter; provided, however, that the Companies will pay the Periodic Fee for the period from the date hereof through June 30, 2007 at the Effective Time (as defined in the Merger Agreement). The Periodic Fee will be prorated for any partial period of less than three months. Each payment made pursuant to this Section 2 will be paid by wire transfer of immediately available federal funds to the accounts the Manager specifies to the Companies in writing prior to such payment. If, at any time, the Companies are not permitted to make any payment or reimbursement due to the Manager under this Agreement under the terms of any credit agreement or other financing agreement to which any of the Companies is a party, such obligations shall accrue as provided herein, but payment or reimbursement thereof shall be deferred until such time as (i) such payments are no longer prohibited under the terms of the applicable agreement or (ii) the loan amount due thereunder is repaid in full. In the event of the liquidation of any of the Companies, all amounts due to the Manager under this Agreement shall be paid to the Manager before any liquidating distributions or similar payments are made to equityholders of any of the Companies (unless the equityholder is the Company or one of its wholly-owned subsidiaries).

3. Term. This Agreement will continue in full force and effect until December 31, 2017; provided that this Agreement shall be automatically extended each December 31^st thereafter for an additional year unless the Company or the Manager provides written notice of its desire not to automatically extend the term of this Agreement to one another at least 90 days prior to such December 31^st; and provided further, however, that (i) the Manager may terminate this Agreement at any time and (ii) this Agreement will terminate automatically immediately prior to an Initial Public Offering or a Change of Control (each as defined in the Stockholders Agreement dated as of the date of this Agreement among the Company and certain of its equityholders) unless the Company and the Manager determine otherwise (the period on and after the date hereof through the termination hereof being referred to herein as the “Term”); and provided further, that each of (x) Sections 4, 6 and 9 (whether in respect of or relating to services rendered during or after the Term) will all survive any termination of this Agreement to the maximum extent permitted under applicable law, and (y) any and all accrued and unpaid obligations of the Companies owed under Section 2 will be paid promptly upon any termination of this Agreement. At the end of the Term, all obligations of the Manager under this Agreement will terminate, and any subsequent services rendered by the Manager to the Companies will be separately compensated.

 

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4. Expenses; Indemnification.

(a) Expenses. The Companies will pay on demand all (i) reasonable out-of-pocket expenses incurred from and after the Effective Time relating to the operations of, or the services provided by the Manager to, the Companies or any of their affiliates from time to time, and (ii) expenses incurred from and after the Effective Time by the Manager, its members and their respective affiliates which the Manager determines are properly allocable to the Companies under this Agreement.

(b) Indemnity and Liability. Each of the Companies hereby indemnifies and agrees to exonerate and hold the Manager, and its former, current or future, direct or indirect, directors, officers, employees, agents, advisors or affiliates, each former, current or future, direct or indirect, holder of any equity interests or securities of the Manager (whether such holder is a limited or general partner, member, equityholder or otherwise), each former, current or future assignee of the Manager and each former, current or future director, officer, employee, agent, advisor, general or limited partner, manager, member, equityholder, affiliate, controlling person, representative or assignee of any of the foregoing (each such person or entity, a “Related Person”) (collectively, the “Indemnitees”), each of whom is an intended third-party beneficiary of this Agreement, free and harmless from and against any and all actions, causes of action, suits, claims, liabilities, damages and costs and expenses in connection therewith (including reasonable attorneys’ fees and expenses) incurred by the Indemnitees or any of them before or after the date of this Agreement (collectively, the “Indemnified Liabilities”), as a result of, arising out of or in any way relating to the operations of, or services provided by the Manager to, the Companies or any of their affiliates from time to time (including, but not limited to, any indemnification obligations assumed or incurred by any Indemnitee to or on behalf of the Companies or any of their accountants or other representatives, agents or affiliates), except for any such Indemnified Liabilities arising from such Indemnitee’s gross negligence or willful misconduct. If and to the extent that the foregoing undertaking may be unavailable or unenforceable for any reason, the Companies hereby agree to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law. For purposes of this Section 4(b), “gross negligence or willful misconduct” will be deemed to have occurred only if so found in a final non-appealable judgment of a court of competent jurisdiction, in which case, to the extent any of the foregoing limitations is so determined to apply to any Indemnitee as to any previously advanced indemnity payments made by the Companies, then such payments shall be promptly repaid by such Indemnitee to the Companies. The rights of any Indemnitee to indemnification hereunder will be in addition to any other rights any such person may have under any other agreement or instrument referenced above, or any other agreement or instrument to which such Indemnitee is or becomes a party or is or otherwise becomes a beneficiary, or under law or regulation. If the Indemnitees are similarly situated with respect to their interests in connection with a matter that may be an Indemnified Liability and such Indemnified Liability is not based on a “Third-Party Claim,” the Indemnitees may enforce their rights pursuant to this Section 4(b) with respect to such matter only with

 

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the consent of the Manager. In this Agreement, “Person” means any individual or corporation, association, partnership, limited liability company, joint venture, joint stock or other company, business trust, trust, organization or other entity of any kind. A “Third-Party Claim” means any (i) claim brought by a Person other than the Companies, the Manager or any Indemnitee related to the Manager, and (ii) any derivative claim brought in the name of any of the Companies that is initiated by a Person other than the Manager or any Indemnitee related to the Manager.

5. Covenants. The Company hereby covenants that it will cause each of the Subsidiaries to execute this Agreement immediately after the Effective Time.

6. Disclaimer and Limitation of Liability; Opportunities; Information.

(a) Disclaimer; Standard of Care. None of the Manager, its members, managers or officers make any representations or warranties, express or implied, in respect of the services to be provided by the Manager hereunder. In no event will the Manager or any of the Indemnitees be liable to the Companies or any of their respective affiliates for any act, alleged act, omission or alleged omission that does not constitute gross negligence or willful misconduct of the Manager as determined by a final, non-appealable determination of a court of competent jurisdiction.

(b) Freedom to Pursue Opportunities. In recognition that the Manager and the Indemnitees currently have, and will in the future have, or will consider acquiring, investments in numerous companies with respect to which the Manager or another Indemnitee may serve as an advisor, a director or in some other capacity, and in recognition that the Manager and Indemnitees have myriad duties to various investors and partners, and in anticipation that the Companies and their respective affiliates, on the one hand, and the Manager (or one or more members, affiliates, associated investment funds or portfolio companies or clients), on the other hand, may engage in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunities, and in recognition of the benefits to be derived by the Companies hereunder, and in recognition of the difficulties that may confront any advisor who desires and endeavors fully to satisfy such advisor’s duties in determining the full scope of such duties in any particular situation, the provisions of this Section 6(b) are set forth to regulate, define and guide the conduct of certain affairs of the Companies as they may involve the Manager or its members, managers or officers. Except as the Manager, its members or any other Indemnitee may otherwise agree in writing after the date hereof:

(i) The Manager and its Indemnitees will have the right: (A) to directly or indirectly engage in any business (including, without limitation, any business activities or lines of business that are the same as or similar to those pursued by, or competitive with, the Companies and their respective subsidiaries) or invest, own or deal in securities of any other Person so engaged in any business, (B) to directly or indirectly do business with any client or customer of the Companies and their respective affiliates, (C) to take any other action that the Manager believes in good faith is necessary to or appropriate to fulfill its obligations as

 

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described in the first sentence of this Section 6(b) and (D) not to present potential transactions, matters or business opportunities to the Companies or any of their respective affiliates, and to pursue, directly or indirectly, any such opportunity for itself, and to direct any such opportunity to another Person.

(ii) The Manager and its Indemnitees will have no duty (contractual or otherwise) to communicate or present any corporate opportunities to the Companies or any of their respective affiliates, or to refrain from any actions specified in Section 6(b)(i) above, and the Companies, on their own behalf and on behalf of their respective affiliates, hereby renounce and waive any right to require the Manager or any of its Indemnitees to act in a manner inconsistent with the provisions of this Section 6(b).

(iii) The Manager and its Indemnitees will not be liable to the Companies or any of their respective affiliates for breach of any duty (contractual or otherwise) by reason of any activities or omissions of the types referred to in this Section 6(b) or of any such Person’s participation therein.

(c) Limitation of Liability. In no event will the Manager or any of its Indemnitees be liable to the Companies or any of their affiliates for any indirect, special, incidental or consequential damages, including, without limitation, lost profits or savings, whether or not such damages are foreseeable, or for any third-party claims (whether based in contract, tort or otherwise), relating to the services to be provided by the Manager hereunder.

(d) Information. The Companies will use their reasonable best efforts to furnish, or to cause their respective affiliates and agents to furnish, the Manager with such information (the “Information”) as the Manager reasonably believes appropriate to its engagement hereunder. The Companies acknowledge and agree that (i) the Manager will rely on the Information and on information available from generally recognized public sources in performing the Services, and (ii) the Manager does not assume responsibility for the accuracy or completeness of the Information and such other information.

7. Assignment, etc. Except as provided below, no party hereto has the right to assign this Agreement without the prior written consent of each of the other parties. Notwithstanding the foregoing, (i) the Manager may assign all or part of its rights and obligations hereunder to any affiliate of the Manager that provides services similar to those called for by this Agreement, in which event the Manager will be released of all of its rights and obligations hereunder, and (ii) the provisions hereof for the benefit of Indemnitees other than the Manager itself shall also inure to the benefit of such other Indemnitees and their successors and assigns.

8. Amendments and Waivers. No amendment or waiver of any term, provision or condition of this Agreement will be effective unless in writing and executed by the Manager and the Companies (or their respective successors); provided, that the Manager may agree to waive or reduce any fee to which it is entitled pursuant to this Agreement, and, unless otherwise

 

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directed by the Manager, such waived portion shall revert to the Company or its designee. No waiver on any one occasion will extend to or effect or be construed as a waiver of any right or remedy on any future occasion. Neither any course of dealing of any Person, nor any delay or omission in exercising any right or remedy, will constitute an amendment of this Agreement or a waiver of any right or remedy of any party hereto.

9. Governing Law; Jurisdiction.

(a) Choice of Law. This Agreement, and all matters arising under or related to this Agreement, will be governed by and construed in accordance with the laws of the State of New York.

(b) Consent to Jurisdiction. Each of the parties agrees that all actions, suits or proceedings arising out of, based upon or relating to this Agreement or the subject matter hereof will be brought and maintained exclusively in the federal and state courts of the State of New York, City of New York, County of New York. Each of the parties hereto, by execution hereof (i) hereby irrevocably submits to the jurisdiction of the federal and state courts in the State of New York, City of New York, County of New York for the purpose of any action, suit or proceeding arising out of or based upon this Agreement or the subject matter hereof, and (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that it is immune from extraterritorial injunctive relief or other injunctive relief, that its property is exempt or immune from attachment or execution, that any such action, suit or proceeding may not be brought or maintained in one of the above-named courts, that any such action, suit or proceeding brought or maintained in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the above-named courts or should be stayed by virtue of the pendency of any other action, suit or proceeding in any court other than one of the above-named courts or that this Agreement or the subject matter hereof may not be enforced in or by any of the above-named courts. Notwithstanding the foregoing, to the extent that any party hereto is or becomes a party in any litigation in connection with which it may assert indemnification rights set forth in this Agreement, the court in which such litigation is being heard will be deemed to be included in clause (i) above. Each of the parties hereto hereby consents to service of process in any such suit, action or proceeding in any manner permitted by the laws of the State of New York, agrees that service of process by registered or certified mail, return receipt requested, at the address specified in or pursuant to Section 11 is reasonably calculated to give actual notice and waives and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, suit or proceeding any claim that service of process made in accordance with Section 11 does not constitute good and sufficient service of process. The provisions of this Section 9 will not restrict the ability of any party to enforce in any court any judgment obtained in a court included in clause (i) above.

 

-6-

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(c) WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING ARISING OUT OF, BASED UPON OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY EACH OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 9(C) CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH PARTY IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. ANY OF THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH OF THE PARTIES HERETO TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

10. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof, and supersedes any prior communication or agreement with respect thereto.

11. Notice. All notices, demands and communications required or permitted under this Agreement will be in writing and will be effective if served upon such other party and such other party’s copied persons as specified below to the address set forth for it and them below (or to such other address as such party will have specified by notice to each other party) if (i) delivered personally, (ii) sent and received by facsimile or (iii) sent by certified or registered mail or by Federal Express, DHL, UPS or any other comparably reputable overnight courier service, postage prepaid, to the appropriate address as follows:

If to the Companies, to them at:

c/o Kangaroo Holdings, Inc.

2202 N. West Shore Blvd., Suite 500

Tampa, FL 33607

Facsimile: (813) 281-2114

Attention: Chief Executive Officer

with copies to:

Ropes & Gray LLP

One International Place

Boston, Massachusetts 02110

Facsimile: (617) 951-7050

Attention: Howard S. Glazer

       Jane D. Goldstein

 

-7-

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If to the Manager, to it at:

Kangaroo Management Company I, LLC

c/o Bain Capital Partners, LLC

111 Huntington Avenue

Boston, MA 02199

Facsimile: (617) 516-2010

Attention: Andrew Balson

with copies to:

Ropes & Gray LLP

One International Place

Boston, Massachusetts 02110

Facsimile: (617) 951-7050

Attention: Howard S. Glazer

       Jane D. Goldstein

and

Catterton Partners

599 West Putnam Avenue

Greenwich, CT 06830

Facsimile: (203) 629-4903

Attention: J. Michael Chu

and

Latham & Watkins LLP

555 Eleventh Street, NW

Washington, DC 20004

Facsimile: (202) 637-2201

Attention: Eric Stern

and

Kirkland & Ellis LLP

Citigroup Center

153 East 53rd Street

New York, NY 10022

Facsimile: (212) 446-6460

Attention: Michael Brosse

 

-8-

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Unless otherwise specified herein, such notices or other communications will be deemed effective, (i) on the date received, if personally delivered or sent by facsimile during normal business hours, (ii) on the business day after being received if sent by facsimile other than during normal business hours, (iii) one business day after being sent by Federal Express, DHL or UPS or other comparably reputable delivery service and (iv) five business days after being sent by registered or certified mail. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto.

12. Severability. If, in any judicial or arbitral proceedings, a court or arbitrator refuses to enforce any provision of this Agreement, then such unenforceable provision will be deemed eliminated from this Agreement for the purpose of such proceedings to the extent necessary to permit the remaining provisions to be enforced, and the parties hereto shall negotiate in good faith to seek to enter into substitute provisions incorporating, as nearly as possible, the purpose, intent and effect of such unenforceable provision. To the full extent, however, that the provisions of any applicable law may be waived, they are hereby waived to the end that this Agreement be deemed to be a valid and binding agreement enforceable in accordance with its terms, and in the event that any provision hereof is found to be invalid or unenforceable, such provision will be construed by limiting it so as to be valid and enforceable to the maximum extent consistent with and possible under applicable law.

13. Miscellaneous.

(a) Counterparts. This Agreement may be executed in any number of counterparts, and by each of the parties hereto in separate counterparts, each of which when so executed will be deemed to be an original, and all of which together will constitute one and the same agreement.

(b) Interpretation. The headings contained in this Agreement are for convenience of reference only, and will not in any way affect the meaning or interpretation hereof. As used herein the word “including” shall be deemed to mean “including without limitation.” This Agreement reflects the mutual intent of the parties, and no rule of construction against the drafting party shall apply.

[The remainder of this page is intentionally left blank.]

 

-9-

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf as an instrument under seal as of the date first above written by its officer or representative thereunto duly authorized.

 

THE COMPANY:		KANGAROO HOLDINGS, INC.
		/s/ Andrew Balson
		Name:		Andrew Balson
		Title:		President
THE MANAGER:		KANGAROO MANAGEMENT COMPANY I, LLC
		/s/ Andrew Balson
		Name:		Andrew Balson
		Title:		Authorized Person

[Management Agreement]

---

THE SUBSIDIARIES:		OSI HOLDCO II, INC.
		/s/ Ian Blasco
		Name:		Ian Blasco
		Title:		Vice President
		OSI HOLDCO I, INC.
		/s/ Ian Blasco
		Name:		Ian Blasco
		Title:		Vice President
		OSI HOLDCO, INC.
		/s/ Ian Blasco
		Name:		Ian Blasco
		Title:		Vice President
		OSI RESTAURANT PARTNERS, LLC
		/s/ A. William Allen, III
		Name:		A. William Allen, III
		Title:		Chief Executive Officer

[Management Agreement]

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FIRST AMENDMENT TO MANAGEMENT AGREEMENT

This First Amendment to Management Agreement is made and entered into this 10^th day of May, 2012 by and among (i) Kangaroo management Company I, LLC (the “Manager”), (ii) Bloomin’ Brands, Inc., formerly known as Kangaroo Holdings, Inc. (the “Company”) and (iii) each of the Company’s subsidiaries that executes a counterpart signature page hereto (the “Subsidiaries”).

RECITALS

WHEREAS, the Company, the Subsidiaries and the Manager entered into that certain management Agreement dated as of June 14, 2007; and

WHEREAS, the parties desire to amend the Management Agreement as set forth below.

AGREEMENT

Now, Therefore, in consideration of the mutual covenants contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Acknowledgement of Initial Public Offering. The parties acknowledge that the Company has filed a registration statement on Form S-1 with the Securities Exchange Commission, and that the offering contemplated in the registration statement will qualify as an Initial Public Offering as defined in the Management Agreement.

2. Agreement to Terminate. The parties acknowledge that the Management Agreement shall, pursuant to its terms, terminate immediately prior to an Initial Public Offering unless the Company and the Manager determine otherwise. The Company and the Manager hereby acknowledge that the Management Agreement shall terminate immediately prior to an Initial Public Offering.

3. Termination Fee. The Company and the Manager hereby agree if the Management Agreement is terminated due to an Initial Public Offering in 2012 the Company shall pay to Manager, within sixty days of completion of the Initial Public Offering, but in all events on or before December 31, 2012, a termination fee of Eight Million Dollars ($8,000,000). The termination fee shall be paid in addition to the pro-rated Periodic fee as provided in the Management Agreement.

4. Ratification. The parties hereby ratify and confirm the Management Agreement and acknowledge the same is in full force and effect in accordance with its terms except as specifically modified hereby.

SIGNATURE PAGES ATTACHED

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf as an instrument under seal as of the date first above written by its officer or representative thereunto duly authorized.

 

THE COMPANY:		BLOOMIN’ BRANDS, INC
		/s/ Elizabeth A. Smith
		Name:		Elizabeth A. Smith
		Title:		Chief Executive Officer
THE MANAGER:		KANGAROO MANAGEMENT COMPANY I, LLC
		/s/ Andrew Balson
		Name:		Andrew Balson
		Title:		Authorized Person

---

THE SUBSIDIARIES:		OSI HOLDCO II, INC
		/s/ Joseph J. Kadow
		Name:		Joseph J. Kadow
		Title:		Vice President
		OSI HOLDCO I, INC.
		/s/ Joseph J. Kadow
		Name:		Joseph J. Kadow
		Title:		Vice President
		OSI HOLDCO, INC.
		/s/ Joseph J. Kadow
		Name:		Joseph J. Kadow
		Title:		Vice President
		OSI RESTAURANT PARTNERS, LLC
		/s/ Elizabeth A. Smith
		Name:		Elizabeth A. Smith
		Title:		Chief Executive Officer

Exhibit 10.55

AMENDMENT TO BONUS AGREEMENTS

This Amendment to Bonus Agreements is made and entered into this 10^th day of May, 2012 by and between ELIZABETH A. SMITH (the “Executive”) and BLOOMIN’ BRANDS, INC., formerly known as Kangaroo Holdings, Inc., (the “Company”).

RECITALS

WHEREAS, Executive and the Company entered into that certain Retention Bonus Agreement dated November 2, 2009 (“Retention Agreement”); and

WHEREAS, Executive and the Company entered into that certain Bonus Agreement dated December 31, 2009 (“Bonus Agreement”); and

WHEREAS, Executive and the Company desire to amend the Retention Agreement and the Bonus Agreement as specified below.

AGREEMENT

Now, Therefore, in consideration of the mutual covenants contained here, the parties hereto, intending to be legally bound, agree as follows:

1. Remaining Payments under Retention Agreement. The parties acknowledge and agree that Executive has received all amounts payable pursuant to the Retention Agreement except for Seven Million Two Hundred Thousand Dollars ($7,200,000) (“Remaining Retention Payments”) payable in installments of Three Million Six Hundred Thousand Dollars ($3,600,000) on each of November 2, 2012 and November 2, 2013.

2. Remaining Payments under Bonus Agreement. The parties acknowledge and agree that Executive has not received any amounts payable pursuant to the Bonus Agreement and the entire amount of Fifteen Million Two Hundred Twenty Five Thousand Dollars ($15,225,000) (“Remaining Bonus Payments”) remains unpaid.

3. Modification of Remaining Payments. Executive and Company hereby agree that notwithstanding any contrary provision of the Retention Agreement or the Bonus Agreement, in the event (i) the Company completes an Initial Public Offering (as defined in the Bonus Agreement) during 2012 and (ii) Executive is employed as Chief Executive Officer of the Company at the time of completion of the Initial Public Offering, then all of the Remaining Retention Payments and all of the Remaining Bonus Payments shall be paid to Executive in a lump sum within sixty (60) days of the completion of the Initial Public Offering. If the forgoing conditions are not met, this Amendment shall be null and void ab initio.

4. Ratification. Executive and Company hereby ratify and confirm the Retention Agreement

 

1

---

and the Bonus Agreement and acknowledge same are in full force and effect in accordance with their terms except as expressly modified hereby.

In Witness Whereof, the parties have executed this Agreement the date and year first above written.

 

 

2

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Amendment No. 1 to Registration Statement No. 333-180615 on Form S-1 of Bloomin’ Brands, Inc. of our report dated April 6, 2012 relating to the consolidated financial statements and financial statement schedule of Bloomin’ Brands, Inc., which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Tampa, Florida

May 16, 2012

Exhibit 23.2

Consent of Independent Auditors

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated March 25, 2011, with respect to the consolidated financial statements of PGS Consultoria e Serviços Ltda. included in Amendment 1 to the Registration Statement (Form S-1 No. 333-180615) and related Prospectus of Bloomin’ Brands, Inc. for the registration of its common stock.

/s/ Ernst & Young Terco Auditores Independentes S.S.

Rio de Janeiro, Brazil

May 16, 2012

 

PNC Center

1900 East 9th Street, Suite 3200

Cleveland, OH 44114-3482

T 216.621.0200

F 216.696.0740

www.bakerlaw.com

May 16, 2012

VIA EDGAR

Ms. Loan Lauren P. Nguyen, Special Counsel

US Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, DC 20549

 

Re:

Bloomin’ Brands, Inc.

Registration Statement on Form S-1

File No. 333-180615

Dear Ms. Nguyen:

On behalf of Bloomin’ Brands, Inc. (the “Company”), we transmit herewith Amendment No. 1 (“Amendment No. 1”) to the above-referenced Registration Statement on Form S-1 (as amended, the Registration Statement”) via the EDGAR system of the Securities and Exchange Commission (the “Commission”). In this letter, we respond to the comments of the staff (the “Staff”) of the Division of Corporation Finance of the Commission contained in the Staff’s letter dated May 3, 2012 (the “Letter”). We also are forwarding a copy of this letter under separate cover, together with four (4) courtesy copies of Amendment No. 1, marked to show the revisions made in response to the Staff’s comments.

For ease of reference, the numbered paragraphs below correspond to the numbered comments in the Letter, with the Staff’s comments presented in bold type. All page references in the responses set forth below refer to page numbers in Amendment No. 1.

General

 

1.

We note that you have relied throughout your filing on various data. Please furnish support for each of the key claims made, beliefs stated, or figures cited. We note, for example, statements such as “over the last two years, Outback Steakhouse, Carrabba’s and Bonefish Grill have significantly outperformed the Knapp-Track Casual Dining Index on traffic growth by 8.5%, 11.2% and 20.2%,” “Outback Steakhouse holds the #1 U.S. market position,” “Carrabba’s and Bonefish Grill hold the #2 U.S. market position,” and “Outback Steakhouse also held the #1 position in Brazil in the full-service restaurant sector and in South Korea among western full-

 

Chicago     Cincinnati     Cleveland     Columbus     Costa Mesa

Denver     Houston     Los Angeles     New York     Orlando     Washington, DC

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May 16, 2012

Page 2

 

service restaurant concepts,” among other statements. Please revise to provide context for such statements by disclosing the number and types of restaurants that are measured in the Knapp-Track Casual Dining Index and other applicable surveys. Please also provide us with a copy of this data as it relates to the statements you make in the prospectus.

We are supplementally providing to the Staff under separate cover copies of the market and other industry data supporting such statements in the Registration Statement. The Company is requesting that such supplemental material be returned pursuant to Rule 418. The Company has revised the disclosure on page ii in response to the Staff’s comment.

 

2.	Please revise to remove the “Table of Contents” and “Index to Financial Statements” heading from each page except the applicable pages.

We note that the referenced headings are hypertext links to the Table of Contents and Index to Financial Statements, respectively, in order to assist readers in navigating the electronic version of the filing. We believe these internal links are customary and permitted by Item 105(b) of Regulation S-T. We confirm that hard copy versions of the prospectus will not contain these headers.

 

3.

We note that the chronological order of financial information is not consistent throughout the filing. On page 55 you begin with fiscal year 2009 and on page F-3 you begin with fiscal year 2011. Please revise to ensure financial information reads consistently from left to right in the same chronological order throughout the filing. Please refer to ASC topic 205-10-S99-9 for further guidance.

The Company has revised the financial information so that it is consistently ordered throughout the filing.

Inside Cover Page Graphics

 

4.

Please revise to remove the word “[g]rowth” from the first page of graphics, the words “innovation,” “growth” and “fresh” from the second page of graphics and the words “quality,” “passion” and “pride” from the third page of graphics. In addition, please revise to remove the statement that “[e]very meal we serve tells the story of our SUCCESS” from the third page of graphics. Your graphics should be limited to your products or the services you provide and text accompanying your graphics should only be used to the extent necessary to explain briefly the visuals in the presentation.

The Company has revised the graphics in response to the Staff’s comment. In particular, the Company has deleted the words “growth” and “success.” As revised, the Company believes the graphics are appropriately limited to the products and services provided by the Company and the accompanying text is properly limited to terms that will be familiar and readily understandable to average investors and that are otherwise consistent with, and do not detract from, the prospectus disclosure. The Company believes the revised graphics are consistent with the Staff’s guidance contained in the Current Issues and Rulemaking Projects, Quarterly Update, March 31, 2001, Section VIII (http://www.sec.gov/divisions/corpfin/cfcrq032001.htm#secviii).

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May 16, 2012

Page 3

 

Outside Cover Page Graphics

 

5.	Please revise to remove the text from the first two pages of graphics.

The Company does not believe any revisions to these graphics are necessary, as we believe they are consistent with the Staff’s guidance cited in response to comment #4. Please refer to our response to comment #4 for additional details.

Market and Other Industry Data, page ii

 

6.

Please confirm that all market data and reports cited in the prospectus are publicly available or available through subscriptions and were not prepared in contemplation of your securities offering. Otherwise, please file a consent from the preparer pursuant to Rule 436 or advise as to why a consent is not required.

The Company has advised us that all market data and reports cited in the Registration Statement are publicly available or available through subscriptions and were not prepared in contemplation of this offering.

 

7.	Please revise this section to remove the implication that information contained in the prospectus may not be accurate by providing that you act and believe that the information is true and accurate. You may not disclaim responsibility for the accuracy of the information contained in your document.

The Company has revised the Market and Other Industry Data section on page ii in response to the Staff’s comment.

Prospectus Summary, page 1

 

8.	We note that your summary, in large part, repeats identical information contained in your Business section. Please revise the summary to identify those aspects of the offering that are the most material to you. Refer to Item 503 of Regulation S-K.

The Company has revised the disclosure on pages 1 through 5 of the Summary section in response to the Staff’s comment.

 

9.

Please revise the summary section and throughout to eliminate non-substantiable statements such as the statements on page 1 that your concepts provide a “compelling” customer experience combining “great food, highly attentive service” and “lively and contemporary ambience at attractive prices” and Outback Steakhouse features “high quality” and “attentive service” at a “compelling value.” We note other statements such as your management possessing “strong” brand management and “innovation expertise” on page 4 and your “successful” remodel program on page 5. In addition, please revise to clarify what you mean and provide the basis for your statements that Carrabba’s features “high quality handcrafted

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May 16, 2012

Page 4

 

dishes” and “warm Italian hospitality,” Bonefish Grill features “high-end yet approachable service” and an “energetic setting for drinks, dining and socializing with a popular bar menu” and Fleming’s offers a “stylish, lively and memorable dining experience” and “quality” wines. In addition, please revise to clarify what you mean by a “polished” casual seafood restaurant” on page 2. Please revise the Business section accordingly.

The Company has revised the Summary section and remainder of the prospectus (including pages 1, 2, 3, 4, 5, 95, 96, 98, 101, 103, 104 and 105) in response to the Staff’s comments.

However, the Company believes that various statements identified by the Staff as “non-substantiable” provide helpful descriptions for potential investors to understand how the Company seeks to position its restaurant concepts and to attract customers. For example, references to the “high quality” of its food indicate that the Company is selective in its ingredients, such as the grade of beef and freshness of its seafood and vegetables, and “handcrafted dishes” indicate that menu items are made from scratch at individual restaurant locations rather than mass-produced or prepackaged through an automated process. The Company’s service model provides customers with frequent attention from the restaurant staff and reflects high wait staff-to-table ratios. Furthermore, the ambience of each of its restaurant concepts differs, and these statements are intended to provide the reader with an understanding of how they are differentiated, which supports the Company’s business model and growth opportunities. The Company believes that there is sufficient explanation provided in the prospectus to enable the reader to understand what these abbreviated descriptions mean in the Summary and Business sections.

Our Company, page 1

 

10.

We note your disclosure on page 1 that Outback Steakhouse holds the #1 U.S. market position and Carrabba’s and Bonefish Grill holds the #2 U.S. market position, in their respective full-service restaurant categories, “[i]n 2010, Outback Steakhouse also held the #1 position in Brazil in the full-service restaurant sector and in South Korea among western full-service restaurant concepts” and other similar statements regarding market position throughout your document. Please revise to add balancing disclosure regarding the highly-fragmented nature of the restaurant industry and the small amount of market share held by even the largest companies. In addition, please revise to identify the “respective full-service restaurant categories” that Carrabba’s and Bonefish Grill operate in. Please revise the Business section accordingly.

The Company has revised the disclosure on pages 1 and 95 in response to the Staff’s comment.

 

11.	Please revise to clarify what you mean by the “best practices of the consumer products industry.”

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May 16, 2012

Page 5

 

The Company has revised the disclosure on pages 1 and 95 in response to the Staff’s comment.

 

12.	Please revise to clarify that you own a 50% interest in a joint venture that owns and operates Roy’s restaurants. Please revise page 87 as applicable.

The Company has revised the disclosure on pages 2 and 96 in response to the Staff’s comment.

 

13.	We note your disclosure in the second paragraph in this section regarding your comparable restaurant sales. Please revise to include Roy’s comparable restaurant sales regarding Roy’s and revise the Business section accordingly.

The joint venture in which the Company holds a 50% interest owns and operates only 22 Roy’s restaurants represents a very small portion of the Company’s over 1,400 restaurants. The Roy’s business has not been an area of focus for the Company over the past few years. The Company’s growth strategy has focused on increasing comparable restaurant sales in its four core concepts, and accordingly, the Company does not believe that including Roy’s in its comparable store sales data on page 1 would provide an appropriate reflection of its progress in that regard or the measures that it uses in managing the business.

 

14.	We note your reference to the Knapp-Track Casual Dining Index in the third paragraph in this section. Please revise to provide the corresponding information for Fleming’s and Roy’s and revise the Business section accordingly or advise.

The Company has revised pages 1 and 95 to provide the requested disclosure for Fleming’s relative to the Knapp-Track High End index, which the Company understands to be an index of high end steakhouses. The Company does not believe there is a comparable Knapp-Track index that would provide corresponding information for Roy’s.

 

15.	Please revise the third-to-last sentence in the first paragraph and the second sentence in the third paragraph in this section to state as beliefs and revise the business section accordingly.

The Company has revised the disclosure on pages 1 and 95 in response to the Staff’s comment.

Recent Evolution of our Business, page 2

 

16.	Please balance your disclosure on page 3 regarding the significant cost savings by disclosing that your cost of sales has increased due to rising commodity prices.

The Company has revised the disclosure on page 3 in response to the Staff’s comment. The Company has also provided disclosure regarding increased commodity prices elsewhere in the prospectus, including Risk Factors on page 17 and Management’s Discussion and Analysis on pages 61 and 64.

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May 16, 2012

Page 6

 

17.	Please revise to remove the word “extensive” from this section as this term is subjective and does not further investors’ understanding of the nature and type of consumer research you conducted. In addition, please revise the Business section accordingly.

The Company has revised the disclosure on pages 2, 3, 97, 99, 106 and 109 in response to the Staff’s comment.

Competitive Strengths, page 4

 

18.

We note that your summary contains a lengthy description of your competitive strengths and your growth strategy. Please balance the disclosure in your summary by providing a brief discussion of your current debt level, including the type and amount of your assets that have been pledged as collateral under your senior secured credit facilities and the 2012 CMBS loan, and the challenges of implementing your strategy.

The Company has revised the disclosure on page 6 in response to the Staff’s comment.

 

19.	Please explain what is a “compelling 360-degree customer experience.” Alternatively, please remove such disclosure.

The Company has revised the disclosure on pages 3 and 98 in response to the Staff’s comment.

 

20.	Please provide the basis for your statement on page 3 that customer experience and value perception differentiate your restaurants from other restaurants. Alternatively, please remove such disclosure.

The Company has revised the disclosure on pages 3 and 98 in response to the Staff’s comment.

 

21.	Please revise to clarify what you mean by your disclosure on page 4 that “[you] have enhanced the value that [you] offer [your] customers through menu and promotional innovation, rather than aggressive discounting.”

The Company has revised the disclosure on page 4 to remove the statement in order to shorten the Summary. The Company has also revised the disclosure on page 99 in response to the Staff’s comment.

 

22.

Please provide the basis for your statement that you “offer price points that deliver superior value to customers while maintaining attractive margins” and clarify what you mean by “attractive margins” by providing quantitative information. In addition, please disclose that you have offset the impact of rising commodity prices by increasing menu prices.

The Company has revised the disclosure on pages 4 and 99 in response to the Staff’s comment.

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May 16, 2012

Page 7

 

23.	Please provide the basis for your statement on page 4 that the fact that a “majority of [your] international restaurants are company-owned or operated through joint venture” differentiates you from “[your] casual dining peers.” Alternatively, please delete such statements.

The statement is based on the Company’s review of the information that is made publicly available by its peers and available through casual dining industry surveys, which indicate that many of these casual dining competitors have established international restaurant locations predominantly through franchise arrangements, rather than company-owned or joint venture owned stores. The Company has revised the disclosure on page 4 to remove the statements in order to shorten the Summary. The Company has revised the statement on page 99 to clarify that it is referring to “many” of its casual dining peers, rather than the group as a whole.

 

24.	Please revise to clarify what you mean by the term “best-in-class” in the last paragraph on page 4.

The Company has revised the disclosure on pages 4 and 100 in response to the Staff’s comment.

 

25.

Please revise to clarify what you mean by “high quality” and define “affordable” in the second bullet point on page 5 by including in brackets the range of prices. In addition, please revise to clarify what you mean by “meaningful” in the third bullet point on page 5 by providing quantitative information. Please revise throughout as appropriate.

The Company has revised the disclosure on pages 5 and 101 in response to the Staff’s comment.

 

26.

Please balance the fourth bullet point on page 5 and the last sentence of the first paragraph on page 6 to clarify that there is no guarantee that your “R&D team will continue to introduce innovative items that match evolving consumer preferences” or that your productivity measures will “yield productivity and costs savings of approximately $50 million in 2012 and additional savings in future years.” Similarly, please revise the third complete bullet point on page 92.

The Company has revised the disclosure on pages 5 and 102 in response to the Staff’s comment.

Our History, page 6

 

27.	When you refer to your “initial public offering” in the second sentence of the first paragraph on page 6, please clarify which entity you are referring to. Please also revise page 87 accordingly.

The Company has revised the disclosure on pages 6 and 96 in response to the Staff’s comment.

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May 16, 2012

Page 8

 

Our Sponsors, page 7

 

28.

Please revise the Our Sponsors section to remove the second sentence from your Bain Capital Partners, LLC section and the second sentence and the words “positioned for attractive growth” from the Catterton Management Company, LLC section on page 7, as you are offering shares of Bloomin’ Brands, Inc. not interests in Bain Capital Partners or Catterton Management Company.

The Company has revised the disclosure on page 7 in response to the Staff’s comment.

 

29.

Please balance the disclosure by disclosing that certain of your directors are also officers or control persons of your sponsors and briefly discuss the conflicts of interests that your sponsors, who also serve as your directors and members of your management company, may have with your business. In addition, please briefly discuss the conflicts of interest that your founders, two of whom serve as directors, may have with your business.

The Company has revised the Summary on pages 6 and 7 in response to the Staff’s comment regarding the officers and control persons of the Company’s Sponsors who are also directors. The Company has also added disclosure on page 29 in Risk Factors regarding conflicts of interest that its Founders who also serve as directors may have with the Company’s business due to their involvement in related party transactions, since the section referenced in the Summary section only pertains to the Sponsors.

Summary Consolidated Financial and Other Data, page 9

 

30.

We note your disclosure on page 12 in footnote (8) in which you state that as a result of your current liability for unearned revenue from the sale of gift cards, you have a working capital deficit. However, when you receive cash in advance from the sale of gift cards you have an increase in cash with an equal increase in unearned revenue liability, which in and of itself would not create a working capital deficit as both current assets and liabilities are increased. Please revise this disclosure as appropriate.

The Company has revised footnote (7) on page 11 to clarify the reasons why it has a working capital deficit.

Risk Factors, page 13

 

31.	Please add a risk factor about the risk that a significant amount of the proceeds will not be available to help you grow as a business as a significant amount of the proceeds will be used to pay your existing debt.

The Company has added a risk factor on page 25 in response to the Staff’s comment.

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May 16, 2012

Page 9

 

We may be required to use cash to pay one of our franchisees, page 15

 

32.	Please revise to also disclose that your development plans may be impacted by your grant to one of the T-Bird entities the exclusive right through 2031 to develop and operate Outback Steakhouse restaurants as a franchisee in California.

The Company does not believe the exclusive right granted to the T-Bird entities will have a material impact on its development plans. The exclusive right is limited to Outback Steakhouse restaurants in California, and the Company does not have plans to develop additional Outback Steakhouse restaurants in California at this time.

 

33.	Please revise to provide additional details regarding the equity interests in the T-Bird entities that own Outback Steakhouse restaurants which you may be required to purchase for cash.

The Company has revised the disclosure on page 14 in response to the Staff’s comment.

Increased commodity, energy and other costs could decrease our profit margins, page 18

 

34.	Please revise to describe the rising cost of commodities in 2011 and the increase in your menu prices in 2011.

The Company has revised the disclosure on page 17 in response to the Staff’s comment.

Consumer reaction to public health issues, such as an outbreak of flu viruses, page 20

 

35.	We note that recently the USDA confirmed one case of mad cow disease found in a dairy cow in California and some media circuits report that certain foreign jurisdictions have banned U.S. beef until further notice. Please revise to update this risk factor as appropriate.

The Company has revised the disclosure in the risk factor regarding unfavorable publicity on page 19 in response to the Staff’s comment. The Company believes that the disclosure regarding mad cow disease is more appropriate in this risk factor, rather than the risk factor regarding consumer reaction to public health issues, as noted in the Staff’s comment.

We outsource certain accounting processes to a third-party vendor, which subjects us to, page 21

 

36.	Please revise to remove the word “unforeseen” from the heading for this risk factor.

The Company has revised the disclosure on page 21 in response to the Staff’s comment.

Our debt agreements contain restrictions that limit our flexibility, page 25

 

37.	Please revise to clarify the significant portion of your assets that you have pledged as collateral under the senior secured credit facilities and the 2012 CMBS Loan.

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May 16, 2012

Page 10

 

The Company has revised the disclosure on page 24 in response to the Staff’s comment.

Cautionary Note Regarding Forward-Looking Statements, page 31

 

38.

We note your disclosure on page 32 that “those factors should not be construed as exhaustive and should be read with other cautionary statements in [the] prospectus.” Please revise to provide cross-references to the other sections or clarify that your Risk Factors section includes all known and material risks.

The Company has revised the disclosure on page 32 to remove the cited language.

Termination of Management Agreement, page 40

 

39.	Please tell us whether you will pay a termination fee in connection with this offering to the management company. Also file the management agreement with the registration statement or advise.

On May 10, 2012, the Company entered into an amendment to the management agreement, pursuant to which it will pay an $8 million termination fee to the management company in connection with the completion of this offering. Relevant disclosure has been revised throughout the prospectus. The Company has filed the management agreement, as amended, as an Exhibit to Amendment No. 1.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 50

Factors Impacting Financial Results, page 54

 

40.

We note your statement that you expect to maintain a full valuation allowance on your net deferred income tax assets until you sustain an appropriate level of profitability that generates taxable income that would enable you to conclude that it is more likely than not that a portion of your deferred income tax assets will be realized. However, per the table on page F-42 you have a valuation allowance of only approximately $36 million and net deferred income tax assets of approximate $277 million. Please advise.

The table on page F-42 indicates that the Company has net deferred tax liabilities of $161 million. These net deferred tax liabilities include deferred tax assets and liabilities for foreign jurisdictions, for which no valuation allowance has been recorded. Also included in the net deferred tax liabilities are liabilities related to indefinite-lived assets. The full valuation allowance is recorded for net U.S. deferred income tax assets, excluding deferred tax liabilities related to indefinite-lived assets.

The Company has clarified the disclosure on page 56 in response to the Staff’s comment.

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May 16, 2012

Page 11

 

Ownership Structures, page 53

 

41.

We note the disclosure in the second paragraph that your company-owned or controlled restaurants include restaurants structured as limited partnerships where you are a general partner. We further note that your legal ownership interests in these partnerships and joint ventures generally range from 50% to 90%. Please clarify your ownership structure with respect to the limited partnerships and disclose whether the manager partners and chef partners are limited partners.

The Company has revised the disclosure on pages 55 and 115 in response to the Staff’s comment.

 

42.	Please revise to include a risk factor to disclose that your cash flow may be affected by the partnership distributions to your partners or explain to us why this is immaterial.

The Company has revised the disclosure on pages 55 and 115 to indicate that it does not receive 100% of the profits from restaurants in which it does not have a 100% interest. The Company does not believe this situation creates a risk to its business or cash flows, but is merely a structural arrangement. The partnership distributions to its partners are in proportion to their ownership interests.

Dividends, page 75

 

43.	Please revise to briefly disclose the limited circumstances under which OSI will pay dividends to you.

The Company has revised the disclosure on page 84 in response to the Staff’s comment.

Business, page 86

Our Company, page 86

 

44.	Please revise to remove the word “uniquely” seasoned beef on page 86 and the word “uniquely” prepared Italian dishes or please provide the basis for your belief that your seasoning and food preparation are unique.

The Company has revised the disclosure with regard to Carrabba’s on pages 2, 96 and 104 in response to the Staff’s comment. With respect to the Company’s statement regarding “uniquely seasoned beef,” the Company believes this is an accurate and helpful description of the steak it offers at Outback Steakhouse, which the Company has used for many years. The Company considers its recipe, which consists of 17 different spices, to be valuable proprietary information and safeguards its recipe accordingly. The Company believes, based on customer feedback, that its flavors are distinct from its competitors.

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May 16, 2012

Page 12

 

History and Evolution of Our Business, page 87

 

45.

We note your disclosure on page 88 that the percentage of customers that rated their overall customer satisfaction at Outback Steakhouse as excellent or very good increased from April 2009 to December 2011. Please revise to disclose the percentage of customers surveyed in April 2009 and December 2011. Please also disclose whether you have conducted similar surveys in your other restaurants, and, to the extent you have, whether the results at Outback Steakhouse are representative of the results of the surveys conducted at your other restaurants. In addition, please revise to provide a cross reference to page 105, where you provide a description of the Service Management Group and the customer surveys. Alternatively, please remove the disclosure.

The Company has revised the disclosure page 97 and the now cross-referenced page 114 in response to the Staff’s comment.

 

46.

Please revise the first sentence in the second-to-the-last bullet point on page 88 to state as a belief and remove the word “extensive” in the first and last bullet points on page 88, page 97 and page 100. In addition, please revise to clarify that it is your belief that you have improved the performance metrics provided to your managing and area operating partners in the last bullet point on page 88.

The Company has revised the disclosure on pages 2, 3, 97, 99, 106 and 109 in response to the Staff’s comment.

Competitive Strengths, page 89

 

47.	Please revise to remove the word “experienced” in the first bullet point on page 90 or substantiate to us that your managing partners are all experienced. Please also revise the second bullet point on page 90 to state as a belief.

The Company has revised the disclosure on pages 3 and 99 in response to the Staff’s comment.

Business Model Focused on Continuous Innovation and Productivity, page 90

 

48.	We note the disclosure that you reinvest a portion of productivity savings in innovation. Please revise to provide quantitative information regarding the portion of such savings that you invest in innovation or advise.

The Company has revised the disclosure to delete the referenced statement in the Summary section on page 4 and on page 100.

 

49.	Please revise to clarify what you mean by “strong value proposition” in the second bullet point on page 91.

The Company has revised the disclosure on pages 4 and 100 in response to the Staff’s comment.

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May 16, 2012

Page 13

 

Experienced Executive and Field Management Teams, page 91

 

50.	Please revise to disclose that it is your belief that Ms. Smith has a “strong track record of growth and operating discipline” and revise to clarify what you mean by “operating discipline.”

The Company has revised the disclosure on page 100 in response to the Staff’s comment.

 

51.	With a view towards revised disclosure, please advise as to how “innovation expertise” has been driven by your team’s focus on analytics and customer testing. In addition, please revise to remove the word “strong” as this term is subjective.

The Company has revised the disclosure on pages 4 and 100 in response to the Staff’s comment.

 

52.	Please revise the fourth sentence in the second paragraph of this section on page 91 to state as a belief. Similarly revise the second sentence in the first complete bullet point on page 92.

The Company has revised the disclosure pages 100 and 101 in response to the Staff’s comment.

 

53.	We note your disclosure on page 91 that you believe that your compensation structure differentiates you from your peers. Please provide the basis for this belief.

The Company has revised the disclosure on page 100 to clarify that the Company believes its compensation structure differentiates it from any competitor of similar size. These competitors generally include public companies, and the Company’s belief is based on its comparison of its program with those publicly disclosed by these competitors. Based on the public disclosure of the Company’s competitors, as well as management’s industry knowledge, the Company does not believe that any similarly-sized competitors utilize a similar compensation structure.

Pursue New Domestic and International Development, page 92

 

54.	We note your disclosure on page 92 that you are targeting a minimum of a 15% average pre-tax return on the initial investment in your new domestic restaurants. Please revise to clarify that there is no guarantee that you will achieve your goal of a minimum 15% average pre-tax return.

The Company has revised the disclosure on page 101 in response to the Staff’s comment.

 

55.	Please revise to disclose when you expect to double the number of Bonefish Grill restaurants from the existing base of 158 units or advise.

The Company has revised the disclosure on page 101 in response to the Staff’s comment.

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May 16, 2012

Page 14

 

Industry Overview, page 94

 

56.	Please clarify, if true, that the data provided in the first three paragraphs has been obtained from the National Restaurant Association.

The data cited in this section is used as described in Market and Other Industry Data. However, the Company has revised the disclosure page 103 to clarify this disclosure.

Our Concepts, page 94

 

57.	Please revise to clarify what you mean by “contemporary cooking techniques” and “Hawaiian hospitality” on page 96.

The Company has revised the disclosure on page 105 in response to the Staff’s comment.

 

58.	Please revise to clarify what you mean by “spacious” dining rooms and an “expansive” lounge area on page 96.

The Company has revised the disclosure on page 105 in response to the Staff’s comment.

Remodel/Renovation Plan, page 98

 

59.	Please revise to state that it is your belief your traffic growth increased because of the renovations on page 98.

The Company has revised the disclosure on page 107 to remove the statement attributing the traffic growth to the renovation program.

Restaurant Development, page 99

 

60.	Please revise to clarify what you mean by “[i]n the near term” in the second sentence in the first complete paragraph on page 100.

The Company has revised the disclosure on pages 5, 102 and 109 in response to the Staff’s comment.

Research & Development/Innovation, page 100

 

61.	If material, please revise to disclose the amount spent on research and development pursuant to Item 101(c)(1)(xi) of Regulation S-K.

The Company does not believe that disclosure of the amount it spent on research and development is required under Item 101(c)(1)(xi) of Regulation S-K, as the amount spent was not material.

 

62.	Please revise the second and third sentences in this section to state as beliefs.

The Company has revised the disclosure on page 109 in response to the Staff’s comment.

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May 16, 2012

Page 15

 

Strategy and Market Intelligence, page 101

 

63.	Please revise to provide quantitative information regarding the “consistent improvements in [your] rate of return.”

The Company has removed the disclosure on page 110 in response to the Staff’s comment.

Advertising and Marketing, page 102

 

64.	Please revise to clarify what you mean by “grassroots marketing” on page 102. In addition, please revise to clarify what you mean by “sufficient” penetration and a “meaningful” broadcast schedule.

The Company has revised the disclosure on page 111 in response to the Staff’s comment.

Restaurant Operations, page 103

 

65.	Please revise the first sentence in this section to state as a belief.

The Company has revised the disclosure on page 111 in response to the Staff’s comment.

Area Operating, Managing and Chef Partner Programs, page 103

 

66.	Please revise to clarify what you mean by “distributable cash flow” and “positive distributable cash flow” in accordance with the terms of a partner’s employment agreement on page 103.

The Company has revised the disclosure on pages 81 and 112 in response to the Staff’s comment.

Service, page 105

 

67.	Please revise to provide context regarding the Service Management Group surveys by disclosing the number of participants and the percentage of your customers that receive an invitation to participate in the web-based survey and the percentage of customers that participate in the survey.

The Company has revised the disclosure on page 114 in response to the Staff’s comment.

Sourcing and Supply, page 106

 

68.	Please revise to clarify how you are “building stronger partnerships with [your] key vendors.”

The Company has revised the disclosure on page 115 in response to the Staff’s comment. Furthermore, we note that the cited language is included in a sentence describing the mission of the Company’s supply chain management organization. There are many different ways that the Company might be able to build stronger relationships with its vendors, and one of the purposes of the supply chain management organization is to identify and evaluate any such opportunities. However, the Company does not believe that attempting to describe these activities or opportunities in the prospectus would add value to investors.

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May 16, 2012

Page 16

 

69.

We note your disclosure regarding your national distribution program with a custom distribution company. Please identify the sole custom distribution company and revise your risk factor section to address the risk of relying on a single distribution company or tell us why such disclosure is not necessary.

The Company has revised the Risk Factor disclosure on page 20 to indicate that it relies on a single custom distribution company.

The Company does not believe that naming the distribution company is required under Regulation S-K or necessary to an investor’s understanding of our supply of materials. The distribution company is a service provider that acts as an intermediary between the Company and its suppliers. The Company does not believe that its business or operations would be materially and adversely impacted if the Company was for any reason unable to continue to receive distribution services from this distribution company. The Company believes it would still be able to acquire products from its suppliers, either directly or through other distributors, without a material interruption in its business activities. The Company believes that competition in the food distribution industry is intense and that other distributors would compete for its business.

Furthermore, this distribution company has a highly diversified platform with four different divisions. The Company only utilizes a single platform known as the Custom division. From a geographical and logistical standpoint, this distribution company has tremendous reach and the Company perceives it to present a low risk of interruption of services. The Company obtains goods from seven different distribution facilities. In the event of an issue with one facility, the Company could shift to another or use one of the distributor’s other divisions (i.e. other than Custom).

Company-owned Restaurants, page 106

 

70.

We note disclosure stating that in the future you do not plan to utilize limited partnerships for domestic company-owned restaurants. Please tell us why you have decided to change the organizational structure for your domestic company-owned restaurants and whether the change in structure will affect your cash flow.

The Company has decided not to utilize limited partnerships for domestic company-owned restaurants in the future primarily for ease of administration and clarity with respect to employment tax treatment. The change will increase the Company’s payroll taxes as distributions will be subject to payroll taxes, but the change will not materially affect the Company’s cash flow.

Unaffiliated Franchise Program, page 107

 

71.	We note your disclosure on page 107 that your regional vice presidents “regularly” inspect franchised restaurants.” Please revise to disclose how frequently your vice presidents inspect your franchisees.

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May 16, 2012

Page 17

 

The Company has revised the disclosure on page 116 in response to the Staff’s comment.

Employees, page 110

 

72.	We note your disclosure on page 19 regarding the consent decree you entered into in December 2009 in settlement of litigation brought by the U.S. Equal Employment Opportunity Commission. Please revise to describe the terms of the settlement here or in your Legal Proceedings section.

The Company has disclosed the settlement and Consent Decree on page 118 in the Governmental Regulation section of the prospectus, which the Company believes is a more appropriate location for such disclosure than the Employees section. In response to the Staff’s comment, the Company has revised the disclosure on page 118 to provide additional details about the terms of the settlement and Consent Decree.

The Company has not disclosed the settlement in a Legal Proceedings section because it occurred in 2009. Item 103 of Regulation S-K applies to material pending legal proceedings. The Company does not consider this a pending proceeding. Nor does it consider the monetary amount of the settlement material within the meaning of Item 103 of Regulation S-K (including Instruction 2 thereto). Furthermore, even though the Consent Decree is still applicable, the Company does not consider the terms of the Consent Decree material enough to require disclosure under Item 103.

The Company disclosed the settlement and Consent Decree in the Risk Factors primarily to provide an example of the types of litigation that the Company could face, but this disclosure was not intended to be a distinct, material risk impacting the Company. The Company has been subject to the Consent Decree since 2009 and does not believe that continuing compliance poses a material risk or otherwise materially burdens the Company’s operations or its relations with its employees. The Risk Factor disclosure on page 18 has been revised to clarify and provide additional details about the terms of the settlement and Consent Decree.

 

73.	Please revise to disclose as to whether any of the employees of your franchisees are covered by a collective bargaining agreement.

The Company does not believe that such disclosure is required by Regulation S-K or otherwise would be helpful to investors. The disclosure in this section relates to the Company’s employees. Employees of the Company’s franchisees are not employees of the Company or any of the Company’s subsidiaries or affiliates. Any collective bargaining agreements covering employees of a franchisee would relate to the relationship between such franchisee and its employees, but it would not involve the Company or its employees. The Company advises the Staff that, other than the employees of a small number of franchised restaurants located in airports, the Company does not believe that the employees of its franchisees are subject to collective bargaining agreements. However, the Company does not have complete information from its 153 franchised restaurants to allow it to state in a prospectus whether or not the franchisee employees are covered by collective bargaining agreements.

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May 16, 2012

Page 18

 

Management, page 114

 

74.	We note your disclosure on page 114 that Dirk Montgomery will serve as your chief financial officer until you hire a new chief financial officer. Please revise to disclose when you intend to hire a new chief financial officer.

Effective May 7, 2012, the Company appointed David Deno as its new Chief Financial Officer. The Company has revised the Management section on pages 123 and 124 accordingly. The Company has also added an explanatory footnote to the Summary Compensation Table on page 136 and filed Mr. Deno’s employment agreement as Exhibit 10.53 to the Registration Statement.

Compensation Discussion and Analysis, page 119

 

75.	We note the disclosure on page 119 that you had 15 system-wide restaurant openings across most brands in 2011. Please revise to clarify whether the recently opened restaurants are company-owned, franchises and/or joint ventures.

The Company has revised the disclosure on pages 54 and 128 to specify that of the restaurant openings, seven were company-owned, five were joint ventures and three were franchises.

 

76.	Please revise to clarify what you mean by your disclosure that 2.1% of comparable sales represents “payment at target” on page 122. It appears that you may have intended to state that it represents payment at 50% of target.

The Company has revised the disclosure on page 131 in response to the Staff’s comment.

Compensation Changes for 2012, page 125

 

77.

We note your disclosure on page 124 that you granted Mr. Kadow and Ms. Bliney options based on the recommendation of your compensation consultant on December 9, 2011. We also note your disclosure on page 125 that your compensation consultant utilized comparative market data. To the extent that you used benchmarking in your decision to grant the options to Mr. Kadow and Ms. Bliney, please revise to identify the companies to which you benchmarked and the degree to which you considered such companies comparable to you. Refer to Item 402(b)(2)(xiv) of Regulation S-K.

The Company has revised the disclosure on page 134 in response to the Staff’s comment.

Executive Compensation, page 127

Summary Compensation Table, page 127

 

78.	We note your cross-reference to Grants of Plan-Based Awards for Fiscal 2009 in footnote 5 of your summary compensation table. However, we are unable to find such a section in your registration statement. Please advise.

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May 16, 2012

Page 19

 

The Company has deleted the cited cross-reference in footnote 5 on page 136 in response to the Staff’s comment.

Related Party Transactions, page 144

 

79.	Please revise to file your lease agreement with MVP LRS, LCC as an exhibit to your filing or tell us why this is not necessary.

The Company has filed the lease agreements with Selmon’s/Florida-I, Limited Partnership (predecessor to MVP LRS, LLC) as Exhibits 10.51 and 10.52 in response to the Staff’s comment. In addition, the Company notes that it deleted the disclosure regarding these leases on page 154 (previously under the heading “MVP LRS, LLC”) because this disclosure is already contained within the disclosure on page 155 under the heading “Sale of Lee Roy Selmon’s Concept.”

 

80.

Refer to page F-48 to F-51. Please revise to disclose the transaction with Paradise Restaurant Group, LLC and your transactions with the owners of your primary domestic beef cutting operations, which hold a greater than 50% combined ownership interest in your franchisee of six Outback Steakhouse restaurants in Southeast Asia or tell us why this is not necessary.

The Company does not believe that either of these transactions is required to be disclosed as a related party transaction under Item 404(a) of Regulation S-K, or otherwise is material to the disclosures in this section.

As disclosed in the notes to the financial statements, Paradise Restaurant Group is controlled by the former president of the Cheeseburger in Paradise concept and also includes as investors a current development partner of the Company and former Company employees. However, none of these individuals was or is a “related person” as defined in Instruction 1 to Item 404(a), either at the time of transaction or anytime thereafter, because none of these individuals was a director, executive officer or covered security holder of the Company, or an immediate family member of any of the foregoing. As a result, no “related persons” of the Company had or have a direct or indirect material interest in the Paradise Restaurant Group transactions.

With respect to the Company’s transactions with its primary domestic beef cutting operation, no “related person” within the meaning of Item 404(a) has any interest in such transactions. Despite the relationship between the beef cutting operation and the Company’s franchisee in Southeast Asia, no director, executive officer, covered security holder or an immediate family member or any of the foregoing has any direct or indirect material interest in either of these entities. As such, no “related person” has a direct or indirect material interest in the Company’s transactions with such entities.

The transactions referenced in the Staff’s comments were disclosed in Note 17 to the financial statements after considering the disclosure guidance applicable to financial statements and the notes thereto.

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May 16, 2012

Page 20

 

Restrictive Covenants and Other Matters, page 148

 

81.	Please revise to disclose the financial covenants and define the total leverage ratio test.

The Company has revised the disclosure on page 159 in response to the Staff’s comment.

Principal Stockholders, page 155

 

82.	Please revise footnote 2 to identify the individual or individuals who have voting or investment power with respect to the shares held by Catterton Partners VI-Kangaroo L.P.

The Company has revised footnote 2 on page 167 in response to the Staff’s comment.

Notes to Consolidated Financial Statements, page F-8

Note 16. Commitments and Contingencies, page F-46

Insurance, page F-48

 

83.

We note your disclosure that reserves recorded for worker’s compensation and general liability claims are discounted using the average of the 1-year and 5-year risk free rate of monetary assets that have comparable maturities. Please confirm to us that the amount and timing of cash payments related to these liabilities are fixed or reliably determinable. Please revise to disclose the amounts accrued for these liabilities.

Please note that if a liability is recognized on a discounted basis, the notes should also include the following disclosures:

 

•

Expected aggregate undiscounted amount;

 

•

Expected payments for each of the five succeeding year, and the aggregate amount thereafter;

 

•

A reconciliation of the expected aggregate undiscounted amount to amounts recognized in the statement of financial position; and

 

•

An explanation of material changes in the expected aggregate amount since the prior balance sheet date, other than those resulting from pay-down of the obligation.

Please refer to the guidance in ASC Topic 450-20-S99-1 and revise accordingly.

Reserves recorded for workers’ compensation and general liability claims represent management’s best estimate based upon an actuarial valuation provided by a third party actuary. Included in the reserves balances are case reserve estimates for reported losses, plus additional amounts based on projections for incurred but not reported claims and anticipated increases in case reserve estimates. The amount and timing of cash payments related to these liabilities are fixed or reliably determinable given a sufficient level of historical claim volume to support actuarial assumptions and judgments.

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May 16, 2012

Page 21

 

The Company has revised its disclosure within Note 16 on pages F-48 and F-49 to the Consolidated Financial Statements to comply with ASC Topic 450-20-S99-1.

Other

 

84.	The financial statements should be updated, as necessary, to comply with Rule 3-12 of Regulation S-X at the effective date of the registration statement.

The Company has updated the financial statements.

 

85.	Provide a currently dated consent from the independent public accountant in the amendment.

The Company has filed currently dated consents as Exhibits to Amendment No. 1.

If you have any questions regarding the foregoing or Amendment No. 1, please contact the undersigned at (216) 861-7398.

Very truly yours,

/s/ John M. Gherlein

 

 

 

cc:	Elizabeth A. Smith, Bloomin’ Brands, Inc.

Joseph J. Kadow, Bloomin’ Brands, Inc.