AGREEMENT OF LEASE BETWEEN BLACKSTONE INVESTMENTS, L.L.C. AND H20 HOSPITALITY, LLC

Transcription

1 ... ATTACHMENT rr 1 n AGREEMENT OF LEASE BETWEEN BLACKSTONE INVESTMENTS, L.L.C. AND H20 HOSPITALITY, LLC Dated as of July~ 2002.

2 TABLE OF CONTENTS I. CONDITIONS PRECEDENT TO OBLIGATION OF TENANT...! 2. TITLE AND SURVEY OBJECTIONS RISK OF LOSS CONDEMNATION ACCESS/COOPERATION REPRESENTATIONS AND WARRANTIES OF THE LANDLORD DEFAULT AGENTS AND BROKERS LANDLORD'S INDEMNIFICATION AGREEMENT TO LEASE; TERM RENT RENEWAL OPTION USE OF PREMISES; ENVIRONMENTAL ASSESSMENT...: EASEMENTS WITH COVENANTS AND RESTRICTIONS AFFECTING LAND ("ECR") AGREEMENT... IO 15. CONSTRUCTION OF IMPROVEMENTS... IO 16. ASSIGNMENT AND SUBLEASING...!! 17. NET LEASE... l2 18. TAXES... l2 19. MAlNTENANCE, REPAIRS AND REPLACEMENTS ALTERATIONS, CHANGES, AND IMPROVEMENTS...: ESTOPPEL CERTIFICATES... l4 22. UTILITIES COMPLIANCE WITH LAWS, REGULATIONS AND RESTRICTIONS FIRE AND CASUALTY DAMAGE...: CONDEMNATION LANDLORD'S PERFORJ.\1ANCE OF TENANT'S OBLIGATIONS INDEMNIFICATION INSURANCE DEFAULT BY TENANT LANDLORD'S RIGHT OF ENTRY QUIET ENJOYMENT HOLDING OVER SURRENDER OF LEASE NOT MERGER ATIORNEYS' FEES NOTICES RESERVED GOVERNING LAW RELATIONSHIP OF THE PARTIES RESERVED RESERVED MISCELLANEOUS PROVISIONS

3 ~. AGREEMENT OF LEASE THIS AGREEMENT OF LEASE is made as of the day of July, 2002, between BLACKSTONE INVESTMENTS, L.L.C. ("Landlord"), and H20 HOSPITALITY, LLC, a Virginia limited liability company ("Tenant"). RECITALS: A. Landlord is the Owner of that certain parcel of land known as Lot 2 on the final plat for subdivision of the land of John Frank Chambers, a copy of which is recorded in the Clerk's Office, Circuit Court, Nottoway County, Virginia, in Plat Book 5, page 179 (the "Plat") and consisting of approximately acres located in the Town of Blackstone, Nottoway County, Virginia, being the same property described on Exhibit A attached hereto and made a part hereof (the "Land"). B. Provided the conditions precedent for the benefit of Tenant are satisfactorily addressed, Tenant proposes (i) to construct a restaurant on the Land (the Land is the "Premises" or "Leased Premises"), and (ii) occupy the Improvements (hereinafter defined) and lease the Land from Landlord on all the terms and conditions set forth herein. WI TN E S S E T H: NOW THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: L CONDITIONS PRECEDENT TO OBLIGATION OF TENANT. This Leas~ and all oftenant's obligations hereunder are subject to Tenant determining to its sole satisfaction within sixty (60) days after the complete execution of this Lease by Landlord and Tenant (the "Execution Date"), that all aspects of the Land are feasible for Tenant's purposes (the "Feasibility Period"). In the event that Tenant's examination of the Land shall not in Tenant's sole and absolute discretion, verify the feasibility of Tenant's proposed use, and development of the Land, Tenant shall give written notice thereof to Landlord within the Feasibility Period in which event this Lease shall terminate, the Deposit (hereinafter defined) shall be returned to Tenant and both Landlord and Tenant shall thereafter be relieved from any and all liability under this Le!lse, except as set forth in paragraph 5(a) hereof. In the event Tenant does not give Landlord such written notice, the feasibility condition precedent shall be deemed to have been satisfied or waived.

4 ~. This Lease and all of Tenant's obligations hereunder are further contingent upon the following conditions being satisfied or waived by Tenant during the Feasibility Period unless otherwise stated herein: (a) Title Commitment. The Tenant shall have obtained from a title insurance company selected by the Tenant a title insurance binder committing to insure, for a premium not greater than such company's regularly scheduled rates, that the title to the Land is acceptable to the Tenant in its sole discretion. Tenant shall apply for a title commitment within five (5) business days of receiving a copy of the fully executed agreement. (b) Survey. The Tenant shall have obtained at its sole cost and expense a survey (the "Survey") of the "Land which shall not disclose any facts not acceptable to the Tenant in its sole discretion. Tenant shall engage a licensed surveyor within five (5) business days of receiving a copy of the fully executed agreement. Tenant agrees to provide a copy of survey to Landlord. (c) Permits. The Land shall be zoned to permit the use of the Property for a restaurant, with the imposition of only such conditions to the zoning as are acceptable to Tenant in its sole discretion. In addition, Tenant shall have -. obtained within four (4) months from the Execution Date (the "Effective Date") (on terms and conditions satisfactory to it in its sole discretion) all appropriate private and governmental permits and approvals which are necessary or desirable to permit the development and construction of the Improvements, including without limitation building permits, curb cuts, subdivision, schematic plan approvals and environmental approvals, if any (the "Permits"). Landlord shall bear the cost of obtaining all of the zoning and subdivision approvals should Tenant determine the Land is not properly zoned or subdivided for its intended use as a restaurant during the Feasibility Period. Landlord hereby consents and agrees to join in, execute and timely support in good faith, as required or requested, all at no cost to Landlord, such applications as may be necessary or desirable to obtain the appropriate approvals and permits, and in good faith will cooperate, support and take all action reasonable or necessary, all at no cost to Landlord, to assist Tenant in making and prosecuting such applications. (d).. Utility Availability. There shall be available for use by Tenant at or near one of the boundary lines of the Land without cost to Tenant other than the cost of extension across the Leased Premises and normal connection fees, electrical power, gas, telephone service, and other utilities desirable for development of the Land, all adequate to service the Land, or alternative sources for water, sewer and other such items available on terms acceptable to Tenant. Such utilities, services and facilities shall be available without the necessity of obtaining off-site easements. 2

5 .. (e) Moratorium. There shall be no building or other moratorium affecting the Land or the Improvements pending or proposed by any applicable authority. (f) Pending Litigation. There shall be no litigation, proceeding or investigation pending, or to the knowledge of Tenant or Landlord threatened, which might prevent or adversely affect the construction and operation of Improvements on any portion of the Land or which questions the validity of any action taken or to be taken by Landlord or Tenant hereunder. (g) Hazardous Materials. There shall have been no hazardous materials used, discharged or stored on or about the Land. (h) Separate Parcel. The Demised Premises shall be recognized as a separate tax parcel by applicable local and state taxing authorities. (i) Franchisor Approval and Landlord Execution of Franchisor Option Documents. Within four months from the Effective Date each of the following shall have occurred: (A) Huddle House, Inc. granting final written approval of the Leased Premises as a Huddle House location. Tenant agrees to submit an application for a franchise for the Leased Premises within thirty (30) days of the Execution Date and shall provide evidence of submission to Landlord. (B) Huddle House,.Inc. entering into a Franchise Agreement with Tenant to operate a Huddle House restaurant on the Leased Premises. (C) Landlord, subject to its review and approval, entering into Huddle House, Inc.'s standard form of Option Agreement and Collateral Assignment of Lease granting Huddle House, Inc. the option to lease the Leased Premises directly from Landlord upon the occurrence of certain events more fully set forth in the Option Agreement. (D) Landlord and Landlord's mortgagee, subject to their respective review and approval, entering into Huddle House, Inc.'s standard and reasonable form of Non-Disturbance, Subordination and Attornment Agreement providing that in the event Huddle House, Inc. exercises its Option for the Leased Premises and Mortgagee takes possession of the Leased Premises, Huddle House, Inc. will attorn to Mortgagee as its landlord and Mortgagee will not disturb Huddle House, Inc.'s possession under this Lease so long as Huddle House, Inc. is not in default under the Lease. 3

6 (E) Landlord and Tenant agreeing on the terms and entering into a Short Form Lease to record the terms of this Lease and Huddle House, Inc.'s option rights, the cost of recording to be paid by Tenant. With respect to Paragraphs 1(i)(C), (D) and (E), the Tenant shall submit to Landlord within thirty (30) days of the Execution Date the forms of the documents described therein. The parties shall have sixty (60) days thereafter to negotiate the documents. The foregoing conditions precedent are hereby acknowledged to be conditions for the benefit of the Tenant. The Tenant shall have the right to waive any or all of such conditions within the applicable timeframe contained herein and proceed to lease the Leased Premises with no reduction in the Base Rent (hereinafter defined), provided, however, that any such elective waiver or waivers must be in writing and given in accordance with the provisions of Paragraph 35. The failure of Tenant to provide a written waiver prior to the expiration of the Feasibility Period, o r the Effective Date for the issuance of the Permits in item (c) above, shall be deemed a waiver of said condition by Tenant hereunder. In regard to obtaining the Permits referenced in item (c) above, Tenant shall have the right to terminate this Lease by notice given on or before the Effective Date, in which event the Deposit shall be returned to Tenant and both Landlord and Tenant shall thereafter be relieved from any and all liability under this Lease, except as set forth in Paragraph 5(a) hereof. 2. TITLE AND SURVEY OBJECTIONS. The Tenant shall request a title insurance commitment for the Land and the Survey promptly following execution of this Lease and shall deliver copies thereof to the Landlord upon their receipt. The Tenant shall inform the Landlord in writing as to any Survey or title defects or other objections regarding the Land disclosed by the Survey or commitment that the Tenant is unwilling to accept within the Feasibility Period (the "Objection Notice"). If the. Landlord is unable or unwilling to cure such Survey or title defects or objections to the Tenant's satisfaction and so notifies Tenant within fifteen (15) days of receipt of the Objection Notice (the "Landlord Response") then the Tenant may, at its option elected by written notice to Landlord within fifteen (15) days of receipt of the Landlord Response, and as its sole remedy, notwithstanding anything herein contained to the contrary, either (i) terminate this Lease by giving the Landlord written notice of such termination; (ii) cure such defects or objections at Tenant's expense and proceed to Rent Commencement Date with no reduction in the Base Rent; or (iii) waive such defects and proceed to Rent Commencement Date with no reduction in the Base Rent. If the Tenant so elects to terminate this Lease, the Deposit shall be returned to Tenant and both Landlord and Tenant shall thereafter be relieved from any and all liability under this Lease, except as set forth in Paragraph 5(a) hereof, the parties hereto shall have no further obligations or liabilities to one another hereunder. If the Tenant (i) fails to timely notify the Landlord of any Survey or title defects or objections to the Land, or (ii) has notified 4

7 the Landlord of defects or objections which Landlord elects not to cure (either by sending the Landlord Response or by failing to respond to the Objection Notice, which failure shall be deemed Landlord's election not to cure anything stated in the Objection Notice) and the Tenant has not timely terminated this Lease, the Tenant shall be deemed to have approved in writing all matters relating to the Survey or title to the Land disclosed on the Survey and the commitment as of their respective dates. 3. RISK OF LOSS. The risk of loss or damage to the Land by fire or other casualty prior to the Effective Date shall be on the Landlord. If such loss or damage materially and adversely affects the Tenant's intended use and enjoyment of the Land as of the Effective Date, the Tenant shall be entitled to terminate this Lease and have the Deposit returned to the Tenant. The parties hereto shall have no further obligations or liabilities to one another hereunder, except as set forth in Paragraph 5(a) hereof. 4. CONDEMNATION. If, prior to the Effective Date, any taking pursuant to the power of eminent domain is proposed or occurs, as to all or any portion of the Land intended to be leased to the Tenant, or sale occurs in lieu thereof, the Tenant shall be entitled to elect to terminate this Lease. If the Tenant. elects to terminate this Lease, the Deposit shall be returned to Tenant and the parties shall have no further obligations or liabilities to one another hereunder, except as set forth in Paragraph 5(a) hereof. 5. ACCESS/COOPERATION. (a) Inspection. During the Feasibility Period at reasonable times and upon reasonable notice to Landlord, which may be written or oral, the Tenant, its duly authorized agents and employees shall be entitled to reasonable access to the L?-nd, for the purpose of inspecting the Land and making surveys, examinations, measurements, soil tests, engineering and other findings, and undertaking such other activities related to the use and further development of the Land, provided that such studies do not result in any material change in the present character of the Land. Tenant shall pay all costs, expenses, liabilities and charges incurred by Tenant or Tenant's agents or related to Tenant's entry or entry by Tenant's agents. If the Tenant fails to proceed with the Lease, the Tenant agrees to repair all damage or injury arising as a result of its exercise of the right of access granted in this Paragraph and to indemnify, defend and hold the Landlord and the Leased Premises free and harmless of and from all costs, expenses, damages, claims, liens, liabilities, charges and expenses, including attorneys' fees and costs arising out of or in any way connected with the entry or activities upon the Leased Premises by Tenant or Tenant's agents, other than as a result of the Landlord's gross negligence or willful misconduct and shall return the Leased Premises to the condition existing prior to such entry. Tenant shall keep the Leased Premises free 5

8 and clear of all liens arising out of Tenant's or Tenant's agents' activities conducted upon the Leased Premises. The foregoing indemnification shall survive Tenant's termination of the Lease prior to the Effective Date. (b) Environmental Test. Prior to performing any environmental tests or studies on the Premises beyond the scope of work generally performed in a Phase I study, Tenant shall notify Landlord of the scope of work intended to be performed. Prior to the Effective Date, all information derived from Tenant's tests and test results shall, to the extent permissible under existing law, remain confidential and not be disclosed to any party other than as is necessary in connection with the consummation of the transactions contemplated hereby or as is necessary to comply with any obligations Tenant may have under applicable law. Such parties would include public agencies, lenders and future owners. If this Agreement is terminated, copies of all third party reports obtained by Tenant with respect to the Premises shall be delivered to Landlord at no cost to Landlord, if requested by Landlord. (c) Construction. At any time after Tenant has determined that the Land is feasible for its purposes and has waived all conditions precedent contained in Section 1 hereof, subject only to obtaining the Permits, Tenant shall be permitte?d to have access to the Land for the purpose of constructing the Improvements. Landlord shall have the right to review and approve plans per Paragraph 15(a) prior to commencement of construction such approvals shall not be unreasonably withheld. 6. REPRESENTATIONS AND WARRANTIES OF THE LANDLORD. The Landlord represents and warrants as of the date hereof and by appropriate certificate delivered at the Effective Date will represent and warrant as of the Effective Date that: (a) Public Improvements. The Landlord has no knowledge of any planned public improvement which may result in a special assessment being made against the Land. (b) Repairs. No governmental agency has served any notice on the Landlord regarding, nor does the Landlord have knowledge of any planned notice requiring, repairs, alterations or corrections of any existing condition on the Land. (c) Condemnation. The Landlord has no knowledge of any pending or threatened proceedings for condemnation or the exercise of the right of eminent domain as to any part of the Land or for the limiting or denying of any right of access thereto. 6

9 . (d) No Special Taxes. The Landlord has no knowledge of, nor has it received any notice of, any special taxes or assessments relating to the Land or any part thereof. (e) Authorization and Execution. This Lease has been duly executed and delivered by the Landlord, constitutes the valid and binding agreement of the Landlord and is enforceable against the Landlord in accordance with its terms. (f) Hazardous Materials. To the best of Landlord's knowledge, (i) no hazardous or toxic materials, as said terms are defined in any applicable federal or state laws ("Hazardous Materials") have been used, discharged or stored on or about the Land, (ii) no Hazardous Materials are now or will be at the Effective Date located on or below the Land, and (iii) there are no storage tanks located in, on or under the Land. 7. DEFAULT. (a) Prior to the Effective Date, the parties agree that in the event of a default by Tenant under this Lease, the damages suffered by Landlord would be. difficult to ascertain. Therefore, Landlord and Tenant agree that, in the event of such a default by Tenant, Landlord's sole and exclusive remedy, in lieu of all other remedies, shall be to retain the Five Thousand and 00/100 Dollars deposit and interest thereon (the "Deposit") paid to Landlord prior to execution of this Lease and an additional $20, paid within thirty days of the default, as full and complete liquidated damages, subject only to any additional claims related to Section 5(a) hereof which are not repaired by Tenant to Landlord's satisfaction, and Landlord hereby specifically waives the right to seek specific performance of this Lease by Tenant or any other remedy at law or in equity, if Tenant wrongfully refuqes to commence with the Lease. (b) If Landlord defaults (which default is not timely cured) hereunder prior to the Effective Date, Tenant shall have the option to seek demand payment of $25,000 from the Landlord within thirty (30) days of default. 8. AGENTS AND BROKERS. Each party hereto agrees to indemnify and hold harmless the other party from all liability, expense, loss, cost or damage, including reasonable attorneys' fees, that may arise by reason of any claim, demand or suit of any agent or broker acting for such party with the exception of The Shopping Center Group which represents the Landlord and shall be compensated by the Landlord per separate agreement. 9. LANDLORD'S INDEMNIFICATION. Landlord shall indemnify, defend and hold harmless Tenant, its officers, employees and partners, from and 7

10 against any loss, damage, cost or expense (including litigation costs and reasonable attorneys' fees including, without limitation, those incurred in enforcing this indemnity) incurred by Tenant as a result of or in connection with the presence of Hazardous Materials, including, without limitation, all removal and remediation costs, the costs of all tests, borings, assessments and other studies and all fines and other government impositions. This indemnification shall relate only to Hazardous Materials which (i) are determined to have been present at, on or under the Land prior to the Effective Date, (ii) are discovered on or before the date that Tenant stabilizes the soil (puts down st<~me) for its Improvements, but in no event later than two (2) years following the Effective Date, and (iii) are not on or under the Land as a result of Tenant's activities thereon. 10. AGREEMENT TO LEASE; TERM. Subject to satisfaction or waiver of all of the conditions precedent set forth herein, (a) Landlord hereby leases to Tenant and Tenant hereby takes from Landlord the Land, together with the nonexclusive easements for vehicular and pedestrian access, ingress and egress granted for the benefit of the Land by the ECR (hereinafter defined) and agrees to use, occupy and lease the same in accordance with the terms and provisions hereof. (b) This Lease shall commence upon the Execution Date but rent shall commence (the "Rent Commencement Date") on the earlier of either the date Tenant opens for business or January 1, 2003 unless the Tenant has previously terminated the Lease during the Feasibility Period or prior to the Effective Date due to the inability to obtain the Permits as contemplated by Section 1(c) hereof, and shall end on the last day of the one hundred and eightieth (180th) month after the first day of the first full month after the Rent Commencement Date, unless sooner terminated or extended as hereinafter provided. The term "Lease Year" as used herein shall mean a period of twelve (12) consecutive calendar months. The First Lease Year shall begin on the first day of the first calendar month after the Rent Commencement Date. The parties agree to execute an addendum to this Lease to acknowledge the Rent Commencement Date once said date is determined. 11. RENT. (a) Tenant agrees initially to pay Landlord for the Land (tlie "Base Rent") in accordance with the following schedule: Lease Years 1-5 Lease Years 6-10 Lease Years $1,166,67 per month $1, per month $1, per month 8

11 Base Rent shall be payable in advance in lawful money of the United States in monthly installments during the term of this Lease, including any renewal terms beginning on the Rent Commencement Date and continuing thereafter on or before the first day of each month during the term of this Lease (the "Due Date") without demand, offset, rights of recoupment or deduction for any reason whatsoever, except as expressly permitted hereunder. Rent for any portion of a month shall be prorated. The term "rent" shall be deemed to include the Base Rent and the Additional Rent (defined herein) payable by Tenant hereunder. All rent due under this Lease shall be payable by Tenant to: Blackstone Investments, L.L.C. c/o The Shopping Center Group 8003 Franklin Farms Drive, St. 220 Richmond, VA or to such other place as Landlord shall from time to time designate. Rent mailed shall be deemed paid on the date payment is received by Landlord, addressed as provided above with postage prepaid. (b) The term "Additional Rent" as used herein shall mean all sums. payable by Tenant under this Lease (other than the Base Rent provided for above), and any sums expended by Landlord to cure any default by Tenant (after notice and expiration of any applicable cure period), and shall be deemed rent for purposes of Landlord's rights and remedies with respect thereto. Base Rent and Additional Rent are sometimes referred to together hereinafter as "Rent". (c) In the event Tenant fails. to pay to Landlord when due any installment of Rent or any other payments which may become due hereunder, Landlord will incur additional expenses in an amount not readily ascertainable and which has not been elsewhere provided for between Landlord and Tenant. If Tenant should fail to pay to Landlord when due any installment of Rent, Tenant will pay Landlord on demand a late charge equal to three percent (3%) of the past due amount. Failure to pay such late charge upon demand therefor shall be an event of default hereunder. Provision for such late charge shall be in addition to all other rights and remedies available to Landlord hereunder or at law or in equity and shall not be construed as liquidated damages or limiting Landlord's remedies in any manner. 12. RENEWAL OPTION. Provided that at the time of the giving of Tenant's renewal notice, Tenant is not in default beyond any applicable cure period in performance of its covenants contained in this Lease, then Tenant is hereby granted an option to renew this Lease for three (3) successive additional terms of five (5) year(s) each (the "Renewal Terms") upon Tenant's notifying Landlord in writing of its election to renew no later than 180 days prior to the expiration of the 9

12 '. Initial Term and! or each of the Renewal Terms, as applicable. Any renewal notice once given shall be irrevocable, and failure to give notice within the required time will be a bar on the part of Tenant to any further option to renew this Lease. Base Rent during each Lease Year of the Renewal Term shall be as follows: Renewal Term 1 (Lease Years 16-20) Renewal Term 2 (Lease Years 21-25) Renewal Term 3 (Lease Years 26-30) $1, per month $1, per month $1, per month 13. USE OF PREMISES; ENVIRONMENTAL ASSESSMENT. (a) The Leased Premises may be used and occupied for the operation of a casual dining restaurant or, subject to the written consent of the Landlord, which shall not be unreasonably delayed, conditioned or withheld, any other lawful purpose allowable under applicable zoning laws which does not violate any exclusive use restrictions granted by Landlord to other tenants or users on property shown on the Plat ("Tenant's Purposes"). Tenant shall, at its own risk and expense, obtain and keep in force all governmental licenses and permits necessary for such use. Landlord and Tenant shall cooperate with each other in obtaining any governmental permits or approvals necessary to permit the conduct of Tenant's business operations at the Premises, all at no cost to Landlord. Tenant covenants that it will at all times use the Leased Premises in compliance with all applicable zoning laws, ordinances and requirements and will not allow the Leased Premises to be used for any illegal purpose. (b) Tenant shall indemnify and hold harmless the Landlord from any and all claims, damages, fines, judgnients, penalties, costs, liabilities, or losses arising during or after the term of this Lease and arising because Tenant causes or permits the presence of any Hazardous Materials on or in the vicinity of the Leased Premises that results in its contamination. The obligations of Tenant under this Paragraph 13(b) shall survive the termination of this Lease. 14. EASEMENTS WITH COVENANTS AND RESTRICTIONS AFFECTING LAND C"ECR") AGREEMENT. Notwithstanding anything herein to the contrary, Tenant agrees to conform to the referenced agreement dated September 8, 1997 between Wal-Mart Real Estate Business Trust and Blackstone Investments, L.L.C. recorded in the Office of the Clerk of the Circuit Court of Nottoway County, Virginia on October 6, 1997, in Deed Book 303, page 854 and a copy of which is hereby attached as Exhibit B. 15. CONSTRUCTION OF IMPROVEMENTS. (a) All costs of construction, except a.s otherwise provided herein, including, without limitation, engineering and architectural expenses, survey 10

13 .. expenses, costs of all required licenses and permits and actual construction costs, shall be borne solely by Tenant. The improvements to be constructed by Tenant (the "Improvements") shall be completed in accordance with plans and specifications ("Tenant's Plans") which shall be submitted by Tenant to Landlord for Landlord's reasonable written approval prior to the beginning of any such construction and provided such plans have received all necessary governmental approvals. If Landlord does not reject Tenant's Plans within fifteen (15) days after receipt thereof, Tenant's Plans shall be deemed approved. Any approval by Landlord of Tenant's Plans shall in no way serve as a representation or warranty as to the qualify of materials, workmanship or engineering design or compliance with applicable laws. Tenant shall have the right, at Tenant's sole expense, from time to time to submit, in its own name or in Landlord's name if so required, applications for such building permits and other construction approvals, and with the prior written approval of the Landlord which approval shall not be unreasonably withheld or delayed and which approval shall be deemed given as to any provisional use permit affecting operating hours, and which approval shall be given if the proposal does not materially adversely affect the value of the Land, rezoning, conditional use permits and all such other permits and approvals as shall be related to use of the Land and the construction and operation of Improvements thereon for Tenant's Purposes. Landlord will, at no cost to Landlord, join in such applications if requested to do so by Tenant. Upon completion of the Improvements, the Tenant shall submit to the Landlord an ((as-built" survey showing that the Improvements have been completed in accordance with Tenant's Plans. (b) Title to the Improvements and fixtures thereto shall be vested in Tenant for the Initial Term, as it may be.extended. At such time as this Lease expires or is terminated, and unless Tenant purchases the Land, title to the Improvements shall automatically vest in Landlord without the necessity of any further action by Landlord or Tenant. (c) Should a claim of lien against the Land arise as a result of Tenant's construction, maintenance and/or repair of the Improvements, Tenant will at its sole cost and expense cause same to be discharged of record prior to the lien claimant enforcing its lien against the Land, or sooner if so requested by Landlord or Landlord's mortgagee, and Tenant shall indemnify Landlord from loss, cost or expense (including reasonable attorneys' fees) reasonably incurred in protecting the Land from any such lien claim. 16. ASSIGNMENT AND SUBLEASING. Landlord does hereby agree that Tenant may at any time with or without the consent of Landlord, sublease, assign or encumber, its interest, rights, privileges and obligations arising out of this Agreement of Lease, to any other person or persons, provided Tenant obtains the written approval of Huddle House, Inc., its successors and assigns, for such subleasing or assignment and provided further that Tenant shall not be released 11

14 ,... from its obligations hereunder in the event of an assignment. Landlord and Tenant agree that subleasing shall in no way alter or affect the Landlord-Tenant relationship then existing between them and that Sublessee shall be the tenant of the Tenant, and liable directly to Tenant only. 17. NET LEASE. It is the purpose and intent of the parties hereto that the rent payable hereunder shall be absolutely net to Landlord. All costs, fees, interest, charges, expenses, reimbursements and obligations of every kind and nature whatsoever related to the Leased Premises (excluding, however, any debt service of Landlord's mortgage, which becomes due during the Initial Term and any Renewal Term), including without limitation, taxes and insurance premiums as provided in Paragraph 18 and Paragraph 28 below, shall be paid and discharged by Tenant as Additional Rent. 18. TAXES. (a) As used herein, Taxes shall mean all real estate taxes, assessments and other governmental levies and charges of every kind, whether general or special, ordinary or extraordinary, unforeseen or foreseen (including any interest or penalty) which may be imposed, levied, assessed or confirmed by any - lawful taxing authorities or which may become a lien or charge on or against all or any part of the Leased Premises at any time during the Term or any Renewal Term, or any tax in lieu thereof. Provided the Leased Premises is listed as a separate parcel and bills are sent from the taxing authorities directly to Tenant, Tenant shall be liable for and shall pay at least thirty (30) days before delinquency, directly to the taxing authority, as additional rent ("Additional Rent"), all Taxes assessed against the Premises from and after the Effective Date. Tenant shall provide Landlord evidence of such payment at least ten (10) days before delinquency. Tenant shall have the right to inspect and review any tax bill provided, however, in the ~vent of a dispute or controversy, Tenant shall pay the amount claimed when due, without prejudice to Tenant's right to protest such assessment. Real estate taxes, assessments and other levies payable by Tenant hereunder shall be prorated during the first and last years of this Lease on a calendar basis. In the event the tax bill is not sent directly to the Tenant by the taxing authorities, Landlord shall immediately forward said bills upon receipt. (b) Tenant shall be liable for and shall pay at least ten (10) days before delinquency all taxes levied against any personal property or Trade Fixtures (hereinafter defined) placed by Tenant in or about the Leased Premises. If any such taxes are levied against Landlord or Landlord's property, Tenant shall upon demand repay to Landlord the amount paid by Landlord. In any such event, Tenant shall have the right, at Tenant's sole cost and.expense, to bring suit to recover the amount so paid under protest, and any amount so recovered shall belong to Tenant. 12

15 MAINTENANCE, REPAIRS AND REPLACEMENTS. (a) During the Initial Term and any Renewal Term, Tenant shall be solely responsible for all maintenance and repairs of the Improvements including, but not limited to, maintenance and repairs to plumbing, heating, electrical, air conditioning, plate glass and windows. Tenant shall also be solely responsible for maintaining all the interior and exterior of the Improvements, including, but not limited to, the repair of the foundations, ceilings, floors, lighting, walls, roof, parking areas, driveways and landscaping of the Improvements and Tenant's signs. During the Initial Term and any Renewal Term, Tenant shall maintain and keep in good condition the Land, Improvements and appurtenances thereof, ordinary wear and tear excepted. Landlord shall have no responsibility for maintenance, repair or replacements to the Improvements, whether structural or nonstructural. In addition, Tenant shall pay up to 25% of the actual out-of-pocket costs related to the roadway that serves the Leased Premises, as cross hatched on Exhibit A-, not to exceed $1,500 per annum, payable in arrears at the end of each Lease Year. A1f Q~'f I (b) Upon the termination of this Lease, Tenant shall deliver _ possession of the Leased Premises, broom clean and in good condition, normal wear and tear excepted but Tenant shall have the right to remove Trade Fixtures, equipment, furnishings, signs and other identifying characteristics from the Leased Premises and Improvements. 20. ALTERATIONS, CHANGES, AND IMPROVEMENTS. (a) The cost of making such alterations, improvements or additions to the Leased Premises and preparing said plans shall be borne by Tenant. All such work shall be done in a good and workmanlike manner. All such work shall comply with all laws, ordinances or regulations of any governmental or administrative agency having jurisdiction over the Leased Premises, including any appropriate boards, commissions and underwriting agencies now or hereafter exercising similar rights and powers. (b) Tenant shall have the right at all times and at its sole expense to install Tenant's shelves, bins, equipment, and trade fixtures, hereinafter collectively called "Tenant's Trade Fixtures", provided Tenant complies with all applicable gove_rnmentallaws, ordinances and regulations. (c) Tenant may, upon the termination of this Lease, remove any of Tenant's previously installed Trade Fixtures, provided further that Tenant shall immediately repair any damage caused by such removal. In such event, any Trade Fixtures not removed upon termination of this Lease shall become the property of Landlord for disposal by Landlord in any manner Landlord may elect. 13

16 .. ' ESTOPPEL CERTIFICATES. Tenant and Landlord each agree at any time and from time to time within fifteen (15) days after Notice (hereinafter defined) to execute, acknowledge and deliver to the other a statement, in writing, and in form and substance reasonably acceptable to Landlord, Landlord's lender, if any, Tenant and Tenant's lender, if any, certifying that this Lease is unmodified and in full force and effect (or if there have been modifications that this Lease is in full force and effect as modified and stating the modifications), the dates to which the rent and other charges have been paid in advance, if any, and whether or not there exists any default in the performance of any term, condition or covenant of this Lease and, if so, specifying each such default, it being intended that any such statement delivered pursuant to this paragraph may be relied upon by Landlord, Tenant and by any mortgagees, prospective Tenants or prospective mortgagees of Landlord's or Tenant's interest in all or any part of the Leased Premises. 22. UTILITIES. Tenant shall arrange for construction, installation, connection and operation of, and shall pay the cost of, all utility services, all charges for water, sewer, gas, heat, power, telephone service and all other services to the Leased Premises during the term of this Lease and Tenant shall make payments when due directly to the utility or service company involved. Tenant's obligation to pay its utility bills due and payable during the term of this Lease shall survive the termination of this Lease. Landlord shall not be required to pay for any connection fees, services, supplies or upkeep in connection with utilities or other services to the Leased Premises. Landlord shall not be liable for damages or otherwise to Tenant or to person or property, if any utility service to the Leased Premises is interrupted or terminated, unless caused by Landlor4's gross negligence or willful misconduct, nor shall any such interruption or termination be construed as an eviction (actual or constructive) of Tenant, nor work an abatement of any rent, nor relieve Tenant from the obligation to fulfill each and every covenant or condition of this Lease. 23. COMPLIANCE WITH LAWS, REGULATIONS AND RESTRICTIONS. Tenant shall comply with all governmental laws, rules, orders, ordinances, directions, regulations, and requirements of federal, state, county and municipal authorities, now in force or which hereafter may be in force, which shall impose any duty upon Landlord or Tenant with respect to the use, occupation or alteration of the Leased Premises, or the operations conducted by Tenant at the Premises, whether material or incidental to said use and shall promptly comply with all changes in governmental laws, ordinances, regulations, orders and directives and all restrictions and covenants of record affecting the Leased Premises. 24. FIRE AND CASUALTY DAMAGE. In the event the Leased Premises or the Improvements are damaged or destroyed by fire or other cause, Tenant shall give immediate notice thereof to Landlord. The rights and obligations of Landlord and Tenant in the event of such casualty shall be as follows: 14

17 . (a) If the Leased Premises or Improvements are damaged by fire or other cause during the last five years of the Initial Term or during any Renewal Term, Tenant may elect to terminate the Lease, and the proceeds from any fire and casualty insurance policies applicable to the Improvements and the Leased Premises shall be retained by the Tenant which Tenant will use to demolish the Improvements and rough grade the Demised Premises. If the Tenant elects to repair the Leased Premises and the Improvements during the last five years of the Initial Term or during any Renewal Term, this Lease shall not terminate, and Tenant shall, regardless of the adequacy of insurance proceeds proceed with reasonable diligence to rebuild or repair the Leased Premises to substantially the condition that existed immediately prior to such damage. In such event, any casualty insurance proceeds received by Landlord shall be paid over to the Tenant within ten (10) days after receipt by Landlord. (b) Except to the extent specifically provided for in this Lease, none of the Rent payable by Tenant, nor any of Tenant's other obligations under any provisions of this Lease, shall be affected by any damage or destruction of the Leased Premises by any cause whatsoever, nor shall Landlord have any liability to Tenant as a result of any casualty. 25. CONDEMNATION. (a) For the purpose of this Lease, "taking" shall mean any condemnation or exercise of the power of eminent domain by any public authority vested with such power or any taking in any other manner for public use, including a private purchase in lieu of condemnatio n by a public authority vested with the power of eminent domain; the "date of any taking" shall mean the earlier of the date upon which title to the Land and/or Improvements or portion thereof taken is vested in the condemning authority or the date upon which possession of the Land and/or Improvements is taken by the condemning authority; and "substantially all of the Land" shall mean (i) so much of the Land and/or Improvements as, when taken, leaves the untaken portion unusable under applicable ordinances and restrictions for the continued feasible and economic operation of the Land and Improvements by Tenant for the same purposes as immediately prior to such taking or as contemplated herein in Tenant's sole discretion, or (ii) so many of the parking spaces within the Land as reduces the number of parking spaces existing on the Land, and Landlord is unable, after reasonable efforts with due diligence, to provide substantially similar alternative parking within thirty (30) days after such taking. (b) In the event of a taking of all or more than 25% of the Land, the Term shall automatically cease and terminate on the date of such taking; however, a taking of parking spaces under clause (ii) of Subparagraph 25(a) above shall not terminate this Lease unless Tenant elects to terminate same by written notice to 15

18 .... Landlord. All Rent and other sums payable by Tenant hereunder shall be apportioned and paid through and including the date of such taking. (c) In the event of a taking of a portion of the Land which does not adversely affect Tenant's use thereof, then this Lease and all the duties and obligations of Tenant under this Lease shall remain unmodified, unaffected and in full force and effect. In the event of such a taking, Tenant shall promptly commence and diligently prosecute to completion any demolition, repair, restoration, rebuilding, reconstruction or replacement of the Improvements which is necessary to return the Land and Improvements to a condition suitable for use and operation for the same purposes as immediately prior to such taking. (d) In the event of a taking of the Land and/or Improvements or any portion thereof for temporary use which does not adversely affect Tenant's use thereof, without the taking of the fee simple title therein, then this Lease shall remain in full force and effect, and such taking shall not relieve Tenant from its duty and obligation fully and completely to keep, observe, perform, satisfy and comply with each and every agreement, term, covenant, condition, requirement, provision, and restriction of this Lease. All awards, damages; compensation and proceeds payable by reason of such temporary taking of the Land and/or Improvements for periods prior to the termination of this Lease shall be payable to Tenant, and all such awards, damages, compensation and proceeds for periods after the termination of this Lease shall be payable to Landlord. (e) In the event of a taking described in Subparagraph 25(b) above, the condemnation award for the Land sh~ll belong to the Landlord and the condemnation award for the Improvements shall be paid to the Tenant. (f) In the event of a taking described in Subparagraph 25(c) above, the condemnation award for the Improvements shall be paid to Tenant and the condemnation award for the Land shall be paid to Landlord. 26. LANDLORD'S PERFORMANCE OF TENANT'S OBLIGATIONS. If Tenant fails to perform any of its obligations hereunder within the time periods specified herein, at its option Landlord may, but shall not be obligated to perform the obligations of Tenant which Tenant has failed to perform and Landlord shall have no liability to Tenant for any loss or damage resulting in any way from such action by Landlord. Any amounts advanced in so performing the obligations of Tenant shall be Additional Rent and shall bear interest at the rate of the eighteen percent (18%) per annum (or, if lower, the highest lawful rate) from the date expended until repaid and shall be due and payable within fifteen (15) days of Tenant's receipt of written notice of Landlord's payment thereof, and the failure to pay within such period shall constitute an independent Event of Default hereunder unless otherwise specified herein. Payment or performance by Landlord of the 16

19 obligations of Tenant shall not waive or cure any breach occasioned by Tenant's failure or refusal to pay or perform same. 27. INDEMNIFICATION. Tenant shall protect, indemnify and save harmless Landlord from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted against Landlord by reason of (a) any occurrence, injury to or death of persons (including Tenant's workmen) or loss of or damage to property occurring on or about the Leased Premises or any part thereof or the adjoining sidewalks, curbs, streets or ways which is attributable in whole or in part to Tenant, its agents, contractors, employees, invitees or guests or which arises out of, or in the course of Tenant's use and occupancy of the Leased Premises, (b) any use, non-use or condition of the Leased Premises or any part thereof or the adjoining sidewalks, curbs, streets or ways to the extent required to be maintained by Tenant, (c) any failure on the part of Tenant to perform or comply with any of the terms of this Lease, or (d) performance by Tenant of any labor or services or the furnishing of any materials or other property in respect of the Leased Premises or any part thereof. The obligations of Tenant under this paragraph arising by reason of any such occurrence having taken place during the term of this Lease shall survive any expiration or termination of this Lease. 28. INSURANCE. (a) At all times during the term of this Lease and at its sole cost and expense, Tenant shall obtain, maintain and keep in full force and effect, at its sole expense, the following insurance: (i) Fire and casualty insurance on the Leased Premises, incluqing standard multi-peril endorsements and coverage against all risks included within the term "extended coverage", together with vandalism and malicious mischief insurance, in an amount not less than the current replacement value of all Improvements, exclusive of the foundation, footings and parking area; (ii) Fire insurance, including extended coverage, vandalism and mal~cious mischief upon property of every description owned by Tenant and located in the Improvements or for which Tenant is legally liable or installed by or on behalf of Tenant including, without limitation, furniture, fittings, installations, fixtures, inventory and any other personal property in an amount not less than the full replacement cost thereof; (iii) Commercial general liability insurance coverage to include personal injury, bodily injury, broad form property damage, operations hazard, owner's protective coverage, contractual liability, fire damage liability 17

20 (minimum $1,000, coverage) products and completed operations liability in limits of not less than One Million Dollars ($1,000,000.00) per occurrence with umbrella or excess liability coverage of One Million Dollars ($1,000,000.00); provided, however, the above coverage shall comply with the terms and conditions of the ECR and if it is determined by the parties to the ECR that such coverage is insufficient, Tenant shall obtain the necessary coverage in order to comply with the terms of the ECR. (iv) Worker's compensation and employer's liability insurance in accordance with applicable law; (v) During the construction of the Improvements or any permitted alterations which are not covered by Tenant's liability insurance as required above, Tenant shall maintain builder's risk insurance in such amounts as shall be reasonably required by Landlord given the cost of the construction. (b) All policies shall be taken out by Tenant with insurers duly authorized to do business in Virginia, reasonaply acceptable to Landlord, and in form reasonably satisfactory from time to time to Landlord. Upon request, Tenant agrees that certificates of insurance on the insurer's standard form, will be delivered to Landlord as soon as practicable after the placing of the required insurance, but in no event later than the Effective Date, as to initial coverage, and ten (10) days prior to the expiration of the policies as to renewals of coverage. All policies shall obligate the insurers to notify Landlord in writing not less than thirty (30) days prior to any material change, reduction in coverage, cancellation or other termination thereof, including those for nonpayment of premium. The policies referred to in 28(a)(i)-(iii) shall name, as additional insureds, Landlord and any other entity having an insurable interest or liability in or relating to the Leased Premises (including any mortgagee of Landlord). (c) The coverage limitations for commercial general liability insurance shall be reviewed at least every ten (10) years. If the limits of such coverage are less than generally carried by businesses similar to Tenant's business on the Premises in the general area of the Land, such coverages shall be increased to typical coverage limitations for such businesses. 29. DEFAULT BY TENANT. (a) The following events shall be deemed to be an Event of Default by Tenant under this Lease: (i) Tenant's failure to pay any overdue installment of the Base Rent or Additional Rent within 'ten (10) days after receipt of written Notice (hereinafter defined) thereof to Tenant or Tenant's failure to comply with any term, 18