HTML Document View

Full title: Objection to (related document(s): 347 Notice (generic) filed by Debtor Studio Movie Grill Holdings, LLC)Veritex Community Bank's Limited Objection To: (A) Proposed Assumption And Assignment Of Leases, Including Proposed Cure Amount; And (B) Sale Of Substantially All Of Debtors' Assets filed by Creditor Veritex Community Bank. (Attachments: # 1 Exhibit 1 # 2 Exhibit 2 # 3 Exhibit 3 # 4 Exhibit 4 # 5 Exhibit 5 # 6 Exhibit 6 # 7 Exhibit 7 # 8 Exhibit 8 # 9 Exhibit 9 # 10 Exhibit 10 # 11 Exhibit 11 # 12 Exhibit 12 # 13 Exhibit 13 # 14 Exhibit 14 # 15 Exhibit 15 # 16 Exhibit 16) (Zabarauskas, Bruce)

Document posted on Jan 11, 2021 in the bankruptcy, 18 pages and 2 tables.

Bankrupt11 Summary (Automatically Generated)

1 The Debtors in these Chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Studio Movie Grill Holdings, LLC (6546) (“SMG Holdings”); OHAM Holdings, LLC (0966); Movie Grill Concepts Trademark Holdings, LLC (3096); Movie Grill Concepts I, Ltd. (6645); Movie Grill Concepts III, Ltd. (2793); Movie Grill Concepts IV, Ltd. (1454); Movie Grill Concepts IX, LLC (3736); Movie Grill Concepts VI, Ltd. (6895); Movie Grill Concepts VII, LLC (2291); Movie Grill Concepts X, LLC (6906); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XII, LLC (6040); Movie Grill Concepts XIII, LLC (5299); Movie Grill Concepts XIV, LLC (4709); Movie Grill Concepts XIX, LLC (9646); Movie Grill Concepts XL, LLC (4454); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLII, LLC (2309); Movie Grill Concepts XLIII, LLC (9721); Movie Grill Concepts XLIV, LLC (8783); Movie Grill Concepts XLV, LLC (2570); Movie Grill Concepts XV, LLC (4939); Movie Grill Concepts XVI, LLC (1033); Movie Grill Concepts XVII, LLC (1733); Movie Grill Concepts XVIII, LLC (8322); Movie Grill Concepts XX, LLC (7300); Movie Grill Concepts XXI, LLC (1508); Movie Grill Concepts XXII, LLC (6748); Movie Grill Concepts XXIV, LLC (5114); Movie Grill Concepts XXIX, LLC (5857); Movie Grill Concepts XXV, LLC (4985); Movie Grill Concepts XXVI, LLC (5233); Movie Grill Concepts XXVII, LLC (4427); Movie Grill Concepts XXVIII, LLC (1554); Movie Grill Concepts XXX, LLC (1431); Movie Grill Concepts XXXI, LLC (3223); Movie Grill Concepts XXXII, LLC (0196); Movie Grill Concepts XXXIII, LLC (1505); Movie Grill Concepts XXXIV, LLC (9770); Movie Grill Concepts XXXIX, LLC (3605); Movie Grill Concepts XXXV, LLC (0571); Movie Grill Concepts XXXVI, LLC (6927); Movie Grill Concepts XXXVII, LLC (6401); Movie Grill Concepts XXXVIII, LLC (9657); Movie Grill Concepts XXIII, LLC (7893); Studio Club, LLC (3023); Studio Club IV, LLC (9440); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLVI, LLC (2344); Movie Grill Concepts XLVII, LLC (5866); Movie Grill Concepts XLVIII, LLC (8601); Movie Grill Concepts XLIX, LLC (0537); Movie Grill Concepts L, LLC (5940); Movie Grill Concepts LI, LLC (7754); Movie Grill Concepts LII, LLC (8624); Movie Grill Concepts LIII, LLC (3066); Movie Grill Concepts LIV, LLC (2018); Movie Grill Concepts LV, LLC (4699); Movie Grill Partners 3, LLC (4200); Movie Grill Partners 4, LLC (1363); Movie Grill Partners 6, LLC (3334); and MGC ManagementThe Lessee-Debtors are: (i) Movie Grill XXIV, LLC (“Movie Grill XXIV”); (ii) Movie Grill XXX, LLC (“Movie Grill XXX”); (iii) Movie Grill XXXII, LLC (“Movie Grill XXXII”); and (iv) Movie Grill XL, LLC (“Movie Grill XL”).Tampa, Florida 33612-5552, which includes a Master Lease Schedule (including Exhibit A thereto) and an Equipment Addendum (the “Tampa Lease”)3; (ii) a Master Lease Agreement, dated December 4, 2018, between Presidio as lessor and Movie Gr

List of Tables

Page 1

Bruce J. Zabarauskas Texas Bar No. 24095654 Thompson & Knight LLP 1722 Routh Street, Suite 1500 Dallas, Texas 75201 Telephone: 214-969-2511 email: bruce.zabarauskas@tklaw.com Attorneys for Veritex Community Bank UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION § Case No. 20-32633-SGJ-11 In re: § Chapter 11 § STUDIO MOVIE GRILL HOLDINGS, § Jointly Administered LLC, et al.1, § § Debtors. § VERITEX COMMUNITY BANK’S LIMITED OBJECTION TO: (A) PROPOSED ASSUMPTION AND ASSIGNMENT OF LEASES, INCLUDING PROPOSED CURE AMOUNTS; AND (B) SALE OF SUBSTANTIALLY ALL OF DEBTORS’ ASSETS (Related To Dkt. Nos. 133, 347) TO: THE HONORABLE STACEY G.C. JERNIGAN, U.S. BANKRUPTCY JUDGE 1 The Debtors in these Chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Studio Movie Grill Holdings, LLC (6546) (“SMG Holdings”); OHAM Holdings, LLC (0966); Movie Grill Concepts Trademark Holdings, LLC (3096); Movie Grill Concepts I, Ltd. (6645); Movie Grill Concepts III, Ltd. (2793); Movie Grill Concepts IV, Ltd. (1454); Movie Grill Concepts IX, LLC (3736); Movie Grill Concepts VI, Ltd. (6895); Movie Grill Concepts VII, LLC (2291); Movie Grill Concepts X, LLC (6906); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XII, LLC (6040); Movie Grill Concepts XIII, LLC (5299); Movie Grill Concepts XIV, LLC (4709); Movie Grill Concepts XIX, LLC (9646); Movie Grill Concepts XL, LLC (4454); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLII, LLC (2309); Movie Grill Concepts XLIII, LLC (9721); Movie Grill Concepts XLIV, LLC (8783); Movie Grill Concepts XLV, LLC (2570); Movie Grill Concepts XV, LLC (4939); Movie Grill Concepts XVI, LLC (1033); Movie Grill Concepts XVII, LLC (1733); Movie Grill Concepts XVIII, LLC (8322); Movie Grill Concepts XX, LLC (7300); Movie Grill Concepts XXI, LLC (1508); Movie Grill Concepts XXII, LLC (6748); Movie Grill Concepts XXIV, LLC (5114); Movie Grill Concepts XXIX, LLC (5857); Movie Grill Concepts XXV, LLC (4985); Movie Grill Concepts XXVI, LLC (5233); Movie Grill Concepts XXVII, LLC (4427); Movie Grill Concepts XXVIII, LLC (1554); Movie Grill Concepts XXX, LLC (1431); Movie Grill Concepts XXXI, LLC (3223); Movie Grill Concepts XXXII, LLC (0196); Movie Grill Concepts XXXIII, LLC (1505); Movie Grill Concepts XXXIV, LLC (9770); Movie Grill Concepts XXXIX, LLC (3605); Movie Grill Concepts XXXV, LLC (0571); Movie Grill Concepts XXXVI, LLC (6927); Movie Grill Concepts XXXVII, LLC (6401); Movie Grill Concepts XXXVIII, LLC (9657); Movie Grill Concepts XXIII, LLC (7893); Studio Club, LLC (3023); Studio Club IV, LLC (9440); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLVI, LLC (2344); Movie Grill Concepts XLVII, LLC (5866); Movie Grill Concepts XLVIII, LLC (8601); Movie Grill Concepts XLIX, LLC (0537); Movie Grill Concepts L, LLC (5940); Movie Grill Concepts LI, LLC (7754); Movie Grill Concepts LII, LLC (8624); Movie Grill Concepts LIII, LLC (3066); Movie Grill Concepts LIV, LLC (2018); Movie Grill Concepts LV, LLC (4699); Movie Grill Partners 3, LLC (4200); Movie Grill Partners 4, LLC (1363); Movie Grill Partners 6, LLC (3334); and MGC Management I, LLC (3224).

Page 2

Veritex Community Bank (“Veritex”) as assignee of Presidio Technology Capital, LLC (“Presidio”), by and through its undersigned counsel, submits this limited objection (the “Objection”) to the proposed assumption and assignment of its equipment leases with certain of the Debtors, the proposed cure amounts under those leases, and the sale of substantially all of the Debtors’ assets (the “Sale”) to the extent set forth below, and respectfully states as follows: Introduction 1. Veritex is the assignee of the lessor under four equipment leases where certain of the Debtors are the lessees. As set forth in more detail below, Vertex objects to the assumption and assignment of these leases because: (i) the cure amounts asserted by the Debtors in connection with the leases are inaccurate; and (ii) no showing has been made to satisfy the Debtors’ evidentiary burden that there exists adequate assurance of future performance by the Debtors or their assignee under the leases as required by § 365 of the Bankruptcy Code. Veritex also objects to the Sale to the extent that the assets being leased under the Leases (as defined below) are not excluded from the assets being sold by the Debtors. Background 2. On October 23, 2020 (the “Petition Date”), the Debtors filed voluntary Chapter 11 bankruptcy petitions with this Court. Since the Petition Date, the Debtors have been operating their businesses and managing their properties pursuant to Bankruptcy Code §§ 1107 and 1108. 3. By order dated October 27, 2020, the Debtors’ bankruptcy cases are being jointly administered for administrative purposes only. [Dkt. No. 48].

Page 3

The Bid Procedures And Sale Motion And Bid Procedures Order 4. On November 5, 2020, the Debtors filed their Motion for (I) Entry of an Order (A) Approving Bid Procedures, (B) the Form and Manner of Notice, and (C) the Procedures for Determining Cure Amounts for Executory Contracts and Unexpired Leases, and (II) Entry of an Order Approving (A) the Sale of Substantially All of the Debtors’ Assets Free and Clear of All Liens, Claims, Encumbrances, and Interests, and (B) the Assumption and Assignment of Certain Contracts and Unexpired Leases (the “Bid Procedures and Sale Motion”). [Dkt. No. 133] 5. On December 11, 2020, the Court entered an Order Approving (A) Bid Procedures; (B) The Form And Manner Of Notice; (C) The Procedures For Determining Cure Amounts On Executory Contracts And Unexpired Leases; And (D) Granting Related Relief (the “Bid Procedures Order”). [Dkt. No. 335]. 6. On December 14, 2020, the Debtors filed and served their Notice Of Executory Contracts And Unexpired Leases Which May Be Assumed And Assigned, Pursuant To Section 365 Of The Bankruptcy Code, In Connection With The Sale Of Substantially All Of The Debtors’ Assets And The Proposed Cure Amounts With Respect Thereto (the “Assumption Notice”). [Dkt. No. 347]. The Leases 7. Veritex is the assignee of Presidio as lessor under four leases (the “Leases”) pursuant to which certain of the Debtors as lessees (collectively, the “Lessee-Debtors”), leased equipment, software, accessories and other property from the lessor.2 See Declaration of Michael 2 The Lessee-Debtors are: (i) Movie Grill XXIV, LLC (“Movie Grill XXIV”); (ii) Movie Grill XXX, LLC (“Movie Grill XXX”); (iii) Movie Grill XXXII, LLC (“Movie Grill XXXII”); and (iv) Movie Grill XL, LLC (“Movie Grill XL”).

Page 4

Carp in support of this Objection, a copy of which is annexed hereto as Exhibit 1 at ¶ 3. Each of the Leases are set forth as Desired 365 Contracts (as defined in the Assumption Notice) which may be assumed and assigned to the purchaser of the Debtors’ assets at the Sale. [Dkt. No. 347-1 at p. 1]. 8. Specifically, the Leases consist of: (i) a Master Lease Agreement, dated March 10, 2017, between Presidio as lessor and Movie Grill XXIV as lessee, related to Movie Grill XXIV’s operation of a Studio Movie Grill located at 2332 University Mall Ct., Tampa, Florida 33612-5552, which includes a Master Lease Schedule (including Exhibit A thereto) and an Equipment Addendum (the “Tampa Lease”)3; (ii) a Master Lease Agreement, dated December 4, 2018, between Presidio as lessor and Movie Grill XXX, LLC as lessee related to Movie Grill XXX’s operation of a Studio Movie Grill located at 3204 Margaritaville Blvd., Kissimmee, Florida 34747 (the “Kissimmee Lease”), which includes a Master Lease Schedule (including Exhibit A thereto) and an Equipment Addendum4; (iii) a Master Lease Agreement, dated September 19, 2019, between Presidio as lessor and Movie Grill XXXII, LLC as lessee, related to Movie Grill XXXII’s operation of a Studio Movie Grill located at 5336 Docia Crossing Rd., Charlotte, North Carolina 28269 (the “Charlotte Equipment Lease”), which includes a Master Lease Schedule (including Exhibit A thereto) and an Equipment Addendum5; and (iv) a Master Lease Agreement, dated September 19, 2019, between Presidio as lessor and Movie Grill XL, LLC related to Movie Grill XL’s operation of a Studio Movie Grill located at 128-130 N. Artsakh Street, Glendale, California 91206 (the “Glendale Equipment Lease”), which includes a Master Lease Schedule (including Exhibit A thereto) and an Equipment Addendum.6 (Exhibit 1 at ¶ 4). 3 A copy of the Tampa Lease is annexed here as Exhibit 2. 4 A copy of the Glendale Lease is annexed hereto as Exhibit 3. 5 A copy of the Kissimmee Lease is annexed hereto as Exhibit 4. 6 A copy of the Charlotte Lease is annexed here as Exhibit 5.

Page 5

Presidio’s Assignments Of The Leases To Veritex 9. Section 24 of each Lease provides, in part: ASSIGNMENT BY LESSOR: LESSOR MAY, WITHOUT THE CONSENT OF OR NOTICE TO LESSEE, ASSIGN, SELL OR ENCUMBER ALL OR ANY PART OF THIS LEASE AGREEMENT, ANY SCHEDULE, THE EQUIPMENT AND THE PAYMENTS AND OTHER AMOUNTS DUE HEREUNDER OR THEREUNDER, OR THE RIGHT TO ENTER INTO ANY SCHEDULE… ANY SUCH ASSIGNEE SHALL HAVE ALL OF THE RIGHTS, BUT NONE OF THE OBLIGATIONS (UNLESS EXPRESSLY ASSUMED BY SUCH ASSIGNEE) OF LESSOR UNDER THIS LEASE AGREEMENT, AND LESSEE SHALL NOT ASSERT AGAINST ANY SUCH ASSIGNEE ANY DEFENSE, COUNTERCLAIM OR SET-OFF WHICH LESSEE MAY HAVE AGAINST LESSOR FOR ANY REASON WHATSOEVER. 10. Pursuant to § 24 of the Leases, Presidio and Veritex entered into an Assignment of Lease and Security Agreements (each hereafter referred to as an “Assignment”) with respect to each of the Leases, whereby Presidio assigned all of its rights to the payments under the Leases and lessor’s remedies under the Leases, and any guarantees thereof, to Veritex. Accordingly, Veritex has the right to enforce the Leases.7 The Payment Terms Under The Leases 11. The term and monthly payment obligations of the Lessee–Debtors under each of the Leases is as follows8: 7 A copy of the Assignment in connection with the Tampa Lease is annexed hereto as Exhibit 6, A copy of the Assignment in connection with the Kissimmee Lease is annexed hereto as Exhibit 7. A copy of the Assignment in connection with the Charlotte Lease is annexed hereto as Exhibit 8. A copy of the Assignment in connection with the Glendale Lease is annexed hereto as Exhibit 9. As set forth in the Assignments, title to the leased assets remains in Presidio, who is entitled to any moneys resulting from any exercise of the purchase option at the end of the Leases; Presidio has no interest in the monthly payments under the Leases (Exhibit 1 at ¶ 6, fn 6; Exhibit 6 at p. 1, Exhibit 7 at p. 1; Exhibit 8 at p. 1; Exhibit 9 at p. 1). 8 Each of the Leases contained a three month free rent provision at the beginning of the lease. See Exhibit 2 at ¶ 4 of Master Lease Schedule; Exhibit 3 at ¶ 4 of Master Lease Schedule; Exhibit 4 at ¶ 4 of Master Lease Schedule; Exhibit 5 at ¶ 4 of Master Lease Schedule.

Page 6

(a) the Tampa Lease has a 36 month term and Movie Grill XXIV is required to make monthly payments of $19,490.40 (consisting of $18,340 in rent and taxes of $1,150.40) (Exhibit 2 at ¶ 4 of Master Lease Schedule); (b) the Kissimmee Lease has a 60 month term and Movie Grill XXX is required to make monthly payments of $56,532.72 (consisting of $52,262 in rent and taxes of $3,270.72) during months four through thirty-six, and $13,200 plus sales tax during months thirty-seven through sixty under the lease (Exhibit 3 at ¶ 4 of Master Lease Schedule);9 (c) the Charlotte Lease has a 48 month term and Movie Grill XXXII is required to make monthly payments of $27,595.43 (consisting of $25,730 in rent and taxes of $1,865.43) (Exhibit 4 at ¶ 4 of Master Lease Schedule); and (d) the Glendale Lease has a 48 month term and Movie Grill XL is required to make monthly payments of $28,244.95 (consisting of $25,619 in rent and taxes of $2,625.95) (Exhibit 5 at ¶ 4 of Master Lease Schedule) (Exhibit 1 at ¶ 7). Common Terms Under Each Of The Equipment Leases 12. Each of the Leases contain certain identical provisions relating to, inter alia, the effects of default under the Lease (Exhibit 1 at ¶ 8). 13. Section 22(a) of each of the Leases provides, in part: Lessee shall be in default under this Lease Agreement upon the occurrence of any of the following events or conditions (each, an “Event of Default”): Lessee fails to make any Payment or any other amount payable under this Lease Agreement or any other Document, and such failure continues for five (5) days after it becomes due... (Exhibit 1 at ¶ 9; Exhibit 2 at §22(a); Exhibit 3 at §22(a); Exhibit 4 at §22(a); Exhibit 5 at §22(a)). 14. Section 22(c) of the Leases provides: Lessee shall be liable for, and reimburse Lessor, for all reasonable and necessary legal fees and all commercially reasonable costs and expenses 9 At all times relevant to this objection, the monthly payment due under the Kissimmee Lease has been and is $56,532.72. (Exhibit 1 at ¶ 7, fn 6; Exhibit 3 at ¶ 4 of Master Lease Schedule).

Page 7

incurred by Lessor as a result of an Event of Default hereunder, or the exercise of Lender’s remedies, including placing any Equipment in the condition required by Section 15 hereof. After an Event of Default has occurred, any Payments or other amount not paid to Lessor when due shall bear interest, from due date until paid, at the lesser of eighteen percent (18%) per annum or the maximum rate allowed by law. Such amount shall be payable by demand. (Exhibit 1 at ¶ 10; Exhibit 2 at §22(c); Exhibit 3 at §22(c); Exhibit 4 at §22(c); Exhibit 5 at §22(c)). 15. Section 21 of the Leases provides: TIME IS OF THE ESSENCE; LATE CHARGES: Time is of the essence in this Lease Agreement. If any Payment or other obligation of Lessee hereunder is not paid within five (5) days of its due date. Lessee Agrees to pay a late charge of five cents ($0.05) per dollar on, and in addition to, the amount of such obligation but not exceeding the lawful maximum, if any. Late charges, if any, shall be payable by Lessee to Lessor on demand. (Exhibit 1 at ¶ 11; Exhibit 2 at §21; Exhibit 3 at §21; Exhibit 4 at §21; Exhibit 5 at §21). 16. Section 16 of the Leases provides, in part: TAXES AND FEES: (a) Lessee shall timely pay, and indemnify and hold harmless Lessor against, all assessments, license fees, taxes (including sales, use, excise, personal property; and valorem, stamp, documentary and other taxes) and all other governmental or third-party charges, expenses, fees, fines, or penalties whatsoever, whether payable by Lessor or Lessee on or relating to this Lease Agreement, any Schedule, the Payments, Equipment, Software or Services, or the use, registration, shipment, transportation, delivery, ownership or operation thereof, and on or relating to this Lease Agreement; excluding, however, Lessor’s net income taxes. Applicable sales and use taxes shall be paid with the Payments unless Lessee provides evidence of direct payment authority or an exemption certificate valid in the state where the Equipment and/or Software is located… (Exhibit 1 at ¶ 13; Exhibit 2 at § 16; Exhibit 3 at § 16; Exhibit 4 at § 16; Exhibit 5 at § 16). 17. Section 30 of each Lease provides that it is governed by Georgia law. (Exhibit 1 at ¶ 13; Exhibit 2 at §30; Exhibit 3 at §30; Exhibit 4 at §30; Exhibit 5 at §30).

Page 8

18. Each of the Leases provides that at the end of its term, the lessee may purchase the leased equipment for an amount which is not less than the “then fair market value” of the equipment. (Exhibit 1 at ¶ 14; Exhibit 2 at Exhibit A to Master Lease Schedule; Exhibit 3 at Exhibit A to Master Lease Schedule; Exhibit 4 at Exhibit A to Master Lease Schedule; Exhibit 5 at Exhibit A to Master Lease Schedule). The Guarantees Of The Leases 19. Debtor, Studio Movie Grill Holdings, LLC (“Studio Movie Grill Holdings”) executed guarantees of the Lessee-Debtors’ obligations under each of the Leases. Brian Schultz (“Schultz”) executed guarantees of the lessees’ obligations under the Charlotte Lease and Glendale Lease. (Exhibit 1 at ¶ 15).10 The Lessee-Debtors’ Defaults Under The Leases 20. Each of the Lessee-Debtors defaulted under their Lease by failing to make their required monthly lease payments for July 2020 and August 202011. Accordingly, on August 27, 2020, Veritex sent a Notice of Default/Demand To Cure (each a “Notice of Default” or collectively the “Notices of Default”) to each of the Lessee-Debtors.12 (Exhibit 1 at ¶ 16). 10 Copies of the guarantees of the Leases executed by Studio Movie Grill Holdings are annexed hereto as Exhibit 10. Copies of the guarantees of the Charlotte Lease and Glendale Lease executed by Brian Schultz (“Schultz”) are annexed hereto as Exhibit 11. 11 While the Lessee-Debtors also failed to make their monthly lease payments for April, May and June 2020, the parties entered into a Payment Deferral Agreement, pursuant to which the term of each lease was extended by three months, and deferred payments for April, May and June 2020 would be made during such extended three month period. Exhibit 1 at ¶ 16, fn 10. 12 A copy of the Notice of Default as to the Tampa Lease is annexed hereto as Exhibit 12. A copy of the Notice of Default as to the Kissimmee Lease is annexed hereto as Exhibit 13. A copy of the Notice of Default as to the Charlotte Lease is annexed hereto as Exhibit 14. A copy of the Notice of Default as to the Glendale Lease is annexed hereto as Exhibit 15.

Page 9

21. Notwithstanding receipt of such Notices of Default, the Lessee-Debtors further defaulted under the Leases by failing to make their required monthly lease payments for September and October 2020. (Exhibit 1 at ¶ 17). 22. Additionally, debtor Movie Grill XXXIV has failed to pay the full amount of its required monthly payment under the Tampa Lease for each month since the Petition Date. The Debtors have paid only $15,408 monthly post-petition under the Tampa Lease, instead of the required $18,340 monthly payment. (Exhibit 1 at ¶ 18). The Incorrect Cure Amounts Asserted By The Debtors In The Assumption Notice 23. The Assumption Notice provides that the Leases may be assumed in connection with the Sale. 24. The Assumption Notice filed by the Debtors with the Court incorrectly states that the amounts necessary to cure the defaults under each of the Leases are as follows: (i) Tampa Lease - $65,829.92; (ii) Kissimmee Lease - $226,130.88; (iii) Charlotte Lease - $119,527.16; and (iv) Glendale Lease - $110,381.72 [Dkt. No. 247 and 247-1 at p. 1]13 The Correct Cure Amounts Under The Leases 25. As set forth in more detail below, the correct cure amounts (the “Correct Cure Amounts”) for each of the Leases, not including legal fees and expenses incurred after December 31, 2020 (which must be added to such cure amounts) are as follows: (i) Tampa Lease - $118,145.29; (ii) Kissimmee Lease - $$274,826.97; (iii) Charlotte Lease - $143,957.02; and (iv) Glendale Lease - $147,780.72. (Exhibit 1 at ¶¶ 21-29). 13 The Assumption Notice incorrectly references Presidio, rather than its assignee – Veritex, as the non-debtor party to the Lease. See Dkt. No. 347-1 at p1.

Page 10

How The Correct Cure Amounts Under The Leases Were Calculated 26. As this Court has recognized: “If a debtor chooses to assume an unexpired lease where there has been a default, it must do three things: (1) cure or provide adequate assurance that it will promptly cure all monetary and most non-monetary defaults, (2) compensate, or provide adequate assurance that it will promptly compensate, the non-debtor party to the lease for any actual pecuniary losses related to the default, and (3) provide adequate assurance of future performance under the lease.” In re Senior Care Centers, LLC, 607 B.R. 580, 588 (Bankr. N.D. Tex. 2019)(Jernigan, J). See also 11 U.S.C. § 365(b). 27. Courts have found that the following categories of expenses/damages are to be included as part of a lessor’s cure claim to the extent provided for in the parties’ lease or contract: (i) unpaid monthly lease payments; (ii) late charges14; (iii) default interest15; (iv) reasonable legal fees and expenses16; and taxes17. 28. Each of these categories of expenses or damages is provided for in the Leases. 29. Section 1 of the Leases requires the Debtor to make monthly lease payments. The Lessee-Debtors have breached this provision pre-petition for the months of July through October 2020 for each of the Leases. Additionally, Movie Grill XXIV is in arrears on its post-petition 14 Senior Care Centers, LLC, 607 B.R. 580, 589-590 (Bankr. N.D. Tex. 2019)(Jernigan, J.)(landlord entitled to 5% late charge on late payments, as provided in lease as part of its cure claim); In re Joshua Slocum, Ltd., 103 B.R. 603, 609-610 (Bankr. E.D. Pa. 1989)(lessor entitled to late charges upon assumption of lease). 15 See, e.g., In re Schulz. 63 B.R. 163, 168 (Bankr. D. Neb. 1986)(“if the lease is assumed, all of the obligations under the lease, including any default interest provisions must be paid in order to cure the default.”): In re Sr. Care Centers, LLC 607 B.R. 580, 589-590 (Bankr. N.D. Tex. 2019)( Jernigan, J.)(lessor entitled to interest on missed payments). 16 See, e.g., Senior. Care Centers, LLC, 607 B.R. 580, 589-590 (Bankr. N.D. Tex. 2019)(Jernigan, J.)(landlord entitled to reasonable legal fees and expenses as provided in lease as part of its cure claim);.In re Am. The Beautiful Dreamer, 2006 Banker LEXIS 1371 at *5 (W.D. Wash. 2006)(cure claim included post-petition attorneys’ fees). 17 See, e.g., In re Bachrach Clothing, Inc., 396 B.R. 219, 221 (N.D. Ill 2008) (taxes were part of cure claim)

Page 11

monthly payment obligations under the Tampa Lease in the amount of $12,247.20. Accordingly, the unpaid monthly rental payments due under each Lease are included in the Correct Cure Amounts. (Exhibit 1 at ¶ 24; Exhibit 2 at §1 and ¶ 4 of Master Lease Schedule; Exhibit 3 at §1 and ¶ 4 of Master Lease Schedule; Exhibit 4 at §1 and ¶ 4 of Master Lease Schedule; Exhibit 5 at §1 and ¶ 4 of Master Lease Schedule). 30. Section 22(a) of the Leases provides for a 5% late charge on all late payments under the Leases. Accordingly, the Correct Cure Claims should include late charges for all payments from July through October 2020 under the Leases (Exhibit 1 at ¶ 25; Exhibit 2 at §22(a); Exhibit 3 at §22(a); Exhibit 4 at §22(a); Exhibit 5 at §22(a)). 31. Section 22(c) also provides that upon an Event of Default, the lessor is entitled to 18% interest on unpaid monthly payments under the Leases. Accordingly, the Correct Cure Claims includes default interest at 18% on all late payments from their due date through the Petition Date. (Exhibit 1 at ¶ 26; Exhibit 2 at § 22(c); Exhibit 3 at § 22(c); Exhibit 4 at § 22(c); Exhibit 5 at § 22(c). 32. Section 22(c) of the Leases also provides for the payment of reasonable legal fees and expenses incurred by Lessor as a result of an Event of Default hereunder, or the exercise of Lender’s remedies. (Exhibit 1 at ¶ 27; Exhibit 2 at § 22(c); Exhibit 3 at § 22(c); Exhibit 4 at § 22(c); Exhibit 5 at § 22(c)). As of December 31, 2020, Veritex has incurred legal fees and expenses in the amount of $69,478.17 as a result of the Lessee-Debtors’ defaults under the Leases, and expects to continue to incur additional fees and expenses in connection with these bankruptcy proceedings. Veritex submits that such fees and expenses should be allocated 25% to each of the Lessee-Debtors ($17,369.54 as to amounts through December 31, 2020 with respect to each of the Leases). (Exhibit 1 at ¶ 26).

Page 12

33. Section 16 of the Leases requires the Lessee-Debtors to pay all personal property taxes related to the leased assets. The Correct Cure Amounts therefore should include all unpaid personal property taxes owed by the Lessee-Debtors, which amounts were paid by the lessor. (Exhibit 1 at ¶ 28). 34. Based upon the foregoing, the Correct Cure Amounts for each of the Leases are set forth in the charts below, which are the amounts that should be paid upon assumption or assignment of each of the Leases, to the extent granted by the Court. Tampa Lease
Table 1 on page 12. Back to List of Tables
Category Amount
Missed Pre-Petition Monthly Payments (July through October 2020) $ 77,961.60
Shortage On Post-Petition Monthly Payments $ 12,247.20
Late Charges (5%) On Missed Pre-Petition Monthly Payments $ 3,898.08
Default Interest (Calculated at 18% Through The Petition Date) $ 2,923.56
2020 Personal Property Tax $ 3,745.31
Legal Fees And Expenses Through December 31, 2020 $ 17,369.54
Legal Fees And Expenses Subsequent To December 31, 2020 To Be Determined
Total Cure Claim As Of January 31, 2021 $118,145.29
Plus Legal Fees And
Expenses Incurred
After December 31,
2020
33. Section 16 of the Leases requires the Lessee-Debtors to pay all personal property taxes related to the leased assets. The Correct Cure Amounts therefore should include all unpaid personal property taxes owed by the Lessee-Debtors, which amounts were paid by the lessor. (Exhibit 1 at ¶ 28). 34. Based upon the foregoing, the Correct Cure Amounts for each of the Leases are set forth in the charts below, which are the amounts that should be paid upon assumption or assignment of each of the Leases, to the extent granted by the Court. Tampa Lease Kissimmee Lease
Table 2 on page 12. Back to List of Tables
Category Amount
Missed Pre-Petition Monthly Payments (July through October 2020) $226,130.88
Late Charges (5%) On Missed Pre-Petition Monthly Payments $ 11,306.54
Default Interest (Calculated at 18% Through The Petition Date) $ 8,479.91
2020 Personal Property Tax $ 11,000.10
Legal Fees And Expenses Through December 31, 2020 $ 17,369.54
Legal Fees And Expenses Subsequent To December 31, 2020 To Be Determined
Total Cure Claim As Of January 31, 2021 $274,286.97
Plus Legal Fees And
Expenses Incurred

Page 13

After December 31, 2020 Charlotte Lease
Table 1 on page 13. Back to List of Tables
Category Amount
Missed Pre-Petition Monthly Payments (July through October 2020) $110,381.72
Late Charges (5%) On Missed Pre-Petition Monthly Payments $ 5,519.09
Default Interest (Calculated at 18% Through The Petition Date) $ 4,139.31
2020 Personal Property Tax $ 6,547.36
Legal Fees And Expenses Through December 31, 2020 $ 17,369.54
Legal Fees And Expenses Subsequent To December 31, 2020 To Be Determined
Total Cure Claim As Of January 31, 2021 $143,957.02
Plus Legal Fees And
Expenses Incurred
After December 31,
2020
After December 31, 2020 Charlotte Lease Glendale Lease
Table 2 on page 13. Back to List of Tables
Category Amount
Missed Pre-Petition Monthly Payments (July through October 2020) $112,978.80
Late Charges (5%) On Missed Pre-Petition Monthly Payments $ 5,648.49
Default Interest (Calculated at 18% Through The Petition Date) $ 4,236.74
2020 Personal Property Tax $ 7,545.64
Legal Fees And Expenses Through December 31, 2020 $ 17,369.54
Legal Fees And Expenses Subsequent To December 31, 2020 To Be Determined
Total Cure Claim As Of January 31, 2021 $147,780.72
Plus Legal Fees And
Expenses Incurred
After December 31,
2020
A detailed calculation of these amounts is annexed hereto as Exhibit 16. (Exhibit 1 at ¶ 29).

Page 14

The Court Should Not Allow The Assumption And/Or Assignment Of The Leases Without The Debtors And/Or Purchaser Establishing Adequate Assurance Of Future Performance 35. In order to assume or assign an unexpired lease or executory contract under § 365 of the Bankruptcy Code, the debtor or assignee must establish “adequate assurance of future performance.” 11 U.S.C § 365(f). 36. The Debtors have not yet selected a purchaser of their assets, and therefore no evidence has been proffered yet as to adequate assurance of future performance. Accordingly, Veritex reserves its right to supplement this Objection to address this issue following the identification of any purchaser/assignee. However, since each of the Leases contains a guarantee of a corporate parent, and two of the Leases (the Charlotte Lease and Glendale Lease) included the guaranty of the president of the corporate guarantor. (Exhibit 1 at ¶ 33-34; Exhibit 10; Exhibit 11). Veritex submits that any assignment of the Leases pursuant to the Sale should similarly require that the corporate parent of the assignee guarantee the lessee’s obligations under each of the Leases, and that the president of such corporate guarantor should be required to guarantee the lessee’s obligations under the Charlotte Lease and Glendale Lease. Additionally, the assumption and assignment of any of the Leases should not result in the release or discharge of the obligations of Studio Movie Grill Holdings or Schultz under their guarantees of the Leases. Veritex Objects To The Sale To The Extent That It Seeks To Transfer Title To The Assets Which Are Being Leased By The Lessee-Debtors Under The Leases 37. Finally, Veritex objects to the Sale to the extent that the Sale seeks to transfer title to the assets which are being leased under the Leases to the purchaser of the Sale.18 Absent 18 Even though title to the leased assets remains in Presidio, Veritex holds a security interest in such assets. (Exhibit 1 at ¶ 32, fn 13; Exhibit 6 at ¶ 1; Exhibit 7 at ¶ 1; Exhibit 8 at ¶ 1; Exhibit 9 at ¶ 1.

Page 15

circumstances set forth in Bankruptcy Code § 363(h), which are inapplicable in this case, the Debtors may only sell property of their bankruptcy estates. 38. Bankruptcy Code § 541(a)(1) defines property of the estate as “all legal or equitable interests of the debtor in property as of the commencement of the case.” 39. The determination as to whether property constitutes property of a bankruptcy estate is determined by state law. See, e.g., Butner v. United States 440 U.S. 48 (1979). Similarly, the determination as to whether an agreement is a “true lease” is determined by state law. See, e.g., In re Royal T Energy, LLC, 596 B.R. 525, 529 (Bankr. E.D. Tex. 2019); In re Jarrells, 205 B.R. 994,996 (Bankr. M.D. Ga. 1996). 40. The Leases are governed by Georgia law. (Exhibit 1 at ¶ 30; Exhibit 2 at § 30; Exhibit 3 at § 30; Exhibit 4 at § 30; Exhibit 5 at § 30) 41. Under Georgia law, where a lease provides for a significant or fair market value purchase option at the termination, the lease is a “true lease” and the lessee holds a leasehold, and not an ownership, interest in the leased property. See, e.g., Aniebue v. Jaguar Credit Corp., 708 S.E.2d 4, 7 (Ga, Ct. App. 2011)(in determining whether agreement is a ‘true lease’ or financing arrangement, court looks to “whether lessees has an option to become the owner of the goods for no additional consideration or nominal consideration upon compliance with lease agreement.”); Coleman v. DaimlerChrysler Services of N. Am., 623 S.E.2d 189 (Ga. Ct. App. 2005)(consideration to purchase property at end of lease is not nominal if based upon fair market consideration at the time purchase option is to executed). 42. Here, each of the Leases provides that at the conclusion of the Lease, the lessee may purchase the leased equipment for a price equal to the greater of several hundred thousand dollars or the then fair market value of the property. See Exhibit 1 at ¶ 32-33; Exhibit 2 at Exhibit

Page 16

A to Master Lease Schedule; Exhibit 3 at Exhibit A to Master Lease Schedule; Exhibit 4 at Exhibit A to Master Lease Schedule; Exhibit 5 at Exhibit A to Master Lease Schedule. 43. Therefore, under the Georgia law, the Debtors have no ownership interest in the assets leased under the Leases, and the Debtors may not sell the leased assets to any party. The Lessee-Debtors’ rights are limited to assuming and assigning their interests as lessees under the Leases, to the extent they can satisfy the requirements for assumption and assignment set forth in Bankruptcy Code § 365. 44. Accordingly, Veritex requests that any order approving the Sale expressly provide that the assets leased by the Lessee-Debtors under the Leases are excluded from the assets being sold pursuant to the Sale. WHEREFORE, Veritex respectfully requests that the Court enter an order providing: (i) the Correct Cure Amounts are the amounts required by the Debtors to assume and/or assign the Leases, provided that the Debtors are able to establish all of the requirements under the Bankruptcy Code for the assumption and/or assignment of the Leases, including without limitation that the Debtors or assignee in the event of an assignment, shall provide adequate assurance of future performance to Veritex under the Leases; and (ii) title to the assets leased to the Lessee-Debtors under the Leases shall be excluded from the assets being sold pursuant to the Sale.

Page 17

DATED: January 12, 2021 Respectfully submitted, THOMPSON & KNIGHT LLP /s/ Bruce J. Zabarauskas Bruce J. Zabarauskas Texas Bar No. 24095654 1722 Routh Street, Suite 1500 Dallas, Texas 75201 Telephone: 214-969-2511 e-mail: bruce.zabarauskas@tklaw.com Attorneys for Veritex Community Bank

Page 18

CERTIFICATE OF SERVICE I hereby certify that on January 12, 2021, a true and correct copy of the foregoing (with exhibits) has been served on all parties entitled to service via this Court’s Case Management/Electronic Case Filing System (“CM/ECF”). I hereby further certify that on January 12, 2021, a true and correct copy of the foregoing (with exhibits) has been served by email upon the following parties: (i) counsel to the Debtors: Law Offices of Frank J. Wright, 2323 Ross Avenue, Suite 730, Dallas, Texas 75201 Attn: Frank J. Wright, Esq. and Jeffery M. Veteto, Esq., email: frank@fjwright.law and jeff@fjwright.law; (ii) counsel to the Agent: Vinson & Elkins LLP, 2001 Ross Avenue, Suite 3900, Dallas, Texas 75201 Attn: William L. Wallander, Esq. and Bradley R. Foxman, Esq., email: bwallander@velaw.com and bfoxman@velaw.com; (iii) counsel to DIP Lender, Jones Day, 250 Vesey Street, New York, New York 10281, Attn: John E. Mazey, Esq., Michael C. Schneidereit, Esq., and Nicholas J. Morin, Esq., email: jemazey@jonesday.com, mschneidereit@jonesday.com, and nmorin@jonesday.com); (iv) counsel to the Committee: Pachulski Stang Ziehl & Jones LLP, 780 Third th Avenue, 34 Floor, New York, NY 10017, Attn: Jeffrey Pomerantz, Esq., Robert Feinstein, Esq., and Steven Golden, Esq., email: jpomerantz@pszjlaw.com, rfeinstein@pszjlaw.com and sgolden@pszjlaw.com; (v) counsel to the Committee: Norton Rose Fulbright US LLP, 2200 Ross Avenue, Suite 3600, Dallas, TX 75201, Attn: Ryan Manns, Esq., ryan.manns@nortonrosefulbright.com; and (vi) the United States Trustee at the Office of the United States Trustee for the Northern District of Texas, 1100 Commerce Street, Room 976, Dallas, TX 75242 Attn: Lisa L. Lambert, Esq. and Meredyth A. Kippes, Esq., email lisa.l.lambert@usdoj.gov and meredyth.a.kippes@usdoj.gov. /s/ Bruce J. Zabarauskas Bruce J. Zabarauskas