Exhibit 10.1

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EXECUTION COPY

 

$200,000,000

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

among

 

RED ROBIN INTERNATIONAL, INC.,

 

as Borrower,

 

RED ROBIN GOURMET BURGERS, INC.

 

as Parent,

 

THE DOMESTIC SUBSIDIARIES OF THE BORROWER

FROM TIME TO TIME PARTIES HERETO,

as Guarantors,

 

THE LENDERS PARTIES HERETO,

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

 

WELLS FARGO BANK, N.A.,

as Syndication Agent

 

and

 

BANK OF AMERICA, N.A.

and

KEYBANK NATIONAL ASSOCIATION

as Documentation Agents

 

Dated as of December 14, 2005

 

WACHOVIA CAPITAL MARKETS, LLC

as Sole Lead Arranger and Sole Book Runner

 

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TABLE OF CONTENTS

 

          Page

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ARTICLE I DEFINITIONS

   1

Section 1.1

  

Defined Terms

   1

Section 1.2

  

Other Definitional Provisions; Time References

   26

Section 1.3

  

Accounting Terms

   27

ARTICLE II THE LOANS; AMOUNT AND TERMS

   27

Section 2.1

  

Revolving Loans

   27

Section 2.2

  

Letter of Credit Subfacility

   29

Section 2.3

  

Swingline Loan Subfacility

   32

Section 2.4

  

Incremental Facilities

   34

Section 2.5

  

Fees

   35

Section 2.6

  

Commitment Reductions

   36

Section 2.7

  

Prepayments

   36

Section 2.8

  

Default Rate and Payment Dates

   38

Section 2.9

  

Conversion Options

   39

Section 2.10

  

Computation of Interest and Fees

   39

Section 2.11

  

Pro Rata Treatment and Payments

   40

Section 2.12

  

Non-Receipt of Funds by the Administrative Agent

   42

Section 2.13

  

Inability to Determine Interest Rate

   43

Section 2.14

  

Illegality

   43

Section 2.15

  

Requirements of Law

   44

Section 2.16

  

Indemnity

   45

Section 2.17

  

Taxes

   46

Section 2.18

  

Indemnification; Nature of Issuing Lender’s Duties

   47

ARTICLE III REPRESENTATIONS AND WARRANTIES

   49

Section 3.1

  

Financial Condition

   49

Section 3.2

  

No Change

   49

Section 3.3

  

Corporate Existence; Compliance with Law

   49

Section 3.4

  

Corporate Power; Authorization; Enforceable Obligations

   50

Section 3.5

  

Compliance with Laws; No Conflict; No Default

   50

Section 3.6

  

No Material Litigation

   51

Section 3.7

  

Investment Company Act; PUHCA; Etc.

   51

Section 3.8

  

Margin Regulations

   51

Section 3.9

  

ERISA

   52

Section 3.10

  

Environmental Matters

   52

Section 3.11

  

Purpose of Loans

   53

Section 3.12

  

Subsidiaries

   53

Section 3.13

  

Ownership; Insurance

   54

Section 3.14

  

Indebtedness

   54

Section 3.15

  

Taxes

   54

Section 3.16

  

Intellectual Property

   54

Section 3.17

  

Solvency

   55

Section 3.18

  

Investments

   55

Section 3.19

  

Location of Collateral

   55

Section 3.20

  

No Burdensome Restrictions

   55

Section 3.21

  

Brokers’ Fees

   55

 

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Section 3.22

  

Labor Matters

   55

Section 3.23

  

Security Documents

   56

Section 3.24

  

Accuracy and Completeness of Information

   56

Section 3.25

  

Material Contracts

   56

Section 3.26

  

Anti-Terrorism Laws

   56

Section 3.27

  

Compliance with OFAC Rules and Regulations

   57

ARTICLE IV CONDITIONS PRECEDENT

   57

Section 4.1

  

Conditions to Closing and Initial Extensions of Credit

   57

Section 4.2

  

Conditions to All Extensions of Credit

   61

ARTICLE V AFFIRMATIVE COVENANTS

   62

Section 5.1

  

Financial Statements

   62

Section 5.2

  

Certificates; Other Information

   63

Section 5.3

  

Payment of Taxes and Other Obligations

   65

Section 5.4

  

Conduct of Business and Maintenance of Existence

   65

Section 5.5

  

Maintenance of Property; Insurance

   65

Section 5.6

  

Inspection of Property; Books and Records; Discussions

   66

Section 5.7

  

Notices

   66

Section 5.8

  

Environmental Laws

   67

Section 5.9

  

Financial Covenants

   68

Section 5.11

  

Compliance with Law

   68

Section 5.12

  

Pledged Assets

   68

Section 5.13

  

Covenants Regarding Intellectual Property

   71

Section 5.14

  

Deposit and Securities Accounts

   72

Section 5.15

  

Post-Closing Covenant; Further Assurances

   72

ARTICLE VI NEGATIVE COVENANTS

   73

Section 6.1

  

Indebtedness

   73

Section 6.2

  

Liens

   74

Section 6.3

  

Guaranty Obligations

   74

Section 6.4

  

Nature of Business

   74

Section 6.5

  

Consolidation, Merger, Sale or Purchase of Assets, etc.

   74

Section 6.6

  

Advances, Investments and Loans

   76

Section 6.7

  

Transactions with Affiliates

   76

Section 6.8

  

Ownership of Subsidiaries; Restrictions

   76

Section 6.9

  

Fiscal Year; Organizational Documents; Material Contracts

   76

Section 6.10

  

Limitation on Restricted Actions

   77

Section 6.11

  

Restricted Payments

   77

Section 6.12

  

Sale Leasebacks

   77

Section 6.13

  

No Further Negative Pledges

   78

Section 6.14

  

Amendments to Subordinated Debt, etc.

   78

Section 6.15

  

Management Fees

   78

Section 6.16

  

Parent Holding Company/Liquor License Subsidiaries

   78

ARTICLE VII EVENTS OF DEFAULT

   79

Section 7.1

  

Events of Default

   79

Section 7.2

  

Acceleration; Remedies

   81

ARTICLE VIII THE AGENT

   82

Section 8.1

  

Appointment

   82

Section 8.2

  

Delegation of Duties

   82

Section 8.3

  

Exculpatory Provisions

   83

Section 8.4

  

Reliance by Administrative Agent

   83

 

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Section 8.5

  

Notice of Default

   83

Section 8.6

  

Non-Reliance on Administrative Agent and Other Lenders

   84

Section 8.7

  

Indemnification

   84

Section 8.8

  

Administrative Agent in Its Individual Capacity

   85

Section 8.9

  

Successor Administrative Agent

   85

Section 8.10

  

Nature of Duties

   85

ARTICLE IX MISCELLANEOUS

   86

Section 9.1

  

Amendments, Waivers and Release of Collateral

   86

Section 9.2

  

Notices

   87

Section 9.3

  

No Waiver; Cumulative Remedies

   88

Section 9.4

  

Survival of Representations and Warranties

   89

Section 9.5

  

Payment of Expenses and Taxes

   89

Section 9.6

  

Successors and Assigns; Participations; Purchasing Lenders

   90

Section 9.7

  

Adjustments; Set-off

   92

Section 9.8

  

Table of Contents and Section Headings

   93

Section 9.9

  

Counterparts

   93

Section 9.10

  

Effectiveness

   94

Section 9.11

  

Severability

   94

Section 9.12

  

Integration

   94

Section 9.13

  

Governing Law

   94

Section 9.14

  

Consent to Jurisdiction and Service of Process

   94

Section 9.15

  

Confidentiality

   95

Section 9.16

  

Acknowledgments

   96

Section 9.17

  

Waivers of Jury Trial

   96

Section 9.18

  

Compliance with Tax Shelter Regulations

   96

ARTICLE X GUARANTY

   97

Section 10.1

  

The Guaranty

   97

Section 10.2

  

Bankruptcy

   98

Section 10.3

  

Nature of Liability

   98

Section 10.4

  

Independent Obligation

   98

Section 10.5

  

Authorization

   99

Section 10.6

  

Reliance

   99

Section 10.7

  

Waiver

   99

Section 10.8

  

Limitation on Enforcement

   100

Section 10.9

  

Confirmation of Payment

   101

 

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Schedules

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Schedule 1.1-1

  

Account Designation Letter

Schedule 1.1-2

  

Permitted Liens

Schedule 1.1-3

  

Existing Letters of Credit

Schedule 2.1(b)(i)

  

Form of Notice of Borrowing

Schedule 2.1(e)

  

Form of Revolving Note

Schedule 2.3(d)

  

Form of Swingline Note

Schedule 2.7(b)(ii)

  

Excluded Properties

Schedule 2.9

  

Form of Notice of Conversion/Extension

Schedule 2.17

  

Tax Exempt Certificate

Schedule 3.6

  

Litigation

Schedule 3.9

  

ERISA

Schedule 3.12

  

Subsidiaries

Schedule 3.16

  

Intellectual Property

Schedule 3.19(a)

  

Location of Real Property

Schedule 3.19(b)

  

Location of Collateral

Schedule 3.19(c)

  

Chief Executive Offices

Schedule 3.22

  

Labor Matters

Schedule 3.25

  

Material Contracts

Schedule 4.1-1

  

Form of Secretary’s Certificate

Schedule 4.1-2

  

Form of Solvency Certificate

Schedule 5.1(c)

  

Form of Officer’s Certificate

Schedule 5.5(b)

  

Insurance

Schedule 5.10

  

Form of Joinder Agreement

Schedule 5.12(b)

  

Mortgaged Properties

Schedule 6.1(b)

  

Indebtedness

Schedule 6.6

  

Investments

Schedule 9.6(c)

  

Form of Assignment Agreement

 

iv

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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 14, 2005, among RED
ROBIN INTERNATIONAL, INC., a Nevada corporation, (the “Borrower”), RED ROBIN
GOURMET BURGERS, INC. (the “Parent”) and those Domestic Subsidiaries of the
Borrower identified as a “Guarantor” on the signature pages hereto and such
other Domestic Subsidiaries of the Borrower as may from time to time become a
party hereto, as Guarantors, the several banks and other financial institutions
as may from time to time become parties to this Agreement (individually a
“Lender” and collectively the “Lenders”) and WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, as administrative agent for the
Lenders hereunder (in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower is party to that certain Amended and Restated Credit
Agreement, dated as of May 20, 2003, among the Borrower, the Guarantors parties
thereto, the several banks and other financial institutions parties thereto (the
“Existing Lenders”) and the Administrative Agent (as amended, modified or
supplemented, the “Existing Credit Agreement”), pursuant to which the Existing
Lenders have agreed to make loans and other financial accommodations to the
Borrower in the amount of up to $85,000,000; and

 

WHEREAS, the Borrower has requested that the Lenders agree to amend and restate
the Existing Credit Agreement and to make loans and other financial
accommodations to the Borrower in the amount of up to $200,000,000, as more
particularly described herein; and

 

WHEREAS, the Lenders have agreed to amend and restate the Existing Credit
Agreement and to make such loans and other financial accommodations to the
Borrower on the terms and conditions contained herein.

 

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

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1 Defined Terms.

 

As used in this Agreement, terms defined in the preamble to this Agreement have
the meanings therein indicated, and the following terms have the following
meanings:

 

“ABR Default Rate” shall mean, as of any date of determination, the Alternate
Base Rate plus the Applicable Percentage for Alternate Base Rate Loans in effect
on such date plus 2%.

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“Account Designation Letter” shall mean the Notice of Account Designation Letter
dated the Closing Date from the Borrower to the Administrative Agent
substantially in the form attached hereto as Schedule 1.1-1.

 

“Additional Credit Party” shall mean each Person that becomes a Guarantor by
execution of a Joinder Agreement in accordance with Section 5.10.

 

“Additional Loan” shall have the meaning set forth in Section 2.4.

 

“Administrative Agent” or “Agent” shall have the meaning set forth in the first
paragraph of this Agreement and any successors in such capacity.

 

“Administrative Details Form” shall mean, with respect to any Lender, a document
containing such Lender’s contact information for purposes of notices provided
under this Credit Agreement and account details for purposes of payments made to
such Lender under this Credit Agreement.

 

“Affiliate” shall mean as to any Person, any other Person (excluding any
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition, a
Person shall be deemed to be “controlled by” a Person if such Person possesses,
directly or indirectly, power either (a) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person or
(b) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. Notwithstanding the foregoing, neither
the Administrative Agent nor any Lender shall be deemed an Affiliate of Borrower
solely by reason of the relationship created by the Credit Documents.

 

“Agreement” or “Credit Agreement” shall mean this Credit Agreement, as amended,
restated, amended and restated, extended, replaced, modified or supplemented
from time to time in accordance with its terms.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: “Prime
Rate” shall mean, at any time, the rate of interest per annum publicly announced
from time to time by Wachovia at its principal office in Charlotte, North
Carolina as its prime rate. Each change in the Prime Rate shall be effective as
of the opening of business on the day such change in the Prime Rate occurs. The
parties hereto acknowledge that the rate announced publicly by Wachovia as its
Prime Rate is an index or base rate and shall not necessarily be its lowest or
best rate charged to its customers or other banks; and “Federal Funds Effective
Rate” shall mean, for any day, the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published on
the next succeeding Business Day, the average of the quotations for the day of
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive in the

 

2

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absence of manifest error) that it is unable to ascertain the Federal Funds
Effective Rate, for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the opening of business on the date of such
change.

 

“Alternate Base Rate Loans” shall mean Loans that bear interest at an interest
rate based on the Alternate Base Rate.

 

“Applicable Percentage” shall mean, for any day, the rate per annum set forth
below opposite the applicable Level then in effect, it being understood that the
Applicable Percentage for (i) Alternate Base Rate Loans shall be the percentage
set forth under the column “Alternate Base Rate Margin,” (ii) LIBOR Rate Loans
and the Letter of Credit Fee shall be the percentage set forth under the column
“LIBOR Rate Margin/Letter of Credit Fee” and (iii) the Commitment Fee shall be
the percentage set forth under the column “Commitment Fee”:

 

Level

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Leverage Ratio

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   Alternate
Base Rate
Margin

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    LIBOR Rate
Margin/Letter
of Credit Fee

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    Commitment
Fee

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I

   < 0.50 to 1.00    0.000 %   0.625 %   0.125 %

II

   ³ 0.50 to 1.00 but < 1.00 to 1.00    0.000 %   0.750 %   0.150 %

III

   ³ 1.00 to 1.00 but < 1.50 to 1.00    0.000 %   0.875 %   0.175 %

IV

   ³ 1.50 to 1.00 but £ 2.00 to 1.00    0.000 %   1.000 %   0.200 %

V

   > 2.00 to 1.00    0.250 %   1.250 %   0.250 %

 

The Applicable Percentage shall, in each case, be determined and adjusted
quarterly on the date five (5) Business Days after the date on which the
Administrative Agent has received from the Borrower the quarterly financial
information and certifications required to be delivered to the Administrative
Agent and the Lenders in accordance with the provisions of Sections 5.1(a),
(b) and (c) (each an “Interest Determination Date”). Such Applicable Percentage
shall be effective from such Interest Determination Date until the next Interest
Determination Date. If the Borrower shall fail to provide the financial
information and certifications in accordance with the provisions of
Sections 5.1(a), (b) and (c), the Applicable Percentage shall, on the date five
(5) Business Days after the date by which the Borrower was so required to
provide such financial information and certifications to the Administrative
Agent and the Lenders, be based on Level V until such time as such information
and certifications are provided, whereupon the Level shall be determined by the
then current Leverage Ratio.

 

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“Approved Fund” shall mean, with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

“Arranger” shall mean Wachovia Capital Markets, LLC, as Sole Lead Arranger and
Book Runner.

 

“Asset Disposition” shall mean the disposition of any or all of the assets
(including, without limitation, the Capital Stock of a Subsidiary or any
ownership interest in a joint venture) of any Credit Party or any Subsidiary
whether by sale, lease, transfer or otherwise and the receipt by such Credit
Party or Subsidiary of cash proceeds or other non-cash consideration therefore;
provided that the disposal of assets of a restaurant in connection with a
refinishing, refurnishing or upgrade of such restaurant for consideration less
than $100,000 in the aggregate per restaurant shall not constitute an “Asset
Disposition.” The term “Asset Disposition” shall not include
(i) Sections 6.5(a)(i), (ii), (iii), (v) or (vii) hereof or (ii) any Equity
Issuance.

 

“Assignment Agreement” shall mean an Assignment Agreement, substantially in the
form of Schedule 9.6(c).

 

“Autoborrow Feature” shall mean that certain automated borrowing and repayment
mechanism attached to a concentration account (the “Concentration Account”)
maintained by the Borrower with the Swingline Lender which grants the Borrower
the ability to automatically borrow and repay Swingline Loans through such
Concentration Account.

 

“Bankruptcy Code” shall mean the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.

 

“Base Rent Expense” shall mean, for any period, all rental expense of the Parent
and its Subsidiaries during such period, determined on a consolidated basis in
accordance with GAAP, incurred under any rental agreements or leases of real or
personal property, including space leases and ground leases and including
performance-based payments, if any, actually paid by the Parent and its
Subsidiaries under any rental agreements or leases but excluding obligations in
respect of Capital Leases, including performance-based payments, if any,
actually paid by the Parent or any of its Subsidiaries under any rental
agreements or leases and net of rental income derived from subleases of such
property.

 

“Borrower” shall have the meaning set forth in the first paragraph of this
Agreement.

 

“Borrowing Date” shall mean, in respect of any Loan, the date such Loan is made.

 

“Business” shall have the meaning set forth in Section 3.10(b).

 

“Business Day” shall mean a day other than a Saturday, Sunday or other day on
which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close; provided, however, that when used in
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate Loan, the term “Business Day”

 

4

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shall also exclude any day on which banks in London, England are not open for
dealings in Dollar deposits in the London interbank market.

 

“Capital Lease” shall mean any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.

 

“Capital Lease Obligations” shall mean the capitalized lease obligations
relating to a Capital Lease determined in accordance with GAAP.

 

“Capital Stock” shall mean (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

 

“Cash Equivalents” shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition (“Government Obligations”),
(ii) Dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar certificates of
deposit of (y) any domestic commercial bank of recognized standing having
capital and surplus in excess of $250,000,000 or (z) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody’s is at least P-1 or the equivalent thereof (any such bank being an
“Approved Bank”), in each case with maturities of not more than 364 days from
the date of acquisition, (iii) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody’s and maturing within six months of the date of acquisition,
(iv) repurchase agreements with a bank or trust company (including a Lender) or
a recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States of America, (v) obligations of any state of the United States or any
political subdivision thereof for the payment of the principal and redemption
price of and interest on which there shall have been irrevocably deposited
Government Obligations maturing as to principal and interest at times and in
amounts sufficient to provide such payment, (vi) auction preferred stock rated
in the highest short-term credit rating category by S&P or Moody’s and
(vii) shares of money market mutual or similar funds that invest exclusively in
assets satisfying the requirements of clauses (i) through (vi) of this
definition.

 

“Change of Control” shall mean the occurrence of any of the following events:
(a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2)
of the Securities Exchange Act becomes the “beneficial owner” (as defined in
Rule l3d-3 under the Securities Exchange Act) of more than 20% of then
outstanding Voting Stock of the Parent, measured by

 

5

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voting power rather than the number of shares or (b) Continuing Directors shall
cease for any reason to constitute a majority of the members of the board of
directors of the Parent then in office.

 

“Closing Date” shall mean the date of this Agreement.

 

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

 

“Collateral” shall mean a collective reference to the collateral which is
identified in, and at any time will be covered by, the Security Documents and
any other property or assets of a Credit Party, whether tangible or intangible
and whether real or personal, that may from time to time secure the Credit Party
Obligations.

 

“Commitment” shall mean a Revolving Commitment.

 

“Commitment Fee” shall have the meaning set forth in Section 2.5(a).

 

“Commitment Period” shall mean the period from, the Closing Date to but not
including the Maturity Date.

 

“Commonly Controlled Entity” shall mean an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.

 

“Concentration Account” shall have the meaning set forth in the definition of
“Autoborrow Feature”.

 

“Consolidated” or “consolidated” shall mean, with reference to any term defined
herein, such term as applied to the accounts of the Parent and its Subsidiaries,
consolidated in accordance with GAAP.

 

“Consolidated Capital Expenditures” shall mean, for any period, all capital
expenditures (including, without limitation, the Total Consideration for all
Permitted Acquisitions and Capital Lease Obligations) of the Parent and its
Subsidiaries on a consolidated basis for such period, as determined in
accordance with GAAP. The term “Consolidated Capital Expenditures” shall not
include capital expenditures in respect of the reinvestment of proceeds derived
from Recovery Events received by the Parent and its Subsidiaries to the extent
that such reinvestment is permitted under the Credit Documents.

 

“Consolidated Cash Flow” shall mean, for any period, an amount equal to
(i) Consolidated EBITDA for such period, minus (ii) Maintenance Capital
Expenditures for such period.

 

“Consolidated Debt Service” shall mean, with respect to the Parent and its
Subsidiaries and for any period, the sum, without duplication, of
(i) Consolidated Interest Expense for such

 

6

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period, plus (ii) any and all scheduled repayments of principal during such
period in respect of Indebtedness that becomes due and payable during such
period pursuant to any agreement or instrument to which the Parent or any of its
Subsidiaries is a party relating to or in respect of (without duplication)
(A) the borrowing of money, including the issuance of notes or bonds, (B) the
deferred purchase price of assets (other than trade payables or accrued
liabilities arising in the ordinary course of business), (C) any Capital Leases,
and (D) Indebtedness of another Person of the type referred to in clauses
(A) through (C) above guaranteed by the Parent or any of its Subsidiaries.
Demand obligations shall be deemed to be due and payable during any fiscal
period during which such obligations are outstanding.

 

“Consolidated EBITDA” shall mean, with respect to any period, an amount equal to
the sum of (i) Consolidated Net Income for such period, plus (ii) in each case
to the extent deducted in the calculation of Consolidated Net Income and without
duplication, (A) depreciation and amortization for such period, plus (B) income
tax expense for such period, plus (C) Consolidated Interest Expense for such
period, plus (D) other noncash charges for such period that will not result in
cash payments in a subsequent period, plus (E) the amount of any prepayment
penalties incurred as a result of extraordinary debt extinguishment, all as
determined in accordance with GAAP.

 

“Consolidated Interest Expense” shall mean, for any period, the aggregate amount
of interest required to be paid or accrued by the Parent and its Subsidiaries
during such period on all Indebtedness (other than synthetic leases and other
similar off-balance sheet financing products) of the Parent and its Subsidiaries
outstanding during all or any part of such period (excluding amounts paid during
such period that were accrued in a prior period), whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of any Capital Lease and commitment
fees, agency fees, facility fees and similar fees or expenses in connection with
the borrowing of money (but excluding the amortization of transaction fees in
connection with the closing of this Agreement).

 

“Consolidated Net Income” shall mean, for any period, the consolidated net
income (or deficit) of the Parent and its Subsidiaries, after deduction of all
expenses, taxes, and other proper charges, determined in accordance with GAAP,
after eliminating therefrom (i) all extraordinary items of income and (ii) all
gains attributable to sales of assets outside the ordinary course of business.

 

“Continuing Directors” shall mean during any period of 24 consecutive months
commencing after the Closing Date, individuals who at the beginning of such
24 month period were directors of the Parent (together with any new director
whose election by the Parent’s board of directors was approved by, or whose
nomination for election by the Parent’s shareholders was recommended by, a vote
of at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously approved or recommended as described in this
parenthetical).

 

“Copyright Licenses” shall mean any agreement (other than any franchise
agreement), whether written or oral, providing for the grant by or to a Credit
Party or any Subsidiary thereof of

 

7

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any right under any Copyright, including, without limitation, any thereof
referred to in Schedule 3.16 to this Agreement.

 

“Copyrights” shall mean all copyrights (other than copyrights of de minimis
value) owned by the Credit Parties and their Subsidiaries in all works, now
existing or hereafter created or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Copyright Office or in any similar office or agency of the United States,
any state thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in Schedule
3.16 and all renewals thereof.

 

“Credit Documents” shall mean this Agreement, each of the Notes, any Joinder
Agreement, the Letters of Credit and any other LOC Documents, any Assignment
Agreement, the Security Documents and all other agreements, documents,
certificates and instruments (excluding (i) any such agreements, documents,
certificates or instruments which are purely administrative in nature and
(ii) any agreements, documents, certificates and instruments related to a
Hedging Agreement) delivered to the Administrative Agent or any Lender by any
Credit Party in connection herewith or therewith.

 

“Credit Party” or “Credit Parties” shall mean any of the Borrower or the
Guarantors, individually or collectively, as appropriate.

 

“Credit Party Obligations” shall mean, without duplication, (i) all of the
obligations, indebtedness and liabilities of the Credit Parties to the Lenders
(including the Issuing Lender) and the Administrative Agent, whenever arising,
under this Agreement, the Notes or any of the other Credit Documents including
principal, interest, fees, reimbursements and indemnification obligations and
other amounts (including, but not limited to, any interest accruing after the
occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code
with respect to any Credit Party, regardless of whether such interest is an
allowed claim under the Bankruptcy Code) and (ii) all liabilities and
obligations, whenever arising, owing from any Credit Party to any Hedging
Agreement Provider arising under any Secured Hedging Agreement.

 

“Debt Issuance” shall mean the issuance of any Indebtedness for borrowed money
by any Credit Party or any of its Subsidiaries (excluding, for purposes hereof,
any Indebtedness of the Borrower and its Subsidiaries permitted to be incurred
pursuant to Section 6.1 hereof).

 

“Default” shall mean any of the events specified in Section 7.1, whether or not
any requirement for the giving of notice or the lapse of time, or both, or any
other condition, has been satisfied.

 

“Defaulting Lender” shall mean, at any time, any Lender that, at such time
(a) has failed to make a Loan required pursuant to the term of this Agreement,
including the funding of a Participation Interest in accordance with the terms
hereof, (b) has failed to pay to the Administrative Agent or any Lender an
amount owed by such Lender pursuant to the terms of this Agreement, or (c) has
been deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or to a receiver, trustee or similar official.

 

8

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“Dollars” and “$” shall mean dollars in lawful currency of the United States of
America.

 

“Domestic Lending Office” shall mean, initially, the office of each Lender
designated as such Lender’s Domestic Lending Office located in the United States
as shown in such Lender’s Administrative Details Form; and thereafter, such
other office of such Lender located in the United States as such Lender may from
time to time specify to the Administrative Agent and the Borrower as the office
of such Lender at which Alternate Base Rate Loans of such Lender are to be made.

 

“Domestic Subsidiary” shall mean any Subsidiary that is organized and existing
under the laws of the United States or any state or commonwealth thereof or
under the laws of the District of Columbia.

 

“Environmental Laws” shall mean any and all applicable foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other Requirement
of Law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time be in effect during the term of this Agreement.

 

“Equity Issuance” shall mean any issuance by any Credit Party or any Subsidiary
to any Person which is not a Credit Party of (a) shares of its Capital Stock,
(b) any shares of its Capital Stock pursuant to the exercise of options or
warrants or (c) any shares of its Capital Stock pursuant to the conversion of
any debt securities to equity. The term “Equity Issuance” shall not include
(i) any issuance of shares of its Capital Stock pursuant to employee stock
purchase plans or the exercise of stock options held by or issued to current or
former officers, directors or employees of a Credit Party, (ii) any Asset
Disposition or (iii) any Debt Issuance.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

“Eurodollar Reserve Percentage” shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

 

“Event of Default” shall mean any of the events specified in Section 7.1;
provided, however, that any requirement for the giving of notice or the lapse of
time, or both, or any other condition, has been satisfied.

 

“Existing Credit Agreement” shall have the meaning set forth in the recitals to
this Agreement.

 

9

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“Existing Letters of Credit” shall mean the letters of credit described by date
of issuance, amount, purpose and the date of expiry on Schedule 1.1-3 hereto.

 

“Extension of Credit” shall mean, as to any Lender, the making of a Loan by such
Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.

 

“Federal Funds Effective Rate” shall have the meaning set forth in the
definition of “Alternate Base Rate”.

 

“Fee Letter” shall mean the letter agreement dated November 9, 2005 addressed to
the Borrower from Wachovia and Wachovia Capital Markets, LLC, as amended,
modified or otherwise supplemented.

 

“Fixed Charge Coverage Ratio” shall mean, for any Reference Period, the ratio of
(i) Consolidated Cash Flow for such Reference Period plus Base Rent Expense for
such Reference Period to (ii) Consolidated Debt Service for such Reference
Period plus Base Rent Expense for such Reference Period plus cash payments for
all income taxes paid by the Parent and its Subsidiaries during such Reference
Period.

 

“Flood Hazard Property” shall mean any real property of a Credit Party that is
located in an area designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards.

 

“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic
Subsidiary.

 

“Funded Debt” shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person incurred, issued or
assumed as the deferred purchase price of property or services purchased by such
Person (other than trade debt incurred in the ordinary course of business and
due within six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such Person, (e) the principal portion of all
obligations of such Person under Capital Leases, (f) the maximum amount of all
letters of credit issued or bankers’ acceptances facilities created for the
account of such Person and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (g) all preferred Capital Stock issued by such Person
and which by the terms thereof could be (at the request of the holders thereof
or otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration, (h) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product, (i) all net payment obligations of such Person under
Hedging Agreements, excluding any portion thereof which would be accounted for
as interest expense under GAAP, (j) all Indebtedness of others of the type
described in clauses (a) through (i) hereof secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production from,
property owned or acquired by

 

10

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such Person, whether or not the obligations secured thereby have been assumed,
(k) all Guaranty Obligations of such Person with respect to Indebtedness of
another Person of the type described in clauses (a) through (j) hereof, and
(l) all Indebtedness of the type described in clauses (a) through (j) hereof of
any partnership or unincorporated joint venture in which such Person is a
general partner or a joint venturer; provided, however, that Funded Debt shall
not include Indebtedness among the Credit Parties to the extent such
Indebtedness would be eliminated on a Consolidated basis.

 

“GAAP” shall mean generally accepted accounting principles in effect in the
United States of America applied on a consistent basis, subject, however, in the
case of determination of compliance with the financial covenants set out in
Section 5.9 to the provisions of Section 1.3.

 

“Government Acts” shall have the meaning set forth in Section 2.18.

 

“Governmental Approvals” shall have the meaning set forth in Section 3.5(a).

 

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

 

“Guarantor” shall mean the Parent and any of the Domestic Subsidiaries
identified as a “Guarantor” on the signature pages hereto and the Additional
Credit Parties (other than Liquor License Subsidiaries) which execute a Joinder
Agreement, together with their successors and permitted assigns.

 

“Guaranty” shall mean the guaranty of the Guarantors set forth in Article X.

 

“Guaranty Obligations” shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the lesser of (a) the outstanding
principal amount (or maximum principal amount, if larger) of the Indebtedness in
respect of which such Guaranty Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guaranty Obligation.

 

“Hedging Agreement Provider” shall mean any Person that enters into a Secured
Hedging Agreement with a Credit Party or any of its Subsidiaries that is
permitted by Section 6.1 to the

 

11

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extent such Person is a Lender, an Affiliate of a Lender or any other Person
that was a Lender (or an Affiliate of a Lender) at the time it entered into the
Secured Hedging Agreement but has ceased to be a Lender (or whose Affiliate has
ceased to be a Lender) under the Credit Agreement.

 

“Hedging Agreements” shall mean, with respect to any Person, any agreement
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreement or similar arrangement between such Person
and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements.

 

“Incremental Facility” shall have the meaning set forth in Section 2.4.

 

“Indebtedness” shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Guaranty Obligations of such Person with respect to Indebtedness of another
Person, (h) the principal portion of all Capital Lease Obligations of such
Person, (i) all net payment obligations of such Person under Hedging Agreements,
excluding any portion thereof which would be accounted for as interest expense
under GAAP, (j) the maximum amount of all letters of credit issued or bankers’
acceptances facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (k) all
preferred Capital Stock issued by such Person and which by the terms thereof
could be (at the request of the holders thereof or otherwise) subject to
mandatory sinking fund payments, redemption or other acceleration, (l) the
principal balance outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product and
(m) the Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer; provided however that
Indebtedness shall not include Indebtedness among the Credit Parties to the
extent such Indebtedness would be eliminated on a Consolidated basis.

 

“Insolvency” shall mean, with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.

 

“Insolvent” shall mean being in a condition of Insolvency.

 

12

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“Intellectual Property” shall mean all Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks and Trademark Licenses.

 

“Interest Payment Date” shall mean (a) as to any Alternate Base Rate Loan, the
last day of each March, June, September and December and on the Maturity Date,
(b) as to any LIBOR Rate Loan having an Interest Period of three months or less,
the last day of such Interest Period, and (c) as to any LIBOR Rate Loan having
an Interest Period longer than three months, the day that is three months after
the first day of such Interest Period and the last day of such Interest Period.

 

“Interest Period” shall mean, with respect to any LIBOR Rate Loan,

 

(i) initially, the period commencing on the Borrowing Date or conversion date,
as the case may be, with respect to such LIBOR Rate Loan and ending one, two,
three or six months thereafter, as selected by the Borrower in the Notice of
Borrowing or Notice of Conversion given with respect thereto; and

 

(ii) thereafter, each period commencing on the last day of the immediately
preceding Interest Period applicable to such LIBOR Rate Loan and ending one,
two, three or six months thereafter, as selected by the Borrower by irrevocable
notice to the Administrative Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto;

 

provided that the foregoing provisions are subject to the following:

 

(A) if any Interest Period pertaining to a LIBOR Rate Loan would otherwise end
on a day that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;

 

(B) any Interest Period pertaining to a LIBOR Rate Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the relevant calendar month;

 

(C) if the Borrower shall fail to give notice as provided above, the Borrower
shall be deemed to have selected an Alternate Base Rate Loan to replace the
affected LIBOR Rate Loan;

 

(D) no Interest Period in respect of any Loan shall extend beyond the Maturity
Date; and

 

(E) no more than seven (7) LIBOR Rate Loans may be in effect at any time. For
purposes hereof, LIBOR Rate Loans with different Interest Periods

 

13

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shall be considered as separate LIBOR Rate Loans, even if they shall begin on
the same date and have the same duration, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined at the
end of existing Interest Periods to constitute a new LIBOR Rate Loan with a
single Interest Period.

 

“Investment” shall mean all investments, in cash or by delivery of property
made, directly or indirectly in or to any Person, whether by acquisition of
shares of Capital Stock, property, assets, indebtedness or other obligations or
securities or by loan advance, capital contribution or otherwise.

 

“Issuing Lender” shall mean Wachovia or any successor in such capacity.

 

“Issuing Lender Fees” shall have the meaning set forth in Section 2.5(c).

 

“Joinder Agreement” shall mean a Joinder Agreement substantially in the form of
Schedule 5.10, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10.

 

“Lender” shall have the meaning set forth in the first paragraph of this
Agreement and shall include the Issuing Lender and the Swingline Lender.

 

“Lender Commitment Letter” shall mean, with respect to any Lender, the letter
(or other correspondence) to such Lender from the Administrative Agent notifying
such Lender of its LOC Commitment and Revolving Commitment Percentage.

 

“Letter of Credit Fee” shall have the meaning set forth in Section 2.5(b).

 

“Letters of Credit” shall mean (a) any letter of credit issued by the Issuing
Lender pursuant to the terms hereof and (b) any Existing Letter of Credit, in
each case as such Letter of Credit may be amended, modified, extended, renewed
or replaced from time to time.

 

“Leverage Ratio” shall mean, for any Reference Period, as of the end of any
fiscal quarter of the Parent the ratio of (i) Funded Debt outstanding on such
date to (ii) Consolidated EBITDA for the Reference Period ending on such date.

 

“LIBOR” shall mean, for any LIBOR Rate Loan for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term “LIBOR” shall mean, for any LIBOR Rate Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on

 

14

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Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). If,
for any reason, neither of such rates is available, then “LIBOR” shall mean the
rate per annum at which, as determined by the Administrative Agent, Dollars in
an amount comparable to the Loans then requested are being offered to leading
banks at approximately 11:00 A.M. London time, two (2) Business Days prior to
the commencement of the applicable Interest Period for settlement in immediately
available funds by leading banks in the London interbank market for a period
equal to the Interest Period selected.

 

“LIBOR Lending Office” shall mean, initially, the office of each Lender
designated as such Lender’s LIBOR Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which the LIBOR Rate Loans of such Lender are to be made.

 

“LIBOR Rate” shall mean a rate per annum (rounded upwards, if necessary, to the
next higher 1/100th of 1%) determined by the Administrative Agent pursuant to
the following formula:

 

LIBOR Rate

 

=

     LIBOR             1.00 - Eurodollar Reserve Percentage     

 

“LIBOR Rate Loan” shall mean Loans the rate of interest applicable to which is
based on the LIBOR Rate.

 

“Lien” shall mean any mortgage, pledge, hypothecation, assignment for security
purposes, deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Capital Lease having substantially the same economic effect as any of the
foregoing).

 

“Liquor License Subsidiaries” shall mean a collective reference to Red Robin of
Anne Arundel, Inc., Red Robin of Baltimore County, Inc., Red Robin of Montgomery
County, Inc., Red Robin of Howard County, Inc., Red Robin of Charles County,
Inc., Red Robin West Walnut Club, Inc. and any other current or future special
purpose Subsidiary of a Credit Party whose primary asset is, and sole purpose is
holding, liquor licenses and other operations incidental thereto; no Liquor
License Subsidiary shall be or become a Credit Party.

 

“Loan” shall mean a Revolving Loan and/or a Swingline Loan as appropriate.

 

“LOC Commitment” shall mean the commitment of the Issuing Lender to issue
Letters of Credit and, with respect to each Lender, the commitment of such
Lender to purchase Participation Interests in the Letters of Credit up to such
Lender’s LOC Commitment as specified in the Lender Commitment Letter or in the
Register, as such amount may be reduced from time to time in accordance with the
provisions hereof.

 

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“LOC Committed Amount” shall have the meaning set forth in Section 2.2(a).

 

“LOC Documents” shall mean, with respect to any Letter of Credit, such Letter of
Credit, any amendments thereto, any documents delivered in connection therewith,
any application therefor, and any agreements, instruments, guarantees or other
documents (whether general in application or applicable only to such Letter of
Credit) governing or providing for (i) the rights and obligations of the parties
concerned or (ii) any collateral security for such obligations.

 

“LOC Obligations” shall mean, at any time, the sum of (i) the maximum amount
which is, or at any time thereafter may become, available to be drawn under
Letters of Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus (ii) the aggregate
amount of all drawings under Letters of Credit honored by the Issuing Lender but
not theretofore reimbursed.

 

“Maintenance Capital Expenditures” shall mean Consolidated Capital Expenditures
which are not New Store Capital Expenditures, including without limitation,
facility upgrades for existing stores operated by the Parent or any of its
Subsidiaries.

 

“Mandatory LOC Borrowing” shall have the meaning set forth in Section 2.2(e).

 

“Mandatory Swingline Borrowing” shall have the meaning set forth in
Section 2.3(b)(ii).

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Credit Parties and their Subsidiaries taken as a whole, (b) the ability of the
Borrower or any Guarantor to perform its obligations after giving effect to any
cure period hereunder, when such obligations are required to be performed, under
this Agreement, any of the Notes or any other Credit Document or (c) the
validity or enforceability of this Agreement, any of the Notes or any of the
other Credit Documents or the rights or remedies of the Administrative Agent or
the Lenders hereunder or thereunder or the perfection or priority of any Lien on
any material property or material assets in favor of the Administrative Agent.

 

“Material Contract” shall mean any contract or agreement, whether written or
oral, to which any Credit Party or any of its Subsidiaries is a party as to
which the breach, nonperformance, cancellation or failure to renew by any party
thereto could reasonably be expected to have a Material Adverse Effect,
including the contracts and agreements set forth on Schedule 3.26.

 

“Materials of Environmental Concern” shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.

 

“Maturity Date” shall mean December 14, 2010.

 

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“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Mortgage Instruments” shall mean the mortgages, deeds of trust or deeds to
secure debt encumbering the fee interest of the Credit Parties in the Mortgaged
Properties, as the same may be amended, restated, amended and restated,
extended, replaced, modified or supplemented from time to time in accordance
with its terms.

 

“Mortgage Policy” shall mean, with respect to any Mortgage Instrument, an ALTA
mortgagee title insurance policy issued by a title insurance company (the “Title
Insurance Company”) selected by the Borrower and reasonably acceptable to the
Administrative Agent, assuring the Administrative Agent that such Mortgage
Instrument creates a valid and enforceable first priority mortgage lien on the
Mortgaged Property encumbered by such Mortgage Instrument, free and clear of all
defects and encumbrances except Permitted Liens.

 

“Mortgaged Properties” shall mean (a) the real property of the Credit Parties
set forth on Schedule 5.12(b), which is, or will be, subject to a Mortgage
Instrument from a Credit Party for the benefit of the Administrative Agent and
(b) any other real property of a Credit Party that is required to be subject to
a Lien from such Credit Party for the benefit of the Administrative Agent in
accordance with Sections 5.12(b) and (c).

 

“Multiemployer Plan” shall mean a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

 

“Net Cash Proceeds” shall mean the aggregate cash proceeds received by any
Credit Party or any Subsidiary in respect of any Asset Disposition, Equity
Issuance or Debt Issuance, net of (a) direct costs (including, without
limitation, reasonable legal, accounting and investment banking fees, sales
commissions underwriting discounts and commissions and other customary fees and
expenses) and (b) taxes paid or payable as a result thereof; it being understood
that “Net Cash Proceeds” shall include, without limitation, any cash received
upon the sale or other disposition of any non-cash consideration received by any
Credit Party or any Subsidiary in any Asset Disposition, Equity Issuance or Debt
Issuance.

 

“New Store Capital Expenditures” shall mean Consolidated Capital Expenditures
relating to Permitted Acquisitions and/or the construction after the Closing
Date of new stores to be operated by the Parent or any of its Subsidiaries.

 

“Notes” shall mean the Revolving Notes.

 

“Notice of Borrowing” shall mean a request for a Revolving Loan borrowing
pursuant to Section 2.1(b)(i) or a request for a Swingline Loan borrowing
pursuant to Section 2.3(b)(i), as appropriate. A Form of Notice of Borrowing is
attached as Schedule 2.1(b)(i).

 

“Notice of Conversion/Extension” shall mean the written notice of conversion of
a LIBOR Rate Loan to an Alternate Base Rate Loan or an Alternate Base Rate Loan
to a LIBOR Rate Loan, or extension of a LIBOR Rate Loan, in each case
substantially in the form of Schedule 2.9.

 

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“Obligations” shall mean, collectively, Loans and LOC Obligations and all other
obligations of the Credit Parties to the Administrative Agent and the Lenders
under the Credit Documents.

 

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

 

“Operating Lease” shall mean, as applied to any Person, any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) which is not a Capital Lease
other than any such lease in which that Person is the lessor.

 

“Parent” shall mean Red Robin Gourmet Burgers, Inc., a Delaware corporation.

 

“Participant” shall have the meaning set forth in Section 9.6(b).

 

“Participation Interest” shall mean the purchase by a Lender of a participation
interest in Letters of Credit as provided in Section 2.2 and in Swingline Loans
as provided in Section 2.3.

 

“Patent Licenses” shall mean all agreements, whether written or oral, providing
for the grant by or to a Credit Party or any Subsidiary thereof of any right to
manufacture, use or sell any invention covered by a Patent, including, without
limitation, any thereof referred to in Schedule 3.16 to the Agreement.

 

“Patents” shall mean all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions thereof,
including, without limitation, any thereof referred to in Schedule 3.16 to this
Agreement, and (ii) all applications for letters patent of the United States or
any other country, now existing or hereafter arising, and all provisionals,
divisions, continuations and continuations-in-part and substitutes thereof,
including, without limitation, any thereof referred to in Schedule 3.16 to this
Agreement, in each case of the Credit Parties and their Subsidiaries.

 

“Patriot Act” shall have the meaning set forth in Section 9.18.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.

 

“Permitted Acquisition” shall mean an acquisition or any series of related
acquisitions by a Credit Party of all or substantially all of the assets or a
majority of Capital Stock of a Person that is incorporated, formed or organized
in the United States or Canada or any division, line of business or other
business unit of a Person that is incorporated, formed or organized in the
United States (such Person or such division, line of business or other business
unit of such Person referred to herein as the “Target”), in each case that is a
purchase or repurchase of a Red Robin franchise or of a Target that is converted
into one or more Red Robin restaurants, so long as (a) no Default or Event of
Default shall then exist or will exist after giving effect thereto,

 

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(b) the Credit Parties shall demonstrate to the reasonable satisfaction of the
Administrative Agent that the Credit Parties will be in compliance on a Pro
Forma Basis upon the consummation of any such acquisition with all of the terms
and provisions of the financial covenants set forth in Section 5.9, (c) the
Administrative Agent, on behalf of the Lenders, shall have received (or shall
receive in connection with the closing of such acquisition) a first priority
perfected security interest (subject to Permitted Liens) in all personal
property (including, without limitation, Capital Stock) and, to the extent
required hereunder, all real property acquired with respect to the Target, and
if the Capital Stock of the Target is acquired and the Target becomes a
Subsidiary that is not a Liquor License Subsidiary, then such Target shall, in
connection with the closing of such acquisition, execute and deliver to the
Administrative Agent a Joinder Agreement in accordance with the terms of
Section 5.10, (d) the Target in any acquisition involving Total Consideration in
excess of $5,000,000 has earnings before interest, taxes, depreciation and
amortization for the four fiscal quarter prior to the acquisition date in an
amount greater than $0 and (e) such acquisition is not a “hostile” acquisition
and has been approved by the applicable Credit Party and the Target.

 

“Permitted Investments” shall mean:

 

(i) cash and Cash Equivalents not to exceed at any time $10,000,000 in the
aggregate over any period of thirty (30) consecutive days if, during such
period, there are borrowings outstanding under Section 2.1 hereof;

 

(ii) receivables owing to any Credit Party or any of its Subsidiaries, and
advances to suppliers and other extensions of trade credit, in each case if
created, acquired or made in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;

 

(iii) Investments or loans (pursuant to Section 6.1(d)) made by a Credit Party
in or to another Credit Party;

 

(iv) (A) loans and advances to employees to finance purchases of Capital Stock
of the Parent in an aggregate amount not to exceed $500,000 and (B) advances to
officers, directors and employees for travel and other ordinary course expenses
and other loans and advances to employees, in an aggregate amount not to exceed
$500,000 at any time outstanding;

 

(v) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of franchisees, suppliers and customers and in
settlement of delinquent obligations of, and other disputes with franchisees,
customers and suppliers arising in the ordinary course of business;

 

(vi) non-cash consideration received in connection with sales of property or
assets permitted under Section 6.5(a);

 

(vii) Permitted Acquisitions;

 

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(viii) Guaranty Obligations permitted by Section 6.3;

 

(ix) Investments existing as of the Closing Date as set forth on Schedule 6.6;

 

(x) Investments to the extent permitted under Section 6.11(d); and

 

(xi) in addition to the Investments otherwise expressly permitted by this
definition, other Investments by any Credit Party in an aggregate amount not to
exceed $500,000 during the term of this Agreement.

 

“Permitted Liens” shall mean:

 

(i) Liens created by or otherwise existing, under or in connection with this
Agreement or the other Credit Documents in favor of the Administrative Agent, on
behalf of the Secured Parties;

 

(ii) purchase money Liens securing purchase money indebtedness (and refinancings
thereof) to the extent permitted under Section 6.1(c);

 

(iii) Liens for taxes, assessments, charges or other governmental levies not yet
due or as to which the period of grace (not to exceed 60 days), if any, related
thereto has not expired or which are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP (or, in the case of Subsidiaries with significant
operations outside of the United States of America, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);

 

(iv) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s inchoate,
unperfected or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings; provided that a reserve, bond or other
appropriate provision shall have been made therefor;

 

(v) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation and deposits securing liability
to insurance carriers under insurance or self-insurance arrangements in an
aggregate amount not to exceed $750,000;

 

(vi) any interest or title of a lessor under any lease entered into by any
Credit Party or any Subsidiary in the ordinary course of its business and
covering only the assets so leased;

 

(vii) any extension, renewal or replacement (or successive extensions, renewals
or replacements), in whole or in part, of any Lien referred to in the foregoing
clauses (i)-(vi); provided that such extension, renewal or replacement Lien
shall be

 

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limited to all or a part of the property which secured the Lien so extended,
renewed or replaced (plus improvements on such property);

 

(viii) Liens existing on any property or asset (A) prior to the acquisition
thereof by any Credit Party or any Subsidiary; provided that (1) such Lien is
not created in contemplation of such acquisition and (2) such Lien does not
apply to any other property or assets of the Credit Party or Subsidiary, or
(B) belonging to any Person prior to such Person becoming a Subsidiary pursuant
to an acquisition permitted by the terms of this Agreement; provided that
(1) such Lien is not created in contemplation of such acquisition and (2) such
Lien does not apply to any other property or assets of a Credit Party or
Subsidiary;

 

(ix) Liens consisting of conditional sale or other title retention agreements
entered into in the ordinary course of business in an aggregate amount not to
exceed $1,000,000;

 

(x) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

 

(xi) Liens existing on the Closing Date and set forth on Schedule 1.1-2;
provided that (a) no such Lien shall at any time be extended to cover property
or assets other than the property or assets subject thereto on the Closing Date
and (b) the principal amount of the Indebtedness secured by such Liens shall not
be increased, extended, renewed, refunded or refinanced;

 

(xii) Liens arising in connection with Indebtedness permitted under
Section 6.1(c);

 

(xiii) easements, rights-of-way, zoning restrictions, minor defects or
irregularities in title and other similar encumbrances not interfering in any
material respect with the value or use of the property to which such lien is
attached;

 

(xiv) Liens of Securities Intermediaries (as defined in the UCC), banks and
other financial institutions in Deposit Accounts (as defined in the UCC),
Securities Accounts (as defined in the UCC) and similar accounts;

 

(xv) any Lien with respect to judgments, orders or awards to the extent such
judgments, orders or awards secured thereby shall not, either individually or in
the aggregate, result in an Event of Default under Section 7.1(f);

 

(xvi) Liens in favor of a Hedging Agreement Provider in connection with any
Secured Hedging Agreement, but only if such Hedging Agreement Provider and the
Administrative Agent, on behalf of the Lenders, shall share pari passu in the
collateral subject to such Liens; and

 

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(xvii) other Liens in addition to those permitted by the foregoing clauses
securing Indebtedness in an aggregate amount not to exceed $1,000,000.

 

“Person” shall mean an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

 

“Plan” shall mean, at any particular time, any employee benefit plan which is
covered by Title IV of ERISA and in respect of which any Credit Party or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.

 

“Pledge Agreements” shall mean (i) the Amended and Restated Pledge Agreement
dated as of the Closing Date to be executed in favor of the Administrative Agent
by the Borrower and each of the other Credit Parties and (ii) any other Pledge
Agreement executed by a Credit Party to secure the Credit Party Obligations, in
each case as amended, modified, restated or supplemented from time to time.

 

“Prime Rate” shall have the meaning set forth in the definition of Alternate
Base Rate.

 

“Pro Forma Basis” shall mean, with respect to any transaction, that such
transaction shall be deemed to have occurred as of the first day of the
twelve-month period ending as of the most recent quarter end preceding the date
of such transaction.

 

“Properties” shall have the meaning set forth in Section 3.10(a).

 

“Purchasing Lenders” shall have the meaning set forth in Section 9.6(c).

 

“Recovery Event” shall mean theft, loss, physical destruction or damage, taking
or similar event with respect to any property or assets owned by any Credit
Party or any of its Subsidiaries which results in the receipt by any Credit
Party or any of its Subsidiaries of any cash insurance proceeds (excluding
proceeds of business interruption insurance) or condemnation award payable by
reason thereof.

 

“Reference Period” shall mean, as of any date of determination, the period of
four consecutive fiscal quarters of the Parent and its Subsidiaries ending on
such date.

 

“Register” shall have the meaning set forth in Section 9.6(d).

 

“Reorganization” shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.

 

“Reportable Event” shall mean any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty-day notice period is
waived under PBGC Reg. §4043.

 

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“Required Lenders” shall mean Lenders holding in the aggregate greater than 50%
of (i) the outstanding Loans, Participation Interests and unfunded Commitments
(and Participation Interests therein) or (ii) if the Commitments have been
terminated, the outstanding Loans and Participation Interests (including the
Participation Interests of the Issuing Lender (in its capacity as a Lender) in
any Letters of Credit and of the Swingline Lender (in its capacity as a Lender)
in Swingline Loans); provided, however, that if any Lender shall be a Defaulting
Lender at such time, then there shall be excluded from the determination of
Required Lenders, Obligations (including Participation Interests) owing to such
Defaulting Lender and such Defaulting Lender’s Commitments, or after termination
of the Commitments, the principal balance of the Obligations owing to such
Defaulting Lender.

 

“Requirement of Law” shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

 

“Responsible Officer” shall mean, as to (a) the Borrower, any of the President,
the Chief Executive Officer or the Chief Financial Officer or (b) any other
Credit Party, any duly authorized officer thereof.

 

“Restricted Payment” shall mean (a) any dividend or other distribution, direct
or indirect, on account of any shares of any class of Capital Stock of the
Parent or any of its Subsidiaries, now or hereafter outstanding, (b) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of the Parent or any of its Subsidiaries, now or hereafter outstanding,
(c) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of the Parent or any of its Subsidiaries, now or hereafter outstanding,
(d) any payment or prepayment of principal or premium, if any, or interest on
redemption purchase, retirement, defeasance, sinking fund or similar payment
with respect to any Subordinated Debt, or (e) the payment by the Parent or any
of its Subsidiaries of any management or consulting fee to any Person or of any
salary, bonus or other form of compensation to any Person who is directly or
indirectly a significant partner, shareholder, owner or executive officer of any
such Person, to the extent such salary, bonus or other form of compensation is
not included in the corporate overhead of the Parent, the Borrower or such
Subsidiary.

 

“Revolving Commitment” shall mean, with respect to each Lender, the commitment
of such Lender to make Revolving Loans in an aggregate principal amount at any
time outstanding up to an amount equal to such Lender’s Revolving Commitment
Percentage of the Revolving Committed Amount.

 

“Revolving Commitment Percentage” shall mean, for each Lender, the percentage
identified as its Revolving Commitment Percentage in its Lender Commitment
Letter or in the Assignment Agreement pursuant to which such Lender became a
Lender hereunder, as such

 

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percentage may be modified in connection with any assignment made in accordance
with the provisions of Section 9.6(c).

 

“Revolving Committed Amount” shall have the meaning set forth in Section 2.1.

 

“Revolving Loans” shall have the meaning set forth in Section 2.1.

 

“Revolving Notes” shall mean the promissory notes of the Borrower in favor of
each of the Lenders evidencing the Revolving Loans provided pursuant to
Section 2.1(e), individually or collectively, as appropriate, as such promissory
notes may be amended, modified, supplemented, extended, renewed or replaced from
time to time.

 

“S&P” shall mean Standard & Poor’s Ratings Group, a division of The McGraw Hill
Companies, Inc.

 

“Sanctioned Country” shall mean a country subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/enforcement /ofac/sanctions/index.html, or as
otherwise published from time to time.

 

“Sanctioned Person” shall mean (a) a Person named on the list of “Specially
Designated Nationals and Blocked Persons” maintained by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise
published from time to time, or (b) (i) an agency of the government of a
Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or
(iii) a person resident in a Sanctioned Country, to the extent subject to a
sanctions program administered by OFAC.

 

“Sale Leaseback Property” shall have the meaning set forth in Section 6.12.

 

“Sale Leaseback Transaction” shall have the meaning set forth in Section 6.12.

 

“Secured Hedging Agreement” shall mean any Hedging Agreement between a Credit
Party and a Hedging Agreement Provider to the extent permitted pursuant to
Section 6.1, as amended, modified, supplemented, extended or restated from time
to time.

 

“Securities Exchange Act” shall mean the Securities Exchange Act of 1934,
together with any amendment thereto or replacement thereof and any rules or
regulations promulgated thereunder.

 

“Security Agreements” shall mean (i) the Amended and Restated Security Agreement
dated as of the Closing Date given by the Borrower and the other Credit Parties
to the Administrative Agent and (ii) any other Security Agreement executed by a
Credit Party to secure the Credit Party Obligations, in each case as amended,
modified or supplemented from time to time in accordance with its terms.

 

“Security Documents” shall mean the Security Agreements, the Pledge Agreements,
the Mortgage Instruments and any other documents executed and delivered in
connection with the

 

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granting, attachment and perfection of the Administrative Agent’s security
interests and liens arising thereunder, including, without limitation, UCC
financing statements.

 

“Single Employer Plan” shall mean any Plan which is not a Multiemployer Plan.

 

“Specified Sales” shall mean (a) the sale, transfer, lease or other disposition
of inventory and materials in the ordinary course of business and (b) the
conversion of cash into Cash Equivalents and Cash Equivalents into cash.

 

“Subordinated Debt” shall mean any Indebtedness incurred by any Credit Party
which by its terms is specifically subordinated in right of payment to the prior
payment of the Credit Party Obligations on terms reasonably satisfactory to the
Administrative Agent.

 

“Subsidiary” shall mean, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.

 

“Swingline Commitment” shall mean the commitment of the Swingline Lender to make
Swingline Loans in an aggregate principal amount at any time outstanding up to
the Swingline Committed Amount, and the commitment of the Lenders to purchase
Participation Interests in the Swingline Loans as provided in
Section 2.3(b)(ii), as such amounts may be reduced from time to time in
accordance with the provisions hereof.

 

“Swingline Committed Amount” shall mean the amount of the Swingline Lender’s
Swingline Commitment as specified in Section 2.3(a).

 

“Swingline Lender” shall mean Wachovia and any successor swingline lender.

 

“Swingline Loan” or “Swingline Loans” shall have the meaning set forth in
Section 2.3(a).

 

“Swingline Note” shall mean the promissory note of the Borrower in favor of the
Swingline Lender evidencing the Swingline Loans provided pursuant to
Section 2.3(d), as such promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time.

 

“Target” shall have the meaning set forth in the definition of “Permitted
Acquisitions.”

 

“Tax Exempt Certificate” shall have the meaning set forth in Section 2.17.

 

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“Taxes” shall have the meaning set forth in Section 2.17.

 

“Title Insurance Company” shall have the meaning set forth in the definition of
“Mortgage Policy.”

 

“Total Consideration” shall mean the total consideration paid or payable in
connection with any Permitted Acquisition including, without limitation,
payments made in cash, Capital Stock, assumed debt and earnout obligations.

 

“Trademark License” shall mean any agreement (other than any franchise
agreement), whether written or oral, providing for the grant by or to a Person
of any right to use any Trademark, including, without limitation, any thereof
referred to in Schedule 3.16 to this Agreement.

 

“Trademarks” shall mean (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, service marks,
elements of package or trade dress of goods or services, logos and other source
or business identifiers (other than such items that are of de minimis value)
owned by a Credit Party or any Subsidiary, together with the goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, including, without limitation, any thereof referred to in
Schedule 3.16 to this Agreement, and (ii) all renewals thereof including,
without limitation, any thereof referred to in Schedule 3.16.

 

“Transfer Effective Date” shall have the meaning set forth in each Assignment
Agreement.

 

“Voting Stock” shall mean, with respect to any Person, Capital Stock issued by
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.

 

“Wachovia” shall mean Wachovia Bank, National Association, together with its
successors and/or assigns.

 

Section 1.2 Other Definitional Provisions; Time References.

 

(a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes or other Credit Documents
or any certificate or other document made or delivered pursuant hereto.

 

(b) 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, and Section, subsection, Schedule
and Exhibit references are to this Agreement unless otherwise specified.

 

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(c) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

(d) Unless otherwise expressly indicated, each time reference in any Credit
Document shall be to Charlotte, North Carolina time.

 

Section 1.3 Accounting Terms.

 

Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Parent delivered to the Lenders;
provided that, if the Borrower shall notify the Administrative Agent that it
wishes to amend any covenant in Section 5.9 (or the definitions used therein) to
eliminate the effect of any change in GAAP on the operation of such covenant (or
if the Administrative Agent notifies the Borrower that the Required Lenders wish
to amend Section 5.9 or any definition used therein for such purpose), then
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Required Lenders.

 

The Borrower shall deliver to the Administrative Agent and each Lender at the
same time as the delivery of any annual or quarterly financial statements given
in accordance with the provisions of Section 5.1, (a) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (b) a reasonable estimate of the effect on the financial statements on
account of such changes in application.

 

For purposes of computing the financial covenants set forth in Section 5.9 for
any applicable test period, any Permitted Acquisition or permitted sale of
assets (including a stock sale) shall have been deemed to have taken place as of
the first day of such applicable test period.

 

ARTICLE II

 

THE LOANS; AMOUNT AND TERMS

 

Section 2.1 Revolving Loans.

 

(a) Revolving Commitment. During the Commitment Period, subject to the terms and
conditions hereof, the Lenders severally agree to make revolving credit loans
(“Revolving Loans”) to the Borrower from time to time in an aggregate principal
amount of up to TWO HUNDRED MILLION DOLLARS ($200,000,000) (as such aggregate
maximum amount may

 

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be reduced from time to time as provided in Section 2.6, the “Revolving
Committed Amount”) for the purposes hereinafter set forth; provided, however,
that (i) with regard to each Lender individually, the sum of such Lender’s
Revolving Commitment Percentage of outstanding Revolving Loans plus such
Lender’s Revolving Commitment Percentage of outstanding Swingline Loans plus
such Lender’s Revolving Commitment Percentage of LOC Obligations shall not
exceed such Lender’s Revolving Commitment, and (ii) with regard to the Lenders
collectively, the sum of the outstanding Revolving Loans plus outstanding
Swingline Loans plus outstanding LOC Obligations shall not exceed the Revolving
Committed Amount. Revolving Loans may consist of Alternate Base Rate Loans or
LIBOR Rate Loans, or a combination thereof, as the Borrower may request, and may
be repaid and reborrowed in accordance with the provisions hereof. LIBOR Rate
Loans shall be made by each Lender at its LIBOR Lending Office and Alternate
Base Rate Loans at its Domestic Lending Office.

 

(b) Revolving Loan Borrowings.

 

(i) Notice of Borrowing. The Borrower shall request a Revolving Loan borrowing
by delivering a written Notice of Borrowing (or telephone notice promptly
confirmed in writing by delivery of a written Notice of Borrowing, which
delivery may be by facsimile) to the Administrative Agent not later than
11:00 a.m. on the date of the requested borrowing in the case of Alternate Base
Rate Loans, and on the third Business Day prior to the date of the requested
borrowing in the case of LIBOR Rate Loans. Each such request for borrowing shall
be irrevocable and shall specify (A) that a Revolving Loan is requested, (B) the
date of the requested borrowing (which shall be a Business Day), (C) the
aggregate principal amount to be borrowed, (D) whether the borrowing shall be
comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a combination
thereof, and if LIBOR Rate Loans are requested, the Interest Period(s) therefor.
If the Borrower shall fail to specify in any such Notice of Borrowing (I) an
applicable Interest Period in the case of a LIBOR Rate Loan, then such notice
shall be deemed to be a request for an Interest Period of one month, or (II) the
type of Revolving Loan requested, then such notice shall be deemed to be a
request for an Alternate Base Rate Loan hereunder. The Administrative Agent
shall give notice to each Lender promptly upon receipt of each Notice of
Borrowing, the contents thereof and each such Lender’s share thereof. All
Revolving Loans made on the Closing Date and on any of the three Business Days
following the Closing Date shall bear interest at the Alternate Base Rate unless
the Borrower delivers to the Administrative Agent a funding indemnity letter
acceptable to the Administrative Agent.

 

(ii) Minimum Amounts. Each Revolving Loan which is an Alternate Base Rate Loan
shall be in a minimum aggregate amount of $500,000 and in integral multiples of
$100,000 in excess thereof (or the remaining amount of the Revolving Committed
Amount, if less). Each Revolving Loan which is a LIBOR Rate Loan shall be in a
minimum aggregate amount of $1,000,000 and in integral multiples of $500,000 in
excess thereof.

 

(iii) Advances. Each Lender will make its Revolving Commitment Percentage of
each Revolving Loan borrowing available to the Administrative Agent for the
account

 

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of the Borrower at the office of the Administrative Agent specified in
Schedule 9.2, or at such other office as the Administrative Agent may designate
in writing, by 1:00 p.m. on the date specified in the applicable Notice of
Borrowing in Dollars and in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent by crediting the account of the Borrower on the books of
such office with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.

 

(c) Repayment. The principal amount of all Revolving Loans shall be due and
payable in full on the Maturity Date. The Borrower covenants and agrees to pay
the Revolving Loans in accordance with the terms of this Agreement and the
Revolving Notes.

 

(d) Interest. Subject to the provisions of Section 2.8, Revolving Loans shall
bear interest as follows:

 

(i) Alternate Base Rate Loans. During such periods as Revolving Loans shall be
comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan shall
bear interest at a per annum rate equal to the sum of the Alternate Base Rate
plus the Applicable Percentage; and

 

(ii) LIBOR Rate Loans. During such periods as Revolving Loans shall be comprised
of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a per
annum rate equal to the sum of the LIBOR Rate plus the Applicable Percentage.

 

Interest on Revolving Loans shall be payable in arrears on each Interest Payment
Date.

 

(e) Revolving Notes. At the request of any Lender, such Lender’s Revolving
Commitment shall be evidenced by a duly executed promissory note of the Borrower
to such Lender in substantially the form of Schedule 2.1(e).

 

Section 2.2 Letter of Credit Subfacility.

 

(a) Issuance. Subject to the terms and conditions hereof and of the LOC
Documents, if any, and any other terms and conditions which the Issuing Lender
may reasonably require, during the Commitment Period the Issuing Lender shall
issue, and the Lenders shall participate in, Letters of Credit for the account
of the Borrower from time to time upon request in a form acceptable to the
Issuing Lender; provided, however, that (i) the aggregate amount of LOC
Obligations shall not at any time exceed FIFTEEN MILLION DOLLARS ($15,000,000)
(the “LOC Committed Amount”), (ii) the sum of outstanding Revolving Loans plus
outstanding Swingline Loans plus outstanding LOC Obligations shall not at any
time exceed the Revolving Committed Amount, (iii) all Letters of Credit shall be
denominated in U.S. Dollars and (iv) Letters of Credit shall be issued for
lawful corporate purposes and may be issued as standby letters of credit,
including in connection with workers’ compensation and other insurance programs.
Except as otherwise expressly agreed upon by all the Lenders, no Letter of
Credit shall have an original expiry date more than one year from the date of
issuance; provided, however,

 

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so long as no Default or Event of Default has occurred and is continuing and
subject to the other terms and conditions to the issuance of Letters of Credit
hereunder, the expiry dates of Letters of Credit may be extended annually or
periodically from time to time on the request of the Borrower or by operation of
the terms of the applicable Letter of Credit to a date not more than one year
from the date of extension; provided, further, that no Letter of Credit, as
originally issued or as extended, shall have an expiry date extending beyond the
date that is thirty (30) days prior to the Maturity Date. Each Letter of Credit
shall comply with the related LOC Documents. The issuance and expiry date of
each Letter of Credit shall be a Business Day. Any Letters of Credit issued
hereunder shall be in a minimum original face amount of $100,000. Wachovia shall
be the Issuing Lender on all Letters of Credit issued on or after the Closing
Date. The Borrower’s reimbursement obligations in respect of each Existing
Letter of Credit, and each Lender’s participation obligations in connection
therewith, shall be governed by the terms of this Credit Agreement.

 

(b) Notice and Reports. The request for the issuance of a Letter of Credit shall
be submitted to the Issuing Lender at least five (5) Business Days prior to the
requested date of issuance. The Issuing Lender will promptly upon request
provide to the Administrative Agent for dissemination to the Lenders a detailed
report specifying the Letters of Credit which are then issued and outstanding
and any activity with respect thereto which may have occurred since the date of
any prior report, and including therein, among other things, the account party,
the beneficiary, the face amount, expiry date as well as any payments or
expirations which may have occurred. The Issuing Lender will further provide to
the Administrative Agent promptly upon request copies of the Letters of Credit.
The Issuing Lender will provide to the Administrative Agent promptly upon
request a summary report of the nature and extent of LOC Obligations then
outstanding.

 

(c) Participations. Each Lender (i) on the Closing Date with respect to each
Existing Letter of Credit and (ii) upon issuance of any other Letter of Credit
(or upon such Lender becoming a Lender hereunder pursuant to Section 9.6(c)),
shall be deemed to have purchased without recourse a risk participation from the
Issuing Lender in such Letter of Credit and the obligations arising thereunder
and any collateral relating thereto, in each case in an amount equal to its
Revolving Commitment Percentage of the obligations under such Letter of Credit
and shall absolutely, unconditionally and irrevocably assume, as primary obligor
and not as surety, and be obligated to pay to the Issuing Lender therefor and
discharge when due, its Revolving Commitment Percentage of the obligations
arising under such Letter of Credit. Without limiting the scope and nature of
each Lender’s participation in any Letter of Credit, to the extent that the
Issuing Lender has not been reimbursed as required hereunder or under any LOC
Document, each such Lender shall pay to the Issuing Lender its Revolving
Commitment Percentage of such unreimbursed drawing in same day funds pursuant to
and in accordance with the provisions of subsection (d) hereof. The obligation
of each Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an Event
of Default or any other occurrence or event. Any such reimbursement shall not
relieve or otherwise impair the obligation of the Borrower to reimburse the
Issuing Lender under any Letter of Credit, together with interest as hereinafter
provided.

 

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(d) Reimbursement. In the event of any drawing under any Letter of Credit, the
Issuing Lender will promptly notify the Borrower and the Administrative Agent.
The Borrower shall reimburse the Issuing Lender on the day of drawing under any
Letter of Credit (with the proceeds of a Revolving Loan obtained hereunder or
otherwise) in same day funds as provided herein or in the LOC Documents. If the
Borrower shall fail to reimburse the Issuing Lender as provided herein, the
unreimbursed amount of such drawing shall bear interest at a per annum rate
equal to the ABR Default Rate for so long as such amount shall be unreimbursed.
Unless the Borrower shall immediately notify the Issuing Lender and the
Administrative Agent of its intent to otherwise reimburse the Issuing Lender,
the Borrower shall be deemed to have requested a Mandatory LOC Borrowing in the
amount of the drawing as provided in subsection (e) hereof, the proceeds of
which will be used to satisfy the reimbursement obligations. The Borrower’s
reimbursement obligations hereunder shall be absolute and unconditional under
all circumstances irrespective of any rights of set-off, counterclaim or defense
to payment the Borrower may claim or have against the Issuing Lender, the
Administrative Agent, the Lenders, the beneficiary of the Letter of Credit drawn
upon or any other Person, including without limitation any defense based on any
failure of the Borrower to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing Lender will
promptly notify the other Lenders of the amount of any unreimbursed drawing and
each Lender shall promptly pay to the Administrative Agent for the account of
the Issuing Lender in Dollars and in immediately available funds, the amount of
such Lender’s Revolving Commitment Percentage of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Lender from the
Issuing Lender if such notice is received at or before 2:00 p.m., otherwise such
payment shall be made at or before 12:00 Noon on the Business Day next
succeeding the day such notice is received. If such Lender does not pay such
amount to the Issuing Lender in full upon such request, such Lender shall, on
demand, pay to the Administrative Agent for the account of the Issuing Lender
interest on the unpaid amount during the period from the date of such drawing
until such Lender pays such amount to the Issuing Lender in full at a rate per
annum equal to, if paid within two (2) Business Days of the date of drawing, the
Federal Funds Effective Rate and thereafter at a rate equal to the Alternate
Base Rate. Each Lender’s obligation to make such payment to the Issuing Lender,
and the right of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and without
regard to the termination of this Agreement or the Commitments hereunder, the
existence of a Default or Event of Default or the acceleration of the Credit
Party Obligations hereunder and shall be made without any offset, abatement,
withholding or reduction whatsoever.

 

(e) Repayment with Revolving Loans. On any day on which the Borrower shall have
requested, or been deemed to have requested, a Revolving Loan to reimburse a
drawing under a Letter of Credit, the Administrative Agent shall give notice to
the Lenders that a Revolving Loan has been requested or deemed requested in
connection with a drawing under a Letter of Credit, in which case a Revolving
Loan borrowing comprised entirely of Alternate Base Rate Loans (each such
borrowing, a “Mandatory LOC Borrowing”) shall be immediately made (without
giving effect to any termination of the Commitments pursuant to Section 7.2) pro
rata based on each Lender’s respective Revolving Commitment Percentage
(determined before giving effect to any termination of the Commitments pursuant
to Section 7.2). The proceeds of such Mandatory LOC Borrowing shall be paid
directly to the Issuing Lender for application to the respective

 

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LOC Obligations. Each Lender hereby irrevocably agrees to make such Revolving
Loans immediately upon any such request or deemed request on account of each
Mandatory LOC Borrowing in the amount and in the manner specified in the
preceding sentence and on the same such date notwithstanding (i) the amount of
Mandatory LOC Borrowing may not comply with the minimum amount (or integral
amount in excess thereof) for borrowings of Revolving Loans otherwise required
hereunder, (ii) whether any conditions specified in Section 4.2 are then
satisfied, (iii) whether a Default or an Event of Default then exists,
(iv) failure for any such request or deemed request for Revolving Loan to be
made by the time otherwise required in Section 2.1(b), (v) the date of such
Mandatory LOC Borrowing, or (vi) any reduction in the Revolving Committed Amount
after any such Letter of Credit may have been drawn upon; provided, however,
that in the event any such Mandatory LOC Borrowing should be less than the
minimum amount for borrowings of Revolving Loans otherwise provided in
Section 2.1(b)(ii), the Borrower shall pay to the Administrative Agent for its
own account an administrative fee of $500. In the event that any Mandatory LOC
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code), then each such Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory LOC Borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or after
such date and prior to such purchase) its Participation Interests in the
outstanding LOC Obligations; provided, further, that in the event any Lender
shall fail to fund its Participation Interest on the day the Mandatory LOC
Borrowing would otherwise have occurred, then the amount of such Lender’s
unfunded Participation Interest therein shall bear interest payable by such
Lender to the Issuing Lender upon demand, at the rate equal to, if paid within
two (2) Business Days of such date, the Federal Funds Effective Rate, and
thereafter at a rate equal to the Alternate Base Rate.

 

(f) Modification, Extension. The issuance of any supplement, modification,
amendment, renewal, or extension to any Letter of Credit shall, for purposes
hereof, be treated in all respects the same as the issuance of a new Letter of
Credit hereunder.

 

(g) Uniform Customs and Practices/ISP 98. Unless otherwise expressly agreed by
the Issuing Lender and the Borrower, when a Letter of Credit is issued, (i) the
rules of the “International Standby Practices 1998” published by the Institute
of International Banking Law & Practice (or such later version thereof as may be
in effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce at the time
of issuance, shall apply to each trade Letter of Credit.

 

(h) Conflict with LOC Documents. In the event of any conflict between this
Credit Agreement and any LOC Document, this Credit Agreement shall control.

 

Section 2.3 Swingline Loan Subfacility.

 

(a) Swingline Commitment. During the Commitment Period, subject to the terms and
conditions hereof, the Swingline Lender, in its individual capacity, agrees to
make certain revolving credit loans to the Borrower (each a “Swingline Loan”
and, collectively, the “Swingline Loans”) for the purposes hereinafter set
forth; provided, however, (i) the aggregate

 

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amount of Swingline Loans outstanding at any time shall not exceed SEVEN MILLION
FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) (the “Swingline Committed Amount”),
and (ii) the sum of the outstanding Revolving Loans plus outstanding Swingline
Loans plus outstanding LOC Obligations shall not exceed the Revolving Committed
Amount. Swingline Loans hereunder may be repaid and reborrowed in accordance
with the provisions hereof.

 

(b) Swingline Loan Borrowings.

 

(i) Swingline Loan Borrowings and Disbursements. The Swingline Lender will make
Swingline Loans available to the Borrower on any Business Day (A) upon request
made by the Borrower not later than 12:00 Noon on such Business Day by delivery
to the Swingline Lender of a notice of request for Swingline Loan borrowing in
the form of Schedule 2.1(b)(i) with appropriate modifications or (B) in
accordance with the lending mechanics and other terms of the Autoborrow Feature,
upon the event that expenses charged to the Borrower’s Concentration Account
shall exceed the available cash deposits in such Concentration Account in an
amount equal to such excess. Swingline Loans issued pursuant to subclause
(A) above shall be made in minimum amounts of $100,000 and in integral amounts
of $50,000 in excess thereof.

 

(ii) Repayment of Swingline Loans. Each Swingline Loan borrowing shall be due
and payable on the earlier of (A) the seventh day after the date of such
Swingline Loan borrowing and (B) the Maturity Date. The Swingline Lender may, at
any time, in its sole discretion, by written notice to the Borrower and the
Administrative Agent, demand repayment of its Swingline Loans by way of a
Revolving Loan borrowing, in which case the Borrower shall be deemed to have
requested a Revolving Loan borrowing comprised entirely of Alternate Base Rate
Loans in the amount of such Swingline Loans; provided, however, that, in the
following circumstances, any such demand shall also be deemed to have been given
one Business Day prior to each of (w) the Maturity Date, (x) the occurrence of
any Event of Default described in Section 7.1(e), (y) upon acceleration of the
Credit Party Obligations hereunder, whether on account of an Event of Default
described in Section 7.1(e) or any other Event of Default, and (z) the exercise
of remedies in accordance with the provisions of Section 7.2 hereof (each such
Revolving Loan borrowing made on account of any such deemed request therefor as
provided herein being hereinafter referred to as “Mandatory Borrowing”). Each
Lender hereby irrevocably agrees to make such Revolving Loans promptly upon any
such request or deemed request on account of each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the same
such date notwithstanding (I) the amount of Mandatory Borrowing may not comply
with the minimum amount for borrowings of Revolving Loans otherwise required
hereunder, (II) whether any conditions specified in Section 4.2 are then
satisfied, (III) whether a Default or an Event of Default then exists, (IV)
failure of any such request or deemed request for Revolving Loans to be made by
the time otherwise required in Section 2.1(b)(i), (V) the date of such Mandatory
Borrowing, or (VI) any reduction in the Revolving Commitment or termination of
the Revolving Commitments immediately prior to such Mandatory Borrowing or
contemporaneously therewith. In the event that any Mandatory Borrowing cannot
for any reason be made on the date otherwise required above (including, without

 

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limitation, as a result of the commencement of a proceeding under the Bankruptcy
Code), then each Lender hereby agrees that it shall forthwith purchase (as of
the date the Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such date and prior to such
purchase) from the Swingline Lender such participations in the outstanding
Swingline Loans as shall be necessary to cause each such Lender to share in such
Swingline Loans ratably based upon its respective Revolving Commitment
Percentage (determined before giving effect to any termination of the
Commitments pursuant to Section 7.2) provided that (A) all interest payable on
the Swingline Loans shall be for the account of the Swingline Lender until the
date as of which the respective participation is purchased, and (B) at the time
any purchase of participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Swingline Lender interest on
the principal amount of such participation purchased for each day from and
including the day upon which the purchase occurs hereunder to but excluding the
date of payment for such participation, at the rate equal to, if paid within
two (2) Business Days of the date of the Mandatory Borrowing, the Federal Funds
Effective Rate, and thereafter at a rate equal to the Alternate Base Rate.

 

(c) Interest on Swingline Loans. Subject to the provisions of Section 2.8,
Swingline Loans shall bear interest at a per annum rate equal to the Alternate
Base Rate plus the applicable Percentage for Revolving Loans that are Alternate
Base Rate Loans. Interest on Swingline Loans shall be payable in arrears on each
Interest Payment Date.

 

(d) Swingline Note. The Swingline Loans shall be evidenced by a duly executed
promissory note of the Borrower to the Swingline Lender in the original amount
of the Swingline Committed Amount and substantially in the form of Schedule
2.3(d).

 

Section 2.4 Incremental Facilities.

 

Subject to the terms and conditions set forth herein, the Borrower shall have
the right, at any time prior to the Maturity Date, to incur additional
Indebtedness under this Credit Agreement in the form of one or more increases to
the Aggregate Revolving Committed Amount or one or more tranches of term loans
(each an “Incremental Facility”) in an amount not to exceed $40,000,000 in the
aggregate. The following terms and conditions shall apply to the Incremental
Facility: (a) the loans made under the Incremental Facility (each an “Additional
Loan”) shall constitute Credit Party Obligations and will be secured and
guaranteed with the other Credit Party Obligations on a pari passu basis,
(b) the Incremental Facility shall have an interest rate margin no lower than
the Applicable Percentage for the existing Revolving Loans, (c) the Incremental
Facility shall have a maturity date no sooner than the Maturity Date, (d) the
Incremental Facility shall be entitled to the same voting rights as the existing
Revolving Loans and shall be entitled to receive proceeds of prepayments (i) on
the same basis as the existing Revolving Loans to the extent such Incremental
Facility is an increase to the Aggregate Revolving Committed Amount or
(ii) prior to the payment of the existing Revolving Loans to the extent such
Incremental Facility is a term loan, (e) any such Incremental Facility shall be
in a minimum principal amount of $10,000,000 and integral multiples of
$1,000,000 in excess thereof, (f) the Incremental Facility shall be obtained
from existing Lenders or from other banks,

 

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financial institutions or investment funds, in each case in accordance with the
terms set forth below, (g) the proceeds of the Additional Loans will be used for
the purposes set forth in Section 3.11, (h) the Borrower shall execute a Note in
favor of any new Lender that requests a Note, (i) the conditions to Extensions
of Credit in Section 4.2 shall have been satisfied, (j) the Administrative Agent
shall have received from the Borrower updated financial projections and an
officer’s certificate, in each case in form and substance reasonably
satisfactory to the Administrative Agent, demonstrating that, as of the date of
such Incremental Facility and, after giving effect to any new Additional Loans
thereunder on a Pro Forma Basis, the Credit Parties will be in compliance with
the financial covenants set forth in Section 5.9 and no Default or Event of
Default shall exist, and (k) the Administrative Agent shall receive an opinion
of counsel to the Credit Parties and such other documentation as it deems
reasonable necessary to effectuate the Incremental Facility, all in form and
substance satisfactory to the Administrative Agent. Participation in the
Incremental Facility shall be offered first to each of the existing Lenders and
each such Lender shall have at least ten (10) Business Days to respond to such
offer, but each such Lender shall have no obligation to provide all or any
portion of the Incremental Facility. If the amount of the Incremental Facility
shall exceed the commitments which the existing Lenders are willing to provide
with respect to the Incremental Facility, then the Borrower may invite other
banks, financial institutions and investment funds reasonably acceptable to the
Administrative Agent to join this Credit Agreement as Lenders hereunder for the
portion of the Incremental Facility not taken by existing Lenders, provided that
such other banks, financial institutions and investment funds shall enter into
such joinder agreements to give effect thereto as the Administrative Agent may
reasonably request. The Administrative Agent is authorized to enter into, on
behalf of the Lenders, any amendment to this Credit Agreement or any other
Credit Document as may be necessary to incorporate the terms of the Incremental
Facility therein.

 

Section 2.5 Fees.

 

(a) Commitment Fee. In consideration of the Revolving Commitments, the Borrower
agrees to pay to the Administrative Agent, for the ratable benefit of the
Lenders, a commitment fee (the “Commitment Fee”) in an amount equal to the
Applicable Percentage per annum on the average daily unused portion of the
Revolving Committed Amount. For purposes of computing the Commitment Fee, LOC
Obligations shall be considered usage of the Revolving Committed Amount but
Swingline Loans shall not be considered usage of the Revolving Committed Amount.
The Commitment Fee shall be payable quarterly in arrears on the 15th day
following the last day of each calendar quarter for the prior calendar quarter.

 

(b) Letter of Credit Fees. In consideration of the LOC Commitments, the Borrower
agrees to pay to the Issuing Lender, for the benefit of the Lenders, a fee (the
“Letter of Credit Fee”) equal to the Applicable Percentage per annum on the
average daily maximum amount available to be drawn under each Letter of Credit
from the date of issuance to the date of expiration. In addition to such Letter
of Credit Fee, the Issuing Lender may charge, and retain for its own account
without sharing by the other Lenders, an additional facing fee of one-tenth of
one percent (1/10%) per annum on the average daily maximum amount available to
be drawn under each such Letter of Credit issued by it. The Issuing Lender shall
promptly pay over to the Administrative Agent for the ratable benefit of the
Lenders, for the benefit of all Lenders having a Revolving Commitment (including
the Issuing Lender), the Letter of Credit Fee. The Letter of

 

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Credit Fee shall be payable quarterly in arrears on the 15th day following the
last day of each calendar quarter for such calendar quarter.

 

(c) Issuing Lender Fees. In addition to the Letter of Credit Fees payable
pursuant to subsection (b) hereof, the Borrower shall pay to the Issuing Lender,
for its own account without sharing by the other Lenders, the reasonable and
customary charges from time to time of the Issuing Lender with respect to the
amendment, transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit (collectively, the “Issuing Lender
Fees”).

 

(d) Administrative Fee. The Borrower agrees to pay to the Administrative Agent
the annual administrative fee as described in the Fee Letter.

 

Section 2.6 Commitment Reductions.

 

(a) Voluntary Reductions. The Borrower shall have the right to terminate or
permanently reduce the unused portion of the Revolving Committed Amount at any
time or from time to time upon not less than five Business Days’ prior notice to
the Administrative Agent (which shall notify the Lenders thereof as soon as
practicable) of each such termination or reduction, which notice shall specify
the effective date thereof and the amount of any such reduction which shall be
in a minimum amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof and shall be irrevocable and effective upon receipt by the
Administrative Agent; provided that no such reduction or termination shall be
permitted if after giving effect thereto, and to any prepayments of the Loans
made on the effective date thereof, the sum of the outstanding Revolving Loans
plus outstanding Swingline Loans plus outstanding LOC Obligations would exceed
the Revolving Committed Amount.

 

(b) Maturity Date. The Revolving Commitment, the Swingline Commitment and the
LOC Commitment shall automatically terminate on the Maturity Date.

 

Section 2.7 Prepayments.

 

(a) Optional Prepayments. The Borrower shall have the right to prepay Loans in
whole or in part from time to time; provided, however, that (i) each partial
prepayment of an Alternate Base Rate Loan shall be in a minimum principal amount
of $500,000 and integral multiples of $100,000 in excess thereof or, if less,
the unpaid balance thereof, (ii) each partial prepayment of a LIBOR Rate Loan
shall be in a minimum principal amount of $1,000,000 and integral multiples of
$500,000 in excess thereof or, if less, the unpaid balance thereof, and
(iii) each partial prepayment of a Swingline Loan shall be in a minimum
principal amount of $100,000 and integral multiples of $50,000 in excess thereof
or the unpaid balance thereof, if less. The Borrower shall give three Business
Days’ irrevocable notice in the case of LIBOR Rate Loans and one Business Day’s
irrevocable notice in the case of Alternate Base Rate Loans to the
Administrative Agent (which shall notify the Lenders thereof as soon as
practicable). Each prepayment pursuant to this Section 2.7(a) shall be applied
to the outstanding Loans as the Borrower may elect; provided, however, each
prepayment shall be applied first to Alternate Base Rate Loans and then to LIBOR
Rate Loans in direct order of Interest Period maturities. All

 

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prepayments under this Section 2.7(a) shall be subject to Section 2.16, but
otherwise without premium or penalty. Interest on the principal amount prepaid
shall be payable on the next occurring Interest Payment Date that would have
occurred had such Loan not been prepaid or, at the request of the Administrative
Agent, interest on the principal amount prepaid shall be payable on any date
that a prepayment is made hereunder through the date of prepayment.

 

(b) Mandatory Prepayments.

 

(i) Revolving Committed Amount. If at any time after the Closing Date, the sum
of the outstanding Revolving Loans plus outstanding Swingline Loans plus
outstanding LOC Obligations shall exceed the Revolving Committed Amount, the
Borrower immediately shall prepay the Revolving Loans in an amount sufficient to
eliminate such excess (such prepayment to be applied as set forth in clause (v)
below).

 

(ii) Asset Dispositions. Promptly following one or more Asset Dispositions in
excess of $1,000,000 in the aggregate in any fiscal year, the Borrower shall
prepay the Loans and/or cash collateralize the LOC Obligations in an aggregate
amount equal to the Net Cash Proceeds derived from such Asset Disposition (such
prepayment to be applied as set forth in clause (v) below); provided, however,
that such Net Cash Proceeds shall not be required to be so applied to the extent
the Borrower delivers to the Administrative Agent a certificate stating that the
Borrower (or a Guarantor) intends to use such Net Cash Proceeds to acquire fixed
or capital assets useful in its business within 180 days of the receipt of such
Net Cash Proceeds, it being expressly agreed that any Net Cash Proceeds not so
reinvested shall be applied to repay the Loans and/or cash collateralize the LOC
Obligations (such prepayment to be applied as set forth in clause (v) below)
immediately following the 180th day occurring after the receipt by a Credit
Party of such Net Cash Proceeds; provided, further that Net Cash Proceeds
received from the sale of the properties set forth on Schedule 2.7(b)(ii) shall
not be required to be so applied and no reduction in the Revolving Commitment
shall occur as a result thereof.

 

(iii) Issuances. Immediately upon receipt by any Credit Party or any of its
Subsidiaries of proceeds from any Debt Issuance, the Borrower shall prepay the
Loans and/or cash collateralize the LOC Obligations in an aggregate amount equal
to one hundred percent (100%) of the Net Cash Proceeds of such Debt Issuance to
the Lenders (such prepayment to be applied as set forth in clause (v) below).

 

(iv) Recovery Event. To the extent that cash proceeds received in connection
with all Recovery Events (other than business interruption insurance) in any
fiscal year exceed $1,000,000 in the aggregate, the Borrower shall prepay the
Loans and/or cash collateralize the LOC Obligations in an aggregate amount equal
to such cash proceeds (such prepayment to be applied as set forth in clause (v)
below); provided, however, that such cash proceeds shall not be required to be
so applied to the extent the Borrower delivers to the Administrative Agent a
certificate stating that the Borrower (or a Guarantor) intends to use such cash
proceeds to acquire or repair fixed or capital assets useful in its business
within 180 days of the receipt of such cash proceeds, it being expressly agreed
that any cash proceeds not so reinvested shall be applied to repay the

 

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Loans and/or cash collateralize the LOC Obligations (such prepayment to be
applied as set forth in clause (v) below) immediately following the 180th day
occurring after the receipt by a Credit Party of such cash proceeds.

 

(v) Application of Mandatory Prepayments. All amounts required to be paid
pursuant to this Section 2.7(b) shall be applied as follows: (A) with respect to
all amounts prepaid pursuant to Section 2.7(b)(i), (1) first to the outstanding
Swingline Loans (without any reduction in the Revolving Commitments), (2) second
to the outstanding Revolving Loans (without any reduction in the Revolving
Commitments) and (3) third to a cash collateral account in respect of
outstanding LOC Obligations, (B) with respect to all amounts prepaid pursuant to
Sections 2.7(b)(ii) through (iv), (1) first to the Additional Loans consisting
of term loans, (2) second to the outstanding Swingline Loans (without a
corresponding reduction in the Revolving Commitments), (3) third to the
outstanding Revolving Loans (without a corresponding reduction in the Revolving
Commitments) and (4) fourth to a cash collateral account in respect of
outstanding LOC Obligations. Within the parameters of the applications set forth
above, prepayments shall be applied first to Alternate Base Rate Loans and then
to LIBOR Rate Loans in direct order of Interest Period maturities. All
prepayments under this Section 2.7(b) shall be subject to Section 2.16 and be
accompanied by interest on the principal amount prepaid through the date of
prepayment.

 

Notwithstanding the foregoing provisions of this Section 2.7, if at any time any
prepayment of the Loans pursuant to Section 2.7 would result in LIBOR Rate Loans
being prepaid other than on the last day of an Interest Period with respect
thereto, then the Borrower, so long as no Event of Default shall have occurred
and be continuing, may deposit the amount that otherwise would have been paid in
respect of such LIBOR Rate Loans with the Administrative Agent to be held as
security for the obligation of the Borrower to make such prepayment pursuant to
a cash collateral agreement to be entered into on terms reasonably satisfactory
to the Administrative Agent, with such cash collateral to be directly applied
upon the first occurrence thereafter of the last day of any Interest Period with
respect to such LIBOR Rate Loans.

 

(c) Hedging Obligations Unaffected. Any prepayment made pursuant to this
Section 2.7 shall not affect the Borrower’s obligation to continue to make
payments under any Hedging Agreement, which shall remain in full force and
effect notwithstanding such prepayment, subject to the terms of such Hedging
Agreement.

 

Section 2.8 Default Rate and Payment Dates.

 

Upon the occurrence, and during the continuance, of an Event of Default, the
principal of and, to the extent permitted by law, interest on the Loans and any
other amounts owing hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate 2% greater than the rate which
would otherwise be applicable (or if no rate is applicable, whether in respect
of interest, fees or other amounts, then at the ABR Default Rate).

 

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Section 2.9 Conversion Options.

 

(a) The Borrower may, in the case of Revolving Loans, elect from time to time to
convert Alternate Base Rate Loans to LIBOR Rate Loans, by giving the
Administrative Agent at least three Business Days’ prior irrevocable written
notice of such election. A form of Notice of Conversion/ Extension is attached
as Schedule 2.9. If the date upon which an Alternate Base Rate Loan is to be
converted to a LIBOR Rate Loan is not a Business Day, then such conversion shall
be made on the next succeeding Business Day and during the period from such last
day of an Interest Period to such succeeding Business Day such Loan shall bear
interest as if it were an Alternate Base Rate Loan. All or any part of
outstanding Alternate Base Rate Loans may be converted as provided herein,
provided that (i) no Loan may be converted into a LIBOR Rate Loan when any
Default or Event of Default has occurred and is continuing and (ii) partial
conversions to LIBOR Rate Loans shall be in an aggregate principal amount of
$1,000,000 or a whole multiple of $500,000 in excess thereof.

 

(b) Any LIBOR Rate Loans may be continued as such upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with the
notice provisions contained in Section 2.9(a); provided, that no LIBOR Rate Loan
may be continued as such when any Default or Event of Default has occurred and
is continuing, in which case such Loan shall be automatically converted to an
Alternate Base Rate Loan at the end of the applicable Interest Period with
respect thereto. If the Borrower shall fail to give timely notice of an election
to continue a LIBOR Rate Loan, or the continuation of LIBOR Rate Loans is not
permitted hereunder, such LIBOR Rate Loans shall be automatically converted to
Alternate Base Rate Loans at the end of the applicable Interest Period with
respect thereto.

 

Section 2.10 Computation of Interest and Fees.

 

(a) Interest payable hereunder with respect to Alternate Base Rate Loans based
on the Prime Rate shall be calculated on the basis of a year of 365 days (or 366
days, as applicable) for the actual days elapsed. All other fees, interest and
all other amounts payable hereunder shall be calculated on the basis of a
360 day year for the actual days elapsed. The Administrative Agent shall as soon
as practicable notify the Borrower and the Lenders of each determination of a
LIBOR Rate on the Business Day of the determination thereof. Any change in the
interest rate on a Loan resulting from a change in the Alternate Base Rate shall
become effective as of the opening of business on the day on which such change
in the Alternate Base Rate shall become effective. The Administrative Agent
shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change.

 

(b) Each determination of an interest rate by the Administrative Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Administrative
Agent shall, at the request of the Borrower, deliver to the Borrower a statement
showing the computations used by the Administrative Agent in determining any
interest rate.

 

(c) It is the intent of the Lenders and the Credit Parties to conform to and
contract in strict compliance with applicable usury law from time to time in
effect. All agreements between

 

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the Lenders and the Credit Parties are hereby limited by the provisions of this
paragraph which shall override and control all such agreements, whether now
existing or hereafter arising and whether written or oral. In no way, nor in any
event or contingency (including but not limited to prepayment or acceleration of
the maturity of any Obligation), shall the interest taken, reserved, contracted
for, charged, or received under this Agreement, under the Notes or otherwise,
exceed the maximum nonusurious amount permissible under applicable law. If, from
any possible construction of any of the Credit Documents or any other document,
interest would otherwise be payable in excess of the maximum nonusurious amount,
any such construction shall be subject to the provisions of this paragraph and
such interest shall be automatically reduced to the maximum nonusurious amount
permitted under applicable law, without the necessity of execution of any
amendment or new document. If any Lender shall ever receive anything of value
which is characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum nonusurious
amount, an amount equal to the amount which would have been excessive interest
shall, without penalty, be applied to the reduction of the principal amount
owing on the Loans and not to the payment of interest, or refunded to the
Borrower or the other payor thereof if and to the extent such amount which would
have been excessive exceeds such unpaid principal amount of the Loans. The right
to demand payment of the Loans or any other Indebtedness evidenced by any of the
Credit Documents does not include the right to receive any interest which has
not otherwise accrued on the date of such demand, and the Lenders do not intend
to charge or receive any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with respect to the Loans
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term (including any renewal or
extension) of the Loans so that the amount of interest on account of such
indebtedness does not exceed the maximum nonusurious amount permitted by
applicable law.

 

Section 2.11 Pro Rata Treatment and Payments.

 

(a) Each borrowing of Revolving Loans and any reduction of the Revolving
Commitments shall be made pro rata according to the respective Revolving
Commitment Percentages of the Lenders. Each payment (other than prepayments) of
principal or interest under this Agreement or any Note shall be applied pro
rata, first, to any fees then due and owing by the Borrower pursuant to
Section 2.5, second, to interest then due and owing hereunder and under the
Notes and, third, to principal then due and owing hereunder and under the Notes.
Each payment on account of any fees pursuant to Section 2.5 shall be made pro
rata in accordance with the respective amounts due and owing (except as to the
portion of the Letter of Credit retained by the Issuing Lender and the Issuing
Lender Fees). Each optional prepayment of the Loans shall be applied in
accordance with Section 2.7(a) and each mandatory prepayment of the Loans shall
be applied in accordance with Section 2.7(b). Prepayments made pursuant to
Section 2.14 shall be applied in accordance with such section. All payments
(including prepayments) to be made by the Borrower on account of principal,
interest and fees shall be made without defense, set-off or counterclaim (except
as provided in Section 2.17(b)) and shall be made to the Administrative Agent
for the account of the Lenders at the Administrative Agent’s office specified on
Schedule 9.2 in Dollars and in immediately available funds not later than
12:00 Noon on the date when due. The Administrative Agent shall distribute such
payments to the Lenders entitled thereto promptly upon receipt in like funds as
received. If any payment

 

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hereunder (other than payments on the LIBOR Rate Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a LIBOR Rate Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.

 

(b) Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Agreement to the contrary, after the exercise of remedies by
the Administrative Agent or the Lenders pursuant to Section 7.2 (or after the
Commitments shall automatically terminate and the Loans (with accrued interest
thereon) and all other amounts under the Credit Documents (including without
limitation the maximum amount of all contingent liabilities under Letters of
Credit) shall automatically become due and payable in accordance with the terms
of such Section), all amounts collected or received by the Administrative Agent
or any Lender on account of the Credit Party Obligations or any other amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:

 

FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation reasonable attorneys’ fees) of the Administrative
Agent in connection with enforcing the rights of the Lenders under the Credit
Documents and any protective advances made by the Administrative Agent with
respect to the Collateral under or pursuant to the terms of the Security
Documents;

 

SECOND, to payment of any fees owed to the Administrative Agent;

 

THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys’ and consultants’ fees) of
each of the Lenders in connection with enforcing its rights under the Credit
Documents or otherwise with respect to the Credit Party Obligations owing to
such Lender;

 

FOURTH, to the payment of all of the Credit Party Obligations consisting of
accrued fees and interest, and including with respect to any Secured Hedging
Agreement, any fees, premiums and scheduled periodic payments due under such
Secured Hedging Agreement and any interest accrued thereon;

 

FIFTH, to the payment of the outstanding principal amount of the Credit Party
Obligations and the payment or cash collateralization of the outstanding LOC
Obligations, and including with respect to any Secured Hedging Agreement, any
breakage, termination or other payments due under such Secured Hedging Agreement
and any interest accrued thereon;

 

SIXTH, to all other Credit Party Obligations and other obligations which shall
have become due and payable under the Credit Documents or otherwise and not
repaid pursuant to clauses “FIRST” through “FIFTH” above; and

 

41

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SEVENTH, to the payment of the surplus, if any, to whomever may be lawfully
entitled to receive such surplus.

 

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans, LOC
Obligations and obligations outstanding under the Hedge Agreements (if any)
permitted by Section 6.1(e) held by such Lender (and its Affiliates in the case
of Hedge Agreement obligations) bears to the aggregate then outstanding Loans,
LOC Obligations and obligations outstanding under the Hedge Agreements between
any Credit Party and any Lender or any Affiliate of a Lender that are permitted
by Section 6.1(e)) of amounts available to be applied pursuant to clauses
“FOURTH” and “FIFTH” above; and (iii) to the extent that any amounts available
for distribution pursuant to clause “FIFTH” above are attributable to the issued
but undrawn amount of outstanding Letters of Credit, such amounts shall be held
by the Administrative Agent in a cash collateral account and applied (A) first,
to reimburse the Issuing Lender from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses “FIFTH” and
“SIXTH” above in the manner provided in this Section 2.12(b). Notwithstanding
the foregoing terms of this Section 2.12, only Collateral proceeds and payments
under the Guaranty (as opposed to ordinary course principal, interest and fee
payments hereunder) shall be applied to obligations under any Secured Hedging
Agreement.

 

Section 2.12 Non-Receipt of Funds by the Administrative Agent.

 

(a) Unless the Administrative Agent shall have been notified in writing by a
Lender prior to the date a Loan is to be made by such Lender (which notice shall
be effective upon receipt) that such Lender does not intend to make the proceeds
of such Loan available to the Administrative Agent, the Administrative Agent may
assume that such Lender has made such proceeds available to the Administrative
Agent on such date, and the Administrative Agent may in reliance upon such
assumption (but shall not be required to) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent, the Administrative Agent shall be able to recover
such corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Administrative Agent’s demand therefor,
in accordance with the terms hereof, the Administrative Agent will promptly
notify the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover from the Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent at a per annum rate equal to (i) from the Borrower at the
applicable rate for the applicable borrowing pursuant to the Notice of Borrowing
and (ii) from a Lender at the Federal Funds Effective Rate.

 

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(b) Unless the Administrative Agent shall have been notified in writing by the
Borrower, prior to the date on which any payment is due from it hereunder (which
notice shall be effective upon receipt) that the Borrower does not intend to
make such payment, the Administrative Agent may assume that the Borrower has
made such payment when due, and the Administrative Agent may in reliance upon
such assumption (but shall not be required to) make available to each Lender on
such payment date an amount equal to the portion of such assumed payment to
which such Lender is entitled hereunder, and if the Borrower has not in fact
made such payment to the Administrative Agent, such Lender shall, on demand,
repay to the Administrative Agent the amount made available to such Lender. If
such amount is repaid to the Administrative Agent on a date after the date such
amount was made available to such Lender, such Lender shall pay to the
Administrative Agent on demand interest on such amount in respect of each day
from the date such amount was made available by the Administrative Agent to such
Lender to the date such amount is recovered by the Administrative Agent at a per
annum rate equal to the Federal Funds Effective Rate.

 

(c) A certificate of the Administrative Agent submitted to the Borrower or any
Lender with respect to any amount owing under this Section 2.12 shall be
conclusive in the absence of manifest error.

 

Section 2.13 Inability to Determine Interest Rate.

 

Notwithstanding any other provision of this Agreement, if (i) the Administrative
Agent shall reasonably determine (which determination shall be conclusive and
binding absent manifest error) that, by reason of circumstances affecting the
relevant market, reasonable and adequate means do not exist for ascertaining
LIBOR for such Interest Period, or (ii) the Required Lenders shall reasonably
determine (which determination shall be conclusive and binding absent manifest
error) that the LIBOR Rate does not adequately and fairly reflect the cost to
such Lenders of funding LIBOR Rate Loans that the Borrower has requested be
outstanding as a LIBOR Rate Loan during such Interest Period, the Administrative
Agent shall forthwith give telephone notice of such determination, confirmed in
writing, to the Borrower, and the Lenders at least two Business Days prior to
the first day of such Interest Period. Unless the Borrower shall have notified
the Administrative Agent upon receipt of such telephone notice that they wish to
rescind or modify their request regarding such LIBOR Rate Loans, any Loans that
were requested to be made as LIBOR Rate Loans shall be made as Alternate Base
Rate Loans and any Loans that were requested to be converted into or continued
as LIBOR Rate Loans shall remain as or be converted into Alternate Base Rate
Loans. Until any such notice has been withdrawn by the Administrative Agent, no
further Loans shall be made as, continued as, or converted into, LIBOR Rate
Loans for the Interest Periods so affected.

 

Section 2.14 Illegality.

 

Notwithstanding any other provision of this Agreement, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
by the relevant Governmental Authority to any Lender shall make it unlawful for
such Lender or its LIBOR Lending Office to make or maintain LIBOR Rate Loans as
contemplated by this Agreement or to obtain in the interbank eurodollar market
through its LIBOR Lending Office the funds with

 

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which to make such Loans, (a) such Lender shall promptly notify the
Administrative Agent and the Borrower thereof, (b) the commitment of such Lender
hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall
forthwith be suspended until the Administrative Agent shall give notice that the
condition or situation which gave rise to the suspension shall no longer exist,
and (c) such Lender’s Loans then outstanding as LIBOR Rate Loans, if any, shall
be converted on the last day of the Interest Period for such Loans or within
such earlier period as required by law as Alternate Base Rate Loans. The
Borrower hereby agrees to promptly pay any Lender, upon its demand, any
additional amounts necessary to compensate such Lender for actual and direct
costs (but not including anticipated profits) reasonably incurred by such Lender
in making any repayment in accordance with this Section including, but not
limited to, any interest or fees payable by such Lender to lenders of funds
obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender, through the Administrative Agent, to the Borrower
shall be conclusive in the absence of manifest error. Each Lender agrees to use
reasonable efforts (including reasonable efforts to change its LIBOR Lending
Office) to avoid or to minimize any amounts which may otherwise be payable
pursuant to this Section; provided, however, that such efforts shall not cause
the imposition on such Lender of any additional costs or legal or regulatory
burdens deemed by such Lender in its sole discretion to be material.

 

Section 2.15 Requirements of Law.

 

(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:

 

(i) shall subject such Lender to any tax of any kind whatsoever with respect to
any Letter of Credit or any application relating thereto, any LIBOR Rate Loan
made by it, or change the basis of taxation of payments to such Lender in
respect thereof (except for tax on the overall net income of such Lender and
changes in the rate of such tax);

 

(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender which
is not otherwise included in the determination of the LIBOR Rate hereunder; or

 

(iii) shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining LIBOR Rate Loans or the Letters of Credit or to reduce any
amount receivable hereunder or under any Note, LIBOR Rate Loan or Letter of
Credit, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such additional cost or reduced amount receivable which such Lender reasonably
deems to be material as determined by such Lender with respect to its LIBOR Rate
Loans or Letters of Credit. A certificate as to any additional amounts payable
pursuant to

 

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this Section submitted by such Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
Domestic Lending Office or LIBOR Lending Office, as the case may be) to avoid or
to minimize any amounts which might otherwise be payable pursuant to this
paragraph of this Section; provided, however, that such efforts shall not cause
the imposition on such Lender of any additional costs or other disadvantages
deemed by such Lender to be material.

 

(b) If any Lender shall have reasonably determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central bank
or Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Lender’s or such corporation’s
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender’s or such
corporation’s policies with respect to capital adequacy) by an amount reasonably
deemed by such Lender to be material, then from time to time, within fifteen
(15) days after demand by such Lender, the Borrower shall pay to such Lender
such additional amount as shall be certified by such Lender as being required to
compensate it for such reduction. Such a certificate as to any additional
amounts payable under this Section submitted by a Lender (which certificate
shall include a description of the basis for the computation), through the
Administrative Agent, to the Borrower shall be conclusive absent manifest error.

 

(c) The agreements in this Section 2.15 shall survive the termination of this
Agreement and payment of the Notes and all other amounts payable hereunder.

 

Section 2.16 Indemnity.

 

The Borrower hereby agrees to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which such Lender may sustain or incur
as a consequence of (a) default by the Borrower in payment of the principal
amount of or interest on any Loan by such Lender in accordance with the terms
hereof, (b) default by the Borrower in accepting a borrowing after the Borrower
has given a notice in accordance with the terms hereof, (c) default by the
Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder. A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. The agreements in
this Section shall survive termination of this Agreement and payment of the
Notes and all other amounts payable hereunder.

 

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Section 2.17 Taxes.

 

(a) All payments made by the Borrower hereunder or under any Note shall be,
except as provided in Section 2.17(b), made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any Governmental Authority or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding any
tax imposed on or measured by the net income or profits of a Lender pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of such Lender is
located or any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect thereto (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as “Taxes”). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note. The
Borrower will furnish to the Administrative Agent as soon as practicable after
the date the payment of any Taxes is due pursuant to applicable law certified
copies (to the extent reasonably available and required by law) of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Lender, and reimburse such Lender upon its written request,
for the amount of any Taxes so levied or imposed and paid by such Lender.

 

(b) Each Lender that is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) agrees to deliver to the Borrower and the
Administrative Agent on or prior to the Closing Date, or in the case of a Lender
that is an assignee or transferee of an interest under this Agreement pursuant
to Section 9.6(d) (unless the respective Lender was already a Lender hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Lender, (i) if the Lender is a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, two accurate and complete original
signed copies of Internal Revenue Service Form W-8BEN or W-8ECI (or successor
forms) certifying such Lender’s entitlement to a complete exemption from United
States withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, either Internal Revenue Service Form W-8BEN or
W-8ECI as set forth in clause (i) above, or (x) a certificate substantially in
the form of Schedule 2.17 (any such certificate, a “Tax Exempt Certificate”) and
(y) two accurate and complete original signed copies of Internal Revenue Service
Form W-8 (or successor form) certifying such Lender’s entitlement to an
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Note. In addition, each
Lender agrees that it will deliver upon the Borrower’s request updated versions
of the foregoing, as applicable, whenever the previous certification has become
obsolete or inaccurate in any material respect, together with such other forms
as may be required in order to confirm or establish the entitlement of such
Lender to a continued exemption from or reduction in United States withholding
tax with respect to payments under this Agreement and any Note. Notwithstanding
anything to the contrary contained in Section 2.17(a), but subject to the
immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold Taxes imposed by
the United States (or any political

 

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subdivision or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Lender which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes to the extent that such Lender has not provided
to the Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrower shall not be
obligated pursuant to Section 2.17(a) hereof to gross-up payments to be made to
a Lender in respect of Taxes imposed by the United States if (I) such Lender has
not provided to the Borrower the Internal Revenue Service Forms required to be
provided to the Borrower pursuant to this Section 2.17(b) or (II) in the case of
a payment, other than interest, to a Lender described in clause (ii) above, to
the extent that such Forms do not establish a complete exemption from
withholding of such Taxes. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 2.17, the Borrower agrees to
pay additional amounts and to indemnify each Lender in the manner set forth in
Section 2.17(a) (without regard to the identity of the jurisdiction requiring
the deduction or withholding) in respect of any amounts deducted or withheld by
it as described in the immediately preceding sentence as a result of any changes
after the Closing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of Taxes.

 

(c) Each Lender agrees to use reasonable efforts (including reasonable efforts
to change its Domestic Lending Office or LIBOR Lending Office, as the case may
be) to avoid or to minimize any amounts which might otherwise be payable
pursuant to this Section; provided, however, that such efforts shall not cause
the imposition on such Lender of any additional costs or other disadvantages
deemed by such Lender in its sole discretion to be material.

 

(d) If the Borrower pays any additional amount pursuant to this Section 2.17
with respect to a Lender, such Lender shall use reasonable efforts to obtain a
refund of tax or credit against its tax liabilities on account of such payment;
provided that such Lender shall have no obligation to use such reasonable
efforts if either (i) it is in an excess foreign tax credit position or (ii) it
believes in good faith, in its sole discretion, that claiming a refund or credit
would cause adverse tax consequences to it. In the event that such Lender
receives such a refund or credit, such Lender shall pay to the Borrower an
amount that such Lender reasonably determines is equal to the net tax benefit
obtained by such Lender as a result of such payment by the Borrower. In the
event that no refund or credit is obtained with respect to the Borrower’s
payments to such Lender pursuant to this Section 2.17, then such Lender shall
upon request provide a certification that such Lender has not received a refund
or credit for such payments. Nothing contained in this Section 2.17(d) shall
require a Lender to disclose or detail the basis of its calculation of the
amount of any tax benefit or any other amount or the basis of its determination
referred to in the proviso to the first sentence of this Section 2.17(d) to the
Borrower or any other party.

 

(e) The agreements in this Section 2.17 shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.

 

Section 2.18 Indemnification; Nature of Issuing Lender’s Duties.

 

(a) In addition to its other obligations under Section 2.2, the Borrower hereby
agrees to protect, indemnify, pay and save each Issuing Lender harmless from and
against any and all

 

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claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys’ fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit or (ii) the failure of the Issuing Lender to honor a drawing
under a Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called “Government
Acts”).

 

(b) As between the Borrower and the Issuing Lender, the Borrower shall assume
all risks of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. The Issuing Lender shall not be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may prove to
be invalid or ineffective for any reason; (iii) for failure of the beneficiary
of a Letter of Credit to comply fully with conditions required in order to draw
upon a Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) for errors in interpretation of
technical terms; (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (vii) for any consequences arising from causes beyond
the control of the Issuing Lender, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting of the
Issuing Lender’s rights or powers hereunder.

 

(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Lender, under or in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put such Issuing
Lender under any resulting liability to the Borrower. It is the intention of the
parties that this Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in the issuance
of the Letters of Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts or omissions,
whether rightful or wrongful, of any Government Authority. The Issuing Lender
shall not, in any way, be liable for any failure by the Issuing Lender or anyone
else to pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.

 

(d) Nothing in this Section 2.18 is intended to limit the reimbursement
obligation of the Borrower contained in Section 2.2(d) hereof. The obligations
of the Borrower under this Section 2.18 shall survive the termination of this
Agreement. No act or omissions of any current or prior beneficiary of a Letter
of Credit shall in any way affect or impair the rights of the Issuing Lender to
enforce any right, power or benefit under this Agreement.

 

(e) Notwithstanding anything to the contrary contained in this Section 2.18, the
Borrower shall have no obligation to indemnify any Issuing Lender in respect of
any liability incurred by such Issuing Lender arising out of the gross
negligence or willful misconduct of the

 

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Issuing Lender (including action not taken by an Issuing Lender), as determined
by a court of competent jurisdiction.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders to enter into this Agreement and to make the Extensions of
Credit herein provided for, the Credit Parties hereby represent and warrant to
the Administrative Agent and to each Lender that:

 

Section 3.1 Financial Condition.

 

(a) The unaudited consolidated financial statements of the Parent and its
Subsidiaries for the fiscal quarter ending October 2, 2005:

 

(A) were prepared in accordance with GAAP (to the extent applicable)
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein;

 

(B) fairly present the financial condition of the Parent and its Subsidiaries as
of the date or dates thereof (subject to normal year-end adjustments) and
results of operations for the period covered thereby; and

 

(C) show all Indebtedness and other liabilities in excess of $500,000 in
aggregate principal amount, direct or contingent, of the Parent and its
Subsidiaries as of the date thereof, including liabilities for taxes,
commitments and other contingent obligations.

 

(b) The written projections of the Parent and its Subsidiaries through fiscal
year 2010 provided to the Administrative Agent on or before the Closing Date
have been prepared in good faith based upon reasonable assumptions.

 

Section 3.2 No Change.

 

Since October 2, 2005 (and, after delivery of annual audited financial
statements in accordance with Section 5.1(a), from the date of the most recently
delivered annual audited financial statements) there has been no development or
event which, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.

 

Section 3.3 Corporate Existence; Compliance with Law.

 

Each of the Credit Parties (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
requisite corporate power, authority and right to own and operate all its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified to conduct

 

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business and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification except to the extent that the failure to so qualify
or be in good standing could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

Section 3.4 Corporate Power; Authorization; Enforceable Obligations.

 

Each of the Credit Parties has full corporate power, authority and right to
execute, deliver and perform the Credit Documents to which it is party and has
taken all necessary limited liability company or corporate action to authorize
the execution, delivery and performance by it of the Credit Documents to which
it is party. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution, delivery or
performance of any Credit Document by the Credit Parties (other than those which
have been obtained) or with the validity or enforceability of any Credit
Document against the Credit Parties (except such filings as are necessary in
connection with the perfection of the Liens created by such Credit Documents).
Each Credit Document to which it is a party has been duly executed and delivered
on behalf of each of the Credit Parties. Each Credit Document to which it is a
party constitutes a legal, valid and binding obligation of each of the Credit
Parties, enforceable against such Credit Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

Section 3.5 Compliance with Laws; No Conflict; No Default.

 

(a) The execution, delivery and performance by each Credit Party of the Credit
Documents to which such Credit Party is a party, in accordance with their
respective terms, the borrowings hereunder and the transactions contemplated
hereby do not and will not, by the passage of time, the giving of notice or
otherwise, (i) violate any Requirement of Law relating to such Credit Party,
(ii) conflict with, result in a breach of or constitute a default under the
articles of incorporation, bylaws, articles of organization, operating agreement
or other organizational documents of such Credit Party or any material
indenture, agreement or other instrument to which such Person is a party or by
which any of its properties may be bound or any license, permit or other
approval required by any Governmental Authority (collectively “Governmental
Approvals”) relating to such Person, except to the extent that such conflict,
breach or default with respect to any such indenture, agreement or instrument
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by such Person other than Liens arising under the Credit
Documents.

 

(b) Each Credit Party (i) (x) has all Governmental Approvals required by law for
it to conduct its business in all material respects, each of which is in full
force and effect, (y) each such Governmental Approval is final and not subject
to review on appeal and (z) each such

 

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Governmental Approval is not the subject of any pending or, to the best of its
knowledge, threatened attack by direct or collateral proceeding, and (ii) is in
compliance with each Governmental Approval applicable to it and in compliance
with all other Requirements of Law relating to it or any of its respective
properties, in each case except to the extent the failure to obtain such
Governmental Approval or failure to comply with such Governmental Approval or
Requirement of Law could not reasonably be expected to have a Material Adverse
Effect.

 

(c) None of the Credit Parties is in default under or with respect to any of its
Material Contracts, or any judgment, order or decree to which it is a party, in
any respect which could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.

 

Section 3.6 No Material Litigation.

 

Set forth on Schedule 3.6 is a list, as of the Closing Date, of any material
litigation, investigation, bankruptcy or insolvency, injunction, order or claim
affecting or relating to any Credit Party or any of its Subsidiaries, any such
Person’s properties or revenues, or any Credit Document that is pending or, to
the knowledge of the Credit Parties, threatened, by or against any Credit Party
or any of its Subsidiaries or against any of its or their respective properties
or revenues that has not been settled, dismissed, vacated, discharged or
terminated. No litigation, investigation, bankruptcy or insolvency, injunction,
order or claim affecting or relating to any Credit Party or any of its
Subsidiaries, any such Person’s properties or revenues, or any Credit Document
is pending or, to the knowledge of the Credit Parties, threatened, by or against
any Credit Party or any of its Subsidiaries or against any of its or their
respective properties or revenues that has not been settled, dismissed, vacated,
discharged or terminated which could reasonably be expected to have a Material
Adverse Effect, and no judgments are outstanding which could reasonably be
expected to have a Material Adverse Effect.

 

Section 3.7 Investment Company Act; PUHCA; Etc.

 

No Credit Party is an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended. No Credit Party is a subject to regulation under the Public Utility
Holding Company Act of 1935, as amended, the Federal Power Act, the Interstate
Commerce Act, or any federal or state statute or regulation limiting its ability
to incur the Credit Party Obligations.

 

Section 3.8 Margin Regulations.

 

No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Credit
Parties (a) are not engaged, principally or as one of their important
activities, in the business of extending credit for the purpose of “purchasing”
or “carrying” “margin stock” within the respective meanings of each of such
terms under Regulation U and (b) taken as a group do not own “margin stock”
except as identified in the

 

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financial statements referred to in Section 3.1 and the aggregate value of all
“margin stock” owned by the Credit Parties taken as a group does not exceed 25%
of the value of their assets.

 

Section 3.9 ERISA.

 

Except as set forth in Schedule 3.9, neither a Reportable Event nor an
“accumulated funding deficiency” (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except to the extent that any such occurrence
or failure to comply would not reasonably be expected to have a Material Adverse
Effect. No termination of a Single Employer Plan has occurred resulting in any
liability that has remained underfunded, and no Lien in favor of the PBGC or a
Plan has arisen, during such five-year period which could reasonably be expected
to have a Material Adverse Effect. The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by an amount which, as determined
in accordance with GAAP, could reasonably be expected to have a Material Adverse
Effect. Neither any Credit Party, nor any of its Subsidiaries nor any Commonly
Controlled Entity is currently subject to any liability for a complete or
partial withdrawal from a Multiemployer Plan which could reasonably be expected
to have a Material Adverse Effect.

 

Section 3.10 Environmental Matters.

 

Except for exceptions to the following which, either individually or in the
aggregate, could not be reasonably expected to result in a Material Adverse
Effect:

 

(a) The facilities and properties owned, leased or operated by the Credit
Parties or any of their Subsidiaries (the “Properties”) do not contain any
Materials of Environmental Concern in amounts or concentrations which
(i) constitute a violation of, or (ii) could give rise to liability under, any
Environmental Law.

 

(b) The Properties and all operations of the Credit Parties and their
Subsidiaries at the Properties are in compliance, and have in the last five
years been in compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the business operated by the Credit Parties or any of their Subsidiaries (the
“Business”).

 

(c) No Credit Party nor any Subsidiary thereof has received any written or
actual notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business, nor
does any Credit Party nor any Subsidiary thereof have knowledge or reason to
believe that any such notice will be received or is being threatened.

 

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(d) Materials of Environmental Concern have not been transported or disposed of
from the Properties in violation of, or in a manner or to a location which could
give rise to liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on or
under any of the Properties in violation of, or in a manner that could give rise
to liability under, any applicable Environmental Law.

 

(e) No judicial proceeding or governmental or administrative action is pending
or, to the knowledge of any Credit Party or any Subsidiary thereof, threatened,
under any Environmental Law to which the Borrower or any other Credit Party or
any Subsidiary is or will be named as a party with respect to the Properties or
the Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.

 

(f) There has been no release or threat of release of Materials of Environmental
Concern at or from the Properties, or arising from or related to the operations
of the Borrower or any other Credit Party or any Subsidiary in connection with
the Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability under Environmental
Laws.

 

Section 3.11 Purpose of Loans.

 

The proceeds of the Extensions of Credit shall be used solely by the Borrower as
follows:

 

(a) with respect to the Loans, to (i) finance restaurant construction costs,
(ii) pay costs, fees and expenses in connection with such new restaurant
construction, (iii) refinance existing Indebtedness of the Borrower, (iv) pay
any fees and expenses in connection with this Agreement, (v) provide for the
working capital and general corporate requirements of the Borrower and its
Subsidiaries and (vi) to finance Permitted Acquisitions; and

 

(b) the Letters of Credit shall be used only for or in connection with appeal
bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions and
obligations not otherwise aforementioned relating to transactions entered into
by the applicable account party in the ordinary course of business.

 

Section 3.12 Subsidiaries.

 

Set forth on Schedule 3.12 is a complete and accurate list of all Subsidiaries
of the Credit Parties as of the Closing Date. Information on the attached
Schedule includes state of incorporation or organization; the number of
authorized shares of each class of Capital Stock or other equity interests; the
number of outstanding shares of each class of Capital Stock or other equity
interests, the owner thereof and the percentage of such ownership; and the
number and effect, of all outstanding options, warrants, rights of conversion or
purchase and similar rights. The outstanding Capital Stock and other equity
interests of all such Subsidiaries is validly issued, fully paid and
non-assessable and is owned free and clear of all Liens (other than those
arising under or contemplated in connection with the Credit Documents).

 

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Section 3.13 Ownership; Insurance.

 

Each of the Credit Parties is the owner of, and has good and, to the extent
applicable, marketable title to, and adequate insurance coverage for, all of its
respective assets that, together with assets leased or licensed by the Credit
Parties, represents all assets individually or in the aggregate material to the
conduct of the businesses of the Credit Parties taken as a whole, and none of
such assets is subject to any Lien other than Permitted Liens. Each Credit Party
enjoys peaceful and undisturbed possession under all of its leases and all such
leases are valid and subsisting and in full force and effect other than
exceptions to the foregoing that could not reasonably be expected to have a
Material Adverse Effect. The Credit Parties have delivered, or made available
for review, complete and accurate copies of all material leases to the
Administrative Agent as of the Closing Date.

 

Section 3.14 Indebtedness.

 

Except as otherwise permitted under Section 6.1, the Credit Parties and their
Subsidiaries have no Indebtedness.

 

Section 3.15 Taxes.

 

Each of the Credit Parties and their Subsidiaries has filed, or caused to be
filed, all tax returns (federal, state, local and foreign) required to be filed
and paid (a) all amounts of taxes shown thereon to be due (including interest
and penalties) and (b) all other taxes, fees, assessments and other governmental
charges (including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. None of the Credit Parties is aware as of the Closing Date
of any proposed tax assessments against it or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.

 

Section 3.16 Intellectual Property.

 

Each of the Credit Parties and its Subsidiaries owns, or has the legal right to
use, all trademarks, tradenames, copyrights, patents, technology, know-how and
processes necessary for each of them to conduct its business as currently
conducted. Set forth on Schedule 3.16 is a list of all Intellectual Property
owned by the Credit Parties and their Subsidiaries or that any Credit Party or
any of its Subsidiaries has the right to use. Except as provided on
Schedule 3.16, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property owned by a
Credit Party or the validity or effectiveness of any such Intellectual Property
owned by a Credit Party, nor do any Credit Party or any of its Subsidiaries know
of any such claim, and, to the knowledge of any Credit Party and its
Subsidiaries, the use of such Intellectual Property by any Credit Party or any
of its Subsidiaries does not infringe on the rights of any Person, except for
such claims and infringements that in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Schedule 3.16 may be updated

 

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from time to time by the Borrower to include new Intellectual Property by giving
written notice thereof to the Administrative Agent.

 

Section 3.17 Solvency.

 

The fair saleable value of all Credit Parties’ assets, taken as a whole and
measured on a going concern basis, exceeds all probable liabilities, including
those to be incurred pursuant to this Agreement. None of the Credit Parties
(a) has unreasonably small capital in relation to the business in which it is or
proposes to be engaged or (b) has incurred, or believes that it will incur after
giving effect to the transactions contemplated by this Agreement, debts beyond
its ability to pay such debts as they become due.

 

Section 3.18 Investments.

 

All Investments of each of the Credit Parties and their Subsidiaries are
Permitted Investments.

 

Section 3.19 Location of Collateral.

 

Set forth on Schedule 3.19(a) is a list of the Properties of the Credit Parties
and their Subsidiaries with street address, county and state where located as of
the Closing Date. Set forth on Schedule 3.19(b) is a list of all locations where
any tangible personal property of the Credit Parties is located, including
county and state where located as of the Closing Date. Set forth on
Schedule 3.19(c) is the chief executive office and principal place of business
of the Credit Parties as of the Closing Date.

 

Section 3.20 No Burdensome Restrictions.

 

None of the Credit Parties or any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

Section 3.21 Brokers’ Fees.

 

None of the Credit Parties or any of its Subsidiaries have any obligation to any
Person in respect of any finder’s, broker’s, investment banking or other similar
fee in connection with any of the transactions contemplated under the Credit
Documents other than the closing and other fees payable pursuant to this
Agreement.

 

Section 3.22 Labor Matters.

 

There are no collective bargaining agreements or Multiemployer Plans covering
the employees of the Credit Parties or any of its Subsidiaries as of the Closing
Date, other than as set forth in Schedule 3.22 hereto. As of the Closing Date
none of the Credit Parties or any of its Subsidiaries (i) has suffered any
strikes, walkouts, work stoppages or other material labor

 

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difficulty within the five years preceding the Closing Date, other than as set
forth in Schedule 3.22 hereto or (ii) has knowledge of any pending strike,
walkout or work stoppage that could, in either case, reasonably be expected to
have a Material Adverse Effect.

 

Section 3.23 Security Documents.

 

The Security Documents create valid security interests in, and Liens on, the
Collateral purported to be covered thereby, which security interests and Liens
are currently (or will be, upon the filing of appropriate financing statements
and grants of security in Intellectual Property, and the recordation of the
applicable Mortgage Instruments, in each case in favor of the Administrative
Agent) perfected security interests and Liens, prior to all other Liens other
than Permitted Liens.

 

Section 3.24 Accuracy and Completeness of Information.

 

All factual information (other than immaterial factual information, the failure
of such to be true and accurate in all material respects does not adversely
affect the Lenders) heretofore, contemporaneously or hereafter furnished by or
on behalf of any Credit Party or any of its Subsidiaries to the Administrative
Agent or any Lender for purposes of or in connection with this Agreement or any
other Credit Document, or any transaction contemplated hereby or thereby, is or
will be true and accurate in all material respects and not incomplete by
omitting to state any material fact necessary to make such information not
misleading. There is no fact now known to any Credit Party or any of its
Subsidiaries which has, or could reasonably be expected to have, a Material
Adverse Effect.

 

Section 3.25 Material Contracts.

 

Schedule 3.25 sets forth a complete and accurate list of all Material Contracts
of the Borrowers and their Subsidiaries in effect as of the Closing Date. As of
the Closing Date, other than as set forth in Schedule 3.25, each such Material
Contract is, and after giving effect to the transactions contemplated by the
Credit Documents will be, in full force and effect in accordance with the terms
thereof and no Borrower or Subsidiary thereof has violated in any material
respect any such Material Contract. The Borrowers have delivered or made
available to the Administrative Agent for its review a correct and complete copy
of each written agreement listed in Schedule 3.25 (as amended to date) and a
written summary setting forth the terms and conditions of each oral agreement
referred to in such Schedule.

 

Section 3.26 Anti-Terrorism Laws.

 

Neither any Credit Party nor any of its Subsidiaries is an “enemy” or an “ally
of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act
of the United States of America (50 U.S.C. App. §§ 1 et seq.), as amended.
Neither any Credit Party nor any or its Subsidiaries is in violation of (a) the
Trading with the Enemy Act, as amended, (b) any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto or (c) the Patriot Act (as defined in Section 9.18). None of the Credit
Parties (i) is a blocked person

 

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described in section 1 of the Anti-Terrorism Order or (ii) to its knowledge,
engages in any dealings or transactions, or is otherwise associated, with any
such blocked person.

 

Section 3.27 Compliance with OFAC Rules and Regulations.

 

None of the Credit Parties or their Subsidiaries or their respective Affiliates
(i) is a Sanctioned Person, (ii) has more than 15% of its assets in Sanctioned
Countries, or (iii) derives more than 15% of its operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned Countries.
No part of the proceeds of any Extension of Credit hereunder will be used
directly or indirectly to fund any operations in, finance any investments or
activities in or make any payments to, a Sanctioned Person or a Sanctioned
Country.

 

ARTICLE IV

 

CONDITIONS PRECEDENT

 

Section 4.1 Conditions to Closing and Initial Extensions of Credit.

 

This Agreement shall become effective upon, and the obligation of each Lender to
make the initial Extensions of Credit on the Closing Date is subject to, the
satisfaction of the following conditions precedent:

 

(a) Execution of Credit Documents. The Administrative Agent shall have received
(i) counterparts of this Agreement, (ii) for the account of each Lender
requesting the same, a Revolving Note, (iii) for the account of the Swingline
Lender, the Swingline Note, and (iv) counterparts to the Security Agreement, the
Pledge Agreement and each Mortgage Instrument, in each case conforming to the
requirements of this Agreement and executed by a duly authorized officer of each
party thereto, and in each case in form and substance reasonably satisfactory to
the Lenders.

 

(b) Authority Documents. The Administrative Agent shall have received the
following:

 

(i) Articles of Incorporation/Charter Documents. Copies of the articles of
incorporation or other charter documents, as applicable, of each Credit Party
certified to be true and complete as of a recent date by the appropriate
Governmental Authority of the state of its incorporation.

 

(ii) Resolutions. Copies of resolutions of the board of directors of each Credit
Party approving and adopting the Credit Documents, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by a secretary
or assistant secretary of such Credit Party (pursuant to a secretary’s
certificate in substantially the form of Schedule 4.1-1 attached hereto) as of
the Closing Date to be true and correct and in force and effect as of such date.

 

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(iii) Bylaws/Operating Agreement. A copy of the bylaws or comparable operating
agreement of each Credit Party certified by a secretary or assistant secretary
of such Credit Party (pursuant to a secretary’s certificate in substantially the
form of Schedule 4.1-1 attached hereto) as of the Closing Date to be true and
correct and in force and effect as of such date.

 

(iv) Good Standing. Copies of certificates of good standing, existence or its
equivalent with respect to each Credit Party certified as of a recent date by
the appropriate Governmental Authorities of the state of incorporation or
organization and each other state in which the failure to so qualify and be in
good standing could reasonably be expected to have a Material Adverse Effect on
the business or operations of the Credit Parties in such state.

 

(v) Incumbency. An incumbency certificate of each Credit Party certified by a
secretary or assistant secretary (pursuant to a secretary’s certificate in
substantially the form of Schedule 4.1-1 attached hereto) to be true and correct
as of the Closing Date.

 

(c) Legal Opinions of Counsel. The Administrative Agent shall have received
opinions of legal counsel (including local counsel to the extent required by the
Administrative Agent) for the Credit Parties, dated the Closing Date and
addressed to the Administrative Agent and the Lenders in form and substance
reasonably acceptable to the Administrative Agent.

 

(d) Personal Property Collateral. The Administrative Agent shall have received,
in form and substance satisfactory to the Administrative Agent:

 

(i) searches of Uniform Commercial Code filings in the jurisdiction of the state
of incorporation or organization of each Credit Party and each other
jurisdiction deemed necessary by the Administrative Agent and copies of the
financing statements on file in such jurisdictions;

 

(ii) UCC financing statements for each appropriate jurisdiction as is necessary,
in the Administrative Agent’s sole discretion, to perfect the Administrative
Agent’s security interest in the Collateral;

 

(iii) searches of ownership of Intellectual Property in the appropriate
governmental offices and such patent/trademark/copyright filings as reasonably
requested by the Administrative Agent in order to perfect the Administrative
Agent’s security interest in the Intellectual Property;

 

(iv) all stock or membership certificates, if any, evidencing the Capital Stock
pledged to the Administrative Agent pursuant to the Pledge Agreement, together
with duly executed in blank undated stock or transfer powers attached thereto;

 

(v) all instruments and chattel paper individually in excess of $500,000 in the
possession of any of the Credit Parties, together with allonges or assignments
as may be

 

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necessary or appropriate to perfect the Administrative Agent’s security interest
in such instruments and chattel paper;

 

(vi) with respect to any Collateral with a fair market value in excess of
$500,000 in the aggregate held by a warehouseman or a bailee, such estoppel
letter, consent and waiver from such warehousemen or bailee as may be required
by the Administrative Agent;

 

(vii) with respect to the deposit accounts and securities accounts of the Credit
Parties, such control agreements as may be required pursuant to the terms of
Section 5.14; and

 

(viii) such other duly executed agreements or consents as are necessary, in the
Administrative Agent’s reasonable discretion, to perfect the Administrative
Agent’s security interest in the Collateral.

 

(e) Liability, Casualty, Business Interruption and Food Borne Illness Insurance.
The Administrative Agent shall have received copies of insurance policies or
certificates of insurance evidencing liability, casualty, business interruption
and food borne illness insurance meeting the requirements set forth herein or in
the Security Documents. The Administrative Agent shall be named as loss payee or
mortgagee, as its interest may appear, and/or additional insured with respect to
such insurance, and each provider of any such insurance shall agree, by
endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Administrative Agent, that it will give the
Administrative Agent thirty (30) days prior written notice before any such
policy or policies shall be altered or canceled.

 

(f) Fees. The Administrative Agent and the Lenders shall have received all fees,
if any, owing pursuant to the Fee Letter and Section 2.5.

 

(g) Litigation. Except for litigation disclosed on Schedule 3.6, there shall not
exist any material litigation, investigation, bankruptcy or insolvency,
injunction, order or claim affecting or relating to any Credit Party or any of
its Subsidiaries or with respect to this Agreement and the other Credit
Documents that has not been settled, dismissed, vacated, discharged or
terminated prior to the Closing Date.

 

(h) Solvency Certificate. The Administrative Agent shall have received an
officer’s certificate prepared by the chief financial officer of the Parent as
to the financial condition, solvency and related matters of the Credit Parties,
taken as a whole, in substantially the form of Schedule 4.1-2 hereto.

 

(i) Account Designation Letter. The Administrative Agent shall have received the
executed Account Designation Letter in the form of Schedule 1.1-1 hereto.

 

(j) Corporate Structure. The corporate, capital and ownership structure of the
Credit Parties and their Subsidiaries shall be as described in Schedule 3.12,
and shall otherwise be reasonably satisfactory to the Administrative Agent and
the Lenders.

 

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(k) Consents. The Administrative Agent shall have received evidence that all
material governmental, shareholder, board of director and third party consents
and approvals necessary in connection with the financings and other transactions
contemplated hereby have been obtained.

 

(l) Compliance with Laws. The financings and other transactions contemplated
hereby shall be in compliance with all applicable laws and regulations
(including all applicable securities and banking laws, rules and regulations).

 

(m) Bankruptcy. There shall be no bankruptcy or insolvency proceedings with
respect to any Credit Party or any of its Subsidiaries.

 

(n) Material Adverse Effect. No material adverse change shall have occurred
since October 2, 2005 in the business, properties, operations or financial
condition of the Credit Parties and their Subsidiaries taken as a whole.

 

(o) Minimum Consolidated EBITDA. The Administrative Agent shall have received
evidence reasonably satisfactory thereto provided by the Borrower that
Consolidated EBITDA of the Parent and its Subsidiaries is not less than
$69,000,000 for the Reference Period ended as of October 2, 2005.

 

(p) Maximum Leverage Ratio. The Administrative Agent shall have received
evidence reasonably satisfactory thereto provided by the Borrower that the
Leverage Ratio of the Parent and its Subsidiaries for the Reference Period ended
as of October 2, 2005 shall not exceed 1.00 to 1.00.

 

(q) Financial Statements. The Administrative Agent shall have received copies of
the financial statements and other financial information referred to in
Section 3.1 hereof, each in form and substance reasonably satisfactory to it.

 

(r) Termination of Existing Indebtedness. All existing Indebtedness for borrowed
money of the Credit Parties and their Subsidiaries (other than the Indebtedness
listed on Schedule 6.1(b)) shall have been repaid in full and terminated and all
Liens relating thereto (other than those in favor of the Administrative Agent)
shall have been terminated.

 

(s) Officer’s Certificates. The Administrative Agent shall have received a
certificate executed by a Responsible Officer of the Parent as of the Closing
Date stating that (i) except as set forth on Schedule 3.6, there is no material
pending or, to the knowledge of any Credit Party, threatened litigation,
investigation, bankruptcy or insolvency, injunction, order or claim affecting or
relating to any Credit Party or any of its Subsidiaries, this Agreement or the
other Credit Documents, that has not been settled, dismissed, vacated,
discharged or terminated prior to the Closing Date and (ii) immediately after
giving effect to this Agreement (including the initial Extensions of Credit
hereunder), the other Credit Documents and all the transactions contemplated
therein to occur on such date, (A) no Default or Event of Default exists,
(B) all representations and warranties contained herein and in the other Credit
Documents are true and

 

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correct in all material respects, and (C) the Credit Parties are in compliance
with each of the financial covenants set forth in Section 5.9 for the Reference
Period ending as of October 2, 2005.

 

(u) Patriot Act Certificate. The Administrative Agent shall have received a
certificate satisfactory thereto, for benefit of itself and the Lenders,
provided by the Borrower that sets forth information required by the Patriot Act
including, without limitation, the identity of the Borrower, the name and
address of the Borrower and other information that will allow the Administrative
Agent or any Lender, as applicable, to identify such Company in accordance with
the Patriot Act.

 

(v) Additional Matters. All other documents and legal matters in connection with
the transactions contemplated by this Agreement shall be reasonably satisfactory
in form and substance to the Administrative Agent and its counsel.

 

Section 4.2 Conditions to All Extensions of Credit.

 

The obligation of each Lender to make any Extension of Credit (including,
without limitation, any Swingline Loan made pursuant to the Autoborrow Feature)
hereunder is subject to the satisfaction of the following conditions precedent
on the date of making such Extension of Credit:

 

(a) Representations and Warranties. The representations and warranties made by
the Credit Parties herein, in the Security Documents or which are contained in
any certificate furnished at any time under or in connection herewith shall be
true and correct on and as of the date of such Extension of Credit as if made on
and as of such date, except for representations and warranties expressly stated
to relate to a specific earlier date.

 

(b) No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to such Extension
of Credit.

 

(c) Compliance with Commitments. Immediately after giving effect to the making
of any such Extension of Credit (and the application of the proceeds thereof),
(i) the sum of outstanding Revolving Loans plus outstanding Swingline Loans plus
LOC Obligations shall not exceed the Revolving Committed Amount, (ii) the LOC
Obligations shall not exceed the LOC Committed Amount and (iii) the Swingline
Loans shall not exceed the Swingline Committed Amount.

 

(d) Additional Conditions to Revolving Loans. If a Revolving Loan is requested,
all conditions set forth in Section 2.1 shall have been satisfied.

 

(e) Additional Conditions to Letters of Credit. If the issuance of a Letter of
Credit is requested, all conditions set forth in Section 2.2 shall have been
satisfied.

 

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(f) Additional Conditions to Swingline Loans. If a Swingline Loan is requested,
all conditions set forth in Section 2.3 shall have been satisfied.

 

Each request for an Extension of Credit (including, without limitation, any
Swingline Loan made pursuant to the Autoborrow Feature, which shall be deemed a
request by the Borrower for a Swingline Loan for purposes of this Section 4.2)
and each acceptance by the Borrower of any such Extension of Credit shall be
deemed to constitute representations and warranties by the Borrower as of the
date of such Extension of Credit that the applicable conditions in
paragraphs (a) through (f) of this Section have been satisfied.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations together with interest, Commitment Fee and all other amounts owing
to the Administrative Agent or any Lender hereunder, are paid in full, the
Credit Parties shall, and shall cause each of their Subsidiaries (other than in
the case of Sections 5.1, 5.2 or 5.7 hereof), to:

 

Section 5.1 Financial Statements.

 

Furnish to the Administrative Agent and each of the Lenders:

 

(a) Annual Financial Statements. As soon as available, but in any event within
ninety (90) days after the end of each fiscal year of the Parent, a copy of the
consolidated balance sheet of the Parent and its consolidated Subsidiaries as at
the end of such fiscal year and the related consolidated statements of income
and retained earnings and of cash flows of the Parent and its consolidated
Subsidiaries for such year which shall be audited by a firm of independent
certified public accountants of nationally recognized standing reasonably
acceptable to the Administrative Agent, setting forth in each case in
comparative form the figures for the previous year, reported on without a “going
concern” or like qualification or exception, or qualification indicating that
the scope of the audit was inadequate to permit such independent certified
public accountants to certify such financial statements without such
qualification;

 

(b) Quarterly Financial Statements. As soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter of the Parent, a copy
of the consolidated balance sheet of the Parent and its consolidated
Subsidiaries as at the end of such period and related consolidated statements of
income and retained earnings and of cash flows for the Parent and its
consolidated Subsidiaries for such quarterly period and for the portion of the
fiscal year ending with such period, in each case setting forth in comparative
form consolidated figures for the corresponding period or periods of the
preceding fiscal year (subject to normal recurring year-end audit adjustments);

 

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(c) Officer’s Certificate. At the time of delivery of the financial statements
provided for in Sections 5.1(a) and 5.1(b) above, a certificate of a Responsible
Officer of the Parent substantially in the form of Schedules 5.1(c),
(i) demonstrating compliance with the financial covenants contained in
Section 5.9 by calculation thereof as of the end of each such fiscal period and
(iii) stating that no Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and extent thereof and what
action the Credit Parties propose to take with respect thereto.

 

(d) Annual Operating Budget and Cash Flow. As soon as available, but in any
event within sixty (60) days following the end of each fiscal year, a copy of
the detailed annual operating budget or plan including cash flow projections of
the Parent and its Subsidiaries for the next four fiscal quarter period prepared
on a quarterly basis, in form and detail reasonably acceptable to the
Administrative Agent, together with a summary of the material assumptions made
in the preparation of such annual budget or plan;

 

all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change, if any, in the application of accounting principles as
provided in Section 1.3.

 

Section 5.2 Certificates; Other Information.

 

Furnish to the Administrative Agent and each of the Lenders:

 

(a) concurrently with the delivery of the financial statements referred to in
Section 5.1(a) above, a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default with respect to the provisions of Section 5.9, except as specified in
such certificate;

 

(b) within ninety (90) days after the end of each fiscal year of the Borrower, a
certificate containing information regarding the amount of all Asset
Dispositions, Debt Issuances, and Equity Issuances that were made during the
prior fiscal year and amounts received in connection with any Recovery Event
during the prior fiscal year;

 

(c) promptly upon receipt thereof, a copy of any other report or “management
letter” submitted by independent accountants to the Borrower or any of its
Subsidiaries in connection with any annual, interim or special audit of the
books of such Person;

 

(d) promptly after the same are sent or upon their becoming available, copies of
or access to (i) all Securities and Exchange Commission reports of the Credit
Parties, (ii) all financial statements, reports, notices and proxy statements
sent or made available by the Credit Parties to their equityholders, (iii) all
regular and periodic reports and all registration statements

 

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and prospectuses, if any, filed by any of the Credit Parties with any securities
exchange or with the Securities and Exchange Commission or any governmental or
private regulatory authority, and (iv) all press releases and other statements
made available by any of the Credit Parties to the public concerning material
developments in the business of any of the Credit Parties;

 

(e) not less than twenty (20) Business Days prior to the consummation of any
Permitted Acquisition with Total Consideration in excess of $1,000,000, the
following information:

 

(i) a reasonably detailed description of the material terms of such Permitted
Acquisition (including, without limitation, the purchase price and method and
structure of payment) and of each Target;

 

(ii) audited (to the extent available) financial statements of the Target for
its two (2) most recent fiscal years prepared by independent certified public
accountants acceptable to the Administrative Agent and unaudited fiscal
year-to-date statements for the two (2) most recent interim periods;

 

(iii) consolidated projected income statements of the Parent and its
consolidated Subsidiaries (giving effect to such Permitted Acquisition and the
consolidation with the Parent of each relevant Target) for the three (3)-year
period following the consummation of such Permitted Acquisition, in reasonable
detail, together with any appropriate statement of assumptions and pro forma
adjustments reasonably acceptable to the Required Lenders;

 

(iv) a certificate, in form and substance reasonably satisfactory to the
Administrative Agent, executed by a Responsible Officer of the Parent
(A) setting forth a good faith estimate of the Total Consideration to be paid
for each Target, (B) certifying that (y) such Permitted Acquisition complies
with the requirements of this Agreement and (z) after giving effect to such
Permitted Acquisition and any borrowings in connection therewith, the Parent
believes in good faith that it will have sufficient availability under the
Revolving Commitments to meet its ongoing working capital requirements and
(C) certifying compliance with clauses (c), (d) and (e) of the definition of the
Permitted Acquisition and demonstrating compliance with clause (b) of the
definition of Permitted Acquisition; and

 

(v) any due diligence reports prepared by, or on behalf of, any Credit Party
with respect to the Target;

 

(f) promptly, such additional financial and other information as the
Administrative Agent, or any Lender through the Administrative Agent, may from
time to time reasonably request; and

 

(g) concurrently with the delivery of the financial statements referred to in
Section 5.1(b) above, notice of any acquisition or construction of a new
restaurant.

 

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Section 5.3 Payment of Taxes and Other Obligations.

 

Pay, discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its taxes (Federal, state, local and any
other taxes) and other material obligations and liabilities of whatever nature
and any additional costs that are imposed as a result of any failure to so pay,
discharge or otherwise satisfy such taxes, obligations and liabilities (except
where the failure to pay, discharge or satisfy such obligations and liabilities
(other than taxes) could not reasonably be expected to have a Material Adverse
Effect), except when the amount or validity of any such taxes, obligations and
liabilities is currently being contested in good faith by appropriate
proceedings and reserves, if applicable, in conformity with GAAP with respect
thereto have been provided on the books of the Credit Parties.

 

Section 5.4 Conduct of Business and Maintenance of Existence.

 

Continue to engage in business of the same general type as conducted by it on
the Closing Date; preserve, renew and keep in full force and effect its
existence and good standing and take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of its business and to maintain its goodwill; comply with all Material Contracts
and Requirements of Law applicable to it except to the extent that failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

Section 5.5 Maintenance of Property; Insurance.

 

(a) Keep all material property useful and necessary in its business in good
working order and condition (ordinary wear and tear and obsolescence excepted).

 

(b) Maintain with financially sound and reputable insurance companies
(i) insurance on all its property (including without limitation its tangible
Collateral) insuring against at least such risks as are usually insured against
in the same or a similar business, (ii) liability and food borne illness
insurance covering at least such risks as are usually insured against in the
same or a similar business; and furnish to the Administrative Agent, upon
written request, full information as to the insurance carried. The
Administrative Agent shall be named as loss payee or mortgagee, as its interest
may appear, or an additional insured, as applicable, with respect to such
insurance policies, and each provider of such insurance policies shall agree, by
endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Administrative Agent, that it will give the
Administrative Agent thirty (30) days prior written notice before any such
policy or policies shall be altered or canceled, and that no act or default of
any Credit Party or any of its Subsidiaries or any other Person shall affect the
rights of the Administrative Agent or the Lenders under such policy or policies.
The present insurance coverage of the Credit Parties as of the Closing Date is
outlined as to carrier, policy number, expiration date, type and amount on
Schedule 5.5(b).

 

(c) In case of any material loss, damage to or destruction of the Collateral of
any Credit Party or any material part thereof, such Credit Party shall promptly
give written notice thereof to the Administrative Agent generally describing the
nature and extent of such damage or destruction.

 

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Section 5.6 Inspection of Property; Books and Records; Discussions.

 

Keep proper books of records and accounts in which full, true and correct
entries (in all material respects) shall be made of all dealings and
transactions in relation to its businesses and activities, such entries to be in
conformity with GAAP and all Requirements of Law; and permit, during regular
business hours and upon reasonable notice by the Administrative Agent or any
Lender, the Administrative Agent or any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired, and to discuss
the business, operations, properties and financial and other condition of the
Credit Parties and their Subsidiaries with officers and employees of the Credit
Parties and with its independent certified public accountants.

 

Section 5.7 Notices.

 

Give notice in writing to the Administrative Agent (which shall promptly
transmit such notice to each Lender) of:

 

(a) promptly, but in any event within two (2) Business Days after any Credit
Party knows or has reason to know thereof, the occurrence of any Default or
Event of Default;

 

(b) promptly, the occurrence of any default or event of default under any
Material Contracts of any Credit Party or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect or involve a monetary
claim in excess of $5,000,000;

 

(c) promptly, any litigation, or any investigation or proceeding known to any
Credit Party (i) affecting any Credit Party or any of its Subsidiaries which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect or involve a monetary claim in excess of $5,000,000, (ii) affecting or
with respect to this Agreement or any other Credit Document or (iii) involving
an environmental claim or potential liability under Environmental Laws in excess
of $5,000,000;

 

(d) as soon as possible and in any event within thirty (30) days after any
Credit Party knows or has reason to know thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC (other than a Permitted Lien) or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or any
Credit Party or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan;

 

(e) any notice of any material violation of any Requirement of Law received by
any Credit Party or any of its Subsidiaries from any Governmental Authority
including, without limitation, any notice of material violation of Environmental
Laws;

 

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(f) any labor controversy that has resulted in, or threatens to result in, a
strike or other work action against any Credit Party or any of its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect;

 

(g) any attachment, judgment, lien, levy or order exceeding $1,000,000 that may
be assessed against any Credit Party other than Permitted Liens; and

 

(h) promptly, any other development or event which could reasonably be expected
to have a Material Adverse Effect.

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Credit Parties propose to take with respect thereto.
In the case of any notice of a Default or Event of Default, the Borrower shall
specify that such notice is a Default or Event of Default notice on the face
thereof.

 

Section 5.8 Environmental Laws.

 

(a) Comply in all material respects with, and take reasonable steps to ensure
compliance in all material respects by all tenants and subtenants, if any, with,
all applicable Environmental Laws and obtain and comply in all material respects
with and maintain, and take reasonable steps to ensure that all tenants and
subtenants obtain and comply in all material respects with and maintain, any and
all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws;

 

(b) Conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws except to the
extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not reasonably be
expected to have a Material Adverse Effect; and

 

(c) Defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective employees, agents, officers and directors, from
and against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Credit Parties or any of their Subsidiaries
or the Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorney’s and consultant’s fees, investigation and laboratory fees, response
costs, court costs and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct of the party
seeking indemnification therefor as determined by a court of competent
jurisdiction in a final and non-appealable judgment. The agreements in this
paragraph shall survive repayment of the Credit Party Obligations.

 

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Section 5.9 Financial Covenants.

 

Commencing on the day immediately following the Closing Date, the Credit Parties
shall comply with the following financial covenants:

 

(a) Leverage Ratio. The Leverage Ratio, as of the last day of each fiscal
quarter of the Parent, shall be less than or equal to 2.50 to 1.0.

 

(b) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of the last
day of each fiscal quarter of the Parent shall be greater than or equal to 1.25
to 1.0.

 

Section 5.10 Additional Subsidiary Guarantors.

 

The Credit Parties will cause each of their Domestic Subsidiaries (other than a
Liquor License Subsidiary), whether newly formed, after acquired or otherwise
existing, to promptly become a Guarantor hereunder by way of execution of a
Joinder Agreement. In connection therewith, the Credit Parties shall give notice
to the Administrative Agent not less than fifteen (15) days prior to creating a
Subsidiary, or acquiring the Capital Stock of any other Person. The guaranty
obligations of any such Additional Credit Party shall be secured by, among other
things, the Collateral of the Additional Credit Party and a pledge of 100% of
the Capital Stock of its Domestic Subsidiaries that such Additional Credit Party
owns and 65% (or such higher percentage that would not result in material
adverse tax consequences for such Additional Credit Party) of the voting Capital
Stock and 100% of the non-voting Capital Stock of its first-tier Foreign
Subsidiaries. In connection with the foregoing, the Credit Parties shall deliver
to the Administrative Agent such charter and organizational documents and
opinions of counsel as the Administrative Agent may reasonably request.

 

Section 5.11 Compliance with Law.

 

Each Credit Party will, and will cause each of its Subsidiaries to, comply with
all laws, rules, regulations and orders, and all applicable restrictions imposed
by all Governmental Authorities, applicable to it and its property if
noncompliance with any such law, rule, regulation, order or restriction could
reasonably be expected to have a Material Adverse Effect.

 

Section 5.12 Pledged Assets.

 

(a) Each Credit Party will, and will cause each of its Subsidiaries to, cause
100% of the Capital Stock of each of its direct or indirect Domestic
Subsidiaries that such Credit Party owns and 65% of the voting Capital Stock and
100% of the non-voting Capital Stock of each of its first-tier Foreign
Subsidiaries that such Credit Party owns to be subject at all times to a first
priority, perfected Lien in favor of the Administrative Agent pursuant to the
terms and conditions of the Security Documents or such other security documents
as the Administrative Agent shall reasonably request.

 

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(b) The Credit Parties have executed and delivered, or will execute and deliver,
to the Administrative Agent Mortgage Instruments encumbering the real property
of the Credit Parties set forth in Schedule 5.12(b). Subject to the limitation
set forth in Section 5.12(c), real property acquired or leased by a Credit Party
after the Closing Date shall be subject to the requirements set forth in this
Section 5.12(b). If, subsequent to the Closing Date, a Credit Party shall
acquire any owned real property, securities, instruments having a fair market
value in excess of $500,000, chattel paper evidencing obligations in excess of
$500,000, or other personal property having a fair market value in excess of
$500,000 required for perfection to be delivered to the Administrative Agent as
Collateral hereunder or under any of the Security Documents or if any owned real
property which has previously been subject to a mortgage or deed of trust in
favor of a third party shall cease to be subject to such encumbrance, the
Borrower shall promptly (and in any event within three (3) Business Days) after
such acquisition or release of encumbrance notify the Administrative Agent of
same. Each Credit Party shall take such action at its own expense as may be
necessary or otherwise reasonably requested by the Administrative Agent
(including, without limitation, any of the actions described in Section 4.1(d)
hereof) to ensure that the Administrative Agent has a first priority perfected
Lien to secure the Credit Party Obligations in (i) all Collateral of the Credit
Parties located in the United States and (ii) to the extent deemed to be
material by the Administrative Agent in its reasonable discretion, all other
personal property (other than items of Collateral that are excluded from the
Security Documents) or, subject to the terms of Section 5.12(c), owned real
property of the Credit Parties (and certain leasehold property interests if an
Event of Default has occurred and is continuing to the extent deemed necessary
by the Administrative Agent), subject in each case only to Permitted Liens.
Subject to the terms of Section 5.12(c), with respect to any real property
leased by a Credit Party subsequent to the Closing Date, to the extent requested
by the Administrative Agent, such Credit Party shall use its commercially
reasonable efforts to deliver to the Administrative Agent a landlord waiver in
form and substance reasonably satisfactory to the Administrative Agent. With
respect to any owned or leased real property of a Credit Party required to be
mortgaged to the Administrative Agent pursuant to this Section 5.12, such Credit
Party shall deliver the following documentation, which in each case shall be in
form and substance reasonably satisfactory to the Administrative Agent:

 

(A) a fully executed and notarized Mortgage Instrument encumbering (1) the fee
interest in such real property or (2) if an Event of Default has occurred and is
continuing, the leasehold interest in such property to the extent deemed
necessary by the Administrative Agent;

 

(B) a title report in respect of such real property;

 

(C) a Mortgage Policy in an amount reasonably satisfactory to the Administrative
Agent, which Mortgage Policy shall provide for affirmative insurance and such
reinsurance as the Administrative Agent may reasonably request;

 

(D) evidence as to (1) whether such real property is a Flood Hazard Property and
(2) if such real property is a Flood Hazard Property, (x) whether the community
in which such real property is located is participating in the National Flood
Insurance Program, (y) the applicable Credit Party’s written acknowledgment of
receipt of written

 

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notification from the Administrative Agent (I) as to the fact that such real
property is a Flood Hazard Property and (II) as to whether the community in
which each such Flood Hazard Property is located is participating in the
National Flood Insurance Program, and (z) copies of insurance policies or
certificates of insurance of the Credit Parties and their Subsidiaries
evidencing flood insurance reasonably satisfactory to the Administrative Agent
and naming the Administrative Agent as loss payee on behalf of the Lenders;

 

(E) map or plat of an as-built survey (or, to the extent approved by the
Administrative Agent, a boundary survey) of the site of the real property
certified to the Administrative Agent and the Title Insurance Company issuing
the applicable Mortgage Policy in a manner reasonably satisfactory to them,
dated a date reasonably satisfactory to each of the Administrative Agent and
such Title Insurance Company by an independent professional licensed land
surveyor selected by the Borrower and reasonably satisfactory to each of the
Administrative Agent and such Title Insurance Company, which map or plat and the
survey on which they are based shall be sufficient to delete any standard
printed survey exception contained in the applicable Mortgage Policy and be made
in accordance with the Minimum Standard Detail Requirements for Land Title
Surveys jointly established and adopted by the American Land Title Association
and the American Congress on Surveying and Mapping in 1992, and, without
limiting the generality of the foregoing, there shall be surveyed and shown on
such map, plat or survey the following: (1) the location on such site of all the
buildings, structures and other improvements and the established building
setback lines; (2) the lines of streets abutting the site and width thereof;
(3) all access and other easements appurtenant to the site necessary to use the
site; (4) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the site, whether
recorded, apparent from a physical inspection of the site or otherwise known to
the surveyor; (5) any encroachments on any adjoining property by the building
structures and improvements on the site; and (6) if the site is described as
being on a filed map, a legend relating the survey to such map;

 

(F) an environmental review of such real property, including but not limited to
Phase I environmental assessments, together with a reliance letter in favor of
the Lenders;

 

(G) an opinion of counsel to the Credit Parties for the jurisdiction in which
such real property located; and

 

(H) to the extent readily available, a zoning letter from the municipality or
other Governmental Authority for the jurisdiction in which the real property is
located.

 

(c) Notwithstanding the foregoing terms of Section 5.12(b), (i) any document
required to be delivered to the Administrative Agent pursuant to this
Section 5.12 that is not delivered on or prior to the Closing Date, shall be
delivered to the Administrative Agent within forty-five (45) days of the Closing
Date (or such extended period of time as agreed to by the Administrative Agent)
and (ii) so long as the Leverage Ratio is less than or equal to 2.00 to 1.00 as
of the last fiscal quarter end for which the Leverage Ratio is reported pursuant
to Section 5.1(c), then the Credit Parties shall not be required to obtain or
deliver a Mortgage Instrument,

 

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Mortgage Policy, landlord waiver or other instrument or documentation referenced
in Section 5.12(b) with respect to any real property leased or acquired by any
Credit Party after the Closing Date; provided that to the extent any real
property is leased or acquired by a Credit Party after the Closing Date with
proceeds from a Recovery Event involving a Mortgaged Property, the Credit
Parties shall deliver such documentation referenced in Section 5.12(b) with
respect to such real property.

 

Section 5.13 Covenants Regarding Intellectual Property.

 

(a) Each Credit Party shall notify the Administrative Agent promptly if it knows
that any application, letters patent or registration relating to any material
Patent or any registration relating to any material Trademark of such Credit
Party or any of its Subsidiaries may become abandoned, or of any adverse
determination or development (including, without limitation, the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office or any court) regarding such Credit Party’s or any
of its Subsidiary’s ownership of any material Patent or material registered
Trademark, its right to patent or register the same, or to enforce, keep and
maintain the same, or its rights under any material Patent License or material
Trademark License.

 

(b) Each Credit Party shall notify the Administrative Agent promptly after it
knows of any final adverse determination (including, without limitation, any
such determination in any proceeding in any court) regarding any material
Copyright of such Credit Party or any of its Subsidiaries, whereby (i) such
material Copyright may become invalid or unenforceable prior to its expiration
or termination, or (ii) such Credit Party’s or any of its Subsidiary’s ownership
of such material Copyright, its right to register the same or to enforce, keep
and maintain the same, or its rights under such material Copyright, may be
adversely affected.

 

(c) (i) Each Credit Party shall promptly notify the Administrative Agent of any
filing by such Credit Party or any of its Domestic Subsidiaries, either itself
or through any agent, employee, licensee or designee (but in no event later than
the fifth Business Day following the last day of the fiscal quarter in which
such filing occurs), of any application for registration of any Intellectual
Property with the United States Copyright Office or United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, or any new Intellectual Property acquired or
licensed by a Credit Party or any Domestic Subsidiary thereof.

 

(ii) Upon request of the Administrative Agent, each Credit Party shall execute
and deliver any and all agreements, instruments, documents, and papers as the
Administrative Agent may reasonably request to evidence the Administrative
Agent’s security interest in the Intellectual Property and the general
intangibles (including goodwill) related thereto or represented thereby.

 

(d) The Credit Parties and their Subsidiaries will take all necessary actions,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office or the United States Copyright Office, to maintain the
registration of each material registered Copyright, Patent and Trademark owned
by the Credit Parties and their Subsidiaries, including,

 

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without limitation, payment of maintenance fees, filing of applications for
renewal, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings.

 

(e) In the event that any Credit Party becomes aware that any Intellectual
Property is infringed, misappropriated or diluted by a third party in any
material respect, such Credit Party shall notify the Administrative Agent
promptly after it learns thereof and shall, unless such Credit Party shall
reasonably determine that such Intellectual Property is not material to the
business of such Credit Party or the Credit Parties and their Subsidiaries taken
as a whole, or that taking legal action will not be financially prudent,
promptly take action against such infringement, misappropriation or dilution to
terminate such infringement, misappropriation or dilution and/or recover any and
all damages for such infringement, misappropriation or dilution, and take such
other actions as such Credit Party shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property.

 

Section 5.14 Deposit and Securities Accounts.

 

The Credit Parties shall maintain each of their deposit and securities accounts
with (a) a Lender or (b) a financial institution that has entered into an
account control agreement in form and substance reasonably satisfactory to the
Administrative Agent; provided that (i) any account with a financial institution
(other than a Lender) that has an outstanding balance, or contains assets that
are valued, at all times less than $1,000,000 shall not be subject to the
requirements of this Section 5.14 and (ii) the outstanding balance of, or the
amount of assets in, all accounts excluded from the requirements of this
Section 5.14 shall not exceed $3,000,000 at any time.

 

Section 5.15 Post-Closing Covenant; Further Assurances.

 

(a) Within forty-five (45) days of the Closing Date (or such extended period of
time as agreed to by the Administrative Agent), the Credit Parties shall use
commercially reasonable efforts to provide evidence to the Administrative Agent
that the Liens indicated on Schedule 1.1-2 as to be terminated have been
terminated of record.

 

(b) Upon the request of the Administrative Agent, the Credit Parties shall
promptly perform or cause to be performed any and all acts and execute or cause
to be executed any and all documents which are necessary or advisable to create
or maintain in favor of the Administrative Agent, for the benefit of the
Lenders, Liens on all Collateral of the Credit Parties as may be required by
this Agreement or any Security Document that are duly perfected in accordance
with all applicable Requirements of Law.

 

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ARTICLE VI

 

NEGATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations together with interest, Commitment Fee and all other amounts owing
to the Administrative Agent or any Lender hereunder, are paid in full that:

 

Section 6.1 Indebtedness.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to,
contract, create, incur, assume or permit to exist any Indebtedness, except:

 

(a) Indebtedness arising or existing under this Agreement and the other Credit
Documents;

 

(b) Indebtedness existing as of the Closing Date as referenced in the financial
statements referenced in Section 3.1 (and set out more specifically in
Schedule 6.1(b)) hereto and renewals, refinancings or extensions thereof in a
principal amount not in excess of that outstanding as of the date of such
renewal, refinancing or extension;

 

(c) Indebtedness incurred after the Closing Date consisting of Capital Leases or
Indebtedness incurred to provide all or a portion of the purchase price of
furniture, fixtures and equipment provided that (i) such Indebtedness when
incurred shall not exceed the purchase price or cost of construction of such
furniture, fixtures and equipment; (ii) no such Indebtedness shall be refinanced
for a principal amount in excess of the principal balance outstanding thereon at
the time of such refinancing; and (iii) the total amount of all such
Indebtedness shall not exceed $15,000,000 at any time outstanding and renewals,
refinancings or extensions thereof in a principal amount not in excess of that
outstanding as of the date of such renewal, refinancing or extension;

 

(d) Unsecured intercompany Indebtedness among the Credit Parties; provided that
any such Indebtedness shall be fully subordinated to the Credit Party
Obligations hereunder on terms reasonably satisfactory to the Administrative
Agent;

 

(e) Indebtedness and obligations owing under Secured Hedging Agreements and
other Hedging Agreements entered into in order to manage existing or anticipated
business risks and not for speculative purposes;

 

(f) Indebtedness and obligations of Credit Parties owing under documentary
letters of credit for the purchase of goods or other merchandise (but not under
standby, direct pay or other letters of credit except for the Letters of Credit
hereunder) generally;

 

(g) Indebtedness in respect of Guaranty Obligations to the extent permitted
under Section 6.3;

 

(h) Indebtedness in respect of Sale Leaseback Transactions to the extent
permitted under Section 6.12;

 

(i) performance, surety, bid, appeal or similar bonds arising in the ordinary
course of business;

 

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(j) any Indebtedness owing by any Person prior to such Person becoming a
Subsidiary of a Credit Party pursuant to a Permitted Acquisition; provided that
such Indebtedness is not created in contemplation of such acquisition; and

 

(k) other Indebtedness of the Credit Parties and their Subsidiaries which does
not exceed $1,000,000 in the aggregate at any time outstanding.

 

Section 6.2 Liens.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, except for Permitted
Liens. Notwithstanding the foregoing, if a Credit Party shall grant a Lien on
any of its assets in violation of this Section 6.2, then it shall be deemed to
have simultaneously granted an equal and ratable Lien on any such assets in
favor of the Administrative Agent for the benefit of the Lenders, to the extent
such a Lien has not already been granted to the Administrative Agent.

 

Section 6.3 Guaranty Obligations.

 

The Credit Parties will not enter into or otherwise become or be liable in
respect of any Guaranty Obligations (excluding specifically therefrom
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) other than (a) those in favor of the Lenders in
connection herewith, (b) guaranties given by the Borrower or any of its
Subsidiaries in connection with obligations not constituting Indebtedness,
including Permitted Acquisitions, real property leases and other contracts
entered into in the ordinary course of business and (iii) Guaranty Obligations
by the Credit Parties and their Subsidiaries with respect to Indebtedness
permitted under Section 6.1 (except, as regards Indebtedness under subsection
(b) thereof, only if and to the extent such Indebtedness was guaranteed on the
Closing Date).

 

Section 6.4 Nature of Business.

 

Except as permitted by Section 6.5, each of the Credit Parties will not, nor
will it permit any Subsidiary to, alter its business in any material respect
from that conducted as of the Closing Date.

 

Section 6.5 Consolidation, Merger, Sale or Purchase of Assets, etc.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to:

 

(a) dissolve, liquidate or wind up its affairs, sell, transfer, lease to a third
party or otherwise dispose of its property or assets or agree to do so at a
future time except the following, without duplication, shall be expressly
permitted:

 

(i) Specified Sales;

 

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(ii) Sale Leaseback Transactions to the extent permitted under Section 6.12;

 

(iii) the disposition of property or assets as a result of a Recovery Event;

 

(iv) the sale, lease, transfer or other disposition of (A) machinery, parts and
equipment no longer used or useful in the conduct of the business of the
Borrower or any of its Subsidiaries and (B) property and assets located at or
used in connection with, or which are otherwise associated with, restaurants
that are not material to the business of any Credit Party;

 

(v) the sale, lease or transfer of property or assets between Credit Parties, so
long as the Liens of the Administrative Agent with respect to such property or
assets remain in full force and effect and fully perfected after giving effect
to such transaction;

 

(vi) the dissolution, liquidation or winding up of a Liquor License Subsidiary
or any sale, transfer or other disposition of assets from a Liquor License
Subsidiary to a Credit Party or another Liquor License Subsidiary;

 

(vii) the sale, lease or transfer of the properties set forth on Schedule
2.7(b)(ii), and

 

(viii) the sale, lease or transfer of property or assets not to exceed
$2,000,000 in the aggregate in any fiscal year and $10,000,000 in the aggregate
during the term of this Agreement;

 

provided, that in each case (other than with respect to clause (v) above and
dispositions of assets of a restaurant in connection with a refinishing,
refurnishing or upgrade of such restaurant for consideration less than $100,000
in the aggregate per restaurant) (A) at least 75% of the consideration received
therefor by any Credit Party or any such Subsidiary shall be in the form of cash
or Cash Equivalents, (B) after giving effect to the sale, lease, transfer or
other disposition of such property or assets and the repayment of Indebtedness
(if any) with the proceeds thereof, the Credit Parties shall be in compliance on
a Pro Forma Basis with the financial covenants set forth in Section 5.9 hereof
and shall be in compliance with all other terms and conditions of this
Agreement, and (C) no Event of Default shall exist or shall result from such
sale, lease, transfer or other disposition of property or assets; provided,
further, that with respect to any sale or transfer of property or assets
permitted hereunder to an unrelated third party, the Administrative Agent shall
be entitled, without the consent of the Lenders or the Required Lenders, to
release its Liens relating to the particular property or assets sold; or

 

(b) (i) purchase, lease or otherwise acquire (in a single transaction or a
series of related transactions) all or substantially all of the property or
assets or a majority of the Voting Stock of any Person (other than purchases or
other acquisitions of inventory,

 

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goods, materials, property and equipment in the ordinary course of business,
except as otherwise limited or prohibited herein) or (ii) enter into any
transaction of merger or consolidation, except for (A) Permitted Acquisitions,
(B) investments or acquisitions permitted pursuant to Section 6.6, and (C) the
merger or consolidation of a Credit Party with and into another Credit Party;
provided that if the Borrower is a party thereto, the Borrower will be the
surviving corporation.

 

Section 6.6 Advances, Investments and Loans.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to, lend
money or extend credit or make advances to any Person, or purchase or acquire
any Capital Stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any Person except for Permitted Investments.

 

Section 6.7 Transactions with Affiliates.

 

Except as permitted in subsection (iv), subsection (ix) or subsection (x) of the
definition of Permitted Investments or as permitted under Section 6.11, each of
the Credit Parties will not, nor will it permit any Subsidiary to, enter into
any transaction or series of transactions, whether or not in the ordinary course
of business, with any officer, director, shareholder or Affiliate other than on
terms and conditions substantially as favorable as would be obtainable in a
comparable arm’s-length transaction with a Person other than an officer,
director, shareholder or Affiliate.

 

Section 6.8 Ownership of Subsidiaries; Restrictions.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to,
create, form or acquire any Subsidiaries, except for (i) wholly-owned Domestic
Subsidiaries which are joined as Additional Credit Parties in accordance with
the terms hereof and (ii) Liquor License Subsidiaries. Each of the Credit
Parties will not, nor will it permit any Subsidiary to, sell, transfer, pledge
or otherwise dispose of any Capital Stock or other equity interests in any of
its Subsidiaries, nor will it, or permit any Subsidiary to, issue, sell,
transfer, pledge or otherwise dispose of any of its Capital Stock or other
equity interests, except as required by the Credit Documents or pursuant to a
transaction permitted by this Agreement.

 

Section 6.9 Fiscal Year; Organizational Documents; Material Contracts.

 

Each of the Credit Parties will not, nor will it permit any of its Subsidiaries
to, change its fiscal year. Each of the Credit Parties will not, nor will they
permit any of its Subsidiaries to, amend, modify or change their articles of
incorporation (or corporate charter or other similar organizational document),
operating agreement or bylaws (or other similar document) in any material
respect without the prior written consent of the Required Lenders. Each of the
Credit Parties will not, nor will it permit any of its Subsidiaries to, without
the prior written consent of the Administrative Agent, amend, modify, cancel or
terminate or fail to renew or extend or permit the amendment, modification,
cancellation or termination of any of the Material Contracts (other than in the
ordinary course of business), except in the event that such amendments,

 

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modifications, cancellations or terminations could not, either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 6.10 Limitation on Restricted Actions.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Person to
(a) pay dividends or make any other distributions to any Credit Party on its
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits, (b) pay any Indebtedness or other obligation owed to
any Credit Party, (c) make loans or advances to any Credit Party, (d) sell,
lease or transfer any of its properties or assets to any Credit Party, or
(e) act as a Guarantor and pledge its assets pursuant to the Credit Documents or
any renewals, refinancings, exchanges, refundings or extension thereof, except
(in respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Agreement
and the other Credit Documents, (ii) applicable law, (iii) any document or
instrument governing Indebtedness maintained pursuant to Section 6.1(b) or
incurred pursuant to Section 6.1(c), provided that any such restriction
contained therein relates only to the asset or assets constructed or acquired in
connection therewith or (iv) any Permitted Lien or any document or instrument
governing any Permitted Lien, provided that any such restriction contained
therein relates only to the asset or assets subject to such Permitted Lien.

 

Section 6.11 Restricted Payments.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to,
directly or indirectly, declare, order, make or set apart any sum for or pay any
Restricted Payment, except (a) to make dividends payable solely in the common
stock or equivalent equity interests of such Person, (b) to make dividends or
other distributions payable to any Credit Party (directly or indirectly through
Subsidiaries), and (c) so long as no Default or Event of Default shall have
occurred and be continuing, the Parent may redeem and/or repurchase shares of
its Capital Stock pursuant to the terms of any employment agreement of any
officer or director of the Parent or any Subsidiary in an aggregate amount not
to exceed $500,000 in cash during the term of this Agreement.

 

Section 6.12 Sale Leasebacks.

 

No Credit Party will, directly or indirectly, (i) sell or transfer any property
(whether real, personal or mixed and whether now owned or hereafter acquired) to
a Person that is not a Credit Party (for purposes of this Section 6.12, the
“Sale Leaseback Property”) and then (ii) promptly lease (whether as an Operating
Lease or a Capital Lease), or guaranty a lease of, the Sale Leaseback Property
and use the Sale Leaseback Property for substantially the same purpose in
existence prior to the sale or transfer (any such transaction, a “Sale Leaseback
Transaction”); provided, however, that Sale Leaseback Transactions shall be
permitted so long as such Sale Leaseback Transactions do not exceed an aggregate
amount of $4,000,000 during any fiscal year or an aggregate amount of
$20,000,000 during the term of this Agreement.

 

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Section 6.13 No Further Negative Pledges.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to, enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security to secure obligations under such agreement if security is given for
some other obligation, except (a) pursuant to this Agreement and the other
Credit Documents, (b) pursuant to any document or instrument governing
Indebtedness incurred pursuant to Section 6.1(c), provided that any such
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith, and (c) in connection with any Permitted Lien
or any document or instrument governing any Permitted Lien, provided that any
such restriction contained therein relates only to the asset or assets subject
to such Permitted Lien.

 

Section 6.14 Amendments to Subordinated Debt, etc.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to, after
the issuance thereof, amend or modify (or permit the amendment or modification
of) any of the terms of any Subordinated Debt of such Credit Party or Subsidiary
if such amendment or modification would add or change any terms in a manner
adverse to the Lenders, or shorten the final maturity or average life to
maturity or require any payment to be made sooner than originally scheduled or
increase the interest rate applicable thereto or change any subordination
provision thereof.

 

Section 6.15 Management Fees.

 

Each of the Credit Parties will not, nor will it permit any Subsidiary to,
directly or indirectly, pay any management, consulting or similar fees to any
Affiliate or to any manager, director, officer or employee of the Credit Parties
or any of their Subsidiaries, other than those payments included in the
corporate overhead of the Parent or any Subsidiary or other payments made in the
ordinary course of business without the prior written consent of the Required
Lenders.

 

Section 6.16 Parent Holding Company/Liquor License Subsidiaries.

 

The Parent shall not engage in any activities or operations whatsoever, other
than (a) general administrative and other functions required by law, (b) owning
all of the Capital Stock of the Borrower, (c) guaranteeing the Credit Party
Obligations pursuant to the terms of this Agreement and the other Credit
Documents and performing its obligations hereunder and thereunder and (d) those
activities or operations that are necessary or appropriate to comply with
Requirements of Law or to comply with the rules and regulations of NASDAQ or any
other national securities exchange or any other securities regulatory authority.
None of the Liquor License Subsidiaries shall engage in any activities or
operations whatsoever, other than (i) general administrative and other functions
required by law and (ii) owning their respective liquor licenses and other
activities or operations incidental thereto.

 

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ARTICLE VII

 

EVENTS OF DEFAULT

 

Section 7.1 Events of Default.

 

An Event of Default shall exist upon the occurrence of any of the following
specified events (each an “Event of Default”):

 

(a) The Borrower shall fail to pay any principal on any Loan when due (whether
at maturity, by reason of acceleration or otherwise) in accordance with the
terms hereof; or the Borrower shall fail to reimburse the Issuing Lender for any
LOC Obligations when due (whether at maturity, by reason of acceleration or
otherwise) in accordance with the terms hereof; or the Borrower shall fail to
pay any interest on any Loan or other Credit Party Obligation or any fee or
other amount payable hereunder when due (whether at maturity, by reason of
acceleration or otherwise) in accordance with the terms hereof and such failure
to pay shall continue unremedied for three (3) Business Days; or any Guarantor
shall fail to pay on the Guaranty in respect of any of the foregoing or in
respect of any other Guaranty Obligations hereunder; or

 

(b) Any representation or warranty of a Credit Party made or deemed made herein,
in the Security Documents or in any of the other Credit Documents or which is
contained in any certificate, document or financial statement furnished at any
time under or in connection with this Agreement provided by a Responsible
Officer shall prove to have been incorrect, false or misleading in any material
respect on or as of the date made or deemed made; or

 

(c) (i) Any Credit Party shall fail to perform, comply with or observe any term,
covenant or agreement applicable to it contained in Sections 5.1, 5.2, 5.4 (with
respect to conduct of its business and maintenance of a Credit Party’s
existence), 5.6 (with respect to inspections), 5.7 (with respect to notice of a
Default or Event of Default) or 5.9 or Article VI hereof; or (ii) any Credit
Party shall fail to comply with any other covenant, contained in this Agreement
or the other Credit Documents (other than as described in Sections 7.1(a) or
7.1(c)(i) above), and in the event such breach or failure to comply is capable
of cure, is not cured within the time prescribed therein, or to the extent not
prescribed therein, within thirty (30) days of its occurrence; or

 

(d) Any Credit Party or any of its Subsidiaries shall (i) default in any payment
of principal of or interest on any Indebtedness (other than the Indebtedness
hereunder) in a principal amount outstanding of at least $1,000,000 in the
aggregate for the Credit Parties and their Subsidiaries beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or agreement
under which such Indebtedness was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any Indebtedness
(other than the Indebtedness hereunder) in a principal amount outstanding of at
least $1,000,000 in the aggregate for the Credit Parties and their

 

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Subsidiaries or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity; or (iii) default
any Secured Hedging Agreement, the effect of which default is to cause or permit
the counterparty thereto to declare an event of default or termination event, as
defined therein; or

 

(e) (i) Any Credit Party or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to have it judged bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or any
Credit Party or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against any Credit
Party or any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against any Credit Party or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
their assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) any Credit Party or any of its
Subsidiaries shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) any Credit Party or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or

 

(f) One or more judgments, orders, decrees or arbitration awards shall be
entered against any Credit Party or any of its Subsidiaries involving in the
aggregate a liability (to the extent not covered by third-party insurance with
respect to which coverage has not been disputed by the insurer for a period in
excess of ninety (90) days; provided however that such ninety (90) day period
shall no longer be in effect to the extent that any such judgment, order, decree
or arbitration award shall be executed upon at any time during such period by
the holder thereof) of $1,000,000 or more and all such judgments, orders,
decrees or arbitration awards shall not have been paid and satisfied, vacated,
discharged, stayed or bonded pending appeal within 10 Business Days from the
entry thereof or any injunction, temporary restraining order or similar decree
shall be issued against any Credit Party or any of its Subsidiaries that could
reasonably be expected to result in a Material Adverse Effect; or

 

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(g) (i) Any Person shall engage in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan (other than a Permitted Lien) shall arise on the assets of any
Credit Party, any of its Subsidiaries or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a Trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) any Credit Party, any of its Subsidiaries or any
Commonly Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a withdrawal from,
or the Insolvency or Reorganization of, any Multiemployer Plan or (vi) any other
similar event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could have a Material Adverse
Effect; or

 

(h) There shall occur a Change of Control; or

 

(i) The Guaranty or any provision thereof for any reason shall cease to be in
full force and effect or any Guarantor or any Person acting by or on behalf of
any Guarantor shall deny or disaffirm any Guarantor’s obligations under the
Guaranty; or

 

(j) Any other Credit Document shall fail to be in full force and effect or to
give the Administrative Agent and/or the Lenders the security interests, liens,
rights, powers and privileges purported to be created thereby in any material
respect (except as such documents may be terminated or no longer in force and
effect in accordance with the terms thereof, other than those indemnities and
provisions which by their terms shall survive) or any Lien shall fail to be
perfected on a material portion of the Collateral; or

 

(k) Any uninsured damage to or loss, theft or destruction of any assets of any
Credit Party or any of its Subsidiaries shall occur that is in excess of
$3,000,000.

 

Section 7.2 Acceleration; Remedies.

 

Upon the occurrence and during the continuation of an Event of Default, then,
(a) if such event is an Event of Default specified in Section 7.1(e) above,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon), and all other Credit Party Obligations under the
Credit Documents (including without limitation the maximum amount of all
contingent liabilities under Letters of Credit) shall immediately become due and
payable, and the Borrower shall immediately pay to the Administrative Agent cash
collateral as security for the LOC Obligations for subsequent drawings under
then outstanding Letters of Credit in an amount equal to the maximum amount
which may be drawn under Letters of Credit then outstanding and (b) if such
event is any other Event of Default, any of the following actions

 

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may be taken: with the written consent of the Required Lenders, the
Administrative Agent may, or upon the written request of the Required Lenders,
the Administrative Agent shall, (i) by notice to the Borrower declare all or any
portion of the Commitments to be terminated forthwith, whereupon such
Commitments shall immediately terminate, (ii) by notice of default to the
Borrower, declare the Loans (with accrued interest thereon) and all other Credit
Party Obligations under the Credit Documents (including without limitation the
maximum amount of all contingent liabilities under Letters of Credit) to be due
and payable forthwith and direct the Borrower to pay to the Administrative Agent
cash collateral as security for the LOC Obligations for subsequent drawings
under then outstanding Letters of Credit an amount equal to the maximum amount
of which may be drawn under Letters of Credit then outstanding, whereupon the
same shall immediately become due and payable, (iii) hire, at the expense of the
Credit Parties, one or more consultants and the Credit Parties agree to
cooperate with such consultants, (iv) exercise any rights or remedies of the
Administrative Agent or the Lenders under this Agreement or any other Credit
Document, including, without limitation, any rights or remedies with respect to
the Collateral, and (v) exercise any rights or remedies available to the
Administrative Agent or Lenders under applicable law.

 

ARTICLE VIII

 

THE AGENT

 

Section 8.1 Appointment.

 

Each Lender hereby irrevocably designates and appoints Wachovia as the
Administrative Agent of such Lender under this Agreement, and each such Lender
irrevocably authorizes Wachovia, as the Administrative Agent for such Lender, to
take such action on its behalf under the provisions of this Agreement and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative Agent.

 

Section 8.2 Delegation of Duties.

 

The Administrative Agent may execute any of its duties under this Agreement by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care. Without limiting the
foregoing, the Administrative Agent may appoint one of its affiliates as its
agent to perform its the functions of the Administrative Agent hereunder
relating to the advancing of funds to the Borrower and distribution of funds to
the Lenders and to perform such other related functions of the Administrative
Agent hereunder as are reasonably incidental to such functions.

 

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Section 8.3 Exculpatory Provisions.

 

Neither the Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement (except for its or such Person’s own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Borrower or any officer thereof contained in this Agreement or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Credit Documents or for any failure of the Borrower
to perform their obligations hereunder or thereunder. The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance by the Borrower of any of the agreements contained
in, or conditions of, this Agreement, or to inspect the properties, books or
records of the Borrower.

 

Section 8.4 Reliance by Administrative Agent.

 

The Administrative Agent shall be entitled to rely, and shall be fully protected
in relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it in good faith
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may deem
and treat the payee of any Note as the owner thereof for all purposes unless
(a) a written notice of assignment, negotiation or transfer thereof shall have
been filed with the Administrative Agent and (b) the Administrative Agent shall
have received the written agreement of such assignee to be bound hereby as fully
and to the same extent as if such assignee were an original Lender party hereto,
in each case in form satisfactory to the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under any of the Credit Documents in
accordance with a request of the Required Lenders or all of the Lenders, as may
be required under this Agreement, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.

 

Section 8.5 Notice of Default.

 

The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default”. In the event that

 

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the Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided, however, that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders except
to the extent that this Agreement expressly requires that such action be taken,
or not taken, only with the consent or upon the authorization of the Required
Lenders, or all of the Lenders, as the case may be.

 

Section 8.6 Non-Reliance on Administrative Agent and Other Lenders.

 

Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representation or warranty to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.

 

Section 8.7 Indemnification.

 

The Lenders agree to indemnify the Administrative Agent in its capacity
hereunder (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Revolving Commitment Percentages in effect on the date on which indemnification
is sought under this Section, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of any Credit Document or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in

 

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connection with any of the foregoing; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the Administrative Agent’s gross negligence or
willful misconduct, as determined by a court of competent jurisdiction. The
agreements in this Section 8.7 shall survive the termination of this Agreement
and payment of the Notes and all other amounts payable hereunder.

 

Section 8.8 Administrative Agent in Its Individual Capacity.

 

The Administrative Agent and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower as though
the Administrative Agent were not the Administrative Agent hereunder. With
respect to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms “Lender” and “Lenders” shall include the Administrative
Agent in its individual capacity.

 

Section 8.9 Successor Administrative Agent.

 

The Administrative Agent may resign as Administrative Agent upon 30 days’ prior
notice to the Borrower and the Lenders. If the Administrative Agent shall resign
as Administrative Agent under this Agreement and the Notes, then the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent shall be approved by the Borrower with such approval not
to be unreasonably withheld (provided, however if an Event of Default shall
exist at such time, no approval of the Borrower shall be required hereunder),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term “Administrative Agent” shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Administrative Agent’s resignation as
Administrative Agent, the provisions of this Section 8.9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.

 

Section 8.10 Nature of Duties.

 

Except as otherwise expressly stated herein, any agent (other than the
Administrative Agent) listed from time to time on the cover page of this
Agreement shall have no obligations, responsibilities or duties under this
Agreement or under any other Credit Document other than obligations,
responsibilities and duties applicable to all Lenders in their capacity as
Lenders; provided, however, that such agents shall be entitled to the same
rights, protections, exculpations and indemnifications granted to the
Administrative Agent under this Article VIII in their capacity as an agent.

 

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ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1 Amendments, Waivers and Release of Collateral.

 

Neither this Agreement, nor any of the Notes, nor any of the other Credit
Documents, nor any terms hereof or thereof may be amended, supplemented, waived
or modified except in accordance with the provisions of this Section nor may be
released except as specifically provided herein or in the Security Documents or
in accordance with the provisions of this Section 9.1. The Required Lenders may,
or, with the written consent of the Required Lenders, the Administrative Agent
may, from time to time, (a) enter into with the Borrower written amendments,
supplements or modifications hereto and to the other Credit Documents for the
purpose of adding any provisions to this Agreement or the other Credit Documents
or changing in any manner the rights of the Lenders or of the Borrower hereunder
or thereunder or (b) waive, on such terms and conditions as the Required Lenders
may specify in such instrument, any of the requirements of this Agreement or the
other Credit Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, waiver,
supplement, modification or release shall:

 

(i) (A) reduce the amount or extend the scheduled date of maturity of any Loan
or Note or any installment thereon or waive any payment default, (B) extend the
expiration date of a Letter of Credit beyond the Maturity Date, (C) reduce the
stated rate of any interest or fee payable hereunder (other than interest at the
increased post-default rate) or extend the scheduled date of any payment
thereof, or (D) increase the amount or extend the expiration date of any
Lender’s Commitment, in each case without the written consent of each Lender
directly affected thereby, or

 

(ii) amend, modify or waive any provision of Section 2.11, Section 2.16, this
Section 9.1 or change the percentage specified in the definition of Required
Lenders, without the written consent of all the Lenders, or

 

(iii) amend, modify or waive any provision of Article VIII without the written
consent of the then Administrative Agent, or

 

(iv) release the Parent or the Borrower from its obligations under the Credit
Documents or any material Guarantor from its obligations under the Guaranty,
without the written consent of all of the Lenders, or

 

(v) release all or any material portion of the Collateral, without the written
consent of all of the Lenders and any Hedging Agreement Provider, or

 

(vi) amend the definitions of “Hedging Agreement,” “Secured Hedging Agreement,”
or “Hedging Agreement Provider” without the consent of any Hedging Agreement
Provider that would be adversely affected thereby; or

 

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(vii) amend, modify or waive any provision of the Credit Documents requiring
consent, approval or request of the Required Lenders or all Lenders, without the
written consent of all of the Required Lenders or Lenders as appropriate and,
provided, further, that no amendment, waiver or consent affecting the rights or
duties of the Administrative Agent or the Issuing Lender under any Credit
Document shall in any event be effective, unless in writing and signed by the
Administrative Agent and/or the Issuing Lender, as applicable, in addition to
the Lenders required hereinabove to take such action.

 

Any such waiver, any such amendment, supplement or modification and any such
release shall apply equally to each of the Lenders and shall be binding upon the
Borrower, the other Credit Parties, the Lenders, the Issuing Lender, the
Administrative Agent and all future holders of the Notes. In the case of any
waiver, the Borrower, the other Credit Parties, the Lenders, the Issuing Lender
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the outstanding Loans and Notes and other Credit
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.

 

Notwithstanding any of the foregoing to the contrary, the consent of the
Borrower shall not be required for any amendment, modification or waiver of the
provisions of Article VIII (other than the provisions of Section 8.9); provided,
however, that the Administrative Agent will provide written notice to the
Borrower of any such amendment, modification or waiver. In addition, the
Borrower and the Lenders hereby authorize the Administrative Agent to modify
this Agreement by unilaterally amending or supplementing Schedule 2.1(a) and
Section 9.2 from time to time in the manner requested by the Borrower, the
Administrative Agent or any Lender in order to reflect any assignments or
transfers of the Loans as provided for hereunder; provided, however, that the
Administrative Agent shall promptly deliver a copy of any such modification to
the Borrower and each Lender.

 

Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersedes the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.

 

Section 9.2 Notices.

 

Except as otherwise provided in Article II, all notices, requests and demands to
or upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) when delivered by hand, (b) when
transmitted via telecopy (or other facsimile device) to the number set out
herein, (c) the Business Day immediately following the day on which the same has
been delivered prepaid (or pursuant to an invoice arrangement) to a reputable
national

 

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overnight air courier service, or (d) the third Business Day following the day
on which the same is sent by certified or registered mail, postage prepaid, in
each case, addressed as follows in the case of the Borrower, the other Credit
Parties and the Administrative Agent, and, with respect to each Lender, as set
forth in such Lender’s Administrative Details Form, or to such other address as
may be hereafter notified by the respective parties hereto and any future
holders of the Notes:

 

The Borrower    Red Robin International, Inc. and the other    6312 S. Fiddler’s
Green Circle Credit Parties:    Suite 200 North      Greenwood Village, CO 80111
     Attention: Katherine L. Scherping, Chief Financial Officer      Telecopier:
(303) 846-6067      Telephone: (303) 846-6024      with a copy to:      Davis
Graham & Stubbs LLP      1550 17th Street, Suite 500      Denver, CO 80202     
Attention: Joel Benson, Esq.      Telecopier: (303) 892-7470      Telephone:
(303) 893-1379 The Administrative Agent:   

Wachovia Bank, National Association, as Administrative Agent

Charlotte Plaza

     201 South College Street, CP-8      Charlotte, North Carolina 28288-0680  
   Attention: Syndication Agency Services      Telecopier: (704) 383-0288     
Telephone: (704) 383-3721      with a copy to:      Wachovia Bank, National
Association      301 South College Street      NC5562      Charlotte, North
Carolina 28288      Attention: Trey Anglin      Telecopier: (704) 383-6647     
Telephone: (704) 383-3776

 

Section 9.3 No Waiver; Cumulative Remedies.

 

No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or

 

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privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

Section 9.4 Survival of Representations and Warranties.

 

All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans, provided that all such representations and warranties shall
terminate on the date upon which the Commitments have been terminated and all
amounts owing hereunder and under any Notes have been paid in full.

 

Section 9.5 Payment of Expenses and Taxes.

 

The Borrower agrees (a) to pay or reimburse each Lender and the Administrative
Agent for all its reasonable out-of-pocket costs and expenses incurred in
connection with the development, preparation, negotiation, printing and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Credit Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, together with the reasonable fees
and disbursements of counsel to each Lender and the Administrative Agent, (b) to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent and to the Lenders (including reasonable allocated costs of
in-house legal counsel), and (c) on demand, to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, the Credit Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their Affiliates (collectively, the “Indemnified
Parties”) harmless from and against, any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (irrespective of whether the
Indemnified Party is named as a party to any litigation or proceeding) with
respect to the execution, delivery, enforcement, performance and administration
of the Credit Documents and any such other documents and the use, or proposed
use, of proceeds of the Loans (all of the foregoing, collectively, a “Third
Party Claim”; provided, however, that the Borrower shall not have any obligation
hereunder to the Administrative Agent or any Lender with respect to Third Party
Claims arising from the gross negligence or willful misconduct of the
Administrative Agent or any such Lender, as determined by a court of competent
jurisdiction in a final and non-appealable judgment; provided, further, that
(i) each Indemnified Party shall promptly notify the Borrower in writing upon
becoming aware of the initiation of any Third Party Claim against it, (ii) the
Borrower shall be entitled to participate in the defense of any such Third Party
Claim and, if the borrower so chooses, to assume the defense, at the Borrower’s
expense, of any such Third Party Claim with counsel

 

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selected by the Borrower (it being understood that any Indemnified Party shall
have the right to participate in such defense and employ counsel separate from
the counsel employed by the Borrower, and that such counsel shall be at the
expense of such Indemnified Party unless such Indemnified Party shall have been
advised by counsel that there may be legal defenses available to it that are
inconsistent with or in addition to those available to the Borrower, in which
case such counsel shall be at the Borrower’s expense) and (iii) no Indemnified
Party shall settle any Third Party Claim without the Borrower’s prior written
consent (such consent not to be unreasonably withheld). The agreements in this
Section 9.5 shall survive repayment of the Loans, Notes and all other amounts
payable hereunder.

 

Section 9.6 Successors and Assigns; Participations; Purchasing Lenders.

 

(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the Notes
and their respective successors and assigns, except that the Borrower and the
Guarantors may not assign or transfer any of their rights or obligations under
this Agreement or the other Credit Documents without the prior written consent
of each Lender.

 

(b) Any Lender may, in the ordinary course of its commercial banking business
and in accordance with applicable law, at any time sell to one or more banks or
other entities (“Participants”) participating interests in any Loan owing to
such Lender, any Note held by such Lender, any Commitment of such Lender, or any
other interest of such Lender hereunder. In the event of any such sale by a
Lender of participating interests to a Participant, such Lender’s obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. No Lender shall transfer
or grant any participation under which the Participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (i) extend the
scheduled maturity of any Loan or Note or any installment thereon in which such
Participant is participating, or reduce the stated rate or extend the time of
payment of interest or fees thereon (except in connection with a waiver of
interest at the increased post-default rate) or reduce the principal amount
thereof, or increase the amount of the Participant’s participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without consent of any participant if the Participant’s participation is not
increased as a result thereof), (ii) release all or substantially all of the
Guarantors from their obligations under the Guaranty, (iii) release all or
substantially all of the Collateral, or (iv) consent to the assignment or
transfer by the Borrower or the Guarantors of any of their rights and
obligations under this Agreement. In the case of any such participation, the
Participant shall not have any rights under this Agreement or any of the other
Credit Documents (the Participant’s rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation, provided that each

 

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Participant shall be entitled to the benefits of Sections 2.15, 2.16, 2.17 and
9.5 with respect to its participation in the Commitments and the Loans
outstanding from time to time; provided, that no Participant shall be entitled
to receive any greater amount pursuant to such Sections than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.

 

(c) Any Lender may, in the ordinary course of its commercial banking business
and in accordance with applicable law, at any time, sell or assign to any Lender
or any affiliate or Approved Fund thereof and, with the consent of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower (in each case, which consent shall not be unreasonably
withheld), to one or more additional banks or financial institutions or entities
(“Purchasing Lenders”), all or any part of its rights and obligations under this
Agreement and the Notes in minimum amounts of $5,000,000 (or, if less, the
entire amount of such Lender’s interests and obligations), pursuant to a
Assignment Agreement, executed by such Purchasing Lender and such transferor
Lender (and, in the case of a Purchasing Lender that is not then a Lender or an
affiliate or Approved Fund thereof, the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower), and delivered to
the Administrative Agent for its acceptance and recording in the Register. Upon
such execution, delivery, acceptance and recording, from and after the Transfer
Effective Date specified in such Assignment Agreement, (x) the Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Assignment Agreement, have the rights and obligations of a Lender hereunder with
a Commitment as set forth therein, and (y) the transferor Lender thereunder
shall, to the extent provided in such Assignment Agreement, be released from its
obligations under this Agreement (and, in the case of a Assignment Agreement
covering all or the remaining portion of a transferor Lender’s rights and
obligations under this Agreement, such transferor Lender shall cease to be a
party hereto). Such Assignment Agreement shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of Revolving Commitment
Percentages arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such transferor Lender under this
Agreement and the Notes. On or prior to the Transfer Effective Date specified in
such Assignment Agreement, the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent in exchange for the Notes delivered to the
Administrative Agent pursuant to such Assignment Agreement new Notes to the
order of such Purchasing Lender in an amount equal to the Commitment assumed by
it pursuant to such Assignment Agreement and, unless the transferor Lender has
not retained a Commitment hereunder, new Notes to the order of the transferor
Lender in an amount equal to the Commitment retained by it hereunder. Such new
Notes shall be dated the Closing Date and shall otherwise be in the form of the
Notes replaced thereby. The Notes surrendered by the transferor Lender shall be
returned by the Administrative Agent to the Borrower marked “canceled”.

 

(d) The Administrative Agent shall maintain at its address referred to in
Section 9.2 a copy of each Assignment Agreement delivered to it and a register
(the “Register”) for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and

 

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the Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

 

(e) Upon its receipt of a duly executed Assignment Agreement, together with
payment to the Administrative Agent by the transferor Lender or the Purchasing
Lender, as agreed between them, of a registration and processing fee of
$3,500.00 for each Purchasing Lender (other than an affiliate of such Lender or
an Approved Fund) listed in such Assignment Agreement and the Notes subject to
such Assignment Agreement, the Administrative Agent shall (i) accept such
Assignment Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice of such acceptance and recordation to the
Lenders and the Borrower.

 

(f) The Borrower authorizes each Lender to disclose to any Participant or
Purchasing Lender (each, a “Transferee”) and any prospective Transferee any and
all financial information in such Lender’s possession concerning the Borrower
and its Affiliates which has been delivered to such Lender by or on behalf of
the Borrower pursuant to this Agreement or which has been delivered to such
Lender by or on behalf of the Borrower in connection with such Lender’s credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement, in each case subject to Section 9.15.

 

(g) At the time of each assignment pursuant to this Section 9.6 to a Person
which is not already a Lender hereunder and which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for Federal income
tax purposes, the respective assignee Lender shall provide to the Borrower and
the Administrative Agent the appropriate Internal Revenue Service Forms (and, if
applicable, a Tax Exempt Certificate) described in Section 2.16.

 

(h) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any such pledge or assignment to a Federal Reserve Bank, and
this Section 9.6 shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such assignee for such Lender as a party hereto.

 

Section 9.7 Adjustments; Set-off.

 

(a) Each Lender agrees that if any Lender (a “benefited Lender”) shall at any
time receive any payment of all or part of its Loans, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
Section 7.1(e), or otherwise) in a greater proportion than any such payment to
or collateral received by any other Lender, if any, in respect of such other
Lender’s Loans, or interest thereon, such benefited Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender’s Loan, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefited Lender to share the excess payment or benefits of such

 

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collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion of
another Lender’s Loans may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

 

(b) In addition to any rights and remedies of the Lenders provided by law
(including, without limitation, other rights of set-off), each Lender shall have
the right, without prior notice to the Borrower or the applicable Credit Party,
any such notice being expressly waived by the Credit Parties to the extent
permitted by applicable law, upon the occurrence of any Event of Default, to
setoff and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held by or
owing to such Lender or any branch or agency thereof to or for the credit or the
account of the Borrower or any other Credit Party, or any part thereof in such
amounts as such Lender may elect, against and on account of the Loans and other
Credit Party Obligations of the Borrower and the other Credit Parties to the
Administrative Agent and the Lenders and claims of every nature and description
of the Administrative Agent and the Lenders against the Borrower and the other
Credit Parties, in any currency, whether arising hereunder, under any other
Credit Document or any Secured Hedging Agreement pursuant to the terms of this
Credit Agreement, as such Lender may elect, whether or not the Administrative
Agent or the Lenders have made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
aforesaid right of set-off may be exercised by such Lender against the Borrower,
any other Credit Party or against any trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, receiver or execution,
judgment or attachment creditor of the Borrower or any other Credit Party, or
against anyone else claiming through or against the Borrower, any other Credit
Party or any such trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the occurrence of any Event of Default. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such set-off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.

 

Section 9.8 Table of Contents and Section Headings.

 

The table of contents and the Section and subsection headings herein are
intended for convenience only and shall be ignored in construing this Agreement.

 

Section 9.9 Counterparts.

 

This Agreement may be executed by one or more of the parties to this Agreement
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to

 

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constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

 

Section 9.10 Effectiveness.

 

This Agreement shall become effective on the date on which all of the parties
have signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent pursuant to Section 9.2 or, in
the case of the Lenders, shall have given to the Administrative Agent written,
telecopied or telex notice (actually received) at such office that the same has
been signed and mailed to it. Upon this Agreement becoming effective, the
Existing Credit Agreement shall be deemed amended and restated by this Agreement
without effecting a novation thereof.

 

Section 9.11 Severability.

 

Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

Section 9.12 Integration.

 

This Agreement and the Notes represent the agreement of the Borrower, the
Administrative Agent and the Lenders with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent, the Borrower or any Lender relative to the subject matter
hereof not expressly set forth or referred to herein or in the Notes.

 

Section 9.13 Governing Law.

 

This Agreement and the Notes and the rights and obligations of the parties under
this Agreement and the Notes shall be governed by, and construed and interpreted
in accordance with, the law of the State of North Carolina.

 

Section 9.14 Consent to Jurisdiction and Service of Process.

 

All judicial proceedings brought against the Borrower and/or any other Credit
Party with respect to this Agreement, any Note or any of the other Credit
Documents may be brought in any state or federal court of competent jurisdiction
in the State of North Carolina, and, by execution and delivery of this
Agreement, each of the Borrower and the other Credit Parties accepts, for itself
and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Agreement
from which no appeal has been taken or is available. Each of Borrower and the
other Credit Parties irrevocably agrees that all service of process in any such
proceedings in any such court may be effected by mailing a copy thereof by

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registered or certified mail (or any substantially similar form of mail),
postage prepaid, to it at its address set forth in Section 9.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto, such service being hereby acknowledged by the Borrower and the other
Credit Parties to be effective and binding service in every respect. Each of the
Borrower, the other Credit Parties, the Administrative Agent and the Lenders
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens which it
may now or hereafter have to the bringing of any such action or proceeding in
any such jurisdiction. Nothing herein shall affect the right to serve process in
any other manner permitted by law or shall limit the right of the Administrative
Agent or any Lender to bring proceedings against the Borrower or the other
Credit Parties in the court of any other jurisdiction.

 

Section 9.15 Confidentiality.

 

The Administrative Agent and each of the Lenders agrees that it will use its
commercially reasonable efforts not to disclose without the prior consent of the
Borrower any information with respect to the Parent and its Subsidiaries which
is furnished pursuant to this Agreement, any other Credit Document or any
documents contemplated by or referred to herein or therein and which is
designated by the Borrower to the Lenders in writing as confidential or as to
which it is otherwise reasonably clear such information is not public (the
“Information”), except that any Lender may disclose any such Information (a) to
its employees, affiliates, auditors or counsel or to another Lender each of whom
shall have been made aware of this confidentiality requirement and shall have
agreed to be bound by its provisions and other than as prohibited by Regulation
FD, (b) as has become generally available to the public other than by a breach
of this Section 9.15, (c) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or federal regulatory
body having or claiming to have jurisdiction over such Lender or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or the Office of the
Comptroller of the Currency or the National Association of Insurance
Commissioners or similar organizations (whether in the United States or
elsewhere) or their successors, (d) as may be required or appropriate in
response to any summons or subpoena or any law, order, regulation or ruling
applicable to such Lender, (e) to (i) any prospective Participant or assignee in
connection with any contemplated transfer pursuant to Section 9.6 or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower, provided that such prospective transferee
shall have been made aware of this Section 9.15 and shall have agreed to be
bound by its provisions as if it were a party to this Credit Agreement, (f) to
Gold Sheets and other similar bank trade publications; such information to
consist of deal terms and other information regarding the credit facilities
evidenced by this Credit Agreement customarily found in such publications,
(g) in connection with any suit, action or proceeding for the purpose of
defending itself, reducing its liability, or protecting or exercising any of its
claims, rights, remedies or interests under or in connection with the Credit
Documents or any Secured Hedging Agreement, (h) to any direct or indirect
contractual counterparty in swap agreements or such contractual counterparty’s
professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions of
this Section 9.15), (i) any nationally recognized rating agency that requires
access to information about a Lender’s investment portfolio in connection with
ratings issued with respect to such Lender, or (j) to a Person that is a

 

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trustee, collateral manager, servicer, noteholder or secured party in a
Securitization in connection with the administration, servicing and reporting on
the assets serving as collateral for such Securitization; provided that such
Person shall have been made aware of this Section 9.15 and shall have agreed to
be bound by its provisions as if it were a party to this Credit Agreement. For
purposes of this Section “Securitization” shall mean a public or private
offering by a Lender or any of its affiliates or their respective successors and
assigns, of securities which represent an interest in, or which are
collateralized in whole or in part by, the Loans.

 

Section 9.16 Acknowledgments.

 

The Borrower and the other Credit Parties each hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of
each Credit Document;

 

(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any other Credit Party arising out
of or in connection with this Agreement and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower and the other
Credit Parties, on the other hand, in connection herewith is solely that of
debtor and creditor; and

 

(c) no joint venture exists among the Lenders or among the Borrower or the other
Credit Parties and the Lenders.

 

Section 9.17 Waivers of Jury Trial.

 

THE BORROWER, THE OTHER CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

Section 9.18 Compliance with Tax Shelter Regulations.

 

(a) The Borrower and each Lender (i) represents and warrants that, as of the
Closing Date, it does not intend to treat the Extensions of Credit hereunder and
the other transactions contemplated hereby as a “reportable transaction” (within
the meaning of Treasury Regulation Section 1.6011-4) and (ii) covenants to give
prior written notice to the Administrative Agent and the Borrower (as
applicable) if it determines to take any action inconsistent with the intention
represented in the foregoing clause (i).

 

(b) Subject to the terms of Section 9.18(a)(ii), if a Lender determines that the
Extensions of Credit made by such Lender should be treated as part of a
transaction that is subject to Treasury Regulation Section 1.6011-4 or
Section 301.6112-1, such Lender, the Administrative Agent and the Borrower may
file such IRS forms or maintain such lists and other records as they may
determine is required by such Treasury Regulations.

 

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(c) Notwithstanding anything herein (including Section 9.15) or in any other
Credit Document to the contrary, the Borrower, the Administrative Agent and each
Lender may disclose to any and all persons, without limitation of any kind, any
information with respect to the U.S. federal income tax treatment and U.S.
federal income tax structure of the transactions contemplated hereby and all
material of any kind (including opinions or other tax analyses) that are
provided to the Borrower, the Administrative Agent or such Lender relating to
such tax treatment and tax structure.

 

Section 9.19 Patriot Act Notice.

 

Each Lender and the Administrative Agent (for itself and not on behalf of any
other party) hereby notifies the Borrower that, pursuant to the requirements of
the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26,
2001 (the “Patriot Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Patriot Act.

 

ARTICLE X

 

GUARANTY

 

Section 10.1 The Guaranty.

 

In order to induce the Lenders to enter into this Credit Agreement and any
Hedging Agreement Provider to enter into any Secured Hedging Agreement and to
extend credit hereunder and thereunder and in recognition of the direct benefits
to be received by the Guarantors from the Extensions of Credit hereunder and any
Secured Hedging Agreement, each of the Guarantors hereby agrees with the
Administrative Agent, the Lenders and the Hedging Agreement Providers as
follows: the Guarantor hereby unconditionally and irrevocably jointly and
severally guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise, of
any and all Credit Party Obligations. If any or all of the indebtedness becomes
due and payable hereunder or under any Secured Hedging Agreement, each Guarantor
unconditionally promises to pay such indebtedness to the Administrative Agent,
the Lenders, the Hedging Agreement Providers, or their respective order, or
demand, together with any and all reasonable expenses which may be incurred by
the Administrative Agent or the Lenders in collecting any of the Credit Party
Obligations.

 

Notwithstanding any provision to the contrary contained herein or in any other
of the Credit Documents, to the extent the obligations of a Guarantor shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).

 

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Section 10.2 Bankruptcy.

 

Additionally, each of the Guarantors unconditionally and irrevocably guarantees
jointly and severally the payment of any and all Credit Party Obligations of the
Borrower to the Lenders and any Hedging Agreement Provider whether or not due or
payable by the Borrower upon the occurrence of any of the events specified in
Section 7.1(f), and unconditionally promises to pay such Credit Party
Obligations to the Administrative Agent for the account of the Lenders and to
any such Hedging Agreement Provider, or order, on demand, in lawful money of the
United States. Each of the Guarantors further agrees that to the extent that the
Borrower or a Guarantor shall make a payment or a transfer of an interest in any
property to the Administrative Agent, any Lender or any Hedging Agreement
Provider, which payment or transfer or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, or otherwise is avoided,
and/or required to be repaid to the Borrower or a Guarantor, the estate of the
Borrower or a Guarantor, 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 avoidance or repayment, the obligation or part thereof intended
to be satisfied shall be revived and continued in full force and effect as if
said payment had not been made.

 

Section 10.3 Nature of Liability.

 

The liability of each Guarantor hereunder is exclusive and independent of any
security for or other guaranty of the Credit Party Obligations of the Borrower
whether executed by any such Guarantor, any other guarantor or by any other
party, and no Guarantor’s liability hereunder shall be affected or impaired by
(a) any direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the Credit Party
Obligations of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Administrative Agent, the Lenders or any Hedging Agreement Provider on the
Credit Party Obligations which the Administrative Agent, such Lenders or such
Hedging Agreement Provider repay the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each of the Guarantors waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.

 

Section 10.4 Independent Obligation.

 

The obligations of each Guarantor hereunder are independent of the obligations
of any other Guarantor or the Borrower, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other Guarantor or the Borrower and whether or not any other
Guarantor or the Borrower is joined in any such action or actions.

 

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Section 10.5 Authorization.

 

Each of the Guarantors authorizes the Administrative Agent, each Lender and each
Hedging Agreement Provider without notice or demand (except as shall be required
by applicable statute and cannot be waived), and without affecting or impairing
its liability hereunder, from time to time to (a) renew, compromise, extend,
increase, accelerate or otherwise change the time for payment of, or otherwise
change the terms of the Credit Party Obligations or any part thereof in
accordance with this Credit Agreement and any Secured Hedging Agreement, as
applicable, including any increase or decrease of the rate of interest thereon,
(b) take and hold security from any Guarantor or any other party for the payment
of this Guaranty or the Credit Party Obligations and exchange, enforce waive and
release any such security, (c) apply such security and direct the order or
manner of sale thereof as the Administrative Agent and the Lenders in their
discretion may determine and (d) release or substitute any one or more
endorsers, Guarantors, the Borrower or other obligors.

 

Section 10.6 Reliance.

 

It is not necessary for the Administrative Agent, the Lenders or any Hedging
Agreement Provider to inquire into the capacity or powers of the Borrower or the
officers, directors, members, partners or agents acting or purporting to act on
its behalf, and any Credit Party Obligations made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.

 

Section 10.7 Waiver.

 

(a) Each of the Guarantors waives any right (except as shall be required by
applicable statute and cannot be waived) to require the Administrative Agent,
any Lender or any Hedging Agreement Provider to (i) proceed against the
Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrower, any other guarantor or any other
party, or (iii) pursue any other remedy in the Administrative Agent’s, any
Lender’s or any Hedging Agreement Provider’s power whatsoever. Each of the
Guarantors waives any defense based on or arising out of any defense of the
Borrower, any other guarantor or any other party other than payment in full of
the Credit Party Obligations (other than contingent indemnity obligations),
including without limitation any defense based on or arising out of the
disability of the Borrower, any other guarantor or any other party, or the
unenforceability of the Credit Party Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other
than payment in full of the Credit Party Obligations. The Administrative Agent
may, at its election, foreclose on any security held by the Administrative Agent
by one or more judicial or nonjudicial sales (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative Agent or any Lender may have against the Borrower or any other
party, or any security, without affecting or impairing in any way the liability
of any Guarantor hereunder except to the extent the Credit Party Obligations
have been paid in full and the Commitments have been terminated. Each of the
Guarantors waives any defense arising out of any such election by the
Administrative Agent or any of the Lenders, even though such election

 

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operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of the Guarantors against the Borrower or any other party
or any security.

 

(b) Each of the Guarantors waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notice of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional Credit
Party Obligations. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower’s financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Credit Party
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that neither the Administrative Agent
nor any Lender shall have any duty to advise such Guarantor of information known
to it regarding such circumstances or risks.

 

(c) Each of the Guarantors hereby agrees it will not exercise any rights of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under Section 509 of the U.S. Bankruptcy Code, or
otherwise) to the claims of the Lenders or any Hedging Agreement Provider
against the Borrower or any other guarantor of the Credit Party Obligations of
the Borrower owing to the Lenders or such Hedging Agreement Provider
(collectively, the “Other Parties”) and all contractual, statutory or common law
rights of reimbursement, contribution or indemnity from any Other Party which it
may at any time otherwise have as a result of this Guaranty until such time as
the Credit Party Obligations shall have been paid in full and the Commitments
have been terminated. Each of the Guarantors hereby further agrees not to
exercise any right to enforce any other remedy which the Administrative Agent,
the Lenders or any Hedging Agreement Provider now have or may hereafter have
against any Other Party, any endorser or any other guarantor of all or any part
of the Credit Party Obligations of the Borrower and any benefit of, and any
right to participate in, any security or collateral given to or for the benefit
of the Lenders and/or the Hedging Agreement Providers to secure payment of the
Credit Party Obligations of the Borrower until such time as the Credit Party
Obligations (other than contingent indemnity obligations) shall have been paid
in full and the Commitments have been terminated.

 

Section 10.8 Limitation on Enforcement.

 

The Lenders and the Hedging Agreement Providers agree that this Guaranty may be
enforced only by the action of the Administrative Agent acting upon the
instructions of the Required Lenders or such Hedging Agreement Provider (only
with respect to obligations under the applicable Secured Hedging Agreement) and
that no Lender or Hedging Agreement Provider shall have any right individually
to seek to enforce or to enforce this Guaranty, it being understood and agreed
that such rights and remedies may be exercised by the Administrative Agent for
the benefit of the Lenders under the terms of this Credit Agreement and for the
benefit of any Hedging Agreement Provider under any Secured Hedging Agreement.
The Lenders and the Hedging Agreement Providers further agree that this Guaranty
may not be enforced against any director, officer, employee or stockholder of
the Guarantors.

 

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Section 10.9 Confirmation of Payment.

 

The Administrative Agent and the Lenders will, upon request after payment of the
Credit Party Obligations which are the subject of this Guaranty and termination
of the Commitments relating thereto, confirm to the Borrower, the Guarantors or
any other Person that such indebtedness and obligations have been paid and the
Commitments relating thereto terminated, subject to the provisions of
Section 10.2.

 

At such time as the Credit Party Obligations which are the subject of this
Guaranty have been paid in full and the Commitments have been terminated, this
Guaranty and all obligations of the Guarantors hereunder shall terminate and be
of no further force and effect, all without delivery of any instrument or
performance of any act by any Person.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by its proper and duly authorized officers as of the day
and year first above written.

 

BORROWER:

     

RED ROBIN INTERNATIONAL, INC.,

a Nevada corporation

           

By:

 

/s/ Katherine L. Scherping

           

Name:

 

Katherine L. Scherping

           

Title:

 

Chief Financial Officer

GUARANTORS:

     

RED ROBIN GOURMET BURGERS, INC.,

a Delaware corporation

RED ROBIN WEST, INC.,

a Nevada corporation

RED ROBIN DISTRIBUTING COMPANY, INC.,

a Colorado corporation

WESTERN FRANCHISE DEVELOPMENT, INC.,

a California corporation

           

By:

 

/s/ Katherine L. Scherping

           

Name:

 

Katherine L. Scherping

           

Title:

 

Chief Financial Officer of each

of the foregoing Guarantors

 

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ADMINISTRATIVE AGENT

       

AND LENDERS:

     

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent and as a Lender

           

By:

 

/s/ Richard E. Anglin

           

Name:

 

Richard E. Anglin III

           

Title:

 

Vice President

 

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WELLS FARGO BANK, N.A.,

as Syndication Agent and as a Lender

By:

 

/s/ Randall Schmidt

Name:

 

Randall Schmidt

Title:

 

Vice President

 

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BANK OF AMERICA, N.A.,

as Documentation Agent and as a Lender

By:

 

/s/ Heidi Piché

Name:

 

Heidi Piché

Title:

 

Vice President

 

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KEYBANK NATIONAL ASSOCIATION,

as Documentation Agent and as a Lender

By:

 

/s/ Marianne T. Meil

Name:

 

Marianne T. Meil

Title:

 

Vice President

 

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COOPERATIEVE CENTRALE RAIFFEISEN- BORENLEENBANK, B.A. “RABOBANK INTERNATIONAL”,
NEW YORK BRANCH

as a Lender

By:

 

/s/ Steve Staples

Name:

 

Steve Staples

Title:

 

Executive Director

By:

 

/s/ Rebecca Morrow

Name:

 

Rebecca Morrow

Title:

 

Executive Director

 

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SUN TRUST BANK,

as a Lender

By:

 

/s/ Charles Johnson

Name:

 

Charles Johnson

Title:

 

Managing Director

 

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U.S. BANK NATIONAL ASSOCIATION,

as a Lender

By:

 

/s/ Thomas J. McCarthy

Name:

 

Thomas J. McCarthy

Title:

 

Vice President