Exhibit 10.77

 

 

LINE OF CREDIT AGREEMENT

 

Dated as of January 30, 2004

 

Between

 

S&W OF LAS VEGAS, L.L.C.

 

as Borrower,

 

THE SMITH & WOLLENSKY RESTAURANT GROUP, INC.

 

as Guarantor

 

and

 

MORGAN STANLEY DEAN WITTER
COMMERCIAL FINANCIAL SERVICES, INC.

 

as Lender

 

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BASIC LOAN TERMS

 

Note:

 

See Schedule I below for certain definitions of terms used in these Basic Loan
Terms.

 

 

 

Line of Credit Commitment:

 

$2,000,000 (the “Commitment”).

 

 

 

Use of Proceeds:

 

The proceeds of the Advances shall be available (and the Borrower agrees that it
shall use such proceeds or cause such proceeds to be used) solely for (i) the
Borrower’s working capital purposes and (ii) closing costs incurred in
connection herewith. No proceeds of any Advance will be used to purchase or
carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.

 

 

 

Repayment:

 

The Borrower shall repay to the Lender on the Termination Date the aggregate
principal amount of the Advances then outstanding.

 

 

 

Interest:

 

The Borrower shall pay to the Lender interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount shall be
paid in full, at a fluctuating rate per annum equal to the sum of (i) the LIBO
Rate in effect from time to time plus (ii) 3.0% per annum, payable in arrears
monthly on the last day of each month and on the date such Advance shall be paid
in full. For purposes hereof, “LIBO Rate” means, for any day, an interest rate
per annum equal to the interest rate set forth in The Wall Street Journal (New
York City edition) as the one-month London Interbank Offered Rate (LIBOR) (or an
equivalent rate) for such day (or, if The Wall Street Journal shall not be
published on any Business Day, any other publication selected in good faith by
the Lender that sets forth the one-month London Interbank Offered Rate), or, if
such interest rate shall not be so set forth for such day, for the then most
recent day for which such interest rate is so set forth.

 

 

 

Mandatory and Optional Prepayments:

 

The Borrower may, at any time, prepay all or any part of the Advances without
premium or penalty. If at any time the aggregate unpaid principal amount of the
Advances exceeds the Commitment, the Borrower shall immediately prepay Advances
in an amount sufficient to reduce such aggregate unpaid principal amount to an
amount that is not greater than the Commitment. Such payment shall be applied by
the Lender to repayment of Advances in such order as the Lender in its sole
discretion shall select. Upon such prepayment by the Borrower, the Lender shall
advise the Borrower of, and the Borrower shall immediately pay to the Lender,
the amount of accrued and unpaid interest at the interest rate set forth herein
on the amount of such prepayment of each Advance to the date of such prepayment.

 

 

 

Payments and Computations:

 

The Borrower hereby irrevocably authorizes Morgan Stanley DW from time to time
to pay or prepay to the Lender on behalf of the Borrower any amount due and
payable hereunder or under the Note, by application of funds from any Free
Credit Balance existing at such time or from redemption or other disposition of
any MS BusinesScape Funds in the Borrower’s MS BusinesScape Account (and

 

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the Borrower hereby authorizes Morgan Stanley DW from time to time to redeem or
otherwise dispose of such MS BusinesScape Funds for the purpose of obtaining
funds to make such payment or prepayment). The Borrower agrees to deposit or
otherwise make available to the Borrower’s MS BusinesScape Account for the
account of the Lender on the day when due and payable, the amount necessary for
the purpose of making payment of any amount due hereunder or under the Note. To
the extent that such Free Credit Balance and the value of such MS BusinesScape
Funds are insufficient for Morgan Stanley DW to so pay to the Lender on behalf
of the Borrower any such amount due hereunder, the Lender may, in its sole
discretion, make an Advance pursuant to (and to the extent permitted under)
Section 2.02(a)(iii) in such amount.

 

 

 

 

 

The Borrower shall make each payment hereunder or under the Note in respect of
interest on, principal of, or other amount related to the Advances, not later
than 12:00 noon (New York City time) on the day when due and payable in United
States Dollars in same day funds, with payments being so received by the Lender
after such time being deemed to have been made on the next succeeding Business
Day.

 

 

 

 

 

All computations of interest hereunder or under the Note shall be made by the
Lender on the basis of a year of 365 or 366 days, as the case may be, in each
case for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest is payable. Each
determination by the Lender of an interest rate hereunder or under the Note
shall be conclusive and binding for all purposes, absent manifest error.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest.

 

 

 

Late Charge:

 

If the Borrower fails to make any payment within 15 days after any such payment
shall become due, the Borrower shall pay to the Lender a late charge equal to 5%
of the amount of any such overdue payment.

 

 

 

Default Rate:

 

Upon the occurrence and during the continuance of an Event of Default, the
interest on the unpaid principal amount of all Advances shall be increased, at
the option of the Lender, to a rate equal to the lesser of two (2%) percent per
annum above the rate of interest provided herein or the Maximum Rate.

 

 

 

Facility Fee:

 

The Borrower has or will pay to the Lender, on or before the date hereof, a
facility fee in the amount of $20,000.00. An application fee of $10,000.00
(previously paid by the Borrower) shall be credited against such $20,000.00
facility fee.

 

 

 

Unused Availability Fee:

 

The Borrower will pay to the Lender an unused availability fee equal to 1.75%
per annum on the daily unused portion of the Commitment, which fee shall be
payable quarterly in arrears.

 

 

 

Notices, Etc.:

 

All notices and other communications provided for hereunder shall be in writing
(including fax communication and any other method of communication authorized by
the Lender) and mailed, faxed, or otherwise sent or delivered, if to the
Borrower or the Guarantor, at its address at c/o The Smith & Wollensky

 

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Restaurant Group, Inc., 1114 First Avenue, New York, New York 10021, or fax
number (212) 758-6028, Attention: Alan M. Mandel, CFO; if to the Lender, at its
address at 825 Third Avenue, New York, New York 10022, or fax number (212)
310-6256, Attention: Director of Credit; or, as to the Borrower, the Guarantor
or the Lender at such other address or fax number as shall be designated by such
party in a written notice to the other party. All such notices and
communications shall, when mailed, faxed, or otherwise sent or delivered, be
effective when deposited in the mails, faxed, or otherwise sent or delivered,
respectively, except that notices and communications to the Lender pursuant to
Article II shall not be effective until received by the Lender. Delivery by fax
of an executed counterpart of any amendment or waiver of any provision of this
Agreement or of any schedule or exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of an original executed counterpart
thereof.

 

The foregoing Basic Loan Terms are incorporated into and made a part of this
Line of Credit Agreement.

 

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LINE OF CREDIT AGREEMENT

 

LINE OF CREDIT AGREEMENT, dated as of January 30, 2004 between S&W OF LAS VEGAS,
L.L.C., a Delaware limited liability company (the “Borrower”), THE SMITH &
WOLLENSKY RESTAURANT GROUP, INC., a Delaware corporation (the “Guarantor”), and
MORGAN STANLEY DEAN WITTER COMMERCIAL FINANCIAL SERVICES, INC., a Delaware
corporation (the “Lender”).

 

PRELIMINARY STATEMENTS:

 

(1)                                  The Borrower and the Guarantor have
requested that the Lender extend to the Borrower a commercial line of credit.

 

(2)                                  The Lender has agreed to extend to the
Borrower a commercial line of credit on the terms and conditions hereinafter set
forth.

 

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

 

ARTICLE I

 

 DEFINITIONS, BASIC LOAN AND ACCOUNTING TERMS

 

Section 1.01  Certain Defined Terms.  In addition to the terms defined elsewhere
in this Agreement, the terms used herein shall have the meanings given thereto
in Schedule I annexed hereto and incorporated by reference herein.

 

Section 1.02  Basic Loan Terms, Schedules and Exhibits.  The Basic Loan Terms
and all exhibits and schedules referred to herein are incorporated herein by
reference as though set forth herein in full.

 

Section 1.03  Accounting Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, consistent with those applied
in the preparation of the financial statements referred to in Paragraph (a) of
Schedule II.

 

ARTICLE II

 

THE ADVANCES

 

Section 2.01                                The Advances.  The Lender agrees, on
the terms and conditions hereinafter set forth, to make advances (“Advances”) to
the Borrower from time to time on any Business Day during the period from the
Effective Date hereof until the Termination Date in an aggregate amount
outstanding not to exceed at any time the Commitment.  Within the limits of the
Commitment, the Borrower may borrow, repay and reborrow under this
Section 2.01(a).

 

Section 2.02                                Making the Advances.

 

(a)  An Advance under this Agreement may be made by the Lender to the Borrower
in any of the ways set forth in clauses (i), (ii) and (iii) below:

 

(i)  The Borrower shall be deemed to have requested the Lender to make an
Advance hereunder on the date of, and in the amount of, each Uncovered Debit
resulting from each use of any Card or any Check, whether or not such use by any
person is authorized by the Borrower.  The Borrower will not be liable hereunder
(x) for more than $50.00 of principal (plus interest on such principal) in
respect of any Advance made as a result of any unauthorized use of

 

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any Card by any person other than a person authorized by the Borrower as a
Cardholder (including, without limitation, as such authorized person any person
to whom such Cardholder has permitted to use such Card) and (y) for any amount
in respect of any Advance made as a result of any unauthorized use of any Card
after the Lender or Morgan Stanley DW shall have been notified of a loss, theft
or unauthorized use of such Card (and, for purposes of this Agreement, no
Advance referred to in clause (x) shall be outstanding in a principal amount
more than $50.00, and no Advance referred to in clause (y) shall be outstanding
in any amount).  The Lender shall make available to the Borrower, by means of a
credit to the Borrower’s MS BusinesScape Account in United States Dollars and in
same day funds, the amount of such Advance.  The Borrower hereby authorizes
Morgan Stanley DW to apply the proceeds of such Advance to pay itself in
reimbursement for the amount paid by it to Bank One Indiana or Bank One Ohio
relating to such use of such Card or such Check.

 

(ii)  The Borrower may request the Lender, and the Lender or its Affiliates may
make, at the sole and absolute discretion of the Lender, an Advance by wire
transfer (or other means agreed to by the Lender) hereunder on written notice,
given not later than 11:00 a.m. (New York City time) one (1) Business Day prior
to the date of the proposed Advance, by the Borrower to the Lender.  Each such
notice of an Advance shall be by telephone, confirmed immediately in writing, or
fax or other method then authorized by the Lender, and shall specify therein the
requested (x) date of such Advance, (y) amount of such Advance and (z) the
deposit account to which the wire transfer of such Advance is to be sent.  If
the Lender consents to make a wire transfer, the Lender or its Affiliates shall,
on such date, (A) make available to the Borrower, by means of a credit to the
Borrower’s MS BusinesScape Account, in United States Dollars and in same day
funds, the amount of such Advance, and (B) cause the proceeds of such Advance to
be sent by wire transfer to the deposit account at a bank in the United States
as the Borrower may specify in the notice of such Advance.

 

(iii)  If any accrued interest on any Advances, or any fee or other amount due
and payable under Loan Documents (other than principal on any Advance) payable
hereunder shall not be paid by or on behalf of the Borrower as contemplated by
the Section entitled “Payments and Computations”, as set forth in the Basic Loan
Terms when such interest, fee or other amount becomes due and payable, the
Borrower shall be deemed to have requested the Lender to make, and shall be
deemed to agree to, an Advance hereunder on the due date of, and in the amount
of, such interest, fee or other amount.  Upon fulfillment of the applicable
conditions set forth in Article III, the Lender may, in its sole discretion on
such date, (A) make available to the Borrower, by means of a credit to the
Borrower’s MS BusinesScape Account in United States Dollars and in same day
funds, the amount of such Advance and (B) cause the proceeds of such Advance to
be applied to the payment of such interest, fee or other amount.  If, however,
on such date the aggregate outstanding principal amount of the Advances shall be
$250,000 or less, the Borrower may, on or before the 20th day of the month next
following such date, notify the Lender that the Borrower does not so request or
agree to such Advance made pursuant to this clause (iii) and that the Borrower
has paid or will pay such interest, fee or other amount by other means.  If the
Borrower shall so notify the Lender, such Advance and such application of
proceeds pursuant to this clause (iii) shall be cancelled and the Lender shall
be deemed not to have so made such Advance or applied the proceeds thereof (and,
for purposes of this Agreement, such Advance shall not be outstanding).  If,
however, the Borrower shall not so notify the Lender on or before such 20th day,
the Borrower shall be deemed to have confirmed its agreement to such Advance.

 

(b)  The obligation of the Lender to make the Advances is subject to fulfillment
of the conditions set forth in Article III hereof.

 

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Section 2.03                                Terms of Advances and Repayment. 
The Advances shall bear interest and be repaid in accordance with the terms and
conditions set forth in the Basic Loan Terms.

 

Section 2.04                                Taxes.  The Borrower shall pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any payment made hereunder or
from the execution, delivery or registration or recording of, performing under,
or otherwise with respect to, this Agreement, the Note, the Deed of Trust or any
other Loan Document.

 

Section 2.05                                Evidence of Debt.  The Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to the Lender resulting from the Advances from
time to time, including the amounts of principal and interest payable and paid
to the Lender from time to time hereunder or under the Note.  Entries made in
good faith by the Lender in such account or accounts shall be prima facie
evidence of the amount of principal and interest due and payable or to become
due and payable from the Borrower to the Lender under this Agreement, absent
manifest error, provided, however, that the failure of the Lender to make an
entry, or any finding that an entry is incorrect, in such account or accounts
shall not limit or otherwise affect the obligations of the Borrower under the
Note, this Agreement or any other Loan Document.

 

Section 2.06.                             NRS 106.300-400.  Notwithstanding
anything to the contrary contained in this Agreement, if the Lender shall
receive a notice of termination contemplated under NRS 106.300-400 (referred to
in Paragraph 55 of the Deed of Trust), the Commitment shall immediately and
automatically terminate and the Borrower shall cease to be entitled to any
Advance hereunder.  Moreover, the Lender shall not be required to pay any Check
or to fund any use of the Card after receipt of such notice.  The Borrower and
the Guarantor agree that no inference of a Commitment larger than $2,000,000
shall be drawn from the $3,000,000 figure set forth in the said Paragraph 55.

 

ARTICLE III

CONDITIONS OF LENDING

 

Section 3.01  Conditions Precedent to First Advance.  The Borrower will be
entitled to receive the first Advance on and as of the first date (the
“Effective Date”) on which all of the following conditions precedent have been
satisfied:

 

(a)  The Borrower shall have established the MS BusinesScape Account.

 

(b)  The Lender shall have received, and be satisfied with, any amendments to
the organizational documents for the Borrower and the Guarantor since the date
of the closing of the loan made pursuant to the Second Loan Agreement, as may be
requested by the Lender.

 

(c)   The Guarantor shall own all the membership interests in the Borrower and
shall be the sole member of the Borrower.

 

(d)  The Borrower shall have paid the facility fee payable pursuant to the Basic
Loan Terms, as well as the other payment items set forth on the Closing Agenda
including, without limitation, the fees and disbursements of New York and Nevada
counsel to the Lender associated herewith.

 

(e)  The Lender shall have received, and be satisfied with, the documents and
other items listed on the Closing Agenda including, without limitation, a copy
of the rent roll for the Trust Property, a certified copy of the Subject Lease
and an estoppel certificate from the lessor under the Subject Lease.

 

(f)  The following statements shall be true (and the execution and delivery of
this Agreement and the other Loan Documents by the Borrower and the Guarantor
shall constitute a representation and warranty by the Borrower and the Guarantor
that on the date of such execution and delivery such statements are true):

 

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(i)  the representations and warranties of the Borrower and the Guarantor
contained in Section 4.01 hereof and in each other Loan Document are correct on
and as of the date of such execution and delivery of the Loan Documents, before
and after giving effect to any Advance made that day and to the application of
the proceeds therefrom, as though made on and as of such date, and

 

(ii)  no event has occurred and is continuing, or would result from any Advance
or from the application of the proceeds therefrom, that constitutes a Default.

 

(g)  The Lender shall have received such other approvals, opinions and documents
as the Lender may reasonably request.

 

Upon satisfaction of such conditions, the Borrower hereby authorizes the Lender
to insert the Effective Date of this Agreement on page 1 hereof, whereupon the
requested Advances (if any) shall be made available to the Borrower in
accordance with the terms and conditions hereof.  At any time prior to the
Effective Date, the Lender may, in its sole and absolute discretion, terminate
the obligation it may have, if any, to execute and deliver this Agreement and
make the Advances, whereupon any obligation of the Lender to make the Advances
set forth herein or in any other document executed in connection herewith shall
terminate and be void and of no force and effect.

 

Section 3.02  Conditions Precedent to Each Advance.  The obligation of the
Lender to make each Advance shall be subject to the satisfaction of the
following conditions precedent before or concurrently with the making of such
Advance:

 

(a)  The following statements shall be true (and the acceptance by the Borrower
of the proceeds of such Advance shall constitute a representation and warranty
by the Borrower that on the date of such Advance such statements are true):

 

(i)  the representations and warranties of the Borrower and the Guarantor
contained in Section 4.01 hereof and in each other Loan Document are correct in
all material respects on and as of the date of such Advance, before and after
giving effect to such Advance and to the application of the proceeds therefrom,
as though made on and as of such date, and

 

(ii)  no event has occurred and is continuing, or would result from such Advance
or from the application of the proceeds therefrom, that constitutes a Default.

 

(b)  The Lender shall have received such other approvals, opinions and documents
as the Lender may reasonably request.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.01  Representations and Warranties of the Borrower and the Guarantor. 
In addition to the representations and warranties set forth in Schedule II, each
of the Borrower and the Guarantor represents and warrants as follows:

 

(a)  The Borrower and the Guarantor (i) are each duly organized, validly
existing and in good standing under the laws of the state of its organization,
(ii) are each duly qualified and in good standing as a foreign limited liability
company or corporation (as applicable) in each other jurisdiction (including
Nevada, in the case of the Borrower) in which it owns or leases property or in
which the conduct of its business requires it to so qualify, except where the
failure to so qualify would not be reasonably likely to have a Material Adverse
Effect, and (iii) has all requisite organizational power and authority
(including, without limitation, all governmental licenses, agreements and other
approvals) to own and lease and operate its respective properties and to carry
on its respective business as now conducted and as proposed to be conducted.

 

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(b)  The execution, delivery and performance by the Borrower and the Guarantor
of the Loan Documents to which each of them is a party are within their
respective organizational powers, have been duly authorized by all necessary
limited liability company or corporate action (as applicable), and do not
contravene (i) the Borrower’s or the Guarantor’s charter, by-laws, articles of
organization or incorporation or limited liability company agreement (as
applicable), (ii) any law or any contractual restriction binding on or affecting
the Borrower or the Guarantor, (iii) result in the breach of, or constitute a
default or require any payment to be made under, any loan agreement, credit
agreement, indenture, mortgage, deed of trust, bond, note, lease or other
instrument or agreement binding on or affecting the Borrower, the Guarantor or
any of their properties, or (iv) except for the Liens created under the Loan
Documents, result in or require the creation or imposition of any Lien upon or
with respect to any of the properties of the Borrower or the Guarantor.

 

(c)  No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or any other third party is
required for (i) the due execution, delivery and performance by the Borrower or
the Guarantor of the Loan Documents to which either of them is a party, or (ii)
the grant by the Borrower of the Liens granted by it pursuant to the Collateral
Documents to which it is a party.

 

(d)  The Loan Documents to which the Borrower or the Guarantor are a party have
been duly executed and delivered by the Borrower and the Guarantor, and are the
legal, valid and binding obligations of the Borrower and the Guarantor
enforceable against the Borrower and the Guarantor in accordance with their
respective terms.  The “Loan Documents” (as such term is defined in each of the
First Loan Agreement and in the Second Loan Agreement, respectively)  to which
the Borrower or the Guarantor are a party remain in full force and effect,
subject to the effect of the Covenants Agreement.

 

(e)  Except as set forth in the Guarantor’s most recent 10-K filing with the
Securities and Exchange Commission, there is no pending or threatened action or
other proceeding affecting the Borrower or the Guarantor before any court,
governmental agency or arbitrator that (i) could be reasonably likely to have a
Material Adverse Effect, or (ii) purports to affect the legality, validity or
enforceability of this Agreement, the Note, the Deed of Trust or any other Loan
Document to which the Borrower or the Guarantor is a party, or any of the “Loan
Documents” as that term is used in the First Loan Agreement and the Second Loan
Agreement, or the consummation of any of the transactions contemplated hereby or
thereby.

 

(f)  The Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock, as defined in Regulation U
issued by the Board of Governors of the Federal Reserve System, and no proceeds
of any of the Advances will be used to purchase or carry any such margin stock
or to extend credit to others for the purpose of purchasing or carrying any such
margin stock.

 

(g)  The Guarantor owns all of the issued and outstanding membership interests
in the Borrower and is the sole manager of the Borrower.

 

(h)  To the best of their knowledge, the Trust Property is in material
compliance with all applicable laws, rules, regulations and orders including,
without limitation, those relating to use, occupancy, fire, safety and zoning
(including those in respect of parking and set-back requirements).  To the best
of their knowledge, the Trust Property is not the subject of any noted violation
of law.  To the best of their knowledge, there have been no changes or
introductions to, removals from or activites conducted on the Trust Property
that would adversely alter or effect the environmental assessment of the Trust
Property which was reviewed in connection with the closing under the First Loan
Agreement.

 

(i)  There have been no exterior changes to the buildings or other improvements
located at the Trust Property (and no additions at the Trust Property) other
than conversion of a garbage shed to a

 

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concrete structure, since the date of the survey certified to the Lender and
insured by the Lender’s existing title policy issued in connection with the
closing under the First Loan Agreement.

 

(j)  The License Agreement and the Sublicense Agreement are unamended and in
full force and effect, and there are no defaults thereunder, or events which
with the giving of notice and/or the passage of time, could result in a default
thereunder.

 

(k)  “S&W of Las Vegas, L.L.C.” is the proper legal name of the Borrower and it
is a Delaware limited liability company.  “The Smith & Wollensky Restaurant
Group, Inc.” is the proper legal name of the Guarantor and it is a Delaware
Corporation.  As of the Effective Date, each of the Borrower and the Guarantor
have only those Subsidiaries and Affiliates as are listed on Schedule 4.01(k).

 

(l)                                     To the best of their knowledge, there
are no “Events of Default”, or events that with the giving of notice, the
passage of time or both, shall become “Events of Default”, existing and/or
continuing under the First Loan Agreement the Second Loan Agreement, or under
any documents entered into in connection with either of them.  For the purposes
of this clause (l), the term “Events of Default” shall have the meaning assigned
to such term in the First Loan Agreement or the Second Loan Agreement, as
applicable.

 

(m)                               The Borrower, each of its Affiliates and each
Person who, to its knowledge has an economic interest in the Borrower, or, to
the Borrower’s knowledge, has or will have an interest in the transaction
contemplated by this Agreement or in the Trust Property or will participate, in
any manner whatsoever, in the Loan, is:  (i) not a “blocked” person listed in
the Annex to Executive Order Nos. 12947, 13099 and 13224 and all modifications
thereto or thereof (as used in this Section only, the “Annex”); (ii) in full
compliance with the requirements of the USA Patriot Act of 2001, 107 Public Law
56 (October 26, 2001) and in other statutes and all orders, rules and
regulations of the United States government and its various executive
departments, agencies and offices, related to the subject matter of the Patriot
Act, including Executive Order 13224 effective September 24, 2001 (the “Patriot
Act”) and all other requirements contained in the rules and regulations of the
Office of Foreign Assets Control, Department of the Treasury (as used in this
Section only, “OFAC”); (iii) operated under policies, procedures and practices,
if any, that are in compliance with the Patriot Act and available to the Lender
for the Lender’s review and inspection during normal business hours and upon
reasonable prior notice; (iv) not in receipt of any notice from the Secretary of
State or the Attorney General of the United States or any other department,
agency or office of the United States claiming a violation or possible violation
of the Patriot Act; (v) not listed as a Specially Designated Terrorist (as
defined in the Patriot Act) or as a “blocked” person on any lists maintained by
the OFAC pursuant to the Patriot Act or any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations
of the OFAC issued pursuant to the Patriot Act or on any other list of
terrorists or terrorist organizations maintained pursuant to the Patriot Act;
(vi) not a Person who has been determined by competent authority to be subject
to any of the prohibitions contained in the Patriot Act; and (vii) not owned or
controlled by or now acting and or will in the future act for or on behalf of
any Person named in the Annex or any other list promulgated under the Patriot
Act or any other Person who has been determined to be subject to the
prohibitions contained in the Patriot Act.

 

ARTICLE V

 

COVENANTS OF THE BORROWER

 

Section 5.01  Affirmative Covenants.  So long as any Advance shall remain unpaid
or the Lender shall have any Commitment hereunder, the Borrower (and, where
specifically indicated, the Guarantor) will (in addition to those affirmative
covenants set forth on Schedule II):

 

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(a)  Compliance with Laws, Etc.  Comply and cause each of its Subsidiaries to
comply, with all applicable laws, rules, regulations and orders, such compliance
to include, without limitation, compliance with ERISA.

 

(b)  Payment of Taxes, Etc.  Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges or levies imposed upon it or
upon its property subject to the right to contest as set forth in the Deed of
Trust and (ii) all lawful claims that, if unpaid, might by law become a Lien
upon its property.

 

(c)  Maintenance of Insurance.  Maintain, and cause each of its Subsidiaries to
maintain, insurance as required under the Deed of Trust and the Security
Agreement, and otherwise with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Borrower or such Subsidiary operates.  Each of
the Borrower and the Guarantor shall maintain insurance coverage which complies
with the workers’ compensation and employees’ liability laws of all states in
which the Borrower and the Guarantor shall be required to maintain such
insurance.

 

(d)  Preservation of Corporate or Limited Liability Company Existence, Etc. 
Preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, the Borrower’s limited liability company existence, and the
Guarantor’s corporate existence, as well as their respective rights (charter and
statutory) and franchises.

 

(e)  Visitation Rights.  In the case of the Borrower and the Guarantor, at any
reasonable time and from time to time, upon reasonable notice during normal
business hours, permit the Lender or any agents or representatives thereof, to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, the Borrower and the Guarantor, and any of
their respective Subsidiaries, and to discuss the affairs, finances and accounts
of the Borrower and the Guarantor, and any of their respective Subsidiaries,
with any of their officers or directors and with their independent certified
public accountants.

 

(f)  Keeping of Books.  In the case of the Borrower and the Guarantor, keep, and
cause each of their respective Subsidiaries to keep, proper books of record and
account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Borrower and the Guarantor in
accordance with GAAP.

 

(g)  Maintenance of Properties, Etc.  Maintain and preserve, and cause each of
its Subsidiaries to maintain and preserve, all of its properties that are used
or useful in the conduct of its business (i) as required under the Deed of Trust
and the Security Agreement with respect to the Trust Property and (ii) otherwise
in good working order and condition, ordinary wear and tear excepted.

 

(h)  Transactions with Affiliates.  Conduct, and cause each of its Subsidiaries
to conduct, all business or transactions otherwise permitted under the Loan
Documents with any of the Borrower’s Affiliates on terms that are fair and
reasonable and no less favorable to the Borrower than it would obtain in a
comparable arm’s-length transaction with a Person not an Affiliate.

 

(i)  Reporting Requirements. In the case of the Borrower and the Guarantor,
furnish to the Lender all financial statements, reports, documents and other
information at the times and in accordance with the requirements set forth in
Paragraph (b) of Schedule II.

 

(j)  Maintenance of MS BusinesScape Account.  In the case of the Borrower and
the Guarantor, maintain its MS BusinesScape Account.

 

(k)  Further Assurances.  In the case of the Borrower and the Guarantor,
promptly upon request by the Lender, do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register any and all such further
acts, deeds, conveyances, pledge agreements, mortgages, deeds of trust,

 

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trust deeds, assignments, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments as the Lender may reasonably require from time
to time in order to (i) carry out more effectively the purposes of the Loan
Documents, (ii) to the fullest extent permitted by applicable law, subject the
Borrower’s or any of its Subsidiaries’ properties, assets, rights or interests
to the Liens now or hereafter intended to be covered by any of the Collateral
Documents, (iii) perfect and maintain the validity, effectiveness and priority
of any of the Collateral Documents and any of the Liens intended to be created
thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect
and confirm more effectively unto the Lender the rights granted or now or
hereafter intended to be granted to the Lender under any Loan Document or under
any other instrument executed in connection with any Loan Document to which the
Borrower or the Guarantor or any of their respective Subsidiaries is or is to be
a party, and cause each of its Subsidiaries to do so.

 

(l)  Subordination of Borrower Obligations.  At the request of the Lender, all
obligations of the Borrower to the Guarantor will be subordinated to the
obligations of the Borrower to the Lender under the Loan Documents, which
subordination shall be pursuant to documentation in form and substance
satisfactory to the Lender.

 

(m)  License Agreement.  In the case of the Borrower and the Guarantor,
preserve, protect, renew and keep in full force and effect its rights, licenses,
permits, patents, trademarks, trade names and franchises, including, without
limitation, the rights granted to the Guarantor under the License Agreement and
the rights granted to the Borrower under the Sublicense Agreement.

 

Section 5.02  Negative Covenants.  So long as any Advance shall remain unpaid or
the Lender shall have any Commitment hereunder, the Borrower (and the Guarantor
as to subparagraphs (i) and (j) below) will not (in addition to those negative
covenants set forth in Schedule II):

 

(a)  Liens, Etc.  Create or suffer to exist, any Lien on or with respect to any
of its properties, whether now owned or hereafter acquired, other than as set
forth in Paragraph (c) of Schedule II.

 

(b)  Mergers, Etc.  Merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets to (whether now owned or
hereafter acquired), any Person, or permit any of its Subsidiaries to do so.

 

(c)  Debt.  Create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Debt other than as
set forth in Paragraph (d) of Schedule II.

 

(d)  Change in Nature of Business, Management or Ownership.  Make, or permit any
of its Subsidiaries to make, any material change in the nature of its business
as carried on at the date hereof, in the identity of the manager of the Borrower
(under its limited liability company agreement), or in the composition of the
current executive management of the Borrower or in its equity ownership, or
operate the restaurant at the Trust Property under any name other than “Smith &
Wollensky”.  Notwithstanding the foregoing, the withdrawal of Alan N. Stillman
from the management of the Borrower shall not constitute a breach of this
Section 5.02(d), provided that the Lender is reasonably satisfied with the
Borrower’s management following such withdrawal.

 

(e)  Sales, Etc., of Assets.  Sell, lease, transfer or otherwise dispose of, or
permit any of its Subsidiaries to sell, lease, transfer or otherwise  dispose
of, any assets, or grant any option or other right to purchase, lease or
otherwise acquire any assets other than (i) assets to be sold in the ordinary
course of business and (ii) assets to be sold or disposed of in the ordinary
course of business which are no longer necessary or required in the conduct of
its business. The forgoing exceptions (i) and (ii) are subject to compliance
with the applicable Collateral Documents.

 

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(f)  Investments in Other Persons.  Create or acquire any Subsidiary without the
express written consent of the Lender, or make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person.

 

(g)  Restricted Payments.  Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its membership interests
now or hereafter outstanding, return any capital to its members (or the
equivalent Persons thereof) as such, make any distribution of assets, membership
interests, obligations or securities to its members (or the equivalent Persons
thereof) as such, or issue or sell any membership interests.

 

(h)  Lease Obligations.  Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to credit, incur, assume or suffer to exist, any obligations
as lessee other than as set forth in Paragraph (e) of Schedule II.

 

(i)  Fee Ownership of Property.  Acquire, or permit or any Affiliate of the
Borrower (including the Guarantor) to acquire, fee ownership of the property
leased under the Subject Lease (and the improvements and equipment thereon)
unless simultaneously with such acquisition, the Lender obtains a first priority
fee deed of trust encumbering such property, improvements and equipment in form
and substance satisfactory to the Lender.

 

(j)  License Agreement and Sublicense Agreement.  Enter into any amendment to
the License Agreement or the Sublicense Agreement without the written consent of
the Lender, which consent shall not unreasonably withheld.

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

Section 6.01  Events of Default.  If any of the following events (“Events of
Default”) shall occur and be continuing:

 

(a)  The Borrower shall fail to pay (i) any principal of any Advance when the
same becomes due and payable; or (ii) the Borrower shall fail to pay any
interest or to make any payment of fees or other amounts payable under this
Agreement or the Note within five days after the same becomes due and payable;
or

 

(b)  Any representation or warranty made by the Borrower or the Guarantor (or by
any of their respective officers, or members) herein or in any other Loan
Document, or in connection with this Agreement or any other Loan Document, shall
prove to have been incorrect or misleading in any material respect when made or
as of the date of the Loan; or

 

(c)  (i) The Borrower or the Guarantor (as applicable) shall fail to perform or
observe any term, covenant or agreement contained in Section 5.01(c), (d), (h),
(j), (l), or (m), 5.02, or in the Covenants Agreement; or (ii) the Borrower or
the Guarantor (as applicable) shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed if such failure described in this subsection (c)(ii) shall remain
unremedied for 10 business days after the earlier of (x) the time the Borrower
or such Guarantor (as applicable) becomes aware or should have reasonably become
aware of such failure, or (y) notice from the Lender; or (iii) the Guarantor
shall at any time cease to own all of the membership interests in the Borrower;
or (iv) an “Event of Default” (as defined therein, where applicable) or a
default beyond applicable periods of notice and grace, if any, shall occur under
a Loan Document other than this Agreement; or

 

(d)  (i) The Borrower or the Guarantor shall fail to pay any principal of or
premium or interest on any Debt (other than the Debt outstanding hereunder) of
the Borrower or the Guarantor (as the case may be), when the same becomes due
and payable (whether by scheduled maturity, required

 

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prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or (ii) any other event shall occur or
condition shall exist under any agreement or instrument relating to any such
Debt and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof.  The provisions of clause (i) of this subparagraph (d) shall
apply to (x) any Debt of the Borrower or the Guarantor to the Lender or any of
its Affiliates in any amount, and (y) any Debt to any other creditor for
borrowed money in excess of $100,000 with respect to the Borrower, and
$1,000,000 with respect to the Guarantor, unless the Lender determines, in its
reasonable judgment, that the default to such other creditor is subject to a
bona fide dispute; or

 

(e)                                  Either the Borrower or the Guarantor shall
voluntarily dissolve, liquidate or terminate operations, or shall generally not
pay its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the Borrower
or the Guarantor seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it),
either (A) such proceeding shall remain undismissed or unstayed for a period of
10 days, or (B) any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or the Guarantor
shall take any action to authorize any of the actions set forth above in this
subsection (e); or

 

(f)                                    Any judgment or order for the payment of
money in excess of $100,000 shall be rendered against the Borrower, or in excess
of $200,000 (or $300,000 in the case of the lawsuit referred to in Paragraph
2(e) of the Covenants Agreement) shall be rendered against the Guarantor and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of ten (10)
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or

 

(g)                                 The Borrower, the Guarantor or any of the
Borrower’s or the Guarantor’ ERISA Affiliates shall incur one or more of the
following:  (i) the occurrence of any ERISA Event; (ii) the partial or complete
withdrawal of the Borrower or the Guarantor, or any of the Borrower’s or the
Guarantor’s ERISA Affiliates from a Multiemployer Plan; or (iii) the
reorganization or termination of a Multiemployer Plan; or

 

(h)                                 Any Lien granted pursuant to any Collateral
Document shall for any reason cease to be a valid and perfected first priority
lien on and security interest in the Collateral purported to be covered thereby;
or

 

(i) The Guaranty or the Environmental Guaranty shall for any reason cease to be
a valid and binding obligation or enforceable against the Guarantor (or the
Borrower, in the case of the Environmental Guaranty), or (ii) the Guarantor
shall repudiate, revoke or deny any liability under the Guaranty or the
Environmental Guaranty (or the Borrower shall do the same with respect to the
Environmental Guaranty); or

 

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(j)                                     A default beyond any applicable notice
and/or grace period shall have occurred under the License Agreement or the
Sublicense Agreement; or

 

(k)                                  A Change in Control with respect to the
Guarantor shall have occurred; or

 

(l)                                     Either of the Borrower or the Guarantor,
or an Affiliate of either of them, or a holder of any substantial equity
interest in any of the Borrower or the Guarantor or in any such Affiliate shall
(i) become named on any list of persons who are or may be engaged in or who have
been or may have been engaged in possible criminal activity or other wrongdoing,
which list is promulgated under the Patriot Act, or (ii) be indicted, arraigned
or custodially detained on charges involving money laundering or any predicate
crime to money laundering;

 

then, and in any such event, the Lender may, by notice to the Borrower and the
Guarantor, declare the Advances, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Advances, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower and the
Guarantor; provided, however, that upon the occurrence of any event described in
subsection (e) above, the Loan, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower and the Guarantor.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01  Amendments, Etc.  No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Borrower or the Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, the Borrower and the Guarantor, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.

 

Section 7.02  Notices, Etc.  All notices and other communications provided for
hereunder shall be in writing (including fax communication and any other method
of communication authorized by the Lender) and mailed, faxed, or otherwise sent
or delivered as described in the Basic Loan Terms.

 

Section 7.03  No Waiver; Remedies.  No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.  The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

 

Section 7.04  Costs and Expenses; Indemnification.

 

(a)  The Borrower and the Guarantor jointly and severally agree to pay on demand
all fees, costs and expenses reasonably incurred by the Lender in connection
with the preparation, negotiation, execution, delivery, administration,
modification and amendment of this Agreement, the Note, the Collateral Documents
and the other Loan Documents, including, without limitation, search, filing and
recording fees and taxes, costs of reappraisals required by the Lender and the
fees and expenses of counsel for the Lender with respect thereto, and with
respect to advising the Lender as to its rights and responsibilities under such
documents.  The Borrower and the Guarantor further jointly and severally agree
to pay on demand all fees, costs and expenses reasonably incurred by the Lender,
if any (including, without limitation, counsel fees and expenses), in connection
with the enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement, the Note, the Collateral Documents and the other
Loan Documents, including, without limitation, reasonable fees and expenses of
counsel for the

 

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Lender in connection with the enforcement of rights under this Section 7.04(a). 
Each of the Borrower and the Guarantor hereby authorizes the Lender and its
Affiliates at any time and from time to time, without notice to the Borrower or
the Guarantor, and whether or not the Lender shall have made any demand or an
Event of Default shall have occurred, to charge any account of the Borrower or
the Guarantor maintained by the Lender or its Affiliates against such fees,
costs and expenses.  The rights of the Lender and its Affiliates under this
Section are in addition to other rights and remedies (including, without
limitation, rights of set-off) that the Lender and its Affiliates may have.

 

(b)  The Borrower and the Guarantor agree to indemnify and hold harmless the
Lender and each of its Affiliates and officers, directors, employees, agents and
advisors (each, an “Indemnified Party”) from and against any and all claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) this Agreement, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loan except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party’s gross negligence or willful misconduct.  In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section 7.04(b) applies, such indemnity shall be effective whether or
not such investigation, litigation or proceeding is brought by the Borrower, its
directors, equityholders or creditors or an Indemnified Party or any other
Person, whether or not any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated.  Each of
the Borrower and the Guarantor also agrees not to assert any claim against the
Lender, any of its Affiliates, or any of their directors, officers, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to this
Agreement, any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Loan.

 

(c)  Without prejudice to the survival of any other agreement of the Borrower or
the Guarantor hereunder, the agreements and obligations of the Borrower and the
Guarantor contained in this Section 7.04 shall survive the payment in full of
principal, interest and all other amounts payable hereunder, under the Note and
the other Loan Documents.

 

Section 7.05  Right of Set-off.  Upon the occurrence and during the continuance
of any Event of Default, the Lender and its Affiliates are hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to sell,
liquidate, transfer or otherwise apply any assets or securities of the Borrower
or the Guarantor held by the Lender or any of its Affiliates and set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
or such Affiliates to or for the credit or the account of the Borrower or the
Guarantor against any and all of the respective obligations of the Borrower or
Guarantor now or hereafter existing under this Agreement, the Note, the
Guaranty, the Environmental Guaranty or any other Loan Document, whether or not
the Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured.  The rights of the
Lender and its Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that the
Lender and its Affiliates may have.

 

Section 7.06  Binding Effect; Successors and Assigns.  This Agreement shall
become effective on the Effective Date and thereafter shall be binding upon and
inure to the benefit of the Borrower, the Guarantor, the Lender and their
respective successors and assigns, except that neither the Borrower nor the
Guarantor shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lender.

 

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Section 7.07  Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.

 

Section 7.08  Execution in Counterparts.  This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.  Delivery of
an executed counterpart of a signature page to this Agreement by fax shall be
effective as delivery of an original executed counterpart of this Agreement.

 

Section 7.09  Interest Rate Limitation.  Anything herein to the contrary
notwithstanding, if at any time the applicable interest rate, together with all
fees and charges that are treated as interest under applicable law
(collectively, the “Charges”), as provided for herein or in any other Loan
Document, or otherwise contracted for, charged, received, taken or reserved by
the Lender, shall exceed the maximum lawful rate (the “Maximum Rate”) that may
be contracted for, charged, taken, received or reserved by the Lender in
accordance with applicable law, the rate of interest payable on the Loan,
together with all Charges payable to the Lender, shall be limited to the Maximum
Rate.  Neither the Borrower nor the Guarantor shall ever be liable for unearned
interest thereon or shall ever be required to pay interest thereon in excess of
the maximum amount that may be lawfully charged under applicable law from time
to time in effect, and the provisions of this Section 7.09 shall control over
all other provisions of the Loan Documents that may be in conflict.  If (a) the
maturity of the obligations of the Borrower under Note or this Agreement is
accelerated for any reason, (b) any of such obligations are prepaid and as a
result any amounts held to constitute interest are determined to be in excess of
the legal maximum or (c) the Lender or any other holder of any or all of the
obligations of the Borrower under this Agreement shall otherwise collect moneys
that are determined to constitute interest that would otherwise increase the
interest on any or all of such obligations to an amount in excess of that
permitted to be charged by applicable law then in effect, then all such sums
determined to constitute interest in excess of such legal limit shall, without
premium, penalty, be promptly applied to reduce the then outstanding principal
of such obligations or, at the Lender’s or such holder’s option, shall be
promptly returned to the Borrower or the other payor thereof upon such
determination.

 

Section 7.10  Jurisdiction, Etc.

 

(a)  Each of the parties hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court.  Each of the
parties hereto consents to the service of copies of any and all process which
may be served in any such action or proceeding by the mailing of copies of such
process to such party at its address specified in Section 7.02.  Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement or
any other Loan Document shall affect any right that any party may otherwise have
to bring any action or proceeding relating to this Agreement or any other Loan
Document in the courts of any other jurisdiction.

 

(b)  Each of the parties hereto irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
New York State or federal court.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

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Section 7.11  Assignments and Participations.  The Lender may assign to one or
more Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the
Advances owing to it), without notice to, or the consent of the Borrower or the
Guarantor.  The Lender may sell participations to one or more Persons  (other
than the Borrower or any of its Affiliates) in or to all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment and the Advances owing to it).  The Lender may,
in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section, disclose to the assignee or participant
or proposed assignee or participant, any information relating to the Borrower
and the Guarantor furnished to the Lender by or on behalf of the Borrower or the
Guarantor.  In addition, the terms of the Note relating to participations of the
Note shall be applicable to participations of the Lender’s rights and
obligations under this Agreement.  The Lender represents that as of the date
hereof, it has no present intention of assigning its rights and obligations
under this Agreement (including, without limitation, all or a portion of the
Loan owing to it); provided, however, the foregoing shall in no way impair or
otherwise alter the Lender’s rights under this Section.

 

Section 7.12  WAIVER OF JURY TRIAL.  EACH OF THE BORROWER, THE GUARANTOR AND THE
LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE
ADVANCES OR THE ACTIONS OF THE LENDER OR ANY OF ITS AFFILIATES IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.

 

Section 7.13  Severability of Provisions.  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 of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

 

Section 7.14  Headings.  Article, section and paragraph headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part hereof for any other purpose.

 

Section 7.15  Conflicts.  Conflicts between this Agreement and any of the
Collateral Documents shall be resolved in favor of the latter.

 

Section 7.16  Lender Action.  The Lender shall have the right, but not the
obligation, to take any action at the Borrower’s expense if the Lender believes,
in its reasonable discretion after consultation with Borrower or the Guarantor,
that such action is necessary to avoid the occurrence of a Material Adverse
Effect with respect to the Borrower or the Guarantor, including, without
limitation, curing any defaults under the License Agreement.

 

Section 7.17  Other Loan Agreements.  The parties agree that the Advances shall
be a permitted “Debt”, and the Collateral Documents (as they relate to the
Borrower and the Trust Property) shall be permitted “Liens” as those terms are
used in that certain Term Loan Agreement dated as of August 23, 2002 among the
Borrower, the Guarantor and the Lender, as amended (the “First Loan Agreement”)
and in that certain Term Loan Agreement dated as of December 24, 2002 among the
Borrower, the Guarantor, Dallas S & W, L.P. and the Lender, as amended (the
“Second Loan Agreement”).

 

Section 7.18  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word
“will” shall be construed to have the same meaning and effect as the word
“shall”.  Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as

 

14

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referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

 

Section 7.19  Secured Obligation under Security Agreement.  The parties agree
that the obligations of the Borrower under this Agreement and the other Loan
Documents shall be one of the “Secured Obligations” under the Security
Agreement, and that: (a) the term “Deed of Trust” as used therein shall mean the
“Deed of Trust” (as defined in the First Loan Agreement), the “Deed of Trust”
(as defined in the Second Loan Agreement) and the Deed of Trust (as defined
herein); (b) the term “Assignment of Leases” as used therein shall mean the
“Assignment of Leases” (as defined in the First Loan Agreement), the “Assignment
of Leases” (as defined in the Second Loan Agreement) and the Assignment of
Leases (as defined herein); (c) the term “Credit Agreement” as used therein
shall mean the First Loan Agreement, the Second Loan Agreement and this
Agreement; and (d) all other capitalized terms used, but not defined, in the
Security Agreement (including, without limitation, “Loan Documents” and “Note”)
shall have the meanings given to such terms in the First Term Loan Agreement,
the Second Loan Agreement and in this Agreement, mutatis mutandis.

 

Section 7.20  Tax Information.  Notwithstanding anything herein to the contrary,
the Borrower and the Guarantor (and any employee, representative or other agent
of either of them) may disclose to any and all Persons, without limitation of
any kind, the U.S. federal income tax treatment and the U.S. federal income tax
structure of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to the Borrower or
the Guarantor (or any employee, representative or other agent of either of them)
relating to such tax treatment and tax structure.  However, no disclosure of any
information relating to such tax treatment or tax structure may be made to the
extent nondisclosure is reasonably necessary in order to comply with applicable
securities laws.

 

 Section 7.21  Collateral Account.  The covenant added to the First Loan
Agreement and the Second Loan Agreement pursuant to Section 3 of the Amendment
to Term Loan Agreements dated as of August 20, 2003 is hereby incorporated by
reference, mutatis mutandis, into this Agreement.

 

 

[rest of page deliberately left blank]

 

15

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective representatives thereunto duly authorized, as of the date
first above written.

 

 

S&W OF LAS VEGAS, L.L.C.

 

By:

The Smith & Wollensky Restaurant Group,

 

 

Inc., Sole Member

 

 

 

 

By:

/s/ Alan M. Mandel

 

 

 

Name: Alan M. Mandel

 

 

Title: Secretary

 

 

STATE OF NEW YORK

)

 

ss.:

COUNTY OF NEW YORK

)

 

On the 30th day of January in the year 2004 before me, the undersigned, a Notary
Public in and for said State, personally appeared Alan M. Mandel, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

 

 

/s/ Maria A. Chang

 

 

Notary Public

 

 

Notarized

 

 

 

 

 

 

THE SMITH & WOLLENSKY
RESTAURANT GROUP, INC.

 

 

 

 

By:

/s/ Alan M. Mandel

 

 

 

Name: Alan M. Mandel

 

 

Title: Secretary

 

STATE OF NEW YORK

)

 

ss.:

COUNTY OF NEW YORK

)

 

On the 30th day of January in the year 2004 before me, the undersigned, a Notary
Public in and for said State, personally appeared Alan M. Mandel, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

 

 

/s/ Maria A. Chang

 

 

Notary Public

 

 

Notarized

 

 

--------------------------------------------------------------------------------

 

 

MORGAN STANLEY DEAN WITTER
COMMERCIAL FINANCIAL SERVICES, INC.

 

 

 

 

By:

/s/ Christopher Mayrose

 

 

 

Name: Christopher Mayrose

 

 

Title: Executive Director

 

 

STATE OF NEW YORK

)

 

ss.:

COUNTY OF NEW YORK

)

 

On the 30th day of January in the year 2004 before me, the undersigned, a Notary
Public in and for said State, personally appeared Christopher Mayrose,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

 

 

/s/ Eva Marie Aromi

 

 

Notary Public

 

 

Notarized

 

 

--------------------------------------------------------------------------------

 

SCHEDULE I
TO LINE OF CREDIT AGREEMENT WITH
S&W OF LAS VEGAS, L.L.C. AND
THE SMITH & WOLLENSKY RESTAURANT GROUP, INC.

CERTAIN DEFINED TERMS

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Advance” means an advance by the Lender to the Borrower pursuant to Article II.

 

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.  For purposes of this
definition, the term “control” (including the terms “controlling”, “controlled
by” and “under common control with”) of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the voting stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting stock, by contract or otherwise.

 

“Assignment of Leases” means the Absolute Assignment of Rents and Leases of even
date herewith made by the Borrower in favor of the Lender, as the same may be
amended, replaced or restated from time to time.

 

“Bank One Indiana” means Bank One, Indiana, NA.

 

“Bank One Ohio” means Bank One, Columbus , NA, Delaware, Ohio.

 

“Business Day” means a day of the year on which banks are not required or
authorized by law to close in New York City.

 

“Card” means any MasterCard Business Card debit card issued by Bank One Indiana
for use in connection with the Borrower’s MS BusinesScape Account applicable to
the Advances.

 

“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) of shares
representing more than 33-1/3% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Guarantor, or (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Guarantor by Persons who were neither (i) nominated by the
board of directors of the Guarantor nor (ii) appointed by directors so
nominated.

 

“Charges” has the meaning specified in Section 7.09.

 

“Check” means any check drawn on Bank One Ohio for use in connection with the
Borrower’s MS BusinesScape Account applicable to the Advances.

 

“Closing Agenda” means the Closing Agenda prepared by the Lender and delivered
to the Borrower setting forth the documents and other items to be executed
and/or delivered, and payments to be made, by the parties in connection with
this Agreement.

 

“Collateral” means all “Collateral” referred to in the Collateral Documents and
all other property that is or is intended to be subject to any Lien in favor of
the Lender.

 

“Collateral Documents” means the Security Agreement, Deed of Trust, the
Assignment of Leases, all Uniform Commercial Code financing statements with
respect to the Collateral and any other Loan Document pursuant to which any
collateral is granted to the Lender by the Borrower.

 

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“Covenants Agreement” means the Covenants Agreement and Amendment to Term Loan
Agreements of even date herewith among the Lender, the Borrower, the Guarantor
and Dallas S&W, L.P., detailing certain financial covenants made by the Borrower
and/or or the Guarantor to the Lender, which agreement also amends the First
Loan Agreement and the Second Loan Agreement.

 

“Debt” of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade payables incurred in the ordinary course of
business), (b) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (c) all capital lease obligations of
such Person, (d) all obligations of such Person, contingent or otherwise, in
respect of acceptances, letters of credits or similar extensions of credit, (e)
all liabilities secured by any Lien on any property owned by such Person, even
though such Person has not assumed or otherwise become liable for the payment
thereof, (f) all obligations of such Person in respect of interest rate or
currency protection agreements, and (g) all Debt of others guaranteed directly
or indirectly in any manner by such Person.  The foregoing is intended to
include any and all indebtedness arising under each of the First Loan Agreement
and the Second Loan Agreement.

 

“Deed of Trust” means a third priority Leasehold Deed of Trust of even date
herewith made by the Borrower to the trustee thereunder for the benefit of the
Lender and encumbering the Trust Property, as the same may be amended, replaced
or restated from time to time, and shall include any new (or replacement) fee
deed of trust entered into in the event the Borrower, the Guarantor or an
Affiliate acquires the fee interest in the Trust Property.

 

“Default” means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or both.

 

“Effective Date” has the meaning specified in Section 3.01.

 

“Environmental Guaranty” means the Joint and Several Hazardous Material Guaranty
and Indemnification Agreement of even date herewith made by the Borrower and the
Guarantor in favor of the Lender in respect of the Trust Property, as the same
may be amended, replaced or restated from time to time.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

 

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a
member of the Borrower’s or controlled group, or under common control with the
Borrower or within the meaning of Section 414 of the Internal Revenue Code.

 

“ERISA Event” means (a) (i) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
is reasonably expected to occur with respect to such Plan within the following
30 days; (b) the application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a notice of intent
to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of the Borrower or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
the withdrawal by the Borrower or The Guarantor or any ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a

 

2

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substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the
conditions for the imposition of a lien under Section 302(f) of ERISA shall have
been met with respect to any Plan; (g) the adoption of an amendment to a Plan
requiring the provision of security to such Plan pursuant to Section 307 of
ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, a Plan.

 

“Events of Default” has the meaning specified in Section 6.01.

 

“First Loan Agreement” has the meaning specified in Section 7.14.

 

“Free Credit Balance” means the amount of any cash that may be withdrawn from
the Borrower’s MS BusinesScape Account at any time without creating a negative
balance therein or giving rise to interest charges thereon.

 

“GAAP” means the generally accepted accounting principles applied in the United
States.

 

“Guarantor” means The Smith & Wollensky Restaurant Group, Inc., a Delaware
corporation.

 

“Guaranty” means the Guaranty of Payment of even date herewith made by the
Guarantor in favor of the Lender in respect of the Loan, as the same may be
amended, replaced or restated from time to time.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.

 

“Investment” in any Person means any loan or advance to such Person, any
purchase or other acquisition of any capital stock or Debt or the assets
comprising a division or business unit for a substantial part or all of the
business of such Person, any capital contribution to such Person or any other
direct or indirect investment in such Person, including, without limitation, any
acquisition by way of a merger or consolidation.

 

“License Agreement” means the Sale and License Agreement dated August 16, 1996
between St. James Associates and The New York Restaurant Group, LLC pursuant to
which, among other things, the Guarantor possesses the right to use and to
sublicense the trademark “Smith & Wollensky”.

 

“Lien” means any lien, security interest or other charge or encumbrance of any
kind, or any other type of preferential arrangement having the effect of a lien
or security interest, including, without limitation, the lien or retained
security title of a conditional vendor and any easement, right of way or other
encumbrance on title to real property.

 

“Loan Documents” means this Agreement, the Note, the Collateral Documents, the
Guaranty, the Covenants Agreement, the Environmental Guaranty and any other
documents executed and/or delivered by the Borrower or the Guarantor in
connection therewith, in each case as amended, supplemented, replaced, restated
or otherwise modified from time to time.

 

“Material Adverse Change” means any material adverse change in the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower or the Guarantor, or the Borrower, or the Guarantor
and its Subsidiaries taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower or the Guarantor, or the Borrower or the Guarantor and
its Subsidiaries taken as a whole, (b) the rights and remedies of the Lender
under this Agreement or (c) the ability of the Borrower or the Guarantor to
perform its obligations under any Loan Document to which it is a party.

 

“Maximum Rate” has the meaning specified in Section 7.09.

 

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“Morgan Stanley DW” means Morgan Stanley DW Inc., a Delaware corporation, or any
successor thereof.

 

“MS BusinesScape Account” means, in respect of the Borrower, the MS BusinesScape
Account for Business maintained by the Borrower at Morgan Stanley DW, MS
BusinesScape Account No.476-040-167 and in respect of the Guarantor, the MS
BusinesScape Account for Business maintained by the Guarantor at Morgan Stanley
DW, MS BusinesScape Account No. 476-027766-427.

 

“MS BusinesScape Funds” means any of the money market fund shares credited to
the Borrower’s MS BusinesScape Account.

 

“Multiemployer Plan” means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.

 

“Multiple Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower, the Guarantor or any ERISA Affiliate and at least one Person other
than the Borrower, the Guarantor and the ERISA Affiliates or (b) was so
maintained and in respect of which the Borrower, the Guarantor or any ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.

 

“Note” means the Promissory Note of even date herewith in the original principal
amount of $2,000,000.00 made by the Borrower in favor of the Lender.

 

“Patriot Act” has the meaning set forth in Section 4.01(m).

 

“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

 

“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture,
limited liability company or other entity, or a government or any political
subdivision or agency thereof.

 

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

 

“Second Loan Agreement” has the meaning specified in Section 7.17.

 

“Security Agreement” means the Security Agreement dated August 23, 2002 made by
the Borrower to the Lender, as the same may have been or may be amended,
replaced or restated from time to time.

 

“Single Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower, the Guarantor or any ERISA Affiliate and no Person other than the
Borrower, the Guarantor and the ERISA Affiliates or (b) was so maintained and in
respect of which the Borrower, the Guarantor or any ERISA Affiliate could have
liability under Section 4069 of ERISA in the event such plan has been or were to
be terminated.

 

“Subject Lease” has the meaning set forth in the Deed of Trust.

 

“Sublicense Agreement” means the Sublicense Agreement dated August 23, 2002
between the Guarantor and the Borrower.

 

“Subordinated Debt” of any Person means all Debt completely subordinated to such
Person’s obligations to the Lender pursuant to a subordination agreement in form
and substance satisfactory to the Lender.

 

4

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“Subsidiary” of any Person means any corporation, partnership, joint venture,
limited liability company, trust or estate of which (or in which) more than 50%
of (a) the issued and outstanding voting stock of such corporation, (b) the
interest in the capital or profits of such limited liability company,
partnership or joint venture or (c) the beneficial interest in such trust or
estate is at the time directly or indirectly owned or controlled by such Person,
by such Person and one or more of its other Subsidiaries or by one or more of
such Person’s other Subsidiaries.

 

“Termination Date” means the earlier of (a) the date which occurs on the second
anniversary of the date hereof, and (b) the date of termination in whole of the
Commitment pursuant to Section  6.01.

 

“Trust Property” has the meaning given to the term “Trust Property” in the Deed
of Trust.

 

“United States Dollars” means money of the United States of America.

 

“Uncovered Debit” means any debit that is at any time in the Borrower’s MS
BusinesScape Account resulting from any use of any Card or any Check and that
exceeds the remainder of (i) the sum of the Free Credit Balance and the value of
MS BusinesScape Funds shares in the Borrower’s MS BusinesScape Account at such
time minus (ii) any other debits at such time applicable to the Borrower’s MS
BusinesScape Account resulting from any transactions other than any use of any
Card or any Check.

 

5

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SCHEDULE II
TO LINE OF CREDIT AGREEMENT WITH
S&W OF LAS VEGAS, L.L.C. AND
THE SMITH & WOLLENSKY RESTAURANT GROUP, INC.

FINANCIAL REPRESENTATIONS, COVENANTS AND REPORTING

 

(a)  Representation.  The Borrower represents and warrants that the management
prepared unaudited statements of operations for the periods ended June 30, 2003
and September 30, 2003, copies of which have been furnished to the Lender,
fairly present the financial condition of the Borrower as at such dates, all in
accordance with GAAP consistently applied.  The Guarantor represents and
warrants that (i) the 10-K statement for the 2002 fiscal year and (ii) the 10-Q
statement for the fiscal quarter ended September 30, 2003 fairly present the
financial condition of the Guarantor as at such dates, all in accordance with
GAAP consistently applied.  The Guarantor represents and warrants that the
management prepared break-down of results for each individual restaurant
operated by the Guarantor and each of its Subsidiaries for the period ended
September 30, 2003, a copy of which have been furnished to the Lender, is true
and complete in all material respects as at such date.  Since the dates of such
statements, there has been no Material Adverse Change.

 

(b)  Reporting Requirements.  So long as any Advance shall remain unpaid or the
Lender shall have any Commitment hereunder, the Borrower and the Guarantor (as
applicable) will furnish to the Lender:

 

(i)  For the Guarantor:  as soon as available and in any event within 45 days
after the end of each quarter of each fiscal year of the Guarantor, consolidated
management prepared (10-Q) financial statements of the Guarantor and its
Subsidiaries as of the end of such quarter, duly certified by the chief
financial officer the Guarantor as having been prepared in accordance with GAAP,
together with a certificate of the chief financial officer of the Guarantor
setting forth in reasonable detail the calculations necessary to demonstrate
compliance with the Covenants Agreement;

 

(ii)  For the Borrower and the Guarantor: as soon as available and in any event
within 45 days after the end of each quarter of each fiscal year of the
Borrower, management prepared financial statements of the Borrower as of the end
of such quarter, duly certified by the sole or managing member of the Borrower
as having been prepared in accordance with GAAP, together with a certificate of
the sole or managing member of the Borrower setting forth in reasonable detail
the calculations necessary to demonstrate compliance with the Covenants
Agreement;

 

(iii)  For the Guarantor:  as soon as available and in any event within 90 days
after the end of each fiscal year of the Guarantor, a copy of the annual audited
financial statements for such year for the Guarantor and its Subsidiaries
(including the Borrower) containing a consolidated balance sheet of the
Guarantor and its Subsidiaries as of the end of such fiscal year and a
consolidated statement of income and cash flows of the Guarantor and its
Subsidiaries for such fiscal year, in each case accompanied by an opinion
acceptable to the Lender and an accountant letter, if issued, by independent
public accountants acceptable to the Lender, together with a certificate of the
chief certified financial officer of the Guarantor setting forth in reasonable
detail the calculations necessary to demonstrate compliance with the Covenants
Agreement;

 

(iv)  For the Borrower as soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the annual reviewed
financial statements for such year for the Borrower, containing a balance sheet
of the Borrower as of the end of such fiscal year and a

 

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statement of income and cash flows of the Borrower for such fiscal year, in each
case accompanied by an opinion acceptable to the Lender and an accountant
letter, if issued, by independent certified public accountants acceptable to the
Lender, together with a certificate of the sole or managing member of the
Borrower setting forth in reasonable detail the calculations necessary to
demonstrate compliance with the Covenants Agreement;

 

(v)  For the Borrower, not later than 90 days after the end of each fiscal year
of the Borrower, a detailed rent roll for the Trust Property in form
satisfactory to the Lender;

 

(vi)  As soon as possible and in any event within five days after the occurrence
of each Default continuing on the date of such statement, a statement of the
sole or managing member of the Borrower or the chief financial officer of the
Guarantor setting forth details of such Default and the action that the
defaulting party has taken and proposes to take with respect thereto;

 

(vii)  together with the filing of each 10-K and 10-Q statement with the
Securities and Exchange Commission, a management prepared break-down of results
for each individual restaurant operated by the Guarantor or any of its
Subsidiaries, duly certified by the chief financial officer of the Guarantor as
being true and complete; and

 

(viii)  such other information respecting the Borrower or the Guarantor or any
of the Guarantor’s Subsidiaries as the Lender may from time to time reasonably
request.

 

(c)  Liens, Etc.  So long as any Advance shall remain unpaid or the Lender shall
have any Commitment hereunder, the Borrower will not create or suffer to exist,
any Lien on or with respect to any of its properties, whether now owned or
hereafter acquired, or assign any right to receive income, other than: (i) Liens
created or expressly permitted under the Loan Documents, (ii) purchase money
Liens upon or in any real property or equipment acquired (or leased) or held by
the Borrower in the ordinary course of business to secure the purchase price of
such property or equipment or to secure Debt incurred solely for the purpose of
financing the acquisition (or lease) of such property or equipment, or Liens
existing on such property or equipment at the time of its acquisition or
extensions, renewals or replacements of any of the foregoing for the same or a
lesser amount, provided, however, that no such Lien shall extend to or cover any
properties of any character other than the real property or equipment being
acquired, and no such extension, renewal or replacement shall extend to or cover
any properties not theretofore subject to the Lien being extended, renewed or
replaced, provided further that the aggregate principal amount of the
indebtedness secured by the Liens referred to in this clause (ii) shall not
exceed the amount specified therefor in Paragraph (d) of this Schedule II at any
time outstanding, (iii) the Liens existing on the Effective Date and described
on Schedule 5.02(a) hereto and (iv) Liens held by the Lender.

 

(d)  Debt.  So long as any Advance shall remain unpaid, the Borrower will not
create, incur, assume or suffer to exist, any Debt other than: (i) Debt existing
on the Effective Date and described on Schedule 5.02(c) hereto, (ii) Debt
secured by Liens permitted by Paragraph (c)(ii) of this Schedule II aggregating
not more than $100,000.00 at any one time outstanding, (iii) Debt under the Loan
Documents, (iv) unsecured Debt incurred in the ordinary course of business
aggregating not more than $200,000.00 at any one time outstanding and (v) Debt
owing to the Lender.

 

(e) Lease Obligations.  So long as any Advance shall remain unpaid, the Borrower
will not create, incur, assume or suffer to exist, any obligations as lessee (i)
for the rental or hire of real or personal property in connection with any sale
and leaseback transaction, or (ii) otherwise, except for the Subject Lease and
equipment leases made in the ordinary course of business, for the rental or hire
of other real or personal property of any kind under leases or agreements to
lease having an original term of one year or more.

 

2

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SCHEDULE 4.01(k)
TO LINE OF CREDIT AGREEMENT WITH
S&W OF LAS VEGAS, L.L.C. AND
THE SMITH & WOLLENSKY RESTAURANT GROUP, INC.

SUBSIDIARIES/AFFILIATES

 

Atlantic & Pacific Grill Associates, L.L.C.

 

La Cite Associates, L.L.C.

 

Manhattan Ocean Club Associates L.L.C.

 

MOC D.C., L.L.C.

 

MOC of Miami, LLC

 

Mrs. Parks Sub, L.L.C.

 

New York RGI Sub, L.L.C.

 

 Parade 59 Restaurant

 

Restaurant Group Management Services, L.L.C.

 

S&W of Boston, LLC

 

S&W of Chicago, L.L.C.

 

S&W D.C., L.L.C.

 

S&W of Miami, L.L.C.

 

S&W of Las Vegas, L.L.C.

 

S&W of New Orleans, L.L.C.

 

S&W of Philadelphia, L.L.C.

 

S&W of Ohio, L.L.C.

 

S&W of Dallas, LLC

 

Smith & Wollensky of Houston, LLC

 

Smith & Wollensky of America, LLC

 

1 Washington Avenue Corp.

 

South Pointe Hospitality, Inc.

 

1

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SCHEDULE 5.02(a)
TO LINE OF CREDIT AGREEMENT WITH
S&W OF LAS VEGAS, L.L.C. AND
THE SMITH & WOLLENSKY RESTAURANT GROUP, INC.

EXISTING LIENS

 

 

None.

 

1

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SCHEDULE 5.02(c)
TO LINE OF CREDIT AGREEMENT WITH
S&W OF LAS VEGAS, L.L.C. AND
THE SMITH & WOLLENSKY RESTAURANT GROUP, INC.

EXISTING DEBT

 

 

None.

 

1

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