Exhibit 10.1

 

 

 

 

CREDIT AGREEMENT

 

dated as of August 14, 2013

 

among

 

LUBY’S, INC.

 

The Lenders From Time to Time Party Hereto

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

AMEGY BANK NATIONAL ASSOCIATION,

as Syndication Agent

 

 

 

 

 

 
 

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TABLE OF CONTENTS

 

  Page

ARTICLE I Definitions

1

SECTION 1.01 Defined Terms

1

SECTION 1.02 Classification of Loans and Borrowings

19

SECTION 1.03 Terms Generally

19

SECTION 1.04 Accounting Terms; GAAP

20

ARTICLE II The Credits

20

SECTION 2.01 Commitments

20

SECTION 2.02 Loans and Borrowings

20

SECTION 2.03 Requests for Borrowings

21

SECTION 2.04 Letters of Credit

22

SECTION 2.05 Funding of Borrowings

26

SECTION 2.06 Interest Elections

26

SECTION 2.07 Termination, Reduction and Increase of Commitments

27

SECTION 2.08 Repayment of Loans; Evidence of Debt

29

SECTION 2.09 Prepayment of Loans

29

SECTION 2.10 Fees

30

SECTION 2.11 Interest

31

SECTION 2.12 Alternate Rate of Interest

32

SECTION 2.13 Increased Costs

32

SECTION 2.14 Break Funding Payments

34

SECTION 2.15 Taxes

34

SECTION 2.16 Payments Generally; Pro Rata Treatment; Sharing of Set-offs

35

SECTION 2.17 Mitigation Obligations; Replacement of Lenders

37

SECTION 2.18 Defaulting Lender

37

ARTICLE III Representations and Warranties

38

SECTION 3.01 Organization; Powers

38

SECTION 3.02 Authorization; Enforceability

38

SECTION 3.03 Governmental Approvals; No Conflicts

39

SECTION 3.04 Financial Condition

39

SECTION 3.05 Properties

39

SECTION 3.06 Litigation and Environmental Matters

40

SECTION 3.07 Compliance with Laws and Agreements

40

 

 
 

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TABLE OF CONTENTS

 

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SECTION 3.08 Investment Company Status

40

SECTION 3.09 Taxes

40

SECTION 3.10 ERISA

40

SECTION 3.11 Disclosure

41

SECTION 3.12 Subsidiaries

41

SECTION 3.13 Insurance

41

SECTION 3.14 Labor Matters

41

SECTION 3.15 Solvency

41

SECTION 3.16 Material Property Subject to Security Documents

42

ARTICLE IV Conditions

42

SECTION 4.01 Effective Date

42

SECTION 4.02 Each Credit Event

44

ARTICLE V Affirmative Covenants

44

SECTION 5.01 Financial Statements and Other Information

44

SECTION 5.02 Notices of Material Events

45

SECTION 5.03 Information Regarding the Borrower

46

SECTION 5.04 Existence; Conduct of Business

47

SECTION 5.05 Payment of Obligations

47

SECTION 5.06 Maintenance of Properties

47

SECTION 5.07 Insurance

48

SECTION 5.08 Casualty and Condemnation

48

SECTION 5.09 Books and Records; Inspection and Audit Rights

48

SECTION 5.10 Compliance with Laws

48

SECTION 5.11 Use of Proceeds and Letters of Credit

48

SECTION 5.12 Further Assurances

48

SECTION 5.13 Financial Covenants

49

SECTION 5.14 Appraisals

49

SECTION 5.15 Deposit Concentration Accounts

49

ARTICLE VI Negative Covenants

49

SECTION 6.01 Indebtedness; Certain Equity Securities

50

SECTION 6.02 Liens

50

SECTION 6.03 Fundamental Changes

51

 

 
 

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TABLE OF CONTENTS

 

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SECTION 6.04 Investments, Loans, Advances and Guarantees

51

SECTION 6.05 Asset Sales

52

SECTION 6.06 Sale and Leaseback Transactions

53

SECTION 6.07 Swap Agreements

53

SECTION 6.08 Restricted Payments

53

SECTION 6.09 Transactions with Affiliates

54

SECTION 6.10 Restrictive Agreements

54

SECTION 6.11 Amendment of Material Documents

54

SECTION 6.12 Additional Subsidiaries

54

SECTION 6.13 Intentionally Left Blank

55

SECTION 6.14 Acquisitions

55

ARTICLE VII Events of Default

55

ARTICLE VIII The Administrative Agent

58

ARTICLE IX Miscellaneous

60

SECTION 9.01 Notices

60

SECTION 9.02 Waivers; Amendments

61

SECTION 9.03 Expenses; Indemnity; Damage Waiver

62

SECTION 9.04 Successors and Assigns

63

SECTION 9.05 Survival

66

SECTION 9.06 Counterparts; Integration; Effectiveness

66

SECTION 9.07 Severability

66

SECTION 9.08 Right of Setoff

66

SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process

67

SECTION 9.10 WAIVER OF JURY TRIAL

67

SECTION 9.11 Headings

68

SECTION 9.12 Interest Rate Limitation

68

SECTION 9.13 USA Patriot Act

69

SECTION 9.14 Confidentiality

69

SECTION 9.15 Amendment and Restatement

69

 

 
 

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Schedule 1.01(a) – Existing Letters of Credit

Schedule 1.01(b) – Scheduled Real Property

Schedule 2.01 – Commitments

Schedule 3.12 – Subsidiaries

Schedule 6.02 – Existing Liens

Schedule 6.05 – Permitted Asset Sales

Schedule 6.09 – Affiliate Transactions

Exhibit A – Assignment and Assumption

Exhibit B – Compliance Certificate

Exhibit C – Note

 

 
 

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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (as amended, modified, restated, supplemented and in
effect from time to time, herein called this “Agreement”) dated as of August 14,
2013 (the “Effective Date”), among LUBY’S, INC., a Delaware corporation, the
LENDERS party hereto, AMEGY BANK NATIONAL ASSOCIATION, as Syndication Agent, and
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent for the Lenders.

 

ARTICLE I
Definitions

 

The parties hereto agree as follows:

 

SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

"Accounts" shall have the meaning assigned to it in the UCC.

 

"Additional Personal Collateral" shall have the meaning ascribed to such term in
Section 5.03(b) hereof.

 

"Additional Personal Collateral Event" shall have the meaning ascribed to such
term in Section 5.03(b) hereof.

 

"Additional Real Collateral" shall have the meaning ascribed to such term in
Section 5.03(c) hereof.

 

"Additional Real Collateral Event" shall have the meaning ascribed to such term
in Section 5.03(c) hereof.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

 

“Administrative Agent” means Wells Fargo Bank, National Association, in its
capacity as administrative agent for the Lenders hereunder, and its successors
in that capacity.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

 
 

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“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment. If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.

 

“Applicable Rate” means, for any day with respect to any ABR Loan or Eurodollar
Loan or with respect to the commitment fees payable hereunder, as the case may
be, the applicable rate per annum set forth below under the caption “ABR
Spread”, “Eurodollar Spread” or “Commitment Fee Rate”, as the case may be, based
upon the Total Leverage Ratio as of the most recent determination date; but
until the end of the fourth fiscal quarter of fiscal year 2013 the Eurodollar
Spread shall be 3.00%, the ABR Spread shall be 1.25% and the Commitment Fee Rate
shall be 0.35%:

 

Total Leverage Ratio

ABR Spread

Eurodollar Spread

Commitment Fee Rate

Category 1: greater than 1.25

1.75

3.50

0.40

Category 2: greater than 0.50 but less than or equal to 1.25

1.25

3.00

0.35

Category 3: less than or equal to 0.50

0.75

2.50

0.30

 

For purposes of the foregoing, (i) the Total Leverage Ratio shall be determined
as of the end of each fiscal quarter of the Borrower’s fiscal year based upon
the Borrower’s consolidated financial statements delivered pursuant to Sections
5.01(a) or (b) and (ii) each change in the Applicable Rate resulting from a
change in the Total Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change; but the
Total Leverage Ratio shall be deemed to be in Category 1 at the request of the
Required Lenders if the Borrower fails to timely deliver the consolidated
financial statements required to be delivered by it pursuant to Sections 5.01(a)
or (b), during the period from the deadline for delivery thereof until such
consolidated financial statements are received.

 

 
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“Appraisal” means an appraisal of the fair market value (in dollars) of real
property, in form and substance satisfactory to the Administrative Agent,
determined on a market value basis and performed by an appraiser acceptable to
the Required Lenders.

 

“Approved Fund” has the meaning assigned to such term in Section 9.04.

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

 

“Banking Services” means each and any of the following bank services provided to
any Loan Party by any Lender or any of its Affiliates: (a) commercial credit
cards, (b) stored value cards and (c) treasury management services (including,
without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).

 

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America and any successor entity performing similar functions.

 

“Borrower” means Luby’s, Inc., a Delaware corporation.

 

“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.

 

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Houston, Texas are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

 

“Capital Expenditures” means, for any period, and without duplication, (a) the
additions to property, plant and equipment and other capital expenditures of the
Borrower and its consolidated Subsidiaries that are (or would be) set forth in a
consolidated statement of cash flows of the Borrower for such period prepared in
accordance with GAAP and (b) Capital Lease Obligations incurred by the Borrower
and its consolidated Subsidiaries during such period, but excluding expenditures
for the restoration, repair or replacement of any fixed or capital asset which
was destroyed, damaged or condemned, in whole or in part, to the extent financed
by the proceeds of an insurance policy maintained by such Person or the receipt
of any proceeds resulting from such condemnation, as applicable.

 

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.

 

 
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“Ceiling Rate” means, on any day, the maximum nonusurious rate of interest
permitted for that day by whichever of applicable federal or Texas (or any
jurisdiction whose usury laws are deemed to apply to the Notes or any other Loan
Documents despite the intention and desire of the parties to apply the usury
laws of the State of Texas) laws permits the higher interest rate, stated as a
rate per annum. On each day, if any, that the Texas Finance Code establishes the
Ceiling Rate, the Ceiling Rate shall be the “weekly ceiling” (as defined in the
Texas Finance Code) for that day. Administrative Agent may from time to time, as
to current and future balances, implement any other ceiling under the Texas
Finance Code by notice to the Borrower, if and to the extent permitted by the
Texas Finance Code. Without notice to the Borrower or any other Person, the
Ceiling Rate shall automatically fluctuate upward and downward as and in the
amount by which such maximum nonusurious rate of interest permitted by
applicable law fluctuates.

 

“Change in Control” means (a) any “person” or “group” (as such terms are used
for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), is or becomes the “beneficial owner” (as that term is used in Rules
13d-3 and 13d-5 under the Exchange Act, whether or not applicable), except that
a person shall be deemed to have “beneficial ownership” of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time, directly or indirectly, of more
than 35% of the total voting power in the aggregate of all classes of Equity
Interests then outstanding of the Borrower normally entitled to vote in
elections of directors or (b) occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Borrower by Persons who were
neither (1) nominated by the board of directors of the Borrower nor (2)
appointed by directors so nominated.

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender’s or such Issuing Bank’s holding company, if any) with any binding
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

 

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

 

"Collateral" means any and all assets with respect to which a Lien securing the
Obligations is created under any Security Document. The Collateral shall not
include any Excluded Assets.

 

“Commitment” means, with respect to each Lender, the commitment, if any, of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender’s Revolving Exposure hereunder, as such commitment may be (a)
reduced or increased from time to time pursuant to Section 2.07 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set
forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which
such Lender shall have assumed its Commitment, as applicable. The initial
aggregate amount of the Lenders’ Commitments is $70,000,000.

 

 
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“Contribution Agreement” means that certain Contribution Agreement dated
concurrently herewith by and among Borrower and the current Subsidiaries of
Borrower, as the same may be amended, modified, supplemented and restated--and
joined in pursuant to a joinder agreement--from time to time.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

 

“Debt Service Coverage Ratio” means, as of the last day of any fiscal quarter of
the Borrower, the ratio of (a) EBITDA for the four fiscal quarters ending on
such date to (b) the sum of (x) Interest Expense for such four fiscal quarter
period plus (y) Phantom Amortization for such four fiscal quarter period,
determined in each case on a consolidated basis for Borrower and its
Subsidiaries.

 

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

 

"Deposit Concentration Account" means any account into which cash from Local
Accounts are deposited, and "Deposit Concentration Accounts" shall mean all such
accounts collectively.

 

“dollars” or “$” refers to lawful money of the United States of America.

 

“EBITDA” means, without duplication, for any period, consolidated income from
continuing operations of the Borrower, consistent with the Borrower’s Forms 10-K
and 10-Q, plus depreciation, amortization, other non-cash expenses, interest
expense, taxes, and minus in the case of income or plus in the case of losses,
non-cash income and extraordinary gains or losses and other non-recurring items
of income or expense as approved by the Administrative Agent; provided that, if
the Borrower or any of its Subsidiaries acquires the Equity Interests or assets
of any Person during such period under circumstances permitted under Section
6.14 hereof, EBITDA shall be adjusted to give pro forma effect to such
acquisition assuming that such transaction had occurred on the first day of such
period.

 

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

 

 
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“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any other Loan Party directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, or any warrants, options
or other rights to acquire such interests.

 

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

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower or any other Loan Party, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any other Loan Party or any of their
ERISA Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any other Loan Party
or any of their ERISA Affiliates from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by the Borrower or any other
Loan Party or any of their ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any other Loan Party or any of their ERISA Affiliates
of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
other Loan Party or any of their ERISA Affiliates of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

 

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to such term in Article VII.

 

“Excluded Assets” means (i) all leasehold estates with respect to office space
used by Borrower or any of its Subsidiaries, (ii) motor vehicles having an
aggregate book value of not greater than $500,000, (iii) “commercial tort
claims” (as that term is defined in the UCC) having an aggregate book value of
not greater than $3,000,000, (iv) all real property owned by Borrower or any of
its Subsidiaries other than the Scheduled Real Property and (v) any item of
general intangibles that is now or hereafter held by Borrower or any of its
Subsidiaries but only to the extent that such item of general intangibles (or
any agreement evidencing such item of general intangibles) contains a term,
provision or other contractual obligation or is subject to a rule of law,
statute or regulation that restricts, prohibits, or requires a consent (that has
not been obtained) of a Person (other than Borrower or any of its Subsidiaries)
to, the grant, creation, attachment or perfection of the security interest
granted in the Security Documents, and any such restriction, prohibition and/or
requirement of consent is effective and enforceable under applicable law and is
not rendered ineffective by applicable law (including, without limitation,
pursuant to Sections 9.406, 9.407, 9.408 or 9.409 of the UCC, and any successor
provision thereto).

 

 
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“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Banks or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.17(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender’s failure to comply with Section 2.15(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.15(a).

 

“Existing Letters of Credit” means the letters of credit described on Schedule
1.01(a) hereto.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent.

 

“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.

 

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

 

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

 

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

 

“Guarantors” means each of the present or future Subsidiaries of the Borrower.

 

“Guaranty” means that certain Guaranty dated as of November 9, 2009 executed by
LUBY’S HOLDINGS, INC., a Delaware corporation, LUBY’S LIMITED PARTNER, INC., a
Delaware corporation, LUBCO, INC., a Delaware corporation, LUBY’S MANAGEMENT,
INC., a Delaware corporation, LUBY’S BEVCO, INC., a Texas corporation, and
LUBY’S FUDDRUCKERS RESTAURANTS, LLC, a Texas limited liability company
(successor in interest to LUBY’S RESTAURANTS LIMITED PARTNERSHIP, a Texas
limited partnership), in favor of the Administrative Agent (and joined in by
FUDDRUCKERS TULSA, LLC, a Texas limited liability company, R. WES, INC., a Texas
corporation, FUDDRUCKERS OF ANNAPOLIS, LLC, a Maryland limited liability
company, FUDDRUCKERS OF HOWARD COUNTY, LLC, a Maryland limited liability
company, PARADISE CHEESEBURGERS, LLC, a Texas limited liability company,
PARADISE RESTAURANT GROUP, LLC, a Delaware limited liability company,
CHEESEBURGER OF NEWARK, LLC, a Delaware limited liability company, CHEESEBURGER
OF FORT MEYERS, LLC, a Florida limited liability company, CHEESEBURGER OF
SANDESTIN, LLC, a Florida limited liability company, CHEESEBURGER OF DOWNERS
GROVE, LLC, an Illinois limited liability company, CHEESEBURGER OF ALGONQUIN,
LLC, an Illinois limited liability company, CHEESEBURGER OF EVANSVILLE, LLC, an
Indiana liability company, CHEESEBURGER OF FISHERS, LLC, an Indiana limited
liability company, CHEESEBURGER OF SOUTHPORT, LLC, an Indiana limited liability
company, CHEESEBURGER OF TERRE HAUTE, LLC, an Indiana limited liability company,
CHEESEBURGER OF KANSAS CITY, LLC, a Kansas limited liability company,
CHEESEBURGER OF PASADENA, LLC, a Maryland limited liability company,
CHEESEBURGER OF CALIFORNIA, LLC, a Maryland limited liability company,
CHEESEBURGER IN PARADISE OF ANNE ARUNDEL COUNTY, INC., a Maryland corporation,
CHEESEBURGER IN PARADISE OF ST. MARY’S COUNTY, LLC, a Maryland limited liability
company, CHEESEBURGER OF STERLING HEIGHTS, LLC, a Michigan limited liability
company, HIGH TIDES OF OMAHA, LLC, a Nebraska limited liability company, a
Nebraska limited liability company, CHEESEBURGER OF SEACAUCUS, LLC, a New Jersey
limited liability company, CHEESEBURGER OF WALLKILL, LLC, a New York limited
liability company, CHEESEBURGER OF HILLIARD, LLC, a Ohio limited liability
company, CHEESEBURGER OF MYRTLE BEACH, LLC, a South Carolina limited liability
company, CHEESEBURGER OF FREDERICKSBURG, LLC, a Virginia limited liability
company, CHEESEBURGER OF NEWPORT NEWS, LLC, a Virginia limited liability
company, CHEESEBURGER OF VIRGINIA BEACH, LLC, a Virginia limited liability
company, CHEESEBURGER OF WOODBRIDGE, LLC, a Virginia limited liability company,
CHEESEBURGER OF MIDDLETON, LLC, a Wisconsin limited liability company by
separate Joinder Agreements) and any and all other guaranties now or hereafter
executed in favor of the Administrative Agent relating to the Obligations
hereunder and the other Loan Documents, as any of them may from time to time be
amended, modified, restated or supplemented.

 

 
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“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property acquired by such Person, (e) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding
current Accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
Notwithstanding the foregoing, (i) contingent obligations in respect of surety
bonds in an aggregate amount equal to or less than $5,000,000 shall not
constitute “Indebtedness” for purposes of this Agreement, (ii) contingent
obligations in respect of standby letters of credit shall not constitute
“Indebtedness” to the extent such obligations are fully cash collateralized, and
(iii) Banking Services shall not constitute “Indebtedness” for purposes of this
Agreement.

 

 
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“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.06.

 

“Interest Expense” means, for any period, interest expense of the Borrower and
its Subsidiaries, on a consolidated basis, during such period, determined in
accordance with GAAP, provided that, if the Borrower or any of its Subsidiaries
acquires the Equity Interests or assets of any Person during such period under
circumstances permitted under Section 6.14 hereof, Interest Expense shall be
adjusted to give pro forma effect to such acquisition assuming that such
transaction had occurred on the first day of such period.

 

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December, and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.

 

“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six  months
thereafter, or, if all of the Lenders shall have consented in writing, seven or
fourteen days or nine or twelve months thereafter, as the Borrower may elect;
provided, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.

 

"Inventory" shall have the meaning assigned to it in the UCC.

 

“Issuing Bank” means (a) Wells Fargo Bank, National Association and (b) Amegy
Bank National Association, each in its capacity as an issuer of Letters of
Credit hereunder, and its successors in such capacity as provided in
Section 2.04(i). An Issuing Bank may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case
the term “Issuing Bank” shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate. Without limiting the foregoing, as to any
particular Letter of Credit, the Borrower and any Lender may agree that such
Lender (or an Affiliate of such Lender) shall be the “Issuing Bank” and in such
event, such Lender shall be entitled to all of the rights, benefits and
privileges of an Issuing Bank under this Agreement and the other Loan Documents
(provided that the address of such Issuing Bank shall, in lieu of the address
set forth in Section 9.1(iii) hereof, be such address as the Borrower and such
Issuing Bank may agree in writing). If any Letter of Credit is issued by any
Person other than Wells Fargo Bank, National Association, Amegy Bank National
Association, or their respective Affiliates, written notice thereof shall be
given to the Administrative Agent designating the applicable Issuing Bank and
providing applicable administrative information.

 

 
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“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter
of Credit.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.

 

“LC Sublimit” means $5,000,000 as of the Effective Date; provided that, upon
written request by the Borrower and the prior written consent of the
Administrative Agent and the Issuing Bank, the LC Sublimit may be increased or
decreased from time to time; provided further, however, that the LC Sublimit
shall not exceed $15,000,000 without the prior written consent of the Required
Lenders.

 

“Lease Adjusted Leverage Ratio” means, as of the last day of any fiscal quarter
of the Borrower, the ratio of (a) the sum of (x) Indebtedness as of such date
plus (y) eight times rental expense for the four fiscal quarters ending on such
date to (b) the sum of (x) EBITDA for the four fiscal quarters ending on such
date plus (y) rental expense for such four fiscal quarter period, determined in
each case on a consolidated basis for Borrower and its Subsidiaries.

 

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.

 

“Letter of Credit” means the Existing Letters of Credit and any letter of credit
issued pursuant to this Agreement.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate set forth on Page BBAM of the Bloomberg Financial Markets
Information Service as the London Interbank Offered Rate (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate (rounded upwards, if necessary, to the
next 1/16 of 1%) at which dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office of
the Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

 

 
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“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

 

“Loan” means a loan made pursuant to Section 2.01 as part of a Borrowing and
refers to an ABR Loan or an Eurodollar Loan.

 

“Loan Documents” means, collectively, this Agreement, the Notes, the Guaranty,
the Security Documents, the Notice of Entire Agreement, the Contribution
Agreement, the Subordination Agreements, all instruments, certificates and
agreements now or hereafter executed or delivered to the Administrative Agent or
any Lender pursuant to any of the foregoing or in connection with the
obligations under this Agreement and the other Loan Documents, and all
amendments, modifications, renewals, extensions, increases and rearrangements
of, and substitutions for, any of the foregoing. The term “Loan Document” as
used herein shall not include any Swap Agreement or agreements governing Banking
Services.

 

“Loan Parties” means the Borrower and each of its Subsidiaries and shall also
include each Guarantor.

 

"Loan to Value Ratio" means, as of any date, the ratio of (i) the aggregate
Commitments as of such date to (ii) the value of all Mortgaged Property, as
determined by the Administrative Agent in accordance with its standard
procedures after due review of the most recently delivered Appraisals of the
Scheduled Real Property.

 

"Local Account" means an account into which cash from restaurants of the
Borrower and its Subsidiaries is initially deposited, and "Local Accounts" shall
mean all such accounts collectively.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations or condition, financial or otherwise, of the Borrower and its
Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any
of its obligations under any Loan Document or (c) the rights of or benefits
available to the Lenders under any Loan Document.

 

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and any other Loan Party in an aggregate principal amount
exceeding $8,000,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations in respect of any Swap Agreement at any
time shall be the maximum aggregate amount (giving effect to any netting
agreements) that would be required to be paid if such Swap Agreement were
terminated at such time.

 

 
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“Maturity Date” means September 1, 2017.

 

“Maximum Loan to Value Ratio” means seventy percent (70%).

 

“Moody’s” means Moody’s Investors Service, Inc.

 

"Mortgage" means a mortgage, deed of trust, assignment of leases and rents,
leasehold mortgage or other security document granting a Lien on any Mortgaged
Property to secure the Obligations. Each Mortgage shall be satisfactory in form
and substance to the Administrative Agent. Concurrently with the execution
hereof, the Administrative Agent and the appropriate Loan Parties shall execute
a Modification Agreement relating to the Mortgages executed prior to the date
hereof acknowledging the extension of the Maturity Date, and counterparts of
such Modification Agreement shall be filed in each jurisdiction in which the
Mortgages executed prior to the date hereof have been filed.

 

"Mortgaged Property" means the Scheduled Real Property and the improvements
thereto owned by Borrower and its Subsidiaries. In the event that any real
property is added as additional Scheduled Real Property, such additional real
property shall also become Mortgaged Property. In the event that any Scheduled
Real Property ceases to be Scheduled Real Property, such Scheduled Real Property
shall cease to be Mortgaged Property.

 

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

 

“Net Profit” means, at any date, net income after tax from continuing operations
plus asset impairment charges from continuing operations, determined in
accordance with GAAP.

 

"Net Proceeds" means, with respect to any event (a) the cash proceeds received
in respect of such event including (i) any cash received in respect of any non
cash proceeds, but only as and when received, (ii) in the case of a casualty,
insurance proceeds, and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out of pocket expenses paid by the Borrower or any of its
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale, transfer or other disposition of an asset
(including pursuant to a sale and leaseback transaction or a casualty or a
condemnation or similar proceeding), the amount of all payments required to be
made by the Borrower and its Subsidiaries as a result of such event to repay
Indebtedness (other than Loans) secured by such asset or otherwise subject to
mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by the Borrower and its
Subsidiaries, and the amount of any reserves established by the Borrower and its
Subsidiaries to fund contingent liabilities reasonably estimated to be payable,
in each case during the year that such event occurred or the next succeeding
year and that are directly attributable to such event (as determined reasonably
and in good faith by a Financial Officer of the Borrower).

 

 
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“Notes” shall have the meaning assigned to such term in Section 2.02(a) hereof.

 

“Notice of Entire Agreement” means a notice of entire agreement executed by the
Borrower each other Loan Party and the Administrative Agent, as the same may
from time to time be amended, modified, supplemented or restated.

 

“Obligations” means, as at any date of determination thereof, the sum of the
following: (i) the aggregate principal amount of Loans outstanding hereunder,
plus (ii) the aggregate amount of the LC Exposure, plus (iii) all other
liabilities, obligations and indebtedness under any Loan Document of the
Borrower or any other Loan Party, including, but not limited to, amounts
accruing subsequent to the filing of any bankruptcy receivership, insolvency or
like petition, whether or not allowed in connection with such bankruptcy,
receivership, insolvency or like proceeding, plus (iv) any obligations of
Borrower (whether now existing or hereafter arising) under any Swap Agreement
entered into with any Lender (or an Affiliate of any Lender) or agreements
governing Banking Services entered into with any Lender (or an Affiliate of any
Lender).

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

 

“Participant” has the meaning set forth in Section 9.04.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

 

“Permitted Encumbrances” means:

 

(a)     Liens imposed by law for taxes, assessments, or other governmental
charges or levies that are not yet due or are being contested in compliance with
Section 5.05;

 

(b)     carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.05;

 

(c)     pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance, old age pensions
or other social security or retirement benefits, or similar legislation or to
secure public or statutory obligations of the Borrower or any of its
Subsidiaries;

 

(d)     deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

 

(e)     judgment liens in respect of judgments that do not constitute an Event
of Default under clause (l) of Article VII;

 

 
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(f)     rights of set-off of banks or lenders in the ordinary course of banking
arrangements; and

 

(g)     easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or interfere with the ordinary conduct of
business of the Borrower or other Loan Party;

 

provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.

 

“Permitted Investments” means:

 

(a)     direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;

 

(b)     investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody’s;

 

(c)     investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any Lender or any other commercial bank
organized under the laws of the United States of America or any State thereof
which has a combined capital and surplus and undivided profits of not less than
$500,000,000;

 

(d)     fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above; and

 

(e)     money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio
assets of at least $5,000,000,000.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Phantom Amortization” means, for any fiscal quarter, an amount equal to the
outstanding principal balance of the Loans as of the close of business on the
last day of such fiscal quarter divided by seven (7).

 

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or other Loan Party
or any of their ERISA Affiliates is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.

 

 
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"Prepayment Event" means any sale, transfer or other disposition by the Borrower
or any of its Subsidiaries (including pursuant to a sale and leaseback
transaction) of (i) any of the assets listed on Schedule 6.05 attached hereto or
(ii) any auction rate securities.

 

“Prime Rate” means, on any day, the prime rate of Wells Fargo Bank, National
Association in effect for that day at the principal offices of Wells Fargo Bank,
National Association in Houston, Texas. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate or a favored rate, and
Administrative Agent and each Lender disclaims any statement, representation or
warranty to the contrary. Administrative Agent, any Lender or Wells Fargo Bank,
National Association may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.

 

“Register” has the meaning set forth in Section 9.04.

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

 

“Required Lenders” means (a) at any time when there are more than two Lenders,
Lenders having Revolving Exposures and unused Commitments representing at least
66⅔% of the sum of the total Revolving Exposures and unused Commitments at such
time and (b) at any time when there are one or two Lenders, all of the Lenders.

 

“Restricted Payment” means (i) any payment or prepayment of any Subordinated
Debt and (ii) any dividend or other distribution (whether in cash, securities or
other property) with respect to any Equity Interests in the Borrower or other
Loan Party, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any Equity
Interests in the Borrower or other Loan Party or any option, warrant or other
right to acquire any such Equity Interests in the Borrower or other Loan Party.
The term “Restricted Payments” as used herein shall include management fees paid
to any Person owning any Equity Interests in and to the Borrower or any other
Loan Party but shall not include issuances of Equity Interests by the Borrower.

 

“Revolving Availability Period” means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.

 

“Revolving Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Loans and its LC Exposure at
such time.

 

“S&P” means Standard & Poor’s Ratings Group.

 

 
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“Scheduled Real Property” means the real property described on Schedule 1.01(b)
hereto. Schedule 1.01(b) shall be updated from time to time to (i) add
additional Scheduled Real Property, as provided for in Section 5.03(c), and (ii)
delete any Scheduled Real Property in the event that the Borrower or any of its
Subsidiaries sells or otherwise disposes of any real property described on
Schedule 1.01(b) and such sale or other disposition is permitted under the terms
of this Agreement.

 

"Security Agreements" means, collectively, (i) the Security Agreement dated as
of November 9, 2009 executed by Borrower securing, among other obligations, the
Obligations, (ii) Security Agreement dated as of November 9, 2009 executed by
LUBY’S HOLDINGS, INC., a Delaware corporation, LUBY’S LIMITED PARTNER, INC., a
Delaware corporation, LUBCO, INC., a Delaware corporation, LUBY’S MANAGEMENT,
INC., a Delaware corporation, LUBY’S BEVCO, INC., a Texas corporation, and
LUBY’S FUDDRUCKERS RESTAURANTS, LLC, a Texas limited liability company
(successor in interest to LUBY’S RESTAURANTS LIMITED PARTNERSHIP, a Texas
limited partnership), in favor of the Administrative Agent (and joined in by
FUDDRUCKERS TULSA, LLC, a Texas limited liability company, R. WES, INC., a Texas
corporation, FUDDRUCKERS OF ANNAPOLIS, LLC, a Maryland limited liability
company, FUDDRUCKERS OF HOWARD COUNTY, LLC, a Maryland limited liability
company, PARADISE CHEESEBURGERS, LLC, a Texas limited liability company,
PARADISE RESTAURANT GROUP, LLC, a Delaware limited liability company,
CHEESEBURGER OF NEWARK, LLC, a Delaware limited liability company, CHEESEBURGER
OF FORT MEYERS, LLC, a Florida limited liability company, CHEESEBURGER OF
SANDESTIN, LLC, a Florida limited liability company, CHEESEBURGER OF DOWNERS
GROVE, LLC, an Illinois limited liability company, CHEESEBURGER OF ALGONQUIN,
LLC, an Illinois limited liability company, CHEESEBURGER OF EVANSVILLE, LLC, an
Indiana liability company, CHEESEBURGER OF FISHERS, LLC, an Indiana limited
liability company, CHEESEBURGER OF SOUTHPORT, LLC, an Indiana limited liability
company, CHEESEBURGER OF TERRE HAUTE, LLC, an Indiana limited liability company,
CHEESEBURGER OF KANSAS CITY, LLC, a Kansas limited liability company,
CHEESEBURGER OF PASADENA, LLC, a Maryland limited liability company,
CHEESEBURGER OF CALIFORNIA, LLC, a Maryland limited liability company,
CHEESEBURGER IN PARADISE OF ANNE ARUNDEL COUNTY, INC., a Maryland corporation,
CHEESEBURGER IN PARADISE OF ST. MARY’S COUNTY, LLC, a Maryland limited liability
company, CHEESEBURGER OF STERLING HEIGHTS, LLC, a Michigan limited liability
company, HIGH TIDES OF OMAHA, LLC, a Nebraska limited liability company, a
Nebraska limited liability company, CHEESEBURGER OF SEACAUCUS, LLC, a New Jersey
limited liability company, CHEESEBURGER OF WALLKILL, LLC, a New York limited
liability company, CHEESEBURGER OF HILLIARD, LLC, a Ohio limited liability
company, CHEESEBURGER OF MYRTLE BEACH, LLC, a South Carolina limited liability
company, CHEESEBURGER OF FREDERICKSBURG, LLC, a Virginia limited liability
company, CHEESEBURGER OF NEWPORT NEWS, LLC, a Virginia limited liability
company, CHEESEBURGER OF VIRGINIA BEACH, LLC, a Virginia limited liability
company, CHEESEBURGER OF WOODBRIDGE, LLC, a Virginia limited liability company,
CHEESEBURGER OF MIDDLETON, LLC, a Wisconsin limited liability company by
separate Joinder Agreements), securing, among other obligations, the
Obligations, and (iii) any and all security agreements hereafter securing all or
any part of the Obligations, as any of them may from time to time be amended,
modified, restated or supplemented.

 

 
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"Security Documents" means, collectively, the Mortgages, the Security Agreements
and any and all other agreements, instruments and financing statements now or
hereafter executed and delivered as security for, among other obligations, the
Obligations, as any of them may from time to time be amended, modified, restated
or supplemented.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

 

“Subordinated Debt” means all Indebtedness of a Person which has been
subordinated on terms and conditions satisfactory to the Required Lenders, in
their sole discretion, to all of the Obligations, whether now existing or
hereafter incurred. Indebtedness shall not be considered as “Subordinated Debt”
unless and until the Administrative Agent shall have received copies of the
documentation evidencing or relating to such Indebtedness together with a
subordination agreement, in form and substance satisfactory to the Required
Lenders, duly executed by the holder or holders of such Indebtedness and
evidencing the terms and conditions of the required subordination.

 

“Subordinated Debt Documents” means any indenture or note under which any
Subordinated Debt is issued and all other instruments, agreements and other
documents evidencing or governing any Subordinated Debt or providing for any
Guarantee or other right in respect thereof.

 

“Subordination Agreements” means (i) any subordination agreements now or
hereafter executed in favor the Lenders with respect to any of the Subordinated
Debt, and (ii) all amendments modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing.

 

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, Controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

 

 
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“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or any of
its Subsidiaries shall be a Swap Agreement.

 

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

 

“Total Leverage Ratio” means, as of any day, the ratio of (a) Indebtedness as of
such date to (b) EBITDA for the four fiscal quarters most recently ended,
determined in each case on a consolidated basis for the Borrower and its
Subsidiaries.

 

“Transactions” means (a) the execution, delivery and performance by each Loan
Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder and (b) the execution, delivery and performance by each Loan Party of
each other document and instrument required to satisfy the conditions precedent
to the initial Loan hereunder.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

 

“UCC” means the Uniform Commercial Code in effect from time to time in the State
of Texas.

 

SECTION 1.02 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar
Loan”). Borrowings also may be classified and referred to by Type (e.g., a
“Eurodollar Borrowing”).

 

SECTION 1.03 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 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.

 

 
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SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

 

ARTICLE II
The Credits

 

SECTION 2.01 Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees to make Loans to the Borrower from time to time during the
Revolving Availability Period in an aggregate principal amount that will not
result in such Lender’s Revolving Exposure exceeding such Lender’s Commitment.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Loans.

 

SECTION 2.02 Loans and Borrowings.

 

(a)     Each Loan shall be made as part of a Borrowing consisting of Loans of
the same Type made by the Lenders ratably in accordance with their respective
Commitments. The failure of any Lender to make any Loan required to be made by
it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required. The Loans
made by each Lender shall be evidenced by a single Note of the Borrower (each,
together with all renewals, extensions, modifications and replacements thereof
and substitutions therefor, a “Note,” collectively, the “Notes”) in
substantially the form of Exhibit C payable to the order of such Lender in a
principal amount equal to the applicable Commitment of such Lender and otherwise
duly completed. Each Lender is hereby authorized by the Borrower to endorse on
the schedule (or a continuation thereof) that may be attached to each Note of
such Lender, to the extent applicable, the date, amount, type of and the
applicable period of interest for each Loan made by such Lender to the Borrower
hereunder, and the amount of each payment or prepayment of principal of such
Loan received by such Lender, provided that any failure by such Lender to make
any such endorsement shall not affect the obligations of the Borrower under such
Note or hereunder in respect of such Loan.

 

 
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(b)     Subject to Section 2.12, each Borrowing shall be comprised entirely of
ABR Loans or Eurodollar Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)     At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount of $200,000 or an
integral multiple of $100,000 in excess thereof. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $200,000 or an integral multiple of $100,000 in excess
thereof; provided that an ABR Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Commitments or that is required
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.04(e). Borrowings of more than one Type may be outstanding at the same time;
provided that there shall not at any time be more than a total of five (5)
Eurodollar Borrowings outstanding.

 

(d)     Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.

 

SECTION 2.03 Requests for Borrowings.   To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., Houston, Texas time,
three Business Days before the date of the proposed Borrowing and (b) in the
case of an ABR Borrowing, not later than 11:00 a.m., Houston, Texas time, one
Business Day before the date of the proposed Borrowing; provided that any such
notice of an ABR Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.04(e) may be given not later than 10:00 a.m., Houston,
Texas time, on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:

 

(i)     the aggregate amount of such Borrowing;

 

(ii)     the date of such Borrowing, which shall be a Business Day;

 

(iii)     whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

 

(iv)     in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and

 

 
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(v)     the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.05.

 

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

SECTION 2.04 Letters of Credit.

 

(a)     General. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of Letters of Credit, in a form reasonably
acceptable to the Administrative Agent and the applicable Issuing Bank, at any
time and from time to time during the Revolving Availability Period. In the
event of any inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit application or
other agreement submitted by the Borrower to, or entered into by the Borrower
with, an Issuing Bank relating to any Letter of Credit, the terms and conditions
of this Agreement shall control.

 

(b)     Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the applicable Issuing Bank and
the Administrative Agent (at least five Business Days in advance of the
requested date of issuance, amendment, renewal or extension) a notice requesting
the issuance of a Letter of Credit, or identifying the Letter of Credit to be
amended, renewed or extended, and specifying the date of issuance, amendment,
renewal or extension (which shall be a Business Day), the date on which such
Letter of Credit is to expire (which shall comply with paragraph (c) of this
Section), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit. If requested by such Issuing Bank,
the Borrower also shall submit a letter of credit application on such Issuing
Bank’s standard form in connection with any request for a Letter of Credit. A
Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed
The LC Sublimit and (ii) the total Revolving Exposures shall not exceed the
total Commitments.

 

(c)     Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date.

 

(d)     Participations. By the issuance of a Letter of Credit by an Issuing Bank
or an amendment to a Letter of Credit increasing the amount thereof (or in the
case of the Existing Letters of Credit, on the Effective Date), and without any
further action on the part of such Issuing Bank or the Lenders, such Issuing
Bank hereby grants to each Lender, and each Lender hereby acquires from such
Issuing Bank, a participation in such Letter of Credit equal to such Lender’s
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of such Issuing Bank, such Lender’s Applicable Percentage
of each LC Disbursement made by such Issuing Bank and not reimbursed by the
Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

 

 
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(e)     Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 2:00 p.m., Houston, Texas time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., Houston, Texas time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 2:00 p.m., Houston, Texas time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 10:00
a.m., Houston, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with this Agreement that such payment be financed with an
ABR Borrowing in an equivalent amount and, to the extent so financed, the
Borrower’s obligation to make such payment shall be discharged and replaced by
the resulting ABR Borrowing. If the Borrower fails to make such payment when
due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and such
Lender’s Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and
Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the applicable
Issuing Bank the amounts so received by it from the Lenders. Promptly following
receipt by the Administrative Agent of any payment from the Borrower pursuant to
this paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders
and such Issuing Bank as their interests may appear. Any payment made by a
Lender pursuant to this paragraph to reimburse such Issuing Bank for any LC
Disbursement (other than the funding of ABR Loans as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.

 

 
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(f)     Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower’s obligations hereunder. Neither
the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of any
Issuing Bank; provided that the foregoing shall not be construed to excuse any
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
such Borrower that are caused by an Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of such
Issuing Bank (as finally determined by a court of competent jurisdiction), such
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, an
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.

 

(g)     Disbursement Procedures. An Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. Such Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether such Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse such
Issuing Bank and the Lenders with respect to any such LC Disbursement.

 

(h)     Interim Interest. If an Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Loans; provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of
this Section, then Section 2.11(c) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of the applicable Issuing Bank, except
that interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse such Issuing Bank shall be for the
account of such Lender to the extent of such payment.

 

 
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(i)     Replacement of an Issuing Bank. An Issuing Bank may be replaced at any
time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of such Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.10(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to include such successor or any previous Issuing Bank, or such successor and
all previous Issuing Banks, as the context shall require. After the replacement
of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party
hereto and shall continue to have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit issued by it prior
to such replacement, but shall not be required to issue additional Letters of
Credit.

 

(j)     Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing greater than 66-2/3%
of the total LC Exposure) demanding the deposit of cash collateral pursuant to
this paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to the Borrower
described in clauses (h) or (i) of Article VII. The Borrower also shall deposit
cash collateral pursuant to this paragraph as and to the extent required by
Section 2.09(b). Each such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and
at the Borrower’s risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse an Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject to the
consent of Lenders with LC Exposure representing greater than 66⅔% of the total
LC Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived. If
the Borrower is required to provide an amount of cash collateral hereunder
pursuant to Section 2.09(b), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower as and to the extent that, after
giving effect to such return, the Borrower would remain in compliance with
Section 2.09(b) and no Default shall have occurred and be continuing.

 

 
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SECTION 2.05 Funding of Borrowings.

 

(a)     Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 12:00
noon, Houston, Texas time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in Houston, Texas and designated by the
Borrower in the applicable Borrowing Request; provided that ABR Loans made to
finance the reimbursement of an LC Disbursement as provided in Section 2.04(e)
shall be remitted by the Administrative Agent to the applicable Issuing Bank.

 

(b)     Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in such Borrowing.

 

SECTION 2.06 Interest Elections.

 

(a)     Each Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall
have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower may elect to convert such Borrowing to a different Type
or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
elect Interest Periods therefor, all as provided in this Section. The Borrower
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.

 

 
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(b)      To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.

 

(c)     Each telephonic and written Interest Election Request shall specify the
following information:

 

(i)     the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

 

(ii)     the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;

 

(iii)     whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and

 

(iv)     if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

 

(d)     Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

 

(e)     If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.

 

SECTION 2.07 Termination, Reduction and Increase of Commitments.

 

(a)     Unless previously terminated, the Commitments shall terminate on the
Maturity Date.

 

 
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(b)     The Borrower may at any time terminate, or from time to time reduce, the
Commitment; provided that (i) each reduction of the Commitments shall be in an
amount equal to $1,000,000 or an integral multiple of $500,000 in excess thereof
and (ii) the Borrower shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.09, the sum of the Revolving Exposures would exceed the total
Commitments.

 

(c)     The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section, at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.

 

(d)     At any time prior to the expiration of the Revolving Availability
Period, and so long as no Default or Event of Default shall have occurred which
is continuing, the Borrower may elect to increase the aggregate of the
Commitments to an amount not exceeding $90,000,000 minus any reductions in the
Commitments pursuant to Section 2.07(b) hereof, provided that (i) the Borrower
shall give at least fifteen (15) Business Days’ prior written notice of such
increase to the Administrative Agent and each existing Lender, (ii) each
existing Lender shall have the right (but not the obligation) to subscribe to
its pro rata share of the proposed increase in the Commitments by giving written
notice of such election to the Borrower and the Administrative Agent within ten
(10) Business Days after receipt of a notice from the Borrower as above
described and only if an existing Lender does not exercise such election may the
Borrower elect to add a new Lender, (iii) no Lender shall be required to
increase its Commitment unless it shall have expressly agreed to such increase
in writing (but otherwise, no notice to or consent by any Lender shall be
required, notwithstanding anything to the contrary set forth in Section 9.02
hereof), (iv) the addition of new Lenders shall be subject to the terms and
provisions of Section 9.04 hereof as if such new Lenders were acquiring an
interest in the Loans by assignment from an existing Lenders (to the extent
applicable, i.e. required approvals, minimum amounts and the like), (v) the
Borrower shall execute and deliver such additional or replacement Notes and such
other documentation (including evidence of proper authorization) as may be
reasonably requested by the Administrative Agent, any new Lender or any Lender
which is increasing its Commitment, (vi) no Lender shall have any right to
decrease its Commitment as a result of such increase of the aggregate amount of
the Commitments, (vii) the Administrative Agent shall have no obligation to
arrange, find or locate any Lender or new bank or financial institution to
participate in any unsubscribed portion of such increase in the aggregate
committed amount of the Commitments, and (viii) such option to increase the
Commitments may only be exercised once. The Borrowers shall be required to pay
(or to reimburse each applicable Lender for) any breakage costs incurred by any
Lender in connection with the need to reallocate existing Loans among the
Lenders following any increase in the Commitments pursuant to this provision.
Any increase of the Commitments pursuant to this Section 2.07(d) shall be
subject to receipt by the Administrative Agent of evidence satisfactory to the
Administrative Agent regarding compliance with Section 5.03(c) hereof.

 

 
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SECTION 2.08 Repayment of Loans; Evidence of Debt.

 

(a)     The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Loan of such Lender on the Maturity Date.

 

(b)     Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

 

(c)     The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.

 

(d)     The entries made in the accounts maintained pursuant to paragraphs (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein (absent manifest error); provided
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligation of
the Borrower to repay the Loans in accordance with the terms of this Agreement.

 

SECTION 2.09 Prepayment of Loans.

 

(a)     The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to the requirements of this
Section.

 

(b)     In the event and on such occasion that the sum of the Revolving
Exposures exceeds the total Commitments, the Borrower shall prepay Borrowings
(or, if no such Borrowings are outstanding, deposit cash collateral in an
account with the Administrative Agent pursuant to Section 2.04(j)) in an
aggregate amount equal to such excess.

 

(c)     In the event and on each occasion that any Net Proceeds are received by
or on behalf of the Borrower or any of its Subsidiaries in respect of any
Prepayment Event, the Borrower shall, within three Business Days after such Net
Proceeds are received, prepay Borrowings in an aggregate amount equal to 100% of
such Net Proceeds in the case of a Prepayment Event with respect to any real
property that is listed on Schedule 6.05 attached hereto. To the extent such
prepayment would result in the payment of breakage costs hereunder, at the
election of the Required Lenders, either (i) such prepayment shall be deferred
until the last day of the applicable Interest Period or (ii) such breakage costs
shall be waived.

 

 
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(d)     Prior to any optional or mandatory prepayment of Borrowings hereunder,
the Borrower shall select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to this
Section.

 

(e)     The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Houston, Texas
time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., Houston, Texas time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
notice of optional prepayment is given in connection with a conditional notice
of termination of the Commitments as contemplated by Section 2.07, then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.07. Promptly following receipt of any such notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment.

 

(f)     All Swap Agreements and agreements governing Banking Services between
Borrower and any Lender (or any Affiliate of a Lender) are independent
agreements governed by the written provisions of said Swap Agreements, which
will remain in full force and effect, unaffected by any repayment, prepayment,
acceleration, reduction, increase or change in the terms of the Obligations,
except as otherwise expressly provided in said Swap Agreements, and any payoff
statement relating to the Obligations shall not apply to said Swap Agreements
except as otherwise expressly provided in such payoff statement.

 

SECTION 2.10 Fees.

 

(a)     The Borrower agrees to pay to the Administrative Agent for the account
of each Lender a commitment fee, which shall accrue at the Applicable Rate on
the average daily unused amount of the Commitment of such Lender during the
period from and including the date hereof to but excluding the date on which
such Commitment terminates. Accrued commitment fees shall be payable in arrears
on the last day of March, June, September and December of each year and on the
date on which the Commitments terminate, commencing on the first such date to
occur after the date hereof. All commitment fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
such commitment fees, a Commitment of a Lender shall be deemed to be used to the
extent of the outstanding Loans and LC Exposure of such Lender.

 

(b)     The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue at the same Applicable Rate used to
determine the interest rate applicable to Eurodollar Loans on the average daily
amount of such Lender’s LC Exposure (excluding any portion thereof attributable
to unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure (provided, however, that in no event shall such participation fees for
any single Letter of Credit be less than $500) and (ii) to the applicable
Issuing Bank a fronting fee, which shall accrue at the rate of 1/8% per annum on
the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, as well as such Issuing Bank’s standard fees with respect to the
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Commitments terminate and any such
fees accruing after the date on which the Commitments terminate shall be payable
on demand. Any other fees payable to an Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

 
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(c)     On the Effective Date, the Borrower agrees to pay to the Administrative
Agent, for the pro rata benefit of the Lenders, a fee in the amount of $175,000.

 

(d)     All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the applicable
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.

 

SECTION 2.11 Interest.

 

(a)     The Loans comprising each ABR Borrowing shall bear interest at the
lesser of (i) the sum of the Alternate Base Rate plus the Applicable Rate or
(ii) the Ceiling Rate.

 

(b)     The Loans comprising each Eurodollar Borrowing shall bear interest at
the lesser of (i) the Adjusted LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Rate or (ii) the Ceiling Rate.

 

(c)     Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to the lesser of (i) the Ceiling Rate or (ii) in the case of
overdue principal of any Loan, 2% plus the rate otherwise applicable to such
Loan as provided in the preceding paragraphs of this Section or in the case of
any other amount, 2% plus the rate applicable to ABR Loans as provided in
paragraph (a) of this Section.

 

 
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(d)     Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and upon termination of the Commitments;
provided that (i) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Loan prior to the end of the
Revolving Availability Period), accrued interest on the principal amount repaid
or prepaid shall be payable on the date of such repayment or prepayment and
(iii) in the event of any conversion of any Eurodollar Loan prior to the end of
the current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.

 

(e)     All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate or Adjusted
LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

 

SECTION 2.12 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

 

(a)     the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

 

(b)     the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing; provided that if the circumstances
giving rise to such notice affect only one Type of Borrowings, then the other
Type of Borrowings shall be permitted.

 

SECTION 2.13 Increased Costs.

 

(a)     If any Change in Law shall:

 

(i)     impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate) or any Issuing Bank; or

 

 
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(ii)     impose on any Lender or any Issuing Bank or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made by such
Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or such
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.

 

(b)     If any Lender or any Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or such Issuing Bank’s capital or on the capital of
such Lender’s or such Issuing Bank’s holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender or such Issuing Bank or such Lender’s or such
Issuing Bank’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s or such Issuing Bank’s policies and the
policies of such Lender’s or such Issuing Bank’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank or such Lender’s or such
Issuing Bank’s holding company for any such reduction suffered.

 

(c)     A certificate of a Lender or an Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or such Issuing Bank or its holding
company, as the case may be, as specified in paragraphs (a) or (b) of this
Section shall be delivered to the Borrower, demonstrating in reasonable detail
the calculation of the amounts, and shall be conclusive absent manifest error.
The Borrower shall pay such Lender or such Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

 

(d)     Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or such Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 90 days prior to the date that such Lender or such Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or such Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive and if
such Lender or such Issuing Bank, as the case may be, notifies the Borrower of
such Change of Law within 90 days after the adoption, enactment or similar act
with respect to such Change of Law, then the 90-day period referred to above
shall be extended to include the period from the effective date of such Change
of Law to the date of such notice.

 

 
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SECTION 2.14 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Loan on the date specified in any notice delivered pursuant hereto,
or (d) the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.17, then, in any such event, the Borrower shall compensate
each Lender for the loss, cost and expense attributable to such event. Such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the Eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section, demonstrating in reasonable
detail the calculation of the amounts, shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.

 

SECTION 2.15 Taxes.

 

(a)     Any and all payments by or on account of any obligation of the Borrower
hereunder or under any other Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.

 

(b)     In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

 

(c)     The Borrower shall indemnify the Administrative Agent, each Lender and
each Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or such Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or an Issuing Bank, demonstrating in
reasonable detail the calculation of the amounts, shall be conclusive absent
manifest error.

 

 
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(d)     As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

 

(e)     Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

 

SECTION 2.16 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)     The Borrower shall make each payment required to be made by it hereunder
or under any other Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Sections 2.13,
2.14 or 2.15, or otherwise) prior to the time expressly required hereunder or
under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 2:00 p.m., Houston, Texas time), on the date when
due, in immediately available funds, without setoff, deduction or counterclaim.
Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 1700 Lincoln Ave.,
MAC C7300-034, Denver, Colorado 80203, except payments to be made directly to an
Issuing Bank as expressly provided herein and except that payments pursuant to
Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
dollars.

 

(b)     If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

 

 
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(c)     If any Lender shall, by exercising any right of setoff or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements; provided that (i)
if any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any other Loan Party or Affiliate thereof (as to which the
provisions of this paragraph shall apply). Each Lender agrees that it will not
exercise any right of setoff or counterclaim or otherwise obtain payment in
respect of any Obligation owed to it other than principal of and interest
accruing on the Loans and participations in the LC Disbursements, unless all of
the outstanding principal of and accrued interest on the Loans and LC
Disbursements have been paid in full. The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

 

(d)     Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the applicable
Issuing Bank, as the case may be, the amount due. If the Borrower has not in
fact made such payment when due, then each of the Lenders or the applicable
Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

 

(e)     If any Lender shall fail to make any payment required to be made by it
pursuant to this Agreement, then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations hereunder until all such unsatisfied obligations are
fully paid.

 

 
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SECTION 2.17 Mitigation Obligations; Replacement of Lenders.

 

(a)     If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or Affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Sections 2.13 or 2.15, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

 

(b)     If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i)such assignor
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (ii) in the case of
any such assignment resulting from a claim for compensation under Section 2.13
or payments required to be made pursuant to Section 2.15, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.

 

SECTION 2.18 Defaulting Lender.

 

(a)     Notwithstanding anything to the contrary contained herein, in the event
any Lender (x) has refused (which refusal constitutes a breach by such Lender of
its obligations under this Agreement) to make available its portion of any Loan
or (y) notifies either the Administrative Agent or the Borrower that such Lender
does not intend to make available its portion of any Loan (if the actual refusal
would constitute a breach by such Lender of its obligations under this
Agreement) (each, a “Lender Default”), all rights and obligations hereunder of
such Lender (a “Defaulting Lender”) as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section while such Lender Default remains in effect.

 

 
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(b)      Advances shall be incurred pro rata from Lenders which are not
Defaulting Lenders (the “Non-Defaulting Lenders”) based on their respective
Commitments) and no Commitment of any Lender or any pro rata share of any Loans
required to be advanced by any Lender shall be increased as a result of such
Lender Default. Amounts received in respect of principal of any type of Loans
shall be applied to reduce the applicable Loans of each Lender pro rata based on
the aggregate of the outstanding Loans of that type of all Lenders at the time
of such application; provided that such amount shall not be applied to any Loans
of a Defaulting Lender at any time when, and to the extent that, the aggregate
amount of Loans of any Non-Defaulting Lender exceeds such Non-Defaulting
Lender’s Commitment of all Loans then outstanding.

 

(c)     A Defaulting Lender shall not be entitled to give instructions to the
Administrative Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the other Loan Documents. All amendments,
waivers and other modifications of this Agreement and the other Loan Documents
may be made without regard to a Defaulting Lender and, for purposes of the
definition of “Required Lenders,” a Defaulting Lender shall be deemed not to be
a Lender and not to have Loans outstanding.

 

(d)     Other than as expressly set forth in this Section, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify the
Administrative Agent) and the other parties hereto shall remain unchanged.
Nothing in this Section shall be deemed to release any Defaulting Lender from
its obligations under this Agreement and the other Loan Documents, shall alter
such obligations, shall operate as a waiver of any default by such Defaulting
Lender hereunder, or shall prejudice any rights which the Borrower, the
Administrative Agent or any Lender may have against any Defaulting Lender as a
result of any default by such Defaulting Lender hereunder.

 

(e)     In the event a Defaulting Lender retroactively cures to the satisfaction
of the Administrative Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement and the other Loan
Documents.

 

ARTICLE III
Representations and Warranties

 

The Borrower represents and warrants to the Lenders that:

 

SECTION 3.01 Organization; Powers. Each of the Borrower and the other applicable
Loan Parties is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so would not reasonably be expected to result in a Material
Adverse Effect, is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required.

 

SECTION 3.02 Authorization; Enforceability. The Transactions to be entered into
by each Loan Party are within such Loan Party’s powers and have been duly
authorized by all necessary action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document to which
any Loan Party is to be a party, when executed and delivered by such Loan Party,
will constitute, a legal, valid and binding obligation of the Borrower or such
Loan Party (as the case may be), enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

 

 
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SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not
require any material consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except filings necessary to perfect
Liens created under the Loan Documents, (b) will not violate any applicable law
or regulation or the charter, by-laws or other organizational documents of the
Borrower or any other applicable Loan Party or any order of any Governmental
Authority, (c) will not violate or result in a default under any material
indenture, agreement or other instrument binding upon the Borrower or any other
Loan Party or their assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any other Loan Party, and (d) will not
result in the creation or imposition of any Lien on any asset of the Borrower or
any other Loan Party, except Liens created under the Loan Documents.

 

SECTION 3.04 Financial Condition. The Borrower has heretofore furnished to the
Lenders the Borrower’s consolidated balance sheet and statements of income,
stockholders equity and cash flows (1) as of and for the fiscal year ended
August 29, 2012 and (2) as of and for the fiscal quarters ended November 21,
2012, February 13, 2013 and May 8, 2013, certified by its chief financial
officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (2) above. Since
August 29, 2012, there has been no material adverse change in the business,
assets, operations or condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole. After giving effect to the Transactions, none of
the Borrower or its Subsidiaries has, as of the Effective Date, any material
contingent liabilities or unrealized losses except as evidenced by the Loan
Documents.

 

SECTION 3.05 Properties.

 

(a)     The Borrower and each other Loan Party has good title to, or valid
leasehold interests in, all its real and personal property material to its
business (including the Mortgaged Properties), except for minor defects in title
that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes.

 

(b)     The Borrower and each other Loan Party owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and each other
Loan Party does not infringe upon the rights of any other Person, except for any
such infringements that could not reasonably be expected to result in a Material
Adverse Effect.

 

 
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SECTION 3.06 Litigation and Environmental Matters.

 

(a)     There are no actions, suits or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any other Loan Party (i) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect or (ii) that involve any of the Loan Documents or the
Transactions.

 

(b)     Except with respect to any other matters that could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any
other Loan Party (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability, (iv) knows of any basis for any Environmental Liability
or (v) has failed to properly dispose of all “hazardous” and “toxic” substances.
No such substances have been released at any site or facility owned or
controlled by the Borrower or any other Loan Party which could result in
liability exceeding $1,000,000 in the aggregate.

 

SECTION 3.07 Compliance with Laws and Agreements. The Borrower and each other
Loan Party is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.

 

SECTION 3.08 Investment Company Status. Neither the Borrower nor any other Loan
Party is an “investment company” as defined in, or subject to regulation under,
the Investment Company Act of 1940.

 

SECTION 3.09 Taxes. The Borrower and each other Loan Party has timely filed or
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings and
for which the Borrower or such other Loan Party, as applicable, has set aside on
its books adequate reserves or (b) to the extent that the failure to do so could
not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of all such
underfunded Plans, in each of such cases so as to cause a Material Adverse
Effect.

 

 
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SECTION 3.11 Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which the
Borrower or any other Loan Party is subject, the breach or non-compliance of
which could reasonably be expected to result in a Material Adverse Effect, and
has disclosed to the Lenders all other matters known to any of them, that could
reasonably be expected to result in a Material Adverse Effect. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, taken as a
whole, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Borrower makes no representation or
warranty as to the accuracy of any projections.

 

SECTION 3.12 Subsidiaries. As of the date of this Agreement, the Borrower has no
Subsidiaries other than as set forth on Schedule 3.12 hereto. As of the date of
this Agreement, the Borrower owns, directly or indirectly, all of the
outstanding Equity Interests in and to each Subsidiary listed on Schedule 3.12
hereto and such Equity Interests constitute 100% of the issued and outstanding
Equity Interest of each such Subsidiary.

 

SECTION 3.13 Insurance. As of the Effective Date, all premiums due in respect of
all insurance maintained by the Borrower and each other Loan Party have been
paid.

 

SECTION 3.14 Labor Matters. As of the Effective Date, there are no strikes,
lockouts or slowdowns against the Borrower or any other Loan Party pending or,
to the knowledge of the Borrower, threatened. The hours worked by and payments
made to employees of the Borrower and the other Loan Parties have not been in
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters, except where any such
violation could not reasonably be expected to have a Material Adverse Effect.
All payments due from the Borrower or any other Loan Party, or for which any
claim may be made against the Borrower or any other Loan Party, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of the Borrower or such other Loan
Party. The consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Borrower or any other Loan Party is
bound.

 

SECTION 3.15 Solvency. Immediately after the consummation of the Transactions to
occur on the Effective Date and immediately following the making of each Loan
made on the Effective Date and after giving effect to the application of the
proceeds of such Loans, (a) the fair value of the assets of each Loan Party, at
a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property of
each Loan Party will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured;
(c) each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Effective Date.

 

 
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SECTION 3.16 Material Property Subject to Security Documents. The Collateral
constitutes all of the Scheduled Real Property and all of the material personal
property owned by Borrower or any of its Subsidiaries (other than Excluded
Assets).

 

ARTICLE IV
Conditions

 

SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans and of
the Issuing Banks to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

 

(a)     The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) counterparts of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed counterparts of this Agreement.

 

(b)     The Administrative Agent (or its counsel) shall have received from
Borrower an original of each Note signed on behalf of Borrower.

 

(c)     The Administrative Agent (or its counsel) shall have received from
Borrower and from each other party to the Loan Documents (other than the Notes
and the Mortgages) either (i) counterparts of each applicable Loan Document
signed on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of the applicable Loan Document) that such party has signed
counterparts of such Loan Document.

 

(d)     The Administrative Agent shall have received written opinions (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of
counsel for the Borrower and the other Loan Parties, in form and substance
reasonably satisfactory to the Administrative Agent and its counsel, covering
such other matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Required Lenders shall reasonably request.

 

(e)     The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party,
the authorization of the Transactions and any other legal matters relating to
the Loan Parties, the Loan Documents or the Transactions, all in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.

 

(f)     The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by an appropriate officer or other responsible party
acceptable to Administrative Agent on behalf of the Borrower, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02.

 

 
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(g)     The Administrative Agent shall have received all fees and other amounts
due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses (including
fees, charges and disbursements of counsel) required to be reimbursed or paid by
any Loan Party hereunder or under any other Loan Document.

 

(h)     The Administrative Agent shall have received each of the following:

 

(i)     to the extent applicable, certificates representing all of the
outstanding Equity Interests in each Subsidiary of Borrower as of the Effective
Date (other than Equity Interests included in the Excluded Assets) and powers of
attorney, endorsed in blank, with respect to such certificates;

 

(ii)     all documents and instruments, including Uniform Commercial Code
financing statements, required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded to create or perfect
the Liens intended to be created under the Security Documents;

 

(iii)     the results of a search of the Uniform Commercial Code (or equivalent)
filings made with respect to the Loan Parties in such jurisdictions as the
Administrative Agent may require and copies of the financing statements (or
similar documents) disclosed by such search and evidence reasonably satisfactory
to the Administrative Agent that the Liens indicated by such financing
statements (or similar documents) are permitted by Section 6.02 or have been
released; and

 

(v)     evidence reasonably satisfactory to Lender that none of the Mortgaged
Property lies in an area requiring special notices of flood hazard issues or the
purchase of flood hazard insurance.

 

(i)     The Administrative Agent and the Lenders shall have received evidence
that the insurance required by Section 5.07 is in effect and that the insurance
required by the Security Documents is in effect.

 

(j)     The Administrative Agent shall have received, and shall be satisfied
with the results of, an environmental report prepared by a consultant acceptable
to the Administrative Agent with respect to any Environmental Liabilities that
may be attributable to such properties or operations as have been specified by
the Administrative Agent for review.

 

(k)     The Administrative Agent shall have received Appraisals of real property
owned by the Loan Parties covered by a Mortgage reflecting appraised values
which, when added to the appraised values of the real property currently covered
by a Mortgage, would cause the Loan to Value Ratio to be less than or equal to
the Maximum Loan to Value Ratio.

 

(l)     The Administrative Agent shall have received evidence satisfactory to
the Administrative Agent that the existing title insurance policies relating to
the Mortgages executed prior to the date hereof shall remain in full force and
effect, including such endorsements as the Administrative Agent may reasonably
require (to the extent available).

 

 
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The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.

 

SECTION 4.02 Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing (other than a Borrowing which is merely a
conversion or continuation of existing Loans), and of the Issuing Banks to
issue, amend, renew or extend any Letter of Credit, is subject to receipt of the
request therefor in accordance herewith and to the satisfaction of the following
conditions:

 

(a)     The representations and warranties of each Loan Party set forth in the
Loan Documents shall be true and correct on and as of the date of such Borrowing
or the date of issuance, amendment, renewal or extension of such Letter of
Credit, as applicable.

 

(b)     At the time of and immediately after giving effect to such Borrowing or
the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing and there shall
have occurred no event which would be reasonably likely to have a Material
Adverse Effect.

 

Each Borrowing (other than a Borrowing which is merely a conversion or
continuation of existing Loans) and each issuance, amendment, renewal or
extension of a Letter of Credit shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.

 

ARTICLE V
Affirmative Covenants

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:

 

SECTION 5.01 Financial Statements and Other Information. The Borrower will
furnish to the Administrative Agent and each Lender:

 

(a)     within 90 days after the end of each fiscal year of the Borrower, its
audited consolidated balance sheet and related statements of operations,
shareholders’ equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;

 

(b)     within 45 days after the end of each fiscal quarter (excluding the last
fiscal quarter) of each fiscal year of the Borrower, its consolidated balance
sheet and related statements of operations, shareholders’ equity and cash flows
as of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;

 

 
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(c)     concurrently with any delivery of financial statements under clauses (a)
or (b) above, a certificate of a Financial Officer of the Borrower, in the form
of Exhibit B hereto, (i) certifying as to whether a Default has occurred and, if
a Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 5.13 and
(iii) stating whether any change in GAAP or in the application thereof has
occurred since the Effective Date and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;

 

(d)     within sixty (60) days after the commencement of each fiscal year of the
Borrower, a detailed consolidated budget for such fiscal year (including a
projected consolidated balance sheet and related statements of projected
operations and cash flow as of the end of and for such fiscal year and setting
forth the assumptions used for purposes of preparing such budget and including
detailed break-outs for each fiscal month) and, promptly when available, any
significant revisions of such budget;

 

(e)     concurrently with any delivery of financial statements under clauses (a)
or (b) above, a management discussion and analysis; and

 

(f)     within twenty (20) days after the end of each calendar month, a report
of same store sales results and such other information regarding the real
property of the Borrower and its Subsidiaries as Administrative Agent or any
Lender may from time to time reasonably require; and

 

(g)     promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any other Loan Party, or compliance with the terms of any Loan
Document, as the Administrative Agent may reasonably request.

 

SECTION 5.02 Notices of Material Events. The Borrower will furnish to the
Administrative Agent prompt written notice of the following:

 

(a)     the occurrence of any Default;

 

(b)     the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;

 

 
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(c)     any other development that results in, or would reasonably be expected
to result in, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

 

SECTION 5.03 Information Regarding the Borrower.

 

(a)     The Borrower will furnish to the Administrative Agent prompt written
notice of any change (i) in any Loan Party’s jurisdiction of organization,
corporate name or in any trade name used to identify it in the conduct of its
business or in the ownership of its properties, (ii) in the location of any Loan
Party’s chief executive office, its principal place of business, any office in
which it maintains books or records relating to Collateral owned by it or any
office or facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), (iii) in any Loan Party’s
identity or corporate structure or (iv) in any Loan Party’s Federal Taxpayer
Identification Number. The Borrower agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the UCC or otherwise that are required in order for the Administrative Agent to
continue at all times following such change to have a valid, legal and perfected
security interest in all the Collateral. The Borrower also agrees promptly to
notify the Administrative Agent if any material portion of the Collateral is
damaged or destroyed.

 

(b)     After the Effective Date, Borrower will notify the Administrative Agent
in writing promptly upon Borrower’s or any of its Subsidiaries’ acquisition or
ownership of any personal property (other than Excluded Assets) not already
covered by the Security Documents (such acquisition or ownership being herein
called an “Additional Personal Collateral Event” and the personal property so
acquired or owned being herein called “Additional Personal Collateral”). As soon
as practicable and in any event within forty-five (45) days after an Additional
Personal Collateral Event, Borrower shall (i) execute and deliver or cause to be
executed and delivered Security Documents, in form and substance reasonably
satisfactory to Administrative Agent, in favor of Administrative Agent and duly
executed by Borrower or the applicable Subsidiary, covering and affecting and
granting a first-priority Lien upon the applicable Additional Personal
Collateral, and such other documents (including, without limitation, all items
required by Administrative Agent in connection with the Security Documents
executed prior to the initial Loans being made hereunder, such as certificates
and legal opinions, all in form and substance reasonably satisfactory to
Administrative Agent) as may be required by Administrative Agent in connection
with the execution and delivery of such Security Documents and (ii) deliver or
cause to be delivered by Subsidiaries of Borrower such other documents or
certificates consistent with the terms of this Agreement and relating to the
transactions contemplated hereby as Administrative Agent may reasonably request.

 

 
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(c)     In the event that (i) either (x) an Appraisal has been provided pursuant
to Section 5.14 of this Agreement or (y) any Mortgaged Property is sold pursuant
to Section 6.05 of this Agreement or (z) the Borrower shall elect to increase
the Commitments pursuant to Section 2.07(d) hereof, and (ii) the Loan to Value
Ratio exceeds the Maximum Loan to Value Ratio (such event being herein called an
"Additional Real Collateral Event"), as soon as practicable and in any event
within forty-five (45) days after an Additional Real Collateral Event, Borrower
shall (1) execute and deliver or cause to be executed and delivered a Mortgage
or Mortgages, in form and substance reasonably satisfactory to Administrative
Agent, in favor of Administrative Agent and duly executed by Borrower or the
applicable Subsidiary, covering and affecting and granting a first-priority Lien
upon real property with an Appraisal value that is in an amount sufficient to
cause the Loan to Value Ratio to not exceed the Maximum Loan to Value Ratio (the
real property covered by the Mortgage or Mortgages created pursuant to this
Section 5.03(c) being herein called the "Additional Real Collateral"), and such
other documents (including, without limitation, surveys, environmental
assessments, certificates and legal opinions, all in form and substance
reasonably satisfactory to Administrative Agent) as may be required by
Administrative Agent in connection with the execution and delivery of such
Mortgage or Mortgages, (2) deliver or cause to be delivered by Subsidiaries of
Borrower such other documents or certificates consistent with the terms of this
Agreement and relating to the transactions contemplated hereby as Administrative
Agent may reasonably request, (3) to the extent required by Administrative
Agent, cause a title insurance underwriter satisfactory to Administrative Agent
to issue to Administrative Agent a mortgage policy of title insurance, in form
and substance satisfactory to Administrative Agent, insuring the first-priority
Lien of the applicable Mortgage in such amount as is satisfactory to
Administrative Agent and (4) deliver or cause to be delivered by Subsidiaries of
Borrower evidence reasonably satisfactory to the Administrative Agent that such
Additional Real Property lies in an area requiring special notices of flood
hazard issues or the purchase of flood hazard insurance. The Additional Real
Collateral shall become Mortgaged Property and Scheduled Real Property for
purposes of this Agreement. The real property that constitutes Additional Real
Collateral shall be selected at the Borrower's discretion and shall be
satisfactory to the Required Lenders.

 

SECTION 5.04 Existence; Conduct of Business. The Borrower will, and will cause
each other Loan Party to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business; provided
that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 or any sale, transfer or disposition
permitted under Section 6.05.

 

SECTION 5.05 Payment of Obligations. The Borrower will, and will cause each
other Loan Party to, pay its Indebtedness and other obligations, including
liabilities for Taxes, before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Borrower or such other Loan Party has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP, (c) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest would not reasonably be expected to
result in a Material Adverse Effect.

 

SECTION 5.06 Maintenance of Properties. The Borrower will, and will cause each
other Loan Party to, keep and maintain all property material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted.

 

 
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SECTION 5.07 Insurance. The Borrower will, and will cause each other Loan Party
to, maintain, with financially sound and reputable insurance companies (a)
insurance in such amounts (with no greater risk retention) and against such
risks as are customarily maintained by companies of established repute engaged
in the same or similar businesses operating in the same or similar locations and
(b) all insurance required to be maintained pursuant to the Security Documents.
Unless required by applicable laws, neither the Borrower nor any Loan Party
shall be required to maintain worker’s compensation insurance so long as the
Borrower or such Loan Party maintains non-subscriber employer’s liability
insurance in such amounts (with no greater risk retention) as are customarily
maintained by companies of established repute engaged in the same or similar
businesses operating in the same or similar locations. The Borrower will furnish
to the Lenders, upon request of the Administrative Agent or any Lender,
information in reasonable detail as to the insurance so maintained. In addition,
upon reasonable request by the Administrative Agent (but, so long as no Event of
Default has occurred which is continuing, not more frequently than once in any
fiscal year), the Borrower will provide to the Administrative Agent a report by
an independent insurance consultant reasonably acceptable to the Administrative
Agent regarding the compliance by the Borrower and the other Loan Parties with
the provisions of this Section.

 

SECTION 5.08 Casualty and Condemnation. The Borrower will furnish to the
Administrative Agent and the Lenders prompt written notice of any casualty or
other insured damage to any material portion of the Collateral or the
commencement of any action or proceeding for the taking of any Collateral or any
part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding.

 

SECTION 5.09 Books and Records; Inspection and Audit Rights. The Borrower will,
and will cause each other Loan Party to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each other Loan Party to, permit any representatives designated by
the Administrative Agent or by any Lender, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.

 

SECTION 5.10 Compliance with Laws. The Borrower will, and will cause each other
Loan Party to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so would not reasonably be expected to result in a Material
Adverse Effect.

 

SECTION 5.11 Use of Proceeds and Letters of Credit. The Letters of Credit and
the proceeds of the Loans will be used only for general corporate purposes and
for general working capital purposes, which may include refinancing existing
Indebtedness and costs associated with acquisitions permitted hereunder. No part
of the proceeds of any Loan will be used, whether directly or indirectly, for
any purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.

 

SECTION 5.12 Further Assurances. The Borrower will, and will cause each other
Loan Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, mortgages, deeds
of trust and other documents), which may be required under any applicable law,
or which the Administrative Agent or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Security Documents or the validity or priority of any such Lien, all at
the expense of the Loan Parties. The Borrower also agrees to provide to the
Administrative Agent, from time to time upon reasonable request by the
Administrative Agent, evidence reasonably satisfactory to the Administrative
Agent as to the perfection and priority of the Liens created or intended to be
created by the Security Documents.

 

 
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SECTION 5.13 Financial Covenants. The Borrower will have and maintain:

 

(a)     Debt Service Coverage Ratio – a Debt Service Coverage Ratio of not less
than 2.50 to 1.00 at all times.

 

(b)     Net Profit – Two Consecutive Quarters – minimum Net Profit of not less
than $1.00 for at least one of any two consecutive fiscal quarters.

 

(c)     Net Profit – Four Consecutive Quarters – minimum Net Profit of not less
than $1.00 for any period of four consecutive fiscal quarters.

 

(d)     Lease Adjusted Leverage Ratio – a Lease Adjusted Leverage Ratio of not
more than 4.25 to 1.00 at all times.

 

SECTION 5.14 Appraisals. Borrower shall provide Appraisals of the Mortgaged
Property to the Administrative Agent upon request by the Administrative Agent
(but not more frequently than once in any period of twelve months unless an
Event of Default has occurred and is continuing). The Borrower shall pay all
costs and expenses incurred in obtaining any Appraisals required hereunder.

 

SECTION 5.15 Deposit Concentration Accounts. Borrower shall, and shall cause
each of its Subsidiaries to, maintain their Deposit Concentration Accounts with
a Lender.

 

ARTICLE VI
Negative Covenants

 

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

 
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SECTION 6.01 Indebtedness; Certain Equity Securities.

 

(a)     The Borrower will not, and will not permit any other Loan Party to,
create, incur, assume or permit to exist any Indebtedness, except (subject, in
each case, to the terms and provisions of Section 5.12):

 

(i)     Indebtedness created under the Loan Documents;

 

(ii)     Indebtedness of the Borrower owing to any of its wholly-owned
Subsidiaries and Indebtedness of any of the Borrower’s wholly-owned Subsidiaries
owing to the Borrower or any of its other wholly-owned Subsidiaries;

 

(iii)     Guarantees by the Borrower or any of the Borrower’s wholly-owned
Subsidiaries of Indebtedness of the Borrower or any of its other wholly-owned
Subsidiaries to the extent such Indebtedness is otherwise permitted hereunder;

 

(iv)     “Mark to market” exposure resulting from any Swap Agreement entered
into for protection against interest rate risks, and not for speculative
purposes;

 

(v)     purchase money Indebtedness and Capital Lease Obligations;

 

(vi)     Indebtedness of the Borrower or any of the Borrower’s wholly-owned
Subsidiaries incurred in connection with any transaction or series of
transactions permitted under the terms and provisions of Section 6.14 (whether
pre-existing Indebtedness owed by any Person acquired by the Borrower or any of
its wholly-owned Subsidiaries or Indebtedness incurred in contemplation of such
acquisition);

 

(vii)     other indebtedness in an aggregate principal amount not exceeding
$2,000,000 at any one time outstanding; and

 

(viii)     extensions, renewals and replacements of any of the foregoing that do
not increase the outstanding principal amount thereof.

 

(b)     The Borrower will not, nor will it permit any other Loan Party to, issue
any preferred stock or other preferred Equity Interests after the Effective
Date, other than preferred stock or preferred Equity Interests issued by a
wholly-owned Subsidiary of the Borrower to the Borrower or to another
wholly-owned Subsidiary of the Borrower pursuant to any merger permitted by
Section 6.03.

 

SECTION 6.02 Liens. The Borrower will not, and will not permit any other Loan
Party to, create, incur, assume or permit to exist any Lien on any property or
asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:

 

(i)     Liens created under the Loan Documents and Liens securing obligations
owed to one or more of the Lenders or Affiliates thereof (but not to any Person
which is not, at the time such obligations are incurred, a Lender or an
Affiliate thereof) under a Swap Agreement or under an agreement governing
Banking Services;

 

 
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(ii)     Liens listed on Schedule 6.02 attached hereto and any renewals,
replacements or extensions thereof;

 

(iii)     Liens created pursuant to Capital Lease Obligations or purchase money
Indebtedness permitted under Section 6.01(a)(v); provided that such Liens are
only in respect of the property or assets subject to, and secure only, the
respective Capital Lease Obligations or purchase money Indebtedness;

 

(iv)     any Lien securing Indebtedness permitted under Section 6.01(a)(vi)
hereof existing on any property or asset of the acquired Person; provided that
(x) such Lien is not created in contemplation of or in connection with such
acquisition, (y) such Lien shall not apply to any other property or assets of
the Borrower or any Subsidiary and (z) such Lien shall secure only those
obligations which it secures on the date of such acquisition and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof;

 

(v)     in addition to and cumulative of the Liens permitted under the other
provisions of this Section, Liens securing Indebtedness not exceeding, in the
aggregate at any one time outstanding, $10,000,000; and

 

(vi)     Permitted Encumbrances.

 

SECTION 6.03 Fundamental Changes.

 

(a)     The Borrower will not, nor will it permit any other Loan Party to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, other than in connection
with acquisitions permitted under Section 6.14 hereof, except that, so long as
no Default or Event of Default exists or would occur after giving effect thereto
any Subsidiary of the Borrower may merge with or into any other wholly-owned
Subsidiary of the Borrower or into the Borrower (except that if the Borrower is
a party to any such merger, the Borrower must be the survivor).

 

(b)     The Borrower will not, and will not permit any other Loan Party to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and the other Loan Parties on the date of execution of
this Agreement and businesses reasonably related thereto.

 

SECTION 6.04 Investments, Loans, Advances and Guarantees. The Borrower will not,
and will not permit any other Loan Party to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a wholly owned
Subsidiary of the Borrower prior to such merger) any Equity Interests in or
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, except:

 

 
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(a)     Permitted Investments;

 

(b)     loans or advances made by the Borrower to any of the Borrower’s
wholly-owned Subsidiaries and loans or advances made by any of the Borrower’s
wholly-owned Subsidiaries to the Borrower or any of its other wholly-owned
Subsidiaries;

 

(c)     loans or advances by the Borrower or any of its Subsidiaries to their
respective employees in the ordinary course of business, not to exceed $500,000
in the aggregate at any one time outstanding;

 

(d)     Accounts receivable owned by the Borrower or any of its Subsidiaries, if
created in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;

 

(e)     Guarantees constituting Indebtedness permitted by Section 6.01;

 

(f)     creation of additional Subsidiaries in compliance with Section 6.12;

 

(g)     trade and customer accounts receivable which are for goods furnished or
services rendered in the ordinary course of business and are payable in
accordance with customary trade terms;

 

(h)     Capital Expenditures made by the Borrower and its Subsidiaries in
connection with their respective businesses;

 

(i)     investments under Swap Agreements permitted by Section 6.07;

 

(j)     acquisitions permitted by Section 6.14;

 

(k)     acquisition of loans which are fully guaranteed by the Borrower or any
of its Subsidiaries (to the extent such guaranties are permitted under this
Agreement);

 

(l)     investments received in connection with the bankruptcy or reorganization
of, or settlement of delinquent Accounts and disputes with, customers and
suppliers, in each case in the ordinary course of business; and

 

(m)     other investments, loans or advances not otherwise permitted by this
Section 6.04 not to exceed $10,000,000 in the aggregate at any one time
outstanding.

 

SECTION 6.05 Asset Sales. The Borrower will not, and will not permit any other
Loan Party to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrower permit any of
its Subsidiaries to issue any additional Equity Interest in such Subsidiary,
except:

 

(a)     sales of inventory, used or surplus equipment and Permitted Investments
in the ordinary course of business;

 

 
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(b)     sales, transfers and dispositions by the Borrower to any of its
wholly-owned Subsidiaries or by any wholly-owned Subsidiary of the Borrower to
the Borrower or any other wholly-owned Subsidiary of the Borrower;

 

(c)     sales, transfers, leases and dispositions by the Borrower or any of its
Subsidiaries of the assets listed on Schedule 6.05 attached hereto;

 

(d)     other sales, transfers, leases and dispositions by the Borrower or any
of its Subsidiaries (other than a lease of any Mortgaged Property or a
conveyance of less than all of the Equity Interests in and to any Subsidiary
owned by the Borrower or any of its Subsidiaries) which do not exceed, in any
fiscal year, eight percent (8%) of the net book value of the assets of the
Borrower (on a consolidated basis) as of the last day of the immediately
preceding fiscal year;

 

provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made to
unaffiliated third parties for fair value and, except for sellers’ notes not
exceeding twenty percent (20%) of the sales price and which constitute
investments permitted under Section 6.04 hereof, solely for cash consideration.

 

SECTION 6.06 Sale and Leaseback Transactions. Except as permitted under the
provisions of Sections 6.05 and 6.14, the Borrower will not, and will not permit
any other Loan Party to, enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereinafter acquired, and thereafter rent
or lease such property or other property that it intends to use for
substantially the same purpose or purposes as the property sold or transferred.

 

SECTION 6.07 Swap Agreements. The Borrower will not, and will not permit any
other Loan Party to, enter into any Swap Agreement except as approved (excluding
any pricing terms in connection with any Swap Agreement offered by a Lender) by
Administrative Agent (such approval not to be unreasonably withheld or delayed).

 

SECTION 6.08 Restricted Payments. The Borrower will not, nor will it permit any
other Loan Party to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so. Notwithstanding the foregoing, at any time (i) the Borrower
may declare and pay dividends with respect to its Equity Interests payable
solely in additional shares of its common stock, (ii) Subsidiaries of the
Borrower may declare and pay dividends ratably with respect to their Equity
Interests, (iii) the Borrower may declare and pay such payments or prepayments
of Subordinated Debt as may be permitted under the terms and provisions of any
applicable Subordination Agreement, and (iv) the Borrower may pay management
fees to advisors and consultants. Without limiting the foregoing, the Borrower
may declare and pay any Restricted Payments so long as (x) there are no Loans
outstanding at the time of (and after giving effect to) the proposed Restricted
Payments, (y) no Default or Event of Default has occurred which is continuing
(or would reasonably be expected to arise by reason of the proposed Restricted
Payments) and (z) the Borrower exceeds $5,000,000 in net profit after tax
(excluding other comprehensive income and goodwill impairment), determined in
accordance with GAAP, at each fiscal year end of the Borrower preceding the
proposed Restricted Payments.

 

 
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SECTION 6.09 Transactions with Affiliates. The Borrower will not, nor will it
permit any other Loan Party to, sell, lease or otherwise transfer any property
or assets to, or purchase, lease or otherwise acquire any property or assets
from, or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions in the ordinary course of business that are at prices
and on terms and conditions not less favorable to the Borrower or such other
Loan Party than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among the Borrower and any Loan Party not
involving any other Affiliate, (c) transactions described on Schedule 6.09
attached hereto, and (d) any Restricted Payment permitted by Section 6.08.

 

SECTION 6.10 Restrictive Agreements. The Borrower will not, nor will it permit
any other Loan Party to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Borrower or any other Loan Party to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary of the Borrower to pay dividends or other
distributions with respect to any of its Equity Interests or to make or repay
loans or advances to the Borrower or any other Subsidiary of the Borrower or to
Guarantee Indebtedness of the Borrower or any other Subsidiary of the Borrower;
provided that the foregoing shall not apply to (x) restrictions and conditions
imposed by law, by any Loan Document or (y) the terms or provisions of any
document or agreement evidencing Indebtedness permitted under Section 6.01(a)(v)
hereof which restrict the creation or incurrence of Liens upon any assets
securing such Indebtedness or evidencing Indebtedness permitted under Section
6.01(a)(vi) hereof which restrict the creation or incurrence of Liens upon any
assets owned by the applicable Subsidiary which is acquired.

 

SECTION 6.11 Amendment of Material Documents. The Borrower will not, nor will it
permit any other Loan Party to, amend, modify or waive any of its rights under
(a) any Subordinated Debt Document except as permitted pursuant to the
applicable subordination provisions set forth in such Subordinated Debt Document
or as permitted in any related intercreditor agreement, or (b) its
organizational documents in any manner materially adverse to the Lenders.

 

SECTION 6.12 Additional Subsidiaries. The Borrower will not, and will not permit
any other Loan Party to, form or acquire any Subsidiary after the Effective Date
except that the Borrower or any of its Subsidiaries may form, create or acquire
a Subsidiary so long as (a) immediately thereafter and giving effect thereto, no
event will occur and be continuing which constitutes a Default; (b) such
Subsidiary (and, where applicable, the Borrower) shall execute and deliver a
Guaranty (or, at the option of Administrative Agent, a joinder to the Guaranty
executed concurrently herewith) and such Security Documents as the
Administrative Agent may reasonably require to effectuate the provisions of this
Agreement regarding Collateral to be covered by the Security Documents, (c) such
Subsidiary shall be wholly-owned by the Borrower (directly or indirectly) except
as permitted under Section 6.14, and (d) Administrative Agent is given at least
fifteen (15) Business Days’ prior notice of such formation, creation or
acquisition.

 

 
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SECTION 6.13 Intentionally Left Blank.

 

SECTION 6.14 Acquisitions. The Borrower will not, and will not permit any other
Loan Party to, enter into any transaction or series of transactions for the
purposes of acquiring all or a substantial portion of the assets, property
and/or Equity Interests in and to any Person other than the acquisition by the
Borrower or any Loan Party of Equity Interests in and to (which may be way of a
merger with and into the Borrower or another Loan Party so long as the Borrower
or the applicable Loan Party is the surviving entity), or all or a substantial
portion of the assets, property and/or operations of, any Person provided that

 

(a)     Aggregate consideration paid by the Loan Parties in connection with all
acquisitions occurring in any fiscal year of the Borrower shall not exceed
$10,000,000 and aggregate consideration paid by the Loan Parties in connection
with all acquisitions occurring on or after August 14, 2013 shall not exceed
$25,000,000;

 

(b)     the Company may acquire less than 100% of the Equity Interests of a
Person, but in no event less than 80% except as permitted under Section 6.04;

 

(c)     no Default or Event of Default shall have occurred and be continuing or,
on a pro forma basis, would reasonably be expected to result from such
acquisition;

 

(d)     such acquisition is of a Person in the restaurant business or a
reasonably-related business (or of assets used in the restaurant business or a
reasonably-related business);

 

(e)     the Borrower can demonstrate, on a pro forma basis, after giving effect
to such acquisition that the Total Leverage Ratio does not exceed 2.50 to 1.00;
and

 

(f)     the Borrower shall have delivered (or caused to be delivered) to the
Administrative Agent such other documents as may be reasonably requested by the
Administrative Agent in connection with such acquisition.

 

ARTICLE VII
Events of Default

 

If any of the following events (“Events of Default”) shall occur:

 

(a)     the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

 

(b)     the Borrower shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;

 

(c)     any representation or warranty made or deemed made by or on behalf of
the Borrower or any other Loan Party in or in connection with any Loan Document
or any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document (other than projections)
furnished pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
in any material respect when made or deemed made;

 

 
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(d)     the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Sections 5.02, 5.03(b), 5.07, 5.11, 5.12, 5.13, 5.14 or
5.15 or in Article VI;

 

(e)     the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.01 and such failure shall continue unremedied
for a period of 10 days.

 

(f)      any Loan Party shall fail to observe or perform any covenant, condition
or agreement contained in any Loan Document (other than those specified in
clauses (a), (b), (d) or (e) of this Article), and such failure shall continue
unremedied for a period of 30 days after the earlier of (i) the Borrower
becoming aware of such failure and (ii) notice thereof from the Administrative
Agent to the Borrower (which notice will be given at the request of the Required
Lenders);

 

(g)     the Borrower or any other Loan Party shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable and the
same shall continue beyond all applicable grace periods;

 

(h)     any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;

 

(i)     an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any other Loan Party or their debts, or of a
substantial part of their assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any other Loan Party or for
a substantial part of their assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;

 

(j)     the Borrower or any other Loan Party shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (i) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any other Loan Party or for a substantial
part of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;

 

 
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(k)     the Borrower or any other Loan Party shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

 

(l)     one or more judgments for the payment of money in an aggregate amount in
excess of $8,000,000 (exclusive of amounts covered by insurance) shall be
rendered against the Borrower or any other Loan Party and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any other Loan
Party to enforce any such judgment;

 

(m)     an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;

 

(n)     any Lien purported to be created under any Security Document shall cease
to be a valid and perfected Lien on any Collateral, with the priority required
by the applicable Security Document, except as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted under the
Loan Documents, and the same shall not be fully cured within 30 days after
notice thereof to the Borrower by the Administrative Agent, or any Lien
purported to be created under any Security Document shall be asserted by any
Loan Party not to be a valid and perfected Lien on any Collateral, with the
priority required by the applicable Security Document, except as a result of the
sale or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents;

 

(o)     a Change in Control shall occur;

 

then, and in every such event (other than an event with respect to the Borrower
described in clauses (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, with the
consent of the Required Lenders and shall, at the request of the Required
Lenders, by notice to the Borrower, take either or both of the following
actions, at the same or different times:  (i) terminate the Commitments, and
thereupon the Commitments shall terminate immediately, and (ii) declare the
Loans then outstanding to be due and payable in whole (or in part, in which case
any principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower; and in case of any event
with respect to the Borrower described in clauses (i) or (j) of this Article,
the Commitments shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.

 

 
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ARTICLE VIII
The Administrative Agent

 

Each of the Lenders and each Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.

 

The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any of its Subsidiaries or other
Affiliate thereof as if it were not the Administrative Agent hereunder.

 

The Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or willful misconduct, BUT REGARDLESS OF THE
PRESENCE OF ORDINARY NEGLIGENCE. The Administrative Agent shall not be deemed to
have knowledge of any Default unless and until written notice thereof is given
to the Administrative Agent by the Borrower or a Lender, and the Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with any
Loan Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.

 

The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

 

 
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The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

 

Subject to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may (and, in the event (i)
neither the Administrative Agent nor any Affiliate of the Administrative Agent,
as a Lender, has any Revolving Exposure or unused Commitment and (ii) the
Required Lenders so request, the Administrative Agent shall) resign at any time
by notifying the Lenders, the Issuing Banks and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Banks, appoint a successor Administrative Agent which shall be a bank with an
office in Houston, Texas, or an Affiliate of any such bank. Upon the acceptance
of its appointment as Administrative Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.

 

 
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ARTICLE IX
Miscellaneous

 

SECTION 9.01 Notices.

 

(a)     Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

 

(i)     if to the Borrower, to it at 13111 Northwest Freeway, Suite 600,
Houston, Texas 77040, Attention: Michael Racusin, General Counsel (Telecopy:
713-329-6800);

 

(ii)     if to the Administrative Agent, to Wells Fargo Bank, National
Association, 1700 Lincoln Street, Third Floor, MAC C7300-033, Denver, CO 80203,
Telecopy No.: 303-863-5533, with a copy to: Wells Fargo Bank, National
Association, MAC T0002-032, 1000 Louisiana St., 3rd Floor, Houston, TX 77002,
Attention: Missy Collura, Telecopy No.: 713-739-1086;

 

(iii)     if to Wells Fargo Bank, National Association, in its capacity as an
Issuing Bank, to Wells Fargo Bank, National Association, 1700 Lincoln Street,
Third Floor, MAC C7300-033, Denver, CO 80203, Telecopy No.: 303-863-5533, with a
copy to: Wells Fargo Bank, National Association, MAC T0002-032, 1000 Louisiana
St., 3rd Floor, Houston, TX 77002, Attention: Missy Collura, Telecopy No.:
713-739-1086;

 

(iv)     if to Amegy Bank National Association, in its capacity as an Issuing
Bank, to Amegy Bank National Association, 5 Post Oak Park Office, 4400 Post Oak
Parkway, Houston, Texas 77027, Attention: Kelly Nash (Telecopy No.
713-561-0083), with a copy to Amegy Bank National Association - Syndicated
Finance, 5 Post Oak Park Office, 4400 Post Oak Parkway, Houston, Texas 77027
(facsimile No. 713-571-5413); and

 

(v)     if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.

 

(b)     If a notice is delivered by telecopy, it shall be promptly confirmed in
a writing delivered by one of the other available delivery mechanisms provided
above. Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

(c)     Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

 

 
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SECTION 9.02 Waivers; Amendments.

 

(a)     No failure or delay by the Administrative Agent, any Issuing Bank or any
Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Issuing Banks and the Lenders hereunder and under
the other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time.

 

(b)     Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the
Borrower and the Required Lenders or, in the case of any other Loan Document,
pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment (including any mandatory
prepayment) of the principal amount of any Loan or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or reduce the amount of, waive
or excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
release all or substantially all of the Collateral from the Liens of the
Security Documents, without the written consent of each Lender, (v) change
Section 2.16(b) or (c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, or (vi)
change any of the provisions of this Section or the definition of “Required
Lenders” or any other provision of any Loan Document specifying the number or
percentage of Lenders required to waive, amend or modify any rights thereunder
or make any determination or grant any consent thereunder, without the written
consent of each Lender provided further that (A) no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent or
any Issuing Bank without the prior written consent of the Administrative Agent
or such Issuing Bank, and (B) no consent of the Administrative Agent or any
Lender shall be required to release any Lien or security interest on any asset
or property of the Borrower or any of its Subsidiaries in connection with a
sale, transfer or disposition of such asset or property made in compliance with
this Agreement.

 

 
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SECTION 9.03 Expenses; Indemnity; Damage Waiver.

 

(a)     The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by each Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, any Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, any
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

 

(b)     The Borrower shall indemnify the Administrative Agent, each Issuing Bank
and each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of any Loan
Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by any Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any Mortgaged Property or any other property currently or formerly
owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
resulted from the gross negligence or willful misconduct of such Indemnitee, BUT
THE PRESENCE OF ORDINARY NEGLIGENCE SHALL NOT AFFECT THE AVAILABILITY OF SUCH
INDEMNITY.

 

(c)     To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent or any Issuing Bank under paragraphs (a)
or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or such the Issuing Bank, as the case may be, such Lender’s
pro rata share (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or such Issuing Bank in its capacity as such. For purposes
hereof, a Lender’s “pro rata share” shall be determined based upon (without
duplication) its share of the sum of the total Revolving Exposures and unused
Commitments at the time.

 

 
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(d)     To the extent permitted by applicable law, neither the Borrower nor any
other Loan Party shall assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.

 

(e)     All amounts due under this Section shall be payable not later than three
Business Days after written demand therefor.

 

SECTION 9.04 Successors and Assigns.

 

(a)     The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of any Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

 

(b)     (i)      Subject to the conditions set forth in paragraph (b)(ii) below,
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:

 

(A)     the Borrower, provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if
an Event of Default has occurred and is continuing, any other assignee; and

 

(B)     the Administrative Agent; and

 

(C)     each Issuing Bank.

 

(ii)     Assignments shall be subject to the following additional conditions:

 

 
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(A)     except in the case of an assignment to a Lender or an Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning Lender’s
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 and shall not result in the assigning Lender holding
Commitments and Loans in an aggregate amount which is less than $5,000,000
unless each of the Borrower and the Administrative Agent otherwise consent,
provided that no such consent of the Borrower shall be required if an Event of
Default has occurred and is continuing;

 

(B)     each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement;

 

(C)     the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

 

(D)     the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

For the purposes of this Section, the term “Approved Fund” has the following
meaning:

 

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

(iii)     Subject to acceptance and recording thereof pursuant to paragraph
(b)(iv) of this Section, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

 

(iv)     The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Banks and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, any Issuing Banks and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

 

 
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(v)     Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

 

(c)     (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Banks or the other Lenders, sell
participations to one or more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent, the Issuing Banks and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.16(c) as though it were a Lender.

 

(ii)     A Participant shall not be entitled to receive any greater payment
under Sections 2.13 or 2.15 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.

 

(d)     Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

 

 
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SECTION 9.05 Survival. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, any Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

 

SECTION 9.06 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.

 

SECTION 9.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

 

SECTION 9.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower against
any of and all the obligations of the Borrower now or hereafter existing under
this Agreement held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement and although such obligations
may be unmatured. The rights of each Lender under this Section are in addition
to other rights and remedies (including other rights of setoff) which such
Lender may have.

 

 
66

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SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.

 

(a)     This Agreement shall be construed in accordance with and governed by the
law of the State of Texas.

 

(b)     The Borrower hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of each court of the State of
Texas sitting in Harris County and of the United States District Court of the
Southern District of Texas (Houston Division), and any appellate court from any
thereof, in any action or proceeding arising out of or relating to any 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 such
Texas State or, to the extent permitted by law, in such Federal court. 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 the Administrative Agent,
any Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against the
Borrower or its properties in the courts of any jurisdiction.

 

(c)     The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which 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
court referred to in paragraph (b) of this Section. 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.

 

(d)     Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.

 

SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

 
67

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SECTION 9.11 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

SECTION 9.12 Interest Rate Limitation. The Borrower and the Lenders intend to
strictly comply with all applicable federal and Texas laws, including applicable
usury laws (or the usury laws of any jurisdiction whose usury laws are deemed to
apply to the Notes or any other Loan Documents despite the intention and desire
of the parties to apply the usury laws of the State of Texas). Accordingly, the
provisions of this Section shall govern and control over every other provision
of this Agreement or any other Loan Document which conflicts or is inconsistent
with this Section, even if such provision declares that it controls. As used in
this Section, the term “interest” includes the aggregate of all charges, fees,
benefits or other compensation which constitute interest under applicable law,
provided that, to the maximum extent permitted by applicable law, (a) any
non-principal payment shall be characterized as an expense or as compensation
for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or
received shall be amortized, prorated, allocated and spread, using the actuarial
method, during the full term of the Notes. In no event shall the Borrower or any
other Person be obligated to pay, or any Lender have any right or privilege to
reserve, receive or retain, (a) any interest in excess of the maximum amount of
nonusurious interest permitted under the laws of the State of Texas or the
applicable laws (if any) of the United States or of any other jurisdiction, or
(b) total interest in excess of the amount which such Lender could lawfully have
contracted for, reserved, received, retained or charged had the interest been
calculated for the full term of the Notes at the Ceiling Rate. The daily
interest rates to be used in calculating interest at the Ceiling Rate shall be
determined by dividing the applicable Ceiling Rate per annum by the number of
days in the calendar year for which such calculation is being made. None of the
terms and provisions contained in this Agreement or in any other Loan Document
(including, without limitation, Article VII hereof) which directly or indirectly
relate to interest shall ever be construed without reference to this Section, or
be construed to create a contract to pay for the use, forbearance or detention
of money at any interest rate in excess of the Ceiling Rate. If the term of any
Note is shortened by reason of acceleration or maturity as a result of any
Default or by any other cause, or by reason of any required or permitted
prepayment, and if for that (or any other) reason any Lender at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Ceiling Rate,
then and in any such event all of any such excess interest shall be canceled
automatically as of the date of such acceleration, prepayment or other event
which produces the excess, and, if such excess interest has been paid to such
Lender, it shall be credited pro tanto against the then-outstanding principal
balance of the Borrower’s obligations to such Lender, effective as of the date
or dates when the event occurs which causes it to be excess interest, until such
excess is exhausted or all of such principal has been fully paid and satisfied,
whichever occurs first, and any remaining balance of such excess shall be
promptly refunded to its payor.

 

 
68

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SECTION 9.13 USA Patriot Act. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act.

 

SECTION 9.14 Confidentiality. Each of the Administrative Agent, the Issuing
Banks and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or prospective Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative Agent,
any Issuing Bank or any Lender on a nonconfidential basis from a source other
than the Borrower. For the purposes of this Section, “Information” means all
information received from the Borrower relating to the Borrower or its business,
other than any such information that is available to the Administrative Agent,
any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
the Borrower; provided that, in the case of information received from the
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

SECTION 9.15 Amendment and Restatement. This Agreement amends and restates in
its entirety that certain Credit Agreement (the “Original Credit Agreement”)
dated as of November 9, 2009 by and among the Borrower, Wells Fargo Bank,
National Association, as Administrative Agent, and the other lenders named
therein.

 

 
69

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

 

LUBY’S, INC.,

a Delaware corporation

 

 

By:                                                         

Christopher J. Pappas,

President and Chief Executive Officer

 

 

Tax ID Number: 74-1335253

 

The undersigned hereby join in this Agreement to evidence their consent to
execution by Borrower of this Agreement, to confirm that each Loan Document now
or previously executed by the undersigned in connection with the November 9,
2009 credit agreement described in Section 9.15 hereof applies and shall
continue to apply to this Agreement, and to acknowledge that without such
consent and confirmation, Lenders would not execute this Agreement.

 

LUBY’S HOLDINGS, INC.,

a Delaware corporation,

LUBY’S LIMITED PARTNER, INC.,

a Delaware corporation,

LUBCO, INC.,

a Delaware corporation,

LUBY’S MANAGEMENT, INC.,

a Delaware corporation,

LUBY’S BEVCO, INC.,

a Texas corporation

LUBY’S FUDDRUCKERS RESTAURANTS, LLC, a Texas limited liability company

FUDDRUCKERS TULSA, LLC,

a Texas limited liability company

R. WES, INC.,

a Texas corporation

FUDDRUCKERS OF ANNAPOLIS, LLC,

a Maryland limited liability company

FUDDRUCKERS OF HOWARD COUNTY,

LLC, a Maryland limited liability company

 

 

By:                                                            

Christopher J. Pappas,

President and Chief Executive Officer

 

 

[Signature Page for Credit Agreement]

 
 

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

 

 

 

PARADISE CHEESEBURGERS, LLC,

a Texas limited liability company

PARADISE RESTAURANT GROUP, LLC,

a Delaware limited liability company

CHEESEBURGER OF NEWARK, LLC,

a Delaware limited liability company

CHEESEBURGER OF FT. MEYERS, LLC,

a Florida limited liability company

CHEESEBURGER OF SANDESTIN, LLC,

a Florida limited liability company

CHEESEBURGER OF DOWNERS GROVE, LLC, an Illinois limited liability company

CHEESEBURGER OF ALGONQUIN, LLC,

an Illinois limited liability company

CHEESEBURGER OF EVANSVILLE, LLC,

an Indiana liability company

CHEESEBURGER OF FISHERS, LLC,

an Indiana limited liability company

CHEESEBURGER OF SOUTHPORT, LLC,

an Indiana limited liability company

CHEESEBURGER OF TERRE HAUTE, LLC,

an Indiana limited liability company

CHEESEBURGER OF KANSAS CITY, LLC,

a Kansas limited liability company

CHEESEBURGER OF PASADENA, LLC,

a Maryland limited liability company

CHEESEBURGER OF CALIFORNIA, LLC,

a Maryland limited liability company

CHEESEBURGER IN PARADISE OF ANNE ARUNDEL COUNTY, INC., a Maryland corporation

CHEESEBURGER IN PARADISE OF ST. MARY’S COUNTY, LLC, a Maryland limited liability
company

CHEESEBURGER OF STERLING HEIGHTS, LLC, a Michigan limited liability company

HIGH TIDES OF OMAHA, LLC,

a Nebraska limited liability company

CHEESEBURGER OF SEACAUCUS, LLC,

a New Jersey limited liability company

CHEESEBURGER OF WALLKILL, LLC,

a New York limited liability company

CHEESEBURGER OF HILLIARD, LLC,

a Ohio limited liability company

CHEESEBURGER OF MYRTLE BEACH, LLC, a South Carolina limited liability company

 

 

[Signature Page for Credit Agreement]

 
 

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

 

 

CHEESEBURGER OF FREDERICKSBURG, LLC, a Virginia limited liability company

CHEESEBURGER OF NEWPORT NEWS, LLC, a Virginia limited liability company

CHEESEBURGER OF VIRGINIA BEACH, LLC, a Virginia limited liability company

CHEESEBURGER OF WOODBRIDGE, LLC,

a Virginia limited liability company

CHEESEBURGER OF MIDDLETON, LLC,

a Wisconsin limited liability company

 

 

By:                                                             

Peter Tropoli, President

 

 

 

 

 

 

[Signature Page for Credit Agreement]

 
 

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

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, individually and as Administrative Agent
and as an Issuing Bank

 

 

By:                                                            

Missy Collura, Vice President

 

 

 

[Signature Page for Credit Agreement]

 
 

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

 

 

 

AMEGY BANK NATIONAL ASSOCIATION,

individually and as an Issuing Bank

 

 

By:                                                              

Kelly Nash, Vice President

 

 

 

[Signature Page for Credit Agreement]

 
 

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

 

 

 

Schedule 1.01(a)

 

Existing Letters of Credit

 

Sidecar Ref

Risk Type

Expiry Date

Issue Date

Beneficiary

FX Amount

 

Evergreen

000000000002101

PERLC

7/2/2014 12:00:00 AM

5/20/2013 12:00:00 AM

NATIONAL UNION FIRE INSURANCE CO.

$102,000.00

 

Y

000000000002102

FINLC

7/2/2014 12:00:00 AM

5/20/2013 12:00:00 AM

CONTINENTAL CASUALTY COMPANY

$130,000.00

 

Y

000000000002103

FINLC

7/2/2014 12:00:00 AM

5/20/2013 12:00:00 AM

CONTINENTAL CASUALTY COMPANY

$36,000.00

 

Y

000000000002104

FINLC

7/2/2014 12:00:00 AM

5/20/2013 12:00:00 AM

CONTINENTAL CASUALTY COMPANY

$29,000.00

 

Y

000000000002105

FINLC

7/2/2014 12:00:00 AM

5/20/2013 12:00:00 AM

CONTINENTAL CASUALTY COMPANY

$41,000.00

 

Y

000000000002106

FINLC

7/2/2014 12:00:00 AM

5/20/2013 12:00:00 AM

CONTINENTAL CASUALTY COMPANY

$22,000.00

 

Y

000000000002107

FINLC

9/7/2013 12:00:00 AM

5/20/2013 12:00:00 AM

CITY OF PHARR, TEXAS

$44,606.50

 

N

000000000002108

PERLC

7/2/2014 12:00:00 AM

5/20/2013 12:00:00 AM

TIG INSURANCE COMPANY AND/OR OTHERS

$350,000.00

 

Y

000000000002109

PERLC

7/2/2014 12:00:00 AM

5/20/2013 12:00:00 AM

LUMBERMENS MUTUAL CASUALTY CO.

$13,000.00

 

Y

000000000002110

FINLC

11/16/2013 12:00:00 AM

5/20/2013 12:00:00 AM

LIBERTY MUTUAL INSURANCE COMPANY

$215,000.00

 

Y

 

 

 

 
 

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

 

 

 

Schedule 1.01(b)

 

Scheduled Real Property

 

Address

City

County

State

Zip

13817 U.S. Highway 183 North

Austin

Travis

TX

78729

951 North Loop 340

Bellmead

McLennan

TX

76705

8511 Tesoro Drive

San Antonio

Bexar

TX

78217

822 Dixeland Road

Harlingen

Cameron

TX

78552

730 FM 1960 West

Houston

Harris

TX

77090

701 East Expressway 83

Mission

Hidalgo

TX

78572

5901 South Hulen St.

Fort Worth

Tarrant

TX

76132

5471 South Cooper Street

Arlington

Tarrant

TX

76013

4709 Center St.

Deer Park

Harris

TX

77536

3925 South General Bruce Dr.

Temple

Bell

TX

76502

3801 Northeast Loop 820

Fort Worth

Tarrant

TX

76017

3312 Southeast Loop 820

Forest Hill

Tarrant

TX

76140

3301 Gus Thomasson Road

Mesquite

Dallas

TX

75150

2695 Interstate 10 East

Beaumont

Jefferson

TX

77702

2211 Avenue F

Del Rio

Val Verde

TX

78840

2001 Expressway 83 West

Weslaco

Hidalgo

TX

78596

200 IH-35 North

San Marcus

Hays

TX

78666

1600 Nasa Road One

Houston

Harris

TX

77058

1510 South Padre Island Drive

Corpus Christi

Nueces

TX

78411

139 IH 45 North

Huntsville

Walker

TX

77320

13451 Northwest Freeway

Houston

Harris

TX

77040

13400 San Pedro Avenue

San Antonio

Bexar

TX

78216

1201 West Baker Road

Baytown

Harris

TX

77521

1188 Hawkins Boulevard

El Paso

El Paso

TX

79925

11811 West Loop 1604 North

San Antonio

Bexar

TX

78023

 

 

 
 

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

 

 

108 West Greens Road

Houston

Harris

TX

77067

10575 West Airport Boulevard

Stafford

Fort Bend

TX

77477

1727 Old Spanish Trail

Houston

Harris

TX

77054

19668 Northwest Freeway

Houston

Harris

TX

77065

2730 Fondren Road

Houston

Harris

TX

77063

18206 Blanco Road

San Antonio

Bexar

TX

78258

5307 Walzem Road

Windcrest

Bexar

TX

78239

1410 E. Anderson Lane

Austin

Travis

TX

78752

8176 N. Mopac Expressway

Austin

Travis

TX

78759

485 S. Mason Road

Katy

Harris

TX

77450

7933 Veterans Memorial Drive

Houston

Harris

TX

77088

922 Lake Front Circle

The Woodlands

Montgomery

TX

77380

1200 Bridgewood Drive

Fort Worth

Tarrant

TX

76112

2201 W.Univerity Drive

Edinburg

Hidalgo

TX

78539

944 Southeast Military Drive

San Antonio

Bexar

TX

78214

13455 Midway Road

Dallas

Dallas

TX

75244

710 W. Calton Road

Laredo

Webb

TX

78041

2124 Boca Chica Blvd

Brownsville

Cameron

TX

78521

201 Longmire Rd.

Conroe

Montgomery

TX

77304

801 N.Beckley Rd.

Desoto

Dallas

TX

75115

926 E. Highway 67

Duncanville

Dallas

TX

75137

2506 S. 77 Sunshine Strip

Harlingen

Cameron

TX

78550

11250 Northwest Freeway

Houston

Harris

TX

77092

12405 East Freeway

Houston

Harris

TX

77015

5730 Saratoga Blvd

Corpus Christi

Nueces

TX

78414

11595 Fuqua

Houston

Harris

TX

77034

300 W.Campbell Road

Richardson

Dallas

TX

75080

9251 Floyd Curl Drive

San Antonio

Bexar

TX

78240

7511 FM 1960 West

Houston

Harris

Texas

77064

2040 Nasa Road One

Houston

Harris

Texas

77058

855 Normandy

Houston

Harris

Texas

77015

2475 Kirkwood

Houston

Harris

Texas

77077

2290 Buckthorne Place

The Woodlands

Montgomery

Texas

77380

11950 Kurland

Houston

Harris

Texas

77034

25407 Bell Patina Dr.

Katy

Fort Bend

Texas

77494

 

 
 

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

 

 

  

SCHEDULE 2.01

 

 

   

Lender

Commitments

   

Wells Fargo Bank, National Association

$35,000,000

Amegy Bank National Association

$35,000,000

 

 

 
 

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

 

 

 

Schedule 3.12

 

Subsidiaries

 

Name of Entity

Type of Entity

Taxpayer ID No.

Organizational No.

Luby’s Holdings, Inc.

Delaware corporation

74-2804009

2680297

Luby’s Limited Partner, Inc.

Delaware corporation

51-0378641

2680301

Lubco, Inc.

Delaware corporation

51-0378640

2680299

Luby’s Management, Inc.

Delaware corporation

74-2802655

2680302

Luby’s Fuddruckers Restaurants, LLC

Texas limited liability

74-2802656

801292153

Luby’s Bevco, Inc.

Texas corporation

74-2874452

148561500

Fuddruckers Tulsa, LLC

Texas limited liability

45-2478068

801429633

R. Wes, Inc.

Texas corporation

04-3055337

111523900

Fuddruckers of Annapolis, LLC

Maryland limited liability

61-1640141

W13698337

Fuddruckers of Howard County, LLC

Maryland limited liability

81-0551955

W06455620

Paradise Cheeseburgers, LLC

Texas limited liability

80-0874600

801686273

Paradise Restaurant Group, LLC

Delaware limited liability

27-0390701

4695735

Cheeseburger of Algonquin, LLC

Illinois limited liability

27-0395326

2819473

Cheeseburger of California, LLC

Maryland limited liability

27-0394672

W13092143

 

 
 

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

 

 

 

Cheeseburger in Paradise of St. Mary's County, LLC

Maryland limited liability

55-0867034

W10870236

Cheeseburger of Downers Grove, LLC

Illinois limited liability

27-0395288

2821907

Cheeseburger of Evansville, LLC

Indiana limited liability

27-0394260

2009061100210 

Cheeseburger of Fishers, LLC

Indiana limited liability

27-0394217

2009061100195 

Cheeseburger of Fredericksburg, LLC

Virginia limited liability

27-0393284

S2944421

Cheeseburger of Ft. Meyers, LLC

Florida limited liability

27-0395037

L09000055331

Cheeseburger of Hilliard, LLC

Ohio limited liability

27-0395477

1863149

Cheeseburger of Kansas City, LLC

Kansas limited liability

27-0393935

4319703

Cheeseburger of Middleton, LLC

Wisconsin limited liability

27-0394956

C074563

Cheeseburger of Myrtle Beach, LLC

South Carolina limited liability

27-0394712

N/A

Cheeseburger of Newark, LLC

Delaware limited liability

27-0391808

4695790

Cheeseburger of Newport News, LLC

Virginia limited liability

27-0393451

S2944439

High Tides of Omaha, LLC

Nebraska limited liability

27-0458660

10124366

Cheeseburger of Pasadena, LLC

Maryland limited liability

27-0394626

10124366

Cheeseburger in Paradise of Anne Arundel County, Inc.

Maryland corporation

11-3760023

D07939275

Cheeseburger of Sandestin, LLC

Florida limited liability

27-0395066

L09000055740

Cheeseburger of Secaucus, LLC

New Jersey limited liability

27-0395519

 

Cheeseburger of Southport, LLC

Indiana limited liability

27-0394295

2009061100188 

Cheeseburger of Sterling Heights, LLC

Michigan limited liability

27-0394026

D2760N

Cheeseburger of Terre Haute, LLC

Indiana limited liability

27-0394161

2009061100207 

Cheeseburger of Virginia Beach, LLC

Virginia limited liability

27-0393338

S2944173

Cheeseburger of Wallkill, LLC

New York limited liability

27-0394917

3823053

Cheeseburger of Woodbridge, LLC

Virginia limited liability

27-0393517

S2944207

Cheeseburger in Paradise, LLC

Delaware limited liability

----

3264456

 

 
 

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

 

 

 

Schedule 6.02

 

Existing Liens

 

 

None

 

 
 

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

 

 

 

 Schedule 6.05

 

Permitted Asset Sales

 

 

Property Name

   

Address

       

Baybrook-Webster TX

   

20001 Gulf Freeway Webster, Tx 77598 (Leased)

Ft W #3-White Settlement

   

1551 South Cherry Lane Fort Worth, Tx 76108

Hous #15-Hwy.6 N.@Aspenglenn

   

4518 Hwy. 6 North @ Aspenglenn Houston, Tx 77084

Houston #35-Airline Dr

   

4525 North Freeway, Houston, TX 77022

Pasadena-E. Southmore

   

1210 East Southmore Pasadena, Tx 77502

Plano #3-Highway 121

   

4940 Highway 121 Plano, Tx 75024

Rosenberg-Avenue H

   

5115 Avenue H Rosenburg, Tx 77471

 

 

 
 

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

 

 

 

Schedule 6.09

 

Affiliate Transactions

 

Master Sales Agreement dated June 13, 2012 between Luby's, Inc. and certain
Pappas entities.

 

Lease Agreement between Luby's Restaurants Limited Partnership, as lessee, and a
partnership affiliated with Christopher J. Pappas and Harris J. Pappas, as
lessor, in connection with the Luby's facility located in the Post Oak Plaza
Shopping Center in Houston, Texas.