**Exhibit10.1**

 

CREDIT AGREEMENT

 

Dated as of May 31, 2002

 

among

 

U.S.  RESTAURANT PROPERTIES OPERATING L.P. (“USRP Operating”),

 

USRP FUNDING 2002-A, L.P. (the“General SPE”),

 

as, collectively, the “Borrower,”

 

USRP MANAGING, INC. (the“General Partner”),

the General Partner of theBorrower, as a Guarantor,

 

U.S. RESTAURANT PROPERTIES, INC.(the “USRP REIT”),

as a Guarantor,

 

and

 

THE SUBSIDIARIES OF THEBORROWER, GENERAL PARTNER AND THE USRP REIT

FROM TIME TO TIME PARTY HERETO,

as guarantors (the “Guarantors”),

 

THE LENDERS

FROM TIME TO TIME PARTY HERETO(the “Lenders”),

 

BANK OF AMERICA, N.A.

as agent (the “Agent”)

 

and

 

BANC OF AMERICA SECURITIES LLC,

as Sole Lead Arranger and SoleBook Manager

 

----

 

TABLE OF CONTENTS

 
| ARTICLE  I  DEFINITIONS                                      |
|-------------------------------------------------------------------|
|                                                              | 1.1 | Definitions. |
|                                                              | 1.2 | Computation of Time  Periods. |
|                                                              | 1.3 | Accounting  Terms. |
| ARTICLE  II  CREDIT FACILITIES                               |
|                                                              | 2.1 | Revolving  Loans. |
|                                                              | 2.2 | Letter of Credit  Subfacility. |
|                                                              | 2.4 | Joint  and Several Liability of the Borrowers. |
|                                                              | 2.5 | Appointment  of Principal Borrower as Agent for Borrowers. |
| ARTICLE III  OTHER  PROVISIONS RELATING TO CREDIT FACILITIES |
|                                                              | 3.1 | Default Rate. |
|                                                              | 3.2 | Continuation/Conversion. |
|                                                              | 3.3 | Prepayments. |
|                                                              | 3.4 | Termination  and Reduction of Revolving Committed Amount. |
|                                                              | 3.5 | Fees. |
|                                                              | 3.6 | Capital  Adequacy. |
|                                                              | 3.7 | Limitation on  Eurodollar Loans. |
|                                                              | 3.8 | Illegality. |
|                                                              | 3.9 | Requirements  of Law. |
|                                                              | 3.10 | Treatment of Affected  Loans. |
|                                                              | 3.11 | Taxes. |
|                                                              | 3.12 | Compensation. |
|                                                              | 3.13 | Pro  Rata Treatment. |
|                                                              | 3.14 | Sharing  of Payments. |
|                                                              | 3.15 | Payments,  Computations, Etc. |
|                                                              | 3.16 | Evidence  of Debt. |
|                                                              | 3.17 | Usury. |
|                                                              | 3.18 | Agreement  Regarding Interest and Charges. |
|                                                              | 3.19 | Statements  of Account. |
|                                                              | 3.20 | Defaulting  Lenders. |
|                                                              | 3.21 | Assumptions  Concerning Funding of Eurodollar Loans. |
| ARTICLE  IV  GUARANTY                                        |
|                                                              | 4.1 | The Guaranty. |
|                                                              | 4.2 | Obligations  Unconditional. |
|                                                              | 4.3 | Reinstatement. |
|                                                              | 4.4 | Certain Additional  Waivers. |
|                                                              | 4.5 | Remedies. |
|                                                              | 4.6 | Rights  of Contribution. |
|                                                              | 4.7 | Guarantee  of Payment; Continuing Guarantee. |
| ARTICLE  V  CONDITIONS                                       |
|                                                              | 5.1 | Closing  Conditions. |
|                                                              | 5.2 | Conditions  to all Extensions of Credit. |
| ARTICLE  VI  REPRESENTATIONS AND  WARRANTIES                 |
|                                                              | 6.1 | Financial  Condition. |
|                                                              | 6.2 | No  Material Change. |
|                                                              | 6.3 | Organization and  Good Standing. |

 

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|                                    | 6.4  | Power;  Authorization; Enforceable Obligations.                                                     |
|-----------------------------------------|------|-----------------------------------------------------------------------------------------------------|
|                                    | 6.5  | No Conflicts.                                                                                       |
|                                    | 6.6  | No Default.                                                                                         |
|                                    | 6.7  | Ownership.                                                                                          |
|                                    | 6.8  | Indebtedness.                                                                                       |
|                                    | 6.9  | Litigation.                                                                                         |
|                                    | 6.10 | Taxes.                                                                                              |
|                                    | 6.11 | Compliance  with Law.                                                                               |
|                                    | 6.12 | ERISA.                                                                                              |
|                                    | 6.13 | Corporate  Structure; Capital Stock, etc.                                                           |
|                                    | 6.14 | Governmental Regulations,  Etc.                                                                     |
|                                    | 6.15 | Purpose  of Loans, Letters of Credit and Derivative Exposure Reserve.                               |
|                                    | 6.16 | Environmental  Matters.                                                                             |
|                                    | 6.17 | Intellectual  Property.                                                                             |
|                                    | 6.18 | Solvency.                                                                                           |
|                                    | 6.19 | Investments.                                                                                        |
|                                    | 6.20 | Principal  Offices.                                                                                 |
|                                    | 6.21 | Disclosure.                                                                                         |
|                                    | 6.22 | No Burdensome  Restrictions.                                                                        |
|                                    | 6.23 | Brokers’ Fees.                                                                                 |
|                                    | 6.24 | Labor Matters.                                                                                      |
|                                    | 6.25 | Nature  of Business.                                                                                |
| ARTICLE VII  AFFIRMATIVE COVENANTS |
|                                    | 7.1  | Information  Covenants.                                                                             |
|                                    | 7.2  | Preservation  of Existence, Franchises, Bankruptcy Remote Borrowing Entity Status and REIT  Status. |
|                                    | 7.3  | Books  and Records.                                                                                 |
|                                    | 7.4  | Compliance  with Law.                                                                               |
|                                    | 7.5  | Payment of  Taxes and Other Indebtedness.                                                           |
|                                    | 7.6  | Insurance.                                                                                          |
|                                    | 7.7  | Maintenance of Property.                                                                            |
|                                    | 7.8  | Performance of  Obligations.                                                                        |
|                                    | 7.9  | Use of Proceeds.                                                                                    |
|                                    | 7.10 | Audits/Inspections.                                                                                 |
|                                    | 7.11 | Financial  Covenants.                                                                               |
|                                    | 7.12 | New  Subsidiaries.                                                                                  |
|                                    | 7.13 | ERISA  Exemptions.                                                                                  |
|                                    | 7.14 | Further Assurances.                                                                                 |
| ARTICLE VIII  NEGATIVE COVENANTS   |
|                                    | 8.1  | Indebtedness.                                                                                       |
|                                    | 8.2  | Liens.                                                                                              |
|                                    | 8.3  | Nature  of Business.                                                                                |
|                                    | 8.4  | Consolidation,  Merger, Dissolution, etc.                                                           |
|                                    | 8.5  | Asset Dispositions/Substitution  of Assets.                                                         |
|                                    | 8.6  | Investments.                                                                                        |
|                                    | 8.7  | Restricted  Payments.                                                                               |

 

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|                                | 8.8   | Other  Indebtedness.                               |
|-------------------------------------|-------|----------------------------------------------------|
|                                | 8.9   | Transactions with  Affiliates.                     |
|                                | 8.10  | Fiscal Year;  Organizational Documents.            |
|                                | 8.11  | Limitation on  Restricted Actions.                 |
|                                | 8.12  | Contingent  Obligations.                           |
|                                | 8.13  | Sale Leasebacks.                                   |
|                                | 8.14  | Intentionally  Omitted.                            |
|                                | 8.15  | Negative  Pledges/Liens.                           |
|                                | 8.16  | Operating Lease  Obligations.                      |
|                                | 8.17  | No  Foreign Subsidiaries.                          |
| ARTICLE  IX  EVENTS OF DEFAULT |
|                                | 9.1   | Events of  Default.                                |
|                                | 9.2   | Acceleration;  Remedies.                           |
| ARTICLE  X  AGENCY PROVISIONS  |
|                                | 10.1  | Appointment, Powers and  Immunities.               |
|                                | 10.2  | Reliance by  Agent.                                |
|                                | 10.3  | Defaults.                                          |
|                                | 10.4  | Rights as a  Lender.                               |
|                                | 10.5  | Indemnification.                                   |
|                                | 10.6  | Non–Reliance  on Agent and Other Lenders.     |
|                                | 10.7  | Successor Agent.                                   |
| ARTICLE  XI  MISCELLANEOUS     |
|                                | 11.1  | Notices.                                           |
|                                | 11.2  | Right of Set–Off;  Adjustments.               |
|                                | 11.3  | Successors  and Assigns                            |
|                                | 11.4  | No Waiver; Remedies  Cumulative.                   |
|                                | 11.5  | Expenses; Indemnification.                         |
|                                | 11.6  | Amendments,  Waivers and Consents.                 |
|                                | 11.7  | Counterparts.                                      |
|                                | 11.8  | Headings.                                          |
|                                | 11.9  | Survival.                                          |
|                                | 11.10 | Governing  Law; Submission to Jurisdiction; Venue. |
|                                | 11.11 | Severability.                                      |
|                                | 11.12 | Entirety.                                          |
|                                | 11.13 | Binding Effect;  Termination.                      |
|                                | 11.14 | Confidentiality.                                   |
|                                | 11.15 | Source of Funds.                                   |
|                                | 11.16 | Regulation D.                                 |
|                                | 11.17 | Conflict.                                          |

 

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| SCHEDULES              |
|------------------------|
|                   |   |   |
| Schedule 1.1(a)   |   | Revolving  Commitments |
| Schedule 2.1(a)   |   | Lenders/Agent |
| Schedule 5.1(i)   |   | Corporate  Structure |
| Schedule 6.4      |   | Required  Consents, Authorizations, Notices and Filings |
| Schedule 6.9      |   | Litigation |
| Schedule 6.12     |   | ERISA |
| Schedule 6.13     |   | Subsidiaries |
| Schedule 6.16     |   | Environmental Disclosures |
| Schedule 6.20     |   | Chief  Executive Offices/Principal Places of Business |
| Schedule 6.28          |   | Closing Date  Borrowing Base Assets |
| Schedule 7.6      |   | Insurance |
| Schedule 8.1      |   | Indebtedness |
| Schedule 8.2      |   | Liens |
| Schedule 8.6      |   | Investments |
| Schedule 8.11     |   | Permitted  Restricted Actions |
| Schedule 8.12(b)  |   | Material  Contingent Obligations |
|                   |   |   |
| EXHIBITS               |
|                   |   |   |
| Exhibit 1.1(a)    |   | Bankruptcy  Remote Borrowing Entity Requirements |
| Exhibit 2.1(b)(i) |   | Form of Notice of Borrowing |
| Exhibit 2.1(e)    |   | Form  of Revolving Note |
| Exhibit 3.2       |   | Form of  Notice of Continuation/Conversion |
| Exhibit 7.1(c)    |   | Form of  Officer’s Compliance Certificate |
| Exhibit 7.1(k)    |   | Form  of Borrowing Base Certificate |
| Exhibit 7.12      |   | Form  of Joinder Agreement |
| Exhibit 11.3(b)   |   | Form of Assignment and  Assumption |

 

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**CREDIT AGREEMENT**

 

**THIS CREDITAGREEMENT**, dated as ofMay 31, 2002 (as amended, modified, restated or supplemented from time to time,the “Credit Agreement”), is by and among **U.S. RESTAURANT PROPERTIES OPERATING L.P.**, a Delaware limitedpartnership (“USRP Operating” or the “Principal Borrower”), **USRP FUNDING2002-A, L.P.**, a Texas limited partnership (the “General SPE);collectively, with USRP Operating, the “Borrower”), **USRP MANAGING, INC.**, aDelaware corporation and the general partner of USRP Operating, as a Guarantor(the “General Partner”), **U.S. RESTAURANT PROPERTIES, INC.**, aMaryland corporation, as a Guarantor (“USRP REIT”), the SubsidiaryGuarantors (as defined herein), the Lenders (as defined herein), **BANK OFAMERICA, N.A.**, as Agent for the Lenders (in such capacity, the “Agent”)and **BANCOF AMERICA SECURITIES LLC**, as Sole Lead Arranger and SoleBook Manager (in such capacity “BAS”).

 

**W I T N E S S E T H**

 

**WHEREAS**, the Borrowers have requested that the Lendersprovide credit facilities in an aggregate amount of $35,000,000 (the “CreditFacilities”) for the purposes hereinafter set forth; and

 

**WHEREAS**, the Lenders have agreed to make the requestedCredit Facilities available to the Borrowers on the terms and conditionshereinafter set forth;

 

**NOW, THEREFORE,IN CONSIDERATION**of thepremises and other good and valuable consideration, the receipt and sufficiencyof which is hereby acknowledged, the parties hereto agree as follows:

 

# **ARTICLEI**

 

# **DEFINITIONS**

 

## **1.1          Definitions.**

 

As used in this Credit Agreement, the following terms shall have themeanings specified below unless the context otherwise requires:

 

“Adjusted Base Rate” means the Base Rate plus 3.00%.

 

“Adjusted Eurodollar Rate” means the Eurodollar Rate plus3.00%.

 

“AdministrativeQuestionnaire” means an Administrative Questionnaire in a form supplied bythe Agent.

 

“Affiliate” means, withrespect to any Person, any other Person (i) directly or indirectlycontrolling or controlled by or under direct or indirect common control withsuch Person or (ii) directly or indirectly owning or holding fivepercent (5%) or more of the Capital Stock in such Person.  For purposes of this definition, “control”when used with respect to any Person means the power to direct the managementand policies of such Person, directly or indirectly, whether through theownership of voting securities, by contract or otherwise; and the terms“controlling” and “controlled” have meanings correlative to the foregoing.

 

“Agent” shall have themeaning assigned to such term in the heading hereof, together with anysuccessors or assigns.

 

“Aggregate Derivative ReserveAmount” means, at any given time, an amount equal to the aggregate amountreserved in connection with all Derivative Exposure Reserves in effect at suchtime.

 

“Applicable Law” meansall applicable provisions of constitutions, statutes, rules, regulations andorders of all governmental bodies and all orders and decrees of all courts,tribunals and arbitrators.

 

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“Applicable Lending Office”means, for each Lender, the office of such Lender (or of an Affiliate of suchLender) as such Lender may from time to time specify to the Agent and theBorrower by written notice as the office by which its Eurodollar Loans are madeand maintained.

 

“Approved Fund” means any Fund that isadministered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) anentity or an Affiliate of an entity that administers or manages a Lender.

 

“Approved Shoneys Assets” means a collectivereference to those Shoneys Assets which are wholly owned by the General SPE andhave been approved by the Agent and the Required Lenders as assets which may,to the extent meeting all other requirements set forth herein, contribute tothe calculation of the Borrowing Base Asset Value pursuant to a DeterminationDecision delivered in connection with Section 3.24 hereof.

 

“Asset Disposition” meansany disposition (including pursuant to a Sale and Leaseback Transaction) of anyor all of the Property (including without limitation the Capital Stock of aSubsidiary) of any Consolidated Party whether by sale, lease (other than in theordinary course of business), licensing, transfer or otherwise, but other thanpursuant to any casualty or condemnation event.

 

“Asset Value” means, with respect to any givenparcel of Real Property for any given date of calculation, (a) if such RealProperty has been owned for at least one (1) year, the trailing twelve monthEBITDA from such Real Property as of such date of calculation and (b) if suchReal Property has been owned less than one (1) year, the annualized EBITDA fromsuch Real Property (based on the EBITDA from the date of acquisition throughsuch date of calculation), in each case, capitalized at eleven and one halfpercent (11.5%); provided, that (a) the Agent shall have the right, at itsdiscretion, to review the appropriateness of the capitalization rate on anannual basis (such review period to commence on May1 of each calendar year andend as of June 1 of such calendar year) and (b) the Required Lenders shallhave the right, in their sole discretion, to adjust the capitalization rateduring the Agent’s review period each year (by an amount not to exceed +/–0.50% in any given year) based on then–prevailing market conditions forcomparable property types (each as determined by the Required Lenders).

 

“Assignment and Assumption” means an assignmentand assumption entered into by a Lender and an Eligible Assignee (with theconsent of any party whose consent is required by Section 11.3, and accepted bythe Agent, in substantially the form of Exhibit 11.3 or any otherform approved by the Agent.

 

“Availability” means, atany time, an amount (not less than zero) equal to (a) the Revolving CommittedAmount, less (b) the sum of (i) the outstanding principal amount of theRevolving Loans, plus (ii) the LOC Obligations, plus (iii) theAggregate Derivative Reserve Amount.

 

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

 

“Bankruptcy Event” means,with respect to any Person, the occurrence of any of the following:(i) the entry of a decree or order for relief by a court or governmentalagency in an involuntary case under any applicable bankruptcy, insolvency orother similar law now or hereafter in effect, or the appointment by a court orgovernmental agency of a receiver, liquidator, assignee, custodian, trustee,sequestrator (or similar official) of such Person or for any substantial partof its Property or the ordering of the winding up or liquidation of its affairsby a court or governmental agency; or (ii) the commencement against suchPerson of an involuntary case under any applicable bankruptcy, insolvency orother similar law now or hereafter in effect, or of any case, proceeding orother action for the appointment of a receiver, liquidator, assignee,custodian, trustee, sequestrator (or similar official) of such Person or forany substantial part of its Property or for the winding up or liquidation ofits affairs, and such involuntary case or other case, proceeding or otheraction shall remain undismissed for a period of sixty (60) consecutivedays, or the repossession or seizure by a creditor of such Person of asubstantial part of its Property; or (iii) such Person shall commence avoluntary case under any applicable bankruptcy, insolvency or other similar lawnow or hereafter in effect, or consent to the entry of an order for relief inan involuntary case under any such law, or consent to the appointment of or thetaking possession by a receiver, liquidator, assignee, creditor in possession,custodian, trustee, sequestrator (or similar 

 

2

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official) of such Person or forany substantial part of its Property or make any general assignment for thebenefit of creditors; or (iv) such Person shall be unable to, or shalladmit in writing its inability to, pay its debts generally as they become due.

 

“Bankruptcy Remote Borrowing Entity” means aPerson meeting each of the criteriaset forth on Exhibit 1.1(a) attached hereto.

 

“BAS” shall have the meaning given to such termin the introductory paragraph hereof.

 

“Base Rate” means, forany day, the rate per annum equal to the higher of (a) the Federal FundsRate for such day plus one–half of one percent (0.5%) and(b) the Prime Rate for such day. Any change in the Base Rate due to a change in the Prime Rate or theFederal Funds Rate shall be effective on the effective date of such change inthe Prime Rate or Federal Funds Rate.

 

“Base Rate Loan” meansany Loan bearing interest at a rate determined by reference to the Base Rate.

 

“BOA” means Bank ofAmerica, N.A. and its successors and assigns.

 

“BOA Derivative Instrument”means any derivative transaction, hedging transaction, takeout commitment orforward equity commitment entered into by and between the General Partner orthe USRP REIT and any Derivative Counterparty.

 

“Borrower” means,collectively, USRP Operating, the General SPE, and their permitted successorsand assigns.

 

“Borrowing Base” means,as of any day, an amount equal to thirty percent (30%) multiplied bythe Borrowing Base Asset Value; provided, however, that, prior to suchcalculation, each of clauses (a) through (c) below shall be satisfied withrespect to the assets contributing to the Borrowing Base Asset Value:

 

(a)           the assets of singleConcepts or Tenants shall not, in any case, account for more than tenpercent (10%) (or, in the case of the Burger King Concept, twentypercent (20%)) of the Total Rent; to the extent the assets of a singleConcept or Tenant account for more than ten percent (10%) (or, in the caseof the Burger King Concept, twenty percent (20%)) of the Total Rentassociated with the assets used in calculating Borrowing Base Asset Value, theassets associated with such Concept or Tenant shall be removed from the calculationof Borrowing Base Asset Value to the extent necessary to reduce such Concept’sor Tenant’s percentage of the Total Rent of the assets used in calculatingBorrowing Base Asset Value to a portion equal to or less than tenpercent (10%) (or, in the case of the Burger King Concept, twentypercent (20%));

 

(b)           the portion ofBorrowing Base Asset Value attributable to Ground Lease Interests shall not, inany case, exceed twenty percent (20%) of the aggregate Borrowing BaseAsset Value; to the extent Ground Lease Interests constitute more than twentypercent (20%) of the Borrowing Base Asset Value, the Value of such GroundLease Interests shall be removed from the calculation thereof to the extentnecessary to reduce the percentage associated with the Ground Lease Interestsas a portion of all of the assets used in calculating Borrowing Base AssetValue to a portion equal to or less than twenty percent (20%); and

 

(c)           the underlyingleases with respect to the Borrowing Base Assets shall not, in any case, have aweighted average remaining lease term of less than nine (9) years; to theextent the weighted average of the remaining lease term(s) of the underlyingleases with respect to the assets contributing to the Borrowing Base AssetValue (with each such lease’s term given a weighting in relation to the otherleases involved in such calculation based on the contribution of each suchlease to the Borrowing Base Asset Value) is less than nine (9) years,assets with remaining lease terms of less than nine (9) years shall beremoved from the calculation of Borrowing Base Asset Value until the weightedaverage of the remaining lease terms with respect to all such assets is equalto or greater than nine (9) years.

 

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“Borrowing Base Asset Value”means, as of any given calculation date, an amount equal to (a) the sum of (i)the sum of the Asset Values of all Real Properties which are wholly owned bythe General SPE; plus (ii) the sum of the Asset Values of each of theApproved Shoneys Assets; less (b) any amounts included in theabove calculations that are attributable to (i) assets subject to one or moreLiens or Negative Pledges; and (ii) Excluded Assets.

 

“Borrowing Base Assets” means, as of any givendate, those assets contributing to the Borrowing Base Asset Value after thereductions made pursuant to subclause (b) of the definition thereof.

 

“Borrowing Base Certificate”shall have the meaning given to such term in Section 7.1(k).

 

“Business Day” means aday other than a Saturday, Sunday or other day on which commercial banks inCharlotte, North Carolina or New York, New York are authorized or required bylaw to close, exceptthat, when used in connection with aEurodollar Loan, such day shall also be a day on which dealings between banksare carried on in Dollar deposits in London, England.

 

“Businesses” means, atany time, a collective reference to the businesses operated by the ConsolidatedParties at such time.

 

“Capitalized Lease Obligation”means Indebtedness represented by obligations under a Capital Lease, and theamount of such Indebtedness is the capitalized amount of such obligationsdetermined in accordance with GAAP.

 

“Capital Lease” means, asapplied to any Person, any lease of any Property (whether real, personal ormixed) by that Person as lessee which, in accordance with GAAP, is required tobe accounted for as a capital lease on the balance sheet of that Person.

 

“Capital Stock” means (i) in the case of acorporation, capital stock, (ii) in the case of an association or businessentity, any and all shares, interests, participations, rights or otherequivalents (however designated) of capital stock, (iii) in the case of apartnership, partnership interests (whether general or limited), (iv) inthe case of a limited liability company, membership interests and (v) anyother interest or participation that confers on a Person the right to receive ashare of the profits and losses of, or distributions of assets of, the issuingPerson.

 

“Cash Equivalents” means,as at any date, (a) securitiesissued or directly and fully guaranteed or insured by the United States or anyagency or instrumentality thereof (provided that the full faith and credit ofthe United States is pledged in support thereof) having maturities of not morethan twelve months from the date of acquisition, (b) Dollar denominatedtime deposits and certificates of deposit of (i) any Lender, (ii) anydomestic commercial bank of recognized standing having capital and surplus inexcess of $500,000,000 or (iii) any bank whose short–term commercialpaper rating from S&P is at least A–1 or the equivalent thereof orfrom Moody’s is at least P–1 or the equivalent thereof (any such bankbeing an “Approved Bank”), in each case with maturities of not more than270 days from the date of acquisition, (c) commercial paper and variableor fixed rate notes issued by any Approved Bank (or by the parent companythereof) or any variable rate notes issued by, or guaranteed by, any domesticcorporation rated A–1 (or the equivalent thereof) or better by S&P orP–1 (or the equivalent thereof) or better by Moody’s and maturing withinsix months of the date of acquisition, (d) repurchase agreements enteredinto by any Person with a bank or trust company (including any of the Lenders)or recognized securities dealer having capital and surplus in excess of$500,000,000 for direct obligations issued by or fully guaranteed by the UnitedStates in which such Person shall have a perfected first priority securityinterest (subject to no other Liens) and having, on the date of purchasethereof, a fair market value of at least 100% of the amount of the repurchaseobligations and (e) Investments, classified in accordance with GAAP ascurrent assets, in money market investment programs registered under theInvestment Company Act of 1940, as amended, which are administered by reputablefinancial institutions having capital of at least $500,000,000 and theportfolios of which are limited to Investments of the character described inthe foregoing subdivisions (a) through (d).

 

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“Change in Mangement”means a change in the identity of the Chief Executive Officer of the GeneralPartner or the USRP REIT, other than on account of the death or permanentdisability of such Person.

 

“Change of Control” meansany of the following events: (a) the sale, lease, transfer or otherdisposition (other than by way of merger or consolidation), in one or a seriesof related transactions, of all or substantially all of the assets of either ofthe Borrowers and such Borrower’s Subsidiaries taken as a whole to any “person” or “group”(withinthe meaning of Sections 13(d) and 14(d)(2) of the Securities ExchangeAct), or (b) the USRP REIT shall fail to own and control (whether directlyor indirectly) 80% of the outstanding CapitalStock of either Borrower.  As used herein, “beneficial ownership” shall havethe meaning provided in Rule 13d–3 of the Securities and ExchangeCommission under the Securities Exchange Act.

 

“Closing Date” means thedate hereof.

 

“Code” means the InternalRevenue Code of 1986, as amended, and any successor statute thereto, asinterpreted by the rules and regulations issued thereunder, in each case as ineffect from time to time.  References tosections of the Code shall be construed also to refer to any successorsections.

 

“Collateral Agent” meansBank of America, N.A., in such capacity under the Credit Documents, or itssuccessors and assigns.

 

“Commitment” means(i) with respect to each Lender, the Revolving Commitment of such Lender,and (ii) with respect to the Issuing Lender, the LOC Commitment.

 

“Commitment Fee” shallhave the meaning given to such term in Section 5.1(f) hereof.

 

“Concept” means anydistinctive system for establishing and operating restaurants which is thesubject of a license or franchise from a Person.  Not in limitation of the foregoing, and by way of example only,such systems would include “Burger King,” “Pizza Hut,” “Denny’s,” and “Fina.”

 

“Consolidated Capital Expenditures” means, as of any date, for the four fiscal quarterperiod most recently ending on or prior to such date, the sum of allcapital expenditures of the ConsolidatedParties on a consolidated basis, asdetermined in accordance with GAAP.

 

“Consolidated Total EBITDA” means, as of anydate, for the four fiscal quarter period most recently ending on or prior tosuch date, the sum of (i) Consolidated Net Income, plus (or minus, asapplicable) (ii) an amount which, in the determination of Consolidated NetIncome, has been deducted for (A) interest expense, (B) totalFederal, state, local and foreign income taxes, (C) depreciation andamortization expense, (D) extraordinary gains (losses) and gains (losses) fromsales of assets for such period, (E) all straight line rent levelingadjustments (as reported in the consolidated financial statements of theConsolidated Parties), (F) equity in net earnings (or net loss) ofunconsolidated Affiliates of the Consolidated Parties, (G) amounts incurred bythe Consolidated Parties for such period as “impairment of long lived assets,”and (H) amounts denoted by the Consolidated Parties as “provision(s) fordoubtful accounts,” in each case without duplication and as determined inaccordance with GAAP; provided, that, (i) each of the above calculations shallinclude, without duplication, any amounts attributable to any interests held byany Consolidated Party in any Minority Interest Entity and (ii) all amountsincluded in the above calculations (and not otherwise adjusted to account for OutsideInterests) shall be adjusted to deduct therefrom the pro rata share of suchamounts allocable to Outside Interests.

 

“Consolidated Interest Expense” means, as ofany date, for the four fiscal quarter period most recently ending on or priorto such date, the sum of (i) interest expense in connection with UnsecuredIndebtedness (including the amortization of debt discount and premium, theinterest component under Capital Leases, the implied interest component underSynthetic Leases and obligation payments under the any hedging agreements orsimilar arrangements entered into by any Consolidated Party) of theConsolidated Parties on a consolidated basis, as determined in accordance withGAAP, plus (ii) without duplication, interest expense in connection withUnsecured Indebtedness (including the amortization of debt discount andpremium, the interest component under Capital Leases and the implied interest

 

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component underSynthetic Leases) of each Minority Interest Entity multiplied by the respectiveMinority Interest of each such entity; provided, that in each case, all of theabove amounts not otherwise adjusted to account for Outside Interests shall beadjusted to deduct therefrom the pro rata share of such amounts allocable tothe Outside Interests.

 

“Consolidated Net Income” means, as of anydate, for the four fiscal quarter period most recently ending on or prior tosuch date, (i) net income (excluding extraordinary items) of the ConsolidatedParties on a consolidated basis after interest expense, income, value added andsimilar taxes and depreciation and amortization, all as determined inaccordance with GAAP, plus (ii) without duplication, an amount equal to theaggregate of net income (excluding extraordinary items) after interest expense,income, value added and similar taxes and depreciation and amortization, asdetermined in accordance with GAAP, of each Minority Interest Entity multipliedby the respective Minority Interest of each such entity; provided, that in eachcase, all of the above amounts not otherwise adjusted to account for OutsideInterests shall be adjusted to deduct therefrom the pro rata share of suchamounts allocable to the Outside Interests.

 

“Consolidated Parties”means a collective reference to the USRP REIT, the General Partner, theBorrower and each of their Subsidiaries, and “Consolidated Party” meansany one of them.

 

“Consolidated Scheduled Funded Debt Payments”means, as of any date, for the four fiscal quarter period most recently endingon or prior to such date, the sum of (i) all scheduled payments of principal onFunded Indebtedness of the Consolidated Parties on a consolidated basis(including, without limitation, (a) the implied principal component of paymentsdue on Capital Leases and Synthetic Leases, (b) all dividends paid on thepreferred Capital Stock of any Consolidated Party and (c) payments made inconnection with any ground leases, but excluding voluntary prepayments ormandatory prepayments required pursuant to Section 3.3 and any scheduledballoon, bullet or similar principal payment repaying the related underlyingprincipal Indebtedness in full), as determined in accordance with GAAP, plus(ii) without duplication, the sum of (a) all scheduled payments of principal onFunded Indebtedness of each Minority Interest Entity multiplied by therespective Minority Interest of each such entity, (b) all dividends paid on thepreferred Capital Stock of any Minority Interest Entity multiplied by therespective Minority Interest of each such entity; and (c) payments made by anyMinority Interest Entity in connection with any ground leases multiplied by therespective Minority Interest of each such entity; provided, that in each case,all of the above amounts not otherwise adjusted to account for OutsideInterests shall be adjusted to deduct therefrom the pro rata share of suchamounts allocable to the Outside Interests.

 

"Contingent Obligation”means, with respect to any Person, any obligation of such Person to guaranteeor intended to guarantee any Indebtedness, leases, dividends or otherobligations (“primary obligations”) of any other Person (the “primary obligor”)in any manner, whether directly or indirectly (exclusive of any non–materialcontractual indemnities and non–material guarantees of non–monetaryobligations which have not yet been called on or quantified), including,without limitation, (a) the direct or indirect guaranty, endorsement (otherthan for collection or deposit in the ordinary course of business), co–making,discounting with recourse or sale with recourse by such Person of theobligation of a primary obligor, (b) the obligation to make take–or–payor similar payments, if required, regardless of nonperformance by any otherparty or parties to an agreement, (c) any obligation of such Person, whether ornot contingent, (i) to purchase any such primary obligation or any propertyconstituting direct or indirect security therefor, (ii) to advance or supplyfunds (A) for the purchase or payment of any such primary obligation or (B) tomaintain working capital, equity capital, net worth or other balance sheetcondition or any income statement condition of the primary obligor or otherwiseto maintain the solvency of the primary obligor, (iii) to purchase, lease orotherwise acquire property, assets, securities or services primarily for thepurpose of assuring the owner of any such primary obligation of the ability ofthe primary obligor to make payment of such primary obligation or (iv)otherwise to assure or hold harmless the holder of such primary obligationagainst loss in respect thereof, (d) any residual obligation or liability ofsuch Person under any Synthetic Lease or any other off–balance sheetfinancing, or (e) any obligation of such Person in connection with anyderivative transaction, hedging transaction (including, without limitation, anyHedging Agreements), takeout commitment or forward equity commitment.  The amount of any Contingent Obligationshall be deemed to be an amount equal to the stated or determinable amount ofthe primary obligation in respect of which such Contingent Obligation is made(or, if less, the maximum amount of 

 

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such primary obligation forwhich such Person may be liable pursuant to the terms of the agreement,instrument or other document evidencing such Contingent Obligation) or, if notstated or determinable, the maximum reasonably anticipated liability in respectthereof (assuming such Person is required to perform thereunder), as determinedby such Person in good faith. Contingent Obligations shall not include the following obligations orliabilities of the General Partner, the Borrower or any other Subsidiariesthereof (including any Special Purpose Entity) to the extent incurred inconnection with a Securitization Asset Sale: reasonable and customaryobligations of the General Partner, the Borrower or any other Subsidiariesthereof with respect to (i) the servicing of any assets which are the subjectof such Securitization Asset Sale, (ii) administrative and ministerial mattersrelating to any applicable Special Purpose Entity, (iii) maintenance of thecorporate separateness of any such Special Purpose Entity from that of theGeneral Partner and its other Subsidiaries and (iv) the guaranty of payment offees of any Person acting as a trustee in connection with such SecuritizationAsset Sale and indemnification obligations owing to any such Person.  In addition, the ownership of a SubordinatedInterest shall not be deemed to give rise to any Contingent Obligation on thepart of the owner thereof.  Further,Contingent Obligations shall not include liabilities of the General Partner,Borrower or any Consolidated Party (i) which result solely from the GeneralPartner or such Consolidated Party being a general partner of a Special PurposeEntity that is a limited partnership and is not a Consolidated Party, and (ii)which liabilities are attributable to customary and reasonable non–recourseexceptions, representations and warranties involved with securitizationtransactions and not related to the creditworthiness of the obligors involvedin such transactions (including, without limitation, exceptions for fraud,environmental indemnities and misapplication of proceeds).

 

“Continue”, “Continuation”and “Continued” shall refer to the continuation pursuant toSection 3.2(a) hereof of a Eurodollar Loan from one Interest Period to thenext Interest Period.

 

“Convert”, “Conversion”and “Converted” shall refer to a conversion pursuant to Section 3.2(b)or Sections 3.7 through 3.12, inclusive, of a Base Rate Loan into aEurodollar Loan.

 

“Credit Documents” means a collective referenceto this Credit Agreement, the Notes, the LOC Documents, the USRP PledgeAgreement, each Joinder Agreement, any UCCfinancing statements securing payment under any of such documents, and anyother documents securing the obligations of the Credit Parties under thisCredit Agreement or any other Credit Document (in each case as the same may be amended, modified, restated,supplemented, extended, renewed or replaced from time to time), and “Credit Document” means any one ofthem.

 

“Credit Facilities” shall have the meaning assigned to such term in the recitals hereto.

 

“Credit Parties” means acollective referenceto the Borrower, the General Partner and the otherGuarantors, and “Credit Party” means any one of them.

 

“Credit Party Obligations”means, without duplication, (i) all of the obligations of the CreditParties to the Lenders (including the Issuing Lender) and the Agent, wheneverarising, under this Credit Agreement, the Notes or any of the other CreditDocuments (including, but not limited to, any interest accruing after theoccurrence of a Bankruptcy Event with respect to any Credit Party, regardlessof whether such interest is an allowed claim under the Bankruptcy Code) and(ii) all liabilities and obligations, whenever arising, owing from anyCredit Party to any Lender, or any Affiliate of a Lender, arising under anyHedging Agreement.

 

“Debt Service” means, forany given calculation period and assuming an opening principal balance equal tothe amount of the principal balance outstanding under this Credit Agreement atthe beginning of such period, an amount of debt service equal to the greater of(a) the amount of principal and interest payments that would be paid on suchprincipal balance during such period (assuming level monthly payments ofprincipal and interest) at an annual interest rate equal to the yield, as ofthe last day of the calculation period, on the seven year U.S. Treasury Bond plus2.50% and with a twenty–five (25) year amortization schedule and (b)the amount of principal and interest payments resulting from the application ofa loan constant equal to 10.07% to such opening principal balance (assuminglevel monthly payments of principal and interest over a twenty–five (25)year amortization schedule); provided, however, that to the extent theamount of actual debt service payments due from the Borrower during theapplicable calculation period exceed the amount calculated in accordance 

 

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with the above provisions, “DebtService” shall, notwithstanding the above, equal the amount of such actual debtservice payments due during the applicable period.

 

“Debt Service Coverage Ratio”means, for any given date of calculation, the ratio of (i) EBITDA generated inconnection with the Borrowing Base Assets during the previous twelve (12)month period for which the Borrower has delivered officer’s certificatespursuant to the terms of Section 7.1(c) of this Agreement to (ii) Debt Servicefor the same twelve (12) month period. Notwithstanding the foregoing, to the extent any Borrowing Base Asset(s)have been held by the Borrower for less than twelve months as of the applicablecalculation date, EBITDA with respect to such asset(s) shall be calculated byannualizing EBITDA amounts attributable to such asset(s) as set forth in thefinancial statements which the Borrower has, as of that calculation date, deliveredto the Agent, except to the extent the Borrower has failed to deliver financialstatements accounting for such Borrowing Base Assets pursuant to and inaccordance with this Agreement, in which case the EBITDA for such BorrowingBase Assets shall, for purposes of this definition, equal zero (0).

 

“Default” means anyevent, act or condition which with notice or lapse of time, or both, wouldconstitute an Event of Default.

 

“Defaulting Lender”means, at any time, any Lender that, as determined by the Agent, (a) hasfailed to make a Loan or purchase a Participation Interest required pursuant tothe term of this Credit Agreement within one Business Day of when due,(b) other than as set forth in (a) above, has failed to pay to the Agentor any Lender an amount owed by such Lender pursuant to the terms of thisCredit Agreement within one Business Day of when due, unless such amount issubject to a good faith dispute or (c) has been deemed insolvent or hasbecome subject to a bankruptcy or insolvency proceeding or with respect towhich (or with respect to any of the assets of which) a receiver, trustee orsimilar official has been appointed.

 

“Delinquency Report”means a report prepared by the Borrower setting forth in itemizeddetail, as of a given date, all delinquencieswith respect to Tenant payments (whether or not such delinquencies result inthe applicable asset being characterized as an Excluded Asset for purposeshereof) and all other matters causing any asset owned by any of theConsolidated Parties to constitute an Excluded Asset.  Such report shall identify the respective owners of the assetsnamed therein and shall identify which, if any, of the assets named thereinconstitute Borrowing Base Assets as of the date of such report.

 

“Derivative Counterparty”means Bank of America, N.A.  or any ofits Affiliates, as applicable, as the counterparty to any derivativetransaction, hedging transaction, takeout commitment or forward equitycommitment entered into by the USRP REIT or the General Partner.

 

“Derivative Exposure FeePeriod” shall have the meaning given to such term in Section 3.6(d)hereof.

 

“Derivative Exposure UsageFee” shall have the meaning given to such term in Section 3.6(d)hereof.

 

“Derivative Exposure Reserve”shall have the meaning given to such term in Section 2.3(a).

 

“Determination Decision”shall have the meaning given to such term in Section 3.24.

 

“Determination Request”shall have the meaning given to such term in Section 3.24.

 

“Development Activities”means activities relating directly or indirectly to the development of build–to–suitReal Property assets that are 100% pre–leased.

 

“Dollars” and “$”means dollars in lawful currency of the United States.

 

“Domestic Subsidiary”means any direct or indirect Subsidiary of the Borrower which is incorporatedor organized under the laws of any State of the United States or the Districtof Columbia.

 

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“EBITDA” means, (i) for any Person over any period, net earnings(loss) of such Person for such period plus the sum of the following (but onlyto the extent taken into account in determining net earnings (loss) for suchperiod):  (A) depreciation andamortization expense for such period; plus (B) interest expense for suchperiod; plus (C) income tax expense in respect of such period; minus(or plus, as appropriate) (D) extraordinary gains (losses) and gains(losses) from sales of assets for such period; plus (or minus, asappropriate) (E) all straight line rent leveling adjustments (reported in theconsolidated financial statements of such Person for purposes of GAAP); plus(or minus, as appropriate) (F) equity in net earnings (or net loss) ofunconsolidated Affiliates of such Person (if any); plus (G) amountsincurred by such Person for such period as “impairment of long lived assets,”and (H) amounts denoted by such Person as “provision(s) for doubtful accounts,”and (ii) for any Real Property for any period, the net income (excluding extraordinary items)of such Real Property for such period before (withoutduplication) interest expense applicable tosuch Real Property, income taxes applicable to such Real Property anddepreciation and amortization applicable to such Real Property, all asdetermined in accordance with GAAP.

 

“Eligible Assignee” means (a) a Lender; (b) anAffiliate of a Lender; (c) an Approved Fund; and (d) any other Person (otherthan a natural person) approved by (i) the Agent, (ii) in the case of anyassignment of a Revolving Commitment, the L/C Issuing Lender, and (iii) unless adefault or Event of Default has occurred and is continuing under this Agreementor any other Credit Document, the Borrower (each such approval not to beunreasonably withheld or delayed); provided that notwithstanding theforegoing, “Eligible Assignee” shall not include the Borrower, any Credit Partyor any of the Borrower’s or any Credit Party’s Affiliates or Subsidiaries.

 

“Environmental Laws”means any and all lawful and applicable Federal, state, local and foreignstatutes, laws (including, without limitation, the Comprehensive EnvironmentalResponse, Compensation and Liability Act of 1980, the Resource Conservation andRecovery Act of 1976, the Toxic Substances Control Act, the Water PollutionControl Act, the Clean Air Act and the Hazardous Materials Transportation Act),regulations, ordinances, rules, judgments, orders, decrees, permits,concessions, grants, franchises, licenses, agreements or other governmentalrestrictions relating to the environment or to emissions, discharges, releasesor threatened releases of pollutants, contaminants, chemicals, or industrial,toxic or hazardous substances or wastes into the environment including, withoutlimitation, ambient air, surface water, ground water, or land, or otherwiserelating to the manufacture, processing, distribution, use, treatment, storage,disposal, transport, or handling of pollutants, contaminants, chemicals, orindustrial, toxic or hazardous substances or wastes.

 

“Equity Issuance” meansany issuance by any Consolidated Party to any Person of (a) shares of itsCapital Stock, (b) any shares of its Capital Stock pursuant to theexercise of options or warrants, (c) any shares of its Capital Stockpursuant to the conversion of any debt securities to equity or (d) anyoptions or warrants relating to its Capital Stock (other than employee stockoptions currently in place).  The term“Equity Issuance” shall not include any Asset Disposition.

 

“ERISA” means theEmployee Retirement Income Security Act of 1974, as amended, and any successorstatute thereto, as interpreted by the rules and regulations thereunder, all asthe same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to anysuccessor sections.

 

“ERISA Affiliate” meansan entity which is under common control with any Consolidated Party within themeaning of Section 4001(a)(14) of ERISA, or is a member of a group whichincludes any Consolidated Party and which is treated as a single employer underSections 414(b) or (c) of the Code.

 

“ERISA Event” means(i) with respect to any Plan, the occurrence of a Reportable Event or thesubstantial cessation of operations (within the meaning of Section 4062(e)of ERISA); (ii) the withdrawal by any Consolidated Party or any ERISAAffiliate from a Multiple Employer Plan during a plan year in which it was asubstantial employer (as such term is defined in Section 4001(a)(2) ofERISA), or the termination of a Multiple Employer Plan; (iii) thedistribution of a notice of intent to terminate or the actual termination of aPlan pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) theinstitution of proceedings to terminate or the actual termination of a Plan bythe PBGC under Section 4042 of ERISA; (v) any event or conditionwhich might constitute grounds under Section 4042 of ERISA for thetermination of, or the appointment of a trustee to administer, any Plan;(vi) the complete or partial withdrawal of any Consolidated Party or anyERISA Affiliate 

 

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from a Multiemployer Plan;(vii) the conditions for imposition of a lien under Section 302(f) ofERISA exist with respect to any Plan; or (viii) the adoption of anamendment to any Plan requiring the provision of security to such Plan pursuantto Section 307 of ERISA.

 

“Eurodollar Loan” meansany Loan that bears interest at a rate based upon the Eurodollar Rate.

 

“Eurodollar Rate” means,for any Eurodollar Loan for any Interest Period therefor, the rate per annum(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by theAgent to be equal to the quotient obtained by dividing (a) the InterbankOffered Rate for such Eurodollar Loan for such Interest Period by (b) 1minus the Eurodollar Reserve Requirement for such Eurodollar Loan for such InterestPeriod.

 

“Eurodollar ReserveRequirement” means, at any time, the maximum rate at which reserves(including, without limitation, any marginal, special, supplemental, oremergency reserves) are required to be maintained under regulations issued fromtime to time by the Board of Governors of the Federal Reserve System (or anysuccessor) by member banks of the Federal Reserve System against “Eurocurrencyliabilities” (as such term is used in Regulation D).  Without limiting the effect of theforegoing, the Eurodollar Reserve Requirement shall reflect any other reservesrequired to be maintained by such member banks with respect to (i) anycategory of liabilities which includes deposits by reference to which theAdjusted Eurodollar Rate is to be determined, or (ii) any category ofextensions of credit or other assets which include Eurodollar Loans.  The Adjusted Eurodollar Rate shall beadjusted automatically on and as of the effective date of any change in theEurodollar Reserve Requirement.

 

“Event of Default” shall havethe meaning assigned to such term in Section 9.1.

 

“Excluded Assets” means, as of any date, (a) allassets of the Consolidated Parties which are either a lease by a ConsolidatedParty, as lessor of a parcel of Real Property, or a promissory note held by aConsolidated Party which is secured by a mortgage instrument, in either casewhere (i) any required rental payment, principal or interest payment, or otherpayment due under such lease or promissory note, as the case may be, is morethan sixty (60) days past due, except, with respect to payments due undera lease, to the extent (A) the aggregate amount of such past due payments withrespect to such lease is less than $500 and (B) the aggregate amount of suchpast due payments does not exceed $10,000; (ii) the Tenant under such lease orthe maker of such promissory note, as the case may be, or any Person that isthe franchisor or licensor of any Concept (if any) applicable to such RealProperty, is the subject of a Bankruptcy Event (except to the extent that (A)such Person has been subject to a proceeding under Chapter 11 of the FederalBankruptcy Code, (B) the applicable bankruptcy court has approved and confirmedsuch Person’s plan for reorganization, (C) all statutory appeal periods withrespect to such proposed plan have been exhausted or expired without objection,(D) the approved plan requires such Person to continue to perform itsobligations with respect to the applicable lease/franchise agreement and (E)such Person is performing its obligations under such approved plan and underthe applicable lease/franchise agreement); (iii) condemnation proceedings have been instituted or condemnation hasoccurred with respect to a material portion of the applicable parcel of RealProperty; or (iv) the subject Real Property has been vacant for more thansixty (60) days and such vacancy is not the result of an on–schedulemoving–in process or scheduled renovations, and (b) all Real Propertyassets of the Consolidated Parties which are, as of such date, not subject to alease agreement under which a Consolidated Party is the lessor or are otherwisevacant (except as noted above in subclause (a)).

 

“Executive Officer” ofany Person means any of the chief executive officer, chief operating officer,president, vice president, chief financial officer or treasurer of such Person.

 

“Exit Fee” shall have themeaning given to such term in Section 3.5(e) hereof.

 

“Extended Maturity Date”shall have the meaning given to such term in Section 2.1(c)(ii) hereof.

 

“Federal Funds Rate”means, for any day, the rate per annum (rounded upwards, if necessary, to thenearest 1/100 of 1%) equal to the weighted average of the rates on overnightFederal funds transactions with members of the Federal Reserve System arrangedby Federal funds brokers on such day, as published by the Federal Reserve Bankof New York on the Business Day next succeeding such day; provided that(a) if such 

 

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day is not a Business Day, theFederal Funds Rate for such day shall be such rate on such transactions on thenext preceding Business Day as so published on the next succeeding BusinessDay, and (b) if no such rate is so published on such next succeedingBusiness Day, the Federal Funds Rate for such day shall be the average ratecharged to the Agent (in its individual capacity) on such day on suchtransactions as determined by the Agent.

 

“Fee Letter” means that certain Fee Letterentered into by and among Borrower, the Agent and BAS and dated as of or prior tothe date hereof.

 

“Fees” means all feespayable pursuant to Section 3.5.

 

“FFO” means, for a given period, (a) netearnings of the Consolidated Parties and their Subsidiaries (before minorityinterests and before extraordinary and non recurring items) for such period minus(or plus) (b) gains (or losses) from debt restructuring and sales ofproperty during such period plus (c) depreciation and amortization ofreal and personal property assets for such period, and after adjustments forunconsolidated partnerships and joint ventures.

 

“FFO Distribution Allowance”means, (a) for the fiscal quarter ending on or around June 30, 2002, an amountequal to 95% of FFO for such quarter, plus, to the extent not otherwisedistributed prior to commencement of the quarter for which such calculation isbeing performed, 95% of FFO for the immediately preceding fiscal quarter, (b)for the fiscal quarter ending on or around September 30, 2002, an amount equalto 95% of FFO for such quarter, plus, to the extent not otherwise distributedprior to commencement of the quarter for which such calculation is beingperformed, 95% of FFO for the immediately preceding two fiscal quarters, (c)for the fiscal quarter ending on or around December 31, 2002 and for eachfiscal quarter ending thereafter, an amount equal to 95% of FFO for suchquarter, plus, to the extent not otherwise distributed prior tocommencement of the quarter for which such calculation is being performed, 95%of FFO for the immediately preceding three fiscal quarters.

 

“Financial Covenants”means a collective reference to the covenants contained in Sections 7.11,8.1(c) and (h), 8.2(b) and (c), 8.5(a) and (b), 8.6(d), (e), (h), (i) and (j)and 8.16 hereof.

 

“Fixed Charge Coverage Ratio”means, as of the end of any fiscal quarter of the Consolidated Parties, for thefour fiscal quarter period most recently ending on or prior to such datewith respect to the Consolidated Parties ona consolidated basis, the ratio of (a) Consolidated Total EBITDA for suchperiod to (b) the sum of (without duplication) (i) ConsolidatedInterest Expense for such period plus (ii) Consolidated ScheduledFunded Debt Payments for such period.

 

“Foreign Lender” shallhave the meaning given to such term in Section 3.11(d) hereof.

 

“Foreign Subsidiary”means any direct or indirect Subsidiary of the Borrower which is not a DomesticSubsidiary.

 

“Fully Satisfied” means, with respect to the Credit Party Obligations as of any date,that, as of such date, (a) all principal of and interest accrued to such datewhich constitute Credit Party Obligationsshall have been paid in full in cash, (b) all fees, expenses and otheramounts then due and payable which constitute CreditParty Obligations shall have been paid in cash, (c) all outstandingLetters of Credit shall have been (i) terminated, (ii) fully cashcollateralized or (iii) secured by one or more letters of credit on termsand conditions, and with one or more financial institutions, reasonablysatisfactory to the Issuing Lender and (d) the Commitments shall have beenexpired or terminated in full.

 

“Fund” means any Person (other than a naturalperson) that is (or will be) engaged in making, purchasing, holding orotherwise investing in commercial loans and similar extensions of credit in theordinary course of its business.

 

“Funded Indebtedness”means, with respect to any Person, without duplication, (i) allIndebtedness of such Person other than Indebtedness of the types referred to inclauses (e), (f), (g), (i), (n) and (p) of the definition of “Indebtedness”set forth in this Section 1.1, (ii) all Funded Indebtedness of othersof the type 

 

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referred to in clause (i)above secured by (or for which the holder of such Funded Indebtedness has anexisting right, contingent or otherwise, to be secured by) any Lien on, orpayable out of the proceeds of production from, Property owned or acquired bysuch Person, whether or not the obligations secured thereby have been assumed(or, if less, the aggregate net book value of all Property securing such FundedIndebtedness of others), (iii) all Guaranty Obligations of such Personwith respect to Funded Indebtedness of the type referred to in clause (i)above of another Person and (iv) Funded Indebtedness of the type referredto in clause (i) above of any partnership or unincorporated jointventure in which such Person is a general partner or a joint venturer to theextent such Funded Indebtedness is recourse to such Person.

 

“GAAP” means generallyaccepted accounting principles in the United States applied on a consistentbasis except as specifically set forth in the definitions contained herein andsubject to the terms of Section 1.3.

 

“General Partner” shallhave the meaning given to such term in the heading hereof.

 

“General SPE” shall havethe meaning given to such term in the heading hereof.

 

“Governmental Authority”means any Federal, state, local or foreign court or governmental agency,authority, instrumentality or regulatory body.

 

“Ground Lease Interests”means Real Property assets with respect to which a Consolidated Party is theground lessee.

 

“Guarantors” means acollective reference to the USRP REIT, theGeneral Partner and each of the Subsidiary Guarantors, together with each oftheir successors and permitted assigns, and “Guarantor “ means any oneof them.

 

“Guaranty Obligations”means, with respect to any Person, without duplication, any obligations of suchPerson (other than endorsements in the ordinary course of business ofnegotiable instruments for deposit or collection) guaranteeing or intended toguarantee any Indebtedness of any other Person in any manner, whether direct orindirect, and including without limitation any obligation, whether or notcontingent, (i) to purchase any such Indebtedness or any Propertyconstituting security therefor, (ii) to advance or provide funds or othersupport for the payment or purchase of any such Indebtedness or to maintainworking capital, solvency or other balance sheet condition of such other Person(including without limitation keep well agreements, maintenance agreements,comfort letters or similar agreements or arrangements) for the benefit of anyholder of Indebtedness of such other Person, (iii) to lease or purchaseProperty, securities or services primarily for the purpose of assuring theholder of such Indebtedness, or (iv) to otherwise assure or hold harmlessthe holder of such Indebtedness against loss in respect thereof.  The amount of any Guaranty Obligation hereundershall (subject to any limitations set forth therein) be deemed to be an amountequal to the outstanding principal amount (or maximum principal amount, iflarger) of the Indebtedness in respect of which such Guaranty Obligation ismade.

 

“Hedging Agreements”means any interest rate protection agreement or foreign currency exchangeagreement entered into in order to manage existing or anticipated interest rateor exchange rate risks with respect to the Credit Documents and not forspeculative purposes (including, without limitation, any BOA DerivativeInstruments).

 

“Indebtedness” means,with respect to any Person, without duplication, (a) all obligations ofsuch Person for borrowed money, (b) all obligations of such Personevidenced by bonds, debentures, notes or similar instruments, or upon whichinterest payments are customarily made, (c) all obligations of such Personunder conditional sale or other title retention agreements relating to Propertypurchased by such Person (other than customary reservations or retentions oftitle under agreements with suppliers entered into in the ordinary course ofbusiness), (d) all obligations of such Person issued or assumed as thedeferred purchase price of Property or services purchased by such Person (otherthan trade debt incurred in the ordinary course of business and due within sixmonths of the incurrence thereof) which would appear as liabilities on abalance sheet of such Person, (e) all obligations of such Person undertake-or-pay or similar arrangements or under commodities agreements, (f) allIndebtedness of others secured by (or for which the holder of such Indebtednesshas an 

 

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existing right, contingent orotherwise, to be secured by) any Lien on, or payable out of the proceeds ofproduction from, Property owned or acquired by such Person, whether or not theobligations secured thereby have been assumed, (g) all GuarantyObligations of such Person with respect to Indebtedness of another Person,(h) the implied principal component of all obligations of such Personunder Capital Leases, including all Capitalized Lease Obligations of suchPerson, (i) all obligations of such Person under hedging agreements andother similar arrangements, (j) the maximum amount of all performance andstandby letters of credit issued or bankers’ acceptances facilities created forthe account of such Person and, without duplication, all drafts drawnthereunder (to the extent unreimbursed), (k) all preferred Capital Stockissued by such Person and which by the terms thereof could be (at the requestof the holders thereof or otherwise) subject to mandatory sinking fundpayments, redemption or other acceleration (other than as a result of a Changeof Control or an Asset Disposition that does not in fact result in a redemptionof such preferred Capital Stock) at any time prior to the Maturity Date,(l) the principal portion of all obligations of such Person underSynthetic Leases, (m) all obligations of such Person to repurchase anysecurities issued by such Person at any time prior to the Maturity Date whichrepurchase obligations are related to the issuance thereof, including, withoutlimitation, obligations commonly known as residual equity appreciationpotential shares, (n) the Indebtedness of any partnership or unincorporatedjoint venture in which such Person is a general partner or a joint venturer tothe extent such Indebtedness is recourse to such Person, (o) the aggregateamount of uncollected accounts receivable of such Person subject at such timeto a sale of receivables (or similar transaction) to the extent suchtransaction is effected with recourse to such Person (whether or not suchtransaction would be reflected on the balance sheet of such Person inaccordance with GAAP) and (p) all Contingent Obligations of such Person.  For purposes of clarification, the ordinaryand customary rent obligations of a Person pursuant to the terms of a realproperty lease which is not entered into as a capital or financing lease shallnot be included in the calculation of “Indebtedness” hereunder.

 

“Indemnified Party” shallhave the meaning assigned to such term in Section 11.5(b).

 

“Initial Maturity Date”shall have the meaning given to such term in Section 2.1(c)(i) hereof.

 

“Interbank Offered Rate” means, for any Eurodollar Loan for any InterestPeriod therefor, the rate per annum (rounded upwards, if necessary, to thenearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successorpage) as the London interbank offered rate for deposits in Dollars atapproximately 11:00 a.m. (London time) two Business Days prior to the first dayof such Interest Period. If for any reason such rate is not available, the term“LIBOR” shall mean, for any Eurodollar Loan for any Interest Period therefor,the rate per annum (‘rounded upwards, if necessary, to the nearest 1/100 of 1%)appearing on Reuters Screen LIBO Page as the London interbank offered rate fordeposits in Dollars at approximately 11:00 a.m. (London time) two Business Daysprior to the first day of such Interest Period for a term comparable to suchInterest Period; provided, however, if more than one rate isspecified on Reuters Screen LIBO Page, the applicable rate shall be thearithmetic mean of all such rates.

 

“Interest Payment Date”means (a) as to Base Rate Loans, (i) the 20th day of eachcalendar month, (ii) the date of repayment of principal of such Loan and (iii)the Maturity Date, and (b) as to Eurodollar Loans, (i) the last day ofeach applicable Interest Period, (ii) the date of repayment of principal ofsuch Loan, (iii) the Maturity Date, and (iv) where the applicable InterestPeriod for a Eurodollar Loan is greater than one month, the dates occurringeach calendar month following the first day of the Interest Period.

 

“Interest Period” means,as to Eurodollar Loans, a period of one, two, three, six or twelve months’duration, as the Borrower may elect, commencing, in each case, on the date ofthe borrowing (including continuations and conversions thereof); provided,however, (a) if any Interest Period would end on a day which is nota Business Day, such Interest Period shall be extended to the next succeedingBusiness Day (except that where the next succeeding Business Day falls in thenext succeeding calendar month, then on the next preceding Business Day),(b) no Interest Period shall extend beyond the Maturity Date and(c) where an Interest Period begins on a day for which there is nonumerically corresponding day in the calendar month in which the InterestPeriod is to end, such Interest Period shall end on the last Business Day ofsuch calendar month.

 

“Investment” in anyPerson means (a) the acquisition (whether for cash, property, services,assumption of Indebtedness, securities or otherwise) of assets (other thanequipment, inventory and supplies in

 

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the ordinary course of businessand other than any acquisition of assets constituting a Consolidated CapitalExpenditure), Capital Stock, bonds, notes, debentures, partnership, jointventures or other ownership interests or other securities of such other Person,(b) any deposit with, or advance, loan or other extension of credit to,such Person (other than deposits made in connection with the purchase ofequipment inventory and supplies in the ordinary course of business) or(c) any other capital contribution to or investment in such Person,including, without limitation, any Guaranty Obligations (including any supportfor a letter of credit issued on behalf of such Person) incurred for thebenefit of such Person and any Asset Disposition to such Person forconsideration less than the fair market value of the Property disposed in suchtransaction, but excluding any Restricted Payment to such Person.  Investments which are capitalcontributions or purchases of Capital Stock which have a right to participatein the profits of the issuer thereof shall be valued at the amount actuallycontributed or paid to purchase such Capital Stock as of the date of suchcontribution or payment.  Investmentswhich are loans, advances, extensions of credit or Guaranty Obligations shallbe valued at the principal amount of such loan, advance or extension of creditoutstanding as of the date of determination or, as applicable, the principalamount of the loan or advance outstanding as of the date of determinationactually guaranteed by such Guaranty Obligation.

 

“I/O Strip” means aninterest in a pool of promissory notes, mortgage loans, or other similarfinancial assets, issued in connection with a Securitization Asset Sale orotherwise, which entitles the holder to receive a portion of the interest paidon, but not principal repaid in respect of, such financial assets.

 

“Issuing Lender” meansBOA.

 

“Issuing Lender Fees”shall have the meaning given to such term in Section 3.5(c) hereof.

 

“Joinder Agreement” meansa Joinder Agreement substantially in the form of Exhibit 7.12hereto, executed and delivered by a new Guarantor in accordance with theprovisions of Section 7.12.

 

“Lender” means any of thePersons identified as a “Lender” on the signature pages hereto, and any Personwhich may become a Lender by way of assignment in accordance with the termshereof, together with their successors and permitted assigns.

 

“Lender Party” shall meanany of the Agent, Collateral Agent or any Lender from time to time a partyhereto; and “Lender Parties” means a collective reference to each.

 

“Letter of Credit” meansany letter of credit issued by the Issuing Lender for the account of theBorrower in accordance with the terms of Section 2.2.

 

“Letter of Credit Fee”shall have the meaning assigned to such term in Section 3.5.

 

“Leverage Ratio” means,as of the end of any fiscal quarter of the Consolidated Parties, the ratio of(a) Total Liabilities to (b) Total Tangible Assets.

 

“Lien” means anymortgage, pledge, hypothecation, assignment, deposit arrangement, securityinterest, encumbrance, lien (statutory or otherwise), preference, priority orcharge of any kind (including any agreement to give any of the foregoing, anyconditional sale or other title retention agreement, any financing or similarstatement or notice filed under the Uniform Commercial Code as adopted and ineffect in the relevant jurisdiction or other similar recording or noticestatute, and any lease in the nature thereof); provided, that the term “Lien”shall not refer to or include Negative Pledges.

 

“Loan” or “Loans”means the Revolving Loans (or a portion of any Revolving bearing interest atthe Adjusted Base Rate or the Adjusted Eurodollar Rate and referred to as aBase Rate Loan or a Eurodollar Loan), individually or collectively, asappropriate.

 

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“LOC Commitment” meansthe commitment of the Issuing Lender to issue Letters of Credit in an aggregateface amount at any time outstanding (together with the amounts of anyunreimbursed drawings thereon) of up to the LOC Committed Amount.

 

“LOC Committed Amount”shall have the meaning assigned to such term in Section 2.2.

 

“LOC Documents” means,with respect to any Letter of Credit, such Letter of Credit, any amendmentsthereto, any documents delivered in connection therewith, any applicationtherefor, and any agreements, instruments, guarantees or other documents(whether general in application or applicable only to such Letter of Credit)governing or providing for (i) the rights and obligations of the partiesconcerned or at risk or (ii) any collateral security for such obligations.

 

“LOC Obligations” means,at any time, the sum of (i) the maximum amount which is, or at any timethereafter may become, available to be drawn under Letters of Credit thenoutstanding, assuming compliance with all requirements for drawings referred toin such Letters of Credit plus (ii) the aggregate amount of alldrawings under Letters of Credit honored by the Issuing Lender but nottheretofore reimbursed by the Borrower.

 

“Material Adverse Effect”means a material adverse effect on (i) the condition (financial orotherwise), operations, business, assets, liabilities or prospects of theConsolidated Parties taken as a whole, (ii) the ability of any CreditParty to perform any material obligation under the Credit Documents to which itis a party or (iii) the material rights and remedies of the Agent and theLenders under the Credit Documents; provided, that, for purposes ofSection 6.16 hereof only, “Material Adverse Effect” means any one of (i)through (iii) above or (iv) a material adverse effect on the value of,conditions on, operations on, business conducted on or prospects of any parcelof Real Property or the rights and remedies of the Agent and the Lenders withrespect thereto.

 

“Materials of EnvironmentalConcern” means any gasoline or petroleum (including crude oil or anyfraction thereof) or petroleum products or any hazardous or toxic substances,materials or wastes, defined or regulated as such in or under any EnvironmentalLaws, including, without limitation, asbestos, polychlorinated biphenyls andurea–formaldehyde insulation.

 

“Maturity Date” shallhave the meaning given to such term in Section 2.1(c)(iii) hereof.

 

“Minority Interest” meansthe percentage of the Capital Stock or other equity interest owned by aConsolidated Party in a Minority Interest Entity accounted for pursuant to theequity method of accounting under GAAP.

 

“Minority Interest Entity”means any corporation, partnership, association, joint venture or other entity,in each case which is not a Consolidated Party, in which a Consolidated Partyowns, directly or indirectly, Capital Stock or any other equity interest.

 

“Moody’s” means Moody’sInvestors Service, Inc., or any successor or assignee of the business of suchcompany in the business of rating securities.

 

“Multiemployer Plan”means a Plan which is a “multiemployer plan” as defined in Sections 3(37)or 4001(a)(3) of ERISA.

 

“Multiple Employer Plan”means a Plan (other than a Multiemployer Plan) which any Consolidated Party orany ERISA Affiliate and at least one employer other than the ConsolidatedParties or any ERISA Affiliate are contributing sponsors.

 

“Negative Pledge” means aprovision of any agreement (other than this Credit Agreement or any otherCredit Document) that prohibits the creation of any Lien on any assets of aPerson, whether presently owned or hereafter acquired; provided, however,that an agreement that establishes a maximum ratio of unsecured debt tounencumbered assets, or of secured debt to total assets, or that otherwiseconditions a

 

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Person’s ability to encumber itsassets upon the maintenance of one or more specified ratios that limit suchPerson’s ability to encumber its assets but that do not generally prohibit theencumbrance of its assets, or the encumbrance of specific assets, shall notconstitute a “Negative Pledge” for purposes of this Credit Agreement.

 

“Net Cash Proceeds” meansthe aggregate proceeds paid in cash or Cash Equivalents received by anyConsolidated Party in respect of any Asset Disposition or Equity Issuance (asapplicable), net of (a) direct costs (including, without limitation,legal, accounting and investment banking fees, and sales commissions)(b) taxes paid or payable as a result thereof and (c) in the case ofany Asset Disposition, the amount necessary to retire any Indebtedness securedby a Permitted Lien (ranking senior to any Lien of the Agent) on the related Property; it being understood that “Net Cash Proceeds”shall include, without limitation, any cash or Cash Equivalents received uponthe sale or other disposition of any non–cash consideration received byany such Consolidated Party in any such Asset Disposition or Equity Issuance.

 

“Note” or “Notes”means the Revolving Notes, individually or collectively, as appropriate.

 

“Notice of Borrowing”means a written notice of borrowing in substantially the form of Exhibit 2.1(b)(i),as required by Section 2.1(b)(i), Section 2.3(b) orSection 2.4(b).

 

“Notice of Continuation” means a notice in theform of Exhibit 3.2 to be delivered to the Agent pursuant toSection 3.2(a) evidencing the Borrower’s request for the Continuation of aEurodollar Loan.

 

“Notice of Conversion”means a notice in the form of Exhibit 3.2 to be delivered to theAgent pursuant to Section 3.2(b) evidencing the Borrower’s request for theConversion of a Loan from one Type to another Type.

 

“Operating Lease” means,as applied to any Person, any lease (including, without limitation, leaseswhich may be terminated by the lessee at any time) of any Property (whetherreal, personal or mixed) which is not a Capital Lease other than any such leasein which that Person is the lessor.

 

“Other Taxes” shallhave the meaning assigned to such term in Section 3.11(b).

 

“Outside Interests” means, at any time,interests in any assets or entities (and, as applicable, the cost thereof, Cashand Cash Equivalents held in connection therewith, the income, revenues,interest expense, taxes, depreciation and amortization attributable thereto)owned by entities that are not Consolidated Parties.

 

“Participant” has the meaning assigned to suchterm in clause (d) of Section 11.3.

 

“Participation Interest”means a purchase by a Lender of a participation in Letters of Credit or LOCObligations as provided in Section 2.2 or in any Loans as provided inSection 3.14.

 

“PBGC” means the PensionBenefit Guaranty Corporation established pursuant to Subtitle A ofTitle IV of ERISA and any successor thereof.

 

“Permitted Investments”means, at any time, Investments by the Consolidated Parties permitted to existat such time pursuant to the terms of Section 8.6.

 

“Permitted Liens” means,at any time, Liens in respect of Property of the Consolidated Parties permittedto exist at such time pursuant to the terms of Section 8.2.

 

“Person” means anyindividual, partnership, joint venture, firm, corporation, limited liabilitycompany, association, trust or other enterprise (whether or not incorporated)or any Governmental Authority.

 

“Plan” means any employeebenefit plan (as defined in Section 3(3) of ERISA) which is covered byERISA and with respect to which any Consolidated Party or any ERISA Affiliateis (or, if such plan were 

 

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terminated at such time, wouldunder Section 4069 of ERISA be deemed to be) an “employer” within themeaning of Section 3(5) of ERISA.

 

“Prime Rate” means theper annum rate of interest established from time to time by BOA as its primerate, which rate may not be the lowest rate of interest charged by BOA to itscustomers.

 

“Principal Borrower”shall have the meaning given to such term in the introductory paragraph hereof.

 

“Pro Forma Basis” means, for purposes ofcalculating (utilizing the principles set forth in the second paragraph ofSection 1.3) compliance with each of the Financial Covenantsin respect of a proposed transaction,that such transaction shall be deemed to have occurred as of the first day ofthe four fiscal–quarter period ending as of the most recent fiscal quarter end preceding the date of such transactionwith respect to which the Agent has received the Required FinancialInformation.  As used herein, “transaction”shall mean (i) any incurrence or assumption of Indebtedness as referred toin Section 8.1(h)(i), or (ii) any Asset Disposition as referred to inSection 8.5(a).  In connection withany calculation of the Financial Covenants, upon giving effect to a transactionon a Pro Forma Basis:

 

(A)                              forpurposes of any such calculation in respect of any incurrence or assumption ofIndebtedness as referred to in Section 8.1(h)(i), any Indebtedness whichis retired in connection with such incurrence or assumption shall be excludedand deemed to have been retired as of the first day of the applicable period;and

 

(B)                                forpurposes of any such calculation in respect of any Asset Disposition asreferred to in Section 8.5(a), (1) income statementitems (whether positive or negative) and capital expenditures attributableto the Property disposed of shall be excluded and (2) any Indebtednesswhich is retired in connection with such transaction shall be excluded anddeemed to have been retired as of the first day of the applicable period.

 

“Pro Forma Compliance Certificate” means acertificate of an Executive Officer of the Borrower delivered to the Agent inconnection with (i) any incurrence, assumption or retirement ofIndebtedness as referred to in Section 8.1(h)(i), or (ii) any Asset Dispositionas referred to in Section 8.5(a), as applicable, and containing reasonablydetailed calculations, upon giving effect to the applicable transaction on aPro Forma Basis, of those items required for determining compliance withSection 7.11 as of the most recent fiscal quarter end preceding the dateof the applicable transaction with respect to which the Agent shall havereceived the Required Financial Information.

 

“Property” means anyinterest in any kind of property or asset, whether real, personal or mixed, ortangible or intangible.

 

“Qualified REIT Subsidiary”shall have the meaning given to such term in the Code.

 

“Real Properties” means,at any time, a collective reference to each of the facilities and realproperties owned, leased or operated by the Consolidated Parties or in whichany Consolidated Party has an interest at such time; and “Real Property”means any one of such Real Properties.

 

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

 

“Register” shall have themeaning assigned to such term in Section 11.3(c).

 

“Regulation D, T, U, orX” means Regulation D, T, U or X, respectively, of the Board ofGovernors of the Federal Reserve System as from time to time in effect and anysuccessor to all or a portion thereof.

 

“REIT” means a Personqualifying for treatment as a “real estate investment trust” under the Code.

 

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“Reportable Event” meansany of the events set forth in Section 4043(c) of ERISA, other than thoseevents as to which the notice requirement has been waived by regulation.

 

“Required Financial Information” means, withrespect to any given date, (i) the financial statements of the Consolidated Parties required to bedelivered pursuant to Section 7.1(a) or (b) for the fiscal period orquarter ending most recently with respect to such date, and (ii) thecertificate of an Executive Officer ofthe Borrower required by Section 7.1(c) to be delivered with the financialstatements described in clause (i) above.

 

“Required Lenders” means,at any time, (a) the Agent and (b) Lenders (other than Defaulting Lenders)holding in the aggregate at least 66 2/3% of (i) the Revolving Commitments(and Participation Interests therein), or (ii) if the Revolving Commitments have been terminated, theoutstanding Loans, LOC Obligations and Participation Interests (including theParticipation Interests of the Issuing Lender in any Letters of Credit).

 

“Requirement of Law”means, as to any Person, the certificate of incorporation and by–laws orother organizational or governing documents of such Person, and any law,treaty, rule or regulation or determination of an arbitrator or a court orother Governmental Authority, in each case applicable to or binding upon suchPerson or to which any of its material property is subject.

 

“Reserve Limit” shallhave the meaning given to such term in Section 2.3(a).

 

“Restricted Payment”means (i) any dividend or other payment or distribution, direct orindirect, on account of any shares of any class of Capital Stock of anyConsolidated Party, now or hereafter outstanding (including without limitationany payment in connection with any dissolution, merger, consolidation ordisposition involving any Consolidated Party), or to the holders, in theircapacity as such, of any shares of any class of Capital Stock of anyConsolidated Party, now or hereafter outstanding (other than dividends ordistributions payable in Capital Stock of the applicable Person and dividendsor distributions payable (directly or indirectly through Subsidiaries) to anyCredit Party other than the General Partner), (ii) any redemption,retirement, sinking fund or similar payment, purchase or other acquisition forvalue, direct or indirect, of any shares of any class of Capital Stock of anyConsolidated Party, now or hereafter outstanding, (iii) any payment madeto retire, or to obtain the surrender of, any outstanding warrants, options orother rights to acquire shares of any class of Capital Stock of anyConsolidated Party, now or hereafter outstanding, and (iv) any loan oradvance to the General Partner.

 

“Revolving Commitment”means, with respect to each Lender, the commitment of such Lender in anaggregate principal amount as set forth on Schedule 1.1(a) attachedhereto, as such schedule may be modified in connection with any assignment madein accordance with Section 11.3 or as a result of the application ofSection 3.20 hereof.

 

“Revolving CommitmentPercentage” means, for any Lender, the percentage represented by suchLender’s Revolving Commitment as a portion of the total Revolving CommittedAmount, as such percentage may be modified in connection with any assignmentmade in accordance with the provisions of Section 11.3.

 

“Revolving Committed Amount”means $35,000,000.00, as such amount may be adjusted pursuant to and inaccordance with the terms of this Credit Agreement (including, withoutlimitation, pursuant to Sections 3.4 hereof).

 

“Revolving Loans” shallhave the meaning assigned to such term in Section 2.1(a).

 

“Revolving Note” or “RevolvingNotes” means the promissory notes of the Borrower in favor of each Lenderprovided pursuant to Section 2.1(e) and evidencing the Revolving Loans ofsuch Lender, individually or collectively, as appropriate, as such promissorynotes may be amended, modified, restated, supplemented, extended, renewed orreplaced from time to time.

 

“S&P” means Standard& Poor’s Ratings Group, a division of The McGraw Hill Companies, Inc., orany successor or assignee of the business of such division in the business ofrating securities.

 

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“Sale and LeasebackTransaction” means any arrangement pursuant to which any ConsolidatedParty, directly or indirectly, becomes liable as lessee, guarantor or othersurety with respect to any lease, whether an Operating Lease or a CapitalLease, of any Property (a) which such Consolidated Party has sold ortransferred (or is to sell or transfer) to a Person which is not a ConsolidatedParty or (b) which such Consolidated Party intends to use forsubstantially the same purpose as any other Property which has been sold ortransferred (or is to be sold or transferred) by such Consolidated Party toanother Person which is not a Consolidated Party in connection with such lease.

 

“Secured Indebtedness” means, with respect to anyPerson, any Indebtedness (other than Indebtedness incurred hereunder) that issecured in any manner by any Lien. Indebtedness in respect of Capitalized Lease Obligations shall not bedeemed to be Secured Indebtedness.  Forclarification purposes, (i) any unsecured guaranty given by any Credit Party ofsecured indebtedness of a Person who is not a Credit Party constitutesUnsecured Indebtedness of such Credit Party giving the guaranty, (ii) anyunsecured guaranty given by any Credit Party of the secured indebtedness ofanother Credit Party constitutes the Secured Indebtedness of the Credit Partydirectly incurring the secured indebtedness and shall not be calculated as partof the Indebtedness (either Secured or Unsecured) of such Credit Party givingthe guaranty (except to the extent that the relevant calculation does nototherwise account for the Indebtedness of the Credit Party directly incurringthe underlying secured indebtedness, in which case it shall constitute theUnsecured Indebtedness of the Credit Party giving the guaranty), (iii) anyunsecured guaranty given by any Credit Party of the unsecured indebtedness of aPerson who is not a Credit Party constitutes the Unsecured Indebtedness of suchCredit Party giving the guaranty, (iv) any unsecured guaranty given by anyCredit Party of the unsecured Indebtedness of another Credit Party constitutesthe Unsecured Indebtedness of the Credit Party directly incurring suchIndebtedness and shall not be calculated as part of the Indebtedness (eitherSecured or Unsecured) of such Credit Party giving the guaranty (except to theextent that the relevant calculation does not otherwise account for theIndebtedness of the Credit Party directly incurring the underlying unsecuredindebtedness, in which case it shall constitute the Unsecured Indebtedness ofthe Credit Party giving the guaranty), (v) any secured guaranty given by anyCredit Party of secured indebtedness of a Person who is not a Credit Partyconstitutes Secured Indebtedness of such Credit Party giving the guaranty, (vi)any secured guaranty given by any Credit Party of the secured indebtedness ofanother Credit Party constitutes the Secured Indebtedness of the Credit Partydirectly incurring the secured indebtedness and shall not be calculated as partof the Indebtedness (either Secured or Unsecured) of such Credit Party giving theguaranty (except to the extent that the relevant calculation does not otherwiseaccount for the Indebtedness of the Credit Party directly incurring theunderlying secured indebtedness, in which case it shall constitute the SecuredIndebtedness of the Credit Party giving the guaranty), (vii) any securedguaranty given by any Credit Party of the unsecured indebtedness of a Personwho is not a Credit Party constitutes the Secured Indebtedness of such CreditParty giving the guaranty, and (viii) any secured guaranty given by any CreditParty of the unsecured Indebtedness of another Credit Party constitutes theSecured Indebtedness of such Credit Party giving the guaranty and shall not becalculated as part of the Indebtedness (either Secured or Unsecured) of theCredit Party directly incurring such Indebtedness (except to the extent thatthe relevant calculation does not otherwise account for the Indebtedness ofsuch Credit Party giving the guaranty, in which case it shall constitute theUnsecured Indebtedness of the Credit Party directly incurring the underlyingunsecured indebtedness).

 

“Securities Act”means the Securities Act of 1933, asamended, and all regulations issued pursuant thereto.

 

“Securitization Asset Sale”means a transaction consisting of one or more limited recourse or nonrecoursetransfers by the Borrower, the General Partner or any of their Subsidiaries, toa Special Purpose Entity, of promissory notes, mortgage loans, net leased realproperty interests, investment securities representing an interest in orsecured by debt or equity tranches of investment securities, chattel paper,leases or other similar financial assets originated by the General Partner, theBorrower or any other Subsidiary thereof, together with any related title orother insurance policies, hedge agreements and other assets directly related tosuch financial assets, which transfers may properly be, and is, accounted foron the consolidated balance sheet of the General Partner as a sale inconformity with Financial Accounting Standards Board Statement of FinancialAccounting Standard No.  125 followed byeither (x) limited

 

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recourse or nonrecourse sales ofsuch financial assets (or interests therein) by such Special Purpose Entity toone or more Persons the accounts of which would not be required to beconsolidated with those of the General Partner in their consolidated financialstatements in accordance with GAAP (provided that subordinated interests insuch financial assets and I/O Strips may be issued or sold to any Person) or(y) the incurrence by such Special Purpose Entity of Indebtedness secured by aLien encumbering only the assets of such Special Purpose Entity; provided thatall of the Indebtedness, liabilities and other obligations of such SpecialPurpose Entity incurred in connection with such transactions are nonrecoursefor the payment or performance thereof to the General Partner, the Borrower orany other Subsidiary (excluding such Special Purpose Entity) other than thefollowing: (a) reasonable and customary obligations of the General Partner, theBorrower or any other Subsidiary with respect to (i) the servicing of anyassets which are the subject of such transaction, (ii) administrative andministerial matters relating to such Special Purpose Entity, (iii) maintenanceof the corporate separateness of such Special Purpose Entity from that of theGeneral Partner and its other Subsidiaries, and (iv) the guaranty of payment offees of any Person acting as a trustee in connection with such transaction andindemnification obligations owing to any such Person; (b) reasonable andcustomary repurchase obligations and other liabilities resulting from thebreach of representations, warranties and covenants that are not related tocreditworthiness of the obligors on the financial assets the subject of suchtransactions and (c) limited recourse provisions giving rise to Indebtednesssolely to the extent permitted under Section 8.1.  For purposes of this definition, whether an obligationor liability is “reasonable and customary” shall be determined with referenceto terms of similar transactions prevailing as of the date hereof.

 

“SecuritiesExchange Act” means theSecurities Exchange Act of 1934, as amended, and all regulations issuedpursuant thereto.

 

“Shoneys Assets” meansall real properties acquired from Shoney’s, Inc. pursuant to the AssetTransfer Agreement to be executed after the date hereof.

 

“Single Employer Plan”means any Plan which is covered by Title IV of ERISA, but which is not aMultiemployer Plan or a Multiple Employer Plan.

 

“Solvent” or “Solvency”means, with respect to any Person as of a particular date, that on such date(i) such Person is able to pay its debts and other liabilities, contingentobligations and other commitments as they mature in the normal course ofbusiness, (ii) such Person does not intend to, and does not believe thatit will, incur debts or liabilities beyond such Person’s ability to pay as suchdebts and liabilities mature in their ordinary course, (iii) such Personis not engaged in a business or a transaction, and is not about to engage in abusiness or a transaction, for which such Person’s Property would constituteunreasonably small capital after giving due consideration to the prevailingpractice in the industry in which such Person is engaged or is to engage,(iv) the fair value of the Property of such Person is greater than thetotal amount of liabilities, including, without limitation, contingentliabilities, of such Person and (v) the present fair salable value of theassets of such Person is not less than the amount that will be required to paythe probable liability of such Person on its debts as they become absolute andmatured.  In computing the amount ofcontingent liabilities at any time, it is intended that such liabilities willbe computed at the amount which, in light of all the facts and circumstancesexisting at such time, represents the amount that can reasonably be expected tobecome an actual or matured liability.

 

“Special Purpose Entity” means any Person (a)which has a legal structure and capitalization intended to make such entity a“bankruptcy remote” entity and which legal structure and capitalization havebeen approved in writing by the Agent; (b) which has been organized for thesole purpose of effecting a structured financing; (c) which has no assets otherthan (i) the financial assets directly acquired in connection with, and whichare the subject of, such structured financing, and any related title or otherinsurance policies, hedge agreements and other assets directly related to suchfinancial assets, (ii) cash and other assets contributed or distributed to suchPerson, or otherwise acquired by it, in connection with such structuredfinancing, and which assets are retained by such Person either pursuant to therequirements of such structured financing or to permit it to fulfill itsobligations under the terms of such structured financing, (iii) assets whichsuch Person is to (and does in fact) dispose of promptly, and in any eventwithin two Business Days, following such Person’s acquisition of such assets,and (iv) in the case of a

 

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Securitization Asset Sale, subordinated interestsacquired in connection with such Securitization Asset Sale; (d) which has noIndebtedness, liabilities or other obligations other than (i) those directlyincurred in connection with such structured financing, (ii) any liabilitiesresulting from representations and warranties made by such Person with respectto any such financial assets or other assets being transferred by it to anotherPerson so long as such representations and warranties (A) are customary or (B)are substantially similar to those made to such Person when such assets wereinitially transferred to it and (iii) trade payables incurred in the ordinarycourse of trade or business in an aggregate amount not to exceed $25,000; and(e) which none of the General Partner, the Borrower or any other Subsidiariesthereof have any direct obligation to maintain or preserve such Person’sfinancial condition or to cause such Person to achieve any specified levels ofoperating results except as otherwise permitted in connection with suchstructured financing.

 

“Subordinated Interest”means a subordinate interest (whether characterized as debt or equity, andincluding without limitation, general and limited partnership interests,participation certificates and trust certificates) in a pool of promissorynotes, mortgage loans, chattel paper, leases or other similar financial assets,issued in connection with a Securitization Asset Sale or otherwise.

 

“Subsidiary” means, as toany Person at any time, (a) any corporation more than 50% of whose CapitalStock of any class or classes having by the terms thereof ordinary voting powerto elect a majority of the directors of such corporation (irrespective ofwhether or not at such time, any class or classes of such corporation shallhave or might have voting power by reason of the happening of any contingency)is at such time owned by such Person directly or indirectly throughSubsidiaries, and (b) any partnership, association, joint venture or otherentity of which such Person directly or indirectly through Subsidiaries owns atsuch time more than 50% of the Capital Stock.

 

“Subsidiary Guarantor”means each of the Persons identified as a “Subsidiary Guarantor” on thesignature pages hereto and each Person which may hereafter execute a JoinderAgreement pursuant to Section 7.12, together with their successors andpermitted assigns, and “Subsidiary Guarantor” means any one of them.

 

“Synthetic Lease” meansany synthetic lease, tax retention operating lease, off–balance sheetloan or similar off–balance sheet financing product where suchtransaction is considered borrowed money indebtedness for tax purposes but isclassified as an Operating Lease under GAAP.

 

“Tangible Net Worth”means, as of any given calculation date, the sum of (a) Total Tangible Assets, less(b) the sum of (i) Total Liabilities less (ii) the aggregate of theamounts added to Total Liabilities pursuant to clauses (b) and (d) of thedefinition thereof and in connection with proviso items (i) and (ii)(B)contained in such definition.

 

“Taxes” shallhave the meaning assigned to such term in Section 3.11(a).

 

“Tenant” means any Person (or their respectiveAffiliates) who is a lessee with respect to any lease held by the Borrower aslessor or as an assignee of the lessor thereunder.

 

“Term Securitization”means a Securitization Asset Sale (a) involving only a single transfer (orseries of related and substantially contemporaneous transfers) to a SpecialPurpose Entity of financial assets, and any related title or other insurancepolicies, hedge agreements and other assets directly related to such financialassets, by the General Partner, the Borrower or any other Subsidiary thereofother than any transfer of such assets (i) being substituted for any assetpreviously transferred pursuant to customary and reasonable repurchase andsubstitution obligations resulting from the breach of representations,warranties and covenants that are not related to the creditworthiness of theobligor on the financial assets or (ii) being substituted for cash collateralor a cash deposit (including in connection with reasonable and customary “pre–funding”arrangements), and (b) under which the Persons acquiring such financial assets(or interests therein) from the applicable Special Purpose Entity or makingadvances to such Special Purpose Entity secured directly or indirectly by suchfinancial assets, are neither required nor permitted to acquire 

 

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additional financial assets (orinterests therein) from, or otherwise make additional advances to, such SpecialPurpose Entity, except as otherwise permitted under the immediately precedingclause (a).

 

“Total Liabilities” means the sum of (a) total liabilities of theConsolidated Parties on a consolidated basis, as determined in accordance withGAAP, plus (b) an amount equal to the aggregate total liabilities, asdetermined in accordance with GAAP, of each Minority Interest Entity multipliedby the respective Minority Interest of each such entity plus (c) withoutduplication, the Indebtedness of the Consolidated Parties on a consolidatedbasis plus (d) without duplication, the aggregate of Indebtedness(including, without limitation, all Contingent Obligations) of each MinorityInterest Entity multiplied by the respective Minority Interest of each suchentity; provided, that (i) in each case, all of the above amounts nototherwise adjusted to account for Outside Interests shall be adjusted to deducttherefrom the pro rata share of such amounts allocable to the Outside Interests(except to the extent any Credit Party would be legally liable for the fullamount of such liabilities) and (ii) notwithstanding anything contained hereinto the contrary, “Total Liabilities” shall include (A) the maximum amount thatcould be owed by any Consolidated Party with respect to such ConsolidatedParty’s preferred Capital Stock and (B) the amount equal to (1) the maximumamount that could be owed by any Minority Interest Entity with respect to suchMinority Interest Entity’s preferred Capital Stock, multiplied by  (2) the respectiveMinority Interest of each such entity.

 

“Total Rent” means, withrespect to rental income used in calculating Borrowing Base Asset Value, grossrental income from all Borrowing Base Assets over the applicable period priorto reductions for any delinquencies.

 

“Total Tangible Assets”means the sum of (a) Asset Values of each of the Real Properties, plus(b) the value of all other assets and interests therein held by theConsolidated Parties (provided, that, the amounts calculated pursuant toclauses (a) and (b) above (i) shall include, without duplication, eachConsolidated Parties’ interests in the assets of any Minority Interest Entityand (ii) shall not include any interests in assets which are attributable toany Outside Interests), less (c) the value of all intangible assets, ifany, included in (a) and (b) above.

 

“Type” with respect toany Loan, refers to whether such Loan is a Eurodollar Loan or Base Rate Loan.

 

“Unsecured Indebtedness”means, with respect to any Person and for any given calculation date, allIndebtedness of such Person that is not Secured Indebtedness, including allIndebtedness in respect of Capitalized Lease Obligations.  For clarification purposes, (i) anyunsecured guaranty given by any Credit Party of secured indebtedness of aPerson who is not a Credit Party constitutes Unsecured Indebtedness of suchCredit Party giving the guaranty, (ii) any unsecured guaranty given by anyCredit Party of the secured indebtedness of another Credit Party constitutesthe Secured Indebtedness of the Credit Party directly incurring the securedindebtedness and shall not be calculated as part of the Indebtedness (eitherSecured or Unsecured) of such Credit Party giving the guaranty (except to theextent that the relevant calculation does not otherwise account for theIndebtedness of the Credit Party directly incurring the underlying securedindebtedness, in which case it shall constitute the Unsecured Indebtedness ofthe Credit Party giving the guaranty), (iii) any unsecured guaranty given byany Credit Party of the unsecured indebtedness of a Person who is not a CreditParty constitutes the Unsecured Indebtedness of such Credit Party giving theguaranty, (iv) any unsecured guaranty given by any Credit Party of theunsecured Indebtedness of another Credit Party constitutes the UnsecuredIndebtedness of the Credit Party directly incurring such Indebtedness and shallnot be calculated as part of the Indebtedness (either Secured or Unsecured) ofsuch Credit Party giving the guaranty (except to the extent that the relevantcalculation does not otherwise account for the Indebtedness of the Credit Party

 

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directly incurring theunderlying unsecured indebtedness, in which case it shall constitute theUnsecured Indebtedness of the Credit Party giving the guaranty), (v) anysecured guaranty given by any Credit Party of secured indebtedness of a Personwho is not a Credit Party constitutes Secured Indebtedness of such Credit Partygiving the guaranty, (vi) any secured guaranty given by any Credit Party of thesecured indebtedness of another Credit Party constitutes the SecuredIndebtedness of the Credit Party directly incurring the secured indebtednessand shall not be calculated as part of the Indebtedness (either Secured orUnsecured) of such Credit Party giving the guaranty (except to the extent thatthe relevant calculation does not otherwise account for the Indebtedness of theCredit Party directly incurring the underlying secured indebtedness, in whichcase it shall constitute the Secured Indebtedness of the Credit Party givingthe guaranty), (vii) any secured guaranty given by any Credit Party of theunsecured indebtedness of a Person who is not a Credit Party constitutes theSecured Indebtedness of such Credit Party giving the guaranty, and (viii) anysecured guaranty given by any Credit Party of the unsecured Indebtedness ofanother Credit Party constitutes the Secured Indebtedness of such Credit Partygiving the guaranty and shall not be calculated as part of the Indebtedness(either Secured or Unsecured) of the Credit Party directly incurring suchIndebtedness (except to the extent that the relevant calculation does nototherwise account for the Indebtedness of such Credit Party giving theguaranty, in which case it shall constitute the Unsecured Indebtedness of theCredit Party directly incurring the underlying unsecured indebtedness).  For purposes of calculating the FinancialCovenants, the Credit Party Obligations shall be deemed Unsecured Indebtedness.

 

“Unused Revolving CommittedAmount” means, for any period, the daily average of the amount by which(a) the then applicable Revolving Committed Amount exceeds (b) thesum of (i) the outstanding aggregate principal amount of all RevolvingLoans plus (ii) the outstanding aggregate principal amount of allLOC Obligations plus (iii) the Aggregate Derivative Reserve Amount.

 

“USRP Operating” has themeaning given to such term in the Preamble of this Credit Agreement.

 

“USRP Pledge Agreement”means that certain Pledge and Security Agreement entered into by USRP Operatingas of the date hereof in favor of the Collateral Agent and for the benefit ofthe Lender Parties.

 

“USRP REIT” meansU.S.  Restaurant Properties, Inc.,

 

“Value” means, withrespect to any Consolidated Party’s interest in any Real Property, the bookvalue of such interest in Real Property plus accumulated depreciationwith respect thereto (provided, for purposes of clarification, that the “Value”of any interest in Real Property shall not include any amount of the book valueof such Real Property interest attributable to Outside Interests).

 

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

 

“Wholly Owned Subsidiary”means any Person 100% of whose Voting Stock is at the time owned by theBorrower directly or indirectly through other Persons 100% of whose VotingStock is at the time owned, directly or indirectly, by the Borrower.

 

## **1.2          Computation of Time Periods.**

 

For purposes of computation of periods of time hereunder, the word“from” means “from and including” and the words “to” and “until” each mean “tobut excluding.”

 

## **1.3          AccountingTerms.**

 

Except as otherwise expressly provided herein, all accounting termsused herein shall be interpreted, and all financial statements and certificatesand reports as to financial matters required to be delivered to the Lendershereunder shall be prepared, in accordance with GAAP applied on a consistentbasis; provided, however, that calculations of the impliedprincipal component of all obligations under any Synthetic Lease or the impliedinterest component of any rent paid under any Synthetic Lease shall be made bythe Borrower in accordance with accepted financial practice and consistent withthe terms of such Synthetic Lease.  Allcalculations made for the purposes of determining compliance with this CreditAgreement shall (except as otherwise expressly provided herein) be made byapplication of GAAP applied on a basis consistent with the most recent annualor quarterly financial statements delivered pursuant to Section 7.1 (or,prior to the delivery of the first financial statements pursuant toSection 7.1, consistent with the financial statements as at December 31,2001), but, in any event, after elimination for minority interests;****provided,however, if

 

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(a) the Credit Parties shall object to determining such complianceon such basis at the time of delivery of such financial statements due to anychange in GAAP or the rules promulgated with respect thereto or (b) theAgent or the Required Lenders shall so object in writing within 60 days afterdelivery of such financial statements, then such calculations shall be made ona basis consistent with the most recent financial statements delivered by theCredit Parties to the Lenders as to which no such objection shall have beenmade.

 

Notwithstandingthe above or anything contained herein to the contrary, the provisions setforth in FAS 133 shall not be used in accounting for derivatives instrumentsand hedging activities in the definitions contained herein.

 

# **ARTICLEII**

# ** **

# **CREDITFACILITIES**

 

## **2.1          RevolvingLoans.**

 

(a)           Revolving Commitment.  Subject to the terms and conditions hereof and in reliance uponthe representations and warranties set forth herein, each Lender severallyagrees to make available to the Borrower such Lender’s Revolving CommitmentPercentage of revolving credit loans requested by the Borrower in Dollars (“RevolvingLoans”) from time to time from the Closing Date until the Maturity Date, orsuch earlier date as the Revolving Commitments shall have been terminated asprovided herein; provided, however, that the sum of the aggregateoutstanding principal amount of Revolving Loans shall not, at any time, exceedthe lesser of (i) the Revolving Committed Amount and (ii) the Borrowing Base; provided,further, (A) with regard to each Lender individually, such Lender’soutstanding Revolving Loans shall not exceed such Lender’s Revolving CommitmentPercentage of the Revolving Committed Amount, and (B) the sum of (1) theaggregate outstanding principal amount of Revolving Loans plus (2) theLOC Obligations plus (3) the Aggregate Derivative Reserve Amount shallnot exceed the lesser of the Revolving Committed Amount and the BorrowingBase.  Revolving Loans may consist ofBase Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrowermay request; provided, however, that no more than ten (10)****EurodollarLoans shall be outstanding hereunder at any time (it being understood that, forpurposes hereof, Eurodollar Loans with different Interest Periods shall beconsidered as separate Eurodollar Loans, even if they begin on the same date,although borrowings, extensions and conversions may, in accordance with theprovisions hereof, be combined at the end of existing Interest Periods toconstitute a new Eurodollar Loan with a single Interest Period).  Revolving Loans hereunder may be repaid andreborrowed in accordance with the provisions hereof.

 

(b)           Revolving Loan Borrowings.

 

(i)            Notice of Borrowing.  The Borrower shall request a Revolving Loan borrowing by writtennotice (or telephonic notice promptly confirmed in writing) to the Agent notlater than 11:00 A.M.  (Charlotte,North Carolina time) on the Business Day prior to the date of the requestedborrowing in the case of Base Rate Loans, and on the third Business Day priorto the date of the requested borrowing in the case of Eurodollar Loans.  Each such request for borrowing shall beirrevocable and shall specify (A) that a Revolving Loan is requested,(B) the date of the requested borrowing (which shall be a Business Day),(C) the aggregate principal amount to be borrowed, and (D) whetherthe borrowing shall be comprised of Base Rate Loans, Eurodollar Loans or acombination thereof, and if Eurodollar Loans are requested, the InterestPeriod(s) therefor.  If the Borrowershall fail to specify in any such Notice of Borrowing (I) an applicableInterest Period in the case of a Eurodollar Loan, then such notice shall bedeemed to be a request for an Interest Period of one month, or (II) thetype of Revolving Loan requested, then such notice shall be deemed to be arequest for a Base Rate Loan hereunder. The Agent shall give notice to each affected Lender promptly uponreceipt of each Notice of Borrowing pursuant to this Section 2.1(b)(i),the contents thereof and each such Lender’s share of any borrowing to be madepursuant thereto.

 

(ii)           Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is a Revolving Loan shall bein a minimum aggregate principal amount of $500,000 and integral multiples of$100,000 in excess thereof (or the remaining amount of the Revolving CommittedAmount, if less).

 

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(iii)          Advances. Each Lender will make its Revolving Commitment Percentage of eachRevolving Loan borrowing available to the Agent for the account of the Borroweras specified in Section 3.15(a), or in such other manner as the Agent mayspecify in writing, by 1:00 P.M. (Charlotte, North Carolina time) on the date specified in the applicableNotice of Borrowing in Dollars and in funds immediately available to theAgent.  Such borrowing will then be madeavailable to the Borrower by the Agent by crediting the account of the Borroweron the books of such office with the aggregate of the amounts made available tothe Agent by the Lenders and in like funds as received by the Agent.

 

(c)           Repayment.The principal amount of all Revolving Loans and all other amounts owed by theBorrower or any Credit Party hereunder or under any Credit Document shall bedue and payable as follows:

 

(i)            Theprincipal amount of all Revolving Loans shall be due and payable in full May31, 2003 (the “Initial Maturity Date”) unless accelerated soonerpursuant to the terms and conditions set forth herein.

 

(ii)           Thematurity date of the Revolving Loans may be extended to May 31, 2004 (the “ExtendedMaturity Date”) if the following conditions are satisfied by the datespecified:

 

(A)          Borrowerhas requested the extension by written notice to Bank not more than sixty (60)days, and not less than thirty (30) days, prior to the Initial Maturity Date;

 

(B)           theRevolving Commitments hereunder have been reestructured such that (1) theRevolving Commitment of BOA is, as of the Initial Maturity Date, reduced to anamount equal to or less than $20,000,000 and (2) the sum of (x) the aggregate outstanding principalamount of Revolving Loans, plus (y) the LOC Obligations, plus (z)the Aggregate Derivative Reserve Amount is, as of such date, equal to or lessthan the Revolving Commitments of all Persons who have agreed to act as Lendershereunder during the extended term;

 

(C)           the Borrower has, on or before theInitial Maturity Date, paid to the Agent an extension fee (the “Extension Fee”)in an amount equal to one half of one percent (0.50%) of the sum of theRevolving Commitments which will be in effect immediately following the InitialMaturity Date;

 

(D)          all of the conditions precedent setforth in Sections 5.1 and 5.2 hereof have been complied with or otherwisesatisfied as of the Initial Maturity Dateand the Credit Parties remain in compliance with such provisions and suchconditions remain satisfied as of the Initial Maturity Date;

 

(E)           currentfinancial statements regarding each Borrower and each Guarantor and all otherfinancial statements and other information as may be required hereunderregarding Borrower and each Guarantor shall have been submitted promptly to theAgent concurrently with Borrower’s request for the extension, and there shallnot have occurred, in the opinion of Agent, any material adverse change in thebusiness or financial condition of Borrowers or any Guarantor or in any otherstate of facts submitted to the Agent in connection with the Credit Documents, fromthat which existed on the Closing Date;

 

(F)           theAgent and each Lender have delivered to the Borrower their respective writtenapprovals of the extension referenced in this Section 2.1(c)(ii); provided,that each such approval shall be conditioned only upon such Agent’s 

 

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and Lenders’ reasonable determination that the CreditParties have satisfied each of the conditions to extension set forth in thisSection 2.1(c)(ii);

 

(G)           whetheror not the extension becomes effective, Borrower shall pay all out–of–pocketcosts and expenses incurred by the Agent and the Lenders in connection with theproposed extension (pre– and post–closing), including, withoutlimitation, appraisal fees and legal fees; all such costs and expenses incurredup to the Initial Maturity Date shall be due and payable prior to Agent’s andLenders’ execution of their approval of the extension referenced in Section2.1(c)(ii)(F) or, if the proposed extension does not become effective, then upondemand by the Agent), and any future failure to pay such amounts shallconstitute an Event of Default under the Credit Documents; and

 

(H)          atthe time of the request, and at the time of the extension, there shall notexist any Default or Event of Default under any Credit Document.

 

(iii)          As used herein, the term “Maturity Date”means the latest to occur of (A) the Initial Maturity Date and (B) to theextent all conditions precedent to the extension of the Revolving Loans as setforth in Section 2.1(c)(ii) have been satisfied, the Extended MaturityDate.  For purposes of clarification,notwithstanding the possibility that the conditions precedent set forth inSection 2.1(c)(ii) may be satisfied as of a later date, the “Maturity Date” onany date prior to such satisfaction shall be deemed to be the Initial MaturityDate.

 

(d)           Interest.  Subject to the provisions ofSection 3.1,

 

(i)            Base Rate Loans. During such periods as Revolving Loans shall be comprised in whole or inpart of Base Rate Loans, such Base Rate Loans shall bear interest at a perannum rate equal to the Adjusted Base Rate.

 

(ii)           Eurodollar Loans. During such periods as Revolving Loans shall be comprised in whole or inpart of Eurodollar Loans, such Eurodollar Loans shall bear interest at a perannum rate equal to the Adjusted Eurodollar Rate.

 

Interest on Revolving Loansshall be payable in arrears on each applicable Interest Payment Date (or atsuch other times as may be specified herein).

 

(e)           Revolving Notes. The Revolving Loans made by each Lender shall be evidenced by a dulyexecuted promissory note of the Borrower to such Lender in an originalprincipal amount equal to such Lender’s Revolving Commitment Percentage of theRevolving Committed Amount and in substantially the form of Exhibit 2.1(e).

 

## **2.2          Letter of Credit Subfacility.**

 

(a)           Issuance. Subject to the terms and conditions hereof and in reliance upon therepresentations and warranties set forth herein, the Issuing Lender agrees toissue, and each Lender severally agrees to participate in the issuance by theIssuing Lender of, standby and trade Letters of Credit in Dollars from time totime from the Closing Date until the date thirty (30) days prior to theMaturity Date as the Borrower may request, in a form acceptable to the IssuingLender; provided, however, that (i) the LOC Obligationsoutstanding shall not at any time exceed TEN MILLION DOLLARS ($10,000,000) (the“LOC Committed Amount”) and (ii) the sum of (A) the aggregateoutstanding principal amount of Revolving Loans plus (B) the LOCObligations plus (C) the Aggregate Derivative Reserve Amount shall notexceed the lesser of the Revolving Committed Amount and the BorrowingBase.  No Letter of Credit shall(x) have an original expiry date more than one year from the date of issuance(provided that any such Letter of Credit may contain customary “evergreen”provisions pursuant to which the expiry date is automatically extended by aspecific time period unless the Issuing Lender gives notice to the beneficiaryof such Letter of Credit at least a specified

 

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time period prior to the expirydate then in effect) or (y) as originally issued or as extended, have anexpiry date extending beyond the date thirty (30) days prior to the MaturityDate.  Each Letter of Credit shallcomply with the related LOC Documents. The issuance and expiry dates of each Letter of Credit shall be aBusiness Day.

 

(b)           Notice and Reports.  The request for the issuance of a Letter of Credit shall besubmitted by the Borrower to the Issuing Lender at least three (3)Business Days prior to the requested date of issuance.  The Issuing Lender will, at least quarterlyand more frequently upon request, disseminate to each of the Lenders a detailedreport specifying the Letters of Credit which are then issued and outstandingand any activity with respect thereto which may have occurred since the date ofthe prior report, and including therein, among other things, the beneficiary,the face amount and the expiry date, as well as any payment or expirationswhich may have occurred.

 

(c)           Participation. Each Lender, upon issuance of a Letter of Credit, shall be deemed tohave purchased without recourse a Participation Interest from the IssuingLender in such Letter of Credit and the obligations arising thereunder and anycollateral relating thereto, in each case in an amount equal to its pro ratashare of the obligations under such Letter of Credit (based on the respectiveRevolving Commitment Percentages of the Lenders) and shall absolutely,unconditionally and irrevocably assume and be obligated to pay to the IssuingLender and discharge when due, its pro rata share of the obligations arisingunder such Letter of Credit.  Withoutlimiting the scope and nature of each Lender’s Participation Interest in anyLetter of Credit, to the extent that the Issuing Lender has not been reimbursedas required hereunder or under any such Letter of Credit, each such Lendershall pay to the Issuing Lender its pro rata share of such unreimbursed drawingin same day funds on the day of notification by the Issuing Lender of anunreimbursed drawing pursuant to the provisions of subsection (d)below.  The obligation of each Lender toso reimburse the Issuing Lender shall be absolute and unconditional and shallnot be affected by the occurrence of a Default, an Event of Default or anyother occurrence or event.  Any suchreimbursement shall not relieve or otherwise impair the obligation of theBorrower to reimburse the Issuing Lender under any Letter of Credit, togetherwith interest as hereinafter provided.

 

(d)           Reimbursement. In the event of any drawing under any Letter of Credit, the IssuingLender will promptly notify the Borrower. Unless the Borrower shall immediately notify the Issuing Lender that theBorrower intends to otherwise reimburse the Issuing Lender for such drawing,the Borrower shall be deemed to have requested that the Lenders make aRevolving Loan in the amount of the drawing as provided in subsection (e)below on the related Letter of Credit, the proceeds of which will be used tosatisfy the related reimbursement obligations. The Borrower promises to reimburse the Issuing Lender on the day ofdrawing under any Letter of Credit (either with the proceeds of a RevolvingLoan obtained hereunder or otherwise) in same day funds.  If the Borrower shall fail to reimburse theIssuing Lender as provided hereinabove, the Borrower promises to pay theIssuing Lender interest on the the unreimbursed amount of such drawing ondemand at a per annum rate equal to the Adjusted Base Rate plus 5%.  The Borrower’s reimbursement obligationshereunder shall be absolute and unconditional under all circumstancesirrespective of any rights of setoff, counterclaim or defense to payment theBorrower may claim or have against the Issuing Lender, the Agent, the Lenders,the beneficiary of the Letter of Credit drawn upon or any other Person,including without limitation any defense based on any failure of the Borroweror any other Credit Party to receive consideration or the legality, validity,regularity or unenforceability of the Letter of Credit.  The Issuing Lender will promptly notify theother Lenders of the amount of any unreimbursed drawing and each Lender shallpromptly pay to the Agent for the account of the Issuing Lender in Dollars andin immediately available funds, the amount of such Lender’s pro rata share ofsuch unreimbursed drawing.  Such paymentshall be made on the day such notice is received by such Lender from theIssuing Lender if such notice is received at or before 2:00 P.M.  (Charlotte, North Carolina time), andotherwise such payment shall be made at or before 12:00 Noon (Charlotte, NorthCarolina time) on the Business Day next succeeding the day such notice isreceived.  If such Lender does not paysuch amount to the Issuing Lender in full upon such request, such Lender shall,on demand, pay to the Agent for the account of the Issuing Lender interest onthe unpaid amount during the period from the date of such drawing until suchLender pays such amount to the Issuing Lender in full at a rate per annum equalto, if paid within two (2) Business Days of the date that such Lender isrequired to make payments of such amount pursuant to the preceding sentence,the Federal Funds Rate and thereafter at a rate equal to the Base Rate.  Each Lender’s obligation to make suchpayment to the Issuing Lender, and the right of the Issuing Lender to receivethe same, shall be absolute and unconditional, shall not be affected by anycircumstance whatsoever and

 

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without regard to thetermination of this Credit Agreement or the Commitments hereunder, theexistence of a Default or Event of Default or the acceleration of theobligations of the Borrower hereunder and shall be made without any offset,abatement, withholding or reduction whatsoever.  Simultaneously with the making of each such payment by a Lenderto the Issuing Lender, such Lender shall, automatically and without any furtheraction on the part of the Issuing Lender or such Lender, acquire aParticipation Interest in an amount equal to such payment (excluding theportion of such payment constituting interest owing to the Issuing Lender) inthe related unreimbursed drawing portion of the LOC Obligation and in theinterest thereon and in the related LOC Documents, and shall have a claimagainst the Borrower with respect thereto.

 

(e)           Repayment with Revolving Loans.  On any day on which the Borrower shall haverequested, or been deemed to have requested, a Revolving Loan advance toreimburse a drawing under a Letter of Credit, the Agent shall give notice tothe Lenders that a Revolving Loan has been requested or deemed requested by theBorrower to be made in connection with a drawing under a Letter of Credit, inwhich case a Revolving Loan advance comprised of Base Rate Loans (or EurodollarLoans to the extent the Borrower has complied with the procedures ofSection 2.1(b)(i) with respect thereto) shall be immediately made to theBorrower by all Lenders (notwithstanding any termination of the Commitmentspursuant to Section 9.2) prorata based on the respectiveRevolving Commitment Percentages of the Lenders (determined before givingeffect to any termination of the Commitments pursuant to Section 9.2) andthe proceeds thereof shall be paid directly to the Issuing Lender forapplication to the respective LOC Obligations. Each such Lender hereby irrevocably agrees to make its pro rata share ofeach such Revolving Loan immediately upon any such request or deemed request inthe amount, in the manner and on the date specified in the preceding sentence notwithstanding(i) the amount of such borrowing may not comply with the minimum amountfor advances of Revolving Loans otherwise required hereunder, (ii) whetherany conditions specified in Section 5.2 are then satisfied,(iii) whether a Default or an Event of Default then exists,(iv) failure for any such request or deemed request for Revolving Loan tobe made by the time otherwise required hereunder, (v) whether the date ofsuch borrowing is a date on which Revolving Loans are otherwise permitted to bemade hereunder or (vi) any termination of the Commitments relating theretoimmediately prior to or contemporaneously with such borrowing.  In the event that any Revolving Loan cannotfor any reason be made on the date otherwise required above (including, withoutlimitation, as a result of the commencement of a proceeding under theBankruptcy Code with respect to the Borrower or any other Credit Party), theneach such Lender hereby agrees that it shall forthwith purchase (as of the datesuch borrowing would otherwise have occurred, but adjusted for any paymentsreceived from the Borrower on or after such date and prior to such purchase)from the Issuing Lender such Participation Interests in the outstanding LOCObligations as shall be necessary to cause each such Lender to share in suchLOC Obligations ratably (based upon the respective Revolving CommitmentPercentages of the Lenders (determined before giving effect to any terminationof the Commitments pursuant to Section 9.2)), provided that at thetime any purchase of Participation Interests pursuant to this sentence isactually made, the purchasing Lender shall be required to pay to the IssuingLender, to the extent not paid to the Issuing Lender by the Borrower inaccordance with the terms of subsection (d) above, interest on theprincipal amount of Participation Interests purchased for each day from andincluding the day upon which such borrowing would otherwise have occurred tobut excluding the date of payment for such Participation Interests, at the rateequal to, if paid within two (2) Business Days of the date of theRevolving Loan advance, the Federal Funds Rate, and thereafter at a rate equalto the Base Rate.

 

(f)            Designation of Consolidated Parties as Account Parties.  Notwithstanding anything to the contrary setforth in this Credit Agreement, including without limitationSection 2.2(a), a Letter of Credit issued hereunder may contain astatement to the effect that such Letter of Credit is issued for the account ofany Subsidiary of the Borrower, provided that notwithstanding such statement,the Borrower shall be the actual account party for all purposes of this CreditAgreement for such Letter of Credit and such statement shall not affect theBorrower’s reimbursement obligations hereunder with respect to such Letter ofCredit.

 

(g)           Renewal, Extension.  The renewal or extension of any Letter of Credit shall, forpurposes hereof, be treated in all respects the same as the issuance of a newLetter of Credit hereunder.

 

(h)           Uniform Customs and Practices.  The Issuing Lender may have the Letters ofCredit be subject to The Uniform Customs and Practice for Documentary Credits(the “UCP”) or the International Standby Practices 1998 (the “ISP98”),in either case as published as of the date of issue by the International

 

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Chamber of Commerce, in whichcase the UCP or the ISP98, as applicable, may be incorporated therein anddeemed in all respects to be a part thereof.

 

(i)            Indemnification; Nature of Issuing Lender’s Duties.

 

(i)            In addition to its other obligations under thisSection 2.2, the Borrower hereby agrees to pay, and protect, indemnify andsave each Lender harmless from and against, any and all claims, demands,liabilities, damages, losses, costs, charges and expenses (including reasonableattorneys’ fees) that such Lender may incur or be subject to as a consequence,direct or indirect, of (A) the issuance of any Letter of Credit or(B) the failure of such Lender to honor a drawing under a Letter of Creditas a result of any act or omission, whether rightful or wrongful, of anypresent or future de jure or de facto government or Governmental Authority (allsuch acts or omissions, herein called “Government Acts”).

 

(ii)           As between the Borrower and the Lenders (including theIssuing Lender), the Borrower shall assume all risks of the acts, omissions ormisuse of any Letter of Credit by the beneficiary thereof.  No Lender (including the Issuing Lender)shall be responsible:  (A) for theform, validity, sufficiency, accuracy, genuineness or legal effect of anydocument submitted by any party in connection with the application for andissuance of any Letter of Credit, even if it should in fact prove to be in anyor all respects invalid, insufficient, inaccurate, fraudulent or forged;(B) for the validity or sufficiency of any instrument transferring orassigning or purporting to transfer or assign any Letter of Credit or therights or benefits thereunder or proceeds thereof, in whole or in part, thatmay prove to be invalid or ineffective for any reason; (C) for errors,omissions, interruptions or delays in transmission or delivery of any messages,by mail, cable, telegraph, telex or otherwise, whether or not they be incipher; (D) for any loss or delay in the transmission or otherwise of anydocument required in order to make a drawing under a Letter of Credit or of theproceeds thereof; and (E) for any consequences arising from causes beyondthe control of such Lender, including, without limitation, any GovernmentActs.  None of the above shall affect,impair, or prevent the vesting of the Issuing Lender’s rights or powershereunder.

 

(iii)          In furtherance and extension and not in limitation of thespecific provisions hereinabove set forth, any action taken or omitted by anyLender (including the Issuing Lender), under or in connection with any Letterof Credit or the related certificates, if taken or omitted in good faith, shallnot put such Lender under any resulting liability to the Borrower or any otherCredit Party.  It is the intention ofthe parties that this Credit Agreement shall be construed and applied toprotect and indemnify each Lender (including the Issuing Lender) against anyand all risks involved in the issuance of the Letters of Credit, all of whichrisks are hereby assumed by the Borrower (on behalf of itself and each of theother Credit Parties), including, without limitation, any and all GovernmentActs.  No Lender (including the IssuingLender) shall, in any way, be liable for any failure by such Lender or anyoneelse to pay any drawing under any Letter of Credit as a result of anyGovernment Acts or any other cause beyond the control of such Lender.

 

(iv)          Nothing in this subsection (i) is intended to limitthe reimbursement obligations of the Borrower contained in subsection (d)above.  The obligations of the Borrowerunder this subsection (i) shall survive the termination of this CreditAgreement.  No act or omission of anycurrent or prior beneficiary of a Letter of Credit shall in any way affect orimpair the rights of the Lenders (including the Issuing Lender) to enforce anyright, power or benefit under this Credit Agreement.

 

(v)           Notwithstanding anything to the contrary contained in thissubsection (i), the Borrower shall have no obligation to indemnify anyLender (including the Issuing Lender) in respect of any liability incurred bysuch Lender (A) arising solely out of the gross negligence or willfulmisconduct of such Lender, as determined by a court of competent jurisdiction,or (B) caused by such Lender’s failure to pay under any Letter of Creditafter presentation to it of a request strictly complying with the terms andconditions of such Letter of Credit, as determined by a court of

 

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competent jurisdiction, unless such payment is prohibited by any law,regulation, court order or decree.

 

(j)            Responsibility of Issuing Lender.  It is expressly understood and agreed thatthe obligations of the Issuing Lender hereunder to the Lenders are only thoseexpressly set forth in this Credit Agreement and that the Issuing Lender shallbe entitled to assume that the conditions precedent set forth in Section 5.2have been satisfied unless it shall have acquired actual knowledge that anysuch condition precedent has not been satisfied; provided, however,that nothing set forth in this Section 2.2 shall be deemed to prejudicethe right of any Lender to recover from the Issuing Lender any amounts madeavailable by such Lender to the Issuing Lender pursuant to thisSection 2.2 in the event that it is determined by a court of competentjurisdiction that the payment with respect to a Letter of Credit constitutedgross negligence or willful misconduct on the part of the Issuing Lender.

 

(k)           Conflict with LOC Documents.  In the event of any conflict between thisCredit Agreement and any LOC Document (including any letter of creditapplication), this Credit Agreement shall control.

 

**2.3          DerivativeExposure Reserve.**

 

(a)           Establishment of Reserve.  To the extent the Borrower (as credit support provider), pursuantto the terms of any BOA Derivative Instrument, is required to providecollateral or other credit support for the General Partner’s or the USRP REIT’sobligations under such BOA Derivative Instrument, the Agent shall, subject tothe terms and conditions set forth in this Section 2.3 and the consent ofthe applicable Derivative Counterparty, reserve an amount of Availability whichwhen combined with all then existing Availability reserves is equal to or lessthan SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000.00)(the “Reserve Limit”) in satisfaction of such requirement.  The term “Derivative Exposure Reserve”shall mean, with respect to any given BOA Derivative Instrument, the reserveestablished pursuant to this Section 2.3 in connection with such BOADerivative Instrument.  Notwithstandinganything to the contrary contained in this Credit Agreement, Availabilityreserved pursuant to this Section 2.3 shall be deemed an outstandingprincipal advance hereunder for purposes of the covenant calculations requiredhereunder (including, without limitation, the covenant calculations requiredpursuant to Sections 7.11 and 8.1 hereof).

 

(b)           Conditions. If, at any time on or prior to the Business Day occurring five (5)days prior to the date of the termination of this Credit Agreement, Agent hasreceived notice of the Borrower’s obligation (as credit support provider),pursuant to a given BOA Derivative Instrument, to provide collateral or othercredit support for the General Partner’s or the USRP REIT’s obligationsthereunder, the Agent shall, within one (1) Business Day of receivingnotice thereof, establish a Derivative Exposure Reserve in connection with suchBOA Derivative Instrument to the extent that (i) the applicable DerivativeCounterparty has consented to the establishment of a Derivative ExposureReserve with respect to the Borrower’s obligations (as credit support provider)under such BOA Derivative Instrument; (ii) the sum of (A) the aggregate outstanding principal amount of theRevolving Loans, plus (B) the LOC Obligations, plus (C) theAggregate Derivative Reserve Amount plus the amount of the pendingDerivative Exposure Reserve is less than the Revolving Committed Amount; and(iii) to the Agent’s knowledge, no Default or Event of Default exists as of thedate on which the applicable notice is received.

 

(c)           Adjustment of Reserve Amounts.  The amount of any given Derivative ExposureReserve shall be adjusted (either up or down, as applicable) from time to timeby the Agent upon receipt by the Agent of any notice from a DerivativeCounterparty that the Borrower’s obligation (as credit support provider) toprovide collateral or other credit support for the General Partner’s or theUSRP REIT’s obligations under the applicable BOA Derivative Instrument hasincreased or decreased; provided, that the Agent shall not be required to makesuch adjustment to the extent (i) any increase in the Borrower’s obligation (ascredit support provider) to provide collateral or other credit support for theGeneral Partner’s or the USRP REIT’s obligations under the applicable BOADerivative Instrument would cause thesum of (A) the aggregate outstanding principal amount of the Revolving Loans, plus(B) the LOC Obligations, plus (C) the Aggregate Derivative ReserveAmount to exceed the Revolving Committed Amount or (ii) such increase wouldcause the aggregate amount of the Derivative Exposure Reserve to exceed theReserve Limit.

 

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(d)           Notices. The Borrower (i) hereby consents to the establishment of DerivativeExposure Reserves with respect to any BOA Derivative Instrument existing as ofthe date hereof or later existing, (ii) hereby consents to the delivery by eachDerivative Counterparty to the Agent of all notices, reports and otherinformation regarding any BOA Derivative Instrument concurrently with or priorto the delivery thereof to the Borrower, and (iii) agrees to direct and herebydirects each Derivative Counterparty to so deliver such notices, reports andother information to the Agent.   TheAgent hereby agrees to provide to the Borrower notice, (i) within three (3)Business Days, of the establishment of a given Derivative Exposure Reserve, theunderlying BOA Derivative Instrument and the amount of such Derivative ExposureReserve; (ii) within three (3) Business Days, any adjustment in the amountof a given Derivative Exposure Reserve and (iii) within three (3) BusinessDays, of the making of any Revolving Loan in satisfaction of the Borrower’sobligations under a given BOA Derivative Instrument in connection withsubsection (f) of this Section 2.3.

 

(e)           Payment from Derivative Exposure Reserve.  In the event any Derivative Counterpartyforecloses upon or otherwise redeems its interest in any amount allocated as aDerivative Exposure Reserve and so notifies the Agent and Borrower of suchforeclosure/redemption, the Borrower shall be deemed to have requested that theLenders make a Revolving Loan in the amount of the applicable DerivativeExposure Reserve as provided in subsection (f) below.  The Borrower hereby (i) consents to theapplication of the proceeds resulting from any Revolving Loans made pursuant tosubsection (f) of this Section 2.3 to the Borrower’s obligationsunder the applicable BOA DerivativeInstrument, (ii) covenants andagrees, to the extent it receivesany of the proceeds resulting fromany Revolving Loans made pursuant to subsection (f) of thisSection 2.3, to apply such proceeds to its obligations under theapplicable BOA Derivative Instrumentimmediately upon its receipt thereof and (iii) agrees that, notwithstandinganything to the contrary contained herein, failure to adhere to the terms ofthis Section 2.3 will result in an immediate Event of Default hereunder.

 

(f)            Repayment with Revolving Loans.  On any day on which the Borrower shall havebeen deemed, pursuant to subsections (e) or (g) of this Section 2.3,to have requested a Revolving Loan advance in connection with a givenDerivative Exposure Reserve, the Agent shall give notice to the Lenders that aRevolving Loan has been deemed requested by the Borrower in connection withsuch Derivative Exposure Reserve. Concurrently with such notice, a Revolving Loan advance comprised ofBase Rate Loans (or Eurodollar Loans to the extent the Borrower has compliedwith the procedures of Section 2.1(b)(i) with respect thereto) shall beimmediately made to the Borrower by all Lenders (notwithstanding anytermination of the Commitments pursuant to Section 9.2) proratabased on the respective Revolving Commitment Percentages of the Lenders(determined before giving effect to any termination of the Commitments pursuantto Section 9.2) and the proceeds thereof shall be paid directly to theapplicable Derivative Counterparty for application to the applicable BOADerivative Instrument or as cash collateral therefor, as applicable.  Each Lender hereby irrevocably agrees tomake its pro rata share of each such Revolving Loan immediately upon any suchrequest or deemed request in the amount, in the manner and on the datespecified in the preceding sentence notwithstanding (i) the amountof such borrowing may not comply with the minimum amount for advances ofRevolving Loans otherwise required hereunder, (ii) whether any conditionsspecified in Section 5.2 are then satisfied, (iii) whether a Defaultor an Event of Default then exists, (iv) failure for any such request ordeemed request for Revolving Loan to be made by the time otherwise requiredhereunder, (v) whether the date of such borrowing is a date on whichRevolving Loans are otherwise permitted to be made hereunder or (vi) anytermination of the Commitments relating thereto immediately prior to orcontemporaneously with such borrowing. In the event that any Revolving Loan cannot for any reason be made onthe date otherwise required above (including, without limitation, as a resultof the commencement of a proceeding under the Bankruptcy Code with respect tothe Borrower or any other Credit Party), then each Lender hereby agrees that itshall forthwith purchase (as of the date such borrowing would otherwise haveoccurred, but adjusted for any payments received from the Borrower on or aftersuch date and prior to such purchase) from the Derivative Counterparty (to theextent expressly permitted by such Derivative Counterparty) such interests inthe applicable BOA DerivativeInstrument as shall be necessary tocause each such Lender to share in the obligations secured by the applicableDerivative Exposure Reserve ratably (based upon the respective RevolvingCommitment Percentages of the Lenders (determined before giving effect to anytermination of the Commitments pursuant to Section 9.2)).

 

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(g)           Termination of Derivative ExposureReserves.  The respective DerivativeExposure Reserves established pursuant to this Section 2.3 shall beterminated upon the earlier of (i) the termination of the underlying BOADerivative Instrument and subsequent payment by the Borrower of all amounts duethereunder, either through the making of Revolving Loans undersubsection (f) hereof or otherwise, (ii) the Business Day occurring immediatelypreceding the Maturity Date, (iii) the Business Day occurring immediatelypreceding the date of the termination of this Credit Agreement other than as aresult of the occurrence of the Maturity Date. To the extent the Derivative Exposure Reserves are terminated pursuantto subsections (i), (ii) or (iii) above, the Borrower shall, as of thedate of such termination, be deemed to have requested Revolving Loans to bemade in accordance with subsection (f) hereof in an amount equal to theAggregate Derivative Reserve Amount for the purpose of providing cashcollateral to secure its obligations under the BOA Derivative Instruments forwhich Derivative Exposure Reserves exist on such date; provided, however, thatto the extent the Derivative Exposure Reserves are to be terminated as a resultof the occurrence of the Maturity Date, the Borrower shall be permitted toprovide such collateral as may be acceptable to the Derivative Counterparty inlieu of a funding of Revolving Loans hereunder if and to the extent (A) theBorrower provides fifteen (15) Business Days notice of its intention toprovide such collateral, (B) the Borrower delivers such collateral to theDerivative Counterparty five (5) Business Days prior to the Maturity Dateand (C) such collateral is deemed acceptable by the Derivative Counterparty.

 

## **2.4**          Jointand Several Liability of the Borrowers.

 

(a)           Eachof the Borrowers is accepting joint and several liability hereunder inconsideration of the financial accommodation to be provided by the Lendersunder this Credit Agreement, for the mutual benefit, directly and indirectly,of each of the Borrowers and in consideration of the undertakings of each ofthe Borrowers to accept joint and several liability for the obligations of eachof them.

 

(b)           Eachof the Borrowers jointly and severally hereby irrevocably and unconditionallyaccepts, not merely as a surety but also as a co–debtor, joint andseveral liability with the other Borrowers with respect to the payment andperformance of all of the Credit Party Obligations arising under this CreditAgreement and the other Credit Documents, it being the intention of the partieshereto that all the Credit Party Obligations shall be the joint and severalobligations of each of the Borrowers without preferences or distinction amongthem.

 

(c)           Ifand to the extent that any of the Borrowers shall fail to make any payment withrespect to any of the obligations hereunder as and when due or to perform anyof such obligations in accordance with the terms thereof, then in each suchevent, the other Borrowers will make such payment with respect to, or perform,such obligation.

 

(d)           Theobligations of each Borrower under the provisions of this Section 2.3constitute full recourse obligations of such Borrower, enforceable against itto the full extent of its properties and assets, irrespective of the validity,regularity or enforceability of this Credit Agreement or any othercircumstances whatsoever.

 

(e)           Exceptas otherwise expressly provided herein, each Borrower hereby waives notice ofacceptance of its joint and several liability, notice of occurrence of anyDefault or Event of Default (except to the extent notice is expressly requiredto be given pursuant to the terms of this Credit Agreement), or of any demandfor any payment under this Credit Agreement, notice of any action at any timetaken or omitted by the Lender under or in respect of any of the Credit PartyObligations hereunder, any requirement of diligence and, generally, alldemands, notices and other formalities of every kind in connection with thisCredit Agreement.  Each Borrower herebyassents to, and waives notice of, any extension or postponement of the time forthe payment of any of the Credit Party Obligations hereunder, the acceptance ofany partial payment thereon, any waiver, consent or other action oracquiescence by the Lenders at any time or times in respect of any default byany Borrower in the performance or satisfaction of any term, covenant,condition or provision of this Credit Agreement, any and all other indulgenceswhatsoever by the Lenders in respect of any of the Credit Party Obligationshereunder, and the taking,

 

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addition, substitution or release, in whole or inpart, at any time or times, of any security for any of such Credit PartyObligations or the addition, substitution or release, in whole or in part, ofany Borrower.  Without limiting thegenerality of the foregoing, each Borrower assents to any other action or delayin acting or any failure to act on the part of the Lender, including, withoutlimitation, any failure strictly or diligently to assert any right or to pursueany remedy or to comply fully with applicable laws or regulations thereunderwhich might, but for the provisions of this Section 2.3, afford groundsfor terminating, discharging or relieving such Borrower, in whole or in part,from any of its obligations under this Section 2.3, it being the intentionof each Borrower that, so long as any of the Credit Party Obligations hereunderremain unsatisfied, the obligations of such Borrower under thisSection 2.3 shall not be discharged except by performance and then only tothe extent of such performance.  Theobligations of each Borrower under this Section 2.3 shall not be diminishedor rendered unenforceable by any winding up, reorganization, arrangement,liquidation, reconstruction or similar proceeding with respect to anyreconstruction or similar proceeding with respect to any Borrower or anyLender.  The joint and several liabilityof the Borrowers hereunder shall continue in full force and effectnotwithstanding any absorption, merger, amalgamation or any other changewhatsoever in the name, membership, constitution or place of formation of anyBorrower or any Lender.

 

(f)            Theprovisions of this Section 2.3 are made for the benefit of the Agent andthe Lenders and their respective successors and assigns, and may be enforced byany such Person from time to time against any of the Borrowers as often asoccasion therefor may arise and without requirement on the part of any Lenderfirst to marshal any of its claims or to exercise any of its rights against anyof the other Borrowers or to exhaust any remedies available to it against anyof the other Borrowers or to resort to any other source or means of obtainingpayment of any of the Credit Party Obligations or to elect any otherremedy.  Without limiting the generalityof the foregoing, each Borrower hereby specifically waives the benefits ofN.C.  Gen.  Stat.  §§26–7through 26–9, inclusive, to the extent applicable.  The provisions of this Section 2.3shall remain in effect until all the Credit Party Obligations hereunder shallhave been paid in full or otherwise fully satisfied.  If at any time, any payment, or any part thereof, made in respectof any of the Credit Party Obligations, is rescinded or must otherwise berestored or returned by the Lenders upon the insolvency, bankruptcy orreorganization of any of the Borrowers, or otherwise, the provisions of thisSection 2.3 will forthwith be reinstated and in effect as though suchpayment had not been made.

 

(g)           Notwithstandingany provision to the contrary contained herein or in any other of the CreditDocuments or Hedging Agreements, the obligations of each Borrower hereundershall be limited to an aggregate amount equal to the largest amount that wouldnot render its obligations hereunder subject to avoidance underSection 548 of the Bankruptcy Code or any comparable provisions of anyapplicable state law.

 

## **2.5**          Appointmentof Principal Borrower as Agent for Borrowers.

 

Each Borrowerhereby appoints the Principal Borrower to act as its exclusive agent for allpurposes under this Credit Agreement and the other Credit Documents (including,without limitation, with respect to all matters related to the borrowing andrepayment of loans as described in Section 2 and Section 3hereof).  Each Borrower acknowledges andagrees that (a) the Principal Borrower may execute such documents on behalf ofall the Borrowers as the Principal Borrower deems appropriate in its solediscretion and each Borrower shall be bound by and obligated by all of theterms of any such document executed by the Principal Borrower on its behalf,(b) any notice or other communication delivered by the Agent or any Lenderhereunder to the Principal Borrower shall be deemed to have been delivered toeach Borrower and (c) the Agent and each of the Lenders shall accept (and shallbe permitted to rely on) any document or agreement executed by the PrincipalBorrower on behalf of the Borrowers (or any of them).  The Borrowers must act through the Principal Borrower for allpurposes under this Credit Agreement and the other Credit Documents.  Notwithstanding anything contained herein tothe contrary, to the extent any provision in this Credit Agreement requires anyBorrower to interact in any manner with the Agent or the Lenders, such Borrowershall do so through the Principal Borrower.

 

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# **ARTICLEIII**

# ** **

# **OTHER PROVISIONS RELATING TO CREDIT FACILITIES**

 

## **3.1          DefaultRate.**

 

Upon the occurrence, and during the continuance, of an Event ofDefault, (i) the principal of and, to the extent permitted by law,interest on the Loans and any other amounts owing hereunder or under the otherCredit Documents shall bear interest, payable on demand, at a per annum rate 5%greater than the rate which would otherwise be applicable (or if no rate isapplicable, whether in respect of interest, fees or other amounts, then theAdjusted Base Rate plus 5%) and (ii) the Letter of Credit Fee shallaccrue at a per annum rate 5% greater than the rate which would otherwise beapplicable.

 

## **3.2          Continuation/Conversion.**

 

(a)           So long as no Event of Default shallhave occurred and be continuing and to the extent permitted in the definitionof the term “Interest Period”, the Borrower may on any Business Day, withrespect to any Eurodollar Loan, elect to maintain such Eurodollar Loan or anyportion thereof as a Eurodollar Loan by selecting a new Interest Period for suchEurodollar Loan.  Each new InterestPeriod selected under this Section 3.2 shall commence on the last day ofthe immediately preceding Interest Period. Each selection of a new Interest Period shall be made by the Borrowergiving to the Agent a Notice of Continuation not later than11:00 A.M.  on the third BusinessDay prior to the date of any such Continuation.  Such notice by the Borrower of a Continuation shall be by telephoneor telecopy, confirmed immediately in writing if by telephone, in the form of aNotice of Continuation, (a) specifying (i) the proposed date of suchContinuation, (ii) the Eurodollar Loan and portion thereof subject to suchContinuation and (iii) the duration of the selected Interest Period, all ofwhich shall be specified in such manner as is necessary to comply with alllimitations on Loans outstanding hereunder and (b) containing certifications of the Borrower withrespect to the conditions set forth in Section 5.2 clauses (b)through (e) as set forth in Exhibit 3.2.  EachNotice of Continuation shall be irrevocable by and binding on the Borrower oncegiven.  Promptly after receipt of aNotice of Continuation, the Agent shall notify each Lender Party by telecopy orother similar form of transmission of the proposed Continuation.  If the Borrower shall fail to select in atimely manner a new Interest Period for any Eurodollar Loan in accordance withthis Section 3.2(a), such Loan will automatically, on the last day of thecurrent Interest Period therefor, Convert into a Base Rate Loan notwithstandingfailure of the Borrower to comply with Section 3.2(b).

 

(b)           So long as no Default or Event ofDefault shall have occurred and be continuing, the Borrower may on any BusinessDay, upon the Borrower’s giving of a Notice of Conversion to the Agent, Convertall or a portion of a Loan of one Type into a Loan of another Type.  Any Conversion of a Eurodollar Loan into aBase Rate Loan shall be made on, and only on, the last day of an InterestPeriod for such Eurodollar Loan and, upon Conversion of a Base Rate Loan into aEurodollar Loan, the Borrower shall pay accrued interest to the date ofConversion on the principal amount so Converted.  Each such Notice of Conversion shall be given not later than12:00 noon on the Business Day prior to the date of any proposed Conversioninto Base Rate Loans and on the third Business Day prior to the date of anyproposed Conversion into Eurodollar Loans. Promptly after receipt of a Notice of Conversion, the Agent shall notifyeach Lender Party by telecopy or other similar form of transmission of theproposed Conversion.  Subject to therestrictions specified above, each Notice of Conversion shall be bytelephone (confirmed immediately in writing) or telecopy in the form of aNotice of Conversion (a) specifying (i) the requested date of such Conversion,(ii) the Type of Loan to be Converted, (iii) the portion of such Type of Loanto be Converted, (iv) the Type of Loan such Loan is to be Converted into and(v) if such Conversion is into a Eurodollar Loan, the requested duration of theInterest Period of such Loan, and (b)containing certifications of the Borrower with respect to the conditions setforth in Section 5.2 clauses (b) through (e) as set forth in Exhibit 3.2.  EachNotice of Conversion shall be irrevocable by and binding on the Borrower oncegiven.

 

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## **3.3          Prepayments.**

 

(a)           Voluntary Prepayments.  The Borrower shall have the right to prepayLoans in whole or in part from time to time; provided, however,that (i) each partial prepayment of Loans shall be in a minimum principalamount of $500,000 and integral multiples of $100,000 in excess thereof (or thethen remaining principal balance of the Revolving Loans and (ii) each partialprepayment shall include payment for any and all applicable fees, expenses,breakage costs and redeployment costs incurred by the Lenders and the Agent asa result thereof (as such amounts are reasonably calculated by the Lenders andthe Agent, as applicable, and communicated to the Borrower).  Subject to the foregoing terms, amountsprepaid under this Section 3.3(a) shall be applied as the Borrower mayelect; provided that if the Borrower shall fail to specify with respectto any voluntary prepayment, such voluntary prepayment shall be applied firstto Base Rate Loans and then to Eurodollar Loans in direct order of InterestPeriod maturities.  All prepaymentsunder this Section 3.3(a) shall be subject to Section 3.12, butotherwise without premium or penalty, and shall be accompanied by interest on the principal amount prepaidthrough the date of prepayment.

 

(b)           Mandatory Prepayments.

 

(i)            (A)          Revolving Committed Amount.  If, at any time, the sum of (1) theaggregate outstanding principal amount of Revolving Loans, plus (2) theLOC Obligations, plus (3) the Aggregate Derivative Reserve Amount shallexceed the Revolving Committed Amount, the Borrower immediately shall prepaythe Revolving Loans, (after all Revolving Loans have been repaid) cashcollateralize the LOC Obligations, and (after all Revolving Loans have beenpaid and all LOC Obligations have been fully cash collateralized) cashcollateralize the then-existing Derivative Exposure Reserves in an amountsufficient to eliminate such excess.

 

(B)            LOC Committed Amount.  If, at any time, the sum of the aggregate principal amount of LOCObligations shall exceed the LOC Committed Amount, the Borrower immediatelyshall cash collateralize the LOC Obligations in an amount sufficient toeliminate such excess.

 

(C)            Derivative Exposure Reserves.  If, at any time, the sum of the AggregateDerivative Reserve Amount shall exceed the Reserve Limit, the Borrowerimmediately shall cash collateralize its Aggregate Derivative Reserve Amountobligations in an amount sufficient to eliminate such excess.

 

(D)           Borrowing Base Asset Value.  If, at any time, the sum of (1) theaggregate outstanding principal amount of Revolving Loans, plus (2) theLOC Obligations, plus (3) the Aggregate Derivative Reserve Amount shallexceed the Borrowing Base Asset Value, the Borrower immediately shall prepaythe Revolving Loans, (after all Revolving Loans have been repaid) cashcollateralize the LOC Obligations, and (after all Revolving Loans have beenpaid and all LOC Obligations have been fully cash collateralized) cash collateralizethe then-existing Derivative Exposure Reserves in an amount sufficient toeliminate such excess.

 

(ii)           Application of Mandatory Prepayments.  All amounts required to be paid pursuant tothis Section 3.3(b) shall be applied as follows: (A) with respect toall amounts prepaid pursuant to Section 3.3(b)(i)(A) or (D), to RevolvingLoans and (after all Revolving Loans have been repaid) to a cash collateralaccount in respect of LOC Obligations, (B) with respect to all amountsprepaid pursuant to Section 3.3(b)(i)(B), to a cash collateral account inrespect of LOC Obligations and (C) with respect to all amounts prepaid pursuantto Section 3.3(b)(i)(C), to a cash collateral account in respect of theBorrower’s Aggregate Derivative Reserve Amount obligations.  Withinthe parameters of the applications set forth above, prepayments shall beapplied first to Base Rate Loans and then to Eurodollar Loans in direct orderof Interest Period maturities.  Allprepayments under this Section 3.3(b) shall be subject toSection 3.12, but otherwise without premium or penalty, and shall be accompanied by interest on theprincipal amount prepaid through the date of prepayment.

 

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## **3.4          Termination and Reduction ofRevolving Committed Amount.**

 

(a)           Voluntary Reductions.  The Borrower may from time to time permanently reduce orterminate the Revolving Committed Amount in whole or in part (in minimumaggregate amounts of $1,000,000 or in integral multiples of $500,000 in excessthereof (or, if less, the full remaining amount of the then applicableRevolving Committed Amount)) upon five (5) Business Days’ prior writtennotice to the Agent; provided, however, no such termination orreduction shall be made which would cause the sum of the aggregate outstandingprincipal amount of Revolving Loans, plus the LOC Obligations, plusthe Aggregate Derivative Reserve Amount to exceed the Revolving CommittedAmount, unless, concurrently with such termination or reduction, the RevolvingLoans are repaid to the extent necessary to eliminate such excess.  The Agent shall promptly notify eachaffected Lender of receipt by the Agent of any notice from the Borrowerpursuant to this Section 3.4(a).

 

(b)           Maturity Date. Unless terminated sooner pursuant to Section 3.4(a) orSection 9.2, the Revolving Commitments of the Lenders and the LOCCommitment of the Issuing Lender shall automatically terminate on the MaturityDate.

 

## **3.5          Fees.**

 

(a)           Unused Fee. In consideration of the Revolving Commitments of the Lenders hereunder,the Borrower promises to pay to the Agent for the account of each Lender a fee(the “Unused Fee”) on the Unused Revolving Committed Amount computed ata per annum rate for each day during the applicable Unused Fee CalculationPeriod (hereinafter defined) equal to three tenths of onepercent (0.30%).  The Unused Feeshall commence to accrue on the Closing Date and shall be due and payable inarrears on the last Business Day of each March, June, September andDecember (and on any date that the Revolving Committed Amount is reducedand on the Maturity Date) for the immediately preceding quarter (or portionthereof) (each such quarter or portion thereof for which the Unused Fee ispayable hereunder being herein referred to as an “Unused Fee CalculationPeriod”), beginning with the first of such dates to occur after the ClosingDate.

 

(b)           Letter of Credit Fee.  In consideration of the issuance of Lettersof Credit hereunder, the Borrower promises to pay to the Agent for the accountof each Lender a fee (the “Letter of Credit Fee”) on such Lender’sCommitment Percentage of the average daily maximum amount available to be drawnunder each such Letter of Credit computed at a per annum rate for each day fromthe date of issuance to the date of expiration equal to threepercent (3.00%).  The Letter ofCredit Fee will be payable quarterly in arrears on the last Business Day ofeach March, June, September and December for the immediately precedingcalendar quarter (or portion thereof) including the date of payment.

 

(c)           Issuing Lender Fees.  In addition to the Letter of Credit Feepayable pursuant to clause (b) above, the Borrower promises to pay to theIssuing Lender for its own account without sharing by the other Lenders (i) afee equal to the greater of (A) twelve and one half one hundredths of onepercent (0.125%) and (B) $1,500.00 on each Letter of Credit issued by theIssuing Lender (such fee to be due upon issuance of such Letter of Credit and,provided, that to the extent the applicable Letter of Credit contains“evergreen” provisions, the Borrower shall pay such fee for each renewal ofsuch Letter of Credit) and (ii) customary charges from time to time of theIssuing Lender with respect to the issuance, amendment, transfer,administration, cancellation and conversion of, and drawings under, suchLetters of Credit (collectively, the “Issuing Lender Fees”).

 

(d)           Derivative Exposure Usage Fee.  In consideration of the exposure of theLenders hereunder created by amounts reserved as a portion of the DerivativeExposure Reserve, the Borrower promises to pay to the Agent for the account ofeach Lender a fee (the “Derivative Exposure Usage Fee”) on the amount ofAvailability reserved pursuant to Section 2.3 hereof as a portion of theDerivative Exposure Reserve for each day during a given Derivative Exposure FeePeriod (as defined below).  Such feeshall be computed at a per annum rate equal to three percent (3.00%) applied tothe amount of Availability reserved on each day of the applicable Derivative ExposureFee Period (with the total fee for a given Derivative Exposure Fee Periodequaling the sum of each such day’s calculation).  The Derivative Exposure Usage Fee shall, to the extent anyAvailability is reserved under Section 2.3 as of the Closing Date,commence to accrue on the Closing Date and shall be due and payable in arrearson the last Business Day of each March, June, September and 

 

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December (andon the Maturity Date) for the immediately preceding quarter (or portionthereof, as applicable), beginning with the first of such dates to occur afterthe Closing Date (each such quarter or portion thereof for which the DerivativeExposure Reserve Fee is payable hereunder being herein referred to as an “DerivativeExposure Fee Period”).

 

(e)           Exit Fee.  Inaddition to all fees and other sums due and payable hereunder or under anyCredit Document and in consideration of the Agent’s administration of theCredit Facilities pursuant to the terms hereof and of the other CreditDocuments, the Borrower promises topay to the Agent for the account ofthe Agent a fee (the “Exit Fee”) in the amount of $100,000 immediately upon theoccurrence of the Maturity Date; provided, however, that in the event that, onor prior to the Maturity Date, Borrower refinances the entire amount of theLoan upon terms and conditions acceptable to the Agent and the Borrower, noExit Fee shall be due.

 

(f)            Other Fees.  Borrower shall pay to the Agent and BAS thefees required pursuant to the terms of the Fee Letter.

 

## **3.6          CapitalAdequacy.**

 

If any Lender has determined, after the date hereof, that the adoptionor the becoming effective of, or any change in, or any change by anyGovernmental Authority, central bank or comparable agency charged with theinterpretation or administration thereof in the interpretation oradministration of, any applicable law, rule or regulation regarding capitaladequacy, or compliance by such Lender with any request or directive regardingcapital adequacy (whether or not having the force of law) of any suchauthority, central bank or comparable agency, has or would have the effect ofreducing the rate of return on such Lender’s capital or assets as a consequenceof its commitments or obligations hereunder to a level below that which suchLender could have achieved but for such adoption, effectiveness, change orcompliance (taking into consideration such Lender’s policies with respect tocapital adequacy), then, upon notice from such Lender to the Borrower, the Borrowershall be obligated to pay to such Lender such additional amount or amounts aswill compensate such Lender for such reduction (without duplication of anyamount received by Lender by virtue of the definition of the term “EurodollarReserve Requirement”).  Eachdetermination by any such Lender of amounts owing under thisSection shall, absent manifest error, be conclusive and binding on theparties hereto.

 

## **3.7          Limitation on Eurodollar Loans.**

 

If on or prior to the first day of any Interest Period for anyEurodollar Loan:

 

(a)           the Agent determines (which determination shall beconclusive) that by reason of circumstances affecting the relevant market,adequate and reasonable means do not exist for ascertaining the Eurodollar Ratefor such Interest Period; or

 

(b)           the Required Lenders determine (which determination shallbe conclusive) and notify the Agent that the Eurodollar Rate will notadequately and fairly reflect the cost to the Lenders of funding EurodollarLoans for such Interest Period;

 

then the Agent shall give the Borrower prompt notice thereof, and solong as such condition remains in effect, the Lenders shall be under noobligation to make additional Eurodollar Loans, Continue Eurodollar Loans, orto Convert Base Rate Loans into Eurodollar Loans and the Borrower shall, on thelast day(s) of the then current Interest Period(s) for the outstandingEurodollar Loans, either prepay such Eurodollar Loans or Convert suchEurodollar Loans into Base Rate Loans in accordance with the terms of this CreditAgreement.

 

## **3.8          Illegality.**

 

Notwithstanding any other provision of this Credit Agreement, in theevent that it becomes unlawful for any Lender or its Applicable Lending Officeto make, maintain, or fund Eurodollar Loans hereunder, then such Lender shallpromptly notify the Borrower thereof and such Lender’s obligation to make orContinue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loansshall be suspended until such time as such Lender may again make, maintain, andfund Eurodollar Loans (in which case the provisions of Section 3.10 shallbe applicable).

 

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## **3.9          Requirementsof Law.**

 

If, after the date hereof, the adoption of any applicable law, rule, orregulation, or any change in any applicable law, rule, or regulation, or anychange in the interpretation or administration thereof by any GovernmentalAuthority, central bank, or comparable agency charged with the interpretationor administration thereof, or compliance by any Lender (or its ApplicableLending Office) with any request or directive (whether or not having the forceof law) of any such Governmental Authority, central bank, or comparable agency:

 

(i)         shall subject such Lender (or itsApplicable Lending Office) to any tax, duty, or other charge with respect toany Eurodollar Loans, its Notes, or its obligation to make Eurodollar Loans, orchange the basis of taxation of any amounts payable to such Lender (or itsApplicable Lending Office) under this Credit Agreement or its Notes in respectof any Eurodollar Loans (other than taxes imposed on the overall net income ofsuch Lender by the jurisdiction in which such Lender has its principal officeor such Applicable Lending Office);

 

(ii)        shall impose, modify, or deem applicableany reserve, special deposit, assessment, or similar requirement (other thanthe Eurodollar Reserve Requirement utilized in the determination of theAdjusted Eurodollar Rate) relating to any extensions of credit or other assetsof, or any deposits with or other liabilities or commitments of, such Lender(or its Applicable Lending Office), including the Commitment of such Lenderhereunder; or

 

(iii)       shall impose on such Lender (or itsApplicable Lending Office) or the London interbank market any other conditionaffecting this Credit Agreement or its Notes or any of such extensions ofcredit or liabilities or commitments;

 

and the result of any of the foregoing is to increasethe cost to such Lender (or its Applicable Lending Office) of making,Converting into, Continuing, or maintaining any Eurodollar Loans or to reduceany sum received or receivable by such Lender (or its Applicable LendingOffice) under this Credit Agreement or its Notes with respect to any EurodollarLoans, then the Borrower shall pay to such Lender on demand such amount oramounts as will compensate such Lender for such increased cost orreduction.  If any Lender requestscompensation by the Borrower under this Section 3.9, the Borrower may, bynotice to such Lender (with a copy to the Agent), suspend the obligation ofsuch Lender to make or Continue Eurodollar Loans, or to Convert Base Rate Loansinto Eurodollar Loans, until the event or condition giving rise to such requestceases to be in effect (in which case the provisions of Section 3.10 shallbe applicable); provided that such suspension shall not affect the rightof such Lender to receive the compensation so requested.  Each Lender shall promptly notify theBorrower and the Agent of any event of which it has knowledge, occurring afterthe date hereof, which will entitle such Lender to compensation pursuant tothis Section 3.9 and will designate a different Applicable Lending Officeif such designation will avoid the need for, or reduce the amount of, suchcompensation and will not, in the judgment of such Lender, be otherwisedisadvantageous to it.  Any Lenderclaiming compensation under this Section 3.9 shall furnish to the Borrowerand the Agent a statement setting forth the additional amount or amounts to bepaid to it hereunder which shall be conclusive in the absence of manifesterror.  In determining such amount, suchLender may use any reasonable averaging and attribution methods.

 

## **3.10        Treatment of Affected Loans.**

 

If the obligation of any Lender to make any Eurodollar Loan or to Continue,or to Convert Base Rate Loans into, Eurodollar Loans shall be suspendedpursuant to Section 3.7, 3.8 or 3.9 hereof, such Lender’s Eurodollar Loansshall be automatically Converted into Base Rate Loans on the last day(s) of thethen current Interest Period(s) for such Eurodollar Loans (or, in the case of aConversion, on such earlier date as such Lender may specify to the Borrowerwith a copy to the Agent) and, unless and until such Lender gives notice asprovided below that the circumstances specified in Section 3.7, 3.8 or 3.9hereof that gave rise to such Conversion no longer exist:

 

(a)            to the extent that such Lender’sEurodollar Loans have been so Converted, all payments and prepayments ofprincipal that would otherwise be applied to such Lender’s Eurodollar Loansshall be applied instead to its Base Rate Loans; and

 

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(b)           all Loans that would otherwise be made or Continued bysuch Lender as Eurodollar Loans shall be made or Continued instead as Base RateLoans, and all Base Rate Loans of such Lender that would otherwise be Convertedinto Eurodollar Loans shall remain as Base Rate Loans.

 

Ifsuch Lender gives notice to the Borrower (with a copy to the Agent) that thecircumstances specified in Section 3.7, 3.8 or 3.9 hereof that gave riseto the Conversion of such Lender’s Eurodollar Loans pursuant to thisSection 3.10 no longer exist (which such Lender agrees to do promptly uponsuch circumstances ceasing to exist) at a time when Eurodollar Loans made byother Lenders are outstanding, such Lender’s Base Rate Loans shall beautomatically Converted, on the first day(s) of the next succeeding InterestPeriod(s) for such outstanding Eurodollar Loans, to the extent necessary sothat, after giving effect thereto, all Loans held by the Lenders holdingEurodollar Loans and by such Lender are held pro rata (as to principal amounts,interest rate basis, and Interest Periods) in accordance with their respectiveCommitments.

 

## **3.11        Taxes.**

 

(a)            Any and all payments by any Credit Party to or for theaccount of any Lender or the Agent hereunder or under any other Credit Documentshall be made free and clear of and without deduction for any and all presentor future taxes, duties, levies, imposts, deductions, charges or withholdings,and all liabilities with respect thereto, excluding, in the case of eachLender and the Agent, taxes imposed on its income, and franchise taxes imposedon it, by the jurisdiction under the laws of which such Lender (or itsApplicable Lending Office) or the Agent (as the case may be) is organized orany political subdivision thereof (all such non-excluded taxes, duties, levies,imposts, deductions, charges, withholdings, and liabilities being hereinafterreferred to as “Taxes”).  If anyCredit Party shall be required by law to deduct any Taxes from or in respect ofany sum payable under this Credit Agreement or any other Credit Document to anyLender or the Agent, (i) the sum payable shall be increased as necessaryso that after making all required deductions (including deductions applicableto additional sums payable under this Section 3.11) such Lender or theAgent receives an amount equal to the sum it would have received had no suchdeductions been made, (ii) such Credit Party shall make such deductions,(iii) such Credit Party shall pay the full amount deducted to the relevanttaxation authority or other authority in accordance with applicable law, and(iv) such Credit Party shall furnish to the Agent, at its address referredto in Section 11.1, the original or a certified copy of a receiptevidencing payment thereof.

 

(b)           In addition, the Borrower agrees to pay any and allpresent or future stamp or documentary taxes and any other excise or propertytaxes or charges or similar levies which arise from any payment made under thisCredit Agreement or any other Credit Document or from the execution or deliveryof, or otherwise with respect to, this Credit Agreement or any other CreditDocument (hereinafter referred to as “Other Taxes”).

 

(c)            TheBorrower agrees to indemnify each Lender and the Agent for the full amount ofTaxes and Other Taxes (including, without limitation, any Taxes or Other Taxesimposed or asserted by any jurisdiction on amounts payable under thisSection 3.11) paid by such Lender or the Agent (as the case may be) andany liability (including penalties, interest, and expenses) arising therefromor with respect thereto.

 

(d)           Each Lender that is not a UnitedStates person under Section 7701(a)(30) of the Code, on or prior to thedate of its execution and delivery of this Credit Agreement in the case of eachLender listed on the signature pages hereof and on or prior to the date onwhich it becomes a Lender in the case of each other Lender (such Lenderconstituting a “Foreign Lender”), and from time to time thereafter ifrequested in writing by the Borrower or the Agent (but only so long as suchLender remains lawfully able to do so), shall provide the Borrower and theAgent with (i) Internal Revenue Service Form W-8 BEN or W-8 ECI, asappropriate, or any successor form prescribed by the Internal Revenue Service,certifying that such Lender is entitled to benefits under an income tax treatyto which the United States is a party which reduces to zero the rate ofwithholding tax on payments of interest or certifying that the incomereceivable pursuant to this Credit Agreement is effectively connected with theconduct of a trade or business in the United States, (ii) Internal RevenueService Form W-8 or W-9, as appropriate, or any successor form prescribedby the Internal Revenue Service, and/or (iii) any other form orcertificate required by any taxing authority (including any certificaterequired by Sections 871(h) and 881(c) of the Internal Revenue Code),certifying that such Lender is entitled to an exemption from tax on paymentspursuant to this Credit Agreement or any of the other Credit Documents.

 

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(e)            For any period with respect to whicha Lender has failed to provide the Borrower and the Agent with the appropriateform pursuant to Section 3.11(d) (unless such failure is due to a changein treaty, law, or regulation occurring subsequent to the date on which a formoriginally was required to be provided), such Lender shall not be entitled toindemnification under Section 3.11(a) or 3.11(b) with respect to Taxesimposed by the United States; provided, however, that should aLender, which is otherwise exempt from withholding tax, become subject to Taxesbecause of its failure to deliver a form required hereunder, the Borrower shalltake such steps as such Lender shall reasonably request to assist such Lenderto recover such Taxes.

 

(f)            If any Credit Party is required to pay additional amounts to or for theaccount of any Lender pursuant to this Section 3.11, then such Lender willagree to use reasonable efforts to change the jurisdiction of its ApplicableLending Office so as to eliminate or reduce any such additional payment whichmay thereafter accrue if such change, in the judgment of such Lender, is nototherwise disadvantageous to such Lender.

 

(g)           Without prejudice to the survival ofany other agreement of the Credit Parties hereunder, the agreements andobligations of the Credit Parties contained in this Section 3.11 shall survive the repayment of the Loans, LOCObligations and other obligations under the Credit Documents and thetermination of the Commitments hereunder.

 

## **3.12        Compensation.**

 

Uponthe request of any Lender, the Borrower shall pay to such Lender such amount oramounts as shall be sufficient (in the reasonable opinion of such Lender) tocompensate it for any loss, cost, or expense (excluding loss of anticipatedprofits) incurred by it as a result of:

 

(a)            anypayment, prepayment, or Conversion of a Eurodollar Loan for any reason(including, without limitation, (i) in connection with any assignment byBOA pursuant to Section 11.3(b) as part of the primary syndication of theLoans during the 180-day period immediately following the Closing Date and (ii) theacceleration of the Loans pursuant to Section 9.2) on a date other thanthe last day of the Interest Period for such Loan; or

 

(b)           anyfailure by the Borrower for any reason (including, without limitation, thefailure of any condition precedent specified in Section 5 to be satisfied)to borrow, Convert, Continue, or prepay a Eurodollar Loan on the date for suchborrowing, Conversion, Continuation, or prepayment specified in the relevantnotice of borrowing, prepayment, Continuation, or Conversion under this CreditAgreement.

 

Withrespect to Eurodollar Loans, such indemnification may include an amount equalto the excess, if any, of (a) the amount of interest which would haveaccrued on the amount so prepaid, or not so borrowed, Converted or Continued,for the period from the date of such prepayment or of such failure to borrow,Convert or Continue to the last day of the applicable Interest Period (or, inthe case of a failure to borrow, Convert or Continue, the Interest Period thatwould have commenced on the date of such failure) in each case at theapplicable rate of interest for such Eurodollar Loans provided for herein over(b) the amount of interest (as reasonably determined by such Lender) whichwould have accrued to such Lender on such amount by placing such amount ondeposit for a comparable period with leading banks in the interbank Eurodollarmarket.  The covenants of the Borrowerset forth in this Section 3.12 shall survive the repayment of the Loans,LOC Obligations and other obligations under the Credit Documents and thetermination of the Commitments hereunder.

 

## **3.13        ProRata Treatment.**

 

Exceptto the extent otherwise provided herein:

 

(a)            Loans.  Each Loan, each payment or (subject to theterms of Section 3.3) prepayment of principal of any Loan or reimbursementobligations arising from drawings under Letters of Credit, each payment ofinterest on the Loans or reimbursement obligations arising from drawings underLetters of Credit, 

 

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each payment of the Letter of Credit Fee, each reductionof the Revolving Committed Amount and each conversion or extension of any Loan,shall be allocated pro rata among the Lenders in accordance with the respectiveprincipal amounts of their outstanding Loans of the applicable type andParticipation Interests in Loans of the applicable type and Letters of Credit.

 

(b)           Advances.  No Lender shall be responsible for thefailure or delay by any other Lender in its obligation to make its ratableshare of a borrowing hereunder; provided, however, that thefailure of any Lender to fulfill its obligations hereunder shall not relieveany other Lender of its obligations hereunder. Unless the Agent shall have been notified by any Lender prior to thedate of any requested borrowing that such Lender does not intend to makeavailable to the Agent its ratable share of such borrowing to be made on suchdate, the Agent may assume that such Lender has made such amount available tothe Agent on the date of such borrowing, and the Agent in reliance upon suchassumption, may (in its sole discretion but without any obligation to do so)make available to the Borrower a corresponding amount.  If such corresponding amount is not in factmade available to the Agent, the Agent shall be able to recover suchcorresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon theAgent’s demand therefor, the Agent will promptly notify the Borrower, and theBorrower shall immediately pay such corresponding amount to the Agent.  The Agent shall also be entitled to recoverfrom the Lender or the Borrower, as the case may be, interest on suchcorresponding amount in respect of each day from the date such correspondingamount was made available by the Agent to the Borrower to the date suchcorresponding amount is recovered by the Agent at a per annum rate equal to(i) from the Borrower at the applicable rate for the applicable borrowingpursuant to the Notice of Borrowing and (ii) from a Lender at the FederalFunds Rate.

 

## **3.14        Sharingof Payments.**

 

TheLenders agree among themselves that, in the event that any Lender shall obtainpayment in respect of any Loan, LOC Obligations or any other obligation owingto such Lender under this Credit Agreement through the exercise of a right ofsetoff, banker’s lien or counterclaim, or pursuant to a secured claim underSection 506 of Title 11 of the United States Code or other securityor interest arising from, or in lieu of, such secured claim, received by suchLender under any applicable bankruptcy, insolvency or other similar law orotherwise, or by any other means, in excess of its pro rata share of suchpayment as provided for in this Credit Agreement, such Lender shall promptlypurchase from the other Lenders a Participation Interest in such Loans, LOCObligations and other obligations in such amounts, and make such otheradjustments from time to time, as shall be equitable to the end that allLenders share such payment in accordance with their respective ratable sharesas provided for in this Credit Agreement. The Lenders further agree among themselves that if payment to a Lenderobtained by such Lender through the exercise of a right of setoff, banker’slien, counterclaim or other event as aforesaid shall be rescinded or mustotherwise be restored, each Lender which shall have shared the benefit of suchpayment shall, by repurchase of a Participation Interest theretofore sold,return its share of that benefit (together with its share of any accruedinterest payable with respect thereto) to each Lender whose payment shall havebeen rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a ParticipationInterest may, to the fullest extent permitted by law, exercise all rights ofpayment, including setoff, banker’s lien or counterclaim, with respect to suchParticipation Interest as fully as if such Lender were a holder of such Loan,LOC Obligations or other obligation in the amount of such ParticipationInterest.  Except as otherwise expresslyprovided in this Credit Agreement, if any Lender shall fail to remit to theAgent or any other Lender an amount payable by such Lender to the Agent or suchother Lender pursuant to this Credit Agreement on the date when such amount isdue, such payments shall be made together with interest thereon for each datefrom the date such amount is due until the date such amount is paid to theAgent or such other Lender at a rate per annum equal to the Federal FundsRate.  If under any applicablebankruptcy, insolvency or other similar law, any Lender receives a securedclaim in lieu of a setoff to which this Section 3.14 applies, such Lendershall, to the extent practicable, exercise its rights in respect of suchsecured claim in a manner consistent with the rights of the Lenders under thisSection 3.14 to share in the benefits of any recovery on such securedclaim.

 

## **3.15        Payments, Computations, Etc.**

 

(a)           Generally.  Except as otherwise specifically providedherein, all payments hereunder shall be made to the Agent in Dollars in immediatelyavailable funds, without setoff, deduction, counterclaim or withholding of anykind, at the Agent’s office specified in Schedule 2.1(a) not laterthan 2:00 P.M.  (Charlotte, NorthCarolina time) on the date when due. Payments received after such time shall be deemed to have been 

 

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receivedon the next succeeding Business Day. The Agent may (but shall not be obligated to) debit the amount of anysuch payment which is not made by such time to any ordinary deposit account ofthe Borrower or any other Credit Party maintainedwith the Agent (with notice to the Borrower or such other Credit Party).  TheBorrower shall, at the time it makes any payment under this Credit Agreement,specify to the Agent the Loans, LOC Obligations, Fees, interest or otheramounts payable by the Borrower hereunder to which such payment is to beapplied (and in the event that it fails so to specify, or if such applicationwould be inconsistent with the terms hereof, the Agent shall distribute suchpayment to the Lenders in such manner as the Agent may determine to beappropriate in respect of obligations owing by the Borrower hereunder, subjectto the terms of Section 3.13(a)). The Agent will distribute such payments to such Lenders, if any suchpayment is received prior to 2:00 P.M. (Charlotte, North Carolina time) on a Business Day in like funds asreceived prior to the end of such Business Day and otherwise the Agent will distributesuch payment to such Lenders on the next succeeding Business Day.  Whenever any payment hereunder shall bestated to be due on a day which is not a Business Day, the due date thereofshall be extended to the next succeeding Business Day (subject to accrual ofinterest and Fees for the period of such extension), except that in the case ofEurodollar Loans, if the extension would cause the payment to be made in thenext following calendar month, then such payment shall instead be made on thenext preceding Business Day.  Except asexpressly provided otherwise herein, all computations of interest and feesshall be made on the basis of actual number of days elapsed over a year of 360days.  Interest shall accrue from andinclude the date of borrowing, but exclude the date of payment.

 

(b)           Allocation ofPayments After Event of Default. Notwithstanding any other provisions of this Credit Agreement to thecontrary, after the occurrence and during the continuance of an Event ofDefault, all amounts collected or received by the Agent or any Lender on accountof the Credit Party Obligations or any other amounts outstanding under any ofthe Credit Documents shall be paid over or delivered as follows:

 

FIRST, to the payment of all reasonable out-of-pocketcosts and expenses (including without limitation reasonable attorneys’ fees) ofthe Agent in connection with enforcing the rights of the Lenders under theCredit Documents;

 

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

 

THIRD, to the payment of all of the Credit PartyObligations consisting of accrued fees and interest;

 

FOURTH, to the payment of the outstanding principalamount of the Credit Party Obligations (including the payment or cashcollateralization of the outstanding LOC Obligations and Derivative ExposureReserves);

 

FIFTH, to the payment of all reasonable out-of-pocketcosts and expenses (including without limitation, reasonable attorneys’ fees)of each of the Lenders in connection with enforcing its rights under the CreditDocuments or otherwise with respect to the Credit Party Obligations owing tosuch Lender;

 

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

 

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

 

In carrying out theforegoing, (i) amounts received shall be applied in the numerical orderprovided until exhausted prior to application to the next succeeding category;(ii) each of the Lenders shall receive an amount equal to its pro ratashare (based on the proportion that the then outstanding Loans and LOCObligations held by such Lender bears to the aggregate then outstanding Loansand LOC Obligations and Derivative Exposure Reserves) of amounts available tobe applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH” and “SIXTH”above; and (iii) to the extent that any amounts available for distributionpursuant to clause “FIFTH” above are attributable to the issued butundrawn amount of 

 

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outstanding Letters ofCredit, such amounts shall be held by the Agent in a cash collateral accountand applied (A) first, to reimburse the Issuing Lender from time to time forany drawings under such Letters of Credit and (B) then, following theexpiration of all Letters of Credit, to all other obligations of the typesdescribed in clauses ”FIFTH” and “SIXTH” above in the manner provided inthis Section 3.15(b).

 

## **3.16        Evidenceof Debt.**

 

(a)           Each Lender shallmaintain an account or accounts evidencing each Loan made by such Lender to theBorrower from time to time, including the amounts of principal and interestpayable and paid to such Lender from time to time under this CreditAgreement.  Each Lender will makereasonable efforts to maintain the accuracy of its account or accounts and topromptly update its account or accounts from time to time, as necessary.

 

(b)           The Agent shallmaintain the Register pursuant to Section 11.3(c), and a subaccount foreach Lender, in which Register and subaccounts (taken together) shall berecorded (i) the amount, type and Interest Period of each such Loanhereunder, (ii) the amount of any principal or interest due and payable orto become due and payable to each Lender hereunder and (iii) the amount ofany sum received by the Agent hereunder from or for the account of any CreditParty and each Lender’s share thereof. The Agent will make reasonable efforts to maintain the accuracy of thesubaccounts referred to in the preceding sentence and to promptly update suchsubaccounts from time to time, as necessary.

 

(c)           The entries made inthe accounts, Register and subaccounts maintained pursuant to clause (b)of this Section 3.16 (and, if consistent with the entries of the Agent,clause (a)) shall be prima facie evidence of the existence and amounts ofthe obligations of the Credit Parties thereinrecorded; provided, however, that the failure of any Lender orthe Agent to maintain any such account, such Register or such subaccount, asapplicable, or any error therein, shall not in any manner affect the obligationof the Credit Parties to repay theCredit Party Obligations owing to such Lender.

 

## **3.17        Usury.**

 

In no event shall the amount ofinterest due or payable on the Loans or other obligations evidenced hereby orunder the other Credit Documents exceed the maximum rate of interest allowed byApplicable Law and, if any such payment is paid by the Borrower or received byany Lender Party, then such excess sum shall be credited as a payment ofprincipal, unless the Borrower shall notify the respective Lender Party inwriting that the Borrower elects to have such excess sum returned to itforthwith.  It is the express intent ofthe parties hereto that the Borrower not pay and the Lender Parties notreceive, directly or indirectly, in any manner whatsoever, interest in excessof that which may be lawfully paid by the Borrower under Applicable Law.

 

## **3.18        Agreement RegardingInterest and Charges.**

 

The parties hereto hereby agreeand stipulate that the only charge imposed upon the Borrower for the use ofmoney in connection with this Credit Agreement is and shall be the interestspecifically described in Section 2.1(d). Notwithstanding the foregoing, the parties hereto further agree andstipulate that all agency fees, syndication fees, facility fees, letter ofcredit fees, underwriting fees, default charges, late charges, funding or“breakage” charges, increased cost charges, attorneys’ fees and reimbursement forcosts and expenses paid by the Agent or any Lender Party to third parties orfor damages incurred by the Agent or any Lender Party, are charges made tocompensate the Agent or any such Lender Party for underwriting oradministrative services and costs or losses performed or incurred, and to beperformed or incurred, by the Agent and the Lender Parties in connection withthis Credit Agreement and shall under no circumstances be deemed to be chargesfor the use of money.  Except asexpressly agreed otherwise in writing, all charges other than charges for theuse of money shall be fully earned and nonrefundable when due.

## ** **

## **3.19        Statements of Account.**

 

The Agent will account to theBorrower monthly with a statement of Loans, Letter of Credit, accrued interestand Fees, charges and payments made pursuant to this Credit Agreement and theother Credit Documents, 

 

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and such account rendered by the Agent shall beprima facie evidence of the amounts and other matters set forth therein.  The failure of the Agent to deliver such astatement of accounts shall not relieve or discharge the Borrower from any ofits obligations hereunder.

 

## **3.20        Defaulting Lenders.**

 

(a)           Generally. If for any reason any Lender Party at any time becomes a DefaultingLender, then, in addition to the rights and remedies that may be available tothe Agent or the Borrower under this Credit Agreement or Applicable Law, suchDefaulting Lender’s right to participate in the administration of the Loans,this Credit Agreement and the other Credit Documents, including withoutlimitation, any right to vote in respect of, to consent to or to direct anyaction or inaction of the Agent or to be taken into account in the calculationof the Required Lenders, shall be suspended during the pendency of such failureor refusal.  Upon a Lender Partybecoming a Defaulting Lender, the Agent shall give prompt notice to each otherLender thereof.  If a Lender Party is aDefaulting Lender because it has failed to make timely payment to the Agent ofany amount required to be paid to the Agent hereunder (without giving effect toany notice or cure periods), in addition to other rights and remedies which theAgent or the Borrower may have under the immediately preceding provisions orotherwise, the Agent shall be entitled (i) to collect interest from suchDefaulting Lender on such delinquent payment for the period from the date onwhich the payment was due until the date on which the payment is made at theFederal Funds Rate, (ii) to withhold or setoff and to apply in satisfaction ofthe defaulted payment and any related interest, any amounts otherwise payableto such Defaulting Lender under this Credit Agreement or any other CreditDocument and (iii) to bring an action or suit against such Defaulting Lender ina court of competent jurisdiction to recover the defaulted amount and anyrelated interest.  Any amounts receivedby the Agent in respect of a Defaulting Lender’s Loans shall not be paid tosuch Defaulting Lender and shall be held uninvested by the Agent and eitherapplied against the purchase price of such Loans under the followingsubsection (b) or paid to such Defaulting Lender upon the DefaultingLender’s curing of its default.

 

(b)           Purchase of Defaulting Lender’s Commitment.  Any Lender Party who is not a DefaultingLender shall have the right, but not the obligation, in its sole discretion, toacquire all of a Defaulting Lender’s Revolving Commitment.  Any Lender Party desiring to exercise suchright shall give written notice thereof to the Agent no sooner thantwo (2) Business Days and not later than ten (10) Business Days aftersuch Defaulting Lender became a Defaulting Lender.  If more than one Lender Party exercises such right, each suchLender Party shall have the right to acquire an amount of such DefaultingLender’s Revolving Commitment in proportion to the Revolving Commitments of theother Lender Parties exercising such right. If after such 10th Business Day, the Lender Parties have not elected topurchase all of the Revolving Commitment of such Defaulting Lender, then anyEligible Assignee may purchase such Revolving Commitment.  None of the Agent, the Sole Lead Arranger orany of the Lender Parties shall have any obligation whatsoever to initiate anysuch replacement or to assist in finding an Eligible Assignee.  Upon any such purchase, the DefaultingLender’s interest in the Loans and its rights hereunder (but not its liabilityin respect thereof or under the Credit Documents or this Credit Agreement tothe extent the same relate to the period prior to the effective date of thepurchase) shall terminate on the date of purchase, and the Defaulting Lendershall promptly execute all documents reasonably requested to surrender andtransfer such interest to the purchaser thereof, including an appropriateAssignment and Assumption Agreement and, notwithstanding Section 11.3,shall pay to the Agent an assignment fee in the amount of $5,000.  The purchase price for the RevolvingCommitment of a Defaulting Lender shall be equal to the amount of the principalbalance of the Loans outstanding and owed by the Borrower to the DefaultingLender.  Prior to payment of suchpurchase price to a Defaulting Lender, the Agent shall apply against suchpurchase price any amounts retained by the Agent pursuant to the last sentenceof the immediately preceding subsection (a).  The Defaulting Lender shall be entitled to receive amounts owedto it by the Borrower under the Credit Documents which accrued prior to thedate of the default by the Defaulting Lender, to the extent the same arereceived by the Agent from or on behalf of the Borrower.  There shall be no recourse against anyLender Party or the Agent for the payment of such sums except to the extent ofthe receipt of payments from any other party or in respect of the Loans.  If, prior to a Lender Party’s acquisition ofa Defaulting Lender’s Revolving Commitment pursuant to this subsection, suchDefaulting Lender shall cure the event or condition which caused it to become aDefaulting Lender and shall have paid all amounts owing by it hereunder as aresult thereof, then such Lender Party shall no longer have the right toacquire such Defaulting Lender’s Revolving Commitment.

 

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## **3.21        AssumptionsConcerning Funding of Eurodollar Loans.**

 

Calculationof all amounts payable to a Lender Party under this Article III shall bemade as though such Lender Party had actually funded Eurodollar Loans throughthe purchase of deposits in the relevant market bearing interest at the rateapplicable to such Eurodollar Loans in an amount equal to the amount of theEurodollar Loans and having a maturity comparable to the relevant InterestPeriod; provided, however, that each Lender Party may fund each of its EurodollarLoans in any manner it sees fit and the foregoing assumption shall be used onlyfor calculation of amounts payable under this Article III.

 

**3.22        Intentionally Omitted.**

 

**3.23        Intentionally Omitted**.

 

**3.24        Approval or Release of Shoneys Assets.**

 

Within thirty (30) daysfollowing a written request of the Borrower (a “Determination Request”),the Agent and Required Lenders shall deliver to the Borrower a written notice(a “Determination Decision”) determining whether any Shoneys Assets, asidentified by the Borrower in such Determination Request, are assetswhich may, to the extent meeting all other requirements set forth herein,contribute to the calculation of the Borrowing Base Asset Value.  Thedecision of the Agent and Required Lenders set forth in the DeterminationDecision shall be made in the sole discretion of the Agent and RequiredLenders.  To the extent any of theassets referenced in a Determination Request are not approved pursuant to theapplicable Determination Decision, the Agent and Lenders hereby agree to permitthe transfer or disposition of such asset by the General SPE and to executesuch documentation as is reasonably requested by the Borrower to permit suchtransfer or disposition.  The Borrowershall not make more than two (2) Determination Requests during the term hereof.

 

# **ARTICLEIV**

# ** **

# **GUARANTY**

 

## **4.1          TheGuaranty.**

 

Each of the Guarantors herebyjointly and severally guarantees to each Lender, each Affiliate of a Lenderthat enters into a Hedging Agreement, and the Agent as hereinafter provided, asprimary obligor and not as surety, the prompt payment of the Credit PartyObligations in full when due (whether at stated maturity, as a mandatoryprepayment, by acceleration, as a mandatory cash collateralization orotherwise) strictly in accordance with the terms thereof.  The Guarantors hereby further agree that ifany of the Credit Party Obligations are not paid in full when due (whether atstated maturity, as a mandatory prepayment, by acceleration, as a mandatorycash collateralization or otherwise), the Guarantors will, jointly andseverally, promptly pay the same, without any demand or notice whatsoever, andthat in the case of any extension of time of payment or renewal of any of theCredit Party Obligations, the same will be promptly paid in full when due(whether at extended maturity, as a mandatory prepayment, by acceleration, as amandatory cash collateralization or otherwise) in accordance with the terms ofsuch extension or renewal.

 

Notwithstanding any provision tothe contrary contained herein or in any other of the Credit Documents orHedging Agreements, the obligations of each Guarantor under this Credit Agreement and the other CreditDocuments shall be limited to an aggregate amount equal to the largestamount that would not render such obligations subject to avoidance underSection 548 of the Bankruptcy Code or any comparable provisions of anyapplicable state law.

 

## **4.2          Obligations Unconditional.**

 

The obligations of theGuarantors under Section 4.1 are joint and several, absolute andunconditional, irrespective of the value, genuineness, validity, regularity orenforceability of any of the Credit Documents or Hedging Agreements, or anyother agreement or instrument referred to therein, or any substitution,release, impairment or exchange of any other guarantee of or security for anyof the Credit Party Obligations, and, to the fullest extent permitted byapplicable law, irrespective of any other circumstance whatsoever which mightotherwise constitute a legal or 

 

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equitable discharge or defense of a surety orguarantor, it being the intent of this Section 4.2 that the obligations ofthe Guarantors hereunder shall be absolute and unconditional under any and allcircumstances.  Each Guarantor agreesthat such Guarantor shall have no right of subrogation, indemnity,reimbursement or contribution against the Borrower or any other Guarantor foramounts paid under this Section 4 until such time as the Credit PartyObligations have been Fully Satisfied. Without limiting the generality of the foregoing, it is agreed that, tothe fullest extent permitted by law, the occurrence of any one or more of thefollowing shall not alter or impair the liability of any Guarantor hereunderwhich shall remain absolute and unconditional as described above:

 

(a)           at any time or fromtime to time, without notice to any Guarantor, the time for any performance ofor compliance with any of the Credit Party Obligations shall be extended, orsuch performance or compliance shall be waived;

 

(b)           any of the actsmentioned in any of the provisions of any of the Credit Documents, any HedgingAgreement between any Consolidated Party and any Lender, or any Affiliate of aLender, or any other agreement or instrument referred to in the CreditDocuments or such Hedging Agreements shall be done or omitted;

 

(c)           the maturity of anyof the Credit Party Obligations shall be accelerated, or any of the CreditParty Obligations shall be modified, supplemented or amended in any respect, orany right under any of the Credit Documents, any Hedging Agreement between anyConsolidated Party and any Lender, or any Affiliate of a Lender, or any otheragreement or instrument referred to in the Credit Documents or such HedgingAgreements shall be waived or any other guarantee of any of the Credit PartyObligations or any security therefor shall be released, impaired or exchangedin whole or in part or otherwise dealt with;

 

(d)           any Lien granted to,or in favor of, the Agent or any Lender or Lenders as security for any of theCredit Party Obligations shall fail to attach or be perfected; or

 

(e)           any of the CreditParty Obligations shall be determined to be void or voidable (including,without limitation, for the benefit of any creditor of any Guarantor) or shallbe subordinated to the claims of any Person (including, without limitation, anycreditor of any Guarantor).

 

Withrespect to its obligations hereunder, each Guarantor hereby expressly waivesdiligence, presentment, demand of payment, protest and all notices whatsoever,and any requirement that the Agent or any Lender exhaust any right, power orremedy or proceed against any Person under any of the Credit Documents, anyHedging Agreement between any Consolidated Party and any Lender, or anyAffiliate of a Lender, or any other agreement or instrument referred to in theCredit Documents or such Hedging Agreements, or against any other Person underany other guarantee of, or security for, any of the Credit Party Obligations.

 

## **4.3          Reinstatement.**

 

Theobligations of the Guarantors under this Section 4 shall be automaticallyreinstated if and to the extent that for any reason any payment by or on behalfof any Person in respect of the Credit Party Obligations is rescinded or mustbe otherwise restored by any holder of any of the Credit Party Obligations,whether as a result of any proceedings in bankruptcy or reorganization orotherwise, and each Guarantor agrees that it will indemnify the Agent and eachLender on demand for all reasonable costs and expenses (including, withoutlimitation, fees and expenses of counsel) incurred by the Agent or such Lenderin connection with such rescission or restoration, including any such costs andexpenses incurred in defending against any claim alleging that such paymentconstituted a preference, fraudulent transfer or similar payment under anybankruptcy, insolvency or similar law.

 

## **4.4          Certain Additional Waivers.**

 

Withoutlimiting the generality of the provisions of this Section 4, eachGuarantor hereby specifically waives the benefits of N.C.  Gen. Stat.  §§ 26-7 through 26-9,inclusive, to the extent applicable. Each Guarantor further agrees that such Guarantor shall have no right ofrecourse to security for the Credit Party Obligations, except through theexercise of rights of subrogation pursuant to Section 4.2 and through theexercise of rights of contribution pursuant to Section 4.6.

 

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## **4.5          Remedies.**

 

TheGuarantors agree that, to the fullest extent permitted by law, as between theGuarantors, on the one hand, and the Agent and the Lenders, on the other hand,the Credit Party Obligations may be declared to be forthwith due and payable asprovided in Section 9.2 (and shall be deemed to have become automaticallydue and payable in the circumstances provided in said Section 9.2) forpurposes of Section 4.1 notwithstanding any stay, injunction or otherprohibition preventing such declaration (or preventing the Credit PartyObligations from becoming automatically due and payable) as against any otherPerson and that, in the event of such declaration (or the Credit PartyObligations being deemed to have become automatically due and payable), theCredit Party Obligations (whether or not due and payable by any other Person)shall forthwith become due and payable by the Guarantors for purposes ofSection 4.1.

 

## **4.6          Rights of Contribution.**

 

TheGuarantors hereby agree as among themselves that, if any Guarantor shall makean Excess Payment (as defined below), such Guarantor shall have a right ofcontribution from each other Guarantor in an amount equal to such otherGuarantor’s Contribution Share (as defined below) of such Excess Payment.  The payment obligations of any Guarantorunder this Section 4.6 shall be subordinate and subject in right ofpayment to the Credit Party Obligations until such time as the Credit PartyObligations have been Fully Satisfied, and none of the Guarantors shallexercise any right or remedy under this Section 4.6 against any other Guarantoruntil such Credit Party Obligations have been Fully Satisfied.  For purposes of this Section 4.6,(a) “Excess Payment” shall mean the amount paid by any Guarantor inexcess of its Pro Rata Share of any Guaranteed Obligations; (b) “ProRata Share” shall mean, for any Guarantor in respect of any payment ofCredit Party Obligations, the ratio (expressed as a percentage) as of the dateof such payment of Guaranteed Obligations of (i) the amount by which theaggregate present fair salable value of all of its assets and propertiesexceeds the amount of all debts and liabilities of such Guarantor (includingcontingent, subordinated, unmatured, and unliquidated liabilities, butexcluding the obligations of such Guarantor hereunder) to (ii) the amountby which the aggregate present fair salable value of all assets and otherproperties of all of the Credit Parties exceeds the amount of all of the debts and liabilities (includingcontingent, subordinated, unmatured, and unliquidated liabilities, butexcluding the Credit Party Obligations) of the Credit Parties; provided, however, that, forpurposes of calculating the Pro Rata Shares of the Guarantors in respect of anypayment of Credit Party Obligations, any Guarantor that became a Guarantorsubsequent to the date of any such payment shall be deemed to have been aGuarantor on the date of such payment and the financial information for suchGuarantor as of the date such Guarantor became a Guarantor shall be utilizedfor such Guarantor in connection with such payment; and (c) “ContributionShare” shall mean, for any Guarantor in respect of any Excess Payment madeby any other Guarantor, the ratio (expressed as a percentage) as of the date ofsuch Excess Payment of (i) the amount by which the aggregate present fairsalable value of all of its assets and properties exceeds the amount of alldebts and liabilities of such Guarantor (including contingent, subordinated,unmatured, and unliquidated liabilities, but excluding the obligations of suchGuarantor hereunder) to (ii) the amount by which the aggregate presentfair salable value of all assets and other properties of the CreditParties other than the maker of such ExcessPayment exceeds the amount of all of the debts and liabilities (includingcontingent, subordinated, unmatured, and unliquidated liabilities, butexcluding the Credit Party Obligations)of the Credit Parties other than themaker of such Excess Payment; provided, however, that, forpurposes of calculating the Contribution Shares of the Guarantors in respect ofany Excess Payment, any Guarantor that became a Guarantor subsequent to thedate of any such Excess Payment shall be deemed to have been a Guarantor on thedate of such Excess Payment and the financial information for such Guarantor asof the date such Guarantor became a Guarantor shall be utilized for suchGuarantor in connection with such Excess Payment.  This Section 4.6 shall not be deemed to affect any right ofsubrogation, indemnity, reimbursement or contribution that any Guarantor mayhave under applicable law against the Borrower in respect of any payment ofGuaranteed Obligations.  Notwithstandingthe foregoing, all rights of contribution against any Guarantor shall terminatefrom and after such time, if ever, that such Guarantor shall be relieved of itsobligations pursuant to Section 8.5(a).

 

## **4.7          Guarantee of Payment; ContinuingGuarantee.**

 

Theguarantee in this Section 4 is a guaranty of payment and not ofcollection, is a continuing guarantee, and shall apply to all Credit PartyObligations whenever arising.

 

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# **ARTICLEV**

# ** **

# **CONDITIONS**

 

## **5.1          ClosingConditions.**

 

Theobligation of the Lenders to enter into this Credit Agreement and to make theinitial Loans or reserve amounts under the Derivative Exposure Reserve or theIssuing Lender to issue the initial Letter of Credit, whichever shall occurfirst, shall be subject to satisfaction of the following conditions (in formand substance acceptable to the Agent):

 

(a)           Executed CreditDocuments.  Receipt by the Agent ofduly executed copies of:  (i) thisCredit Agreement, (ii) the Notes, (iii) the USRP Operating PledgeAgreement and (iv) all other Credit Documents.

 

(b)           CorporateDocuments.  Receipt by the Agent ofthe following:

 

(i)            CharterDocuments.  Copies of the articlesor certificates of incorporation or other charter documents of each CreditParty certified to be true and complete as of a recent date by the appropriateGovernmental Authority of the state or other jurisdiction of its incorporationand certified by a secretary or assistant secretary of such Credit Party to betrue and correct as of the Closing Date.

 

(ii)           Bylaws.  A copy of the bylaws of each Credit Partycertified by a secretary or assistant secretary of such Credit Party to be trueand correct as of the Closing Date.

 

(iii)          Resolutions.  Copies of resolutions of the Board ofDirectors of each Credit Party approving and adopting the Credit Documents towhich it is a party, the transactions contemplated therein and authorizingexecution and delivery thereof, certified by a secretary or assistant secretaryof such Credit Party to be true and correct and in force and effect as of theClosing Date.

 

(iv)          GoodStanding.  Copies of(A) certificates of good standing, existence or its equivalent withrespect to each Credit Party certified as of a recent date by the appropriateGovernmental Authorities of the state or other jurisdiction of incorporationand each other jurisdiction in which the failure to so qualify and be in goodstanding could have a Material Adverse Effect and (B) to the extentavailable, a certificate indicating payment of all corporate or comparablefranchise taxes certified as of a recent date by the appropriate governmentaltaxing authorities.

 

(v)           Incumbency.  An incumbency certificate of each CreditParty certified by a secretary or assistant secretary to be true and correct asof the Closing Date.

 

(vi)          REITStatus.  Evidence, satisfactory tothe Agent, that the USRP REIT qualifies as a REIT, that each of itsSubsidiaries that are corporations are Qualified REIT Subsidiaries and that theexecution and performance by the Credit Parties under the Credit Documentsshall not affect such status.

 

(vii)         BankruptcyRemote Borrowing Entity Status. Evidence, satisfactory to the Agent, that the General SPE qualifies as aBankruptcy Remote Borrowing Entity and that the execution and performance bythe Credit Parties under the Credit Documents shall not affect such status.

 

(c)           Opinions ofCounsel.  The Agent shall havereceived, in each case dated as of the Closing Date and in form andsubstance reasonably satisfactory to the Agent:

 

(i)            alegal opinion of Richard Wilensky, general counsel for the CreditParties; and

 

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(ii)           alegal opinion of special local counsel for each Credit Party not organized inthe State of Delaware.

 

(d)           Officer’sCertificates.  The Agent shall havereceived a certificate or certificates executed by an Executive Officer of theBorrower as of the Closing Date, in form and substance satisfactory to theAgent, stating that (A) each Credit Party is in compliance with allexisting financial obligations, (B) all governmental, shareholder andthird party consents and approvals, if any, with respect to the Credit Documentsand the transactions contemplated thereby have been obtained, (C) noaction, suit, investigation or proceeding is pending or threatened in any courtor before any arbitrator or governmental instrumentality that purports toaffect any Credit Party or any transaction contemplated by the CreditDocuments, if such action, suit, investigation or proceeding could have aMaterial Adverse Effect, and (D) immediately after giving effect to theTransaction, (1) no Default or Event of Default exists, (2) all representationsand warranties contained herein and in the other Credit Documents are true andcorrect in all material respects and (3) on the basis of incomestatement items and capital expenditures forthe 12-month period ending on the last day of the most recently ended calendarmonth prior to the Closing Date and balance sheet items as of the Closing Dateafter giving effect to the Credit Documents, the Credit Parties are in proforma compliance with each of the Financial Covenants.

 

(e)           SolvencyCertificate.  The Agent shall havereceived a certificate executed by an Executive Officer of the Borrower as ofthe Closing Date, in form and substance satisfactory to the Agent, regardingthe Solvency of each of the Credit Parties.

 

(f)            Fees andExpenses.  Payment by the CreditParties to the Lenders and the Agent of all fees and expenses relating to theCredit Facilities which are due and payable on the Closing Date, including,without limitation, the payment by Borrower to the Agent (i) for its ownaccount those fees specified in the Fee Letter, (ii) for the account of theLenders existing as of the Closing Date, a commitment fee (the “CommitmentFee”) in an amount equal to one half of one percent (0.50%) of the RevolvingCommitted Amount as of such date (or $175,000) and (iii) all fees and expensesof Moore & Van Allen, PLLC whether reflected on previously issued invoicesor an invoice to be delivered at closing.

 

(g)           Current and Pro Forma FinancialStatements.  Receipt by the Agentand the Lenders of (i) the consolidated financial statements of theConsolidated Parties, including balance sheets and income and cash flowstatements for the fiscal quarter ended March 31, 2002; (ii) pro forma covenantcalculations with respect to each of the Financial Covenants, showingcompliance with such covenants as of the Closing Date; (iii) detailedprojections of financial statements for the Consolidated Parties and ofcalculations with respect to each of the Financial Covenants, in each case, forthe three year period following the most recently completed fiscal quarter ofthe Consolidated Parties; and (iv) such other information relating to theConsolidated Parties as the Agent may reasonably require.

 

(h)           Opening Borrowing Base Certificateand Delinquency Report.  Receipt bythe Agent of a Borrowing Base Certificate containing the Borrower’s mostrecently collected information with respect to the Borrowing Base Assets (but,in any event, with respect to information that is not more than 45 days old asof the Closing Date), substantially in the form of Exhibit 7.1(d) and certified by an Executive Officer of the Borrower to be true and correct anda Delinquency Report dated as of the Closing Date and certified by an Executive Officer of the Borrower to betrue and correct as of the Closing Date.

 

(i)            Other.  Receipt by the Lenders of such otherdocuments, instruments, agreements or information as reasonably requested byany Lender, including, but not limited to, information regarding litigation,tax, accounting, labor, insurance, pension liabilities (actual or contingent),real estate leases, material contracts, debt agreements, property ownership andcontingent liabilities of the Consolidated Parties.

 

## **5.2          Conditions to all Extensions ofCredit.**

 

Theobligations of each Lender to make, convert or extend any Loan and of theIssuing Lender to issue or extend any Letter of Credit (including the initialLoans and the initial Letter of Credit) are subject to satisfaction of thefollowing conditions in addition to satisfaction on the Closing Date of theconditions set forth in Section 5.1:

 

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(a)           The Borrower shallhave delivered (i) in the case of any Loan, an appropriate Notice ofBorrowing, Notice of Continuation or Notice of Conversion or (ii) in thecase of any Letter of Credit, the Issuing Lender shall have received anappropriate request for issuance in accordance with the provisions ofSection 2.2(b);

 

(b)           The representationsand warranties set forth in Section 6 shall, subject to the limitationsset forth therein, be true and correct in all material respects as of such date(except for those which expressly relate to an earlier date);

 

(c)           There shall not havebeen commenced against any Consolidated Party an involuntary case under anyapplicable bankruptcy, insolvency or other similar law now or hereafter ineffect, or any case, proceeding or other action for the appointment of areceiver, liquidator, assignee, custodian, trustee, sequestrator (or similarofficial) of such Person or for any substantial part of its Property or for thewinding up or liquidation of its affairs, and such involuntary case or othercase, proceeding or other action shall remain undismissed;

 

(d)           No Default or Eventof Default shall exist and be continuing either prior to or after giving effectthereto; and

 

(e)           Immediately aftergiving effect to the making of such Loan (and the application of the proceedsthereof), the establishment of a Derivative Exposure Reserve or to the issuanceof such Letter of Credit, as the case may be, (i) the sum of the aggregateoutstanding principal amount of Revolving Loans plus LOC Obligations plusthe Aggregate Derivative Exposure Amount shall not exceed the lesser of (A) theRevolving Committed Amount, (B) the Borrowing Base, (ii) the LOCObligations shall not exceed the LOC Committed Amount and (iii) the AggregateDerivative Exposure Amount shall not exceed Reserve Limit.

 

Thedelivery of each Notice of Borrowing and each request for a Letter of Creditpursuant to Section 2.2(b) shall constitute a representation and warrantyby the Credit Parties of thecorrectness of the matters specified in subsections (b), (c), (d) and (e)above.

 

# **ARTICLEVI**

 

# **REPRESENTATIONS AND WARRANTIES**

 

TheCredit Parties hereby represent to the Agent and each Lender that:

 

## **6.1          FinancialCondition.**

 

(a)           The auditedconsolidated balance sheets and income statements of the Consolidated Partiesfor the fiscal years ended December 31, 1999,December 31, 2000 and December 31, 2001 (including the notes thereto)(i) have been audited by Deloitte Touche Tohmatsu, (ii) have beenprepared in accordance with GAAP consistently applied throughout the periodscovered thereby and (iii) present fairly (on the basis disclosed in thefootnotes to such financial statements) the consolidated financial condition,results of operations and cash flows of the Consolidated Parties as of suchdate and for such periods.  Theunaudited interim balance sheets of the Consolidated Parties as at the end of,and the related unaudited interim statements of earnings and of cash flows for,each fiscal month and quarterly period ended after December 31, 2000and prior to the Closing Date (i) have been prepared in accordance withGAAP consistently applied throughout the periods covered thereby and(ii) present fairly (on the basis disclosed in the footnotes to suchfinancial statements) the consolidated financial condition, results ofoperations and cash flows of the Consolidated Parties as of such date and forsuch periods.  During the period fromDecember 31, 2001 to and including the Closing Date, there has been no sale,transfer or other disposition by any Consolidated Party of any material part ofthe business or property of the Consolidated Parties, taken as a whole, and nopurchase or other acquisition by any of them of any business or property(including any Capital Stock of any other Person) material in relation to theconsolidated financial condition of the Consolidated Parties, taken as a whole,in each case, which is not reflected in the foregoing 

 

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financialstatements or in the notes thereto and has not otherwise been disclosed inwriting to the Lenders on or prior to the Closing Date.  As of the Closing Date, the Borrower and itsSubsidiaries have no material liabilities (contingent or otherwise) that arenot reflected in the foregoing financial statements or in the notes thereto.

 

(b)           The financialstatements and other information delivered pursuant to Section 5.1(g) havebeen prepared in accordance with GAAP (except as may otherwise be permittedunder Section 1.3) and present fairly (on the basis disclosed in thefootnotes to such financial statements) the consolidated financial condition,results of operations and cash flows of the General Partner and theConsolidated Parties as of such date and for such periods.

 

## **6.2          NoMaterial Change.**

 

SinceDecember 31, 2001, there has been no development or event relating to oraffecting a Consolidated Party which has had or could have a Material AdverseEffect.

 

## **6.3          Organization and Good Standing.**

 

Eachof the Consolidated Parties (a) is duly organized, validly existing and isin good standing under the laws of the jurisdiction of its incorporation ororganization, (b) has the corporate or other necessary power andauthority, and the legal right, to own and operate its property, to lease theproperty it operates as lessee and to conduct the business in which it iscurrently engaged and (c) is duly qualified as a foreign entity and ingood standing under the laws of each jurisdiction where its ownership, lease oroperation of property or the conduct of its business requires suchqualification, other than in such jurisdictions where the failure to be soqualified and in good standing would not have a Material Adverse Effect.

 

## **6.4          Power; Authorization; EnforceableObligations.**

 

Eachof the Credit Parties has the corporate or other necessary power and authority,and the legal right, to make, deliver and perform the Credit Documents to whichit is a party, and in the case of the Borrower, to obtain extensions of credithereunder, and has taken all necessary corporate or other necessary action toauthorize the borrowings and other extensions of credit on the terms andconditions of this Credit Agreement and to authorize the execution, deliveryand performance of the Credit Documents to which it is a party.  No consent or authorization of, filing with,notice to or other similar act by or in respect of, any Governmental Authorityor any other Person is required to be obtained or made by or on behalf of anyCredit Party in connection with the borrowings or other extensions of credithereunder or with the execution, delivery, performance, validity orenforceability of the Credit Documents to which such Credit Party is a party,except for consents, authorizations, notices and filings described in Schedule 6.4,all of which have been obtained or made or have the status described in such Schedule 6.4.  ThisCredit Agreement has been, and each other Credit Document to which any CreditParty is a party will be, duly executed and delivered on behalf of the CreditParties.  This Credit Agreementconstitutes, and each other Credit Document to which any Credit Party is aparty when executed and delivered will constitute, a legal, valid and bindingobligation of such Credit Party enforceable against such party in accordancewith its terms, except as enforceability may be limited by applicablebankruptcy, insolvency, reorganization, moratorium or similar laws affecting theenforcement of creditors’ rights generally and by general equitable principles(whether enforcement is sought by proceedings in equity or at law).

 

## **6.5          NoConflicts.**

 

Neitherthe execution and delivery of the Credit Documents, nor the consummation of thetransactions contemplated therein, nor performance of and compliance with theterms and provisions thereof by such Credit Party will (a) violate orconflict with any provision of its articles or certificate of incorporation orbylaws or other organizational or governing documents of such Person,(b) violate, contravene or materially conflict with any Requirement of Lawor any other law, regulation (including, without limitation, Regulation Uor Regulation X), order, writ, judgment, injunction, decree or permitapplicable to it, (c) violate, contravene or conflict with contractualprovisions of, or cause an event of default under, any indenture, loanagreement, mortgage, deed of trust, contract or other agreement or instrumentto which it is a party or by which it may be bound, the violation of whichcould have a Material Adverse Effect, or (d) result in or require thecreation of any Lien (other than those contemplated in or created in connectionwith the Credit Documents) upon or with respect to its properties.

 

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## **6.6          NoDefault.**

 

NoConsolidated Party is in default in any respect under any contract, lease, loanagreement, indenture, mortgage, security agreement or other agreement orobligation to which it is a party or by which any of its properties is boundwhich default could have a Material Adverse Effect.  No Default or Event of Default has occurred or exists except aspreviously disclosed in writing to the Lenders.

 

## **6.7          Ownership.**

 

EachConsolidated Party is the owner of, and has good and marketable title to, allof its respective assets and none of such assets is subject to any Lien otherthan Permitted Liens and Liens granted in connection with any TermSecuritization specifically contemplated and approved pursuant to the termshereof.

 

## **6.8          Indebtedness.**

 

Exceptas otherwise permitted under Section 8.1, the Consolidated Parties have noIndebtedness.

 

## **6.9          Litigation.**

 

Exceptas disclosed in Schedule 6.9, there does not exist any pending orthreatened action, suit or legal, equitable, arbitration or administrativeproceeding against any Consolidated Party which might have a Material AdverseEffect.

 

## **6.10        Taxes.**

 

EachConsolidated Party has filed, or caused to be filed, all tax returns (Federal,state, local and foreign) required to be filed and paid (a) all amounts oftaxes shown thereon to be due (including interest and penalties) and(b) all other taxes, fees, assessments and other governmental charges(including mortgage recording taxes, documentary stamp taxes and intangiblestaxes) owing by it, except for such taxes (i) which are not yet delinquentor (ii) that are being contested in good faith and by proper proceedings,and against which adequate reserves are being maintained in accordance withGAAP.  No Credit Party is aware of anyproposed federal or state income tax assessments against it or any otherConsolidated Party.  No Credit Party isaware of any other proposed tax assessments against it or any other ConsolidatedParty that could have a Material Adverse Effect.

 

## **6.11        Compliancewith Law.**

 

EachConsolidated Party is in compliance with all Requirements of Law and all otherlaws, rules, regulations, orders and decrees (including without limitationEnvironmental Laws) applicable to it, or to its properties, unless such failureto comply could not have a Material Adverse Effect.  No currently-existing Requirement of Law could cause a MaterialAdverse Effect.

 

## **6.12        ERISA.**

 

Exceptas disclosed and described in Schedule 6.12 attached hereto:

 

(a)            Duringthe five-year period prior to the date on which this representation is made ordeemed made: (i) no ERISA Event has occurred, and, to the best knowledgeof the Executive Officers of the Credit Parties, no event or condition hasoccurred or exists as a result of which any ERISA Event could reasonably beexpected to occur, with respect to any Plan; (ii) no “accumulated fundingdeficiency,” as such term is defined in Section 302 of ERISA andSection 412 of the Code, whether or not waived, has occurred with respectto any Plan; (iii) each Plan has been maintained, operated, and funded incompliance with its own terms and in material compliance with the provisions ofERISA, the Code, and any other applicable Federal or state laws; and(iv) no lien in favor of the PBGC or a Plan has arisen or is reasonablylikely to arise on account of any Plan.

 

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(b)           Theactuarial present value of all “benefit liabilities” (as defined inSection 4001(a)(16) of ERISA), whether or not vested, under each SingleEmployer Plan, as of the last annual valuation date prior to the date on whichthis representation is made or deemed made (determined, in each case, inaccordance with Financial Accounting Standards Board Statement 87, utilizingthe actuarial assumptions used in such Plan’s most recent actuarial valuationreport), did not exceed as of such valuation date the fair market value of theassets of such Plan.

 

(c)            Neitherany Consolidated Party nor any ERISA Affiliate has incurred, or, to the bestknowledge of the Executive Officers of the Credit Parties, could be reasonablyexpected to incur, any withdrawal liability under ERISA to any MultiemployerPlan or Multiple Employer Plan.  Neitherany Consolidated Party nor any ERISA Affiliate would become subject to anywithdrawal liability under ERISA if any Consolidated Party or any ERISAAffiliate were to withdraw completely from all Multiemployer Plans and MultipleEmployer Plans as of the valuation date most closely preceding the date onwhich this representation is made or deemed made.  Neither any Consolidated Party nor any ERISA Affiliate hasreceived any notification that any Multiemployer Plan is in reorganization(within the meaning of Section 4241 of ERISA), is insolvent (within themeaning of Section 4245 of ERISA), or has been terminated (within themeaning of Title IV of ERISA), and no Multiemployer Plan is, to the bestknowledge of the Executive Officers of the Credit Parties, reasonably expectedto be in reorganization, insolvent, or terminated.

 

(d)           Noprohibited transaction (within the meaning of Section 406 of ERISA orSection 4975 of the Code) or breach of fiduciary responsibility hasoccurred with respect to a Plan which has subjected or may subject anyConsolidated Party or any ERISA Affiliate to any liability underSections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of theCode, or under any agreement or other instrument pursuant to which anyConsolidated Party or any ERISA Affiliate has agreed or is required to indemnifyany Person against any such liability.

 

(e)            Neitherany Consolidated Party nor any ERISA Affiliates has any material liability withrespect to “expected post-retirement benefit obligations” within the meaning ofthe Financial Accounting Standards Board Statement 106.  Each Plan which is a welfare plan (asdefined in Section 3(1) of ERISA) to which Sections 601-609 of ERISAand Section 4980B of the Code apply has been administered in compliance inall material respects of such sections.

 

(f)            Neitherthe execution and delivery of this Credit Agreement nor the consummation of thefinancing transactions contemplated thereunder will involve any transactionwhich is subject to the prohibitions of Sections 404, 406 or 407 of ERISAor in connection with which a tax could be imposed pursuant toSection 4975 of the Code.  Therepresentation by the Credit Parties in the preceding sentence is made inreliance upon and subject to the accuracy of the Lenders’ representation inSection 11.15 with respect to their source of funds and is subject, in theevent that the source of the funds used by the Lenders in connection with thistransaction is an insurance company’s general asset account, to the applicationof Prohibited Transaction Class Exemption 95-60, 60 Fed.  Reg. 35,925 (1995), compliance with the regulations issued underSection 401(c)(1)(A) of ERISA, or the issuance of any other prohibitedtransaction exemption or similar relief, to the effect that assets in an insurancecompany’s general asset account do not constitute assets of an “employeebenefit plan” within the meaning of Section 3(3) of ERISA or a “plan”within the meaning of Section 4975(e)(1) of the Code.

 

## **6.13        Corporate Structure; Capital Stock,etc.**

 

Thecorporate capital and ownership structure of the Consolidated Parties as of theClosing Date after giving effect to the Credit Documents executed as of thedate hereof is as described in Schedule 6.13A.  Set forth on Schedule 6.13B is acomplete and accurate list as of the Closing Date with respect to the Borrowerand each of its direct and indirect Subsidiaries of (i) jurisdiction ofincorporation, (ii) number of shares of each class of Capital Stockoutstanding, (iii) number and percentage of outstanding shares of eachclass owned (directly or indirectly) by the Consolidated Parties and(iv) number and effect, if exercised, of all outstanding options,warrants, rights of conversion or purchase and all other similar rights withrespect thereto as of the Closing Date. The outstanding Capital Stock of all such Persons is validly issued,fully paid and non-assessable and is owned by the Consolidated Parties,directly or indirectly, in the manner set forth on Schedule 6.13B,free and clear of all Liens (other than those arising under or 

 

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contemplatedin connection with the Credit Documents). Other than as set forth in Schedule 6.13B, neither theBorrower nor any of its Subsidiaries has outstanding any securities convertibleinto or exchangeable for its Capital Stock nor does any such Person haveoutstanding any rights to subscribe for or to purchase or any options for thepurchase of, or any agreements providing for the issuance (contingent orotherwise) of, or any calls, commitments or claims of any character relating toits Capital Stock.  Each of the DomesticSubsidiaries of the General Partner, the USRP REIT and the Borrower existing asof the date hereof, except USRP/HCI Partnership 1, L.P., USRP Funding 2001-A,L.P., USRP (SFGP), LLC, USRP JV1, LLC, USRP (Adams), LP, USRP GP 7, LLC, USRP(Maier), LP, USRP GP 6, LLC, USRP (Green), LLC, USRP (Martin), LLC and USRP(Warren), LLC are listed as Subsidiary Guarantors on the signature pageshereto.

 

## **6.14        Governmental Regulations, Etc.**

 

(a)           None of the transactionscontemplated by this Credit Agreement (including, without limitation, thedirect or indirect use of the proceeds of the Loans) will violate or result ina violation of the Securities Act, the Securities Exchange Act or any ofRegulations U and X.  If requestedby any Lender or the Agent, the Borrower will furnish to the Agent and eachLender a statement, in conformity with the requirements of FR Form U-1referred to in Regulation U, that no part of the Letters of Credit orproceeds of the Loans will be used, directly or indirectly, for the purpose of“buying” or “carrying” any “margin stock” within the meaning of Regulations Uand X, or for the purpose of purchasing or carrying or trading in anysecurities.

 

(b)           None of theConsolidated Parties is (i) an “investment company”, or a company“controlled” by “investment company”, within the meaning of the InvestmentCompany Act of 1940, as amended, (ii) a “holding company” as defined in,or otherwise subject to regulation under, the Public Utility Holding CompanyAct of 1935, as amended or (iii) subject to regulation under any otherFederal or state statute or regulation which limits its ability to incurIndebtedness.

 

## **6.15        Purpose of Loans, Letters of Creditand Derivative Exposure Reserve.**

 

Theproceeds of the Loans hereunder shall be used solely by the Borrower to providefor working capital and general corporate purposes of the Borrower and itsSubsidiaries.  The Letters of Creditshall be used only for or in connection with appeal bonds, reimbursementobligations arising in connection with surety and reclamation bonds,reinsurance, domestic or international trade transactions and obligations nototherwise aforementioned relating to transactions entered into by theapplicable account party in the ordinary course of business.  Proceeds paid with respect to the DerivativeExposure Reserve shall be used only in connection with the Borrower’s exposureunder BOA Derivative Instruments.  Noproceeds of the Loans shall be used to (a) finance the purchase of “marginstock” as such term is defined in Regulation U of the Federal ReserveBoard or (b) finance the acquisition of any investments in commercial mortgage–backedsecurities.

 

## **6.16        Environmental Matters.**

 

Exceptas disclosed and described in Schedule 6.16 attached hereto:

 

(a)           Each of the RealProperties and all operations at the Real Properties are in material compliancewith all applicable Environmental Laws, there is no violation of anyEnvironmental Law with respect to the Real Properties or the Businesses, andthere are no conditions relating to the Real Properties or the Businesses thatcould give rise to liability under any applicable Environmental Laws that couldresult in a Material Adverse Effect.

 

(b)           None of the RealProperties contains, or has previously contained, any Materials ofEnvironmental Concern at, on or under the Real Properties in amounts orconcentrations that could result in a Material Adverse Effect.

 

(c)           No ConsolidatedParty has received any written or verbal notice of, or inquiry from anyGovernmental Authority regarding, any violation, alleged violation,non-compliance, liability or potential liability regarding environmentalmatters or compliance with Environmental Laws with regard to any of the 

 

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Real Properties or the Businesses that could result in aMaterial Adverse Effect, nor does any Executive Officer of any Credit Partyhave knowledge or reason to believe that any such notice will be received or isbeing threatened.

 

(d)           Materials ofEnvironmental Concern have not been transported or disposed of from the RealProperties, or generated, treated, stored or disposed of at, on or under any ofthe Real Properties or any other location, in each case by or on behalf of anyConsolidated Party in a manner that could result in a Material Adverse Effect.

 

(e)           No judicialproceeding or governmental or administrative action is pending or, to the bestknowledge of the Executive Officers of the Credit Parties, threatened, underany Environmental Law to which any Consolidated Party is or will be named as aparty, nor are there any consent decrees or other decrees, consent orders,administrative orders or other orders, or other administrative or judicialrequirements outstanding under any Environmental Law with respect to theConsolidated Parties, the Real Properties or the Businesses that could resultin a Material Adverse Effect.

 

(f)            There has been norelease, or threat of release, of Materials of Environmental Concern at or fromany of the Real Properties, or arising from or related to the operations(including, without limitation, disposal) of any Consolidated Party inconnection with the Real Properties or otherwise in connection with theBusinesses in a manner that could result in a Material Adverse Effect.

 

## **6.17        Intellectual Property.**

 

Each Consolidated Party owns, orhas the legal right to use, all trademarks, tradenames, copyrights, technology,know–how and processes (the “Intellectual Property”) necessary foreach of them to conduct its business as currently conducted except for thosethe failure to own or have such legal right to use could not have a MaterialAdverse Effect.

 

## **6.18        Solvency.**

 

Each Credit Party is and, afterconsummation of the transactions contemplated by the Credit Documents, will beSolvent.

 

## **6.19        Investments.**

 

All Investments of eachConsolidated Party are Permitted Investments.

 

## **6.20        PrincipalOffices.**

 

Set forth on Schedule 6.20is the chief executive office and principal place of business of each CreditParty.  Schedule 6.20 may beupdated from time to time by the Borrowers by giving written notice thereof tothe Agent.

 

## **6.21        Disclosure.**

 

Neither this Credit Agreementnor any financial statements delivered to the Lenders nor any other document,certificate or statement furnished to the Lenders by or on behalf of anyConsolidated Party in connection with the transactions contemplated herebycontains any untrue statement of a material fact or omits to state a materialfact necessary in order to make the statements contained therein or herein notmisleading.

 

## **6.22        No Burdensome Restrictions.**

 

No Consolidated Party is a partyto any agreement or instrument or subject to any other obligation or anycharter or corporate restriction or any provision of any applicable law, ruleor regulation which, individually or in the aggregate, could have a MaterialAdverse Effect.

 

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## **6.23        Brokers’Fees.**

 

No Consolidated Party has anyobligation to any Person in respect of any finder’s, broker’s, investmentbanking or other similar fee in connection with any of the transactionscontemplated under the Credit Documents.

 

## **6.24        LaborMatters.**

 

There are no collectivebargaining agreements or Multiemployer Plans covering the employees of a ConsolidatedParty as of the Closing Date and none of the Consolidated Parties has sufferedany strikes, walkouts, work stoppages or other material labor difficulty withinthe last five years.

 

## **6.25        Natureof Business.**

 

As of the Closing Date, theConsolidated Parties are engaged in the business of acquiring, owning,operating, managing and developing restaurant, service station, other serviceretail properties and several miscellaneous properties (including billboardproperties, one office building and one fuel terminal facility).

 

**6.26        REIT Status.**

 

The USRP REIT is qualified as aREIT and each of its Subsidiaries that is a corporation is a Qualified REITSubsidiary.

 

**6.27        Bankruptcy Remote Borrowing Entity.**

 

The General SPE is a BankruptcyRemote Borrowing Entity and USRP Operating owns 99% of the Capital Stockthereof.

 

**6.28        Closing Date Borrowing Base Assets**.

 

Schedule6.28 sets forth each ofthe Borrowing Base Assets as of the Closing Date.  Each asset listed on Schedule 6.28 fully qualifies as aBorrowing Base Asset and, collectively, the assets listed thereon qualify to beincluded in the Borrowing Base.

 

# **ARTICLEVII**

# ** **

# **AFFIRMATIVE COVENANTS**

 

Each Credit Party herebycovenants and agrees that, so long as this Credit Agreement is in effect or anyamounts payable hereunder or under any other Credit Document shall remainoutstanding or any Letter of Credit is outstanding, and until all of theCommitments hereunder shall have terminated:

 

## **7.1          Information Covenants.**

 

The Credit Parties will furnish, or cause to be furnished, to theAgent and each of the Lenders:

 

(a)           Annual FinancialStatements.  As soon as available,and in any event within 90 days after the close of each fiscal year of theConsolidated Parties, a consolidated balance sheet and income statement of theConsolidated Parties as of the end of such fiscal year, together with relatedconsolidated statements of retained earnings and cash flows for such fiscalyear (along with a summary of amount of all Asset Dispositions and EquityIssuances that were made during the prior fiscal year), in each case settingforth in comparative form consolidated figures for the preceding fiscal year,all such financial information described above to be in reasonable form anddetail and audited by independent certified public accountants of recognizednational standing reasonably acceptable to the Agent and whose opinion shall beto the effect that such financial statements have been prepared in accordancewith GAAP (except for changes with which such accountants concur) and shall notbe limited as to the scope of the audit or qualified as to the status of theConsolidated Parties as a going concern or any other material qualifications orexceptions.

 

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(b)           Quarterly FinancialStatements.  As soon as available,and in any event within 45 days after the close of each of the first threefiscal quarters of each fiscal year of the Consolidated Parties, a consolidatedbalance sheet and income statement of the Consolidated Parties as of the end ofsuch fiscal quarter, together with related consolidated statements of retainedearnings and cash flows for such fiscal quarter, in each case setting forth incomparative form consolidated figures for the corresponding period of the precedingfiscal year, all such financial information described above to be in reasonableform and detail and reasonably acceptable to the Agent, and accompanied by acertificate of an Executive Officer of the Borrower to the effect that suchquarterly financial statements fairly present in all material respects thefinancial condition of the Consolidated Parties and have been prepared inaccordance with GAAP, subject to changes resulting from audit and normalyear-end audit adjustments.

 

(c)           Officer’sCertificate.  At the time ofdelivery of the financial statements provided for in Sections 7.1(a) and7.1(b) above, a certificate of an Executive Officer of the Borrowersubstantially in the form of Exhibit 7.1(c), (i) demonstratingcompliance with the Financial Covenants by calculation thereof as of the end ofeach such fiscal period, (ii) stating that no Default or Event of Defaultexists, or if any Default or Event of Default does exist, specifying the natureand extent thereof and what action the Credit Parties propose to take withrespect thereto and disclosing any Hedging Agreements entered into by anyConsolidated Party.

 

(d)           IntentionallyOmitted.

 

(e)           Accountant’sCertificate.  Within the period fordelivery of the annual financial statements provided in Section 7.1(a), acertificate of the accountants conducting the annual audit stating that theyhave reviewed this Credit Agreement as it relates to accounting and otherfinancial matters and stating further whether, in the course of their audit,they have become aware of any Default or Event of Default and, if any suchDefault or Event of Default exists, specifying the nature and extent thereof, providedthat such accountants shall not be liable by reason of any failure to obtainknowledge of any such Default or Event of Default that would not be disclosedin the course of their audit examination.

 

(f)            Auditor’sReports.  Promptly upon receiptthereof, a copy of any other report or “management letter” submitted byindependent accountants to any Consolidated Party in connection with anyannual, interim or special audit of the books of such Person.

 

(g)           Reports.  Promptly upon transmission or receiptthereof, (i) copies of any filings and registrations with, and reports toor from, the Securities and Exchange Commission, or any successor agency, andcopies of all financial statements, proxy statements, notices and reports asany Consolidated Party shall send to its shareholders or to a holder of anyIndebtedness owed by any Consolidated Party in its capacity as such a holderand (ii) upon the request of the Agent, all reports and writteninformation to and from the United States Environmental Protection Agency, orany state or local agency responsible for environmental matters, the UnitedStates Occupational Health and Safety Administration, or any state or localagency responsible for health and safety matters, or any successor agencies orauthorities concerning environmental, health or safety matters.

 

(h)           Notices.  Upon any Executive Officer of a Credit Partyobtaining knowledge thereof, the Credit Parties will give written notice to the Agent immediately of (i) theoccurrence of an event or condition consisting of a Default or Event ofDefault, specifying the nature and existence thereof and what action the CreditParties propose to take with respect thereto, and (ii) the occurrence ofany of the following with respect to any Consolidated Party (A) thependency or commencement of any litigation, arbitral or governmental proceedingagainst such Person which if adversely determined is likely to have a MaterialAdverse Effect or (B) the institution of any proceedings against suchPerson with respect to, or the receipt of notice by such Person of potentialliability or responsibility for violation, or alleged violation of any Federal,state or local law, rule or regulation, including but not limited to,Environmental Laws, the violation of which could have a Material AdverseEffect.

 

(i)            ERISA.  Upon any Executive Officer of a Credit Partyobtaining knowledge thereof, the Credit Parties will give written notice to the Agent promptly (and in any event withinfive Business Days) of: 

 

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(i) any event or condition, including, but notlimited to, any Reportable Event, that constitutes, or might reasonably leadto, an ERISA Event; (ii) with respect to any Multiemployer Plan, thereceipt of notice as prescribed in ERISA or otherwise of any withdrawalliability assessed against the Credit Parties or any ERISA Affiliates, or of a determination that any MultiemployerPlan is in reorganization or insolvent (both within the meaning ofTitle IV of ERISA); (iii) the failure to make full payment on orbefore the due date (including extensions) thereof of all amounts which anyConsolidated Party or any ERISA Affiliate is required to contribute to eachPlan pursuant to its terms and as required to meet the minimum funding standardset forth in ERISA and the Code with respect thereto; or (iv) any changein the funding status of any Plan that could have a Material Adverse Effect,together with a description of any such event or condition or a copy of anysuch notice and a statement by an Executive Officer of the Borrower briefly setting forth the detailsregarding such event, condition, or notice, and the action, if any, which hasbeen or is being taken or is proposed to be taken by the Credit Parties withrespect thereto.  Promptly upon request,the Credit Parties shall furnish the Agent and the Lenders with such additionalinformation concerning any Plan as may be reasonably requested, including, butnot limited to, copies of each annual report/return (Form 5500 series), aswell as all schedules and attachments thereto required to be filed with theDepartment of Labor and/or the Internal Revenue Service pursuant to ERISA andthe Code, respectively, for each “plan year” (within the meaning ofSection 3(39) of ERISA).

 

(j)            Environmental.  Upon the reasonable written request of theAgent, the Credit Parties will furnish or cause to be furnished to the Agent,at the Credit Parties’ expense, areport of an environmental assessment of reasonable scope, form and depth,(including, where appropriate, invasive soil or groundwater sampling) by aconsultant reasonably acceptable to the Agent as to the nature and extent ofthe presence of any Materials of Environmental Concern on any Real Properties(as defined in Section 6.16) contributing to the Borrowing Base and as tothe compliance by any Consolidated Party with Environmental Laws at such RealProperties.  If the Credit Parties failto deliver such an environmental report within seventy-five (75) daysafter receipt of such written request then the Agent may arrange for same, andthe Consolidated Parties hereby grant to the Agent and their representativesaccess to the Real Properties to reasonably undertake such an assessment(including, where appropriate, invasive soil or groundwater sampling).  The reasonable cost of any assessmentarranged for by the Agent pursuant to this provision will be payable by the CreditParties on demand and added to the CreditParty Obligations.

 

(k)           BorrowingBase Certificates/Delinquency Reports. Within 15 days after the end of each calendar month, a certificate as ofthe end of the immediately preceding month, substantially in the form of Exhibit 7.1(k) and certified byan Executive Officer of the Borrower to be true and correct as of the datethereof (a “Borrowing Base Certificate”) and a Delinquency Report withrespect to the last day of such calendar month certified by an ExecutiveOfficer of the Borrower to be true and correct as of such date.

 

(l)            Three Year Projections/Updates.  As soonas available, and in any event within 90 days after the close of each fiscalyear of the Consolidated Parties, detailed projections of financial statementsfor the Consolidated Parties and of calculations with respect to each of theFinancial Covenants, in each case, for the three year period following the mostrecently ended fiscal quarter of the Consolidated Parties.

 

(m)          Other Information.  With reasonable promptness upon any suchrequest, such other information regarding the business, properties or financialcondition of any Consolidated Party as the Agent or the Required Lenders mayreasonably request.

 

## **7.2          Preservation of Existence,Franchises, Bankruptcy Remote Borrowing Entity Status and REIT Status.**

 

Exceptas a result of or in connection with a dissolution, merger or disposition of aSubsidiary not prohibited bySection 8.4 or Section 8.5, each Credit Party will, and will cause eachof its corporate Subsidiaries to, do all things necessary to preserve and keepin full force and effect its existence, rights, franchises, authority andstatus as a REIT or Qualified REIT Subsidiary, as applicable.  The General SPE shall maintain its respectivestatus as a Bankruptcy Remote Borrowing Entity and each of the Credit Partiesshall take such action as is required to maintain such status at all timesduring the term hereof.  The General SPEshall, at all times during the term hereof, remain a Wholly Owned Subsidiary ofUSRP Operating.

 

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## **7.3          Booksand Records.**

 

EachCredit Party will, and will cause each of its Subsidiaries to, keep completeand accurate books and records of its transactions in accordance with goodaccounting practices on the basis of GAAP (including the establishment andmaintenance of appropriate reserves).

 

## **7.4          Compliancewith Law.**

 

EachCredit Party will, and will cause each of its Subsidiaries to, comply with alllaws, rules, regulations and orders, and all applicable restrictions imposed byall Governmental Authorities, applicable to it and its Property ifnoncompliance with any such law, rule, regulation, order or restriction couldhave a Material Adverse Effect.

 

## **7.5          Payment of Taxes and OtherIndebtedness.**

 

EachCredit Party will, and will cause each of its Subsidiaries to, pay anddischarge (a) all taxes, assessments and governmental charges or leviesimposed upon it, or upon its income or profits, or upon any of its properties,before they shall become delinquent, (b) all lawful claims (includingclaims for labor, materials and supplies) which, if unpaid, might give rise toa Lien upon any of its properties, and (c) except as prohibited hereunder,all of its other Indebtedness as it shall become due; provided, however,that no Consolidated Party shall be required to pay any such tax, assessment,charge, levy, claim or Indebtedness which is being contested in good faith byappropriate proceedings and as to which adequate reserves therefor have beenestablished in accordance with GAAP, unless the failure to make any suchpayment (i) could give rise to an immediate right to foreclose on a Liensecuring such amounts or (ii) could have a Material Adverse Effect.

 

## **7.6          Insurance.**

 

The present insurance coverageof the Consolidated Parties is outlined as to carrier, policy number,expiration date, type and amount on Schedule 7.6, and the Borrowershall update such Schedule 7.6 and notify the Agent immediatelyupon the occurrence of any change in such insurance coverage.

 

## **7.7          Maintenance of Property.**

 

EachCredit Party will, will cause each of its Subsidiaries to, and (as applicable)will use its best efforts to cause the applicable Person in possession of aReal Property to, maintain and preserve its properties and equipment materialto the conduct of its business in good repair, working order and condition,normal wear and tear and casualty and condemnation excepted, and will make, orcause to be made, in such properties and equipment from time to time allrepairs, renewals, replacements, extensions, additions, betterments andimprovements thereto as may be needed or proper, to the extent and in themanner customary for companies in similar businesses.

 

## **7.8          Performance of Obligations.**

 

EachCredit Party will, and will cause each of its Subsidiaries to, perform in allmaterial respects all of its obligations under the terms of all materialagreements and all material indentures, mortgages, security agreements or otherdebt instruments to which it is a party or by which it is bound.

 

## **7.9          Useof Proceeds.**

 

TheBorrower will use the proceeds of the Loans and will use the Letters of Creditsolely for the purposes set forth in Section 6.15.

 

## **7.10        Audits/Inspections.**

 

Uponreasonable notice and during normal business hours, each Credit Party will, andwill cause each of its Subsidiaries to, permit representatives appointed by theAgent, including, without limitation, independent accountants, agents,attorneys, and appraisers to visit and inspect its property (subject to therights of tenants under their respective leases), including its books andrecords, its accounts receivable and inventory, its facilities and its otherbusiness assets, 

 

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andto make photocopies or photographs thereof and to write down and record anyinformation such representative obtains and shall permit the Agent or itsrepresentatives to investigate and verify the accuracy of information providedto the Lenders and to discuss all such matters with the officers, employees andrepresentatives of such Person.

 

## **7.11        FinancialCovenants.**

 

(a)           Leverage Ratio.  The Leverage Ratio, as of the last day ofeach fiscal quarter of the Consolidated Parties, shall be less than or equal to0.70 to 1.0.

 

(b)           Tangible NetWorth.  At all times theTangible Net Worth shall be greater than or equal to the sum of (i)$270,000,000.00, plus (ii) an amount equal to 85% of the Net CashProceeds of any Equity Issuance received by the Consolidated Parties afterDecember 31, 2001, calculated on a cumulative basis.

 

(c)           Fixed ChargeCoverage Ratio.  The Fixed ChargeCoverage Ratio, as of the last day of each fiscal quarter of the ConsolidatedParties, shall be (i) for fiscal quarters ending on or before December 31,2003, greater than or equal to 1.35 to 1.0; (ii) for fiscal quarters ending onor before December 31, 2004, greater than or equal to 1.45 to 1.0 and (iii) forfiscal quarters ending thereafter, greater than or equal to 1.55 to 1.0.

 

(d)           DistributionLimitation.  For any given fiscal quarter of the ConsolidatedParties, the aggregate sum of (i) the amount of cash distributions made ordeclared by the Consolidated Parties to their shareholders (excluding anyshareholders which are Consolidated Parties) plus (ii) the amount spentby the Consolidated Parties for the purpose of repurchasing their own CapitalStock (whether common or preferred) shall not exceed the greater of (1) the FFODistribution Allowance for such fiscal quarter or (2) so long as no Default orEvent of Default has occurred and is then continuing, the amount necessary tomaintain the status of the USRP REIT as a REIT.

 

(e)           SecuredIndebtedness to Asset Value Ratio. The ratio of (i) Secured Indebtedness to (ii) the sum of Asset Valuesfor each of the Real Properties (less any amounts attributable to OutsideInterests) as of the end of each fiscal quarter of the Consolidated Partiesshall be less than or equal to 0.40 to 1.0.

 

(f)            Debt ServiceCoverage Ratio.  The Debt ServiceCoverage Ratio shall be, at all times, be equal to or greater than 2.50 to 1.0.

 

## **7.12        NewSubsidiaries.**

 

As soon as practicableand in any event within 30 days after any Person becomes a direct or indirectSubsidiary of the General Partner, the USRP REIT or the Borrower, the Borrowershall provide the Agent with written notice thereof setting forth informationin reasonable detail describing all of the assets of such Person and shall(a) if such Person is a Domestic Subsidiary, cause such Person to (a)execute a Joinder Agreement in substantially the same form as Exhibit 7.12 and (b) deliversuch other documentation as the Agent may reasonably request in connectiontherewith, including, without limitation, financial statements, certifiedresolutions and other organizational and authorizing documents of such Person,favorable opinions of counsel to such Person (which shall cover, among otherthings, the legality, validity, binding effect and enforceability of thedocumentation referred to above) and other items of the types required to bedelivered pursuant to Section 5.1, as applicable, all in form, content andscope reasonably satisfactory to the Agent; provided, that thisSection 7.12 shall not be construed to require USRP/HCI Partnership 1,L.P., USRP Funding 2001-A, L.P., USRP(SFGP), LLC, USRP JV1, LLC, USRP (Adams), LP, USRP GP 7, LLC, USRP (Maier), LP,USRP GP 6, LLC, USRP (Green), LLC, USRP (Martin), LLC and USRP (Warren), LLC(or their respective successor entities) to execute Joinder Agreements orotherwise act as Subsidiary Guarantors hereunder unless and until (i) withrespect to USRP/HCI Partnership 1, L.P, such entity ceases to be a jointventure and is controlled by any Consolidated Party, (ii) with respect to USRPFunding 2001-A, L.P., such entity ceases to maintain its status as a SpecialPurpose Entity, or (iii) with respect to each such entity, such entity is notprohibited by the terms of other financing transactions or its organizationaldocuments from acting as a Guarantor hereunder.  For purposes of the preceding sentence, it is understood that noentity shall be deemed prohibited from executing a Joinder Agreement once itbecomes a Wholly Owned Subsidiary by virtue of a provision in itsorganizational documents notwithstanding any such provision in such documents.

 

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**7.13        ERISA Exemptions.**

 

EachCredit Party and the Borrower shall not, and shall not permit any of theirrespective Subsidiaries to, permit any of their respective assets to become orbe deemed to be “plan assets” within the meaning of ERISA, the Code and therespective regulations promulgated thereunder.

 

**7.14        Further Assurances.**

 

The Borrower shall, fromtime to time, at the expense of the Borrower, promptly execute, deliver, file and/orrecord all further instruments and documents, and take all further action, thatmay be necessary or desirable, or that the Agent or Collateral Agent mayreasonably request in order to (a) properly evidence the Borrower’sIndebtedness hereunder or under any Credit Document or (b) perfect, continueand protect the pledge, assignment and/or security interest, as applicable,granted or purported to be granted hereby or pursuant to any Credit Documentand to enable the Agent and/or Collateral Agent to exercise and enforce theirrights and remedies hereunder and under any other Credit Document.  The Borrower shall promptly deliver to theCollateral Agent a copy of each such instrument and evidence of its properfiling or recording, as necessary.

 

**ARTICLE VIII**

 

**NEGATIVE COVENANTS**

 

EachCredit Party hereby covenants and agrees that, so long as this Credit Agreementis in effect or any amounts payable hereunder or under any other CreditDocument shall remain outstanding or any Letter of Credit is outstanding, anduntil all of the Commitments hereunder shall have terminated:

 

**8.1          Indebtedness.**

 

TheCredit Parties will not permit any Consolidated Party to contract, create,incur, assume or permit to exist any Indebtedness, except:

 

(a)           Indebtednessarising under this Credit Agreement, the other Credit Documents or Indebtednessexpressly permitted hereunder;

 

(b)           Indebtedness in existence as of the AgreementDate and described on Schedule 8.1 and any Indebtedness (the “ReplacementIndebtedness”) extending the maturity of, or refunding, refinancing orreplacing, in whole or in part, any such existing Indebtedness (the “ReplacedIndebtedness”) so long as (i) the direct and contingent obligors withrespect to the Replaced Indebtedness and the Replacement Indebtedness shall bethe same, (ii) the Replacement Indebtedness shall not mature prior to thestated maturity date or mandatory redemption date of the Replaced Indebtedness,(iii) if the Replaced Indebtedness is subordinated in right of payment orotherwise to the obligations of each of the Credit Parties under and in respectof the Credit Documents to which any of them is a party, then the ReplacementIndebtedness must be subordinated to such obligations to at least the sameextent and (iv) the Replacement Indebtedness otherwise complies with all otherterms and conditions contained in any other Section of this CreditAgreement;

 

(c)           purchasemoney Indebtedness (including obligations in respect of Capital Leases orSynthetic Leases) hereafter incurred by the Borrower or any of its Subsidiariesto finance the purchase of fixed assets; provided that (i) thetotal of all such Indebtedness for all such Persons taken together shall notexceed an aggregate principal amount of $250,000 at any one time outstanding;(ii) such Indebtedness when incurred shall not exceed the purchase priceof the asset(s) financed; and (iii) no such Indebtedness shall berefinanced for a principal amount in excess of the principal balanceoutstanding thereon at the time of such refinancing;

 

(d)           Indebtednessresulting from customary recourse carve-outs associated with securitizationtransactions (including, by way of example, those for fraud, misapplication ofproceeds and environmental indemnities) and not involving the creditworthinessof the applicable obligors;

 

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(e)           Indebtednessin the form of trade payables incurred in the ordinary course of business;

 

(f)            obligationsof the Borrower in respect of Hedging Agreements;

 

(g)           intercompanyIndebtedness permitted under Section 8.6; provided, however, that the obligations of each obligor of suchIndebtedness shall: (i) be subordinated to the Credit Party Obligations onterms acceptable to the Required Lenders in their sole discretion and (ii) havesuch other terms and provisions as the Agent may reasonably require;

 

(h)           inaddition to the Indebtedness otherwise permitted by this Section 8.1,

 

(i)            otherrecourse Indebtedness hereafter incurred by the General Partner, the Borrower orany of their Subsidiaries provided that (A) the loan documentation withrespect to such Indebtedness shall not contain financial covenants or defaultprovisions relating to any Consolidated Party that are more restrictive thanthe covenants and default provisions contained in the Credit Documents,(B) the Borrower shall have delivered to the Agent a Pro FormaCompliance Certificate demonstrating that, upon giving effect on a Pro Forma Basis to the incurrence of suchIndebtedness and to the concurrent retirement of any other Indebtedness of anyConsolidated Party, the Credit Parties would be in compliance with theFinancial Covenants and (C) the aggregate principal amount of suchIndebtedness, together with Indebtedness permitted pursuant toSections 8.1(c) and (f) shall not at any time exceed $10,000,000 plus theamount of any hedge obligations incurred with respect to a Term Securitization;

 

(ii)           Indebtednesswhere the recourse of the lender is limited to foreclosure of its securityinterest in the subject property; and

 

(iii)          GuarantyObligations of any Guarantor with respect to any Indebtedness permitted underthis Section 8.1.

 

Notwithstandingthe foregoing, the General Partner and the Borrower shall not, and shall notpermit any other Subsidiary to, create, incur or assume any Indebtedness afterthe Closing Date if immediately prior to the creation, incurring or assumptionthereof, or immediately thereafter and after giving effect thereto, a Defaultor Event of Default is or would be in existence, including without limitation,a Default or Event of Default resulting from a violation of any of thecovenants contained in this Section 8.1.

 

**8.2          Liens.**

 

TheCredit Parties will not permit any Consolidated Party to contract, create,incur, assume or permit to exist any Lien with respect to any of its Property,whether now owned or after acquired, except for:

 

(a)           Liensin favor of the Agent to secure the Credit Party Obligations;

 

(b)           (i)Liens, about which any Credit Party has had knowledge for less thanthirty (30) days, in an aggregate amount less than $200,000 (other thanLiens created or imposed under ERISA) for taxes, assessments or governmentalcharges or levies not yet due or, if due, are for taxes, assessments orgovernmental charges or levies that are more than five (5) days from thedate on which such items may be deemed delinquent or on which penalties fornon-payment may be assessed or (ii) Liens for taxes being contested in goodfaith by appropriate proceedings for which adequate reserves determined inaccordance with GAAP have been established (and as to which the Propertysubject to any such Lien is not yet subject to foreclosure, sale or loss onaccount thereof);

 

(c)           statutoryLiens of landlords and Liens of carriers, warehousemen, mechanics, materialmenand suppliers and other Liens imposed by law or pursuant to customaryreservations or retentions of title arising in the ordinary course of business,in each case which any Credit Party has had knowledge for less thanthirty (30) days, in an aggregate amount less than $200,000, providedthat such Liens secure only amounts not

 

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yetdue and payable or, if due and payable, are unfiled and no other action hasbeen taken to enforce the same or are being contested in good faith byappropriate proceedings for which adequate reserves determined in accordancewith GAAP have been established (and as to which the Property subject to anysuch Lien is not yet subject to foreclosure, sale or loss on account thereof);

 

(d)           Liens(other than Liens created or imposed under ERISA) incurred or deposits made byany Consolidated Party in the ordinary course of business in connection withworkers’ compensation, unemployment insurance and other types of socialsecurity, or to secure the performance of tenders, statutory obligations, bids,leases, government contracts, performance and return-of-money bonds and othersimilar obligations (exclusive of obligations for the payment of borrowedmoney);

 

(e)           Liensin connection with attachments or judgments (including judgment or appealbonds) provided that the judgments secured shall, within 30 days afterthe entry thereof, have been discharged or execution thereof stayed pendingappeal, or shall have been discharged within 30 days after the expiration ofany such stay;

 

(f)            easements,rights-of-way, restrictions (including zoning restrictions), minor defects orirregularities in title and other similar charges or encumbrances not, in anymaterial respect, impairing the use of the encumbered Property for its intendedpurposes;

 

(g)           Lienson Property of any Person securing purchase money Indebtedness (includingCapital Leases and Synthetic Leases) of such Person permitted underSection 8.1(c), provided that any such Lien attaches to suchProperty concurrently with or within 90 days after the acquisition thereof;

 

(h)           leasesor subleases granted to others not interfering in any material respect with thebusiness of any Consolidated Party;

 

(i)            anyinterest of title of a lessor under, and Liens arising from UCC financingstatements (or equivalent filings, registrations or agreements in foreignjurisdictions) relating to, leases permitted by this Credit Agreement;

 

(j)            Liensdeemed to exist in connection with Investments in repurchase agreementspermitted under Section 8.6;

 

(k)           normaland customary rights of setoff upon deposits of cash in favor of banks or otherdepository institutions;

 

(l)            Liensof a collection bank arising under Section 4-210 of the Uniform CommercialCode on items in the course of collection;

 

(m)          Liensof sellers of goods to the Borrower and any of its Subsidiaries arising underArticle 2 of the Uniform CommercialCode or similar provisions of applicable law in the ordinary course ofbusiness, covering only the goods sold and securing only the unpaid purchaseprice for such goods and related expenses;

 

(n)           Liensexisting as of the Closing Date as set forth or as contemplated on Schedule 8.2;provided that no such Lien shall at any time be extended to orcover any Property other than the Property subject thereto on the Closing Date;and

 

(o)           Lienssecuring Indebtedness described in Section 8.1(h)(ii).

 

**8.3          Natureof Business.**

 

TheCredit Parties will not permit any Consolidated Party to substantively alterthe character or conduct of the business conducted by such Person as of theClosing Date.

 

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**8.4          Consolidation,Merger, Dissolution, etc.**

 

TheCredit Parties will not permit any Consolidated Party to enter into anytransaction of merger or consolidation or liquidate, wind up or dissolve itself(or suffer any liquidation or dissolution); provided that,notwithstanding the foregoing provisions of this Section 8.4 but subjectto the terms of Sections 7.12, (a) the Borrower or General Partner maymerge or consolidate with any of its Subsidiaries provided that theBorrower or General Partner (as applicable) shall be the continuing orsurviving corporation, (b) any Credit Party other than the General Partneror the Borrower may merge or consolidate with any other Credit Party other thanthe General Partner or the Borrower, (c) any Consolidated Party which isnot a Credit Party may be merged or consolidated with or into any Credit Party;provided that such Credit Party shall be the continuing or survivingcorporation, (d) any Consolidated Party which is not a Credit Party may bemerged or consolidated with or into any other Consolidated Party which is not aCredit Party, and (e) any Wholly Owned Subsidiary of the Borrower maydissolve, liquidate or wind up its affairs at any time provided that suchdissolution, liquidation or winding up, as applicable, could not have aMaterial Adverse Effect.

 

**8.5          Asset Dispositions/Substitution ofAssets.**

 

(a)           TheCredit Parties will not permit any Consolidated Party to make any AssetDisposition or series of Asset Dispositions in which the aggregate value of theassets sold or otherwise disposed pursuant to such Asset Disposition or seriesof Asset Dispositions exceeds $70,000,000****unless the Borrower shall have deliveredto the Agent at least two (2) Business Days prior to such AssetDisposition or series of Asset Dispositions a Pro Forma Compliance Certificatedemonstrating on a Pro Forma Basis that, upon giving effect to such AssetDisposition or series of Asset Dispositions, the Credit Parties shall be incompliance with all of the covenants contained in Section 7.11.

 

(b)           The General SPE shall not sell,transfer, assign, pledge, encumber or otherwise dispose of any of its assetsexcept to the extent the General SPE obtains the prior written consent of theAgent (which consent may be withheld at the sole reasonable discretion of theAgent).

 

**8.6          Investments.**

 

TheCredit Parties will not permit any Consolidated Party to make any Investmentsafter the Closing Date, except for:

 

(a)           Investmentsconsisting of cash and Cash Equivalents;

 

(b)           Investmentsconsisting of accounts receivable created, acquired or made by any ConsolidatedParty in the ordinary course of business and payable or dischargeable inaccordance with customary trade terms;

 

(c)           Investmentsconsisting of Capital Stock, obligations, securities or other property receivedby any Consolidated Party in settlement of accounts receivable (created in theordinary course of business) from bankrupt obligors or guarantors of bankruptobligors;

 

(d)           Investmentsconsisting of loans or advances to Tenants in an amount not to exceed$25,000,000.00;

 

(e)           Investmentsconsisting of advances or loans to directors, officers, employees, agents orsuppliers that do not, in the aggregate, exceed the sum of $700,000.00;

 

(f)            Investmentsin any Credit Party;

 

(g)           Investmentsentered into in connection with a Term Securitization permitted andcontemplated hereunder;

 

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(h)           Investmentsin non-wholly owned general and limited partnerships, joint ventures and otherPersons which are not corporations (excluding such Investments in existence asof the date hereof), the aggregate book value of which constitutes less thanfive percent (5%) of Total Tangible Assets;

 

(i)            Investmentsin Development Activities; provided, that (i) the aggregate amount ofInvestments made by the Consolidated Parties with respect to such DevelopmentActivities shall not, at any one time, exceed $15,000,000.00 and (ii) all costsand expenses associated with all existing Development Activities (budget tocompletion) shall be included in determining the aggregate Investment of theConsolidated Parties with respect to such activities;

 

(j)            Investmentsconsisting of loans to Persons who have or are purchasing real property from aConsolidated Party; provided that (i) the total aggregate amount of such loansshall not exceed $45,000,000.00, (ii) such loans shall be made on a securedbasis and (iii) such loans shall be made on commercially reasonable terms;

 

(k)           Investmentsin marketable securities that do not, in the aggregate, exceed the sum of$5,000,000.00;

 

(l)            Investmentsin debt and equity securities of Shoney’s, Inc. that do not, in the aggregate,exceed the sum of $1,800,000.00; provided, that, the Agent is given a summaryof the amount and type of such debt and of equity securities prior to themaking of such investment.

 

**8.7          RestrictedPayments.**

 

Exceptas set forth on Schedule 8.11, the Credit Parties will not permitany Consolidated Party to, directly or indirectly, declare, order, make or setapart any sum for or pay any Restricted Payment, except (a) to makedividends or other distributions payable to any Credit Party (directly orindirectly through Subsidiaries), (b) Special Purpose Entities may (directly or indirectly through anyintermediate Subsidiaries) (i) make Restricted Payments to the extent requiredto do so under the terms of a Term Securitization and (ii) distribute I/0Strips and other assets to the General Partner, the Borrower or any otherGuarantor and (c) as expresslypermitted by Section 7.11(d), Section 8.6, Section 8.8 orSection 8.9.

 

**8.8          OtherIndebtedness.**

 

TheCredit Parties will not permit any Consolidated Party to if any Default or Eventof Default has occurred and is continuing or would be directly or indirectlycaused as a result thereof, (a) after the issuance thereof, amend ormodify any of the terms of any Indebtedness of such Consolidated Party if suchamendment or modification would add or change any terms in a manner adverse tosuch Consolidated Party, or shorten the final maturity or average life tomaturity or require any payment to be made sooner than originally scheduled orincrease the interest rate applicable thereto, or (b) make (or give any noticewith respect thereto) any voluntary or optional payment or prepayment orredemption or acquisition for value of (including without limitation, by way ofdepositing money or securities with the trustee with respect thereto before duefor the purpose of paying when due), refund, refinance or exchange of any otherIndebtedness of such Consolidated Party.

 

**8.9          Transactionswith Affiliates.**

 

TheCredit Parties will not permit any Consolidated Party to enter into or permitto exist any transaction or series of transactions with any officer, director,shareholder, Subsidiary or Affiliate of such Person other than(a) advances of working capital to any Credit Party, (b) transfers ofcash and assets to any Credit Party, (c) intercompany transactionsexpressly permitted by Section 8.1, Section 8.4, Section 8.5,Section 8.6, or Section 8.7, (d) normal compensation andreimbursement of expenses of officers and directors and (e) except asotherwise specifically limited in this Credit Agreement, other transactionswhich are entered into in the ordinary course of such Person’s business onterms and conditions substantially as favorable to such Person as would beobtainable by it in a comparable arms-length transaction with a Person otherthan an officer, director, shareholder, Subsidiary or Affiliate.

 

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**8.10        Fiscal Year; Organizational Documents.**

 

TheCredit Parties will not permit any Consolidated Party to change its fiscal yearor amend, modify or change its articles of incorporation (or corporate charteror other similar organizational document) or bylaws (or other similardocument).

 

**8.11        Limitationon Restricted Actions.**

 

TheCredit Parties will not permit any Consolidated Party to, directly or indirectly,create or otherwise cause or, except as set forth on Schedule 8.11,suffer to exist or become effective any encumbrance or restriction on theability of any such Person to (a) pay dividends or make any otherdistributions to any Credit Party onits Capital Stock or with respect to any other interest or participation in, ormeasured by, its profits, (b) pay any Indebtedness or other obligationowed to any Credit Party, (c) make loans or advances to any Credit Party, (d) sell, lease ortransfer any of its properties or assets to any Credit Party, or (e) actas a Credit Party and pledge its assets pursuant to the Credit Documentsor any renewals, refinancings, exchanges, refundings or extension thereof,except (in respect of any of the matters referred to in clauses (a)-(d)above) for such encumbrances or restrictions existing under or by reason of(i) this Credit Agreement and the other Credit Documents,(ii) applicable law, (iii) anydocument or instrument governing Indebtedness incurred pursuant to (A)Section 8.1(b), and (B) with respect to clause (d) of thisSection 8.11 only, Section 8.1(h),provided that anysuch restriction contained therein relates only to the asset or assetsconstructed or acquired in connection therewith, (iv) any Permitted Lienor any document or instrument governing any Permitted Lien, providedthat any such restriction contained therein relates only to the asset or assetssubject to such Permitted Lien or (v) customary restrictions andconditions contained in any agreement relating to the sale of any Propertypermitted under Section 8.5 pending the consummation of such sale.

 

**8.12        ContingentObligations.**

 

Neitherthe General Partner nor the Borrower shall become or remain liable, or permitany other Subsidiary to become or remain liable, on or under any ContingentObligation other than the following:

 

(a)           Contingent Obligations arising underany of the Credit Documents;

 

(b)           Contingent Obligations in existenceas of the Closing Date (the material ones having been disclosed to the Agent inwriting on Schedule 8.12(b) attached hereto) and any ContingentObligation incurred in replacement, in whole or in part, of any such existingContingent Obligations so long as (i) the amount of such replacement ContingentObligation shall not be increased, (ii) such replacement Contingent Obligationshall not mature or otherwise be required to be performed prior to thecorresponding maturity or performance date of the Contingent Obligation beingso replaced, and (iii) if the Contingent Obligation being so replaced issubordinated to any of the Credit Party Obligations, such replacementContingent Obligation shall be subordinated to such obligations to at least thesame extent;

 

(c)           Contingent Obligations resulting fromendorsement of negotiable instruments for collection or deposit in the ordinarycourse of business;

 

(d)           Contingent Obligations incurred inthe ordinary course of business with respect to surety and appeal bonds,performance and return-of-money bonds and other similar obligations;

 

(e)           Contingent Obligations to the extentconstituting Indebtedness permitted under Section 8.1; and

 

(f)            Guaranties by a Consolidated Partyof the obligations of another Consolidated Party;

 

**8.13        SaleLeasebacks.**

 

Notwithstandinganything contained herein to the contrary, the Credit Parties will not permitany Consolidated Party to enter into any Sale and Leaseback Transaction.

 

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**8.14        IntentionallyOmitted.**

 

**8.15        NegativePledges/Liens.**

 

Notwithstanding anythingcontained herein or in any other Credit Document to the contrary:

 

(a)           noneof the Consolidated Parties shall, at any time, enter into, assume or becomesubject to any Negative Pledge on their Property prohibiting or otherwiserestricting the existence of any Lien upon any of its Property in favor of theAgent (for the benefit of the Lenders) for the purpose of securing the CreditParty Obligations, except (i) in connection with any document or instrumentgoverning Indebtedness incurred in accordance with Section 8.1(c);provided, that any such restriction contained therein relates only to the assetor assets constructed or acquired in connection therewith, (ii) in connectionwith any Permitted Lien or any document or instrument governing any PermittedLien, provided, that any such restriction contained therein relates only to theasset or assets subject to such Permitted Lien and (iii) pursuant to customaryrestrictions and conditions contained in any agreement relating to the sale ofany Property permitted under Section 8.5, pending the consummation of suchsale;

 

(b)           none of the Consolidated Partiesshall, at any time, pledge or otherwise encumber (except in connection herewithor with any of the Credit Documents) any income derived from any of the assetscontributing to the calculation of Borrowing Base Asset Value;

 

(c)           the General SPE shall not, atany time, contract, create, incur, assumeor permit to exist any Lien with respect to any of its assets except to theextent such Liens are of the types described in Sections 8.2(b), (c), (d), (e),(f), (h) and (i);

 

(d)           the General SPE shall****not, in any case, incur any Indebtednessor Contingent Obligations aside from Indebtedness and/or Contingent Obligationsarising in connection with the Credit Documents and Indebtedness and/orContingent Obligations of the type described in Section 8.1(e); and

 

(e)           USRP Operating shall not, at anytime, contract, create, incur, assume or permit to exist any Lien on itsownership interests in the General SPE or on the income derived therefrom(except to the extent such Liens arise in connection with the CreditDocuments).

 

**8.16        OperatingLease Obligations.**

 

TheCredit Parties will not permit any Consolidated Party to enter into, assume orpermit to exist any obligations for the payment of rental under OperatingLeases (excluding ground leases) which in the aggregate for all such Personswould exceed $1,000,000 in any fiscal year.

 

**8.17        No Foreign Subsidiaries.**

 

TheCredit Parties will not create, acquire or permit to exist any ForeignSubsidiary.

 

**8.18        GroundLeases.**

 

Forall leases executed following the Closing Date, the USRP REIT, the GeneralPartner and the Borrower shall, and shall not permit any other ConsolidatedSubsidiary to, lease as lessee any real property pursuant to a ground leaseunless such ground lease contains customary provisions protective of any lenderto the lessee which provisions do not vary in any material respect from thoserequired under the Borrower’s standard underwriting procedures and policies.

 

**8.19        ERISAExemptions.**

 

TheUSRP REIT, the General Partner and the Borrower shall not, and shall not permitany other Consolidated Subsidiary to, permit any of its respective assets tobecome or be deemed to be “plan assets” within the meaning of ERISA, the Codeand the respective regulations promulgated thereunder.

 

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**8.20        Transferof Assets to Non-Guarantor Subsidiaries and Affiliates.**

 

TheUSRP REIT, the General Partner and the Borrower shall not, and shall not permitany other Consolidated Subsidiary to, transfer any of their respective assetsto any of their respective Subsidiaries or Affiliates except to the extent theapplicable Subsidiary or Affiliate has, at the time of such transfer, executeda Joinder Agreement and is a Guarantor hereunder.

 

**ARTICLE IX**

** **

**EVENTS OF DEFAULT**

 

**9.1          Events ofDefault.**

 

AnEvent of Default shall exist upon the occurrence and during the continuance ofany of the following specified events (each an “Event of Default”):

 

(a)           Payment.  Any Credit Party shall

 

(i)            defaultin the payment when due of any principal of any of the Loans or of anyreimbursement obligations arising from drawings under Letters of Credit, or

 

(ii)           default,and such default shall continue for three (3) or more Business Days, inthe payment when due of any interest on the Loans or on any reimbursementobligations arising from drawings under Letters of Credit, or of any Fees orother amounts owing hereunder, under any of the other Credit Documents or inconnection herewith or therewith; or

 

(b)           Representations.  Any representation, warranty or statementmade or deemed to be made by any Credit Party herein, in any of the otherCredit Documents, or in any statement or certificate delivered or required tobe delivered pursuant hereto or thereto shall prove untrue in any materialrespect on the date as of which it was deemed to have been made; or

 

(c)           Covenants.  Any Credit Party shall

 

(i)            defaultin the due performance or observance of any term, covenant or agreementcontained in Sections 7.2, 7.9, 7.11 or 7.12 or Section 8;

 

(ii)           defaultin the due performance or observance of any term, covenant or agreementcontained in Sections 7.1(a), (b), (c) or (d) and such default shallcontinue unremedied for a period of at least 5 days after the earlier of anExecutive Officer of a Credit Party becoming aware of such default or noticethereof by the Agent; or

 

(iii)          defaultin the due performance or observance by it of any term, covenant or agreement(other than those referred to in subsections (a), (b), (c)(i) or (c)(ii)of this Section 9.1) contained in this Credit Agreement or any otherCredit Document and such default shall continue unremedied for a period of atleast 30 days after the earlier of an Executive Officer of a Credit Partybecoming aware of such default or notice thereof by the Agent; or

 

(d)           OtherCredit Documents.  Except as aresult of or in connection with a dissolution, merger or disposition of aSubsidiary not prohibited bySection 8.4 or Section 8.5, any Credit Document shall fail to be infull force and effect or to give the Agent and/or the Lenders the Liens,rights, powers and privileges purported to be created thereby, or any CreditParty shall so state in writing; or

 

(e)           Guaranties.  Except as the result of or in connectionwith (i) a dissolution, merger or disposition of a Subsidiary notprohibited by Section 8.4 orSection 8.5 or (ii) a release specifically provided for inSection 4.8, the guaranty given by any Guarantor hereunder (including anyPerson after the Closing Date

 

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inaccordance with Section 7.12) or any provision thereof shall cease to bein full force and effect, or any Guarantor (including any Person after theClosing Date in accordance with Section 7.12) hereunder or any Personacting by or on behalf of such Guarantor shall deny or disaffirm suchGuarantor’s obligations under such guaranty, or any Guarantor shall default inthe due performance or observance of any term, covenant or agreement on itspart to be performed or observed pursuant to any guaranty; or

 

(f)            Bankruptcy,etc.  Any Bankruptcy Event shalloccur with respect to the Borrower, the General Partner or any otherConsolidated Party; or

 

(g)           Challengeof Loan Documents.  The Borrower orany Guarantor shall disavow, revoke or terminate or attempt to do any of theforegoing with respect to any Loan Document to which it is a party or shallotherwise challenge or contest in any action, suit or proceeding in any courtor before any Governmental Authority the validity or enforceability of any LoanDocument; or

 

(h)           Defaultsunder Other Agreements.

 

(i)            AnyConsolidated Party shall default in the performance or observance (beyond theapplicable grace period with respect thereto, if any) of any materialobligation or condition of any contract or lease material to the ConsolidatedParties taken as a whole if such default could reasonably be expected to have aMaterial Adverse Effect; or

 

(ii)           Withrespect to Indebtedness (other than Indebtedness outstanding under this CreditAgreement) in excess of $5,000,000 in the aggregate (for the ConsolidatedParties taken as a whole), (A) either (1) a default in any paymentshall occur and continue (beyond the applicable grace period with respectthereto, if any) with respect to any such Indebtedness, (2) a default inthe observance or performance relating to such Indebtedness or contained in anyinstrument or agreement evidencing, securing or relating thereto and suchdefault is not cured within the applicable grace period, if any, or  (3) any event or condition shall occur orexist, the effect of which event or condition is to cause, or permit, theholder or holders of such Indebtedness (or trustee or agent on behalf of suchholders) to cause any such Indebtedness to become due prior to its statedmaturity; or (B) any such Indebtedness shall be declared due and payable,or required to be prepaid other than by a regularly scheduled requiredprepayment, prior to the stated maturity thereof; or

 

(i)            Judgments.  One or more judgments or decrees shall beentered against one or more of the Consolidated Parties involving a liabilityof $1,000,000 or more in the aggregate (to the extent not paid or fully coveredby insurance provided by a carrier who has acknowledged coverage and has theability to perform) and any such judgments or decrees shall not have beenvacated, discharged or stayed or bonded pending appeal within 30 days from theentry thereof; or

 

(j)            ERISA.  Any of the following events or conditions,if such event or condition could involve possible taxes, penalties, and otherliabilities in an aggregate amount in excess of $1,000,000:  (i) any “accumulated fundingdeficiency,” as such term is defined in Section 302 of ERISA andSection 412 of the Code, whether or not waived, shall exist with respectto any Plan, or any lien shall arise on the assets of any Consolidated Party orany ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA Eventshall occur with respect to a Single Employer Plan, which is, in the reasonableopinion of the Agent, likely to result in the termination of such Plan forpurposes of Title IV of ERISA; (iii) an ERISA Event shall occur withrespect to a Multiemployer Plan or Multiple Employer Plan, which is, in thereasonable opinion of the Agent, likely to result in (A) the terminationof such Plan for purposes of Title IV of ERISA, or (B) anyConsolidated Party or any ERISA Affiliate incurring any liability in connectionwith a withdrawal from, reorganization of (within the meaning ofSection 4241 of ERISA), or insolvency (within the meaning ofSection 4245 of ERISA) of such Plan; or (iv) any prohibitedtransaction (within the meaning of Section 406 of ERISA orSection 4975 of the Code) or breach of fiduciary responsibility shalloccur which may subject any Consolidated Party or any ERISA Affiliate to anyliability under Sections 406, 409, 502(i), or 502(l) of ERISA orSection 4975 of the Code, or under any agreement or other instrumentpursuant to which any Consolidated Party or any ERISA Affiliate has agreed oris required to indemnify any person against any such liability; or

 

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(k)           Ownership.  There shall occur a Change of Control; or

 

(l)            REITStatus.  The USRP REIT shall, forany reason, lose or fail to maintain its status as a REIT; or

 

(m)          MaterialAdverse Effect.  The Borrower, theGeneral Partner, any Consolidated Party or any combination thereof shallexperience a change in financial condition that, in the reasonable opinion ofthe Agent, has or will have a Material Adverse Effect; or

 

(n)           Dispositionof Assets.  The proceeds generatedfrom sales, conveyances and dispositions (whether such transactions are enteredinto voluntarily or otherwise) of the assets of the Borrower, General Partnerand their Subsidiaries for the period commencing as of the Closing Date andextending through any given date during the term hereof are, in the aggregate,greater than $135,000,000 (exclusive of the cash proceeds generated by a TermSecuritization); or

 

(o)           MaterialChange in Management, Operations or Business.  There shall occur a Change in Management.

 

**9.2          Acceleration; Remedies.**

 

Uponthe occurrence and during the continuance of an Event of Default, the Agent mayor, upon the request and direction of the Required Lenders, shall, by writtennotice to the Credit Parties take any of the following actions:

 

(a)           Terminationof Commitments.  Declare theCommitments terminated whereupon the Commitments shall be immediately terminated.

 

(b)           Acceleration.  Declare the unpaid principal of and anyaccrued interest in respect of all Loans, any reimbursement obligations arisingfrom drawings under Letters of Credit and any and all other indebtedness orobligations of any and every kind owing by the Credit Parties to the Agent and/or any of the Lenders hereunderto be due whereupon the same shall be immediately due and payable withoutpresentment, demand, protest or other notice of any kind, all of which arehereby waived by the Credit Parties.

 

(c)           CashCollateral.  Direct the Borrowerto pay (and the Borrower herebypromises to pay, upon receipt of suchnotice) to the Agent additional cash, to be held by the Agent, for the benefitof the Lenders, in a cash collateral account as additional security for the LOCObligations in respect of subsequent drawings under all then outstandingLetters of Credit in an amount equal to the maximum aggregate amount which maybe drawn under all Letters of Credits then outstanding or as additional securityfor the reimbursement of any subsequent drawings in relation to the DerivativeExposure Reserve in an amount equal to the Aggregate Derivative Reserve Amount.

 

(d)           Enforcementof Rights.  Enforce any and allrights and interests created and existing under the Credit Documents including,without limitation, all rights and remedies against any Guarantor and allrights of set–off.

 

Notwithstandingthe foregoing, if an Event of Default specified in Section 9.1(f) shalloccur with respect to the Borrower, then, without the giving of any notice orother action by the Agent or the Lenders, (i) the Commitmentsautomatically shall terminate, (ii) all of the outstanding Credit PartyObligations automatically shall immediately become due and payable, (iii) theBorrower automatically shall beobligated (and hereby promises) to pay to the Agent additional cash, to be heldby the Agent, for the benefit of the Lenders, in a cash collateral account asadditional security for the LOC Obligations in respect of subsequent drawingsunder all then outstanding Letters of Credit in an amount equal to the maximumaggregate amount which may be drawn under all Letters of Credits thenoutstanding and (iv) the Borrower automaticallyshall be obligated (and hereby promises) to pay to the Agent additional cash,to be held by the Agent, for the benefit of the Lenders, in a cash collateralaccount as additional security for the reimbursement of any subsequent drawingsin relation to the Derivative Exposure Reserve in an amount equal to theAggregate Derivative Reserve Amount.

 

 

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**ARTICLE X**

 

**AGENCY PROVISIONS**

 

**10.1        Appointment, Powers and Immunities.**

 

Each Lender herebyirrevocably appoints and authorizes the Agent to act as its agent under thisCredit Agreement and the other Credit Documents with such powers and discretionas are specifically delegated to the Agent by the terms of this CreditAgreement and the other Credit Documents, together with such other powers asare reasonably incidental thereto.  TheAgent (which term as used in this sentence and in Section 10.5 and thefirst sentence of Section 10.6 hereof shall include its Affiliates and itsown and its Affiliates’ officers, directors, employees, and agents):  (a) shall not have any duties orresponsibilities except those expressly set forth in this Credit Agreement andshall not be a trustee or fiduciary for any Lender; (b) shall not beresponsible to the Lenders for any recital, statement, representation, orwarranty (whether written or oral) made in or in connection with any CreditDocument or any certificate or other document referred to or provided for in,or received by any of them under, any Credit Document, or for the value,validity, effectiveness, genuineness, enforceability, or sufficiency of anyCredit Document, or any other document referred to or provided for therein orfor any failure by any Credit Party or any other Person to perform any of itsobligations thereunder; (c) shall not be responsible for or have any dutyto ascertain, inquire into, or verify the performance or observance of anycovenants or agreements by any Credit Party or the satisfaction of anycondition or to inspect the property (including the books and records) of anyCredit Party or any of its Subsidiaries or Affiliates; and (d) shall notbe responsible for any action taken or omitted to be taken by it under or inconnection with any Credit Document, except for its own gross negligence orwillful misconduct.  The Agent mayemploy agents and attorneys-in-fact and shall not be responsible for thenegligence or misconduct of any such agents or attorneys–in–factselected by it with reasonable care.

 

**10.2        Reliance by Agent.**

 

The Agent shall beentitled to rely upon any certification, notice, instrument, writing, or othercommunication (including, without limitation, any thereof by telephone ortelecopy) believed by it to be genuine and correct and to have been signed,sent or made by or on behalf of the proper Person or Persons, and upon adviceand statements of legal counsel (including counsel for any Credit Party),independent accountants, and other experts selected by the Agent.  The Agent may deem and treat the payee ofany Note as the holder thereof for all purposes hereof unless and until theAgent receives and accepts an Assignment and Assumption executed in accordancewith Section 11.3(b) hereof.  As toany matters not expressly provided for by this Credit Agreement, the Agentshall not be required to exercise any discretion or take any action, but shallbe required to act or to refrain from acting (and shall be fully protected inso acting or refraining from acting) upon the instructions of the RequiredLenders, and such instructions shall be binding on all of the Lenders; provided,however, that the Agent shall not be required to take any action thatexposes the Agent to personal liability or that is contrary to any CreditDocument or applicable law or unless it shall first be indemnified to itssatisfaction by the Lenders against any and all liability and expense which maybe incurred by it by reason of taking any such action.

 

**10.3        Defaults.**

 

The Agent shall not bedeemed to have knowledge or notice of the occurrence of a Default or Event ofDefault unless the Agent has received written notice from a Lender or a CreditParty specifying such Default or Event of Default and stating that such noticeis a “Notice of Default”.  In the eventthat the Agent receives such a notice of the occurrence of a Default or Eventof Default, the Agent shall give prompt notice thereof to the Lenders.  The Agent shall (subject toSection 10.2 hereof) take such action with respect to such Default orEvent of Default as shall reasonably be directed by the Required Lenders (orsuch other Lenders as required by Section 11.6), providedthat,unless and until the Agent shall have received such directions, the Agent may(but shall not be obligated to) take such action, or refrain from taking suchaction, with respect to such Default or Event of Default as it shall deemadvisable in the best interest of the Lenders.

 

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**10.4        Rights as a Lender.**

 

With respect to itsCommitment and the Loans made by it, BOA (and any successor acting as Agent) inits capacity as a Lender hereunder shall have the same rights and powershereunder as any other Lender and may exercise the same as though it were notacting as the Agent, and the term “Lender” or “Lenders” shall, unless thecontext otherwise indicates, include the Agent in its individual capacity.  BOA (and any successor acting as Agent) andits Affiliates may (without having to account therefor to any Lender) acceptdeposits from, lend money to, make investments in, provide services to, andgenerally engage in any kind of lending, trust, or other business with anyCredit Party or any of its Subsidiaries or Affiliates as if it were not actingas Agent, and BOA (and any successor acting as Agent) and its Affiliates mayaccept fees and other consideration from any Credit Party or any of its Subsidiariesor Affiliates for services in connection with this Credit Agreement orotherwise without having to account for the same to the Lenders.

 

**10.5        Indemnification.**

 

The Lenders agree toindemnify the Agent (to the extent not reimbursed under Section 11.5 hereof,but without limiting the obligations of the Credit Parties under such Section)ratably (in accordance with their respective RevolvingCommitments (or, if the Revolving Commitments have been terminated, theoutstanding Revolving Loans and Participation Interests in Letters of Credit(including the Participation Interests of the Issuing Lender in Letters ofCredit)) for any and all liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees),or disbursements of any kind and nature whatsoever that may be imposed on,incurred by or asserted against the Agent (including by any Lender) in any wayrelating to or arising out of any Credit Document or the transactionscontemplated thereby or any action taken or omitted by the Agent under anyCredit Document; provided that no Lender shall be liable for any of theforegoing to the extent they arise from the gross negligence or willfulmisconduct of the Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse theAgent promptly upon demand for its ratable share of any costs or expensespayable by the Credit Parties under Section 11.5, to the extent that theAgent is not promptly reimbursed for such costs and expenses by the CreditParties.  The agreements in this Section 10.5 shall survive the repayment ofthe Loans, LOC Obligations and other obligations under the Credit Documents andthe termination of the Commitments hereunder.

 

**10.6        Non-Reliance on Agent and OtherLenders.**

 

Each Lender agrees thatit has, independently and without reliance on the Agent or any other Lender,and based on such documents and information as it has deemed appropriate, madeits own credit analysis of the Credit Parties and their Subsidiaries anddecision to enter into this Credit Agreement and that it will, independentlyand without reliance upon the Agent or any other Lender, and based on suchdocuments and information as it shall deem appropriate at the time, continue tomake its own analysis and decisions in taking or not taking action under theCredit Documents.  Except for notices,reports, and other documents and information expressly required to be furnishedto the Lenders by the Agent hereunder, the Agent shall not have any duty orresponsibility to provide any Lender with any credit or other informationconcerning the affairs, financial condition, or business of any Credit Party orany of its Subsidiaries or Affiliates that may come into the possession of theAgent or any of its Affiliates.

 

**10.7        Successor Agent.**

 

The Agent may resign atany time by giving notice thereof to the Lenders and the Credit Parties.  Upon any such resignation, the RequiredLenders shall have the right to appoint a successor Agent.  If no successor Agent shall have been soappointed by the Required Lenders and shall have accepted such appointmentwithin thirty (30) days after the retiring Agent’s giving of notice ofresignation, then the retiring Agent may, on behalf of the Lenders, appoint asuccessor Agent which shall be a commercial bank organized under the laws ofthe United States having combined capital and surplus of at least$100,000,000.  Upon the acceptance ofany appointment as Agent hereunder by a successor, such successor shallthereupon succeed to and become vested with all the rights, powers, discretion,privileges, and duties of the retiring Agent, and the retiring Agent shall bedischarged from its duties and obligations hereunder.  After any retiring Agent’s resignation hereunder as Agent, theprovisions of this Section 10 shall continue in effect for its benefit inrespect of any actions taken or omitted to be taken by it while it was actingas Agent.

 

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**ARTICLE X1**

 

**MISCELLANEOUS**

 

**11.1        Notices.**

 

Exceptas otherwise expressly provided herein, all notices and other communicationsshall have been duly given and shall be effective (a) when delivered,(b) when transmitted via telecopy (or other facsimile device) to thenumber set out below, (c) the Business Day following the day on which thesame has been delivered prepaid (orpursuant to an invoice arrangement) toa reputable national overnight air courier service, or (d) the thirdBusiness Day following the day on which the same is sent by certified orregistered mail, postage prepaid, in each case to the respective parties at theaddress, in the case of the Credit Parties and the Agent, set forth below, and, in the case of the Lenders, setforth on Schedule 2.1(a), or at such other address as such partymay specify by written notice to the other parties hereto:

 

ifto any Credit Party:

 

U.S.  Restaurant Properties Operating, L.P.

c/oU.S. Restaurant Properties Inc.

12240Inwood Road, Suite 300

Dallas,TX 75244

Attn:  H.G. (Carey) Carrington, JR. CFO, COO

Telephone:

Telecopy:

 

ifto the Agent:

 

Bankof America, N.A.

PortfolioManagement - Charlotte

#NC1-007-15-08

100North Tryon Street

Charlotte,NC 28255

Attn:Russ Ruhnke

Telephone:(704) 388-7057

Telecopy:(704) 388-8841

 

andto:

 

Bankof America, N.A.

1101Wootton Parkway, 3rd Floor

MailCode:  MD9-978-03-02

Rockville,MD 20852

Attn:Derinda Hammond

Telephone:(301) 517-3186

Telecopy:(301) 517-3218

 

**11.2        Right of Set-Off; Adjustments.**

 

Upon the occurrence andduring the continuance of any Event of Default, each Lender (and each of itsAffiliates) is hereby authorized at any time and from time to time, to thefullest 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 andother indebtedness at any time owing by such Lender (or any of its Affiliates)to or for the credit or the account of any Credit Party against any and all ofthe obligations of such Person now or hereafter existing under this CreditAgreement, under the Notes, under any other Credit Document or otherwise,irrespective of whether such Lender shall have made any demand hereunder orthereunder and although such obligations may be unmatured.  Each Lender agrees promptly to notify anyaffected Credit Party after any such set-off and application made by suchLender; provided, however, that the failure to give such noticeshall not affect the validity of such set-off and

 

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application.  The rights of each Lender under thisSection 11.2 are in addition to other rights and remedies (including,without limitation, other rights of set-off) that such Lender may have.

 

**11.3        Successors and Assigns.**

 

(a)           The provisions of this Agreementshall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns permitted hereby, except that the Borrowermay not assign or otherwise transfer any of its rights or obligations hereunderwithout the prior written consent of each Lender and no Lender may assign orotherwise transfer any of its rights or obligations hereunder except (i) to anEligible Assignee in accordance with the provisions of paragraph (b) of thisSection, (ii) by way of participation in accordance with the provisions ofparagraph (d) of this Section or (iii) by way of pledge or assignment of asecurity interest subject to the restrictions of paragraph (f) of this Section(and any other attempted assignment or transfer by any party hereto shall benull and void).  Nothing in thisAgreement, expressed or implied, shall be construed to confer upon any Person(other than the parties hereto, their respective successors and assignspermitted hereby, Participants to the extent provided in paragraph (d) of thisSection and, to the extent expressly contemplated hereby, the Related Partiesof each of the Agent and the Lenders) any legal or equitable right, remedy orclaim under or by reason of this Agreement.

 

(b)           Any Lender may at any time assign toone or more Eligible Assignees all or a portion of its rights and obligationsunder this Agreement (including all or a portion of its Commitment and theLoans at the time owing to it); provided that (i) except in the case ofan assignment of the entire remaining amount of the assigning Lender’sCommitment and the Loans at the time owing to it or in the case of anassignment to a Lender or an Affiliate of a Lender or an Approved Fund withrespect to a Lender, the aggregate amount of the Commitment (which for thispurpose includes Loans outstanding thereunder) or, if the applicable Commitmentis not then in effect, the principal outstanding balance of the Loan of theassigning Lender subject to each such assignment (determined as of the date theAssignment and Assumption with respect to such assignment is delivered to theAgent or, if “Trade Date” is specified in the Assignment and Assumption, as ofthe Trade Date) shall not be less than $2,500,000, in the case of anyassignment in respect of a revolving facility, or $1,000,000, in the case ofany assignment in respect of a term facility, unless each of the Agent and, solong as no default or Event of Default has occurred and is continuing hereunderor any other Credit Document, the Borrower otherwise consent (each such consentnot to be unreasonably withheld or delayed); (ii) each partial assignment shallbe made as an assignment of a proportionate part of all the assigning Lender’srights and obligations under this Agreement with respect to the Loan or theCommitment assigned, except that this clause (ii) shall not apply to rights inrespect of Competitive Loans; (iii) any assignment of a Revolving Commitmentmust be approved by the Agent and the Issuing Lender unless the Person that isthe proposed assignee is itself a Lender with a Revolving Commitment (whetheror not the proposed assignee would otherwise qualify as an Eligible Assignee);and (iv) the parties to each assignment shall execute and deliver to the Agentan Assignment and Assumption, together with a processing and recordation fee of$3,500**,**and the Eligible Assignee, if it shall not be a Lender, shall deliver to theAgent an Administrative Questionnaire. Subject to acceptance and recording thereof by the Agent pursuant toparagraph (c) of this Section, from and after the effective date specified ineach Assignment and Assumption, the Eligible Assignee thereunder shall be aparty to this Agreement and, to the extent of the interest assigned by suchAssignment and Assumption, have the rights and obligations of a Lender underthis Agreement, and the assigning Lender thereunder shall, to the extent of theinterest assigned by such Assignment and Assumption, be released from itsobligations under this Agreement (and, in the case of an Assignment andAssumption covering all of the assigning Lender’s rights and obligations underthis Agreement, such Lender shall cease to be a party hereto) but shallcontinue to be entitled to the benefits of Sections 3.6 through 3.12**withrespect to facts and circumstances occurring prior to the effective date ofsuch assignment.  Any assignment ortransfer by a Lender of rights or obligations under this Agreement that doesnot comply with this paragraph shall be treated for purposes of this Agreementas a sale by such Lender of a participation in such rights and obligations inaccordance with paragraph (d) of this Section.

 

(c)           The Agent, acting solely for thispurpose as an agent of the Borrower, shall maintain at one of its offices acopy of each Assignment and Assumption delivered to it and a register for therecordation of the names and addresses of the Lenders, and the Commitments of,and principal amounts of the Loans owing to, each Lender pursuant to the termshereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and theBorrower, the Agent and the Lenders may treat each Person whose name isrecorded in the Register pursuant to the terms hereof as a Lender hereunder forall purposes of this Agreement, notwithstanding notice to the contrary.

 

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The Register shall beavailable for inspection by the Borrower and any Lender, at any reasonable timeand from time to time upon reasonable prior notice.

 

(d)           Any Lender may at any time, withoutthe consent of, or notice to, the Borrower or the Agent, sell participations toany Person (other than a natural person, the Borrower or any of the CreditParties or any of the Borrower’s or any Credit Party’s Affiliates orSubsidiaries) (each, a “Participant”) in all or a portion of suchLender’s rights and/or obligations under this Agreement (including all or aportion of its Commitment and/or the Loans owing to it); provided that(i) such Lender’s obligations under this Agreement shall remain unchanged,(ii) such Lender shall remain solely responsible to the other partieshereto for the performance of such obligations and (iii) the Borrower, theAgent and the other Lenders shall continue to deal solely and directly withsuch Lender in connection with such Lender’s rights and obligations under thisAgreement.  Any agreement or instrumentpursuant to which a Lender sells such a participation shall provide that suchLender shall retain the sole right to enforce this Agreement and to approve anyamendment, modification or waiver of any provision of this Agreement; providedthat such agreement or instrument may provide that such Lender will not,without the consent of the Participant, agree to any amendment, modification orwaiver described in Section 11.6 that affects such Participant.  Subject to paragraph (e) of this Section,the Borrower agrees that each Participant shall be entitled to the benefits ofSections 3.6 through 3.12**to the same extent as if it were a Lenderand had acquired its interest by assignment pursuant to paragraph (b) of thisSection.  To the extent permitted bylaw, each Participant also shall be entitled to the benefits of Section 11.2 asthough it were a Lender, provided such Participant agrees to be subject toSections 3.14 and 3.15 as though it were a Lender.

 

(e)           A Participant shall not be entitledto receive any greater payment under Sections 3.6 through 3.12**thanthe applicable Lender would have been entitled to receive with respect to theparticipation sold to such Participant, unless the sale of the participation tosuch Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lenderif it were a Lender shall not be entitled to the benefits of Section 3.11unless the Borrower is notified of the participation sold to such Participantand such Participant agrees, for the benefit of the Borrower, to comply withSection 3.11 as though it were a Lender.

 

(f)            Any Lender may at any time pledge orassign a security interest in all or any portion of its rights under thisAgreement to secure obligations of such Lender, including without limitationany pledge or assignment to secure obligations to a Federal Reserve Bank; providedthat no such pledge or assignment shall release such Lender from any of itsobligations hereunder or substitute any such pledgee or assignee for suchLender as a party hereto.

 

**11.4        No Waiver; Remedies Cumulative.**

 

Nofailure or delay on the part of the Agent or any Lender in exercising anyright, power or privilege hereunder or under any other Credit Document and nocourse of dealing between the Agent or any Lender and any of the Credit Partiesshall operate as a waiver thereof; nor shall any single or partial exercise ofany right, power or privilege hereunder or under any other Credit Document precludeany other or further exercise thereof or the exercise of any other right, poweror privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusiveof any rights or remedies which the Agent or any Lender would otherwisehave.  No notice to or demand on anyCredit Party in any case shall entitle the Credit Parties to any other or further notice or demand insimilar or other circumstances or constitute a waiver of the rights of theAgent or the Lenders to any other or further action in any circumstanceswithout notice or demand.

 

**11.5        Expenses; Indemnification.**

 

(a)           The Credit Parties jointly andseverally agree to pay on demand all costs and expenses of the Agent inconnection with the syndication, preparation, execution, delivery,administration, modification, and amendment of this Credit Agreement, the otherCredit Documents, and the other documents to be delivered hereunder, including,without limitation, the reasonable fees and expenses of counsel for the Agent(including the cost of internal counsel) with respect thereto and with respectto advising the Agent as to its rights and responsibilities under the CreditDocuments.  The Credit Parties furtherjointly and severally agree to pay on demand all costs and expenses of theAgent and the Lenders, if any (including, without limitation, reasonableattorneys’ fees and expenses and the cost of internal counsel), in connectionwith any work–out or restructuring relating to the Credit Facilities orany

 

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enforcement (whetherthrough negotiations, legal proceedings, or otherwise) of any of the CreditDocuments.

 

(b)           The Credit Parties jointly andseverally agree to indemnify and hold harmless the Agent and each Lender andeach of their Affiliates and their respective officers, directors, employees,agents, and advisors (each, an “Indemnified Party”) from and against anyand all claims, damages, losses, liabilities, costs, and expenses (including,without limitation, reasonable attorneys’ fees) that may be incurred by orasserted or awarded against any Indemnified Party, in each case arising out ofor in connection with or by reason of (including, without limitation, inconnection with any investigation, litigation, or proceeding or preparation ofdefense in connection therewith) the Credit Documents, any of the transactionscontemplated herein or the actual or proposed use of the proceeds of the Loans,except to the extent such claim, damage, loss, liability, cost, or expense isfound in a final, non-appealable judgment by a court of competent jurisdictionto have resulted from such Indemnified Party’s gross negligence or willfulmisconduct.  In the case of aninvestigation, litigation or other proceeding to which the indemnity in thisSection 11.5 applies, such indemnity shall be effective whether or notsuch investigation, litigation or proceeding is brought by any of the CreditParties, their respective directors, shareholders or creditors or an IndemnifiedParty or any other Person or any Indemnified Party is otherwise a party theretoand whether or not the transactions contemplated hereby are consummated.  The Credit Parties agree not to assert anyclaim against the Agent, any Lender, any of their Affiliates, or any of theirrespective directors, officers, employees, attorneys, agents, and advisers, onany theory of liability, for special, indirect, consequential, or punitivedamages arising out of or otherwise relating to the Credit Documents, any ofthe transactions contemplated herein or the actual or proposed use of theproceeds of the Loans.

 

(c)           Without prejudice to the survival ofany other agreement of the Credit Parties hereunder, the agreements andobligations of the Credit Parties contained in this Section 11.5 shall survive the repayment of the Loans, LOCObligations and other obligations under the Credit Documents and thetermination of the Commitments hereunder.

 

**11.6        Amendments, Waivers and Consents.**

 

Neitherthis Credit Agreement nor any other Credit Document nor any of the terms hereofor thereof may be amended, changed, waived, discharged or terminated unlesssuch amendment, change, waiver, discharge or termination is in writing enteredinto by, or approved in writing by, each of the Credit Parties party theretoand the Required Lenders, provided, however, that:

 

(a)           withoutthe consent of each Lender affected thereby, neither this Credit Agreement norany other Credit Document may be amended, changed, waived, discharged orterminated so as to

 

(i)            extendany Commitment or the final maturity of any Loan or of any reimbursementobligation, or any portion thereof, arising from drawings under Letters ofCredit, or extend or waive any Principal Amortization Payment of any Loan, orany portion thereof,

 

(ii)           reducethe rate or extend the time of payment of interest on any Loan or of anyreimbursement obligation, or any portion thereof, arising from drawings underLetters of Credit (other than as a result of waiving the applicability of anypost–default increase in interest rates) or of any Fees,

 

(iii)          reduceor waive the principal amount of any Loan or of any reimbursement obligation,or any portion thereof, arising from drawings under Letters of Credit,

 

(iv)          increasethe Commitment of a Lender over the amount thereof in effect (it beingunderstood and agreed that a waiver of any condition precedent set forth inSection 5.2 or of any Default or Event of Default or mandatory reductionin the Commitments shall not constitute a change in the terms of any Commitmentof any Lender),

 

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(v)           exceptas the result of or in connection with a dissolution, merger or disposition ofa Consolidated Party not prohibited bySection 8.4 or Section 8.5, release the Borrower or substantially allof the other Credit Parties from its or their obligations under the CreditDocuments,

 

(vi)          amend,modify or waive any provision of this Section 11.6,

 

(vii)         reduceany percentage specified in, or otherwise modify, the definition of RequiredLenders, or

 

(viii)        consentto the assignment or transfer by the Borrower of all or substantially all ofthe other Credit Parties of any of its or their rights and obligations under(or in respect of) the Credit Documents except as permitted thereby;

 

(b)           withoutthe consent of the Required Lenders, no Default or Event of Default may bewaived for purposes of Section 5.2(d);

 

(c)           withoutthe consent of the Agent, no provision of Section 10 may be amended,changed, waived, discharged or terminated; and

 

(d)           withoutthe consent of the Issuing Lender, no provision of Section 2.2 may beamended, changed, waived, discharged or terminated.

 

Notwithstandingthe fact that the consent of all the Lenders is required in certaincircumstances as set forth above, (x) each Lender is entitled to vote assuch Lender sees fit on any bankruptcy reorganization plan that affects theLoans, and each Lender acknowledges that the provisions of Section 1126(c)of the Bankruptcy Code supersedes the unanimous consent provisions set forthherein and (y) the Required Lenders shall determine whether or not toallow a Credit Party to use cash collateral in the context of a bankruptcy orinsolvency proceeding and such determination shall be binding on all ofthe Lenders.

 

**11.7        Counterparts.**

 

ThisCredit Agreement may be executed in any number of counterparts, each of whichwhen so executed shall be an original, but all of which shall constitute oneand the same instrument.  It shall notbe necessary in making proof of this Credit Agreement to produce or account formore than one such counterpart for each of the parties hereto.  Delivery by facsimile by any of the partieshereto of an executed counterpart of this Credit Agreement shall be as effectiveas an original executed counterpart hereof and shall be deemed a representationthat an original executed counterpart hereof will be delivered.

 

**11.8        Headings.**

 

Theheadings of the sections hereof are provided for convenience only and shall notin any way affect the meaning or construction of any provision of this CreditAgreement.

 

**11.9        Survival.**

 

Allindemnities set forth herein, including, without limitation, inSection 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall survive the execution anddelivery of this Credit Agreement, the making of the Loans, the issuance of theLetters of Credit, the repayment of the Loans, LOC Obligations and otherobligations under the Credit Documents and the termination of the Commitmentshereunder, and all representations and warranties made by the Credit Parties hereinshall survive until this Credit Agreement shall be terminated in accordancewith the terms of Section 11.13(b).

 

**11.10      Governing Law; Submission toJurisdiction; Venue.**

 

(a)           THISCREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY PROVIDED THEREIN, THE OTHERCREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER ANDTHEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND

 

77

----

 

INTERPRETEDIN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.  Any legal action or proceeding with respectto this Credit Agreement or any other Credit Document may be brought in thecourts of the State of North Carolina in Mecklenburg County, or of the UnitedStates for the Western District of North Carolina, and, by execution anddelivery of this Credit Agreement, each of the Credit Parties herebyirrevocably accepts for itself and in respect of its property, generally andunconditionally, the nonexclusive jurisdiction of such courts.  Each of the Credit Parties furtherirrevocably consents to the service of process out of any of the aforementionedcourts in any such action or proceeding by the mailing of copies thereof byregistered or certified mail, postage prepaid, to it at the address set out fornotices pursuant to Section 11.1, such service to become effectivethree (3) days after such mailing. Nothing herein shall affect the right of the Agent or any Lender toserve process in any other manner permitted by law or to commence legalproceedings or to otherwise proceed against any Credit Party in any otherjurisdiction.

 

(b)           Eachof the Credit Parties hereby irrevocably waives any objection which it may nowor hereafter have to the laying of venue of any of the aforesaid actions orproceedings arising out of or in connection with this Credit Agreement or anyother Credit Document brought in the courts referred to in subsection (a)above and hereby further irrevocably waives and agrees not to plead or claim inany such court that any such action or proceeding brought in any such court hasbeen brought in an inconvenient forum.

 

(c)           TOTHE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS, EACH OF THE CREDITPARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT,ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

**11.11      Severability.**

 

Ifany provision of any of the Credit Documents is determined to be illegal,invalid or unenforceable, such provision shall be fully severable and theremaining provisions shall remain in full force and effect and shall beconstrued without giving effect to the illegal, invalid or unenforceableprovisions.

 

**11.12      Entirety.**

 

ThisCredit Agreement together with the other Credit Documents represent the entireagreement of the parties hereto and thereto, and supersede all prior agreementsand understandings, oral or written, if any, including any commitment lettersor correspondence relating to the Credit Documents or the transactionscontemplated herein and therein.

 

**11.13      Binding Effect; Termination.**

 

(a)           ThisCredit Agreement shall become effective at such time on or after the ClosingDate when it shall have been executed by each Credit Party and the Agent, andthe Agent shall have received copies hereof (telefaxed or otherwise) which,when taken together, bear the signatures of each Lender, and thereafter thisCredit Agreement shall be binding upon and inure to the benefit of each CreditParty, the Agent and each Lender and their respective successors and assigns.

 

(b)           Theterm of this Credit Agreement shall be until the Credit Party Obligations areFully Satisfied.

 

**11.14      Confidentiality.**

 

Each Lender Party agreesto keep confidential any information furnished or made available to it by or onbehalf of the Credit Parties pursuant to this Credit Agreement; providedthat nothing herein shall prevent any Lender Party from disclosing suchinformation (a) to any other Lender Party or any Affiliate of any LenderParty, or any officer, director, employee, agent, or advisor of any LenderParty or Affiliate of any Lender Party, (b) to any other Person ifreasonably incidental to the administration of the Credit Facilities, (c) as required by any law, rule, orregulation, (d) upon the order of any court or administrative agency,(e) upon the request or demand of any

 

78

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regulatory agency orauthority, (f) that is or becomes available to the public or that is orbecomes available to any Lender Party other than as a result of a disclosure byany Lender Party prohibited by this Credit Agreement, (g) in connectionwith any litigation to which such Lender Party or any of its Affiliates may bea party, (h) to the extent necessary in connection with the exercise ofany remedy under this Credit Agreement or any other Credit Document,(i) to the National Association of Insurance Commissioners or any similarorganization or any nationally recognized rating agency that requires access toinformation about a Lender’s investment portfolio in connection with ratingsissued with respect to such Lender, (j) to any direct or indirectcontractual counterparty in swap agreements or such contractual counterparty’sprofessional advisor (so long as such contractual counterparty or professionaladvisor to such contractual counterparty (i) has been approved in writingby the Borrower and (ii) agrees in a writing enforceable by the Borrowerto be bound by the provisions of this Section 11.14) and (k) subjectto provisions substantially similar to those contained in thisSection 11.14, to any actual or proposed participant or assignee.

 

**11.15      Source of Funds.**

 

Eachof the Lenders hereby represents and warrants to the Borrower that at least oneof the following statements is an accurate representation as to the source offunds to be used by such Lender in connection with the financing hereunder:

 

(a)           nopart of such funds constitutes assets allocated to any separate accountmaintained by such Lender in which any employee benefit plan (or its relatedtrust) has any interest;

 

(b)           tothe extent that any part of such funds constitutes assets allocated to anyseparate account maintained by such Lender, such Lender has disclosed to theBorrower the name of each employee benefit plan whose assets in such accountexceed 10% of the total assets of such account as of the date of such purchase(and, for purposes of this clause (b), all employee benefit plansmaintained by the same employer or employee organization are deemed to be asingle plan);

 

(c)           tothe extent that any part of such funds constitutes assets of an insurancecompany’s general account, such insurance company has complied with all of therequirements of the regulations issued under Section 401(c)(1)(A) of ERISA;or

 

(d)           suchfunds constitute assets of one or more specific benefit plans which such Lenderhas identified in writing to the Borrower.

 

Asused in this Section 11.15, the terms “employee benefit plan” and“separate account” shall have the respective meanings assigned to such terms inSection 3 of ERISA.

 

**11.16      Regulation D.**

 

Eachof the Lenders hereby represents and warrants to the Borrower that it isa commercial lender, other financial institution or other “accredited” investor(as defined in SEC Regulation D) which makes or acquires or loans on theordinary course of business and that it will make or acquire Loans for its ownaccount in the ordinary course of business.

 

**11.17      Conflict.**

 

Tothe extent that there is a conflict or inconsistency between any provisionhereof, on the one hand, and any provision of any Credit Document, on the otherhand, this Credit Agreement shall control.

 

[Signature Page to Follow]

 

79

----

 

**IN WITNESSWHEREOF**, each of the partieshereto has caused a counterpart of this Credit Agreement to be duly executedand delivered as of the date first above written.

 
| **BORROWER**:              | U.S.  RESTAURANT PROPERTIES OPERATING, L.P. |                                            |
|----------------------------|---------------------------------------------|-------------------------------------------------|
|                       |                                        |                                            |   |
|                       | By:  USRP MANAGING, INC.               |                                            |
|                       |                                        |                                            |   |
|                       |                                        | By:                                             |   |   |   |
|                       |                                        | Name:                                           |   |
|                       |                                        | Title:                                          |   |
|                       |                                        |                                            |   |
|                       |                                        |                                            |   |
|                       | USRP  FUNDING 2002-A, L.P.                  |                                            |
|                       |                                        |                                            |   |
|                       | By:  USRP (SFGP) 2, LLC                |                                            |
|                       |                                        |                                            |   |
|                       |                                        | By:                                             |   |   |   |
|                       |                                        | Name:                                           |   |
|                       |                                        | Title:                                          |   |
|                       |                                        |                                            |   |
|                       |                                        |                                            |   |
| **GENERAL PARTNER**:       |                                        |                                            |   |
|                       | USRP  MANAGING, INC.                        |                                            |
|                       |                                        |                                            |   |
|                       |                                        | By:                                             |   |   |   |
|                       |                                        | Name:                                           |   |
|                       |                                        | Title:                                          |   |
|                       |                                        |                                            |   |
| **USRP REIT**:             |                                        |                                            |   |
|                       | U.S.  RESTAURANT PROPERTIES, INC.      |                                            |
|                       |                                        |                                            |   |
|                       |                                        | By:                                             |   |   |   |
|                       |                                        | Name:                                           |   |
|                       |                                        | Title:                                          |   |
|                       |                                        |                                            |   |
|                       |                                        |                                            |   |
| **SUBSIDIARY  GUARANTORS** |                                        |                                            |   |
|                       | ARKANSAS RESTAURANTS  #10, L.P.,            |                                            |
|                       | a Texas limited  partnership                |                                            |
|                       |                                        |                                            |   |
|                       |                                        | By: North American  Restaurant Management, Inc. |   |
|                       |                                        |                                            |   |
|                       |                                        | By:                                             |   |   |
|                       |                                        | Name:                                           |   |
|                       |                                        | Title:                                          |   |
|                            |                                             |                                                 |  |  |  |  |  |

 

----

 
|   | RESTAURANT PROPERTY  PARTNERS, L.P., |
|--------|--------------------------------------|
|   | a Texas limited  partnership         |
|   |                                 |   |
|   |                                 | By: Restaurant Funding,  Inc |
|   |                                 |   |
|   |                                 | By: |   |   |
|   |                                 | Name: |
|   |                                 | Title: |
|   |                                 |   |
|   |                                 |   |
|   | SOUTHEAST FAST-FOOD  PARTNERS, L.P., |
|   | a Texas limited  partnership         |
|   |                                 |   |
|   |                                 | By: Bulldog Management,  Inc. |
|   |                                 |   |
|   |                                 | By: |   |   |
|   |                                 | Name: |
|   |                                 | Title: |
|   |                                 |   |
|   |                                 |   |
|   | USRP (66), LTD.,                     |
|   | a Texas limited  partnership         |
|   |                                 |   |
|   |                                 | By: USRP GP1, LLC |
|   |                                 |   |
|   |                                 | By: |   |   |
|   |                                 | Name: |
|   |                                 | Title: |
|   |                                 |   |
|   |                                 |   |
|   | USRP (FAIN 10), L.P.,                |
|   | a Texas limited  partnership         |
|   |                                 |   |
|   |                                 | By: USRP GP5, LLC |
|   |                                 |   |
|   |                                 | By: |   |   |
|   |                                 | Name: |
|   |                                 | Title: |
|   |                                 |   |
|   |                                 |   |
|   | USRP (KATY), L.P.,                   |
|   | a Texas limited  partnership         |
|   |                                 |   |
|   |                                 | By: USRP GP8, LLC |
|   |                                 |   |
|   |                                 | By: |   |   |
|   |                                 | Name: |
|   |                                 | Title: |

 

----

 
|   | USRP (LAVID), L.P.,          |
|--------|------------------------------|
|   | a Texas limited  partnership |
|   |                         |   |
|   |                         | By: USRP GP, LLC |
|   |                         |   |
|   |                         | By: |   |   |
|   |                         | Name: |
|   |                         | Title: |
|   |                         |   |
|   |                         |   |
|   | USRP (PAC), L.P.,            |
|   | a Texas limited  partnership |
|   |                         |   |
|   |                         | By: USRP (Cap), Inc. |
|   |                         |   |
|   |                         | By: |   |   |
|   |                         | Name: |
|   |                         | Title: |
|   |                         |   |
|   |                         |   |
|   | USRP (QUEST), L.P.,          |
|   | a Texas limited  partnership |
|   |                         |   |
|   |                         | By: USRP GP4, LLC |
|   |                         |   |
|   |                         | By: |   |   |
|   |                         | Name: |
|   |                         | Title: |
|   |                         |   |
|   |                         |   |
|   | USRP (SAN ANTONIO),  LTD.,   |
|   | a Texas limited  partnership |
|   |                         |   |
|   |                         | By: USRP GP, LLC |
|   |                         |   |
|   |                         | By: |   |   |
|   |                         | Name: |
|   |                         | Title: |
|   |                         |   |
|   |                         |   |
|   | USRP (T&C), L.P.,        |
|   | a Texas limited  partnership |
|   |                         |   |
|   |                         | By: USRP GP3, LLC |
|   |                         |   |
|   |                         | By: |   |   |
|   |                         | Name: |
|   |                         | Title: |

 

----

 
|   | BULLDOG MANAGEMENT,  INC.                    |
|--------|----------------------------------------------|
|   |                                         |   |
|   |                                         | By: |   |   |
|   |                                         | Name: |
|   |                                         | Title: |
|   |                                         |   |
|   |                                         |   |
|   | NORTH AMERICAN  RESTAURANT MANAGEMENT, INC., |
|   |                                         |   |
|   |                                         | By: |   |   |
|   |                                         | Name: |
|   |                                         | Title: |
|   |                                         |   |
|   |                                         |   |
|   | RESTAURANT FUNDING,  INC.                    |
|   |                                         |   |
|   |                                         | By: |   |   |
|   |                                         | Name: |
|   |                                         | Title: |
|   |                                         |   |
|   |                                         |   |
|   | PINNACLE RESTAURANT  GROUP, LLC,             |
|   | a Texas limited  liability company           |
|   |                                         |   |
|   |                                         | By: |   |   |
|   |                                         | Name: |
|   |                                         | Title: |
|   |                                         |   |
|   |                                         |   |
|   | USRP (ACQUISITION),  LLC,                    |
|   | a Texas limited liability  company           |
|   |                                         |   |
|   |                                         | By: |   |   |
|   |                                         | Name: |
|   |                                         | Title: |
|   |                                         |   |
|   |                                         |   |
|   | USRP (BC), LLC,                              |
|   | a Texas limited  liability company           |
|   |                                         |   |
|   |                                         | By: |   |   |
|   |                                         | Name: |
|   |                                         | Title: |

 

----

 
|   | USRP (BILL), LLC,                  |
|--------|------------------------------------|
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (BOB), LLC,                   |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (CAL), LLC,                   |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (CAP), INC.                   |
|   | a Texas corporation                |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (CARROLL), LLC,               |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (CENTRAL AVENUE),  LLC,       |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |

 

----

 
|   | USRP (CHRIS), LLC,                 |
|--------|------------------------------------|
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (DEEDEE), LLC,                |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (DON), LLC,                   |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (FINANCE), LLC,               |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (FRED), LLC,                  |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (GANT1), LLC,                 |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |

 

----

 
|   | USRP (GANT2), LLC,                 |
|--------|------------------------------------|
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (GOLD), LLC,                  |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP GP, LLC,                      |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP GP1, LLC,                     |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP GP3, LLC,                     |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP GP4, LLC,                     |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |

 

----

 
|   | USRP GP5, LLC,                     |
|--------|------------------------------------|
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP GP8, LLC,                     |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (ILLINOIS), LLC,              |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (JENNIFER), LLC,              |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (JONES), LLC,                 |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (JV2), LLC,                   |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |

 

----

 
|   | USRP (MANAGER), LLC,               |
|--------|------------------------------------|
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (MIDON), LLC,                 |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (MINNESOTA), LLC,             |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (MISSOURI), LLC,              |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (MOLLY), LLC,                 |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (PALMA), LLC,                 |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |

 

----

 
|   | USRP (PAT), LLC,                   |
|--------|------------------------------------|
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (POPEYE’S), LLC,         |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (RIBBIT), LLC,                |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (SARAH), LLC,                 |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (ST.  LOUIS), LLC,       |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (STEVE), LLC,                 |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |

 

----

 
|   | USRP (SUSI), LLC,                  |
|--------|------------------------------------|
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (SYBRA), LLC,                 |
|   | a Texas limited  liability company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (VALERIE), LLC,               |
|   | a Texas limited liability  company |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | FUEL SUPPLY, INC.                  |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | PINNACLE RESTAURANT  GROUP II, LLC |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (CAROLINA), LTD.              |
|   |                               |   |
|   | By:                                | Restaurant Acquisition  Corp. |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |
|   |                               |   |
|   |                               |   |
|   | USRP (LINCOLN), LTD.               |
|   |                               |   |
|   | By:                                | Restaurant Acquisition  Corp. |
|   |                               |   |
|   |                               | By: |   |   |
|   |                               | Name: |
|   |                               | Title: |

 

----

 
|   | USRP (NORMAN), LTD.                           |
|--------|-----------------------------------------------|
|   |                                          |   |
|   | By:                                           | Restaurant Acquisition  Corp. |
|   |                                          |   |
|   |                                          | By: |   |   |
|   |                                          | Name: |
|   |                                          | Title: |
|   |                                          |   |
|   |                                          |   |
|   | USRP (WEST VIRGINIA)  PARTNERS, L.P.          |
|   |                                          |   |
|   | By:                                           | USRP Renovation Corp. |
|   |                                          |   |
|   |                                          | By: |   |   |
|   |                                          | Name: |
|   |                                          | Title: |
|   |                                          |   |
|   |                                          |   |
|   | U.S. RESTAURANT  PROPERTIES DEVELOPMENT, L.P. |
|   |                                          |   |
|   |                                          | By:  Restaurant Contractor Corp. |
|   |                                          |   |
|   |                                          | By: |   |   |
|   |                                          | Name: |
|   |                                          | Title: |
|   |                                          |   |
|   |                                          |   |
|   | RESTAURANT RENOVATION  PARTNERS, L.P.         |
|   |                                          |   |
|   |                                          | By: Restaurant  Acquisition Corp. |
|   |                                          |   |
|   |                                          | By: |   |   |
|   |                                          | Name: |
|   |                                          | Title: |
|   |                                          |   |
|   |                                          |   |
|   | RESTAURANT ACQUISITION  CORP.                 |
|   |                                          |   |
|   |                                          | By: |   |   |
|   |                                          | Name: |
|   |                                          | Title: |
|   |                                          |   |
|   |                                          |   |
|   | RESTAURANT CONTRACTOR  CORP.                  |
|   |                                          |   |
|   |                                          | By: |   |   |
|   |                                          | Name: |
|   |                                          | Title: |

 

----

 
|   | USRP RENOVATION CORP. |
|--------|-----------------------|
|   |                  |   |
|   |                  | By: |   |   |
|   |                  | Name: |
|   |                  | Title: |

 

[remainder of pageleft intentionally blank – additional signature page to follow]

 

----

 
| **LENDERS**: | **BANK OF AMERICA, N.A.**                                               |
|--------------|-------------------------------------------------------------------------|
|         | individually  in its capacity as a  Lender and in its capacity as Agent |
|         |                                                                    |
|         | By:                                                                     |   |   |
|         | Name:                                                                   |   |   |
|         | Title:                                                                  |   |   |
|              |                                                                         |  |  |  |  |

 

----

 

**Schedule 1.1(a)**

 

**Revolving Commitments**

 
| **Lender**                |   | **Revolving  Committed Amount** |       | **Revolving  Commitment Percentage** |   |
|---------------------------|--------|---------------------------------|------------|--------------------------------------|--------|
|                      |   |                            |       |                                 |   |
| 1.  Bank of America, N.A. |   | $                               | 35,000,000 |                                 | 100.00 | % |
|                      |   |                            |       |                                 |   |
| Totals:                   |   | $                               | 35,000,000 |                                 | 100.00 | % |

 

----

 

**Schedule 2.1(a)**

 

**LENDERADDRESSES AND COMMITMENTS**

 

Lender/Agent:

 

Bankof America, N.A.

 

Bankof America, N.A.

PortfolioManagement - Charlotte

#NC1-007-15-08

100North Tryon Street

Charlotte,NC 28255

Attn:Russ Ruhnke

Telephone:(704) 388-7057

Telecopy:(704) 388-8841

 

and:

 

Bankof America, N.A.

1101Wootton Parkway, 3rd Floor

MailCode:  MD9-978-03-02

Rockville,MD 20852

Attn:Derinda Hammond

Telephone:(301) 517-3186

Telecopy:(301) 517-3218

 

OtherLenders:

 

None.

 

2

----

 

**Schedule 5.1(i)**

 

**CORPORATE STRUCTURE**

 

3

----

 

**Schedule 6.4**

 

**REQUIRED CONSENTS****, AUTHORIZATIONS, NOTICES AND FILINGS**

 

4

----

 

**Schedule 6.9**

 

**LITIGATION**

 

5

----

 

**Schedule 6.12**

 

**ERISA**

 

6

----

 

**Schedule 6.13**

 

**SUBSIDIARIES**

 

7

----

 

**Schedule 6.16**

 

**ENVIRONMENTAL DISCLOSURES**

 

8

----

 

**Schedule 6.20(c)**

 

**CHIEF EXECUTIVE OFFICES/****PRINCIPAL PLACES OF BUSINESS**

 

9

----

 

**Schedule 6.28**

 

**CLOSING DATEBORROWING BASE ASSETS**

 

10

----

 

**Schedule 7.6**

 

**INSURANCE**

 

11

----

 

**Schedule 8.1**

 

**INDEBTEDNESS**

 

12

----

 

**Schedule 8.2**

 

**LIENS**

 

13

----

**Schedule 8.6**

 

**INVESTMENTS**

 

14

----

 

**Exhibit 2.1(b)(i)**

 

**FORM OF NOTICE OF BORROWING**

 

Bankof America, N.A.,

  as Agent for the Lenders

101North Tryon Street

IndependenceCenter, 15th Floor

NC1-001-15-04

Charlotte,North Carolina  28255

Attention:  Agency Services

 

Ladiesand Gentlemen:

 

Theundersigned, U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., as the principalborrower thereunder (the “Borrower”), refers to the Credit Agreementdated as of              ,2002 (as amended, modified, restated or supplemented from time to time, the “CreditAgreement”), among the Borrower, the Guarantors, the Lenders and Bank ofAmerica, N.A., as Agent.  Capitalizedterms used herein and not otherwise defined herein shall have the meaningsassigned to such terms in the Credit Agreement.  The Borrower hereby gives notice pursuant to Section 2.1 ofthe Credit Agreement that it requests a Revolving Loan advance under the CreditAgreement, and in connection therewith sets forth below the terms on which suchLoan advance is requested to be made:

 
| [(A)   |   | Date  of Borrowing (which is a Business Day) | ]*     |   |
|--------|--------|----------------------------------------------|--------|--------|
|   |   |                                         |   |   |
| [(B)   |   | Principal  Amount of Borrowing               | ]*     |   |
|   |   |                                         |   |   |
| (C)    |   | Interest  rate basis                         |   |   |
|   |   |                                         |   |   |
| (D)    |   | Interest  Period and the last day thereof    |   |   |

 

Inaccordance with the requirements of Section 5.2, the Borrower herebyreaffirms the representations and warranties set forth in the Credit Agreementas provided in clause (b) of such Section, and confirms that the mattersreferenced in clauses (c), (d) and (e) of such Section, are true and correct.

 
|   | U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., |
|--------|---------------------------------------------------------|
|   | as  Principal Borrower                                  |
|   |                                                    |
|   | By:                                                     |   |   |
|   | Name:                                                   |   |   |
|   | Title:                                                  |   |   |
|        |                                                         |  |  |  |  |

 

15

----

 

**Exhibit 2.1(e)**

 

**FORM OF REVOLVING NOTE**

 
| $ |   |   |   | , 2002 |
|---|--------|--------|--------|--------|

 

FORVALUE RECEIVED, U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., a Delawarecorporation and USRP FUNDING 2000-A, L.P., a Delaware limited partnership(collectively, the “Borrower”), hereby promise to pay to the order of                                        ,its successors and assigns (the “Lender”), at the office of Bank ofAmerica, N.A., as Agent (the “Agent”), **at 101 North Tryon Street, IndependenceCenter, NC1-001-15-04, Charlotte, North Carolina  28255** (or at such other place or places as the holderhereof may designate), at the times set forth in the Credit Agreement dated asof             ,2002 among the Borrower, the Guarantors, the Lenders and the Agent (as it maybe as amended, modified, restated or supplemented from time to time, the “CreditAgreement”; all capitalized terms not otherwise defined herein shall havethe meanings set forth in the Credit Agreement), but in no event later than theMaturity Date, in Dollars and in immediately available funds, the principalamount of                           **DOLLARS($              )**or, if less than such principal amount, the aggregate unpaid principal amountof all Revolving Loans made by the Lender to the Borrower pursuant to theCredit Agreement, and to pay interest from the date hereof on the unpaidprincipal amount hereof, in like money, at said office, on the dates and at therates selected in accordance with Section 2.1(d) of the Credit Agreement.

 

Uponthe occurrence and during the continuance of an Event of Default, the balanceoutstanding hereunder shall bear interest as provided in Section 3.1 ofthe Credit Agreement.  Further, in theevent the payment of all sums due hereunder is accelerated under the terms ofthe Credit Agreement, this Note, and all other indebtedness of the Borrower tothe Lender shall become immediately due and payable, without presentment,demand, protest or notice of any kind, all of which are hereby waived by theBorrower.

 

Inthe event this Note is not paid when due at any stated or accelerated maturity,the Borrower agrees to pay, in addition to the principal and interest, allcosts of collection, including reasonable attorneys’ fees.

 

ThisNote and the Loans evidenced hereby may be transferred in whole or in part onlyby registration of such transfer on the Register maintained by or on behalf ofthe Borrower as provided in Section 11.3(c) of the Credit Agreement.

 

INWITNESS WHEREOF, the Borrower has caused this Note to be duly executed by itsduly authorized officer as of the day and year first above written.

 
| **BORROWER**: |   | U.S.  RESTAURANT  PROPERTIES OPERATING, L.P. |   |
|---------------|--------|--------------------------------------------------------|--------|
|          |   |                                                   |   |
|          |   | By:  USRP MANAGING, INC.                          |   |
|          |   |                                                   |   |
|          |   |                                                   | By:    |   |   |   |
|          |   |                                                   | Name:  |   |
|          |   |                                                   | Title: |   |
|          |   |                                                   |   |
|          |   |                                                   |   |
|          |   | USRP  FUNDING 2002-A, L.P.                             |   |
|          |   |                                                   |   |
|          |   | By:  USRP (SFGP) 2, LLC                           |   |   |
|          |   |                                                   |   |
|          |   |                                                   | By:    |   |   |   |
|          |   |                                                   | Name:  |
|          |   |                                                   | Title: |
|          |   |                                                   |   |
|               |        |                                                        |        |  |  |  |  |  |  |  |  |

 

16

----

 

**Exhibit 3.2**

 

**FORM OF NOTICEOF CONTINUATION/CONVERSION**

 

Bankof America, N.A.,

  as Agent for the Lenders

101North Tryon Street

IndependenceCenter, 15th Floor

NC1-001-15-04

Charlotte,North Carolina  28255

Attention:  Agency Services

 

Ladiesand Gentlemen:

 

Theundersigned, U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., as principalborrower thereunder (the “Borrower”), refers to the Credit Agreementdated as of              ,2002 (as amended, modified, restated or supplemented from time to time, the “CreditAgreement”), among the Borrower, the Guarantors, the Lenders and Bank ofAmerica, N.A., as Agent.  Capitalizedterms used herein and not otherwise defined herein shall have the meaningsassigned to such terms in the Credit Agreement.  The Borrower hereby gives notice pursuant to Section 3.2 ofthe Credit Agreement that it requests an continuation or conversion of aRevolving Loan outstanding under the Credit Agreement, and in connectiontherewith sets forth below the terms on which such extension or conversion isrequested to be made:

 
| (A)    |   | Loan  Type                                                       |   |   |
|--------|--------|------------------------------------------------------------------|--------|--------|
|   |   |                                                             |   |   |
| (B)    |   | Date  of Extension or Conversion                                 |   |   |
|   |   | (which  is the last day of the   the applicable Interest Period) |   |   |
|   |   |                                                             |   |   |
| (C)    |   | Principal  Amount of Extension or Conversion                     |   |   |
|   |   |                                                             |   |   |
| (D)    |   | Interest  rate basis                                             |   |   |
|   |   |                                                             |   |   |
| (E)    |   | Interest  Period and the last day thereof                        |   |   |

 

Inaccordance with the requirements of Section 5.2, the Borrower herebyreaffirms the representations and warranties set forth in the Credit Agreementas provided in clause (b) of such Section, and confirms that the mattersreferenced in clauses (c), (d) and (e) of such Section, are true andcorrect.

 

The undersigned officerof U.S. Restaurant Properties Operating L.P. hereby represents and warrantsthat he/she has the necessary power and authority to execute this letter onbehalf of the Borrower and that such action has been duly authorized by allnecessary action of the Borrower and its partners prior to or on the datehereof.

 
|   | U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., |
|--------|---------------------------------------------------------|
|   | as  Principal Borrower                                  |
|   |                                                    |
|   | By:                                                     |   |   |
|   | Name:                                                   |   |   |
|   | Title:                                                  |   |   |
|        |                                                         |  |  |  |  |

 

17

----

 

**Exhibit 7.1(c)**

 

**FORM OFOFFICER’S COMPLIANCE CERTIFICATE**

 

Forthe fiscal quarter ended                           , 20     .

 

I,                              ,[Title] of U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., as principalborrower (the “Borrower”) hereby certify that, to the best of myknowledge and belief, with respect to that certain Credit Agreement dated as of                ,2002 (as amended, modified, restated or supplemented from time to time, the “CreditAgreement”; all of the defined terms in the Credit Agreement areincorporated herein by reference) among the Borrower, the Guarantors, theLenders and Bank of America, N.A., as Agent:

 

a.                                       The company-prepared financial statements whichaccompany this certificate are true and correct in all material respects andhave been prepared in accordance with GAAP applied on a consistent basis,subject to changes resulting from normal year-end audit adjustments.

 

b.                                      Since                    (the date of the last similar certification, or, if none, the Closing Date) noDefault or Event of Default has occurred under the Credit Agreement; and

 

c.                                       Since                     (the date of the last similar certification, or, if none, the Closing Date) theConsolidated Parties have entered into the following Hedging Agreements:

 

 

 

 

Deliveredherewith are detailed calculations demonstrating compliance by the CreditParties with the Financial Covenants as of the end of the fiscal periodreferred to above.

 

This           day of                 , 20    .

 
|   | U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., |
|--------|---------------------------------------------------------|
|   | as  Principal Borrower                                  |
|   |                                                    |
|   | By:                                                     |   |   |
|   | Name:                                                   |   |   |
|   | Title:                                                  |   |   |
|        |                                                         |  |  |  |  |

 

18

----

 

Attachment to Officer’s Certificate

 

**Computation ofFinancial Covenants**

 

19

----

 

**Exhibit 7.12**

 

**FORM OF JOINDER AGREEMENT**

 

**THIS JOINDERAGREEMENT** (the “Agreement”),dated as of                        , 20    ,is by and between                                  ,a                                 (the “Subsidiary”), and **BANK OF AMERICA, N.A.**, in its capacity asAgent under that certain Credit Agreement (as it may be amended, modified,restated or supplemented from time to time, the “Credit Agreement”),dated as of                 ,2002, by and among U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., a Delawarelimited partnership (the “Borrower”), the Guarantors, the Lenders andBANK OF AMERICA, N.A., as Agent.  All ofthe defined terms in the Credit Agreement are incorporated herein by reference.

 

TheCredit Parties are required by Section 7.12 of the Credit Agreement tocause the Subsidiary to become a “Guarantor”.

 

Accordingly,the Subsidiary hereby agrees as follows with the Agent, for the benefit of theLenders:

 

1.           The Subsidiary hereby acknowledges, agrees and confirmsthat, by its execution of this Credit Agreement, the Subsidiary will be deemedto be a party to the Credit Agreement and a “Guarantor” for all purposes of theCredit Agreement, and shall have all of the obligations of a Guarantorthereunder as if it had executed the Credit Agreement.  The Subsidiary hereby ratifies, as of thedate hereof, and agrees to be bound by, all of the terms, provisions andconditions applicable to the Guarantors contained in the Credit Agreement.  Without limiting the generality of theforegoing terms of this paragraph 1, the Subsidiary hereby jointly andseverally together with the other Guarantors, guarantees to each Lender and theAgent, as provided in Section 4 of the Credit Agreement, the promptpayment and performance of the Credit Party Obligations in full when due(whether at stated maturity, as a mandatory prepayment, by acceleration orotherwise) strictly in accordance with the terms thereof.

 

2.           The address of the Subsidiary for purposes of all noticesand other communications is                                    ,                                                    ,Attention of                            (FacsimileNo.                        ).

 

3.           The Subsidiary hereby waives acceptance by the Agent andthe Lenders of the guaranty by the Subsidiary under Section 4 of theCredit Agreement upon the execution of this Credit Agreement by the Subsidiary.

 

4.           This Credit Agreement may be executed in two or morecounterparts, each of which shall constitute an original but all of which whentaken together shall constitute one contract.

 

5.             This Credit Agreement shall begoverned by and construed and interpreted in accordance with the laws of theState of North Carolina.

 

INWITNESS WHEREOF, the Subsidiary has caused this Joinder Agreement to be dulyexecuted by its authorized officers, and the Agent, for the benefit of theLenders, has caused the same to be accepted by its authorized officer, as ofthe day and year first above written.

 
|   | [SUBSIDIARY]                     |
|--------|----------------------------------|
|   |                             |
|   |                             |
|   | By:                              |   |   |
|   | Name:                            |   |   |
|   | Title:                           |   |   |
|   |                             |
|   |                             |
|   | Acknowledged  and accepted:      |
|   |                             |
|   | BANK  OF AMERICA, N.A., as Agent |
|   |                             |
|   | By:                              |   |   |
|   | Name:                            |   |   |
|   | Title:                           |   |   |
|        |                                  |  |  |  |  |

 

20

----

 

**Exhibit 11.3(b)**

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment andAssumption (the “Assignment and Assumption”) is dated as of the ClosingDate set forth below and is entered into by and between [*Insert name of Assignor*](the “Assignor”) and [*Insert name of Assignee*] (the “Assignee”).  Capitalized terms used but not definedherein shall have the meanings given to them in the Credit Agreement identifiedbelow (as amended, the “Credit Agreement”), receipt of a copy of whichis hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached heretoare hereby agreed to and incorporated herein by reference and made a part ofthis Assignment and Assumption as if set forth herein in full.

 

For an agreedconsideration, the Assignor hereby irrevocably sells and assigns to theAssignee, and the Assignee hereby irrevocably purchases and assumes from theAssignor, subject to and in accordance with the Standard Terms and Conditionsand the Credit Agreement, as of the Closing Date inserted by the Agent ascontemplated below (i) all of the Assignor’s rights and obligations in itscapacity as a Lender under the Credit Agreement and any other documents orinstruments delivered pursuant thereto to the extent related to the amount andpercentage interest identified below of all of such outstanding rights andobligations of the Assignor under the respective facilities identified below(including without limitation any letters of credit, guarantees, and swinglineloans included in such facilities) and (ii) to the extent permitted to beassigned under applicable law, all claims, suits, causes of action and anyother right of the Assignor (in its capacity as a Lender) against any Person,whether known or unknown, arising under or in connection with the Credit Agreement,any other documents or instruments delivered pursuant thereto or the loantransactions governed thereby or in any way based on or related to any of theforegoing, including, but not limited to, contract claims, tort claims,malpractice claims, statutory claims and all other claims at law or in equityrelated to the rights and obligations sold and assigned pursuant to clause (i)above (the rights and obligations sold and assigned pursuant to clauses (i) and(ii) above being referred to herein collectively as, the “Assigned Interest”).  Such sale and assignment is without recourseto the Assignor and, except as expressly provided in this Assignment andAssumption, without representation or warranty by the Assignor.

 
| 1.     |   | Assignor:         |                                                  |   |
|--------|--------|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |              |                                                                                                                                                                                                                                                                                             |   |
| 2.     |   | Assignee:         |                                                  |   |
|   |   |              | [and is an  Affiliate/Approved Fund of [*identify Lender*](1)                                                                                                                                                                                                                                    |
|   |   |              |                                                                                                                                                                                                                                                                                             |   |
| 3.     |   | Borrower(s):      |                                                  |   |
|   |   |              |                                                                                                                                                                                                                                                                                             |   |
| 4.     |   | Agent:            |                                 ,  as the agent under the Credit Agreement                                                       |
|   |   |              |                                                                                                                                                                                                                                                                                             |   |
| 5.     |   | Credit Agreement: | That certain Credit  Agreement dated as of April       , 2002 among  U.S. Restaurant Operating, L.P., USRP Funding 2002-A, L.P., the Lenders  parties thereto, Bank of America, N.A., as Agent, and the other agents  parties thereto.                             |

 

6.             Assigned Interest:

 
| **Facility Assigned(2)** |   | **Aggregate  Amount of   Commitment/Loans for all Lenders*** |   | **Amount of  Commitment/Loans   Assigned*** |   | **Percentage  Assigned of   Commitment/Loans(3)** |   |
|--------------------------|--------|--------------------------------------------------------------|--------|---------------------------------------------|--------|---------------------------------------------------|--------|
|                     |   | $                                                            |   | $                                           |   |                                              | %      |
|                     |   | $                                                            |   | $                                           |   |                                              | %      |
|                     |   | $                                                            |   | $                                           |   |                                              | %      |

 

[7.            TradeDate:                      ](4)

 

----

| (1) |   | Select as applicable.                                                                                                                                                                                                              |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Fill in the appropriate  terminology for the types of facilities under the Credit Agreement that are  being assigned under this Assignment (e.g. “Revolving Credit Commitment,”  “Term Loan Commitment,” etc.) |
| *   |   | Amount to be adjusted  by the counterparties to take into account any payments or prepayments made  between the Trade Date and the Closing Date.                                                                                   |
| (3) |   | Set forth, to at least  9 decimals, as a percentage of the Commitment/Loans of all Lenders  thereunder.                                                                                                                            |

 

21

----

 

 

Closing Date:                  ,20      [TO BE INSERTED BY AGENT AND WHICH SHALL BETHE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The terms set forth inthis Assignment and Assumption are hereby agreed to:

 
|   | ASSIGNOR           |
|--------|--------------------|
|   | [NAME OF ASSIGNOR] |
|   |               |
|   | By:                |   |   |
|   |               | Title: |
|   |               |
|   | ASSIGNEE           |
|   | [NAME OF ASSIGNEE] |
|   |               |
|   | By:                |   |   |
|   |               | Title: |
|        |                    |  |  |  |  |  |

 
| Consented to and  Accepted:                             |   |
|---------------------------------------------------------|--------|
|                                                    |   |
| BANK OF AMERICA, N.A.  as                               |   |
|   Agent                                            |   |
|                                                    |   |
| By:                                                     |   |   |   |
| Title:                                                  |   |
|                                                    |   |
| Consented to:                                           |   |
|                                                    |   |
| U.S.  RESTAURANT  PROPERTIES OPERATING, L.P., |   |
| as  Principal Borrower                                  |   |
|                                                    |   |
| By:                                                     |   |   |   |
| Name:                                                   |   |   |   |
| Title:                                                  |   |   |   |
|                                                         |        |  |  |  |  |  |

 

----

| (4) |   | To be completed if the  Assignor and the Assignee intend that the minimum assignment amount is to be  determined as of the Trade Date. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------|

 

22

----

 

ANNEX 1

 

STANDARD TERMS ANDCONDITIONS FOR

ASSIGNMENT ANDASSUMPTION

 

1.  Representations and Warranties.

 

1.1   Assignor.  The Assignor (a) represents and warrants that (i) it is the legaland beneficial owner of the Assigned Interest, (ii) the Assigned Interest isfree and clear of any lien, encumbrance or other adverse claim and (iii) it hasfull power and authority, and has taken all action necessary, to execute anddeliver this Assignment and Assumption and to consummate the transactionscontemplated hereby; and (b) assumes no responsibility with respect to (i) anystatements, warranties or representations made in or in connection with the CreditAgreement or any other Credit Document, (ii) the execution, legality, validity,enforceability, genuineness, sufficiency or value of the Credit Documents orany collateral thereunder, (iii) the financial condition of the Borrower, anyof its Subsidiaries or Affiliates or any other Person obligated in respect ofany Credit Document or (iv) the performance or observance by the Borrower, anyof its Subsidiaries or Affiliates or any other Person of any of theirrespective obligations under any Credit Document.

 

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has fullpower and authority, and has taken all action necessary, to execute and deliverthis Assignment and Assumption and to consummate the transactions contemplatedhereby and to become a Lender under the Credit Agreement, (ii) it meets allrequirements of an Eligible Assignee under the Credit Agreement (subject toreceipt of such consents as may be required under the Credit Agreement), (iii)from and after the Closing Date, it shall be bound by the provisions of theCredit Agreement as a Lender thereunder and, to the extent of the AssignedInterest, shall have the obligations of a Lender thereunder, (iv) it hasreceived a copy of the Credit Agreement, together with copies of the mostrecent financial statements delivered pursuant to the terms thereof, asapplicable, and such other documents and information as it has deemedappropriate to make its own credit analysis and decision to enter into thisAssignment and Assumption and to purchase the Assigned Interest on the basis ofwhich it has made such analysis and decision independently and without relianceon the Agent or any other Lender, and (v) if it is a Foreign Lender(5),attached to the Assignment and Assumption is any documentation required to bedelivered by it pursuant to the terms of the Credit Agreement, duly completedand executed by the Assignee; and (b) agrees that (i) it will, independentlyand without reliance on the Agent, the Assignor or any other Lender, and basedon such documents and information as it shall deem appropriate at the time,continue to make its own credit decisions in taking or not taking action underthe Credit Documents, and (ii) it will perform in accordance with their termsall of the obligations which by the terms of the Credit Documents are requiredto be performed by it as a Lender.

 

2.   Payments.  From and after the Closing Date, the Agent shall make allpayments in respect of the Assigned Interest (including payments of principal,interest, fees and other amounts) to the Assignor for amounts which haveaccrued to but excluding the Closing Date and to the Assignee for amounts whichhave accrued from and after the Closing Date.

 

3.  General Provisions. This Assignmentand Assumption shall be binding upon, and inure to the benefit of, the partieshereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number ofcounterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of asignature page of this Assignment and Assumption by telecopy shall be effectiveas delivery of a manually executed counterpart of this Assignment andAssumption.  This Assignment andAssumption shall be governed by, and construed in accordance with, the law ofthe State of North Carolina.

 

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Exhibit 1.1(a)

 

BANKRUPTCY REMOTEBORROWING ENTITY REQUIREMENTS

 

A “Bankruptcy RemoteBorrowing Entity” shall satisfy the following requirements:

 

1.             General Requirements.  The entity’s Organizational Documents must provide for thefollowing (the term “Organizational Documents” as used herein means (i)with respect to a corporation, its articles of incorporation and bylaws, (ii)with respect to a limited partnership, its limited partnership agreement, and(iii) with respect to a limited liability company, its articles of organizationand operating agreement):

 

(A)                              LimitedPurpose.  The entity’s purpose mustbe limited solely to owning and managing its assets, entering into the CreditDocuments and the transactions contemplated thereby and engaging in incidentalactivities in connection therewith.

 

(B)                                CertainActions Requiring Unanimous Vote. The unanimous vote of the entity’s board of directors (including that ofthe Independent Director, as defined in Section 2(A) hereof), partners ormembers, as applicable, must be required in order to:

 

(i)                                     takeany Bankruptcy Action (as defined in Addendum A hereof);

 

(ii)                                  dissolve,liquidate, consolidate, merge or sell all or substantially all of its assets;

 

(iii)                               amendor recommend the amendment of its Organizational Documents; and

 

(iv)                              engagein transactions with affiliates (except to the extent such transactions are on terms and conditions substantially as favorableto such Person as would be obtainable by it in a comparable arms-lengthtransaction with a Person other than an officer, director, shareholder,Subsidiary or Affiliate).

 

(C)                                SeparatenessProvisions.  The entity must berequired to:

 

(i)                                     notcommingle assets with those of any other entity and must hold its assets in itsown name;

 

(ii)                                  conductits own business in its own name;

 

(iii)                               maintainseparate bank accounts, books, records and financial statements;

 

(iv)                              maintainits books, records, resolutions and agreements as official records;

 

(v)                                 payits own liabilities out of its own funds;

 

(vi)                              maintainadequate capital in light of contemplated business operations;

 

(vii)                           observeall corporate, partnership, company or other organizational formalities;

 

(viii)                        maintainan arm’s-length relationship with affiliates;

 

(ix)                                paythe salaries of its own employees and maintain a sufficient number of employeesin light of contemplated business operations;

 

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(x)                                   notguarantee or become obligated for the debts of any other entity or hold out itscredit as being available to satisfy the obligations of others;

 

(xi)                                notacquire obligations or securities of affiliates;

 

(xii)                             notmake loans to any other person or entity;

 

(xiii)                          allocatefairly and reasonably any overhead for shared office space;

 

(xiv)                         useseparate stationery, invoices and checks;

 

(xv)                            notpledge its assets for the benefit of any other entity;

 

(xvi)                         holditself out as a separate entity, and not fail to correct any knownmisunderstanding regarding its separate identity; and

 

(xvii)                      not identifyitself or any of its affiliates as a division or part of the other.

 

(D)                               Subordinationof Indemnification Obligations.  Theentity’s obligation, if any, to indemnify its directors and officers, partners,or members or managers, as applicable, must be fully subordinated to the loanand the loan documents and must not constitute a claim against it in the eventthat cash flow in excess of amounts necessary to pay holders of the loan isinsufficient to pay such obligations.

 

2.                                       AdditionalRequirements for Corporations.  Inaddition to the general requirements set forth above, for a corporation to be aBankruptcy Remote Borrowing Entity, its Organizational Documents must providefor the following:

 

(A)                              IndependentDirector.  The corporation’s boardof directors must include an Independent Director.  An “Independent Director” means a director of thecorporation who is not at the time of initial appointment, has not been at anytime during the preceding five (5) years, and will not be at any timeprior to payment of the loan in full: (i) a stockholder, director, officer,employee, partner or member of the corporation or the borrower (if thecorporation is a partner or member of the borrower),****or any affiliate thereof;(ii) a customer, supplier or other person (including without limitation, anattorney, accountant or other professional) who derives any portion of itspurchases or revenues from its activities with the corporation or the borrower(if the corporation is a partner or member of the borrower) or any affiliatethereof, other than reasonable compensation for the performance of itsobligations as Independent Director; (iii) a person or other entity controllingor under common control with any such stockholder, partner, member, customer,supplier or other person; or (iv) a member of the immediate family of any suchstockholder, director, officer, employee, partner, member, customer, supplieror other person.  As used herein, theterm “control” means the possession, directly or indirectly, of the power todirect or cause the direction of management, policies or activities of a personor entity, whether through ownership of voting securities, by contract orotherwise.

 

3.                                       AdditionalRequirements for Limited Partnerships. In addition to the general requirements set forth above, for a limitedpartnership to be a Bankruptcy Remote Borrowing Entity, its OrganizationalDocuments must provide for the following:

 

(A)                              GeneralPartner.  Each general partner ofthe limited partnership must be a Bankruptcy Remote Borrowing Entity satisfyingthe general requirements set forth above and the additional requirements setforth herein applicable to such general partner (i.e., corporate, limitedpartnership or limited liability company requirements).  In addition, each such general partner’sOrganizational Documents must provide for the following:

 

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(i)                                     LimitedPurpose.  Each such general partner’spurpose must be limited to serving as a general partner in the limitedpartnership.

 

(ii)                                  UnanimousVote Required to Withdraw.  Theunanimous vote of each such the general partner’s board of directors (includingthat of the Independent Director), partners or members, as applicable, must berequired for the a general partner to withdraw as a general partner of thelimited partnership.

 

(B)                                Continuanceof Partnership.  If there is morethan one general partner, the Organizational Documents must require theremaining partners to continue the partnership upon an event of dissolution forso long at least one of the general partners remains solvent.

 

4.                                       AdditionalRequirements for Limited Liability Companies(6).  In addition to the general requirements set forth above, for alimited liability company to be an SPE, its Organizational Documents mustprovide for the following:

 

(A)                              IndependentMember/Manager.  The company musthave one, or, if the transaction involves more than $20,000,000.00, twoindependent members/managers.  Suchindependent members/managers should have the same basic traits as theindependent directors described with respect to corporate SPEs.  The determination of whether the independententity/individual must be a manager or a member is dependent upon the locus ofcontrol in the LLC.

 

(B)                                SPEMember.  At least one member of thecompany must be an SPE satisfying the general SPE requirements set forth aboveand the additional requirements applicable to such member (i.e., corporate,limited partnership or limited liability company requirements).  “Bankruptcy” events of dissolution must belimited to the bankruptcy of such SPE member. This may necessitate that the SPE member be designated the sole“managing member” of the company.  Eachsuch SPE member’s Organizational Documents must provide for the following:

 

(i)                                     LimitedPurpose.  Such member’s purpose mustbe limited to serving as a member in the company.

 

(ii)                                  UnanimousVote Required to Withdraw.  Theunanimous vote of such member’s board of directors (including that of theIndependent Director), partners or members, as applicable, must be required forthe member to withdraw as a member of the company.

 

(C)                                Considerationof Interests of Creditors.  Thecompany’s members must be required to consider the interests of creditors inconnection with any action subject to the vote of its members (including theSPE member), notwithstanding that the company may not then be insolvent.

 

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(6)           Limited liability companies raisespecial issues in that their members have limited liability under state law forthe obligations of the company, yet usually anticipate receiving “flow-through”or partnership tax treatment.  Becauseof certain criteria for such treatment under the Internal Revenue Code, taxcounsel should be consulted with respect to the organizational structuredescribed herein.

 

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(D)                               Continuanceof Company.  The vote of amajority-in-interest of the remaining members of the company is sufficient to continuethe life of the company upon the occurrence of an event of dissolution or othertermination event.  If the requiredconsent of the remaining members to continue the company is not obtained, thecompany’s Organization Documents must provide that the company not liquidatecollateral (except as permitted under the loan documents) without the consentof holders of the loan, and that such holders may continue to exercise all oftheir rights under the loan documents and retain any collateral until the loanhas been paid in full or otherwise completely discharged.

 

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Addendum A

 

As used herein, “BankruptcyAction” means any of the following:

 

1.                                       Takingany action that might cause the entity (or the borrower if the entity is apartner or member of the borrower)****to become insolvent.

 

2.                                       Commencingany case, proceeding or other action on behalf of the entity (or the borrowerif the entity is a partner or member of the borrower) under any existing orfuture law of any jurisdiction relating to bankruptcy, insolvency,reorganization or relief of debtors.

 

3.                                       Institutingproceedings to have the entity (or the borrower if the entity is a partner ormember of the borrower) adjudicated as bankrupt or insolvent.

 

4.                                       Consentingto the institution of bankruptcy or insolvency proceedings against the entity(or the borrower if the entity is a partner or member of the borrower).

 

5.                                       Filinga petition or consent to a petition seeking reorganization arrangement,adjustment, winding-up, dissolution, composition, liquidation or other reliefon behalf of the entity (or the borrower if the entity is a partner or memberof the borrower) of its (or their) debts under any federal or state lawrelating to bankruptcy.

 

6.                                       Seekingor consenting to the appointment of a receiver, liquidator, assignee, trustee,sequestrator, custodian or any similar official for the entity (or the borrowerif the entity is a partner or member of the borrower) or a substantial portionof its (or their) properties.

 

7.                                       Makingany assignment for the benefit of the entity’s creditors (or the borrower’screditors if the entity is a partner or member of the borrower).

 

8.                                       Takingany action (or causing the borrower to take any action if the entity is apartner or member of the borrower) in furtherance of any of the foregoing.

 

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Notealso the potential necessity for a Non-Consolidation Opinion from Borrower’scounsel.

 

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