**Exhibit10.3**

 

**Execution Version**

 

 

CREDIT AGREEMENT

 

Dated as of November 4, 2003

 

among

 

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

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

USRP (S&C), LLC, a Texaslimited liability company (“S&C”),

USRP (JV1), LLC, a Texaslimited liability company (“JV1”),

USRP/HCI PARTNERSHIP 1, L.P., aTexas limited partnership (“HCI”),

USRP HOLDING CORP., a Texascorporation (“USRP Holding),

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

 

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TABLE OF CONTENTS

 
| ARTICLE I   DEFINITIONS                                     |
|------------------------------------------------------------------|
| 1.1                                                              | Definitions. |
| 1.2                                                              | Computation of Time  Periods. |
| 1.3                                                              | Accounting Terms. |
| 1.4                                                              | References to Agreements  and Laws. |
| 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, Reduction or Increase 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. |
| 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. |

 

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| 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; Termination of Replaced Credit  Agreement. |
| 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.                                                                                              |
| 6.26                                    | REIT Status.                                                                                                     |
| 6.27                                    | Bankruptcy Remote Borrowing Entity.                                                                              |
| 6.28                                    | Closing Date Borrowing  Base Assets.                                                                             |
| 6.29                                    | Tax Shelter Regulations.                                                                                         |
| 6.30                                    | Representations and  Warranties Under Term Loan Documents.                                                       |
| 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.                                                                                             |
| 8.8                                     | Other Indebtedness.                                                                                              |
| 8.9                                     | Transactions with Affiliates.                                                                                    |

 

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| 8.10                                | Fiscal Year; Organizational Documents.                            |
|-------------------------------------|-------------------------------------------------------------------|
| 8.11                                | Limitation on Restricted  Actions.                                |
| 8.12                                | Contingent Obligations.                                           |
| 8.13                                | Sale Leasebacks.                                                  |
| 8.14                                | Borrowing  Base Asset Removal                                     |
| 8.15                                | Negative Pledges/Liens.                                           |
| 8.16                                | Operating Lease Obligations.                                      |
| 8.17                                | No Foreign Subsidiaries.                                          |
| 8.18                                | Ground Leases.                                                    |
| 8.19                                | ERISA Exemptions.                                                 |
| 8.20                                | Transfer of Assets to  Non-Guarantor Subsidiaries and Affiliates. |
| 8.21                                | Term Loan Document Covenants and Amendments.                      |
| 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.                                   |
| 11.4                                | 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.                                                         |
| 11.18                               | USA Patriot Act Notice                                            |

 

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| SCHEDULES            |
|----------------------|
|                 |   |   |
| Schedule 1.1(a) |   | Revolving Commitments |
| Schedule 2.1(a) |   | Lenders/Agent |

 

 
| 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 7.12      |   | Form of Joinder Agreement |
| Exhibit 11.3(b)   |   | Form of Assignment and Assumption |

 

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**CREDIT AGREEMENT**

 

**THISCREDIT AGREEMENT**, dated as of November 4, 2003 (asamended, modified, restated or supplemented from time to time, the “CreditAgreement”), 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”);**USRP(S&C), LLC**, a Texas limited liability company (“S&C”),**USRP(JV1), LLC**, a Texas limited liability company (“JV1”), **USRP/HCIPARTNERSHIP 1, L.P.**, a Texas limited partnership (“HCI”), **USRP HOLDINGCORP.**, a Texas corporation (“USRP Holding”; and together withthe Principal Borrower, the General SPE, JV1, HCI and S&C, the “Borrower”),**USRPMANAGING, INC.**, a Delaware corporation and the general partner ofUSRP Operating, as a Guarantor (the “General Partner”), **U.S.RESTAURANT PROPERTIES, INC.**, a Maryland corporation, as a Guarantor (“USRPREIT”), the Subsidiary Guarantors (as defined herein), the Lenders (asdefined herein), **BANK OF AMERICA, N.A.**, as Agent for the Lenders (in suchcapacity, the “Agent”) and as issuing lender (in such capacity, “IssuingLender”) and **BANC OF 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 Lenders provide a revolving creditfacility in an aggregate amount equal to $50,000,000 (the “Credit Facility”)for the purposes hereinafter set forth; and

 

**WHEREAS**,the Lenders have agreed to make the requested Credit Facility available to theBorrowers on the terms and conditions hereinafter set forth;

 

**NOW,THEREFORE, IN CONSIDERATION**of the premises and othergood and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the parties hereto agree as follows:

 

# **ARTICLE I**

# ** **

# **DEFINITIONS**

 

## **1.1          Definitions.**

 

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

 

“2001-ATerm Securitization Documents” means that certain Amended and RestatedIndenture dated as of August 1, 2001 by and among USRP Funding 2001-A, L.P., asissuer, Wells Fargo Bank Minnesota, N.A., as indenture trustee and MBIAInsurance Corporation, as certificate issuer and all documents and instrumentsexecuted in connection therewith or pursuant to the terms thereof, in each caseas amended prior to the Closing Date.

 

“AdjustedBase Rate” means the Base Rate plus 1.00%.

 

“AdjustedEurodollar Rate” means the Eurodollar Rate plus 3.00%.

 

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

 

“Affiliate”means, with respect to any Person, any other Person (i) directly orindirectly controlling or controlled by or under direct or indirect commoncontrol with such Person or (ii) directly or indirectly owning or holdingfive percent (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.

 

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“Agent”shall have the meaning assigned to such term in the heading hereof, togetherwith any successors or assigns.

 

“Aggregate Derivative Reserve Amount” means, at any given time,an amount equal to the aggregate amount reserved in connection with allDerivative Exposure Reserves in effect at such time.

 

“Applicable Law” means all applicable provisions ofconstitutions, statutes, rules, regulations and orders of all governmentalbodies and all orders and decrees of all courts, tribunals and arbitrators.

 

“ApplicableLending Office” means, for each Lender, the office of such Lender (or of anAffiliate of such Lender) as such Lender may from time to time specify to theAgent and the Borrower by written notice as the office by which its EurodollarLoans are made and maintained.

 

“ApprovedFund” means any Fund that is administered or managed by (a) a Lender, (b)an Affiliate of a Lender or (c) an entity or an Affiliate of an entity thatadministers or manages a Lender.

 

“AssetDisposition” means any disposition (including pursuant to a Sale andLeaseback Transaction) of any or all of the Property (including withoutlimitation the Capital Stock of a Subsidiary) of any Consolidated Party whetherby sale, lease (other than in the ordinary course of business), licensing,transfer or otherwise, but other than pursuant to any casualty or condemnationevent.

 

“AssetValue” means, with respect to any given parcel of Real Property for anygiven date of calculation, (a) if such Real Property has been owned for atleast one (1) year, the trailing twelve month EBITDA from such Real Property asof such date of calculation and (b) if such Real Property has been owned lessthan one (1) year, the annualized EBITDA from such Real Property (based on theEBITDA from the date of acquisition through such date of calculation), in eachcase, capitalized at ten and one half percent (10.5%); provided, that (a)the Agent shall have the right, at its discretion, to review theappropriateness of the capitalization rate on an annual basis (such reviewperiod to commence on May 1 of each calendar year and end as of June 1 ofsuch calendar year); (b) the Required Lenders shall have the right to adjustthe capitalization rate during the Agent’s review period each year (by anamount not to exceed +/- 0.50% in any given year) based on then-prevailingmarket conditions for comparable property types (each as determined by theRequired Lenders) and on the Agent’s review and recommendation; and (c) theapplicable capitalization rate shall not at any time, notwithstanding theprovisions regarding adjustment thereof set forth above, (i) exceed 11.5% or(ii) be less than 9.5%.

 

“Assignmentand Assumption” means an assignment and assumption entered into by a Lenderand an Eligible Assignee (with the consent of any party whose consent isrequired by Section 11.3, and accepted by the Agent, in substantially the formof Exhibit 11.3 or any other form approved by the Agent.

 

“Availability” means, at any time, an amount (not less thanzero) equal to (a) the Revolving Committed Amount, less (b) the sum of(i) the outstanding principal amount of the Revolving Loans, plus (ii)the LOC Obligations, plus (iii) the Aggregate Derivative Reserve Amount.

 

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

 

“BankruptcyEvent” means, with respect to any Person, the occurrence of any of thefollowing: (i) the entry of a decree or order for relief by a court orgovernmental agency in an involuntary case under any applicable bankruptcy,insolvency or other similar law now or hereafter in effect, or the appointmentby a court or governmental agency of a receiver, liquidator, assignee,custodian, trustee, sequestrator (or similar official) of such Person or forany substantial part of its Property or the ordering of the winding up orliquidation of its affairs by a court or governmental agency; or (ii) thecommencement against such Person of an involuntary case under any applicablebankruptcy, insolvency or other similar law now or hereafter in effect, or ofany case, proceeding or other action for the appointment of a receiver,liquidator, assignee, custodian, trustee, sequestrator (or similar official) ofsuch Person or for any substantial part of its Property or for the winding up

 

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or liquidation of its affairs, and suchinvoluntary case or other case, proceeding or other action shall remainundismissed for a period of sixty (60) consecutive days, or therepossession or seizure by a creditor of such Person of a substantial part ofits Property; or (iii) such Person shall commence a voluntary case underany applicable bankruptcy, insolvency or other similar law now or hereafter ineffect, or consent to the entry of an order for relief in an involuntary caseunder any such law, or consent to the appointment of or the taking possessionby a receiver, liquidator, assignee, creditor in possession, custodian,trustee, sequestrator (or similar official) of such Person or for anysubstantial part of its Property or make any general assignment for the benefitof creditors; or (iv) such Person shall be unable to, or shall admit inwriting its inability to, pay its debts generally as they become due.

 

“BankruptcyRemote Borrowing Entity” means a Person meetingeach of the criteria set forth on Exhibit 1.1(a) attached hereto.

 

“BAS” shall have the meaning given to such term in the introductoryparagraph hereof.

 

“Base Rate”means, for any day, the rate per annum equal to the higher of (a) theFederal Funds Rate 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 RateLoan” means any Loan bearing interest at a rate determined by reference tothe Base Rate.

 

“BOA” meansBank of America, N.A. and its successors and assigns.

 

“BOA Derivative Instrument” means any derivative transaction,hedging transaction, takeout commitment or forward equity commitment enteredinto by and between the General Partner or the USRP REIT and any DerivativeCounterparty.

 

“Borrower”means, collectively, USRP Operating, the General SPE, S&C, JV1, HCI, USRPHolding and their respective permitted successors and assigns.

 

“BorrowingBase” means, as of any day, an amount equal to fifty percent (50%)multiplied by the Borrowing Base Asset Value; provided, however, that, prior tosuch calculation, each of clauses (a) through (c) below shall be satisfiedwith respect to the assets contributing to the Borrowing Base Asset Value:

 

(a)           theassets of single Concepts or Tenants shall not, in any case, account for morethan twenty percent (20%) of the Total Rent; to the extent the assets of asingle Concept or Tenant account for more than twenty percent (20%) of theTotal Rent associated with the assets used in calculating Borrowing Base AssetValue, the assets associated with such Concept or Tenant shall be removed fromthe calculation of Borrowing Base Asset Value to the extent necessary to reducesuch Concept’s or Tenant’s percentage of the Total Rent of the assets used incalculating Borrowing Base Asset Value to a portion equal to or less thantwenty percent (20%);

 

(b)           theportion of Borrowing Base Asset Value attributable to Ground Lease Interestsshall not, in any case, exceed twenty percent (20%) of the aggregateBorrowing Base Asset Value; to the extent Ground Lease Interests constitutemore than twenty percent (20%) of the Borrowing Base Asset Value, theValue of such Ground Lease Interests shall be removed from the calculationthereof to the extent necessary to reduce the percentage associated with theGround Lease Interests as a portion of all of the assets used in calculatingBorrowing Base Asset Value to a portion equal to or less than twentypercent (20%); and

 

(c)           theunderlying leases with respect to the Borrowing Base Assets pursuant to whichBorrower is the lessor shall not, in any case, have a weighted averageremaining lease term of less than, (i) for the period commencing as of the datehereof and ending as of (and including) the date 24 calendar months thereafter,eight (8) years, (ii) for the period commencing as of the day after thedate which is 24 months following the date hereof and ending as of (andincluding) the date 48 months following

 

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the date hereof, seven (7) years, and (iii)for all periods thereafter, six (6) years; to the extent the weighted averageof the remaining lease term(s) of the underlying leases with respect to theassets contributing to the Borrowing Base Asset Value (with each such lease’sterm given a weighting in relation to the other leases involved in suchcalculation based on the contribution of each such lease to the Borrowing BaseAsset Value) is less than the applicable required term of years, assets withremaining lease terms of less than the applicable required term of years shallbe removed from the calculation of Borrowing Base Asset Value until theweighted average of the remaining lease terms with respect to all such assetsis equal to or greater than the applicable required term of years.

 

“BorrowingBase Asset Value” means, as of any given calculation date, an amount equalto (a) the sum of the Asset Values of all Real Properties which are whollyowned by any of the General SPE, HCI (or Wholly-Owned Subsidiaries thereof),HCI (or Wholly-Owned Subsidiaries thereof) or S&C; less (b) anyamounts included in the above calculations that are attributable to (i) assetssubject to one or more Liens or Negative Pledges; and (ii) Excluded Assets.

 

“BorrowingBase Assets” means, as of any given date, those assets contributing to theBorrowing Base Asset Value after the reductions made pursuant tosubclause (b) of the definition thereof.

 

“BorrowingBase Certificate” shall have the meaning given to such term inSection 7.1(k).

 

“BusinessDay” means a day other than a Saturday, Sunday or other day on whichcommercial banks in Charlotte, North Carolina or New York, New York areauthorized or required by law to close.

 

“Businesses”means, at any time, a collective reference to the businesses operated by theConsolidated Parties at such time.

 

“Capitalized Lease Obligation” means Indebtedness represented byobligations under a Capital Lease, and the amount of such Indebtedness is thecapitalized amount of such obligations determined in accordance with GAAP.

 

“CapitalLease” means, as applied to any Person, any lease of any Property (whetherreal, personal or mixed) by that Person as lessee which, in accordance withGAAP, is required to be accounted for as a capital lease on the balance sheetof that Person.

 

“CapitalStock” means (i) in the case of a corporation, capital stock,(ii) in the case of an association or business entity, any and all shares,interests, participations, rights or other equivalents (however designated) ofcapital stock, (iii) in the case of a partnership, partnership units orinterests (whether general or limited), (iv) in the case of a limitedliability company, membership interests and (v) any other interest orparticipation that confers on a Person the right to receive a share of theprofits and losses of, or distributions of assets of, the issuing Person.

 

“CashEquivalents” means, as at any date, (a) securities issued or directlyand fully guaranteed or insured by the United States or any agency orinstrumentality thereof (provided that the full faith and credit of the UnitedStates is pledged in support thereof) having maturities of not more than twelvemonths from the date of acquisition, (b) Dollar denominated time depositsand certificates of deposit of (i) any Lender, (ii) any domesticcommercial bank of recognized standing having capital and surplus in excess of$500,000,000 or (iii) any bank whose short-term commercial paper ratingfrom S&P is at least A-1 or the equivalent thereof or from Moody’s is atleast P-1 or the equivalent thereof (any such bank being an “Approved Bank”),in each case with maturities of not more than 270 days from the date ofacquisition, (c) commercial paper and variable or fixed rate notes issuedby any Approved Bank (or by the parent company thereof) or any variable ratenotes issued by, or guaranteed by, any domestic corporation rated A-1 (or theequivalent thereof) or better by S&P or P-1 (or the equivalent thereof) orbetter by Moody’s and maturing within six months of the date of acquisition,(d) repurchase agreements entered into by any Person with a bank or trustcompany (including any of the Lenders) or recognized securities dealer havingcapital and surplus in excess of $500,000,000 for direct obligations issued byor fully guaranteed by the United States in which such Person shall have aperfected first priority security interest (subject to no other Liens) andhaving, on the date of purchase thereof, a fair market

 

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value of atleast 100% of the amount of the repurchase obligations and(e) Investments, classified in accordance with GAAP as current assets, inmoney market investment programs registered under the Investment Company Act of1940, as amended, which are administered by reputable financial institutionshaving capital of at least $500,000,000 and the portfolios of which are limitedto Investments of the character described in the foregoing subdivisions (a)through (d).

 

“Change in Management” means a change in the identity of theChief Executive Officer of the General Partner or the USRP REIT, other than onaccount of the death or permanent disability of such Person.

 

“Change ofControl” means any of the following events: (a) the sale, lease, transferor other disposition, in one or a series of related transactions, of all orsubstantially all of the assets of any of the Borrowers and such Borrower’sSubsidiaries taken as a whole to any “person” or “group”(within the meaning of Sections 13(d) and 14(d)(2)of the Securities Exchange Act), or (b) the USRP REIT shall fail to ownand control (whether directly or indirectly) 80% of the outstanding CapitalStock of any Borrower.  As used herein,“beneficial ownership” shall have the meaning provided in Rule 13d-3 ofthe Securities and Exchange Commission under the Securities Exchange Act.

 

“ClosingDate” means the date hereof.

 

“Code”means the Internal Revenue Code of 1986, as amended, and any successor statutethereto, as interpreted by the rules and regulations issued thereunder, in eachcase as in effect from time to time. References to sections of the Code shall be construed also to refer toany successor sections.

 

“CollateralAgent” means Bank of America, N.A., in such capacity under the IntercreditorAgreement and the Security Documents, or its successors and assigns.

 

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

 

“Concept” means any distinctive brand, trade name or system forestablishing and operating restaurants and/or convenience stores 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.”

 

“ConsolidatedCapital Expenditures” means, as of any date, for the four fiscal quarterperiod most recently ending on or prior to such date, the sum of all capitalexpenditures of the Consolidated Parties on a consolidated basis, as determinedin accordance with GAAP.

 

“ConsolidatedFixed Charges” means, as of any date, for the four fiscal quarter periodmost recently ending on or prior to such date, the sum of (a) all scheduledpayments of principal on Funded Indebtedness of the Consolidated Parties on aconsolidated basis (including, without limitation, (i) the implied principalcomponent of payments due on Capital Leases and Synthetic Leases, (ii) alldividends paid on the preferred Capital Stock of any Consolidated Party and(iii) an amount, not less than zero (0), equal to  (A) payments made in connection with any ground leases, butexcluding voluntary prepayments or mandatory prepayments required pursuant toSection 3.3 and any scheduled balloon, bullet or similar principal paymentrepaying the related underlying principal Indebtedness in full), as determinedin accordance with GAAP, less (B) the rental income received by theConsolidated Parties in connection with such ground leased properties in connectionwith operating leases under which a Consolidated Party is the lessor, plus (b)without duplication, the sum of (i) all scheduled payments of principal onFunded Indebtedness of each Unconsolidated Affiliate multiplied by therespective Unconsolidated Affiliate Interest of each such entity, (ii) alldividends paid on the preferred Capital Stock of any Unconsolidated Affiliatemultiplied by the respective Unconsolidated Affiliate Interest of each suchentity; and (iii) an amount, not less than zero (0), equal to (A) (1) paymentsmade by any Unconsolidated Affiliate in connection with any ground leases, less(2) the rental income received by any Unconsolidated Affiliate in connectionwith such ground leased properties in connection with operating leases underwhich an Unconsolidated Affiliate is the lessor, multiplied by (B) therespective Unconsolidated Affiliate Interest of

 

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each such entity; provided, that in eachcase, all of the above amounts not otherwise adjusted to account for MinorityInterests shall be adjusted to deduct therefrom the pro rata share of suchamounts allocable to the Minority Interests, plus (c) Consolidated InterestExpense.

 

“ConsolidatedInterest Expense” means, as of any date, for the four fiscal quarter periodmost recently ending on or prior to such date, the sum of (i) interest expensein connection with Funded Indebtedness (including the amortization of debtdiscount and premium, the interest component under Capital Leases, the impliedinterest component under Synthetic Leases and obligation payments under the anyhedging agreements or similar arrangements entered into by any ConsolidatedParty) of the Consolidated Parties on a consolidated basis, as determined inaccordance with GAAP, plus (ii) without duplication, interest expense inconnection with Funded Indebtedness (including the amortization of debtdiscount and premium, the interest component under Capital Leases and theimplied interest component under Synthetic Leases) of each UnconsolidatedAffiliate multiplied by the respective Unconsolidated Affiliate Interest ofeach such entity; provided, that in each case, all of the above amounts nototherwise adjusted to account for Minority Interests shall be adjusted to deducttherefrom the pro rata share of such amounts allocable to the MinorityInterests.

 

“ConsolidatedNet Income” means, as of any date, for the four fiscal quarter period mostrecently ending on or prior to such date, (i) net income (excluding extraordinaryitems) of the Consolidated Parties on a consolidated basis after interestexpense, income, value added and similar taxes and depreciation andamortization, all as determined in accordance with GAAP, plus (ii) withoutduplication, an amount equal to the aggregate of net income (excludingextraordinary items) after interest expense, income, value added and similartaxes and depreciation and amortization, as determined in accordance with GAAP,of each Unconsolidated Affiliate multiplied by the respective UnconsolidatedAffiliate Interest of each such entity; provided, that in each case, all of theabove amounts not otherwise adjusted to account for Minority Interests shall beadjusted to deduct therefrom the pro rata share of such amounts allocable to theMinority Interests.

 

“ConsolidatedParties” means a collective reference to the USRP REIT, the GeneralPartner, the Borrower and each of their Subsidiaries, and “ConsolidatedParty” means any one of them.

 

“ConsolidatedTotal EBITDA” means, as of any date, for the four fiscal quarter periodmost recently ending on or prior to such date, the sum of (a) ConsolidatedNet Income, plus (b) the sum of thefollowing (but only to the extent taken into account in determiningConsolidated Net Income for such period): (i) depreciation and amortization expense for such period; plus(ii) interest expense for such period; plus (iii) income tax expense inrespect of such period; minus (or plus, as appropriate) (iv)extraordinary gains (losses) and gains (losses) from sales of assets for suchperiod (provided, for purposes of clarification, that such gains shallbe subtracted from the overall amount calculated pursuant to this clause (ii)and such losses shall be added to such amount); plus (or minus, as appropriate) (v) extraordinarygains (or losses) (provided, for purposes of clarification, that such gainsshall be subtracted from the overall amount calculated pursuant to this clause(b) and such losses shall be added to such amount), plus (or minus, asappropriate) (vi) all straight line rent leveling adjustments (reported in theconsolidated financial statements of such Person for purposes of GAAP); plus(or minus, as appropriate) (vii) equity in net earnings (or net loss) ofunconsolidated Affiliates of such Person (if any); plus (viii) amountsincurred by such Person for such period as “impairment of long lived assets,” ineach case without duplication and as determined in accordance with GAAP;provided, that, (A) each of the above calculations shall include, without duplication,any amounts attributable to any interests held by any Consolidated Party in anyUnconsolidated Affiliate and (B) all amounts included in the above calculations(and not otherwise adjusted to account for Minority Interests) shall beadjusted to deduct therefrom the pro rata share of such amounts allocable toMinority Interests.

 

“Contingent Obligation” means, with respect to any Person, anyobligation of such Person to guarantee or intended to guarantee anyIndebtedness, leases, dividends or other obligations (“primary obligations”) ofany other Person (the “primary obligor”) in any manner, whether directly orindirectly (exclusive of any non-material contractual indemnities andnon-material guarantees of non-monetary obligations which have not yet beencalled on or quantified), including, without limitation, (a) the direct or

 

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indirectguaranty, endorsement (other than for collection or deposit in the ordinarycourse of business), co-making, discounting with recourse or sale with recourseby such Person of the obligation of a primary obligor, (b) the obligation tomake take-or-pay or similar payments, if required, regardless of nonperformanceby any other party or parties to an agreement, (c) any obligation of suchPerson, whether or not contingent, (i) to purchase any such primary obligationor any property constituting direct or indirect security therefor, (ii) toadvance or supply funds (A) for the purchase or payment of any such primaryobligation or (B) to maintain working capital, equity capital, net worth orother balance sheet condition or any income statement condition of the primaryobligor or otherwise to maintain the solvency of the primary obligor, (iii) topurchase, lease or otherwise acquire property, assets, securities or servicesprimarily for the purpose of assuring the owner of any such primary obligationof the ability of the primary obligor to make payment of such primaryobligation or (iv) otherwise to assure or hold harmless the holder of suchprimary obligation against loss in respect thereof, (d) any residual obligationor liability of such Person under any Synthetic Lease or any other off-balancesheet financing, or (e) any obligation of such Person in connection with any derivativetransaction, hedging transaction (including, without limitation, any HedgingAgreements), 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 such primary obligation for which suchPerson may be liable pursuant to the terms of the agreement, instrument orother document evidencing such Contingent Obligation) or, if not stated ordeterminable, the maximum reasonably anticipated liability in respect thereof(assuming such Person is required to perform thereunder), as determined by suchPerson in good faith.  ContingentObligations shall not include the following obligations or liabilities of theGeneral Partner, the Borrower or any other Subsidiaries thereof (including anySpecial Purpose Entity and any Bankruptcy Remote Borrowing Entity) to theextent incurred in connection with a Securitization Asset Sale: reasonable andcustomary obligations of the General Partner, the Borrower or any otherSubsidiaries thereof with respect to (i) the servicing of any assets which arethe subject of such Securitization Asset Sale, (ii) administrative andministerial matters relating to any applicable Special Purpose Entity, (iii)maintenance of the corporate separateness of any such Special Purpose Entityfrom that of the General Partner and its other Subsidiaries and (iv) theguaranty of payment of fees of any Person acting as a trustee in connectionwith such Securitization Asset Sale and indemnification obligations owing toany such Person.  In addition, theownership of a Subordinated Interest shall not be deemed to give rise to anyContingent Obligation on the part of the owner thereof.  Further, Contingent Obligations shall notinclude liabilities of the General Partner, Borrower or any Consolidated Party(i) which result solely from the General Partner or such Consolidated Partybeing a general partner of a Special Purpose Entity that is a limitedpartnership and is not a Consolidated Party, and (ii) which liabilities areattributable to customary and reasonable non-recourse exceptions,representations and warranties involved with securitization transactions andnot related to the creditworthiness of the obligors involved in suchtransactions (including, without limitation, exceptions for fraud,environmental indemnities and misapplication of proceeds).

 

“Continue”,“Continuation” and “Continued” shall refer to the continuationpursuant to Section 3.2(a) hereof of a Eurodollar Loan from one InterestPeriod to the next Interest Period.

 

“Convert”,“Conversion” and “Converted” shall refer to a conversion pursuantto Section 3.2(b) or Sections 3.7 through 3.12, inclusive, of a BaseRate Loan into a Eurodollar Loan.

 

“CreditDocuments” means a collective reference to this Credit Agreement, theNotes, each Joinder Agreement, and theSecurity Documents (in each case as the same may be amended, modified,restated, supplemented, extended, renewed or replaced from time to time), and “CreditDocument” means any one of them.

 

“CreditFacility” shall have the meaning assigned to such term in the recitalshereto.

 

“CreditParties” means a collective reference to the Borrower, the General Partnerand the other Guarantors, and “Credit Party” means any one of them.

 

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“CreditParty Obligations” means, without duplication, (i) all of theobligations of the Credit Parties to the Lenders (including the Issuing Lender)and the Agent, whenever arising, under this Credit Agreement, the Notes or anyof the other Credit Documents (including, but not limited to, any interestaccruing after the occurrence of a Bankruptcy Event with respect to any CreditParty, regardless of whether such interest is an allowed claim under theBankruptcy Code) and (ii) all liabilities and obligations, wheneverarising, owing from any Credit Party to any Lender, or any Affiliate of a Lender,arising under any Hedging Agreement.

 

“DebtService” means, for any given calculation period and assuming an openingprincipal balance equal to the amount of the principal balance outstandingunder this Credit Agreement  and theprincipal amount of the Term Loan Obligations at the beginning of such period,an amount of debt service equal to the greater of (a) the amount of principaland interest payments that would be paid on such principal balance during suchperiod (assuming level monthly payments of principal and interest) at an annualinterest rate equal to the yield, as of the last day of the calculation period,on the seven year U.S. Treasury Bond plus 2.50% and with atwenty-five (25) year amortization schedule and (b) the amount ofprincipal and interest payments resulting from the application of a loanconstant equal to 9.33% to such opening principal balance (assuming levelmonthly payments of principal and interest over a twenty-five (25) yearamortization schedule); provided, however, that to the extent the amountof actual debt service payments due from the Borrower during the applicablecalculation period exceed the amount calculated in accordance with the aboveprovisions, “Debt Service” shall, notwithstanding the above, equal the amountof such actual debt service payments due during the applicable period.

 

“DebtService Coverage Ratio” means, for any given date of calculation, the ratioof (i) EBITDA generated in connection with the Borrowing Base Assets during theprevious twelve (12) month period for which the Borrower has deliveredofficer’s certificates pursuant to the terms of Section 7.1(c) of thisAgreement to (ii) Debt Service for the same twelve (12) month period.  Notwithstanding the foregoing, to the extentany Borrowing Base Asset(s) have been held by the Borrower for less than twelvemonths as of the applicable calculation date, EBITDA with respect to suchasset(s) shall be calculated by annualizing EBITDA amounts attributable to suchasset(s) as set forth in the financial statements which the Borrower has, as ofthat calculation date, delivered to the Agent, except to the extent theBorrower has failed to deliver financial statements accounting for suchBorrowing Base Assets pursuant to and in accordance with this Agreement, inwhich case the EBITDA for such Borrowing Base Assets shall, for purposes ofthis definition, equal zero (0).

 

“Default”means any event, act or condition which with notice or lapse of time, or both,would constitute an Event of Default.

 

“DefaultingLender” means, at any time, any Lender that, as determined by the Agent,(a) has failed to make a Loan or purchase a Participation Interestrequired pursuant to the term of this Credit Agreement within one Business Dayof when due, (b) other than as set forth in (a) above, has failed to payto the Agent or any Lender an amount owed by such Lender pursuant to the termsof this Credit Agreement within one Business Day of when due, unless suchamount is subject to a good faith dispute or (c) has been deemed insolventor has become subject to a bankruptcy or insolvency proceeding or with respectto which (or with respect to any of the assets of which) a receiver, trustee orsimilar official has been appointed.

 

“DelinquencyReport” means a report prepared by the Borrower setting forth in itemizeddetail, as of a given date, all delinquencies with respect to Tenant payments(whether or not such delinquencies result in the applicable asset beingcharacterized as an Excluded Asset for purposes hereof) and all other matterscausing any asset owned by any of the Consolidated Parties to constitute anExcluded Asset.  Such report shallidentify the respective owners of the assets named therein and shall identifywhich, if any, of the assets named therein constitute Borrowing Base Assets asof the date of such report.

 

“Derivative Counterparty” means Bank of America, N.A.  or any of its Affiliates, as applicable, asthe counterparty to any derivative transaction, hedging transaction, takeoutcommitment or forward equity commitment entered into by the USRP REIT or theGeneral Partner.

 

“Derivative Exposure Fee Period” shall have the meaning given tosuch term in Section 3.6(d) hereof.

 

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“Derivative Exposure Usage Fee” shall have the meaning given tosuch term in Section 3.6(d) hereof.

 

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

 

“Determination Decision” shall have the meaning given to suchterm in Section 3.22.

 

“Determination Request” shall have the meaning given to suchterm in Section 3.22.

 

“Development Activities” means activities relating directly orindirectly to the development of build-to-suit Real Property assets that are100% pre-leased.

 

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

 

“DomesticSubsidiary” means any direct or indirect Subsidiary of the Borrower whichis incorporated or organized under the laws of any State of the United Statesor the District of Columbia.

 

“EBITDA”means, (a) for any Person over any period,(i) net earnings (loss) of such Person for such period plus (ii) the sum of thefollowing (but only to the extent taken into account in determining netearnings (loss) for such period): (A) depreciation and amortization expense forsuch period; plus (B) interest expense for such period; plus (C)income tax expense in respect of such period; minus (or plus, asappropriate) (D) extraordinary gains (losses) and gains (losses) from sales ofassets for such period (provided, for purposes of clarification, thatsuch gains shall be subtracted from the overall amount calculated pursuant tothis clause (ii) and such losses shall be added to such amount); plus (or minus, as appropriate)(E) extraordinary gains (or losses) (provided, for purposes ofclarification, that such gains shall be subtracted from the overall amountcalculated pursuant to this clause (ii) and such losses shall be added to suchamount), plus (or minus, as appropriate) (F) allstraight line rent leveling adjustments (reported in the consolidated financialstatements of such Person for purposes of GAAP); plus (or minus,as appropriate) (G) equity in net earnings (or net loss) of unconsolidatedAffiliates of such Person (if any); plus (H) amounts incurred by suchPerson for such period as “impairment of long lived assets,” in eachcase without duplication and as determined in accordance with GAAP; and (b) for any Real Property for anyperiod, the net income (excluding extraordinary items) of such Real Propertyfor such period (which, for leased Real Properties, shall be the rental incomefor such Real Properties during such period) before (without duplication)interest expense applicable to such Real Property, income taxes applicable tosuch Real Property and depreciation and amortization applicable to such RealProperty, all as determined in accordance with GAAP.

 

“EligibleAssignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an ApprovedFund; and (d) any other Person (other than a natural person) approved by (i)the Agent, (ii) in the case of any assignment of a Revolving Commitment, theL/C Issuing Lender, and (iii) unless a default or Event of Default has occurredand is continuing under this Agreement or any other Credit Document, theBorrower (each such approval not to be unreasonably withheld or delayed); providedthat notwithstanding the foregoing, “Eligible Assignee” shall not include theBorrower, any Credit Party or any of the Borrower’s or any Credit Party’sAffiliates or Subsidiaries.

 

“EnvironmentalLaws” means any and all lawful and applicable Federal, state, local andforeign statutes, laws (including, without limitation, the ComprehensiveEnvironmental Response, Compensation and Liability Act of 1980, the ResourceConservation and Recovery Act of 1976, the Toxic Substances Control Act, theWater Pollution Control Act, the Clean Air Act and the Hazardous MaterialsTransportation Act), regulations, ordinances, rules, judgments, orders,decrees, permits, concessions, grants, franchises, licenses, agreements or othergovernmental restrictions relating to the environment or to emissions,discharges, releases or threatened releases of pollutants, contaminants,chemicals, or industrial, toxic or hazardous substances or wastes into theenvironment including, without limitation, ambient air, surface water, groundwater, or land, or otherwise relating to the manufacture, processing,distribution, use, treatment, storage, disposal, transport, or handling ofpollutants, contaminants, chemicals, or industrial, toxic or hazardoussubstances or wastes.

 

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

 

“ERISA”means the Employee Retirement Income Security Act of 1974, as amended, and anysuccessor statute thereto, as interpreted by the rules and regulationsthereunder, all as the same may be in effect from time to time.  References to sections of ERISA shall beconstrued also to refer to any successor sections.

 

“ERISAAffiliate” means an entity which is under common control with anyConsolidated Party within the meaning of Section 4001(a)(14) of ERISA, oris a member of a group which includes any Consolidated Party and which istreated as a single employer under Sections 414(b) or (c) of the Code.

 

“ERISAEvent” means (i) with respect to any Plan, the occurrence of aReportable Event or the substantial cessation of operations (within the meaningof Section 4062(e) of ERISA); (ii) the withdrawal by any ConsolidatedParty or any ERISA Affiliate from a Multiple Employer Plan during a plan yearin which it was a substantial employer (as such term is defined in Section 4001(a)(2)of ERISA), 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) the institutionof proceedings to terminate or the actual termination of a Plan by the PBGCunder Section 4042 of ERISA; (v) any event or condition which mightconstitute grounds under Section 4042 of ERISA for the termination of, orthe appointment of a trustee to administer, any Plan; (vi) the complete orpartial withdrawal of any Consolidated Party or any ERISA Affiliate from aMultiemployer Plan; (vii) the conditions for imposition of a lien underSection 302(f) of ERISA exist with respect to any Plan; or (viii) theadoption of an amendment to any Plan requiring the provision of security tosuch Plan pursuant to Section 307 of ERISA.

 

“EurodollarLoan” means any Loan that bears interest at a rate based upon theEurodollar Rate.

 

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

 

“EurodollarReserve Requirement” 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 ofDefault” shall have the meaning assigned to such term in Section 9.1.

 

“ExcludedAssets” means, as of any date, with respect to each of the General SPE,S&C, JV1 and its Wholly Owned Subsidiaries and HCI and its Wholly OwnedSubsidiaries, (a) all assets of such Person which are either a lease by aPerson, as lessor of a parcel of Real Property, or a promissory note held bysuch Person which is secured by a mortgage instrument, in either case where (i)any required rental payment, principal or interest payment, or other paymentdue under such lease or promissory note, as the case may be, is more thansixty (60) days past due, except, with respect to payments due under a lease,to the extent (A) the aggregate amount of such past due payments with respectto such lease is less than $2500 and (B) the aggregate amount of such past duepayments does not exceed $30,000; (ii) the Tenant under such lease or the makerof such

 

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promissory note, as the case may be, is thesubject of a Bankruptcy Event (except tothe extent that (A) such Person has been subject to a proceeding underChapter 11 of the Federal Bankruptcy Code, (B) the applicable bankruptcy courthas approved and confirmed such Person’s plan for reorganization, (C) allstatutory appeal periods with respect to such proposed plan have been exhaustedor expired without objection, (D) the approved plan requires such Person tocontinue to perform its obligations with respect to the applicablelease/franchise agreement and (E) such Person is performing its obligationsunder such approved plan and under the applicable lease/franchise agreement); (iii) condemnation proceedings have beeninstituted or condemnation has occurred with respect to a material portion ofthe applicable parcel of Real Property; or (iv) the subject Real Property hasbeen vacant for more than sixty (60) days and such vacancy is not theresult of an on-schedule moving-in process or scheduled renovations, and (b)all Real Property assets of the General SPE, S&C, JV1 and its WhollyOwned Subsidiaries and HCI and itsWholly Owned Subsidiaries which are, as ofsuch date, not subject to a lease agreement under which a Consolidated Party isthe lessor or are otherwise vacant (except as noted above insubclause (a)).

 

“ExecutiveOfficer” of any Person means any of the chief executive officer, chiefoperating officer, president, vice president, chief financial officer ortreasurer of such Person.

 

“ExtendedMaturity Date” shall have the meaning given to such term in Section2.1(c)(ii) hereof.

 

“ExtensionFee” shall have the meaning given to such term in Section 2.1(c)(iii)hereof.

 

“FederalFunds Rate” means, for any day, the rate per annum (rounded upwards, ifnecessary, to the nearest 1/100 of 1%) equal to the weighted average of therates on overnight Federal funds transactions with members of the FederalReserve System arranged by Federal funds brokers on such day, as published bythe Federal Reserve Bank of New York on the Business Day next succeeding suchday; provided that (a) if such 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 Letter entered into by and among Borrower, BOA and BASand dated as of or prior to the date hereof.

 

“Fees”means all fees payable pursuant to Section 3.5.

 

“FFO”means, for a given period, (a) Consolidated Net Income (before UnconsolidatedAffiliate Interests and before extraordinary and non recurring items) for suchperiod minus (or plus) (b) gains (or losses) from debtrestructuring and sales of property during such period, plus (c)depreciation and amortization of real and personal property assets for suchperiod, and after adjustments for unconsolidated partnerships and jointventures, plus (d) impairment charges reported by such Persons for suchperiod.  In determining whether anamount distributed in a given fiscal quarter is applicable to the FFO of suchfiscal quarter or a prior fiscal quarter, the Borrower shall, in all cases,assume that amounts distributed are distributed with respect to FFO earned inthe most recent fiscal quarter for which there exists undistributed FFO.

 

“FFODistribution Allowance” means, for each fiscal quarter of the ConsolidatedParties, an amount equal to 95% of FFO for such quarter, plus, to theextent not otherwise distributed prior to commencement of the quarter for whichsuch calculation is being performed, 95% of FFO for the immediately precedingthree fiscal quarters.  In determiningwhether an amount distributed in a given fiscal quarter is applicable to theFFO of such fiscal quarter or a prior fiscal quarter, the Borrower shall, inall cases, assume that amounts distributed are distributed with respect to FFOearned in the most recent fiscal quarter for which there exists undistributedFFO.

 

“FinancialCovenants” means a collective reference to the covenants contained inSections 7.11, 8.1(c) and (h), 8.2(b) and (c), 8.5(a) and (b), 8.6(d), (e),(h), (i), (j), (k), (l) and (m) and 8.16 hereof.

 

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“FixedCharge Coverage Ratio” means, as of the end of any fiscal quarter of theConsolidated Parties, for the four fiscal quarter period most recently endingon or prior to such date with respect to the Consolidated Parties on aconsolidated basis, the ratio of (a) Consolidated Total EBITDA for suchperiod to (b) Consolidated Fixed Charges for such period.

 

“ForeignLender” shall have the meaning given to such term in Section 3.11(d)hereof.

 

“ForeignSubsidiary” means any direct or indirect Subsidiary of the Borrower whichis not a Domestic Subsidiary.

 

“FullySatisfied” means, with respect to the Credit Party Obligations as of anydate, that, as of such date, (a) all principal of and interest accrued tosuch date which constitute Credit Party Obligations shall have been paid infull in cash, (b) all fees, expenses and other amounts then due andpayable which constitute Credit Party Obligations shall have been paid in cash,(c) all outstanding Letters of Credit shall have been (i) terminated,(ii) fully cash collateralized or (iii) secured by one or moreletters of credit on terms and conditions, and with one or more financialinstitutions, reasonably satisfactory to the Issuing Lender and (d) theCommitments shall have been expired or terminated in full.

 

“Fund”means any Person (other than a natural person) that is (or will be) engaged inmaking, purchasing, holding or otherwise investing in commercial loans andsimilar extensions of credit in the ordinary course of its business.

 

“FundedIndebtedness” means, with respect to any Person, without duplication,(i) all Indebtedness of such Person other than Indebtedness of the typesreferred to in clauses (e), (f), (g), (i), (n) and (p) of the definitionof “Indebtedness” set forth in this Section 1.1, (ii) all FundedIndebtedness of others of the type referred to in clause (i) above securedby (or for which the holder of such Funded Indebtedness has an existing right,contingent or otherwise, to be secured by) any Lien on, or payable out of theproceeds of production from, Property owned or acquired by such Person, whetheror not the obligations secured thereby have been assumed (or, if less, theaggregate net book value of all Property securing such Funded Indebtedness ofothers), (iii) all Guaranty Obligations of such Person with respect to FundedIndebtedness of the type referred to in clause (i) above of another Personand (iv) Funded Indebtedness of the type referred to inclause (i) above of any partnership or unincorporated joint venturein which such Person is a general partner or a joint venturer to the extentsuch Funded Indebtedness is recourse to such Person.

 

“GAAP”means generally accepted accounting principles in the United States applied ona consistent basis except as specifically set forth in the definitionscontained herein and subject to the terms of Section 1.3.

 

“GeneralPartner” shall have the meaning given to such term in the heading hereof.

 

“GeneralSPE” shall have the meaning given to such term in the heading hereof.

 

“GovernmentalAuthority” means any Federal, state, local or foreign court or governmentalagency, authority, instrumentality or regulatory body.

 

“GroundLease Interests” means Real Property assets with respect to which aConsolidated Party is the ground lessee.

 

“Guarantors”means a collective reference to the USRP REIT, the General Partner and each ofthe Subsidiary Guarantors, together with each of their successors and permittedassigns, and “Guarantor “ means any one of them.

 

“GuarantyObligations” means, with respect to any Person, without duplication, anyobligations of such Person (other than endorsements in the ordinary course ofbusiness of negotiable instruments for deposit or collection) guaranteeing orintended to guarantee any Indebtedness of any other Person in any manner,whether direct or indirect, and including without limitation any obligation,whether or not contingent, (i) to purchase any such Indebtedness or anyProperty constituting security therefor, (ii) to advance or provide funds

 

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or other support for the payment or purchaseof any such Indebtedness or to maintain working capital, solvency or otherbalance sheet condition of such other Person (including without limitation keepwell agreements, maintenance agreements, comfort letters or similar agreementsor arrangements) for the benefit of any holder of Indebtedness of such otherPerson, (iii) to lease or purchase Property, securities or servicesprimarily for the purpose of assuring the holder of such Indebtedness, or(iv) to otherwise assure or hold harmless the holder of such Indebtednessagainst loss in respect thereof.  Theamount of any Guaranty Obligation hereunder shall (subject to any limitationsset forth therein) be deemed to be an amount equal to the outstanding principalamount (or maximum principal amount, if larger) of the Indebtedness in respectof which such Guaranty Obligation is made.

 

“HawaiiLoan Documents” means that certain Loan Agreement to be entered into by andamong USRP (Bob), LLC, USRP (Hawaii), LLC and Fuel Supply, Inc. (as theborrowers thereunder) and First Hawaiian Bank (as the lender) and each of the“Loan Documents” as defined therein; provided, that such documents shallsubstantially similar to those delivered to the Agent prior to the Closing Dateand be otherwise in form and substance acceptable to the Agent in itsdiscretion.

 

“HCI” has the meaning given to such term in thePreamble of this Credit Agreement.

 

“HedgingAgreements” means (a) any and all rate swap transactions, basis swaps,credit derivative transactions, forward rate transactions, commodity swaps,commodity options, forward commodity contracts, equity or equity index swaps oroptions, bond or bond price or bond index swaps or options or forward bond orforward bond price or forward bond index transactions, interest rate options,forward foreign exchange transactions, cap transactions, floor transactions,collar transactions, currency swap transactions, cross-currency rate swaptransactions, currency options, spot contracts, or any other similartransactions or any combination of any of the foregoing (including any optionsto enter into any of the foregoing), whether or not any such transaction isgoverned by or subject to any master agreement (including, without limitation, any BOA Derivative Instruments), and(b) any and all transactions of any kind, and the related confirmations,which are subject to the terms and conditions of, or governed by, any form ofmaster agreement published by the International Swaps and Derivatives Association,Inc., any International Foreign Exchange Master Agreement, or any other masteragreement (any such master agreement, together with any related schedules, a “MasterAgreement”), including any such obligations or liabilities under any MasterAgreement, in each case (with respect to both clause (a) and (b) of thisdefinition, entered into between any Consolidated Party and any Lender.

 

“ICAJoinder Agreement” shall have the meaning given to such term in theIntercreditor Agreement.

 

“Indebtedness”means, with respect to any Person, without duplication, (a) allobligations of such Person for borrowed money, (b) all obligations of suchPerson evidenced by bonds, debentures, notes or similar instruments, or uponwhich interest payments are customarily made, (c) all obligations of suchPerson under conditional sale or other title retention agreements relating toProperty purchased by such Person (other than customary reservations orretentions of title under agreements with suppliers entered into in theordinary course of business), (d) all obligations of such Person issued orassumed as the deferred purchase price of Property or services purchased bysuch Person (other than trade debt incurred in the ordinary course of businessand due within six months of the incurrence thereof) which would appear asliabilities on a balance sheet of such Person, (e) all obligations of suchPerson under take-or-pay or similar arrangements or under commoditiesagreements, (f) all Indebtedness of others secured by (or for which the holderof such Indebtedness has an existing right, contingent or otherwise, to besecured by) any Lien on, or payable out of the proceeds of production from,Property owned or acquired by such Person, whether or not the obligationssecured thereby have been assumed, (g) all Guaranty Obligations of suchPerson with respect to Indebtedness of another Person, (h) the impliedprincipal component of all obligations of such Person under Capital Leases,including all Capitalized Lease Obligations of such Person, (i) allobligations of such Person under hedging agreements and other similararrangements, (j) the maximum amount of all performance and standbyletters of credit issued or bankers’ acceptances facilities created for theaccount of such Person and, without duplication, all drafts drawn thereunder(to the extent unreimbursed), (k) all preferred Capital Stock issued bysuch Person and which by the terms thereof could be (at the request of theholders thereof or otherwise) subject to mandatory sinking fund payments,redemption or other acceleration (other than as a result of a Change of Controlor an Asset

 

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Disposition that does not in fact result in aredemption of such preferred Capital Stock) at any time or which are otherwiseclassified as liabilities or indebtedness under GAAP, (l) the principalportion of all obligations of such Person under Synthetic Leases, (m) allobligations of such Person to repurchase any securities issued by such Person atany time prior to the Maturity Date which repurchase obligations are related tothe issuance thereof, including, without limitation, obligations commonly knownas residual equity appreciation potential shares, (n) the Indebtedness ofany partnership or unincorporated joint venture in which such Person is ageneral partner or a joint venturer to the extent such Indebtedness is recourseto such Person, (o) the aggregate amount of uncollected accountsreceivable of such Person subject at such time to a sale of receivables (orsimilar transaction) to the extent such transaction is effected with recourseto such Person (whether or not such transaction would be reflected on thebalance sheet of such Person in accordance with GAAP) and (p) all ContingentObligations of such Person.  Forpurposes of clarification, the ordinary and customary rent obligations of aPerson pursuant to the terms of a real property lease which is not entered intoas a capital or financing lease shall not be included in the calculation of“Indebtedness” hereunder.

 

“IndemnifiedParty” shall have the meaning assigned to such term inSection 11.5(b).

 

“InitialMaturity Date” shall have the meaning given to such term in Section2.1(c)(i) hereof.

 

“InterbankOffered Rate” means, for any EurodollarLoan for any Interest Period therefor, the rate per annum (rounded upwards, ifnecessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (orany successor page) as the London interbank offered rate for deposits inDollars at approximately 11:00 a.m. (London time) two Business Days prior tothe first day of such Interest Period. If for any reason such rate is notavailable, the term “LIBOR” shall mean, for any Eurodollar Loan for anyInterest 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 Londoninterbank offered rate for deposits in Dollars at approximately 11:00 a.m.(London time) two Business Days prior to the first day of such Interest Periodfor a term comparable to such Interest Period; provided, however,if more than one rate is specified on Reuters Screen LIBO Page, the applicablerate shall be the arithmetic mean of all such rates.

 

“Intercreditor Agreement” means that certain IntercreditorAgreement dated as of  the date hereofand entered into by and among the Collateral Agent, the Agent and the “Agent”under the Term Loan Agreement with respect to the priority of payments made byBorrower hereunder and under the Term Loan Agreement and the allocation ofproceeds derived from the collateral under the Security Documents, as the samemay be amended, restated, supplemented or otherwise modified from time to timein accordance with its terms.

 

“InterestPayment Date” means (a) as to Base Rate Loans, (i) the 20thday of each calendar month, (ii) the date of repayment of principal of suchLoan and (iii) the Maturity Date, and (b) as to Eurodollar Loans, (i) thelast day of each applicable Interest Period, (ii) the date of repayment ofprincipal of such Loan, (iii) the Maturity Date, and (iv) where the applicableInterest Period for a Eurodollar Loan is greater than one month, the datesoccurring each calendar month following the first day of the Interest Period.

 

“InterestPeriod” means, as to Eurodollar Loans, a period of one, two, three, six ortwelve months duration (to the extent available from each of the Lenders), asthe Borrower may elect, commencing, in each case, on the date of the borrowing(including continuations and conversions thereof); provided, however,(a) if any Interest Period would end on a day which is not a Business Day,such Interest Period shall be extended to the next succeeding Business Day(except that where the next succeeding Business Day falls in the nextsucceeding 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 any Person means (a) the acquisition (whether for cash, property,services, assumption of Indebtedness, securities or otherwise) of assets (otherthan equipment, inventory and supplies in the ordinary course of business andother than any acquisition of assets constituting a Consolidated CapitalExpenditure), Capital Stock, bonds, notes, debentures, partnership, jointventures or other ownership interests or

 

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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 capital contributionsor purchases of Capital Stock which have a right to participate in the profitsof the issuer thereof shall be valued at the amount actually contributed orpaid to purchase such Capital Stock as of the date of such contribution orpayment.  Investments which are loans,advances, extensions of credit or Guaranty Obligations shall be valued at theprincipal amount of such loan, advance or extension of credit outstanding as ofthe date of determination or, as applicable, the principal amount of the loanor advance outstanding as of the date of determination actually guaranteed bysuch Guaranty Obligation.

 

“I/O Strip” means an interest in a pool of promissory notes,mortgage loans, or other similar financial assets, issued in connection with aSecuritization Asset Sale or otherwise, which entitles the holder to receive aportion of the interest paid on, but not principal repaid in respect of, suchfinancial assets.

 

“IssuingLender” shall have the meaning assigned to such term in the heading hereof,together with any successors or assigns.

 

“IssuingLender Fees” shall have the meaning given to such term inSection 3.5(c) hereof.

 

“JoinderAgreement” means a 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.

 

“JV1”shall have the meaning given to such term in the introductory paragraph hereof.

 

“JV1 PledgeAgreement” means that certain Pledgeand Security Agreement entered into by JV1 as of the date hereof in favor ofthe Collateral Agent and for the benefit of the Lender Parties.

 

“Lender”means any of the Persons identified as a “Lender” on the signature pageshereto, and any Person which may become a Lender by way of assignment inaccordance with the terms hereof, together with their successors and permittedassigns.

 

“LenderParty” shall mean any of the Agent, Collateral Agent or any Lender fromtime to time a party hereto; and “Lender Parties” means a collective referenceto each.

 

“Letter ofCredit” means any letter of credit issued by the Issuing Lender for theaccount of the Borrower in accordance with the terms of Section 2.2.

 

“Letter ofCredit Fee” shall have the meaning assigned to such term inSection 3.5.

 

“LeverageRatio” means, as of the end of any fiscal quarter of the ConsolidatedParties, the ratio of (a) Total Liabilities to (b) Total TangibleAssets.

 

“Lien”means any mortgage, pledge, hypothecation, assignment, deposit arrangement,security interest, encumbrance, lien (statutory or otherwise), preference,priority or charge of any kind (including any agreement to give any of theforegoing, any conditional sale or other title retention agreement, anyfinancing or similar statement or notice filed under the Uniform CommercialCode as adopted and in effect in the relevant jurisdiction or other similarrecording or notice statute, and any lease in the nature thereof); provided,that the term “Lien” shall not refer to or include Negative Pledges.

 

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“Loan”or “Loans” means the Revolving Loans (or a portion of any Revolving Loanbearing interest at the Adjusted Base Rate or the Adjusted Eurodollar Rate andreferred to as a Base Rate Loan or a Eurodollar Loan), individually orcollectively, as appropriate.

 

“LOCCommitment” means the commitment of the Issuing Lender to issue Letters ofCredit in an aggregate face amount at any time outstanding (together with theamounts of any unreimbursed drawings thereon) of up to the LOC CommittedAmount.

 

“LOCCommitted Amount” shall have the meaning assigned to such term inSection 2.2.

 

“LOCDocuments” means, with respect to any Letter of Credit, such Letter ofCredit, any amendments thereto, any documents delivered in connection therewith,any application therefor, and any agreements, instruments, guarantees or otherdocuments (whether general in application or applicable only to such Letter ofCredit) governing or providing for (i) the rights and obligations of theparties concerned or at risk or (ii) any collateral security for suchobligations.

 

“LOCObligations” means, at any time, the sum of (i) the maximum amountwhich is, or at any time thereafter may become, available to be drawn underLetters of Credit then outstanding, assuming compliance with all requirementsfor drawings referred to in such Letters of Credit plus (ii) theaggregate amount of all drawings under Letters of Credit honored by the IssuingLender but not theretofore reimbursed by the Borrower.

 

“MaterialAdverse Effect” means a material adverse effect on (i) the condition(financial or otherwise), operations, business, assets, liabilities orprospects of the Consolidated Parties taken as a whole, (ii) the abilityof any Credit Party to perform any material obligation under the CreditDocuments to which it is a party or (iii) the material rights and remediesof the Agent and the Lenders under the Credit Documents; provided, that, forpurposes of Section 6.16 hereof only, “Material Adverse Effect” means anyone of (i) through (iii) above or (iv) a material adverse effect on thevalue of, conditions on, operations on, business conducted on or prospects ofany parcel of Real Property or the rights and remedies of the Agent and theLenders with respect thereto.

 

“Materialsof Environmental Concern” means any gasoline or petroleum (including crudeoil or any fraction thereof) or petroleum products or any hazardous or toxicsubstances, materials or wastes, defined or regulated as such in or under anyEnvironmental Laws, including, without limitation, asbestos, polychlorinatedbiphenyls and urea-formaldehyde insulation.

 

“MaturityDate” shall have the meaning given to such term in Section 2.1(c)(iv)hereof.

 

“MinorityInterests” means, at any time, interests in any assets or entities (and, asapplicable, the cost thereof, Cash and Cash Equivalents held in connectiontherewith, the income, revenues, interest expense, taxes, depreciation andamortization attributable thereto) owned by entities that are not ConsolidatedParties.

 

“Moody’s”means Moody’s Investors Service, Inc., or any successor or assignee of thebusiness of such company in the business of rating securities.

 

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

 

“MultipleEmployer Plan” means a Plan (other than a Multiemployer Plan) which anyConsolidated Party or any ERISA Affiliate and at least one employer other thanthe Consolidated Parties or any ERISA Affiliate are contributing sponsors.

 

“Negative Pledge” means a provision of any agreement (other thanthis Credit Agreement or any other Credit Document) that prohibits the creationof any Lien on any assets of a Person, whether presently owned or hereafteracquired; provided, however, that an agreement that establishes amaximum ratio of

 

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unsecured debtto unencumbered assets, or of secured debt to total assets, or that otherwiseconditions a Person’s ability to encumber its assets upon the maintenance ofone or more specified ratios that limit such Person’s ability to encumber itsassets but that do not generally prohibit the encumbrance of its assets, or theencumbrance of specific assets, shall not constitute a “Negative Pledge” forpurposes of this Credit Agreement.

 

“Net CashProceeds” means the aggregate proceeds paid in cash or Cash Equivalentsreceived by any Consolidated Party in respect of any Asset Disposition orEquity Issuance (as applicable), net of (a) direct costs (including,without limitation, legal, accounting and investment banking fees, and salescommissions) (b) taxes paid or payable as a result thereof and (c) inthe case of any Asset Disposition, the amount necessary to retire anyIndebtedness secured by a Permitted Lien (ranking senior to any Lien of theAgent) 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 by anysuch Consolidated Party in any such Asset Disposition or Equity Issuance.

 

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

 

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

 

“Notice of Continuation” means a notice in the form of Exhibit 3.2to be delivered to the Agent pursuant to Section 3.2(a) evidencing theBorrower’s request for the Continuation of a Eurodollar Loan.

 

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

 

“OperatingLease” means, as applied to any Person, any lease (including, withoutlimitation, leases which may be terminated by the lessee at any time) of anyProperty (whether real, personal or mixed) which is not a Capital Lease otherthan any such lease in which that Person is the lessor.

 

“OtherTaxes” shall have the meaning assigned to such term inSection 3.11(b).

 

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

 

“ParticipationInterest” means a purchase by a Lender of a participation in Letters ofCredit or LOC Obligations as provided in Section 2.2 or in any Loans asprovided in Section 3.14.

 

“PBGC”means the Pension Benefit Guaranty Corporation established pursuant to SubtitleA of Title IV of ERISA and any successor thereof.

 

“PermittedInvestments” means, at any time, Investments by the Consolidated Partiespermitted to exist at such time pursuant to the terms of Section 8.6.

 

“PermittedLiens” means, at any time, Liens in respect of Property of the ConsolidatedParties permitted to exist at such time pursuant to the terms ofSection 8.2.

 

“Person”means any individual, partnership, joint venture, firm, corporation, limitedliability company, association, trust or other enterprise (whether or notincorporated) or any Governmental Authority.

 

“Plan”means any employee benefit plan (as defined in Section 3(3) of ERISA)which is covered by ERISA and with respect to which any Consolidated Party orany ERISA Affiliate is (or, if such plan were terminated at such time, would underSection 4069 of ERISA be deemed to be) an “employer” within the meaning ofSection 3(5) of ERISA.

 

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“Preferred Stock”****means, with respect to any Person, sharesof Capital Stock in such Person which are entitled to preference or priorityover any other Capital Stock in such Person in respect of the payment ofdividends or distribution of assets upon liquidation or both.

 

“Prime Rate”means the per annum rate of interest established from time to time by BOA asits prime rate, which rate may not be the lowest rate of interest charged byBOA to its customers.

 

“PrincipalBorrower” shall have the meaning given to such term in the introductoryparagraph hereof.

 

“Pro FormaBasis” means, for purposes of calculating (utilizing the principles setforth in the second paragraph of Section 1.3) compliance with each of theFinancial Covenants in respect of a proposed transaction, that such transactionshall be deemed to have occurred as of the first day of the applicable periodfor which a given calculation is being performed.  As used herein, “transaction” shall mean (i) anyincurrence or assumption of Indebtedness as referred to inSection 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)                              for purposes of any suchcalculation in respect of any incurrence or assumption of Indebtedness asreferred to in Section 8.1(h)(i), any Indebtedness which is retired inconnection with such incurrence or assumption shall be excluded and deemed tohave been retired as of the first day of the applicable period; and

 

(B)                                for purposes of anysuch calculation in respect of any Asset Disposition as referred to inSection 8.5(a), (1) income statement items (whether positive ornegative) and capital expenditures attributable to the Property disposed ofshall be excluded and (2) any Indebtedness which is retired in connectionwith such transaction shall be excluded and deemed to have been retired as ofthe first day of the applicable period.

 

“Pro FormaCompliance Certificate” means a certificate of an Executive Officer of theBorrower delivered to the Agent in connection with (i) any incurrence,assumption or retirement of Indebtedness as referred to inSection 8.1(h)(i), or (ii) any Asset Disposition as referred to inSection 8.5(a), as applicable, and containing reasonably detailedcalculations, upon giving effect to the applicable transaction on a Pro FormaBasis, 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 any interest in any kind of property or asset, whether real, personal ormixed, or tangible or intangible.

 

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

 

“RealProperties” means, at any time, a collective reference to each of thefacilities and real properties owned, leased or operated by the ConsolidatedParties or in which any Consolidated Party has an interest at such time; and “RealProperty” means any one of such Real Properties.

 

“RelatedParties” means, with respect to any specified Person, such Person’sAffiliates and the respective directors, officers, employees, agents andadvisors of such Person and such Person’s Affiliates.

 

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

 

“Regulation D,T, U, or X” means Regulation D, T, U or X, respectively, of the Boardof Governors of the Federal Reserve System as from time to time in effect andany successor to all or a portion thereof.

 

“REIT” means a Person qualifying for treatment as a “real estateinvestment trust” under the Code.

 

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“Replaced Credit Agreement” means that certain Credit Agreementdated as of May 31, 2002 among the Borrower, the Guarantors, the Agent, thelenders identified therein and BAS, as the same has been amended, restated,supplemented or otherwise modified prior to the date hereof.

 

“ReportableEvent” means any of the events set forth in Section 4043(c) of ERISA,other than those events as to which the notice requirement has been waived byregulation.

 

“RequiredFinancial Information” means, with respect to any given date, (i) thefinancial statements of the Consolidated Parties required to be deliveredpursuant to Section 7.1(a) or (b) for the fiscal period or quarter endingmost recently with respect to such date, and (ii) the certificate of anExecutive Officer of the Borrower required by Section 7.1(c) to bedelivered with the financial statements described in clause (i) above.

 

“RequiredLenders” means, at any time, (a) the Agent, (b) the “Agent” under the TermLoan Agreement and (c) Lenders (other than Defaulting Lenders) and Term LoanLenders holding in the aggregate at least 66 2/3% of the Revolver/TermOutstanding Amount (excluding amounts held by Defaulting Lenders).

 

“RequiredRevolver Lenders” means, at any time, (a) the Agent and (b) Lenders (otherthan 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, the outstandingLoans, LOC Obligations and Participation Interests (including the ParticipationInterests of the Issuing Lender in any Letters of Credit).

 

“Requirementof Law” means, as to any Person, the certificate of incorporation andby-laws or other organizational or governing documents of such Person, and anylaw, 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.

 

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

 

“RestrictedPayment” means (i) any dividend or other payment or distribution,direct or indirect, on account of any shares of any class of Capital Stock ofany Consolidated Party, now or hereafter outstanding (including withoutlimitation any payment in connection with any dissolution, merger,consolidation or disposition involving any Consolidated Party), or to theholders, in their capacity as such, of any shares of any class of Capital Stockof any Consolidated Party, now or hereafter outstanding (other than dividendsor distributions payable in Capital Stock of the applicable Person anddividends or distributions payable (directly or indirectly throughSubsidiaries) to any Credit Party other than the General Partner),(ii) any redemption, retirement, sinking fund or similar payment, purchaseor other acquisition for value, direct or indirect, of any shares of any classof Capital Stock of any Consolidated Party, now or hereafter outstanding,(iii) any payment made to retire, or to obtain the surrender of, anyoutstanding warrants, options or other rights to acquire shares of any class ofCapital Stock of any Consolidated Party, now or hereafter outstanding, and(iv) any loan or advance to the General Partner.

 

“Revolver/TermOutstanding Amount” means an amount equal to the sum of (a) (i) theRevolving Commitments (and Participation Interests therein), or (ii) ifthe Revolving Commitments have been terminated, the outstanding Loans, LOCObligations and Participation Interests (including the Participation Interestsof the Issuing Lender in any Letters of Credit), in each case, if any, plus(b) the “Outstanding Amount” as such term is defined in the Term LoanAgreement, if any.

 

“RevolvingCommitment” means, with respect to each Lender, the commitment of suchLender in an aggregate principal amount as set forth on Schedule 1.1(a)attached hereto, as such schedule may be modified in connection with anyassignment made in accordance with Section 11.3, as a result of theapplication of Section 3.20 hereof or as a result of the application ofSection 3.4 hereof.

 

“RevolvingCommitment Percentage” means, for any Lender, the percentage represented bysuch Lender’s Revolving Commitment as a portion of the total RevolvingCommitted Amount, as such percentage

 

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may be modified in connection with any assignmentmade in accordance with the provisions of Section 11.3 or otherwise inconnection with the terms and conditions set forth herein.

 

“RevolvingCommitted Amount” means $50,000,000.00, as such amount may be adjustedpursuant to and in accordance with the terms of this Credit Agreement(including, without limitation, pursuant to Sections 3.4 hereof).

 

“RevolvingLoans” shall have the meaning assigned to such term in Section 2.1(a).

 

“RevolvingNote” or “Revolving Notes” means the promissory notes of theBorrower in favor of each Lender provided pursuant to Section 2.1(e) andevidencing the Revolving Loans of such Lender, individually or collectively, asappropriate, as such promissory notes may be amended, modified, restated,supplemented, extended, renewed or replaced from time to time.

 

“S&C”has the meaning given to such term in thePreamble of this Credit Agreement.

 

“S&P”means Standard & Poor’s Ratings Group, a division of The McGraw HillCompanies, Inc., or any successor or assignee of the business of such divisionin the business of rating securities.

 

“Sale andLeaseback Transaction” means any arrangement pursuant to which any Person,directly or indirectly, becomes liable as lessee, guarantor or other suretywith respect to any lease, whether an Operating Lease or a Capital Lease, ofany Property (a) which such Person has sold or transferred (or is to sellor transfer) to a Person which is not a consolidated affiliate of such Personor (b) which such Person intends to use for substantially the same purposeas any other Property which has been sold or transferred (or is to be sold ortransferred) by such Person to another Person which is not a consolidatedaffiliate of such Person in connection with such lease.

 

“Secured Indebtedness” means, with respect to any Person, anyIndebtedness (other than Indebtedness incurred hereunder or under the Term LoanDocuments) that is secured in any manner by any Lien.  Indebtedness in respect of Capitalized Lease Obligations shallnot be deemed to be Secured Indebtedness. 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) 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) anyunsecured guaranty given by any Credit Party of the unsecured Indebtedness ofanother Credit Party constitutes the Unsecured Indebtedness of the Credit Partydirectly incurring such Indebtedness and shall not be calculated as part of theIndebtedness (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 unsecured indebtedness, in which case it shall constitute theUnsecured Indebtedness of the Credit Party giving the guaranty),

 

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(v) any securedguaranty given by any Credit Party of secured indebtedness of a Person who isnot a Credit Party constitutes Secured Indebtedness of such Credit Party givingthe guaranty,

 

(vi) any securedguaranty given by any Credit Party of the secured indebtedness of anotherCredit Party constitutes the Secured Indebtedness of the Credit Party directlyincurring the secured indebtedness and shall not be calculated as part of theIndebtedness (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) anysecured guaranty given by any Credit Party of the unsecured indebtedness of aPerson who is not a Credit Party constitutes the Secured Indebtedness of suchCredit 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).

 

“Secured Parties” shall have the meaning given to such term inthe Intercreditor Agreement.

 

“SecuritiesAct” means the Securities Act of 1933, as amended, and all regulationsissued pursuant thereto.

 

“Securitization Asset Sale” means a transaction consisting ofone or more limited recourse or nonrecourse transfers by the Borrower, theGeneral Partner or any of their Subsidiaries, to a Special Purpose Entity, ofpromissory notes, mortgage loans, net leased real property interests,investment securities representing an interest in or secured by debt or equitytranches of investment securities, chattel paper, leases or other similarfinancial assets originated by the General Partner, the Borrower or any otherSubsidiary thereof, together with any related title or other insurancepolicies, hedge agreements and other assets directly related to such financialassets, which transfers may properly be, and is, accounted for on theconsolidated balance sheet of the General Partner as a sale in conformity with FinancialAccounting Standards Board Statement of Financial Accounting Standard No. 125followed by either (x) limited recourse or nonrecourse sales of such financialassets (or interests therein) by such Special Purpose Entity to one or morePersons the accounts of which would not be required to be consolidated withthose of the General Partner in their consolidated financial statements inaccordance with GAAP (provided that subordinated interests in such financialassets and I/O Strips may be issued or sold to any Person) or (y) theincurrence by such Special Purpose Entity of Indebtedness secured by a Lienencumbering only the assets of such Special Purpose Entity; provided that allof the Indebtedness, liabilities and other obligations of such Special PurposeEntity incurred in connection with such transactions are nonrecourse for thepayment or performance thereof to the General Partner, the Borrower or anyother 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

 

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obligation orliability is “reasonable and customary” shall be determined with reference toterms of similar transactions prevailing as of the date hereof.

 

“SecuritiesExchange Act” means the Securities Exchange Act of 1934, as amended, andall regulations issued pursuant thereto.

 

“SecurityDocuments” means a collective reference to , the USRP Pledge Agreement, theUSRP Holding Pledge Agreement, the JV1 Pledge Agreement, any UCC financing statements securing paymentunder any of such documents, and any other documents securing the obligationsof the Credit Parties under this Credit 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).

 

“SingleEmployer Plan” means any Plan which is covered by Title IV of ERISA,but which is not a Multiemployer 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 otherliabilities, contingent obligations and other commitments as they mature in thenormal course of business, (ii) such Person does not intend to, and doesnot believe that it will, incur debts or liabilities beyond such Person’sability to pay as such debts and liabilities mature in their ordinary course,(iii) such Person is not engaged in a business or a transaction, and isnot about to engage in a business or a transaction, for which such Person’sProperty would constitute unreasonably small capital after giving dueconsideration to the prevailing practice in the industry in which such Personis engaged or is to engage, (iv) the fair value of the Property of suchPerson is greater than the total amount of liabilities, including, withoutlimitation, contingent liabilities, of such Person and (v) the presentfair salable value of the assets of such Person is not less than the amountthat will be required to pay the probable liability of such Person on its debtsas they become absolute and matured.  Incomputing the amount of contingent liabilities at any time, it is intended thatsuch liabilities will be computed at the amount which, in light of all thefacts and circumstances existing at such time, represents the amount that canreasonably be expected to become an actual or matured liability.

 

“Special Purpose Entity” means any Person (a) which has a legalstructure and capitalization intended to make such entity a “bankruptcy remote”entity and which legal structure and capitalization have been approved inwriting by the Agent; (b) which has been organized for the sole purpose ofeffecting a structured financing; (c) which has no assets other than (i) thefinancial assets directly acquired in connection with, and which are thesubject of, such structured financing, and any related title or other insurancepolicies, hedge agreements and other assets directly related to such financialassets, (ii) cash and other assets contributed or distributed to such Person,or otherwise acquired by it, in connection with such structured financing, andwhich assets are retained by such Person either pursuant to the requirements ofsuch structured financing or to permit it to fulfill its obligations under theterms of such structured financing, (iii) assets which such Person is to (anddoes in fact) dispose of promptly, and in any event within two Business Days,following such Person’s acquisition of such assets, and (iv) in the case of aSecuritization Asset Sale, subordinated interests acquired in connection withsuch Securitization Asset Sale; (d) which has no Indebtedness, liabilities orother obligations other than (i) those directly incurred in connection withsuch structured financing, (ii) any liabilities resulting from representationsand warranties made by such Person with respect to any such financial assets orother assets being transferred by it to another Person so long as suchrepresentations and warranties (A) are customary or (B) are substantiallysimilar to those made to such Person when such assets were initiallytransferred to it and (iii) trade payables incurred in the ordinary course oftrade or business in an aggregate amount not to exceed $100,000; and (e) whichnone of the General Partner, the Borrower or any other Subsidiaries thereofhave any direct obligation to maintain or preserve such Person’s financialcondition or to cause such Person to achieve any specified levels of operatingresults except as otherwise permitted in connection with such structured financing.

 

“Subordinated Interest” means a subordinate interest (whethercharacterized as debt or equity, and including without limitation, general andlimited partnership interests, participation certificates and trust

 

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certificates) ina pool of promissory notes, mortgage loans, chattel paper, leases or othersimilar financial assets, issued in connection with a Securitization Asset Saleor otherwise.

 

“Subsidiary”means, as to any Person at any time, (a) any corporation more than 50% ofwhose Capital Stock of any class or classes having by the terms thereofordinary voting power to elect a majority of the directors of such corporation(irrespective of whether or not at such time, any class or classes of suchcorporation shall have or might have voting power by reason of the happening ofany contingency) is at such time owned by such Person directly or indirectlythrough Subsidiaries, and (b) any partnership, association, joint ventureor other entity of which such Person directly or indirectly throughSubsidiaries owns at such time more than 50% of the Capital Stock.

 

“SubsidiaryGuarantor” means each of the Persons identified as a “Subsidiary Guarantor”on the signature pages hereto and each Person which may hereafter execute aJoinder Agreement pursuant to Section 7.12, together with their successorsand permitted assigns, and “Subsidiary Guarantor” means any one of them.

 

“SuccessfulSyndication” means a syndication of the Credit Facility by BAS which resultsin (a) BOA having a Revolving Commitment hereunder equal to or less than$30,000,000; and (b) total Revolving Commitments equal to or in excess of$50,000,000.

 

“SyndicationLetter” means that certain mandate letter dated as of September 23, 2003 byand among Borrower, Guarantor, Agent and BAS.

 

“SyntheticLease” means any synthetic lease, tax retention operating lease,off-balance sheet loan or similar off-balance sheet financing product wheresuch transaction is considered borrowed money indebtedness for tax purposes butis classified as an Operating Lease under GAAP.

 

“TangibleNet Worth” means, as of any given calculation date, (a) Total TangibleAssets, less (b) the sum of (i) Total Liabilities less (ii) theaggregate of the amounts added to Total Liabilities pursuant to clauses (b) and(d) of the definition thereof and in connection with proviso items (i) and(ii)(A) and (C) contained in such definition.

 

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

 

“Tenant”means any Person (or their respective Affiliates) who is a lessee with respectto any lease held by the Borrower as lessor or as an assignee of the lessorthereunder.

 

“Term LoanAgreement” means that certain $35 million Term Loan Credit Agreement datedas of the date hereof among the Borrower, Guarantors, BOA, as administrativeagent and BAS and such other lenders as may be party thereto from time to time,as the same may be amended, restated, supplemented or otherwise modified fromtime to time following the date hereof.

 

“Term LoanLenders” means the “Lenders” as such term is defined in the Term LoanAgreement; provided, that, for purposes of this Agreement, such term shall notinclude “Defaulting Lenders” under the Term Loan Agreement.

 

“Term LoanDocuments” means the “Credit Documents” as such term is defined in the TermLoan Agreement.

 

“Term LoanObligations” means, at any time, an amount equal to the amount of the“Credit Party Obligations,” as defined in the Term Loan Agreement.

 

“Term Securitization” means a Securitization Asset Sale (a)involving only a single transfer (or series of related and substantiallycontemporaneous transfers) to a Special Purpose Entity of financial assets, andany related title or other insurance policies, hedge agreements and other assetsdirectly related to such financial assets, by the General Partner, the Borroweror any other Subsidiary thereof other than any

 

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transfer of suchassets (i) being substituted for any asset previously transferred pursuant tocustomary and reasonable repurchase and substitution obligations resulting fromthe breach of representations, warranties and covenants that are not related tothe creditworthiness of the obligor on the financial assets or (ii) beingsubstituted for cash collateral or a cash deposit (including in connection withreasonable and customary “pre-funding” arrangements), and (b) under which thePersons acquiring such financial assets (or interests therein) from theapplicable Special Purpose Entity or making advances to such Special PurposeEntity secured directly or indirectly by such financial assets, are neitherrequired nor permitted to acquire additional financial assets (or intereststherein) from, or otherwise make additional advances to, such Special PurposeEntity, except as otherwise permitted under the immediately precedingclause (a).

 

“Total Liabilities” means the sum of (a) totalliabilities of the Consolidated Parties on a consolidated basis, as determinedin accordance with GAAP, plus (b) an amount equal to the aggregate totalliabilities, as determined in accordance with GAAP, of each UnconsolidatedAffiliate multiplied by the respective Unconsolidated Affiliate Interest ofeach such entity plus (c) without duplication, the Indebtedness of theConsolidated Parties on a consolidated basis plus (d) withoutduplication, the aggregate of Indebtedness (including, without limitation, allContingent Obligations) of each Unconsolidated Affiliate multiplied by therespective Unconsolidated Affiliate Interest of each such entity; provided,that (i) in each case, all of the above amounts not otherwise adjusted toaccount for Minority Interests shall be adjusted to deduct therefrom the prorata share of such amounts allocable to the Minority Interests (except to theextent any Credit Party would be legally liable for the full amount of suchliabilities) and (ii) notwithstanding anything contained herein to thecontrary, “Total Liabilities” shall include, without duplication (A) all obligations of any Consolidated Party topurchase, redeem, retire, defease or otherwise make any payment in respect ofany Preferred Stock of any entity in which it owns any Capital Stock, valued,in the case of redeemable Preferred Stock, at the greater of its voluntary orinvoluntary liquidation preference plus accrued and unpaid dividends;(B) the maximum amount that could be owed by any Consolidated Party withrespect to all of such Consolidated Party’s other Preferred Stock and (C) theamount equal to (1) the maximum amount that could be owed by any UnconsolidatedAffiliate with respect to such Unconsolidated Affiliate’s Preferred Stock,multiplied by (2) the respective Unconsolidated Affiliate Interest of each suchentity.

 

“Total Rent”means, with respect to rental income used in calculating Borrowing Base AssetValue, gross rental income from all Borrowing Base Assets over the applicableperiod.

 

“TotalTangible Assets” means the sum of (a) Asset Values of each of the RealProperties, plus (b) the book value of all other assets and intereststherein held by the Consolidated Parties (provided, that, the amountscalculated pursuant to clauses (a) and (b) above (i) shall include, withoutduplication, each Consolidated Parties’ interests in the assets of any UnconsolidatedAffiliate and (ii) shall not include any interests in assets which areattributable to any Minority Interests), less (c) the value of allintangible assets, if any, included in (a) and (b) above.

 

“Type” with respect to any Loan, refers to whether such Loan isa Eurodollar Loan or Base Rate Loan.

 

“Unsecured Indebtedness” means, with respect to any Person andfor any given calculation date, all Indebtedness of such Person that is notSecured Indebtedness, including all Indebtedness in respect of CapitalizedLease Obligations (subject to the provisions and allocation rules set forth inthe definition of “Secured Indebtedness” set forth herein). For purposes ofcalculating the Financial Covenants, the Credit Party Obligations and the TermLoan Obligations shall be deemed Unsecured Indebtedness.

 

“UnusedRevolving Committed Amount” means, for any period, the daily average of theamount by which (a) the then applicable Revolving Committed Amount exceeds(b) the sum of (i) the outstanding aggregate principal amount of allRevolving Loans plus (ii) the outstanding aggregate principalamount of all LOC Obligations plus (iii) the Aggregate DerivativeReserve Amount.

 

“USRPHolding” has the meaning given to suchterm in the Preamble of this Credit Agreement.

 

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“USRPHolding Pledge Agreement” means thatcertain Pledge and Security Agreement entered into by USRP Holding as of November4, 2003 in favor of the Collateral Agentand for the benefit of the Lender Parties.

 

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

 

“USRP Pledge Agreement” means that certain Pledge and SecurityAgreement entered into by USRP Operating as of the date hereof in favor of theCollateral Agent and for the benefit of the Lender Parties.

 

“USRP REIT” means U.S. Restaurant Properties, Inc..

 

“Value”means, with respect to any Consolidated Party’s interest in any Real Property,the book value of such interest in Real Property plus accumulateddepreciation with respect thereto (provided, for purposes of clarification,that the “Value” of any interest in Real Property shall not include any amountof the book value of such Real Property interest attributable to MinorityInterests).

 

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

 

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

 

## **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          Accounting Terms.**

 

Except as otherwise expresslyprovided herein, all accounting terms used herein shall be interpreted, and allfinancial statements and certificates and reports as to financial mattersrequired to be delivered to the Lenders hereunder shall be prepared, inaccordance with GAAP applied on a consistent basis; provided, however,that calculations of the implied principal component of all obligations underany Synthetic Lease or the implied interest component of any rent paid underany Synthetic Lease shall be made by the Borrower in accordance with acceptedfinancial practice and consistent with the terms of such Synthetic Lease.  All calculations made for the purposes ofdetermining compliance with this Credit Agreement shall (except as otherwiseexpressly provided herein) be made by application of GAAP applied on a basisconsistent with the most recent annual or quarterly financial statementsdelivered pursuant to Section 7.1 (or, prior to the delivery of the firstfinancial statements pursuant to Section 7.1, consistent with thefinancial statements as at September 30, 2003), but, in any event, afterelimination for Unconsolidated Affiliate Interests; provided, however,if (a) the Credit Parties shall object to determining such compliance onsuch 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.

 

Notwithstanding the above or anything contained herein to the contrary,the provisions set forth in FAS 133 shall not be used in accounting forderivatives instruments and hedging activities in the definitions containedherein.

 

## **1.4          References to Agreements and Laws.**

 

Unless otherwise expressly provided herein, (a) references toorganizational documents, agreements (including the Credit Documents and theTerm Loan Documents) and other contractual instruments shall be deemed

 

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to include all subsequent amendments, restatements, extensions,supplements and other modifications thereto, but only to the extent that suchamendments, restatements, extensions, supplements and other modifications arenot prohibited by any Credit Document; and (b) references to any law,rule, regulation, mandate, standard or requirement  shall include all provisions consolidating, amending, replacing,supplementing or interpreting such law, rule, regulation, mandate, standard orrequirement.

 

## **1.5          Times of Day.**

 

Unless otherwise specified, all references herein to times of day shallbe deemed to be references to Charlotte, North Carolina time.

 

 

# **ARTICLE II**

# ** **

# **CREDIT** FACILITIES

 

## **2.1          Revolving Loans.**

 

(a)           Revolving Commitment.  Subject to the terms and conditions hereofand in reliance upon the representations and warranties set forth herein, eachLender severally agrees to make available to the Borrower such Lender’sRevolving Commitment Percentage of revolving credit loans requested by theBorrower in Dollars (“Revolving Loans”) from time to time from theClosing Date until the Maturity Date, or such earlier date as the RevolvingCommitments shall have been terminated as provided herein; provided, however,(i) with regard to each Lender individually, such Lender’s outstandingRevolving Loans shall not exceed such Lender’s Revolving Commitment Percentageof the Revolving Committed Amount, (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 Revolving Committed Amount, and (iii) the sum of (A) the aggregateoutstanding principal amount of Revolving Loans plus (B) the LOCObligations plus (C) the Aggregate Derivative Exposure Amount, plus(D) the then-outstanding Term Loan Obligations shall not exceed the BorrowingBase.  Revolving Loans may consist ofBase Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrowermay request (subject to the terms and conditions set forth herein); provided,however, that no more than ten (10)****Eurodollar Loans shall beoutstanding hereunder at any time (it being understood that, for purposeshereof, Eurodollar Loans with different Interest Periods shall be considered asseparate Eurodollar Loans, even if they begin on the same date, althoughborrowings, extensions and conversions may, in accordance with the provisionshereof, be combined at the end of existing Interest Periods to constitute a newEurodollar Loan with a single Interest Period).  The Revolving Loans made hereunder may be repaid and reborrowedin accordance with the provisions hereof.

 

(b)           Revolving Loan Borrowings.

 

(i)            Notice of Borrowing.  The Borrower shall request a Revolving Loanborrowing by written notice (or telephonic notice promptly confirmed in writingin the form of a Notice of Borrowing) to the Agent not later than11:00 A.M.  (Charlotte, NorthCarolina time) on the Business Day prior to the date of the requested borrowingin the case of Base Rate Loans, and on the third Business Day prior to the dateof 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, (D) whether theborrowing shall be comprised of Base Rate Loans, Eurodollar Loans or acombination thereof, and if Eurodollar Loans are requested, the InterestPeriod(s) therefor, and (E) that all conditions to such borrowing containedherein (including those set forth in Section 5.2 hereof) have been fullysatisfied.  If the Borrower shall failto specify in any such Notice of Borrowing (I) an applicable InterestPeriod in the case of a Eurodollar Loan, then such notice shall be deemed to bea request for an Interest Period of one month, or (II) the type ofRevolving Loan requested, then such notice shall be deemed to be a request fora Base Rate Loan hereunder.  The Agentshall give notice to each affected Lender promptly upon receipt of each Notice

 

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of Borrowing pursuant to thisSection 2.1(b)(i), the contents thereof and each such Lender’s share ofany borrowing to be made pursuant thereto

 

(ii)           Minimum Amounts.  Each Eurodollar Loan or Base Rate Loan thatis a Revolving Loan shall be in a minimum aggregate principal amount of$500,000 and integral multiples of $100,000 in excess thereof (or the remainingamount of the Revolving Committed Amount, if less).

 

(iii)          Advances.  Each Lender will make its RevolvingCommitment Percentage of each Revolving Loan borrowing available to the Agentfor the account of the Borrower as specified in Section 3.15(a), or insuch other manner as the Agent may specify in writing, by 1:00 P.M.  (Charlotte, North Carolina time) on the datespecified in the applicable Notice of Borrowing in Dollars and in fundsimmediately available to the Agent. Such borrowing will then be made available to the Borrower by the Agentby crediting the account of the Borrower on the books of such office with theaggregate of the amounts made available to the Agent by the Lenders and in likefunds as received by the Agent.

 

(c)           Repayment. The principalamount of all Revolving Loans and all other amounts owed by the Borrower or anyCredit Party hereunder or under any Credit Document shall be due and payable asfollows:

 

 

(i)            The principal amount of allRevolving Loans shall, subject to subclauses (ii) and (iii) below, be due andpayable in full October 31, 2005 (the “Initial Maturity Date”) unlessaccelerated sooner pursuant to the terms and conditions set forth herein.

 

(ii)           The maturity date of the RevolvingLoans may be extended to October 31, 2006 (the “Extended Maturity Date”)if a Successful Syndication is achieved on or prior to December 31, 2003.

 

(iii)          The maturity date of the RevolvingLoans may, in the absence of an extension pursuant to subclause (ii) above, beextended to the Extended Maturity Date if the following conditions aresatisfied by the date specified:

 

(A)          Borrower has requested the extensionby written notice to Bank not more than sixty (60) days, and not less thanthirty (30) days, prior to the Initial Maturity Date;

 

(B)           the Borrower has, on or before theInitial Maturity Date, paid to the Agent (for the benefit of the Lenders) anextension fee (the “Extension Fee”) in an amount equal to one half ofone percent (0.50%) of the sum of the Revolving Commitments which will be ineffect immediately following the Initial Maturity Date;

 

(C)           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 Date and the Credit Parties remain incompliance with such provisions and such conditions remain satisfied as of theInitial Maturity Date;

 

(D)          current financial statements regardingeach Borrower and each Guarantor and all other financial statements and otherinformation as may be required hereunder regarding Borrower and each Guarantorshall have been submitted promptly to the Agent concurrently with Borrower’srequest for the extension, and there shall not have occurred, in the opinion ofAgent, any material adverse change in the business or financial condition ofBorrowers or any Guarantor or in any other state of facts submitted to theAgent in connection with the Credit Documents, from that which existed on theClosing Date;

 

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(E)           the Agent and each Lender havedelivered to the Borrower their respective written approvals of the extensionreferenced in this Section 2.1(c)(iii); provided, that each such approval shallbe conditioned only upon such Agent’s and Lenders’ reasonable determinationthat the Credit Parties have satisfied each of the conditions to extension setforth in this Section 2.1(c)(iii);

 

(F)           whether or not the extension becomeseffective, Borrower shall pay all out-of-pocket costs and expenses incurred bythe Agent and the Lenders in connection with the proposed extension (pre- andpost-closing), including, without limitation, appraisal fees and legal fees;all such costs and expenses incurred up to the Initial Maturity Date shall bedue and payable prior to Agent’s and Lenders’ execution of their approval ofthe extension referenced in Section 2.1(c)(iii)(E) or, if the proposedextension does not become effective, then upon demand by the Agent), and anyfuture failure to pay such amounts shall constitute an Event of Default underthe Credit Documents; and

 

(G)           at the time of the request, and atthe time of the extension, there shall not exist any Default or Event ofDefault under any Credit Document.

 

(iv)          As used herein, the term “MaturityDate” means the latest to occur of (A) the Initial Maturity Date and (B) tothe extent either (1) a Successful Syndication is completed prior to the daterequired in subclause (ii) above or (2) all conditions precedent to theextension of the Revolving Loans as set forth in subclause (iii) above havebeen satisfied, the Extended Maturity Date. For purposes of clarification, notwithstanding the possibility that theconditions precedent set forth in Sections 2.1(c)(ii) or (iii) may be satisfiedas of a later date, the “Maturity Date” on any date prior to such satisfactionshall be deemed to be the Initial Maturity Date.

 

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

 

(i)            Base Rate Loans.  During such periods as Revolving Loans shallbe comprised in whole or in part of Base Rate Loans, such Base Rate Loans shallbear interest at a per annum rate equal to the Adjusted Base Rate.

 

(ii)           Eurodollar Loans.  During such periods as Revolving Loans shallbe comprised in whole or in part of Eurodollar Loans, such Eurodollar Loansshall bear interest at a per annum rate equal to the Adjusted Eurodollar Rate.

 

Interest on Revolving Loans shall be payablein arrears on each applicable Interest Payment Date (or at such other times asmay be specified herein).

 

(e)           Revolving Notes.  The Revolving Loans made by each Lendershall be evidenced by a duly executed promissory note of the Borrower to suchLender in an original principal amount equal to such Lender’s RevolvingCommitment Percentage of the Revolving Committed Amount and in substantiallythe form of Exhibit 2.1(e).

 

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

 

(a)           Issuance.  Subject to the terms and conditions hereofand in reliance upon the representations and warranties set forth herein, theIssuing Lender agrees to issue, and each Lender severally agrees to participatein the issuance by the Issuing Lender of, standby and trade Letters of Creditin Dollars from time to time from the Closing Date until the datethirty (30) days prior to the Maturity Date as the Borrower may request,in a form acceptable to the Issuing Lender; provided, however,that (i) the LOC Obligations outstanding shall not at any time exceed FIVEMILLION DOLLARS ($5,000,000) (the “LOC Committed Amount”), (ii) thesum of (A) the aggregate outstanding principal amount of Revolving Loans plus(B) the LOC Obligations plus (C) the Aggregate Derivative ReserveAmount, shall not exceed the Revolving Committed Amount and (iii) the sum of(A) the aggregate outstanding principal amount of Revolving Loans plus(B) the

 

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LOC Obligations plus (C) the AggregateDerivative Exposure Amount, plus (D) the then-outstanding Term LoanObligations shall not exceed the Borrowing Base.  No Letter of Credit shall (x) have an original expiry datemore than one year from the date of issuance (provided that any such Letter ofCredit may contain customary “evergreen” provisions pursuant to which theexpiry date is automatically extended by a specific time period unless theIssuing Lender gives notice to the beneficiary of such Letter of Credit atleast a specified time period prior to the expiry date then in effect) or(y) as originally issued or as extended, have an expiry date extendingbeyond the date thirty (30) days prior to the Maturity Date.  Each Letter of Credit shall comply with therelated LOC Documents.  The issuancedates of each Letter of Credit shall be a Business Day.

 

(b)           Notice and Reports.  The request for the issuance of a Letter ofCredit shall be submitted by the Borrower to the Issuing Lender at leastthree (3) Business Days prior to the requested date of issuance.  The Agent will, at least quarterly,disseminate to each of the Lenders a detailed report specifying the Letters ofCredit which are then issued and outstanding and any activity with respectthereto which may have occurred since the date of the prior report, andincluding therein, among other things, the beneficiary, the face amount and theexpiry date, as well as any payment or expirations which may have occurred.

 

(c)           Participation.  Each Lender, upon issuance of a Letter ofCredit, shall be deemed to have purchased without recourse a ParticipationInterest from the Issuing Lender in such Letter of Credit and the obligationsarising thereunder and any collateral relating thereto, in each case in anamount equal to its pro rata share of the obligations under such Letter ofCredit (based on the respective Revolving Commitment Percentages of theLenders) and shall absolutely, unconditionally and irrevocably assume and beobligated to pay to the Issuing Lender through the Agent and discharge whendue, its pro rata share of the obligations arising under such Letter ofCredit.  Without limiting the scope andnature of each Lender’s Participation Interest in any Letter of Credit, to theextent that the Issuing Lender has not been reimbursed as required hereunder orunder any such Letter of Credit, each such Lender shall pay to the IssuingLender its pro rata share of such unreimbursed drawing in same day funds on theday of notification by the Agent of an unreimbursed drawing pursuant to theprovisions of subsection (d) below. The obligation of each Lender to so reimburse the Issuing Lender shallbe absolute and unconditional and shall not be affected by the occurrence of aDefault, an Event of Default or any other occurrence or event.  Any such reimbursement shall not relieve orotherwise impair the obligation of the Borrower to reimburse the Issuing Lenderunder any Letter of Credit, together with interest as hereinafter provided.

 

(d)           Reimbursement.  In the event of any drawing under any Letterof Credit, the Issuing Lender will notify the Borrower and the Agent by theclose of the following Business Day. Unless the Borrower shall immediately notify the Agent that the Borrowerintends to otherwise reimburse the Issuing Lender for such drawing, theBorrower shall be deemed to have requested that the Lenders make a RevolvingLoan in the amount of the drawing as provided in subsection (e) below onthe related Letter of Credit, the proceeds of which will be used to satisfy therelated reimbursement obligations.  TheBorrower promises to reimburse the Issuing Lender on the day of drawing underany Letter of Credit (either with the proceeds of a Revolving Loan obtainedhereunder or otherwise) in same day funds. If the Borrower shall fail to reimburse the Issuing Lender as providedhereinabove, the Borrower promises to pay the Issuing Lender interest on theunreimbursed amount of such drawing on demand at a per annum rate equal to theAdjusted Base Rate plus five percent (5.0%).  The Borrower’s reimbursement obligations hereunder shall beabsolute and unconditional under all circumstances irrespective of any rightsof setoff, counterclaim or defense to payment the Borrower may claim or haveagainst the Issuing Lender, the Agent, the Lenders, the beneficiary of theLetter of Credit drawn upon or any other Person, including without limitationany defense based on any failure of the Borrower or any other Credit Party toreceive consideration or the legality, validity, regularity or unenforceabilityof the Letter of Credit.  The IssuingLender will promptly notify the other Lenders of the amount of any unreimburseddrawing and each Lender shall promptly pay to the Agent for the account of theIssuing Lender in Dollars and in immediately available funds, the amount ofsuch Lender’s pro rata share of such unreimbursed drawing.  Such payment shall be made on the day suchnotice is received by such Lender from the Issuing Lender if such notice isreceived at or before 2:00 P.M. (Charlotte, North Carolina time), and otherwise such payment shall bemade at or before 12:00 Noon (Charlotte, North Carolina time) on the BusinessDay next succeeding the day such notice is received.  If such Lender does not pay such amount to the Issuing Lender infull upon such request, such

 

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Lender shall, on demand, pay to the Agent forthe account of the Issuing Lender interest on the unpaid amount during theperiod from the date of such drawing until such Lender pays such amount to theIssuing Lender in full at a rate per annum equal to, if paid withintwo (2) Business Days of the date that such Lender is required to makepayments of such amount pursuant to the preceding sentence, the Federal FundsRate and thereafter at a rate equal to the Base Rate.  Each Lender’s obligation to make such payment to the IssuingLender, and the right of the Issuing Lender to receive the same, shall beabsolute and unconditional, shall not be affected by any circumstancewhatsoever and without regard to the termination of this Credit Agreement orthe Commitments hereunder, the existence of a Default or Event of Default orthe acceleration of the obligations of the Borrower hereunder and shall be madewithout any offset, abatement, withholding or reduction whatsoever.  Simultaneously with the making of each suchpayment by a Lender to the Issuing Lender, such Lender shall, automatically andwithout any further action on the part of the Issuing Lender or such Lender,acquire a Participation Interest in an amount equal to such payment (excludingthe portion of such payment constituting interest owing to the Issuing Lender)in the 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) whethera Default or an Event of Default then exists, (iv) failure for any suchrequest or deemed request for Revolving Loan to be made by the time otherwiserequired hereunder, (v) whether the date of such borrowing is a date onwhich Revolving Loans are otherwise permitted to be made hereunder or(vi) any termination of the Commitments relating thereto immediately priorto or contemporaneously 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 such Lender hereby agreesthat it shall forthwith purchase (as of the date such borrowing would otherwisehave occurred, but adjusted for any payments received from the Borrower on orafter such date and prior to such purchase) from the Issuing Lender suchParticipation Interests in the outstanding LOC Obligations as shall be necessaryto cause each such Lender to share in such LOC Obligations ratably (based uponthe respective Revolving Commitment Percentages of the Lenders (determinedbefore giving effect to any termination of the Commitments pursuant toSection 9.2)), provided that at the time any purchase ofParticipation Interests pursuant to this sentence is actually made, thepurchasing Lender shall be required to pay to the Issuing Lender, to the extentnot paid to the Issuing Lender by the Borrower in accordance with the terms ofsubsection (d) above, interest on the principal amount of ParticipationInterests purchased for each day from and including the day upon which suchborrowing would otherwise have occurred to but excluding the date of paymentfor such Participation Interests, at the rate equal to, if paid withintwo (2) Business Days of the date of the Revolving Loan advance, theFederal Funds Rate, and thereafter at a rate equal to the Base Rate.

 

(f)            Designation of ConsolidatedParties as Account Parties.  Notwithstandinganything to the contrary set forth in this Credit Agreement, including withoutlimitation Section 2.2(a), a Letter of Credit issued hereunder may containa statement to the effect that such Letter of Credit is issued for the accountof any Subsidiary of the Borrower, provided that notwithstanding suchstatement, the Borrower shall be the actual account party for all purposes ofthis Credit Agreement for such Letter of Credit and such statement shall notaffect the Borrower’s reimbursement obligations hereunder with respect to suchLetter of Credit.

 

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(g)           Renewal, Extension.  The renewal or extension of any Letter ofCredit shall, for purposes hereof, be treated in all respects the same as theissuance of a new Letter 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 InternationalChamber of Commerce, in which case the UCP or the ISP98, as applicable, may beincorporated therein and deemed in all respects to be a part thereof.

 

(i)            Indemnification; Nature ofIssuing Lender’s Duties.

 

(i)            In addition to its other obligationsunder this Section 2.2, the Borrower hereby agrees to pay, and protect,indemnify and save each Lender harmless from and against, any and all claims,demands, liabilities, damages, losses, costs, charges and expenses (includingreasonable attorneys’ fees) that such Lender may incur or be subject to as aconsequence, direct or indirect, of (A) the issuance of any Letter ofCredit or (B) the failure of such Lender to honor a drawing under a Letterof Credit as a result of any act or omission, whether rightful or wrongful, ofany present or future de jure or de facto government or Governmental Authority(all such acts or omissions, herein called “Government Acts”).

 

(ii)           As between the Borrower and theLenders (including the Issuing Lender), the Borrower shall assume all risks ofthe acts, omissions or misuse of any Letter of Credit by the beneficiarythereof.  No Lender (including theIssuing Lender) shall be responsible: (A) for the form, validity, sufficiency, accuracy, genuineness orlegal effect of any document submitted by any party in connection with theapplication for and issuance of any Letter of Credit, even if it should in factprove to be in any or all respects invalid, insufficient, inaccurate,fraudulent or forged; (B) for the validity or sufficiency of anyinstrument transferring or assigning or purporting to transfer or assign anyLetter of Credit or the rights or benefits thereunder or proceeds thereof, inwhole or in part, that may prove to be invalid or ineffective for any reason;(C) for errors, omissions, interruptions or delays in transmission ordelivery of any messages, by mail, cable, telegraph, telex or otherwise,whether or not they be in cipher; (D) for any loss or delay in thetransmission or otherwise of any document required in order to make a drawingunder a Letter of Credit or of the proceeds thereof; and (E) for anyconsequences arising from causes beyond the control of such Lender, including,without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of theIssuing Lender’s rights or powers hereunder.

 

(iii)          In furtherance and extension and notin limitation of the specific provisions hereinabove set forth, any actiontaken or omitted by any Lender (including the Issuing Lender), under or inconnection with any Letter of Credit or the related certificates, if taken oromitted in good faith, shall not put such Lender under any resulting liabilityto the Borrower or any other Credit Party. It is the intention of the parties that this Credit Agreement shall beconstrued and applied to protect and indemnify each Lender (including theIssuing Lender) against any and all risks involved in the issuance of the Lettersof Credit, all of which risks are hereby assumed by the Borrower (on behalf ofitself and each of the other Credit Parties), including, without limitation,any and all Government Acts.  No Lender(including the Issuing Lender) shall, in any way, be liable for any failure bysuch Lender or anyone else to pay any drawing under any Letter of Credit as aresult of any Government Acts or any other cause beyond the control of suchLender.

 

(iv)          Nothing in this subsection (i) isintended to limit the reimbursement obligations of the Borrower contained insubsection (d) above.  Theobligations of the Borrower under this subsection (i) shall survive thetermination of this Credit Agreement. No act or omission of any current or prior beneficiary of a Letter ofCredit shall in any way affect or impair the rights of the Lenders (includingthe Issuing Lender) to enforce any right, power or benefit under this CreditAgreement.

 

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(v)           Notwithstanding anything to the contrarycontained in this subsection (i), the Borrower shall have no obligation toindemnify any Lender (including the Issuing Lender) in respect of any liabilityincurred by such Lender (A) arising solely out of the gross negligence orwillful misconduct of such Lender, as determined by a court of competentjurisdiction, or (B) caused by such Lender’s failure to pay under anyLetter of Credit after presentation to it of a request strictly complying withthe terms and conditions of such Letter of Credit, as determined by a court ofcompetent 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 inSection 5.2 have been satisfied unless it shall have acquired actual knowledgethat any such 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          Derivative Exposure Reserve.**

 

(a)           Establishment of Reserve.  To the extent the Borrower (as creditsupport provider), pursuant to the terms of any BOA Derivative Instrument, isrequired to provide collateral or other credit support for the GeneralPartner’s or the USRP REIT’s obligations under such BOA Derivative Instrument,the Agent shall, subject to the terms and conditions set forth in thisSection 2.3 and the consent of the applicable Derivative Counterparty,reserve an amount of Availability which when combined with all then existingAvailability reserves is equal to or less than SEVEN MILLION FIVE HUNDREDTHOUSAND AND NO/100 DOLLARS ($7,500,000.00) (the “Reserve Limit”) insatisfaction of such requirement.  Theterm “Derivative Exposure Reserve” shall mean, with respect to any givenBOA Derivative Instrument, the reserve established pursuant to thisSection 2.3 in connection with such BOA Derivative Instrument.  Notwithstanding anything to the contrarycontained in this Credit Agreement, Availability reserved pursuant to thisSection 2.3 shall be deemed an outstanding principal advance hereunder forpurposes of the covenant calculations required hereunder (including, withoutlimitation, the covenant calculations required pursuant to Sections 7.11and 8.1 hereof).

 

 (b)          Conditions.  If, at any time on or prior to the BusinessDay occurring five (5) days prior to the date of the termination of thisCredit Agreement, Agent has received notice of the Borrower’s obligation (ascredit support provider), pursuant to a given BOA Derivative Instrument, to providecollateral or other credit support for the General Partner’s or the USRP REIT’sobligations thereunder, the Agent shall, within one (1) Business Day ofreceiving notice thereof, establish a Derivative Exposure Reserve in connectionwith such BOA Derivative Instrument to the extent that (i) the applicableDerivative Counterparty has consented to the establishment of a DerivativeExposure Reserve with respect to the Borrower’s obligations (as credit supportprovider) 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) thethen-outstanding Term Loan Obligations,  plus(D) the amount of the pending Derivative Exposure Reserve is less than theRevolving Committed Amount; (iii) the sum of (A) the aggregateoutstanding principal amount of Revolving Loans plus (B) the LOCObligations plus (C) the Aggregate Derivative Exposure Amount, plus(D) the then-outstanding Term Loan Obligations plus (E) the amount of thepending Derivative Exposure Reserve is less than the then-applicableBorrowing Base and (iv) to the Agent’sknowledge, no Default or Event of Default exists as of the date on which theapplicable 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

 

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collateral or other credit support for theGeneral Partner’s or the USRP REIT’s obligations under the applicable BOADerivative Instrument has increased or decreased; provided, that the Agentshall not be required to make such adjustment to the extent (i) any increase inthe Borrower’s obligation (as credit support provider) to provide collateral orother credit support for the General Partner’s or the USRP REIT’s obligationsunder the applicable BOA Derivative Instrument would cause the sum of (A) the aggregate outstandingprincipal amount of the Revolving Loans, plus (B) the LOC Obligations, plus(C) the Aggregate Derivative Reserve Amount to exceed the Revolving CommittedAmount, (ii) such increase would cause the sum of (A) the aggregate outstandingprincipal amount of the Revolving Loans, plus (B) the LOC Obligations, plus(C) the Aggregate Derivative Reserve Amount, plus (D) thethen-outstanding Term Loan Obligations to exceed the Borrowing Base or (iii)such increase would cause the aggregate amount of the Derivative ExposureReserve to exceed the Reserve Limit.

 

(d)           Notices.  The Borrower (i) hereby consents to theestablishment of Derivative Exposure Reserves with respect to any BOADerivative Instrument existing as of the date hereof or later existing, (ii)hereby consents to the delivery by each Derivative Counterparty to the Agent ofall notices, reports and other information regarding any BOA DerivativeInstrument concurrently with or prior to the delivery thereof to the Borrower,and (iii) agrees to direct and hereby directs each Derivative Counterparty toso deliver such notices, reports and other information to the Agent.   The Agent hereby agrees to provide to theBorrower notice, (i) within three (3) Business Days, of the establishmentof a given Derivative Exposure Reserve, the underlying BOA DerivativeInstrument and the amount of such Derivative Exposure Reserve; (ii) withinthree (3) Business Days, any adjustment in the amount of a givenDerivative Exposure Reserve and (iii) within three (3) Business Days, ofthe making of any Revolving Loan in satisfaction of the Borrower’s obligationsunder a given BOA Derivative Instrument in connection with subsection (f)of this Section 2.3.

 

(e)           Payment from Derivative ExposureReserve.  In the event anyDerivative Counterparty forecloses upon or otherwise redeems its interest inany amount allocated as a Derivative Exposure Reserve and so notifies the Agentand Borrower of such foreclosure/redemption, the Borrower shall be deemed tohave requested that the Lenders make a Revolving Loan in the amount of theapplicable Derivative Exposure Reserve as provided in subsection (f)below.  The Borrower hereby (i) consentsto the application of the proceeds resulting from any Revolving Loans madepursuant to subsection (f) of this Section 2.3 to the Borrower’sobligations under the applicable BOADerivative Instrument, (ii) covenants and agrees, to the extent it receives any of the proceeds resulting from anyRevolving Loans made pursuant to subsection (f) of this Section 2.3,to apply such proceeds to its obligations under the applicable BOA Derivative Instrument immediately upon itsreceipt thereof and (iii) agrees that, notwithstanding anything to the contrarycontained herein, failure to adhere to the terms of this Section 2.3 willresult 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

 

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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 Derivative Instrument asshall be necessary to cause each such Lender to share in the obligationssecured by the applicable Derivative Exposure Reserve ratably (based upon therespective Revolving Commitment Percentages of the Lenders (determined beforegiving effect to any termination of the Commitments pursuant toSection 9.2)).

 

(g)           Termination ofDerivative Exposure Reserves.  Therespective Derivative Exposure Reserves established pursuant to thisSection 2.3 shall be terminated upon the earlier of (i) the termination ofthe underlying BOA Derivative Instrument and subsequent payment by the Borrowerof all amounts due thereunder, either through the making of Revolving Loansunder subsection (f) hereof or otherwise, (ii) the Business Day occurringimmediately preceding the Maturity Date, (iii) the Business Day occurringimmediately preceding the date of the termination of this Credit Agreementother than as a result of the occurrence of the Maturity Date.  To the extent the Derivative ExposureReserves are terminated pursuant to subsections (i), (ii) or (iii) above,the Borrower shall, as of the date of such termination, be deemed to haverequested Revolving Loans to be made in accordance with subsection (f)hereof in an amount equal to the Aggregate Derivative Reserve Amount for thepurpose of providing cash collateral to secure its obligations under the BOADerivative Instruments for which Derivative Exposure Reserves exist on suchdate; provided, however, that to the extent the Derivative Exposure Reservesare to be terminated as a result of the occurrence of the Maturity Date, theBorrower shall be permitted to provide such collateral as may be acceptable tothe Derivative Counterparty in lieu of a funding of Revolving Loans hereunderif and to the extent (A) the Borrower provides fifteen (15) Business Daysnotice of its intention to provide such collateral, (B) the Borrower deliverssuch collateral to the Derivative Counterparty five (5) Business Daysprior to the Maturity Date and (C) such collateral is deemed acceptable by theDerivative Counterparty.

 

## **2.4**          Joint and SeveralLiability of the Borrowers.

 

(a)           Each of the Borrowers is acceptingjoint and several liability hereunder in consideration of the financialaccommodation to be provided by the Lenders under this Credit Agreement, forthe mutual benefit, directly and indirectly, of each of the Borrowers and inconsideration of the undertakings of each of the Borrowers to accept joint andseveral liability for the obligations of each of them.

 

(b)           Each of the Borrowers jointly andseverally hereby irrevocably and unconditionally accepts, not merely as asurety but also as a co-debtor, joint and several liability with the otherBorrowers with respect to the payment and performance of all of the CreditParty Obligations arising under this Credit Agreement and the other CreditDocuments, it being the intention of the parties hereto that all the CreditParty Obligations shall be the joint and several obligations of each of the Borrowerswithout preferences or distinction among them.

 

(c)           If and to the extent that any of theBorrowers shall fail to make any payment with respect to any of the obligationshereunder as and when due or to perform any of such obligations in accordance withthe terms thereof, then in each such event, the other Borrowers will make suchpayment with respect to, or perform, such obligation.

 

(d)           The obligations of each Borrowerunder the provisions of this Section 2.4 constitute full recourseobligations of such Borrower, enforceable against it to the full extent of itsproperties and assets, irrespective of the validity, regularity orenforceability of this Credit Agreement or any other circumstances whatsoever.

 

(e)           Except as otherwise expresslyprovided herein, each Borrower hereby waives notice of acceptance of its jointand several liability, notice of occurrence of any Default or Event of Default(except

 

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to the extent notice is expressly required tobe given pursuant to the terms of this Credit Agreement), or of any demand forany payment under this Credit Agreement, notice of any action at any time takenor 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, 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 2.4, afford groundsfor terminating, discharging or relieving such Borrower, in whole or in part,from any of its obligations under this Section 2.4, 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 2.4 shall not be discharged except by performance and then only tothe extent of such performance.  Theobligations of each Borrower under this Section 2.4 shall not bediminished or rendered unenforceable by any winding up, reorganization,arrangement, liquidation, reconstruction or similar proceeding with respect toany reconstruction or similar proceeding with respect to any Borrower or any Lender.  The joint and several liability of theBorrowers hereunder shall continue in full force and effect notwithstanding anyabsorption, merger, amalgamation or any other change whatsoever in the name,membership, constitution or place of formation of any Borrower or any Lender.

 

(f)            The provisions of thisSection 2.4 are made for the benefit of the Agent and the Lenders andtheir respective successors and assigns, and may be enforced by any such Personfrom time to time against any of the Borrowers as often as occasion thereformay arise and without requirement on the part of any Lender first to marshalany of its claims or to exercise any of its rights against any of the otherBorrowers or to exhaust any remedies available to it against any of the otherBorrowers or to resort to any other source or means of obtaining payment of anyof the Credit Party Obligations or to elect any other remedy.  Without limiting the generality of theforegoing, each Borrower hereby specifically waives the benefits of N.C.  Gen. Stat.  §§26-7 through 26-9,inclusive, to the extent applicable. The provisions of this Section 2.4 shall remain in effect until allthe Credit Party Obligations hereunder shall have been paid in full orotherwise fully satisfied.  If at anytime, any payment, or any part thereof, made in respect of any of the CreditParty Obligations, is rescinded or must otherwise be restored or returned bythe Lenders upon the insolvency, bankruptcy or reorganization of any of theBorrowers, or otherwise, the provisions of this Section 2.4 will forthwithbe reinstated and in effect as though such payment had not been made.

 

(g)           Notwithstanding any provision to thecontrary contained herein or in any other of the Credit Documents or HedgingAgreements, the obligations of each Borrower hereunder shall be limited to anaggregate amount equal to the largest amount that would not render itsobligations hereunder subject to avoidance under Section 548 of theBankruptcy Code or any comparable provisions of any applicable state law.

 

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

 

Each Borrower hereby appoints the Principal Borrower to act as itsexclusive agent for all purposes under this Credit Agreement and the otherCredit Documents (including, without limitation, with respect to all mattersrelated to the borrowing and repayment of loans as described in Articles II andIII hereof).  Each Borrower acknowledgesand agrees that (a) the Principal Borrower may execute such documents on behalfof all the Borrowers as the Principal Borrower deems appropriate in its solediscretion and each Borrower shall be bound by

 

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and obligated by all of the terms of any such document executed by thePrincipal Borrower on its behalf, (b) any notice or other communicationdelivered by the Agent or any Lender hereunder to the Principal Borrower shallbe deemed to have been delivered to each Borrower and (c) the Agent and each ofthe Lenders shall accept (and shall be permitted to rely on) any document oragreement executed by the Principal Borrower on behalf of the Borrowers (or anyof them).  The Borrowers must actthrough the Principal Borrower for all purposes under this Credit Agreement andthe other Credit Documents.  Notwithstandinganything contained herein to the contrary, to the extent any provision in thisCredit Agreement requires any Borrower to interact in any manner with the Agentor the Lenders, such Borrower shall do so through the Principal Borrower.

 

# **ARTICLE III**

# ** **

# **OTHER PROVISIONS RELATING TO CREDIT FACILITIES**

 

## **3.1          Default Rate.**

 

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 rateequal to the Adjusted Base Rate plus five percent (5.0%) and(ii) the Letter of Credit Fee and the Derivative Exposure Usage Fee shalleach accrue at a per annum rate five percent (5.0%) greater than the rate whichwould otherwise be applicable.

 

## **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 forsuch Eurodollar 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 bytelephone or telecopy, confirmed immediately in writing if by telephone, in theform of a Notice 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) containingcertifications of the Borrower with respect to the conditions set forth inSection 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

 

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Converted, (iv) the Type of Loan such Loan isto be Converted into and (v) if such Conversion is into a Eurodollar Loan, therequested duration of the Interest 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.

 

## **3.3          Prepayments.**

 

(a)           VoluntaryPrepayments.  The Borrower shallhave the right to prepay Loans in whole or in part from time to time; provided,however, that (i) each partial prepayment of Loans shall be in aminimum principal amount of $500,000 and integral multiples of $100,000 inexcess thereof (or the then remaining principal balance of the Revolving Loans,(ii) each partial prepayment shall be accompanied by interest on the principalamount prepaid through the date of prepayment and shall include payment for anyand all applicable fees, expenses, breakage costs and redeployment costsincurred by the Lenders and the Agent as a result thereof (as such amounts arereasonably calculated by the Lenders and the Agent, as applicable, andcommunicated to the Borrower) and (iii) all such voluntary prepayments shall bemade to the Collateral Agent for allocation in accordance with theIntercreditor Agreement.  Subject to theforegoing terms, amounts prepaid under this Section 3.3(a) shall beapplied as the Borrower may elect; provided that if the Borrower shallfail to specify with respect to any voluntary prepayment, such voluntaryprepayment shall be applied first to Base Rate Loans and then to EurodollarLoans in direct order of Interest Period maturities.  All prepayments under this Section 3.3(a) shall be subjectto Section 3.12, but otherwise without premium or penalty.

 

(b)           MandatoryPrepayments.

 

(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)           LOCCommitted Amount.  If, at any time,the sum of the aggregate principal amount of LOC Obligations shall exceed theLOC Committed Amount, the Borrower immediately shall cash collateralize the LOCObligations in an amount sufficient to eliminate such excess.

 

(C)           DerivativeExposure Reserves.  If, at any time,the sum of the Aggregate Derivative Reserve Amount shall exceed the ReserveLimit, the Borrower immediately shall cash collateralize its AggregateDerivative Reserve Amount obligations in an amount sufficient to eliminate suchexcess.

 

(D)          BorrowingBase.  If, at any time, the sum of(1) the aggregate outstanding principal amount of Revolving Loans, plus(2) the LOC Obligations, plus (3) the Aggregate Derivative ReserveAmount, plus (4) the then-outstanding Term Loan Obligations shall exceedthe Borrowing Base, the Borrower immediately shall prepay the principal amountof the Credit Party Obligations and/or Term Loan Obligations (as determined bythe distribution provisions of the Intercreditor Agreement) in an amountsufficient to eliminate such excess.

 

(ii)           Application of MandatoryPrepayments.  All amounts requiredto be paid pursuant to this Section 3.3(b) shall, upon receipt by Agentfrom Collateral Agent in accordance with the Intercreditor Agreement, beapplied as follows: (A) with respect to all amounts prepaid pursuant toSection 3.3(b)(i)(A) or (D), first, to the Revolving Loans, then (afterall Revolving Loans have been repaid) to the cash collateralization of the LOCObligations, and then (after all Revolving Loans have been paid and all LOCObligations have been fully cash collateralized) to the cash collateralizationof

 

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the then-existing Derivative ExposureReserves, (B) with respect to all amounts prepaid pursuant toSection 3.3(b)(i)(B), to a cash collateral account in respect of LOCObligations and (C) with respect to all amounts prepaid pursuant to Section 3.3(b)(i)(C),to a cash collateral account in respect of the Borrower’s Aggregate DerivativeReserve Amount obligations.  Within theparameters of the applications set forth above, prepayments shall be appliedfirst to Base Rate Loans and then to Eurodollar Loans in direct order ofInterest Period maturities.  Allprepayments under this Section 3.3(b) shall be subject toSection 3.12, but otherwise without premium or penalty, and shall beaccompanied by interest on the principal amount prepaid through the date ofprepayment. All prepayments made hereunder shall be made to the CollateralAgent for allocation in accordance with the Intercreditor Agreement.

 

## **3.4          Termination, Reduction or Increase of RevolvingCommitted Amount.**

 

(a)           Voluntary Reductions.  The Borrower may from time to timepermanently reduce or terminate the Revolving Committed Amount in whole or inpart (in minimum aggregate amounts of $5,000,000 or in integral multiples of$5,000,000 in excess thereof (or, if less, the full remaining amount of thethen applicable Revolving Committed Amount)) upon five (5) Business Days’prior written notice to the Agent; provided, however, no suchtermination or reduction shall be made which would cause (i) the sum of theaggregate outstanding principal amount of Revolving Loans, plus the LOCObligations, plus the Aggregate Derivative Reserve Amount to exceed theRevolving Committed Amount, or (ii) the sum of the aggregate outstandingprincipal amount of Revolving Loans, plus the LOC Obligations, plusthe Aggregate Derivative Reserve Amount, plus the then-outstanding TermLoan Obligations to exceed the Borrowing Base unless, concurrently with suchtermination or reduction, the Revolving Loans are repaid to the extentnecessary to eliminate such excess or excesses.  The Agent shall promptly notify each affected Lender of receiptby the Agent of any notice from the Borrower pursuant to thisSection 3.4(a).

 

(b)           Voluntary Increases.  Following the Closing Date, the RevolvingCommitted Amount may be increased to an aggregate amount of up to$75,000,000.00 if (i) the Borrower requests such increase in writing to theAgent, (ii) BAS is able to syndicate the amount of such increase (A) to one ormore financial institutions qualifying as an Eligible Assignee and (B) in amanner otherwise in accordance with the terms and conditions set forth in theSyndication Letter, (iii) such increase does not increase the amount of theRevolving Commitment of any Lender without the written consent of such Lender,(iv) the Borrower executes new promissory notes reflecting the increase in theRevolving Committed Amount and executes such other amendments to the CreditDocuments as are deemed necessary by the Agent, (v) no Default or Event ofDefault exists at such time and (vi) the Borrower pays all fees required by theFee Letter in connection with such increase in the Revolving Committed Amountand all costs and expenses incurred by the Agent in documenting or implementingsuch increase.  All of the terms andconditions of the Credit Documents shall apply to the increased amount of theRevolving Committed Amount as if such amount were in effect as of the datehereof.  Each Lender that may be a partyhereto from time to time hereby acknowledges that the Revolving CommittedAmount may be increased pursuant to this Section 3.4(b) regardless of whethersuch Lender approves such increase or increases its Revolving Commitmenthereunder; provided, that BAS hereby agrees to offer to each existing Lender,on terms and conditions similar to those being offered to other prospectivelenders, a portion of any increase in the Revolving Committed Amount equal tosuch Lender’s Revolving Commitment Percentage immediately prior to suchincrease (to the extent such Lender is not, at such time, a Defaulting Lender).  Notwithstanding anything to the contrarycontained herein, the Borrower may request an increase in the RevolvingCommitted Amount no more than once during the term of this Agreement.

 

(c)           Maturity Date.  Unless terminated sooner pursuant toSection 3.4(a) or Section 9.2, the Revolving Commitments of theLenders and the LOC Commitment of the Issuing Lender shall automaticallyterminate on the Maturity Date.

 

(d)           General.  The Agent will promptly notify the Lendersof (i) any such notice of termination or reduction of the Revolving CommittedAmount and (ii) any requested increase in the Revolving Committed Amount.  Any reduction of the Revolving CommittedAmount shall be applied to the Revolving Commitment of each Lender according toits Revolving Commitment Percentage. All fees

 

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accrued until the effective date of anytermination of all or a portion of the Revolving Committed Amount shall be paidby Borrower on the effective date of such termination.

 

## **3.5          Fees.**

 

(a)           Unused Fee.  In consideration of the RevolvingCommitments of the Lenders hereunder, the Borrower promises to pay to the Agentfor the account of each Lender a fee (the “Unused Fee”) on the UnusedRevolving Committed Amount computed at a per annum rate for each day during theapplicable Unused Fee Calculation Period (hereinafter defined) equal to threeand three-quarters tenths of one percent (0.375%).  The Unused Fee shall commence to accrue onthe Closing Date and shall be due and payable in arrears on the last BusinessDay of each March, June, September and December (and on any date thatthe Revolving Committed Amount is reduced and on the Maturity Date) for theimmediately preceding quarter (or portion thereof) (each such quarter orportion thereof for which the Unused Fee is payable hereunder being hereinreferred to as an “Unused Fee Calculation Period”), beginning with thefirst of such dates to occur after the Closing Date.

 

(b)           Letterof Credit Fee.  In consideration ofthe issuance of Letters of Credit hereunder, the Borrower promises to pay tothe Agent for the account of each Lender a fee (the “Letter of Credit Fee”)on such Lender’s Commitment Percentage of the average daily maximum amountavailable to be drawn under each such Letter of Credit (whether or not suchmaximum amount is then in effect under such Letter of Credit) computed at a perannum rate for each day from the date of issuance to the date of expirationequal to three percent (3.00%).  TheLetter of Credit Fee will be payable quarterly in arrears on the first BusinessDay of each calendar quarter for the immediately preceding calendarquarter (or portion thereof).

 

(c)           IssuingLender Fees.  In addition to theLetter of Credit Fee payable pursuant to clause (b) above, the Borrowerpromises to pay to the Issuing Lender for its own account without sharing bythe other Lenders (i) a fee equal to the greater of (A) twelve and one half onehundredths of one percent (0.125%) and (B) $1,500.00 on each Letter ofCredit issued by the Issuing Lender (such fee to be due upon issuance of suchLetter of Credit and, provided, that to the extent the applicable Letter ofCredit contains “evergreen” provisions, the Borrower shall pay such fee foreach renewal of such Letter of Credit) and (ii) customary charges from time totime of the Issuing 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)           DerivativeExposure Usage Fee.  Inconsideration of the exposure of the Lenders hereunder created by amountsreserved as a portion of the Derivative Exposure Reserve, the Borrower promisesto pay to the Agent for the account of each Lender a fee (the “DerivativeExposure Usage Fee”) on the amount of Availability reserved pursuant toSection 2.3 hereof as a portion of the Derivative Exposure Reserve foreach day during a given Derivative Exposure Fee Period (as defined below).  Such fee shall be computed at a per annumrate equal to three percent (3.00%) applied to the amount of Availabilityreserved on each day of the applicable Derivative Exposure Fee Period (with thetotal fee for a given Derivative Exposure Fee Period equaling the sum of eachsuch day’s calculation).  The DerivativeExposure Usage Fee shall, to the extent any Availability is reserved underSection 2.3 as of the Closing Date, commence to accrue on the Closing Dateand shall be due and payable in arrears on the last Business Day of each March,June, September and December (and on the Maturity Date) for theimmediately preceding quarter (or portion thereof, as applicable), beginningwith the first of such dates to occur after the Closing Date (each such quarteror portion thereof for which the Derivative Exposure Reserve Fee is payablehereunder being herein referred to as an “Derivative Exposure Fee Period”).

 

(e)           OtherFees.  Borrower shall pay to theAgent and BAS the fees required pursuant to the terms of the Fee Letter.

 

## **3.6          Capital Adequacy.**

 

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

 

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(whether or not having the force of law) of any such authority, centralbank or comparable agency, has or would have the effect of reducing the rate ofreturn on such Lender’s capital or assets as a consequence of its commitmentsor obligations hereunder to a level below that which such Lender could haveachieved but for such adoption, effectiveness, change or compliance (takinginto consideration such Lender’s policies with respect to capital adequacy),then, upon notice from such Lender to the Borrower, the Borrower shall beobligated to pay to such Lender such additional amount or amounts as willcompensate such Lender for such reduction (without duplication of any amountreceived by Lender by virtue of the definition of the term “Eurodollar ReserveRequirement”).  Each determination byany such Lender of amounts owing under this Section shall, absent manifesterror, be conclusive and binding on the parties 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 (whichdetermination shall be conclusive) that by reason of circumstances affectingthe relevant market, adequate and reasonable means do not exist forascertaining the Eurodollar Rate for such Interest Period; or

 

(b)           the Required Lenders determine (whichdetermination shall be conclusive) and notify the Agent that the EurodollarRate will not adequately and fairly reflect the cost to the Lenders of fundingEurodollar Loans 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 thisCredit Agreement.

 

## **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).

 

## **3.9          Requirements of 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 deemapplicable any reserve, special deposit, assessment, or similar requirement(other than the Eurodollar Reserve Requirement utilized in the determination ofthe Adjusted Eurodollar Rate) relating to any extensions of credit or otherassets of, or any deposits with or other liabilities or commitments of, suchLender (or its Applicable Lending Office), including the Commitment of suchLender hereunder; or

 

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(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 toincrease the 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 toContinue, or to Convert Base Rate Loans into, Eurodollar Loans shall besuspended pursuant to Section 3.7, 3.8 or 3.9 hereof, such Lender’sEurodollar Loans shall be automatically Converted into Base Rate Loans on thelast day(s) of the then current Interest Period(s) for such Eurodollar Loans(or, in the case of a Conversion, on such earlier date as such Lender mayspecify to the Borrower with a copy to the Agent) and, unless and until suchLender gives notice as provided below that the circumstances specified inSection 3.7, 3.8 or 3.9 hereof that gave rise to such Conversion no longerexist:

 

(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

 

(b)           all Loans that would otherwise bemade or Continued by such Lender as Eurodollar Loans shall be made or Continuedinstead as Base Rate Loans, and all Base Rate Loans of such Lender that wouldotherwise be Converted into Eurodollar Loans shall remain as Base Rate Loans.

 

If such Lender gives notice to the Borrower (with a copy to the Agent)that the circumstances specified in Section 3.7, 3.8 or 3.9 hereof thatgave rise to 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 CreditParty to or for the account of any Lender or the Agent hereunder or under anyother Credit Document shall be made free and clear of and without deduction forany and all present or future taxes, duties, levies, imposts, deductions,charges or withholdings, and all liabilities with respect thereto, excluding,in the case of each Lender and the Agent, taxes imposed on its income, andfranchise taxes imposed on it by the jurisdiction under the laws of which suchLender (or its Applicable Lending Office) or the Agent (as the case may be) isorganized or any political subdivision thereof (all such non-excluded taxes,duties, levies, imposts, deductions, charges, withholdings, and liabilitiesbeing hereinafter

 

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referred to as “Taxes”).  If any Credit Party shall be required by lawto deduct any Taxes from or in respect of any sum payable under this CreditAgreement or any other Credit Document to any Lender or the Agent, (i) thesum payable shall be increased as necessary so that after making all required deductions(including deductions applicable to additional sums payable under thisSection 3.11) such Lender or the Agent receives an amount equal to the sumit would have received had no such deductions been made, (ii) such CreditParty shall make such deductions, (iii) such Credit Party shall pay thefull amount deducted to the relevant taxation authority or other authority inaccordance with applicable law, and (iv) such Credit Party shall furnishto the Agent, at its address referred to in Section 11.1, the original ora certified copy of a receipt evidencing payment thereof.

 

(b)           In addition, the Borrower agrees topay any and all present or future stamp or documentary taxes and any otherexcise or property taxes or charges or similar levies which arise from anypayment made under this Credit Agreement or any other Credit Document or fromthe execution or delivery of, or otherwise with respect to, this CreditAgreement or any other Credit Document (hereinafter referred to as “OtherTaxes”).

 

(c)           The Borrower agrees to indemnify eachLender and the Agent for the full amount of Taxes and Other Taxes (including,without limitation, any Taxes or Other Taxes imposed or asserted by anyjurisdiction on amounts payable under this Section 3.11) paid by suchLender or the Agent (as the case may be) and any liability (includingpenalties, interest, and expenses) arising therefrom or 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.

 

(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 topay additional amounts to or for the account of any Lender pursuant to thisSection 3.11, then such Lender will agree to use reasonable efforts tochange the jurisdiction of its Applicable Lending Office so as to eliminate orreduce any such additional payment which may thereafter accrue if such change,in the judgment of such Lender, is not otherwise disadvantageous to suchLender.

 

(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 shallsurvive the repayment of the Loans, LOC Obligations and other obligations underthe Credit Documents and the termination of the Commitments hereunder.

 

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## **3.12        Compensation.**

 

Upon the request of any Lender, the Borrower shall pay to such Lendersuch amount or amounts as shall be sufficient (in the reasonable opinion ofsuch Lender) to compensate it for any loss, cost, or expense (excluding loss ofanticipated profits) incurred by it as a result of:

 

(a)           any payment, prepayment, orConversion of a Eurodollar Loan for any reason (including, without limitation,the acceleration of the Loans pursuant to Section 9.2) on a date otherthan the last day of the Interest Period for such Loan; or

 

(b)           any failure by the Borrower for anyreason (including, without limitation, the failure of any condition precedentspecified in Section 5 to be satisfied) to borrow, Convert, Continue, orprepay a Eurodollar Loan on the date for such borrowing, Conversion,Continuation, or prepayment specified in the relevant notice of borrowing,prepayment, Continuation, or Conversion under this Credit Agreement.

 

With respect to Eurodollar Loans, such indemnification may include anamount equal to the excess, if any, of (a) the amount of interest whichwould have accrued on the amount so prepaid, or not so borrowed, Converted orContinued, for the period from the date of such prepayment or of such failureto borrow, Convert or Continue to the last day of the applicable InterestPeriod (or, in the case of a failure to borrow, Convert or Continue, theInterest Period that would have commenced on the date of such failure) in eachcase at the applicable rate of interest for such Eurodollar Loans provided forherein over (b) the amount of interest (as reasonably determined by suchLender) which would have accrued to such Lender on such amount by placing suchamount on deposit for a comparable period with leading banks in the interbankEurodollar market.  The covenants of theBorrower set forth in this Section 3.12 shall survive the repayment of theLoans, LOC Obligations and other obligations under the Credit Documents and thetermination of the Commitments hereunder.

 

## **3.13        Pro Rata Treatment.**

 

Except to the extent otherwise provided herein and subject to the termsof the Intercreditor Agreement:

 

(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, each payment of the Letter of Credit Fee, each reduction ofthe 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.

 

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## **3.14        Sharing of Payments.**

 

The Lenders agree among themselves that, in the event that any Lendershall obtain payment in respect of any Loan, LOC Obligation or any otherobligation owing to such Lender under this Credit Agreement through theexercise of a right of setoff, banker’s lien or counterclaim, or pursuant to asecured claim under Section 506 of Title 11 of the United States Codeor other security or interest arising from, or in lieu of, such secured claim,received by such Lender under any applicable bankruptcy, insolvency or othersimilar law or otherwise, or by any other means, in excess of its pro ratashare of such payment as provided for in this Credit Agreement, such Lender(and the other Lenders) shall adhere to the provisions of the IntercreditorAgreement with respect to such payment and any rescission or restorationthereof.  The Borrower agrees that any Lenderpurchasing such a Participation Interest hereunder as a result of any suchpayments 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 Obligation 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 theCollateral Agent, Agent or any other Lender an amount payable by such Lender tothe Agent or such other Lender pursuant to this Credit Agreement on the datewhen such amount is due, such payments shall be made by such Lender togetherwith interest thereon for each date from the date such amount is due until thedate such amount is paid to the Collateral Agent, Agent or such other Lender ata rate per annum equal to the Federal Funds Rate.  If under any applicable bankruptcy, insolvency or other similarlaw, any Lender receives a secured claim in lieu of a setoff to which thisSection 3.14 applies, such Lender shall, to the extent practicable,exercise its rights in respect of such secured claim in a manner consistentwith the rights of the Lenders under this Section 3.14 and the SecuredParties under the Credit Agreement to share in the benefits of any recovery onsuch secured claim.

 

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

 

(a)           Generally. Notwithstandinganything to the contrary contained herein, all payments made by any CreditParty hereunder shall be paid to the Collateral Agent for allocation inaccordance with the Intercreditor Agreement. Except as otherwise specificallyprovided herein, all payments hereunder shall be made to the Collateral Agent(for the benefit of the Agent and Lenders) in Dollars in immediately availablefunds, without setoff, deduction, counterclaim or withholding of any kind, atthe Collateral Agent’s office specified in the Intercreditor Agreement notlater than 2:00 P.M. (Charlotte, North Carolina time) on the date whendue.  Payments received after such timeshall be deemed to have been received on the next succeeding Business Day.    The Agent may (but shall not be obligatedto) debit the amount of any such payment which is not made by such time to anyordinary deposit account of the Borrower or any other Credit Party maintainedwith the Agent (with notice to the Borrower or such other Credit Party). TheAgent shall distribute payments received from the Collateral Agent under theIntercreditor Agreement in accordance with the terms of the IntercreditorAgreement.  The Agent will distributesuch payments to the Lenders entitled thereto, if any such payment is receivedprior to 2:00 P.M.  (Charlotte,North Carolina time) on a Business Day in like funds as received prior to theend of such Business Day and otherwise the Agent will distribute such paymentto such Lenders on the next succeeding Business Day.  Whenever any payment hereunder shall be stated to be due on a daywhich is not a Business Day, the due date thereof shall be extended to the nextsucceeding Business Day (subject to accrual of interest and Fees for the periodof such extension), except that in the case of Eurodollar Loans, if theextension would cause the payment to be made in the next following calendarmonth, then such payment shall instead be made on the next preceding BusinessDay.  Except as expressly providedotherwise herein, all computations of interest and fees shall be made on thebasis of actual number of days elapsed over a year of 360 days.  Interest shall accrue from and include thedate of borrowing, but exclude the date of payment.

 

(b)           Allocation of Payments After Eventof Default. After the occurrence and during the continuance of an Event ofDefault, all amounts collected or received by the Agent or any Lender onaccount of the Credit Party Obligations shall continue to be paid to theCollateral Agent and all payments received by Agent from the Collateral Agentduring such periods shall continue to be paid over or delivered in accordancewith the Intercreditor Agreement; provided that, if the IntercreditorAgreement has been terminated, such amounts shall be applied by the Agent inthe following order:

 

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FIRST, to thepayment of all reasonable out-of-pocket costs and expenses (including withoutlimitation reasonable attorneys’ fees) of the Agent in connection withenforcing the rights of the Lenders under the Credit Documents;

 

SECOND, topayment of any fees owed to the Agent;

 

THIRD, to thepayment of all of the Credit Party Obligations consisting of accrued fees andinterest;

 

FOURTH, to thepayment of the outstanding principal amount of the Credit Party Obligations(including the payment or cash collateralization of the outstanding LOCObligations and Derivative Exposure Reserves);

 

FIFTH, to thepayment of all reasonable out-of-pocket costs and expenses (including withoutlimitation, reasonable attorneys’ fees) of each of the Lenders in connectionwith enforcing its rights under the Credit Documents or otherwise with respectto the Credit Party Obligations owing to such Lender;

 

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

 

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

 

In carrying out the foregoing, amountsreceived shall be applied in the numerical order provided until exhausted priorto application to the next succeeding category.  In allocating payments received from the Collateral Agent (or, inthe event the Intercreditor Agreement is terminated, the Credit Parties), theAgent shall pay to each of the Lenders an amount equal to such Lender’s prorata share of the total amount of the applicable obligations with respect towhich such payment is made.

 

## **3.16        Evidence of Debt.**

 

(a)           Each Lender shall maintain an accountor accounts evidencing each Loan made by such Lender to the Borrower from timeto time, including the amounts of principal and interest payable and paid tosuch Lender from time to time under this Credit Agreement.  Each Lender will make reasonable efforts tomaintain the accuracy of its account or accounts and to promptly update itsaccount or accounts from time to time, as necessary.

 

(b)           The Agent shall maintain the Registerpursuant to Section 11.3(c), and a subaccount for each Lender, in whichRegister and subaccounts (taken together) shall be recorded (i) the amount,type and Interest Period of each such Loan hereunder, (ii) the amount ofany principal or interest due and payable or to become due and payable to eachLender hereunder and (iii) the amount of any sum received by the Agenthereunder from or for the account of any Credit Party and each Lender’s sharethereof.  The Agent will make reasonableefforts to maintain the accuracy of the subaccounts referred to in thepreceding sentence and to promptly update such subaccounts from time to time,as necessary.

 

(c)           The entries made in the accounts,Register and subaccounts maintained pursuant to clause (b) of thisSection 3.16 (and, if consistent with the entries of the Agent,clause (a)) shall be prima facie evidence of the existence and amounts of theobligations of the Credit Parties therein recorded; provided, however,that the failure of any Lender or the Agent to maintain any such account, suchRegister or such subaccount, as applicable, or any error therein, shall not inany manner affect the obligation of the Credit Parties to repay the CreditParty Obligations owing to such Lender.

 

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## **3.17        Usury.**

 

In no event shall the amount of interest dueor payable on the Loans or other obligations evidenced hereby or under theother 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 Regarding Interestand Charges.**

 

The parties hereto hereby agree and stipulatethat the only charge imposed upon the Borrower for the use of money inconnection with this Credit Agreement is and shall be the interest specificallydescribed 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 reimbursementfor costs and expenses paid by the Agent or any Lender Party to third partiesor for 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 the Borrowermonthly with a statement of Loans, Letter of Credit, accrued interest and Fees,charges and payments made pursuant to this Credit Agreement and the otherCredit Documents, and such account rendered by the Agent shall be prima facieevidence 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 anytime becomes a Defaulting Lender, then, in addition to the rights and remediesthat may be available to the Agent or the Borrower under this Credit Agreementor Applicable Law, such Defaulting Lender’s right to participate in theadministration of the Loans, this Credit Agreement and the other CreditDocuments, including without limitation, any right to vote in respect of, toconsent to or to direct any action or inaction of the Agent or to be taken intoaccount in the calculation of the Required Lenders or the Required RevolvingLenders, shall be suspended during the pendency of such failure or refusal.  Upon a Lender Party becoming a DefaultingLender, the Agent shall give prompt notice to each other Lender thereof.  If a Lender Party is a Defaulting Lenderbecause it has failed to make timely payment to the Agent of any amount requiredto be paid to the Agent hereunder (without giving effect to any notice or cureperiods), in addition to other rights and remedies which the Agent or theBorrower may have under the immediately preceding provisions or otherwise, theAgent shall be entitled (i) to collect interest from such Defaulting Lender onsuch delinquent payment for the period from the date on which the payment wasdue until the date on which the payment is made at the Federal Funds Rate, (ii)to withhold or setoff and to apply in satisfaction of the defaulted payment andany related interest, any amounts otherwise payable to such Defaulting Lenderunder this Credit Agreement or any other Credit Document and (iii) to bring anaction or suit against such Defaulting Lender in a court of competentjurisdiction to recover the defaulted amount and any related interest.  Any amounts received by the Agent in respectof a Defaulting Lender’s Loans shall not be paid to such Defaulting Lender andshall be held uninvested by the Agent and either applied against the purchaseprice of such Loans under the following subsection (b) or paid to suchDefaulting Lender upon the Defaulting Lender’s curing of its default.

 

(b)           Purchaseof Defaulting Lender’s Commitment. Any Lender Party who is not a Defaulting Lender shall have the right,but not the obligation, in its sole discretion, to acquire all of a DefaultingLender’s Revolving

 

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Commitment. Any Lender Party desiring to exercise such right shall give writtennotice thereof to the Agent no sooner than two (2) Business Days and notlater than ten (10) Business Days after such Defaulting Lender became aDefaulting Lender.  If more than oneLender Party exercises such right, each such Lender Party shall have the rightto acquire an amount of such Defaulting Lender’s Revolving Commitment inproportion to the Revolving Commitments of the other Lender Parties exercisingsuch right.  If after such 10th BusinessDay, the Lender Parties have not elected to purchase all of the RevolvingCommitment of such Defaulting Lender, then any Eligible Assignee may purchasesuch Revolving Commitment.  None of theAgent, the Sole Lead Arranger or any of the Lender Parties shall have anyobligation whatsoever to initiate any such replacement or to assist in findingan Eligible Assignee.  Upon any suchpurchase, the Defaulting Lender’s interest in the Loans and its rightshereunder (but not its liability in respect thereof or under the CreditDocuments or this Credit Agreement to the extent the same relate to the periodprior to the effective date of the purchase) shall terminate on the date ofpurchase, and the Defaulting Lender shall promptly execute all documentsreasonably requested to surrender and transfer such interest to the purchaserthereof, including an appropriate Assignment and Assumption Agreement and,notwithstanding Section 11.3, shall pay to the Agent an assignment fee inthe amount of $5,000.  The purchaseprice for the Revolving Commitment of a Defaulting Lender shall be equal to theamount of the principal balance of the Loans outstanding and owed by theBorrower to the Defaulting Lender. Prior to payment of such purchase price to a Defaulting Lender, theAgent shall apply against such purchase price any amounts retained by the Agentpursuant to the last sentence of the immediately precedingsubsection (a).  The DefaultingLender shall be entitled to receive amounts owed to it by the Borrower underthe Credit Documents which accrued prior to the date of the default by theDefaulting Lender, to the extent the same are received by the Agent from or onbehalf of the Borrower.  There shall beno recourse against any Lender Party or the Agent for the payment of such sumsexcept to the extent of the receipt of payments from any other party or inrespect of the Loans.  If, prior to aLender Party’s acquisition of a Defaulting Lender’s Revolving Commitmentpursuant to this subsection, such Defaulting Lender shall cure the event orcondition which caused it to become a Defaulting Lender and shall have paid allamounts owing by it hereunder as a result thereof, then such Lender Party shallno longer have the right to acquire such Defaulting Lender’s RevolvingCommitment.

 

## **3.21        Assumptions ConcerningFunding of Eurodollar Loans.**

 

Calculation of all amounts payable to aLender Party under this Article III shall be made as though such LenderParty had actually funded Eurodollar Loans through the purchase of deposits inthe relevant market bearing interest at the rate applicable to such EurodollarLoans in an amount equal to the amount of the Eurodollar Loans and having amaturity comparable to the relevant Interest Period; provided, however,that each Lender Party may fund each of its Eurodollar Loans in any manner itsees fit and the foregoing assumption shall be used only for calculation ofamounts payable under this Article III.

 

## **3.22        Release of HCI.**

 

Notwithstanding anything contained herein tothe contrary, the Agent shall release HCI as a Borrower and Credit Partyhereunder and under each of the Credit Documents, (a) upon receipt by the Agentof a request for release of HCI from the Borrower and all supportingdocumentation, materials and information required by Agent in connectiontherewith; (b) upon receipt by Agent of evidence (satisfactory to Agent in its reasonablediscretion) that all Property owned by HCI has been transferred to JV1, thatHCI has been or will be, immediately upon receipt of an acknowledgement ofrelease by Agent, merged into JV1 or otherwise dissolved in a manner acceptableto the Agent, in its reasonable discretion and that the entities that wereformerly Wholly Owned Subsidiaries of HCI are or will be, immediately uponreceipt of an acknowledgement of release by Agent, Wholly Owned Subsidiaries ofJV1 and Credit Parties hereunder and (c) to the extent no Default or Event ofDefault exists as of the date of such requested release or is otherwise likelyto occur as a result of the granting of such release.  Upon satisfaction of the above-noted conditions, Agent shalldeliver to Borrower written confirmation of the release of HCI as a Borrowerand Credit Party hereunder and under the other Credit Documents.  All references contained herein to HCI andall portions of any representations, warranties and covenants contained in anyCredit Document and directly related to HCI or its ownership structure (but notportions of such representation, warranties and covenants related, in anymanner, to any other Credit Party or Person) shall, immediately upon thedelivery by Agent to the Borrower of the written confirmation of releasepursuant to this Section 3.22, be deemed to be deleted from such CreditDocuments and to be of no further force or effect; provided, however, thatBorrower’s delivery of a request for release with respect to HCI shall be deemedto be an ongoing representation, warranty and covenant that HCI has been orwill be,

 

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immediately upon the receipt of Agent’sconfirmation of release, merged into JV1 or otherwise dissolved in the mannershown in the materials and information provided to Agent in connectiontherewith and an ongoing representation and warranty that such materials andinformation are true and correct in all material respects.  Each of the Lenders hereby consents to therelease of HCI upon the terms and conditions set forth in this Section 3.22.

 

# **ARTICLE**IV

# ** **

# **GUARANTY**

 

## **4.1          TheGuaranty.**

 

Each of the Guarantors hereby jointly and severally guarantees to eachLender, each Affiliate of a Lender that enters into a Hedging Agreement, andthe Agent as hereinafter provided, as primary obligor and not as surety, theprompt payment of the Credit Party Obligations in full when due (whether atstated maturity, as a mandatory prepayment, by acceleration, as a mandatorycash collateralization or otherwise) strictly in accordance with the termsthereof.  The Guarantors hereby furtheragree that if any of the Credit Party Obligations are not paid in full when due(whether at stated maturity, as a mandatory prepayment, by acceleration, as amandatory cash collateralization or otherwise), the Guarantors will, jointlyand severally, promptly pay the same, without any demand or notice whatsoever,and that in the case of any extension of time of payment or renewal of any ofthe Credit 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 to the contrary contained herein or inany other of the Credit Documents or Hedging Agreements, the obligations ofeach Guarantor under this Credit Agreement and the other Credit Documents shallbe limited to an aggregate amount equal to the largest amount that would notrender such obligations subject to avoidance under Section 548 of theBankruptcy Code or any comparable provisions of any applicable state law.

 

## **4.2          Obligations Unconditional.**

 

The obligations of the Guarantors under Section 4.1 are joint andseveral, absolute and unconditional, irrespective of the value, genuineness,validity, regularity or enforceability of any of the Credit Documents orHedging Agreements, or any other agreement or instrument referred to therein,or any substitution, release, impairment or exchange of any other guarantee ofor security for any of the Credit Party Obligations, and, to the fullest extentpermitted by applicable law, irrespective of any other circumstance whatsoeverwhich might otherwise constitute a legal or equitable discharge or defense of asurety or guarantor, it being the intent of this Section 4.2 that theobligations of the Guarantors hereunder shall be absolute and unconditionalunder any and all circumstances.  EachGuarantor agrees that such Guarantor shall have no right of subrogation,indemnity, reimbursement or contribution against the Borrower or any otherGuarantor for amounts paid under this Section 4 until such time as theCredit Party Obligations have been Fully Satisfied.  Without limiting the generality of the foregoing, it is agreedthat, to the fullest extent permitted by law, the occurrence of any one or moreof the following shall not alter or impair the liability of any Guarantorhereunder which shall remain absolute and unconditional as described above:

 

(a)           at any time or from time to time,without notice to any Guarantor, the time for any performance of or compliancewith any of the Credit Party Obligations shall be extended, or such performanceor compliance shall be waived;

 

(b)           any of the acts mentioned in any ofthe provisions of any of the Credit Documents, any Hedging Agreement betweenany Consolidated Party and any Lender, or any Affiliate of a Lender, or anyother agreement or instrument referred to in the Credit Documents or suchHedging Agreements shall be done or omitted;

 

(c)           the maturity of any of the CreditParty Obligations shall be accelerated, or any of the Credit Party Obligationsshall be modified, supplemented or amended in any respect, or any right underany of the Credit Documents, any Hedging Agreement between any ConsolidatedParty and any Lender, or any Affiliate of a Lender, or any other agreement orinstrument referred to in the Credit Documents or such Hedging

 

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Agreements shall be waived or any otherguarantee of any of the Credit Party Obligations or any security therefor shallbe released, impaired or exchanged in 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 the Credit PartyObligations shall fail to attach or be perfected; or

 

(e)           any of the Credit Party Obligationsshall be determined to be void or voidable (including, without limitation, forthe benefit of any creditor of any Guarantor) or shall be subordinated to theclaims of any Person (including, without limitation, any creditor of anyGuarantor).

 

With respect to its obligations hereunder, each Guarantor herebyexpressly waives diligence, presentment, demand of payment, protest and allnotices whatsoever, and any requirement that the Agent or any Lender exhaustany right, power or remedy or proceed against any Person under any of theCredit Documents, any Hedging Agreement between any Consolidated Party and anyLender, or any Affiliate of a Lender, or any other agreement or instrumentreferred to in the Credit Documents or such Hedging Agreements, or against anyother Person under any other guarantee of, or security for, any of the CreditParty Obligations.

 

## **4.3          Reinstatement.**

 

The obligations of the Guarantors under this Section 4 shall beautomatically reinstated if and to the extent that for any reason any paymentby or on behalf of any Person in respect of the Credit Party Obligations is rescindedor must be otherwise restored by any holder of any of the Credit PartyObligations, whether as a result of any proceedings in bankruptcy orreorganization or otherwise, and each Guarantor agrees that it will indemnifythe Agent and each Lender on demand for all reasonable costs and expenses(including, without limitation, fees and expenses of counsel) incurred by theAgent or such Lender in connection with such rescission or restoration,including any such costs and expenses incurred in defending against any claimalleging that such payment constituted a preference, fraudulent transfer orsimilar payment under any bankruptcy, insolvency or similar law.

 

## **4.4          Certain Additional Waivers.**

 

Without limiting the generality of the provisions of this Section 4,each Guarantor 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.

 

## **4.5          Remedies.**

 

The Guarantors agree that, to the fullest extent permitted by law, asbetween the Guarantors, on the one hand, and the Agent and the Lenders, on theother hand, the Credit Party Obligations may be declared to be forthwith dueand payable as provided in Section 9.2 (and shall be deemed to have becomeautomatically due and payable in the circumstances provided in saidSection 9.2) for purposes of Section 4.1 notwithstanding any stay,injunction or other prohibition preventing such declaration (or preventing theCredit Party Obligations from becoming automatically due and payable) asagainst any other Person and that, in the event of such declaration (or theCredit Party Obligations being deemed to have become automatically due andpayable), the Credit Party Obligations (whether or not due and payable by anyother Person) shall forthwith become due and payable by the Guarantors forpurposes of Section 4.1.

 

## **4.6          Rights of Contribution.**

 

The Guarantors hereby agree as among themselves that, if any Guarantorshall make an Excess Payment (as defined below), such Guarantor shall have aright of contribution from each other Guarantor in an amount equal to suchother Guarantor’s Contribution Share (as defined below) of such ExcessPayment.  The payment obligations of anyGuarantor under this Section 4.6 shall be subordinate and subject in rightof payment 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 otherGuarantor until 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 in

 

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excess 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 debtsand liabilities (including contingent, subordinated, unmatured, and unliquidatedliabilities, but excluding the Credit Party Obligations) of the Credit Parties;provided, however, that, for purposes of calculating the Pro RataShares of the Guarantors in respect of any payment of Credit Party Obligations,any Guarantor that became a Guarantor subsequent to the date of any suchpayment shall be deemed to have been a Guarantor on the date of such paymentand the financial information for such Guarantor as of the date such Guarantorbecame a Guarantor shall be utilized for such Guarantor in connection with suchpayment; and (c) ”Contribution Share” shall mean, for any Guarantorin respect of any Excess Payment made by any other Guarantor, the ratio(expressed as a percentage) as of the date of such Excess Payment of(i) the amount by which the aggregate present fair salable value of all ofits assets and properties exceeds the amount of all debts and liabilities ofsuch Guarantor (including contingent, subordinated, unmatured, and unliquidatedliabilities, but excluding the obligations of such Guarantor hereunder) to(ii) the amount by which the aggregate present fair salable value of allassets and other properties of the Credit Parties other than the maker of suchExcess Payment 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; Continuing Guarantee.**

 

The guarantee in this Section 4 is a guaranty of payment and notof collection, is a continuing guarantee, and shall apply to all Credit PartyObligations whenever arising.

 

 

# **ARTICLE V**

# ** **

# **CONDITIONS**

 

 

## **5.1          Closing Conditions.**

 

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 Credit Documents.  Receipt by the Agent of duly executed copiesof:  (i) this Credit Agreement,(ii) the Notes, (iii) the Security Documents; (iv) the IntercreditorAgreement and (v) all other Credit Documents.

 

(b)           Corporate Documents.  Receipt by the Agent of the following:

 

(i)            Charter Documents.  Copies of the articles or certificates ofincorporation or other charter documents of each Credit Party certified to betrue and complete as of a recent date by the

 

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appropriate Governmental Authority of the stateor other jurisdiction of its incorporation and certified by a secretary orassistant secretary of such Credit Party to be true and correct as of theClosing 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)          Good Standing.  Copies of (A) certificates of goodstanding, existence or its equivalent with respect to each Credit Partycertified as of a recent date by the appropriate Governmental Authorities ofthe state or other jurisdiction of incorporation and each other jurisdiction inwhich the failure to so qualify and be in good standing could have a MaterialAdverse Effect and (B) to the extent available, a certificate indicatingpayment of all corporate or comparable franchise taxes certified as of a recentdate by the appropriate governmental taxing 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)          REIT Status.  Evidence, satisfactory to the Agent, thatthe USRP REIT qualifies as a REIT, that each of its Subsidiaries that arecorporations are Qualified REIT Subsidiaries and that the execution andperformance by the Credit Parties under the Credit Documents shall not affectsuch status.

 

(vii)         Bankruptcy Remote Borrowing EntityStatus.  Evidence, satisfactory tothe Agent, that the General SPE qualifies as a Bankruptcy Remote BorrowingEntity and that the execution and performance by the Credit Parties under theCredit Documents shall not affect such status.

 

(c)           Opinions of Counsel.  The Agent shall have received, in each casedated as of the Closing Date and in form and substance reasonably satisfactoryto the Agent:

 

(i)            a legal opinion of Richard Wilensky,general counsel for the Credit Parties; and

 

(ii)           a legal opinion of special localcounsel for each Credit Party not organized in the State of Delaware.

 

(d)           Officer’s Certificates.  The Agent shall have received a certificateor certificates executed by an Executive Officer of the Borrower as of theClosing Date, in form and substance satisfactory to the Agent, stating that(A) each Credit Party is in compliance with all existing financialobligations, (B) all governmental, shareholder and third party consentsand approvals, if any, with respect to the Credit Documents and thetransactions contemplated thereby have been obtained, (C) no action, suit,investigation or proceeding is pending or threatened in any court or before anyarbitrator or governmental instrumentality that purports to affect any CreditParty or any transaction contemplated by the Credit Documents, if such action,suit, investigation or proceeding could have a Material Adverse Effect, and(D) immediately after giving effect to the Transaction, (1) noDefault or Event of Default exists, (2) all representations and warrantiescontained herein and in the other Credit Documents are true and correct in allmaterial respects and (3) on the basis of income statement items andcapital expenditures for the 12-month period ending on the last day of the mostrecently ended calendar month prior to the Closing Date and balance sheet itemsas of the Closing Date after giving effect to the Credit Documents, the CreditParties are in pro forma compliance with each of the Financial Covenants.

 

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(e)           Solvency Certificate.  The Agent shall have received a certificateexecuted by an Executive Officer of the Borrower as of the Closing Date, inform and substance satisfactory to the Agent, regarding the Solvency of each ofthe Credit Parties.

 

(f)            Fees and Expenses.  Payment by the Credit Parties to the Lendersand the Agent of all fees and expenses relating to the Credit Facility whichare due and payable on the Closing Date, including, without limitation, thepayment by Borrower to the Agent and BAS those fees specified in the Fee Letterand all fees and expenses of Moore & Van Allen, PLLC whether reflected onpreviously issued invoices or 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 September 30, 2003; (ii) pro formacovenant calculations 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)           OpeningBorrowing Base Certificate and Delinquency Report.  Receipt by the Agent of a Borrowing BaseCertificate containing the Borrower’s most recently collected information withrespect to the Borrowing Base Assets (but, in any event, with respect toinformation that is not more than 45 days old as of the Closing Date),substantially in the form of Exhibit 7.1(d) and certified by anExecutive Officer of the Borrower to be true and correct and a DelinquencyReport dated as of the Closing Date and certified by an Executive Officer ofthe Borrower to be true and correct as of the Closing Date.

 

(i)            Evidenceof Termination. Evidence, acceptable to the Agent in its reasonablediscretion, indicating that the Replaced Credit Agreement has been terminatedas of the Closing Date.

 

(j)            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          Conditionsto all Extensions of Credit.**

 

The obligations of each Lender to make, convert or extend any Loan andof the Issuing Lender to issue or extend any Letter of Credit (including theinitial Loans and the initial Letter of Credit) are subject to satisfaction ofthe following conditions in addition to satisfaction on the Closing Date of theconditions set forth in Section 5.1:

 

(a)           The Borrower shall have delivered(i) in the case of any Loan, an appropriate Notice of Borrowing, Noticeof  Continuation or Notice of Conversionor (ii) in the case of any Letter of Credit, the Issuing Lender shall havereceived an appropriate request for issuance in accordance with the provisionsof Section 2.2(b);

 

(b)           The representations and warrantiesset forth in Section 6 shall, subject to the limitations set forththerein, be true and correct in all material respects as of such date (exceptfor those which expressly relate to an earlier date);

 

(c)           There shall not have been commencedagainst any Consolidated Party an involuntary case under any applicablebankruptcy, insolvency or other similar law now or hereafter in effect, or anycase, proceeding or other action for the appointment of a receiver, liquidator,assignee, custodian, trustee, sequestrator (or similar official) of such Personor for any substantial part of its Property or for the winding up orliquidation of its affairs, and such involuntary case or other case, proceedingor other action shall remain undismissed;

 

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(d)           No Default or Event of Default shallexist and be continuing either prior to or after giving effect thereto; and

 

(e)           Immediately after giving effect tothe making of such Loan (and the application of the proceeds thereof), theestablishment of a Derivative Exposure Reserve or to the issuance of suchLetter 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 RevolvingCommitted Amount, (ii) the sum of the aggregate outstanding principal amount ofRevolving Loans plus LOC Obligations plus the AggregateDerivative Exposure Amount, plus the then-outstanding Term LoanObligations shall not exceed the Borrowing Base, (iii) the LOC Obligationsshall not exceed the LOC Committed Amount and (iv) the Aggregate DerivativeExposure Amount shall not exceed Reserve Limit.

 

The delivery of each Notice of Borrowing and each request for a Letterof Credit pursuant to Section 2.2(b) shall constitute a representation andwarranty by the Credit Parties of the correctness of the matters specified insubsections (b), (c), (d) and (e) above.

 

 

# **ARTICLE VI**

# ** **

# **REPRESENTATIONS**AND WARRANTIES

 

The Credit Parties hereby represent to the Agent and each Lender that:

 

## **6.1          Financial Condition.**

 

(a)           The audited consolidated balancesheets and income statements of the Consolidated Parties for the fiscal yearsended December 31, 1999, December 31, 2000, December 31,2001 and December 31, 2002 (including the notes thereto) (i) have beenaudited by Deloitte & Touche, (ii) have been prepared in accordancewith GAAP consistently applied throughout the periods covered thereby and(iii) 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.  The unaudited interimbalance sheets of the Consolidated Parties as at the end of, and the relatedunaudited interim statements of earnings and of cash flows for, each fiscalmonth and quarterly period ended after December 31, 2002 and prior tothe Closing Date (i) have been prepared in accordance with GAAPconsistently 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, 2002 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 financial statements orin the notes thereto and has not otherwise been disclosed in writing to theLenders on or prior to the Closing Date. As of the Closing Date, the Borrower and its Subsidiaries have nomaterial liabilities (contingent or otherwise) that are not reflected in theforegoing financial statements or in the notes thereto.

 

(b)           The financial statements and otherinformation delivered pursuant to Section 5.1(g) have been prepared inaccordance with GAAP (except as may otherwise be permitted underSection 1.3) and present fairly (on the basis disclosed in the footnotesto such financial statements) the consolidated financial condition, results ofoperations and cash flows of the General Partner and the Consolidated Partiesas of such date and for such periods.

 

## **6.2          NoMaterial Change.**

 

Since December 31, 2002, there has been no development or eventrelating to or affecting a Consolidated Party which has had or could have aMaterial Adverse Effect.

 

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

 

Each of the Consolidated Parties (a) is duly organized, validlyexisting and is in good standing under the laws of the jurisdiction of itsincorporation or organization, (b) has the corporate or other necessarypower and authority, and the legal right, to own and operate its property, tolease the property it operates as lessee and to conduct the business in whichit is currently engaged and (c) is duly qualified as a foreign entity andin good standing under the laws of each jurisdiction where its ownership, leaseor operation 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; Enforceable Obligations.**

 

Each of the Credit Parties has the corporate or other necessary powerand authority, and the legal right, to make, deliver and perform the CreditDocuments to which it is a party, and in the case of the Borrower, to obtainextensions of credit hereunder, and has taken all necessary corporate or othernecessary action to authorize the borrowings and other extensions of credit onthe terms and conditions of this Credit Agreement and to authorize theexecution, delivery and performance of the Credit Documents to which it is aparty.  No consent or authorization of,filing with, notice to or other similar act by or in respect of, anyGovernmental Authority or any other Person is required to be obtained or madeby or on behalf of any Credit Party in connection with the borrowings or otherextensions of credit hereunder or with the execution, delivery, performance,validity or enforceability of the Credit Documents to which such Credit Partyis a party, except for consents, authorizations, notices and filingsdescribed in Schedule 6.4, all of which have been obtained or madeor have the status described in such Schedule 6.4.  This Credit Agreement has been, and eachother Credit Document to which any Credit Party is a party will be, dulyexecuted and delivered on behalf of the Credit Parties.  This Credit Agreement constitutes, and eachother Credit Document to which any Credit Party is a party when executed anddelivered will constitute, a legal, valid and binding obligation of such CreditParty enforceable against such party in accordance with its terms, except asenforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws affecting the enforcement ofcreditors’ rights generally and by general equitable principles (whetherenforcement is sought by proceedings in equity or at law).

 

## **6.5          NoConflicts.**

 

Neither the execution and delivery of the Credit Documents, nor theconsummation of the transactions contemplated therein, nor performance of andcompliance with the terms and provisions thereof by such Credit Party will(a) violate or conflict with any provision of its articles or certificateof incorporation or bylaws or other organizational or governing documents ofsuch Person, (b) violate, contravene or materially conflict with anyRequirement of Law or any other law, regulation (including, without limitation,Regulation U or Regulation X), order, writ, judgment, injunction,decree or permit applicable to it, (c) violate, contravene or conflictwith contractual provisions of, or cause an event of default under, anyindenture, loan agreement, mortgage, deed of trust, contract or other agreementor instrument to which it is a party or by which it may be bound, the violationof which could have a Material Adverse Effect, or (d) result in or requirethe creation of any Lien (other than those contemplated in or created inconnection with the Credit Documents) upon or with respect to its properties.

 

## **6.6          No Default.**

 

No Consolidated Party is in default in any respect under any contract,lease, loan agreement, indenture, mortgage, security agreement or otheragreement or obligation to which it is a party or by which any of itsproperties is bound which default could have a Material Adverse Effect.  No Default or Event of Default has occurredor exists except as previously disclosed in writing to the Lenders.

 

## **6.7          Ownership.**

 

Each Consolidated Party is the owner of, and has good and marketabletitle to, all of its respective assets and none of such assets is subject toany Lien other than Permitted Liens and Liens granted in connection with anyTerm Securitization specifically contemplated and approved pursuant to theterms hereof.

 

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## **6.8          Indebtedness.**

 

Except as otherwise permitted under Section 8.1, the ConsolidatedParties have no Indebtedness.

 

## **6.9          Litigation.**

 

Except as disclosed in Schedule 6.9, there does not existany pending or threatened action, suit or legal, equitable, arbitration oradministrative proceeding against any Consolidated Party which might have aMaterial Adverse Effect.

 

## **6.10        Taxes.**

 

Each Consolidated Party has filed, or caused to be filed, all materialtax returns (Federal, state, local and foreign) required to be filed and paid(a) all amounts of taxes shown thereon to be due (including interest andpenalties) and (b) all other taxes, fees, assessments and othergovernmental charges (including mortgage recording taxes, documentary stamptaxes and intangibles taxes) owing by it, except for such taxes (i) whichare not yet delinquent or (ii) that are being contested in good faith andby proper proceedings, and against which adequate reserves are being maintainedin accordance with GAAP.  No CreditParty is aware of any proposed federal or state income tax assessments againstit or any other Consolidated Party.  NoCredit Party is aware of any other proposed tax assessments against it or anyother Consolidated Party that could have a Material Adverse Effect.

 

## **6.11        Compliance with Law.**

 

Each Consolidated Party is in compliance with all Requirements of Lawand all other laws, rules, regulations, orders and decrees (including withoutlimitation Environmental Laws) applicable to it, or to its properties, unlesssuch failure to comply could not have a Material Adverse Effect.  No currently-existing Requirement of Lawcould cause a Material Adverse Effect.

 

## **6.12        ERISA.**

 

Except as disclosed and described in Schedule 6.12 attachedhereto:

 

(a)           During the five-year period prior tothe date on which this representation is made or deemed made: (i) no ERISAEvent has occurred, and, to the best knowledge of the Executive Officers of theCredit Parties, no event or condition has occurred or exists as a result ofwhich any ERISA Event could reasonably be expected to occur, with respect toany Plan; (ii) no “accumulated funding deficiency,” as such term isdefined in Section 302 of ERISA and Section 412 of the Code, whetheror not waived, has occurred with respect to any Plan; (iii) each Plan hasbeen maintained, operated, and funded in compliance with its own terms and inmaterial compliance with the provisions of ERISA, the Code, and any otherapplicable Federal or state laws; and (iv) no lien in favor of the PBGC ora Plan has arisen or is reasonably likely to arise on account of any Plan.

 

(b)           The actuarial present value of all“benefit liabilities” (as defined in Section 4001(a)(16) of ERISA),whether or not vested, under each Single Employer Plan, as of the last annualvaluation date prior to the date on which this representation is made or deemedmade (determined, in each case, in accordance with Financial AccountingStandards Board Statement 87, utilizing the actuarial assumptions used in suchPlan’s most recent actuarial valuation report), did not exceed as of suchvaluation date the fair market value of the assets of such Plan.

 

(c)           Neither any Consolidated Party norany ERISA Affiliate has incurred, or, to the best knowledge of the ExecutiveOfficers of the Credit Parties, could be reasonably expected to incur, anywithdrawal liability under ERISA to any Multiemployer Plan or Multiple EmployerPlan.  Neither any Consolidated Partynor any ERISA Affiliate would become subject to any withdrawal liability underERISA if any Consolidated Party or any ERISA Affiliate were to withdrawcompletely from all Multiemployer Plans and Multiple Employer Plans as of thevaluation date most closely preceding the date on which this representation ismade or deemed made.  Neither any ConsolidatedParty nor any ERISA Affiliate has received any notification that anyMultiemployer Plan is in reorganization (within the meaning ofSection 4241 of ERISA),

 

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is insolvent (within the meaning ofSection 4245 of ERISA), or has been terminated (within the meaning ofTitle IV of ERISA), and no Multiemployer Plan is, to the best knowledge ofthe Executive Officers of the Credit Parties, reasonably expected to be inreorganization, insolvent, or terminated.

 

(d)           No prohibited transaction (within themeaning of Section 406 of ERISA or Section 4975 of the Code) orbreach of fiduciary responsibility has occurred with respect to a Plan whichhas subjected or may subject any Consolidated Party or any ERISA Affiliate toany liability 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.

 

(e)           Neither any Consolidated Party norany ERISA Affiliates has any material liability with respect to “expectedpost-retirement benefit obligations” within the meaning of the FinancialAccounting Standards Board Statement 106. Each Plan which is a welfare plan (as defined in Section 3(1) ofERISA) to which Sections 601-609 of ERISA and Section 4980B of theCode apply has been administered in compliance in all material respects of suchsections.

 

(f)            Neither the execution and deliveryof this Credit Agreement nor the consummation of the financing transactionscontemplated thereunder will involve any transaction which is subject to theprohibitions of Sections 404, 406 or 407 of ERISA or in connection withwhich a tax could be imposed pursuant to Section 4975 of the Code.  The representation by the Credit Parties inthe preceding sentence is made in reliance upon and subject to the accuracy ofthe Lenders’ representation in Section 11.15 with respect to their sourceof funds and is subject, in the event that the source of the funds used by theLenders in connection with this transaction is an insurance company’s generalasset account, to the application of Prohibited Transaction Class Exemption95-60, 60 Fed.  Reg.  35,925 (1995), compliance with theregulations issued under Section 401(c)(1)(A) of ERISA, or the issuance ofany other prohibited transaction exemption or similar relief, to the effectthat assets in an insurance company’s general asset account do not constituteassets of an “employee benefit plan” within the meaning of Section 3(3) ofERISA or a “plan” within the meaning of Section 4975(e)(1) of the Code.

 

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

 

The corporate capital and ownership structure of the ConsolidatedParties as of the Closing Date after giving effect to the Credit Documentsexecuted as of the date 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 (except for employee stock optionsrequired to be disclosed in regularly-filed publicly accessibledocuments).  The outstanding CapitalStock of all such Persons is validly issued, fully paid and non-assessable andis owned by the Consolidated Parties, directly or indirectly, in the manner setforth on Schedule 6.13B, free and clear of all Liens (other thanthose arising under or contemplated in connection with the CreditDocuments).  Other than as set forth in Schedule 6.13B,neither the Borrower nor any of its Subsidiaries has outstanding any securitiesconvertible into or exchangeable for its Capital Stock nor does any such Personhave outstanding any rights to subscribe for or to purchase or any options forthe purchase 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 Domestic Subsidiaries of the General Partner,the USRP REIT and the Borrower existing as of the date hereof, except USRPFunding 2001-A, L.P., USRP (SFGP), LLC, USRP (Hawaii), LLC, USRP (Bob), LLC andFuel Supply, Inc. are listed as Subsidiary Guarantors on the signature pageshereto.  S&C has no Subsidiaries andowns no Capital Stock of any other Person. HCI has no Subsidiaries that are notCredit Parties and owns no Capital Stock of any other Person. JV1 has noSubsidiaries that are not Credit Parties and each Subsidiary of JV1 is setforth on Schedule 6.13A attached hereto.

 

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

 

(a)           None of the transactions contemplatedby this Credit Agreement (including, without limitation, the direct or indirectuse of the proceeds of the Loans) will violate or result in a violation of theSecurities Act, the Securities Exchange Act or any of Regulations U and X.  If requested by any Lender or the Agent, theBorrower will furnish to the Agent and each Lender a statement, in conformitywith the requirements of FR Form U-1 referred to in Regulation U,that no part of the Letters of Credit or proceeds of the Loans will be used,directly or indirectly, for the purpose of “buying” or “carrying” any “marginstock” within the meaning of Regulations U and X, or for the purpose ofpurchasing or carrying or trading in any securities.

 

(b)           None of the Consolidated Parties is(i) an “investment company”, or a company “controlled” by “investmentcompany”, within the meaning of the Investment Company Act of 1940, as amended,(ii) a “holding company” as defined in, or otherwise subject to regulationunder, the Public Utility Holding Company Act of 1935, as amended or(iii) subject to regulation under any other Federal or state statute orregulation which limits its ability to incur Indebtedness.

 

## **6.15        Purpose of Loans, Letters of Credit and DerivativeExposure Reserve; Termination of Replaced Credit Agreement.**

 

The proceeds of the Loans hereunder shall be used by the Borrowersolely (a) to refinance one hundred percent (100.0%) of the Indebtedness underthe Replaced Credit Agreement; and (b) to provide for working capital andgeneral corporate purposes of the Borrower and its Subsidiaries.  The Letters of Credit shall be used only foror in connection with appeal bonds, reimbursement obligations arising inconnection with surety and reclamation bonds, reinsurance, domestic orinternational trade transactions and obligations not otherwise aforementionedrelating to transactions entered into by the applicable account party in theordinary course of business.  Proceedspaid with respect to the Derivative Exposure Reserve shall be used only inconnection with the Borrower’s exposure under BOA Derivative Instruments.  No proceeds of the Loans shall be used to(y) finance the purchase of “margin stock” as such term is defined inRegulation U of the Federal Reserve Board or (z) finance the acquisitionof any investments in commercial mortgage-backed securities.  The Replaced Credit Agreement has been orshall be terminated as of the date hereof.

 

## **6.16        Environmental Matters.**

 

Except as disclosed and described in Schedule 6.16 attachedhereto:

 

(a)           Each of the Real Properties and alloperations at the Real Properties are in material compliance with allapplicable Environmental Laws, there is no violation of any Environmental Lawwith respect to the Real Properties or the Businesses, and there are noconditions relating to the Real Properties or the Businesses that could giverise to liability under any applicable Environmental Laws that could result ina Material Adverse Effect.

 

(b)           None of the Real Properties contains,or has previously contained, any Materials of Environmental Concern at, on orunder the Real Properties in amounts or concentrations that could result in aMaterial Adverse Effect.

 

(c)           No Consolidated Party has receivedany written or verbal notice of, or inquiry from any Governmental Authorityregarding, any violation, alleged violation, non-compliance, liability orpotential liability regarding environmental matters or compliance withEnvironmental Laws with regard to any of the Real Properties or the Businessesthat could result in a Material Adverse Effect, nor does any Executive Officerof any Credit Party have knowledge or reason to believe that any such noticewill be received or is being threatened.

 

(d)           Materials of Environmental Concernhave not been transported or disposed of from the Real Properties, orgenerated, treated, stored or disposed of at, on or under any of the RealProperties 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.

 

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(e)           No judicial proceeding orgovernmental or administrative action is pending or, to the best knowledge ofthe Executive Officers of the Credit Parties, threatened, under anyEnvironmental 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 the ConsolidatedParties, the Real Properties or the Businesses that could result in a MaterialAdverse Effect.

 

(f)            There has been no release, or threatof release, of Materials of Environmental Concern at or from any of the RealProperties, or arising from or related to the operations (including, withoutlimitation, disposal) of any Consolidated Party in connection with the RealProperties or otherwise in connection with the Businesses in a manner thatcould result in a Material Adverse Effect.

 

## **6.17        Intellectual Property.**

 

Each Consolidated Party owns, or has the legal right to use, alltrademarks, tradenames, copyrights, technology, know-how and processes (the “IntellectualProperty”) necessary for each of them to conduct its business as currentlyconducted except for those the failure to own or have such legal right to usecould not have a Material Adverse Effect.

 

## **6.18        Solvency.**

 

Each Credit Party is and, after consummation of the transactionscontemplated by the Credit Documents, will be Solvent.

 

## **6.19        Investments.**

 

All Investments of each Consolidated Party are Permitted Investments.

 

## **6.20        Principal Offices.**

 

Set forth on Schedule 6.20 is the chief executive officeand principal place of business of each Credit Party.  Schedule 6.20 may be updated from time to time by theBorrowers by giving written notice thereof to the Agent.

 

## **6.21        Disclosure.**

 

Neither this Credit Agreement nor any financial statements delivered tothe Lenders nor any other document, certificate or statement furnished to theLenders by or on behalf of any Consolidated Party in connection with thetransactions contemplated hereby contains any untrue statement of a materialfact or omits to state a material fact necessary in order to make thestatements contained therein or herein not misleading.

 

## **6.22        NoBurdensome Restrictions.**

 

No Consolidated Party is a party to any agreement or instrument orsubject to any other obligation or any charter or corporate restriction or anyprovision of any applicable law, rule or regulation which, individually or inthe aggregate, could have a Material Adverse Effect.

 

## **6.23        Brokers’ Fees.**

 

No Consolidated Party has any obligation to any Person in respect ofany finder’s, broker’s, investment banking or other similar fee in connectionwith any of the transactions contemplated under the Credit Documents.

 

## **6.24        LaborMatters.**

 

There are no collective bargaining agreements or Multiemployer Planscovering the employees of a Consolidated Party as of the Closing Date and noneof the Consolidated Parties has suffered any strikes, walkouts, work stoppagesor other material labor difficulty within the last five years.

 

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## **6.25        Nature of Business.**

 

As of the Closing Date, the Consolidated Parties are engaged in thebusiness of acquiring, owning, operating, managing and developing restaurant,service station, other service retail properties and several miscellaneousproperties (including billboard properties, one office building and one fuelterminal facility).

 

## **6.26        REIT Status.**

 

The USRP REIT is qualified as a REIT and each of its Subsidiaries thatis a corporation is a Qualified REIT Subsidiary.  Each of the Subsidiaries of the USRP REIT set forth on Schedule6.26 is a taxable REIT subsidiary, as such term is used in the Code.  The USRP REIT has no Subsidiaries that aretaxable REIT subsidiaries except those set forth on Schedule 6.26.

 

## **6.27        BankruptcyRemote Borrowing Entity.**

 

Each of S&C, HCI and each of its Wholly Owned Subsidiaries, JV1 andeach of its Wholly Owned Subsidiaries and the General SPE is a BankruptcyRemote Borrowing Entity.  USRP Operatingowns 99% of the Capital Stock of the General SPE.  USRP Holding owns 100% of the Capital Stock of S&C.  JV1 holds 100% of the Capital Stock ofHCI.  USRP Operating owns 100% of theCapital Stock of JV1.

 

## **6.28        ClosingDate Borrowing Base Assets.**

 

Schedule 6.28 setsforth each of the Borrowing Base Assets as of the Closing Date.  Each asset listed on Schedule 6.28fully qualifies as a Borrowing Base Asset and, collectively, the assets listedthereon qualify to be included in the Borrowing Base.

 

## **6.29        TaxShelter Regulations.**

 

The Borrowerdoes not intend to treat the Loans and/or Letters of Credit and relatedtransactions as being a “reportable transaction” (within the meaning of TreasuryRegulation section 1.6011-4). If the Borrower determines to take any actioninconsistent with such intention, it will promptly notify the Agentthereof.  The Borrower acknowledges thatthe Agent and/or one or more of the Lenders may treat the Loans and/or Lettersof Credit as part of a transaction that is subject to Treasury Regulationsection 1.6011-4 or section 301.6112-1, and the Agent and such Lender orLenders, as applicable, may file such IRS forms or maintain such lists andother records as they may determine is required by such Treasury Regulations.

 

## **6.30        Representationsand Warranties Under Term Loan Documents.**

 

All of the representations and warranties of the Borrower and the other“Credit Parties” as defined in the Term Loan Agreement and the other Term LoanDocuments are true and correct in all material respects (except to the extentthe same have been waived in accordance with the terms thereof).

 

 

# **ARTICLE VII**

# ** **

# **AFFIRMATIVE**COVENANTS

 

Each Credit Party hereby covenants and agrees that, so long as thisCredit Agreement is in effect or any amounts payable hereunder or under anyother Credit Document shall remain outstanding or any Letter of Credit isoutstanding, and until all of the Commitments hereunder shall have terminated:

 

## **7.1          Information Covenants.**

 

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

 

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(a)           Annual Financial Statements.  As soon as available, and in any eventwithin 90 days after the close of each fiscal year of the Consolidated Parties,a consolidated balance sheet and income statement of the Consolidated Partiesas of the end of such fiscal year, together with related consolidatedstatements of retained earnings and cash flows for such fiscal year (along witha summary of amount of all Asset Dispositions and Equity Issuances that weremade during the prior fiscal year), in each case setting forth in comparativeform consolidated figures for the preceding fiscal year, all such financialinformation described above to be in reasonable form and detail and audited byindependent certified public accountants of recognized national standingreasonably acceptable to the Agent and whose opinion shall be to the effectthat such financial statements have been prepared in accordance with GAAP(except for changes with which such accountants concur) and shall not belimited 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.

 

(b)           Quarterly Financial Statements.  As soon as available, and in any eventwithin 45 days after the close of each of the first three fiscal quarters ofeach fiscal year of the Consolidated Parties, a consolidated balance sheet andincome statement of the Consolidated Parties as of the end of such fiscalquarter, together with related consolidated statements of retained earnings andcash flows for such fiscal quarter, in each case setting forth in comparativeform consolidated figures for the corresponding period of the preceding fiscalyear, all such financial information described above to be in reasonable formand 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’s Certificate.  At the time of delivery of the financialstatements provided for in Sections 7.1(a) and 7.1(b) above, a certificateof an Executive Officer of the Borrower substantially in the form of Exhibit 7.1(c),(i) demonstrating compliance with the Financial Covenants by calculationthereof as of the end of each such fiscal period, (ii) stating that noDefault or Event of Default exists, or if any Default or Event of Default doesexist, specifying the nature and extent thereof and what action the CreditParties propose to take with respect thereto and disclosing any HedgingAgreements entered into by any Consolidated Party.

 

(d)           Intentionally Omitted.

 

(e)           Accountant’s Certificate.  Within the period for delivery of the annualfinancial statements provided in Section 7.1(a), a certificate of theaccountants conducting the annual audit stating that they have reviewed thisCredit Agreement as it relates to accounting and other financial matters and statingfurther whether, in the course of their audit, they have become aware of anyDefault or Event of Default and, if any such Default or Event of Defaultexists, specifying the nature and extent thereof, provided that suchaccountants shall not be liable by reason of any failure to obtain knowledge ofany such Default or Event of Default that would not be disclosed in the courseof their audit examination.

 

(f)            Auditor’s Reports.  Promptly upon receipt thereof, a copy of anyother report or “management letter” submitted by independent accountants to anyConsolidated Party in connection with any annual, interim or special audit ofthe 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 theAgent immediately of (i) the occurrence of an event or condition

 

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consisting of a Default or Event of Default,specifying the nature and existence thereof and what action the Credit Partiespropose to take with respect thereto, and (ii) the occurrence of any ofthe following with respect to any Consolidated Party (A) the pendency orcommencement of any litigation, arbitral or governmental proceeding againstsuch Person which if adversely determined is likely to have a Material AdverseEffect or (B) the institution of any proceedings against such Person withrespect to, or the receipt of notice by such Person of potential liability orresponsibility for violation, or alleged violation of any Federal, state orlocal law, rule or regulation, including but not limited to, EnvironmentalLaws, the violation of which could have a Material Adverse Effect.

 

(i)            ERISA.  Upon any Executive Officer of a Credit Partyobtaining knowledge thereof, the Credit Parties will give written notice to theAgent promptly (and in any event within five Business Days) of: (i) anyevent or condition, including, but not limited to, any Reportable Event, thatconstitutes, or might reasonably lead to, an ERISA Event; (ii) withrespect to any Multiemployer Plan, the receipt of notice as prescribed in ERISAor otherwise of any withdrawal liability assessed against the Credit Parties orany ERISA Affiliates, or of a determination that any Multiemployer Plan is inreorganization or insolvent (both within the meaning of Title IV ofERISA); (iii) the failure to make full payment on or before the due date(including extensions) thereof of all amounts which any Consolidated Party orany ERISA Affiliate is required to contribute to each Plan pursuant to itsterms and as required to meet the minimum funding standard set forth in ERISAand the Code with respect thereto; or (iv) any change in the fundingstatus of any Plan that could have a Material Adverse Effect, together with adescription of any such event or condition or a copy of any such notice and astatement by an Executive Officer of the Borrower briefly setting forth thedetails regarding such event, condition, or notice, and the action, if any,which has been or is being taken or is proposed to be taken by the CreditParties with respect thereto.  Promptlyupon request, the Credit Parties shall furnish the Agent and the Lenders withsuch additional information concerning any Plan as may be reasonably requested,including, but not limited to, copies of each annual report/return(Form 5500 series), as well as all schedules and attachments theretorequired to be filed with the Department of Labor and/or the Internal RevenueService pursuant to ERISA and the Code, respectively, for each “plan year”(within the meaning of Section 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, a report of an environmental assessment ofreasonable scope, form and depth, (including, where appropriate, invasive soilor groundwater sampling) by a consultant reasonably acceptable to the Agent asto the nature and extent of the presence of any Materials of EnvironmentalConcern on any Real Properties (as defined in Section 6.16) contributingto the Borrowing Base and as to the compliance by any Consolidated Party withEnvironmental Laws at such Real Properties. If the Credit Parties fail to deliver such an environmental reportwithin seventy-five (75) days after receipt of such written request thenthe Agent may arrange for same, and the Consolidated Parties hereby grant tothe Agent and their representatives access to the Real Properties to reasonablyundertake such an assessment (including, where appropriate, invasive soil orgroundwater sampling).  The reasonablecost of any assessment arranged for by the Agent pursuant to this provisionwill be payable by the Credit Parties on demand and added to the Credit PartyObligations.

 

(k)           Borrowing BaseCertificates/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 by an Executive Officer of the Borrower to be true and correct asof the date thereof (a “Borrowing Base Certificate”) and a DelinquencyReport with respect to the last day of such calendar month certified by anExecutive Officer of the Borrower to be true and correct as of such date.

 

(l)            Three Year Projections/Updates.  As soon as available, and in any eventwithin 90 days after the close of each fiscal year of the Consolidated Parties,detailed projections of financial statements for the Consolidated Parties andof calculations with respect to each of the Financial Covenants, in each case,for the three year period following the most recently ended fiscal quarter ofthe 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.

 

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(n)           Reportable Transactions.  Promptly after Borrower has notified Agentof any intention by Borrower to treat Loans and related transactions as being a“reportable transaction” (within the meaning of Treasury Regulation Section1.6011-4), a duly completed copy of IRS Form 8886 or any successor form (andBorrower hereby agrees that the Agent and each Lender may disclose to any andall Persons, without limitation of any kind, any information with respect tothe “tax treatment” and “tax structure” (in each case, within the meaning ofTreasury Regulation Section 1.6011-4) of the transactions contemplated herebyand all materials of any kind (including opinions or other tax analyses) thatare provided to the Agent or such Lender relating to such tax treatment and taxstructure).

 

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

 

Except as a result of or in connection with a dissolution, merger ordisposition of a Subsidiary not prohibited by Section 8.4 orSection 8.5, each Credit Party will, and will cause each of its corporateSubsidiaries to, do all things necessary to preserve and keep in full force andeffect its existence, rights, franchises, authority and status as a REIT orQualified REIT Subsidiary, as applicable. The General SPE, HCI and its WhollyOwned Subsidiaries, JV1 and its Wholly Owned Subsidiaries and S&C shalleach maintain their respective status as a Bankruptcy Remote Borrowing Entitiesand each of the Credit Parties shall take such action as is required tomaintain such status at all times during the term hereof.  The General SPE shall, at all times duringthe term hereof, remain a Wholly Owned Subsidiary of USRP Operating.  S&C shall, at all times during the termhereof, remain a Wholly Owned Subsidiary of USRP Holding.  USRP Holding shall, at all times during theterm hereof, remain a Wholly Owned Subsidiary of USRP Operating.  JV1 shall, at all times during the termhereof, remain a Wholly Owned Subsidiary of USRP Operating.  HCI shall, at all times during the termhereof, be subject either to the ownership structure set forth on Schedule6.13A as of the Closing Date or be a Wholly Owned Subsidiary of JV1. The entitiesset forth on Schedule 6.26 shall, at all times during the term hereof,remain taxable REIT subsidiaries, as such term is used in the Code; provided,that such schedule may be amended from time to time by the Borrower with theconsent of the Agent, which consent may be withheld in the Agent’s reasonablediscretion.

 

## **7.3          Books and Records.**

 

Each Credit Party will, and will cause each of its Subsidiaries to,keep complete and accurate books and records of its transactions in accordancewith good accounting practices on the basis of GAAP (including theestablishment and maintenance of appropriate reserves).

 

## **7.4          Compliancewith Law.**

 

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

 

## **7.5          Payment of Taxes and Other Indebtedness.**

 

Each Credit Party will, and will cause each of its Subsidiaries to, payand discharge (a) all taxes, assessments and governmental charges orlevies imposed upon it, or upon its income or profits, or upon any of itsproperties, before they shall become delinquent, (b) all lawful claims(including claims for labor, materials and supplies) which, if unpaid, mightgive rise to a Lien upon any of its properties, and (c) except asprohibited hereunder, all of its other Indebtedness as it shall become due; provided,however, that no Consolidated Party shall be required to pay any suchtax, assessment, charge, levy, claim or Indebtedness which is being contestedin good faith by appropriate proceedings and as to which adequate reservestherefor have been established in accordance with GAAP, unless the failure tomake any such payment (i) could give rise to an immediate right toforeclose on a Lien securing such amounts or (ii) could have a MaterialAdverse Effect.

 

## **7.6          Insurance.**

 

Each Consolidated Party will, and will cause each of its Subsidiariesto, at all times maintain in full force and effect insurance (includingworker’s compensation insurance, liability insurance, environmental insurance,casualty

 

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insurance and business interruption insurance) in such amounts,covering such risks and liabilities and with such deductibles or self-insuranceretentions as are in accordance with normal industry practice.  The present insurance coverage of theConsolidated Parties is outlined as to carrier, policy number, expiration date,type and amount on Schedule 7.6, and the Borrower shall update suchSchedule 7.6 and notify the Agent immediately upon the occurrenceof any change in such insurance coverage.

 

## **7.7          Maintenance of Property.**

 

Each Credit Party will, will cause each of its Subsidiaries to, and (asapplicable) will use its best efforts to cause the applicable Person inpossession of a Real Property to, maintain and preserve its properties andequipment material to the conduct of its business in good repair, working orderand condition, normal wear and tear and casualty and condemnation excepted, andwill make, or cause to be made, in such properties and equipment from time totime all repairs, renewals, replacements, extensions, additions, bettermentsand improvements thereto as may be needed or proper, to the extent and in themanner customary for companies in similar businesses.

 

## **7.8          Performance of Obligations.**

 

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

 

## **7.9          Use of Proceeds.**

 

The Borrower will use the proceeds of the Loans and will use theLetters of Credit solely for the purposes set forth in Section 6.15.

 

## **7.10        Audits/Inspections.**

 

Upon reasonable notice and during normal business hours, each Credit Partywill, and will cause each of its Subsidiaries to, permit representativesappointed by the Agent, including, without limitation, independent accountants,agents, attorneys, and appraisers to visit and inspect its property (subject tothe rights of tenants under their respective leases), including its books andrecords, its accounts receivable and inventory, its facilities and its otherbusiness assets, and to make photocopies or photographs thereof and to writedown and record any information such representative obtains and shall permitthe Agent or its representatives to investigate and verify the accuracy ofinformation provided to the Lenders and to discuss all such matters with theofficers, employees and representatives 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 (i) for fiscalquarters ending on or before September 30, 2005, less than or equal to 0.65 to1.0; and (ii) for fiscal quarters ending thereafter, less than or equal to .60to 1.0.

 

(b)           Tangible Net Worth.  At all times the Tangible Net Worth shall begreater than or equal to the sum of (i) $230,000,000.00, plus (ii) anamount equal to 85% of the Net Cash Proceeds of any Equity Issuance by theConsolidated Parties issued after September 30, 2003, calculated on acumulative basis.

 

(c)           Fixed Charge Coverage Ratio.  The Fixed Charge Coverage Ratio, as of thelast day of each fiscal quarter of the Consolidated Parties, shall be (i) forfiscal quarters ending on or before September 30, 2005, greater than or equalto 1.40 to 1.0; and (ii) for fiscal quarters ending thereafter, greater than orequal to 1.50 to 1.0.

 

(d)           Distribution Limitation.  For anygiven fiscal quarter of the Consolidated Parties, the aggregate sum of (i) theamount of cash distributions made or declared by the Consolidated Parties totheir shareholders (excluding any shareholders which are Consolidated Parties) plus(ii) the amount spent by the Consolidated Parties for the purpose ofrepurchasing their own Capital Stock (whether common or preferred) shall notexceed the greater of (1) the FFO Distribution Allowance for such fiscalquarter or (2)

 

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so long as noDefault or Event of Default has occurred and is then continuing, the amountnecessary to maintain the status of the USRP REIT as a REIT.

 

(e)           SecuredIndebtedness to Asset Value Ratio. The ratio of (i) Secured Indebtedness of the ConsolidatedParties on a consolidated basis to (ii) thesum of Asset Values for each of the Real Properties (less any amountsattributable to Minority Interests) as of the end of each fiscal quarter of theConsolidated Parties shall 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 2.25 to 1.0.

 

For clarification purposes, the Credit Parties shall be permitted, indetermining compliance with the financial covenants set forth above in clauses(a), (c), (d) and (f) of this Section 7.11, to round the results of the finalratio calculations (but not calculations of any of other amounts used indetermining such ratios) to the nearest hundredth (.01).

 

## **7.12        NewSubsidiaries.**

 

As soon as practicable and in any event within 30 days after any Personbecomes a direct or indirect Subsidiary of the General Partner, the USRP REITor the Borrower, the Borrower shall provide the Agent with written noticethereof setting forth information in reasonable detail describing all of theassets of such Person and shall (a) if such Person is a DomesticSubsidiary, cause such Person to (a) execute a Joinder Agreement insubstantially 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 Funding 2001-A, L.P.,USRP (SFGP), LLC, LLC, USRP (Hawaii), LLC, USRP (Bob), LLC and Fuel Supply,Inc. (or their respective successor entities) to execute Joinder Agreements orotherwise act as Subsidiary Guarantors hereunder unless and until (i) withrespect to USRP Funding 2001-A, L.P., such entity ceases to maintain its statusas a Special Purpose Entity, or (ii) with respect to each such entity, suchentity is not prohibited by the terms of other financing transactions or itsorganizational documents from acting as a Guarantor hereunder.  For purposes of the preceding sentence, itis understood that no entity shall be deemed prohibited from executing aJoinder Agreement once it becomes a Wholly Owned Subsidiary by virtue of aprovision in its organizational documents notwithstanding any such provision insuch documents.

 

## **7.13        ERISA Exemptions.**

 

Each Credit Party and the Borrower shall not,and shall not permit any of their respective Subsidiaries to, permit any oftheir respective assets to become or be deemed to be “plan assets” within themeaning of ERISA, the Code and the respective regulations promulgatedthereunder.

 

## **7.14        Further Assurances.**

 

The Borrower shall, from time to time, at the expense of the Borrower,promptly execute, deliver, file and/or record all further instruments anddocuments, and take all further action, that may be necessary or desirable, orthat the Agent or Collateral Agent may reasonably request in order to (a)properly evidence the Borrower’s Indebtedness hereunder or under any CreditDocument or (b) perfect, continue and protect the pledge, assignment and/orsecurity interest, as applicable, granted or purported to be granted hereby orpursuant to any Credit Document and to enable the Agent and/or Collateral Agentto exercise and enforce their rights and remedies hereunder and under any otherCredit Document.  The Borrower shall promptlydeliver to the Collateral Agent a copy of each such instrument and evidence ofits proper filing or recording, as necessary.

 

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# **ARTICLE VIII**

# ** **

# **NEGATIVE**COVENANTS

 

Each Credit Party hereby covenants and agrees that, so long as thisCredit Agreement is in effect or any amounts payable hereunder or under anyother Credit Document shall remain outstanding or any Letter of Credit isoutstanding, and until all of the Commitments hereunder shall have terminated:

 

## **8.1          Indebtedness.**

 

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

 

(a)           Indebtedness arising under thisCredit Agreement, the other Credit Documents, the Term Loan Documents orIndebtedness expressly permitted hereunder;

 

(b)           Indebtednessunder the Hawaii Loan Documents or in existence as of the Agreement Date anddescribed on Schedule 8.1 and any Indebtedness (the “ReplacementIndebtedness”) extending the maturity of, or refunding, refinancing or replacing,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)           purchase money Indebtedness(including obligations in respect of Capital Leases or Synthetic Leases)hereafter incurred by the Borrower or any of its Subsidiaries to finance thepurchase of fixed assets; provided that (i) the total of all suchIndebtedness for all such Persons taken together shall not exceed an aggregateprincipal amount of $250,000 at any one time outstanding; (ii) suchIndebtedness when incurred shall not exceed the purchase price of the asset(s)financed; and (iii) no such Indebtedness shall be refinanced for aprincipal amount in excess of the principal balance outstanding thereon at thetime of such refinancing;

 

(d)           Indebtedness resulting from customaryrecourse carve-outs associated with securitization transactions (including, byway of example, those for fraud, misapplication of proceeds and environmentalindemnities) and not involving the creditworthiness of the applicable obligors;

 

(e)           Indebtedness in the form of tradepayables incurred in the ordinary course of business;

 

(f)            obligations of the Borrower inrespect of Hedging Agreements to the extent such agreements are for the purposeof hedging interest rate risk with respect to the Indebtedness under the CreditDocuments or are otherwise approved by the Agent, in its discretion;

 

(g)           intercompany Indebtedness permittedunder Section 8.6; provided, however,that the obligations of each obligor of such Indebtedness shall: (i) besubordinated to the Credit Party Obligations on terms acceptable to theRequired Revolving Lenders in their sole discretion and (ii) have such otherterms and provisions as the Agent may reasonably require;

 

(h)           in addition to the Indebtednessotherwise permitted by this Section 8.1,

 

(i)            other recourse Indebtednesshereafter incurred by the General Partner, the Borrower or any of theirSubsidiaries provided that (A) the loan documentation with respectto 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

 

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Documents, (B) the Borrower shall havedelivered to the Agent a Pro Forma Compliance Certificate demonstrating that,upon giving effect on a Pro Forma Basis to the incurrence of such Indebtednessand to the concurrent retirement of any other Indebtedness of any ConsolidatedParty, the Credit Parties would be in compliance with the Financial Covenantsand (C) the aggregate principal amount of such Indebtedness, together withIndebtedness permitted pursuant to Sections 8.1(c) and (f) shall not atany time exceed $20,000,000 plus the amount of any hedge obligations incurredwith respect to a Term Securitization;

 

(ii)           Indebtedness where the recourse ofthe lender is limited to foreclosure of its security interest in the subjectproperty; and

 

(iii)          Guaranty Obligations of any Guarantorwith respect to any Indebtedness permitted under this Section 8.1.

 

Notwithstanding the foregoing, the GeneralPartner and the Borrower shall not, and shall not permit any other Subsidiaryto, create, incur or assume any Indebtedness after the Closing Date ifimmediately prior to the creation, incurring or assumption thereof, orimmediately thereafter and after giving effect thereto, a Default or Event ofDefault is or would be in existence, including without limitation, a Default orEvent of Default resulting from a violation of any of the covenants containedin this Section 8.1.

 

## **8.2          Liens.**

 

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

 

(a)           Liens in favor of the Agent to securethe Credit Party Obligations;

 

(b)           (i) Liens, about which any CreditParty has had knowledge for less than thirty (30) days, in an aggregateamount less than $200,000 (other than Liens created or imposed under ERISA) fortaxes, assessments or governmental charges or levies not yet due or, if due,are for taxes, assessments or governmental charges or levies that are more thanfive (5) days from the date on which such items may be deemed delinquentor on which penalties for non-payment may be assessed or (ii) Liens for taxesbeing contested in good faith by appropriate proceedings for which adequatereserves determined in accordance with GAAP have been established (and as towhich the Property subject to any such Lien is not yet subject to foreclosure,sale or loss on account thereof);

 

(c)           statutory Liens of landlords andLiens of carriers, warehousemen, mechanics, materialmen and suppliers and otherLiens imposed by law or pursuant to customary reservations or retentions of titlearising in the ordinary course of business, in each case which any Credit Partyhas had knowledge for less than thirty (30) days, in an aggregate amountless than $200,000, provided that such Liens secure only amounts not 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 orimposed under ERISA) incurred or deposits made by any Consolidated Party in theordinary course of business in connection with workers’ compensation,unemployment insurance and other types of social security, or to secure theperformance of tenders, statutory obligations, bids, leases, governmentcontracts, performance and return-of-money bonds and other similar obligations(exclusive of obligations for the payment of borrowed money);

 

(e)           Liens in connection with attachmentsor judgments (including judgment or appeal bonds) provided that thejudgments secured shall, within 30 days after the entry thereof, have beendischarged or execution thereof stayed pending appeal, or shall have beendischarged within 30 days after the expiration of any such stay;

 

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

 

(g)           Liens on Property of any Personsecuring purchase money Indebtedness (including Capital Leases and SyntheticLeases) of such Person permitted under Section 8.1(c), providedthat any such Lien attaches to such Property concurrently with or within 90days after the acquisition thereof;

 

(h)           leases or subleases granted to othersnot interfering in any material respect with the business of any ConsolidatedParty;

 

(i)            any interest of title of a lessorunder, and Liens arising from UCC financing statements (or equivalent filings,registrations or agreements in foreign jurisdictions) relating to, leasespermitted by this Credit Agreement;

 

(j)            Liens deemed to exist in connectionwith Investments in repurchase agreements permitted under Section 8.6;

 

(k)           normal and customary rights of setoffupon deposits of cash in favor of banks or other depository institutions;

 

(l)            Liens of a collection bank arisingunder Section 4-210 of the Uniform Commercial Code on items in the courseof collection;

 

(m)          Liens of sellers of goods to theBorrower and any of its Subsidiaries arising under Article 2 of theUniform Commercial Code or similar provisions of applicable law in the ordinarycourse of business, covering only the goods sold and securing only the unpaidpurchase price for such goods and related expenses;

 

(n)           Liens existing as of the Closing Dateas set forth or as contemplated on Schedule 8.2; providedthat no such Lien shall at any time be extended to or cover any Propertyother than the Property subject thereto on the Closing Date (other than inconnection with the collateral substitution provisions contained in the 2001-ATerm Securitization Documents);

 

(o)           Liens on property owned by USRP(Bob), LLC, USRP (Hawaii), LLC and/or Fuel Supply, Inc. created in connectionwith the Hawaii Loan Documents; and

 

(p)           Liens securing Indebtedness describedin Section 8.1(h)(ii).

 

## **8.3          Natureof Business.**

 

The Credit Parties will not permit any Consolidated Party tosubstantively alter the character or conduct of the business conducted by suchPerson as of the Closing Date.

 

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

 

The Credit Parties will not permit any Consolidated Party to enter intoany transaction of merger or consolidation or liquidate, wind up or dissolveitself (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 Partnermay merge 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 is nota Credit Party may be merged or consolidated with or into any Credit Party; providedthat such Credit Party shall be the continuing or surviving corporation,(d) any Consolidated Party which is not a Credit Party may be merged orconsolidated with or into any other Consolidated Party which is not a CreditParty, and (e) any Wholly Owned Subsidiary of the Borrower may dissolve,liquidate or wind up its affairs at any time provided that such

 

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dissolution, liquidation or winding up, as applicable, could not have aMaterial Adverse Effect and such entity does not hold any material property orassets (except to the extent such property or assets are able to be transferredto a Credit Party without additional consideration from such Credit Party andwithout adverse tax consequences to such Credit Party).

 

## **8.5          AssetDispositions/Substitution of Assets.**

 

(a)           The Credit Parties will not permitany Consolidated Party to make any Asset Disposition or series of AssetDispositions in which the aggregate value of the assets sold or otherwisedisposed pursuant to such Asset Disposition or series of Asset Dispositionsexceeds an amount equal to (i) ten percent (10.0%) multiplied by (ii)Total Tangible Assets, as calculated on the Closing Date, unless the Borrowershall have delivered to the Agent at least two (2) Business Days prior tosuch Asset Disposition or series of Asset Dispositions a Pro Forma ComplianceCertificate demonstrating on a Pro Forma Basis that, upon giving effect to suchAsset Disposition or series of Asset Dispositions, the Credit Parties shall bein compliance with all of the covenants contained in Section 7.11.

 

(b)           Neither the General SPE, nor HCI orany of its Wholly Owned Subsidiaries, nor JV1 or any of its Wholly OwnedSubsidiaries, nor S&C shall sell, transfer, assign, pledge, encumber orotherwise dispose of any of their respective assets except to the extent suchentity obtains the prior written consent of the Agent (which consent may bewithheld at the sole reasonable discretion of the Agent).

 

## **8.6          Investments.**

 

The Credit Parties will not permit any Consolidated Party to make orhave any Investments after the Closing Date, except for:

 

(a)           Investments in any Credit Party;

 

(b)           Investments consisting of cash andCash Equivalents;

 

(c)           Investments consisting of accountsreceivable created, acquired or made by any Consolidated Party in the ordinarycourse of business and payable or dischargeable in accordance with customarytrade terms;

 

(d)           Investments consisting of CapitalStock, obligations, securities or other property received by any ConsolidatedParty in settlement of accounts receivable (created in the ordinary course ofbusiness) from bankrupt obligors or guarantors of bankrupt obligors;

 

(e)           Investments consisting of loans oradvances to Tenants in an amount not to exceed $25,000,000.00 in the aggregate;

 

(f)            Investments consisting of advancesor loans to employees existing as of the date hereof and additional suchInvestments made following the date hereof that do not, in the aggregate,exceed the sum of $100,000.00;

 

(g)           Investments entered into inconnection with a Term Securitization permitted and contemplated hereunder;

 

(h)           Investments in non-wholly ownedgeneral and limited partnerships, joint ventures and other Persons which arenot corporations (excluding such Investments in existence as of the datehereof), the aggregate book value of which constitutes less than fivepercent (5%) of Total Tangible Assets;

 

(i)            Investments in Development Activities;provided, that (i) the aggregate amount of Investments made by theConsolidated Parties with respect to such Development Activities shall not, atany one time, exceed $15,000,000.00 and (ii) all costs and expenses associatedwith all existing Development Activities

 

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(budget to completion) shall be included indetermining the aggregate Investment of the Consolidated Parties with respectto such activities;

 

(j)            Investments consisting of loans toPersons who have or are purchasing real property from a Consolidated Party;provided that (i) the total aggregate amount of such loans shall not exceed$45,000,000.00, (ii) such loans shall be made on a secured basis and (iii) suchloans shall be made on commercially reasonable terms and require at least 10%cash equity;

 

(k)           Investments in marketable securitiesthat do not, in the aggregate, exceed the sum of $5,000,000.00;

 

(l)            Investments in common equitysecurities that do not, in the aggregate, exceed the sum of $5,000,000.00 andInvestments in preferred equity securities that do not, in the aggregate,exceed the sum of $5,000,000.00; provided, that, the Agent is given a summaryof the amount and type of such equity securities prior to the making of such investment;and

 

(m)          Investments in debt securities that donot, in the aggregate, exceed $30,000,000.00; provided, that such debtsecurities are fully performing and have a current yield equal to or in excessof 9.50%.

 

Notwithstanding the foregoing, the Credit Parties will not permit thetotal Investments of the Consolidated Parties related to items (c) through (m)above shall not, in any case, exceed 12.0% of Total Tangible Assets.

 

## **8.7          Restricted Payments.**

 

Except as set forth on Schedule 8.11, the Credit Partieswill not permit any Consolidated Party to, directly or indirectly, declare,order, make or set apart any sum for or pay any Restricted Payment, except(a) to make dividends or other distributions payable to any Credit Party(directly or indirectly 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/OStrips and other assets to the General Partner, the Borrower or any otherGuarantor and (c) as expressly permitted by Section 7.11(d),Section 8.6, Section 8.8 or Section 8.9.

 

## **8.8          OtherIndebtedness.**

 

The Credit Parties will not permit any Consolidated Party to if anyDefault or Event of Default has occurred and is continuing or would be directlyor indirectly caused as a result thereof, (a) after the issuance thereof,amend or modify any of the terms of any Indebtedness of such Consolidated Partyif such amendment or modification would add or change any terms in a manneradverse to such Consolidated Party, or shorten the final maturity or averagelife to maturity or require any payment to be made sooner than originallyscheduled or increase the interest rate applicable thereto, or (b) make (orgive any notice with respect thereto) any voluntary or optional payment orprepayment or redemption or acquisition for value of (including withoutlimitation, by way of depositing money or securities with the trustee with respectthereto before due for the purpose of paying when due), refund, refinance orexchange of any other Indebtedness of such Consolidated Party.

 

## **8.9          Transactions with Affiliates.**

 

The Credit Parties will not permit any Consolidated Party to enter intoor permit to 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.**

 

The Credit Parties will not permit any Consolidated Party to change itsfiscal year or amend, modify or change its articles of incorporation (orcorporate charter or other similar organizational document) or bylaws (or othersimilar document).

 

## **8.11        Limitationon Restricted Actions.**

 

The Credit Parties will not permit any Consolidated Party to, directlyor 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 on its Capital Stock or with respect to anyother interest or participation in, or measured by, its profits, (b) payany Indebtedness or other obligation owed to any Credit Party, (c) makeloans or advances to any Credit Party, (d) sell, lease or transfer any ofits properties or assets to any Credit Party, or (e) act as a Credit Partyand pledge its assets pursuant to the Credit Documents or any renewals,refinancings, exchanges, refundings or extension thereof, except (in respect ofany of the matters referred to in clauses (a)-(d) above) for suchencumbrances or restrictions existing under or by reason of (i) thisCredit Agreement and the other Credit Documents, (ii) applicable law,(iii) any document or instrument governing Indebtedness incurred pursuantto (A) Section 8.1(b), and (B) with respect to clause (d) of thisSection 8.11 only, Section 8.1(h), provided that any suchrestriction contained therein relates only to the asset or assets constructedor acquired in connection therewith, (iv) any Permitted Lien or anydocument or instrument governing any Permitted Lien, provided that anysuch restriction contained therein relates only to the asset or assets subjectto such Permitted Lien or (v) customary restrictions and conditions containedin any agreement relating to the sale of any Property permitted underSection 8.5 pending the consummation of such sale.

 

## **8.12        Contingent Obligations.**

 

Neither the General Partner nor the Borrowershall become or remain liable, or permit any other Subsidiary to become orremain liable, on or under any Contingent Obligation other than the following:

 

(a)           ContingentObligations arising under any of the Credit Documents;

 

(b)           ContingentObligations in existence as of the Closing Date (the material ones having beendisclosed to the Agent in writing on Schedule 8.12(b) attachedhereto) and any Contingent Obligation incurred in replacement, in whole or inpart, of any such existing Contingent Obligations so long as (i) the amount ofsuch replacement Contingent Obligation shall not be increased, (ii) suchreplacement Contingent Obligation shall not mature or otherwise be required tobe performed prior to the corresponding maturity or performance date of theContingent Obligation being so replaced, and (iii) if the Contingent Obligationbeing so replaced is subordinated to any of the Credit Party Obligations, suchreplacement Contingent Obligation shall be subordinated to such obligations toat least the same extent;

 

(c)           ContingentObligations resulting from endorsement of negotiable instruments for collectionor deposit in the ordinary course of business;

 

(d)           ContingentObligations incurred in the ordinary course of business with respect to suretyand appeal bonds, performance and return-of-money bonds and other similarobligations;

 

(e)           ContingentObligations to the extent constituting Indebtedness permitted underSection 8.1; and

 

(f)            Guarantiesby a Consolidated Party of the obligations of another Consolidated Party;

 

## **8.13        Sale Leasebacks.**

 

Notwithstanding anything contained herein to the contrary, the CreditParties will not permit any Consolidated Party to enter into any Sale andLeaseback Transaction (except to the extent USRP (Bob), LLC or USRP (Hawaii),LLC enters into any such transaction with respect to any gas station assetsheld by such Person).

 

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## **8.14        BorrowingBase Asset Removal.**

 

Notwithstanding anything to the contrary contained herein, no CreditParty shall, at any time, seek to otherwise voluntarily remove or permit to beremoved any Borrowing Base Assets from qualification as such (whether inanticipation of the Disposition or encumbrance thereof or otherwise), unless(a) the Borrower shall have delivered to the Agent (and, to the extent such removalshall require Required Lender approval, the Required Lenders) at least twenty(20) Business Days prior to the effective date of such removal, a Pro FormaCompliance Certificate demonstrating that, upon giving effect to such removal,on a Pro Forma Basis, the Credit Parties shall be in compliance with all of theFinancial Covenants contained herein and (b) to the extent (i) the BorrowingBase Asset Value attributable to the Borrowing Base Asset(s) proposed forremoval, plus the Borrowing Base Asset Values attributable to all other suchassets that have been removed during the previous twelve (12) calendar monthsor that have been approved for removal pursuant to the terms hereof during suchperiod (and which the Borrower still intends to remove from the Borrowing Basecalculation) is less than ten percent (10.0%) of the aggregate Borrowing BaseAsset Value, as determined as of the Closing Date, the Agent has, in itsreasonable discretion, approved such removal in writing; or (ii) the BorrowingBase Asset Value attributable to the Borrowing Base Asset(s) proposed forremoval, plus the Borrowing Base Asset Values attributable to all other suchassets that have been removed during the previous twelve (12) calendar monthsor that have been approved for removal pursuant to the terms hereof during suchperiod (and which the Borrower still intends to remove from the Borrowing Basecalculation) is greater than ten percent (10.0%) of the aggregate BorrowingBase Asset Value, as determined as of the Closing Date, the Agent and theRequired Lenders have approved such removal in writing; provided, however, thatto the extent the Borrowing Base Asset Value attributable to the Borrowing BaseAsset(s) proposed for removal, plus the Borrowing Base Asset Values attributableto all other such assets that have been removed during the term hereof or thathave been approved for removal pursuant to the terms hereof during such period(and which the Borrower still intends to remove from the Borrowing Basecalculation) is greater than twenty percent (20.0%) of the aggregate BorrowingBase Asset Value, as determined as of the Closing Date, such removal shall, inany case, require the written approval of the Agent and the RequiredLenders.  All approvals or rejections ofremoval requests delivered by the Borrower to the Agent and/or Required Lendershereunder shall be delivered by the Agent and/or the Required Lenders, asapplicable, within fifteen (15) days of their receipt thereof or shall bedeemed to be an approval of such request.

 

## **8.15        NegativePledges/Liens.**

## ** **

Notwithstanding anything contained herein or in any other CreditDocument to the contrary:

 

(a)           none of theConsolidated Parties shall, at any time, enter into, assume or become subjectto any Negative Pledge on their Propertyprohibiting or otherwise restricting the existence of any Lien upon any of itsProperty in favor of the Agent (for the benefit of the Lenders) for the purposeof securing the Credit Party Obligations, except (i) in connection with anydocument or instrument governing Indebtedness incurred in accordance withSection 8.1(c); provided, that any such restriction contained thereinrelates only to the asset or assets constructed or acquired in connectiontherewith, (ii) in connection with any Permitted Lien or any document orinstrument governing any Permitted Lien, provided, that any such restrictioncontained therein relates only to the asset or assets subject to such PermittedLien, (iii) pursuant to customary restrictions and conditions contained in anyagreement relating to the sale of any Property permitted underSection 8.5, pending the consummation of such sale and (iv) with respectto USRP (Bob), LLC, USRP (Hawaii), LLC and Fuel Supply, Inc., pursuant to theterms of the Hawaii Loan Documents;

 

(b)           none of theConsolidated Parties shall, at any time, pledge or otherwise encumber (exceptin connection herewith or with any of the Credit Documents) any income derivedfrom any of the assets contributing to the calculation of Borrowing Base AssetValue (except to the extent permitted pursuant to Section 8.14 hereof);

 

(c)           the General SPEshall not, at any time, contract, create, incur, assume or permit to exist anyLien with respect to any of its assets except to the extent such Liens are ofthe types described in Sections 8.2(a), (b), (c), (d), (e), (f), (h) and (i);

 

(d)           the General SPE shall****not, in any case, incur anyIndebtedness or Contingent Obligations aside from Indebtedness and/orContingent Obligations arising in connection with the Credit Documents andIndebtedness and/or Contingent Obligations of the type described in Section8.1(e);

 

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(e)           USRP Operating shallnot, at any time, contract, create, incur, assume or permit to exist any Lienon its ownership interests in the General SPE or on the income derivedtherefrom (except to the extent such Liens arise in connection with the CreditDocuments);

 

(f)            S&C shall not,at any time, contract, create, incur, assume or permit to exist any Lien withrespect to any of its assets except to the extent such Liens are of the typesdescribed in Sections 8.2(a), (b), (c), (d), (e), (f), (h) and (i);

 

(g)           S&C 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);

 

(h)           USRP Holding shallnot, at any time, contract, create, incur, assume or permit to exist any Lien onits ownership interests in S&C or on the income derived therefrom (exceptto the extent such Liens arise in connection with the Credit Documents);

 

(i)            HCI and its WhollyOwned Subsidiaries shall not, at any time, contract, create, incur, assume orpermit to exist any Lien with respect to any of its assets except to the extentsuch Liens are of the types described in Sections 8.2(a), (b), (c), (d), (e),(f), (h) and (i);

 

(j)            HCI  and its Wholly Owned Subsidiaries 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);

 

(k)           JVI shall not, atany time, contract, create, incur, assume or permit to exist any Lien on itsownership interests in HCI or on the income derived therefrom (except to theextent such Liens arise in connection with the Credit Documents);

 

(l)            JV1 and its WhollyOwned Subsidiaries shall not, at any time, contract, create, incur, assume orpermit to exist any Lien with respect to any of its assets except to the extentsuch Liens are of the types described in Sections 8.2(a), (b), (c), (d), (e),(f), (h) and (i);

 

(m)          JV1  and its Wholly Owned Subsidiaries 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

 

(n)           USRP Operating shallnot, at any time, contract, create, incur, assume or permit to exist any Lienon its ownership interests in JV1 or on the income derived therefrom (except tothe extent such Liens arise in connection with the Credit Documents).

 

## **8.16        OperatingLease Obligations.**

 

The Credit Parties will not permit any Consolidated Party to enterinto, assume or permit to exist any obligations for the payment of rental underOperating Leases (excluding Ground Lease Interests) which in the aggregate forall such Persons would exceed $1,000,000 in any fiscal year.

 

## **8.17        NoForeign Subsidiaries.**

 

The Credit Parties will not create, acquire or permit to exist anyForeign Subsidiary.

 

## **8.18        Ground Leases.**

 

For all leases executed following the Closing Date, theUSRP REIT, the General Partner and the Borrower shall, and shall not permit anyother Consolidated Subsidiary to, lease as lessee any real property pursuant toa ground lease unless such ground lease contains customary provisionsprotective of any lender to the lessee which

 

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provisions donot vary in any material respect from those required under the Borrower’sstandard underwriting procedures and policies.

 

## **8.19        ERISA Exemptions.**

 

The USRP REIT, the General Partner and theBorrower shall not, and shall not permit any other Consolidated Subsidiary to,permit any of its respective assets to become or be deemed to be “plan assets”within the meaning of ERISA, the Code and the respective regulationspromulgated thereunder.

 

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

 

The USRP REIT, the General Partner and theBorrower shall not, and shall not permit any other Consolidated Subsidiary to,transfer any of their respective assets to any of their respective Subsidiariesor Affiliates except to the extent the applicable Subsidiary or Affiliate has,at the time of such transfer, executed a Joinder Agreement and is a Guarantorhereunder.

 

## **8.21        Term Loan Document Covenants and Amendments.**

 

Borrower shall not violate any of the covenants, terms or conditionsset forth in the Term Loan Documents (except to the extent such covenants,terms or conditions are waived in accordance with the terms thereof) orotherwise permit to exist any “Event of Default” (as defined in the Term LoanAgreement) to occur at any time during the term of this Credit Agreement.

 

# **ARTICLE IX**

# ** **

# **EVENTS OF DEFAULT**

 

 

## **9.1          Events of Default.**

 

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

 

(a)           Payment.  Any Credit Party shall

 

(i)            default in the payment when due ofany principal of any of the Loans or of any reimbursement obligations arisingfrom drawings under Letters of Credit, or

 

(ii)           default, and such default shallcontinue for three (3) or more Business Days, in the payment when due ofany interest on the Loans or on any reimbursement obligations arising fromdrawings under Letters of Credit, or of any Fees or other amounts owinghereunder, under any of the other Credit Documents or in connection herewith ortherewith; 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)            default in the due performance orobservance of any term, covenant or agreement contained in Sections 7.2,7.9, 7.11 or 7.12 or Section 8;

 

(ii)           default in the due performance orobservance of any term, covenant or agreement contained inSections 7.1(a), (b), (c) or (k) or either of Sections 7.10 or 7.14 andsuch default shall

 

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continue unremedied for a period of at least5 days after the earlier of an Executive Officer of a Credit Party becomingaware of such default or notice thereof by the Agent; or

 

(iii)          default in the due performance orobservance by it of any term, covenant or agreement (other than those referredto in subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1)contained in this Credit Agreement or any other Credit Document and suchdefault shall continue unremedied for a period of at least 30 days after theearlier of an Executive Officer of a Credit Party becoming aware of suchdefault 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 by Section 8.4 or Section 8.5, any CreditDocument shall fail to be in full force and effect or to give the Agent and/orthe Lenders the Liens, rights, powers and privileges purported to be createdthereby, or any Credit Party 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 not prohibited bySection 8.4 or Section 8.5 or (ii) a release specifically providedfor in Section 4.8, the guaranty given by any Guarantor hereunder(including any Person after the Closing Date in accordance with Section 7.12)or any provision thereof shall cease to be in full force and effect, or anyGuarantor (including any Person after the Closing Date in accordance withSection 7.12) hereunder or any Person acting by or on behalf of suchGuarantor shall deny or disaffirm such Guarantor’s obligations under suchguaranty, or any Guarantor shall default in the due performance or observanceof any term, covenant or agreement on its part to be performed or observedpursuant 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)           Challenge of Credit Documents.  The Borrower or any Guarantor shall disavow,revoke or terminate or attempt to do any of the foregoing with respect to anyCredit Document to which it is a party or shall otherwise challenge or contestin any action, suit or proceeding in any court or before any GovernmentalAuthority the validity or enforceability of any Credit Document; or

 

(h)           Defaultsunder Other Agreements.

 

(i)            Any Consolidated Party shall defaultin the performance or observance (beyond the applicable grace period withrespect thereto, if any) of any material obligation or condition of anycontract or lease material to the Consolidated Parties taken as a whole if suchdefault could reasonably be expected to have a Material Adverse Effect; or

 

(ii)           With respect to Indebtedness (otherthan Indebtedness outstanding under this Credit Agreement) in excess of$5,000,000 in the aggregate (for the Consolidated Parties taken as a whole),(A) either (1) a default in any payment shall occur and continue(beyond the applicable grace period with respect thereto, if any) with respectto any such Indebtedness, (2) a default in the observance or performancerelating to such Indebtedness or contained in any instrument or agreementevidencing, securing or relating thereto and such default is not cured withinthe applicable grace period, if any, or (3) any event or condition shall occur or exist, the effect of which eventor condition is to cause, or permit, the holder or holders of such Indebtedness(or trustee or agent on behalf of such holders) to cause any such Indebtednessto become due prior to its stated maturity; or (B) any such Indebtednessshall be declared due and payable, or required to be prepaid other than by aregularly scheduled required prepayment, 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 been vacated,discharged or stayed or bonded pending appeal within 30 days from the entrythereof; or

 

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(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

 

(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 generated from sales, conveyances and dispositions(whether such transactions are entered into voluntarily or otherwise andexclusive of the cash proceeds generated by a Term Securitization) of theassets of the Borrower, General Partner and their Subsidiaries for the periodcommencing as of the Closing Date and extending through any given date duringthe term hereof are, in the aggregate, greater than an amount equal to (i)twenty-five percent (25.0%) multiplied by (ii) Total Tangible Assets, ascalculated as of the Closing Date; or

 

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

 

## **9.2          Acceleration; Remedies.**

 

Subject to the terms of the Intercreditor Agreement, upon theoccurrence and during the continuance of an Event of Default, the Agent may or,upon the request and direction of the Required Revolving Lenders, shall, bywritten notice to the Credit Parties take any of the following actions:

 

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

 

(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 Agentand/or any of the Lenders hereunder to be due whereupon the same shall beimmediately due and payable without presentment, demand, protest or other noticeof any kind, all of which are hereby waived by the Credit Parties.

 

(c)           CashCollateral.  Direct the Borrower topay (and the Borrower hereby promises to pay, upon receipt of such notice) tothe Agent additional cash, to be held by the Agent, for the benefit of theLenders, 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 additionalsecurity for the

 

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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.

 

Notwithstanding the foregoing, if an Event of Default specified inSection 9.1(f) shall occur with respect to the Borrower, then, without thegiving of any notice or other action by the Agent or the Lenders, (i) theCommitments automatically shall terminate, (ii) all of the outstandingCredit Party Obligations automatically shall immediately become due andpayable, (iii) the Borrower automatically shall be obligated (and herebypromises) to pay to the Agent additional cash, to be held by the Agent, for thebenefit of the Lenders, in a cash collateral account as additional security forthe LOC Obligations in respect of subsequent drawings under all thenoutstanding Letters of Credit in an amount equal to the maximum aggregateamount which may be drawn under all Letters of Credits then outstanding and(iv) the Borrower automatically shall be obligated (and hereby promises) to payto the Agent additional cash, to be held by the Agent, for the benefit of theLenders, in a cash collateral account as additional security for thereimbursement of any subsequent drawings in relation to the Derivative ExposureReserve in an amount equal to the Aggregate Derivative Reserve Amount.

 

 

# **ARTICLE X**

# ** **

# **AGENCY**PROVISIONS

 

## **10.1        Appointment,Powers and Immunities.**

 

Each Lender hereby irrevocably appoints and authorizes the Agent to actas its agent under this Credit Agreement and the other Credit Documents withsuch powers and discretion as are specifically delegated to the Agent by theterms of this Credit Agreement and the other Credit Documents, together withsuch other powers as are reasonably incidental thereto.  The Agent (which term as used in thissentence and in Section 10.5 and the first sentence of Section 10.6hereof shall include its Affiliates and its own and its Affiliates’ officers,directors, employees, and agents): (a) shall not have any duties or responsibilities except thoseexpressly set forth in this Credit Agreement and shall not be a trustee orfiduciary for any Lender; (b) shall not be responsible to the Lenders forany recital, statement, representation, or warranty (whether written or oral)made in or in connection with any Credit Document or any certificate or otherdocument referred to or provided for in, or received by any of them under, anyCredit Document, or for the value, validity, effectiveness, genuineness,enforceability, or sufficiency of any Credit Document, or any other documentreferred to or provided for therein or for any failure by any Credit Party orany other Person to perform any of its obligations thereunder; (c) shallnot be responsible for or have any duty to ascertain, inquire into, or verifythe performance or observance of any covenants or agreements by any CreditParty or the satisfaction of any condition or to inspect the property (includingthe books and records) of any Credit Party or any of its Subsidiaries orAffiliates; and (d) shall not be responsible for any action taken oromitted to be taken by it under or in connection with any Credit Document,except for its own gross negligence or willful misconduct.  The Agent may employ agents andattorneys-in-fact and shall not be responsible for the negligence or misconductof any such agents or attorneys-in-fact selected by it with reasonable care.

 

## **10.2        Reliance by Agent.**

 

The Agent shall be entitled to rely upon any certification, notice,instrument, writing, or other communication (including, without limitation, anythereof by telephone or telecopy) believed by it to be genuine and correct andto have been signed, sent or made by or on behalf of the proper Person orPersons, and upon advice and statements of legal counsel (including counsel forany Credit Party), independent accountants, and other experts selected by theAgent.  The Agent may deem and treat thepayee of any Note as the holder thereof for all purposes hereof unless anduntil the Agent receives and accepts an Assignment and Assumption executed inaccordance with Section 11.3(b) hereof. As to any matters not expressly provided for by this Credit Agreement,the Agent shall not be required to exercise any discretion or take any action,but shall be required to act or to refrain from acting (and shall be fullyprotected in so acting or refraining from acting) upon the instructions of theRequired Revolving

 

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Lenders, 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 be deemed to have knowledge or notice of theoccurrence of a Default or Event of Default unless the Agent has receivedwritten notice from a Lender or a Credit Party specifying such Default or Eventof Default and stating that such notice is a “Notice of Default”.  In the event that the Agent receives such anotice of the occurrence of a Default or Event of Default, the Agent shall giveprompt notice thereof to the Lenders. The Agent shall (subject to Section 10.2 hereof and the terms ofthe Intercreditor Agreement) take such action with respect to such Default orEvent of Default as shall reasonably be directed by the Required RevolvingLenders (or such 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 fromtaking such action, with respect to such Default or Event of Default as itshall deem advisable in the best interest of the Lenders (subject to the termsof the Intercreditor Agreement).

 

## **10.4        Rightsas a Lender.**

 

With respect to its Commitment and the Loans made by it, BOA (and anysuccessor acting as Agent) in its capacity as a Lender hereunder shall have thesame rights and powers hereunder as any other Lender and may exercise the sameas though it were not acting as the Agent, and the term “Lender” or “Lenders”shall, unless the context otherwise indicates, include the Agent in itsindividual capacity.  BOA (and anysuccessor acting as Agent) and its Affiliates may (without having to accounttherefor to any Lender) accept deposits from, lend money to, make investmentsin, provide services to, and generally engage in any kind of lending, trust, orother business with any Credit Party or any of its Subsidiaries or Affiliates asif it were not acting as Agent, and BOA (and any successor acting as Agent) andits Affiliates may accept fees and other consideration from any Credit Party orany of its Subsidiaries or Affiliates for services in connection with thisCredit Agreement or otherwise without having to account for the same to theLenders.

 

## **10.5        Indemnification.**

 

The Lenders agree to indemnify the Agent (to the extent not reimbursedunder Section 11.5 hereof, but without limiting the obligations of theCredit Parties under such Section) ratably (in accordance with their respectiveRevolving Commitments (or, if the Revolving Commitments have been terminated,the outstanding Revolving Loans and Participation Interests in Letters ofCredit (including the Participation Interests of the Issuing Lender in Lettersof Credit)) 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 thisSection 10.5 shall survive the repayment of the Loans, LOC Obligations andother obligations under the Credit Documents and the termination of theCommitments hereunder.

 

## **10.6        Non-Relianceon Agent and Other Lenders.**

 

Each Lender agrees that it has, independently and without reliance onthe Agent or any other Lender, and based on such documents and information asit has deemed appropriate, made its own credit analysis of the Credit Partiesand their Subsidiaries and decision to enter into this Credit Agreement andthat it will, independently and without reliance upon the Agent or any otherLender, and based on such documents and information as it shall deemappropriate at the time, continue to make its own analysis and decisions intaking or not taking action under the Credit Documents.  Except for notices, reports, and otherdocuments and information expressly required to be

 

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furnished to the Lenders by the Agent hereunder, the Agent shall nothave any duty or responsibility to provide any Lender with any credit or otherinformation concerning the affairs, financial condition, or business of anyCredit Party or any of its Subsidiaries or Affiliates that may come into thepossession of the Agent or any of its Affiliates.

 

## **10.7        SuccessorAgent.**

 

The Agent may resign at any time by giving notice thereof to theLenders and the Credit Parties.  Uponany such resignation, the Required Revolving Lenders shall have the right toappoint a successor Agent.  If nosuccessor Agent shall have been so appointed by the Required Revolving Lendersand shall have accepted such appointment within thirty (30) days after theretiring Agent’s giving of notice of resignation, then the retiring Agent may,on behalf of the Lenders, appoint a successor Agent which shall be a commercialbank organized under the laws of the United States having combined capital andsurplus of at least $100,000,000.  Uponthe acceptance of any appointment as Agent hereunder by a successor, suchsuccessor shall thereupon succeed to and become vested with all the rights,powers, discretion, privileges, and duties of the retiring Agent, and theretiring Agent shall be discharged from its duties and obligationshereunder.  After any retiring Agent’sresignation hereunder as Agent, the provisions of this Section 10 shallcontinue in effect for its benefit in respect of any actions taken or omittedto be taken by it while it was acting as Agent.  If no successor Agent has accepted appointment as Agent underthis Credit Agreement by the date which is 30 days following a retiring Agent’snotice of resignation, the retiring Agent’s resignation shall neverthelessthereupon become effective and the Lenders shall perform all the duties of theAgent hereunder until such time, if any, as the Required Lenders appoint asuccessor agent as provided for above.

 

 

# **ARTICLE XI**

# ** **

# **MISCELLANEOUS**

 

## **11.1        Notices.**

 

Except as otherwise expressly provided herein, all notices and othercommunications shall have been duly given and shall be effective (a) whendelivered, (b) when transmitted via telecopy (or other facsimile device)to the number set out below, (c) the Business Day following the day onwhich the same has been delivered prepaid (orpursuant to an invoice arrangement) to a reputable national overnight aircourier service, or (d) the third Business Day following the day on whichthe same is sent by certified or registered mail, postage prepaid, in each caseto the respective parties at the address, in the case of the Credit Parties andthe Agent, set forth below, and, in the case of the Lenders, set forth on Schedule 2.1(a),or at such other address as such party may specify by written notice to theother parties hereto:

 

if to any Credit Party:

 

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

c/o U.S.Restaurant Properties, Inc.

12240 InwoodRoad, Suite 300

Dallas, TX 75244

Attn: Stacy M. Riffe, CFO

Telephone: (972) 387-1487, ext 112

Telecopy: (972) 490-9119

 

if to the Agent (for credit-related matters):

 

Bank of America,N.A.

231 SouthLaSalle Street

M/C:  IL1-231-10-35

Chicago, IL  60697

Attention:Matthew W. Sadler, Vice President, Global Portfolio Management, Real Estate

Phone:  (312) 828-7107

Fax:  (312) 974-4970

E-mail:  matthew.w.sadler@bankofamerica.com

 

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and if to the Agent (for administrativematters):

 

Bank of America,N.A.

231 SouthLaSalle Street

Mail code:  IL1-231-10-30

Chicago, IL60697

Attention:Charlene E. Wright-Jones, Assistant Vice President

Phone:  312-828-4160

Fax:  312-828-3950

E-mail:  charlene.wright-jones@bankofamerica.com

 

and if to the Agent (for agency matters):

 

Ramon Garcia

Agency Management Officer

GGIB Agency Management Central

Bank of America

901 Main St.

Dallas, TX 75202-3714

Telephone: (214) 209-4126

Fax:         (214)290-9520

E-mail:    ramon.garcia@bankofamerica.com

 

## **11.2        Rightof Set-Off; Adjustments.**

 

Upon the occurrence and during the continuance of any Event of Default,each Lender (and each of its Affiliates) is hereby authorized (subject to theterms and conditions of the Intercreditor Agreement) at any time and from timeto time, to the fullest extent permitted by law, to set off and apply any andall deposits (general or special, time or demand, provisional or final) at anytime held and other indebtedness at any time owing by such Lender (or any ofits Affiliates) to or for the credit or the account of any Credit Party againstany and all of the obligations of such Person now or hereafter existing underthis Credit Agreement, under the Notes, under any other Credit Document orotherwise, irrespective of whether such Lender shall have made any demandhereunder or thereunder 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 application.  The rights of each Lender under thisSection 11.2 are in addition to other rights and remedies (including, withoutlimitation, other rights of set-off) that such Lender may have.

 

**11.3        Successors and Assigns.**

 

(a)           The provisions ofthis Agreement shall be binding upon and inure to the benefit of the partieshereto and their respective successors and assigns permitted hereby, exceptthat the Borrower may not assign or otherwise transfer any of its rights orobligations hereunder without the prior written consent of each Lender and noLender may assign or otherwise transfer any of its rights or obligationshereunder except (i) to an Eligible Assignee in accordance with the provisionsof paragraph (b) of this Section, (ii) by way of participation in accordancewith the provisions of paragraph (d) of this Section or (iii) by way of pledgeor assignment of a security interest subject to the restrictions of paragraph(f) of this Section (and any other attempted assignment or transfer by anyparty hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed toconfer upon any Person (other than the parties hereto, their respectivesuccessors and assigns permitted hereby, Participants to the extent provided inparagraph (d) of this Section and, to the extent expressly contemplated hereby,the Related Parties of each of the Agent and the Lenders) any legal orequitable right, remedy or claim under or by reason of this Agreement.

 

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(b)           Any Lender may atany time assign to one or more Eligible Assignees all or a portion of itsrights and obligations under this Agreement (including all or a portion of itsCommitment and the Loans at the time owing to it); provided that (i)except in the case of an assignment of the entire remaining amount of theassigning Lender’s Commitment and the Loans at the time owing to it or in thecase of an assignment to a Lender or an Affiliate of a Lender or an ApprovedFund with respect to a Lender, the aggregate amount of the Commitment (whichfor this purpose includes Loans outstanding thereunder) or, if the applicableCommitment is not then in effect, the principal outstanding balance of the Loanof the assigning Lender subject to each such assignment (determined as of thedate the Assignment and Assumption with respect to such assignment is deliveredto the Agent or, if “Trade Date” is specified in the Assignment and Assumption,as of the Trade Date) shall not be less than $2,500,000, unless each of theAgent and, so long as no default or Event of Default has occurred and iscontinuing hereunder or any other Credit Document, the Borrower otherwiseconsent (each such consent not to be unreasonably withheld or delayed); (ii)each partial assignment shall be made as an assignment of a proportionate partof all the assigning Lender’s rights and obligations under this Agreement withrespect to the Loan or the Commitment assigned; (iii) any assignment of aRevolving Commitment must be approved by the Agent and the Issuing Lenderunless the Person that is the proposed assignee is itself a Lender with aRevolving Commitment (whether or not the proposed assignee would otherwisequalify as an Eligible Assignee); and (iv) the parties to each assignment shallexecute and deliver to the Agent an Assignment and Assumption and an ICAJoinder Agreement, 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 this purpose as an agent of theBorrower, shall maintain at one of its offices a copy of each Assignment andAssumption delivered to it and a register for the recordation of the names andaddresses of the Lenders, and the Commitments of, and principal amounts of theLoans owing to, each Lender pursuant to the terms hereof from time to time (the“Register”).  The entries in theRegister shall be conclusive, and the Borrower, the Agent and the Lenders maytreat each Person whose name is recorded in the Register pursuant to the termshereof as a Lender hereunder for all purposes of this Agreement,notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and anyLender, at any reasonable time and from time to time upon reasonable priornotice.

 

(d)           Any Lender may at any time, without the consent of, ornotice to, the Borrower or the Agent, sell participations (in minimum amountsof not less than $2,500,000) to any Person (other than a natural person, theBorrower or any of the Credit Parties or any of the Borrower’s or any CreditParty’s Affiliates or Subsidiaries) (each, a “Participant”) in all or aportion of such Lender’s rights and/or obligations under this Agreement(including all or a portion of its Commitment and/or the Loans owing to it); providedthat (i) such Lender’s obligations under this Agreement shall remainunchanged, (ii) such Lender shall remain solely responsible to the otherparties hereto for the performance of such obligations and (iii) theBorrower, the Agent and the other Lenders shall continue to deal solely anddirectly with such Lender in connection with such Lender’s rights andobligations under this Agreement.  Anyagreement or instrument pursuant to which a Lender sells such a participationshall provide that such Lender shall retain the sole right to enforce thisAgreement and to approve any amendment, 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

 

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Participant agrees to be subject to Sections 3.14 and 3.15 and theIntercreditor Agreement as though it were a Lender.

 

(e)           A Participant shall not be entitled to receive any greaterpayment under Sections 3.6 through 3.12**than the applicable Lender would havebeen entitled to receive with respect to the participation sold to suchParticipant, unless the sale of the participation to such Participant is madewith the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shallnot be entitled to the benefits of Section 3.11 unless the Borrower isnotified of the participation sold to such Participant and such Participantagrees, for the benefit of the Borrower, to comply with Section 3.11 as thoughit were a Lender.

 

(f)            Any Lender mayat any time pledge or assign a security interest in all or any portion of itsrights under this Agreement to secure obligations of such Lender, includingwithout limitation any pledge or assignment to secure obligations to a FederalReserve Bank; provided that no such pledge or assignment shall releasesuch Lender from any of its obligations hereunder or substitute any suchpledgee or assignee for such Lender as a party hereto.

 

## **11.4        NoWaiver; Remedies Cumulative.**

 

No failure or delay on the part of the Agent or any Lender inexercising any right, power or privilege hereunder or under any other CreditDocument and no course of dealing between the Agent or any Lender and any ofthe Credit Parties shall operate as a waiver thereof; nor shall any single or partialexercise of any right, power or privilege hereunder or under any other CreditDocument preclude any other or further exercise thereof or the exercise of anyother right, power or privilege hereunder or thereunder.  The rights and remedies provided herein arecumulative and not exclusive of any rights or remedies which the Agent or anyLender would otherwise have.  No noticeto or demand on any Credit Party in any case shall entitle the Credit Partiesto any other or further notice or demand in similar or other circumstances orconstitute a waiver of the rights of the Agent or the Lenders to any other orfurther action in any circumstances without notice or demand.

 

## **11.5        Expenses; Indemnification.**

 

(a)           TheCredit Parties jointly and severally agree to pay on demand all costs andexpenses of the Agent in connection with the syndication, preparation,execution, delivery, administration, modification, and amendment of this CreditAgreement, the other Credit Documents, and the other documents to be deliveredhereunder, including, without limitation, the reasonable fees and expenses ofcounsel for the Agent (including the cost of internal counsel) with respectthereto and with respect to advising the Agent as to its rights andresponsibilities under the Credit Documents. The Credit Parties further jointly and severally agree to pay on demandall costs and expenses of the Agent and the Lenders, if any (including, withoutlimitation, reasonable attorneys’ fees and expenses and the cost of internalcounsel), in connection with any work-out or restructuring relating to theCredit Facility or any enforcement (whether through negotiations, legalproceedings, or otherwise) of any of the Credit Documents.

 

(b)           TheCredit Parties jointly and severally agree to indemnify and hold harmless theAgent and each Lender and each of their Affiliates and their respectiveofficers, directors, employees, agents, and advisors (each, an “IndemnifiedParty”) from and against any and all claims, damages, losses, liabilities,costs, and expenses (including, without limitation, reasonable attorneys’ fees)that may be incurred by or asserted or awarded against any Indemnified Party,in each case arising out of or in connection with or by reason of (including,without limitation, in connection with any investigation, litigation, orproceeding or preparation of defense in connection therewith) the CreditDocuments, any of the transactions contemplated herein or the actual orproposed use of the proceeds of the Loans, except to the extent such claim,damage, loss, liability, cost, or expense is found in a final, non-appealablejudgment by a court of competent jurisdiction to have resulted from suchIndemnified Party’s gross negligence or willful misconduct.  In the case of an investigation, litigationor other proceeding to which the indemnity in this Section 11.5 applies,such indemnity shall be effective whether or not such investigation, litigationor proceeding is brought by any of the Credit Parties, their respectivedirectors, shareholders or creditors or an Indemnified Party or any otherPerson or any Indemnified Party is otherwise a party thereto and whether or notthe transactions contemplated hereby are consummated.  The Credit Parties agree not to assert any claim against theAgent,

 

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any Lender, any of their Affiliates, or any of their respectivedirectors, officers, employees, attorneys, agents, and advisers, on any theoryof liability, for special, indirect, consequential, or punitive damages arisingout of or otherwise relating to the Credit Documents, any of the transactionscontemplated herein or the actual or proposed use of the proceeds of the Loans.

 

(c)           Withoutprejudice to the survival of any other agreement of the Credit Partieshereunder, the agreements and obligations of the Credit Parties contained inthis 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.**

 

(a)           Neitherthis Credit Agreement nor any other Credit Document nor any of the terms hereofor thereof may be amended, deleted or otherwise changed unless such amendment,deletion or change is in writing entered into by, or approved in writing by,each of the Credit Parties party thereto and the Required Lenders, provided,however, that:

 

(i)            without the consent of each Lenderaffected thereby (in addition to Required Lender consent), neither this CreditAgreement nor any other Credit Document may be amended, deleted or otherwisechanged so as to:

 

(A)          extend any Commitment or the finalmaturity of any Loan or of any reimbursement obligation, or any portionthereof, arising from drawings under Letters of Credit, or extend any paymentdue (or to be due) in connection with any Loan, or any portion thereof,

 

(B)           reduce the rate or extend the time ofpayment of interest on any Loan or of any reimbursement obligation, or anyportion thereof, arising from drawings under Letters of Credit (subject to theright of the Required Revolving Lenders to waive the applicability of anypost-default increase in interest rates pursuant to Section 11.6(b) below) orof any Fees,

 

(C)           reduce the principal amount of anyLoan or of any reimbursement obligation, or any portion thereof, arising fromdrawings under Letters of Credit,

 

(D)          increase the Commitment of a Lenderover the amount thereof in effect (it being understood and agreed that a waiverof any condition precedent set forth in Section 5.2 or of any Default orEvent of Default or mandatory reduction in the Commitments shall not constitutea change in the terms of any Commitment of any Lender),

 

(E)           except as the result of or inconnection with a dissolution, merger or disposition of a Consolidated Partynot prohibited by Section 8.4 or Section 8.5, release the Borrower orsubstantially all of the other Credit Parties from its or their obligationsunder the Credit Documents,

 

(F)           amend or modify any provision of thisSection 11.6,

 

(G)           reduce any percentage specified in,or otherwise modify, the definition of Required Lenders or Required RevolvingLenders, or

 

(H)          consent to the assignment or transferby the Borrower or any of the other Credit Parties of all or substantially allof their rights and obligations under (or in respect of) the Credit Documentsexcept as permitted thereby;

 

(ii)           without the consent of the Agent, noprovision of Section 10 may be amended, deleted or otherwise changed;

 

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(iii)          without the consent of the IssuingLender, no provision of Section 2.2 may be amended, deleted or otherwisechanged; and

 

(iv)          provisions contained in this CreditAgreement and in the Credit Documents pertaining to purely ministerial or administrativematters may be amended, deleted or otherwise changed upon the obtaining of thewritten consent of the Credit Parties and Required Revolving Lenders(regardless of whether Required Lender consent is obtained) to the extend suchamendments, deletions and/or other changes do not, in the judgment of theCollateral Agent, materially and adversely effect the rights, remedies orexpected financial return of the Term Loan Lenders.

 

Notwithstanding the fact that the consent ofall the Lenders is required in certain circumstances as set forth above,(x) each Lender is entitled to vote as such Lender sees fit on anybankruptcy reorganization plan that affects the Loans, and each Lenderacknowledges that the provisions of Section 1126(c) of the Bankruptcy Codesupersedes the unanimous consent provisions set forth herein and (y) theRequired Lenders shall, subject to the terms of the Intercreditor Agreement,determine whether or not to allow a Credit Party to use cash collateral in thecontext of a bankruptcy or insolvency proceeding and such determination shallbe binding on all of the Lenders.

 

(b)           None of the terms or conditions ofthis Credit Agreement or of any of the other Credit Documents may be waivedwithout the written consent of the Required Revolving Lenders; provided,however, that:

 

(i)            without the consent of each Lenderaffected thereby, neither this Credit Agreement nor any other Credit Documentmay be waived so as to (whether expressly or effectively):

 

(A)          extend any Commitment or the final maturityof any Loan or of any reimbursement obligation, or any portion thereof, arisingfrom drawings under Letters of Credit (provided, that any waiver which has theeffect of extending the final maturity of any Loan or any such obligation shallconstitute an amendment requiring approval pursuant to clause (a) of thisSection 11.6), or otherwise waive any payment due (or to be due) in connectionwith any Loan, or any portion thereof,

 

(B)           reduce the rate or extend the time ofpayment of interest on any Loan or of any reimbursement obligation, or anyportion thereof, arising from drawings under Letters of Credit (other than as aresult of waiving the applicability of any post-default increase in interestrates) or of any Fees,

 

(C)           waive the principal amount of anyLoan or of any reimbursement obligation, or any portion thereof, arising fromdrawings under Letters of Credit,

 

(D)          increase the Commitment of a Lenderover the amount thereof in effect (it being understood and agreed that a waiverof any condition precedent set forth in Section 5.2 or of any Default orEvent of Default or mandatory reduction in the Commitments shall not constitutea change in the terms of any Commitment of any Lender),

 

(E)           except as the result of or inconnection with a dissolution, merger or disposition of a Consolidated Partynot prohibited by Section 8.4 or Section 8.5, release the Borrower orsubstantially all of the other Credit Parties from its or their obligationsunder the Credit Documents,

 

(F)           waive any provision of thisSection 11.6 (provided, that any such waiver shall, for purposes hereof,constitute an amendment requiring approval pursuant to clause (a) of thisSection 11.6),

 

(G)           reduce any percentage specified in,or otherwise modify, the definition of Required Lenders or Required RevolvingLenders (provided, that any waiver having such an

 

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effect shall, for purposes hereof, constitutean amendment requiring approval pursuant to clause (a) of this Section 11.6),or

 

(H)          consent to the assignment or transferby the Borrower or any of the other Credit Parties of all or substantially allof their rights and obligations under (or in respect of) the Credit Documentsexcept as permitted thereby;

 

(ii)           without the consent of the Agent, noprovision of Section 10 may be waived; and

 

(iii)          without the consent of the IssuingLender, no provision of Section 2.2 may be waived.

 

## **11.7        Counterparts.**

 

This Credit Agreement may be executed in any number of counterparts,each of which when so executed shall be an original, but all of which shallconstitute one and the same instrument. It shall not be necessary in making proof of this Credit Agreement toproduce or account for more than one such counterpart for each of the partieshereto.  Delivery by facsimile by any ofthe parties hereto of an executed counterpart of this Credit Agreement shall beas effective as an original executed counterpart hereof and shall be deemed arepresentation that an original executed counterpart hereof will be delivered.

 

## **11.8        Headings.**

 

The headings of the sections hereof are provided for convenience onlyand shall not in any way affect the meaning or construction of any provision ofthis Credit Agreement.

 

## **11.9        Survival.**

 

All indemnities 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 Partiesherein shall survive until this Credit Agreement shall be terminated inaccordance with the terms of Section 11.13(b).

 

## **11.10      GoverningLaw; Submission to Jurisdiction; Venue.**

 

(a)           THIS CREDIT AGREEMENT AND, UNLESSOTHERWISE EXPRESSLY PROVIDED THEREIN, THE OTHER CREDIT DOCUMENTS AND THE RIGHTSAND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BYAND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTHCAROLINA.  Any legal action orproceeding with respect to this Credit Agreement or any other Credit Documentmay be brought in the courts of the State of North Carolina in MecklenburgCounty, or of the United States for the Western District of North Carolina,and, by execution and delivery of this Credit Agreement, each of the CreditParties hereby irrevocably accepts for itself and in respect of its property,generally and unconditionally, the nonexclusive jurisdiction of suchcourts.  Each of the Credit Partiesfurther irrevocably consents to the service of process out of any of theaforementioned courts in any such action or proceeding by the mailing of copiesthereof by registered or certified mail, postage prepaid, to it at the addressset out for notices pursuant to Section 11.1, such service to becomeeffective three (3) days after such mailing.  Nothing herein shall affect the right of the Agent or any Lenderto serve process in any other manner permitted by law or to commence legalproceedings or to otherwise proceed against any Credit Party in any otherjurisdiction.

 

(b)           Each of the Credit Parties herebyirrevocably waives any objection which it may now or hereafter have to thelaying of venue of any of the aforesaid actions or proceedings arising out ofor in connection with this Credit Agreement or any other Credit Documentbrought in the courts referred to in subsection (a) above and herebyfurther irrevocably waives and agrees not to plead or claim in any such courtthat any such action or proceeding brought in any such court has been broughtin an inconvenient forum.

 

84

----

 

(c)           TO THE EXTENT PERMITTED BY LAW, EACHOF THE AGENT, THE LENDERS, EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVESALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISINGOUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTSOR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

## **11.11      Severability.**

 

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

 

## **11.12      Entirety.**

 

This Credit Agreement together with the other Credit Documentsrepresent the entire agreement of the parties hereto and thereto, and supersedeall prior agreements and understandings, oral or written, if any, including anycommitment letters or correspondence relating to the Credit Documents or thetransactions contemplated herein and therein.

 

## **11.13      BindingEffect; Termination.**

 

(a)           This Credit Agreement shall becomeeffective at such time on or after the Closing Date when it shall have beenexecuted by each Credit Party and the Agent, and the Agent shall have receivedcopies hereof (telefaxed or otherwise) which, when taken together, bear thesignatures of each Lender, and thereafter this Credit Agreement shall bebinding upon and inure to the benefit of each Credit Party, the Agent and eachLender and their respective successors and assigns.

 

(b)           The term of this Credit Agreement shallbe until the Credit Party Obligations are Fully Satisfied.

 

## **11.14      Confidentiality.**

 

Each Lender Party agrees to maintain the confidentiality of theInformation (as defined below), except that Information may be disclosed (a) toits and its Affiliates’ directors, officers, employees and agents, includingaccountants, legal counsel and other advisors (it being understood that thePersons to whom such disclosure is made will be informed of the confidentialnature of such Information and instructed to keep such Informationconfidential), (b) to the extent requested by any regulatory authority(including any self-regulatory authority, such as the National Association ofInsurance Commissioners), (c) to the extent required by applicable laws orregulations or by any subpoena or similar legal process, (d) to any other partyhereto, (e) in connection with the exercise of any remedies hereunder or underany other Credit Document or any action or proceeding relating to thisAgreement or any other Credit Document or the enforcement of rights hereunderor thereunder, (f) subject to an agreement containing provisions substantiallythe same as those of this Section, to (i) any assignee of or Participant in, orany prospective assignee of or Participant in, any of its rights or obligationsunder this Agreement or (ii) any actual or prospective counterparty (or itsadvisors) to any swap or derivative transaction relating to the Borrower andits obligations, (g) with the consent of the Borrower or (h) to the extent suchInformation (x) becomes publicly available other than as a result of a breachof this Section or (y) becomes available to any Lender Party on anonconfidential basis from a source other than the Borrower.  For purposes of this Section, “Information”means all information received from any Credit Party relating to any CreditParty or any of their respective businesses, other than any such informationthat is available to the Agent or any Lender on a nonconfidential basis priorto disclosure by any Credit Party, provided that, in the case of informationreceived from a Credit Party after the date hereof, such information is clearlyidentified at the time of delivery as confidential.  Any Person required to maintain the confidentiality ofInformation as provided in this Section shall be considered to have compliedwith its obligation to do so if such Person has exercised the same degree ofcare to maintain the confidentiality of such Information as such Person wouldaccord to its own confidential information. Notwithstanding anything herein tothe contrary, “Information” shall not include, and the Borrower, the otherCredit Parties**,** the Lender Parties and the respective

 

85

----

 

Affiliates of each of the foregoing (and the respective partners,directors, officers, employees, agents, advisors and other representatives ofeach of the foregoing and their Affiliates) may disclose to any and allPersons, without limitation of any kind (a) any information with respect to theU.S. federal and state income tax treatment of the transactions contemplatedhereby and any facts that may be relevant to understanding such tax treatment,which facts shall not include for this purpose the names of the parties or anyother Person named herein, or information that would permit identification ofthe parties or such other Persons, or any pricing terms or other nonpublicbusiness or financial information that is unrelated to such tax treatment orfacts, and (b) all materials of any kind (including opinions or other taxanalyses) relating to such tax treatment or facts that are provided to any ofthe Persons referred to above.

 

## **11.15      Source of Funds.**

 

Each of the Lenders hereby represents and warrants to the Borrower thatat least one of the following statements is an accurate representation as tothe source of funds to be used by such Lender in connection with the financinghereunder:

 

(a)           no part of such funds constitutesassets allocated to any separate account maintained by such Lender in which anyemployee benefit plan (or its related trust) has any interest;

 

(b)           to the extent that any part of suchfunds constitutes assets allocated to any separate account maintained by suchLender, such Lender has disclosed to the Borrower the name of each employeebenefit plan whose assets in such account exceed 10% of the total assets ofsuch account as of the date of such purchase (and, for purposes of thisclause (b), all employee benefit plans maintained by the same employer oremployee organization are deemed to be a single plan);

 

(c)           to the extent that any part of suchfunds constitutes assets of an insurance company’s general account, suchinsurance company has complied with all of the requirements of the regulationsissued under Section 401(c)(1)(A) of ERISA; or

 

(d)           such funds constitute assets of oneor more specific benefit plans which such Lender has identified in writing tothe Borrower.

 

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

 

## **11.16      Regulation D.**

 

Each of the Lenders hereby represents and warrants to the Borrower thatit is a commercial lender, other financial institution or other “accredited”investor (as defined in SEC Regulation D) which makes or acquires or loanson the ordinary course of business and that it will make or acquire Loans forits own account in the ordinary course of business.

 

## **11.17      Conflict.**

 

To the extent that there is a conflict or inconsistency between anyprovision hereof, on the one hand, and any provision of any Credit Document, onthe other hand, this Credit Agreement shall control.

 

## **11.18      USAPatriot Act Notice.**

 

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

 

86

----

 

[Remainder of Page Left Intentionally Blank –Signature Pages, Schedules and Exhibits to Follow]

 

87

----

 

**INWITNESS WHEREOF**, each of the parties hereto has causeda counterpart of this Credit Agreement to be duly executed and delivered as ofthe date first above written.

 

 
| **PRINCIPAL BORROWER**: |   | **U.S.  RESTAURANT  PROPERTIES OPERATING L.P.** |
|-------------------------|--------|-----------------------------------------------------------|
|                    |   |                                                      |   |   |   |
|                    |   | By:   USRP MANAGING, INC.                            |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|                    |   |                                                      | Name: | Stacy M. Riffe |   |
|                    |   |                                                      | Title: | Chief Financial Officer |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
| **GENERAL SPE:**        |   | **USRP FUNDING 2002-A, L.P.**                             |
|                    |   |                                                      |   |   |   |
|                    |   | By:   USRP (SFGP) 2, LLC                             |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|                    |   |                                                      | Name: | Stacy M. Riffe |   |
|                    |   |                                                      | Title: | Chief Financial Officer |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
| **S&C:**            |   | **USRP (S&C), LLC**                                   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|                    |   |                                                      | Name: | Stacy M. Riffe |   |
|                    |   |                                                      | Title: | Chief Financial Officer |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
| **HCI:**                |   | **USRP/HCI PARTNERSHIP 1, L.P.**                          |
|                    |   |                                                      |   |   |   |
|                    |   | By:   USRP (JV1), LLC                                |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|                    |   |                                                      | Name: | Stacy M. Riffe |   |
|                    |   |                                                      | Title: | Chief Financial Officer |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
| **JV1:**                |   | **USRP (JV1), LLC**                                       |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|                    |   |                                                      | Name: | Stacy M. Riffe |   |
|                    |   |                                                      | Title: | Chief Financial Officer |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
| **USRP Holding:**       |   | **USRP HOLDING CORP.**                                    |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|                    |   |                                                      | Name: | Stacy M. Riffe |   |
|                    |   |                                                      | Title: | Chief Financial Officer |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
| **GENERAL PARTNER**:    |   | **USRP MANAGING, INC.**                                   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      |   |   |   |
|                    |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|                    |   |                                                      | Name: | Stacy M. Riffe |   |
|                    |   |                                                      | Title: | Chief Financial Officer |   |
|                         |        |                                                           |  |  |  |  |  |  |  |

 

----

 
| **USRP REIT**:              |   | **U.S.  RESTAURANT PROPERTIES,  INC.**                         |
|-----------------------------|--------|---------------------------------------------------------------------|
|                        |   |                                                                |   |   |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: |   | /s/ Stacy M. Riffe |   |
|                        |   |                                                                | Name: | Stacy M. Riffe |   |
|                        |   |                                                                | Title: | Chief Financial Officer |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                |   |   |   |
| **SUBSIDIARY  GUARANTORS**: |   | **ARKANSAS RESTAURANTS #10, L.P.,**a Texas  limited  partnership    |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: North American Restaurant Management,  Inc. |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: |   | /s/ Stacy M. Riffe |   |
|                        |   |                                                                | Name: | Stacy M. Riffe |   |
|                        |   |                                                                | Title: | Chief Financial Officer |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                |   |   |   |
|                        |   | **RESTAURANT PROPERTY PARTNERS, L.P.,**a Texas  limited partnership |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: Restaurant Funding, Inc. |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: |   | /s/ Stacy M. Riffe |   |
|                        |   |                                                                | Name: | Stacy M. Riffe |   |
|                        |   |                                                                | Title: | Chief Financial Officer |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                |   |   |   |
|                        |   | **USRP (66), LTD.,**a Texas limited partnership                     |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: USRP GP1, LLC |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: |   | /s/ Stacy M. Riffe |   |
|                        |   |                                                                | Name: | Stacy M. Riffe |   |
|                        |   |                                                                | Title: | Chief Financial Officer |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                |   |   |   |
|                        |   | **USRP (FAIN 10), L.P.,**a Texas limited  partnership               |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: USRP GP5, LLC |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: |   | /s/ Stacy M. Riffe |   |
|                        |   |                                                                | Name: | Stacy M. Riffe |   |
|                        |   |                                                                | Title: | Chief Financial Officer |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                |   |   |   |
|                        |   | **USRP (KATY), L.P.,**a Texas limited  partnership                  |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: USRP GP8, LLC |   |
|                        |   |                                                                |   |   |   |
|                        |   |                                                                | By: |   | /s/ Stacy M. Riffe |   |
|                        |   |                                                                | Name: | Stacy M. Riffe |   |
|                        |   |                                                                | Title: | Chief Financial Officer |   |
|                             |        |                                                                     |  |  |  |  |  |  |  |

 

----

 
|   |   | **USRP (PAC), L.P.,**a Texas limited  partnership         |
|--------|--------|-----------------------------------------------------------|
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: USRP (Cap), Inc. |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                      | Name: | Stacy M. Riffe |   |
|   |   |                                                      | Title: | Chief Financial Officer |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   | **USRP (QUEST), L.P.,**a Texas limited  partnership       |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: USRP GP4, LLC |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                      | Name: | Stacy M. Riffe |   |
|   |   |                                                      | Title: | Chief Financial Officer |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   | **USRP (SAN ANTONIO), LTD.,**a Texas limited  partnership |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: USRP GP, LLC |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                      | Name: | Stacy M. Riffe |   |
|   |   |                                                      | Title: | Chief Financial Officer |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   | **USRP (T&C), L.P.,**a Texas limited  partnership     |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: USRP GP3, LLC |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                      | Name: | Stacy M. Riffe |   |
|   |   |                                                      | Title: | Chief Financial Officer |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   | **BULLDOG MANAGEMENT, INC.**                              |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                      | Name: | Stacy M. Riffe |   |
|   |   |                                                      | Title: | Chief Financial Officer |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   | **NORTH AMERICAN RESTAURANT MANAGEMENT,  INC.**           |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                      | Name: | Stacy M. Riffe |   |
|   |   |                                                      | Title: | Chief Financial Officer |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   | **RESTAURANT FUNDING, INC.**                              |
|   |   |                                                      |   |   |   |
|   |   |                                                      |   |   |   |
|   |   |                                                      | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                      | Name: | Stacy M. Riffe |   |
|   |   |                                                      | Title: | Chief Financial Officer |   |
|        |        |                                                           |  |  |  |  |  |  |  |

 

----

 
|   |   | **PINNACLE RESTAURANT GROUP, LLC,**a Texas  limited liability company |
|--------|--------|-----------------------------------------------------------------------|
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   | **USRP (ACQUISITION), LLC,**a Texas limited  liability  company       |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   | **USRP (BC), LLC,**a Texas limited liability  company                 |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   | **USRP (BILL), LLC,**a Texas limited liability  company               |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   | **USRP (CAL), LLC,**a Texas limited liability  company                |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   | **USRP (CAP), INC.**a Texas corporation                               |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   | **USRP (CARROLL), LLC,** a Texas limited  liability company           |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   | **USRP (CENTRAL AVENUE), LLC,**a Texas limited  liability company     |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   | **USRP (CHRIS), LLC,**a Texas limited liability  company              |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  |   |   |   |
|   |   |                                                                  | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                                  | Name: | Stacy M. Riffe |   |
|   |   |                                                                  | Title: | Chief Financial Officer |   |
|        |        |                                                                       |  |  |  |  |  |  |  |

 

----

 
|   |   | **USRP (DEEDEE), LLC,**a Texas limited  liability company  |
|--------|--------|------------------------------------------------------------|
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   | **USRP (DON), LLC,**a Texas limited liability  company     |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   | **USRP (FINANCE), LLC,**a Texas limited  liability company |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   | **USRP (FRED), LLC,**a Texas limited liability  company    |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   | **USRP (GANT1), LLC,**a Texas limited liability  company   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   | **USRP (GANT2), LLC,**a Texas limited liability  company   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   | **USRP (GOLD), LLC,**a Texas limited liability  company    |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   | **USRP GP, LLC,**a Texas limited liability  company        |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   | **USRP GP1, LLC,**a Texas limited liability company        |
|   |   |                                                       |   |   |   |
|   |   |                                                       |   |   |   |
|   |   |                                                       | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                       | Name: | Stacy M. Riffe |   |
|   |   |                                                       | Title: | Chief Financial Officer |   |
|        |        |                                                            |  |  |  |  |  |  |  |

 

----

 
|   |   | **USRP GP3, LLC,**a Texas limited liability  company        |
|--------|--------|-------------------------------------------------------------|
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   | **USRP GP4, LLC,**a Texas limited liability  company        |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   | **USRP GP5, LLC,**a Texas limited liability  company        |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   | **USRP GP6, LLC,**a Texas limited liability  company        |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   | **USRP GP7, LLC,**a Texas limited liability  company        |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   | **USRP GP8, LLC,**a Texas limited liability  company        |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   | **USRP (ILLINOIS), LLC,**a Texas limited  liability company |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   | **USRP (JENNIFER), LLC,**a Texas limited  liability company |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   | **USRP (JONES), LLC,**a Texas limited liability  company    |
|   |   |                                                        |   |   |   |
|   |   |                                                        |   |   |   |
|   |   |                                                        | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                        | Name: | Stacy M. Riffe |   |
|   |   |                                                        | Title: | Chief Financial Officer |   |
|        |        |                                                             |  |  |  |  |  |  |  |

 

----

 
|   |   | **USRP (JV2), LLC,**a Texas limited liability  company(1)     |
|--------|--------|---------------------------------------------------------------|
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                          | Name: | Stacy M. Riffe |   |
|   |   |                                                          | Title: | Chief Financial Officer |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   | **USRP (MANAGER), LLC,**a Texas limited  liability  company   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                          | Name: | Stacy M. Riffe |   |
|   |   |                                                          | Title: | Chief Financial Officer |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   | **USRP (MIDON), LLC,**a Texas limited liability  company      |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                          | Name: | Stacy M. Riffe |   |
|   |   |                                                          | Title: | Chief Financial Officer |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   | **USRP (MINNESOTA), LLC,**a Texas limited  liability  company |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                          | Name: | Stacy M. Riffe |   |
|   |   |                                                          | Title: | Chief Financial Officer |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   | **USRP (MISSOURI), LLC,**a Texas limited  liability company   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                          | Name: | Stacy M. Riffe |   |
|   |   |                                                          | Title: | Chief Financial Officer |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   | **USRP (MOLLY), LLC,**a Texas limited liability  company      |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                          | Name: | Stacy M. Riffe |   |
|   |   |                                                          | Title: | Chief Financial Officer |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   | **USRP (PALMA), LLC,**a Texas limited liability  company      |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                          | Name: | Stacy M. Riffe |   |
|   |   |                                                          | Title: | Chief Financial Officer |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   | **USRP (PAT), LLC,** a Texas limited liability  company       |
|   |   |                                                          |   |   |   |
|   |   |                                                          |   |   |   |
|   |   |                                                          | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                          | Name: | Stacy M. Riffe |   |
|   |   |                                                          | Title: | Chief Financial Officer |   |
|        |        |                                                               |  |  |  |  |  |  |  |

 

----

*(1) NOTE – ALTHOUGH INCLUDED IN THE EXECUTED SIGNATURE PAGES OF THEDOCUMENT, THE JV2 ENTITY HAS BEEN DELETED AS A GUARANTOR – IT IS NOT ACONSOLIDATED PARTY AND WAS INCLUDED BY THE BORROWER IN ITS LIST OF SUNSIDIARYGUARANTORS IN ERROR*

 

----

 
|   |   | **USRP (POPEYE’S), LLC,**a Texas limited  liability company   |
|--------|--------|--------------------------------------------------------------------|
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                               | Name: | Stacy M. Riffe |   |
|   |   |                                                               | Title: | Chief Financial Officer |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   | **USRP (RIBBIT), LLC,**a Texas limited  liability company          |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                               | Name: | Stacy M. Riffe |   |
|   |   |                                                               | Title: | Chief Financial Officer |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   | **USRP (SARAH), LLC,**a Texas limited liability  company           |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                               | Name: | Stacy M. Riffe |   |
|   |   |                                                               | Title: | Chief Financial Officer |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   | **USRP (ST.  LOUIS), LLC,**a  Texas limited liability company |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                               | Name: | Stacy M. Riffe |   |
|   |   |                                                               | Title: | Chief Financial Officer |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   | **USRP (STEVE), LLC,**a Texas limited liability  company           |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                               | Name: | Stacy M. Riffe |   |
|   |   |                                                               | Title: | Chief Financial Officer |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   | **USRP (SUSI), LLC,**a Texas limited liability  company            |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                               | Name: | Stacy M. Riffe |   |
|   |   |                                                               | Title: | Chief Financial Officer |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   | **USRP (SYBRA), LLC,**a Texas limited liability  company           |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                               | Name: | Stacy M. Riffe |   |
|   |   |                                                               | Title: | Chief Financial Officer |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   | **USRP (VALERIE), LLC,**a Texas limited  liability company         |
|   |   |                                                               |   |   |   |
|   |   |                                                               |   |   |   |
|   |   |                                                               | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                               | Name: | Stacy M. Riffe |   |
|   |   |                                                               | Title: | Chief Financial Officer |   |
|        |        |                                                                    |  |  |  |  |  |  |  |

 

----

 
|   |   | **PINNACLE RESTAURANT GROUP II, LLC**            |
|--------|--------|--------------------------------------------------|
|   |   |                                             |   |   |   |
|   |   |                                             |   |   |   |
|   |   |                                             | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                             | Name: | Stacy M. Riffe |   |
|   |   |                                             | Title: | Chief Financial Officer |   |
|   |   |                                             |   |   |   |
|   |   |                                             |   |   |   |
|   |   | **USRP (CAROLINA), LTD.**                        |
|   |   |                                             |   |   |   |
|   |   | By:                                              | Restaurant Acquisition Corp. |
|   |   |                                             |   |   |   |
|   |   |                                             | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                             | Name: | Stacy M. Riffe |   |
|   |   |                                             | Title: | Chief Financial Officer |   |
|   |   |                                             |   |   |   |
|   |   |                                             |   |   |   |
|   |   | **USRP (LINCOLN), LTD.**                         |
|   |   |                                             |   |   |   |
|   |   | By:                                              | Restaurant Acquisition Corp. |   |
|   |   |                                             |   |   |   |
|   |   |                                             | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                             | Name: | Stacy M. Riffe |   |
|   |   |                                             | Title: | Chief Financial Officer |   |
|   |   |                                             |   |   |   |
|   |   |                                             |   |   |   |
|   |   | **USRP (NORMAN), LTD.**                          |
|   |   |                                             |   |   |   |
|   |   | By:                                              | Restaurant Acquisition Corp. |   |
|   |   |                                             |   |   |   |
|   |   |                                             | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                             | Name: | Stacy M. Riffe |   |
|   |   |                                             | Title: | Chief Financial Officer |   |
|   |   |                                             |   |   |   |
|   |   |                                             |   |   |   |
|   |   | **U.S. RESTAURANT PROPERTIES DEVELOPMENT  L.P.** |
|   |   |                                             |   |   |   |
|   |   |                                             | By:   Restaurant Contractor Corp. |   |
|   |   |                                             |   |   |   |
|   |   |                                             | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                             | Name: | Stacy M. Riffe |   |
|   |   |                                             | Title: | Chief Financial Officer |   |
|   |   |                                             |   |   |   |
|   |   |                                             |   |   |   |
|   |   | **RESTAURANT RENOVATION PARTNERS, L.P.**         |
|   |   |                                             |   |   |   |
|   |   |                                             | By: Restaurant Acquisition Corp. |   |
|   |   |                                             |   |   |   |
|   |   |                                             | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                             | Name: | Stacy M. Riffe |   |
|   |   |                                             | Title: | Chief Financial Officer |   |
|   |   |                                             |   |   |   |
|   |   |                                             |   |   |   |
|   |   | **RESTAURANT ACQUISITION CORP.**                 |
|   |   |                                             |   |   |   |
|   |   |                                             | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                             | Name: | Stacy M. Riffe |   |
|   |   |                                             | Title: | Chief Financial Officer |   |
|        |        |                                                  |  |  |  |  |  |  |  |

 

----

 
|   |   | **RESTAURANT CONTRACTOR CORP.**                              |
|--------|--------|--------------------------------------------------------------|
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   | **USRP RENOVATION CORP.**                                    |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   | **USRP (Green), LLC,**a Texas limited liability  company     |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   | **USRP (Martin), LLC,**a Texas limited  liability company    |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   | **USRP (SFGP)2, LLC,**a Texas limited liability  company     |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   | **USRP (SHOPORT)1, LLC,**a Texas limited  liability  company |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   | **USRP (Warren), LLC,**a Texas limited  liability company    |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   | **USRP (KRUSE), LLC,**a Texas limited liability  company     |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   | **USRP (PETERS), LLC,**a Texas limited  liability company    |
|   |   |                                                         |   |   |   |
|   |   |                                                         |   |   |   |
|   |   |                                                         | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                                                         | Name: | Stacy M. Riffe |   |
|   |   |                                                         | Title: | Chief Financial Officer |   |
|        |        |                                                              |  |  |  |  |  |  |  |

 

----

 
|   |   | **USRP (ADAMS), L.P.** |
|--------|--------|------------------------|
|   |   |                   |   |   |   |
|   |   |                   | By:   USRP GP7, LLC |   |
|   |   |                   |   |   |
|   |   |                   | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                   | Name: | Stacy M. Riffe |   |
|   |   |                   | Title: | Chief Financial Officer |   |
|   |   |                   |   |   |   |
|   |   |                   |   |   |   |
|   |   | **USRP (Maier), L.P.** |
|   |   |                   |   |   |   |
|   |   |                   | By:   USRP GP6, LLC |   |
|   |   |                   |   |   |
|   |   |                   | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                   | Name: | Stacy M. Riffe |   |
|   |   |                   | Title: | Chief Financial Officer |   |
|   |   |                   |   |   |   |
|   |   |                   |   |   |   |
|   |   | **USRP (SHO)1, L.P.**  |
|   |   |                   |   |   |   |
|   |   |                   | By:   USRP (SHOPORT)1, LLC |   |
|   |   |                   |   |   |   |
|   |   |                   | By: |   | /s/ Stacy M. Riffe |   |
|   |   |                   | Name: | Stacy M. Riffe |   |
|   |   |                   | Title: | Chief Financial Officer |   |
|        |        |                        |  |  |  |  |  |  |  |

 

[remainder of page left intentionally blank –additional signature pages, schedules and exhibits to follow]

 

----

 

**AGENT/ISSUINGLENDER/COLLATERAL AGENT:**

 

**BANK OF AMERICA, N.A.**, in its capacity as Agent, Issuing Lender andCollateral Agent

 

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

 

----

 

**Schedule1.1(a)**

 

**Revolving Commitments**

 

 
| **Lender**               |   | **Revolving  Committed Amount** |       | **Revolving  Commitment Percentage** |   |
|--------------------------|--------|---------------------------------|------------|--------------------------------------|--------|
| 1. Bank of America, N.A. |   | $                               | 30,000,000 |                                 |   | % |
| 2.                       |   |                            |       |                                 | %      |
| Totals:                  |   | $                               |       |                                 | 100.00 | % |

 

----

 

**Schedule 2.1(a)**

 

**LENDER ADDRESSES ANDCOMMITMENTS**

 

 

Lender/Agent:

 

Bank of America, N.A.

(for credit-related matters):

 

Matthew W.Sadler

Vice President

Global PortfolioManagement, Real Estate

Bank of America,N.A.

231 SouthLaSalle Street

M/C:  IL1-231-10-35

Chicago, IL  60697

Phone:  (312) 828-7107

Fax:  (312) 974-4970

E-mail:  matthew.w.sadler@bankofamerica.com

 

(for administrative matters):

 

Charlene E.Wright-Jones

Assistant VicePresident

Bank of America,N.A.

231 SouthLaSalle Street

Mail code:  IL1-231-10-30

Chicago, IL60697

Phone:  312-828-4160

Fax:  312-828-3950

E-mail:  charlene.wright-jones@bankofamerica.com

 

OtherLenders:

 

2

----

 

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

 

**FORM OF NOTICE OF BORROWING**

 

Renona Chinwendu

Bank of America Plaza

901 Main St., Mail Code TX1-492-14-05

Dallas, TX 75202-3714

Phone: (214) 209-2136

Fax: (214) 290-9484

 

Ladies and Gentlemen:

 

The undersigned, U.S. RESTAURANT  PROPERTIES OPERATING,L.P., as the Principal Borrower thereunder (the “Borrower”), refers tothe Credit Agreement dated as of November 4, 2003 (as amended, modified,restated or supplemented from time to time, the “Credit Agreement”),among the Borrower, the other borrowers named therein, the Guarantors, theLenders and Bank of America, N.A., as Agent. Capitalized terms used herein and not otherwise defined herein shallhave the meanings assigned to such terms in the Credit Agreement.  The Borrower hereby gives notice pursuant toSection 2.1 of the Credit Agreement that it requests a Revolving Loanadvance under the Credit Agreement, and in connection therewith sets forthbelow the terms on which such Loan 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    |   |   |
|   |   |                                        |   |   |
| (E)    |   | Purpose of borrowing                        |   |   |

 

In accordance with the requirements of Section 5.2, the Borrowerhereby reaffirms the representations and warranties set forth in the CreditAgreement as provided in clause (b) of such Section, and confirms that thematters referenced in clauses (c), (d) and (e) of such Section, are trueand correct.  The Borrower herebycovenants and agrees to use the proceeds of the borrowing requested abovesolely for those purposes expressly permitted pursuant to Sections 6.15 and 7.9of the Credit Agreement.

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

 

3

----

 

**Exhibit 2.1(e)**

 

**FORM OF REVOLVING NOTE**

 
| $__________ | , 2003 |
|-------------|--------|

 

 

FOR VALUE RECEIVED, U.S. RESTAURANT PROPERTIES OPERATING, L.P., aDelaware corporation, USRP FUNDING 2002-A, L.P., a Texas limited partnership,USRP (S&C), LLC, a Texas limited liability company, USRP (JV1), LLC, aTexas limited liability company, USRP/HCI PARTNERSHIP 1, L.P., a Texas limitedpartnership and USRP Holding Corp., a Texas corporation (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****231 South LaSalle Street**,**Mailcode:  IL1-231-10-30, Chicago, IL 60697(or at such other place or places as the holder hereof may designate), at thetimes set forth in the Credit Agreement dated as of November 4, 2003 among theBorrower, the Guarantors, the Lenders and the Agent (as it may be as amended,modified, restated or supplemented from time to time, the “Credit Agreement”;all capitalized terms not otherwise defined herein shall have the meanings setforth in the Credit Agreement), but in no event later than the Maturity Date,in Dollars and in immediately available funds, the principal amount 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.

 

Upon the occurrence and during the continuance of an Event of Default,the balance outstanding hereunder shall bear interest as provided inSection 3.1 of the Credit Agreement. Further, in the event the payment of all sums due hereunder isaccelerated under the terms of the Credit Agreement, this Note, and all otherindebtedness of the Borrower to the Lender shall become immediately due andpayable, without presentment, demand, protest or notice of any kind, all ofwhich are hereby waived by the Borrower.

 

In the event this Note is not paid when due at any stated oraccelerated maturity, the Borrower agrees to pay, in addition to the principaland interest, all costs of collection, including reasonable attorneys’ fees.

 

This Note and the Loans evidenced hereby may be transferred in whole orin part only by registration of such transfer on the Register maintained by oron behalf of the Borrower as provided in Section 11.3(c) of the CreditAgreement.

 

 

[remainder of page left intentionallyblank – signature page to follow]

 

4

----

 

IN WITNESS WHEREOF, the Borrower has caused this Note to be dulyexecuted by its duly authorized officer as of the day and year first abovewritten.

 
| **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: |   |   |
|          |   |                                                       |   |   |   |
|          |   |                                                       |   |   |   |
|          |   | **USRP (S&C), LLC**                                    |
|          |   |                                                       |   |   |   |
|          |   | By:                                                        | USRP Holding Corp. |   |
|          |   |                                                       |   |   |   |
|          |   |                                                       | By: |   |   |
|          |   |                                                       | Name: |   |   |
|          |   |                                                       | Title: |   |   |
|          |   |                                                       |   |   |   |
|          |   |                                                       |   |   |   |
|          |   | **USRP/HCI PARTNERSHIP 1, L.P.**                           |
|          |   |                                                       |   |   |   |
|          |   | By:                                                        | USRP (JV1), LLC |   |
|          |   |                                                       |   |   |   |
|          |   |                                                       | By: |   |   |
|          |   |                                                       | Name: |   |   |
|          |   |                                                       | Title: |   |   |
|          |   |                                                       |   |   |   |
|          |   |                                                       |   |   |   |
|          |   | **USRP (JV1), LLC.**                                       |
|          |   |                                                       |   |   |   |
|          |   |                                                       | By: |   |   |
|          |   |                                                       | Name: |   |   |
|          |   |                                                       | Title: |   |   |
|          |   |                                                       |   |   |   |
|          |   |                                                       |   |   |   |
|          |   | **USRP HOLDING CORP.**                                     |
|          |   |                                                       |   |   |   |
|          |   |                                                       | By: |   |   |
|          |   |                                                       | Name: |   |   |
|          |   |                                                       | Title: |   |   |
|               |        |                                                            |  |  |  |  |  |  |  |  |

 

5

----

 

**Exhibit 3.2**

 

**FORM OF NOTICE OF CONTINUATION/CONVERSION**

 

RamonGarcia

AgencyManagement Officer

GGIBAgency Management Central

Bankof America

901Main St.

Dallas,TX  75202-3714

Telephone:  (214) 209-4126

Fax:         (214) 290-9520

 

Ladies and Gentlemen:

 

The undersigned, U.S. RESTAURANT  PROPERTIES OPERATING,L.P., as principal borrower thereunder (the “Borrower”), refers to theCredit Agreement dated as of November 4, 2003 (as amended, modified, restatedor supplemented from time to time, the “Credit Agreement”), among theBorrower, the other borrowers named therein, the Guarantors, the Lenders and Bankof America, 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                                                        |   |   |   |

 

In accordance with the requirements of Section 5.2, the Borrowerhereby reaffirms the representations and warranties set forth in the CreditAgreement as provided in clause (b) of such Section, and confirms that thematters referenced in clauses (c), (d) and (e) of such Section, are trueand correct.

 

The undersigned officer of U.S. Restaurant Properties Operating L.P.hereby represents and warrants that he/she has the necessary power andauthority to execute this letter on behalf of the Borrower and that such actionhas been duly authorized by all necessary action of the Borrower and itspartners prior to or on the date hereof.

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

 

6

----

 

**Exhibit 7.1(c)**

 

**FORM OF OFFICER’S COMPLIANCE CERTIFICATE**

 

For the fiscalquarter 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 ofNovember 4, 2003 (as amended, modified, restated or supplemented from time totime, the “Credit Agreement”; all of the defined terms in the CreditAgreement are incorporated herein by reference) among the Borrower, theGuarantors, the Lenders and Bank of America, N.A., as Agent:

 

a.                                       Thecompany-prepared financial statements which accompany this certificate are trueand correct in all material respects and have been prepared in accordance withGAAP applied on a consistent basis, subject to changes resulting from normalyear-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:

 

 

 

Delivered herewith are detailed calculations demonstrating complianceby the Credit Parties with the Financial Covenants as of the end of the fiscalperiod referred to above.

 

This            day of                     , 20      .

 

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

 

7

----

 

Attachment toOfficer’s Certificate

 

**Computation of Financial Covenants**

 

8

----

 

**Exhibit 7.12**

 

**FORM OF JOINDER AGREEMENT**

 

**THISJOINDER AGREEMENT** (the “Agreement”), dated asof                        , 20     ,is by and between                                                ,a                                       (the “Subsidiary”), and **BANK OF AMERICA, N. A.**, in its capacity as Agent under that certain CreditAgreement (as it may be amended, modified, restated or supplemented from timeto time, the “Credit Agreement”), dated as of November 4, 2003, by andamong U.S. RESTAURANT PROPERTIES OPERATING L.P., a Delaware limited partnership(“USRP Operating” or the “Principal Borrower”), USRP FUNDING2002-A, L.P., a Texas limited partnership (the “General SPE”); USRP(S&C), LLC, a Texas limited liability company (“S&C”), USRP(JV1), LLC, a Texas limited liability company (“JV1”), USRP/HCIPARTNERSHIP 1, L.P., a Texas limited partnership (“HCI”), USRP HOLDINGCORP., a Texas corporation (“USRP Holding”; and together with thePrincipal Borrower, the General SPE, HCI, JV1 and S&C, the “Borrower”),the Guarantors, the Lenders and BANK OF AMERICA, N.A., as Agent.  All of the defined terms in the CreditAgreement are incorporated herein by reference.

 

The Credit Parties are required by Section 7.12 of the CreditAgreement to cause the Subsidiary to become a “Guarantor”.

 

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

 

1.             The Subsidiaryhereby acknowledges, agrees and confirms that, by its execution of this CreditAgreement, the Subsidiary will be deemed to be a party to the Credit Agreementand a “Guarantor” for all purposes of the Credit Agreement, and shall have allof the obligations of a Guarantor thereunder as if it had executed the CreditAgreement.  The Subsidiary herebyratifies, as of the date hereof, and agrees to be bound by, all of the terms,provisions and conditions applicable to the Guarantors contained in the CreditAgreement.  Without limiting thegenerality of the foregoing terms of this paragraph 1, the Subsidiary herebyjointly and severally together with the other Guarantors, guarantees to eachLender and the Agent, as provided in Section 4 of the Credit Agreement,the prompt payment and performance of the Credit Party Obligations in full whendue (whether at stated maturity, as a mandatory prepayment, by acceleration orotherwise) strictly in accordance with the terms thereof.

 

2.             The address of theSubsidiary for purposes of all notices and other communications is                          ,                                               ,Attention of                            (Facsimile No.                              ).

 

3.             The Subsidiaryhereby waives acceptance by the Agent and the Lenders of the guaranty by theSubsidiary under Section 4 of the Credit Agreement upon the execution ofthis Credit Agreement by the Subsidiary.

 

4.             This CreditAgreement may be executed in two or more counterparts, each of which shallconstitute an original but all of which when taken together shall constituteone contract.

 

5.             This CreditAgreement shall be governed by and construed and interpreted in accordance withthe laws of the State of North Carolina.

 

IN WITNESS WHEREOF, the Subsidiary has caused this Joinder Agreement tobe duly executed by its authorized officers, and the Agent, for the benefit ofthe Lenders, has caused the same to be accepted by its authorized officer, asof the day and year first above written.

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

 

9

----

 

**Exhibit 11.3(b)**

 

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignmentand Assumption”) is dated as of the Closing Date set forth below and isentered into by and between [*Insert name of Assignor*] (the “Assignor”)and [*Insertname of Assignee*] (the “Assignee”).  Capitalized terms used but not defined herein shall have themeanings given to them in the Credit Agreement identified below (as amended,the “Credit Agreement”), receipt of a copy of which is herebyacknowledged by the Assignee.  TheStandard Terms and Conditions set forth in Annex 1 attached hereto are herebyagreed to and incorporated herein by reference and made a part of thisAssignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignorhereby irrevocably sells and assigns to the Assignee, and the Assignee herebyirrevocably purchases and assumes from the Assignor, subject to and inaccordance with the Standard Terms and Conditions and the Credit Agreement, asof the Closing Date inserted by the Agent as contemplated below (i) all of theAssignor’s rights and obligations in its capacity as a Lender under the CreditAgreement and any other documents or instruments delivered pursuant thereto tothe extent related to the amount and percentage interest identified below ofall of such outstanding rights and obligations of the Assignor under therespective facilities identified below (including without limitation anyletters of credit, guarantees, and swingline loans included in such facilities)and (ii) to the extent permitted to be assigned under applicable law, allclaims, suits, causes of action and any other right of the Assignor (in itscapacity as a Lender) against any Person, whether known or unknown, arisingunder or in connection with the Credit Agreement, any other documents orinstruments delivered pursuant thereto or the loan transactions governedthereby or in any way based on or related to any of the foregoing, including,but not limited to, contract claims, tort claims, malpractice claims, statutoryclaims and all other claims at law or in equity related to the rights andobligations sold and assigned pursuant to clause (i) above (the rights andobligations sold and assigned pursuant to clauses (i) and (ii) above beingreferred 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*](2)]                                                                                                                                                                                                                                                                     |
|   |   |               |   |                                                                                                                                                                                                                                                                                                                               |
| 3.     |   | Borrower(s):       |   |                                                                                                                                                                                                                                                                                                                               |                                      |
|   |   |               |   |                                                                                                                                                                                                                                                                                                                               |
| 4.     |   | Agent:             |   |                                                                                                                                                                                                                                                                                                                               | , as the agent under the Credit Agreement |
|   |   |               |   |                                                                                                                                                                                                                                                                                                                               |
| 5.     |   | Credit Agreement:  |   | That certain Credit Agreement dated as of  November 4, 2003 among U.S. Restaurant Operating, L.P., USRP Funding 2002-A,  L.P., as the Principal Borrower, the other Borrowers thereunder, the  Guarantors referenced therein, the Lenders parties thereto, Bank of America,  N.A., as Agent, and the other agents parties thereto. |
|   |   |               |   |                                                                                                                                                                                                                                                                                                                               |
| 6.     |   | Assigned Interest: |   |                                                                                                                                                                                                                                                                                                                               |
|        |        |                    |        |                                                                                                                                                                                                                                                                                                                                    |                                           |  |

 
| **Facility  Assigned(3)** |   | **Aggregate Amount of  Commitment/Loans for all  Lenders*** |   | **Amount of   Commitment/Loans  Assigned*** |   | **Percentage Assigned of  Commitment/Loans(4)** |   |
|---------------------------|--------|-------------------------------------------------------------|--------|---------------------------------------------|--------|-------------------------------------------------|--------|
|                      |   | $                                                           |   |                                        | $      |                                            |   |   | % |
|                      |   | $                                                           |   |                                        | $      |                                            |   |   | % |
|                      |   | $                                                           |   |                                        | $      |                                            |   |   | % |

 

----

(2) Select as applicable.

(3) Fill in the appropriate terminology for the types offacilities under the Credit Agreement that are being assigned under thisAssignment (e.g. “Revolving Credit Commitment,” “Term Loan Commitment,” etc.)

* Amount to be adjusted by thecounterparties to take into account any payments or prepayments made betweenthe Trade Date and the Closing Date.

(4) Set forth, to at least 9decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

10

 

[7.           Trade Date:                                        ](5)

 

ClosingDate:                                  , 20      [TO BE INSERTED BYAGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THEREGISTER THEREFOR.]

 

The terms setforth in this Assignment and Assumption are hereby agreed to:

 

 

 

 

 

 

 

ASSIGNOR

 

 

 

 

 

 

[NAME OF  ASSIGNOR]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSIGNEE

 

 

 

 

 

 

[NAME OF  ASSIGNEE]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

Title:

Consented toand 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:

 

 

 

(5) To be completed if theAssignor and the Assignee intend that the minimum assignment amount is to bedetermined as of the Trade Date.

 

11

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.  Representations andWarranties.

 

1.1   Assignor.  The Assignor (a) represents and warrantsthat (i) it is the legal and beneficial owner of the Assigned Interest, (ii)the Assigned Interest is free and clear of any lien, encumbrance or otheradverse claim and (iii) it has full power and authority, and has taken allaction necessary, to execute and deliver this Assignment and Assumption and toconsummate the transactions contemplated hereby; and (b) assumes noresponsibility with respect to (i) any statements, warranties orrepresentations made in or in connection with the Credit Agreement or any otherCredit Document, (ii) the execution, legality, validity, enforceability,genuineness, sufficiency or value of the Credit Documents or any collateralthereunder, (iii) the financial condition of the Borrower, any of itsSubsidiaries or Affiliates or any other Person obligated in respect of anyCredit Document or (iv) the performance or observance by the Borrower, any ofits Subsidiaries or Affiliates or any other Person of any of their respectiveobligations under any Credit Document.

 

1.2.  Assignee.  The Assignee (a) represents and warrantsthat (i) it has full power and authority, and has taken all action necessary,to execute and deliver this Assignment and Assumption and to consummate thetransactions contemplated hereby and to become a Lender under the CreditAgreement, (ii) it meets all requirements of an Eligible Assignee under theCredit Agreement (subject to receipt of such consents as may be required underthe Credit Agreement), (iii) from and after the Closing Date, it shall be boundby the provisions of the Credit Agreement as a Lender thereunder and, to theextent of the Assigned Interest, shall have the obligations of a Lenderthereunder, (iv) it has received a copy of the Credit Agreement, together withcopies of the most recent financial statements delivered pursuant to the termsthereof, as applicable, and such other documents and information as it hasdeemed appropriate to make its own credit analysis and decision to enter intothis Assignment and Assumption and to purchase the Assigned Interest on thebasis of which it has made such analysis and decision independently and withoutreliance on the Agent or any other Lender, and (v) if it is a ForeignLender(6), attached to the Assignment and Assumption is any documentationrequired to be delivered by it pursuant to the terms of the Credit Agreement,duly completed and executed by the Assignee; and (b) agrees that (i) it will,independently and without reliance on the Agent, the Assignor or any otherLender, and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit decisions in taking ornot taking action under the Credit Documents, and (ii) it will perform inaccordance with their terms all of the obligations which by the terms of theCredit Documents are required to be performed by it as a Lender.

 

2.   Payments.  From and after the Closing Date, the Agentshall make all payments in respect of the Assigned Interest (including paymentsof principal, interest, fees and other amounts) to the Assignor for amountswhich have accrued to but excluding the Closing Date and to the Assignee foramounts which have accrued from and after the Closing Date. The Assignee herebyacknowledges and agrees to the terms contained in the Intercreditor Agreement

 

3.  General Provisions.This Assignment and Assumption shall be binding upon, and inure to the benefitof, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may beexecuted in any number of counterparts, which together shall constitute oneinstrument.  Delivery of an executedcounterpart of a signature page of this Assignment and Assumption by telecopyshall be effective as delivery of a manually executed counterpart of thisAssignment and Assumption.  ThisAssignment and Assumption shall be governed by, and construed in accordancewith, the law of the State of North Carolina.

 

1

 

Exhibit 1.1(a)

 

BANKRUPTCYREMOTE BORROWING ENTITY REQUIREMENTS

 

A “Bankruptcy Remote Borrowing 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 bylaws, (ii) with respect to a limitedpartnership, its limited partnership agreement, and (iii) with respect to alimited liability company, its 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)            take any Bankruptcy Action (asdefined in Addendum A hereof);

 

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

 

(iii)          amend or recommend the amendment ofits Organizational Documents; and

 

(iv)                              engagein transactions with affiliates (except to the extent such transactions are 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).

 

(C)           Separateness Provisions.  The entity must be required 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, limited partnershipor limited liability company requirements). In addition, each such general partner’s Organizational Documents mustprovide for the following:

 

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(i)                                     LimitedPurpose.  Each such generalpartner’s purpose must be limited to serving as a general partner in thelimited partnership.

 

(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 the remainingpartners to continue the partnership upon an event of dissolution for so longat least one of the general partners remains solvent.

 

4.                                       AdditionalRequirements for Limited Liability Companies.  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 independent member/manager. Such independent member/manager 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 entity be designated the sole “managingmember” of the company.  Each such SPEmember’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.  The company’s members must be required toconsider the interests of creditors in connection with any action subject tothe vote of its members (including the SPE member), notwithstanding that thecompany may not then be insolvent.

 

(D)                               Continuanceof Company.  The vote of amajority-in-interest of the remaining members of the company is sufficient tocontinue the life of the company upon the occurrence of an event of dissolutionor other termination event.  If therequired consent of the remaining members to continue the company is notobtained, the company’s Organization Documents must provide that the companynot liquidate collateral (except as permitted under the loan documents) withoutthe consent of holders of the loan, and that such holders may continue toexercise all of their rights under the loan documents and retain any collateraluntil the loan has been paid in full or otherwise completely discharged.

 

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AddendumA

 

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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Note also the potential necessity for a Non-Consolidation Opinion fromBorrower’s counsel.