**Exhibit10.14**

 

**CREDIT AGREEMENT**

** **

**dated as of**

** **

January 31,2008

 

**among**

** **

**STAR BUFFET, INC. and its**

** **

**SUBSIDIARIES PARTY HERETO, as Borrowers,**

** **

**THE LENDERS PARTY HERETO,**

** **

**WELLS FARGO BANK, N.A., as Administrative Agent,**

** **

**WELLS FARGO BANK, N.A., as Syndication Agent**

** **

**and**

** **

**WELLS FARGO BANK, N.A., as Lead Arranger**

** **

Loan Nos. 93-0908116 and 93-0908117

** **

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** **
| SECTION I DEFINITIONS                                                                           | 1  |
|------------------------------------------------------------------------------------------------------|----|
| 1.1 Definitions                                                                                      | 1  |
| 1.2 Rules of Interpretation                                                                     | 23 |
| SECTION II DESCRIPTION OF  CREDIT                                                               | 24 |
| 2.1 Loans                                                                                            | 24 |
| 2.2 The Notes                                                                                        | 28 |
| 2.3 Notice and Manner of Borrowing or Conversion of Loans                                            | 28 |
| 2.4 Funding of Loans                                                                                 | 29 |
| 2.5 Interest Rates and Payments of Interest                                                          | 30 |
| 2.6 Fees                                                                                             | 31 |
| 2.7 Repayment of Loans                                                                               | 32 |
| 2.8 Prepayments                                                                                      | 32 |
| 2.9 Method and Allocation of Payments                                                                | 34 |
| 2.10 LIBOR Indemnity                                                                                 | 36 |
| 2.11 Computation of Interest and Fees                                                                | 37 |
| 2.12 Changed Circumstances; Illegality                                                               | 37 |
| 2.13 Increased Costs                                                                                 | 38 |
| 2.14 Capital Requirements                                                                            | 38 |
| 2.15 Taxes                                                                                           | 39 |
| 2.16 Parent as Agent for Borrowers; Contribution                                                     | 41 |
| SECTION III LETTERS OF CREDIT                                                                   | 42 |
| 3.1 Issuance                                                                                         | 42 |
| 3.2 Reimbursement Obligation of the Borrowers                                                        | 42 |
| 3.3 Letter of Credit Payments                                                                        | 43 |
| 3.4 Obligations Absolute                                                                             | 43 |
| 3.5 Reliance by the LC Issuer and the Administrative Agent                                           | 44 |
| SECTION IV CONDITIONS OF LOANS  AND LETTERS OF CREDIT                                           | 44 |
| 4.1 Conditions Precedent to Initial Loans and Letters of  Credit                                     | 44 |
| 4.2 Conditions Precedent to all Revolving Credit Loans and  Letters of Credit after the Closing Date | 49 |
| SECTION V REPRESENTATIONS AND  WARRANTIES                                                       | 51 |
| 5.1 Existence, Qualification and Power                                                               | 51 |
| 5.2 Authorization; No Contravention                                                                  | 51 |
| 5.3 Governmental Authorization; Other Consents                                                       | 51 |
| 5.4 Binding Effect                                                                                   | 51 |
| 5.5 Financial Statements; No Material Adverse Effect                                                 | 52 |
| 5.6 Litigation                                                                                       | 53 |
| 5.7 No Default                                                                                       | 53 |
| 5.8 Ownership of Property; Encumbrances; Investments                                                 | 53 |
| 5.9 Environmental Compliance                                                                         | 54 |
| 5.10 Insurance                                                                                       | 54 |
| 5.11 Taxes                                                                                           | 54 |
| 5.12 ERISA Compliance                                                                                | 55 |
| 5.13 Subsidiaries; Equity Interests; Loan Parties                                                    | 55 |
| 5.14 Margin Regulations; Investment Company Act                                                      | 56 |
| 5.15 Disclosure                                                                                      | 56 |

 

i

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| 5.16 Compliance with Laws                                       | 56 |
|-----------------------------------------------------------------|----|
| 5.17 Intellectual Property; Licenses, Etc                       | 56 |
| 5.18 Solvency                                                   | 56 |
| 5.19 Casualty, Etc                                              | 57 |
| 5.20 Labor Matters                                              | 57 |
| 5.21 Security Documents                                         | 57 |
| 5.22 Intentionally Deleted                                      | 57 |
| 5.23 Compliance with OFAC Rules and Regulations            | 57 |
| 5.24 Foreign Assets Control Regulations, Etc                    | 57 |
| 5.25 Parent Public Filings                                      | 57 |
| SECTION VI AFFIRMATIVE  COVENANTS                          | 58 |
| 6.1 Financial Statements                                        | 58 |
| 6.2 Conduct of Business                                         | 59 |
| 6.3 Maintenance and Insurance                                   | 59 |
| 6.4 Taxes                                                       | 60 |
| 6.5 Inspection Rights; Lender Meeting                           | 60 |
| 6.6 Maintenance of Books and Records                            | 61 |
| 6.7 Use of Proceeds                                             | 61 |
| 6.8 Further Assurances                                          | 61 |
| 6.9 Notification Requirements                                   | 61 |
| 6.10 ERISA Reports                                              | 62 |
| 6.11 Environmental Compliance                                   | 62 |
| 6.12 Covenant to Guarantee Obligations and Give Security        | 63 |
| 6.13 Interest Rate Protection                                   | 65 |
| 6.14 Cash Accounts                                              | 65 |
| 6.15 Post-Closing Deliveries                                    | 65 |
| SECTION VII FINANCIAL  COVENANTS                           | 66 |
| 7.1 Total Lease Adjusted Leverage Ratio                         | 66 |
| 7.2 Consolidated Pre-Distribution Fixed Charge Coverage  Ratio  | 66 |
| 7.3 Consolidated Post-Distribution Fixed Charge Coverage  Ratio | 66 |
| 7.4 Consolidated EBITDA                                         | 67 |
| 7.5 Growth Capital Expenditures                                 | 67 |
| SECTION VIII NEGATIVE  COVENANTS                           | 67 |
| 8.1 Indebtedness                                                | 67 |
| 8.2 Contingent Liabilities                                      | 68 |
| 8.3 Encumbrances                                                | 68 |
| 8.4 Merger; Dispositions; Liquidation                           | 69 |
| 8.5 Subsidiaries                                                | 69 |
| 8.6 Restricted Payments                                         | 70 |
| 8.7 Investments; Purchases of Assets                            | 70 |
| 8.8 ERISA Compliance                                            | 71 |
| 8.9 Transactions with Affiliates                                | 71 |
| 8.10 Fiscal Year                                                | 71 |
| 8.11 Payments on Junior Subordinated Debt                       | 71 |
| SECTION IX DEFAULTS                                        | 71 |
| 9.1 Events of Default                                           | 71 |

 

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| 9.2 Remedies upon Event of Default                        | 74 |
|-----------------------------------------------------------|----|
| 9.3 Application of Funds                                  | 74 |
| 9.4 Remedies Cumulative                                   | 75 |
| SECTION X ASSIGNMENT AND  PARTICIPATION              | 76 |
| 10.1 Successors and Assigns                               | 76 |
| 10.2 Replacement of Lenders                               | 79 |
| SECTION XI THE ADMINISTRATIVE  AGENT                 | 80 |
| 11.1 Appointment of Administrative Agent                  | 80 |
| 11.2 Exculpatory Provisions                               | 81 |
| 11.3 Rights as a Lender                                   | 82 |
| 11.4 Actions by Administrative Agent                      | 82 |
| 11.5 Reliance by Administrative Agent                     | 82 |
| 11.6 Delegation of Duties                                 | 82 |
| 11.7 Indemnification                                      | 83 |
| 11.8 Reimbursement                                        | 83 |
| 11.9 Non-Reliance on Administrative Agent and New Lenders | 83 |
| 11.10 Resignation of Administrative Agent                 | 84 |
| 11.11 No Other Duties, etc                                | 84 |
| SECTION XII GENERAL                                  | 84 |
| 12.1 Notices; Effectiveness of Signatures                 | 84 |
| 12.2 Expenses                                             | 86 |
| 12.3 Indemnification                                      | 86 |
| 12.4 Survival of Covenants, Etc                           | 87 |
| 12.5 Set-Off                                              | 87 |
| 12.6 No Waivers                                           | 88 |
| 12.7 Amendments, Waivers, etc.                            | 88 |
| 12.8 Treatment of Certain Information; Confidentiality    | 90 |
| 12.9 Lost Note, Etc                                       | 91 |
| 12.10 Captions; Counterparts                              | 91 |
| 12.11 Entire Agreement, Etc                               | 91 |
| 12.12 Waiver of Jury Trial                                | 91 |
| 12.13 Governing Law                                       | 92 |
| 12.14 Jurisdiction; Consent to Service of Process         | 92 |
| 12.15 USA PATRIOT Act Notice                              | 93 |
| 12.16 Severability                                        | 93 |

 

EXHIBITS

 

*Form of*

 
| A-1 |   | Revolving Credit Note              |
|-----|--------|------------------------------------|
| A-2 |   | Term Note                          |
| B   |   | Notice of Borrowing or  Conversion |
| C   |   | Commitment Increase  Supplement    |
| D   |   | Additional Lender  Supplement      |

 

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| E   |   | Assignment and  Assumption                              |
|-----|--------|---------------------------------------------------------|
| F   |   | Compliance Certificate                                  |
| G-1 |   | Security Agreement                                      |
| G-2 |   | Collateral Assignment  of Contracts                     |
| G-3 |   | Fee Property Security  Documents                        |
| G-4 |   | Form of  Mortgage/Deed of Trust                    |
| G-5 |   | Form of Collateral  Assignment of Leases and Rents |
| G-6 |   | Intellectual Property  Security Agreement               |
| H   |   | Pledge Agreement by  Parent                             |
| I   |   | Opinion Matters –  Counsel to Loan Parties         |
| J-1 |   | Term Loan Payment  Request                              |
| J-2 |   | Revolving Loan Payment  Request                         |

 

SCHEDULES

 
| 1          |   | Commitments and Applicable Percentages                             |
|------------|--------|--------------------------------------------------------------------|
| 4.1(e)     |   | Sources and Uses                                                   |
| 5.3        |   | Consents                                                           |
| 5.5        |   | Material Liabilities and Indebtedness                              |
| 5.8(b)     |   | Encumbrances                                                       |
| 5.8(c)     |   | Owned Real Property                                                |
| 5.8(d)(i)  |   | Leased Real Property (Lessee)                                      |
| 5.8(d)(ii) |   | Leased Real Property (Lessor)                                      |
| 5.8(e)     |   | Existing Investments                                               |
| 5.13       |   | Subsidiaries and Other Equity Investments; Loan  Parties           |
| 5.17       |   | Intellectual Property Matters                                      |
| 6.15       |   | Post-Closing Deliveries                                            |
| 8.1(e)     |   | Existing Indebtedness                                              |
| 8.3(h)     |   | Existing Encumbrances                                              |
| 12.1       |   | Administrative Agent’s  Office, Certain Addresses for Notices |

 

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**CREDIT AGREEMENT**

** **

THISCREDIT AGREEMENT is made as of January 31, 2008, by and among STAR BUFFET, INC., STAR BUFFET MANAGEMENT,INC., SUMMIT FAMILY RESTAURANTS, INC., HTB RESTAURANTS, INC. and NORTHSTARBUFFET, INC., each a Delaware corporation (each individually, a “Borrower”,and collectively, the “Borrowers”), WELLS FARGO BANK, N.A., a nationalbanking association (“Wells Fargo”), and the other financialinstitutions from time to time parties hereto as Lenders (together with WellsFargo, each individually, a “Lender”, and collectively, the “Lenders”),WELLS FARGO BANK, N.A., as administrative agent for the Lenders (in suchcapacity, the “Administrative Agent”) and in its capacity as LC Issuer(as hereinafter defined), WELLS FARGO BANK, N.A., as Syndication Agent (in such capacity, the “SyndicationAgent”), and WELLS FARGO BANK, N.A., as Lead Arranger (in such capacity,the “Lead Arranger”).

 

WHEREAS,the Borrowers, other than Parent, are direct or indirect wholly ownedSubsidiaries of the Parent;

 

WHEREAS,the relationship of the other Borrowers to the Parent provides numerousbenefits, including shared purchasing strength and other economies of scale,which benefits will be increased by the Acquisition;

 

WHEREAS,the Borrowers have requested that the Lenders provide a term loan facility anda revolving credit facility, and the Lenders have indicated their willingnessto lend and the LC Issuer has indicated its willingness to issue Letters ofCredit, in each case, on the terms and subject to the conditions set forthherein;

 

WHEREAS,each Borrower is jointly and severally liable for the Obligations arisinghereunder and under the other Loan Documents; and

 

WHEREAS,by virtue of the foregoing and after giving effect to the probable liability ofeach Borrower hereunder and under the Loan Documents, each Borrower considersthat it is receiving at least fair consideration and reasonably equivalentvalue from the Lenders for the Obligations.

 

NOW,THEREFORE, in consideration of the premises and for other good and valuableconsideration, the receipt and adequacy of which are hereby acknowledged, theparties hereto agree as follows:

 

# SECTION I

#  

# DEFINITIONS

#  

## 1.1           Definitions.

##  

All capitalized terms used in this Agreement or in theNotes or in any certificate, report or other document made or deliveredpursuant to this Agreement (unless otherwise defined therein) shall have themeanings assigned to them below:

 

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Acquisition.  The transactions contemplated by the AssetPurchase Agreement.

 

AdditionalLender.  See Section 2.1(a)(iii).

 

AdditionalLender Supplement.  SeeSection 2.1(a)(iii).

 

AdministrativeAgent.  See Preamble.

 

AdministrativeQuestionnaire.  Anadministrative questionnaire in a form supplied by the Administrative Agent toany Lender.

 

AffectedLoans.  See Section 2.12(a).

 

Affiliate.  With reference to any Person (i) anydirector or officer of that Person, (ii) any other Person controlling,controlled by or under direct or indirect common control of that Person, (iii) anyother Person directly or indirectly holding 5% or more of any class of thecapital stock or other equity interests (including options, warrants,convertible securities and similar rights) of that Person and (iv) anyother Person 5% or more of any class of whose capital stock or other equityinterests (including options, warrants, convertible securities and similarrights) is held directly or indirectly by that Person.

 

Agreement.  This Credit Agreement, including the Exhibitsand Schedules hereto, as the same may be supplemented or amended or restatedfrom time to time.

 

AlternateBase Rate.  The greaterof (i) the rate of interest announced from time to time by theAdministrative Agent at its head office as its “Base Rate” or “Prime Rate”, and(ii) the Federal Funds Effective Rate plus 1/2 of 1% per annum (roundedupwards, if necessary, to the next 1/8 of 1%). The Base Rate is a reference rate and does not necessarily represent thelowest or best rate being charged to any customer.  Any change in the Base Rate or the FederalFunds Effective Rate shall be effective from and including the effective dateof such change.

 

Anti-TerrorismOrder.  The ExecutiveOrder 13224 issued on September 24, 2001.

 

ApplicablePercentage.   Withrespect to (a) any Term Lender at any time, the percentage (carried out tothe ninth decimal place) of the Total Term Loan Commitment represented by suchTerm Lender’s Term Commitment at such time, and (b) any Revolving CreditLender at any time, the percentage (carried out to the ninth decimal place) ofthe Total Revolving Credit Commitment represented by such Revolving CreditLender’s Revolving Credit Commitment at such time.  If the commitment of each Revolving CreditLender to make Revolving Credit Loans and the obligation of the LC Issuer toissue Letters of Credit have been terminated pursuant to Section 9.2, orif the Revolving Credit Commitments have expired, then the Applicable Percentageof each Revolving Credit Lender shall be determined based on the ApplicablePercentage of such Revolving Credit Lender most recently in effect, givingeffect to any subsequent assignments. The initial Applicable Percentage of each Lender in respect of eachcredit facility hereunder is set forth opposite the name of such Lender on Schedule1 or in the Assignment and Assumption pursuant to which such Lender becomesa party hereto, as applicable.

 

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ApprovedFund.  Any Fund that isadministered or managed by (a) a Lender, (b) an Affiliate of a Lenderor (c) an entity or an Affiliate of an entity that administers or managesa Lender.

 

AssetPurchase Agreement. The Asset Purchase Agreement, dated as of December 2, 2007, betweenthe Parent and Barnhill’s Buffet, Inc., as amended on January 21,2008.

 

AssigneeGroup.  Two or moreEligible Assignees that are Affiliates of one another or two or more ApprovedFunds managed by the same investment advisor.

 

Assignmentand Assumption.  Anassignment and assumption entered into by a Lender and an Eligible Assignee(with the consent of any party whose consent is required by Section 10.1(b)(iii)),and accepted by the Administrative Agent, in substantially the form of Exhibit Eor any other form approved by the Administrative Agent.

 

AttributableIndebtedness.  On anydate, (a) in respect of any Capitalized Lease of any Person, thecapitalized amount thereof that would appear on a balance sheet of such Personprepared as of such date in accordance with GAAP, (b) in respect of anySynthetic Lease Obligation, the capitalized amount of the remaining lease orsimilar payments under the relevant lease or other applicable agreement orinstrument that would appear on a balance sheet of such Person prepared as ofsuch date in accordance with GAAP if such lease or other agreement orinstrument were accounted for as a Capitalized Lease and (c) all SyntheticDebt of such Person.

 

BankruptcyCourt.  The United States BankruptcyCourt for the Middle District of Tennessee, Nashville Division.

 

BaseRate Loan.  Any Loanbearing interest determined with reference to the Alternate Base Rate.

 

Borrowers.  See Preamble.

 

Borrowers’Accountants.  MayerHoffman McCann P.C., or such other independent certified public accountants asare selected by the Borrowers and are reasonably acceptable to theAdministrative Agent.

 

BusinessDay. (i) For all purposes other than as covered byclause (ii) below, any day other than a Saturday, Sunday or legal holidayon which banks in Boston, Massachusetts and Los Angeles, California are open for the conduct of a substantial partof their commercial banking business; and (ii) with respect to all noticesand determinations in connection with, and payments of principal and intereston, LIBOR Loans, any day that is a Business Day described in clause (i) andthat is also a day on which dealings in U.S. dollar deposits are also carriedon in the London interbank market and banks are open for business in London.

 

CapitalExpenditures.  Withrespect to any Person for any period, any expenditure in respect of thepurchase or other acquisition of any fixed or capital asset (excluding normalreplacements and maintenance which are properly charged to current operations).

 

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Capitalized Leases.  All leases that have been or should be, inaccordance with GAAP, recorded as capitalized leases.

 

CashCollateralize.   Topledge and deposit with or deliver to the Administrative Agent, for the benefitof the LC Issuer and the Lenders, as collateral for the Maximum Drawing Amount,cash or deposit account balances pursuant to documentation in form andsubstance reasonably satisfactory to the Administrative Agent and the LCIssuer.

 

CashManagement Agreement.  Any agreement to provide cash management services, including treasury,depository, overdraft, credit or debit card, electronic funds transfer andother cash management arrangements.

 

CashManagement Bank.  AnyPerson that, at the time it enters into a Cash Management Agreement, is aLender or an Affiliate of a Lender, in its capacity as a party to such CashManagement Agreement.

 

CFC.  A Person that is a controlled foreigncorporation under Section 957 of the Code.

 

Change of Control.   An event or series of events by which:  (a) Robert E. Wheaton shall have ceasedto hold the office, and engage in the duties and have the responsibilitiesthereof, in the Parent that he holds as of the Closing Date and a successorreasonably satisfactory to the Majority Lenders shall not have been appointedwithin 30 days thereafter; (b) Robert E. Wheaton shall have ceased to holdbeneficial ownership (within the meaning of Rule 13d-3 under the ExchangeAct) of at least 40% of the fully diluted equity interests of the Parent; or (c) anyPerson or two or more Persons acting in concert (other than Robert E. Wheaton(or Persons of which Robert E. Wheaton would be deemed to have beneficialownership)) shall have acquired beneficial ownership (within the meaning of Rule 13d-3under the Exchange Act) of more than 10% of the fully diluted equity interestsof the Parent outstanding on the date hereof.

 

ClosingDate.  The first dateon which the conditions set forth in Sections 4.1 have been satisfied and theinitial Loans are to be made hereunder.

 

Code.  The Internal Revenue Code of 1986 and the rules andregulations thereunder, collectively, as the same may from time to time besupplemented or amended and remain in effect.

 

Collateral.  All of the property, rights and interests ofthe Borrowers, their Subsidiaries and any other Person that are or are intendedto be subject to the security interests and liens created by the SecurityDocuments.

 

Communications.  See Section 12.1.

 

CommitmentFee.  See Section 2.6(a).

 

CommitmentIncrease Supplement. See Section 2.1(a)(iii).

 

Commitments.  In relation to any particular Lender, theRevolving Credit Commitment and/or the Term Loan Commitment of such Lender.

 

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ConsolidatedEBITDA.  At any date ofdetermination for any fiscal period, an amount equal to Consolidated Net Incomeof the Borrowers and their Subsidiaries for such fiscal period plus (a) thefollowing to the extent excluded or deducted in calculating such ConsolidatedNet Income:  (i) ConsolidatedInterest Charges, (ii) the provision for Federal, state, local and foreignincome taxes paid or payable, (iii) depreciation (including, withoutlimitation, depreciation of leasehold improvements) and amortization expense, (iv) othernon-recurring expenses reducing such Consolidated Net Income which do notrepresent a cash item in such period or any future period (in each case of orby the Borrowers and their Subsidiaries for such fiscal period), (v) ConsolidatedRestaurant Pre-Opening Expenses and (vi) fees and expenses incurred by theBorrowers in connection with the transactions contemplated by this Agreementand the Asset Purchase Agreement, including, without limitation, attorneys’fees, minus (b) the following to the extent included in calculatingsuch Consolidated Net Income:  (i) Federal,state, local and foreign income tax credits and (ii) all non-recurringitems increasing Consolidated Net Income (in each case of or by the Borrowersand their Subsidiaries for such fiscal period).

 

ConsolidatedEBITDAR.  For anyfiscal period, the sum of (i) the Consolidated EBITDA for such fiscalperiod, plus (ii) the Consolidated Rent Expense for such fiscal period,but only to the extent such Consolidated Rent Expense was excluded or deductedin computing such Consolidated EBITDA.

 

ConsolidatedFunded Indebtedness. As of any date of determination, for the Borrowers and theirSubsidiaries on a consolidated basis and without duplication, the sum of (a) theoutstanding principal amount of all obligations, whether current or long-term,for borrowed money (including Obligations hereunder) and all obligationsevidenced by bonds, debentures, notes, loan agreements or other similarinstruments, (b) all purchase money Indebtedness, (c) all directobligations arising under letters of credit, bankers’ acceptances, bankguaranties, surety bonds and similar instruments, (d) all monetaryobligations secured by any mortgage, pledge, security interest or otherEncumbrance on property owned or acquired by the Borrowers or any Subsidiary,whether or not the obligations secured thereby shall have been assumed, (e) allobligations in respect of the deferred purchase price of property or services(other than trade accounts payable in the ordinary course of business), (f) allAttributable Indebtedness, (g) without duplication, all Guarantees withrespect to outstanding Indebtedness of the types specified in clauses (a) through(f) above of Persons other than the Borrowers or any Subsidiary, and (h) allIndebtedness of the types referred to in clauses (a) through (g) aboveof any partnership or joint venture (other than a joint venture that is itselfa corporation or limited liability company) in which the Borrowers or aSubsidiary is a general partner or joint venturer, unless such Indebtedness isexpressly made non-recourse to such Borrower or such Subsidiary.

 

ConsolidatedInterest Charges.   Forany fiscal period, the sum of (a) all interest, premium payments, debtdiscount, fees, charges and related expenses in connection with borrowed money(including capitalized interest) or in connection with the deferred purchaseprice of assets, in each case to the extent treated as interest in accordancewith GAAP, (b) all interest paid or payable with respect to discontinuedoperations and (c) the portion of rent expense under Capitalized Leasesthat is treated as interest in accordance with GAAP, in each case, of or by theBorrowers and their Subsidiaries on a Consolidated basis for such fiscalperiod.

 

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ConsolidatedNet Income.  At anydate of determination for any fiscal period, the net income (or loss) of theBorrowers and their Subsidiaries on a Consolidated basis for such fiscalperiod; provided that Consolidated Net Income shall exclude, without duplication:(a) extraordinary gains and extraordinary losses for such fiscal period; (b) thenet income of any Subsidiary during such fiscal period to the extent that thedeclaration or payment of dividends or similar distributions by such Subsidiaryof such income is not permitted by operation of the terms of its organizationdocuments or any agreement, instrument or law applicable to such Subsidiaryduring such fiscal period, except that the Borrowers’ equity in any net loss ofany such Subsidiary for such fiscal period shall be included in determiningConsolidated Net Income; (c) any income (or loss) for such Period of anyPerson if such Person is not a Subsidiary, except that the Borrowers’ equity inthe net income of any such Person for such fiscal period shall be included inConsolidated Net Income up to the aggregate amount of cash actually distributedby such Person during such Period to the Borrowers or a Subsidiary as adividend or other distribution (and in the case of a dividend or otherdistribution to a Subsidiary, such Subsidiary is not precluded from furtherdistributing such amount to the Borrowers as described in clause (b) ofthis proviso); (d) any gain or loss arising from any write-up of assets,except to the extent inclusion thereof shall be approved in writing by theAdministrative Agent; (e) earnings of any Subsidiary accrued prior to thedate it became a Subsidiary; (f) any non-cash stock based compensationincome or expense related to restricted stock or stock options; (g) anydeferred or other credit representing any excess of the equity of anySubsidiary at the date of acquisition thereof over the amount invested in suchSubsidiary; and (h) the proceeds of any life insurance policy.

 

ConsolidatedPre-Distribution Fixed Charge Coverage Ratio.   At any date of determination for any fiscalperiod, the ratio of (a) the total of (i) Consolidated EBITDARfor such fiscal period, less (ii) the aggregate amount of Federal,state, local and foreign income taxes paid in cash, in each case, of or by theBorrowers and their Subsidiaries for such fiscal period, and less (iii) theaggregate amount of all Maintenance Capital Expenditures made during suchfiscal period to (b) the sum of (i) Consolidated Interest Charges forsuch fiscal period, plus (ii) the aggregate principal amount of allregularly scheduled principal payments or redemptions or similar acquisitionsfor value of outstanding debt for borrowed money during such fiscal period(excluding, however, the repayment of the Indebtedness under the ExistingCredit Agreement on the Closing Date), plus (iii) the ConsolidatedRent Expense for such fiscal period.

 

ConsolidatedPost-Distribution Fixed Charge Coverage Ratio.   At any date of determination for any fiscalperiod, the ratio of (a) the total of (i) Consolidated EBITDARfor such fiscal period, less (ii) the aggregate amount of Federal,state, local and foreign income taxes paid in cash, in each case, of or by theBorrowers and their Subsidiaries for such fiscal period, and less (iii) theaggregate amount of all Maintenance Capital Expenditures made during suchfiscal period to (b) the sum of (i) Consolidated Interest Charges forsuch fiscal period, plus (ii) the aggregate principal amount of allregularly scheduled principal payments or redemptions or similar acquisitionsfor value of outstanding debt for borrowed money during such fiscal period(excluding, however, the repayment of the Indebtedness under the ExistingCredit Agreement on the Closing Date), plus (iii) the ConsolidatedRent Expense for such fiscal period, and plus (iv) any dividend,distribution, loan, advance, guaranty, extension of credit or other payment,whether in cash or property, made by any Borrower to or for the benefit of anyPerson (other 

 

6

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than another Borrower) who holds an Equity Interest inany Borrower or any of their Subsidiaries, whether or not such interest isevidenced by a security, and any purchase, redemption, retirement or otheracquisition for value of any Equity Interest of the Borrower or any of itsSubsidiaries, whether now or hereafter outstanding, or of any options, warrantsor similar rights to purchase such Equity Interest or any security convertibleinto or exchangeable for such Equity Interest.

 

ConsolidatedRent Expense.   For anyfiscal period, the sum of all rental obligations (payable in cash) incurred bythe Borrowers or any Subsidiary during such fiscal period with respect to alloperating leases (not Capitalized Leases) of real and personal property,calculated in accordance with GAAP on a Consolidated basis.

 

ConsolidatedRestaurant Pre-Opening  Expenses.  “Start-up Costs” (as defined in SOP 98-5published by the American Institute of Certified Public Accountants) of theBorrowers related to the acquisition, opening and organizing of New OperatingUnits, such costs including, without limitation, the cost of feasibilitystudies, initial marketing costs, construction period rents, staff training,and recruiting and travel costs for employees engaged in such start-upactivities.

 

Default.  An Event of Default or event or conditionthat, but for the requirement that time elapse or notice be given, or both,would constitute an Event of Default.

 

DefaultingLender.  Any Lenderthat (a) has failed to fund any portion of the Term Loans, RevolvingCredit Loans, participations in LC Disbursements required to be funded by ithereunder within one Business Day of the date required to be funded by ithereunder, (b) has otherwise failed to pay over to the AdministrativeAgent or any other Lender any other amount required to be paid by it hereunderwithin one Business Day of the date when due, unless the subject of a goodfaith dispute, or (c) has been deemed insolvent or become the subject of abankruptcy or insolvency proceeding.

 

Dispositionor Dispose.  The sale, transfer,license, lease or other disposition (including any sale and leasebacktransaction) of any property by any Person (or the granting of any option orother right to do any of the foregoing), including any sale, assignment,transfer or other disposal, with or without recourse, of any notes or accountsreceivable or any rights and claims associated therewith.

 

DrawdownDate.  The Business Dayon which any Loan is made or is to be made.

 

EligibleAssignee.   Any Personthat meets the requirements to be an assignee under Section 10.1(b)(iii), (v) and(vi) (subject to such consents, if any, as may be required under Section 10.1(b)(iii)).

 

EligibleSwap Agreements.  SwapAgreements purchased by the Borrowers from a Lender.

 

Encumbrances.  See Section 8.3.

 

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EnvironmentalLaws.  Any and allapplicable federal, state and local environmental, health or safety statutes,laws, regulations, rules and ordinances (whether now existing or hereafterenacted or promulgated), and all applicable judicial, administrative andregulatory decrees, judgments, orders and interpretations, including common lawrulings and determinations, relating to injury to, or the protection of, humanhealth or the environment, including, without limitation, all requirementspertaining to reporting, licensing, permitting, investigation, remediation andremoval of emissions, discharges, releases or threatened releases of HazardousMaterials into the environment or relating to the manufacture, processing,distribution, use, treatment, storage, disposal, transport or handling of suchHazardous Materials.

 

EquityInterests.  Withrespect to any Person, all of the shares of capital stock of, or membership,partnership or other ownership or profits interest in, such Person, all of thewarrants, options or other rights for the purchase or acquisition from suchPerson of shares of capital stock of, or membership, partnership or otherownership or profits interest in, such Person, all of the securitiesconvertible into or exchangeable for shares of capital stock of, or membership,partnership or other ownership or profits interest in, such Person or warrants,rights or options for the purchase or acquisition from such Person of suchshares or such other interests, and all of the other ownership or profitinterests in such Person (including partnership, member or trust intereststherein), whether voting or nonvoting, and whether or not such shares, warrants,options, rights or other interests are outstanding on any date ofdetermination.

 

ERISA.  The Employee Retirement Income Security Actof 1974 and the rules and regulations thereunder, collectively, as thesame may from time to time be supplemented or amended and remain in effect.

 

ERISAAffiliate.  Any tradeor business, whether or not incorporated, that is treated as a single employerwith the Borrowers under Section 414(b), (c), (m) or (o) of theCode and Section 4001(a)(14) of ERISA.

 

ERISAEvent.  (a) Any “reportableevent,” as defined in Section 4043 of ERISA or the regulations issuedthereunder, with respect to a Plan unless the 30-day notice requirement withrespect to such event has been waived by the PBGC; (b) the adoption of anyamendment to a Plan that would require the provision of security pursuant to Section 401(a)(29)of the Code or Section 307 of ERISA; (c) the existence with respectto any Plan of an “accumulated funding deficiency” (as defined in Section 412of the Code or Section 302 of ERISA), whether or not waived; (d) thefiling pursuant to Section 412(d) of the Code or Section 303(d) ofERISA of an application for a waiver of the minimum funding standard withrespect to any Plan; (e) the incurrence of any liability under Title IV ofERISA with respect to the termination of any Plan or the withdrawal or partialwithdrawal of the Borrowers or any ERISA Affiliate from any Plan orMultiemployer Plan; (f) the receipt by the Borrowers or any ERISAAffiliate from the PBGC or a plan administrator of any notice relating to theintention to terminate any Plan or Plans or to appoint a trustee to administerany Plan; (g) the receipt by the Borrowers or any ERISA Affiliate of anynotice concerning the imposition of Withdrawal Liability (as defined in Part Iof Subtitle E of Title IV of ERISA) with respect to any Multiemployer Plan or adetermination that a Multiemployer Plan is, or is expected to be, insolvent orin reorganization, within the meaning of Title IV of ERISA; (h) theoccurrence of a Prohibited Acquisition with respect to which the Borrowers orany of their Subsidiaries is a “disqualified person” (within the meaning of Section 

 

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4975 of the Code) or with respect to which theBorrowers or any such Subsidiary could otherwise be liable; and (i) anyother event or condition with respect to a Plan or Multiemployer Plan thatcould reasonably be expected to result in material liability of the Borrowers.

 

Eventof Default.  Any eventdescribed in Section 9.1.

 

ExcessCash Flow.  For anyFiscal Year of the Borrowers, the excess (if any) of (a) the sum ofConsolidated EBITDA for such Fiscal Year, over (b) the sum (forsuch Fiscal Year) of (i) Consolidated Interest Charges actually paid incash by the Borrowers and their Subsidiaries, (ii) the aggregate principalamount of all principal payments, redemptions and acquisitions for value ofConsolidated Funded Indebtedness actually made during such Fiscal Year to theextent permitted by this Agreement, including principal payments of Term Loans,but excluding principal payments of Revolving Loans except to the extent thatthe Total Revolving Credit Commitment is permanently reduced in connection withany such payment of Revolving Loans, (iii) all income taxes actually paidin cash by the Borrowers and their Subsidiaries, and (iv) CapitalExpenditures (including Growth Capital Expenditures) actually made by theBorrowers and their Subsidiaries in such Fiscal Year to the extent permitted bythis Agreement (net of the proceeds of Indebtedness other than Loans permittedby this Agreement or of contributions to the capital of the Borrowers, to theextent such proceeds are applied to fund such Capital Expenditures).

 

Exchange Act.  The Securities Exchange Act of 1934,as amended.

 

ExcludedTaxes.  With respect tothe Administrative Agent, any Lender, the LC Issuer or any other recipient ofany payment to be made by or on account of any obligation of the Borrowershereunder, (a) taxes imposed on or measured by its overall net income(however denominated), and franchise taxes imposed on it (in lieu of net incometaxes), by the jurisdiction (or any political subdivision thereof) under thelaws of which such recipient is organized or in which its principal office is locatedor, in the case of any Lender, in which its applicable lending office islocated, (b) any branch profits taxes imposed by the United States or anysimilar tax imposed by any other jurisdiction in which the Borrowers arelocated and (c) in the case of a Foreign Lender (other than an assigneepursuant to a request by the Borrowers under Section 10.2), anywithholding tax that is imposed on amounts payable to such Foreign Lender atthe time such Foreign Lender becomes a party hereto (or designates a new lendingoffice) or is attributable to such Foreign Lender’s failure or inability (otherthan as a result of a change in law) to comply with Section 2.15(e),except to the extent that such Foreign Lender (or its assignor, if any) wasentitled, at the time of designation of a new lending office (or assignment),to receive additional amounts from the Borrowers with respect to suchwithholding tax pursuant to Section 2.15(a).

 

ExistingCredit Agreement.  TheCredit Agreement dated as of October 28, 2003, as amended, between theParent and M&I Marshall & Ilsley Bank.

 

ExtraordinaryReceipt.  Any cashreceived by or paid to or for the account of any Person not in the ordinarycourse of business, including tax refunds, pension plan reversions, proceeds ofinsurance (other than proceeds of business interruption insurance),condemnation and eminent domain awards (and payments in lieu thereof), andindemnity payments.

 

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Facility.  The Term Facility or the Revolving CreditFacility, as the context may require.

 

FederalFunds Effective Rate. For any day, a fluctuating interest rate per annum equal to the weightedaverage of the rates on overnight Federal funds transactions with members ofthe Federal Reserve System arranged by Federal funds brokers, as published forsuch day (or, if such day is not a Business Day, for the next precedingBusiness Day) by the Federal Reserve Bank of New York, or, if such rate is notso published for any day that is a Business Day, the average of the quotationsfor such day on such transactions received by the Administrative Agent fromthree Federal funds brokers of recognized standing selected by theAdministrative Agent.

 

FeeLetter.  See Section 12.11.

 

FeeProperty.  Theproperties listed on Schedule 5.8(c) hereto and such other realproperty assets in which Borrower or a Subsidiary may acquire fee simple titlefrom and after the date hereof .

 

FeeProperty Security Documents. The documents listed on Exhibit G-3 hereto.

 

FinancialStatements.  See Section 5.5(b)

 

FiscalMonth.  Any of thethirteen periods of time, having approximately the same number of days, whichcomprise the Fiscal Year of the Borrowers.

 

FiscalQuarter.  Any of thefour periods of time, three of which consist of three Fiscal Months and one ofwhich consists of four Fiscal Months, which comprise the Fiscal Year of theBorrowers.

 

FiscalYear.  The 52-53 weekfiscal period of the Borrowers ending on the last Monday in January ofeach calendar year.

 

FixedRate Election.  TheInterest Period selected for a particular LIBOR Loan pursuant to Section 2.3.

 

ForeignLender.  Any Lenderthat is organized under the laws of a jurisdiction other than that in which anyBorrower is resident for tax purposes. For purposes of this definition, the United States, each State thereofand the District of Columbia shall be deemed to constitute a singlejurisdiction.

 

FRB.  See Section 2.5(d).

 

Fund.  Any Person (other than a natural person) thatis (or will be) engaged in making, purchasing, holding or otherwise investingin commercial loans and similar extensions of credit in the ordinary course ofits business.

 

GAAP.  Generally accepted accounting principles,consistently applied.

 

GovernmentalAuthority.  Thegovernment of the United States of America or any other nation, or of anypolitical subdivision thereof, whether state or local, and any agency,authority, 

 

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instrumentality, regulatory body, court, central bankor other entity exercising executive, legislative, judicial, taxing, regulatoryor administrative powers or functions of or pertaining to government (includingany supra-national bodies such as the European Union or the European CentralBank).

 

GrowthCapital Expenditures. Capital Expenditures for growth, including, but not limited to,expenditures for remodeling or re-imaging any Operating Unit that is not a NewOperating Unit, New Construction and the acquisition of restaurants.

 

Guarantees.  As applied to the Borrowers and theirSubsidiaries, all guarantees, endorsements or other contingent or suretyobligations with respect to obligations of others whether or not reflected onthe consolidated balance sheet of the Borrowers and their Subsidiaries,including any obligation to furnish funds, directly or indirectly (whether byvirtue of partnership arrangements, by agreement to keep-well or otherwise),through the purchase of goods, supplies or services, or by way of stockpurchase, capital contribution, advance or loan, or to enter into a contractfor any of the foregoing, for the purpose of payment of obligations of anyother Person.

 

HazardousMaterial.  Anysubstance (i) the presence of which requires or then requiresnotification, investigation, a removal or remediation under any EnvironmentalLaw; (ii) which is or becomes defined as a “hazardous waste”, “hazardousmaterial” or “hazardous substance” or “pollutant” or “contaminant” under anypresent or future Environmental Law or amendments thereto including, withoutlimitation, the Comprehensive Environmental Response, Compensation andLiability Act (42 U.S.C. Section 9601 et seq.) and any applicablelocal statutes and the regulations promulgated thereunder; (iii) which istoxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,mutagenic or otherwise hazardous and which is or becomes regulated pursuant toany Environmental Law by any Governmental Authority, agency, department,commission, board, agency or instrumentality of the United States, any state ofthe United States, or any political subdivision thereof; or (iv) withoutlimitation, which contains gasoline, diesel fuel or other petroleum products,asbestos or polychlorinated biphenyls (“PCB’s”).

 

HazardousMaterials Indemnity Agreement.  The Hazardous Materials Indemnity Agreement,dated as of the date hereof, made by the Borrowers in favor of theAdministrative Agent, as amended and in effect from time to time.

 

IncreasingLender.  See Section 2.1(a)(iii).

 

Indebtedness.  As to any Person at a particular time,without duplication, all of the following, whether or not included asindebtedness or liabilities in accordance with GAAP: (a) allobligations of such Person for borrowed money and all obligations of suchPerson evidenced by bonds, debentures, notes, loan agreements or other similarinstruments; (b) the maximum amount of alldirect or contingent obligations of such Person arising under letters of credit(including standby and commercial), bankers’ acceptances, bank guaranties,surety bonds and similar instruments; (c) netobligations of such Person under any Swap Agreement; (d) allobligations of such Person to pay the deferred purchase price of property orservices (other than trade accounts payable in the ordinary course of businessand not past due for more than 60days 

 

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after the date on which such trade account wascreated); (e) indebtedness (excluding prepaidinterest thereon) secured by an Encumbrance on property owned or beingpurchased by such Person (including indebtedness arising under conditionalsales or other title retention agreements), whether or not such indebtednessshall have been assumed by such Person or is limited in recourse; (f) all Attributable Indebtedness in respect of CapitalizedLeases and Synthetic Lease Obligations of such Person and all Synthetic Debt ofsuch Person; (g) all obligations of such Personto purchase, redeem, retire, defease or otherwise make any payment in respectof any Equity Interest in such Person or any other Person or any warrant, rightor option to acquire such Equity Interest, valued, in the case of a redeemablepreferred interest, at the greater of its voluntary or involuntary liquidationpreference plus accrued and unpaid dividends; and (h) allGuarantees of such Person in respect of any of the foregoing. For all purposeshereof, the Indebtedness of any Person shall include the Indebtedness of anypartnership or joint venture (other than a joint venture that is itself acorporation or limited liability company) in which such Person is a generalpartner or a joint venturer, unless such Indebtedness is expressly madenon-recourse to such Person.  The amountof any net obligation under any Swap Agreement on any date shall be deemed tobe the Swap Termination Value thereof as of such date.

 

Indemnified Taxes.  All Taxes other than Excluded Taxes.

 

InterestPeriod.  With respectto each LIBOR Loan, the period commencing on the date of the making orcontinuation of or conversion to such LIBOR Loan and ending one (1) month,two (2) months or three (3) months thereafter, as the Borrowers mayelect in the applicable Notice of Borrowing or Conversion; providedthat:

 

(i)  anyInterest Period (other than an Interest Period determined pursuant to clause (ii) below)that would otherwise end on a day that is not a Business Day shall be extendedto the next succeeding Business Day;

 

(ii)  anyInterest Period that would otherwise end after the Maturity Date, shall end onthe Maturity Date;

 

(iii) notwithstanding clause (ii) above, no Interest Period shall have aduration of less than one (1) month, and if any Interest Period applicableto a Loan would be for a shorter period, such Interest Period shall not beavailable hereunder; and

 

(iv)  theBorrowers may not select any Interest Period for a Term Loan, if, after givingeffect to such selection, the aggregate principal amount of all Term Loanshaving Interest Periods ending after any date on which an installment of theTerm Loans is scheduled to be repaid would exceed the aggregate principalamount of the Term Loans scheduled to be outstanding after giving effect tosuch repayment.

 

Investment.  As applied to the Borrowers and theirSubsidiaries, the purchase or acquisition of any share of capital stock,partnership interest, evidence of indebtedness or other equity security of anyother Person (including any Subsidiary), any loan, advance or extension ofcredit (excluding accounts receivable arising in the ordinary course ofbusiness) to, or contribution to the capital of, any other Person (includingany Subsidiary), any real estate held 

 

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for sale or investment, any securities or commoditiesfutures contracts held, any other investment in any other Person (including anyother Subsidiary of the Borrowers), and the making of any commitment oracquisition of any option to make an Investment.

 

IPRights.  See Section 5.17.

 

JuniorSubordinated Debt.  AllIndebtedness and other obligations of the Parent under or in respect of theJunior Subordinated Note and the Junior Subordinated Debt Documents.

 

JuniorSubordinated Debt Documents. The Junior Subordinated Note, the Loan Agreement dated June 15,2007 between the Parent and the Junior Subordinated Lender, as amended as of thedate hereof, and any other agreements evidencing, securing or otherwise madepursuant to or in connection with the Junior Subordinated Note, in each case asin effect on the Closing Date without any amendment to or modification thereof,except as permitted by the Subordination Agreement.

 

JuniorSubordinated Lender. Collectively, Robert E. Wheaton and Suzanne H. Wheaton.

 

JuniorSubordinated Note. That certain Note, dated as of June 15, 2007, in the originalprincipal amount of $1,400,000 made by the Parent payable to the JuniorSubordinated Lender.

 

LCDisbursement.  Apayment made by the LC Issuer pursuant to a Letter of Credit.

 

LCExposure.   At anytime, the sum of (a) the Maximum Drawing Amount at such time, and (b) theaggregate LC Disbursements that at such time have not been reimbursed by or onbehalf of the Borrowers to the LC Issuer. The LC Exposure of any Revolving Credit Lender at any time shall be itsApplicable Percentage of the total LC Exposure at such time.

 

LCIssuer.  Wells Fargo.

 

LandlordWaivers.  Landlord’sconsent and estoppel certificates (in form reasonably acceptable to theAdministrative Agent) in favor of the Administrative Agent specified thereinand covering those leased real properties as specified on Schedule 5.8(d)(i) andany leased real properties that are acquired by the Borrowers or any Subsidiaryafter the date hereof.

 

LeadArranger.  SeePreamble.

 

Lenders.  Wells Fargo, the other financial institutionsparties hereto and listed on Schedule 1 attached hereto and each otherPerson that may after the date hereof become an assignee of a Lender pursuantto Section 10.1 and, thereby a party to this Agreement as a “Lender”hereunder, but from and after the effective date that any Person shall haveassigned its entire Commitment pursuant to Section 10.1, “Lenders” shallno longer include such Person.

 

Letterof Credit Applications. Applications for Letters of Credit in such form as may be required bythe LC Issuer from time to time which are executed and delivered by the Borrowersto the LC Issuer pursuant to Section 3.1, as the same may be amended orsupplemented from time to time.

 

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Letterof Credit Fee.  See Section 2.6(b).

 

Letterof Credit Participation. See Section 3.1(b).

 

Letterof Credit Sublimit. $500,000.

 

Lettersof Credit.  See Section 3.1(a).

 

LIBORLoan.  Any Loan bearinginterest at a rate determined with reference to the LIBOR Rate.

 

LIBORRate.  With respect toany LIBOR Loan for any Interest Period, the rate per annum as determined by theAdministrative Agent on the basis of the offered rates for deposits in U.S.dollars, for a period of time comparable to such Interest Period, which appearson Reuters page LIBOR01 (formerly Telerate page 3750) as of 11:00 a.m.London time on the day that is two Business Days preceding the Drawdown Date ofsuch LIBOR Loan (or, if for any reasonsuch rate is unavailable from Reuters, from any other similar company orservice that provides rate quotations comparable to those currently provided byReuters); provided, however, that if the rate described above is notprovided by Reuters or such other similar company or service on any applicableinterest determination date, the LIBOR Rate shall be the rate (rounded upward,if necessary, to the nearest one hundred-thousandth of a percentage point)determined on the basis of the offered rates for deposits in U.S. dollars for aperiod of time comparable to such Interest Period which are offered by fourmajor banks in the London interbank market at approximately 11:00 a.m.London time, on the day that is two (2) Business Days preceding the firstday of such Interest Period as selected by the Administrative Agent.  The principal London office of each of thefour major London banks will be requested to provide a quotation of its U.S.dollar deposit offered rate.  If at leasttwo such quotations are provided, the LIBOR Rate for that date will be thearithmetic mean of the quotations.  Iffewer than two quotations are provided as requested, the rate for that datewill be determined on the basis of the rates quoted for loans in U.S. dollarsto leading European banks for a period of time comparable to such InterestPeriod offered by major banks in New York City at approximately 11:00 a.m.New York City time, on the day that is two Business Days preceding the firstday of such Interest Period.

 

LoanDocuments.  ThisAgreement, the Notes, the Letter of Credit Applications, any SubsidiaryGuaranty, the Eligible Swap Agreements, Secured Cash Management Agreements, theFee Letter and the Security Documents, together with any agreements,instruments or documents executed and delivered pursuant to or in connectionwith any of the foregoing; provided that for purposes of the definitionof “Material Adverse Effect” and Sections V through IX, “Loan Documents” shallnot include Eligible Swap Agreements or Secured Cash Management Agreements.

 

LoanParties.  Collectively,the Borrowers and eachSubsidiary Guarantor.

 

Loans.  The loans made or to be made by the Lendersto the Borrowers pursuant to this Agreement, including Revolving Credit Loansand Term Loans.

 

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MaintenanceCapital Expenditures. Any Capital Expenditure that is not a Growth Capital Expenditure.

 

MajorityLenders.  As of anydate, one (1) or more Lenders (that are not Defaulting Lenders) holdingmore than fifty percent (50%) of the Total Commitments, or if the TotalRevolving Credit Commitments shall have terminated, one (1) or moreLenders (that are not Defaulting Lenders) holding more than fifty percent (50%)of the outstanding principal amount of the Loans and Letter of CreditParticipations; provided that the portion of the Total Commitments, orthe outstanding principal amount of the Loans and Letter of CreditParticipations, as the case may be, that are held or deemed held by, anyDefaulting Lender will be excluded for purposes of making a determination ofMajority Lenders.

 

MajorityRevolving Credit Lenders. As of any date of determination, one (1) or more Lenders holdingmore than fifty percent (50%) of the Total Revolving Credit Outstandings; providedthat the portion of the Total Revolving Credit Outstandings held or deemed heldby, any Defaulting Lender shall be excluded for purposes of making adetermination of Majority Revolving Credit Lenders.

 

MajorityTerm Lenders.  As ofany date of determination, one (1) or more Lenders holding more than fiftypercent (50%) of the outstanding principal amount of Term Loans on such date; providedthat the portion of the outstanding principal amount of Term Loans held by anyDefaulting Lender shall be excluded for purposes of making a determination ofthe Majority Term Lenders.

 

MaterialAdverse Effect.  Any of(a) a material adverse change in, or a material adverse effect upon, theoperations, business, properties, liabilities (actual or contingent), condition(financial or otherwise) of the Borrowers and their Subsidiaries taken as awhole; (b) a material impairment of the rights and remedies of theAdministrative Agent or any Lender under any Loan Document or of the ability ofany Loan Party to perform its obligations under any Loan Document to which itis a party; or (c) a material adverse effect upon the legality, validity,binding effect or enforceability against any Loan Party of any Loan Document(including with respect to the lien priority of any Security Document), towhich it is a party.

 

MaturityDate.  January 31,2012.

 

MaximumDrawing Amount.  At anytime, the aggregate undrawn amount of all then outstanding Letters of Credit.

 

MeasurementPeriod.  At any date ofdetermination, the most recently completed four Fiscal Quarters of the Borrower.

 

MultiemployerPlan.  Any Plan whichis a Multiemployer Plan as defined in Section 4001(a)(3) of ERISA.

 

NetCash Proceeds.  Withrespect to:

 

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(a)           any Disposition by the Borrowers or any of their Subsidiaries, or any Extraordinary Receiptreceived or paid to the account of the Borrowers or any of their Subsidiaries,the excess, if any, of (i) the sum of cash and cash equivalents receivedin connection with such transaction (including any cash or cash equivalentsreceived by way of deferred payment pursuant to, or by monetization of, a notereceivable or otherwise, but only as and when so received) over (ii) thesum of (A) the amount of any Indebtedness that is secured by theapplicable asset and that is required to be repaid in connection with suchtransaction (other than Indebtedness under the Loan Documents), (B) thereasonable and customary out-of-pocket expenses incurred by the Borrowers or a Subsidiaryin connection with such transaction and (C) income taxes reasonablyestimated to be actually payable within two years of the date of the relevanttransaction as a result of any gain recognized in connection therewith; providedthat, if the amount of any estimated taxes pursuant to subclause (C) exceedsthe amount of taxes actually required to be paid in cash in respect of suchDisposition, the aggregate amount of such excess shall constitute Net CashProceeds; and

 

(b)           the sale or issuance of any Equity Interestby the Borrowers or any of their Subsidiaries, or the incurrence or issuance ofany Indebtedness by the Borrower or any of their Subsidiaries, the excess of (i) thesum of the cash and cash equivalents received in connection with such transactionover (ii) the underwriting discounts and commissions, and other reasonableand customary out-of-pocket expenses, incurred by the Borrowers or suchSubsidiaries in connection therewith.

 

NewConstruction. Construction by the Borrowers or any of theirSubsidiaries related to the opening of a New Operating Unit or the meaningfulexpansion of capacity at an Operating Unit which is not a New Operating Unit.

 

NewLender.  See Section 2.1(a)(ii).

 

NewOperating Unit.  Arestaurant owned or operated by the Borrowers or any of their Subsidiarieswhose ownership or operation by the Borrowers or any of their Subsidiariesstarts on a date after the Closing Date.

 

NoteRecord.  Any internalrecord, including a computer record, maintained by any Lender with respect toany Loan.

 

Notes.  Collectively, the Revolving Credit Notes andthe Term Notes.

 

Noticeof Borrowing or Conversion. The notice, substantially in the form of Exhibit B hereto,to be given by the Borrowers to the Administrative Agent to request a Loan orto convert an outstanding Loan of one Type into a Loan of another Type, inaccordance with Section 2.3.

 

Obligations.  The following:

 

(a)           the due and punctualpayment by the Borrowers of (i) the principal of and interest (includinginterest accruing during the pendency of any bankruptcy, insolvency,receivership or other similar proceeding, regardless of whether allowed orallowable in such proceeding) on the Loans, when and as due, whether atmaturity, by acceleration, 

 

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upon one or more datesset for prepayment or otherwise, (ii) each payment required to be made bythe Borrowers in respect of any Letter of Credit, when and as due, includingthe unreimbursed amount of any LC Disbursement, interest thereon (includinginterest accruing during the pendency of any bankruptcy, insolvency,receivership or other similar proceeding, regardless of whether allowed orallowable in such proceeding) and obligations to provide cash collateral, and (iii) allother monetary obligations of the Borrowers under this Agreement and under theother Loan Documents (including, without limitation, under each Eligible SwapAgreement and Secured Cash Management Agreement), including obligations to payfees, expense reimbursement obligations and indemnification obligations,whether primary, secondary, direct, contingent, fixed or otherwise, arisingunder the Loan Documents (including monetary obligations incurred during thependency of any bankruptcy, insolvency, receivership or other similarproceeding, regardless of whether allowed or allowable in such proceeding), and

 

(b)           the due and punctualpayment of all the monetary obligations of each other Loan Party under orpursuant to this Agreement and each of the other Loan Documents.

 

OFAC.  The U.S. Department of the Treasury’s Officeof Foreign Assets Control.

 

OperatingUnits.   Allrestaurants operated by the Borrowers or any of their Subsidiaries, which foravoidance of doubt, shall include all New Operating Units.

 

OtherTaxes.  All present orfuture stamp or documentary taxes or any other excise or property taxes,charges or similar levies arising from any payment made hereunder or under anyother Loan Document or from the execution, delivery or enforcement of, orotherwise with respect to, this Agreement or any other Loan Document.

 

OverpayingBorrower.  See Section 2.16(b).

 

Parent.  Star Buffet, Inc., a Delawarecorporation.

 

ParentFinancial Statements. See Section 5.25.

 

ParentSEC Documents.  TheParent’s (a) Annual Report on Form 10-K for its most recent fiscalyear for which such a report has been filed, (b) Quarterly Report on Form 10-Qfor its most recent fiscal quarter for which such a report has been filed, (c) mostrecent Proxy Statement on Schedule 14A, and (d) all Current Reports on Form 8-Kfiled since the end of the most recent fiscal year for which it has filed itsAnnual Report on Form 10-K.

 

Participant.  See Section 10.1(d).

 

PatriotAct.  See Section 12.15.

 

PaymentDate.  The firstBusiness Day of each calendar quarter.

 

PBGC.  The Pension Benefit Guaranty Corporation orany entity succeeding to any or all of its functions under ERISA.

 

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PensionPlan.  Any Plan whichis an “employee pension benefit plan” (as defined in ERISA).

 

PermittedEncumbrances.  See Section 8.3.

 

Person.  Any individual, corporation, partnership,trust, unincorporated association, business or other legal entity, and anygovernment or governmental agency or political subdivision thereof.

 

Plan.  Any “employee pension benefit plan” or “employeewelfare benefit plan” (each as defined in ERISA) maintained by the Borrowers orany Subsidiary of the Borrowers.

 

Platform.  An electronic deliverysystem (which may be provided by the Administrative Agent, an Affiliate of theAdministrative Agent or any Person that is not an Affiliate of theAdministrative Agent), such as IntraLinks or a substantially similar electronicsystem.

 

PledgeAgreement.  See Section 4.1(a)(iii).

 

ProForma Financial Statements. See Section 4.1(h).

 

ProhibitedAcquisition.  Any “prohibitedtransaction” within the meaning of Section 406 of ERISA or Section 4975of the Code.

 

QualifiedInvestments.  Asapplied to the Borrowers and their Subsidiaries, investments in (i) notes,bonds or other obligations of the United States of America or any agencythereof that as to principal and interest constitute direct obligations of orare guaranteed by the United States of America and that have maturity dates notmore than one year from the date of acquisition, (ii) certificates ofdeposit, demand deposit accounts or other deposit instruments or accountsmaintained in the ordinary course of business with banks or trust companiesorganized under the laws of the United States or any state thereof that havecapital and surplus of at least $500,000,000 which certificates of deposit andother deposit instruments, if not payable on demand, have maturities of notmore than one year from the date of acquisition, (iii) commercial paperthat is rated not less than prime-one or A-1 or their equivalents by Moody’sInvestors Service, Inc. or Standard & Poor’s Corporation,respectively, or their successors, and in each case maturing not more than oneyear from the date of acquisition, (iv) any repurchase agreement securedby any one or more of the foregoing.

 

Register.  See Section 10.1(c).

 

RelatedParties.  With respectto any Person, such Person’s Affiliates and the partners, directors, officers,employees, agents and advisors of such Person and of such Person’s Affiliates.

 

ReservePercentage.  For anyInterest Period, the aggregate of the maximum reserve percentages (includingall basic, marginal, special, emergency and supplemental reserves), expressedas a decimal, established by the Board of Governors of the Federal ReserveSystem and any other banking authority, domestic or foreign, to which anyLender is subject with respect to “Eurocurrency Liabilities” (as defined inregulations issued from time to time by such Board 

 

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ofGovernors).  The Reserve Percentage shallbe adjusted automatically on and as of the effective date of any change in anysuch reserve percentage.

 

ResponsibleOfficer.  The chiefexecutive officer, president, chief financial officer, treasurer or controllerof a Loan Party.  Any document deliveredhereunder that is signed by a Responsible Officer of a Loan Party shall beconclusively presumed to have been authorized by all necessary corporate,partnership and/or other action on the part of such Loan Party and suchResponsible Officer shall be conclusively presumed to have acted on behalf ofsuch Loan Party.

 

RestrictedPayment.  Any of thefollowing: (a) any dividend, distribution, loan, advance, guaranty,extension of credit or other payment, whether in cash or property to or for thebenefit of any Person who holds an Equity Interest in the Borrowers or any oftheir Subsidiaries, whether or not such interest is evidenced by a security,and any purchase, redemption, retirement or other acquisition for value of anyEquity Interest of the Borrowers or any of their Subsidiaries, whether now orhereafter outstanding, or of any options, warrants or similar rights topurchase such Equity Interest or any security convertible into or exchangeablefor such Equity Interest and (b) any payment or prepayment of any kind,whether in cash or property, to or for the benefit of any Person that is anAffiliate of (i) the Borrowers or any of their Subsidiaries or (ii) anyholder of an Equity Interest in or any beneficiary of the Parent.

 

RevolvingCredit Commitment.  Inrelation to any particular Revolving Credit Lender, the maximum dollar amountwhich such Lender has agreed to loan to the Borrowers as Revolving Credit Loansor to make available to the Borrowers pursuant to Letter of CreditParticipations upon the terms and subject to the conditions of this Agreement,initially as set forth on Schedule 1 attached hereto, as such Lender’sRevolving Credit Commitment may be modified pursuant hereto and in effect fromtime to time.  Schedule 1 shall beamended from time to time to reflect any changes in the Revolving CreditCommitments of the Revolving Credit Lenders, and the Administrative Agent shallpromptly provide copies of revised Schedule 1 to the Lenders.

 

RevolvingCredit Facility.  Thecredit facility provided under Section 2.1(a).

 

RevolvingCredit Lender.  EachLender having a Revolving Credit Commitment.

 

RevolvingCredit Loans.  See Section 2.1(a)(i).

 

RevolvingCredit Note.  See Section 2.2(a).

 

Sanctioned Country.  A country subject to a sanctions programidentified on the list maintained by OFAC and available athttp://www.treas.gov/offices/eotffc/ofac/sanctions/ index.html, or as otherwisepublished from time to time.

 

Sanctioned Person.  Any of the following:  (i) a Person named on the list of “SpeciallyDesignated Nationals and Blocked Persons” maintained by OFAC available athttp://www.treas.gov/offices/ eotffc/ofac/sdn/index.html, or as otherwisepublished from time to time, or (ii) (A) an agency of the government of aSanctioned Country, (B) an organization 

 

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controlledby a Sanctioned Country, or (C) a person resident in a Sanctioned Country,to the extent subject to a sanctions program administered by OFAC.

 

SEC.  United States Securities and ExchangeCommission.

 

SecuredCash Management Agreement. Any Cash Management Agreement entered into between or among any Borrowerand any Cash Management Bank.

 

SecuredParties.  Collectively,the Administrative Agent, the Lenders, the LC Issuer, the Swap Banks, the CashManagement Banks, and the other Persons the Obligations owing to which are orare purported to be secured by the Collateral under the terms of the SecurityDocuments.

 

SecuritiesAct.  The SecuritiesAct of 1933, as amended.

 

SecurityAgreement.  See Section 4.1(a)(iii).

 

SecurityDocuments.  TheSecurity Agreement, the Hazardous Materials Indemnity Agreement, the FeeProperty Security Documents, the Landlord Waivers, and the deposit accountcontrol agreements referenced in Section 4.1(a)(iii)(E), each in favor ofthe Administrative Agent to secure Obligations, in each case as amended and/orrestated and in effect from time to time, and any additional documentsevidencing or perfecting the Administrative Agent’s lien on the Collateral.

 

Solventand Solvency.  With respect to anyPerson on any date of determination, that on such date (a) the fair valueof the property of such Person is greater than the total amount of liabilities,including contingent liabilities pursuant to GAAP, of such Person, (b) thepresent fair salable value of the assets of such Person is not less than theamount that will be required to pay the probable liability of such Person onits debts as they become absolute and matured, (c) such Person does notintend to, and does not believe that it will, incur debts or liabilities beyondsuch Person’s ability to pay such debts and liabilities as they mature, (d) suchPerson is not engaged in business or a transaction, and is not about to engagein business or a transaction, for which such Person’s property would constitutean unreasonably small capital, and (e) such Person is able to pay itsdebts and liabilities, contingent obligations and other commitments as they maturein the ordinary course of business.  Theamount of contingent liabilities at any time shall be computed as the amountthat, in the light of all the facts and circumstances existing at such time,represents the amount that can reasonably be expected to become an actual ormatured liability.

 

SubordinatedDebt.  Indebtedness ofthe Borrowers or any of their Subsidiaries, including, without limitation, theJunior Subordinated Debt, which is expressly subordinated and made junior tothe payment and performance in full of the Obligations on terms and conditionsreasonably satisfactory to the Majority Lenders.

 

Subordination Agreement.  The Subordination Agreement, dated theClosing Date, by and among the Administrative Agent, the Junior SubordinatedLender and the Parent, as amended, restated, supplemented or modified from timeto time.

 

SubordinationProvisions.  See Section 9.1(m).

 

20

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Subsidiary.  With respect to any Person means acorporation, partnership, joint venture, limited liability company or otherbusiness entity of which a majority of the shares of securities or otherinterests having ordinary voting power for the election of directors or othergoverning body (other than securities or interests having such power only byreason of the happening of a contingency) are at the time beneficially owned,or the management of which is otherwise controlled, directly, or indirectlythrough one or more intermediaries, or both, by such Person.  Unless otherwise specified, all referencesherein to a “Subsidiary” or to “Subsidiaries” shall refer to aSubsidiary or Subsidiaries of theBorrower.

 

SubsidiaryGuarantor.  EachSubsidiary of any Borrower required to execute and deliver a SubsidiaryGuaranty pursuant to Section 6.12.

 

SubsidiaryGuaranty.  See Section 6.12.

 

Summaryof Sources and Uses. The summary of sources and uses of funds set forth on Schedule 4.1(e) attachedhereto.

 

SwapAgreement.   Any andall (a) rate swap transactions, basis swaps, credit derivativetransactions, forward rate transactions, commodity swaps, commodity options,forward commodity contracts, equity or equity index swaps or options, bond orbond price or bond index swaps or options or forward bond or forward bond priceor forward bond index transactions, interest rate options, forward foreignexchange transactions, cap transactions, floor transactions, collartransactions, 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, and (b) transactions ofany kind, and the related confirmations, which are subject to the terms andconditions of, or governed by, any form of master agreement published by theInternational Swaps and Derivatives Association, Inc., any InternationalForeign Exchange Master Agreement, or any other master agreement (any suchmaster agreement, together with any related schedules, a “Master Agreement”),including any such obligations or liabilities under any Master Agreement.

 

SwapBank.  Any Person thatat the time it entered into a Swap Agreement was a Lender, an Affiliate of aLender, or a bank or trust company organized under the laws of the UnitedStates or any state thereof that has capital and surplus of at least$1,000,000,000.

 

SwapTermination Value.   Inrespect of any one or more Swap Agreements, after taking into account theeffect of any legally enforceable netting agreement relating to such SwapAgreements, (a) for any date on or after the date such Swap Agreementshave been closed out and termination value(s) determined in accordancetherewith, such termination value(s), and (b) for any date prior to thedate referenced in clause (a), the amount(s) determined as themark-to-market value(s) for such Swap Agreements, as determined based uponone or more mid-market or other readily available quotations provided by anyrecognized dealer in such Swap Agreements (which may include a Lender or anyAffiliate of a Lender).

 

SyndicationAgent.  See Preamble.

 

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SyntheticDebt.  With respect toany Person as of any date of determination thereof, all obligations of suchPerson in respect of transactions entered into by such Person that are intendedto function primarily as a borrowing of funds (including any minority interesttransactions that function primarily as a borrowing) but are not otherwiseincluded in the definition of “Indebtedness” or as a liability on theconsolidated balance sheet of such Person and its Subsidiaries in accordancewith GAAP.

 

SyntheticLease Obligation.   Themonetary obligation of a Person under (a) a so-called synthetic,off-balance sheet or tax retention lease, or (b) an agreement for the useor possession of property (including sale and leaseback transactions), in eachcase, creating obligations that do not appear on the balance sheet of suchPerson but which, upon the application of any bankruptcy or similar law to suchPerson, would be characterized as the indebtedness of such Person (withoutregard to accounting treatment).

 

Taxes  All present or future taxes, levies, imposts,duties, deductions, withholdings, assessments, fees or other charges imposed byany Governmental Authority, including any interest, additions to tax orpenalties applicable thereto.

 

TermLender.  Each Lenderhaving a Term Loan Commitment.

 

TermLoans.  See Section 2.1(b).

 

TermLoan Commitment.  Withrespect to any Lender, the maximum dollar amount which such Lender has agreedto loan to the Borrower as a Term Loan upon the terms and subject to theconditions of this Agreement, initially as set forth on Schedule 1attached hereto and as such Lender’s Term Loan Commitment may be modifiedpursuant hereto from time to time.  Schedule1 shall be amended from time to time to reflect any changes in the TermLoan Commitments of the Term Lenders, and the Administrative Agent shallpromptly provide copies of revised Schedule 1 to the Lenders.

 

TermFacility.  The creditfacility provided under Section 2.1(b).

 

TermNotes.  See Section 2.2(b).

 

Title Company.  LandAmerica Title Insurance Company.

 

TitlePolicy.  For each FeeProperty, an ALTA 1992 loan policy of title insurance providing coverage foreach such property at least in the amount set forth on Schedule 5.8(c) hereto,issued by the Title Company to Administrative Agent and its successors andassigns, insuring the Fee Property Security Documents for such Fee Property inaccordance with the requirements of Section 4.1(a)(v).

 

TotalCommitment.  The sum ofthe Total Revolving Credit Commitment and the Total Term Loan Commitment.

 

TotalLease Adjusted Leverage Ratio.  As of the end of any fiscal period, the ratioof (a) the sum of (i) Consolidated Funded Indebtedness as of the endof such fiscal period, plus (ii) the 

 

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productof eight (8) times the Consolidated Rent Expense for such fiscalperiod, to (b) Consolidated EBITDAR for such fiscal period.

 

TotalRevolving Credit Commitment. The sum of the Revolving Credit Commitments of the Revolving CreditLenders as in effect from time to time, which as of the Closing Date shall be$2,000,000.

 

TotalRevolving Credit Outstandings.  At any time, the sum of (i) theaggregate outstanding principal balance of the Revolving Credit Loans at thetime and (ii) the LC Exposure at the time.

 

TotalTerm Loan Commitment. The sum of the Term Loan Commitments of the Term Lenders as in effectfrom time to time, which as of the Closing Date shall be $7,000,000.

 

Type.  A LIBOR Loan or a Base Rate Loan.

 

WellsFargo.  See Preamble.

 

WorkingCapital.  As of anydate of determination, the excess of consolidated current assets overconsolidated current liabilities of the Borrowers and their Subsidiaries.

 

## 1.2           Rules ofInterpretation.

##  

### (a)           Allterms of an accounting character used herein but not defined herein shall havethe meanings assigned thereto by GAAP. All calculations for the purposes of Section VII hereof shall bemade in accordance with GAAP.

###  

### (b)           Areference to any document or agreement shall include such document or agreementas amended, modified or supplemented and in effect from time to time inaccordance with its terms and the terms of this Agreement.

###  

### (c)           Thesingular includes the plural and the plural includes the singular.  A reference to “Borrowers” shall include anysingle Borrower.  Whenever the contextmay require, any pronoun shall include the corresponding masculine, feminineand neuter forms.

###  

### (d)           Areference to any Person includes its permitted successors and permittedassigns.

###  

### (e)           Thewords “include”, “includes” and “including” are not limiting.

###  

### (f)            Thewords “herein”, “hereof”, “hereunder” and words of like import shall refer tothis Agreement as a whole and not to any particular section or subdivision ofthis Agreement.

###  

### (g)           Allterms not specifically defined herein or by GAAP, which terms are defined inthe Uniform Commercial Code as in effect in the State of New York, shall havethe meanings assigned to them in such Uniform Commercial Code.

 

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#  

# SECTION II

#  

# DESCRIPTION OF CREDIT

#  

## 2.1           Loans.

##  

### (a)           RevolvingCredit Loans.

###  

#### (i)            Upon the terms andsubject to the conditions of this Agreement, and in reliance upon therepresentations, warranties and covenants of the Borrowers herein, each of theLenders agrees, severally and not jointly, to make revolving credit loans (the “RevolvingCredit Loans”) to the Borrowers and to acquire Letter of CreditParticipations at the Borrowers’ request from time to time from and after theClosing Date and prior to the Maturity Date, provided that the TotalRevolving Credit Outstandings (after giving effect to all requested RevolvingCredit Loans and Letters of Credit) shall not exceed $250,000 on the ClosingDate and shall not at any time exceed the Total Revolving Credit Commitment,and provided, further that the sum of the aggregate principalamount of outstanding Revolving Credit Loans made by each Lender and alloutstanding Letter of Credit Participations of such Lender shall not at anytime (after giving effect to all requested Revolving Credit Loans) exceed suchLender’s Revolving Credit Commitment. Subject to the terms and conditions of this Agreement, the Borrowers mayborrow, repay, prepay and reborrow amounts, up to the limits imposed by this Section 2.1,from time to time between the Closing Date and the Maturity Date upon requestgiven to the Administrative Agent pursuant to Section 2.3.  Each request for a Revolving Credit Loan or aLetter of Credit hereunder shall constitute a representation and warranty by theBorrowers that the conditions set forth in Sections 4.1 or 4.2 (as the case maybe) have been satisfied as of the date of such request.

####  

#### (ii)           The Borrowers may (A) requestany of one or more of the Revolving Credit Lenders to increase the amount ofits Revolving Credit Commitment (which request shall be in writing and sent tothe Administrative Agent to forward to such Lender) and/or (B) request theAdministrative Agent to arrange for any of one or more banks or financialinstitutions not a party hereto (a “New Lender”) to become a party toand a Lender under this Agreement, provided that the identification andarrangement of such New Lender to become a party hereto and a Lender under thisAgreement shall be reasonably acceptable to the Administrative Agent and willbe made by the Administrative Agent in consultation with the Borrowers, and providedfurther that such New Lender is an Eligible Assignee, and providedfurther that in no event shall the amount of the Total Revolving CreditCommitment as increased pursuant to this Section 2.1(a) exceed$3,000,000.  In no event may any Lender’sRevolving Credit Commitment be increased without the prior written consent ofsuch Lender, and the failure of any Lender to respond to the Borrowers’ requestfor an increase shall be deemed a rejection by such Lender of the Borrowers’request.  The Total Revolving CreditCommitment may not be increased if, at the time of any proposed increasehereunder, a Default has occurred and is continuing.  Upon any request by the Borrowers to increasethe Total Revolving Credit Commitment, the Borrowers shall be deemed to haverepresented and warranted on and as of the date of such request that no Defaulthas occurred and is 

####  

#### 24

#### 

####  

#### continuing, giving effect to such increase.  Notwithstanding anything contained in thisAgreement to the contrary, no Lender shall have any obligation whatsoever toincrease the amount of its Revolving Credit Commitment, and each Lender may atits option, unconditionally and without cause, decline to increase itsRevolving Credit Commitment.

####  

#### (iii)          If any Lender iswilling, in its sole and absolute discretion, to increase the amount of itsRevolving Credit Commitment hereunder (such a Lender hereinafter referred to asan “Increasing Lender”), it shall enter into a written agreement to thateffect with the Borrowers and the Administrative Agent, substantially in theform of Exhibit C (a “Commitment Increase Supplement”),which agreement shall specify, among other things, the amount of the increasedRevolving Credit Commitment of such Increasing Lender.  Upon the effectiveness of such IncreasingLender’s increase in its Revolving Credit Commitment, Schedule 1 shall,without further action, be deemed to have been amended appropriately to reflectthe increased Revolving Credit Commitment and of such Increasing Lender.  Any New Lender which is willing to become aparty hereto and a Lender hereunder shall enter into a written agreement withthe Borrowers and the Administrative Agent, substantially in the form of Exhibit D(an “Additional Lender Supplement”), which agreement shall specify,among other things, its Revolving Credit Commitment hereunder.  When such New Lender becomes a Lenderhereunder as set forth in the Additional Lender Supplement, Schedule 1shall, without further action, be deemed to have been amended as appropriate toreflect the Revolving Credit Commitment of such New Lender.  Upon the execution by the AdministrativeAgent, the Borrowers and such New Lender of such Additional Lender Supplement,such New Lender shall become and be deemed a party hereto and a “Lender”hereunder for all purposes hereof and shall enjoy all rights and assume allobligations on the part of the Lenders set forth in this Agreement, and itsRevolving Credit Commitment shall be the amount specified in its AdditionalLender Supplement.  Each New Lender whichexecutes and delivers an Additional Lender Supplement and becomes a partyhereto and a “Lender” hereunder pursuant to such Additional Lender Supplementis hereinafter referred to as an “Additional Lender.”

####  

#### (iv)          In no event shall anincrease in a Lender’s Revolving Credit Commitment or the Revolving CreditCommitment of a New Lender which results in the Total Revolving Credit Commitmentexceeding the amount which is authorized at such time in resolutions previouslydelivered to the Administrative Agent become effective until the AdministrativeAgent shall have received a copy of the resolutions, in form and substancereasonably satisfactory to the Administrative Agent, of the boards of directorsof the Borrowers authorizing the borrowings contemplated pursuant to suchincrease, certified by the secretary or an assistant secretary of suchBorrower.  Upon the effectiveness of theincrease in a Lender’s Revolving Credit Commitment or the Revolving CreditCommitment of a New Lender pursuant to the preceding sentence and execution byan Increasing Lender of a Commitment Increase Supplement or by an AdditionalLender of an Additional Lender Supplement, the Borrowers shall make suchborrowing from such Increasing Lender or Additional Lender, and/or shall makesuch prepayment of outstanding Revolving Credit Loans, as applicable, as shallbe required to cause the aggregate outstanding principal amount of such Loansowing to each Lender (including 

####  

#### 25

#### 

####  

#### each such Increasing Lender and Additional Lender) tobe proportional to such Lender’s share of the relevant Total Revolving CreditCommitment after giving effect to any increase thereof.

####  

#### (v)           Notwithstandinganything herein to the contrary, in no event may the Total Revolving CreditCommitment be increased hereunder unless (A) after giving effect to suchincrease (and assuming the Total Revolving Credit Commitment, as so increased,is fully utilized by the Borrowers), no Default will have occurred and becontinuing and the Borrowers will be in compliance on a pro forma basis withall financial covenants under Section VII and (B) the AdministrativeAgent shall have received a certificate of a Responsible Officer of eachBorrower certifying that the condition in clause (A) has been satisfied(with calculations demonstrating compliance with such financial covenants on apro forma basis, in reasonable detail).

####  

#### (vi)          No New Lender may becomean Additional Lender unless an Additional Lender Supplement (or counterpartsthereof) has been signed by such bank or financial institution and whichAdditional Lender Supplement has been agreed to and acknowledged by theBorrowers and acknowledged by the Administrative Agent.  No consent of any Lender or acknowledgment ofany of the other Lenders hereunder shall be required therefor.  In no event shall the Revolving CreditCommitment of any Lender be increased by reason of any bank or financialinstitution becoming an Additional Lender, or otherwise, but the TotalRevolving Credit Commitment shall be increased by the amount of each AdditionalLender’s Revolving Credit Commitment. Upon any Lender entering into a Commitment Increase Supplement or anyAdditional Lender becoming a party hereto, the Administrative Agent shallnotify each other Lender thereof and shall deliver to each Lender a copy of theAdditional Lender Supplement executed by such Additional Lender, agreed to andacknowledged by the Borrowers and acknowledged by the Administrative Agent, andthe Commitment Increase Supplement executed by such Increasing Lender, agreedto and acknowledged by the Borrowers and acknowledged by the AdministrativeAgent.

####  

### (b)           TermLoans.  Upon the terms and subject tothe conditions of this Agreement, and in reliance upon the representations,warranties and covenants of the Borrowers herein, each of the Lenders having aTerm Loan Commitment agrees, severally and not jointly, to make a term loan(individually, a “Term Loan”, and collectively, the “Term Loans”)to the Borrowers on the Closing Date in the principal amount equal to suchLender’s Term Loan Commitment, provided that the aggregate outstandingprincipal amount of the Term Loans shall not at any time exceed the Total TermLoan Commitment.

###  

### (c)           Limitations.  Each LIBOR Loan shall be in a minimumprincipal amount of $100,000 or in integral multiples of $25,000 in excess ofsuch minimum amount, and each Base Rate Loan shall be in a minimum principalamount of $100,000 or in integral multiples of $25,000 in excess of suchminimum amount.  No more than five (5) LIBORLoans may be outstanding at any time.

###  

### (d)           Conversionsof Loans.  Upon the terms and subjectto the conditions and limitations of this Agreement, the Borrowers may convertall or any part of any outstanding Loan 

 

26

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### into a Loan of anotherType on any Business Day (which, in the case of a conversion of an outstanding LIBORLoan shall be the last day of the Interest Period applicable to such LIBORLoan).  The Borrowers shall give theAdministrative Agent prior notice of each such conversion (which notice shallbe effective upon receipt) in accordance with Section 2.3.  Notwithstanding the foregoing, the Borrowersmay not convert any Loan into a LIBOR Loan or continue a LIBOR Loan if there isa continuing Default.

###  

### (e)           Terminationor Reduction of Commitments.

###  

#### (i)            The Total RevolvingCredit Commitment shall terminate on the Maturity Date.

####  

#### (ii)           The Total Term LoanCommitment shall be reduced upon and by the amount of each mandatory oroptional payment or prepayment of the Term Loan.

####  

#### (iii)          The Borrowers shall havethe right at any time and from time to time upon five (5) Business Days’prior written notice to the Administrative Agent to reduce by $100,000, and inintegral multiples of $50,000 if in excess thereof, the Total Revolving CreditCommitment or to terminate entirely the Lenders’ Commitments to make RevolvingCredit Loans hereunder, whereupon the Revolving Credit Commitments of theLenders shall be reduced pro rata in accordance with their respectiveApplicable Percentages by the aggregate amount specified in such notice orshall, as the case may be, be terminated entirely.

####  

#### (iv)          Any mandatory payment ofRevolving Credit Loans made pursuant to the provisions of Section 2.8(b) shallpermanently reduce the Total Revolving Credit Commitment (allocated ratably toeach Lender based on each Lender’s Revolving Credit Commitment) by the amountof such payment.

####  

#### (v)           If, as a result of anysuch reduction of the Total Revolving Credit Commitment, the LC Exposure at thetime would exceed the Total Revolving Credit Commitment or the amount ofLetters of Credit permitted to be outstanding under Sections 2.1(a) and3.1(a), the Borrowers shall, in connection with any such reduction, depositwith and pledge to the Administrative Agent for the benefit of the Lenders andthe LC Issuer cash in an amount equal to 105% of such excess.  If any Letters of Credit would remainoutstanding after the effective date of any such termination of the TotalRevolving Credit Commitment, in addition to satisfaction of all otherapplicable terms and conditions of this Agreement, the Borrowers shall depositwith and pledge to the Administrative Agent for the benefit of the Lenders andthe LC Issuer cash in an amount equal to 105% of the Maximum Drawing Amount ofunder all Letters of Credit at the effective date of such termination.

####  

#### (vi)          No such reduction ortermination of any Commitment may be reinstated.

##  

## 27

## 

##  

## 2.2           The Notes.

##  

### (a)           TheRevolving Credit Loans shall be evidenced by a separate promissory note foreach Revolving Credit Lender, each such note to be in substantially the form ofExhibit A-1 hereto, dated as of the Closing Date and completed withappropriate insertions (each such note being referred to herein as a “RevolvingCredit Note” and collectively as the “Revolving Credit Notes”).  One Revolving Credit Note shall be payable tothe order of each Revolving Credit Lender in a principal amount equal to suchLender’s Revolving Credit Commitment.

###  

### (b)           The TermLoans shall be evidenced by a separate promissory note for each Term Lender inthe principal amount equal to such Lender’s Term Loan Commitment, each suchnote to be in substantially the form of Exhibit A-2 hereto, datedas of the Closing Date and completed with appropriate insertions (each suchnote being referred to as a “Term Note” and collectively as the “TermNotes”).

###  

### (c)           TheBorrowers irrevocably authorize each of the Lenders to make or cause to bemade, at or about the time of the Drawdown Date of any Loan or at the time ofreceipt of any payment of principal on any Note, an appropriate notation on itsNote Record reflecting (as the case may be) the making of such Loan or thereceipt of such payment.  The outstandingamount of the Loans set forth on the Note Records shall be prima facieevidence of the principal amount thereof owing and unpaid to such Lenders,absent manifest error, but the failure to record, or any error in so recording,any such amount on any Lender’s Note Record shall not limit or otherwise affectthe obligations of the Borrowers hereunder or under any Note to make payments ofprincipal of or interest on any Note when due.

###  

## 2.3           Noticeand Manner of Borrowing or Conversion of Loans.

##  

### (a)           Wheneverthe Borrowers desire to obtain or continue a Loan hereunder or convert anoutstanding Loan into a Loan of another Type, the Borrowers shall give theAdministrative Agent a telephonic notice promptly confirmed by a written Noticeof Borrowing or Conversion, which telephonic notice shall be irrevocable andwhich must be received no later than 11:00 a.m. Pacific time on the date (i) oneBusiness Day before the day on which the requested Loan is to be made as orconverted to a Base Rate Loan, and (ii) three Business Days before the dayon which the requested Loan is to be made or continued as or converted to aLIBOR Loan.  Such Notice of Borrowing orConversion shall specify (i) the effective date and amount of each Loan orportion thereof requested to be made, continued or converted, subject to thelimitations set forth in Section 2.1, (ii) the interest rate optionrequested to be applicable thereto, and (iii) the duration of theapplicable Interest Period, if any (subject to the provisions of the definitionof the term “Interest Period”).  If suchNotice fails to specify the interest rate option to be applicable to therequested Loan, then the Borrowers shall be deemed to have requested a BaseRate Loan.  If the written confirmationof any telephonic notification differs in any material respect from the actiontaken by the Administrative Agent, the records of the Administrative Agentshall be prima facie evidence of terms of the Loan requested absentmanifest error.

###  

### (b)           Subjectto the provisions of the definition of the term “Interest Period” herein, theduration of each Interest Period for a LIBOR Loan shall be as specified in theapplicable Notice of Borrowing or Conversion. If no Interest Period is specified in a Notice of Borrowing orConversion with respect to a requested LIBOR Loan, then the Borrowers shall be 

 

28

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### deemed to have selectedan Interest Period of one month’s duration. If the Administrative Agent receives a Notice of Borrowing or Conversionafter the time specified in subsection (a) above, such Notice shall not beeffective.  If the Administrative Agentdoes not receive an effective Notice of Borrowing or Conversion with respect toan outstanding LIBOR Loan, or if, when such Notice must be given prior to theend of the Interest Period applicable to such outstanding Loan, the Borrowersshall have failed to satisfy any of the conditions hereof, the Borrowers shallbe deemed to have elected to convert such outstanding Loan in whole into a BaseRate Loan on the last day of the then current Interest Period with respectthereto.

###  

## 2.4           Fundingof Loans.

##  

### (a)           Loansshall be made by the Lenders pro rata in accordance with theirrespective Applicable Percentages for such Loans, provided, howeverthat the failure of any Lender to make any Loan required to be made by ithereunder shall not relieve any other Lender of its obligation to lend hereunder(it being understood, however, that no Lender shall be responsible for thefailure of any other Lender to make any Loan required to be made by such otherLender).

###  

### (b)           TheAdministrative Agent shall notify the Term Lenders or Revolving Credit Lenders,as the case may be, of each requested Loan and of the Drawdown Date thereof andthe amount of each Term Lender’s or Revolving Credit Lender’s proratashare of such Loan.  If such notice isgiven by the close of the Administrative Agent’s business on the Business Dayon which the Administrative Agent receives an effective Notice of Borrowing orConversion as provided in Section 2.3, each Lender will, not later than1:00 p.m. Pacific time on the proposed Drawdown Date of such Loan, makeavailable to the Administrative Agent, at its head office, in immediatelyavailable funds, the amount of such Lender’s prorata share ofthe amount of such requested Loan.  Uponreceipt by the Administrative Agent of such amount, and upon the satisfactionof the conditions set forth in Section 4.1 or 4.2 (to the extentapplicable), the Administrative Agent will make available to the Borrowers theaggregate amount of such Loan.

###  

### (c)           TheAdministrative Agent may, unless notified to the contrary by any Term Lender orRevolving Credit Lender, as the case may be, prior to a Drawdown Date, assumethat each Term Lender or Revolving Credit Lender, as the case may be, has madeavailable to the Administrative Agent on such Drawdown Date the amount of suchLender’s Applicable Percentage of the Loans to be made on such Drawdown Date,and the Administrative Agent may (but it shall not be required to), in relianceupon such assumption, make available to the Borrowers a correspondingamount.  If any such Lender makesavailable to the Administrative Agent such amount on a date after such DrawdownDate, such Lender shall pay to the Administrative Agent on demand an amountequal to the product of (i) the average, computed for the period referredto in clause (iii) below, of the weighted average interest rate paid bythe Administrative Agent for federal funds acquired by the Administrative Agentduring each day included in such period, times (ii) the amount ofsuch Lender’s Applicable Percentage of any such Loans times (iii) afraction, the numerator of which is the number of days that elapse from andincluding such Drawdown Date to the date on which the amount of such Lender’sApplicable Percentage of such Revolving Credit Loans shall become immediatelyavailable to the Administrative Agent, and the denominator of which is365.  A statement of the 

 

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### Administrative Agentsubmitted to such Lender with respect to any amounts owing under this paragraphshall be primafacie evidence of the amount due and owing to theAdministrative Agent by such Lender absent manifest error.  If the amount of such Lender’s ApplicablePercentage of such Loans is not made available to the Administrative Agent bysuch Lender within three (3) Business Days following such Drawdown Date,the Administrative Agent shall be entitled to recover such amount from theBorrowers on demand, with interest thereon at the rate per annum applicable tothe Loans made on such Drawdown Date.

###  

## 2.5           InterestRates and Payments of Interest.

##  

### (a)           EachLoan which is a Base Rate Loan shall bear interest on the outstanding principalamount thereof at a rate per annum equal to the Alternate Base Rate plus 0.25%,which rate shall change contemporaneously with any change in the Alternate BaseRate.  Such interest shall be payablemonthly in arrears on the first Business Day of each calendar month followingthe Closing Date.

###  

### (b)           EachLoan which is a LIBOR Loan shall bear interest on the outstanding principalamount thereof, for each Interest Period applicable thereto, at a rate perannum equal to the LIBOR Rate plus 2.00%. Such interest shall be payable for such Interest Period on the last daythereof.

###  

### (c)           (i)            If an Event of Defaultshall occur, then (x) the unpaid balance of Loans shall bear interest, tothe extent permitted by law, compounded daily at an interest rate equal to 2%per annum above the interest rate applicable to such Loans (determined pursuantto subsections (a) and (b) above) in effect on the day such Event ofDefault occurs, until such Event of Default is cured or waived, and (y) theLetter of Credit Fees shall be increased by 2.00% per annum until such Event ofDefault is cured or waived, and such interest shall be payable upon the demandof the Administrative Agent.

###  

### (d)           Solong as any Lender shall be required under regulations of the Board ofGovernors of the Federal Reserve System (“FRB”) (or any other bankingauthority, domestic or foreign, to which such Lender is subject) to maintainreserves with respect to liabilities or assets consisting of or including “EurocurrencyLiabilities” (as defined in regulations issued from time to time by such Boardof Governors), the Borrowers shall pay to the Administrative Agent for theaccount of each such Lender additional interest on the unpaid principal amountof each LIBOR Loan made by such Lender from the date of such Loan until suchprincipal amount is paid in full, at an interest rate per annum equal at alltimes to the remainder (rounded upwards, if necessary, to the next higher 1/100of 1%) obtained by subtracting (i) the LIBOR Rate for the Interest Periodfor such LIBOR Loan from (ii) the rate obtained by dividing such LIBORRate by a percentage equal to 100% minus the Reserve Percentage of such Lenderfor such Interest Period.  Such additionalinterest shall be determined by such Lender and notified to the Borrowersthrough the Administrative Agent, and shall be payable on each date on whichinterest is payable on such LIBOR Loan.

###  

### (e)           Allagreements between or among the Borrowers and the Lenders are hereby expresslylimited so that in no contingency or event whatsoever, whether by reason ofacceleration of maturity of the Obligations or otherwise, shall the amount paidor agreed to be 

 

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### paid to the Lenders forthe use or the forbearance of the Obligations exceed the maximum permissibleunder applicable law.  As used herein,the term “applicable law” shall mean the law in effect as of the date hereofprovided, however, that in the event there is a change in the law which resultsin a higher permissible rate of interest, then the Loan Documents shall begoverned by such new law as of its effective date.  In this regard, it is expressly agreed thatit is the intent of the Borrowers and the Lenders in the execution, deliveryand acceptance of the Loan Documents to contract in strict compliance with thelaws of the State of New York from time to time in effect.  If, under or from any circumstances whatsoever,fulfillment of any provision of any of the Loan Documents at the time ofperformance of such provision shall be due, shall involve transcending thelimit of such validity prescribed by applicable law, then the Obligation to befulfilled shall automatically be reduced to the limits of such validity, and ifunder or from circumstances whatsoever the Lenders should ever receive asinterest an amount which would exceed the highest lawful rate, such amountwhich would be excessive interest shall be applied to the reduction of theprincipal balance of the Obligations and not to the payment of interest.  This provision shall control every otherprovision of all Loan Documents.

###  

## 2.6           Fees.

##  

### (a)           TheBorrowers shall pay to the Administrative Agent for the benefit of the Lendersa commitment fee (the “Commitment Fee”), computed on the basis of a360-day year and payable quarterly in arrears on each Payment Date followingthe Closing Date and on the Maturity Date, at a rate per annum equal to 0.50%multiplied by the average obtained by dividing (i) the excess of (A) theTotal Revolving Credit Commitment for each day in the calendar quarterimmediately preceding such Payment Date over (B) the Total RevolvingCredit Outstandings for each day in the calendar quarter immediately precedingsuch Payment Date, by (ii) the number of days in such period.

###  

### (b)           TheBorrowers shall pay to the Administrative Agent for the benefit of the Lendersa fee (the “Letter of Credit Fee”) at a rate per annum equal to (i) theMaximum Drawing Amount under each Letter of Credit multiplied by (ii) 2.00%.  The Letter of Credit Fee shall be paidquarterly in arrears on each Payment Date following the Closing Date.

###  

### (c)           Withoutlimiting any of the Lenders’ other rights hereunder or by law, if any Loan orany portion thereof or any interest thereon or any other amount payablehereunder or under any other Loan Document is not paid within ten (10) daysafter its due date, the Borrowers shall pay to the Administrative Agent for thebenefit of the Lenders on demand a late payment charge equal to 5% of theamount of the payment due.

###  

### (d)           TheBorrowers shall pay to the Administrative Agent, such other fees as theBorrowers and the Administrative Agent shall agree in writing.

###  

### (e)           TheBorrowers authorize the Administrative Agent and the Lenders to charge to theirNote Records or to any deposit account which the Borrowers may maintain withany of them the interest, fees, charges, taxes and expenses provided for inthis Agreement, the other Loan Documents or any other document executed ordelivered in connection herewith or therewith. The Administrative Agent or the Lenders (with respect to any depositaccount held by 

 

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### any Lender) shall provideto the Borrowers written notice of any such charge promptly following suchcharge.

###  

## 2.7           Repayment of Loans.

##  

### (a)           TermLoans.  The Borrowers shall repay theprincipal amount of the Term Loans in equal quarterly installments of $150,000for the first six full calendar quarters after the Closing Date and equal quarterlyinstallments of $200,000 for the next nine full calendar quarters, payable oneach Payment Date commencing April 1, 2008, and the aggregate principalamount of all Term Loans outstanding on the Maturity Date shall be paid on suchdate.

###  

### (b)           RevolvingCredit Loans.  The Borrowers shallrepay to the Revolving Credit Lenders on the Maturity Date the aggregateprincipal amount of all Revolving Credit Loans outstanding on such date.

###  

## 2.8           Prepayments.

##  

### (a)           Optional.  The Borrowers may, upon notice to the AdministrativeAgent in substantially the form of Exhibits J-1 or J-2, as thecase may be, at any time or from time to time voluntarily prepay Term Loans andRevolving Credit Loans in whole or in part without premium or penalty (exceptas provided in Section 2.10); provided that (A) such noticemust be received by the Administrative Agent not later than 11:00 a.m.Pacific time (1) three Business Days prior to any date of prepayment ofLIBOR Loans and (2) on the date of prepayment of Base Rate Loans; (B) anyprepayment of LIBOR Loans shall be in a principal amount of $500,000 or a wholemultiple of $500,000 in excess thereof; and (C) any prepayment of BaseRate Loans shall be in a principal amount of $100,000 or a whole multiple of$25,000 in excess thereof or, in each case, if less, the entire principalamount thereof then outstanding.  Eachsuch notice shall specify the date and amount of such prepayment and the Type(s) ofLoans to be prepaid and, if LIBOR Loans are to be prepaid, the Interest Period(s) ofsuch Loans.  The Administrative Agentwill promptly notify each Lender of its receipt of each such notice, and of theamount of such Lender’s ratable portion of such prepayment (based on suchLender’s Applicable Percentage in respect of the relevant Facility).  If such notice is given by the Borrowers, theBorrowers shall make such prepayment and the payment amount specified in suchnotice shall be due and payable on the date specified therein.  Any prepayment of a Loan shall be accompaniedby all accrued interest on the amount prepaid, and if such Loan is a LIBORLoan, any additional amounts required pursuant to Section 2.10.  Each prepayment of Term Loans pursuant tothis Section 2.8(a) shall be applied to the principal repaymentinstallments of the Term Loans (including, without limitation, the installmentdue on the Maturity Date) in inverse order of maturity.

###  

### (b)           Mandatory.

###  

#### (i)            Within the earlier of (x) 95days after the end of each Fiscal Year (commencing with the Fiscal Year endingon January 26, 2009), or (y) five Business Days after financialstatements have been delivered pursuant to Section 6.1(a) and therelated certificate has been delivered pursuant to Section 6.1(d) forsuch Fiscal Year, the Borrowers shall prepay an aggregate principal amount ofLoans equal to fifty percent 

 

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#### (50%) of Excess Cash Flow for the Fiscal Year coveredby such financial statements (such prepayments to be applied as set forth inclauses (vi) and (viii) below).

####  

#### (ii)           If the Borrowers or anyof their Subsidiaries Dispose of any property (other than any Disposition ofany property permitted by Section 8.4(b)) which results in the realizationby such Person of Net Cash Proceeds, the Borrowers shall prepay an aggregateprincipal amount of Loans equal to 100% of such Net Cash Proceeds on the fifthBusiness Day following the receipt thereof by such Person (such prepayments tobe applied as set forth in clauses (vi) and viii) below).

####  

#### (iii)          Upon the sale orissuance by the Borrowers of any of their Equity Interests, unless otherwiseagreed in writing by the Majority Lenders, the Borrowers shall prepay anaggregate principal amount of Loans equal to 100% of all Net Cash Proceedsreceived therefrom promptly upon receipt thereof by the Borrowers (suchprepayments to be applied as set forth in clauses (vi) and (viii) below).

####  

#### (iv)          Upon the incurrence orissuance by the Borrowers or any of their Subsidiaries of any Indebtedness(other than Indebtedness expressly permitted to be incurred or issued pursuantto clauses (a) through (f) and (i) of Section 8.1), theBorrowers shall prepay an aggregate principal amount of Loans equal to 100% ofall Net Cash Proceeds received therefrom promptly upon receipt thereof by theBorrowers or such Subsidiaries (such prepayments to be applied as set forth inclauses (vi) and (viii) below).

####  

#### (v)           Upon any ExtraordinaryReceipt received by or paid to or for the account of the Borrowers or any oftheir Subsidiaries, and not otherwise included in clause (ii), (iii) or (iv) ofthis Section 2.8(b), the Borrowers shall prepay an aggregate principalamount of Loans equal to 100% of all Net Cash Proceeds received therefrompromptly upon receipt thereof by the Borrowers or such Subsidiaries (suchprepayments to be applied as set forth in clauses (vi) and (viii) below);provided, however, that with respect to any proceeds of casualtyinsurance or condemnation or eminent domain awards (or payments in lieuthereof), at the election of the Borrowers (as notified by the Borrowers to theAdministrative Agent on or prior to the date of receipt of such insuranceproceeds, condemnation awards or indemnity payments), and so long as no Defaultshall have occurred and be continuing, the Borrowers or such Subsidiaries mayapply such cash proceeds within one year after the receipt thereof to replaceor repair the equipment, fixed assets or real property in respect of which suchNet Cash Proceeds were received; and provided, further, however,that any Net Cash Proceeds not so applied shall be promptly applied to theprepayment of the Loans as set forth above in this Section 2.8(b)(v).

####  

#### (vi)          Each prepayment of Loanspursuant to the foregoing provisions of this Section 2.8(b) shall beapplied, first, to payment of the unpaid installments of principal ofthe Term Loans in inverse order of maturity, until the Term Loans are paid infull; and second, to the Revolving Credit Facility in the manner setforth in clause (viii) of this Section 2.8(b).

 

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####  

#### (vii)         If for any reason theTotal Revolving Credit Outstandings at any time exceed the Total RevolvingCredit Commitment at such time, the Borrowers shall immediately prepayRevolving Credit Loans and LC Disbursements and/or Cash Collateralize theMaximum Drawing Amount, in an aggregate amount equal to such excess.

####  

#### (viii)        Prepayments of theRevolving Credit Facility made pursuant to this Section 2.8(b), first,shall be applied ratably to any unpaid LC Disbursements, second, shallbe applied ratably to the outstanding Revolving Credit Loans, and, third,shall be used to Cash Collateralize the remaining Maximum Drawing Amount; and,in the case of prepayments of the Revolving Credit Facility required pursuantto clauses (i), (ii), (iii), (iii) and (iv) of this Section 2.8(b),the amount remaining, if any, after the prepayment in full of all LCDisbursements and Revolving Credit Loans outstanding at such time and the cashcollateralization of the remaining Maximum Drawing Amount in full may beretained by the Borrowers for use in the ordinary course of its business.  Upon a drawing under any Letter of Creditthat has been cash collateralized, the funds held as Cash Collateral shall beapplied (without any further action by or notice to or from the Borrowers or anyother Loan Party) to reimburse the LC Issuer or the Revolving Credit Lenders,as applicable.

####  

## 2.9           Method andAllocation of Payments.

##  

### (a)           Allpayments by the Borrowers hereunder and under any of the other Loan Documentsshall be made in lawful money of the United States in immediately availablefunds, and shall be deemed to have been made only when made in compliance withthis Section 2.9.  All such paymentsshall be made without set-off or counterclaim and free and clear of and withoutdeduction for any taxes, levies, imposts, duties, charges, fees, deductions,withholdings, compulsory loans, restrictions or conditions of any nature (otherthan Excluded Taxes) now or hereafter imposed or levied by any jurisdiction orany political subdivision thereof or taxing or other authority therein unlessthe Borrowers are compelled by law to make such deduction or withholding.  If any such obligation is imposed upon theBorrowers with respect to any amount payable by it hereunder or under any ofthe other Loan Documents, the Borrowers will pay to each Lender such additionalamount in U.S. Dollars as shall be necessary to enable such Lender to receivethe same net amount which such Lender would have received on such due date hadno such obligation been imposed upon the Borrowers.  The Borrowers will deliver promptly to eachLender certificates or other valid vouchers or other evidence of paymentreasonably satisfactory to the Administrative Agent for all taxes or othercharges deducted from or paid with respect to payments made by the Borrowershereunder or under such other Loan Document. The Lenders may, and the Borrowers hereby authorize the Lenders to,debit the amount of any payment not made by such time to the demand depositaccounts of the Borrowers with the Lenders or to their Note Records.

###  

### (b)           Subjectto the provisions of Section 2.9(c), all payments hereunder shall be madeand allocated as follows:

###  

#### (i)            all payments ofprincipal of and interest in respect of Revolving Credit Loans shall be made tothe Administrative Agent for the benefit of the Revolving Credit 

 

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#### Lenders, pro rata in accordance with theoutstanding principal balance of Revolving Credit Loans made by each;

####  

#### (ii)           all payments ofprincipal of and interest in respect of Term Loans shall be made to theAdministrative Agent for the benefit of the Term Lenders, pro rata inaccordance with the outstanding principal balance of Term Loans made by eachsuch Term Lender;

####  

#### (iii)          all payments of CommitmentFees and Letter of Credit Fees shall be made to the Administrative Agent forthe benefit of the Revolving Credit Lenders, pro rata in accordance withtheir Revolving Credit Commitments; and

####  

#### (iv)          payments of any otheramounts due hereunder shall be made to the Administrative Agent to be allocatedamong the Administrative Agent, the Lenders and the LC Issuer as theirrespective interests appear.

####  

All such payments shallbe made at the Administrative Agent’s head office or at such other locationthat the Administrative Agent may from time to time designate, in each case inimmediately available funds.

 

### (c)           If theCommitments shall have been terminated or the Obligations shall have beendeclared immediately due and payable pursuant to Section 9.2, proceeds ofCollateral and all other funds received from or on behalf of the Borrowers byany Lender or the LC Issuer in respect of Obligations (except funds received byany Lender as a result of a purchase of a participant interest pursuant to Section 2.9(d) below)shall be remitted to the Administrative Agent, and all such funds, togetherwith all other funds received by the Administrative Agent from or on behalf ofthe Borrowers (including proceeds of Collateral) in respect of Obligations,shall be applied by the Administrative Agent in the following manner andorder:  (i) first, to reimburse theAdministrative Agent, the LC Issuer and the Lenders, in that order, for anyamounts payable pursuant to Sections 12.2 and 12.3 hereof; (ii) second, tothe payment of Commitment Fees, Letter of Credit Fees, and any other feespayable to the Administrative Agent or the Lenders hereunder; (iii) third,to the payment of interest due on the Loans and the LC Disbursements; (iv) fourth,to the payment of the outstanding principal balance of the Loans; (v) fifth,to the payment of any other Obligations payable by the Borrowers, pro ratato the outstanding principal balance of each; and (vi) any remaining fundsshall be paid to whoever shall be entitled thereto or as a court of competentjurisdiction shall direct.

###  

### (d)           Each ofthe Lenders hereby agrees that if it should receive any amount (whether byvoluntary payment, by realization upon security, by the exercise of the rightof set-off or banker’s lien, by counterclaim or cross action, by theenforcement of any right under the Loan Documents, or otherwise) in respect ofprincipal of, or interest on, the Loans or any fees which are to be shared prorata among the Lenders, which, as compared to the amounts theretoforereceived by the other Lenders with respect to such principal, interest or fees,is in excess of such Lender’s Applicable Percentage of such principal, interestor fees, such Lender shall share such excess, less the costs and expenses(including, reasonable attorneys’ fees and disbursements) incurred by suchLender in connection with such realization, exercise, claim or action, prorata with all other Lenders in proportion to their respective ApplicablePercentage for 

 

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### such Loans, and suchsharing shall be deemed a purchase (without recourse) by such sharing party ofparticipant interests in such Loans or such fees, as the case may be, owed tothe recipients of such shared payments to the extent of such shared payments; provided,however, that (i) if all or any portion of such excess amount isthereafter recovered from such Lender, such purchase shall be rescinded and thepurchase price restored to the extent of such recovery, but without interestand (ii) the provisions of this paragraph shall not be construed to applyto (x) any payment made by the Borrowers pursuant to and in accordancewith the express terms of this Agreement or (y) any payment obtained by aLender as consideration for the assignment of or sale of a participation in anyof its Loans or Letter of Credit Participations to any assignee or participant,other than to the Borrowers or any Subsidiary thereof (as to which theprovisions of this paragraph shall apply). The Borrowers consent to the foregoing and agree, to the extent it mayeffectively do so under applicable law, that any Lender acquiring aparticipation pursuant to the foregoing arrangements may exercise against theBorrowers rights of setoff and counterclaim with respect to such participationas fully as if such Lender were a direct creditor of the Borrowers in theamount of such participation.

###  

## 2.10         LIBORIndemnity.  If the Borrowers for anyreason make any payment of principal with respect to any LIBOR Loan on any dayother than the last day of an Interest Period applicable to such LIBOR Loan, orfail to borrow or continue or convert to a LIBOR Loan after giving a Notice ofBorrowing or Conversion thereof pursuant to Section 2.3, or fail to prepaya LIBOR Loan after having given notice thereof, the Borrowers shall pay to theAdministrative Agent for the benefit of the Lenders any amount required tocompensate the Lenders for any additional losses, costs or expenses which theymay reasonably incur as a result of such payment or failure, including, withoutlimitation, any loss (including loss of anticipated profits), costs or expenseincurred by reason of the liquidation or re-employment of deposits or otherfunds required by the Lenders to fund or maintain such LIBOR Loan.  Without limiting the foregoing, the Borrowersshall pay to the Administrative Agent a “yield maintenance fee” for the benefitof the Lenders in an amount computed as follows:  the current rate for United States Treasurysecurities (bills on a discounted basis shall be converted to a bondequivalent) with a maturity date closest to the term chosen pursuant to theFixed Rate Election as to which the prepayment is made, shall be subtractedfrom the interest rate applicable (pursuant to Section 2.5(b)) to eachLIBOR Loan in effect at the time of prepayment. If the result is zero or a negative number, there shall be no yieldmaintenance fee.  If the result is apositive number, then the resulting percentage shall be multiplied by theamount of the principal balance being prepaid. The resulting amount shall be divided by 360 and multiplied by thenumber of days remaining in the term chosen pursuant to the Fixed Rate Electionas to which the prepayment is made.  Saidamount shall be reduced to present value calculated by using the above referencedUnited States Treasury securities rate and the number of days remaining in theterm chosen pursuant to the Fixed Rate Election as to which prepayment ismade.  The resulting amount shall be theyield maintenance fee due to the Lenders upon the payment of a LIBOR Loan underthe circumstances described in the first sentence of this Section.  The Borrowers shall pay such amount uponpresentation by the Administrative Agent of a statement setting forth theamount and the Administrative Agent’s (or the affected Lenders’) calculationthereof pursuant hereto, which statement shall be prima facie evidenceof the amounts owed hereunder absent manifest error.  If the Obligations are declared immediatelydue and payable pursuant to Section 8.2, then any 

 

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## amount provided for inthis Section shall be due and payable in the same manner as though theBorrowers had made a prepayment of the LIBOR Loans.

##  

## 2.11         Computationof Interest and Fees.  Allcomputations of interest for Base Rate Loans when the Alternate Base Rate isdetermined by Wells Fargo’s “Base Rate” shall be made on the basis of a year of365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interestshall be made on the basis of a 360-day year and actual days elapsed (whichresults in more fees or interest, as applicable, being paid than if computed onthe basis of a 365-day year).  If the duedate for any payment of principal is extended by operation of law, interestshall be payable for such extended time. If any payment required by this Agreement becomes due on a day that isnot a Business Day such payment may be made on the next succeeding Business Day(subject to the definition of the term “Interest Period”), and such extensionshall be included in computing interest in connection with such payment.

##  

## 2.12         ChangedCircumstances; Illegality.

##  

### (a)           Notwithstandingany other provision of this Agreement, in the event that:

###  

#### (i)            on any date on whichthe LIBOR Rate would otherwise be set the Administrative Agent shall havedetermined in good faith (which determination shall be final and conclusive)that adequate and fair means do not exist for ascertaining the LIBOR Rate, or

####  

#### (ii)           at any time theAdministrative Agent or any Lender shall have determined in good faith (whichdetermination shall be final and conclusive and, if made by any Lender, shallhave been communicated to the Administrative Agent in writing) that:

####  

##### (A)          the making orcontinuation of or conversion of any Loan to a LIBOR Loan has been madeimpracticable or unlawful by (1) the occurrence of a contingency thatmaterially and adversely affects the interbank LIBOR market or (2) complianceby the Administrative Agent or such Lender in good faith with any applicablelaw or governmental regulation, guideline or order or interpretation or changethereof by any Governmental Authority charged with the interpretation oradministration thereof or with any request or directive of any suchGovernmental Authority (whether or not having the force of law); or

#####  

##### (B)           the LIBOR Rate shall nolonger represent the effective cost to the Administrative Agent or such Lenderfor U.S. dollar deposits in the interbank market for deposits in which itregularly participates;

#####  

then,and in any such event, the Administrative Agent shall forthwith so notify theBorrowers thereof.  Until theAdministrative Agent notifies the Borrowers that the circumstances giving riseto such notice no longer apply, the obligation of the Lenders to allowselection by the Borrowers of the Type of Loan affected by the contingenciesdescribed in this Section (herein called “Affected Loans”) shall besuspended.  If at the time theAdministrative Agent so notifies the Borrowers, the Borrowers have previously giventhe Administrative Agent a Notice of 

 

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Borrowingor Conversion with respect to one or more Affected Loans but such Loans havenot yet gone into effect, such notification shall be deemed to be a request forBase Rate Loans.

 

### (b)           Inthe event of a determination of illegality pursuant to Section 2.12(a)(ii)(A) above,the Borrowers shall, with respect to the outstanding Affected Loans, prepay thesame, together with interest thereon and any amounts required to be paidpursuant to Section 2.9, on such date as shall be specified in such notice(which shall not be earlier than the date such notice is given) and may,subject to the conditions of this Agreement, borrow a Loan of another Type inaccordance with Section 2.1 by giving a Notice of Borrowing or Conversionpursuant to Section 2.3.

###  

## 2.13         IncreasedCosts.  In case any change made afterthe Closing Date in any law, regulation, treaty or official directive or theinterpretation or application thereof by any court or by any GovernmentalAuthority charged with the administration thereof or the compliance with anyguideline or request of any central bank or other Governmental Authority(whether or not having the force of law):

##  

(i)  subjects anyLender or the LC Issuer to any tax with respect to payments of principal orinterest or any other amounts payable hereunder by the Borrowers or otherwisewith respect to the transactions contemplated hereby (except for IndemnifiedTaxes or Other Taxes covered by Section 2.15 and the imposition of, or anychange in the rate of, and Excluded Tax payable by such Lender or the LCIssuer), or

 

(ii)  imposes,modifies or deems applicable any deposit insurance, reserve, special deposit orsimilar requirement against assets held by, or deposits in or for the accountof, or credit extended or participated in by, any Lender (other than suchrequirements as are already included in the determination of the LIBOR Rate) orthe LC Issuer, or

 

(iii)  imposes uponany Lender or the LC Issuer any other condition with respect to its obligationsor performance under this Agreement or in respect of any Letter of Credit,

 

andthe result of any of the foregoing is to increase the cost to such Lender orthe LC Issuer, reduce the income receivable by such Lender or the LC Issuer orimpose any expense upon such Lender or the LC Issuer with respect to any Loansor its obligations under this Agreement or in respect of any Letter of Credit,such Lender or the LC Issuer shall notify the Borrowers and the AdministrativeAgent thereof.  The Borrowers agree topay to such Lender or the LC Issuer the amount of such increase in cost,reduction in income or additional expense as and when such cost, reduction orexpense is incurred or determined, upon presentation by such Lender or the LCIssuer of a statement in the amount and setting forth in reasonable detail suchLender’s or the LC Issuer’s calculation thereof and the assumptions upon whichsuch calculation was based, which statement shall be prima facie evidenceof the amounts owing hereunder absent manifest error.

 

## 2.14         CapitalRequirements.  If after the datehereof any Lender reasonably determines that (i) the adoption of or changein any law, rule, regulation or guideline regarding capital requirements forbanks or bank holding companies, or any change in the interpretation orapplication thereof by any Governmental Authority charged with theadministration thereof, or 

 

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## (ii) compliance bysuch Lender or its parent bank holding company with any guideline, request ordirective of any such entity regarding capital adequacy (whether or not havingthe force of law), has the effect of reducing the return on such Lender’s orsuch holding company’s capital as a consequence of such Lender’s Commitment tomake Loans hereunder or its obligations in respect of any Letter of Credit to alevel below that which such Lender or such holding company could have achievedbut for such adoption, change or compliance (taking into consideration suchLender’s or such holding company’s then existing policies with respect tocapital adequacy and assuming the full utilization of such entity’s capital) byany amount deemed by such Lender to be material, then such Lender shall notify theBorrowers and the Administrative Agent thereof. The Borrowers agree to pay to such Lender the amount of such reductionof return on capital as and when such reduction is determined, payable within90 days after presentation by such Lender of a statement in the amount andsetting forth in reasonable detail such Lender’s calculation thereof and theassumptions upon which such calculation was based (which statement shall be primafacie evidence of amounts payable hereunder absent manifest error) unlesswithin such 90 day period the Borrowers shall have prepaid in full allObligations to such Lender, in which event no amount shall be payable to suchLender under this Section.  Indetermining such amount, such Lender may use any reasonable averaging and attributionmethods.

##  

## 2.15         Taxes.  (a)  Payments Free of Taxes.  Any and all payments by or on account of anyobligation of the Borrowers hereunder or under any other Loan Document shall bemade free and clear of and without reduction or withholding for any IndemnifiedTaxes or Other Taxes, provided that if the Borrowers shall be requiredby applicable law to deduct any Indemnified Taxes (including any Other Taxes)from such payments, then (i) the sum payable shall be increased asnecessary so that after making all required deductions (including deductionsapplicable to additional sums payable under this Section) the AdministrativeAgent, any Lender or the LC Issuer, as the case may be, receives an amountequal to the sum it would have received had no such deductions been made, (ii) theBorrowers shall make such deductions and (iii) the Borrowers shall timelypay the full amount deducted to the relevant Governmental Authority inaccordance with applicable law.

##  

### (b)           Paymentof Other Taxes by the Borrowers. Without limiting the provisions of subsection (a) above, theBorrowers shall timely pay any Other Taxes to the relevant GovernmentalAuthority in accordance with applicable law.

###  

### (c)           Indemnificationby the Borrowers.  The Borrowersshall indemnify the Administrative Agent, each Lender and the LC Issuer, within10 days after demand therefor, for the full amount of any Indemnified Taxes orOther Taxes (including Indemnified Taxes or Other Taxes imposed or asserted onor attributable to amounts payable under this Section) paid by theAdministrative Agent, such Lender or the LC Issuer, as the case may be, and anypenalties, interest and reasonable expenses arising therefrom or with respectthereto, whether or not such Indemnified Taxes or Other Taxes were correctly orlegally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of suchpayment or liability delivered to the Borrowers by a Lender or the LC Issuer(with a copy to the Administrative Agent), or by the Administrative Agent onits own behalf or on behalf of a Lender or the LC Issuer, shall be conclusiveabsent manifest error.

 

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### (d)           Evidenceof Payments.  Upon request of theAdministrative Agent, as soon as reasonably practicable after any payment ofIndemnified Taxes or Other Taxes by the Borrowers to a Governmental Authority,the Borrowers shall deliver to the Administrative Agent the original or acertified copy of a receipt issued by such Governmental Authority evidencingsuch payment, a copy of the return reporting such payment or other evidence ofsuch payment reasonably satisfactory to the Administrative Agent.

###  

### (e)           Statusof Lenders.  Any Foreign Lender thatis entitled to an exemption from or reduction of withholding tax under the lawof the jurisdiction in which the Borrowers are resident for tax purposes, orany treaty to which such jurisdiction is a party, with respect to paymentshereunder or under any other Loan Document shall deliver to the Borrowers (witha copy to the Administrative Agent), at the time or times prescribed byapplicable law or reasonably requested by the Borrowers or the AdministrativeAgent, such properly completed and executed documentation prescribed byapplicable law as will permit such payments to be made without withholding orat a reduced rate of withholding.  Inaddition, any Lender, if requested by the Borrowers or the AdministrativeAgent, shall deliver such other documentation prescribed by applicable law orreasonably requested by the Borrowers or the Administrative Agent as willenable the Borrowers or the Administrative Agent to determine whether or notsuch Lender is subject to backup withholding or information reportingrequirements.

###  

Withoutlimiting the generality of the foregoing, if any Borrower is resident for taxpurposes in the United States, any Foreign Lender shall deliver to theBorrowers and the Administrative Agent (in such number of copies as shall berequested by the recipient) on or prior to the date on which such ForeignLender becomes a Lender under this Agreement (and from time to time thereafterupon the request of the Borrowers or the Administrative Agent, but only if suchForeign Lender is legally entitled to do so), whichever of the following isapplicable:

 

#### (i)            duly completed copiesof Internal Revenue Service Form W-8BEN claiming eligibility for benefitsof an income tax treaty to which the United States is a party,

####  

#### (ii)           duly completed copiesof Internal Revenue Service Form W-8ECI,

####  

#### (iii)          in the case of a ForeignLender claiming the benefits of the exemption for portfolio interest undersection 881(c) of the Code, (A) a certificate to the effect that suchForeign Lender is not (1) a “bank” within the meaning of section 881(c)(3)(A) ofthe Code, (2) a “10 percent shareholder” of any Borrower within themeaning of section 881(c)(3)(B) of the Code, or (3) a “controlledforeign corporation” described in section 881(c)(3)(C) of the Code and (B) dulycompleted copies of  Internal RevenueService Form W-8BEN, or

####  

#### (iv)          any other formprescribed by applicable law as a basis for claiming exemption from or areduction in United States Federal withholding tax duly completed together withsuch supplementary documentation as may be prescribed by applicable law topermit the Borrowers to determine the withholding or deduction required to bemade.

 

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### (f)            Treatmentof Certain Refunds.  If theAdministrative Agent, any Lender or the LC Issuer determines, in its solediscretion, that it has received a refund of any Taxes or Other Taxes as towhich it has been indemnified by the Borrowers or with respect to which theBorrowers have paid additional amounts pursuant to this Section, it shall payto the Borrowers an amount equal to such refund (but only to the extent ofindemnity payments made, or additional amounts paid, by the Borrowers underthis Section with respect to the Taxes or Other Taxes giving rise to suchrefund), net of all out-of-pocket expenses of the Administrative Agent, suchLender or the LC Issuer, as the case may be, and without interest (other thanany interest paid by the relevant Governmental Authority with respect to suchrefund), provided that the Borrowers upon the request of theAdministrative Agent, such Lender or the LC Issuer, shall repay the amount paidover to the Borrowers (plus any penalties, interest or other chargesimposed by the relevant Governmental Authority) to the Administrative Agent,such Lender or the LC Issuer if the Administrative Agent, such Lender or the LCIssuer is required to repay such refund to such Governmental Authority.  This subsection shall not be construed torequire the Administrative Agent, any Lender or the LC Issuer to make availableits tax returns (or any other information relating to its taxes that it deemsconfidential) to the Borrowers or any other Person.

###  

## 2.16         Parent as Agent forBorrowers; Contribution.

##  

### (a)           EachBorrower (other than Parent) hereby appoints Parent as its agent with respectto the receiving and giving of any notices, requests, instructions, reports,schedules, revisions, financial statements or any other written or oralcommunications hereunder.  Parent shallkeep complete, correct and accurate records of all Loans and the application ofproceeds thereof, and all payments in respect of Loans and other amounts duehereunder.  The Lenders are herebyentitled to rely on any communications given or transmitted by Parent as ifsuch communication were given or transmitted by each and every Borrower; provided,however, that any communication given or transmitted by any Borrowerother than Parent shall be binding with respect to such Borrower.  Any communication given or transmitted by theAdministrative Agent or any Lender to Parent shall be deemed given and transmittedto each and every Borrower.

###  

### (b)           TheBorrowers hereby agree that, as among themselves, the ultimate responsibilityfor repayment of the Obligations in the event of a Default by any or all of theBorrowers on their respective Obligations shall be equitably apportioned amongthe Borrowers in the proportion that each has benefited from the making by theLenders of the Loans, or if such equitable apportionment cannot reasonably bedetermined, then in proportion to their respective net worths, determined in amanner such that none of the Obligations of any Borrower would be subject toavoidance as a fraudulent transfer or conveyance under Section 548 ofTitle 11 of the United States Code or any comparable provisions of applicablestate law.  If any Borrower shall pay anamount with respect to the Obligations in excess of its proportionate share,determined as set forth in this subparagraph (b) (an “OverpayingBorrower”), each other Borrower shall make a payment to such OverpayingBorrower in an amount such that the aggregate amount of each Borrower’spayments hereunder and in respect of the Obligations reflects its proportionateshare of the Obligations, as so determined. The foregoing agreement is intended to set forth only the rights andobligations of the Borrowers among themselves and shall in no way affect theobligations of any Borrower to the Lenders in respect of the Obligations.  Until the Obligations have been indefeasiblypaid in full (except for contingent indemnification and expense 

 

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### reimbursement obligationsfor which a claim has not yet been made) and the Commitments shall haveterminated and all Letters of Credit shall have expired or been canceled, eachBorrower shall withhold exercise of any right of contribution hereunder againstany other Borrower.

###  

# SECTION III

#  

# LETTERS OF CREDIT

#  

## 3.1           Issuance.

##  

### (a)           Upon theterms and subject to the conditions hereof, the LC Issuer in reliance upon therepresentations, warranties and covenants of the Borrowers contained herein,agrees to issue letters of credit (the “Letters of Credit”) for theaccount of the Borrowers in such form as may be requested from time to time bythe Borrowers and agreed to by the LC Issuer, provided that the MaximumDrawing Amount (after giving effect to all requested Letters of Credit) shallnot at any time exceed the Letter of Credit Sublimit, provided, furtherthat the Total Revolving Credit Outstandings (after giving effect to allrequested Revolving Credit Loans and Letters of Credit) shall not at any timeexceed the Total Revolving Credit Commitment, and provided further thatno Letter of Credit shall have an expiration date later than five (5) BusinessDays prior to the Maturity Date.  Atleast three (3) Business Days prior to the proposed issuance date of anyLetter of Credit, the Borrowers shall deliver to the LC Issuer a Letter ofCredit Application setting forth the Maximum Drawing Amount of all Letters ofCredit (including the requested Letter of Credit), the requested language ofthe requested Letter of Credit and such other information as the LC Issuershall require.  Each request for theissuance of a Letter of Credit hereunder shall constitute a representation andwarranty by the Borrowers that the conditions set forth in Sections 4.1 or 4.2(as the case may be) have been satisfied as of the date of such request.

###  

### (b)           Effectiveupon the issuance of each Letter of Credit and without any further action onthe part of the LC Issuer or the Lenders in respect thereof, the LC Issuerhereby grants to each Lender, and each Lender hereby acquires from the LCIssuer, a participating interest in such Letter of Credit in an amount equal tothe product of (i) the amount of such Letter of Credit, times (ii) thequotient of (A) such Lender’s Revolving Credit Commitment, divided by(B) the Total Revolving Credit Commitment (the amount so calculated, the “Letterof Credit Participation”), and each Lender severally agrees that it shallbe absolutely liable, without regard to the occurrence of any Default or Eventof Default, to the extent of such Lender’s pro rata share thereof, toreimburse the LC Issuer on demand for the amount of each draft paid by the LCIssuer under each Letter of Credit to the extent that such amount is notreimbursed by the Borrowers.

###  

## 3.2           ReimbursementObligation of the Borrowers.  Inorder to induce the LC Issuer to issue, extend and renew each Letter of Credit,the Borrowers shall reimburse or pay to the Administrative Agent, for theaccount of the LC Issuer or (as the case may be) the Lenders, with respect toeach Letter of Credit issued, extended or renewed by the LC Issuer hereunder asfollows:

 

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###  

### (a)           on eachdate that any draft presented under any Letter of Credit is honored by the LCIssuer or the LC Issuer otherwise makes payment with respect thereto, (i) theamount paid by the LC Issuer under or with respect to such Letter of Credit,and (ii) the amount of any taxes, fees, charges or other costs andexpenses whatsoever incurred by the LC Issuer or any Lender in connection withany payment made by the LC Issuer under, or with respect to, such Letter ofCredit; and

###  

### (b)           upon theMaturity Date or the acceleration of the Maximum Drawing Amount pursuant to Section 9.2,an amount equal to 105% of the then Maximum Drawing Amount of all Letters ofCredit, which amount shall be held by the LC Issuer as cash collateral for allLC Disbursements.

###  

Eachsuch payment shall be made to the Administrative Agent at its head office inimmediately available funds.  Interest onany and all amounts remaining unpaid by the Borrowers under this Section 3.2at any time from the date such amounts become due and payable (whether asstated in this Section 3.2, by acceleration or otherwise) until payment infull (whether before or after judgment) shall be payable to the AdministrativeAgent, for the account of LC Issuer or (as the case may be) the Lenders, ondemand at a rate per annum equal to 2% above the Alternate Base Rate.

 

## 3.3           Letter of CreditPayments.  If any draft shall bepresented or other demand for payment shall be made under any Letter of Credit,the LC Issuer shall notify the Borrowers of the date and amount of the draftpresented or demand for payment and of the date and time when it expects to paysuch draft or honor such demand for payment. The responsibility of the LC Issuer to the Borrowers shall be only todetermine that the documents (including each draft) delivered under each Letterof Credit in connection with such presentment shall be in conformity in allmaterial respects with such Letter of Credit. On the date that such draft is paid or other payment is made by the LCIssuer, the LC Issuer shall promptly notify the Lenders of the amount of anyunpaid LC Disbursement.  All such unpaidLC Disbursements with respect to Letters of Credit shall be deemed to beRevolving Credit Loans.  No later than1:00 p.m. Pacific time on the Business Day next following the receipt ofsuch notice, each Lender shall make available to the Administrative Agent, atthe Administrative Agent’s head office, in immediately available funds, suchLender’s prorata share of such unpaid LC Disbursements, togetherwith an amount equal to the product of (i) the average, computed for theperiod referred to in clause (iii) below, of the weighted average interestrate paid by the Administrative Agent for federal funds acquired by theAdministrative Agent during each day included in such period, times (ii) theamount equal to such Lender’s prorata share of such unpaid LCDisbursement, times (iii) a fraction, the numerator of which is thenumber of days that have elapsed from and including the date the LC Issuer paidthe draft presented for honor or otherwise made payment until the date on whichsuch Lender’s prorata share of such unpaid LC Disbursement shallbecome immediately available to the Administrative Agent, and the denominatorof which is 365.

##  

## 3.4           Obligations Absolute.

##  

### (a)           The Borrowers’obligations to reimburse the LC Issuer for all LC Disbursements shall beabsolute and unconditional under any and all circumstances and irrespective ofthe occurrence of any Default or Event of Default or any condition precedent 

 

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### whatsoever or any setoff, counterclaim or defense to payment which the Borrowers may have or havehad against the LC Issuer, the Administrative Agent, the Lenders or anybeneficiary of a Letter of Credit.  TheBorrowers further agree that the LC Issuer, the Administrative Agent and theLenders shall not be responsible for, and the Borrowers’ obligations in respectof the LC Disbursements shall not be affected by, among other things, thevalidity or genuineness of documents or of any endorsements thereon, even ifsuch documents should in fact prove to be in any or all respects invalid,fraudulent or forged, or any dispute between or among the Borrowers, thebeneficiary of any Letter of Credit or any financing institution or other partyto which any Letter of Credit may be transferred or any claims or defenseswhatsoever of the Borrowers, against the beneficiary of any Letter of Credit orany such transferee.

###  

### (b)           The LCIssuer, the Administrative Agent and the Lenders shall not be liable for anyerror, omission, interruption or delay in transmission, dispatch or delivery ofany message or advice, however transmitted, in connection with any Letter ofCredit.  The Borrowers agree that anyaction taken or omitted by the LC Issuer, the Administrative Agent or theLenders under or in connection with each Letter of Credit and the relateddrafts and documents, if done in good faith, shall be binding upon theBorrowers and shall not result in any liability on the part of the LC Issuer,the Administrative Agent or the Lenders to the Borrowers.

###  

### (c)           Notwithstandingthe foregoing, this Section 3.4 shall not be construed to excuse the LCIssuer from liability to the Borrowers to the extent of any direct damages (asopposed to consequential damages, claims in respect of which are hereby waivedby the Borrowers to the extent permitted by applicable law) suffered by theBorrowers that are caused by the LC Issuer’s gross negligence or willfulmisconduct.

###  

## 3.5           Reliance by the LCIssuer and the Administrative Agent. To the extent not inconsistent with Section 3.4, the LC Issuer andthe Administrative Agent shall be entitled to rely, and shall be fullyprotected in relying upon, any Letter of Credit, draft writing, resolution,notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,telex or teletype message, statement, order or other document believed by it tobe genuine and correct and to have been signed, sent or made by the properPerson or Persons and upon advice and statements of legal counsel, independentaccountants and other experts selected by the LC Issuer or the AdministrativeAgent.

##  

# SECTION IV

#  

# CONDITIONS OF LOANS AND LETTERS OF CREDIT

#  

## 4.1           ConditionsPrecedent to Initial Loans and Letters of Credit.  The obligation of the Lenders to make theinitial Loans and of the LC Issuer to issue the initial Letter of Credit issubject to the satisfaction of the following conditions precedent on or priorto the Closing Date:

##  

### (a)           TheAdministrative Agent’s receipt of the following, each of which shall beoriginals, ‘PDF’ format or telecopies (followed promptly by originals), eachproperly executed by a Responsible Officer of the signing Loan Party unlessotherwise specified, each dated the Closing Date (or, in the case of certificatesof governmental officials, a recent date 

 

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### before the Closing Date)and each in form and substance satisfactory to the Administrative Agent:

###  

#### (i)            executed counterpartsof this Agreement, sufficient in number for distribution to the AdministrativeAgent, each Lender and the Borrowers;

####  

#### (ii)           Notes executed by theBorrowers in favor of each Lender requesting Notes;

####  

#### (iii)          a security agreement insubstantially the form of Exhibit G-1, a collateral assignment ofcontracts in the form of Exhibit G-2 and an intellectual propertysecurity agreement in the form of Exhibit G-6 (together with eachother security agreement and security agreement supplement delivered pursuantto Section 6.12, in each case as amended, collectively, the “SecurityAgreement”), duly executed by each Loan Party, and a pledge agreement (the “PledgeAgreement”) duly executed by the Parent in substantially the form of Exhibit H,together with (subject to the provisions of Section 4.1(m)):

####  

##### (A)          certificatesrepresenting the pledged Equity Interests referred to in the Pledge Agreement(if certificated) accompanied by undated stock powers executed in blank,

#####  

##### (B)           stamped receipt copiesof proper financing statements, duly filed on or before the Closing Date underthe Uniform Commercial Code of all jurisdictions that the Administrative Agentmay deem reasonably necessary or desirable in order to perfect the Encumbrancescreated under the Security Agreement and the Pledge Agreement, covering theCollateral described in the Security Agreement, and the Pledge Agreement,

#####  

##### (C)           completed requests forinformation, dated on or before the date of the initial Credit Extension,****listing the financing statements referred toin clause (B) above and all other effective financingstatements filed in the jurisdictions referred to in clause (B) abovethat name any Loan Party as debtor, together with copies of such otherfinancing statements,

#####  

##### (D)          evidence of thecompletion of all other actions, recordings and filings of or with respect tothe Security Agreement that the Administrative Agent may deem reasonablynecessary or desirable in order to perfect the Encumbrances created thereby,

#####  

##### (E)           account controlagreements, duly executed by the appropriate parties, with respect to all bankaccounts of the Loan Parties, other than bank accounts with Wells Fargo,

#####  

##### (F)           copies of the assignedagreements subject to the collateral assignment of contracts referred to above,together with any reasonably necessary 

 

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##### consents to such assignment, duly executed by eachparty to such assigned agreements other than the Loan Parties, and

#####  

##### (G)           evidence that all otheraction that the Administrative Agent may deem reasonably necessary or desirablein order to perfect the Encumbrances created under the Security Agreement hasbeen taken (including receipt of duly executed payoff letters and UCC-3termination statements);

#####  

#### (iv)          the Fee PropertySecurity Documents;

####  

#### (v)           Title Policies, issuedby the Title Company, insuring the liens of the Fee Property Security Documentsas a valid first liens upon the fee interests of each of the Fee Properties,subject only to the Permitted Encumbrances. Each Title Policy when issued shall be reasonably acceptable toAdministrative Agent following a review of all title exception documents citedin therein and shall specifically include by endorsement or affirmativecoverage (if permitted by Administrative Agent in its discretion), an ALTA 9comprehensive endorsement, a deletion of creditors’ rights exception (ifavailable), and such other endorsements and coverages as Administrative Agentmay reasonably require, provided such endorsements and coverages are available;

####  

#### (vi)          the SubordinationAgreement;

####  

#### (vii)         Landlord Waivers asrequired by and in form and substance satisfactory to the Administrative Agent,executed by each of the Borrowers’ lessors, unless waived by the AdministrativeAgent;

####  

#### (viii)        such certificates ofresolutions or other action, incumbency certificates and/or other certificatesof Responsible Officers of each Loan Party as the Administrative Agent mayrequire evidencing the authority of each Loan Party to consummate thetransactions contemplated hereby and the identity, authority and capacity ofeach Responsible Officer thereof authorized to act as a Responsible Officer inconnection with this Agreement and the other Loan Documents to which such LoanParty is a party or is to be a party;

####  

#### (ix)           such documents andcertifications as the Administrative Agent may reasonably require to evidencethat each Loan Party is duly organized or formed, is validly existing, in goodstanding and qualified to engage in business in each jurisdiction where itsownership, lease or operation of properties or the conduct of its businessrequires such qualification, except to the extent that failure to do so couldnot reasonably be expected to have a Material Adverse Effect;

####  

#### (x)            an opinion ofKilpatrick Stockton LLP counsel to the Loan Parties addressed to the AdministrativeAgent and each Lender, as to the matters set forth in Exhibit I andsuch other matters concerning the Loan Parties and the Loan Documents as theMajority Lenders may reasonably request;

 

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#### (xi)           opinion(s) oflocal counsel to the Loan Parties (as applicable) with respect to theenforceability of the Fee Property Security Documents in their localjurisdictions and such other matters as the Administrative Agent may reasonablyrequire;

####  

#### (xii)          a certificate of aResponsible Officer of each Loan Party either (A) attaching copies of allconsents, licenses and approvals required in connection with the execution,delivery and performance by such Loan Party and the validity against such LoanParty of the Loan Documents to which it is a party, and such consents, licensesand approvals shall be in full force and effect, or (B) stating that nosuch consents, licenses or approvals are so required;

####  

#### (xiii)         a certificate signed by aResponsible Officer of each Borrower certifying that the conditions specifiedin paragraphs (d), (e), (f), (g), (i), (k), (l), (m) and (n) andclause (A) of paragraph (h) of this Section 4.1 have beensatisfied;

####  

#### (xiv)        certificates attesting tothe Solvency of each Loan Party before and after giving effect to theAcquisition, from its chief financial officer;

####  

#### (xv)         evidence that allinsurance required to be maintained pursuant to the Loan Documents has beenobtained and is in effect, together with the certificates of insurance, namingthe Administrative Agent, on behalf of the Lenders, as an additional insured orloss payee, as the case may be, under all insurance policies maintained withrespect to the assets and properties of the Loan Parties that constituteCollateral;

####  

#### (xvi)        evidence that the ExistingCredit Agreement and all outstanding Indebtedness for money borrowed of theBorrowers, other than the Indebtedness set forth on Schedule 8.1(e) attachedhereto, has been, or concurrently with the transactions contemplated hereby isbeing, paid and all Encumbrances securing such Indebtedness have been, orconcurrently with the transactions contemplated hereby are being, released orassigned to the Administrative Agent, which requirement may be satisfied bydelivery of payoff letters in form and substance reasonably satisfactory to theAdministrative Agent;

####  

#### (xvii)       a certificate of aResponsible Officer of the Parent certifying that the Parent has previouslydelivered to the Administrative Agent true and correct copies of the AssetPurchase Agreement and all schedules, documents and agreements ancillarythereto as in effect on the Closing Date;

####  

#### (xviii)      with respect to any FeeProperty, such other, papers, instructions, documents, instruments orcertificates as the Title Company may reasonably require for the issuance ofTitle Policies;

####  

#### (xix)         such other assurances,certificates, documents, consents or opinions as the Administrative Agent, theLC Issuer or any Lender reasonably may require;

####  

#### (xx)          a certificate reasonablysatisfactory to Administrative Agent, for benefit of itself and the Lenders,provided by the Borrowers that sets forth information required by 

 

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#### the Patriot Act including the identity of eachBorrower, the name and address of each Borrower and other information that willallow the Administrative Agent or any Lender, as applicable, to identify eachBorrower in accordance with the Patriot Act; and

####  

#### (xxi)         all amendments to theJunior Subordinated Debt Documents necessary to replace references to M&IMarshall & Ilsley Bank with references to the Administrative Agent,and any other amendments reasonably requested by the Administrative Agent.

####  

### (b)           All feesrequired to be paid to the Administrative Agent, the Lead Arranger and theLenders on or before the Closing Date shall have been paid or will be paid onthe Closing Date from the proceeds of the Loans pursuant to a closing statementdirective from the Borrowers to the Administrative Agent.

###  

### (c)           TheBorrowers shall have paid all fees, charges and disbursements of counsel to theAdministrative Agent (directly to such counsel if requested by theAdministrative Agent) to the extent invoiced prior to or on the Closing Date,plus such additional amounts of such fees, charges and disbursements as shallconstitute its reasonable estimate of such fees, charges and disbursementsincurred or to be incurred by it through the closing proceedings (providedthat such estimate shall not thereafter preclude a final settling of accountsbetween the Borrowers and the Administrative Agent) or will be paid on theClosing Date from the proceeds of the Loans pursuant to a closing statementdirective from the Borrowers to the Administrative Agent.

###  

### (d)           Thereshall not have occurred, since December 2, 2007, any change, effect orcircumstance that would constitute a “Material Adverse Effect” as that term isdefined in the Asset Purchase Agreement.

###  

### (e)           TheBorrowers shall have delivered to the Administrative Agent (i) a certifiedcopy of the final order by the Bankruptcy Court approving the Acquisition onthe Closing Date, in form reasonably satisfactory to counsel to theAdministrative Agent, and (ii) a certificate of no appeal issued by theclerk of such court.

###  

### (f)            TheAcquisition shall have been consummated (or substantially simultaneously withthe borrowing of the initial Loans on the Closing Date shall be consummated) (i) substantiallyin accordance with the Summary of Sources and Uses and (ii) in accordancewith the terms of the Asset Purchase Agreement without giving effect to (x) anyamendments or waivers to the Asset Purchase Agreement or (y) the deliveryof any updated disclosure schedules to the Asset Purchase Agreement, in anycase to the extent that such amendments, waivers or updated disclosure schedules(taken as a whole) are material and adverse to the interests of the Lenders andnot consented to in writing by the Administrative Agent.

###  

### (g)           Aftergiving effect to the Acquisition, the Borrowers will have outstanding noIndebtedness for money borrowed other than the Loans, the Junior SubordinatedDebt and the Indebtedness set forth on Schedule 8.1(e).

 

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### (h)           TheAdministrative Agent shall have received the Borrowers’ projections for each ofthe five Fiscal Years following the Closing Date, including consolidatedbalance sheets and statements of income, retained earnings and cash flows inform and substance satisfactory to the Administrative Agent.

###  

### (i)            Aftergiving effect to the consummation of the Acquisition, the making of any Loans,the issuance of any Letters of Credit, and the application of proceeds of theforegoing (including the payment of all fees and expenses in connectiontherewith) on the Closing Date, substantially in accordance with the Summary ofSources and Uses, the sum of (x) the Borrowers’ unrestricted cash andQualified Investments, plus (y) the excess of the Total RevolvingCredit Commitment over Total Revolving Credit Outstandings shall be at least$2,000,000.

###  

### (j)            TheAdministrative Agent shall not have become aware, after November 30, 2007,of any new or inconsistent information or other matter not previously disclosedto it relating to the Borrowers or the transactions contemplated by theCommitment Letter dated as of January 3, 2008 addressed to the Parent thatthe Administrative Agent, in its reasonable business judgment, deems materialand adverse relative to the information or other matters disclosed to it priorto such date, including matters covered by any third-party diligence reports,background checks or other financial, accounting, insurance or legal review.

###  

### (k)           Therepresentations made by the Barnhill’s Buffet, Inc. in the Asset PurchaseAgreement shall be true and accurate on and as of the Closing Date (but withoutgiving effect to the delivery of any amendments, waivers or updated disclosureschedules pursuant to the Asset Purchase Agreement to the extent that suchamendments, waivers or Updated Schedules are not consented to in writing by theAdministrative Agent).

###  

### (l)            Therepresentations and warranties contained in Section IV and all otherrepresentations and warranties made by the Borrowers under any other LoanDocument shall be true and accurate on and as of the Closing Date as thoughmade at and as of the Closing Date.

###  

### (m)          Alldocuments and instruments required to perfect the Administrative Agent’ssecurity interest in the Collateral shall have been executed and delivered and,if applicable, be in proper form for filing, in each case as contemplated bythe foregoing provisions of this Section 4.1, and none of the Collateralwill be subject to any other pledges, security interests or liens except forPermitted Encumbrances.

###  

### (n)           Nolitigation, arbitration, proceeding or investigation shall be pending or, tothe Borrowers’ knowledge, threatened which questions the validity or legalityof the transactions contemplated by any Loan Document or the Asset PurchaseAgreement or seeks a restraining order, injunction or damages in connectiontherewith, or which, in the reasonable judgment of the Administrative Agent,might adversely affect the transactions contemplated hereby or thereby or mightreasonably be expected to have a Material Adverse Effect.

###  

## 4.2           ConditionsPrecedent to all Revolving Credit Loans and Letters of Credit after the ClosingDate.  The obligation of the Lendersto make any Revolving Credit Loan, to continue LIBOR Loans or to convert Loansof one Type to Loans of another Type, and of the LC Issuer to 

 

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## issue any Letter ofCredit, in each case after the Closing Date, is further subject to thefollowing conditions:

##  

### (a)           timelyreceipt by the Administrative Agent of the Notice of Borrowing or Conversionwith respect to any Revolving Credit Loan, or by the LC Issuer of the Letter ofCredit Application with respect to any Letter of Credit;

###  

### (b)           theoutstanding Loans and Letters of Credit do not and, after giving effect to anyrequested Revolving Loan, will not exceed the limitations set forth in Sections2.1 and 3.1 hereof;

###  

### (c)           therepresentations and warranties contained in Section V hereof and allrepresentations and warranties made by the Borrowers and each other Loan Partyunder any other Loan Document shall be true and accurate in all materialrespects on and as of the date of such Notice of Borrowing or Conversion orLetter of Credit Application and on the effective date of the making,continuation or conversion of each Revolving Credit Loan or issuance of eachLetter of Credit as though made at and as of each such date (except to theextent that such representations and warranties expressly relate to an earlierdate in which case such representations and warranties shall be true andcorrect as of such earlier date);

###  

### (d)           noDefault or Event of Default shall have occurred and be continuing at the timeof, and immediately after, the making of such requested Revolving Credit Loanor the issuance of such requested Letter of Credit;

###  

### (e)           nolitigation, arbitration, proceeding or investigation shall be pending or threatenedwhich questions the validity or legality of the transactions contemplated byany Loan Document or seeks a restraining order, injunction or damages inconnection therewith, or which, in the judgment of the Administrative Agent,might adversely affect the transactions contemplated hereby or thereby or mighthave a Material Adverse Affect on the Borrowers; and

###  

### (f)            nochange shall have occurred in any law or regulation or interpretation thereofthat, in the opinion of counsel for any Lender, would make it illegal oragainst the policy of any governmental agency or authority for such Lender tomake Loans hereunder or, in the opinion of counsel for the LC Issuer, for theLC Issuer to issue Letters of Credit hereunder (as the case may be).

###  

Themaking, continuation or conversion of each Loan and the issuance of each Letterof Credit shall be deemed to be a representation and warranty by the Borrowerson the date of the making, continuation or conversion of such Loan as to theaccuracy of the facts referred to in subsection (c) of this Section 4.2and of the satisfaction of all of the conditions set forth in this Section 4.2.

 

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#  

# SECTION V

#  

# REPRESENTATIONSAND WARRANTIES

#  

The Borrowers,jointly and severally, represent and warrant to the Administrative Agent andthe Lenders that:

 

## 5.1           Existence,Qualification and Power.  Each LoanParty and each of its Subsidiaries (a) is duly organized or formed,validly existing and in good standing under the laws of the jurisdiction of itsincorporation, organization or formation, (b) has all requisite power andauthority and all requisite governmental licenses, authorizations, consents andapprovals to (i) own or lease its assets and carry on its business and (ii) execute,deliver and perform its obligations under the Loan Documents and the SeniorDebt Documents to which it is a party, and (c) is duly qualified and islicensed and in good standing under the laws of each jurisdiction where itsownership, lease or operation of properties or the conduct of its businessrequires such qualification or license; except in each case referred to inclause (b)(i) or (c), to the extent that failure to do so could notreasonably be expected to have a Material Adverse Effect.

##  

## 5.2           Authorization; NoContravention.  The execution,delivery and performance by each Loan Party of each Loan Document to which suchPerson is or is to be a party have been duly authorized by all necessarycorporate or other organizational action, and do not and will not (a) contravenethe terms of any of such Person’s organization documents; (b) conflictwith or result in any breach or contravention of, or the creation of anyEncumbrance under, or require any payment to be made under (i) anycontractual obligation to which such Person is a party or affecting such Personor the properties of such Person or any of its Subsidiaries or (ii) anyorder, injunction, writ or decree of any Governmental Authority or any arbitralaward to which such Person or its property is subject; or (c) violate anylaw, rule or regulation.

##  

## 5.3           GovernmentalAuthorization; Other Consents. Except as set forth on Schedule 5.3, no approval, consent,exemption, authorization, or other action by, or notice to, or filing with, anyGovernmental Authority or any other Person is necessary or required inconnection with (a) the execution, delivery or performance by, orenforcement against, any Loan Party of this Agreement or any other LoanDocument, or for the consummation of the Acquisition, (b) the grant by anyLoan Party of the Encumbrances granted by it pursuant to the SecurityDocuments, (c) the perfection or maintenance of the Encumbrances createdunder the Security Documents (including with respect to the lien prioritythereof) or (d) the exercise by the Administrative Agent or any Lender ofits rights under the Loan Documents or the remedies in respect of theCollateral pursuant to the Security Documents. All applicable waiting periods in connection with the Acquisition haveexpired without any action having been taken by any Governmental Authorityrestraining, preventing or imposing materially adverse conditions upon theAcquisition or the rights of the Loan Parties or its Subsidiaries freely totransfer or otherwise dispose of, or to create any Encumbrance on, anyproperties now owned or hereafter acquired by any of them.

##  

## 5.4           Binding Effect.  This Agreement has been, and each other LoanDocument, when delivered hereunder, will have been, duly executed and deliveredby each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when sodelivered will constitute, a legal, valid and binding obligation of such LoanParty, enforceable against each 

 

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## Loan Party that is partythereto in accordance with its terms except as limited by bankruptcy,insolvency, reorganization, moratorium or other laws affecting the enforcementof creditors’ rights generally, and except as the remedy of specificperformance or of injunctive relief is subject to the discretion of the courtbefore which any proceeding therefor may be brought.

##  

## 5.5           FinancialStatements; No Material Adverse Effect. (a)  The audited consolidated balance sheet of the Borrowers as ofthe end of, and the related consolidated statements of operations, retainedearnings and cash flows for, the Fiscal Year ended January 29, 2007 (i) wereprepared in accordance with GAAP consistently applied throughout the periodcovered thereby; (ii) fairly present the financial condition of theBorrowers and their Subsidiaries as of the date thereof and their results ofoperations for the period covered thereby in accordance with GAAP consistentlyapplied throughout the period covered thereby, in each case except as otherwiseexpressly noted therein; (iii) show all material indebtedness and otherliabilities, direct or contingent, of the Borrowers and their Subsidiaries asof the date thereof, including liabilities for taxes, material commitments andIndebtedness; and (iv) have been delivered to the Administrative Agent.

##  

### (b)           The unauditedconsolidated balance sheet of the Borrowers and their Subsidiaries as of theend of, and the related consolidated statements of operations, retainedearnings and cash flows for, the Fiscal Month ended  November 5, 2007 and for the 13 FiscalMonths then ended (the “Financial Statements”) (i) were prepared in accordance with GAAP consistently appliedthroughout the period covered thereby; (ii) fairly present the financialcondition of the Borrowers and their Subsidiaries as of the date thereof andtheir results of operations for the period covered thereby in accordance withGAAP consistently applied throughout the period covered thereby, in each caseexcept as otherwise expressly noted therein and subject to normal, recurringyear-end adjustments that shall not in the aggregate be material in amount andthe absence of notes thereto; and (iii) have been delivered to theAdministrative Agent.  Schedule 5.5 sets forth all materialIndebtedness and other liabilities, direct or contingent, of the Borrowers andtheir consolidated Subsidiaries as of the date of such Financial Statements,including liabilities for taxes, material commitments and Indebtedness, not setforth in such Financial Statements.

###  

### (c)           Since thedate of the Financial Statements, there has been no event or circumstance,either individually or in the aggregate, that has had or could reasonably beexpected to have a Material Adverse Effect.

###  

### (d)           The ProForma Financial Statements, copies of which have been furnished to theAdministrative Agent, fairly present the consolidated pro forma financialcondition of the Borrowers and their Subsidiaries as at the date thereof andthe consolidated pro forma results of operations of the Borrowers and theirSubsidiaries for the period ended on such date, in each case giving effect tothe Acquisition, all in accordance with GAAP.

###  

### (e)           Theprojected financial information of the Borrowers and their Subsidiaries thathas been provided by the Borrowers to the Lenders prior to the date hereof wasprepared in good faith on the basis of the assumptions stated therein, whichassumptions were reasonable in light of the conditions known to the Borrowersat the time of delivery of such forecasts, and represented, at the time ofdelivery, the reasonable estimate by the Borrowers of 

 

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### the Borrowers’ futurefinancial condition and performance with respect to the time periods statedtherein.

###  

## 5.6           Litigation.  There are no actions, suits, proceedings,claims or disputes pending or, to the knowledge of the Borrowers, overtlythreatened or contemplated, at law, in equity, in arbitration or before anyGovernmental Authority, by or against the Borrowers or any of theirSubsidiaries or against any of their properties or revenues that (a) purportto affect or pertain to this Agreement, any other Loan Document or theconsummation of the Acquisition, or (b) either individually or in theaggregate, if determined adversely, could reasonably be expected to have aMaterial Adverse Effect.

##  

## 5.7           No Default.  No Loan Party or any Subsidiary thereof is indefault under or with respect to, or a party to, any contractual obligationthat could, either individually or in the aggregate, reasonably be expected tohave a Material Adverse Effect.  NoDefault has occurred and is continuing or would result from the consummation ofthe transactions contemplated by this Agreement, any other Loan Document or theJunior Subordinated Debt Documents.

##  

## 5.8           Ownership ofProperty; Encumbrances; Investments. (a)  Each Loan Party and each of its Subsidiaries has good recordand marketable title in fee simple to, or valid leasehold interests in all realproperty necessary or used in the ordinary conduct of its business, except forPermitted Encumbrances and such defects in title as could not, individually orin the aggregate, reasonably be expected to have a Material Adverse Effect.

##  

### (b)           Schedule5.8(b) sets forth a complete and accurate list of all Encumbrances onthe property or assets of each Loan Party and each of its Subsidiaries, showingas of the date hereof the lienholder thereof, the principal amount of theobligations secured thereby and the property or assets of such Loan Party orsuch Subsidiary subject thereto.  Theproperty of each Loan Party and each of its Subsidiaries is subject to noEncumbrances, other than Permitted Encumbrances and Encumbrances set forth on Schedule5.8(b).

###  

### (c)           Schedule5.8(c) sets forth a complete and accurate list of all real propertyowned in fee by each Loan Party and each of its Subsidiaries (each a “FeeProperty”), showing as of the date hereof the street address, county orother relevant jurisdiction, state, record owner and book and estimated fairvalue thereof and noting any contractual obligations, whether contingent orotherwise, to sell such Fee Property. Each Loan Party and each of its Subsidiaries has good, marketable andinsurable fee simple title to each Fee Property owned by such Loan Party orsuch Subsidiary, free and clear of all Encumbrances, other than Encumbrancescreated or permitted by the Loan Documents or set forth on such Schedule.

###  

### (d)           (i) Schedule5.8(d)(i) sets forth a complete and accurate list of all leases ofreal property under which any Loan Party or any Subsidiary of a Loan Party isthe lessee, showing as of the date hereof the street address, county or otherrelevant jurisdiction, state, lessor, lessee and expiration date thereof.  Each such lease is the legal, valid andbinding obligation of the lessor thereof, enforceable in accordance with itsterms, except as limited by bankruptcy, insolvency, reorganization, moratoriumor other laws affecting the enforcement of creditors’ rights generally, andexcept as the remedy of specific performance or of injunctive 

 

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### relief is subject to thediscretion of the court before which any proceeding therefor may be brought.

###  

(ii)  Schedule5.8(d)(ii) sets forth a complete and accurate list of all leases ofreal property under which any Loan Party or any Subsidiary of a Loan Party isthe lessor, showing as of the date hereof the street address, county or otherrelevant jurisdiction, state, lessor, lessee and expiration date thereof.  Each such lease is the legal, valid andbinding obligation of the lessee thereof, enforceable in accordance with itsterms, except as limited by bankruptcy, insolvency, reorganization, moratoriumor other laws affecting the enforcement of creditors’ rights generally, andexcept as the remedy of specific performance of injunctive relief is subject tothe discretion of the court before which any proceeding therefore may bebrought.

 

### (e)           Schedule5.8(e) sets forth a complete and accurate list of all Investments heldby any Loan Party or any Subsidiary of a Loan Party on the date hereof, showingas of the date hereof the amount, obligor or issuer and maturity, if any,thereof.

###  

## 5.9           EnvironmentalCompliance.  The Borrowers and itsSubsidiaries have obtained all permits, licenses and other authorizations andhave made all filings, registrations and other submittals which are requiredunder all Environmental Laws, except to the extent failure to have any such permit,license or authorization would not have a Material Adverse Effect.  The Borrowers and its Subsidiaries are incompliance with the terms and conditions of all such permits, licenses andauthorizations, and are also in compliance with all applicable orders, decrees,judgments and injunctions issued, entered, promulgated or approved under anyEnvironmental Law, except to the extent failure to comply would not have aMaterial Adverse Effect.  The LoanParties and their respective Subsidiaries conduct in the ordinary course ofbusiness a review of claims they receive alleging potential liability orresponsibility for violation of any Environmental Law on their respectivebusinesses, operations and properties, and as a result thereof the Borrowershave reasonably concluded that such Environmental Laws and claims could not,individually or in the aggregate, reasonably be expected to have a MaterialAdverse Effect.  The Borrowers and theirSubsidiaries have made available to Administrative Agent copies of all existingenvironmental reports, reviews and audits and all documents pertaining toactual or potential environmental liabilities, in each case to the extent suchreports, reviews, audits and documents are in their possession, custody orcontrol.

##  

## 5.10         Insurance.  The properties of the Borrowers and theirSubsidiaries are insured with financially sound and reputable insurancecompanies not Affiliates of the Borrowers, in such amounts, with suchdeductibles and covering such risks as are customarily carried by companiesengaged in similar businesses and owning similar properties in localities wherethe applicable Borrower or Subsidiary operates.

##  

## 5.11         Taxes.  The Borrowers and their Subsidiaries havefiled all Federal, state and other material tax returns and reports required tobe filed, and have paid all Federal, state and other material taxes,assessments, fees and other governmental charges levied or imposed upon them ortheir properties, income or assets otherwise due and payable, except thosewhich are being contested in good faith by appropriate proceedings diligentlyconducted and for which adequate reserves have been provided in accordance withGAAP.  There is no proposed tax 

 

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## assessment against theBorrowers or any Subsidiary that would, if made, have a Material AdverseEffect.  No Loan Party or any Subsidiarythereof is party to any tax sharing agreement.

##  

## 5.12         ERISA Compliance.  (a)  Each Plan is in compliance in allmaterial respects with the applicable provisions of ERISA, the Code and otherFederal or state laws.  Each Plan that isintended to qualify under Section 401(a) of the Code has received afavorable determination letter from the IRS or an application for such a letteris currently being processed by the IRS with respect thereto and, to thebest knowledge of the Borrowers, nothing has occurred which would prevent, orcause the loss of, such qualification. The Borrowers and each ERISA Affiliate have made all requiredcontributions to each Plan subject to Section 412 of the Code, and noapplication for a funding waiver or an extension of any amortization periodpursuant to Section 412 of the Code has been made with respect to anyPlan.

##  

### (b)           There areno pending or, to the best knowledge of the Borrowers, overtly threatenedclaims, actions or lawsuits, or action by any Governmental Authority, withrespect to any Plan that could reasonably be expected to have a MaterialAdverse Effect.  There has been no prohibitedtransaction or violation of the fiduciary responsibility rules withrespect to any Plan that has resulted or could reasonably be expected to resultin a Material Adverse Effect.

###  

### (c)           (i) NoERISA Event has occurred or is reasonably expected to occur; (ii) noPension Plan has any Unfunded Pension Liability; (iii) neither theBorrowers nor any ERISA Affiliate has incurred, or reasonably expects to incur,any liability under Title IV of ERISA with respect to any Pension Plan (otherthan premiums due and not delinquent under Section 4007 of ERISA); (iv) neitherthe Borrowers nor any ERISA Affiliate has incurred, or reasonably expects toincur, any liability (and no event has occurred which, with the giving ofnotice under Section 4219 of ERISA, would result in such liability) under Section 4201or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither theBorrowers nor any ERISA Affiliate has engaged in a transaction that could besubject to Section 4069 or 4212(c) of ERISA.

###  

## 5.13         Subsidiaries; EquityInterests; Loan Parties.  The Borrowershave no Subsidiaries other than those specifically disclosed in Part (a) ofSchedule 5.13.  All of theoutstanding Equity Interests in such Subsidiaries have been validly issued, arefully paid and non-assessable and are owned by a Loan Party in the amountsspecified on Part (a) of Schedule 5.13 free and clear of allEncumbrances except those created under the Security Documents.  The Borrowers have no equity investments inany other corporation or entity other than those specifically disclosed in Part (b) ofSchedule 5.13.  All of theoutstanding Equity Interests in the Borrowers have been validly issued, arefully paid and non-assessable and, except with respect to the Parent’s EquityInterests, are owned by the Persons in the amounts specified on Part (c) ofthe Schedule 5.13 free and clear of all Encumbrances except thosecreated under the Security Documents.  Schedule5.13 is a complete and accurate list of all Loan Parties, showing as of theClosing Date (as to each Loan Party) the jurisdiction of its incorporation orformation, the address of its principal place of business and its U.S. taxpayeridentification number or, in the case of any non-U.S. Loan Party that does nothave a U.S. taxpayer identification number, its unique identification numberissued to it by the jurisdiction of its incorporation.  The copy of the charter or otherorganizational document of each Loan Party and each amendment thereto providedpursuant to Section 4.1(a)(ix) is a true and correct copy of eachsuch document, each of which is valid and in full force and effect.

 

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## 5.14         Margin Regulations;Investment Company Act.  (a) The Borrowers are not engaged and will not engage, principally or as one of itsimportant activities, in the business of purchasing or carrying margin stock(within the meaning of Regulation U issued by the FRB), or extending credit forthe purpose of purchasing or carrying margin stock.

##  

### (b)           None ofthe Borrowers, any Person controlling of the Borrowers, or any Subsidiary is oris required to be registered as an “investment company” under the InvestmentCompany Act of 1940.

###  

## 5.15         Disclosure.  The Borrowers have disclosed to theAdministrative Agent and the Lenders all agreements, instruments and corporateor other restrictions to which they or any of their Subsidiaries is subject,and all other matters known to it, that, individually or in the aggregate,could reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificateor other information furnished (whether in writing or orally) by or on behalfof any Loan Party to the Administrative Agent or any Lender in connection withthe transactions contemplated hereby and the negotiation of this Agreement ordelivered hereunder or under any other Loan Document (in each case as modifiedor supplemented by other information so furnished) contains any materialmisstatement of fact or omits to state any material fact necessary to make thestatements therein, in the light of the circumstances under which they weremade, not misleading; provided that, with respect to projected financialinformation, the Borrowers represent only that such information was prepared ingood faith based upon assumptions believed to be reasonable at the time.

##  

## 5.16         Compliance with Laws.  Each Loan Party and each Subsidiary thereofis in compliance in all material respects with the requirements of all laws, rules andregulations and all orders, writs, injunctions and decrees applicable to it orto its properties, except in such instances in which (a) such requirementof law or order, writ, injunction or decree is being contested in good faith byappropriate proceedings diligently conducted or (b) the failure to complytherewith, either individually or in the aggregate, could not reasonably beexpected to have a Material Adverse Effect.

##  

## 5.17         Intellectual Property;Licenses, Etc.  Each Loan Party andeach of its Subsidiaries owns, or possesses the right to use, all of thetrademarks, service marks, trade names, copyrights, patents, patent rights,franchises, licenses and other intellectual property rights (collectively, “IPRights”) that are reasonably necessary for the operation of theirrespective businesses, without conflict with the rights of any other Person,and Schedule 5.17 sets forth a complete and accurate list of all such IPRights owned, licensed to or used by each Loan Party and each of itsSubsidiaries (other than “off the shelf” software products used in the ordinarycourse of business).  To the knowledge ofthe Borrowers, no slogan or other advertising device, product, process, method,substance, part or other material now employed, or now contemplated to beemployed, by any Loan Party or any of its Subsidiaries infringes upon anyrights held by any other Person.  Noclaim or litigation regarding any of the foregoing is pending or, to theknowledge of the Borrowers, threatened, which, either individually or in theaggregate, could reasonably be expected to have a Material Adverse Effect.

##  

## 5.18         Solvency.  Each Loan Party is, individually and togetherwith its Subsidiaries on a consolidated basis, Solvent.

 

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## 5.19         Casualty, Etc.  Neither the businesses nor the properties ofany Loan Party or any of its Subsidiaries are affected by any fire, explosion,accident, strike, lockout or other labor dispute, drought, storm, hail,earthquake, embargo, act of God or of the public enemy or other casualty(whether or not covered by insurance) that, either individually or in theaggregate, could reasonably be expected to have a Material Adverse Effect.

##  

## 5.20         Labor Matters.  There are no collective bargaining agreementsor Multiemployer Plans covering the employees of the Borrowers or any of theirSubsidiaries as of the Closing Date and neither the Borrowers nor any of theirSubsidiaries has suffered any strikes, walkouts, work stoppages or othermaterial labor difficulty within the last five years.

##  

## 5.21         Security Documents.  The provisions of the Security Documents areeffective to create in favor of the Administrative Agent for the benefit of theSecured Parties a legal, valid and enforceable first priority Encumbrance(subject to Permitted Encumbrances) on all right, title and interest of therespective Loan Parties in the Collateral described therein.  Except for filings completed prior to theClosing Date as contemplated hereby and by the Security Documents or addressedin Section 4.1(m), no filing will be necessary to perfect or protect suchEncumbrances.

##  

## 5.22         Intentionally Deleted.

##  

## 5.23         Compliance with OFAC Rules andRegulations.  Neither the Borrowers,nor any Subsidiary nor any Affiliate of the Borrowers (i) is a SanctionedPerson, (ii) has any assets in Sanctioned Countries, or (iii) derivesany of its operating income from investments in, or transactions withSanctioned Persons or Sanctioned Countries. No part of the proceeds of any Loan hereunder will be used directly orindirectly to fund any operations in, finance any investments or activities in ormake any payments to, a Sanctioned Person or a Sanctioned Country.

##  

## 5.24         Foreign Assets ControlRegulations, Etc.  Neither theBorrowers nor any of their Subsidiaries is an “enemy” or an “ally of the enemy”within the meaning of Section 2 of the Trading with the Enemy Act of theUnited States of America (50 U.S.C. App. §§ 1 et seq.), as amended.  Neither the Borrowers nor any of theirSubsidiaries is in violation of (a) the Trading with the Enemy Act, asamended, (b) any of the foreign assets control regulations of the UnitedStates Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or anyenabling legislation or executive order relating thereto or (c) thePatriot Act.  Neither the Borrowers norany of their Subsidiaries (i) is a blocked person described in Section 1of the Anti-Terrorism Order or (ii) to the best of the Borrowers’knowledge, engages in any dealings or transactions, or is otherwise associated,with any such blocked person.

##  

## 5.25         Parent Public Filings.  As of the respective dates thereof, theParent SEC Documents were prepared in all material respects in accordance withthe Exchange Act and did not contain any untrue statement of a material fact oromit to state any material fact required to be stated therein or necessary to makethe statements therein, in light of the circumstances under which they weremade, not misleading.  Parent has timelyfiled all forms, reports and documents with the SEC required to be filed by itpursuant to the Securities Act and the Exchange Act.  The Parent SEC Documents complied as to form,at the time such form, document or report was filed, in all material respectswith the applicable requirements of the Securities Act and the 

 

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## Exchange Act.  The consolidated financial statements ofParent included in the Parent SEC Documents (the “Parent FinancialStatements”), including in each case the notes thereto, have been preparedin accordance with GAAP applied on a consistent basis throughout the periods coveredthereby, except as otherwise noted therein, are true, accurate and complete inall material respects, and fairly present the consolidated financial conditionand the consolidated results of operations and cash flow of Parent, on thebases therein stated, as of the respective dates thereof, and for therespective periods covered thereby subject, in the case of unaudited financialstatements, to normal nonmaterial year-end audit adjustments and accruals.

##  

# SECTION VI

#  

# AFFIRMATIVE COVENANTS

#  

TheBorrowers covenant that so long as any Loan, Letter of Credit or otherObligation, remains outstanding or the Lenders or the LC Issuer have anyobligation to lend or to issue any Letter of Credit hereunder:

 

## 6.1           FinancialStatements.  The Borrowers shallfurnish to the Administrative Agent and each Lender:

##  

### (a)           assoon as available to the Borrowers, but in any event within 90 days after theend of each Fiscal Year, the consolidated balance sheet of the Borrowers andall of their Subsidiaries as of the end of such year and related consolidatedstatements of income, retained earnings and cash flow of the Borrowers and allof their Subsidiaries for such year, prepared in accordance with GAAP andaudited and certified without qualification by the Borrowers’ Accountants; andconcurrently with such financial statements, a copy of the Borrowers’Accountants management report and a written statement by the Borrowers’Accountants that, in the making of the audit necessary for their report andopinion upon such financial statements they have obtained no knowledge of anyDefault or, if in the opinion of such accountants any such Default exists, theyshall disclose in such written statement the nature and status thereof;

###  

### (b)           assoon as available to the Borrowers, but in any event within 45 days after theend of each Fiscal Quarter of each Fiscal Year, a consolidated balance sheet ofthe Borrowers and all their Subsidiaries as of the end of, and relatedconsolidated statements of income, retained earnings and cash flow of the Borrowersand all of their Subsidiaries for, the Fiscal Quarter then ended and portion ofthe Fiscal Year then ended, prepared in accordance with GAAP and certified onbehalf of the Borrowers by the chief financial officer of the Parent, subjectto normal, recurring year-end adjustments that shall not in the aggregate bematerial in amount;

###  

### (c)           assoon as available to the Borrowers, but in any event within 30 days followingthe end of each Fiscal Month, a restaurant by restaurant statement of revenue,cash flow and Consolidated EBITDA, for such Fiscal Month, for all restaurantsowned or operated by the Borrowers or their Subsidiaries (including a statementof revenue, cash flow and Consolidated EBITDA comparing year over yearperformance for all restaurants operated for more than one year), prepared inaccordance with GAAP and certified on behalf of the Borrowers by the chieffinancial officer of the Parent;

 

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###  

### (d)           concurrentlywith the delivery of each financial statement pursuant to subsections (a) and(b) of this Section 6.1, a report in substantially the form of Exhibit Fhereto signed on behalf of the Borrowers by the chief financial officer of theParent;

###  

### (e)           atleast fifteen (15) days prior to the first day of each Fiscal Year, theBorrowers’ projections for such Fiscal Year, prepared on a Fiscal Month basisand including consolidated balance sheets and statements of income, retainedearnings and cash flows;

###  

### (f)            concurrentlywith their filing, true and correct copies of the Borrowers’ federal andmaterial state income tax returns and each amendment thereto;

###  

### (g)           promptlyafter the receipt thereof by the Borrowers, copies of any reports (includingany so-called management letters) submitted to the Borrowers by independentpublic accountants in connection with any annual or interim audit or review ofthe accounts of the Borrowers and/or their Subsidiaries made by suchaccountants;

###  

### (h)           promptlyafter the same are delivered to its equity holders or the SEC, copies of allproxy statements, financial statements and reports as the Borrowers shall sendto their equity holders, or as the Borrowers may file with the SEC or anyGovernmental Authority at any time having jurisdiction over the Borrowers ortheir Subsidiaries, or, in lieu of such delivery, prompt notice after the sameare made publicly available on the Internet; and

###  

### (i)            fromtime to time, such other financial data and information about the Borrowers,their Subsidiaries and their businesses and properties as the AdministrativeAgent or the Lenders may reasonably request, including, without limitation,periodic sales reports relating to restaurants and any accounts receivablesinformation (including aging).

###  

## 6.2           Conductof Business.  (a)  The Borrowersand their Subsidiaries shall duly observe and comply in all material respectswith all material contracts and with all applicable laws, regulations, decrees,orders, judgments and valid requirements of any Governmental Authoritiesapplicable to their corporate existence, rights and franchises, to the conductof their business and to their property and assets (including withoutlimitation all Environmental Laws and ERISA), except in any case where thefailure to observe and comply would not have a Material Adverse Effect, andshall maintain and keep in full force and effect and comply in all materialrespects with all licenses and permits reasonably necessary to the properconduct of their business.

##  

### (b)           TheBorrowers and their Subsidiaries shall, except as otherwise permitted by thisAgreement, maintain their corporate or other entity type existence, comply withtheir respective charters, by-laws, operating agreements and otherorganizational documents, and remain or engage substantially in the samebusiness as that in which they are now engaged and in no unrelated business.

###  

## 6.3           Maintenanceand Insurance.

##  

### (a)           TheBorrowers and each of their Subsidiaries shall maintain (i) theirproperties and the Collateral in good repair, working order and condition asrequired for the 

 

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### normal conduct of theirbusiness, and (ii) all material rights, permits, licenses, approvals andprivileges necessary in the conduct of its business, whether because of itsownership, lease, sublease or other operation or occupation of a property orother conduct of its business, and shall make all reasonably necessary orappropriate filings with, and give all required notices to, GovernmentalAuthorities.

###  

### (b)           TheBorrowers and each of their Subsidiaries shall at all times maintain liability,casualty and business interruption insurance on their properties (including allCollateral) with financially sound and reputable insurers in such amounts andwith such coverages, endorsements, deductibles and expiration dates as theofficers of the Borrowers, in the exercise of their reasonable judgment deem tobe adequate, as are customary in the industry for companies of establishedreputation engaged in the same or similar business and owning or operatingsimilar properties and as shall be reasonably satisfactory to theAdministrative Agent.  The AdministrativeAgent shall be named as loss payee, additional insured and/or mortgagee undersuch insurance as the Administrative Agent shall reasonably require from timeto time, and the Borrowers shall provide to the Administrative Agent lender’sloss payable endorsements in form and substance reasonably satisfactory to theAdministrative Agent.  In addition, theAdministrative Agent shall be given thirty (30) days advance notice of anycancellation of insurance.  In the eventof failure to provide and maintain insurance as herein provided, theAdministrative Agent may, at its option, obtain such insurance and charge theamount thereof to the Borrowers as a Revolving Credit Loan.  The Borrowers shall furnish to theAdministrative Agent certificates or other evidence satisfactory to theAdministrative Agent of compliance with the foregoing insurance provisions.  The Administrative Agent shall not, by thefact of approving, disapproving or accepting any such insurance, incur anyliability for the form or legal sufficiency of insurance contracts, solvency ofinsurance companies or payment of law suits, and the Borrowers hereby expresslyassumes full responsibility therefor and liability, if any, thereunder.

###  

## 6.4           Taxes.  Each Borrower shall pay or cause to be paidall taxes, assessments or governmental charges on or against it or any of itsSubsidiaries or their properties on or prior to the time when they becomedelinquent; except for any tax, assessment or charge that is being contested ingood faith by appropriate proceedings and with respect to which adequatereserves have been established and are being maintained in accordance with GAAPif no Encumbrance shall have been filed (the enforcement of which shall nothave been stayed) to secure such tax, assessment or charge.

##  

## 6.5           Inspection Rights;Lender Meeting.

##  

### (a)           EachBorrower shall, and shall cause each of its Subsidiaries to, permit anyauthorized representatives designated by any Lender to visit and inspect any ofthe properties of such Borrower or of any of its Subsidiaries (i) toinspect, copy and take extracts from their books and records, and todiscuss their affairs, finances and accounts with their officers andindependent public accountants, and (ii) to inspect, review, evaluate andmake physical verifications and appraisals of any improvements, inventory andother Collateral in any manner that such Lender considers reasonably advisable,all at the expense of the Borrowers and all upon reasonable noticeand at such reasonable times during normal business hours and as often as may 

 

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### reasonably be requested,but at any time or from time to time following the occurrence and during thecontinuation of an Event of Default.

###  

### (b)           TheBorrowers will, upon the request of the Administrative Agent or MajorityLenders, participate in a meeting of the Administrative Agent and Lenders onceduring each Fiscal Year to be held at the Borrowers’ principal offices (or atsuch other location as may be agreed to by the Borrowers and AdministrativeAgent) at such time as may be agreed to by the Borrowers and the AdministrativeAgent.

###  

## 6.6           Maintenanceof Books and Records.  The Borrowersand each of their Subsidiaries shall keep adequate books and records ofaccount, in which true and complete entries will be made reflecting all oftheir business and financial transactions, and such entries will be made inaccordance with GAAP consistently applied and applicable law.

##  

## 6.7           Use ofProceeds.

##  

### (a)           TheBorrowers will use the proceeds of the Term Loans to finance the Acquisition,to repay all outstanding Indebtedness under the Existing Credit Agreement andto pay fees and expenses associated with the Acquisition and the othertransactions contemplated hereby. Thereafter, the remainder of the Term Loans and the Revolving CreditLoans shall be available, subject to the terms of the Loan Documents, forworking capital, to finance Capital Expenditures and for other generalcorporate or limited liability company purposes.

###  

### (b)           Noportion of any Loan shall be used for the “purpose of purchasing or carrying”any “margin stock” or “margin security” as such terms are used in RegulationsT, U and X of the Board of Governors of the Federal Reserve System, orotherwise in violation of such regulations.

###  

## 6.8           FurtherAssurances.  At any time and fromtime to time, promptly following the written request of the AdministrativeAgent, the Borrowers shall, and shall cause each of their Subsidiaries to,execute and deliver such further documents and take such further action as mayreasonably be requested by the Administrative Agent (a) to obtain the fullbenefits of this Agreement and the other Loan Documents, (b) to protect,preserve, maintain and enforce the Lenders’ rights in (and the priority of theLenders’ lien on) any Collateral or (c) to enable the Administrative Agentand each Lender to exercise all or any of the rights, remedies and powersgranted herein or in any other Loan Document.

##  

## 6.9           NotificationRequirements.  The Borrowers shallfurnish to the Administrative Agent:

##  

### (a)           promptlyupon becoming aware of the existence of any condition or event that constitutesa Default, written notice thereof specifying the nature and duration thereofand the action being or proposed to be taken with respect thereto;

###  

### (b)           promptlyupon becoming aware of (i) any litigation or (ii) of anyinvestigative proceedings by a Governmental Authority commenced or threatenedagainst the Borrowers or any of their Subsidiaries or any of the Collateral ofwhich either has notice, the 

 

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### outcome of which couldreasonably be expected to have a Materially Adverse Effect, written noticethereof and the action being or proposed to be taken with respect thereto; and

###  

### (c)           promptlyafter becoming aware of any occurrence or any condition affecting the Borrowersor any of their Subsidiaries or any of the Collateral which could reasonably beexpected to have a Material Adverse Effect, written notice thereof.

###  

## 6.10         ERISAReports.

##  

### (a)           EachPlan shall comply in all material respects with ERISA and the Code, except tothe extent failure to comply in any instance would not have a Material AdverseEffect on Borrowers and their Subsidiaries.

###  

### (b)           Withrespect to any Plan, the Borrowers shall, or shall cause their Affiliates to,furnish to the Administrative Agent promptly (i) as soon as possible andin any event within 10 days after the Borrowers or any of their ERISAAffiliates know that any ERISA Event has occurred or is expected to occur, astatement of a Responsible Officer of the Borrowers, describing such ERISAEvent, including copies of any notice concerning an ERISA Event received fromPBGC, a plan administrator, or from a Multiemployer Plan sponsor, and theaction, if any, the Borrowers or such ERISA Affiliate proposes to take withrespect thereto; and (ii) promptly after filing thereof, a copy of theannual report of each Pension Plan (Form 5500 or comparable form) requiredto be filed with the IRS and/or the Department of Labor.  Promptly after the adoption of any PensionPlan, the Borrowers shall notify the Administrative Agent of such adoption.

###  

## 6.11         EnvironmentalCompliance.

##  

### (a)           EachBorrower and its Subsidiaries shall comply in all material respects with allapplicable Environmental Laws in all jurisdictions in which any of themoperates now or in the future, and each Borrower and its Subsidiaries shallcomply in all material respects with all such Environmental Laws that may inthe future be applicable to such Borrower’s or any of its Subsidiaries’business, properties and assets.

###  

### (b)           Ifany Borrower or any Subsidiary shall (i) receive notice that any materialviolation of any Environmental Law may have been committed or is about to becommitted by a Borrower or any Subsidiary, (ii) receive notice that anyadministrative or judicial complaint or order has been filed or is about to befiled against a Borrower or any Subsidiary alleging a material violation of anyEnvironmental Law requiring a Borrower or any Subsidiary to take any action inconnection with the release of Hazardous Materials into the environment, (iii) receiveany notice from a federal, state or local government agency or private partyalleging that a Borrower or any Subsidiary may be liable or responsible for anymaterial amount of costs associated with a response to or cleanup of a releaseof Hazardous Materials into the environment or any damages caused thereby, (iv) becomeaware of any investigative proceedings by a governmental agency or authoritycommenced or threatened against a Borrower or any Subsidiary regarding anypotential material violation of Environmental Laws or any spill, release,discharge or disposal of any Hazardous Material or (v) notify anyGovernmental Authority regarding any potential material violation ofEnvironmental Laws or any spill, release, 

 

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### discharge or disposal ofany Hazardous Material by a Borrower or a Subsidiary, the Borrower shallpromptly notify the Administrative Agent thereof (together with a copy of anysuch notice) and of any action being or proposed to be taken with respect theretoand thereafter shall continue to furnish to the Administrative Agent allfurther notices, demands, reports and other information regarding theforegoing.

###  

## 6.12         Covenant to GuaranteeObligations and Give Security.  (a) Uponthe formation or acquisition of any new direct or indirect Subsidiary by anyLoan Party, the Borrowers shall, at the Borrowers’ expense:

##  

#### (i)            within 10 daysafter such formation or acquisition, cause such Subsidiary (other than any CFCor a Subsidiary that is held directly or indirectly by a CFC), and cause eachdirect and indirect parent of such Subsidiary (if it has not already done so),to duly execute and deliver to the Administrative Agent a guaranty or guarantysupplement, in form and substance reasonably satisfactory to the AdministrativeAgent, guaranteeing the other Loan Parties’ obligations under the LoanDocuments (each such guaranty or guaranty supplement, a “SubsidiaryGuaranty”);

####  

#### (ii)           within 10 days aftersuch formation or acquisition, furnish to the Administrative Agent a descriptionof the real and personal properties of such Subsidiary, in detail reasonablysatisfactory to the Administrative Agent;

####  

#### (iii)          within 15 days aftersuch formation or acquisition, cause such Subsidiary (other than any CFC or aSubsidiary that is held directly or indirectly by a CFC) and each direct andindirect parent of such Subsidiary (if it has not already done so) to executeand deliver to the Administrative Agent a joinder to the Security Agreement andthe other security agreements and pledge agreements, as specified by and inform and substance reasonably satisfactory to the Administrative Agent(including delivery of all Pledged Collateral (as defined in the PledgeAgreement) in and of such Subsidiary (except that the Pledged Collateral shallbe limited to 65% of the equity of such Subsidiary in the case of a CFC or aSubsidiary that is held directly or indirectly by a CFC), and other instrumentsof the type specified in Section 4.1(a)(iii)), securing payment of all theObligations of such Subsidiary or such parent, as the case may be, under theLoan Documents and constituting Encumbrances on all such personal properties;

####  

#### (iv)          deliver to theAdministrative Agent, within 15 days after such formation or acquisition,Landlord Waivers, executed by each of the lessors of any of the leased realproperties of such Subsidiary (other than any CFC or a Subsidiary that is helddirectly or indirectly by a CFC), unless waived by the Administrative Agent;

####  

#### (v)           within 30 days aftersuch formation or acquisition, cause such Subsidiary (other than any CFC or aSubsidiary that is held directly or indirectly by a CFC) and each direct andindirect parent of such Subsidiary (if it has not already done so) to takewhatever additional action (including the filing of Uniform Commercial Codefinancing statements and the giving of notices) as may be reasonably necessaryor advisable in the reasonable opinion of the Administrative Agent to vest inthe Administrative Agent (or in any representative of the Administrative Agentdesignated by it) valid and subsisting 

 

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#### Encumbrances on the properties purported to be subjectto the Security Agreement and the other security agreements and pledgeagreements delivered pursuant to this Section 6.12(a), enforceable againstall third parties in accordance with their terms;

####  

#### (vi)          within 45 days aftersuch formation or acquisition, cause such Subsidiary (other than any CFC or aSubsidiary that is held directly or indirectly by a CFC) to comply with therequirements of Sections 4.1(a)(iv), (v), (xi) and (xviii) with respect to anyFee Property held thereby; and

####  

#### (vii)         within 60 days after suchformation or acquisition, deliver to the Administrative Agent, upon the requestof the Administrative Agent in its sole discretion, a signed copy of one ormore opinions, in form and substance reasonably acceptable to theAdministrative Agent, addressed to the Administrative Agent and the otherSecured Parties, of counsel for the Loan Parties acceptable to theAdministrative Agent as to the matters contained in clauses (i), (ii) and(v) above, and as to such other matters set forth on Exhibit Iattached hereto as the Administrative Agent may reasonably request.

####  

### (b)           Upon theacquisition of any property by any Borrower or any Subsidiary, if suchproperty, in the reasonable judgment of the Administrative Agent, shall notalready be subject to a perfected first priority security interest in favor ofthe Administrative Agent for the benefit of the Secured Parties, then suchBorrower shall, at the Borrowers’ expense:

###  

#### (i)            within 10 days aftersuch acquisition, furnish to the Administrative Agent a description of theproperty so acquired in detail satisfactory to the Administrative Agent,

####  

#### (ii)           within 15 days aftersuch acquisition, deliver to the Administrative Agent Landlord Waivers,executed by each of the lessors of any newly acquired leased real properties,unless waived by the Administrative Agent,

####  

#### (iii)          within 15 days aftersuch acquisition, cause the applicable Loan Party to duly execute and deliverto the Administrative Agent, a joinder to the Security Agreement and the othersecurity agreements and pledge agreements, as specified by and in form andsubstance satisfactory to the Administrative Agent, securing payment of all theObligations of the applicable Loan Party under the Loan Documents andconstituting Encumbrances on all such properties,

####  

#### (iv)          within 30 days aftersuch acquisition, cause the applicable Loan Party to take whatever action(including the filing of Uniform Commercial Code financing statements and thegiving of notices) may be reasonably necessary or advisable in the reasonableopinion of the Administrative Agent to vest in the Administrative Agent (or inany representative of the Administrative Agent designated by it) valid andsubsisting Encumbrances on the properties purported to be subject to theSecurity Agreement and the other security agreements and pledge agreementsdelivered pursuant to this Section 6.12(b), enforceable against all thirdparties in accordance with their terms, and

 

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#### (v)           if the acquiredproperty is a Fee Property, within 45 days after such acquisition, cause theapplicable Loan Party to comply with the requirements of Sections 4.1(a)(iv),(v), (xi) and (xviii) with respect thereto; and

####  

#### (vi)          within 60 days aftersuch acquisition, deliver to the Administrative Agent, upon the request of theAdministrative Agent in its sole discretion, a signed copy of one or more opinions,in form and substance reasonably acceptable to the Administrative Agent,addressed to the Administrative Agent and the other Secured Parties, of counselfor the Loan Parties reasonably acceptable to the Administrative Agent as tothe matters contained in clauses (iii) and (iv) above and as tosuch other matters set forth on Exhibit I attached hereto as theAdministrative Agent may reasonably request.

####  

### (c)           At anytime upon request of the Administrative Agent, the Borrowers shall promptlyexecute and deliver any and all further instruments and documents and take allsuch other action as the Administrative Agent may reasonably deem necessary ordesirable in obtaining the full benefits of, or (as applicable) in perfectingand preserving the Encumbrances of, the Security Documents.

###  

## 6.13         InterestRate Protection.  The Borrowers shallobtain on or before the tenth (10) Business Day after the Closing Date,and maintain in effect at all times until the third anniversary of the ClosingDate, Swap Agreements between themselves and a Swap Bank with respect to notless than fifty percent (50.00%) of the Term Loans outstanding under the TermFacility.

##  

## 6.14         Cash Accounts.  As promptly as reasonably practicable afterthe Closing Date the Borrowers will establish and maintain, and cause each ofthe other Loan Parties to maintain, their primary depository and disbursementaccounts and their treasury management relationships with Wells Fargo pursuantto a Secured Cash Management Agreement, except for secondary depositoryaccounts with another commercial bank located in the United States that hasentered into a deposit account control agreement in form reasonably acceptableto the Administrative Agent.

##  

## 6.15         Post-ClosingDeliveries.  Because of the shortperiod of time between the issuance of the final order of the Bankruptcy Courtapproving the Acquisition and the date mandated by the Bankruptcy Court thatthe Acquisition shall close, the Borrowers represent, and the AdministrativeAgent acknowledges, that the Borrowers cannot deliver by the Closing Date (a) theFee Property Security Documents and the related Title Policies, opinions oflocal counsel and other documents referred to in clauses (v), (xi) and (xviii)of Section 4.1(a) hereof with respect to the Fee Properties listed onSchedule 6.15 attached hereto, (b) the other items listed on Schedule6.15 attached hereto and (c) any other documents, instruments ordeliveries reasonably requested by the Administrative Agent in connection withthe foregoing.  Accordingly, theBorrowers covenant and agree that they shall deliver such Fee Property SecurityDocuments and related Title Policies, legal opinions and other documents andother items on or before the date specified on Schedule 6.15.

 

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#  

# SECTION VII

#  

# FINANCIAL COVENANTS

#  

TheBorrowers covenant that so long as any Loan, Letter of Credit or otherObligation (other than contingent indemnification obligations) remainsoutstanding or the Lenders or the LC Issuer have any obligation to make anyLoan or issue any Letter of Credit hereunder:

 

## 7.1           Total Lease AdjustedLeverage Ratio.  The Borrowers willnot permit the Total Lease Adjusted Leverage Ratio (a) as of the end ofFiscal Year 2009 (taken as a single fiscal period) to be greater than 5.00:1.00,and (b) as of the end of each Measurement Period ending at the end of eachFiscal Quarter ending thereafter to be greater than 5.00:1.00.

##  

## 7.2           ConsolidatedPre-Distribution Fixed Charge Coverage Ratio.

##  

### (a)           TheBorrowers will not permit the Consolidated Pre-Distribution Fixed ChargeCoverage Ratio as of the end of any period specified below to be less than theratio set forth below opposite each such period:

 
| **Period**                                                         | ** ** | **Minimum Consolidated  Fixed Pre-Distribution  Charge Coverage Ratio** |
|--------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------|
|                                                               |       |                                                                                        |
| 1st Fiscal Quarter 2009                                            |       | 1.20:1.00                                                                                   |
| 1st  and 2nd Fiscal Quarters 2009 (taken as a single period)       |       | 1.20:1.00                                                                                   |
| 1st,  2nd and 3rd Fiscal Quarters 2009 (taken as a single  period) |       | 1.20:1.00                                                                                   |
| Fiscal Year 2009 (taken as a single period)                        |       | 1.20:1.00                                                                                   |

 

### (b)           TheBorrowers will not permit the Consolidated Pre-Distribution Fixed ChargeCoverage Ratio to be less than 1.20:1.00 for each Measurement Period ending atthe end of each Fiscal Quarter in the Fiscal Year 2010 and in each Fiscal Yearthereafter.

###  

## 7.3           ConsolidatedPost-Distribution Fixed Charge Coverage Ratio.

##  

### (a)           TheBorrowers will not permit the Consolidated Post-Distribution Fixed ChargeCoverage Ratio as of the end of any period specified below to be less than theratio set forth below opposite each such period:

 
| **Period**                                                         | ** ** | **Minimum Consolidated  Fixed Post-Distribution  Charge Coverage Ratio** |
|--------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|
|                                                               |       |                                                                                         |
| 1st Fiscal Quarter 2009                                            |       | 1.05:1.00                                                                                    |
| 1st  and 2nd Fiscal Quarters 2009 (taken as a single period)       |       | 0.90:1.00                                                                                    |
| 1st,  2nd and 3rd Fiscal Quarters 2009 (taken as a single  period) |       | 0.95:1.00                                                                                    |
| Fiscal  Year 2009 (taken as a single period)                       |       | 1.00:1.00                                                                                    |

 

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### (b)           TheBorrowers will not permit the Consolidated Post-Distribution Fixed ChargeCoverage Ratio to be less than 1.05:1.00 for each Measurement Period ending atthe end of each Fiscal Quarter in Fiscal Year 2010 and in each Fiscal Yearthereafter.

###  

## 7.4           Consolidated EBITDA.  The Borrowers will not permit theConsolidated EBITDA for each Fiscal Quarter (taken as a separate fiscal period)ending during Fiscal Year 2009 to be less than the amount set forth belowopposite each such Fiscal Quarter:

 
| **Fiscal Quarter** | ** ** | **Minimum Consolidated  EBITDA** | ** ** |
|-------------------------|------------|---------------------------------------|------------|
|                    |       |                                  |       |
| Q1 2009                 |       | $                                     | 2,300,000  |   |
| Q2 2009                 |       | $                                     | 1,750,000  |   |
| Q3 2009                 |       | $                                     | 1,300,000  |   |
| Q4 2009                 |       | $                                     | 1,400,000  |   |

##  

## 7.5           Growth CapitalExpenditures.  The Borrowers andtheir Subsidiaries will not make or commit to make (by entering into a lease orother agreement) any Growth Capital Expenditures during any Fiscal Year inexcess of $2,000,000 in the aggregate.

##  

# SECTION VIII

#  

# NEGATIVE COVENANTS

#  

TheBorrowers covenant that so long as any Loan, Letter of Credit or otherObligation, remains outstanding or the Lenders or the LC Issuer have anyobligation to make any Loan or to issue any Letter of Credit hereunder:

 

## 8.1           Indebtedness.  Neither of the Borrowers nor any of theirSubsidiaries shall create, incur, assume, guarantee or be or remain liable withrespect to any Indebtedness other than the following:

##  

### (a)           Obligations;

###  

### (b)           Indebtednessfor taxes, assessments or governmental charges to the extent that paymenttherefor shall at the time not be required to be made in accordance with Section 6.4;

###  

### (c)           currentliabilities on open account for the purchase price of services, materials andsupplies incurred by the Borrowers in the ordinary course of business (not as aresult of borrowing), so long as all of such open account current liabilitiesshall be promptly paid and discharged when due or in conformity with customarytrade terms and practices, except for 

 

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### any such open accountIndebtedness which is being contested in good faith by the Borrowers, as towhich adequate reserves required by GAAP have been established and are beingmaintained and as to which no Encumbrance has been placed on any property ofthe Borrowers or any of their Subsidiaries (other than Permitted Encumbrances);

###  

### (d)           Guaranteespermitted under Section 8.1(h) hereof;

###  

### (e)           Indebtednessof the Borrowers existing on the date of this Agreement and set forth on Schedule8.1(e);

###  

### (f)            Indebtednessof any Borrower or Subsidiary to another Borrower or Subsidiary;

###  

### (g)           SubordinatedDebt;

###  

### (h)           Indebtedness(of a type of described in subclauses (a), (d), (e), (f) or (h) ofthe term Indebtedness but not otherwise included in clauses (a) through (g) ofthis Section 8.1) incurred hereafter in the ordinary course of business; providedthat such Indebtedness does not exceed $250,000 in the aggregate at any timeoutstanding; and

###  

### (i)            Indebtednessof Parent consisting of declared, but unpaid, dividends on its common stock, orauthorized repurchases of its common stock, to the extent permitted under Section 8.6(d).

###  

## 8.2           ContingentLiabilities.  Neither of theBorrowers nor any of their Subsidiaries shall create, incur, assume, guaranteeor be or remain liable with respect to any Guarantees other than (i) SubsidiaryGuarantees and (ii) Guarantees resulting from the endorsement ofnegotiable instruments for deposit or collection in the ordinary course ofbusiness.

##  

## 8.3           Encumbrances.  Neither of the Borrowers nor any of theirSubsidiaries shall create, incur, assume or suffer to exist any mortgage,pledge, security interest, lien or other charge or encumbrance of any kind,including the lien or retained security title of a conditional vendor upon or withrespect to any of its property or assets (“Encumbrances”), or assign orotherwise convey any right to receive income, including the sale or discount ofaccounts receivable with or without recourse, except the following (“PermittedEncumbrances”):

##  

### (a)           Encumbrancescreated under the Security Documents;

###  

### (b)           liensfor taxes, fees, assessments and other governmental charges to the extent thatpayment of the same may be postponed or is not required in accordance with theprovisions of Section 6.4;

###  

### (c)           landlords’and lessors’ liens in respect of rent not in default; liens in respect ofpledges or deposits made in the ordinary course of business in compliance withworkmen’s compensation, unemployment insurance, social security laws, orsimilar legislation (other than ERISA) or in connection with appeal and similarbonds incidental to litigation; mechanics’, warehouseman’s, laborers’ andmaterialmen’s and similar liens, if the obligations secured by such liens arenot then delinquent for more than 30 days or are being contested in 

 

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### good faith by appropriateproceedings and with respect to which adequate reserves have been establishedand are being maintained in accordance with GAAP; liens securing the performanceof bids, tenders, contracts (other than for the payment of money); and lienssecuring statutory obligations or surety, indemnity, performance, or othersimilar bonds incidental to the conduct of the Borrowers’ or any of theirSubsidiaries’ business in the ordinary course and that do not in the aggregatematerially detract from the value of their property or materially impair theuse thereof in the operation of their business;

###  

### (d)           judgmentliens securing judgments that (i) are fully covered by insurance, and (ii) shallnot have been in existence for a period longer than 45 days after the creationthereof or, if a stay of execution shall have been obtained, for a periodlonger than 10 days after the expiration of such stay;

###  

### (e)           rightsof lessors under Capitalized Leases, to the extent such Capitalized Leases arepermitted hereunder;

###  

### (f)            easements,rights of way, restrictions and other similar charges or Encumbrances relatingto real property and not interfering in a material way with the ordinary conductof the Borrowers’ business;

###  

### (g)           Encumbrancesconstituting a renewal, extension or replacement of any Permitted Encumbranceif otherwise permitted hereby and not in conflict with the terms hereof; and

###  

### (h)           Encumbrancesexisting on the date of this Agreement and set forth on Schedule 8.3(h).

###  

## 8.4           Merger;Dispositions; Liquidation.

##  

### (a)           TheBorrowers shall not, and shall not permit any Subsidiary to, merge orconsolidate into or with any other Person or entity or liquidate or dissolve,other than a merger of a Subsidiary into another Subsidiary or into a Borrower(or a liquidation of a Subsidiary into another Subsidiary or into a Borrowerunder Section 332 of the Code), provided that both immediatelybefore and immediately after any such merger, no Default shall have occurredand be continuing.

###  

### (b)           TheBorrowers shall not, and shall not permit any Subsidiary to, Dispose of anyassets or properties, except for sales of Qualified Investments, inventory andobsolete or worn out furniture, fixtures and equipment, in each case in theordinary course of business and consistent with past practices.

###  

## 8.5           Subsidiaries.  The Borrowers shall not permit any of theirSubsidiaries to issue any additional shares of their capital stock or otherequity securities, any options therefor or any securities convertible theretoother than to Borrowers or any of their Subsidiaries.  Neither of the Borrowers nor any of theirSubsidiaries shall sell, transfer or otherwise dispose of any of the capitalstock or other equity securities of a Subsidiary, except to Borrowers or any oftheir Subsidiaries.  The Borrowers shallnot, and shall not permit any of their Subsidiaries to, create or 

 

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## suffer to exist anyconsensual Encumbrances or restrictions on the ability of any Subsidiary to paydividends or make any other distributions on its equity interests held by theBorrowers or pay any Indebtedness owed to the Borrowers or any Subsidiary ofthe Borrowers or to make loans or advances or transfer any of its assets to theBorrowers or any other Subsidiary of the Borrowers.

##  

## 8.6           Restricted Payments.  The Borrowers will not, and will not permitany of their Subsidiaries to, declare or make, or agree to pay or make,directly or indirectly, any Restricted Payment, except

##  

### (a)           Parentmay declare and pay dividends in common stock to its equity holders;

###  

### (b)           Parentmay declare and pay dividends on the Parent’s common stock in cash to itsequity holders or purchase its common stock from its equity holders, providedthat the total amount of such dividends and the amount paid in connection withsuch purchases shall not exceed $1,900,000 in any Fiscal Year, provided,further, that (i) both at the time any such cash dividend isdeclared and paid and any such purchase is authorized and made, and aftergiving effect to the payment in connection therewith, no Default shall haveoccurred and be continuing and (ii) ten Business Days prior to any suchpayment the Administrative Agent shall have received a certificate of aResponsible Officer of Parent certifying on a pro forma basis that theconditions set forth in clause (i) have been satisfied with respect tosuch payment;

###  

### (c)           Subsidiariesof the Borrowers may declare and pay dividends to the Borrowers;

###  

### (d)           compensation,expense reimbursements and perquisites paid to employees, officers anddirectors in the ordinary course of business and consistent with pastpractices; and

###  

### (e)           paymentswith respect to Junior Subordinated Debt to the extent permitted under Section 8.11below.

###  

## 8.7           Investments;Purchases of Assets.  Neither of theBorrowers nor any of their Subsidiaries shall make or maintain any Investmentsor purchase or otherwise acquire any material amount of assets other than:

##  

### (a)           Investmentsexisting on the date hereof in Subsidiaries as described on Schedule 5.8(e);

###  

### (b)           QualifiedInvestments;

###  

### (c)           purchasesof inventory in the ordinary course of business;

###  

### (d)           normaltrade credit extended in the ordinary course of business and consistent withpast practice; and

###  

### (e)           Indebtednesspermitted by Section 8.1(f).

 

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## 8.8           ERISACompliance.  Neither of theBorrowerss nor any of their ERISA Affiliates nor any Plan shall (i) engagein any Prohibited Acquisition which would have a Material Adverse Effect on theBorrowers and their Subsidiaries, (ii) incur any “accumulated fundingdeficiency” (within the meaning of Section 412(a) of the Code and Section 302of ERISA) whether or not waived, (iii) permit to exist any material amountof “unfunded benefit liabilities” (within the meaning of Section 4001(a)(18)of ERISA, (iv) terminate any Pension Plan in a manner which could resultin the imposition of a lien on any property of the Borrowers or any of itsSubsidiaries, (v) fail to make any required contribution to anyMultiemployer Plan or (vi) completely or partially withdraw from aMultiemployer Plan if such complete or partial withdrawal will result in anymaterial withdrawal liability under Title IV of ERISA.

##  

## 8.9           Transactionswith Affiliates.  The Borrowers willnot, and will not permit any of their Subsidiaries to, directly or indirectly,enter into any purchase, sale, lease or other transaction with any Affiliateexcept (i) transactions in the ordinary course of business on terms thatare no less favorable to the Borrowers or their Subsidiaries than those whichmight be obtained at the time in a comparable arm’s-length transaction with anyPerson who is not an Affiliate, (ii) transactions between or among theBorrowers and their Subsidiaries or between Subsidiaries, and (iii) employmentcontracts with senior management of the Borrowers entered into in the ordinarycourse of business and consistent with past practices.  Notwithstanding the foregoing, the Borrowerswill not, and will not permit any Subsidiary to, directly or indirectly, payany management, consulting, overhead, indemnity, guarantee or other similar feeor charge to any Affiliate (other than a Borrower).

##  

## 8.10         FiscalYear.  The Borrowers and theirSubsidiaries shall not change their Fiscal Year without the prior writtenconsent of the Administrative Agent, which will not be unreasonably withheld.

##  

## 8.11         Paymentson Junior Subordinated Debt.  TheBorrowers shall not make any payment or prepayment of principal of or intereston, or any other payment in respect of, the Junior Subordinated Debt, except tothe extent permitted by the Subordination Agreement.

##  

# SECTION IX

#  

# DEFAULTS

#  

## 9.1           Events of Default.  Any of the following shall constitute anEvent of Default:

##  

### (a)           Non-Payment.  Any Borrower or any other Loan Party fails to(i) pay when and as required to be paid herein, any amount of principal ofany Loan or any LC Disbursement or deposit any funds as cash collateral inrespect of the Maximum Drawing Amount, or (ii) pay within three (3) BusinessDays after the same becomes due, any interest on any Loan or on any LCDisbursement, any fee due hereunder or any other amount payable hereunder orunder any other Loan Document; or

###  

### (b)           SpecificCovenants.  (i) The Borrowers failto perform or observe any term, covenant or agreement contained in any ofSections 6.1(a), (b), (c), (d), (h) or (i), Sections 6.2(b), 6.3, 6.5,6.6, 6.7, 6.8, 6.9, 6.12, 6.13 or 6.14 or Section VII or VIII, (ii) anyof the 

 

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### Subsidiary Guarantorsfails to perform or observe any term, covenant or agreement contained in anySubsidiary Guaranty, (iii) any of the Loan Parties which is a party to theSecurity Agreement fails to perform or observe any term, covenant or agreementcontained in Sections 3 or 4 of the Security Agreement, (iv) any ofthe Loan Parties which is a party to the Pledge Agreement fails to perform orobserve any term, covenant or agreement contained in Sections 4, 6 or 7 of thePledge Agreement or (v) any of the Loan Parties which is a party to a FeeProperty Security Agreement that is a mortgage or deed of trust fails toobserve any prohibition on assignments of Rents (as defined therein) containedtherein; or

###  

### (c)           OtherDefaults.  Any Loan Party fails toperform or observe any other covenant or agreement (not specified in Section 9.1(a) or9.1(b) above) contained in any Loan Document on its part to be performedor observed and such failure continues for 30 days; or

###  

### (d)           Representationsand Warranties.  Any representation,warranty, certification or statement of fact made or deemed made by or onbehalf of the Borrowers or any other Loan Party herein, in any other LoanDocument or in any document delivered in connection herewith or therewith shallbe materially incorrect or misleading when made or deemed made; or

###  

### (e)           Cross-Default.  (i) Any Loan Party or any Subsidiarythereof (A) fails to make any payment when due (whether by scheduledmaturity, required prepayment, acceleration, demand, or otherwise) in respectof any Indebtedness or Guarantee (other than Indebtedness hereunder andIndebtedness under Swap Agreements) having an aggregate principal amount(including undrawn committed or available amounts and including amounts owingto all creditors under any combined or syndicated credit arrangement) of morethan $500,000, or (B) fails to observe or perform any other agreement orcondition relating to any such Indebtedness or Guarantee of more than $500,000or contained in any instrument or agreement evidencing, securing or relatingthereto, or any other event occurs, the effect of which default or other eventis to cause, or to permit the holder or holders of such Indebtedness or thebeneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalfof such holder or holders or beneficiary or beneficiaries) to cause, with thegiving of notice if required, such Indebtedness to be demanded or to become dueor to be repurchased, prepaid, defeased or redeemed (automatically or otherwise),or an offer to repurchase, prepay, defease or redeem such Indebtedness to bemade, prior to its stated maturity, or such Guarantee to become payable or cashcollateral in respect thereof to be demanded; (ii) the Borrowers or anyLoan Party shall fail to pay when due (after any applicable period of grace)any amount payable under one or more agreements for the use of real or personalproperty requiring aggregate payments in excess of $25,000 in any twelve monthperiod, or fail to observe or perform any term, covenant or agreement orrelating to such agreement(s) for the use of real or personal property,and the result of any such failure is to permit any other party to suchagreement(s) to exercise remedies under or terminate such agreement(s) priorto the expiration date thereof; or (iii) there occurs under any SwapAgreement an Early Termination Date (as defined in such Swap Agreement)resulting from (A) any event of default under such Swap Agreement as towhich a Loan Party or any Subsidiary thereof is the Defaulting Party (asdefined in such Swap Agreement) or (B) any Termination Event (as sodefined) under such Swap Agreement as to which a Loan Party or any Subsidiarythereof is an Affected Party (as so defined).

 

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### (f)            InsolvencyProceedings, Etc.  Any Loan Party orany Subsidiary thereof institutes or consents to the institution of anyproceeding under any bankruptcy, insolvency, reorganization, receivership orother debtor relief law, or makes an assignment for the benefit of creditors;or applies for or consents to the appointment of any receiver, trustee,custodian, conservator, liquidator, rehabilitator or similar officer for it orfor all or any material part of its property; or any receiver, trustee,custodian, conservator, liquidator, rehabilitator or similar officer isappointed without the application or consent of such Person and the appointmentcontinues undischarged or unstayed for 45 calendar days; or any proceedingunder any bankruptcy, insolvency, reorganization, receivership or other debtorrelief law relating to any such Person or to all or any material part of itsproperty is instituted without the consent of such Person and continuesundismissed or unstayed for 45 calendar days, or an order for relief is enteredin any such proceeding; or

###  

### (g)           Inabilityto Pay Debts; Attachment.  (i) AnyLoan Party or any Subsidiary thereof becomes unable or admits in writing itsinability or fails generally to pay its debts as they become due, or (ii) anywrit or warrant of attachment or execution or similar process is issued orlevied against all or any material part of the property of any such Person andis not released, vacated or fully bonded within 30 days after its issue orlevy; or

###  

### (h)           Judgments.  There is entered against any Loan Party orany Subsidiary thereof (i) one or more final judgments or orders for thepayment of money in an aggregate amount (as to all such judgments and orders)exceeding $250,000 (to the extent not covered by independent third-partyinsurance as to which the insurer is rated at least “A” by A.M. BestCompany, has been notified of the potential claim and does not disputecoverage), or (ii) any one or more non-monetary final judgments that have,or could reasonably be expected to have, individually or in the aggregate, aMaterial Adverse Effect and, in either case, (A) enforcement proceedingsare commenced by any creditor upon such judgment or order, or (B) there isa period of 10 consecutive days while such judgment shall not have beendischarged during which a stay of enforcement of such judgment, by reason of apending appeal or otherwise, is not in effect; or

###  

### (i)            ERISA.  (i) An ERISA Event occurs with respectto a Pension Plan or Multiemployer Plan which has resulted or could reasonablybe expected to result in liability of the Borrowers under Title IV ofERISA to the Pension Plan, Multiemployer Plan or the PBGC; or (ii) anyBorrower or any ERISA Affiliate fails to pay when due, after the expiration ofany applicable grace period, any installment payment with respect to itswithdrawal liability under Section 4201 of ERISA under a MultiemployerPlan; or

###  

### (j)            Invalidityof Loan Documents.  Any materialprovision of any Loan Document, at any time after its execution and deliveryand for any reason other than as expressly permitted hereunder or thereunder orsatisfaction in full of all the Obligations, ceases to be in full force andeffect; or any Loan Party contests in any manner the validity or enforceabilityof any provision of any Loan Document; or any Loan Party denies that it has anyor further liability or obligation under any provision of any Loan Document, orpurports to revoke, terminate or rescind any provision of any Loan Document; or

###  

### (k)           Changeof Control.  There occurs any Changeof Control; or

 

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###  

### (l)            SecurityDocuments.  Any Security Documentafter delivery thereof pursuant to Section 4.1 or 6.12 shall for anyreason (other than pursuant to the terms thereof or solely as a result ofaction or inaction of the secured party thereunder) cease to create a valid andperfected first priority Encumbrance (subject to Permitted Encumbrances) on theCollateral purported to be covered thereby; or

###  

### (m)          Subordination.  (i) The subordination provisions of theSubordination Agreement (the “Subordination Provisions”) shall, in wholeor in part, terminate, cease to be effective or cease to be legally valid,binding and enforceable against any holder of the Subordinated Debt; or (ii) theBorrowers or any other Loan Party shall, directly or indirectly, disavow orcontest in any manner (A) the effectiveness, validity or enforceability ofany of the Subordination Provisions, (B) that the Subordination Provisionsexist for the benefit of the Administrative Agent, the Lenders and the L/CIssuer or (C) that all payments of principal of or premium and interest onthe Subordinated Debt, or realized from the liquidation of any property of anyLoan Party, shall be subject to any of the Subordination Provisions.

###  

## 9.2           Remedies upon Eventof Default.  If any Event of Defaultoccurs and is continuing, the Administrative Agent may, or at the request ofthe Majority Lenders shall, take any or all of the following actions:

##  

### (a)           declarethe commitment of each Lender to make Loans and any obligation of the LC Issuerto issue or extend any Letter of Credit to be terminated, whereupon suchcommitments and obligation shall be terminated;

###  

### (b)           declarethe unpaid principal amount of all outstanding Loans, all interest accrued andunpaid thereon, and all other amounts owing or payable hereunder or under anyother Loan Document to be immediately due and payable, without presentment,demand, protest or other notice of any kind, all of which are hereby expresslywaived by the Borrowers;

###  

### (c)           requirethat the Borrowers Cash Collateralize the Maximum Drawing Amount; and

###  

### (d)           exerciseon behalf of itself, the Lenders and the LC Issuer all rights and remediesavailable to it, the Lenders and the LC Issuer under any of the Loan Documentsand at law;

###  

provided,however, that upon the occurrence of an actual or deemed entry of anorder for relief with respect to the Borrowers under the Bankruptcy Code of theUnited States, the obligation of each Lender to make Loans and any obligationof the LC Issuer to issue or extend any Letter of Credit shall automaticallyterminate, the unpaid principal amount of all outstanding Loans and allinterest and other amounts as aforesaid shall automatically become due andpayable, and the obligation of the Borrowers to Cash Collateralize the MaximumDrawing Amount as aforesaid shall automatically become effective, in each casewithout further act of the Administrative Agent or any Lender.

 

## 9.3           Application of Funds.  After the exercise of remedies provided forin Section 9.2 (or after the Loans have automatically become immediatelydue and payable and the Maximum 

 

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## Drawing Amount hasautomatically been required to be Cash Collateralized as set forth in theproviso to Section 9.2), any amounts received on account of the Obligationsshall be applied by the Administrative Agent in the following order:

##  

First, to payment of thatportion of the Obligations constituting fees, indemnities, expenses and otheramounts (including fees, charges and disbursements of counsel to the AdministrativeAgent ) payable to the Administrative Agent in its capacity as such;

 

Second, to payment of thatportion of the Obligations constituting fees, indemnities and other amounts(other than principal, interest and Letter of Credit Fees) payable to the Lendersand the LC Issuer (including fees, charges and disbursements of counsel to therespective Lenders and the LC Issuer, includingfees and time charges for attorneys who may be employees of any Lender or theLC Issuer) and amounts payable under Sections 2.10, 2.12, 2.13, 2.14 and2.15, ratably among them in proportion to the respective amounts described inthis clause Second payable to them;

 

Third, to payment of thatportion of the Obligations constituting accrued and unpaid Letter of CreditFees and interest on the Loans, LC Disbursements and other Obligations, ratablyamong the Lenders and the LC Issuer in proportion to the respective amountsdescribed in this clause Third payable to them;

 

Fourth, to payment of thatportion of the Obligations constituting unpaid principal of the Loans, LCDisbursements and amounts owing under Eligible Swap Agreements, ratably amongthe Lenders, the LC Issuer and the Swap Banks in proportion to the respectiveamounts described in this clause Fourth held by them;

 

Fifth, to the AdministrativeAgent for the account of the LC Issuer, to Cash Collateralize the MaximumDrawing Amount;

 

Sixth , to payment of thatportion of the Obligations constituting unpaid amounts owing under Secured CashManagement Agreements, ratably among the Cash Management Banks in proportion tothe respective amounts described in this clause Sixth held by them; and

 

Last, the balance, if any, after allof the Obligations have been indefeasibly paid in full, to the Borrowers or asotherwise required by Law.

 

Subjectto Section 3.2, amounts used to Cash Collateralize the Maximum DrawingAmount pursuant to clause Fifth above shall be applied to satisfydrawings under the then outstanding Letters of Credit as they occur.  If any amount remains on deposit as cashcollateral after all Letters of Credit have either been fully drawn or expired,such remaining amount shall be applied to the other Obligations, if any, in theorder set forth above.

 

## 9.4           Remedies Cumulative.  No remedy conferred upon the AdministrativeAgent, the LC Issuer and the Lenders in the Loan Documents is intended to beexclusive of any other remedy, and each and every remedy shall be cumulativeand shall be an addition to every other remedy given hereunder or now orhereafter existing at law or in equity or by statute or by any 

 

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## other provision oflaw.  Without limiting the generality ofthe foregoing or of any of the terms and provisions of any of the SecurityDocuments, if and when the Administrative Agent exercises remedies under theSecurity Documents with respect to Collateral, the Administrative Agent may, inits sole discretion, determine which items and types of Collateral to disposeof and in what order and may dispose of Collateral in any order theAdministrative Agent shall select in its sole discretion, and the Borrowersconsent to the foregoing and waive all rights of marshalling with respect toall Collateral.

##  

# SECTION X

#  

# ASSIGNMENT AND PARTICIPATION

#  

## 10.1         Successors and Assigns.

##  

### (a)           Successorsand Assigns Generally.  Theprovisions of this Agreement shall be binding upon and inure to the benefit ofthe parties hereto and their respective successors and assigns permittedhereby, except that neither the Borrowers nor any other Loan Party may assignor otherwise transfer any of its rights or obligations hereunder without theprior written consent of the Administrative Agent and each Lender and no Lendermay assign or otherwise transfer any of its rights or obligations hereunder except(i) to an assignee in accordance with the provisions of Section 10.1(b),(ii) by way of participation in accordance with the provisions of Section 10.1(d),or (iii) by way of pledgeor assignment of a security interest subject to the restrictions of Section 10.1(f) (andany other attempted assignment or transfer by any party hereto shall be nulland void).  Nothing in this Agreement,expressed or implied, shall be construed to confer upon any Person (other thanthe parties hereto, their respective successors and assigns permitted hereby,Participants to the extent provided in subsection (d) of this Section and,to the extent expressly contemplated hereby, the Related Parties of each of theAdministrative Agent, the LC Issuer and the Lenders) any legal or equitableright, remedy or claim under or by reason of this Agreement.

###  

### (b)           Assignmentsby Lenders.  Any Lender may at anytime assign to one or more assignees all or a portion of its rights andobligations under this Agreement (including all or a portion of its Commitment(s) andthe Loans (including for purposes of this Section 10.1(b), participationsin the Maximum Drawing Amount) at the time owing to it); provided thatany such assignment shall be subject to the following conditions:

###  

#### (i)            Minimum Amounts.

####  

##### (A)          in the case of anassignment of the entire remaining amount of the assigning Lender’s Commitmentunder any Facility and the Loans at the time owing to it under such Facility orin the case of an assignment to a Lender, an Affiliate of a Lender or anApproved Fund, no minimum amount need be assigned; and

#####  

##### (B)           in any case notdescribed in Section 10.1(b)(i)(A), the aggregate amount of the Commitment(which for this purpose includes Loans outstanding thereunder) or, if theCommitment is not then in effect, the principal outstanding 

 

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##### balance of the Loans of the assigning Lender subjectto each such assignment, determined as of the date the Assignment andAssumption with respect to such assignment is delivered to the AdministrativeAgent or, if “Trade Date” is specified in the Assignment and Assumption, as ofthe Trade Date, shall not be less than $2,000,000, in the case of anyassignment in respect of the Revolving Credit Facility, or $2,000,000, in thecase of any assignment in respect of the Term Facility, unless each of theAdministrative Agent and, so long as no Event of Default has occurred and iscontinuing, the Borrowers otherwise consent (each such consent not to beunreasonably withheld or delayed); provided, however, thatconcurrent assignments to members of an Assignee Group and concurrentassignments from members of an Assignee Group to a single Eligible Assignee (orto an Eligible Assignee and members of its Assignee Group) will be treated as asingle assignment for purposes of determining whether such minimum amount hasbeen met;

#####  

#### (ii)           ProportionateAmounts.  Each partial assignmentshall be made as an assignment of a proportionate part of all the assigningLender’s rights and obligations under this Agreement with respect to the Loansor the Commitment assigned, except that this clause (ii) shall notprohibit any Lender from assigning all or a portion of its rights andobligations among separate Facilities on a non-pro rata basis;

####  

#### (iii)          Required Consents.  No consent shall be required for anyassignment except to the extent required by Section 10.1(b)(i)(B) and,in addition:

####  

##### (A)          the consent of theBorrowers (such consent not to be unreasonably withheld or delayed unless theassignment is to an entity in the same business as a Borrower that is a directcompetitor of such Borrower, in which event the consent may be withheld in thesole discretion of Borrowers) shall be required unless (1) an Event ofDefault has occurred and is continuing at the time of such assignment or (2) suchassignment is to a Lender, an Affiliate of a Lender or an Approved Fund;

#####  

##### (B)           the consent of theAdministrative Agent (such consent not to be unreasonably withheld or delayed)shall be required for assignments in respect of (i) any Term Commitment orRevolving Credit Commitment if such assignment is to a Person that is not aLender with a Commitment in respect of the applicable Facility, an Affiliate ofsuch Lender or an Approved Fund with respect to such Lender or (ii) anyTerm Loan to a Person that is not a Lender, an Affiliate of a Lender or anApproved Fund; and

#####  

##### (C)           the consent of the LCIssuer (such consent not to be unreasonably withheld or delayed) shall berequired for any assignment that increases the obligation of the assignee toparticipate in exposure under one or more Letters of Credit (whether or notthen outstanding).

#####  

#### (iv)          Assignment andAssumption.  The parties to eachassignment shall execute and deliver to the Administrative Agent an Assignmentand Assumption, and the 

 

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#### assignee, if it shall not be a Lender, shall deliverto the Administrative Agent an Administrative Questionnaire.

####  

#### (v)           No Assignment toBorrowers.  No such assignment shallbe made to any Borrower or any of the Borrowers’ Affiliates or Subsidiaries.

####  

#### (vi)          No Assignment toNatural Persons.  No such assignmentshall be made to a natural person.

####  

#### (vii)         Assignment Fees.  An assignment fee of $3,500 shall be chargedto the assigning Lender with respect to each assignment, except with respect toan assignment to an Affiliate of the assigning Lender.

####  

Subjectto acceptance and recording thereof by the Administrative Agent pursuant to Section 10.1(c),from and after the effective date specified in each Assignment and Assumption,the assignee thereunder shall be a party to this Agreement and, to the extentof the interest assigned by such Assignment and Assumption, have the rights andobligations of a Lender under this Agreement, and the assigning Lenderthereunder shall, to the extent of the interest assigned by such Assignment andAssumption, be released from its obligations under this Agreement (and, in thecase of an Assignment and Assumption covering all of the assigning Lender’srights and obligations under this Agreement, such Lender shall cease to be aparty hereto but shall continue to be entitled to the benefits of Sections2.10, 2.12, 2.13, 2.15 and 12.2 with respect to facts and circumstancesoccurring prior to the effective date of such assignment).  Upon request, the Borrowers (at theirexpense) shall execute and deliver Notes to the assignee Lender.  Any assignment or transfer by a Lender ofrights or obligations under this Agreement that does not comply with thissubsection shall be treated for purposes of this Agreement as a sale by suchLender of a participation in such rights and obligations in accordance with Section 10.1(d).

 

Notwithstandinganything to the contrary in this Section 10.1(b), each Lender will alsohave the right, without consent of the Borrowers or the Administrative Agent,to assign as security all or part of its rights under the Loan Documents to anyFederal Reserve Bank.

 

### (c)           Register.  The Administrative Agent, acting solely forthis purpose as an agent of the Borrowers, shall maintain at the AdministrativeAgent’s office a copy of each Assignment and Assumption delivered to it and aregister for the recordation of the names and addresses of the Lenders, and theCommitments of, and principal amounts of the Loans and Letter of CreditParticipations owing to, each Lender pursuant to the terms hereof from time totime (the “Register”).  Theentries in the Register shall be conclusive absent manifest error, and theBorrowers, the Administrative Agent and the Lenders may treat each Person whosename is recorded in the Register pursuant to the terms hereof as a Lenderhereunder for all purposes of this Agreement, notwithstanding notice to thecontrary.  The Register shall be availablefor inspection by the Borrowers and any Lender, at any reasonable time and fromtime to time upon reasonable prior notice.

###  

### (d)           Participations.  Any Lender may at any time, without theconsent of, or notice to, the Borrowers or the Administrative Agent, sellparticipations to any Person (other than a natural person or any Borrower orany of the Borrowers’ Affiliates or Subsidiaries) (each, 

 

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### a “Participant”)in all or a portion of such Lender’s rights and/or obligations under thisAgreement (including all or a portion of its Commitment and/or the Loans(including such Lender’s Letter of Credit Participations) 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) theBorrowers, the Administrative Agent, the Lenders and the LC Issuer shallcontinue to deal solely and directly with such Lender in connection with suchLender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to whicha Lender sells such a participation shall provide that such Lender shall retainthe sole right to enforce this Agreement and to approve any amendment,modification or waiver of any provision of this Agreement; provided thatsuch agreement or instrument may provide that such Lender will not, without theconsent of the Participant, agree to any amendment, waiver or othermodification described in the first proviso to Section 12.7(b) thataffects such Participant.  Subject to Section 10.1(e),the Borrowers agree that each Participant shall be entitled to the benefits ofSections 2.10, 2.12, 2.13, 2.15 and 12.2**to the sameextent as if it were a Lender and had acquired its interest by assignmentpursuant to Section 10.1(b).  To theextent permitted by law, each Participant also shall be entitled to thebenefits of Section 12.5**as though itwere a Lender, provided such Participant agrees to be subject to Section 2.9(d) asthough it were a Lender.

###  

### (e)           Limitationsupon Participant Rights.  AParticipant shall not be entitled to receive any greater payment under Section 2.13or 2.15**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 Borrowers’ prior written consent. A Participant that would be a Foreign Lender if it were a Lender shallnot be entitled to the benefits of Section 2.15 unless the Borrowers arenotified of the participation sold to such Participant and such Participantagrees, for the benefit of the Borrowers, to comply with Section 2.15(e) asthough it were a Lender.

###  

### (f)            CertainPledges.  Any Lender may at any timepledge or assign a security interest in all or any portion of its rights underthis Agreement (including under its Notes, if any) to secure obligations ofsuch Lender, including any pledge or assignment to secure obligations to aFederal Reserve Bank; provided that no such pledge or assignment shallrelease such Lender from any of its obligations hereunder or substitute anysuch pledgee or assignee for such Lender as a party hereto.

###  

### (g)           ElectronicExecution of Assignments.  The words “execution,”“signed,” “signature,” and words of like import in any Assignment andAssumption shall be deemed to include electronic signatures or the keeping ofrecords in electronic form, each of which shall be of the same legal effect,validity or enforceability as a manually executed signature or the use of apaper-based recordkeeping system, as the case may be, to the extent and asprovided for in any applicable law, including the Federal Electronic Signaturesin Global and National Commerce Act, the New York State Electronic Signaturesand Records Act, or any other similar state laws based on the UniformElectronic Transactions Act.

###  

## 10.2         Replacement of Lenders.  If any Lender requests compensation under Section 2.13,or if the Borrowers are required to pay any additional amount to any Lender orany Governmental Authority for the account of any Lender pursuant to Section 2.15,or if any other 

 

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## circumstance existshereunder that gives the Borrowers the right to replace a Lender as a partyhereto, then the Borrowers may, at their sole expense and effort, upon noticeto such Lender and the Administrative Agent, require such Lender to assign anddelegate, without recourse (in accordance with and subject to the restrictionscontained in, and consents required by, Section 10.1), all of itsinterests, rights and obligations under this Agreement and the related LoanDocuments to an assignee that shall assume such obligations (which assignee maybe another Lender, if a Lender accepts such assignment), provided that:

##  

### (a)           theBorrowers shall have paid to the Administrative Agent the assignment feespecified in Section 10.1(b);

###  

### (b)           suchLender shall have received payment of an amount equal to the outstandingprincipal of its Loans and its Applicable Percentage of all unpaid LCDisbursements, accrued interest thereon, accrued fees and all other amountspayable to it hereunder and under the other Loan Documents (including anyamounts under Section 2.10) from the assignee (to the extent of suchoutstanding principal and accrued interest and fees) or the Borrowers (in thecase of all other amounts);

###  

### (c)           in thecase of any such assignment resulting from a claim for compensation under Section 2.13or payments required to be made pursuant to Section 2.15, such assignmentwill result in a reduction in such compensation or payments thereafter;

###  

### (d)           in thecase of any such assignment required by the Borrowers pursuant to thepenultimate sentence of Section 12.7, the assignee shall have agreed inwriting to consent to the proposed amendment, waiver, consent or release, asthe case may be, that the assigning Lender has not consented to; and

###  

### (e)           suchassignment does not conflict with applicable Laws.

###  

ALender shall not be required to make any such assignment or delegation if,prior thereto, as a result of a waiver by such Lender or otherwise, thecircumstances entitling the Borrowers to require such assignment and delegationcease to apply.

 

# SECTION XI

#  

# THE ADMINISTRATIVE AGENT

#  

## 11.1         Appointment of AdministrativeAgent.  Each Lender and the LC Issuerhereby irrevocably appoints and authorizes the Administrative Agent to act asits agent hereunder and under the other Loan Documents and to execute the LoanDocuments (other than this Agreement) and all other instruments relatingthereto.  Each Lender and the LC Issuerirrevocably authorizes the Administrative Agent to take such action on behalfof each of the Lenders and the LC Issuer and to exercise all such powers as areexpressly delegated to the Administrative Agent hereunder and in the other LoanDocuments and all related documents, together with such other powers as arereasonably incidental thereto.  TheAdministrative Agent shall also act as the “Agent” or “Administrative Agent”under the Security Documents, and each of the Lenders (in its capacities as aLender, Swap Bank and potential Cash Management Bank) 

 

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## and the LC Issuer herebyirrevocably appoints and authorizes the Administrative Agent to act as theagent of such Lender and the LC Issuer for purposes of acquiring, holding andenforcing any and all Encumbrances on Collateral granted by any of the LoanParties to secure any of the Obligations, together with such powers anddiscretion as are reasonably incidental thereto.  In this connection, the Administrative Agent,as “Agent” or “Administrative Agent” under the Security Documents, and anysub-agent appointed by it, shall be entitled to the benefits of all provisionsof this Section XI as if set forth in full herein with respectthereto.  The Administrative Agent may,and the Borrowers hereby authorizes the Administrative Agent to, includereferences to the Borrowers and their Subsidiaries, and utilize any logo orother distinctive symbol associated with the Borrowers or any of itsSubsidiaries, in connection with any advertising, promotion or marketingundertaken by the Administrative Agent.

##  

## 11.2         Exculpatory Provisions.  The Administrative Agent shall not have anyduties or obligations except those expressly set forth herein.  Without limiting the generality of theforegoing, (i) the Administrative Agent shall not be subject to anyfiduciary or other implied duties, regardless of whether a Default has occurredand is continuing, (ii) the Administrative Agent shall not have any dutyto take any discretionary action or exercise any discretionary powers, exceptdiscretionary rights and powers expressly contemplated hereby that theAdministrative Agent is required to exercise in writing as directed by theMajority Lenders (or such other number or percentage of the Lenders as shall benecessary under the circumstances as provided in Section 12.7)), providedthat the Administrative Agent shall not be required to take any action that, inits opinion or the opinion of its counsel, may expose the Administrative Agentto liability or that is contrary to any Loan Document or applicable law, and (iii) exceptas expressly set forth herein, the Administrative Agent shall not have any dutyto disclose, and shall not be liable for the failure to disclose, anyinformation relating to any Loan Party or any Subsidiary thereof that iscommunicated to or obtained by the bank serving as Administrative Agent or anyof its Affiliates in any capacity.  TheAdministrative Agent shall not be liable for any action taken or not taken byit with the consent or at the request of the Majority Lenders (or such othernumber or percentage of the Lenders as shall be necessary under thecircumstances as provided in Section 12.7) or in the absence of its owngross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of anyDefault unless and until written notice thereof is given to the AdministrativeAgent by the Borrowers or a Lender.  TheAdministrative Agent shall not be responsible for or have any duty to ascertainor inquire into (A) any statement, warranty or representation made in orin connection with this Agreement or any other Loan Document, (B) thecontents of any certificate, report or other document delivered hereunder or inconnection herewith, (C) the performance or observance of any of thecovenants, agreements or other terms or conditions set forth herein, (D) thevalidity, enforceability, effectiveness or genuineness of this Agreement or anyother agreement, instrument or document, (E) the satisfaction of anycondition set forth in Section IV or elsewhere herein, other than toconfirm receipt of items expressly required to be delivered to theAdministrative Agent, (F) the existence, value, collectibility or adequacyof the Collateral or any part thereof or the validity, effectiveness,perfection or relative priority of the liens and security interests of theLenders and the LC Issuer therein, or (G) the filing, recording, refiling,continuing or re-recording of any financing statement or other document orinstrument evidencing or relating to the security interests or liens of theLenders and the LC Issuer in the Collateral.

 

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##  

## 11.3         Rights as a Lender.  The Person serving as the AdministrativeAgent hereunder shall have the same rights and powers in its capacity as aLender as any other Lender and may exercise the same as though it were not theAdministrative Agent and the term “Lender” or “Lenders” shall, unless otherwiseexpressly indicated or unless the context otherwise requires, include thePerson serving as the Administrative Agent hereunder in its individualcapacity.  Such Person and its Affiliatesmay accept deposits from, lend money to, act as the financial advisor or in anyother advisory capacity for and generally engage in any kind of business withany Loan Party or any Subsidiary or other Affiliate thereof as if such Personwere not the Administrative Agent hereunder and without any duty to accounttherefor to the Lenders.

##  

## 11.4         Actionsby Administrative Agent.

##  

### (a)           TheAdministrative Agent shall be fully justified in failing or refusing to takeany action under this Agreement as it reasonably deems appropriate unless itshall first have received such advice or concurrence of the Lenders and shallbe indemnified to its reasonable satisfaction by the Lenders against any andall liability and expense which may be incurred by it by reason of taking orcontinuing to take any such action.  TheAdministrative Agent shall in all cases be fully protected in acting, or inrefraining from acting, under this Agreement or any of the Loan Documents inaccordance with a request of the Lenders, and such request and any action takenor failure to act pursuant thereto shall be binding upon the Lenders and allfuture holders of the Notes.

###  

### (b)           Whetheror not an Event of Default shall have occurred, the Administrative Agent mayfrom time to time exercise such rights of the Administrative Agent, the LCIssuer and the Lenders under the Loan Documents as it determines may benecessary or desirable to protect the Collateral and the interests of theAdministrative Agent, the LC Issuer and the Lenders therein and under the LoanDocuments.

###  

## 11.5         Reliance byAdministrative Agent.   TheAdministrative Agent shall be entitled to rely upon, and shall not incur anyliability for relying upon, any notice, request, certificate, consent,statement, instrument, document or other writing (including any electronicmessage, Internet or intranet website posting or other distribution) believedby it to be genuine and to have been signed, sent or otherwise authenticated bythe proper Person.  The AdministrativeAgent also may rely upon any statement made to it orally or by telephone andbelieved by it to have been made by the proper Person, and shall not incur anyliability for relying thereon.  Indetermining compliance with any condition hereunder to the making of a Loan, orthe issuance of a Letter of Credit, that by its terms must be fulfilled to thesatisfaction of a Lender or the LC Issuer, the Administrative Agent may presumethat such condition is satisfactory to such Lender or the LC Issuer unless theAdministrative Agent shall have received notice to the contrary from suchLender or the LC Issuer prior to the making of such Loan or the issuance ofsuch Letter of Credit.  TheAdministrative Agent may consult with legal counsel (who may be counsel for theBorrowers), independent accountants and other experts selected by it, and shallnot be liable for any action taken or not taken by it in accordance with theadvice of any such counsel, accountants or experts.

##  

## 11.6         Delegation of Duties.  The Administrative Agent may perform any andall of its duties and exercise its rights and powers hereunder or under anyother Loan Document by or 

 

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## through any one or moresub-agents appointed by the Administrative Agent.  The Administrative Agent and any suchsub-agent may perform any and all of its duties and exercise its rights andpowers by or through their respective Related Parties.  The exculpatory provisions of this Section shallapply to any such sub-agent and to the Related Parties of the AdministrativeAgent and any such sub-agent, and shall apply to their respective activities inconnection with the syndication of the credit facilities provided for herein aswell as activities as Administrative Agent.

##  

## 11.7         Indemnification.  Without limiting the obligations of theBorrowers hereunder or under any other Loan Document, the Lenders agree toindemnify the Administrative Agent and the LC Issuer, ratably in accordancewith their Commitments, for any and all liabilities, obligations, losses,damages, penalties, actions, judgments, suits, costs, expenses or disbursementsof any kind or nature whatsoever which may at any time be imposed on, incurredby or asserted against the Administrative Agent or the LC Issuer in any wayrelating to or arising out of this Agreement or any other Loan Document or anydocuments contemplated by or referred to herein or therein or the transactionscontemplated hereby or thereby or the enforcement of any of the terms hereof orthereof or of any such other documents; provided, that no Lendershall be liable for any of the foregoing to the extent it results from thegross negligence or willful misconduct of the Administrative Agent or the LCIssuer, as the case may be.

##  

## 11.8         Reimbursement.  Without limiting the provisions of Section 11.7,the Lenders, the LC Issuer and the Administrative Agent hereby agree that theAdministrative Agent shall not be obliged to make available to any Person anysum which the Administrative Agent is expecting to receive for the account ofthat Person until the Administrative Agent has determined that it has receivedthat sum.  The Administrative Agent may,however, disburse funds prior to determining that the sums which theAdministrative Agent expects to receive have been finally and unconditionallypaid to the Administrative Agent if the Administrative Agent wishes to doso.  If and to the extent that theAdministrative Agent does disburse funds and it later becomes apparent that theAdministrative Agent did not then receive a payment in an amount equal to thesum paid out, then any Person to whom the Administrative Agent made the fundsavailable shall, on demand from the Administrative Agent, refund to theAdministrative Agent the sum paid to that Person.  If the Administrative Agent in good faithreasonably concludes that the distribution of any amount received by it in suchcapacity hereunder or under the other Loan Documents might involve it inliability, it may refrain from making distribution until its right to makedistribution shall have been adjudicated by a court of competentjurisdiction.  If a court of competentjurisdiction shall adjudge that any amount received and distributed by theAdministrative Agent is to be repaid, each Person to whom any such distributionshall have been made shall either repay to the Administrative Agent itsproportionate share of the amount so adjudged to be repaid or shall pay overthe same in such manner and to such Persons as shall be determined by suchcourt.

##  

## 11.9         Non-Relianceon Administrative Agent and New Lenders. Each Lender represents that it has, independently and without relianceon the Administrative Agent or any other Lender, and based on such documentsand information as it has deemed appropriate, made its own appraisal of thefinancial condition and affairs of the Borrowers and decision to enter intothis Agreement and the other Loan Documents and agrees that it will,independently and without 

 

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## reliance upon theAdministrative Agent or any other Lender, and based on such documents andinformation as it shall deem appropriate at the time, continue to make its ownappraisals and decision in taking or not taking action under this Agreement orany other Loan Document.    Unless anyLender shall promptly object to any action taken by the Administrative Agenthereunder (other than actions to which the provisions of Section 12.7(b) areapplicable and other than actions which constitute gross negligence or willfulmisconduct by the Administrative Agent), such Lender shall conclusively bepresumed to have approved the same.

##  

## 11.10       Resignationof Administrative Agent.  TheAdministrative Agent may resign at any time by giving 30 days prior writtennotice thereof to the Lenders and the Borrowers.  Upon any such resignation, the Lenders shallhave the right to appoint a successor Administrative Agent which shall bereasonably acceptable to the Borrowers (whose consent shall not be unreasonablywithheld or delayed) and shall be a financial institution having a combinedcapital and surplus in excess of $150,000,000. If no successor Administrative Agent shall have been so appointed by theLenders and shall have accepted such appointment within 30 days after theretiring Administrative Agent’s giving of notice of resignation, then theretiring Administrative Agent may, on behalf of the Lenders, appoint asuccessor Administrative Agent which shall be reasonably acceptable to theBorrowers (whose consent shall not be unreasonably withheld or delayed) andshall be a Lender or other financial institution having a combined capital andsurplus in excess of $150,000,000.  Uponthe acceptance of any appointment as Administrative Agent hereunder by asuccessor Administrative Agent, such successor Administrative Agent shallthereupon succeed to and become vested with all the rights, powers, privilegesand duties of the retiring Administrative Agent, and the retiringAdministrative Agent shall be discharged from its duties and obligationshereunder.  After any retiringAdministrative Agent’s resignation, the provisions of this Agreement shallcontinue in effect for its benefit in respect of any actions taken or omittedto be taken by it while it was acting as Administrative Agent.

##  

## 11.11       No Other Duties, etc.  Anything herein to the contrary notwithstanding,neither the Lead Arranger nor the Syndication Agent listed on the cover page hereofshall have any powers, duties or responsibilities under this Agreement or anyof the other Loan Documents, except in its capacity, as applicable, as theAdministrative Agent, a Lender or the LC issuer hereunder.

##  

# SECTION XIIGENERAL

#  

## 12.1         Notices; Effectivenessof Signatures.

##  

Unlessotherwise specifically provided herein, any notice or other communicationherein required or permitted to be given shall be in writing and may bepersonally served, or sent by telefacsimile or United States mail or courierservice and shall be deemed to have been given when delivered in person or bycourier service, upon receipt of telefacsimile in complete and legible form, orthree Business Days after depositing it in the United States mail to be sent bycertified or registered mail with postage prepaid and properly addressed; providedthat notices to the Administrative Agent and the LC Issuer shall not beeffective until received.  For thepurposes hereof, the address of each party hereto shall be as set forth on Schedule12.1 hereof or 

 

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(subjectto said Schedule) in its Administrative Questionnaire or (i) as to theBorrowers and the Administrative Agent, such other address as shall bedesignated by such Person in a written notice delivered to the other partieshereto and (ii) as to each other party, such other address as shall bedesignated by such party in a written notice delivered to the AdministrativeAgent.  The Administrative Agent or theBorrowers may, in their discretion, agree to accept notices and othercommunications to such parties hereunder by electronic communications pursuantto procedures approved by such parties, provided that approval of suchprocedures may be limited to particular notices or communications.

 

LoanDocuments and notices under the Loan Documents may be transmitted and/or signedby telefacsimile and by signatures delivered in ‘PDF’ format by electronic mail.  The effectiveness of any such documents andsignatures shall, subject to applicable law, have the same force and effect asan original copy with manual signatures and shall be binding on all LoanParties, the Administrative Agent and the Lenders.  The Administrative Agent may also requirethat any such documents and signature be confirmed by a manually-signed copythereof; provided, however, that the failure to request ordeliver any such manually-signed copy shall not affect the effectiveness of anyfacsimile document or signature.

 

Notwithstandingthe foregoing, the Borrowers agree that the Administrative Agent may make anymaterial delivered by the Borrowers to the Administrative Agent, as well as anyamendments, waivers, consents and other written information, documents,instruments and other materials relating to the Borrowers, any of theirSubsidiaries, or any other materials or matters relating to the Loan Documentsor any of the transactions contemplated hereby that the Administrative Agent isrequired or authorized pursuant to the terms hereof or of any Loan Document toprovide to the Lenders (collectively, the “Communications”) available to the Lenders by posting suchnotices on a Platform.  THE BORROWERSACKNOWLEDGE THAT (A) THE DISTRIBUTION OF MATERIAL THROUGH AN ELECTRONICMEDIUM IS NOT NECESSARILY SECURE AND THAT THERE ARE CONFIDENTIALITY AND OTHERRISKS ASSOCIATED WITH SUCH DISTRIBUTION, (B) A PLATFORM IS PROVIDED “ASIS” AND “AS AVAILABLE” AND (C) NEITHER THE ADMINISTRATIVE AGENT NOR ANY OFITS AFFILIATES WARRANTS THE ACCURACY, COMPLETENESS, TIMELINESS, SUFFICIENCY, ORSEQUENCING OF THE COMMUNICATIONS POSTED ON A PLATFORM.  THE ADMINISTRATIVE AGENT AND ITS AFFILIATESEXPRESSLY DISCLAIM WITH RESPECT TO A PLATFORM ANY LIABILITY FOR ERRORS INTRANSMISSION, INCORRECT OR INCOMPLETE DOWNLOADING, DELAYS IN POSTING ORDELIVERY, OR PROBLEMS ACCESSING THE COMMUNICATIONS POSTED ON SUCH PLATFORM ANDANY LIABILITY FOR ANY LOSSES, COSTS, EXPENSES OR LIABILITIES THAT MAY BESUFFERED OR INCURRED IN CONNECTION WITH SUCH PLATFORM.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED ORSTATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY,FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS ORFREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE ADMINISTRATIVE AGENTOR ANY OF ITS AFFILIATES IN CONNECTION WITH ANY PLATFORM.

 

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EachLender agrees that notice to it (as provided in the next sentence) specifyingthat any Communication has been posted to a Platform shall for purposes of thisAgreement constitute effective delivery to such Lender of such information,documents or other materials comprising such Communication.  Each Lender agrees (1) to notify, on orbefore the date such Lender becomes a party to this Agreement, theAdministrative Agent in writing of such Lender’s e-mail address to which anotice may be sent (and from time to time thereafter to ensure that theAdministrative Agent has on record an effective e-mail address for such Lender)and (2) that any notice may be sent to such e-mail address.

 

## 12.2         Expenses.  Whether or not the transactions contemplatedherein shall be consummated, the Borrowers, jointly and severally, promise toreimburse the Administrative Agent, the LC Issuer and the Lenders for allreasonable out-of-pocket fees and disbursements (including all reasonableattorneys’ fees and collateral evaluation costs) incurred or expended inconnection with the preparation, filing or recording, or interpretation of thisAgreement and the other Loan Documents, or any amendment, modification,approval, consent or waiver hereof or thereof, or in connection with theenforcement of any Obligations or the satisfaction of any indebtedness of theBorrowers hereunder or thereunder, or in connection with any litigation,proceeding or dispute in any way related to the credit hereunder, theObligations, the Loan Documents or the Collateral, including, withoutlimitation, reasonable fees and disbursements of the outside counsel and theallocated costs of in-house legal counsel of the Administrative Agent;accounting, consulting, appraisal, brokerage or other similar professional feesor expenses; any fees or expenses (including the Administrative Agent’s perdiem charges) relating to any inspections, appraisals or examinations conductedin connection with the Loans or any Collateral; and all costs and expensesrelating to any attempt to inspect, verify, protect, preserve, restore,collect, sell, liquidate or otherwise dispose of or realize upon anyCollateral.  The amount of all suchcosts, charges and expenses shall, until paid, bear interest at the rateapplicable to Base Rate Loans and shall be an Obligation secured by theCollateral.  The Borrowers will pay anytaxes (including any interest and penalties in respect thereof), other than theLenders’ federal and state income taxes and other Excluded Taxes, payable on orwith respect to the transactions contemplated by the Loan Documents (theBorrowers, jointly and severally, hereby agreeing, to indemnify theAdministrative Agent, the LC Issuer and the Lenders with respect thereto).

##  

## 12.3         Indemnification.  The Borrowers, jointly and severally, agreeto indemnify and hold harmless the Administrative Agent, the LC Issuer and theLenders, as well as their respective shareholders, directors, offices, agents,attorneys, subsidiaries and Affiliates, from and against all damages, losses,settlement payments, obligations, liabilities, claims, suits, penalties,assessments, citations, directives, demands, judgments, actions or causes ofaction, whether statutorily created or under the common law, all reasonablecosts and expenses (including, without limitation, reasonable fees anddisbursements of attorneys, engineers and consultants) and all otherliabilities whatsoever (including, without limitation, liabilities underEnvironmental Laws) which shall at any time or times be incurred, suffered,sustained or required to be paid by any such indemnified Person (except any ofthe foregoing which result from the gross negligence or willful misconduct ofthe indemnified Person) on account of or in relation to or any way inconnection with any of the arrangements or transactions contemplated by,associated with or ancillary to this Agreement, the other Loan Documents or anyother documents executed or 

 

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## delivered in connectionherewith or therewith, all as the same may be amended from time to time, orwith respect to any Letters of Credit, whether or not all or part of thetransactions contemplated by, associated with or ancillary to this Agreement,any of the Loan Documents or any such other documents are ultimatelyconsummated.  In any investigation,proceeding or litigation, or the preparation therefor, the Administrative Agentand the Lenders shall select their own counsel and, in addition to theforegoing indemnity, the Borrowers shall pay promptly the reasonable fees andexpenses of such counsel.  In the eventof the commencement of any such proceeding or litigation, the Borrowers shallbe entitled to participate in such proceeding or litigation with counsel oftheir choice at their own expense, provided that such counsel shall bereasonably satisfactory to the Administrative Agent.  The Borrowers authorize the AdministrativeAgent, the LC Issuer and the Lenders to charge any deposit account or NoteRecord which it may maintain with any of them for any of the foregoing.  The covenants of this Section 12.3 shallsurvive payment or satisfaction of payment of all amounts owing with respect tothe Notes, any other Loan Document or any other Obligation.

##  

## 12.4         Survivalof Covenants, Etc.  All covenants,agreements, representations and warranties made herein, in the other LoanDocuments or in any documents or other papers delivered by or on behalf of theBorrowers pursuant hereto shall be deemed to have been relied upon by theAdministrative Agent, the LC Issuer and the Lenders, notwithstanding anyinvestigation heretofore or hereafter made by any of them, and shall survivethe making by the Lenders of the Loans as herein contemplated, and shallcontinue in full force and effect so long as any Obligation remains outstandingand unpaid or any Lender has any obligation to make any Loans hereunder or theLC Issuer has any obligation to issue any Letter of Credit.  All statements contained in any certificateor other writing delivered by or on behalf of the Borrowers pursuant hereto orin connection with the transactions contemplated hereby shall constitute jointand several representations and warranties by the Borrowers hereunder.

##  

## 12.5         Set-Off.  If a Default shall have occurred and becontinuing, each Lender, the LC Issuer and each of their respective Affiliatesis hereby authorized at any time and from time to time, after obtaining theprior written consent of the Administrative Agent, to the fullest extentpermitted by applicable law and regardless of the adequacy of any Collateral orother means of obtaining repayment of the Obligations, to set off and apply anyand all deposits (general or special, time or demand, provisional or final, inwhatever currency) at any time held and other obligations (in whatevercurrency) at any time owing by such Lender, the LC Issuer or any such Affiliateto or for the credit or the account of the Borrowers or any other Loan Partyagainst any and all of the obligations of the Borrowers or such Loan Party nowor hereafter existing under this Agreement or any other Loan Document to suchLender or the LC Issuer, irrespective of whether or not such Lender or the LCIssuer shall have made any demand under this Agreement or any other LoanDocument and although such obligations of the Borrowers or such Loan Party maybe contingent or unmatured or are owed to a branch or office of such Lender orthe LC Issuer different from the branch or office holding such deposit orobligated on such indebtedness.  Therights of each Lender, the LC Issuer and their respective Affiliates under thisSection are in addition to other rights and remedies (including otherrights of setoff) that such Lender, the LC Issuer or their respectiveAffiliates may have.  Each Lender and theLC Issuer agrees to notify the Borrowers and the Administrative Agent promptlyafter any such setoff and application, 

 

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## providedthat the failure to give such notice shall not affect the validity of suchsetoff and application.

##  

## 12.6         NoWaivers.  No failure or delay by theAdministrative Agent, the LC Issuer or any Lender in exercising any right,power or privilege hereunder, under the Notes or under any other Loan Documentshall operate as a waiver thereof; nor shall any single or partial exercisethereof preclude any other or further exercise thereof or the exercise of anyother right, power or privilege.  Nowaiver shall extend to or affect any Obligation not expressly waived or impairany right consequent thereon.  No courseof dealing or omission on the part of the Administrative Agent, the LC Issueror the Lenders in exercising any right shall operate as a waiver thereof orotherwise be prejudicial thereto.  Nonotice to or demand upon the Borrowers shall entitle the Borrowers to other orfurther notice or demand in similar or other circumstances, except as otherwisespecifically provided in the Loan Documents. The rights and remedies herein and in the Notes and the other LoanDocuments are cumulative and not exclusive of any rights or remedies otherwiseprovided by agreement or law.

##  

## 12.7         Amendments,Waivers, etc.

##  

### (a)           Neitherthis Agreement nor the Notes nor any other Loan Document nor any provisionhereof or thereof may be amended, waived, discharged or terminated except by awritten instrument signed by the Administrative Agent on behalf of the Lendersand, with respect to Letters of Credit, the LC Issuer or, as the case may be,by the Lenders and, with respect to Letters of Credit, the LC Issuer and also,in the case of amendments, by the Borrowers.

###  

### (b)           Exceptwhere this Agreement or any of the other Loan Documents authorizes or permitsthe Administrative Agent to act alone and except as otherwise expresslyprovided in this Section 12.7(b), any action to be taken (including thegiving of notice) by the Lenders may be taken, and any consent or approvalrequired or permitted by this Agreement or any other Loan Document to be givenby the Lenders may be given, and any term of this Agreement, any other LoanDocument or any other instrument, document or agreement related to thisAgreement or the other Loan Documents or mentioned therein may be amended, andthe performance or observance by the Borrowers or any other Person of any ofthe terms thereof and any Default or Event of Default (as defined in any of theabove-referenced documents or instruments) may be waived (either generally orin a particular instance and either retroactively or prospectively), in eachcase only with the written consent of the Majority Lenders; provided, however,that no such amendment, consent or waiver shall

###  

#### (i)            extend or increase theCommitment of any Lender (or reinstate any Commitment terminated pursuant to Section 9.2)without the written consent of such Lender;

####  

#### (ii)           postpone any date fixedby this Agreement or any other Loan Document for any payment****(excludingmandatory prepayments under subparagraphs (ii) through (v) of Section 2.8(b))of principal, interest, fees or other amounts due to the Lenders (or anyof them) hereunder or under such other Loan Document without the writtenconsent of each Lender entitled to such payment;

 

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#### (iii)          reduce theprincipal of, or the rate of interest specified herein on, any Loan or (subjectto clause (iii) of thesecond proviso to this Section 12.7(b)) any fees or other amountspayable hereunder or under any other Loan Document without the written consentof each Lender entitled to such amount; provided, however, thatonly the consent of the Majority Lenders shall be necessary (x) to amendthe provisions of Section 2.5(c) or to waive any obligation of theBorrowers to pay interest or fees in respect of Letters of Credit at the rateprovided in said Section therein following the occurrence of an Event ofDefault or (y) to amend Section VIIhereof (or any defined term used therein) even if the effect of such amendmentwould be to reduce the rate of interest on any Loan or to reduce any feepayable hereunder;

####  

#### (iv)          change (x) Section 2.9(d) or9.3 in a manner that would alter the pro rata sharing of payments requiredthereby without the written consent of each Lender or (y) the order ofapplication of any reduction in the Commitments or any prepayment of Loansamong the Facilities from the application thereof set forth in the applicableprovisions of Section 2.1(e) and 2.9(b), respectively, in any mannerthat materially and adversely affects the Lenders under a Facility without thewritten consent of (A) if such Facility is the Term Facility, the MajorityTerm Lenders and (B) if such Facility is the Revolving Credit Facility,the Majority Revolving Credit Lenders;

####  

#### (v)           change (x) anyprovision of this Section 12.7 or the definition of “MajorityLenders” or any other provision hereof specifying the number or percentage ofLenders required to amend, waive or otherwise modify any rights hereunder ormake any determination or grant any consent hereunder (other than thedefinitions specified in clause (y) of this subparagraph (v)), without thewritten consent of each Lender or (y) the definition of “MajorityRevolving Credit Lenders,” or “Majority Term Lenders,” without the writtenconsent of each Lender under the applicable Facility;

####  

#### (vi)          release any SubsidiaryGuaranty or any portion of the value of any Subsidiary Guaranty, without thewritten consent of each Lender;

####  

#### (vii)         impose any greaterrestriction on the ability of any Lender under a Facility to assign any of itsrights or obligations hereunder without the written consent of (x) if suchFacility is the Term Facility, the Majority Term Lenders, and (y) if suchFacility is the Revolving Credit Facility, the Majority Revolving CreditLenders; or

####  

#### (viii)        foreclose on any realproperty Collateral without first obtaining reasonable and customaryenvironmental studies and reports regarding such Collateral, without theconsent of each Lender;

####  

and provided,further, that (i) no amendment, waiver or consent shall, unless inwriting and signed by the LC Issuer in addition to the Lenders required above,affect the rights or duties of the LC Issuer under this Agreement or anyApplication relating to any Letter of Credit issued or to be issued by it; (ii) noamendment, waiver or consent shall, unless in writing and signed by theAdministrative Agent in addition to the Lenders required above, affect therights or duties of the Administrative Agent under this Agreement or any otherLoan Document; and (iii) theFee Letter 

 

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may beamended, or rights or privileges thereunder waived, in a writing executed onlyby the parties thereto.

 

If anyLender does not consent to a proposed amendment, waiver, consent or releasewith respect to any Loan Document that requires the consent of each Lender andthat has been approved by the Majority Lenders, the Borrowers may replace suchnon-consenting Lender in accordance with Section 10.2; providedthat such amendment, waiver, consent or release can be effected as a result ofthe assignment contemplated by such Section (together with all other suchassignments required by the Borrowers to be made pursuant to thisparagraph).  Notwithstanding anything tothe contrary herein, no Defaulting Lender shall have any right to approve ordisapprove any amendment, waiver or consent hereunder, except that theCommitment of such Lender may not be increased or extended without the consentof such Lender.

 

## 12.8         Treatment of CertainInformation; Confidentiality.  Eachof the Administrative Agent, the Lenders and the LC Issuer agrees to maintainthe confidentiality of the Information (as defined below), except thatInformation may be disclosed (a) to its Affiliates and to its and itsAffiliates’ respective partners, directors, officers, employees, agents,advisors and representatives (it being understood that the Persons to whom suchdisclosure is made will be informed of the confidential nature of suchInformation and instructed to keep such Information confidential), (b) tothe extent requested by any regulatory authority purporting to havejurisdiction over it (including any self-regulatory authority, such as theNational Association of Insurance Commissioners), (c) to the extentrequired by applicable laws or regulations or by any subpoena or similar legalprocess, (d) to any other party hereto, (e) in connection with theexercise of any remedies hereunder or under any other Loan Document or anyaction or proceeding relating to this Agreement or any other Loan Document orthe enforcement of rights hereunder or thereunder, (f) subject to anagreement containing provisions substantially the same as those of thisSection, to (i) any assignee of or Participant in, or any prospectiveassignee of or Participant in, any of its rights or obligations under thisAgreement or (ii) any actual or prospective counterparty (or its advisors)to any swap or derivative transaction relating to the Borrowers and itsobligations, (g) with the consent of the Borrowers or (h) to theextent such Information (i) becomes publicly available other than as aresult of a breach of this Section or (ii) becomes available to theAdministrative Agent, any Lender, the LC Issuer or any of their respectiveAffiliates on a nonconfidential basis from a source other than the Borrowers.

##  

Forpurposes of this Section, “Information” means all information receivedfrom any Loan Party or any Subsidiary thereof relating to any Loan Party or anySubsidiary thereof or their respective businesses, other than any suchinformation that is available to the Administrative Agent, any Lender or the LCIssuer on a nonconfidential basis prior to disclosure by any Loan Party or anySubsidiary thereof, provided that, in the case of information receivedfrom a Loan Party or any such Subsidiary after the date hereof, suchinformation is clearly identified at the time of delivery as confidential.  Any Person required to maintain theconfidentiality of Information as provided in this Section shall beconsidered to have complied with its obligation to do so if such Person hasexercised the same degree of care to maintain the confidentiality of suchInformation as such Person would accord to its own confidential information.

 

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Eachof the Administrative Agent, the Lenders and the LC Issuer acknowledges that (a) theInformation may include material non-public information concerning theBorrowers or a Subsidiary, as the case may be, (b) it has developedcompliance procedures regarding the use of material non-public information and (c) itwill handle such material non-public information in accordance with applicablelaw, including Federal and state securities laws.

 

## 12.9         LostNote, Etc.  Upon receipt of anaffidavit of an officer of any Lender as to the loss, theft, destruction ormutilation of any Note or any Security Document which is not a public recordand, in the case of any such loss, theft, destruction or mutilation, uponcancellation of such Note or Security Document, if available, the Borrowerswill issue, in lieu thereof, a replacement Note or other Security Document inthe same principal amount thereof and otherwise of like tenor.

##  

## 12.10       Captions;Counterparts.  The captions in thisAgreement are for convenience of reference only and shall not define or limitthe provisions hereof.  This Agreementand any amendment hereof may be executed in several counterparts and by eachparty on a separate counterpart, each of which when so executed and deliveredshall be an original, but all of which together shall constitute oneinstrument.  In proving this Agreement itshall not be necessary to produce or account for more than one such counterpartsigned by the party against whom enforcement is sought.  Except as provided in Section 4.1, thisAgreement shall become effective when it shall have been executed by theAdministrative Agent and when the Administrative Agent shall have receivedcounterparts hereof that, when taken together, bear the signatures of each ofthe other parties hereto.

##  

## 12.11       Entire Agreement, Etc.  The Loan Documents and any other documentsexecuted in connection herewith or therewith express the entire understandingof the parties with respect to the transactions contemplated hereby andsupersede all prior agreements with respect to the subject matter hereof,except for the letter agreement dated January 3, 2008 between the Parentand the Administrative Agent with respect to certain fees payable to theAdministrative Agent and other parties identified therein (as amended from timeto time, the “Fee Letter”), which Fee Letter shall continue in fullforce and effect and shall not be superseded by any of the Loan Documents.

##  

## 12.12       Waiverof Jury Trial.  THE BORROWERS ANDEACH OF THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIRRIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANYDISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOANDOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, THE PERFORMANCEOF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY INCLUDING,WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS ORACTIONS OF THE ADMINISTRATION AGENT OR ANY LENDER RELATING TO THEADMINISTRATION OR ENFORCEMENT OF THE LOANS AND THE LOAN DOCUMENTS, AND AGREETHAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION INWHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 

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EXCEPTAS PROHIBITED BY LAW, THE BORROWERS AND EACH OF THE LENDERS HEREBY WAIVE ANYRIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO INTHE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIALDAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.

 

THEBORROWERS (a) CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THELENDERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDERS WOULD NOT, INTHE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGETHAT THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHERLOAN DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF, AMONG OTHER THINGS, THEBORROWERS’ WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

 

## 12.13       GoverningLaw.  This Agreement and each of theother Loan Documents are contracts under the laws of the State of New York andshall for all purposes be construed in accordance with and governed by the lawsof said State (excluding the laws applicable to conflicts or choice of law).

##  

## 12.14       Jurisdiction; Consent toService of Process.  (a) TheBorrowers hereby irrevocably and unconditionally submit, for itself and itsproperty, to the nonexclusive jurisdiction of the Supreme Court of the State ofNew York sitting in New York County and of the United States District Court ofthe Southern District of New York, and any appellate court from any thereof, inany action or proceeding arising out of or relating to any Loan Document, orfor recognition or enforcement of any judgment, and each of the parties heretohereby irrevocably and unconditionally agrees that all claims in respect of anysuch action or proceeding may be heard and determined in such New YorkState or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that afinal, non-appealed judgment in any such action or proceeding shall beconclusive and may be enforced in other jurisdictions by suit on the judgmentor in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect anyright that the Borrowers, the Administrative Agent, the LC Issuer or any Lendermay otherwise have to bring any action or proceeding relating to this Agreementor any other Loan Document against any other party hereto or their propertiesin the courts of any jurisdiction.

##  

### (b)           TheBorrowers hereby irrevocably and unconditionally waive, to the fullest extentit may legally and effectively do so, any objection which it may now orhereafter have to the laying of venue of any suit, action or proceeding arisingout of or relating to this Agreement or any other Loan Document in any courtreferred to in paragraph (a) of this Section.  Each of the parties hereto hereby irrevocablywaives, to the fullest extent permitted by law, the defense of an inconvenientforum to the maintenance of such action or proceeding in any such court.

###  

### (c)           Eachparty to this Agreement irrevocably consents to service of process in themanner provided for notices in Section 12.1.  Nothing in this Agreement or any other Loan 

 

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### Document will affect theright of any party to this Agreement to serve process in any other mannerpermitted by law.

###  

## 12.15       USA PATRIOT Act Notice.  Each Lender that is subject to the PatriotAct (as defined below) and the Administrative Agent (for itself and not onbehalf of any Lender) hereby notifies the Borrowers that pursuant to therequirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed intolaw October 26, 2001)) (the “Patriot Act”), it is required toobtain, verify and record information that identifies each Loan Party, whichinformation includes the name and address of each Loan Party and otherinformation that will allow such Lender or the Administrative Agent, asapplicable, to identify each Loan Party in accordance with the Patriot Act.

##  

## 12.16       Severability.  The provisions of this Agreement areseverable and if any one clause or provision hereof shall be held invalid orunenforceable in whole or in part in any jurisdiction, then such invalidity orunenforceability shall affect only such clause or provision, or part thereof,in such jurisdiction, and shall not in any manner affect such clause orprovision in any other jurisdiction, or any other clause or provision of thisAgreement in any jurisdiction.

##  

[*Remainder of page intentionally left blank*]

 

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IN WITNESS WHEREOF, the undersigned have duly executedthis Credit Agreement under seal as of the date first above written.

 
|   | STAR BUFFET, INC.                                                             |
|--------|-------------------------------------------------------------------------------|
|   |                                                                          |
|   |                                                                          |
|   | By:                                                                           | /s/ Ron Dowdy |
|   |           Name:  Ron Dowdy  |
|   |           Title:  Secretary |
|   |                                                                          |
|   |                                                                          |
|   | STAR BUFFET MANAGEMENT,  INC.                                                 |
|   |                                                                          |
|   |                                                                          |
|   | By:                                                                           | /s/ Ron Dowdy |
|   |          Name:  Ron Dowdy        |
|   |          Title:  Secretary       |
|   |                                                                          |
|   | SUMMIT FAMILY  RESTAURANTS, INC.                                              |
|   |                                                                          |
|   |                                                                          |
|   | By:                                                                           | /s/ Ron Dowdy |
|   |          Name:  Ron Dowdy        |
|   |          Title:  Secretary       |
|   |                                                                          |
|   |                                                                          |
|   | HTB RESTAURANTS, INC.                                                         |
|   |                                                                          |
|   |                                                                          |
|   | By:                                                                           | /s/ Ron Dowdy |
|   |          Name:  Ron Dowdy        |
|   |          Title:  Secretary       |
|   |                                                                          |
|   |                                                                          |
|   | NORTHSTAR BUFFET, INC.                                                        |
|   |                                                                          |
|   |                                                                          |
|   | By:                                                                           | /s/ Ron Dowdy |
|   |           Name:  Ron Dowdy  |
|   |           Title:Secretary   |

 

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|   | WELLS FARGO BANK, N.A.,  individually and as  Administrative Agent, LC Issuer, Lead Arranger and  Syndication Agent |
|--------|---------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                |
|   |                                                                                                                |
|   | By:                                                                                                                 | /s/ J. Nicholas Cole |
|   |        Name:  J. Nicholas Cole                                              |
|   |        Title:  Managing Director                                                 |

 

----

 

**Schedule1**

**Commitments and ApplicablePercentages**

 
| **Lender**              | ** ** | **Revolving  Credit  Commitment** | ** ** | **Applicable  Percentage** | ** ** | **Term  Commitment** | ** ** | **Applicable  Percentage** | ** ** | **Total  Commitment** | ** ** | **Total  Percentage** | ** ** |
|-------------------------|------------|-----------------------------------|------------|----------------------------|------------|----------------------|------------|----------------------------|------------|-----------------------|------------|-----------------------|------------|
| Wells Fargo  Bank, N.A. |       | $                                 | 2,000,000  |                       | 100        | %                    | $          | 7,000,000                  |       | 100                   | %          | $                     | 9,000,000  |   | 100 | % |
|                    |       |                              |       |                       |       |                 |       |                       |       |                  |       |                  |       |
|                    |       |                              |       |                       |       |                 |       |                       |       |                  |       |                  |       |
|                    |       |                              |       |                       |       |                 |       |                       |       |                  |       |                  |       |
|                    |       |                              |       |                       |       |                 |       |                       |       |                  |       |                  |       |
|                    |       |                              |       |                       |       |                 |       |                       |       |                  |       |                  |       |
|                    |       |                              |       |                       |       |                 |       |                       |       |                  |       |                  |       |
| Total:                  |       | $                                 | 2,000,000  |                       | 100        | %                    | $          | 7,000,000                  |       | 100                   | %          | $                     | 9,000,000  |   | 100 | % |

 

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** **

**AGREEMENT AND**

** **

**AMENDMENT NO. 1 TO CREDITAGREEMENT**

** **

THISAGREEMENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment”) isentered into as of February 29, 2008, by and among STAR BUFFET, INC., STAR BUFFET MANAGEMENT, INC., SUMMIT FAMILYRESTAURANTS, INC., HTB RESTAURANTS, INC., NORTHSTAR BUFFET, INC. and STARLITEHOLDINGS, INC. (“Starlite”), each a Delaware corporation (eachindividually, a “Borrower”, and collectively, the “Borrowers”),and WELLS FARGO BANK, N.A., a national banking association (“Wells Fargo”).

 

WITNESSETH:

 

WHEREAS,the Borrowers (other than Starlite) and Wells Fargo are parties to a certainCredit Agreement, dated as of January 31, 2008 (as amended, restated orotherwise modified from time to time, the “Credit Agreement”; terms definedin the Credit Agreement are used herein with the same meanings); and

 

WHEREAS,Starlite wishes to become a party to the Credit Agreement as a “Borrower”, andthe Borrowers and the Administrative Agent wish to amend the Credit Agreement;

 

NOW,THEREFORE, in consideration of the premises and for other good and valuableconsideration, the receipt and adequacy of which are hereby acknowledged, theparties hereto agree as follows:

 

# Section 1.               StarliteHoldings, Inc.  Starlite and theother parties hereto agree that Starlite as of the date hereof shall become aparty to the Credit Agreement as a “Borrower”, and that accordingly thedefinitions of “Borrower” and “Borrowers” are hereby amended toinclude Starlite.

#  

# Section 2.               Amendments.  Effective as of the date hereof, the CreditAgreement is hereby amended as follows:

#  

### (a)          Thedefinition of “Total Term Loan Commitment” in Section 1.1 of the CreditAgreement is amended in full to read as follows:

###  

“Total TermLoan Commitment.  The sum of the TermLoan Commitments of the Term Lenders as in effect from time to time, which asof February 29, 2008 shall be $8,000,000.”

 

### (b)         Section 2.7(a) ofthe Credit Agreement is amended in full to read as follows:

###  

“Term Loans.  The Borrowers shall repay the principalamount of the Term Loans in equal quarterly installments of $175,000 for thefirst six full calendar quarters after the Closing Date and in equal quarterlyinstallments of $225,000 for the next nine full 

 

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calendar quarters,payable on each Payment Date commencing April 1, 2008, and the aggregateprincipal amount of all Term Loans outstanding on the Maturity Date shall bepaid on such date.”

 

### (c)          Section 6.13of the Credit Agreement is amended in full to read as follows:

###  

### “Interest RateProtection.  The Borrowers shallobtain on or before March 13, 2008, and maintain in effect at all timesuntil the third anniversary of the Closing Date, Swap Agreements betweenthemselves and a Swap Bank with respect to not less than fifty percent (50.00%)of the Term Loans outstanding under the Term Facility.”

###  

### (d)         Theschedules to the Credit Agreement and, to the extent applicable, the other LoanDocuments are hereby amended and restated in the forms attached hereto as Exhibit A.

###  

# Section 3.               Loan Documents.  In addition to Starlite becoming a Borrowerunder the Credit Agreement pursuant to Section 1 above, by its executionhereof, Starlite agrees to become a party to and bound by, and each of theother parties hereto hereby agrees that Starlite shall become a party to, as ofthe date hereof, the following Loan Documents in the same manner as the otherBorrowers:

#  

#### (i)            Revolving Credit Note;

####  

#### (ii)           Term Note;

####  

#### (iii)          Security Agreement;

####  

#### (iv)          Collateral Assignment ofContracts;

####  

#### (v)           Trademark SecurityAgreement;

####  

#### (vi)          Pledge Agreement (as aBorrower, not a Pledgor);

####  

#### (vii)         Indemnity AgreementRegarding Hazardous Materials; and

####  

#### (viii)        Collateral Assignment ofLicenses and Permits.

####  

# Section 4.               Consent to AssetPurchase Agreement.  The Lender hereby consents to thetransactions contemplated by that certain Asset Purchase Agreement, dated as ofFebruary 5, 2008 between Starlite and Barnhill’s Buffet, Inc. (the “PurchaseAgreement”) and the Guaranty by Star Buffet, Inc. in favor of SpiritMaster Funding, LLC (the “Guaranty”).

#  

# Section 5.               Representations andWarranties.  The Borrowers represent and warrant asfollows:

#  

### (a)          Except as set forth on the updated schedules to theCredit Agreement attached hereto as Exhibit A, the representationsand warranties contained in Section V of the Credit Agreement, aftergiving effect to this Amendment, are true and correct in all material respectson and as of the date hereof, as though made on and as of such date, exceptto the extent that such 

 

2

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### representationsand warranties expressly relate solely to an earlier date (in which case suchrepresentations and warranties were true and accurate on and as of such earlierdate).

###  

### (b)         No Defaultor Event of Default has occurred or is continuing on the date hereof and noDefault or Event of Default will occur or be continuing immediately after thedate hereof.

###  

# Section 6.               Conditions toEffectiveness.  This Amendment shallbecome effective only when the Administrative Agent shall have received:

#  

### (a)          counterpartsof this Amendment duly executed by the Borrowers;

###  

### (b)         a dulyexecuted certificate of a Responsible Officer of the Borrowers confirming (i) thatthe Borrowers have delivered to theAdministrative Agent true and correct copies of the Purchase Agreement and theGuaranty and all schedules, documents and agreements ancillary thereto as ineffect on the date hereof, (ii) that all conditions to the effectivenessof the transactions contemplated by the Purchase Agreement have been satisfied,(iii) that the transactions contemplated by the Purchase Agreement havebeen consummated, (iv) that the conditions in Section 5 above and Section 4.2of the Credit Agreement have been satisfied, (v) delivery to theAdministrative Agent of a certified copy of the final order by the Bankruptcy Court approving thetransactions contemplated by the Purchase Agreement, including withoutlimitation the Guaranty, in form reasonably satisfactory to the AdministrativeAgent and (vi) such other matters as the Administrative Agent shallrequire, in form and substance satisfactory to the Administrative Agent;

###  

### (c)          allonges to the Notes in form and substancesatisfactory to the Administrative Agent,

###  

### (d)         originalcertificates representing the pledged Equity Interests referred to in thePledge Agreement, including of Starlite, accompanied by undated stock powersexecuted in blank to the extent not previously delivered to the AdministrativeAgent;

###  

### (e)          stampedreceipt copies of a proper financing statement, duly filed on or before thedate hereof under the Uniform Commercial Code of Delaware with respect to allassets of Starlite;

###  

### (f)          a duly executed certificate of the Secretary ofStarlite as to authorizing resolutions of its Board of Directors, itsCertificate of Incorporation, bylaws, and incumbency and signatures ofits authorized officers, in form and substance satisfactory to theAdministrative Agent;

###  

### (g)         a certificate of good standing of Starlite issued bythe Secretary of State of the State of Delaware;

###  

### (h)         an opinionof Kilpatrick Stockton LLP counsel to the Borrowers addressed to theAdministrative Agent and each Lender in form and substance satisfactory to theAdministrative Agent; and

###  

### (i)           such other certificates, instruments and documents asthe Administrative Agent shall reasonably require.

 

3

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# Section 7.               General.  The foregoing amendments to the CreditAgreement and consent are limited as provided herein and do not extend to anyother provisions of the Credit Agreement not specified herein or to any othermatter.  The Credit Agreement is herebyratified and confirmed and shall continue in full force and effect as amendedhereby.  This Amendment may be executedin any number of counterparts with the same effect as if the signatures heretowere upon the same instrument. Telecopied signatures hereto shall be of the same force and effect as anoriginal of a manually signed copy.

#  

# Section 8.               Governing Law.  The laws of the State of New York shallgovern the construction of this Amendment and the rights and duties of theparties hereto.

#  

# Section 9.               Headings.The descriptive headings of the various provisions of this Amendment are forconvenience of reference only and shall not be deemed to affect the meaning orconstruction of any of the provisions hereof.

#  

[Signature page follows.]

 

4

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INWITNESS WHEREOF, this Agreement and Amendment No. 1 to Credit Agreementhas been executed as an instrument under seal as of the date first set forthabove.

 
| WELLS FARGO BANK, N.A.,  individually and as Administrative Agent, LC Issuer, Lead Arranger and  Syndication Agent | STAR BUFFET, INC.                                                              |
|--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|
|                                                                                                               |                                                                           |
|                                                                                                               | By:                                                                            |           /s/ Ron Dowdy |
|                                                                                                               |           Name:  Ron Dowdy   |
|                                                                                                               |           Title:  Secretary  |
| By:                                                                                                                |           /s/  Darcy McLaren |   |   |
|           Name:  Darcy McLaren                                   | STAR BUFFET MANAGEMENT,  INC.                                                  |
|           Title:   Vice President                           |                                                                           |
|                                                                                                               |                                                                           |
|                                                                                                               | By:                                                                            |          /s/  Ron Dowdy |
|                                                                                                               |          Name:  Ron Dowdy         |
|                                                                                                               |          Title:  Secretary        |
|                                                                                                               |                                                                           |
|                                                                                                               | SUMMIT FAMILY  RESTAURANTS, INC.                                               |
|                                                                                                               |                                                                           |
|                                                                                                               |                                                                           |
|                                                                                                               | By:                                                                            |          /s/  Ron Dowdy |
|                                                                                                               |          Name:  Ron Dowdy         |
|                                                                                                               |          Title:  Secretary        |
|                                                                                                               |                                                                           |
|                                                                                                               | HTB RESTAURANTS, INC.                                                          |
|                                                                                                               |                                                                           |
|                                                                                                               |                                                                           |
|                                                                                                               | By:                                                                            |          /s/  Ron Dowdy |
|                                                                                                               |          Name:  Ron Dowdy         |
|                                                                                                               |          Title:  Secretary        |
|                                                                                                               |                                                                           |
|                                                                                                               | NORTHSTAR BUFFET, INC.                                                         |
|                                                                                                               |                                                                           |
|                                                                                                               |                                                                           |
|                                                                                                               | By:                                                                            |           /s/  Ron Dowdy |
|                                                                                                               |           Name:  Ron Dowdy   |
|                                                                                                               |           Title:  Secretary  |
|                                                                                                               |                                                                           |
|                                                                                                               | STARLITE HOLDINGS, INC.                                                        |
|                                                                                                               |                                                                           |
|                                                                                                               |                                                                           |
|                                                                                                               | By:                                                                            |           /s/  Ron Dowdy |
|                                                                                                               |           Name:  Ron Dowdy   |
|                                                                                                               |           Title:Secretary    |
|                                                                                                                    |                                                                                |  |  |  |  |

 

[Signature Page toAmendment No. 1 to Credit Agreement]

 

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