**Exhibit 10.1**

 

**EXECUTION COPY**

 

**REVOLVINGCREDIT AGREEMENT**

 

Dated as of July 23, 2004

 

among

 

**MCCORMICK& SCHMICK ACQUISITION CORP.**,

**MCCORMICK& SCHMICK RESTAURANT CORP.,**

**MCCORMICK& SCHMICK MARYLAND LIQUOR, INC.,**

**MCCORMICK& SCHMICK ACQUISITION I TEXAS, INC.,**

**MCCORMICK& SCHMICK ACQUISITION II TEXAS, INC.,**

**MCCORMICK& SCHMICK ACQUISITION TEXAS LP,**

**MCCORMICK& SCHMICK ACQUISITION III TEXAS, INC.,**

**MCCORMICK& SCHMICK’S ATLANTA II, LLC,**

**MCCORMICK& SCHMICK’S HACKENSACK, LLC,**

**MCCORMICK& SCHMICK ORLANDO, LLC,**

**MCCORMICK& SCHMICK DALLAS, LP,**

**MCCORMICK& SCHMICK DALLAS LIQUOR, INC.,**

**MCCORMICK& SCHMICK AUSTIN, LP,**

**MCCORMICK& SCHMICK AUSTIN LIQUOR, INC.,**

 

(collectively, the “Borrowers”)

 

**THE LENDERSLISTED ON SCHEDULE 1 HERETO**,

 

**FLEETNATIONAL BANK, as Administrative Agent,**

 

with

 

**BANC OFAMERICA SECURITIES LLC, as Arranger**

 

----

TABLE OF CONTENTS

 

 
| 1.     | DEFINITIONS AND RULES OF INTERPRETATION        |                                            |
|--------|------------------------------------------------|-------------------------------------------------|
|   |                                           |                                            |   |   |
|   | 1.1.                                           | Definitions                                     |   |
|   |                                           |                                            |   |   |
|   | 1.2.                                           | Rules of Interpretation                         |   |
|   |                                           |                                            |   |   |
| 2.     | THE REVOLVING CREDIT FACILITY                  |                                            |
|   |                                           |                                            |   |   |
|   | 2.1.                                           | Commitment to Lend Revolving Credit Loans       |   |
|   |                                           |                                            |   |   |
|   | 2.2.                                           | Commitment  Fee                                 |   |
|   |                                           |                                            |   |   |
|   | 2.3.                                           | Reduction of Total Revolving Credit  Commitment |   |
|   |                                           |                                            |   |   |
|   | 2.4.                                           | The  Notes                                      |   |
|   |                                           |                                            |   |   |
|   | 2.5.                                           | Interest on Revolving Credit Loans              |   |
|   |                                           |                                            |   |   |
|   | 2.6.                                           | Requests for Revolving Credit Loans             |   |
|   |                                           |                                            |   |   |
|   | 2.7.                                           | Conversion Options                              |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.7.1.                                          | Conversion to Different Type of Revolving  Credit Loan |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.7.2.                                          | Continuation of Type of Revolving Credit  Loan |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.7.3.                                          | Eurodollar Rate Loans |   |
|   |                                           |                                            |   |   |
|   | 2.8.                                           | Funds for Revolving Credit Loan                 |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.8.1.                                          | Funding Procedures |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.8.2.                                          | Advances by Administrative Agent |   |
|   |                                           |                                            |   |   |
|   | 2.9.                                           | Repayment of Revolving Credit Loans             |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.9.1.                                          | Maturity |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.9.2.                                          | Mandatory Repayments of the Revolving  Credit Loans |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.9.3.                                          | Optional Repayments of the Revolving Credit  Loans |   |
|   |                                           |                                            |   |   |
|   |                                           | 2.9.4.                                          | Application of Payments Prior to an Event  of Default |   |
|   |                                           |                                            |   |   |
| 3.     | ADDITIONAL FINANCING                           |                                            |
|   |                                           |                                            |   |   |
| 4.     | MANDATORY REPAYMENT OF REVOLVING CREDIT  LOANS |                                            |
|   |                                           |                                            |   |   |
|   | 4.1.                                           | Intentionally Omitted                           |   |
|   |                                           |                                            |   |   |
|   | 4.2.                                           | Proceeds of Certain Events                      |   |
|   |                                           |                                            |   |   |
|   | 4.3.                                           | Application of Payments                         |   |
|        |                                                |                                                 |  |  |  |

 

i

----

 
|   | 4.4.                       | Delivery of Proceeds                      |                                  |
|--------|----------------------------|-------------------------------------------|---------------------------------------|
|   |                       |                                      |                                  |   |
| 5.     | LETTERS  OF CREDIT         |                                      |
|   |                       |                                      |                                  |   |
|   | 5.1.                       | Letter of Credit Commitments              |                                  |
|   |                       |                                      |                                  |   |
|   |                       | 5.1.1.                                    | Commitment to Issue Letters of Credit |   |
|   |                       |                                      |                                  |   |
|   |                       | 5.1.2.                                    | Letter of Credit Applications         |   |
|   |                       |                                      |                                  |   |
|   |                       | 5.1.3.                                    | Terms of Letters of Credit            |   |
|   |                       |                                      |                                  |   |
|   |                       | 5.1.4.                                    | Reimbursement Obligations of Lenders  |   |
|   |                       |                                      |                                  |   |
|   |                       | 5.1.5.                                    | Participations of Lenders             |   |
|   |                       |                                      |                                  |   |
|   | 5.2.                       | Reimbursement Obligation of the Borrowers |                                  |
|   |                       |                                      |                                  |   |
|   | 5.3.                       | Letter of Credit Payments                 |                                  |
|   |                       |                                      |                                  |   |
|   | 5.4.                       | Obligations Absolute                      |                                  |
|   |                       |                                      |                                  |   |
|   | 5.5.                       | Reliance by Issuer                        |                                  |
|   |                       |                                      |                                  |   |
|   | 5.6.                       | Letter of Credit Fee                      |                                  |
|   |                       |                                      |                                  |   |
|   | 5.7.                       | Existing Letters of Credit                |                                  |
|   |                       |                                      |                                  |   |
| 6.     | CERTAIN GENERAL PROVISIONS |                                      |
|   |                       |                                      |                                  |   |
|   | 6.1.                       | Fees                                      |                                  |
|   |                       |                                      |                                  |   |
|   | 6.2.                       | Funds for Payments                        |                                  |
|   |                       |                                      |                                  |   |
|   |                       | 6.2.1.                                    | Payments to Administrative Agent      |   |
|   |                       |                                      |                                  |   |
|   |                       | 6.2.2.                                    | No  Offset, etc                       |   |
|   |                       |                                      |                                  |   |
|   |                       | 6.2.3.                                    | Non-U.S.  Lenders                     |   |
|   |                       |                                      |                                  |   |
|   |                       | 6.2.4.                                    | Exclusion                             |   |
|   |                       |                                      |                                  |   |
|   | 6.3.                       | Computations                              |                                  |
|   |                       |                                      |                                  |   |
|   | 6.4.                       | Inability to Determine Eurodollar Rate    |                                  |
|   |                       |                                      |                                  |   |
|   | 6.5.                       | Illegality                                |                                  |
|   |                       |                                      |                                  |   |
|   | 6.6.                       | Additional Costs, etc                     |                                  |
|   |                       |                                      |                                  |   |
|   | 6.7.                       | Capital  Adequacy                         |                                  |
|   |                       |                                      |                                  |   |
|   | 6.8.                       | Certificate; Replacement of Lenders       |                                  |

 

ii

----

 
|   | 6.9.                                    | Indemnity                                                           |                                    |
|--------|-----------------------------------------|---------------------------------------------------------------------|-----------------------------------------|
|   |                                    |                                                                |                                    |   |
|   | 6.10.                                   | Interest After Default                                              |                                    |
|   |                                    |                                                                |                                    |   |
|   |                                    | 6.10.1.                                                             | Overdue  Amounts                        |   |
|   |                                    |                                                                |                                    |   |
|   |                                    | 6.10.2.                                                             | Amounts Not Overdue                     |   |
|   |                                    |                                                                |                                    |   |
|   |                                    | 6.10.3.                                                             | Letters  of Credit                      |   |
|   |                                    |                                                                |                                    |   |
|   | 6.11.                                   | Concerning Joint and Several Liability of  the Borrowers            |                                    |
|   |                                    |                                                                |                                    |   |
| 7.     | COLLATERAL SECURITY AND PARENT GUARANTY |                                                                |
|   |                                    |                                                                |                                    |   |
|   | 7.1.                                    | Security of Borrowers                                               |                                    |
|   |                                    |                                                                |                                    |   |
|   | 7.2.                                    | Parent Guaranty and Parent Pledge Agreement                         |                                    |
|   |                                    |                                                                |                                    |   |
| 8.     | REPRESENTATIONS AND WARRANTIES          |                                                                |
|   |                                    |                                                                |                                    |   |
|   | 8.1.                                    | Corporate Authority                                                 |                                    |
|   |                                    |                                                                |                                    |   |
|   |                                    | 8.1.1.                                                              | Incorporation; Good Standing            |   |
|   |                                    |                                                                |                                    |   |
|   |                                    | 8.1.2.                                                              | Authorization                           |   |
|   |                                    |                                                                |                                    |   |
|   |                                    | 8.1.3.                                                              | Enforceability                          |   |
|   |                                    |                                                                |                                    |   |
|   | 8.2.                                    | Governmental Approvals                                              |                                    |
|   |                                    |                                                                |                                    |   |
|   | 8.3.                                    | Title to Properties; Leases                                         |                                    |
|   |                                    |                                                                |                                    |   |
|   | 8.4.                                    | Financial Statements and Projections                                |                                    |
|   |                                    |                                                                |                                    |   |
|   |                                    | 8.4.1.                                                              | Fiscal Year; Fiscal Quarters            |   |
|   |                                    |                                                                |                                    |   |
|   |                                    | 8.4.2.                                                              | Financial Statements                    |   |
|   |                                    |                                                                |                                    |   |
|   |                                    | 8.4.3.                                                              | Pro Forma Balance Sheet and Projections |   |
|   |                                    |                                                                |                                    |   |
|   | 8.5.                                    | No Material Adverse Changes, etc                                    |                                    |
|   |                                    |                                                                |                                    |   |
|   | 8.6.                                    | Franchises, Patents, Copyrights, Liquor  Management Agreements, etc |                                    |
|   |                                    |                                                                |                                    |   |
|   | 8.7.                                    | Litigation                                                          |                                    |
|   |                                    |                                                                |                                    |   |
|   | 8.8.                                    | Material Contracts; No Materially Adverse  Contracts, etc           |                                    |
|   |                                    |                                                                |                                    |   |
|   | 8.9.                                    | Compliance with Other Instruments, Laws,  etc                       |                                    |
|   |                                    |                                                                |                                    |   |
|   | 8.10.                                   | Tax  Status                                                         |                                    |

 

iii

----

 
|   | 8.11.                  | No Event of Default                                               |                            |
|--------|------------------------|-------------------------------------------------------------------|---------------------------------|
|   |                   |                                                              |                            |   |
|   | 8.12.                  | Holding Company and Investment Company Acts                       |                            |
|   |                   |                                                              |                            |   |
|   | 8.13.                  | Absence of Financing Statements, etc                              |                            |
|   |                   |                                                              |                            |   |
|   | 8.14.                  | Perfection of Security Interest                                   |                            |
|   |                   |                                                              |                            |   |
|   | 8.15.                  | Certain Transactions                                              |                            |
|   |                   |                                                              |                            |   |
|   | 8.16.                  | Employee  Benefit Plans                                           |                            |
|   |                   |                                                              |                            |   |
|   |                   | 8.16.1.                                                           | In  General                     |   |
|   |                   |                                                              |                            |   |
|   |                   | 8.16.2.                                                           | Terminability  of Welfare Plans |   |
|   |                   |                                                              |                            |   |
|   |                   | 8.16.3.                                                           | Guaranteed Pension Plans        |   |
|   |                   |                                                              |                            |   |
|   |                   | 8.16.4.                                                           | Multiemployer  Plans            |   |
|   |                   |                                                              |                            |   |
|   | 8.17.                  | Use  of Proceeds                                                  |                            |
|   |                   |                                                              |                            |   |
|   |                   | 8.17.1.                                                           | General                         |   |
|   |                   |                                                              |                            |   |
|   |                   | 8.17.2.                                                           | Regulations  U and X            |   |
|   |                   |                                                              |                            |   |
|   |                   | 8.17.3.                                                           | Ineligible  Securities          |   |
|   |                   |                                                              |                            |   |
|   | 8.18.                  | Environmental  Compliance                                         |                            |
|   |                   |                                                              |                            |   |
|   | 8.19.                  | Subsidiaries,  etc                                                |                            |
|   |                   |                                                              |                            |   |
|   | 8.20.                  | Bank  Accounts                                                    |                            |
|   |                   |                                                              |                            |   |
|   | 8.21.                  | Subordinated  Debt Documents; Equity Documents; Warrant Documents |                            |
|   |                   |                                                              |                            |   |
|   | 8.22.                  | Solvency                                                          |                            |
|   |                   |                                                              |                            |   |
|   | 8.23.                  | Restaurants                                                       |                            |
|   |                   |                                                              |                            |   |
|   | 8.24.                  | Franchise Agreements                                              |                            |
|   |                   |                                                              |                            |   |
|   | 8.25.                  | Leases                                                            |                            |
|   |                   |                                                              |                            |   |
|   | 8.26.                  | Disclosure                                                        |                            |
|   |                   |                                                              |                            |   |
|   | 8.27.                  | Change  of Control                                                |                            |
|   |                   |                                                              |                            |   |
| 9.     | AFFIRMATIVE  COVENANTS |                                                              |
|   |                   |                                                              |                            |   |
|   | 9.1.                   | Punctual  Payment                                                 |                            |

 

iv

----

 
|   | 9.2.   | Maintenance  of Office                                 |                                      |
|--------|--------|--------------------------------------------------------|-------------------------------------------|
|   |   |                                                   |                                      |   |
|   | 9.3.   | Records and Accounts                                   |                                      |
|   |   |                                                   |                                      |   |
|   | 9.4.   | Financial Statements, Certificates and Information     |                                      |
|   |   |                                                   |                                      |   |
|   | 9.5.   | Notices                                                |                                      |
|   |   |                                                   |                                      |   |
|   |   | 9.5.1.                                                 | Defaults                                  |   |
|   |   |                                                   |                                      |   |
|   |   | 9.5.2.                                                 | Environmental  Events                     |   |
|   |   |                                                   |                                      |   |
|   |   | 9.5.3.                                                 | Notification  of Claim against Collateral |   |
|   |   |                                                   |                                      |   |
|   |   | 9.5.4.                                                 | Notice of Litigation and Judgments        |   |
|   |   |                                                   |                                      |   |
|   |   | 9.5.5.                                                 | Notice  of Bank Accounts                  |   |
|   |   |                                                   |                                      |   |
|   |   | 9.5.6.                                                 | Notice  of Real Estate                    |   |
|   |   |                                                   |                                      |   |
|   | 9.6.   | Legal  Existence; Maintenance of Properties            |                                      |
|   |   |                                                   |                                      |   |
|   | 9.7.   | Insurance                                              |                                      |
|   |   |                                                   |                                      |   |
|   |   | 9.7.1.                                                 | Required Insurance                        |   |
|   |   |                                                   |                                      |   |
|   |   | 9.7.2.                                                 | Insurance Proceeds                        |   |
|   |   |                                                   |                                      |   |
|   |   | 9.7.3.                                                 | Notice of Cancellation                    |   |
|   |   |                                                   |                                      |   |
|   | 9.8.   | Taxes                                                  |                                      |
|   |   |                                                   |                                      |   |
|   | 9.9.   | Inspection  of Properties and Books, etc               |                                      |
|   |   |                                                   |                                      |   |
|   |   | 9.9.1.                                                 | General                                   |   |
|   |   |                                                   |                                      |   |
|   |   | 9.9.2.                                                 | Environmental Assessments                 |   |
|   |   |                                                   |                                      |   |
|   |   | 9.9.3.                                                 | Communications with Accountants           |   |
|   |   |                                                   |                                      |   |
|   | 9.10.  | Compliance with Laws, Contracts, Licenses, and Permits |                                      |
|   |   |                                                   |                                      |   |
|   | 9.11.  | Employee  Benefit Plans                                |                                      |
|   |   |                                                   |                                      |   |
|   | 9.12.  | Use of  Proceeds                                       |                                      |
|   |   |                                                   |                                      |   |
|   | 9.13.  | Additional Mortgaged Property; Notice of Leases        |                                      |
|   |   |                                                   |                                      |   |
|   | 9.14.  | Conduct of Business; Restaurants                       |                                      |
|   |   |                                                   |                                      |   |
|   | 9.15.  | Intentionally  Omitted                                 |                                      |
|   |   |                                                   |                                      |   |
|   | 9.16.  | Bank  Accounts                                         |                                      |

 

v

----

 
|   | 9.17.                       | Additional Subsidiaries                      |                                                      |
|--------|-----------------------------|----------------------------------------------|-----------------------------------------------------------|
|   |                        |                                         |                                                      |   |
|   | 9.18.                       | Amendments  to Documents                     |                                                      |
|   |                        |                                         |                                                      |   |
|   | 9.19.                       | Further Assurances                           |                                                      |
|   |                        |                                         |                                                      |   |
|   | 9.20.                       | Post-Closing Delivery Requirements           |                                                      |
|   |                        |                                         |                                                      |   |
| 10.    | CERTAIN  NEGATIVE COVENANTS |                                         |
|   |                        |                                         |                                                      |   |
|   | 10.1.                       | Restrictions  on Indebtedness                |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.2.                       | Restrictions  on Liens                       |                                                      |
|   |                        |                                         |                                                      |   |
|   |                        | 10.2.1.                                      | Permitted  Liens                                          |   |
|   |                        |                                         |                                                      |   |
|   |                        | 10.2.2.                                      | Restrictions on Negative Pledges and Upstream Limitations |   |
|   |                        |                                         |                                                      |   |
|   | 10.3.                       | Restrictions on Investments                  |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.4.                       | Restricted Payments                          |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.5.                       | Mergers; Disposition of Assets; Acquisitions |                                                      |
|   |                        |                                         |                                                      |   |
|   |                        | 10.5.1.                                      | Mergers                                                   |   |
|   |                        |                                         |                                                      |   |
|   |                        | 10.5.2.                                      | Disposition  of Assets                                    |   |
|   |                        |                                         |                                                      |   |
|   |                        | 10.5.3.                                      | Acquisitions                                              |   |
|   |                        |                                         |                                                      |   |
|   | 10.6.                       | Sale and Leaseback                           |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.7.                       | Compliance with Environmental Laws           |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.8.                       | Employee  Benefit Plans                      |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.9.                       | Business  Activities                         |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.10.                      | Fiscal Year; Fiscal Quarters                 |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.11.                      | Transactions with Affiliates                 |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.12.                      | Bank  Accounts                               |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.13.                      | Franchises                                   |                                                      |
|   |                        |                                         |                                                      |   |
|   | 10.14.                      | Restrictions on Amendments to Documents      |                                                      |
|   |                        |                                         |                                                      |   |
|   |                        | 10.14.1.                                     | Warrant Documents; Equity Documents                       |   |
|   |                        |                                         |                                                      |   |
|   |                        | 10.14.2.                                     | Acquisition Documents                                     |   |
|   |                        |                                         |                                                      |   |
|   |                        | 10.14.3.                                     | Subordinated  Debt                                        |   |

 

vi

----

 
|   |                | 10.14.4.                                                            | Certain Amendments |   |
|--------|---------------------|---------------------------------------------------------------------|--------------------|--------|
|   |                |                                                                |               |   |
|   | 10.15.              | Capitalization                                                      |               |
|   |                |                                                                |               |   |
|   | 10.16.              | Maximum Number of Unprofitable Restaurants                          |               |
|   |                |                                                                |               |   |
| 11.    | FINANCIAL COVENANTS |                                                                |
|   |                |                                                                |               |   |
|   | 11.1.               | Adjusted Leverage Ratio                                             |               |
|   |                |                                                                |               |   |
|   | 11.2.               | Consolidated  Cash Flow Ratio                                       |               |
|   |                |                                                                |               |   |
|   | 11.3.               | Growth Capital Expenditures                                         |               |
|   |                |                                                                |               |   |
| 12.    | CLOSING CONDITIONS  |                                                                |
|   |                |                                                                |               |   |
|   | 12.1.               | Loan  Documents                                                     |               |
|   |                |                                                                |               |   |
|   | 12.2.               | Certified Copies of Governing Documents                             |               |
|   |                |                                                                |               |   |
|   | 12.3.               | Corporate or Other Action                                           |               |
|   |                |                                                                |               |   |
|   | 12.4.               | Incumbency  Certificate                                             |               |
|   |                |                                                                |               |   |
|   | 12.5.               | Validity  of Liens                                                  |               |
|   |                |                                                                |               |   |
|   | 12.6.               | Perfection  Certificates and Uniform Commercial Code Search Results |               |
|   |                |                                                                |               |   |
|   | 12.7.               | Landlord  Consents; Mortgages                                       |               |
|   |                |                                                                |               |   |
|   | 12.8.               | Certificates of Insurance                                           |               |
|   |                |                                                                |               |   |
|   | 12.9.               | Solvency Certificate                                                |               |
|   |                |                                                                |               |   |
|   | 12.10.              | Opinion of Counsel                                                  |               |
|   |                |                                                                |               |   |
|   | 12.11.              | Capital  Structure                                                  |               |
|   |                |                                                                |               |   |
|   | 12.12.              | Minimum Consolidated EBITDA                                         |               |
|   |                |                                                                |               |   |
|   | 12.13.              | No Material Adverse Change                                          |               |
|   |                |                                                                |               |   |
|   | 12.14.              | Financial Statements and Projections                                |               |
|   |                |                                                                |               |   |
|   | 12.15.              | No Litigation                                                       |               |
|   |                |                                                                |               |   |
|   | 12.16.              | Consents and Approvals                                              |               |
|   |                |                                                                |               |   |
|   | 12.17.              | Employment Agreements; Employee Incentive Plans                     |               |
|   |                |                                                                |               |   |
|   | 12.18.              | Other Documentation                                                 |               |

 

vii

----

 
|   | 12.19.                               | Payoff and Termination of Existing Credit Agreement; Refinancing of  Loans |                                                    |
|--------|--------------------------------------|----------------------------------------------------------------------------|---------------------------------------------------------|
|   |                                 |                                                                       |                                                    |   |
|   | 12.20.                               | Consummation of Initial Public Offering                                    |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 12.21.                               | Maximum Borrowing on Closing Date                                          |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 12.22.                               | Payment of Fees and Expenses                                               |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 12.23.                               | Disbursement  Instructions                                                 |                                                    |
|   |                                 |                                                                       |                                                    |   |
| 13.    | CONDITIONS TO ALL  BORROWINGS        |                                                                       |
|   |                                 |                                                                       |                                                    |   |
|   | 13.1.                                | Representations True; No Event of  Default                                 |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 13.2.                                | No Legal Impediment                                                        |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 13.3.                                | Proceedings  and Documents                                                 |                                                    |
|   |                                 |                                                                       |                                                    |   |
| 14.    | EVENTS OF DEFAULT; ACCELERATION; ETC |                                                                       |
|   |                                 |                                                                       |                                                    |   |
|   | 14.1.                                | Events of Default and Acceleration                                         |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 14.2.                                | Termination of Commitments                                                 |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 14.3.                                | Remedies                                                                   |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 14.4.                                | Distribution  of Collateral Proceeds                                       |                                                    |
|   |                                 |                                                                       |                                                    |   |
| 15.    | THE  AGENT                           |                                                                       |
|   |                                 |                                                                       |                                                    |   |
|   | 15.1.                                | Appointment  and Authority                                                 |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 15.2.                                | Rights  as a Lender                                                        |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 15.3.                                | Exculpatory  Provisions                                                    |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   | 15.4.                                | Reliance by Administrative  Agent                                          |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   |                                 | 15.4.1.                                                                    | General                                                 |   |
|   |                                 |                                                                       |                                                    |   |
|   |                                 | 15.4.2.                                                                    | Non-Reliance on  Administrative Agent and Other Lenders |   |
|   |                                 |                                                                       |                                                    |   |
|   |                                 | 15.4.3.                                                                    | Delegation  of Duties                                   |   |
|   |                                 |                                                                       |                                                    |   |
|   | 15.5.                                | Payments                                                                   |                                                    |
|   |                                 |                                                                       |                                                    |   |
|   |                                 | 15.5.1.                                                                    | Payments to Administrative  Agent                       |   |
|   |                                 |                                                                       |                                                    |   |
|   |                                 | 15.5.2.                                                                    | Distribution  by Administrative Agent                   |   |
|   |                                 |                                                                       |                                                    |   |
|   |                                 | 15.5.3.                                                                    | Delinquent Lenders                                      |   |

 

viii

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|   | 15.6.                               | Reimbursement by Lenders                                        |               |
|--------|-------------------------------------|-----------------------------------------------------------------|--------------------|
|   |                                |                                                            |               |   |
|   | 15.7.                               | Resignation by  Administrative Agent                            |               |
|   |                                |                                                            |               |   |
|   | 15.8.                               | Administrative Agent May File  Proof of Claims                  |               |
|   |                                |                                                            |               |   |
|   | 15.9.                               | No  Other Duties, Etc.                                          |               |
|   |                                |                                                            |               |   |
| 16.    | ASSIGNMENT  AND PARTICIPATION       |                                                            |
|   |                                |                                                            |               |   |
|   | 16.1.                               | Successors and Assigns;  Conditions to Assignment               |               |
|   |                                |                                                            |               |   |
|   | 16.2.                               | Certain Representations  and Warranties; Limitations; Covenants |               |
|   |                                |                                                            |               |   |
|   | 16.3.                               | Register                                                        |               |
|   |                                |                                                            |               |   |
|   | 16.4.                               | Participations                                                  |               |
|   |                                |                                                            |               |   |
|   | 16.5.                               | Assignee or Participant  Affiliated with the Borrowers          |               |
|   |                                |                                                            |               |   |
|   | 16.6.                               | Miscellaneous Assignment  Provisions                            |               |
|   |                                |                                                            |               |   |
|   | 16.7.                               | Syndication                                                     |               |
|   |                                |                                                            |               |   |
| 17.    | PROVISIONS OF GENERAL  APPLICATIONS |                                                            |
|   |                                |                                                            |               |   |
|   | 17.1.                               | Setoff                                                          |               |
|   |                                |                                                            |               |   |
|   | 17.2.                               | Expenses                                                        |               |
|   |                                |                                                            |               |   |
|   | 17.3.                               | Indemnification                                                 |               |
|   |                                |                                                            |               |   |
|   | 17.4.                               | Treatment of Certain Confidential  Information                  |               |
|   |                                |                                                            |               |   |
|   |                                | 17.4.1.                                                         | Confidentiality    |   |
|   |                                |                                                            |               |   |
|   |                                | 17.4.2.                                                         | Prior Notification |   |
|   |                                |                                                            |               |   |
|   |                                | 17.4.3.                                                         | Other              |   |
|   |                                |                                                            |               |   |
|   | 17.5.                               | Survival of Covenants, Etc                                      |               |
|   |                                |                                                            |               |   |
|   | 17.6.                               | Notices                                                         |               |
|   |                                |                                                            |               |   |
|   | 17.7.                               | Governing Law                                                   |               |
|   |                                |                                                            |               |   |
|   | 17.8.                               | Headings                                                        |               |
|   |                                |                                                            |               |   |
|   | 17.9.                               | Counterparts                                                    |               |
|   |                                |                                                            |               |   |
|   | 17.10.                              | Entire Agreement, Etc                                           |               |
|   |                                |                                                            |               |   |
|   | 17.11.                              | Waiver  of Jury Trial                                           |               |

 

ix

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|   | 17.12. | Consents,  Amendments, Waivers, Etc |   |
|--------|--------|-------------------------------------|--------|
|   |   |                                |   |   |
|   | 17.13. | Borrowers’ Representative      |   |
|   |   |                                |   |   |
|   | 17.14. | Severability                        |   |
|   |   |                                |   |   |
|   | 17.15. | USA  Patriot Act Notice             |   |

 

x

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|               | Exhibits                                          |
|--------------------|---------------------------------------------------|
|               |                                              |
| Exhibit A          | Form of Note                                      |
| Exhibit B          | Form of Loan Request                              |
| Exhibit C          | Form of Compliance Certificate                    |
| Exhibit D          | Form of Agency Account Agreement                  |
| Exhibit E          | Form of Assignment and Acceptance                 |
| Exhibit F          | Form of Landlord Waiver                           |
| Exhibit G          | Form of Instrument of Accession                   |
|               |                                              |
|               | Schedules                                         |
|               |                                              |
| Schedule 1         | Lenders and Commitments                           |
| Schedule 1.1       | MS Division Restaurants                           |
| Schedule 8.3       | Title to Properties; Leases                       |
| Schedule 8.4.2     | Financial Statement Exceptions                    |
| Schedule 8.6(a)    | Franchises, Patents, Copyrights, etc.             |
| Schedule 8.6(b)    | Liquor Management Agreements                      |
| Schedule 8.7       | Litigation                                        |
| Schedule 8.8       | Material Contracts                                |
| Schedule 8.15      | Certain Transactions                              |
| Schedule 8.16      | Employee Benefit Plans                            |
| Schedule 8.18      | Environmental Compliance                          |
| Schedule 8.19      | Subsidiaries, Etc.                                |
| Schedule 8.20      | Bank Accounts                                     |
| Schedule 8.23      | Restaurants                                       |
| Schedule 8.25      | Leases                                            |
| Schedule 10.1      | Existing Indebtedness                             |
| Schedule 10.2      | Existing Liens                                    |
| Schedule 10.3      | Existing Investments                              |
| Schedule 12.7 | Leasehold Mortgages Delivered on the Closing Date |

 

----

 

**REVOLVING CREDIT AGREEMENT**

 

This **REVOLVING CREDIT AGREEMENT** is made as ofJuly 23, 2004, by and among **MCCORMICK &SCHMICK ACQUISITION CORP.**, a Delaware corporation (“MSAC”), **MCCORMICK& SCHMICK RESTAURANT CORP.**, a Delaware corporation (“MSRC”), **MCCORMICK& SCHMICK MARYLAND LIQUOR, INC.**, a Maryland corporation, **MCCORMICK & SCHMICK ACQUISITION I TEXAS, INC.**,a Texas corporation (“MS Acquisition I”), **MCCORMICK & SCHMICK ACQUISITION II TEXAS, INC.**,a Delaware corporation (“MS Acquisition II”),**MCCORMICK & SCHMICK ACQUISITION TEXAS LP**,a Texas limited partnership, **MCCORMICK &SCHMICK ACQUISITION III TEXAS, INC.**, a Texas corporation, **MCCORMICK & SCHMICK’S ATLANTA II, LLC**,a Delaware limited liability company, **MCCORMICK& SCHMICK’S HACKENSACK, LLC**, a Delaware limited liabilitycompany, **MCCORMICK & SCHMICK ORLANDO, LLC**,a Delaware limited liability company, **MCCORMICK& SCHMICK DALLAS, L.P.**, a Texas limited partnership, **MCCORMICK & SCHMICK DALLAS LIQUOR, INC.**,a Texas corporation, **MCCORMICK & SCHMICKAUSTIN, LP**, a Texas limited partnership, **MCCORMICK & SCHMICK AUSTIN LIQUOR, INC.**, a Texascorporation, and each of the other Subsidiaries of MSAC which shall from timeto time hereafter become a party hereto pursuant to §9.17 (collectively, the “Borrowers”),the lending institutions listed on Schedule 1 as Lenders, **FLEET NATIONAL BANK**, as administrativeagent for itself and such other Lenders and **BANCOF AMERICA SECURITIES LLC**, as arranger.

 

**1.             DEFINITIONS AND RULES OFINTERPRETATION**.

 

**1.1.         Definitions****.**  Thefollowing terms shall have the meanings set forth in this §1 or elsewhere inthe provisions of this Credit Agreement referred to below:

 

A&M Acquisition.  Theacquisition by the Borrowers of three full-service Angelo and Maxie’srestaurants in New York, Washington, D.C. and Virginia from Angelo and Maxie’sInc., a Delaware corporation.

 

A&M AcquisitionAgreement.  The Asset Purchase Agreement, dated as ofJanuary 7, 2004, among West 52nd Street, Inc., CH-AM Acquisition,Inc., Angelo and Maxie’s, Inc., MSAC and MSRC, as in effect without givingeffect to any additional amendments, modifications or waivers of the termsthereof other than amendments, modifications and waivers permitted by §10.14.2,certified copies of which have been delivered to the Administrative Agent.

 

A&M AcquisitionDocuments.  The A&M Acquisition Agreement, includingall exhibits and schedules thereto, and all other agreements, side letters anddocuments executed in connection therewith, each in the form delivered to the

 

----

 

Administrative Agent on or prior to the Closing Date, together withamendments or modifications thereto permitted pursuant to §10.14.2.

 

Acknowledgment and Consent. The Acknowledgment and Consent, dated as ofthe Closing Date, and as the same may be amended from time to time hereafter,among MS Acquisition I, MS Acquisition II and the Administrative Agent and inform and substance satisfactory to the Administrative Agent.

 

Acquired Assets.  See§10.5.

 

Acquisition.  Anytransaction, or any series of related transactions, consummated prior to orafter the Closing Date, in which the Borrowers or any Subsidiary of a Borrower(in one transaction or as the most recent transaction in a series oftransactions) (a) acquires any business or all or substantially all of theassets of any Person or any division or business unit thereof, whether throughpurchase of assets, merger or otherwise, (b) directly or indirectly acquirescontrol of at least a majority (in number of votes) of the Equity Interests ofa corporation which have ordinary voting power for the election of directors or(c) directly or indirectly acquires control of a majority ownership in anypartnership or joint venture.

 

Acquisition Documents.  Eachof the 2001 Acquisition Documents, the A&M Acquisition Documents, and allother agreements, side letters and documents executed in connection with anyAcquisition together with amendments or modifications thereto permittedpursuant to §10.14.2.

 

Additional SecurityDocuments.  All mortgages, pledge agreements, securityagreements and other security documents and all guarantees of the Obligationsentered into after the date hereof pursuant to §§9.17 and/or 9.19.

 

Adjusted Leverage Ratio.  Asat any date of determination, the ratio of (a) Consolidated Rental Expense forthe Reference Period ending on such date (multipliedby eight (8)) plus Consolidated FundedIndebtedness outstanding on such date to (b) Consolidated EBITDAR for theReference Period ending on such date.

 

Adjustment Date.  Thefirst day of the month immediately following the month in which a ComplianceCertificate is to be delivered by the Borrowers pursuant to §9.4(d).

 

Administrative Agent. Fleet, acting as agent for the Lenders and each other Person appointedas the successor Administrative Agent in accordance with §15.9.

 

Administrative Agent’sOffice.  The Administrative Agent’s office located at100 Federal Street, Boston, Massachusetts 02110, or at such other location asthe Administrative Agent may designate in writing from time to time.

 

Administrative Agent’sSpecial Counsel.  Bingham McCutchen LLP or such other counselas may be approved by the Administrative Agent.

 

2

----

 

Affected Lenders.  See§6.8(c).

 

Affiliate.  AnyPerson that would be considered to be an affiliate of any Borrower or a Lender(as the context requires) under Rule 144(a) of the Rules and Regulations of theSecurities and Exchange Commission, as in effect on the date hereof, if suchBorrower or such Lender were issuing securities.

 

Agency Accounts.  See§9.16.

 

Agency Account Agreements.  See§9.16.

 

Applicable Margin.  Foreach period commencing on an Adjustment Date through the date immediatelypreceding the next Adjustment Date (each a “Rate Adjustment Period”),the Applicable Margin with respect to Revolving Credit Loans (in each case, forBase Rate Loans and Eurodollar Rate Loans) and for the Letters of Credit shallbe the applicable percentage set forth below with respect to each suchRevolving Credit Loan or Letter of Credit, as the case may be, corresponding tothe Adjusted Leverage Ratio, as determined for the most recent Reference Periodending immediately prior to the applicable Rate Adjustment Period:

 
| ** ** | ** ** | ** **                  | ** ** | **Revolving Credit Loans** | ** ** |
|------------|------------|-----------------------------|------------|----------------------------|------------|
| **Level**  | ** ** | **Adjusted Leverage Ratio** | ** ** | **Base Rate Loans**        | ** ** | **Eurodollar Rate  Loans and Letters  of Credit** | ** ** |
| I          |       | < 3.00:1                 |       | 0.25                       | %          | 1.75 | % |
| II         |       | > 3.00:1                 |       | 0.75                       | %          | 2.25 | % |

 

Notwithstanding theforegoing, (a) for the period commencing on the Closing Date through theAdjustment Date immediately following the date of delivery by the Borrowers tothe Administrative Agent of a Compliance Certificate for the fiscal periodending March 26, 2005, the Applicable Margin shall be that percentagecorresponding to Level II in the table above; and (b) if the Borrowers fail todeliver any Compliance Certificate pursuant to §9.4(d) hereof, then for theperiod commencing on the date after the day on which such ComplianceCertificate was due through the date which is five (5) Business Days after suchCompliance Certificate is delivered, the Applicable Margin shall be thatpercentage corresponding to Level II in the table above.

 

Applicable PensionLegislation.  At any time, any pension or retirementbenefits legislation (be it national, federal, provincial, territorial orotherwise) then applicable to any Borrower.

 

3

----

 

Approved Fund.  AnyFund that is administered or managed by (a) a Lender, (b) an Affiliate of aLender or (c) an entity or an Affiliate of an entity that administers ormanages a Lender.

 

Arranger. Banc of America Securities LLC.

 

Asset Sale.  Anyone or series of related transactions in which a Borrower or any Subsidiary ofa Borrower conveys, sells, leases, licenses or otherwise disposes of, directlyor indirectly, any of its properties, businesses or assets (including inconnection with a sale and leaseback transaction and the sale or issuance ofEquity Interests of any Subsidiary other than to a Borrower or any wholly-ownedSubsidiary of a Borrower but excluding any dispositions included in thedefinition of “Casualty Event”) whetherowned on the Closing Date or thereafter acquired.

 

Assignment and Acceptance.  See§16.1.

 

Audited Financials. Collectively, the audited consolidated balance sheets of the Borrowersand their Subsidiaries dated December 27, 2003 and the audited consolidatedstatement of income and cash flow of the Borrowers and their Subsidiaries forthe fiscal year ended December 27, 2003 (in each case with related footnotedisclosures).

 

Avado. Avado Brands, Inc., a Georgia corporation.

 

Balance Sheet Date. December 27, 2003.

 

Bank of America. Bank of America, N.A.

 

Base Rate.  Thehigher of (a) the variable annual rate of interest so announced from time totime by the Administrative Agent as its “primerate”, such rate being a reference rate and not necessarily representingthe lowest or best rate being charged to any customer, and (b) one-half of onepercent (0.5%) above the Federal Funds Effective Rate.  For the purposes of this definition, “FederalFundsEffectiveRate” shall mean for any day, the rate perannum equal to the weighted average of the rates on overnight federal fundstransactions with members of the Federal Reserve System arranged by federalfunds brokers, as published for such day (or, if such day is not a BusinessDay, for the next preceding Business Day) by the Federal Reserve Bank of NewYork, or, if such rate is not so published for any day that is a Business Day,the average of the quotations for such day on such transactions received by theAdministrative Agent from three funds brokers of recognized standing selectedby the Administrative Agent.  Changes inthe Base Rate resulting from any changes in the Administrative Agent’s “prime rate” shall take place immediatelywithout notice or demand of any kind.

 

Base Rate Loans. Revolving Credit Loans bearing interest calculated by reference to theBase Rate.

 

4

----

 

Bell Atlantic Consent.  TheWritten Consent of The Bell Atlantic Master Trust, dated as of June 14, 2004 byMellon Bank, N.A., solely in its capacity as trustee for the Bell AtlanticMaster Trust (as directed by Verizon Investment Management Corp.).

 

Borrower(s).  Asdefined in the preamble hereto.

 

BRS. Bruckmann, Rosser, Sherrill & Co. II, L.P., a limited partnershiporganized under the laws of Delaware.

 

BRS Affiliate. (i) Any Person or account which iscontrolled by or under common control with or managed by or under commonmanagement with, directly or indirectly, BRS or any director, officer oremployee of BRS, (ii) any director, officer or employee of BRS or any familymember of such director, officer or employee, or (iii) any trust or otherPerson established by or for the benefit of any director, officer or employeeof BRS or family member thereof and controlled by such director, officer,employee or family member.

 

Business Day.  Anyday on which banking institutions in Boston, Massachusetts and****New York, New York, are open for thetransaction of banking business and, in the case of Eurodollar Rate Loans, alsoa day which is a Eurodollar Business Day.

 

California Proposition 65.  TheCalifornia Safe Drinking Water and Toxic Enforcement Act of 1986, as amended.

 

Capital Assets. Fixed assets, both tangible (such as land, buildings, fixtures, machineryand equipment) and intangible (such as patents, copyrights, trademarks,franchises and good will); provided that Capital Assets shall notinclude any item customarily charged directly to expense or depreciated over auseful life of twelve (12) months or less in accordance with GAAP.

 

Capital Expenditures. Amounts paid or Indebtedness incurred by the Borrowers or any of theirSubsidiaries (net of any tenant improvement allowances related to a Restaurant)in connection with (i) the purchase or lease by a Borrower or any of itsSubsidiaries of Capital Assets that would be required to be capitalized andshown on the balance sheet of such Person in accordance with GAAP, includingwithout limitation or duplication, maintenance capital, build-out and new storeexpenditures, (ii) without duplication, Consolidated Restaurant Pre-OpeningCosts, and (iii) the lease of any assets by a Borrower or any of itsSubsidiaries as lessee under any Synthetic Lease to the extent that such assetswould have been Capital Assets had the Synthetic Lease been treated foraccounting purposes as a Capitalized Lease.

 

Capitalized Leases. Leases under which a Borrower or any of its Subsidiaries is the lesseeor obligor, the discounted future rental payment obligations under which arerequired to be capitalized on the balance sheet of the lessee or obligor inaccordance with GAAP.

 

5

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Cash Equivalents.  Anyof the following: (a) marketable direct or guaranteed obligations of the UnitedStates of America that mature within one (1) year from the date of purchase bysuch Borrower; (b) demand deposits, certificates of deposit, bank acceptancesand time deposits of United States banks having total assets in excess of$1,000,000,000; and (c) securities commonly known as “commercial paper” issued by a corporation organized and existingunder the laws of the United States of America or any state thereof that at thetime of purchase have been rated and the ratings for which are not less than “P 1”if rated by Moody’s, and not less than “A 1” if rated by S&P.

 

Casualty Event.  Withrespect to any property (including any interest in property) of a Borrower orany of its Subsidiaries, any loss of, damage to, or condemnation or othertaking of, such property for which such Person receives insurance proceeds,proceeds of a condemnation award or other compensation.

 

CERCLA.  See§8.18(a).

 

Change of Control. At any time, the occurrence of one or moreof the following events:  (a) any “person”or “group” (as such terms are used in Section 13(d) and 14(d) of the SecuritiesExchange Act of 1934, as amended (the “ExchangeAct”)), excluding any Sponsor, shall become, or obtain rights (whether bymeans of warrants, options or otherwise) to become, the “beneficial owner” (asdefined in Rule 13(d)-3 and 13(d)-5 under the Exchange Act), directly orindirectly, of 20% or more of the Voting Stock of the Parent unless theSponsors own Voting Stock having a greater percentage of the general votingpower of the outstanding Voting Stock than that held by such person or group,(b) the replacement of a majority of the board of directors of the Parent orany of the Borrowers over a two-year period from the directors who constitutedthe board of directors of such Person at the beginning of such period, and suchreplacement shall not (i) have been approved by a vote of at least a majorityof the board of directors of such Person then still in office who either weremembers of such board of directors at the beginning of such period or whoseelection as a member of such board of directors was previously so approved, or(ii) have been elected or nominated for election by a Sponsor which owns VotingStock of such Person; or (c) the Parent shall cease to own directly or througha Borrower one hundred percent (100%) of the issued and outstanding EquityInterests of the Borrowers.

 

CH. Castle Harlan, Inc., a Delaware corporation.

 

CH Affiliate. (i) Any Person or account which iscontrolled by or under common control with or managed by or under commonmanagement with, directly or indirectly, CH or any director, officer oremployee of CH, (ii) any director, officer or employee of CH or any familymember of such director, officer or employee, or (iii) any trust or otherPerson established by or for the benefit of any director, officer or employeeof CH or family member thereof and controlled by such director, officer,employee or family member.

 

6

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Closing Date.  Thefirst date on which the conditions set forth in §12 have been satisfied and anyRevolving Credit Loans are to be made or any Letter of Credit is to be issuedor continued hereunder.

 

Code.  TheInternal Revenue Code of 1986, as amended.

 

Collateral.  Allof the property, rights and interests of the Parent, the Borrowers and theirSubsidiaries that are or are intended to be subject to the Liens created by theSecurity Documents.

 

Collateral Assignment ofAcquisition Documents.  The Collateral Assignment of AcquisitionDocuments, dated as of the Closing Date, and as the same may be amended fromtime to time hereafter, among MSAC and the Administrative Agent and in form andsubstance satisfactory to the Administrative Agent.

 

Commitment Fee.  See§2.2.

 

Compliance Certificate.  See§9.4(d).

 

Concentration Account. Account number 3752149724 with Bank of America.

 

Consolidated or consolidated.  Withreference to any term defined herein, shall mean that term as applied to theaccounts of the Borrowers and their Subsidiaries, consolidated in accordancewith GAAP.

 

Consolidated Cash Flow.  Forany period, (a) Consolidated EBITDAR of the Borrowers and their Subsidiariesfor such period, minus (b) cash income taxes paid during such period bythe Borrowers and their Subsidiaries, minus(c) Maintenance Capital Expenditures made by the Borrowers and theirSubsidiaries during such period.

 

Consolidated Cash Flow Ratio.  Asat the end of any Reference Period, the ratio of (a) Consolidated Cash Flow forsuch Reference Period to (b) Consolidated Financial Obligations for suchReference Period plus Consolidated RentalExpense for such Reference Period; provided thatfor purposes of calculating the Consolidated Cash Flow Ratio for any ReferencePeriod ending prior to December 25, 2004, there shall be excluded from thedetermination of “Financial Obligations” for such period all payments made bythe Borrowers in respect of principal, interest or fees pursuant to the 2001Credit Agreement and the 2003 Credit Agreement.

 

Consolidated EBITDA.  Withrespect to any fiscal period, an amount equal to the sum of (a) ConsolidatedPre-Tax Income of the Borrowers and their Subsidiaries for such fiscal period, plus(b) in each case to the extent deducted in the calculation of such Person’sConsolidated Pre-Tax Income and without duplication, (i) depreciation andamortization for such period, plus (ii) Consolidated RestaurantPre-Opening Costs for such period, plus (iii) Consolidated TotalInterest Expense paid or accrued during such period, plus (iv) noncash charges for rental expenses for such period,

 

7

----

 

plus (v)one-time noncash unamortized financing costs associated with the 2001 CreditAgreement and the 2003 Credit Agreement, plus(vi) all one-time upfront fees (including without limitation bank fees andbroker fees and commissions) and other amounts paid, and all costs and expenses(including attorneys’ fees and fees of other professionals) incurred and paid,by the Borrowers in connection with (1) the consummation of the financingcontemplated hereby, (2) the termination of the Management Agreements and theOfficer Fees, in an aggregate amount not to exceed $3,000,000, (3) thetermination or continuation of the Interest Rate Agreements outstanding on theClosing Date, and (4) the consummation of the initial public offering by MSSRof the common stock of MSSR pursuant to an effective S-1 Registration Statementunder the Securities Act of 1933, as amended, plus(vii) all costs and expenses incurred and paid by the Borrowers and theirSubsidiaries which are associated with compliance with California Proposition65 and with California employment wage and hour litigation, in an aggregateamount not to exceed $2,000,000 during the period from the Closing Date throughto the Maturity Date, plus (viii) netlosses from sales of assets, whether or not extraordinary (excluding sales inthe ordinary course of business), plus (ix)impairment charges in connection with the impairment or disposal of long-livedassets (including in connection with the closure of restaurants) in accordancewith Financial Accounting Standard Board Statement No. 144, in an aggregateamount not to exceed $3,000,000 during the period from the Closing Date throughto the Maturity Date, plus (x) an aggregate amount of $450,000 inconnection with the A&M Acquisition, plus (xi) minority interestsand accrued dividends and accretions paid during such period with respect tothe Convertible Preferred Stock, in an aggregate amount not to exceed$4,000,000 from and after the Closing Date, and minus(c) to the extent not deducted in the calculation of Consolidated Pre-TaxIncome, GAAP deferred rent credits for such period and minus (d) net gains on sales of assets, whether or not extraordinary(excluding sales in the ordinary course of business), and other extraordinarygains.

 

Consolidated EBITDAR.  Forany period, the sum of (a) the Consolidated EBITDA of the Borrowers and theirSubsidiaries for such period, plus (b) Consolidated Rental Expense forsuch period.

 

Consolidated FinancialObligations.  For any period, the sum of (a) all scheduledpayments of principal or mandatory redemption amounts and fees on Indebtedness(including any Subordinated Debt) of the Borrowers and their Subsidiaries,including Capitalized Leases and including Synthetic Leases, due and payableduring such period or within six (6) Business Days following the last day ofsuch period, plus (b) Consolidated Total Interest Expense for suchperiod.  Demand obligations shall bedeemed to be due and payable during any period during which such obligationsare outstanding.

 

Consolidated FundedIndebtedness.  With respect to the Borrowers and theirSubsidiaries, the sum, without duplication, of (a) the aggregate amount ofIndebtedness of the Borrowers and their Subsidiaries, on a consolidated basis,to the extent relating to (i) the borrowing of money or the obtaining ofcredit, including the issuance of notes or bonds or Indebtedness issued inconnection with the conversion of

 

8

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any Equity Interests, (ii) the deferred purchase price of assets (otherthan trade payables incurred in the ordinary course of business), (iii)Synthetic Leases and Capitalized Leases, and****(iv)the maximum drawing amount of all letters of credit (including Letters ofCredit hereunder) outstanding and bankers acceptances, plus (b)Indebtedness of the type referred to in clause (a) of another Person guaranteedby the Borrowers and any of their Subsidiaries; providedthat, for the avoidance of doubt, subclause (i) shall not include anyderivative contracts (as defined below in the definition of “Indebtedness”).

 

Consolidated Net Income (orDeficit).  The consolidated net income (or deficit) ofthe Borrowers and their Subsidiaries, after deduction of all expenses, taxes,and other proper charges, determined in accordance with GAAP, after eliminatingtherefrom all extraordinary non-recurring items of income.

 

Consolidated Pre-Tax Income.  Forany period, Consolidated Net Income (or Deficit) for such period plus,to the extent deducted from the calculation of Consolidated Net Income (orDeficit), income tax paid or payable for such period, determined in accordancewith GAAP.

 

Consolidated Rental Expense.  Forany period, the sum of (a) all minimum rental expense of the Borrowers andtheir Subsidiaries for such period, determined on a consolidated basis inaccordance with GAAP, incurred under any rental agreements or leases of real orpersonal property, including space leases and ground leases, other thanobligations in respect of any Capitalized Leases or any Synthetic Leases, minus (b) noncash charges for rental expensesfor such period, plus (c) any GAAP deferredrent credits for such period deducted from Consolidated EBITDA pursuant toclause (c) of the definition of ‘ConsolidatedEBITDA’.

 

Consolidated RestaurantPre-Opening Costs. “Start-up costs” (as such term is defined inSOP 98-5 published by the American Institute of Certified Public Accountants)related to the acquisition, opening and organizing of new Restaurants, suchcosts including, without limitation, the cost of feasibility studies,staff-training and recruiting, and travel costs for employees engaged in suchstart-up activities.

 

Consolidated Total InterestExpense.  For any period, the aggregate amount of cashinterest required to be paid by the Borrowers and their Subsidiaries duringsuch period on all Indebtedness (including the Subordinated Debt) of theBorrowers and their Subsidiaries outstanding during all or any part of such period,whether such interest was or is required to be reflected as an item of expenseor capitalized, including (a) payments consisting of interest in respect of anyCapitalized Lease or any Synthetic Lease, (b) commitment fees and letter ofcredit fees incurred in connection with the borrowing of money and (c) facilityfees, balance deficiency fees and similar fees or expenses in connection withthe borrowing of money other than the financing provided under this CreditAgreement and the other Loan Documents.

 

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Conversion Request.  Anotice given by the Borrowers to the Administrative Agent of the Borrowers’election to convert or continue a Revolving Credit Loan in accordance with§2.7.

 

Convertible Preferred Stock.  TheParent’s 13% Senior Exchangeable Preferred Stock, par value $1.00 per share,issued pursuant to the Stock and Warrant Purchase Agreement.

 

Credit Agreement.  ThisRevolving Credit Agreement, including the Schedules and Exhibits hereto.

 

Default.  See§14.1.

 

Delinquent Lender.  See§15.5.3.

 

Developer. Vineyard Creek, LLC, a California limited liability company.

 

Distribution.  Thedeclaration or payment of any dividend on or in respect of any shares of anyclass of Equity Interests of a Person, other than dividends payable solely inEquity Interests of such Person; the purchase, redemption, defeasance,retirement or other acquisition of any shares of any class of Equity Interestsof a Person, directly or indirectly through a Subsidiary of such Person orotherwise (including the setting apart of assets for a sinking or otheranalogous fund to be used for such purpose); the return of capital by a Personto its shareholders as such; or any other distribution on or in respect of anyshares of any class of Equity Interests of such Person.

 

Dollars or $. Dollars in lawful currency of the United States of America.

 

Domestic Lending Office. Initially, the office of each Lender designated as such in Schedule 1hereto; thereafter, such other office of such Lender, if any, located withinthe United States that will be making or maintaining Base Rate Loans.

 

Drawdown Date.  Thedate on which any Revolving Credit Loan is made or is to be made, and the dateon which any Revolving Credit Loan is converted or continued in accordance with§2.7.

 

EBITDA Margin.  Asat any date of determination, the percentage obtained by dividing (a) theConsolidated EBITDA of the Borrowers as at the end of the most recently endedReference Period for which the Borrowers have delivered a ComplianceCertificate by (b) the consolidated revenue (as determined in accordance withGAAP) of the Borrowers for such Reference Period.

 

Eligible Assignee. Means (a) any Lender; (b) an Affiliate of a Lender; (c) an ApprovedFund; and (d) any other Person (other than a natural person) approved by (i)the Administrative Agent, and (ii) unless an Event of Default has occurred andis continuing, the Borrowers (each such approval not to be unreasonablywithheld or

 

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delayed); provided that notwithstanding the foregoing, “EligibleAssignee” shall not include the Borrowers or any of the Borrowers’ Affiliatesor Subsidiaries.

 

Employee Benefit Plan.  Anyemployee benefit plan within the meaning of §3(3) of ERISA maintained orcontributed to by the Borrowers, or any ERISA Affiliate if any Borrower has anyliability for such plan, other than a Guaranteed Pension Plan or aMultiemployer Plan.

 

Environmental Laws.  See§8.18(a).

 

EPA.  See§8.18(b).

 

Equity Documents.  TheRegistration Rights Agreement, dated as of August 22, 2001, by and among MSLLC, BRS, Castle Harlan Partners III, L.P., Julie Frist, David B. Pittaway,Bell Atlantic Master Trust and the other Members referenced therein.

 

Equity Interests.  Allequity interests of a Person, including, without limitation, any (a) common orpreferred stock, (b) limited or general partnership interests, (c) limitedliability company membership interests, (d) options, warrants, or other rightsto purchase or acquire any Equity Interest, or (e) securities convertible intoany Equity Interest.

 

Equity Issuance.  Thesale or issuance by the Parent, any Borrower or any of its Subsidiaries of anyof its Equity Interests to any Person other than, in the case of the Borrowers,another Borrower.

 

ERISA.  TheEmployee Retirement Income Security Act of 1974, as amended.

 

ERISA Affiliate.  AnyPerson which is treated as a single employer with any of the Borrowers under§414 of the Code.

 

ERISA Reportable Event.  Areportable event with respect to a Guaranteed Pension Plan within the meaningof §4043 of ERISA and the regulations promulgated thereunder.

 

Eurocurrency Reserve Rate.  Forany day with respect to a Eurodollar Rate Loan, the maximum rate (expressed asa decimal) at which any bank subject thereto would be required to maintainreserves under Regulation D of the Board of Governors of the Federal ReserveSystem (or any successor or similar regulations relating to such reserverequirements) against “EurocurrencyLiabilities” (as that term isused in Regulation D), if such liabilities were outstanding.  The Eurocurrency Reserve Rate shall beadjusted automatically on and as of the effective date of any change in theEurocurrency Reserve Rate.

 

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Eurodollar Business Day.  Anyday on which commercial banks are open for international business (includingdealings in Dollar deposits) in London or such other eurodollar interbankmarket as may be selected by the Administrative Agent in its sole discretionacting in good faith.

 

Eurodollar Lending Office. Initially, the office of each Lender designated as such in Schedule 1hereto; thereafter, such other office of such Lender, if any, that shall bemaking or maintaining Eurodollar Rate Loans.

 

Eurodollar Rate.  Forany Interest Period with respect to a Eurodollar Rate Loan, the rate ofinterest equal to (a) the rate at which Dollar deposits for such InterestPeriod are offered based on information presented on the page of the Teleratescreen (or any successor thereto) that displays an average British BankersAssociation Interest Settlement Rate for deposits in Dollars (for delivery onthe first day of such Interest Period) with a term equivalent to such InterestPeriod and in an amount comparable to the amount of the Eurodollar Rate Loan ofthe Administrative Agent to which such Interest Period applies as of 10:00 a.m.(Boston time) two (2) Eurodollar Business Days prior to the beginning of suchInterest Period or (b) if such information on such Telerate Page (or anysuccessor thereto) is not available, the arithmetic average of the rates perannum (rounded upwards to the nearest 1/16 of one percent) of the rate at whichthe Reference Lender’s Eurodollar Lending Office is offered Dollar deposits twoEurodollar Business Days prior to the beginning of such Interest Period in theinterbank eurodollar market where the eurodollar and foreign currency andexchange operations of such Eurodollar Lending Office are customarilyconducted, for delivery on the first day of such Interest Period for the numberof days comprised therein and in an amount comparable to the amount of theEurodollar Rate Loan of the Administrative Agent to which such Interest Periodapplies; divided by in the case of a ratedetermined by either clause (a) or clause (b) above, a number equal to 1.00 minus the Eurocurrency Reserve Rate, ifapplicable.

 

Eurodollar Rate Loans. Revolving Credit Loans bearing interest calculated by reference to theEurodollar Rate.

 

Event of Default.  See§14.1.

 

Existing Letters of Credit.  See§5.7.

 

Fee Letter.  Thefee letter, dated on or prior to the Closing Date, between the Borrowers andthe Administrative Agent.

 

Fees. Collectively, the Commitment Fee, the Letter of Credit Fees, the FrontingFees and the fees payable pursuant to the Fee Letter.

 

Financial Affiliate.  ASubsidiary of the bank holding company controlling any Lender, which Subsidiaryis engaging in any of the activities permitted by §4(e) of the Bank HoldingCompany Act of 1956 (12 U.S.C. §1843).

 

Fleet. Fleet National Bank, a national banking association.

 

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FQ1, FQ2, FQ3, FQ4.Thefirst, second, third and fourth fiscal quarters, respectively, of a specifiedfiscal year.

 

Franchise Agreement.  Eachfranchise agreement between a Borrower or any Subsidiary of a Borrower and athird Person which sets forth the terms and conditions for the operation bysuch Person, as a franchisee, of a restaurant.

 

Fronting Fee. See §5.6.

 

GAAP or generally acceptedaccounting principles.  (a) When used in §11, whether directly orindirectly through reference to a capitalized term used therein, means (i)principles that are consistent with the principles promulgated or adopted bythe Financial Accounting Standards Board and its predecessors, in effect forthe fiscal year ended on the Balance Sheet Date, and (ii) to the extentconsistent with such principles, the accounting practice of the Borrowersreflected in the Audited Financials for the year ended on the Balance SheetDate, and (b) when used in general, other than as provided above, meansprinciples that are (i) consistent with the principles promulgated or adoptedby the Financial Accounting Standards Board and its predecessors, as in effectfrom time to time, and (ii) consistently applied with past financial statementsof the Borrowers adopting the same principles, provided that in each casereferred to in this definition of “GAAP” a certified public accountantwould, insofar as the use of such accounting principles is pertinent, be in aposition to deliver an unqualified opinion (other than a qualificationregarding changes in GAAP) as to financial statements in which such principleshave been properly applied; provided, thatdespite FASB 150, redeemable preferred stock of any Borrower shall not, forpurposes of this Credit Agreement, be treated as “Indebtedness”. In the eventany “Accounting Changes” (as defined below)shall occur and such changes affect financing covenants, standards or terms inthis Credit Agreement, then the Borrowers and the Lenders agree to enter intonegotiations in order to amend such provisions of this Credit Agreement so asto equitably reflect such Accounting Changes with the desired result that thecriteria for evaluating the financial condition of the Borrowers shall be thesame as if such Accounting Changes had not been made, and until such time assuch an amendment shall have been executed and delivered by the Borrowers andthe Required Lenders, (a) all financial covenants, standards and terms in thisCredit Agreement shall be calculated and/or construed as if such AccountingChanges had not been made, and (b) the Borrowers shall prepare footnotes to thefinancial statements required to be delivered hereunder that show thedifferences between the financial statements delivered (which reflect suchAccounting Changes) and the basis for calculating financial covenant compliance(without reflecting such Accounting Changes) and the basis for calculatingfinancial covenant compliance (without reflecting such AccountingChanges).  “Accounting Changes” means: (x) changes in accounting principlesrequired by GAAP and implemented by the Company and (y) changes in accountingprinciples recommended by the Borrowers’ certified public accountants.

 

Governing Documents.  Withrespect to any Person, its certificate or articles of incorporation,partnership agreement, membership agreement or other similar

 

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charter agreement, as applicable, its by-laws and all shareholderagreements, voting trusts and similar arrangements applicable to any of itsEquity Interests.

 

Governmental Authority.  Anyforeign, federal, state, regional, local, municipal or other government, or anydepartment, commission, board, bureau, agency, public authority orinstrumentality thereof, or any court or arbitrator.

 

Growth Capital Expenditures. Without duplication, Capital Expenditures related to the construction,acquisition or opening of new Restaurants during any fiscal year, plus Capital Expenditures relating to anyPermitted Acquisition during any fiscal year, plus to the extent notincluded in the calculation of such Capital Expenditures, ConsolidatedRestaurant Pre-Opening Costs plus CapitalExpenditures relating to the conversion and/or remodeling of any existingRestaurant; provided, however, thatthe purchase price paid by the Borrowers and/or their Subsidiaries for theA&M Acquisition shall not constitute and shall not be included for purposesof Growth Capital Expenditures.

 

Guaranteed Pension Plan.  Anyemployee pension benefit plan within the meaning of §3(2) of ERISA maintainedor contributed to by any Borrower or any ERISA Affiliate the benefits of whichare guaranteed on termination in full or in part by the PBGC pursuant to TitleIV of ERISA, other than a Multiemployer Plan.

 

Hazardous Substances.  See§8.18(b).

 

Incurrence Ratio.  Asat any date of determination, the maximum Adjusted Leverage Ratio permittedunder §11.1 as at the end of the most recently ended Reference Period for whichthe Borrowers have delivered a Compliance Certificate, less 0.25.

 

Indebtedness.  Asto any Person and whether recourse is secured by or is otherwise availableagainst all or only a portion of the assets of such Person and whether or notcontingent, but without duplication:

 

(a)   every obligation of such Person for moneyborrowed,

 

(b)   every obligation of such Person evidenced bybonds, debentures, notes or other similar instruments, including obligationsincurred in connection with the acquisition of property, assets or businesses,

 

(c)   every reimbursement obligation of such Personwith respect to letters of credit, bankers’ acceptances or similar facilitiesissued for the account of such Person,

 

(d)   every obligation of such Person issued orassumed as the deferred purchase price of property or services (includingsecurities repurchase agreements but excluding trade accounts payable oraccrued liabilities arising in the ordinary course of business which are notoverdue or which are being contested in good

 

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faith and for which theBorrowers maintain sufficient reserves in accordance with GAAP),

 

(e)   every obligation of such Person under anyCapitalized Lease,

 

(f)    every obligation of such Person under anySynthetic Lease,

 

(g)   all sales by such Person of (i) accounts orgeneral intangibles for money due or to become due, (ii) chattel paper,instruments or documents creating or evidencing a right to payment of money or(iii) other receivables (collectively “receivables”), whether pursuantto a purchase facility or otherwise, other than in connection with thedisposition of the business operations of such Person relating thereto or adisposition of defaulted receivables for collection and not as a financingarrangement, and together with any obligation of such Person to pay anydiscount, interest, fees, indemnities, penalties, recourse, expenses or otheramounts in connection therewith,

 

(h)   every obligation of such Person (an “equityrelatedpurchaseobligation”) to purchase, redeem, retireor otherwise acquire for value any Equity Interests of such Person or anyrights measured by the value of such Equity Interests,

 

(i)    every obligation of such Person under anyforward contract, futures contract, swap, option or other financing agreementor arrangement (including, without limitation, caps, floors, collars andsimilar agreements), the value of which is dependent upon interest rates,currency exchange rates, commodities or other indices (a “derivativecontract”),

 

(j)    every obligation in respect of Indebtednessof any other entity (including any partnership in which such Person is ageneral partner) to the extent that such Person is liable therefor as a resultof such Person’s ownership interest in or other relationship with such entity,except to the extent that the terms of such Indebtedness provide that suchPerson is not liable therefor and such terms are enforceable under applicablelaw, and

 

(k)   every obligation, contingent or otherwise, ofsuch Person guaranteeing, or having the economic effect of guarantying orotherwise acting as surety for, any obligation of a type described in any ofclauses (a) through (j) (the “primaryobligation”) of anotherPerson (the “primaryobligor”), in any manner, whether directlyor indirectly, and including, without limitation, any obligation of such Person(i) to purchase or pay (or advance or supply funds for the purchase of) anysecurity for the payment of such primary obligation, (ii) to purchase property,securities or services for the purpose of assuring the payment of such primaryobligation, or (iii) to maintain working capital, equity capital or otherfinancial statement condition or liquidity of the primary obligor so as to enablethe primary obligor to pay such primary obligation.

 

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The “amount” or “principalamount” of any Indebtedness at any time of determination represented by(i) any Indebtedness, issued at a price that is less than the principal amountat maturity thereof, shall be the amount of the liability in respect thereofdetermined in accordance with GAAP, (ii) any Capitalized Lease shall be theprincipal component of the aggregate of the rentals obligation under such CapitalizedLease payable over the term thereof that is not subject to termination by thelessee, (iii) any sale of receivables shall be the amount of unrecoveredcapital or principal investment of the purchaser (other than any of theBorrowers or any of their wholly-owned Subsidiaries) thereof, excluding amountsrepresentative of yield or interest earned on such investment, (iv) anySynthetic Lease shall be the stipulated loss value, termination value or otherequivalent amount, (v) any derivative contract shall be the maximum amount ofany termination or loss payment required to be paid by such Person if suchderivative contract were, at the time of determination, to be terminated byreason of any event of default or early termination event thereunder, whetheror not such event of default or early termination event has in fact occurred,(vi) any equity related purchase obligation shall be the maximum fixedredemption or purchase price thereof inclusive of any accrued and unpaiddividends to be comprised in such redemption or purchase price and (vii) anyguaranty or other contingent liability referred to in clause (k) shall be anamount equal to the stated or determinable amount of the primary obligation inrespect of which such guaranty or other contingent obligation is made or, ifnot stated or determinable, the maximum reasonably anticipated liability inrespect thereof (assuming such Person is required to perform thereunder) asdetermined by such Person in good faith.

 

Indemnified Liabilities.  See§17.3.

 

Indemnified Person.  See§17.3.

 

Ineligible Securities. Securities which may not be underwritten or dealt in by member banks ofthe Federal Reserve System under Section 16 of the Banking Act of 1933 (12U.S.C. §24, Seventh), as amended.

 

Initial Public Offering.  Aninitial public offering by MSSR of the common stock of MSSR pursuant to aneffective S-1 Registration Statement under the Securities Act of 1933, asamended, which consists of at least thirty-nine point six percent (39.6%) ofissued and outstanding capital stock of MSSR after giving effect to suchoffering.

 

Instrument of Accession.  See§3.

 

Interest Payment Date.  (a)As to any Base Rate Loan, the last day of the calendar quarter**with respect to interest accrued duringsuch calendar quarter, including, without limitation, the calendar quarterwhich includes the Drawdown Date of such Base Rate Loan; and (b) as to anyEurodollar Rate Loan in respect of which the Interest Period is (i) three (3)months or less, the last day of such Interest Period and (ii) more than three(3) months, the date that is three (3) months from the first day of suchInterest Period and, in addition, the last day of such Interest Period.

 

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Interest Period.  Withrespect to each Revolving Credit Loan, (a) initially, the period commencing onthe Drawdown Date of such Loan and ending on the last day of one of the periodsset forth below, as selected by the Borrowers in a Loan Request or as otherwiserequired by the terms of this Credit Agreement (i) for any Base Rate Loan, thelast day of the calendar quarter; and (ii) for any Eurodollar Rate Loan, one(1), two (2), three (3) or six (6) months; and (b) thereafter, each periodcommencing on the last day of the next preceding Interest Period applicable tosuch Revolving Credit Loan and ending on the last day of one of the periods setforth above, as selected by the Borrowers in a Conversion Request; providedthat all of the foregoing provisions relating to Interest Periods are subjectto the following:

 

(A)          if any Interest Period with respect toa Eurodollar Rate Loan would otherwise end on a day that is not a EurodollarBusiness Day, that Interest Period shall be extended to the next succeedingEurodollar Business Day unless the result of such extension would be to carrysuch Interest Period into another calendar month, in which event such InterestPeriod shall end on the immediately preceding Eurodollar Business Day;

 

(B)           if any Interest Period with respectto a Base Rate Loan would end on a day that is not a Business Day, thatInterest Period shall end on the next succeeding Business Day;

 

(C)           if the Borrowers shall fail to givenotice as provided in §2.7, the Borrowers shall be deemed to have requested aconversion of the affected Eurodollar Rate Loan to a Base Rate Loan and thecontinuance of all Base Rate Loans as Base Rate Loans on the last day of thethen current Interest Period with respect thereto;

 

(D)          any Interest Period relating to anyEurodollar Rate Loan that begins on the last Eurodollar Business Day of acalendar month (or on a day for which there is no numerically corresponding dayin the calendar month at the end of such Interest Period) shall end on the lastEurodollar Business Day of a calendar month; and

 

(E)           any Interest Period that wouldotherwise extend beyond the Maturity Date shall end on the Maturity Date.

 

Interest Rate Agreement.  Anyinterest rate swap agreement, interest rate cap agreement, interest rate collaragreement, interest rate futures contract, interest rate option agreement orother similar agreement or arrangement to which any Borrower and any Lender isa party and is designed to protect the Borrowers against fluctuations ininterest rates.

 

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Investments.  Allexpenditures made and all liabilities incurred (contingently or otherwise) forthe acquisition of stock or Indebtedness of, or for loans, advances, capitalcontributions or transfers of property to, or in respect of any guaranties (orother commitments as described under Indebtedness), or obligations of, anyPerson.  In determining the aggregateamount of Investments outstanding at any particular time: (a) the amount of anyInvestment represented by a guaranty shall be taken at not less than theprincipal amount of the obligations guaranteed and still outstanding; (b) thereshall be included as an Investment all interest accrued with respect toIndebtedness constituting an Investment unless and until such interest is paid;(c) there shall be deducted in respect of each such Investment any amountreceived as a return of capital (but only by repurchase, redemption,retirement, repayment, liquidating dividend or liquidating distribution); (d)there shall not be deducted in respect of any Investment any amounts receivedas earnings on such Investment, whether as dividends, interest or otherwise,except that accrued interest included as provided in the foregoing clause (b)may be deducted when paid; and (e) there shall not be deducted from the aggregateamount of Investments any decrease in the value thereof.

 

Lender Affiliate.  (a)With respect to any Lender, (i) an Affiliate of such Lender or (ii) any entity(whether a corporation, partnership, limited liability company, trust or legalentity) that is engaged in making, purchasing, holding or otherwise investingin bank loans and similar extensions of credit in the ordinary course of itsbusiness and is administered or managed by such Lender or an Affiliate of suchLender and (b) with respect to any Lender that is a fund which invests in bankloans and similar extensions of credit, any other entity (whether acorporation, partnership, limited liability company, trust or other legalentity) that is a fund that invests in bank loans and similar extensions ofcredit and is managed by the same investment advisor as such Lender or by anAffiliate of such investment advisor.

 

Lenders.  Eachof the lending institutions listed on Schedule 1 hereto andany other Person who becomes an assignee of any rights and obligations of aLender pursuant to §16 or who agrees to advance additional Revolving CreditLoans pursuant to §3 and is approved by the Borrowers.

 

Letter of Credit.  See§5.1.1.

 

Letter of Credit Application.  See§5.1.1.

 

Letter of Credit Fee.  See§5.6.

 

Letter of CreditParticipation.  See §5.1.4.

 

Lien.  Anymortgage, deed of trust, security interest, pledge, hypothecation, assignment,attachment, deposit arrangement, encumbrance, lien (statutory, judgment orotherwise), or other security agreement or preferential arrangement of any kindor nature whatsoever (including any conditional sale or other title retentionagreement, any Capitalized Lease, any Synthetic Lease, any financing leaseinvolving substantially the same economic effect as any of the foregoing andthe filing of

 

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any financing statement under the Uniform Commercial Code or comparablelaw of any jurisdiction).

 

Liquidity.  Atany time, the sum of (a) all cash and Cash Equivalents of the Borrowers plus(b) the Total Revolving Credit Commitment, minusthe aggregate of (A) the Maximum Drawing Amount, (B) all Unpaid ReimbursementObligations, and (C) outstanding Revolving Credit Loans (after giving effect toall amounts requested).

 

Liquor Management Agreement.  Anyagreement or contract between any of the Borrowers and any of the Sellerspursuant to which such Borrower has obtained the consent of such Seller to useliquor licenses issued to such Seller in the operation of a particular Restaurantfollowing the consummation of the 2001 Acquisition.

 

Loan Documents.  ThisCredit Agreement, the Notes, the Letter of Credit Applications, the Letters ofCredit, the Fee Letter and the Security Documents, and each other document oragreement entered into in connection herewith and therewith.

 

Loan Request.  See§2.6.

 

Maintenance CapitalExpenditures. CapitalExpenditures that are not Growth Capital Expenditures.  For the avoidance of doubt, MaintenanceCapital Expenditures shall include investments in new point of sale systems oraccounting systems.

 

Management Agreements. Collectively, the Management Agreements, each dated as of August 22,2001, by and among CH, BRS, MSAC, and MSRC.

 

Material Adverse Effect.  Withrespect to any event or occurrence of whatever nature (including any adversedetermination in any litigation, arbitration or governmental investigation orproceeding):

 

(a)   a material adverse effect on the business,properties,  condition (financial orotherwise), assets, operations or income of MSRC individually, or the Borrowersand their Subsidiaries taken as a whole;

 

(b)   an adverse effect on the ability of MSRCindividually, or the Borrowers and their Subsidiaries, taken as a whole, toperform any of their respective Obligations under any of the Loan Documents; or

 

(c)   any impairment of (i) the validity, bindingeffect or enforceability of this Credit Agreement or any of the other LoanDocuments, (ii) the rights, remedies or benefits available to theAdministrative Agent or any Lender under any Loan Document, or (iii) theattachment, perfection or priority of any Lien of the Administrative Agentunder the Security Documents on any material portion of the Collateral.

 

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Material Contracts.  Writtenor oral agreements or commitments of or relating to the Parent, the Borrowersor their Subsidiaries that involve monetary obligations of more than $500,000per year.

 

Maturity Date. July 23, 2009.

 

Maximum Drawing Amount.  Themaximum aggregate amount that the beneficiaries may at any time draw underoutstanding Letters of Credit, as such aggregate amount may be reduced fromtime to time pursuant to the terms of the Letters of Credit.

 

Membership Interest PledgeAgreement. TheMembership Interest Pledge Agreement, dated as of the Closing Date, among MSACand the Administrative Agent, and as the same may be amended from time to timehereafter, and in form and substance satisfactory to the Administrative Agent.

 

Moody’s. Moody’s Investors Services, Inc.

 

Mortgaged Property.  AnyReal Estate which is subject to any Mortgage.

 

Mortgages.  Theseveral mortgages and deeds of trust, executed and delivered from time to timefrom and after the Closing Date, as the same may have been amended as of theClosing Date and as each of the same may be amended from time to timehereafter, from the Borrowers and their Subsidiaries to the AdministrativeAgent with respect to the fee and leasehold interests of the Borrowers andtheir Subsidiaries in the Real Estate and in form and substance reasonablysatisfactory to the Administrative Agent.

 

MSAC.  Asdefined in the preamble hereto.

 

MS Acquisition I. McCormick & Schmick Acquisition ITexas, Inc., a Texas corporation.

 

MS Acquisition II. McCormick & Schmick Acquisition II Texas, Inc., a Delawarecorporation.

 

MS Division. Avado (but only with respect to the Restaurants listed on Schedule 1.1 hereto operated by Avado as ofMarch 31, 2001 and immediately prior to August 22, 2001 and the assets and theliabilities directly related thereto), MSHC and the MSHC Subsidiaries.

 

MSHC. McCormick & Schmick Holding Corp., a Georgia corporation.

 

MSHC Subsidiaries. Collectively, McCormick & Schmick Holding Corp., a Delawarecorporation, McCormick & Schmick Operating Corp., a Georgia corporation,McCormick & Schmick TX General, Inc., a Georgia corporation, McCormick& Schmick Limited, Inc., a Georgia corporation, McCormick & Schmick ofTexas, LP, a Texas limited partnership, McCormick & Schmick’s SCP VIII,Inc., an Oregon corporation, McCormick

 

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& Schmick’s RMP III, Inc., an Oregon corporation, McCormick &Schmick of Montgomery County, Inc., a Georgia corporation, and McCormick andSchmick TX Liquor, Inc., a Texas corporation.

 

MS LLC. McCormick & Schmick Holdings, LLC, a Delaware limited liabilitycompany, which was merged with MSSR on or about the Closing Date, with MSSRbeing the surviving entity.

 

MSRC.  Asdefined in the preamble hereto.

 

MSSR. McCormick & Schmick’s Seafood Restaurants, Inc., a Delawarecorporation, which was merged with and into MS LLC on or about the ClosingDate, with MSSR being the surviving entity.

 

Multiemployer Plan.  Anymultiemployer plan within the meaning of §3(37) of ERISA maintained orcontributed to by any of the Borrowers or any ERISA Affiliate.

 

Net Cash Equity IssuanceProceeds.  With respect to any Equity Issuance, theexcess of the gross cash proceeds received by such Person for such EquityIssuance after deduction of all reasonable and customary transaction expenses(including, without limitation, underwriting discounts and commissions)actually incurred in connection with such a sale or other issuance.

 

Net Cash Sale Proceeds.  Thenet cash proceeds received by a Person in respect of any Asset Sale, less thesum of (a) all reasonable out-of-pocket fees, commissions and other reasonablyand customary direct expenses actually incurred in connection with such AssetSale, including the amount of any transfer or documentary taxes required to bepaid by such Person in connection with such Asset Sale, and (b) the aggregateamount of cash so received by such Person which is required to be used toretire (in whole or in part) any Indebtedness (other than under the LoanDocuments) of such Person permitted by this Credit Agreement that was securedby a Lien permitted by this Credit Agreement having priority over the Liens (ifany) of the Administrative Agent (for the benefit of the Administrative Agentand the Lenders) with respect to such assets transferred and which is requiredto be repaid in whole or in part (which repayment, in the case of any otherrevolving credit arrangement or multiple advance arrangement, reduces thecommitment thereunder) in connection with such Asset Sale.

 

Net Cash Debt Proceeds.  Withrespect to any issuance of Subordinated Debt, the excess of the net cash proceeds received by such Person for suchissuance after deduction of all reasonable and customary transaction expenses(including, without limitation, out-of-pocket expenses, underwriting discountsand commissions) actually incurred in connection with such an issuance.

 

New Lending Office. See §6.2.4.

 

Non-U.S. Lender. See §6.2.3.

 

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Note Pledge Agreement.  TheNote Pledge Agreement, dated as of the Closing Date, and as the same may beamended from time to time hereafter, among the MSRC and the AdministrativeAgent, in form and substance satisfactory to the Administrative Agent.

 

Note Record.  ARecord with respect to a Note.

 

Notes. See §2.4.

 

Notice of Redemption.  Theletter, dated June 9, 2004 from MSAC to The Bell Atlantic Master Trust, c/oMellon Bank, N.A., with respect to the redemption of the Convertible PreferredStock.

 

Obligations.  Allindebtedness, obligations and liabilities of any of the Borrowers and theirSubsidiaries to any of the Lenders and the Administrative Agent, individuallyor collectively, existing on the date of this Credit Agreement or arisingthereafter, direct or indirect, joint or several, absolute or contingent,matured or unmatured, liquidated or unliquidated, secured or unsecured, arisingby contract, operation of law or otherwise, arising or incurred under thisCredit Agreement or any of the other Loan Documents or any Interest RateAgreement or in respect of any of the Revolving Credit Loans made orReimbursement Obligations incurred or any of the Notes, Letter of CreditApplications, Letters of Credit or other instruments at any time evidencing anythereof.

 

Officer Fees. Collectively, the fees payable by the Borrowers to William McCormickand/or Douglas Schmick pursuant to the terms of each of the Covenant Not toCompete Agreements, each dated as of January 1, 2004 by and between MSAC andWilliam McCormick and Douglas Schmick, as applicable.

 

outstanding.  Withrespect to the Revolving Credit Loans, the aggregate unpaid principal thereofas of any date of determination.

 

Parent. McCormick & Schmick Acquisition Corp. II, a Delaware corporation.

 

Parent Guaranty.  TheParent Guaranty, dated as of the Closing Date, as the same may be amended fromtime to time hereafter, made by Parent in favor of the Lenders and theAdministrative Agent pursuant to which the Parent guaranties to the Lenders andthe Administrative Agent the payment and performance of the Obligations and inform and substance satisfactory to the Lenders and the Administrative Agent.

 

Parent Pledge Agreement.  TheStock Pledge Agreement, dated as of the Closing Date, and as the same may beamended from time to time hereafter, between the Parent and the AdministrativeAgent and in form and substance satisfactory to the Administrative Agent.

 

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Partnership Pledge Agreement.  The Collateral Assignment of PartnershipInterests, dated as of the Closing Date, and as the same may be amended fromtime to time hereafter, among MS Acquisition I, MS Acquisition II and theAdministrative Agent and in form and substance satisfactory to theAdministrative Agent.

 

PBGC.  The Pension Benefit Guaranty Corporationcreated by §4002 of ERISA and any successor entity or entities having similarresponsibilities.

 

Perfection Certificates.  The Perfection Certificates as defined in theSecurity Agreement.

 

Permitted Acquisition.  Any Acquisition consummated after the ClosingDate, by any Borrower or any Subsidiary of a Borrower, so long as, in eachcase, either the Required Lenders have given their written consent to suchAcquisition or all of the following conditions are satisfied:

 

(a)           after giving effect to theAcquisition, the assets comprising such business (as used in this definition,the “Acquired Assets”) shall be owned orleased exclusively by a Borrower or a Subsidiary of a Borrower;

 

(b)           any Indebtedness incurred or assumedin connection with the Acquisition is Indebtedness permitted under §10.1 or itsincurrence is consented to by the Required Lenders;

 

(c)           in the case of a merger orconsolidation, a Borrower, or a wholly-owned direct or indirect Subsidiary of aBorrower, is the surviving entity;

 

(d)           the Borrowers and their Subsidiariesshall have complied with the requirements of §9.17 hereof;

 

(e)           the Borrowers shall havedemonstrated to the reasonable satisfaction of the Administrative Agent that,immediately after giving effect to the Acquisition (including the making of anyRevolving Credit Loans required to finance such Acquisition and the incurrenceof any Indebtedness required to finance the Acquisition), all covenants(including covenants contained in §11 of this Credit Agreement) containedherein would have been satisfied on a pro forma basis as at the end of and forthe most recently ended Reference Period;

 

(f)            the Borrowers shall have Liquidity(assuming pro-forma covenant compliance) of at least $10,000,000 after givingeffect to the Acquisition;

 

(g)           no Default or Event of Default iscontinuing immediately prior to the Acquisition, and no Default or Event ofDefault would result from the Acquisition immediately after such Acquisition;

 

(h)           the Administrative Agent shall havereceived reasonably satisfactory evidence that the business to be acquired hascomplied with, and, immediately

 

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following theconsummation of the Acquisition, is in compliance with, in all materialrespects, all applicable laws; and

 

(i)            prior to the closing of theAcquisition, the Borrowers have delivered to the Administrative Agent thedefinitive acquisition documents between the applicable Borrower or one oftheir Subsidiaries and the applicable selling entities.

 

Permitted ECF Growth CapEx Amount.  For any period, (a) Consolidated Net Incomeof the Borrowers and their Subsidiaries, plus (b) depreciation andamortization for such period, plus (c) all one-time upfront fees(including without limitation bank fees and broker fees and commissions) paid,and all deferred loan and other costs and expenses (including attorneys’ feesand fees of other professionals) incurred and paid, by the Borrowers inconnection with this Credit Agreement, plus (d) minority interest (asdefined in GAAP), minus (e) Capital Expenditures during such period.

 

Permitted Liens.  Liens permitted by §10.2.

 

Person.  Any individual, corporation, limitedliability company, partnership, limited liability partnership, trust, otherunincorporated association, business, or other legal entity, and anyGovernmental Authority.

 

Pledge Agreement.  The Stock Pledge Agreement, dated as of theClosing Date, and as the same may be amended from time to time hereafter, amongthe Borrowers and the Administrative Agent, in form and substance satisfactoryto the Administrative Agent.

 

Pro Forma Balance Sheet.  See §8.4.3.

 

RCRA.  See §8.18(a).

 

Real Estate.  All real property at any time owned or leased(as lessee or sublessee) by any of the Borrowers or any of their Subsidiaries.

 

Real Estate Documentation.See §9.13(c).

 

Real Estate Leases.  Leases, including ground leases and spaceleases, pursuant to which any of the Borrowers or any of their Subsidiariesleases Real Estate.

 

Record.  The grid attached to a Note, or thecontinuation of such grid, or any other similar record, including computerrecords, maintained by any Lender with respect to any Revolving Credit Loan referredto in such Note.

 

Reference Lender.  Fleet.

 

Reference Period.  As of any date of determination, the periodof four (4) consecutive fiscal quarters of the Borrowers and their Subsidiariesending on such date,

 

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or if such date is not a fiscalquarter end date, the period of four (4) consecutive fiscal quarters mostrecently ended (in each case treated as a single accounting period); provided, however,(a) solely for purposes of calculating the Adjusted Leverage Ratio andConsolidated Cash Flow Ratio set forth in §11.1 and 11.2, until four (4) fiscalquarters of the Borrowers and their Subsidiaries have elapsed since June 26,2004, “Reference Period” shall mean, suchshorter period of one (1), two (2) or three (3) full fiscal quarters elapsedsince June 26, 2004 and (b) solely for purposes of calculating the ConsolidatedFunded Indebtedness for purposes of the Adjusted Leverage Ratio in §§11.1,until four (4) fiscal quarters of the Borrowers and their Subsidiaries haveelapsed since June 26, 2004, the actual amount of Consolidated FundedIndebtedness shall be multiplied by twenty-five percent (25%) for every fiscalquarter in such shorter Reference Period.

 

Register.  See §16.3.

 

Reimbursement Obligation.  The Borrowers’ obligation to reimburse theAdministrative Agent and the Lenders on account of any drawing under any Letterof Credit as provided in §5.2.

 

Related Parties.With respect to any Person, such Person’s Affiliates and the partners,directors, officers, employees, agents and advisors of such Person and of suchPerson’s Affiliates.

 

Required Lenders.  As of any date, any combination of Lendersthe sum of whose aggregate Revolving Credit Commitments constitute at leastsixty-six and two-thirds percent (66 2/3%) of the sum of the Total RevolvingCredit Commitment, or, if the Total Revolving Credit Commitment has beenterminated or if the Maturity Date has occurred, any combination of Lendersholding at least sixty-six and two-thirds percent (66 2/3%) of the totaloutstanding principal amount of the Revolving Credit Loans on such date; provided that at any time when there are notmore than two (2) Lenders, “Required Lenders” shall mean all Lenders.

 

Restaurant.  A particular restaurant at a particularlocation that is owned or operated by a Borrower or a Subsidiary of a Borrower.

 

Restricted Payment.  In relation to the Borrowers and theirSubsidiaries, any (a) Distribution, (b) payment or prepayment by any Borroweror any of its Subsidiaries of any amounts to such Borrower’s or suchSubsidiary’s equity holders or to any Affiliates of such equity holders or ofsuch Borrower, in each case, other than to a Borrower, (c) payment orprepayment of any amounts in respect of any Subordinated Debt, (d) payments inrespect of derivatives or other transactions with any financial institution,commodities or stock exchange or clearinghouse (a “DerivativesCounterparty”)obligating a Borrower or any of its Subsidiaries to make payments to suchDerivatives Counterparty as a result of any change in market value of anyEquity Interests of such Borrower or such Subsidiary, or (e) any paymentsto any Sponsor.

 

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Revolving Credit Commitment.  With respect to each Lender, the amount setforth on Schedule 1 hereto (as adjusted from time to timepursuant to §§3 and/or 16) as the amount of such Lender’s commitment to makeRevolving Credit Loans to, and to participate in the issuance, extension andrenewal of Letters of Credit for the account of, the Borrowers, as the same maybe reduced or increased from time to time pursuant to §3 or §16 hereof; or ifsuch commitment is terminated pursuant to the provisions hereof, zero.

 

Revolving Credit Commitment Percentage.  With respect to each Lender, the percentageset forth on Schedule 1 hereto as such Lender’s percentageof the Total Revolving Credit Commitments as such percentage may be adjustedpursuant to §3 or §16.

 

Revolving Credit Loans.  Revolving credit loans made or to be made bythe Lenders to the Borrowers pursuant to §2.

 

Santa Rosa Pledge Agreement.  The Pledge and Security Agreement, dated asof June 7, 2002, by Developer and MSRC, whereby Developer granted a Lien oncertain furniture, fixtures and equipment located at Developer’s Santa Rosa,California restaurant in favor of MSRC.

 

Santa Rosa Transaction.  Collectively, the (a) management andconsulting services to be provided by MSRC to Developer in connection withDeveloper’s Santa Rosa, California restaurant pursuant to a ManagementAgreement, dated June 6, 2002, between Developer and MSRC, and (b) $400,000loan advanced by MSRC to Developer evidenced by a promissory note, dated as ofJune 7, 2002, issued by Developer in favor of MSRC, and secured by the SantaRosa Pledge Agreement.

 

SARA.  See §8.18(a).

 

Security Agreement.  The Security Agreement, dated as of theClosing Date, and as the same may be amended from time to time hereafter, amongthe Borrowers, each of the Subsidiaries of the Borrowers and the AdministrativeAgent, in form and substance satisfactory to the Administrative Agent.

 

Security Documents.  The Parent Guaranty, the Security Agreement,the Parent Pledge Agreement, the Pledge Agreement, the Partnership PledgeAgreement, Membership Interest Pledge Agreement, the Note Pledge Agreement, theAcknowledgment and Consent, the Mortgages, the Trademark Assignment, the AgencyAccount Agreements, the Collateral Assignment of Acquisition Documents, eachAdditional Security Document, and all other instruments and documents,including without limitation Uniform Commercial Code financing statements,required to be executed or delivered pursuant to any Security Document.

 

Sellers.  Collectively, Avado, MSHC, and each of thePersons listed on Schedule 1.1D of the 2001Acquisition Agreement.

 

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S&P.  Standard & Poor’s Ratings Group.

 

Sponsor(s).  Collectively or individually, BRS, the BRSAffiliates, CH and/or the CH Affiliates, as the context requires.

 

Stock and Warrant Purchase Agreement.  The Stock and Warrant Purchase Agreement,dated as of August 22, 2001, between Mellon Bank, N.A., as trustee for The BellAtlantic Master Trust, and the Parent, and all exhibits and attachmentsthereto, as in effect on August 22, 2001 and as the same has been supplemented,amended or modified from time to time through the Closing Date, in each case inform and substance reasonably satisfactory to the Administrative Agent.

 

Subordinated Debt.  Collectively, (a) unsecured Indebtedness ofany Borrower or any of its Subsidiaries permitted by §10.1(c) and evidenced bythe Subordinated Debt Documents and (b) unsecured Indebtedness of the Parentpermitted pursuant to §4.2(a) of the Parent Guaranty.

 

Subordinated Debt Documents.  Each document evidencing the SubordinatedDebt which has been delivered to the Administrative Agent in form and substancereasonably satisfactory to the Required Lenders, together with amendments ormodifications thereto permitted pursuant to §10.14.3.

 

Subsidiary.  Any corporation, partnership, limitedliability company, association, trust, or other business entity of which thedesignated parent shall at any time own directly or indirectly through aSubsidiary or Subsidiaries at least a majority (by number of votes) of theoutstanding Voting Stock.

 

Synthetic Lease.  Any lease of goods or other property, whetherreal or personal, which is treated as an operating lease under GAAP and as aloan or financing for U.S. income tax purposes.

 

Termination Documents.  Collectively, the (a) Form of Termination ofBRS and CH Management Agreements, effective as of June 25, 2004, between MSAC,MSRC, MSSR, BRS and CH, (b) Termination of Covenant Not to Compete, dated as ofJune 25, 2004, between MSAC, MS LLC, MSSR and Douglas L. Schmick, and (c)Termination of Covenant Not to Compete, dated as of June 25, 2004, betweenMSAC, MS LLC, MSSR and William P. McCormick, in each case in form and substancereasonably satisfactory to the Administrative Agent.

 

Total Revolving Credit Commitment.  The sum of the Revolving Credit Commitmentsof the Lenders, as in effect from time to time, which as of the Closing Dateshall be equal to the aggregate principal amount of $40,000,000, as such amountmay be decreased from time to time pursuant to the terms hereof or increasedafter the Closing Date pursuant to the terms and conditions set forthin §3.

 

Trademark Assignment.  The Trademark Collateral Security and PledgeAgreement, dated as of the Closing Date, as the same may be amended from timeto time

 

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hereafter, made by theBorrowers in favor of the Administrative Agent and the Assignment of Trademarksexecuted in connection therewith, all in form and substance satisfactory to theAdministrative Agent.

 

Type.  As to any Revolving Credit Loan its nature asa Base Rate Loan or a Eurodollar Rate Loan.

 

2001 Acquisition.  The acquisition by the Borrowers from theSellers of substantially all of the assets of the MS Division of the Sellers.

 

2001 Acquisition Agreement.  Collectively, the (a) Asset PurchaseAgreement, dated as of June 7, 2001, among Sellers and MSAC, asamended by the First Amendment of Asset Purchase Agreement, dated as of August22, 2001, and (b) Bill of Sale and Assignment and Assumption Agreement, datedDecember 10, 2001, among MSRC and Sellers, each as in effect without givingeffect to any additional amendments, modifications or waivers of the termsthereof other than amendments, modifications and waivers permitted by §10.14.2,certified copies of which have been delivered to the Administrative Agent.

 

2001 Acquisition Documents.  The 2001 Acquisition Agreement, including allexhibits and schedules thereto, and all other agreements, side letters anddocuments executed in connection therewith, each in the form delivered to theAdministrative Agent prior to the Closing Date, together with amendments ormodifications thereto permitted pursuant to §10.14.2.

 

2001 Credit Agreement.  The Revolving Credit and Term Loan Agreement,dated as of August 22, 2001, by and among certain of the Borrowers, Fleet andcertain other lending institutions party thereto.

 

2003 Credit Agreement.  The Amended and Restated RevolvingCredit  Agreement, dated as of October28, 2003, by and among the Borrowers, Fleet and certain other lendinginstitutions party thereto.

 

Uniform Commercial Code.The Uniform Commercial Code as in effect in any applicable jurisdiction.

 

Uniform Customs. See§5.1.3.

 

Unpaid Reimbursement Obligation.  Any Reimbursement Obligation for which the Borrowersdo not reimburse the Administrative Agent and the Lenders on the date specifiedin, and in accordance with, §5.2.

 

Unprofitable Restaurant.  At the relevant time of reference thereto,any Restaurant (a) which has been in operation for at least twelve (12) monthsand (b) whose individual “Restaurant EBITDA”(as identified on the Borrowers’ financial statements applied consistently fromand after the Closing Date) is less than $1 for the twelve (12) most recentlyended fiscal months; provided that, solelyfor purposes of determining

 

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whether any Restaurant is anUnprofitable Restaurant, it shall be assumed that, for the first six (6) monthsafter any Restaurant commences operation, the “RestaurantEBITDA” of such Restaurant shall be the greater of (i) its actual “Restaurant EBITDA” for such period or (ii) $1.

 

Voting Stock.  Equity Interests, of any class or classes(however designated), the holders of which are at the time entitled, as suchholders, to vote for the election of a majority of the directors (or personsperforming similar functions) of the corporation, general partner orpartnership, limited liability company, association, trust or other businessentity involved, whether or not the right so to vote exists by reason of thehappening of a contingency.

 

Warrant Documents.  Collectively, (a) the Stock and WarrantPurchase Agreement, (b) the Class A-2 Common Units Purchase Warrant issuedAugust 22, 2001 by MS LLC to Mellon Bank, N.A., as Trustee for The BellAtlantic Master Trust pursuant to the Stock and Warrant Purchase Agreement, (c)the Preferred Units Purchase Warrant issued August 22, 2001 by MS LLC to MellonBank, N.A., as Trustee for The Bell Atlantic Master Trust pursuant to the Stockand Warrant Purchase Agreement, and (d) the Bell Atlantic Consent, in each casetogether with amendments or modifications thereto.

 

**1.2.         Rules of Interpretation**.

 

(a)           A reference to any document oragreement shall include such document or agreement as amended, modified orsupplemented from time to time in accordance with its terms and the terms ofthis Credit Agreement unless specifically specified to the contrary, either inthe defined term referring to such document or agreement or otherwise.

 

(b)           The singular includes the plural andthe plural includes the singular.

 

(c)           A reference to any law includes anyamendment or modification to such law.

 

(d)           A reference to any Person includesits permitted successors and permitted assigns.

 

(e)           Accounting terms not otherwisedefined herein have the meanings assigned to them by GAAP applied on aconsistent basis by the accounting entity to which they refer.

 

(f)            The words “include”, “includes” and “including” are not limiting.

 

(g)           All terms not specifically defined hereinor by GAAP, which terms are defined in the Uniform Commercial Code as in effectin the Commonwealth of Massachusetts, have the meanings assigned to themtherein, with the term “instrument” being that defined under Article 9of the Uniform Commercial Code.

 

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(h)           Reference to a particular “§” refersto that section of this Credit Agreement unless otherwise indicated.

 

(i)            The words “herein”, “hereof”, “hereunder” and words of like import shallrefer to this Credit Agreement as a whole and not to any particular section orsubdivision of this Credit Agreement.

 

(j)            Unless otherwise expresslyindicated, in the computation of periods of time from a specified date to alater specified date, the word “from” means“from and including,” the words “to” and “until” each mean “to but excluding,” and theword “through” means “to and including.”

 

(k)           This Credit Agreement and the otherLoan Documents may use several different limitations, tests or measurements toregulate the same or similar matters. All such limitations, tests and measurements are, however, cumulativeand are to be performed in accordance with the terms thereof.

 

(l)            This Credit Agreement and the otherLoan Documents are the result of negotiation among, and have been reviewed bycounsel to, among others, the Administrative Agent and the Borrowers and arethe product of discussions and negotiations among all parties.  Accordingly, this Credit Agreement and the otherLoan Documents are not intended to be construed against the AdministrativeAgent or any of the Lenders merely on account of the Administrative Agent’s orany Lender’s involvement in the preparation of such documents.

 

**2.             THE REVOLVING CREDIT FACILITY**.

 

**2.1.         Commitment to Lend Revolving CreditLoans.**  Subjectto the terms and conditions set forth in this Credit Agreement, each of theLenders severally agrees to lend to the Borrowers, and the Borrowers mayborrow, repay and reborrow from time to time from the Closing Date up to butnot including the Maturity Date upon notice by the Borrowers to theAdministrative Agent given in accordance with §2.6, such sums as are requestedby the Borrowers up to a maximum aggregate amount outstanding (after givingeffect to all amounts requested) at any one time equal to such Lender’sRevolving Credit Commitment minus such Lender’s Revolving CreditCommitment Percentage of the sum of the Maximum Drawing Amount and all UnpaidReimbursement Obligations, provided that the sum of the outstandingamount of the Revolving Credit Loans (after giving effect to all amountsrequested) plus the Maximum Drawing Amount and all Unpaid ReimbursementObligations shall not at any time exceed the Total Revolving Credit Commitmentat such time.  The Revolving Credit Loansshall be made prorata in accordance with each Lender’s RevolvingCredit Commitment Percentage.  Eachrequest for a Revolving Credit Loan hereunder shall constitute a representationand warranty by the Borrowers that the conditions set forth in §12 and §13, inthe case of the initial Revolving Credit Loans to be

 

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made on theClosing Date, and §13, in the case of all other Revolving Credit Loans, havebeen satisfied on the date of such request.

 

**2.2.         Commitment Fee.**  The Borrowers jointly and severally agree topay to the Administrative Agent for the accounts of the Lenders in accordancewith their respective Revolving Credit Commitment Percentages a commitment fee(the “CommitmentFee”) calculated at the rate of**three-eighths of one percent (0.375%) per annum on theaverage daily amount during each calendar quarter or portion thereof from******the Closing Date**to the Maturity Date by which the Total Revolving CreditCommitment minus the sum of the Maximum Drawing Amount and all UnpaidReimbursement Obligations exceeds the outstanding amount of Revolving CreditLoans during such calendar quarter.  TheCommitment Fee shall be payable quarterly in arrears on the first day of eachcalendar quarter for the immediately preceding calendar quarter commencing onthe first such date following the Closing Date, with a final payment on theMaturity Date or any earlier date on which the Revolving Credit Commitmentsshall terminate.

 

**2.3.         Reduction of Total Revolving CreditCommitment.** The Borrowers shall have the right at any time and from time to timeupon five (5) Business Days prior written notice to the Administrative Agent toreduce by $1,000,000 or an integral multiple of $500,000 in excess thereof orto terminate entirely the Total Revolving Credit Commitment, whereupon theRevolving Credit Commitments of the Lenders shall be reduced proratain accordance with their respective Revolving Credit Commitment Percentages ofthe amount specified in such notice or, as the case may be, terminated.  Promptly after receiving any notice of theBorrowers delivered pursuant to this §2.3, the Administrative Agent will notifythe Lenders of the substance thereof.  Uponthe effective date of any such reduction or termination, the Borrowers shallpay to the Administrative Agent for the respective accounts of the Lenders thefull amount of any Commitment Fee then accrued on the amount of thereduction.  No reduction or terminationof the Revolving Credit Commitments may be reinstated.  In addition, the Total Revolving CreditCommitment shall be reduced in accordance with §4.3.

 

**2.4.         The Notes.**  The Revolving Credit Loans shall be evidencedby separate promissory notes of the Borrowers in substantially the form of Exhibit Ahereto (each a “Note”), dated as of the Closing Date (or such other dateon which a Lender may become a party hereto in accordance with §3 or §16hereof) and completed with appropriate insertions.  One Note shall be payable to the order of eachLender in a principal amount equal to such Lender’s Revolving Credit Commitmentor, if less, the outstanding amount of all Revolving Credit Loans made by suchLender, plus interest accrued thereon, as set forth below.  Each of the Borrowers irrevocably authorizeseach Lender to make or cause to be made, at or about the time of the DrawdownDate of any Revolving Credit Loan or at the time of receipt of any payment ofprincipal on such Lender’s Note, an appropriate notation on such Lender’s NoteRecord reflecting the making of such Revolving

 

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Credit Loan or (as the case may be) the receipt ofsuch payment.  The outstanding amount ofthe Revolving Credit Loans set forth on such Lender’s Note Record shall be primafacie evidence of the principal amount thereof owing and unpaid to suchLender, but the failure to record, or any error in so recording, any suchamount on such Lender’s Note Record shall not limit or otherwise affect theobligations of the Borrowers hereunder or under any Note to make payments ofprincipal of or interest on any Note when due.

 

**2.5.         Interest on Revolving Credit Loans.**  Except as otherwise provided in §6.10,

 

(a)           Each Base Rate Loan shall bearinterest for the period commencing with the Drawdown Date thereof and ending onthe last day of the Interest Period with respect thereto at the rate per annumequal to the Base Rate plus the Applicable Margin with respect to BaseRate Loans.

 

(b)           Each Eurodollar Rate Loan shall bearinterest for the period commencing with the Drawdown Date thereof and ending onthe last day of the Interest Period with respect thereto at the rate per annumequal to the Eurodollar Rate determined for such Interest Period plusthe Applicable Margin with respect to Eurodollar Rate Loans.

 

The Borrowers jointly and severally promise to pay interest on eachRevolving Credit Loan in arrears on each Interest Payment Date with respectthereto.

 

**2.6.         Requests for Revolving Credit Loans.**  The Borrowers shall give to theAdministrative Agent written notice in the form of Exhibit Bhereto (or telephonic notice confirmed in a writing in the form of Exhibit Bhereto) of each Revolving Credit Loan requested hereunder (a “Loan Request”) (a) prior to 1:00 p.m. (Bostontime) of the proposed Drawdown Date of any Base Rate Loan and (b) prior to 1:00p.m. (Boston time) on the third Eurodollar Business Day prior to the proposedDrawdown Date of any Eurodollar Rate Loan. Each such notice shall specify (i) the principal amount of the RevolvingCredit Loan requested, (ii) the proposed Drawdown Date of such Revolving CreditLoan, (iii) the Interest Period for such Revolving Credit Loan and (iv) theType of such Revolving Credit Loan. Promptly upon receipt of any such notice, the Administrative Agent shallnotify each of the Lenders thereof.  EachLoan Request shall be irrevocable and binding on the Borrowers and shallobligate the Borrowers to accept the Revolving Credit Loan requested from theLenders on the proposed Drawdown Date. Each Loan Request shall be in a minimum aggregate amount of $500,000 oran integral multiple of $500,000 in excess thereof.

 

**2.7.         Conversion Options**.

 

**2.7.1.      Conversion to Different Type ofRevolving Credit Loan.**  The Borrowers may elect from time to time toconvert any outstanding Revolving Credit Loan to a Revolving Credit Loan ofanother Type,

 

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provided that (a) with respect toany such conversion of a Base Rate Loan to a Eurodollar Rate Loan, theBorrowers shall give the Administrative Agent at least three (3) EurodollarBusiness Days prior written notice of such election; (b) with respect to anysuch conversion of a Eurodollar Rate Loan into a Base Rate Loan, suchconversion shall only be made on the last day of the Interest Period withrespect thereto and (c) no Revolving Credit Loan may be converted into aEurodollar Rate Loan when any Default or Event of Default has occurred and iscontinuing.  On the date on which suchconversion is being made each Lender shall take such action as is necessary totransfer its Revolving Credit Commitment Percentage of such Revolving CreditLoans to its Domestic Lending Office or its Eurodollar Lending Office, as thecase may be.  All or any part ofoutstanding Revolving Credit Loans of any Type may be converted into aRevolving Credit Loan of another Type as provided herein, provided thatany conversion of a Base Rate Loan into a Eurodollar Rate Loan shall be in anaggregate principal amount of $500,000 or an integral multiple of $500,000 inexcess thereof.  Each Conversion Requestrelating to the conversion of a Revolving Credit Loan to a Eurodollar Rate Loanshall be irrevocable by the Borrowers.

 

**2.7.2.      Continuation of Type of RevolvingCredit Loan.** Any Revolving Credit Loan of any Type may be continued as a RevolvingCredit Loan of the same Type upon the expiration of an Interest Period withrespect thereto by compliance by the Borrowers with the notice provisionscontained in §2.7.1; provided that no Eurodollar Rate Loan may becontinued as such when any Default or Event of Default has occurred and iscontinuing, but shall be automatically converted to a Base Rate Loan on thelast day of the first Interest Period relating thereto ending during thecontinuance of any Default or Event of Default of which officers of theAdministrative Agent active upon the Borrowers’ account have actualknowledge.  In the event that theBorrowers fail to provide any such notice with respect to the continuation ofany Eurodollar Rate Loan as such, then such Eurodollar Rate Loan shall beautomatically converted to a Base Rate Loan on the last day of the firstInterest Period relating thereto.  TheAdministrative Agent shall notify the Lenders promptly when any such automaticconversion contemplated by this §2.7 is scheduled to occur.

 

**2.7.3.      Eurodollar Rate Loans.**  Any conversion to or from Eurodollar RateLoans shall be in such amounts and be made pursuant to such elections so that,after giving effect thereto, the aggregate principal amount of all EurodollarRate Loans having the same Interest Period shall not be less than $500,000 oran integral multiple of $500,000 in excess thereof.  No more than six (6) Revolving Credit Loansthat are Eurodollar Rate Loans having different Interest Periods may beoutstanding at any time.

 

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**2.8.         Funds for Revolving Credit Loan**.

 

**2.8.1.      Funding Procedures.**  Not later than 3:00 p.m. (Boston time) on theproposed Drawdown Date of any Revolving Credit Loans, each of the Lenders willmake available to the Administrative Agent, at the Administrative Agent’sOffice, in immediately available funds, the amount of such Lender’s RevolvingCredit Commitment Percentage of the amount of the requested Revolving CreditLoans.  Upon receipt from each Lender ofsuch amount, and upon receipt of the documents required by §§12 and 13 and thesatisfaction of the other conditions set forth therein, to the extentapplicable, the Administrative Agent will make available to the Borrowers theaggregate amount of such Revolving Credit Loans made available to theAdministrative Agent by the Lenders.  Thefailure or refusal of any Lender to make available to the Administrative Agentat the aforesaid time and place on any Drawdown Date the amount of itsRevolving Credit Commitment Percentage of the requested Revolving Credit Loansshall not relieve any other Lender from its several obligation hereunder tomake available to the Administrative Agent the amount of such other Lender’sRevolving Credit Commitment Percentage of any requested Revolving Credit Loans.

 

**2.8.2.      Advances by Administrative Agent.**  The Administrative Agent may, unless notifiedto the contrary by any Lender prior to a Drawdown Date, assume that such Lenderhas made available to the Administrative Agent on such Drawdown Date the amountof such Lender’s Revolving Credit Commitment Percentage of the Revolving CreditLoans to be made on such Drawdown Date, and the Administrative Agent may (butit shall not be required to), in reliance upon such assumption, make available tothe Borrowers a corresponding amount.  Ifany Lender makes available to the Administrative Agent such amount on a dateafter such Drawdown Date, such Lender shall pay to the Administrative Agent ondemand an amount equal to the product of (a) the average computed for theperiod referred to in clause (c) below, of the weighted average interest ratepaid by the Administrative Agent for federal funds acquired by theAdministrative Agent during each day included in such period, times (b)the amount of such Lender’s Revolving Credit Commitment Percentage of suchRevolving Credit Loans, times (c) a fraction, the numerator of which isthe number of days that elapse from and including such Drawdown Date to thedate on which the amount of such Lender’s Revolving Credit CommitmentPercentage of such Revolving Credit Loans shall become immediately available tothe Administrative Agent, and the denominator of which is 360.  A statement of the 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.  Ifthe amount of such Lender’s Revolving Credit Commitment Percentage of

 

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such Revolving Credit Loans is not made available tothe Administrative Agent by such Lender within three (3) Business Daysfollowing such Drawdown Date, the Administrative Agent shall be entitled torecover such amount from the Borrowers on demand, with interest thereon at therate per annum applicable to the Revolving Credit Loans made on such DrawdownDate.

 

**2.9.         Repayment of Revolving Credit Loans**.

 

**2.9.1.      Maturity.**  The Borrowers jointlyand severally promise to pay on the Maturity Date, and there shall becomeabsolutely due and payable on the Maturity Date, all of the Revolving CreditLoans outstanding on such date, together with any and all accrued and unpaidinterest thereon.

 

**2.9.2.      Mandatory Repayments of theRevolving Credit Loans.**  If at any time the sum of the outstandingamount of the Revolving Credit Loans, the Maximum Drawing Amount and all UnpaidReimbursement Obligations exceeds the Total Revolving Credit Commitment at suchtime, then the Borrowers shall immediately pay the amount of such excess to theAdministrative Agent for the respective accounts of the Lenders forapplication:  first, to any Unpaid Reimbursement Obligations; second, to the Revolving Credit Loans; and third, to provide to the Administrative Agent cash collateral forReimbursement Obligations as contemplated by §5.2(b) and (c).  Each payment of any Unpaid ReimbursementObligations or prepayment of Revolving Credit Loans shall be allocated amongthe Lenders, in proportion, as nearly as practicable, to such Lender’s fundedshare of the Reimbursement Obligation or (as the case may be) the respectiveunpaid principal amount of each Lender’s Note, with adjustments to the extentpracticable to equalize any prior payments or repayments not exactly inproportion.

 

**2.9.3.      Optional Repayments of theRevolving Credit Loans.**  The Borrowers shall have the right, at theirelection, to repay the outstanding amount of the Revolving Credit Loans, as awhole or in part, at any time without penalty or premium, provided thatany full or partial prepayment of the outstanding amount of any Eurodollar RateLoans pursuant to this §2.9.3 may be made only on the last day of the InterestPeriod relating thereto.  The Borrowersshall give the Administrative Agent (a) no later than 1:00 p.m. (Boston time), priorwritten notice on the date of any proposed prepayment pursuant to this §2.9.3of Base Rate Loans, and (b) no later than 1:00 p.m. (Boston time), two (2)Eurodollar Business Days prior written notice of any proposed prepaymentpursuant to this §2.9.3 of Eurodollar Rate Loans, in each case specifying theproposed date of prepayment of Revolving Credit Loans and the principal amountto be prepaid.  Each such partialprepayment of the Revolving

 

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Credit Loans shall be in an integral multiple of$100,000, shall be accompanied by the payment of accrued interest on theprincipal prepaid to the date of prepayment and shall be applied, in theabsence of instruction by the Borrowers, firstto the principal of Base Rate Loans and thento the principal of Eurodollar Rate Loans. Each partial prepayment shall be allocated among the Lenders, inproportion, as nearly as practicable, to the respective unpaid principal amountof each Lender’s Note, with adjustments to the extent practicable to equalizeany prior repayments not exactly in proportion.

 

**2.9.4.      Application of Payments Prior to anEvent of Default.**  Prior to the occurrence of an Event ofDefault, if, and solely to the extent that, after giving effect to the prepaymentof any Base Rate Loans then outstanding, any prepayment required to be madepursuant to §4.2 would require the Borrowers to compensate any Lender pursuantto §6.9 with respect to any breakage costs associated with Eurodollar RateLoans, the Borrowers may at their option deposit in their Concentration Accounton the date of prepayment required under §4.2, as applicable, cash in an amountequal to the aggregate amount of the Eurodollar Rate Loans otherwise requiredto be prepaid on such date.  On the lastday of each Interest Period applicable to any such Eurodollar Rate Loans, theBorrowers shall withdraw and pay in immediately available funds to theAdministrative Agent amounts then held in the Concentration Account anddeposited therein pursuant to this §2.9.4 sufficient to repay such EurodollarRate Loans of each Lender.

 

**3.             ADDITIONALFINANCING**.

 

At any time, and from time to time, theBorrowers may solicit the Lenders and any other lending institutions to providethe Borrowers with additional commitments to make Revolving Credit Loans underthis Credit Agreement in an aggregate amount not to exceed ten million dollars($10,000,000), subject to the limitations set forth below.  Neither the Administrative Agent nor anyLender shall have any obligation to provide the Borrowers with all or any partof such additional Revolving Credit Commitment; provided that byexecution of this Credit Agreement, the Administrative Agent and the Lendersshall be deemed to have consented, without the need for further or subsequentconsent, (a) to such additional Revolving Credit Commitments which any otherLender or lending institution may agree to provide for the Revolving CreditLoans which may be advanced in respect thereof and any resulting changes in theRevolving Credit Commitment Percentage, and (b) any amendments which may bemade to the Loan Documents in order to evidence and document such RevolvingCredit Commitments and Revolving Credit Loans to the extent that any suchamendment (i) does not amend any of the provisions specified in §17.12(a) asrequiring the consent of each Lender affected thereby, (ii) does not modify therelative priority of the Revolving Credit Loans (including any such newRevolving Credit Loans) and Revolving Credit Commitments (including any suchnew Revolving Credit Commitments) with respect to the payment,

 

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guarantees, collateral or other collateralsupport, and (iii) is consistent with all other requirements of this §3.  Any such additional Revolving CreditCommitments (and the revolving Credit Loans funded pursuant thereto) shall beotherwise treated (and be subject to the same as terms and conditions) asRevolving Credit Commitments and Revolving Credit Loans hereunder. Notwithstandinganything to the contrary set forth herein, no additional Revolving CreditCommitments shall be permitted hereunder and no additional Revolving CreditLoans may be advanced in respect thereof unless (1) no Default or Event ofDefault shall have occurred and be then continuing or would result immediatelyafter giving effect to such additional Revolving Credit Commitments and theRevolving Credit Loans to be advanced in respect thereof, assuming that suchRevolving Credit Loans were fully advanced on the effective date of suchadditional commitments, (2) the Borrowers shall have delivered to theAdministrative Agent a Compliance Certificate demonstrating compliance with theterms of the Credit Agreement immediately after giving pro forma effect to such loans to be advanced in respect of theadditional commitment and the application of the proceeds thereof, suchcompliance to be calculated based on the Borrowers’ Consolidated EBITDARreported in connection with the preparation of the Borrowers’ Compliance Certificatemost recently delivered to the Administrative Agent, (3) with respect to eachlending institution not yet a party hereto providing additional RevolvingCredit Commitments, such lending institution shall have become a party to thisCredit Agreement (and become subject to all the rights and obligations of aLender hereunder) by executing and delivering to the Administrative Agent anoriginal, executed Instrument of Accession in the form of ExhibitGhereto (an “InstrumentofAccession”), (4) the Borrowersshall have delivered to the Administrative Agent and the Lenders notice thatsuch solicitation has been made and, prior to the effectiveness of suchadditional Revolving Credit Commitment, copies of all documents and instrumentsrelated thereto and (5) the Borrowers shall have delivered to theAdministrative Agent copies of updated financial projections through theMaturity Date.

 

**4.             MANDATORY REPAYMENT OF REVOLVINGCREDIT LOANS**.

 

In addition to payments in respect ofRevolving Credit Loans pursuant to §2.9, the Revolving Credit Loans shall berepaid as follows:

 

**4.1.         Intentionally Omitted.**

 

**4.2.         Proceeds of Certain Events.**  Concurrently with the receipt (after theClosing Date) by any of the Borrowers or any of their Subsidiaries of:

 

(a)           subject to the reinvestmentprovisions of §10.5.2, Net Cash Sale Proceeds in excess of $500,000 per annumfrom Asset Sales (other than proceeds from the sale, lease, license or otherdisposition of assets in the ordinary course of business consistent with pastpractices);

 

(b)           Net Cash Equity Issuance Proceedsfrom an Equity Issuance by the Parent, the Borrowers or any of theirSubsidiaries (other than amounts not to

 

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exceed $500,000 in the aggregate after the date hereofarising from (i) any such sale or issuance to its existing shareholders otherthan in connection with a public offering of the equity securities of anyBorrower and (ii) the sale or issuance to any employee or director of suchBorrower or such Subsidiary pursuant to any stock option plan or compensatoryarrangement approved by the board of directors of such Person in the ordinarycourse of business and consistent with past practices);

 

(c)           proceeds relating to (i) CasualtyEvents, less reasonable expenses relating to such Casualty Events, which havenot been reinvested in the Borrowers’ business within two hundred and seventy(270) days of receipt of such proceeds subject to §9.7.2, provided that, if (A) within such 270-day period after the earlierto occur of receipt of such proceeds by the Borrowers or receipt of suchproceeds by the Administrative Agent, the Borrowers enter into an agreement(which may be a purchase order) pursuant to which such reinvestment shall bemade, a copy of which shall be provided to the Administrative Agent, and (B)within four hundred five (405) days following receipt of such proceeds by theBorrowers or the Administrative Agent, the Borrowers shall have completed, orshall have made significant progress toward completion of, such reinvestment ofsuch proceeds, then the Borrowers shall not be required to prepay the RevolvingCredit Loans in accordance with §4.3 but shall in any event comply with §4.4 (provided,however, if a Default or Event of Default has occurred and is continuing,such proceeds shall be immediately paid to the Administrative Agent), and (ii)any tax refund with respect to any taxable year; or

 

(d)           Net Cash Debt Proceeds from anissuance by the Parent, the Borrowers or any of their Subsidiaries ofSubordinated Debt;

 

then the Borrowers shall pay to the Administrative Agent for therespective accounts of the Lenders an amount equal to one hundred percent(100%) of such proceeds, to be applied in the manner set forth in §4.3 or, ifapplicable, §4.4.

 

**4.3.         Application of Payments.**  All mandatory prepayments pursuant to §4.2shall be applied to the principal of the outstanding Revolving Credit Loans forapplication in accordance with the provisions of §2.9.2 and concurrently withsuch prepayment, to reduce permanently the Total Revolving Credit Commitment inan amount equal to such prepayment.  Inthe event that at the time of such mandatory prepayment event, there are nooutstanding Revolving Credit Loans, the Total Revolving Credit Commitment shallbe permanently reduced by the amount that would otherwise have been prepaidpursuant to §4.2 had Revolving Credit Loans been outstanding.  Any prepayment of principal of the RevolvingCredit Loans shall include all interest accrued to the date of such prepayment.

 

**4.4.         Delivery of Proceeds.**  The Borrowers shall deliver to theAdministrative Agent, promptly upon receipt thereof, all Net Cash Sale Proceedsor proceeds relating to Casualty Events that may have to be applied to prepaythe

 

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Revolving Credit Loans if not reinvested as permittedin §4.2(a) and (b), to be held as Collateral pending reinvestment in accordancewith such §§4.2(a) and (b).  Upon theBorrowers’ request, any cash amounts delivered to the Administrative Agent tobe held as Collateral under this §4.4 may be applied to repay Revolving CreditLoans.

 

**5.             LETTERSOF CREDIT**.

 

**5.1.         Letter of Credit Commitments**.

 

**5.1.1.      Commitment to Issue Letters of Credit.**  Subject to the terms and conditions hereofand the execution and delivery by the Borrowers of a letter of creditapplication on the Administrative Agent’s customary form (a “LetterofCreditApplication”), the Administrative Agent on behalf of theLenders and in reliance upon the agreement of the Lenders set forth in §5.1.4and upon the representations and warranties of the Borrowers contained herein,agrees, in its individual capacity, to issue, extend and renew for the accountof a Borrower one or more standby or documentary letters of credit (individually,a “LetterofCredit”), in such form as may be requestedfrom time to time by such Borrower and agreed to by the Administrative Agent; provided,however, that, after giving effect to such request, (a) the sum of theaggregate Maximum Drawing Amount and all Unpaid Reimbursement Obligations shallnot exceed $10,000,000 at any one time and (b) the sum of (i) the MaximumDrawing Amount on all Letters of Credit, (ii) all Unpaid ReimbursementObligations, and (iii) the amount of all Revolving Credit Loans outstandingshall not exceed the Total Revolving Credit Commitment at such time.  Notwithstanding the foregoing, theAdministrative Agent shall have no obligation to issue any Letter of Credit tosupport or secure any Indebtedness of a Borrower or any of its Subsidiaries tothe extent that such Indebtedness was incurred prior to the proposed issuancedate of such Letter of Credit, unless in any such case such Borrowerdemonstrates to the satisfaction of the Administrative Agent that (x) suchprior incurred Indebtedness was then fully secured by a prior perfected andunavoidable security interest in collateral provided by such Borrower or suchSubsidiary to the proposed beneficiary of such Letter of Credit or (y) suchprior incurred Indebtedness was then secured or supported by a letter of creditissued for the account of such Borrower or such Subsidiary and thereimbursement obligation with respect to such letter of credit was fullysecured by a prior perfected and unavoidable security interest in collateralprovided to the issuer of such letter of credit by such Borrower or suchSubsidiary.

 

**5.1.2.      Letter of Credit Applications.**  Each Letter of Credit Application shall becompleted to the reasonable satisfaction of the Administrative Agent.  In the event that any provision of any Letterof

 

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Credit Application shall be inconsistent with anyprovision of this Credit Agreement, then the provisions of this CreditAgreement shall, to the extent of any such inconsistency, govern.

 

**5.1.3.      Terms of Letters of Credit.**  Each Letter of Credit issued, extended orrenewed hereunder shall, among other things, (a) provide for the payment ofsight drafts for honor thereunder when presented in accordance with the termsthereof and when accompanied by the documents described therein, and (b) havean expiry date no later than the earlier of (x) one (1) year from the date ofissuance, extension or renewal thereof, or (y) the date which is fourteen (14)days (or, if the Letter of Credit is confirmed by a confirmer or otherwiseprovides for one or more nominated persons, forty-five (45) days) prior to theMaturity Date.  Each Letter of Credit soissued, extended or renewed shall be subject to either (i) the Uniform Customsand Practice for Documentary Credits (1993 Revision), International Chamber ofCommerce Publication No. 500 or any successor version thereto adopted by theAdministrative Agent in the ordinary course of its business as a letter ofcredit issuer and in effect at the time of issuance of such Letter of Credit(the “UniformCustoms”) or(ii) the International Standby Practices (ISP98), International Chamber ofCommerce Publication No. 590, or any successor code of standby letter of creditpractices among banks adopted by the Administrative Agent in the ordinarycourse of its business as a standby letter of credit issuer and in effect atthe time of issuance of such Letter of Credit.

 

**5.1.4.      Reimbursement Obligations of Lenders.**  Each Lender severally agrees that it shall beabsolutely liable, without regard to the occurrence of any Default or Event ofDefault or any other condition precedent whatsoever, to the extent of suchLender’s Revolving Credit Commitment Percentage, to reimburse theAdministrative Agent on demand for the amount of each draft paid by theAdministrative Agent under each Letter of Credit to the extent that such amountis not reimbursed by the Borrowers pursuant to §5.2 (such agreement for aLender being called herein the “LetterofCreditParticipation”of such Lender).

 

**5.1.5.      Participations of Lenders.**  Each such payment made by a Lender shall betreated as the purchase by such Lender of a participating interest in theBorrowers’ Reimbursement Obligation under §5.2 in an amount equal to suchpayment.  Each Lender shall share inaccordance with its participating interest in any interest which accruespursuant to §5.2.

 

**5.2.         Reimbursement Obligation of theBorrowers.**  Inorder to induce the Administrative Agent to issue, extend and renew each Letterof Credit and the Lenders to participate therein, the Borrowers hereby jointlyand severally agree to

 

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reimburse or pay to the Administrative Agent, for theaccount of the Administrative Agent or (as the case may be) the Lenders, withrespect to each Letter of Credit issued, extended or renewed by theAdministrative Agent hereunder,

 

(a)           except as otherwise expresslyprovided in §5.2(b) and (c), on each date that any draft presented under suchLetter of Credit is honored by the Administrative Agent, or the AdministrativeAgent otherwise makes a payment with respect thereto, (i) the amount paid bythe Administrative Agent under or with respect to such Letter of Credit, and(ii) the amount of any taxes, fees, charges or other costs and expenseswhatsoever incurred by the Administrative Agent or any Lender in connectionwith any payment made by the Administrative Agent or any Lender under, or withrespect to, such Letter of Credit,

 

(b)           upon the reduction (but not termination)of the Total Revolving Credit Commitment to an amount less than the MaximumDrawing Amount, an amount equal to such difference, which amount shall be heldby the Administrative Agent for the benefit of the Lenders and theAdministrative Agent as cash collateral for all Reimbursement Obligations, and

 

(c)           upon the termination of the TotalRevolving Credit Commitment, or the acceleration of the ReimbursementObligations with respect to all Letters of Credit in accordance with §14, anamount equal to the then Maximum Drawing Amount on all Letters of Credit, whichamount shall be held by the Administrative Agent for the benefit of the Lendersand the Administrative Agent as cash collateral for all ReimbursementObligations.

 

Each such payment shall be made to the Administrative Agent at theAdministrative Agent’s Office in immediately available funds.  Interest on any and all amounts remainingunpaid by the Borrowers under this §5.2 at any time from the date such amountsbecome due and payable (whether as stated in this §5.2, by acceleration orotherwise) until payment in full (whether before or after judgment) shall bepayable to the Administrative Agent on demand at the rate specified in §6.10for overdue principal on the Revolving Credit Loans.

 

**5.3.         Letter of Credit Payments.**  If any draft shall be presented or otherdemand for payment shall be made under any Letter of Credit, the AdministrativeAgent shall notify the Borrowers within a reasonable amount of time of the dateand amount of the draft presented or demand for payment and of the date andtime when it expects to pay such draft or honor such demand for payment.  If the Borrowers fail to reimburse theAdministrative Agent as provided in §5.2 on or before the date that such draftis paid or other payment is made by the Administrative Agent, theAdministrative Agent may at any time thereafter notify the Lenders of theamount of any such Unpaid Reimbursement Obligation.  No later than 3:00 p.m. (Boston time) on theBusiness Day next following the receipt of such notice, each Lender shall makeavailable to the Administrative

 

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Agent, at the Administrative Agent’s Office, inimmediately available funds, such Lender’s Revolving Credit CommitmentPercentage of such Unpaid Reimbursement Obligation, together with an amountequal to the product of (a) the average, computed for the period referred to inclause (c) below, of the weighted average interest rate paid by theAdministrative Agent for federal funds acquired by the Administrative Agentduring each day included in such period, times (b) the amount equal tosuch Lender’s Revolving Credit Commitment Percentage of such UnpaidReimbursement Obligation, times (c) a fraction, the numerator of whichis the number of days that elapse from and including the date theAdministrative Agent paid the draft presented for honor or otherwise madepayment to the date on which such Lender’s Revolving Credit CommitmentPercentage of such Unpaid Reimbursement Obligation shall become immediatelyavailable to the Administrative Agent, and the denominator of which is360.  The responsibility of theAdministrative Agent to the Borrowers and the Lenders 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.

 

**5.4.         Obligations Absolute.**  The Borrowers’ obligations under this §5shall be absolute and unconditional under any and all circumstances andirrespective of the occurrence of any Default or Event of Default or anycondition precedent whatsoever or any setoff, counterclaim or defense topayment which the Borrowers may have or have had against the AdministrativeAgent, any Lender or any beneficiary of a Letter of Credit.  Each of the Borrowers further agrees with theAdministrative Agent and the Lenders that the Administrative Agent and theLenders shall not be responsible for, and the Borrowers’ ReimbursementObligations under §5.2 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 any Borrower, 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.  The AdministrativeAgent and the Lenders shall not be liable for any error, omission, interruptionor delay in transmission, dispatch or delivery of any message or advice,however transmitted, in connection with any Letter of Credit.  Each of the Borrowers agrees that any actiontaken or omitted by the Administrative Agent or any Lender under or inconnection with each Letter of Credit and the related drafts and documents, ifdone in good faith, shall be binding upon the Borrowers and shall not result inany liability on the part of the Administrative Agent or any Lender to theBorrowers.

 

**5.5.         Reliance by Issuer.**  To the extent not inconsistent with §5.4, theAdministrative Agent shall be entitled to rely, and shall be fully protected inrelying upon, any Letter of Credit, draft, writing, resolution, notice,consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telexor teletype

 

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message, statement, order or other document believedby it to be genuine and correct and to have been signed, sent or made by theproper Person or Persons and upon advice and statements of legal counsel,independent accountants and other experts selected by the Administrative Agent.  The Administrative Agent shall be fullyjustified in failing or refusing to take any action under this Credit Agreementunless it shall first have received such advice or concurrence of the RequiredLenders as it reasonably deems appropriate or it shall first be indemnified toits reasonable satisfaction by the Lenders against any and all liability andexpense which may be incurred by it by reason of taking or continuing to takeany such action.  The AdministrativeAgent shall in all cases be fully protected in acting, or in refraining fromacting, under this Credit Agreement in accordance with a request of theRequired Lenders, and such request and any action taken or failure to actpursuant thereto shall be binding upon the Lenders and all future holders of theNotes or of a Letter of Credit Participation.

 

**5.6.         Letter of Credit Fee.**  With respect to each Letter of Credit issuedhereunder, the Borrowers shall pay to the Administrative Agent a fee (each a “Letter of Credit Fee”) for each Letter ofCredit issued or renewed by the Administrative Agent at a rate per annum equalto the Applicable Margin in effect from time to time with respect to EurodollarRate Loans, on the Maximum Drawing Amount of such Letter of Credit for theperiod such Letter of Credit is outstanding. The Administrative Agent shall, in turn, remit to each Lender suchLender’s Revolving Credit Commitment Percentage of the Letter of CreditFee.  In addition, the Borrowers shallpay the Administrative Agent, for its own account, a Fronting Fee (the “Fronting Fee”) equal to one-quarter of onepercent (0.250%) per annum on the Maximum Drawing Amount of such Letter ofCredit for the period such Letter of Credit is outstanding.  The Letter of Credit Fee and the Fronting Feeshall be payable quarterly in arrears on the last day of each calendar quarterfor the calendar quarter then ending.  Inrespect of each Letter of Credit, the Borrowers shall also pay to theAdministrative Agent, for its own account, at such time or times as suchcharges are customarily made by the Administrative Agent, the AdministrativeAgent’s customary issuance, amendment, negotiation or document examination andother administrative fees as in effect from time to time.

 

**5.7.         Existing Letters of Credit.**  The Borrowers and the Lenders each agree that(a) any letter of credit which has been previously issued by Fleet under the2003 Credit Agreement (the “Existing Letters ofCredit”) for the account of a Borrower or any Subsidiary of a Borrower,shall be deemed a Letter of Credit issued under and governed by this CreditAgreement, (b) this Credit Agreement supercedes any and all prior agreementsbetween the Borrowers or any of their Subsidiaries and Fleet with respect tothe Existing Letters of Credit, and (c) all Existing Letters of Credit, fromand after the Closing Date, shall be subject to and governed by the terms ofthis Credit Agreement.

 

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**6.            ****CERTAIN GENERAL PROVISIONS**.

 

**6.1.         Fees**.  The Borrowers jointly and severally agree topay all fees described in the Fee Letter in the amounts and at the times andotherwise in accordance with the terms specified therein.

 

**6.2.         Funds for Payments**.

 

**6.2.1.      Payments to Administrative Agent.**  All payments of principal, interest,Reimbursement Obligations, the Commitment Fee, the Letter of Credit Fees andthe Fronting Fees and any other amounts due hereunder or under any of the otherLoan Documents (except as otherwise provided in such Loan Documents) shall bemade on the due date thereof to the Administrative Agent in Dollars at theAdministrative Agent’s Office or at such other place that the AdministrativeAgent may from time to time designate, in each case at or about 11:00 a.m.(Boston time or other local time at the place of payment) and in immediatelyavailable funds.

 

**6.2.2.      No Offset, etc.**  All payments by the Borrowers hereunder andunder any of the other Loan Documents shall be made without recoupment, setoffor counterclaim and free and clear of and without deduction for any taxes,levies, imposts, duties, charges, fees, deductions, withholdings, compulsoryloans, restrictions or conditions of any nature now or hereafter imposed orlevied by any jurisdiction or any political subdivision thereof or taxing orother authority therein (other than any such deductions or withholdings whichthe Borrowers are compelled by law to make on or with respect to, or measuredby, the income of the Administrative Agent, any Lender, any assignee or anyparticipant, including without limitation, franchise taxes imposed on or withrespect to, or measured by, net income of such Person, in each case by anyjurisdiction, subdivision thereof or taxing or other Governmental Authoritytherein in which the Administrative Agent, such Lender, such assignee or suchparticipant is organized, has its principal place of business, maintains alending office or is otherwise subject to tax) and other deductions, orwithholdings which the Borrowers are compelled by law to make such deduction orwithholding.  If any such obligation isimposed upon the Borrowers with respect to any amount payable by them hereunderor under any of the other Loan Documents, the Borrowers will pay to theAdministrative Agent, for the account of the Lenders or (as the case may be)the Administrative Agent, on the date on which such amount is due and payablehereunder or under such other Loan Document, such additional amount in Dollarsas shall be necessary to enable the Lenders or the Administrative Agent toreceive the same net amount which the Lenders or the Administrative Agent wouldhave received on such due date had no such obligation been imposed upon theBorrowers. The 

 

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Borrowers will deliver promptly to the AdministrativeAgent certificates or other evidence reasonably acceptable to theAdministrative Agent for all taxes or other charges deducted from or paid withrespect to payments made by the Borrowers hereunder or under such other LoanDocument.

 

**6.2.3.      Non-U.S. Lenders.** If any Lender, any transferee or the Administrative Agent is not a U.S.Person as defined in Section 7701(a)(30) of the Code for federal income taxpurposes (a “Non-U.S.Lender”), such Lender, transferee or theAdministrative Agent hereby agrees that, if and to the extent that it islegally able to do so, it shall, prior to the date of the first payment by theBorrowers hereunder to be made to such Lender or the Administrative Agent orfor such Non-U.S. Lender’s or the Administrative Agent’s account, deliver tothe Borrowers and the Administrative Agent, as applicable, such certificates,documents or other evidence, as and when required by the Code or TreasuryRegulations issued pursuant thereto, including (a) in the case of a Non-U.S.Lender that is a “bank” for purposes of Section 881(c)(3)(A) of the Code, two(2) duly completed copies of Internal Revenue Service Form W-8BEN or Form W-8ECIand any other certificate or statement of exemption required by TreasuryRegulations, or any subsequent versions thereof or successors thereto, properlycompleted and duly executed by such Lender or the Administrative Agentestablishing that with respect to payments of principal, interest or feeshereunder it is (i) not subject to United States federal withholding tax underthe Code because such payment is effectively connected with the conduct by suchLender or Administrative Agent of a trade or business in the United States or(ii) totally exempt or partially exempt from United States federal withholdingtax under a provision of an applicable tax treaty and (b) in the case of aNon-U.S. Lender that is not a “bank” for purposes of Section 881(c)(3)(A)of the Code, a certificate in form and substance reasonably satisfactory to theAdministrative Agent and the Borrowers and to the effect that (i) suchNon-U.S. Lender is not a “bank” for purposes of Section 881(c)(3)(A) of theCode, is not subject to regulatory or other legal requirements as a bank in anyjurisdiction, and has not been treated as a bank for purposes of any tax,securities law or other filing or submission made to any governmentalauthority, any application made to a rating agency or qualification for anyexemption from any tax, securities law or other legal requirements,(ii) is not a ten (10) percent shareholder for purposes of Section881(c)(3)(B) of the Code and (iii) is not a controlled foreign corporationreceiving interest from a related person for purposes of Section 881(c)(3)(C)of the Code, together with a properly completed Internal Revenue Service FormW-8 or W-9, as applicable (or successor forms to establish exemption fromwithholding of US taxes).  Each Lender orthe  Administrative Agent agrees that itshall, to the extent any form previously delivered by it pursuant to thissection is no longer effective, and in any case promptly upon the Borrowers’ orthe Administrative Agent’s reasonable request

 

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therefor, deliver to the  Borrowers and the Administrative Agent, asapplicable, if and to the extent it is legally able to do so, a properlycompleted and executed Form W-8BEN, Form W-8ECI, Form W-8 or W-9, asapplicable (or any successor forms thereto).

 

**6.2.4.      Exclusion.**  The Borrowers shall not be required to payany additional amount to any Non-U.S. Lender pursuant to §6.2.3 or §6.6 hereofin respect of any United States federal withholding tax if and to the extentthat (i) the obligation to withhold amounts with respect to such United Statesfederal withholding tax existed on the date such Non-U.S. Lender became a partyto this Credit Agreement or, with respect to a different lending officedesignated by such Non-U.S. Lender as its applicable lending office (a “New Lending Office”), the date such Non-U.S.Lender designated such New Lending Office as a result of an assignment,transfer or designation made at the request of the Borrowers, provided, however,this clause (i) shall not apply to the extent that the indemnity payment oradditional amounts any transferee, or Lender through a New Lending Office,would be entitled to receive without regard to this clause (i) do not exceedthe indemnity payment or additional amounts that the Person making theassignment or transfer to such transferee, or Lender making the designation ofsuch New Lending Office, would have been entitled to receive in the absence ofsuch assignment, transfer or designation, or (ii)  the obligation to pay such additional amountswould not have arisen but for a failure by such Non-U.S. Lender to deliver theforms specified in §6.2.3.

 

**6.3.         Computations.**  All computations of interest on the RevolvingCredit Loans and of Fees shall be based on a 360-day year and paid for theactual number of days elapsed.  Except asotherwise provided in the definition of the term “Interest Period” with respectto Eurodollar Rate Loans, whenever a payment hereunder or under any of theother Loan Documents becomes due on a day that is not a Business Day, the duedate for such payment shall be extended to the next succeeding Business Day,and interest shall accrue during such extension.

 

**6.4.         Inability to Determine EurodollarRate.**  In the event, prior to the commencement ofany Interest Period relating to any Eurodollar Rate Loan, the AdministrativeAgent shall determine**or be notifiedby the Required Lenders that (a) adequate and reasonable methods do not existfor ascertaining the Eurodollar Rate that would otherwise determine the rate ofinterest to be applicable to any Eurodollar Rate Loan during any InterestPeriod or (b) the Eurodollar Rate determined or to be determined for suchInterest Period will not adequately and fairly reflect the cost to the Lendersof making or maintaining their Eurodollar Rate Loans during such period, theAdministrative Agent shall forthwith give notice of such determination (whichshall be conclusive and binding on the Borrowers and the Lenders) to theBorrowers and the Lenders.  In

 

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such event (i) any Loan Request or Conversion Requestwith respect to Eurodollar Rate Loans shall be automatically withdrawn andshall be deemed a request for Base Rate Loans, (ii) each Eurodollar Rate Loanwill automatically, on the last day of the then current Interest Periodrelating thereto, become a Base Rate Loan, and (iii) the obligations of theLenders to make Eurodollar Rate Loans shall be suspended until theAdministrative Agent or the Required Lenders determine that the circumstancesgiving rise to such suspension no longer exist, whereupon the AdministrativeAgent**or, as the case may be, theAdministrative Agent upon the instruction of the Required Lenders, shall sonotify the Borrowers and the Lenders.

 

**6.5.         Illegality.**  Notwithstanding any other provisions herein,if any present or future law, regulation, treaty or directive or theinterpretation or application thereof shall make it unlawful for any Lender tomake or maintain Eurodollar Rate Loans, such Lender shall forthwith give noticeof such circumstances to the Borrowers and the other Lenders and thereupon (a)the commitment of such Lender to make Eurodollar Rate Loans or convert BaseRate Loans to Eurodollar Rate Loans shall forthwith be suspended and (b) suchLender’s Revolving Credit Loans then outstanding as Eurodollar Rate Loans, ifany, shall be converted automatically to Base Rate Loans on the last day ofeach Interest Period applicable to such Eurodollar Rate Loans or within suchearlier period as may be required by law. The Borrowers hereby jointly and severally agree promptly to pay theAdministrative Agent for the account of such Lender, upon demand by suchLender, any additional amounts necessary to compensate such Lender for anycosts incurred by such Lender in making any conversion in accordance with this§6.5, including any interest or fees payable by such Lender to lenders of fundsobtained by it in order to make or maintain its Eurodollar Rate Loanshereunder.

 

**6.6.         Additional Costs, etc.**  If any present or future applicable law,which expression, as used herein, includes statutes, rules and regulationsthereunder and interpretations thereof by any competent court or by anygovernmental or other regulatory body or official charged with theadministration or the interpretation thereof and requests, directives,instructions and notices at any time or from time to time hereafter made upon orotherwise issued to any Lender or the Administrative Agent by any central bankor other fiscal, monetary or other authority (whether or not having the forceof law), shall:

 

(a)           subject any Lender or theAdministrative Agent to any tax, levy, impost, duty, charge, fee, deduction orwithholding of any nature with respect to this Credit Agreement, the other LoanDocuments, any Letters of Credit, such Lender’s Revolving Credit Commitment orthe Revolving Credit Loans (other than taxes based upon or measured by theincome or profits of such Lender or the Administrative Agent), or

 

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(b)           materially change the basis oftaxation (except for changes in taxes based on or measured by net income orprofits) of payments to any Lender of the principal of or the interest on anyRevolving Credit Loans or any other amounts payable to any Lender or theAdministrative Agent under this Credit Agreement or any of the other LoanDocuments, or

 

(c)           impose or increase or render applicable(other than to the extent specifically provided for elsewhere in this CreditAgreement) any special deposit, reserve, assessment, liquidity, capitaladequacy or other similar requirements (whether or not having the force of law)against assets held by, or deposits in or for the account of, or loans by, orletters of credit issued by, or commitments of an office of any Lender, or

 

(d)           impose on any Lender or theAdministrative Agent any other conditions or requirements with respect to thisCredit Agreement, the other Loan Documents, any Letters of Credit, theRevolving Credit Loans, such Lender’s Revolving Credit Commitment, or any classof loans, letters of credit or commitments of which any of the Revolving CreditLoans or such Lender’s Revolving Credit Commitment forms a part, and the resultof any of the foregoing is:

 

(i)            to increase the cost to any Lenderof making, funding, issuing, renewing, extending or maintaining any of theRevolving Credit Loans or such Lender’s Revolving Credit Commitment or anyLetter of Credit, or

 

(ii)           to reduce the amount of principal,interest, Reimbursement Obligation or other amount payable to such Lender orthe Administrative Agent hereunder on account of such Lender’s Revolving CreditCommitment, any Letter of Credit or any of the Revolving Credit Loans, or

 

(iii)          to require such Lender or theAdministrative Agent to make any payment or to forego any interest orReimbursement Obligation or other sum payable hereunder, the amount of whichpayment or foregone interest or Reimbursement Obligation or other sum iscalculated by reference to the gross amount of any sum receivable or deemedreceived by such Lender or the Administrative Agent from the Borrowershereunder,

 

then, and in each such case, the Borrowers will, upon demand made bysuch Lender or (as the case may be) the Administrative Agent at any time andfrom time to time and as often as the occasion therefor may arise, pay to suchLender or the Administrative Agent such additional amounts as will be sufficientto compensate such Lender or the Administrative Agent for such additional cost,

reduction, payment or foregone interest or Reimbursement Obligation orother sum.

 

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**6.7.         Capital Adequacy.** If after the date hereof any Lender or the Administrative Agentdetermines that (a) the adoption of or change in any law, governmental rule,regulation, policy, guideline or directive (whether or not having the force oflaw) regarding capital requirements for Lenders or Lender holding companies orany change in the interpretation or application thereof by a GovernmentalAuthority with appropriate jurisdiction, or (b) compliance by such Lender orthe Administrative Agent or any corporation controlling such Lender or the AdministrativeAgent with any law, governmental rule, regulation, policy, guideline ordirective (whether or not having the force of law) of any such entity regardingcapital adequacy, has the effect of reducing the return on such Lender’s or theAdministrative Agent’s commitment with respect to any Revolving Credit Loans toa level below that which such Lender or the Administrative Agent could haveachieved but for such adoption, change or compliance (taking into considerationsuch Lender’s or the Administrative Agent’s then existing policies with respectto capital adequacy and assuming full utilization of such entity’s capital) byany amount reasonably deemed by such Lender or (as the case may be) theAdministrative Agent to be material, then such Lender or the AdministrativeAgent may notify the Borrowers of such fact. To the extent that the amount of such reduction in the return on capitalis not reflected in the Base Rate, the Borrowers**jointlyand severally agree to pay such Lender or (as the case may be) theAdministrative Agent for the amount of such reduction in the return on capitalas and when such reduction is determined upon presentation by such Lender or(as the case may be) the Administrative Agent of a certificate in accordancewith §6.8 hereof.* *EachLender shall allocate such cost increases among its customers in good faith andon an equitable basis.

 

**6.8.         Certificate; Replacement of Lenders.**  (a)       Acertificate setting forth any additional amounts payable pursuant to §§6.6 or6.7 and a brief explanation of such amounts which are due, submitted by anyLender or the Administrative Agent to the Borrowers, shall be conclusive,absent manifest error, that such amounts are due and owing.

 

(a)           Each Lender agrees that, upon theoccurrence of any event giving rise to the operation of §§6.2.2, 6.6 or 6.7with respect to such Lender, it will, if requested in writing by the Borrowers,use commercially reasonable efforts (subject to overall policy considerationsof such Lender) to designate another lending office for any Revolving CreditLoans affected by such event with the object of avoiding the consequences ofsuch event; provided, that such designationis made on terms that, in the sole judgment of such Lender, cause such Lenderand its lending office(s) to suffer no material economic, legal or regulatorydisadvantage; provided, further, that nothing in this §6.8 shallaffect or postpone any of the obligations of the Borrowers or the rights of anyLender or the Administrative Agent pursuant to §§6.2.2, 6.6 or 6.7.

 

(b)           Upon receipt by the Borrowers fromany Lender (an “Affected Lender”) of aclaim under §§6.2.2, 6.6 or 6.7, the Borrowers may:

 

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(i)            request one or more of the otherLenders to acquire and assume all or part of such Affected Lender’s RevolvingCredit Loans and Revolving Credit Commitment, as applicable, provided that noLender shall be required to accede to any such request; or

 

(ii)           replace such Affected Lender withanother Lender; provided that (A) suchother Lender agrees to be the replacement Lender, (B) such replacement does notconflict with any requirement of law, (C) no Default or Event of Default shallhave occurred and be continuing at the time of such replacement, (D) theBorrowers shall repay, or the replacement Lender shall purchase, at the fullprincipal or face amount of all Revolving Credit Loans, accrued interest, feesand other amounts owing to such replaced Lender prior to the date ofreplacement, (E) the Borrowers shall be liable to such replaced Lender inaccordance with §6.9 with respect to any prepayment or purchase of EurodollarRate Loans, (F) the replacement Lender, if not already a Lender, shall bereasonably satisfactory to the Administrative Agent, (G) the replaced Lendershall be obligated to make such replacement in accordance with the provisionsof §16 (provided that the Borrowers or thereplacement Lender shall be obligated to pay the registration and processingfee) and (H) the Borrowers shall pay all additional amounts (if any) requiredpursuant to §§6.2.2, 6.6 or 6.7, as the case may be, to the extent suchadditional amounts were incurred on or prior to the consummation of suchreplacement.

 

**6.9.         Indemnity.** The Borrowers jointly and severally agree to indemnify each Lender andto hold each Lender harmless from and against any loss, cost or expense(including loss of anticipated profits) that such Lender may sustain or incuras a consequence of (a) default by the Borrowers in payment of the principalamount of or any interest on any Eurodollar Rate Loans as and when due andpayable, including any such loss or expense arising from interest or feespayable by such Lender to banks of funds obtained by it in order to maintainits Eurodollar Rate Loans, (b) default by the Borrowers in making a borrowingor conversion after the Borrowers have given (or are deemed to have given) aLoan Request, or a Conversion Request relating thereto in accordance with §2.6or §2.7 or (c) the making of any payment of a Eurodollar Rate Loan or themaking of any conversion of any such Revolving Credit Loan to a Base Rate Loanon a day that is not the last day of the applicable Interest Period withrespect thereto, including interest or fees payable by such Lender to lendersof funds obtained by it in order to maintain any such Revolving Credit Loans.

 

**6.10.       Interest After Default**.

 

**6.10.1.    Overdue Amounts.**  Overdue principal and (to the extentpermitted by applicable law) interest on the Revolving Credit Loans and allother overdue amounts payable hereunder or under any of the other

 

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Loan Documents shall bear interest compounded monthlyand payable on demand at a rate per annum equal to two percent (2%) above therate of interest which would otherwise be applicable thereto (or, if no rate ofinterest is then applicable thereto, two percent (2%) above the rate ofinterest which would be applicable to any Base Rate Loans) until such amountshall be paid in full (after as well as before judgment).

 

**6.10.2.    Amounts Not Overdue.**  During the continuance of a Default or anEvent of Default the principal of the Revolving Credit Loans not overdue shall,until such Default or Event of Default has been cured or remedied or suchDefault or Event of Default has been waived by the Required Lenders pursuant to§17.12, bear interest at a rate per annum equal to the rate of interestapplicable to overdue principal pursuant to §6.10.1.

 

**6.10.3.    Letters of Credit.**  The Unpaid Reimbursement Obligations and (tothe extent permitted by law) unpaid interest thereon (as provided in thissentence) shall bear interest compounded monthly and payable on demand at arate per annum equal to the Base Rate plus the Applicable Margin then ineffect for Base Rate Loans then in effect plus two percent (2%) perannum until such amount shall be paid in full (after as well as beforejudgment).

 

**6.11.       Concerning Joint and SeveralLiability of the Borrowers**.

 

Notwithstanding anything to the contrarycontained in §§10.3, 10.5.2(c), 10.5.3(d) or 16.8:

 

(a)           Each of the Borrowers is acceptingjoint and several liability hereunder and under the other Loan Documents inconsideration of the financial accommodations to be provided by the Lenders andthe Administrative Agent under this Credit Agreement, for the mutual benefit,directly and indirectly, of each of the Borrowers and in consideration of theundertakings of each other Borrower to accept joint and several liability forthe Obligations.

 

(b)           Each of the Borrowers, jointly andseverally, hereby irrevocably and unconditionally accepts, not merely as asurety but also as a co-debtor, joint and several liability with the otherBorrowers, with respect to the payment and performance of all of theObligations (including, without limitation, any Obligations arising under this§6.11), it being the intention of the parties hereto that all the Obligationsshall be the joint and several obligations of each of the Borrowers withoutpreferences or distinction among them.

 

(c)           If and to the extent that any of theBorrowers shall fail to make any payment with respect to any of the Obligationsas and when due or to perform any of the Obligations in accordance with theterms thereof, then in each such event

 

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the other Borrowers will make such payment withrespect to, or perform, such Obligation.

 

(d)           The Obligations of each of theBorrowers under the provisions of this §6.11 constitute the full recourseObligations of each of the Borrowers enforceable against each such Borrower tothe full extent of its properties and assets, irrespective of the validity,regularity or enforceability of this Credit Agreement or the other LoanDocuments or any other circumstance whatsoever as to any other Borrower.

 

(e)           Except as otherwise expresslyprovided herein, each Borrower hereby waives promptness, diligence,presentment, demand, protest, notice of acceptance of its joint and severalliability, notice of any and all advances of the Revolving Credit Loans madeunder this Credit Agreement and the Notes, notice of occurrence of any Defaultor Event of Default (except to the extent notice is expressly required to begiven pursuant to the terms of this Credit Agreement or any of the other LoanDocuments), or of any demand for any payment under this Credit Agreement,notice of any action at any time taken or omitted by the Administrative Agentor the Lenders under or in respect of any of the Obligations hereunder, anyrequirement of diligence and, generally, all demands, notices and otherformalities of every kind in connection with this Credit Agreement and theother Loan Documents.  Each Borrowerhereby waives all defenses which may be available by virtue of any valuation,stay, moratorium law or other similar law now or hereafter in effect, any rightto require the marshaling of assets of the Borrowers and any other entity orPerson primarily or secondarily liable with respect to any of the Obligations,and all suretyship defenses generally. Each Borrower hereby assents to, and waives notice of, any extension orpostponement of the time for the payment, or place or manner for payment,compromise, refinancing, consolidation or renewals of any of the Obligationshereunder, the acceptance of any partial payment thereon, any waiver, consentor other action or acquiescence by the Administrative Agent and the Lenders atany time or times in respect of any default by any Borrower in the performanceor satisfaction of any term, covenant, condition or provision of this CreditAgreement and the other Loan Documents, any and all other indulgenceswhatsoever by the Administrative Agent and the Lenders in respect of any of theObligations hereunder, and the taking, addition, substitution or release, inwhole or in part, at any time or times, of any security for any of suchObligations or the addition, substitution or release, in whole or in part, ofany Borrower or any other entity or Person primarily or secondarily liable forany Obligation.  Such Borrower furtheragrees that its Obligations shall not be released or discharged, in whole or inpart, or otherwise affected by the adequacy of any rights which theAdministrative Agent or any Lender may have against any collateral security orother means of obtaining repayment of any of the Obligations, the impairment ofany collateral security securing the Obligations, including, withoutlimitation, the failure to protect or preserve any rights which theAdministrative Agent or any Lender may have in such collateral security or thesubstitution, exchange, surrender, release, loss or

 

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destruction of any such collateral security, any otheract or omission which might in any manner or to any extent vary the risk ofsuch Borrower, or otherwise operate as a release or discharge of such Borrower,all of which may be done without notice to such Borrower; provided, however,that the foregoing shall in no way be deemed to create commerciallyunreasonable standards as to the Administrative Agent’s duties as secured partyunder the Loan Documents (as such rights and duties are set forththerein).  If for any reason any of theother Borrowers has no legal existence or is under no legal obligation todischarge any of the Obligations, or if any of the Obligations have becomeirrecoverable from any of the other Borrowers by reason of such otherBorrower’s insolvency, bankruptcy or reorganization or by other operation oflaw or for any reason, this Credit Agreement and the other Loan Documents towhich it is a party shall nevertheless be binding on such Borrower to the sameextent as if such Borrower at all times had been the sole obligor on suchObligations.  Without limiting thegenerality of the foregoing, each Borrower assents to any other action or delayin acting or failure to act on the part of the Administrative Agent and theLenders, including, without limitation, any failure strictly or diligently toassert any right or to pursue any remedy or to comply fully with applicablelaws or regulations thereunder which might, but for the provisions of this§6.11, afford grounds for terminating, discharging or relieving such Borrower,in whole or in part, from any of its obligations under this §6.11, it being theintention of each Borrower that, so long as any of the Obligations hereunderremain unsatisfied, the obligations of such Borrower under this §6.11 shall notbe discharged except by performance and then only to the extent of suchperformance.  The Obligations of eachBorrower under this §6.11 shall not be diminished or rendered unenforceable byany winding up, reorganization, arrangement, liquidation, reconstruction orsimilar proceeding with respect to any reconstruction or similar proceedingwith respect to any other Borrower, or any of the Lenders.  The joint and several liability of theBorrowers hereunder shall continue in full force and effect notwithstanding anyabsorption, merger, amalgamation or any other change whatsoever in the name,ownership, membership, constitution or place of formation of any Borrower orthe Lenders.  Each of the Borrowersacknowledges and confirms that it has itself established its own adequate meansof obtaining from each of the other Borrowers on a continuing basis allinformation desired by such Borrower concerning the financial condition of eachof the other Borrowers and that each such Borrower will look to each of theother Borrowers and not to the Administrative Agent or any Lender in order forsuch Borrower to keep adequately informed of changes in each of the otherBorrowers’ respective financial conditions.

 

(f)            The provisions of this §6.11 aremade for the benefit of the Lenders and the Administrative Agent and theirrespective permitted successors and assigns, and may be enforced by it or themfrom time to time against any or all of the Borrowers as often as occasiontherefor may arise and without requirement on the part of the Lenders or theAdministrative Agent or such successor or assign first to marshall any of itsor their claims or to exercise any of its or their rights

 

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against any of the other Borrowers or to exhaust anyremedies available to it or them against any of the other Borrowers or toresort to any other source or means of obtaining payment of any of the Obligationshereunder or to elect any other remedy. The provisions of this §6.11 shall remain in effect until all of theObligations shall have been paid in full or otherwise fully satisfied.  If at any time, any payment, or any partthereof, made in respect of any of the Obligations, is rescinded or mustotherwise be restored or returned by any Lender or the Administrative Agentupon the insolvency, bankruptcy or reorganization of any of the Borrowers, orotherwise, the provisions of this §6.11 will forthwith be reinstated in effect,as though such payment had not been made.

 

(g)           Each of the Borrowers hereby agreesthat it will not enforce any of its rights of reimbursement, contribution,subrogation or the like against the other Borrowers with respect to any liabilityincurred by it hereunder or under any of the other Loan Documents, any paymentsmade by it to any of the Lenders or the Administrative Agent with respect toany of the Obligations or any collateral security therefor until such time asall of the Obligations have been irrevocably paid in full in cash.  Any claim which any Borrower may have againstany other Borrower with respect to any payments to the Lenders or theAdministrative Agent hereunder or under any other Loan Documents are herebyexpressly made subordinate and junior in right of payment, without limitationas to any increases in the Obligations arising hereunder or thereunder, to theprior payment in full of the Obligations and, in the event of any insolvency,bankruptcy, receivership, liquidation, reorganization or other similarproceeding under the laws of any jurisdiction relating to any Borrower, itsdebts or its assets, whether voluntary or involuntary, all such Obligationsshall be paid in full before any payment or distribution of any character,whether in cash, securities or other property, shall be made to any otherBorrower therefor.

 

(h)           Each of the Borrowers hereby agreesthat the payment of any amounts due with respect to the indebtedness owing byany Borrower to any other Borrower is hereby subordinated to the prior paymentin full in cash of the Obligations.  EachBorrower hereby agrees that after the occurrence and during the continuance ofany Default or Event of Default, such Borrower will not demand, sue for orotherwise attempt to collect any indebtedness of any other Borrower owing tosuch Borrower until the Obligations shall have been paid in full in cash.  If, notwithstanding the foregoing sentence,such Borrower shall collect, enforce or receive any amounts in respect of suchindebtedness, such amounts shall be collected, enforced and received by suchBorrower as trustee for the Administrative Agent and be paid over to theAdministrative Agent for the pro rata accounts of theLenders to be applied to repay the Obligations.

 

**7.             COLLATERAL SECURITY AND PARENTGUARANTY**.

 

**7.1.         Security of Borrowers.**  The Obligations shall be secured by aperfected first priority security interest (subject only to Permitted Liensentitled to

 

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priority under applicable law) in all of the assets ofthe Borrowers and their Subsidiaries, whether now owned or hereafter acquired,pursuant to the terms of the Security Documents to which the Borrowers areparty.

 

**7.2.         Parent Guaranty and Parent PledgeAgreement.**  TheObligations shall also be guaranteed pursuant to the terms of the ParentGuaranty.  The obligations of the Parentunder the Parent Guaranty shall be in turn secured by a perfected firstpriority security interest and pledge in all of the Equity Interests of MSAC,whether now owned or hereafter acquired, pursuant to the terms of the ParentPledge Agreement.

 

**8.             REPRESENTATIONS AND WARRANTIES**.

 

The Borrowers represent and warrant to theLenders and the Administrative Agent as follows:

 

**8.1.         Corporate Authority**.

 

**8.1.1.      Incorporation; Good Standing.**  Each of the Parent, the Borrowers and theirSubsidiaries (a) is a corporation, limited partnership or limited liabilitycompany as shown on Schedule 8.19, dulyorganized, validly existing and in good standing under the laws of itsjurisdiction of incorporation or formation, (b) has all requisite powers to ownits property and conduct its business as now conducted and as presentlycontemplated, and (c) is in good standing as a foreign corporation, limitedpartnership or limited liability company, as applicable, and is duly authorizedto do business in each jurisdiction where such qualification is necessaryexcept where a failure to be so qualified would not have a Material AdverseEffect.

 

**8.1.2.      Authorization.**  The execution, delivery and performance ofthis Credit Agreement and the other Loan Documents to which any of the Parent,the Borrowers or any of their Subsidiaries is or is to become a party and thetransactions contemplated hereby and thereby (a) are within the corporate,limited partnership or limited liability company authority, as applicable, ofsuch Person, (b) have been duly authorized by all necessary entity proceedings,(c) do not and will not conflict with or result in any breach or contraventionof any provision of law, statute, rule or regulation to which the Parent, anyof the Borrowers or any of their Subsidiaries is subject or any judgment,order, writ, injunction, license or permit applicable to, or any agreement orother instrument binding upon, the Parent, any of the Borrowers or any of theirSubsidiaries, except for any such breach or contravention which could notreasonably be expected to have a Material Adverse Effect and (d) do notconflict with any provision of the Governing Documents of the Parent, any ofthe Borrowers or any of their Subsidiaries.

 

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**8.1.3.      Enforceability.**  Theexecution and delivery of this Credit Agreement and the other Loan Documents towhich the Parent, any of the Borrowers or any of their Subsidiaries is or is tobecome a party will result in valid and legally binding obligations of suchPerson enforceable against it in accordance with the respective terms andprovisions hereof and thereof, except as enforceability is limited bybankruptcy, insolvency, reorganization, moratorium or other laws relating to oraffecting generally the enforcement of creditors’ rights and except to theextent that availability of the remedy of specific performance or injunctiverelief is subject to the discretion of the court before which any proceedingtherefor may be brought.

 

**8.2.         Governmental Approvals.**  The execution, delivery and performance bythe Parent, the Borrowers and their Subsidiaries of this Credit Agreement andthe other Loan Documents to which the Parent, the Borrowers or any of theirSubsidiaries is or is to become a party and the transactions contemplatedhereby and thereby do not require the approval or consent of, or filing with,any Governmental Authority other than those already obtained and other thanthose as to which the failure to obtain such approval or consent could notreasonably be expected to have a Material Adverse Effect.

 

**8.3.         Title to Properties; Leases.**  Attached as Schedule 8.3hereto, as such Schedule 8.3 may be updatedfrom time to time in accordance with the provisions of §9.5.6, is a completeand accurate list of Real Estate owned or leased by the Borrowers.  The Borrowers and their Subsidiaries own orlease all of the assets reflected in the Audited Financials as of the BalanceSheet Date or acquired since that date, subject to no Liens or other rights ofothers, except Permitted Liens.

 

**8.4.         Financial Statements and Projections**.

 

**8.4.1.      Fiscal Year; Fiscal Quarters.**  Each of the Parent, the Borrowers and theirSubsidiaries has a fiscal******year whichends on the Saturday closest to December 31 of each calendar year.  The fiscal quarters of the Borrowers andtheir Subsidiaries end on the Saturday closest to March 31, June 30, September30 and December 31 of each calendar year.

 

**8.4.2.      Financial Statements.**  There has been furnished to each of theLenders the Audited Financials.  To thebest of the Borrowers’ knowledge, except as set forth on Schedule 8.4.2 hereto, the Audited Financials have been prepared inaccordance with GAAP and fairly present in all material respects the financialcondition of the Borrowers and their Subsidiaries as at the dates thereof andthe result of operations for the fiscal period then ended.

 

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**8.4.3.      Pro Forma Balance Sheet andProjections.** The Borrowers have delivered to the Administrative Agent a consolidated proforma balance sheet as of June 26, 2004 reflecting the borrowingshereunder on the Closing Date (the “Pro FormaBalance Sheet”), which Pro Forma Balance Sheet has been prepared in goodfaith on the basis of the assumptions stated therein.  The projections of the annual operatingbudgets of the Borrowers and their Subsidiaries on a consolidated basis, balancesheets and cash flow statements for the 2004 to 2009 fiscal years, copies ofwhich have been delivered to each Lender, disclose all assumptions made withrespect to general economic, financial and market conditions used informulating such projections.  To theknowledge of the Borrowers or any of their Subsidiaries, no facts exist that(individually or in the aggregate) would result in any material change in anyof such projections.  The projections arebased upon reasonable estimates and assumptions, have been prepared on thebasis of the assumptions stated therein and reflect the reasonable estimates ofthe Borrowers of the results of operations and other information projectedtherein.  There are no contingent liabilitiesof the Borrowers or their Subsidiaries as of the Closing Date involvingmaterial amounts, known to the officers of the Borrowers, which are notdisclosed in the Pro Forma Balance Sheet.

 

**8.5.         No Material Adverse Changes, etc.**  Since the Balance Sheet Date, to theknowledge of the Borrowers, there has been no event or occurrence which has hada material adverse effect on the Borrowers and their Subsidiaries taken as awhole.

 

**8.6.         Franchises, Patents, Copyrights,Liquor Management Agreements, etc.**  Except as set forth on Schedule 8.6(a) hereto, the Borrowers and each of their Subsidiariespossess all franchises, patents, copyrights, trademarks, trade names, licenses(including liquor licenses) and permits, and rights in respect of theforegoing, adequate for the conduct of their business substantially as nowconducted without known conflict with any rights of others.  Schedule8.6(b) hereto sets forth a list of all Liquor Management Agreements.

 

**8.7.         Litigation.**  Except as set forth in Schedule 8.7hereto, there are no actions, suits, proceedings or, to the knowledge of theBorrowers, investigations of any kind pending or, to the knowledge of theBorrowers, threatened against any of the Parent, the Borrowers or any of theirSubsidiaries, that (a) if adversely determined, might, either in any case or inthe aggregate, have a Material Adverse Effect, or (b) question the validity ofthis Credit Agreement or any of the other Loan Documents, the Subordinated DebtDocuments (if any), or the Equity Documents or any action taken or to be takenpursuant hereto or thereto.

 

**8.8.         Material Contracts; No MateriallyAdverse Contracts, etc.**  Except as set forth on Schedule 8.8 hereto, none of the Parent, the Borrowers or any oftheir Subsidiaries are party to, or after giving affect to any Acquisition, are

 

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obligated under, any Material Contracts.  None of the Borrowers nor any of theirSubsidiaries is subject to any Governing Document or other legal restriction,or any judgment, decree, order, law, statute, rule or regulation that has or isexpected in the future to have a Material Adverse Effect.  None of the Borrowers nor any of theirSubsidiaries is a party to any contract or agreement that has or is expected,in the judgment of the Borrowers’ officers, to have any Material AdverseEffect.

 

**8.9.         Compliance with Other Instruments,Laws, etc.** None of the Borrowers nor any of their Subsidiaries is in violation ofany provision of its Governing Documents, or any agreement or instrument towhich it may be subject or by which it or any of its properties may be bound orany decree, order, judgment, statute, license, rule or regulation, in any ofthe foregoing cases in a manner that could have a Material Adverse Effect.  Any and all approvals by any federal, state orlocal liquor authority necessary for the continued operation of any Restaurantwith full liquor service have been received and remain in full force and effector alternative arrangements (including execution of Liquor ManagementAgreements) which are satisfactory to the Administrative Agent have been madein order to permit such continued operation, except where the failure thereofwould not have a Material Adverse Effect.

 

**8.10.       Tax Status.** The Borrowers and their Subsidiaries (a) have made or filed all federal,state and foreign income and all other tax returns, reports and declarationsrequired by any jurisdiction to which any of them is subject, (b) have paid alltaxes and other governmental assessments and charges shown or determined to bedue on such returns, reports and declarations, except those being contested ingood faith and by appropriate proceedings and (c) have set aside on their booksprovisions reasonably adequate in accordance with GAAP for the payment of alltaxes for periods subsequent to the periods to which such returns, reports ordeclarations apply.  There are no unpaidtaxes in any material amount claimed to be due by the taxing authority of anyjurisdiction other than claims being contested in good faith by appropriateproceedings for which no Lien has been imposed (other than Permitted Liens) andfor which adequate reserves have been set aside in accordance with GAAP.

 

**8.11.       No Event of Default.** No Default or Event of Default has occurred and is continuing.

 

**8.12.       Holding Company and InvestmentCompany Acts.** None of the Parent, the Borrowers or any of their Subsidiaries is a “holdingcompany”, or a “subsidiarycompany” of a “holdingcompany”,or an “affiliate” of a “holdingcompany”, as such termsare defined in the Public Utility Holding Company Act of 1935; nor is it an “investmentcompany”, or an “affiliatedcompany” or a “principalunderwriter” of an “investmentcompany”, as such terms aredefined in the Investment Company Act of 1940.

 

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**8.13.****                     Absenceof Financing Statements, etc.**  Except with respect to Permitted Liens, thereis no financing statement, security agreement, chattel mortgage, real estatemortgage or other document filed or recorded with any filing records, registryor other public office, that purports to cover, affect or give notice of anypresent or possible future Lien on any assets or property of any of the Parent,the Borrowers or any of their Subsidiaries or any rights relating thereto,including assets acquired as part of any Acquisition and rights relating tosuch assets.

 

**8.14.****                     Perfectionof Security Interest.** All filings, assignments, pledges and deposits of documents orinstruments have been made or will be made, and all other actions have beentaken or will be taken that are necessary or advisable, under applicable law,to establish and perfect the Administrative Agent’s security interest in theCollateral.  The Collateral and theAdministrative Agent’s rights with respect to the Collateral are not subject toany setoff, claims, withholdings or other defenses.

 

**8.15.****                     CertainTransactions.**  Except for thetransactions listed on Schedule 8.15 andarm’s length transactions pursuant to which a Borrower or any of itsSubsidiaries makes payments in the ordinary course of business upon terms noless favorable than such Borrower or such Subsidiary could obtain from thirdparties, none of the officers, directors, or employees of any of the Borrowers,any of their Subsidiaries or any Sponsor or any Affiliate of a Borrower, anySubsidiary of a Borrower or any Sponsor is presently a party to any transactionwith any of the Borrowers or any of their Subsidiaries (other than for servicesas employees, officers and directors), including any contract, agreement orother arrangement providing for the furnishing of services to or by, providingfor rental of real or personal property to or from, or otherwise requiringpayments to or from any officer, director or such employee or, to the knowledgeof the Borrowers, any corporation, partnership, trust or other entity in whichany officer, director, or any such employee has a substantial interest or is anofficer, director, trustee or partner.

 

**8.16.****                     EmployeeBenefit Plans**.

 

**8.16.1.****           In General.**  Each Employee Benefit Plan and eachGuaranteed Pension Plan has been maintained and operated in compliance in allmaterial respects with the provisions of ERISA and all Applicable PensionLegislation and, to the extent applicable, the Code, except where the failureto comply could not reasonably be expected to have a Material AdverseEffect.  The Borrowers have heretoforedelivered to the Administrative Agent the most recently completed annualreport, Form 5500, with all required attachments, and actuarial statementsrequired to be submitted under §103(d) of ERISA, with respect to eachGuaranteed Pension Plan maintained or contributed to by the Parent or anySubsidiary of the Parent.

 

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**8.16.2.****           Terminability ofWelfare Plans.**  Except as setforth on Schedule 8.16 hereto and except aswould not reasonably be expected to have a Material Adverse Effect, no EmployeeBenefit Plan, which is an employee welfare benefit plan within the meaning of§3(1) or §3(2)(B) of ERISA, provides benefit coverage subsequent to terminationof employment, except as required by Title I, Part 6 of ERISA or the applicablestate insurance laws.

 

**8.16.3.****           GuaranteedPension Plans.**  Eachcontribution required to be made to a Guaranteed Pension Plan, whether requiredto be made to avoid the incurrence of an accumulated funding deficiency, thenotice or lien provisions of §302(f) of ERISA, or otherwise, has been timelymade.  No waiver of an accumulatedfunding deficiency or extension of amortization periods has been received withrespect to any Guaranteed Pension Plan, and none of the Borrowers nor any ERISAAffiliate is obligated to or has posted security in connection with anamendment to a Guaranteed Pension Plan pursuant to §307 of ERISA or §401(a)(29)of the Code.  No liability to the PBGC(other than required insurance premiums, all of which have been paid) has beenincurred by the Borrowers or any ERISA Affiliate with respect to any GuaranteedPension Plan and there has not been any ERISA Reportable Event (other than anERISA Reportable Event as to which the requirement of thirty (30) days noticehas been waived), or any other event or condition which presents a materialrisk of termination of any Guaranteed Pension Plan by the PBGC. Based on thelatest valuation of each Guaranteed Pension Plan (which in each case occurredwithin twelve months of the date of this representation), and on the actuarialmethods and assumptions employed for that valuation, the aggregate benefitliabilities of all such Guaranteed Pension Plans within the meaning of §4001 ofERISA did not exceed the aggregate value of the assets of all such GuaranteedPension Plans, disregarding for this purpose the benefit liabilities and assetsof any Guaranteed Pension Plan with assets in excess of benefit liabilities.

 

**8.16.4.****           MultiemployerPlans.**  None of the Borrowers norany ERISA Affiliate has incurred any material liability (including secondaryliability) to any Multiemployer Plan as a result of a complete or partialwithdrawal from such Multiemployer Plan under §4201 of ERISA or as a result ofa sale of assets described in §4204 of ERISA. None of the Borrowers nor any ERISA Affiliate has been notified that anyMultiemployer Plan is in reorganization or insolvent under and within themeaning of §4241 or §4245 of ERISA or is at risk of entering reorganization orbecoming insolvent, or that any Multiemployer Plan intends to terminate or hasbeen terminated under §4041A of ERISA.

 

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**8.17.****                     Use ofProceeds**.

 

**8.17.1.****          **General.  On the Closing Date, proceeds of theRevolving Credit Loans shall be used to (a) refinance all outstanding loansunder the 2003 Credit Agreement, (b) pay the fees and expenses associated withthe execution of this Credit Agreement, (c) pay the fees associated with thetermination of the Management Agreements and the Officer Fees in an aggregateamount of up to $3,000,000, and (d) redeem shares of the Convertible PreferredStock.  After the Closing Date, all futureRevolving Credit Loans shall be used for (a) Permitted Acquisitions, (b)payment of fees associated with the termination of the Management Agreementsand the Officer Fees in an aggregate amount (when combined with any such feespaid on the Closing Date) of up to $3,000,000, (c) the acquisition and/orconstruction of new Restaurants and to upgrade existing Restaurants, in eachcase in accordance with the terms hereof, and (d) for working capital andgeneral corporate purposes.  TheBorrowers will obtain Letters of Credit solely for working capital and generalcorporate purposes.

 

**8.17.2.****          **RegulationsU and X.  No portion of any Loan isto be used, and no portion of any Letter of Credit is to be obtained, for thepurpose of purchasing or carrying any “marginsecurity” or “marginstock” as such terms are used in Regulations U and X of the Board ofGovernors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

 

**8.17.3.****          **Ineligible Securities.  No portion of the proceeds of any RevolvingCredit Loans is to be used, and no portion of any Letter of Credit is to beobtained, for the purpose of knowingly purchasing, or providing credit supportfor the purchase of, during the underwriting or placement period or withinthirty (30) days thereafter, any Ineligible Securities underwritten orprivately placed by a Financial Affiliate.

 

**8.18.****                     EnvironmentalCompliance.**  Except asset forth on Schedule 8.18 hereto:

 

(a)          none of the Borrowers,their Subsidiaries or any operator of the Real Estate or any operations thereonis in violation, or alleged violation, of any judgment, decree, order, law,license, rule or regulation pertaining to environmental matters, includingwithout limitation, those arising under the Resource Conservation and RecoveryAct (“RCRA”), the Comprehensive Environmental Response, Compensation andLiability Act of 1980 as amended (“CERCLA”), the Superfund Amendmentsand Reauthorization Act of 1986 (“SARA”), the Federal Clean Water Act,the Federal Clean Air Act, the Toxic Substances Control Act, or any state,local or foreign law, statute, regulation, ordinance, order or decree relatingto health, safety or the environment (hereinafter “EnvironmentalLaws”),which violation would reasonably be expected to have a material adverse effecton the environment or a Material Adverse Effect;

 

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(b)         none of the Borrowers norany of their Subsidiaries has received written notice from any third partyincluding, without limitation, any Governmental Authority, (i) that any one ofthem has been identified by the United States Environmental Protection Agency (“EPA”)as a potentially responsible party under CERCLA with respect to a site listedon the National Priorities List, 40 C.F.R. Part 300 Appendix B, where suchcircumstances would reasonably be expected to have a Material Adverse Effect;(ii) that any hazardous waste, as defined by 42 U.S.C. §6903(5), any hazardoussubstances as defined by 42 U.S.C. §9601(14), any pollutant or contaminant asdefined by 42 U.S.C. §9601(33) and any toxic substances, oil or hazardousmaterials or other chemicals or substances regulated by any Environmental Laws(“HazardousSubstances”) which any one of them has generated,transported or disposed of has been found at any site at which a GovernmentalAuthority has conducted or has ordered that any Borrower or any of itsSubsidiaries conduct a remedial investigation, removal or other response actionpursuant to any Environmental Law, where such circumstances would reasonably beexpected to have a Material Adverse Effect; or (iii) that it is or shall be anamed party to any claim, action, cause of action, complaint, or legal oradministrative proceeding arising out of any third party’s incurrence of costs,expenses, losses or damages of any kind whatsoever in connection with the releaseof Hazardous Substances where such circumstances would reasonably be expectedto have a Material Adverse Effect;

 

(c)          except as could notreasonably be expected to result in a Material Adverse Effect, (i) no portionof the Real Estate has been used for the handling, processing, storage ordisposal of Hazardous Substances except in accordance with applicableEnvironmental Laws; and to the best of the Borrowers’ knowledge, no undergroundtank or other underground storage receptacle for Hazardous Substances islocated on any portion of the Real Estate; (ii) in the course of any activitiesconducted by the Borrowers, their Subsidiaries or operators of its properties,no Hazardous Substances have been generated or are being used on the RealEstate except in accordance with applicable Environmental Laws; (iii) therehave been no releases (i.e. any past or present releasing, spilling, leaking,pumping, pouring, emitting, emptying, discharging, injecting, escaping,disposing or dumping) or threatened releases of Hazardous Substances on, upon,into or from the properties of any of the Borrowers or their Subsidiaries,which releases would reasonably be expected to have a Material Adverse Effect;and (iv) to the best of the Borrowers’ knowledge, there have been no releaseson, upon, from or into any real property in the vicinity of any of the RealEstate which, through soil or groundwater contamination, may have come to belocated on, and which would reasonably be expected to have a Material AdverseEffect; and

 

(d)         none of the Borrowers andtheir Subsidiaries, any Mortgaged Property or any of the other Real Estate issubject, as a result of the transactions contemplated hereby, to any applicableEnvironmental Law requiring the performance of Hazardous Substances siteassessments, or the removal or

 

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remediation ofHazardous Substances, or the giving of notice to any Governmental Authority orthe recording or delivery to other Persons of an environmental disclosure documentor statement by virtue of the transactions set forth herein and contemplatedhereby, or as a condition to the recording of any Mortgage or to theeffectiveness of any other transactions contemplated hereby.

 

(e)          This §8.18 contains thesole representations and warranties of the Borrowers with respect toenvironmental matters.

 

**8.19.****                     Subsidiaries,etc.**  Schedule 8.19, as such Schedule 8.19may be updated from time to time in accordance with the provisions of§9.17, sets forth the only Subsidiaries of MSAC, together with information oneach of the Borrowers’ jurisdictions of incorporation or organization, the typeof organization of each of the Borrowers and their Subsidiaries, the number andclass of authorized and issued Equity Interests of the Borrowers and each oftheir Subsidiaries and the owners of all such issued Equity Interests.  Except as set forth on Schedule 8.19hereto, none of the Borrowers nor any of their Subsidiaries is engaged in anyjoint venture or partnership with any other Person.

 

**8.20.****                     BankAccounts.**  Schedule 8.20, as such Schedule 8.20 may be updated from time totime in accordance with the provisions of §9.5.5, sets forth the accountnumbers and location of all bank accounts of each Borrower and itsSubsidiaries.

 

**8.21.****                     SubordinatedDebt Documents; Equity Documents; Warrant Documents**.

 

(a)          In the event that theBorrowers incur Subordinated Debt pursuant to §10.1(c), the Borrowers shallhave furnished to the Administrative Agent true, complete and correct copies ofthe Subordinated Debt Documents (including schedules, exhibits and annexesthereto).  Such Subordinated DebtDocuments shall not subsequently be amended, supplemented or modified except inaccordance with §10.14.3, and constitute the complete understanding among theparties thereto in respect of the matters and transactions covered thereby.

 

(b)         The Equity Documentspreviously furnished to the Administrative Agent have not subsequently beenamended, supplemented, or modified and constitute the complete understandingamong the parties thereto in respect of the matters and transactions coveredthereby except for amendments (i) prior to the Closing Date, delivered to theAdministrative Agent in accordance with §9.18 of the Existing Credit Agreementand (ii) on or following the Closing Date, delivered to the AdministrativeAgent in accordance with §9.18 hereof.

 

(c)                                  TheWarrant Documents previously furnished to the Administrative Agent have notsubsequently been amended, supplemented, or modified and constitute thecomplete understanding among the parties thereto in respect of the matters andtransactions covered thereby except for amendments (i) prior to the

 

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Closing Date,delivered to the Administrative Agent in accordance with §9.18 of the ExistingCredit Agreement and (ii) on or following the Closing Date, delivered to theAdministrative Agent in accordance with §9.18 hereof.

 

**8.22.****                     Solvency.**  Bothbefore and after giving effect to the execution, delivery and performance of thisCredit Agreement and the other Loan Documents, the Borrowers and theirSubsidiaries, on a consolidated basis, are Solvent.  As used herein, “Solvent” shall meanthat each of the Borrowers and their Subsidiaries (i) have assets having a fairvalue in excess of their liabilities, (ii) have assets having a fair value inexcess of the amount required to pay their liabilities on existing debts assuch debts become absolute and mature, and (iii) have, and expect to continueto have, access to adequate capital for the conduct of their business and theability to pay their debts from time to time incurred in connection with theoperation of their business as such debts mature.

 

**8.23.****                     Restaurants.**  Schedule 8.23sets forth, as of the Closing Date, the names and addresses of each Restaurantand identifies, as of the Closing Date, which of those Restaurants are operatedand/or managed under a franchise agreement or restaurant management agreementby any of the Borrowers or any of their Subsidiaries (whether as franchisor anda franchisee, in the case of a franchise agreement).

 

**8.24.****                     FranchiseAgreements.**  The Borrowershave delivered to the Administrative Agent true and complete copies of anyFranchise Agreements to which any of the Borrowers or any of their Subsidiariesis party.

 

**8.25.****                     Leases.** Except as set forth on Schedule 8.25hereto, neither the execution, delivery and performance of this CreditAgreement nor the other Loan Documents, nor any Subordinated Debt Documents (ifany), to which any of the Parent, the Borrowers or any of their Subsidiaries isa party, including the pledge by the Parent and the Borrowers of all of theissued and outstanding Equity Interests of the Borrowers and the exercise bythe Administrative Agent of its rights to take possession of, or otherwisecontrol, such Equity Interests, will create a default under any Real EstateLease under which any of the Borrowers or any of their Subsidiaries ispresently a lessee or sublessee, which is likely to have a Material AdverseEffect.

 

**8.26.****                     Disclosure.**  None of this Credit Agreement or any of theother Loan Documents contains any untrue statement of a material fact or omitsto state a material fact (known to the Borrowers or any of their Subsidiariesin the case of any document or information not furnished by the Borrower or anyof their Subsidiaries) necessary in order to make the statements herein ortherein not misleading.  There is no factknown to the Borrowers or any of their Subsidiaries which has a MaterialAdverse Effect, or which is reasonably likely in the future to have a MaterialAdverse Effect, exclusive of effects resulting from changes in general economicconditions, legal standards or regulatory conditions.

 

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**8.27.****                     Changeof Control**.  After giving effect to the Initial PublicOffering and the redemption of the Convertible Preferred Stock pursuant to theterms of the Notice of Redemption, if on the date hereof the holders of theWarrant Documents elect to exercise all of their rights thereunder to acquireshares of common stock of MSSR, no Change of Control (as defined herein) wouldoccur immediately upon and following such acquisition.

 

**9.****                                      AFFIRMATIVE COVENANTS**.

 

Each of theBorrowers covenants and agrees that, so long as any Revolving Credit Loan,Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or anyLender has any obligation to make any Revolving Credit Loan or theAdministrative Agent has any obligation to issue, extend or renew any Lettersof Credit:

 

**9.1.****                            Punctual Payment.**  The Borrowers will duly and punctually pay orcause to be paid the principal and interest on the Revolving Credit Loans, allReimbursement Obligations, the Fees and all other amounts provided for in thisCredit Agreement and the other Loan Documents to which any of the Borrowers orany of their Subsidiaries is a party, all in accordance with the terms of thisCredit Agreement and such other Loan Documents.

 

**9.2.****                            Maintenance of Office.**  Each of the Borrowers will, and will causeeach of its Subsidiaries to, maintain its chief executive office at thelocation identified in the Perfection Certificate delivered by it pursuant tothe Security Agreement, or at such other place in the United States of Americaas such Person shall designate upon written notice to the Administrative Agent,where notices, presentations and demands to or upon such Person in respect ofthe Loan Documents to which such Person is a party may be given or made.

 

**9.3.****                            Records and Accounts.**  Each of the Borrowers will (a) keep, andcause each of its Subsidiaries to keep, true and accurate records and books ofaccount in which complete, true and correct entries will be made in accordancewith GAAP, (b) maintain adequate accounts and reserves for all taxes (includingincome taxes), depreciation, depletion, obsolescence and amortization of itsproperties and the properties of its Subsidiaries, contingencies, and otherreserves, and (c) at all times engage PricewaterhouseCoopers or otherindependent certified public accountants reasonably satisfactory to theRequired Lenders as the independent certified public accountants of theBorrowers and their Subsidiaries and will not permit more than thirty (30) daysto elapse between the cessation of such firm’s (or any successor firm’s)engagement as the independent certified public accountants of the Borrowers andtheir Subsidiaries and the appointment in such capacity of a successor firm asshall be reasonably satisfactory to the Administrative Agent.

 

**9.4.****                            Financial Statements, Certificates andInformation.**  The Borrowers willdeliver to each of the Lenders:

 

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(a)          as soon as practicable,but in any event not later than ninety (90) days after the end of each fiscalyear of the Borrowers, the consolidated balance sheet of MSSR and itsSubsidiaries as at the end of such year, and the related consolidated statementof income and consolidated statement of cash flow for such year, each settingforth in comparative form the figures for the previous fiscal year and all suchconsolidated statements to be in reasonable detail, prepared in accordance withGAAP, and certified, without qualification and without an expression ofuncertainty as to the ability of MSSR or any of its Subsidiaries to continue asgoing concerns, by PricewaterhouseCoopers or by other independent certifiedpublic accountants reasonably satisfactory to the Required Lenders, togetherwith a written statement from such accountants to the effect that they haveread a copy of this Credit Agreement, and that, in making the examinationnecessary to said certification, they have obtained no knowledge of any Defaultor Event of Default, or, if such accountants shall have obtained knowledge ofany then existing Default or Event of Default they shall disclose in suchstatement any such Default or Event of Default; provided that suchaccountants shall not be liable to the Lenders for failure to obtain knowledgeof any Default or Event of Default;

 

(b)         as soon as practicable,but in any event not later than forty-five (45) days after the end of each ofthe fiscal quarters of the Borrowers, (i) copies of the unaudited consolidatedbalance sheet of MSSR and its Subsidiaries as at the end of such quarter, andthe related consolidated statement of income and consolidated statement of cashflow for such fiscal quarter and the portion of such Persons’ fiscal year thenelapsed, setting forth in each case in comparative form the figures for thecorresponding period or periods of the previous fiscal year and the comparisonsto projections for such period, all in reasonable detail and prepared inaccordance with GAAP (subject to year-end adjustments and footnote informationrequired by GAAP), together with a certification by the principal financial oraccounting officer of MSSR that the information contained in such financialstatements fairly presents in all material respects the financial position ofMSSR and its Subsidiaries on the date thereof (subject to year-end adjustmentsand footnote information required by GAAP); and (ii) statements of sales andstatements of net earnings before interest, taxes, depreciation andamortization expense, on a summarized Restaurant-by-Restaurant basis, for eachRestaurant operated by any of the Borrowers or their Subsidiaries, settingforth in each case in comparative form the statements for the correspondingperiod or periods of the prior fiscal year and a comparison to the projectionsfor such period, such statements to be in a form satisfactory to the RequiredLenders;

 

(c)          as soon as practicable,but in any event within thirty (30) days after the end of each month in eachfiscal year of MSSR, unaudited monthly consolidated financial statements ofMSSR and its Subsidiaries for such month and the portion of such Persons’fiscal year then ending, setting forth in each case in comparative form thefigures for the corresponding period or periods of the previous fiscal year andthe comparisons to projections for such period, prepared in accordance

 

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with GAAP(subject to year-end adjustments and footnote information required by GAAP),together with a certification by the principal financial or accounting officerof MSSR that the information contained in such financial statements fairlypresents in all material respects the financial condition of MSSR and itsSubsidiaries on the date thereof (subject to year-end adjustments and footnoteinformation required by GAAP), including a list of any new Restaurant locationsas required pursuant to §9.14;

 

(d)         simultaneously with thedelivery of the financial statements referred to in subsections (a) and (b)above, a statement certified by the principal financial or accounting officerof the Borrowers in substantially the form of Exhibit Chereto (a “ComplianceCertificate”) and setting forth inreasonable detail computations evidencing compliance with the covenantscontained in §11 and (if applicable) reconciliations to reflect changes in GAAPsince the Balance Sheet Date;

 

(e)          simultaneously with thedelivery of the financial statements referred to in subsection (a) above, astatement certified by the principal financial or accounting officer of theBorrowers setting forth in reasonable detail computations of the ConsolidatedExcess Operating Cash Flow for the fiscal year then ended;

 

(f)            contemporaneously withthe filing or mailing thereof, copies of all material of a financial naturefiled with the Securities and Exchange Commission or, sent to the equityholders of the Parent or any of the Borrowers;

 

(g)         within forty-five (45)days after the beginning of each fiscal year of the Borrowers and, if a Defaultor Event of Default shall have occurred and be continuing, from time to timeupon the request of the Administrative Agent, projections and budgets of theBorrowers and their Subsidiaries organized for the next fiscal year on amonth-by-month and quarter-by-quarter basis updating those projectionsdelivered to the Lenders and referred to in §8.4.3 or, if applicable, updatingany later such projections delivered in response to a request pursuant to this§9.4(g);

 

(h)         all information sent tothe directors of the Borrowers regarding the opening of new Restaurants;

 

(i)                                     allnotices and other information sent to any holder of Subordinated Debt in itscapacity as such; and

 

(j)             from time to timesuch other financial data and information (including accountants, managementletters) as the Administrative Agent or any Lender may reasonably request.

 

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**9.5.****                            Notices**.

 

**9.5.1.****                  Defaults.**  The Borrowers will notify the AdministrativeAgent and each of the Lenders in writing of the occurrence of any Default orEvent of Default promptly upon becoming aware thereof, together with areasonably detailed description thereof, and the actions the Borrowers proposeto take with respect thereto.  If anyPerson shall give any notice or take any other action in respect of a claimeddefault (whether or not constituting an Event of Default) under this CreditAgreement or any other note, evidence of indebtedness, indenture or otherobligation to which or with respect to which any of the Borrowers or any oftheir Subsidiaries is a party or obligor in excess of $1,000,000, whether asprincipal, guarantor, surety or otherwise, the Borrowers shall forthwith givewritten notice thereof to the Administrative Agent and each of the Lenders,describing the notice or action and the nature of the claimed default.

 

**9.5.2.****                  EnvironmentalEvents.**  The Borrowers willpromptly give notice to the Administrative Agent (a) of any violation of anyEnvironmental Law that the Borrowers or any of their Subsidiaries reports inwriting or is reportable by such Person in writing (or for which any writtenreport supplemental to any oral report is made) to any Governmental Authoritywhere such violation could reasonably be expected to have a Material AdverseEffect, and (b) upon becoming aware of any inquiry, proceeding, investigation,or other action, including a written notice from any agency of potentialenvironmental liability, of any Governmental Authority that could reasonably beexpected to have a Material Adverse Effect.

 

**9.5.3.****                  Notificationof Claim against Collateral.** The Borrowers will, immediately upon becoming aware thereof, notify theAdministrative Agent in writing of any setoff, claims (including, with respectto the Real Estate, environmental claims), withholdings or other defenses towhich any material portion of the Collateral, or the Administrative Agent’srights with respect to such Collateral, are subject.

 

**9.5.4.****                  Noticeof Litigation and Judgments.** The Borrowers will, and will cause each of their Subsidiaries to, givenotice to the Administrative Agent in writing within fifteen (15) days ofbecoming aware of any litigation or proceedings threatened in writing or anypending litigation and proceedings affecting any of the Borrowers or any oftheir Subsidiaries or to which any of the Borrowers or any of theirSubsidiaries is or becomes a party involving an uninsured claim against any ofthe Borrowers or any of their Subsidiaries that could reasonably be expected tohave a Material Adverse Effect and stating the nature and status of suchlitigation or proceedings.  The Borrowerswill, and will cause each of their Subsidiaries to, give notice to theAdministrative Agent, in writing, in form and detail satisfactory to theAdministrative Agent, within ten (10) days of any judgment not covered byinsurance,

 

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final orotherwise, against any of the Borrowers or any of their Subsidiaries in anamount in excess of $1,000,000.

 

**9.5.5.****                  Notice ofBank Accounts.**  TheBorrowers will, and will cause each of their Subsidiaries to, give notice tothe Administrative Agent in writing of any such Person creating or opening anyadditional bank accounts simultaneously with the delivery of the financialstatements referred to in §9.4(c) but in any event no later than one monthafter the opening of such account.  Insuch event, upon receipt by the Administrative Agent of such notice, Schedule 8.20 shall be deemed to have beenamended to include each such new bank account set forth in such notice.

 

**9.5.6.****                  Notice ofReal Estate.**  Withoutprejudice to §9.13, the Borrowers will, and will cause each of their Subsidiariesto, give notice to the Administrative Agent in writing of any such Personacquiring any additional (i) leased Real Estate to the extent such Real Estateis leased for a term of five (5) years or longer or such leased Real Estate isfor office space where books and records relating to the Borrowers’ businessshall be maintained, or (ii) owned Real Estate, simultaneously with thedelivery of the financial statements referred to in §9.4(c) but in any event nolater than one month after such acquisition. In such event, upon receipt by theAdministrative Agent of such notice, Schedule8.3 shall be deemed to have been amended to include each such additionalReal Estate set forth in such notice.

 

**9.6.****                            Legal Existence; Maintenance of Properties.**  Each of the Borrowers will do or cause to bedone all things necessary to preserve and keep in full force and effect itslegal existence, rights and franchises and those of its Subsidiaries.  Each of the Borrowers (i) will cause all ofits properties and those of its Subsidiaries used or useful in the conduct ofits business or the business of its Subsidiaries to be maintained and kept ingood condition, repair and working order and supplied with all necessaryequipment except where the failure to do so could not reasonably be expected toresult in a Material Adverse Effect, (ii) will cause to be made all necessaryrepairs, renewals, replacements, betterments and improvements thereof, all asin the judgment of such Borrower may be necessary so that the business carriedon in connection therewith may be properly conducted at all times, except wherethe failure to do so could not reasonably be expected to result in a MaterialAdverse Effect, and (iii) will, and will cause each of its Subsidiaries to,continue to engage primarily in the businesses now conducted by them and inrelated businesses; provided that nothing in this §9.6 shall prevent anyof the Borrowers from discontinuing the operation and maintenance of any of itsproperties or any of those of its Subsidiaries if such discontinuance is, inthe judgment of such Borrower, desirable in the conduct of its or theirbusiness and that do not in the aggregate have a Material Adverse Effect.

 

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**9.7.****                            Insurance**.

 

**9.7.1.****                  RequiredInsurance.**  Each of theBorrowers will, and will cause each of their Subsidiaries to, maintain withfinancially sound and reputable insurers insurance with respect to itsproperties and business against such casualties and contingencies as shall bein accordance with the general practices of businesses engaged in similaractivities in similar geographic areas and in amounts, containing such terms,in such forms and for such periods as may be reasonable and prudent.  Without limiting the foregoing, (a) suchinsurance shall be in such minimum amounts that such Person will not be deemeda co-insurer under applicable insurance laws, regulations and policies andotherwise shall be in such amounts, contain such terms, be in such forms and befor such periods as may be reasonably satisfactory to the Administrative Agent,(b) all such insurance shall be payable (other than liability insurance, whichshall name the Administrative Agent as an additional insured) to theAdministrative Agent as loss payee under a “standard”or “New York” loss payee clause for thebenefit of the Lenders and the Administrative Agent (c) each such Person will(i) keep all of its physical property insured with casualty or physical hazardinsurance on an “all risks” basis, withflood and earthquake coverages if available at commercially reasonable ratesand to the extent that a given property lies within either a flood and/or anearthquake zone, as applicable, and electronic data processing coverage, with afull replacement cost endorsement and an “agreedamount” clause in an amount equal to one hundred percent (100%) of the fullreplacement cost of such property, subject to aggregate sublimits for flood andearthquake equal to those generally maintained by businesses engaged in similaractivities in similar geographic areas, (ii) maintain all such workers’compensation or similar insurance as may be required by law and (iii) maintain,in amounts**and with deductiblesequal to those generally maintained by businesses engaged in similar activitiesin similar geographic areas, general public liability insurance against claimsof bodily injury, death or property damage occurring, on, in or about theproperties of such Person; and business interruption insurance.  Each of the Borrowers will, and will causeeach of its Subsidiaries to, maintain insurance on the Mortgaged Properties inaccordance with the terms of the Mortgages.

 

**9.7.2.****                  InsuranceProceeds.**  The proceeds ofany casualty insurance in respect of any casualty loss of any of the Collateralshall, subject to the rights, if any, of other parties with a prior interest inthe property covered thereby, (i) so long as no Event of Default has occurredand is continuing and to the extent that the amount of such proceeds is lessthan $2,500,000, be disbursed to the applicable Borrower for reinvestment insuch Borrower’s business and (ii) in all other circumstances, be held by theAdministrative Agent as cash collateral for the Obligations.  The

 

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AdministrativeAgent may, so long as no Event of Default has occurred and is continuing andthe Borrowers are not required to apply such proceeds to prepay the Obligationspursuant to §4.2 or have not elected to reinvest such proceeds pursuant to§§4.2 and 4.4, disburse from time to time all or any part of such proceeds soheld as cash collateral, upon such terms and conditions as the AdministrativeAgent may reasonably prescribe, for direct application by such Borrower solelyto the repair or replacement of such Borrower’s property so damaged ordestroyed or other reinvestment in the Borrowers’ business; provided that, so long as no Event of Defaulthas occurred and is continuing, the Borrowers shall at all times and in anyevent have the rights set forth in the last sentence of §4.4.  In the event that such proceeds have not beenreinvested in the Borrowers’ business within two hundred seventy (270) daysafter the earlier to occur of receipt thereof by the Borrowers or receiptthereof by the Administrative Agent, the Administrative Agent shall apply allor any part of such proceeds to the Obligations as provided in §§4.2 and 4.3; provided that, if (A) within such 270-dayperiod after the earlier to occur of receipt of such proceeds by the Borrowersor receipt of such proceeds by the Administrative Agent, the Borrowers enterinto an agreement (which may be a purchase order) pursuant to which suchreinvestment shall be made, a copy of which shall be provided to theAdministrative Agent, and (B) within four hundred five (405) days followingreceipt of such proceeds by the Borrowers or the Administrative Agent, theBorrowers shall have completed, or shall have made significant progress towardcompletion of, such reinvestment with such proceeds, then the Borrowers shallnot be required to prepay the Revolving Credit Loans pursuant to §§4.2 and 4.3but shall in any event comply with §4.4.

 

**9.7.3.****                  Noticeof Cancellation.**  Allpolicies of insurance shall provide for at least thirty (30) days prior writtencancellation notice to the Administrative Agent; provided,however, in the event of cancellation fornon-payment of premiums, such policies of insurance shall provided for at leastten (10) days prior written cancellation notice to the AdministrativeAgent.  In the event of failure by anyBorrower to provide and maintain insurance as herein provided, theAdministrative Agent may, at its option, provide such insurance and charge theamount thereof to such Borrower; providedthat the Administrative Agent shall provide prompt notice to the Borrowers ofany such action taken by the Administrative Agent.  The Borrowers shall furnish to theAdministrative Agent, on an annual basis within thirty (30) days after the endof each fiscal year, certificates of insurance and policies evidencingcompliance with the foregoing insurance provisions.

 

**9.8.****                            Taxes.**  TheBorrowers will, and will cause each of their Subsidiaries to, duly pay anddischarge, or cause to be paid and discharged, before the same shall becomeoverdue, all taxes, assessments and other governmental

 

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chargesimposed upon it, its Real Estate, its sales and activities, or any partthereof, or upon the income or profits therefrom, as well as all claims forlabor, materials, or supplies that if unpaid would by law become a Lien orcharge upon any of its property; provided that any such tax, assessment,charge, levy or claim need not be paid if the validity or amount thereof shallcurrently be contested in good faith by appropriate proceedings and if suchBorrower or such Subsidiary shall have set aside on its books adequate reservesin accordance with GAAP with respect thereto; and provided, further,that the Borrowers and each of their Subsidiaries will pay all such taxes, assessments,charges, levies or claims forthwith upon the commencement of proceedings toforeclose any Lien that may have attached as security therefor, unless suchproceedings are stayed at the time of determination.

 

**9.9.****                            Inspection of Properties and Books, etc**.

 

**9.9.1.****                  General.**  Nomore frequently than once during any fiscal quarter or, if a Default or Eventof Default shall have occurred and be continuing, from time to time upon therequest of the Administrative Agent or any Lender, each of the Borrowers shallpermit the Lenders, through the Administrative Agent or any of the Lenders’other designated representatives, to visit and inspect any of the properties ofsuch Borrower or any of its Subsidiaries, to examine the books of account ofsuch Borrower and its Subsidiaries (and to make copies thereof and extractstherefrom unless and to the extent that a confidentiality agreement with anunaffiliated third party to which such Borrower or such Subsidiary is boundwould otherwise prohibit such disclosure, in which case such Borrower or suchSubsidiary agrees to use commercially reasonable efforts to obtain the consentof such Person to such disclosure), and to discuss the affairs, finances andaccounts of such Borrower and its Subsidiaries with, and to be advised as tothe same by, its and their officers, all upon reasonable prior notice duringnormal business hours at such reasonable times as the Administrative Agent orany Lender may reasonably request.

 

**9.9.2.****                  EnvironmentalAssessments.**  Upon theoccurrence and during the continuance of an Event of Default, theAdministrative Agent may require the Borrowers to obtain an environmentalassessment or audit reasonable under the circumstances, prepared by ahydrogeologist, an independent engineer or other qualified consultant or expertapproved by the Administrative Agent to evaluate or confirm, (a) whether anyHazardous Materials are present in the soil or water at any Mortgaged Propertyand (b) whether the use and operation of any Mortgaged Property complies with allEnvironmental Laws.  Environmentalassessments may include without limitation detailed visual inspections of anyMortgaged Property including any and all storage areas, storage tanks, drains,dry wells and leaching areas, and the taking of soil samples, surface water

 

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samples andground water samples, as well as such other investigations or analyses as theAdministrative Agent deems appropriate. The reasonable costs of such environmental assessments shall be paid bythe Borrowers.

 

**9.9.3.****                  Communicationswith Accountants.**  TheBorrowers authorize the Administrative Agent and, if accompanied by theAdministrative Agent, the Lenders to communicate directly with the Borrowers’independent certified public accountants and authorizes such accountants todisclose to the Administrative Agent and the Lenders any and all financialstatements and other supporting financial documents and schedules includingcopies of any management letter with respect to the business, financialcondition and other affairs of the Borrowers or any of their Subsidiaries tothe extent prepared for the Borrowers. At the reasonable request of the Administrative Agent, the Borrowersshall deliver a letter addressed to such accountants instructing them to complywith the provisions of this §9.9.3.

 

**9.10.****                     Compliancewith Laws, Contracts, Licenses, and Permits.**  Each of the Borrowers will, and will causeeach of their Subsidiaries to, comply in all material respects with (a) theapplicable laws and regulations wherever its business is conducted, includingall Environmental Laws, (b) the provisions of its Governing Documents, (c) allagreements and instruments by which it or any of its properties may be boundand (d) all applicable decrees, orders, and judgments.  If any authorization, consent, approval,permit or license from any officer, agency or instrumentality of any governmentshall become necessary or required in order that the Borrowers or any of theirSubsidiaries may fulfill any of their obligations hereunder or any of the otherLoan Documents to which any Borrower or such Subsidiary is a party, theBorrowers will, or (as the case may be) will cause such Subsidiary to,immediately take or cause to be taken all reasonable steps within the power ofthe Borrowers or such Subsidiary to obtain such authorization, consent,approval, permit or license and furnish the Administrative Agent and theLenders with evidence thereof.  Withoutlimiting the foregoing, each of the Borrowers will, and will cause each of itsSubsidiaries to, obtain any and all approvals by any federal, state or localliquor authority necessary for the continued operation at all times of anyRestaurant operated by any of the Borrowers or their Subsidiaries with fullliquor service unless the failure to obtain such approvals would not have aMaterial Adverse Effect.

 

**9.11.****                     EmployeeBenefit Plans.**  The Borrowerswill (a) promptly upon request of the Administrative Agent, upon filing thesame with the Department of Labor or Internal Revenue Service a copy of themost recent actuarial statement required to be submitted under §103(d) of ERISAand Annual Report, Form 5500, with all required attachments, in respect of eachGuaranteed Pension Plan, and (b) promptly upon receipt or dispatch, furnish tothe Administrative Agent any notice, report or demand sent or received inrespect of a Guaranteed Pension Plan under

 

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§§302, 4041,4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of aMultiemployer Plan, under §§4041A, 4202, 4219, 4242, or 4245 of ERISA.

 

**9.12.****                     Use ofProceeds.**  The Borrowers will usethe proceeds of the Revolving Credit Loans and obtain Letters of Credit solelyfor the purposes set forth in §8.17.1.

 

**9.13.****                     AdditionalMortgaged Property; Notice of Leases**.

 

(a)          If, after the ClosingDate, any of the Borrowers or any of their Subsidiaries acquires a fee interestin real estate that has a fair market value of $500,000 or more, such Borrowershall, or shall cause such Subsidiary to, deliver forthwith to theAdministrative Agent for the benefit of the Lenders and the AdministrativeAgent a fully executed valid and enforceable first priority mortgage or deed oftrust over such acquired real estate free and clear of all defects andencumbrances except for Permitted Liens.

 

(b)         If, after the ClosingDate, any of the Borrowers or any of their Subsidiaries intends to lease****real estate for a term in excess of five(5) years, or to lease office space where they intend to maintain books andrecords relating to their businesses, the Borrowers shall use reasonable bestefforts to ensure that such lease permits the Administrative Agent to obtain afirst priority leasehold mortgage over such leased real estate and to obtainfrom the landlord a waiver substantially in the form of Exhibit F hereto.  Upon theexecution of such lease, the Borrowers or such Subsidiary shall promptlydeliver to the Administrative Agent a copy of such lease, and, to the extentpermitted by the applicable lease and required by the Administrative Agent, theBorrowers or such Subsidiary shall deliver forthwith to the AdministrativeAgent for the benefit of the Lenders and the Administrative Agent a fullyexecuted, valid and enforceable first priority leasehold mortgage over suchleased real estate, free and clear of all defects and encumbrances except forPermitted Liens.

 

(c)          Each such mortgage,leasehold mortgage or deed of trust referred to in §9.13(a) and (b) shall besubstantially in the form of the Mortgages delivered on or about the ClosingDate, together with evidences of insurance with the Administrative Agent namedas loss payee and additional insured and other documents and certificates withrespect to such real estate, (such evidence of insurance and other documentsand certificates referred to in this §9.13 as “RealEstate Documentation”) as was required for Real Estate of the Borrowers orany of their Subsidiaries as of the Closing Date or as otherwise reasonablyrequired by the Administrative Agent.

 

(d)         If, after the ClosingDate, any of the Borrowers or their Subsidiaries leases real estate or anylease of Real Estate is extended or otherwise modified in any respect, theBorrowers shall, or shall cause such Subsidiary to, use reasonable efforts tocause the relevant lessor to execute and deliver a notice of lease (to the

 

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extent that anotice of lease is not already recorded in respect of such lease) in formmeeting all statutory and recording requirements of the jurisdiction in whichthe relevant real property is located.

 

**9.14.****                     Conductof Business; Restaurants.** The Borrowers will, and will cause each of their Subsidiaries to,continue to engage only in the business of owning, operating and (subject tothe consent of the Administrative Agent, such consent not to be unreasonablywithheld) managing full-service restaurants which (other than the managedrestaurants) operate using the restaurant concepts used by the Borrowers on theClosing Date, and in businesses and activities reasonably related thereto.  The Borrowers shall inform each of theLenders of any new Restaurant locations simultaneously with the delivery of thefinancial statements referred to in §9.4(c) but in any event no later than one(1) month after the opening of a new Restaurant location and the entering intoa lease for, or the acquisition of, the premises for a new Restaurant.  The Parent will continue to engage only inthe business of owning the Equity Interests of the Borrowers and shall not ownany assets other than the Equity Interests of the Borrowers.

 

**9.15.****                     IntentionallyOmitted.**

 

**9.16.****                     Bank Accounts.**  The Borrowers will, and will cause each oftheir Subsidiaries to, cause all cash receipts, checks and cash proceeds ofaccounts receivable and other Collateral of the Borrowers and theirSubsidiaries to be deposited only into (i) depository accounts with financialinstitutions that have entered into agency account agreements in substantiallythe form of Exhibit D hereto (such agencyaccount agreements referred to herein as “AgencyAccount Agreements” and such depository accounts with financialinstitutions that have entered into such Agency Account Agreements referred toherein as “Agency Accounts”) or (ii) theConcentration Account, in each case as such accounts are identified on Schedule 8.20 hereto.  The Agency Account Agreements shall providethat at any time following the occurrence of a Default or an Event of Default,the Administrative Agent shall be entitled to direct the financial institutionsparty thereto to cause all funds of the Borrowers and their Subsidiaries heldin the Agency Accounts at such financial institutions to be transferredimmediately and at any time thereafter to the Agent to be applied to theObligations or held as Collateral, as the Administrative Agent deemsappropriate.  The Borrowers shall cause(A) all cash receipts and checks in excess of $50,000 at each Restaurant to bedeposited into an Agency Account or a Concentration Account, on at least two (2)separate Business Days during each week (a “week”,for the purposes of this §9.16, being deemed to begin at the beginning of eachMonday and end at the end of the following Friday) and (B) all funds in eachAgency Account or any other account of the Borrowers or any of theirSubsidiaries in excess of $35,000 (or, to the extent that more than oneRestaurant makes deposits to one Agency Account, the sum of $35,000 multiplied by the number of Restaurants makingdeposits into such Agency Account) to be deposited in the Concentration Accounton a daily basis on each Business Day.

 

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The Borrowersshall at all times maintain a Concentration Account with a financialinstitution that has entered into an Agency Account Agreement with theAdministrative Agent and the Borrowers that is in all respects satisfactory tothe Administrative Agent.

 

**9.17.****                     AdditionalSubsidiaries.**  In the eventthat, after the date hereof, any of the Borrowers or any of their Subsidiariescreates any new Subsidiary or acquires a new Subsidiary in accordance with§10.5.3, (a) such new Subsidiary shall, concurrently with such event or as soonas practicable thereafter, execute and deliver to the Administrative Agent aninstrument of joinder and accession, in form and substance satisfactory to theAdministrative Agent, pursuant to which such new Subsidiary shall join theCredit Agreement as a Borrower and the Security Documents as a grantor ofsecurity thereunder as if such new Subsidiary was an original signatory heretoand thereto, and (b) the Borrowers and/or such new Subsidiary (as the case maybe) shall deliver such other instruments and documents, including withoutlimitation allonges to the Notes in form and substance satisfactory to the AdministrativeAgent, Perfection Certificates, Uniform Commercial Code financing statementsand stock or other certificates representing all of the issued and outstandingEquity Interests of such new domestic Subsidiary and sixty-five percent (65%)of non-U.S. Subsidiaries, with accompanying stock powers or other instrumentsof transfer duly executed in blank, in each case required to be executed ordelivered pursuant to such Security Documents in order to grant to or maintainthe Administrative Agent’s first priority perfected security interest in and tothe assets of and the Equity Interests issued by such new Subsidiaries.  Further, contemporaneously with the formationor acquisition of such new Subsidiary, the Borrowers and/or such new Subsidiaryshall execute and/or deliver to the Administrative Agent such otherdocumentation as the Administrative Agent may reasonably request in furtheranceof the intent of this §9.17, including without limitation an updated Schedule 8.19 hereto and documentation of thetype required to be supplied by the Borrowers and their Subsidiaries as acondition precedent to the initial Revolving Credit Loans made hereunderpursuant to §12, as applicable to such new Subsidiary or acquisition permittedpursuant to §10.5.3.

 

**9.18.****                     Amendmentsto Documents.**  TheBorrowers will promptly furnish to the Administrative Agent any amendment,supplement or modification to any of the Acquisition Documents, the WarrantDocuments, the Equity Documents or the Subordinated Debt Documents executed ordelivered following the Closing Date, as such documents may amended or modifiedpursuant to §10.14.

 

**9.19.****                     FurtherAssurances.**  The Borrowerswill, and will cause each of their Subsidiaries to, cooperate with the Lendersand the Administrative Agent and execute such further instruments and documentsas the Lenders or the Administrative Agent shall reasonably request to carryout to their satisfaction the

 

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transactionscontemplated by this Credit Agreement and the other Loan Documents.

 

**9.20.****                     Post-Closing Delivery Requirements**.

 

(a)          No later than forty-five(45) days after the Closing Date, the Borrowers shall have delivered to theAdministrative Agent, Agency Account Agreements, in form and substance reasonablysatisfactory to the Administrative Agent, for each depository account of theBorrowers and each of their Subsidiaries and as identified on Schedule8.20of the Credit Agreement.

 

(b)         The Borrowers will usetheir commercially reasonable efforts to execute and deliver to theAdministrative Agent, in form reasonably acceptable to the AdministrativeAgent, no later than sixty (60) days after the Closing Date, leaseholdmortgages or leasehold deeds of trust (and related consents), as applicable,for the following locations (i) Providence Biltmore Hotel, Kennedy Plaza,Providence, RI; (ii) 235 SW First Avenue, Portland, OR; (iii) Pittsburgh, PA;(iv) CNN Center, Atlanta, GA; (v) 8100 East Union Avenue, Denver, CO; and (vi)Mall at the Millenia, 4200 Conroy Road, Space A-146, Orlando, FL.

 

(c)          The Borrowers will usetheir commercially reasonable efforts to execute and deliver to theAdministrative Agent, in form reasonably acceptable to the AdministrativeAgent, no later than sixty (60) days after the Closing Date, landlordsubordination agreements, landlord consents and/or lien waivers, as applicable,for the following leased locations: (i) North Park Shopping Center, Dallas, TX;(ii) Providence Biltmore Hotel, Kennedy Plaza, Providence, RI; (iii) 235 SW FirstAvenue, Portland, OR; (iv) Bridgewater Mall, NJ; (v) Pittsburgh, PA; (vi) CNNCenter, Atlanta, GA; (vii) 8100 East Union Avenue, Denver, CO; and (viii) Mallat the Millenia, 4200 Conroy Road, Space A-146, Orlando, FL.

 

**10.****                               CERTAIN NEGATIVE COVENANTS**.

 

The Borrowerscovenant and agree that, so long as any Revolving Credit Loan, UnpaidReimbursement Obligation, Letter of Credit or Note is outstanding or any Lenderhas any obligation to make any Revolving Credit Loan or the AdministrativeAgent has any obligations to issue, extend or renew any Letters of Credit:

 

**10.1.****                     Restrictionson Indebtedness.**  Noneof the Borrowers will, nor will permit any of its Subsidiaries to, create,incur, assume, guarantee or be or remain liable, contingently or otherwise,with respect to any Indebtedness other than:

 

(a)          Indebtedness to theLenders and the Administrative Agent arising under any of the Loan Documents;

 

(b)         endorsements forcollection, deposit or negotiation and warranties of products or services, ineach case incurred in the ordinary course of business;

 

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(c)          Subordinated Debt; provided that (i) the aggregate principalamount of such Subordinated Debt plus theaggregate principal amount of Subordinated Debt incurred by the Parent shallnot exceed $10,000,000 at any time and (ii) prior to the incurrence of any suchSubordinated Debt, the Borrowers shall have demonstrated pro forma compliance with the covenants set forth in §11.2 for theReference Period most recently ended and projected compliance with allcovenants hereunder for the four (4) fiscal quarters following the incurrenceof such Subordinated Debt; and provided, further, such Subordinated Debt (i) shall beexpressly subordinated and made junior to the payment and performance in fullof the Obligations on terms which are reasonably satisfactory in all respectsto the Required Lenders, (ii) shall have a final maturity not earlier than theMaturity Date, and (iii) shall otherwise contain terms and provisions reasonablysatisfactory to the Required Lenders;

 

(d)         Indebtedness incurred inconnection with the acquisition of any real or personal property by suchBorrower or such Subsidiary or under any Capitalized Lease, and anyrefinancings, renewals and replacements thereof which contain terms no moreonerous to the Borrowers than the Indebtedness so refinanced, renewed orreplaced, provided that the aggregate principal amount of suchIndebtedness (including any such Indebtedness outstanding on the Closing Date)of all of the Borrowers and their Subsidiaries shall not exceed the aggregateamount of $3,000,000 at any one time;

 

(e)          Indebtedness in respectof interest rate agreements, swaps or similar arrangements entered into toprotect the Borrowers from changes in interest rates and not for speculativepurposes;

 

(f)            Indebtedness nototherwise permitted by this §10.1 existing on the Closing Date and listed anddescribed on Schedule 10.1 hereto and any refinancingsthereof not to exceed such original principal amount and on terms andconditions substantially similar thereto; and

 

(g)         Indebtedness of aSubsidiary of a Borrower owing to such Borrower and Indebtedness of oneBorrower owing to another Borrower; providedthat all such intercompany Indebtedness permitted by this §10.1(g), and allinstruments (if any) evidencing any thereof, shall be pledged and delivered tothe Administrative Agent, for the benefit of the Lenders and the AdministrativeAgent, as security for the Obligations pursuant to the provisions of the applicableSecurity Documents, and the Administrative Agent shall have a first priorityperfected lien and security interest therein; and providedfurtherthat all such intercompany Indebtedness shall be subordinated to theObligations on terms satisfactory to the Administrative Agent;

 

(h)         guarantees by a Borroweror a Subsidiary of a Borrower of Indebtedness otherwise permitted under this§10.1;

 

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(i)             Indebtednessconsisting of contingent obligations of any Borrower or any of its Subsidiariesto repurchase or otherwise redeem Equity Interests of MSSR from formeremployees of MSSR, a Borrower or any of their Subsidiaries pursuant to theterms of the Equity Documents or other employee compensation plans of theBorrowers and their Subsidiaries and matured obligations to repurchase orotherwise redeem such stock to the extent such repurchase or redemption ispermitted under §10.4(d); and

 

(j)             other unsecuredIndebtedness not otherwise permitted hereunder in an aggregate principal amountof $2,500,000, provided that no Default orEvent of Default has occurred and is continuing at the time of the incurrenceof such unsecured Indebtedness or would result after giving effect thereto.

 

**10.2.****                     Restrictionson Liens**.

 

**10.2.1.****          **PermittedLiens.  None of the Borrowerswill, nor will permit any of its Subsidiaries to, (a) create or incur or sufferto be created or incurred or to exist any Lien upon any of its property orassets of any character whether now owned, leased or hereafter acquired, orupon the income or profits therefrom; (b) transfer any of such property orassets or the income or profits therefrom for the purpose of subjecting thesame to the payment of Indebtedness or performance of any other obligation inpriority to payment of its general creditors; (c) acquire, or agree or have anoption to acquire, any property or assets upon conditional sale or other titleretention or purchase money security agreement, device or arrangement; (d)suffer to exist any claim or demand against it that if unpaid might by law orupon bankruptcy or insolvency, or otherwise, be given any priority whatsoeverover its general creditors; or**(e)sell, assign, pledge or otherwise transfer any “receivables” as definedin clause (g) of the definition of the term “Indebtedness,” with orwithout recourse; provided that the Borrowers or any of theirSubsidiaries may create or incur or suffer to be created or incurred or toexist:

 

(i)                                     Liensto secure claims in respect of taxes, assessments and other government chargesin respect of obligations not overdue or which are being contested in goodfaith or Liens on properties to secure claims for labor, material or suppliesin respect of obligations not overdue or which are being contested in good faithand for which adequate reserves have been set aside in accordance with GAAP;

 

(ii)                                  depositsor pledges made in connection with, or to secure payment of, workmen’scompensation, unemployment insurance, old age pensions or other social securityobligations, statutory obligations, insurance contracts, performance bondsissued in the ordinary course of business and other similar obligations;

 

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(iii)                               Lienson properties in respect of judgments or awards that have been in force forless than the applicable period for taking an appeal so long as execution isnot levied thereunder or in respect of which such Borrower or such Subsidiaryshall at the time in good faith be prosecuting an appeal or proceedings for reviewand in respect of which a stay of execution shall have been obtained pendingsuch appeal or review and for which adequate reserves have been set aside inaccordance with GAAP;

 

(iv)                              Liensof carriers, warehousemen, mechanics and materialmen, and other like Liens onproperties in existence in respect of obligations not overdue or which arebeing contested in good faith and for which adequate reserves have been setaside in accordance with GAAP;

 

(v)                                 encumbranceson Real Estate consisting of easements, rights of way, zoning restrictions,restrictions on the use of real property and defects and irregularities in thetitle thereto, landlord’s or lessor’s liens, liens that would be disclosed byan accurate survey, and other minor Liens, provided that none of suchLiens (A) interferes materially and adversely with the use of the propertyaffected in the ordinary conduct of the business of the Borrowers and theirSubsidiaries, and (B) individually or in the aggregate have a Material AdverseEffect;

 

(vi)                              Liensexisting**on the Closing Date andlisted on Schedule 10.2 hereto;

 

(vii)                           purchasemoney security interests in or purchase money mortgages on real or personalproperty acquired (in the case of purchase money security interests) or leased(in the case of Capitalized Leases) to secure purchase money Indebtedness orCapitalized Leases of the type and amount permitted by §10.1(d), incurred inconnection with the acquisition or lease of such property, which securityinterests or mortgages cover only the real or personal property so acquired orleased;

 

(viii)                        Liens oneach Mortgaged Property as and to the extent permitted by the Mortgageapplicable thereto;

 

(ix)                                Liensin favor of the Administrative Agent for the benefit of the Lenders and theAdministrative Agent under the Loan Documents and any Interest Rate Agreements;

 

(x)                                   Lienswhich replace Liens otherwise permitted hereunder so long as (i) suchreplacement Liens do not secure Indebtedness in an amount in excess of theamount of the original Indebtedness secured thereby and (ii) such Liensencumber no more than the assets encumbered by the Liens replaced thereby;

 

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(xi)                                claimsand demands of the type specified in clause (d) above to the extent such claimsor demands are not otherwise permitted pursuant to this §10.2.1 if and to theextent such claims or demands (x) are not matured or due and payable or (y) arebeing actively contested in good faith and for which adequate reserves havebeen set aside in accordance with GAAP and; provided that any such claimor demand outstanding for more than ninety (90) days after the date on which itbecame due and payable does not exceed $5,000,000; and

 

(xii)                             licensesof intellectual property granted in the ordinary course of business.

 

**10.2.2.****          **Restrictionson Negative Pledges and Upstream Limitations.  None of the Borrowers will, nor will permitany of its Subsidiaries to, (a) enter into or permit to exist any arrangementor agreement (excluding the Credit Agreement and the other Loan Documents)which directly or indirectly prohibits such Borrower or any of its Subsidiariesfrom creating, assuming or incurring any Lien upon its properties, revenues orassets or those of any of its Subsidiaries whether now owned or hereafter acquired,or (b) enter into any agreement, contract or arrangement (excluding the CreditAgreement and the other Loan Documents) restricting the ability of anySubsidiary of such Borrower to pay or make dividends or distributions in cashor kind to the Borrowers, to make loans, advances or other payments ofwhatsoever nature to the Borrowers, or to make transfers or distributions ofall or any part of its assets to the Borrowers; in each case other than (i)restrictions on specific assets which assets are the subject of purchase moneysecurity interests to the extent permitted under §10.2.1, and (ii) customaryanti-assignment provisions contained in leases and licensing agreements enteredinto by such Borrower or such Subsidiary in the ordinary course of its business.

 

**10.3.****                     Restrictions on Investments.**  None of the Borrowers will, nor willpermit any of its Subsidiaries to, make or permit to exist or to remainoutstanding any Investment except Investments in:

 

(a)          Cash Equivalents;

 

(b)         Investments existing**on the Closing Date and listed on Schedule 10.3hereto;

 

(c)          Investments with respectto Indebtedness permitted by §10.1(g) or (h)**so long as such entities remain (i) a Borrower or (ii) a Subsidiaryof a Borrower, as the case may be;

 

(d)         Investments consisting ofInvestments by a Borrower in another Borrower or by a Borrower in any of itsSubsidiaries, including Investments

 

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effected as aresult of the transfer of assets between Borrowers permitted pursuant to§10.5.2(c) and §10.5.3(d);

 

(e)          Investments consistingof promissory notes received as proceeds of asset dispositions permitted by§10.5.2; provided that the aggregate value of such promissory notesreceived in connection with any such asset disposition shall not exceed fiftypercent (50%) of the aggregate value of the proceeds of such asset disposition;

 

(f)            Investments consistingof loans and advances to employees for moving, entertainment, travel and othersimilar expenses in the ordinary course of business not to exceed $250,000 inthe aggregate at any time outstanding;

 

(g)         securities (includingdebt obligations) received in connection with the bankruptcy or reorganizationof suppliers and customers and in settlement of delinquent obligations of, andother disputes with, customers and suppliers arising in the ordinary course ofbusiness;

 

(h)         Investments consisting ofCapitalized Leases permitted hereunder;

 

(i)             Investmentsconsisting of Interest Rate Agreements entered into by any Borrower to protectthe Borrowers from changes in interest rates and not for speculative purposes;

 

(j)             the Investmentsrelated to the Santa Rosa Transaction, so long as such Investments are securedby the Santa Rosa Pledge Agreement and any other Investment made by a Borrowerin connection with a restaurant management agreement pursuant to §9.14 provided (i) any such other Investment isconsented to by the Administrative Agent (such consent not to be unreasonablywithheld) and (ii) if requested by the Administrative Agent, the property orassets which are the subject of such Investment are made part of the Collateralsubject to the Security Documents; and

 

(k)          Investments consistingof performance bonds or advance payment bonds, in each case issued in theordinary course of business

 

provided,however, that, with the exception of promissory notes referred to in§10.3(e) evidencing Indebtedness in an amount less than or equal to $50,000,and loans and advances referred to in §10.3(f), such Investments will beconsidered Investments permitted by this §10.3 only if all actions have beentaken to the reasonable satisfaction of the Administrative Agent to provide tothe Administrative Agent, for the benefit of the Lenders and the AdministrativeAgent, a first priority perfected security interest in all of such Investmentsfree of all Liens other than Permitted Liens.

 

**10.4.****                     RestrictedPayments.**  None of the Borrowers will, nor willpermit any of its Subsidiaries to, make any Restricted Payments, other than:

 

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(a)          Distributions by anyBorrower to any other Borrower or by any Subsidiary of a Borrower to suchBorrower;

 

(b)         payments by the Borrowersto the Parent to enable the Parent to pay costs and expenses incurred in theordinary course of business as a holding company, including, withoutlimitation, payment of administrative costs and expenses; provided that (A) the aggregate amount of all such amounts payablein any fiscal year of the Borrowers under this subparagraph (b) shall not exceed$500,000 plus reasonable board fees payableto members of the board of directors of the Parent, the Borrowers or MSSR whoare not part of the management of the Borrowers, the Parent or MSSR oraffiliated with the Sponsors and reasonable out of pocket expenses incurred bymembers of the board of directors or observers of the Parent, the Borrowers orMSSR and (B) the Administrative Agent shall have received a ComplianceCertificate for the Reference Period most recently ended;

 

(c)          payments by the Borrowersto the Parent to permit the Parent to pay federal and state income taxes,franchise taxes and other similar licensing expenses incurred in the ordinarycourse of business which are owed or payable by the Parent; and

 

(d)         so long as no Event ofDefault is then continuing, Distributions in an amount not to exceed $500,000per annum and $2,000,000 in the aggregate during the period from the ClosingDate through to the Maturity Date to be used to repurchase or otherwise redeemEquity Interests of MSSR from former employees of MSSR, the Borrowers or theirSubsidiaries pursuant to the terms of the employee compensation plans of MSSR,the Borrowers and their Subsidiaries; provided that the portion of suchDistributions equal to cash payments received by MSSR, any Borrower or any oftheir Subsidiaries from the subsequent sale of such repurchased or redeemedcapital stock for cash to any employee of MSSR, the Borrowers and theirSubsidiaries at the commencement of such Person’s employment shall not bedeemed to be a Distribution for purposes of this §10.4(d); and

 

(e)                                  Distributionsby any Borrower to the Parent solely for the purpose of paying interest onSubordinated Debt incurred by the Parent so long as (i) no Default orEvent of Default shall have occurred and be continuing or would result aftergiving effect to any such Distribution, (ii) the Borrowers shall have deliveredto the Administrative Agent a pro formaCompliance Certificate demonstrating compliance with the financial covenantsset forth in §11 after giving effect to such Distribution, (iii) the aggregateamount of such Distributions, together with any interest paid by the Borrowerson Subordinated Debt incurred by the Borrowers pursuant to §10.1(c), shall notexceed during any fiscal year that amount equal to interest which has accruedon outstanding Subordinated Debt during such year, and (iv) such Distributionsare applied by the Parent solely to pay such interest expense not earlier thanthe regularly scheduled payment date therefor; and

 

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(f)            so long as no Event ofDefault has occurred and is then continuing, payments by the Borrowers to theParent to enable the Parent to pay on or before July 25, 2004 the paymentsrequired under the Termination Documents.

 

In furtheranceof the foregoing, the Borrowers shall not make any Restricted Payments, and theParent shall not accept any Restricted Payments, if such payments would be usedto redeem or prepay the principal amount of any Indebtedness of the Parent.

 

**10.5.****                     Mergers;Disposition of Assets; Acquisitions**.

 

**10.5.1.****           Mergers.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, become a party to any merger, amalgamation orconsolidation except (a) the merger or consolidation of one (1) or moreBorrowers with and into another Borrower and (b) the merger or consolidation ofone (1) or more Subsidiaries of a Borrower with and into a Borrower.

 

**10.5.2.****           Disposition of Assets.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, become a party to or agree to or effect anydisposition of assets (excluding any disposition included in the definition of “Casualty Event”), other than (a) the sale ofinventory or licensing of intellectual property in the ordinary course of businessand the disposition of obsolete assets, (b) the disposition of property as partof a sale and leaseback transaction permitted under §10.6 in the ordinarycourse of business consistent with past practices, (c) assignments,dispositions or transfers by one Borrower to one or more of the other Borrowersof any rights, property, Indebtedness, business or other asset of thetransferring Borrower (whether tangible or intangible and including, withoutlimitation, membership interests and goodwill), together with any liabilityassociated therewith; provided that theBorrowers (i) provide at least thirty (30) days prior written notice to theAdministrative Agent (or such lesser period as may be consented to by theAdministrative Agent) and (ii) execute and deliver Security Documents and suchfurther instruments, if and to the extent requested by the AdministrativeAgent, in form and substance satisfactory to the Administrative Agent, and do,or cause to be done, such further acts as may be necessary or proper in theopinion of the Administrative Agent to evidence, continue, preserve and perfectthe security for the Obligations provided by the Borrowers, and (d) the sale ofup to two (2) Unprofitable Restaurants in any year, provided that the proceeds of such sales of Unprofitable Restaurantsare reinvested in new or existing Restaurants within two hundred seventy (270)days thereafter or are used to repay or prepay the Obligations pursuant to§4.2(a); provided, further, that, if (A) within such 270-day period after receipt ofsuch proceeds by the Borrowers, the Borrowers enter into an agreement pursuantto which such reinvestment shall be made, a copy of which shall be provided tothe Administrative Agent, and (B) within four

 

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hundred five(405) days following receipt of such proceeds by the Borrowers, the Borrowersshall have completed, or shall have made significant progress toward completionof, such reinvestment with such proceeds, then the Borrowers shall not berequired to prepay the Revolving Credit Loans pursuant to §§4.2 and 4.3 butshall in any event comply with §4.4. Nothing in this §10.5.2 is intended to prohibit any Borrower or any ofthe their Subsidiaries from conditionally agreeing to dispose of any assetssubject to the prior approval of the Lenders required by §17.12 if (i) suchBorrower or Subsidiary will not be subject to any penalties in connection withsuch agreement in the event that the Lenders required by §17.12 do not consentto such disposition or (ii) such disposition is contingent upon the prior orsimultaneous repayment of all of the Obligations hereunder.  The Administrative Agent may release anyCollateral disposed of by any Borrower or any Subsidiary of any Borrower ifsuch disposition is in compliance with this §10.5.2 and otherwise in accordancewith the terms hereof.

 

**10.5.3.****           Acquisitions.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, agree to or effect any asset acquisition or stockacquisition except (a) Growth Capital Expenditures permitted pursuant to §11.4,(b) Maintenance Capital Expenditures incurred in the ordinary course ofbusiness to maintain the assets of such Borrower and its Subsidiaries or toinsure compliance with applicable laws and regulations, (c) the acquisition ofinventory, equipment, furnishings and other similar assets (not includingRestaurants or real property) in the ordinary course of business consistentwith past practices, (d) acquisitions by a Borrower effected as a result of thetransfer of assets or obligations between Borrowers permitted pursuant to§10.5.2(c) and (e) Permitted Acquisitions; providedthat during the period from the Closing Date through to the Maturity Datethe aggregate purchase price for all Permitted Acquisitions consummated by theBorrowers during such period shall not exceed $10,000,000.

 

**10.6.****                     Saleand Leaseback.**  None of theBorrowers will, nor will permit any of its Subsidiaries to, enter into anyarrangement, directly or indirectly, whereby any Borrower or any of itsSubsidiaries shall sell or transfer any property owned by it in order then orthereafter to lease such property or lease other property that such Borrower orsuch Subsidiary intends to use for substantially the same purpose as theproperty being sold or transferred; provided that, so long as no Eventof Default has occurred and is continuing, the Borrowers and their Subsidiariesmay enter into sale and leaseback transactions with respect to property andequipment in an aggregate amount not to exceed $2,500,000 during the periodfrom the Closing Date through to the Maturity Date; and provided, further, that (a) the terms of the sale assuch are comparable to terms which could be obtained in an arms length saleamong unaffiliated parties not involving a sale and leaseback transaction, (b)the terms of the lease as such are comparable to

 

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terms whichcould be obtained in an arms length commercial operating lease amongunaffiliated parties and (c) the proceeds of such sale and leasebacktransaction are applied in accordance with §4.2.

 

**10.7.****                     Compliance with Environmental Laws.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, other than in compliance with all applicable EnvironmentalLaws except where the failure to do so would not result in a Material AdverseEffect (a) use any of the Real Estate or any portion thereof for the handling,processing, storage or disposal of Hazardous Substances, (b) cause or permit tobe located on any of the Real Estate any underground tank or other undergroundstorage receptacle for Hazardous Substances, (c) generate any HazardousSubstances on any of the Real Estate, (d) conduct any activity at any RealEstate or use any Real Estate in any manner so as to cause a release (i.e.releasing, spilling, leaking, pumping, pouring, emitting, emptying,discharging, injecting, escaping, leaching, disposing or dumping) or threatenedrelease of Hazardous Substances on, upon or into the Real Estate or (e) otherwiseconduct any activity at any Real Estate or use any Real Estate in any mannerthat would violate any Environmental Law or bring such Real Estate in violationof any Environmental Law.

 

**10.8.****                     Employee BenefitPlans.**  No Borrower nor any ERISAAffiliate will:

 

(a)          engage in any “prohibitedtransaction” within the meaning of §406 of ERISA or §4975 of the Codewhich could reasonably be expected to result in a material liability for any ofthe Borrowers or any of their Subsidiaries; or

 

(b)         permit any GuaranteedPension Plan to incur an “accumulatedfundingdeficiency”,as such term is defined in §302 of ERISA, whether or not such deficiency is ormay be waived; or

 

(c)          fail to contribute toany Guaranteed Pension Plan to an extent which, or terminate any GuaranteedPension Plan in a manner which could reasonably be expected to result in theimposition of a lien or encumbrance on the assets of any of the Borrowers orany of their Subsidiaries pursuant to §302(f) or §4068 of ERISA; or

 

(d)         amend any GuaranteedPension Plan in circumstances requiring the posting of security pursuant to§307 of ERISA or §401(a)(29) of the Code by any of the Borrowers;

 

(e)          permit or take anyaction which would result in the aggregate benefit liabilities (within themeaning of §4001 of ERISA) of all Guaranteed Pension Plans exceeding the valueof the aggregate assets of such Plans disregarding for this purpose the benefitliabilities and assets of any such Plan with assets in excess of benefitliabilities by more than $500,000; or

 

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(f)            permit or take anyaction which would contravene any Applicable Pension Legislation, except to theextent that any such action could not reasonably be expected to have a MaterialAdverse Effect.

 

**10.9.****                     Business Activities.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, engage directly or indirectly (whether throughSubsidiaries or otherwise) in any type of business other than the businessesconducted by the Borrowers and their Subsidiaries immediately prior to theClosing Date and operating and (subject to the consent of the AdministrativeAgent, such consent not to be unreasonably withheld) managing full-servicerestaurants (including, without limitation, MSRC’s performance of services andits Investment related to the Santa Rosa Transaction) which (other than themanaged restaurants) operate using the restaurant concepts used by theBorrowers on the Closing Date, and, in each case, in related businesses.

 

**10.10.****              Fiscal Year;Fiscal Quarters.**  Noneof the Borrowers will, nor will permit any of its Subsidiaries to, change thedate of the end of its fiscal year or fiscal quarters from those set forth in§8.4.1.

 

**10.11.****              Transactionswith Affiliates.**  Noneof the Borrowers will, nor will permit any of its Subsidiaries to, engage inany transaction with any Affiliate or Sponsor or any officer, director oremployee of an Affiliate or a Sponsor, (other than for services as employees,officers and directors or transactions with other Borrowers or any Subsidiaryof the Borrower), including any contract, agreement or other arrangementproviding for the furnishing of services to or by, providing for rental of realor personal property to or from, or otherwise requiring payments to or from anysuch Person or, to the knowledge of such Borrower, any corporation,partnership, trust or other entity in which any such Person has a substantialinterest or is an officer, director, trustee or partner, on terms morefavorable to such Person than would have been obtainable on an arm’s-lengthbasis in the ordinary course of business; provided that so long as noDefault or Event of Default has occurred and is continuing, the foregoingrestriction shall not apply to payments permitted under §10.4(b) and (c).  The Borrowers shall not pay any fees tomembers of the board of directors other than reasonable fees payable to outsidenon-affiliated board members of the board of directors who are not part of themanagement of the Borrowers or affiliated with the Sponsors.

 

**10.12.****              Bank Accounts.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, (a) establish any bank accounts after the ClosingDate other than the Agency Accounts and the Concentration Account without theAdministrative Agent’s prior written consent, (b) violate directly orindirectly any Agency Account Agreement or other bank agency or lock boxagreement in favor of the Administrative Agent for the benefit of the Lendersand the Administrative Agent with respect to such account; or (c) deposit intoAccount No. 3750714986 with Bank of America, any amounts in excess of amountsnecessary to pay current payroll obligations (including payroll taxes) withrespect to management

 

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by $30,000 ormore, (d) deposit into Account No. 3750714973 with Bank of America, any amountsin excess of amounts necessary to pay current payroll obligations (includingpayroll taxes) with respect to non-management employees by $20,000, or (e)establish additional payroll accounts following the Closing Date.

 

**10.13.****              Franchises.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, enter into any Franchise Agreement as a franchisor.

 

**10.14.****              Restrictionson Amendments to Documents**.

 

**10.14.1.****    WarrantDocuments; Equity Documents.** None of the Borrowers will, nor will permit any of its Subsidiaries toamend, supplement or otherwise modify (pursuant to a waiver or otherwise) theterms of the Warrant Documents or the Equity Documents in any manner whichcould have an adverse effect on the Lenders without the prior written consentof the Administrative Agent.

 

**10.14.2.****    AcquisitionDocuments.**  None of theBorrowers will, nor will permit any of its Subsidiaries to, amend, supplementor otherwise modify (pursuant to a waiver or otherwise) any material term orcondition of any of the Acquisition Documents in any manner which could have anadverse effect on the Lenders without the prior written consent of theAdministrative Agent.

 

**10.14.3.****    Subordinated Debt.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, amend, supplement or otherwise modify the terms ofany Subordinated Debt Documents approved by the Required Lenders pursuant to§10.1(c), or prepay, redeem or repurchase any of the Subordinated Debt.  Notwithstanding the foregoing, the terms ofthe Subordinated Debt and the Subordinated Debt Documents may be amended,supplemented or otherwise modified (a) solely to conform to amendments made tothis Credit Agreement and the other Loan Documents, (b) to waive defaultsthereunder or to amend covenants in order to make them less restrictive on theBorrowers or (c) solely to permit the exchange of Subordinated Debt for commonstock of the Parent or other Equity Interests of the Parent with similarattributes; provided that a certified copy of such amendment,modification or waiver is promptly delivered to the Administrative Agent andsuch amendment, modification or waiver is reasonably satisfactory to theRequired Lenders.

 

**10.14.4.****    Certain Amendments. **Notwithstanding the foregoing and for theavoidance of doubt, the Parent and the Borrowers may amend and restate Parent’samended and restated certificate of incorporation in order to (i) conform thedefinition of “Change in Control” contained therein to the definition of “Changeof Control” contained in

 

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this CreditAgreement and (ii) update the references to the “credit agreement” and the “guaranty”referred to in the Parent’s amended and restated certificate of incorporationto refer to this Credit Agreement and the Parent Guaranty; provided thatthe Borrowers comply with the requirements of §9.18 in connection with any suchamendment.

 

**10.15.****              Capitalization.**  Noneof the Borrowers will issue any Equity Interests having debt-like features suchas mandatory cash dividends, mandatory redemption provisions or otherprovisions which create monetary obligations on such Borrower that become dueand payable in cash during a period when any Revolving Credit Loans or Lettersof Credit are outstanding or any Revolving Credit Commitments are outstanding.

 

**10.16.****              MaximumNumber of Unprofitable Restaurants.**  None of the Borrowers will, nor will permitany of its Subsidiaries to, permit the ratio of (a) the aggregate number ofUnprofitable Restaurants to (b) the aggregate number of Restaurants to be morethan ten percent (10%) at any time.

 

**11.****                               FINANCIAL COVENANTS**.

 

The Borrowerscovenant and agree that, so long as any Revolving Credit Loan, Unpaid ReimbursementObligation, Letter of Credit or Note is outstanding or any Lender has anyobligation to make any Revolving Credit Loan or the Administrative Agent hasany obligation to issue, extend or renew any Letters of Credit:

 

**11.1.****                     AdjustedLeverage Ratio.**  As atthe end of any fiscal quarter occurring after the Closing Date, the AdjustedLeverage Ratio for the Reference Period then ended shall not exceed the ratioset forth opposite such fiscal quarter in such table:

 
| **Fiscal Quarter**            | ** ** | **Ratio** | ** ** |
|-------------------------------|------------|-----------|------------|
| Closing Date through FQ2 2005 |       | 4.25:1.00 |       |
| FQ3 2005 and Thereafter       |       | 4.00:1.00 |       |

 

**11.2.****                     ConsolidatedCash Flow Ratio.**  Asat the end of any fiscal quarter referenced in the table below, theConsolidated Cash Flow Ratio for the Reference Period then ended shall not beless than the ratio set forth opposite such fiscal quarter in such table:

 

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| **Fiscal Quarter**        | ** ** | **Ratio** | ** ** |
|---------------------------|------------|-----------|------------|
| FQ4 2004                  |       | 1.50:1.00 |       |
| FQ1 2005 through FQ4 2005 |       | 1.75:1.00 |       |
| FQ1 2006 and Thereafter   |       | 2.00:1.00 |       |

 

**11.3.****                     GrowthCapital Expenditures.**  TheBorrowers will not make, and will not permit any of their Subsidiaries to make,aggregate Growth Capital Expenditures or construct, acquire or open newRestaurants during any fiscal year that exceed the amounts and numbers setforth in the table below opposite such fiscal year, provided thatnotwithstanding the foregoing maximum amounts, commencing with the Borrowers’2005 fiscal year, the maximum amount of Growth Capital Expenditures permittedin each fiscal year shall be increased by (x) up to 100% of the Permitted ECFGrowth CapEx Amount for such fiscal year and (y) one hundred (100%) of theunused Permitted ECF Growth CapEx Amounts from prior fiscal years:

 
| **Period**       | ** ** | **Maximum Growth  Capital Expenditures** | ** ** |
|------------------|------------|------------------------------------------|------------|
|             |       |                                     |       |
| Fiscal year 2004 |       | $                                        | 21,000,000 |   |
| Fiscal year 2005 |       | $                                        | 21,000,000 |   |
| Fiscal year 2006 |       | $                                        | 23,000,000 |   |
| Fiscal year 2007 |       | $                                        | 25,000,000 |   |
| Fiscal year 2008 |       | $                                        | 30,000,000 |   |

 

Notwithstandingthe foregoing, the Borrowers will not commit to open any new Restaurants(including without limitation entering into any lease, purchase agreement,construction contract or other agreement or arrangement relating to theacquisition, build-out or refurbishment of any property in connection with theopening or anticipated opened of a new Restaurant), or make Growth CapitalExpenditures a Borrower was not previously committed to make:

 

(A)                              atany time during which (x) a Default or Event of Default is continuing or (y)when the Adjusted Leverage Ratio as at the end of the most recently endedReference Period for which the Borrowers have delivered a ComplianceCertificate exceeds the Incurrence Ratio; and

 

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(B)                                whichwould require their use of Permitted ECF Growth CapEx Amounts, at any time duringwhich the EBITDA Margin as at the end of the most recently ended ReferencePeriod for which the Borrowers have delivered a Compliance Certificate is thenless than ten percent (10%).

 

For purposesof testing quarterly compliance with this §11.3, the Borrowers shall aggregateGrowth Capital Expenditures incurred year-to-date for the then current fiscalyear and the Growth Capital Expenditures projected in good faith and based onreasonable assumptions to be made during the balance of such fiscal year aftertaking into account the Borrowers’ outstanding commitments and projectionsrelating to the opening of new Restaurants.

 

**12.****                               CLOSING CONDITIONS**.

 

Theobligations of the Lenders to make Revolving Credit Loans and of theAdministrative Agent to issue any initial Letters of Credit shall be subject tothe satisfaction of the following conditions precedent on or prior to July 23,2004:

 

**12.1.****                     LoanDocuments.**  Each of LoanDocuments shall have been duly executed and delivered by the respective partiesthereto, and each Loan Document shall be in full force and effect and shall bein form and substance satisfactory to each of the Lenders.  Each Lender shall have received a fullyexecuted copy of each such document.

 

**12.2.****                     CertifiedCopies of Governing Documents.**  Each of the Lenders shall have received fromeach of the Borrowers and each of their Subsidiaries a copy, certified by aduly authorized officer of such Person to be true and complete on the ClosingDate, of each of its Governing Documents as in effect on such date ofcertification.

 

**12.3.****                     Corporateor Other Action.**  Allcorporate (or other) action necessary for the valid execution, delivery andperformance by each of the Borrowers and each of their Subsidiaries of thisCredit Agreement and the other Loan Documents to which it is or is to become aparty shall have been duly and effectively taken, and evidence thereofsatisfactory to the Lenders shall have been provided to each of the Lenders.

 

**12.4.****                     IncumbencyCertificate.**  Each ofthe Lenders shall have received from each of the Borrowers and theirSubsidiaries an incumbency certificate, dated as of the Closing Date, signed bya duly authorized officer of such Person, and giving the name and bearing aspecimen signature of each individual who shall be authorized: (a) to sign, inthe name and on behalf of such Person, each of the Loan Documents to which suchPerson is or is to become a party on or after the Closing Date; (b) in the caseof the Borrowers, to make Loan Requests and Conversion Requests and to applyfor Letters of Credit; and (c) to give notices and to take other action on itsbehalf under the Loan Documents.

 

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**12.5.****                     Validity ofLiens.**  The Security Documentsshall be effective to create, or to have created, in favor of theAdministrative Agent a legal, valid and enforceable first priority (except forPermitted Liens entitled to priority under applicable law) security interest inand Lien upon the Collateral.  Allfilings, recordings, deliveries of instruments and other actions necessary ordesirable in the opinion of the Administrative Agent to protect and preservesuch security interests shall have been duly effected.  The Administrative Agent shall have receivedevidence thereof in form and substance satisfactory to the AdministrativeAgent.

 

**12.6.****                     PerfectionCertificates and Uniform Commercial Code Search Results.**  The Administrative Agent shall have receivedfrom the Parent and each of the Borrowers and their Subsidiaries a completedand fully executed Perfection Certificate and the results of Uniform CommercialCode searches (and the equivalent thereof in all applicable foreignjurisdictions) with respect to the Collateral, indicating no Liens other thanPermitted Liens and otherwise in form and substance satisfactory to theAdministrative Agent.

 

**12.7.****                     LandlordConsents; Mortgages**. The Borrowers and their Subsidiaries shall have delivered to theAdministrative Agent the consents requested by the Administrative Agent toreceive, as part of the Security Documents, a collateral assignment of eachleasehold of personal property, and a mortgage of each leasehold of realproperty identified on Schedule12.7 hereto, together in eachcase with such estoppel certificates as the Administrative Agent may request.

 

**12.8.****                     Certificatesof Insurance.**  TheAdministrative Agent shall have received (a) a certificate of insurance from anindependent insurance broker dated as of a date preceding the Closing Date bynot more than five (5) Business Days, identifying insurers, types of insurance,insurance limits, and policy terms, and otherwise describing the insuranceobtained in accordance with the provisions of the Security Agreement and (b)certified copies of all policies evidencing such insurance (or certificatestherefore signed by the insurer or an agent authorized to bind the insurer),which certificates shall state that the Administrative Agent is an additionalinsured and in respect of all insurance (other than liability insurance, whichshall state that the Administrative Agent as an additional insured) a losspayee.

 

**12.9.****                     SolvencyCertificate.**  Each of theLenders shall have received an officer’s certificate of the Borrowers dated asof the Closing Date as to the solvency of the Borrowers on a consolidated basisfollowing the consummation of the transactions contemplated herein and in formand substance satisfactory to the Lenders.

 

**12.10.****              Opinion ofCounsel.**  Each of the Lendersand the Administrative Agent shall have received a favorable legal opinionaddressed to the Lenders and

 

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theAdministrative Agent, dated as of the Closing Date, in form and substancesatisfactory to the Administrative Agent, from:

 

(a)          Kirkland & EllisLLP,  counsel to the Borrowers and theirSubsidiaries with respect to the financing contemplated by this CreditAgreement;

 

(b)         Victor & Bernstein,PC, counsel to the Borrowers with respect to liquor law compliance;

 

(c)                                  Thompson& Knight LLP, special counsel to the Borrowers and their Subsidiaries inTexas; and

 

(d)                                 BallardSpahr Andrews & Ingersoll, LLP, special counsel to the Borrowers and theirSubsidiaries in Maryland.

 

**12.11.****              CapitalStructure.**  TheAdministrative Agent shall be satisfied with the capital structure of theBorrowers and their Subsidiaries.

 

**12.12.****              MinimumConsolidated EBITDA.** The Administrative Agent shall have received evidence satisfactory tothe Administrative Agent that the Borrowers’ Consolidated EBITDA for the twelve(12) month period ended June 26, 2004 shall be equal to at least $24,500,000.

 

**12.13.****              No MaterialAdverse Change.**  TheAdministrative Agent shall be satisfied that there shall have occurred nomaterial adverse change in the business, operations, assets, management,properties, financial condition, income or prospects of the Borrowers and theirSubsidiaries taken as a whole since the Balance Sheet Date.

 

**12.14.****              FinancialStatements and****Projections.**  The Administrative Agent shall have receivedcopies of the financial statements and projections described in §8.4, and theAdministrative Agent shall be satisfied that such financial statements fairlypresent in all material respects the financial condition of the Borrowers andtheir Subsidiaries as at the close of business on the date thereof and theresults of operations for the fiscal period then ended and compliance with theterms and conditions hereof.  TheAdministrative Agent shall have received a certificate demonstrating that onthe Closing Date, the ratio of (a) Consolidated Funded Indebtedness of theBorrowers on such date (after giving effect to all Revolving Credit Loans to bemade on the Closing Date) to (b) Consolidated EBITDA for the twelve (12) month periodended June 26, 2004 is no more than 3.40:1.00. The Administrative Agent shall have received a statement of the sourcesand uses of funds in connection with the financing contemplated by this CreditAgreement and such statement of sources and uses shall be satisfactory in allmaterial respects to the Administrative Agent.

 

**12.15.****              NoLitigation.**  No litigation,inquiry, injunction or restraining order shall be pending, entered orthreatened against the Parent, any Borrower or

 

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any Subsidiaryof any Borrower that, in the reasonable opinion of the Administrative Agent,could reasonably be expected to have a Material Adverse Effect on (i) thetransactions contemplated hereby, (ii) the business, assets, liabilities(actual or contingent), operations, condition (financial or otherwise) of theBorrowers, taken as a whole, (iii) the ability of the Borrowers to performtheir obligations under the Loan Documents, (iv) the rights and remedies of theAdministrative Agent and the Lenders under the Loan Documents, or (v) theperfection or priority of any security interests granted to the AdministrativeAgent under the Loan Documents.

 

**12.16.****              Consentsand Approvals.**  TheAdministrative Agent shall have received evidence that all materialgovernmental and third-party approvals (including liquor licenses, LiquorManagement Agreements and other consents to the extent reasonably obtainableand excluding landlord consents to the extent required under §12.7) necessaryor advisable in connection with and the credit facilities contemplated herebyand the continuing operations of the Borrowers shall have been obtained andshall be in full force and effect, and all applicable waiting periods shallhave expired without any action being taken or threatened by any competentauthority that would restrain, prevent or otherwise impose materially adverseconditions on the Borrowers taken as a whole, or the credit facilitiescontemplated hereby.

 

**12.17.****              EmploymentAgreements; Employee Incentive Plans.**  There shall have been made available forreview by the Administrative Agent and the Lenders true and correct copies of(a) any material agreement with respect to the management of any Borrower orany of its Subsidiaries; (b) any material employment agreements entered into byany Borrower or any of its Subsidiaries; and (c) any employee incentive plans,including stock option agreements and other similar arrangements, including anyamendments thereto, in each case, entered into following the date of the 2003Credit Agreement, with each of the foregoing to be reasonably satisfactory tothe Administrative Agent.

 

**12.18.****              OtherDocumentation.**  All othermaterial agreements, including any tax sharing agreements or other financingarrangements of the Borrowers and their Subsidiaries, in each case, enteredinto following the date of the 2003 Credit Agreement shall be reasonablysatisfactory in form and substance to the Administrative Agent.

 

**12.19.****              Payoffand Termination of Existing Credit Agreement; Refinancing of Loans.**  All outstanding loans other obligations andliabilities under the 2003 Credit Agreement shall have been paid in full andall commitments thereunder shall have been terminated on the Closing Date andall interest accrued on such loans and other obligations thereunder shall havebeen paid in full as of the Closing Date.

 

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**12.20.****              Consummationof Initial Public Offering.** Each of the following shall have occurred: (a) the consummation of theInitial Public Offering; (b) the receipt of a minimum amount of net cashproceeds from the Initial Public Offering of $66,960,000, which proceeds shallbe used, among other things, to (i) prepay, redeem or repurchase in whole theConvertible Preferred Stock pursuant to the Notice of Redemption, and (ii)repay debt under the 2003 Credit Agreement; (c) the termination of theManagement Agreements and the Officer Fees pursuant to the TerminationDocuments and copies of such Termination Documents shall have been delivered tothe Administrative Agent and be in form and substance reasonably satisfactoryto the Administrative Agent, and (d) receipt by the Administrative Agent ofcopies of the Warrant Documents, as in effect after giving effect to thetransactions contemplated to occur in connection with the closing of theInitial Public Offering.

 

**12.21.****              MaximumBorrowing on Closing Date.** After giving effect to all transactions to occur on the Closing Date,not more than $25,000,000 of Revolving Credit Loans (excluding for suchpurposes the Maximum Drawing Amount of all outstanding Letters of Credit) shallbe outstanding.

 

**12.22.****              Payment ofFees and Expenses.** The Borrowers shall have paid to the Lenders or the AdministrativeAgent, as appropriate, the Fees pursuant to §§5.6 and 6.1.  The Borrowers shall have reimbursed theAdministrative Agent for, or paid directly, all reasonable fees, costs andexpenses incurred by the Administrative Agent’s Special Counsel and local counselto the Administrative Agent and the Lenders (including, without limitation, thefees, costs and expenses required to be paid pursuant to the Fee Letter in allrelevant jurisdictions in connection with the closing of the transactionscontemplated hereby.

 

**12.23.****              Disbursement Instructions.**  The Administrative Agent shall have receiveddisbursement instructions from the Borrowers with respect to the proceeds ofthe Revolving Credit Loans to be made on the Closing Date.

 

**13.****                               CONDITIONSTO ALL BORROWINGS**.

 

Theobligations of the Lenders to make any Revolving Credit Loan, and of theAdministrative Agent to issue, extend or renew any Letter of Credit, in eachcase whether on or after the Closing Date, shall also be subject to thesatisfaction of the following conditions precedent:

 

**13.1.****                     RepresentationsTrue; No Event of Default.** Each of the representations and warranties of any of the Borrowerscontained in this Credit Agreement, the other Loan Documents or in any documentor instrument delivered pursuant to or in connection with this Credit Agreement(i) that are qualified as to materiality shall be true in all respects, and(ii) that are not qualified as to materiality shall be true in all materialrespects, as of the date as of which they were made and shall also be true inall respects, or true in all material

 

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respects, asapplicable,  at and as of the time of themaking of such Revolving Credit  Loan orthe issuance, extension or renewal of such Letter of Credit, with the sameeffect as if made at and as of that time (except to the extent of changesresulting from transactions contemplated or permitted by this Credit Agreementand the other Loan Documents and changes occurring in the ordinary course ofbusiness that singly or in the aggregate are not materially adverse, and to theextent that such representations and warranties relate expressly to an earlierdate) and no Default or Event of Default shall have occurred and be continuing.

 

**13.2.****                     NoLegal Impediment.**  No changeshall have occurred in any law or regulations thereunder or interpretationsthereof that in the reasonable opinion of any Lender would make it illegal forsuch Lender to make such Revolving Credit Loan or to participate in theissuance, extension or renewal of such Letter of Credit or in the reasonableopinion of the Administrative Agent would make it illegal for theAdministrative Agent to issue, extend or renew such Letter of Credit.

 

**13.3.****                     Proceedingsand Documents.**  Allproceedings in connection with the transactions contemplated by this CreditAgreement, the other Loan Documents and all other documents incident theretoshall be reasonably satisfactory in substance and in form to the Lenders and tothe Administrative Agent and the Administrative Agent’s Special Counsel, andthe Lenders, the Administrative Agent and such counsel shall have received allinformation and such counterpart originals or certified or other copies of suchdocuments as the Administrative Agent may reasonably request.

 

**14.****                               EVENTS OF DEFAULT; ACCELERATION; ETC**.

 

**14.1.****                     Eventsof Default and Acceleration.** If any of the following events (each an “EventofDefault”or, if the giving of notice or the lapse of time or both is required, then,prior to such notice or lapse of time, each a “Default”) shall occur:

 

(a)          the Borrowers shall failto pay any principal of the Revolving Credit Loans or any ReimbursementObligation when the same shall become due and payable, whether at the stateddate of maturity or any accelerated date of maturity or at any other date fixedfor payment;

 

(b)         the Borrowers shall failto pay any interest on the Revolving Credit Loans, any Fees, or other sums duehereunder or under any of the other Loan Documents, when the same shall becomedue and payable, whether at the stated date of maturity or any accelerated dateof maturity or at any other date fixed for payment;

 

(c)                                  anyof the Borrowers (i) shall fail to comply with any of its covenants containedin §§9.5, the first sentence of §§9.6, 9.7, 9.9, 9.12, 9.15, 9.17, 10 or 11 orany of the covenants contained in any of the Mortgages, or (ii) shall fail to

 

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comply withits covenants contained in §9.4 for a period in excess of five (5) days;

 

(d)                                 theParent, any Borrower or any of its Subsidiaries shall fail to perform any term,covenant or agreement contained herein or in any of the other Loan Documents(other than those specified elsewhere in this §14.1) for thirty (30) days afterwritten notice of such failure has been given to the Parent or such Borrower bythe Administrative Agent;

 

(e)                                  anyrepresentation or warranty of the Parent, any Borrower or any of itsSubsidiaries in this Credit Agreement or any of the other Loan Documents or inany other document or instrument delivered pursuant to or in connection withthis Credit Agreement shall prove to have been false in any material respectupon the date when made or deemed to have been made or repeated;

 

(f)            (i) the Parent, anyBorrower or any of its Subsidiaries shall (A) fail to pay at maturity, orwithin any applicable period of grace, any obligation for borrowed money orcredit received or in respect of any Capitalized Leases in an aggregate amountin excess of $750,000, or (B) fail to observe or perform any material term,covenant or agreement contained in any agreement by which it is bound,evidencing or securing borrowed money or credit received or in respect of anyCapitalized Leases in an aggregate amount in excess of $750,000 for such periodof time as would permit (assuming the giving of appropriate notice if required)the holder or holders thereof or of any obligations issued thereunder toaccelerate the maturity thereof, or any such holder or holders shall rescind orshall have a right to rescind the purchase of any such obligations, or (ii) anyIndebtedness in an aggregate amount in excess of $750,000 of the Parent, anyBorrower or any of its Subsidiaries shall be declared due and payable or berequired to be prepaid prior to a regularly scheduled maturity date oramortization payment date;

 

(g)         the Parent, any Borroweror any of its Subsidiaries shall make an assignment for the benefit ofcreditors, or admit in writing its inability to pay or generally fail to payits debts as they mature or become due, or shall petition or apply for theappointment of a trustee or other custodian, liquidator or receiver of theParent, such Borrower or any of its Subsidiaries or of any substantial part ofthe assets of the Parent, such Borrower or any of its Subsidiaries or shallcommence any case or other proceeding relating to the Parent, such Borrower orany of its Subsidiaries under any bankruptcy, reorganization, arrangement,insolvency, readjustment of debt, dissolution or liquidation or similar law ofany jurisdiction, now or hereafter in effect, or shall take any action toauthorize or in furtherance of any of the foregoing, or if any such petition orapplication shall be filed or any such case or other proceeding shall becommenced against the Parent, such Borrower or any of its Subsidiaries and theParent, such Borrower or any of its Subsidiaries shall indicate its approvalthereof, consent thereto or acquiescence

 

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therein orsuch petition or application shall not have been dismissed within forty-five(45) days following the filing thereof;

 

(h)         a decree or order isentered appointing any such trustee, custodian, liquidator or receiver oradjudicating the Parent, any Borrower or any of its Subsidiaries bankrupt orinsolvent, or approving a petition in any such case or other proceeding, or adecree or order for relief is entered in respect of the Parent, any Borrower orany of its Subsidiaries in an involuntary case under federal bankruptcy laws asnow or hereafter constituted;

 

(i)             there shall remain inforce, undischarged, unsatisfied and unstayed, for more than thirty (30) days,any final judgment against the Parent, any Borrower or any of its Subsidiariesthat, with other outstanding final judgments, undischarged, against the Parent,any Borrower or any of its Subsidiaries exceeds in the aggregate $750,000;

 

(j)             the holders of all orany part of any Subordinated Debt shall accelerate the maturity of all or anypart of such Subordinated Debt, Subordinated Debt shall be prepaid, redeemed orrepurchased in whole or in part or an offer to prepay, redeem or repurchase anySubordinated Debt in whole or in part shall have been made; provided that any Subordinated Debt may beexchanged for common stock of the Parent or other Equity Interests of the Parentwith similar attributes as common stock;

 

(k)          if any of the LoanDocuments shall be cancelled, terminated, revoked or rescinded or theAdministrative Agent’s security interests, mortgages or liens in a substantialportion of the Collateral shall cease to be perfected, or shall cease to havethe priority contemplated by the Security Documents, in each case otherwisethan in accordance with the terms thereof or with the express prior writtenagreement, consent or approval of the Lenders, or any action at law, suit or inequity or other legal proceeding to cancel, revoke or rescind any of the LoanDocuments shall be commenced by or on behalf of the Parent, the Borrowers orany of their respective stockholders, or any court or any other GovernmentalAuthority of competent jurisdiction shall make a determination that, or issue ajudgment, order, decree or ruling to the effect that, any one or more of theLoan Documents is illegal, invalid or unenforceable in accordance with theterms thereof;

 

(l)             the Parent or anyBorrower incurs any liability to the PBGC or a Guaranteed Pension Plan pursuantto Title IV of ERISA in an aggregate amount exceeding $750,000, or the Parentor any Borrower is assessed withdrawal liability pursuant to Title IV of ERISAby a Multiemployer Plan requiring aggregate annual payments exceeding $750,000,or any of the following occurs with respect to a Guaranteed Pension Plan: (i)an ERISA Reportable Event, or a failure to make a required installment or otherpayment (within the meaning of §302(f)(1) of ERISA), provided that theAdministrative Agent determines in its

 

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reasonablediscretion that such event (A) could be expected to result in liability of theParent, any Borrower or any of its Subsidiaries to the PBGC or such GuaranteedPension Plan in an aggregate amount exceeding $750,000 and (B) could reasonablybe expected to constitute grounds for the termination of such GuaranteedPension Plan by the PBGC, for the appointment by the appropriate United StatesDistrict Court of a trustee to administer such Guaranteed Pension Plan or forthe imposition of a lien in favor of such Guaranteed Pension Plan; or (ii) theappointment by a United States District Court of a trustee to administer suchGuaranteed Pension Plan; or (iii) the institution by the PBGC of proceedings toterminate such Guaranteed Pension Plan;

 

(m)       any Borrower or any of itsSubsidiaries shall be enjoined, restrained or in any way prevented by the orderof any Governmental Authority from conducting any material part of the businessof MSRC, individually, or the Borrowers and their Subsidiaries, taken as awhole, and such order shall continue in effect for more than thirty (30)consecutive days;

 

(n)         there shall (i) occur anymaterial damage to, or loss, theft or destruction of, any Collateral or anystrike, lockout, labor dispute, embargo, condemnation, act of God or publicenemy, or other casualty, which in any such case causes, for more than thirty(30) consecutive days, the cessation or substantial curtailment of revenueproducing activities at any facility of any Borrower or any of its Subsidiariesif such event or circumstance is not covered by insurance and (ii) suchoccurrence would have a Material Adverse Effect;

 

(o)         the Parent, any Borroweror any of its Subsidiaries shall be indicted for a state or federal crime, orany civil or criminal action shall otherwise have been brought against suchPerson, a punishment for which in any such case is reasonably likely to includethe forfeiture of any assets of such Person having a fair market value inexcess of $750,000;

 

(p)         a Change of Control shalloccur;

 

(q)         the Parent (i) directlyor indirectly, beneficially or otherwise, holds or owns stock or othersecurities of any Person (other than the Borrowers or Subsidiaries of theBorrowers and other than Investments permitted under §10.3), (ii) conducts anyactivity which is inconsistent with activities which are normal and customaryfor a holding company, provided that theParent may issue Subordinated Debt so long as such issuance is in accordancewith §4 of the Guaranty and §10.1(c) of this Credit Agreement, or (iii) ownsany material assets other than the Equity Interests of MSAC; or

 

(r)            the Parent amends,supplements or otherwise modifies the terms of any Subordinated Debt Documentspreviously approved by the Required Lenders pursuant to §10.1(c) other than (i)solely to conform to amendments made to this Credit Agreement and the otherLoan Documents, (ii) to waive defaults

 

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thereunder orto amend covenants in order to make them less restrictive on the Parent or(iii) solely to permit the exchange of Subordinated Debt for common stock ofthe Parent or other Equity Interests of the Parent with similar attributes ascommon stock; provided that a certified copy of such amendment,modification or waiver is promptly delivered to the Administrative Agent andsuch amendment, modification or waiver is reasonably satisfactory to the RequiredLenders;

 

then, and in any such event, so long as thesame may be continuing, the Administrative Agent may, and upon the request ofthe Required Lenders shall, by notice in writing to the Borrowers declare allamounts owing with respect to this Credit Agreement, the Notes and the otherLoan Documents and all Reimbursement Obligations to be, and they shallthereupon forthwith become, immediately due and payable without presentment,demand, protest or other notice of any kind, all of which are hereby expresslywaived by the Borrowers; provided that in the event of any Event ofDefault specified in §§14.1(g), 14.1(h) or 14.1(j), all such amounts shallbecome immediately due and payable automatically and without any requirement ofnotice from the Administrative Agent or any Lender.

 

**14.2.****                     Terminationof Commitments.**  If any oneor more of the Events of Default specified in §§14.1(g), 14.1(h) or 14.1(j)shall occur, any unused portion of the credit hereunder shall forthwithterminate and each of the Lenders shall be relieved of all further obligationsto make Revolving Credit Loans to the Borrowers and the Administrative Agentshall be relieved of all further obligations to issue, extend or renew Lettersof Credit.  If any other Event of Defaultshall have occurred and be continuing, the Administrative Agent may and, uponthe request of the Required Lenders shall, by notice to the Borrowers,terminate the unused portion of the credit hereunder, and upon such noticebeing given such unused portion of the credit hereunder shall terminateimmediately and each of the Lenders shall be relieved of all furtherobligations to make Revolving Credit Loans and the Administrative Agent shallbe relieved of all further obligations to issue, extend or renew Letters ofCredit.  No termination of the credithereunder shall relieve the Borrowers or any of their Subsidiaries of any ofthe Obligations.

 

**14.3.****                     Remedies.**  In case any one or more of the Events ofDefault shall have occurred and be continuing, and whether or not the Lendersshall have accelerated the maturity of the Revolving Credit Loans pursuant to§14.1, each Lender, if owed any amount with respect to the Revolving CreditLoans or the Reimbursement Obligations, may, with the consent of the RequiredLenders but not otherwise, proceed to protect and enforce its rights by suit inequity, action at law or other appropriate proceeding, whether for the specificperformance of any covenant or agreement contained in this Credit Agreement andthe other Loan Documents or any instrument pursuant to which the Obligations tosuch Lender are evidenced, including as permitted by applicable law theobtaining of the exparte appointment of a receiver, and, if such amountshall have become due, by declaration or otherwise, proceed to enforce thepayment thereof or any other

 

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legal orequitable right of such Lender.  Noremedy herein conferred upon any Lender or the Administrative Agent or theholder of any Note or purchaser of any Letter of Credit Participation isintended to be exclusive of any other remedy and each and every remedy shall becumulative and shall be in addition to every other remedy given hereunder ornow or hereafter existing at law or in equity or by statute or any otherprovision of law.

 

**14.4.****                     Distributionof Collateral Proceeds.** In the event that, following the occurrence or during the continuance ofany Default or Event of Default, the Administrative Agent or any Lender, as thecase may be, receives any monies in connection with the enforcement of any theSecurity Documents, or otherwise with respect to the realization upon any ofthe Collateral, such monies shall be distributed for application as follows:

 

(a)          First, to the payment of, or (as the case may be) the reimbursementof the Administrative Agent for or in respect of all reasonable out-of-pocketcosts, expenses, disbursements and losses which shall have been incurred orsustained by the Administrative Agent in connection with the collection of suchmonies by the Administrative Agent, for the exercise, protection or enforcementby the Administrative Agent of all or any of the rights, remedies, powers andprivileges of the Administrative Agent or the Lenders under this CreditAgreement or any of the other Loan Documents or in respect of the Collateral orin support of any provision of adequate indemnity to the Administrative Agentagainst any taxes or liens which by law shall have, or may have, priority overthe rights of the Administrative Agent to such monies;

 

(b)         Second, to all other Obligations in such order or preference as theRequired Lenders may determine; provided, however, that (i)distributions shall be made (A) paripassu among Obligations withrespect to the Administrative Agent’s fee and all other Obligations and (B)with respect to each type of Obligation owing to the Lenders, such as interest,principal, fees and expenses, among the Lenders prorata, and(ii) the Administrative Agent may in its discretion make proper allowance totake into account any Obligations not then due and payable;

 

(c)          Third, upon payment and satisfaction in full or other provisions forpayment in full satisfactory to the Lenders and the Administrative Agent of allof the Obligations, to the payment of any obligations required to be paidpursuant to §9-608(a)(1)(c) or §9-615(a)(3) of the Uniform Commercial Code ofthe Commonwealth of Massachusetts; and

 

(d)         Fourth, the excess, if any, shall be returned to the Borrowers or tosuch other Persons as are entitled thereto.

 

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**15.****                               THE AGENT**.

 

**15.1.****                     Appointmentand Authority.**  Each Lenderhereby irrevocably appoints Fleet to act on its behalf as the AdministrativeAgent hereunder and under the other Loan Documents and authorizes theAdministrative Agent to take such actions on its behalf and to exercise suchpowers delegated to the Administrative Agent by the terms hereof or thereof,together with such actions and powers as are reasonably incidental thereto.

 

**15.2.****                     Rights as a Lender.**  The Person serving as the AdministrativeAgent hereunder shall have the same rights and powers in its capacity as Lenderas 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 withthe Parent, the Borrowers or any Subsidiary or other Affiliate thereof as ifsuch Person were not the Administrative Agent hereunder and without any duty toaccount therefor to the Lenders.

 

**15.3.****                     ExculpatoryProvisions.**  The AdministrativeAgent shall not have any duties or obligations except those expressly set forthherein and in the other Loan Documents. Without limiting the generality of the foregoing, the AdministrativeAgent:

 

(a)          shall not be subject toany fiduciary or other implied duties to the Lenders, regardless of whether aDefault has occurred and is continuing;

 

(b)         shall not have any dutyto take any discretionary action or exercise any discretionary powers, exceptdiscretionary rights and powers expressly contemplated hereby or by the otherLoan Documents that the Administrative Agent is required to exercise asdirected in writing by the Required Lenders (or such other number or percentageof the Lenders as shall be expressly provided for herein or in the other LoanDocuments), provided that the Administrative Agent shall not be requiredto take any action that, in its opinion or the opinion of its counsel, mayexpose the Administrative Agent to liability or that is contrary to any LoanDocument or applicable law; and

 

(c)          shall not, except asexpressly set forth herein and in the other Loan Documents, have any duty todisclose, and shall not be liable for the failure to disclose, any informationrelating to the Parent, the Borrowers or their Subsidiaries or any of theirrespective Affiliates that is communicated to or obtained by the Person servingas the Administrative Agent or any of its Affiliates in any capacity.

 

TheAdministrative Agent shall not be liable for any action taken or not taken byit (i) with the consent or at the request of the Required Lenders (or suchother number or

 

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percentage of the Lenders as shall benecessary, or as the Administrative Agent shall believe in good faith shall benecessary, under the circumstances as provided in §17.2 and §14.3) or (ii) inthe absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed notto have knowledge of any Default unless and until notice describing suchDefault is given to the Administrative Agent by the Borrowers or a Lender.

 

TheAdministrative Agent shall not be responsible for or have any duty to ascertainor inquire into (i) any statement, warranty or representation made in or inconnection with this Credit Agreement or any other Loan Document, (ii) thecontents of any certificate, report or other document delivered hereunder orthereunder or in connection herewith or therewith, (iii) the performanceor observance of any of the covenants, agreements or other terms or conditionsset forth herein or therein or the occurrence of any Default, (iv) thevalidity, enforceability, effectiveness or genuineness of this Credit Agreement,any other Loan Document or any other agreement, instrument or document or (v)the satisfaction of any condition set forth in §12 and §13 or elsewhere herein,other than to confirm receipt of items expressly required to be delivered tothe Administrative Agent.

 

**15.4.****                     Relianceby Administrative Agent**.

 

**15.4.1.****           General.**  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, the Administrative Agent may presume that suchcondition is satisfactory to such Lender unless the Administrative Agent shallhave received notice to the contrary from such Lender prior to the making ofsuch Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult withlegal counsel (who may be counsel for the Borrowers or their Subsidiaries), independentaccountants and other experts selected by it, and shall not be liable for anyaction taken or not taken by it in accordance with the advice of any suchcounsel, accountants or experts.

 

**15.4.2.****          **Non-Relianceon Administrative Agent and Other Lenders.  Each Lender acknowledges that it has,independently and without reliance upon the Administrative Agent or any otherLender or any of their Related Parties and based on such documents andinformation as it has deemed

 

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appropriate,made its own credit analysis and decision to enter into this CreditAgreement.  Each Lender also acknowledgesthat it will, independently and without reliance upon the Administrative Agentor any other Lender or any of their Related Parties and based on such documentsand information as it shall from time to time deem appropriate, continue tomake its own decisions in taking or not taking action under or based upon thisCredit Agreement, any other Loan Document or any related agreement or anydocument furnished hereunder or thereunder.

 

**15.4.3.****          **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 through any one or more sub-agents appointed bythe Administrative Agent.  TheAdministrative Agent and any such sub-agent may perform any and all ofits duties and exercise its rights and powers by or through their respectiveRelated Parties.  The exculpatoryprovisions of this §15 shall apply to any such sub-agent and to theRelated Parties of the Administrative Agent and any such sub-agent, andshall apply to their respective activities in connection with the syndicationof the credit facilities provided for herein as well as activities asAdministrative Agent.

 

**15.5.****                     Payments**.

 

**15.5.1.****           Paymentsto Administrative Agent.** A payment by the Borrowers to the Administrative Agent hereunder orunder any of the other Loan Documents for the account of any Lender shallconstitute a payment to such Lender.  TheAdministrative Agent agrees promptly to distribute to each Lender such Lender’sprorata share of payments received by the Administrative Agentfor the account of the Lenders except as otherwise expressly provided herein orin any of the other Loan Documents.

 

**15.5.2.****           Distribution byAdministrative Agent.**  If in theopinion of the Administrative Agent the distribution of any amount received byit in such capacity hereunder, under the Notes or under any of the other LoanDocuments might involve it in liability, it may refrain from making suchdistribution until its right to make such distribution shall have beenadjudicated by a court of competent jurisdiction.  If a court of competent jurisdiction shalladjudge that any amount received and distributed by the Administrative Agent isto be repaid, each Person to whom any such distribution shall have been madeshall either repay to the Administrative Agent its proportionate share of theamount so adjudged to be repaid or shall pay over the same in such manner andto such Persons as shall be determined by such court.

 

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**15.5.3.****           DelinquentLenders.**  Notwithstandinganything to the contrary contained in this Credit Agreement or any of the otherLoan Documents, any Lender that fails (a) to make available to theAdministrative Agent its prorata share of any Revolving CreditLoan or to purchase any Letter of Credit Participation or (b) to comply withthe provisions of §17.1 with respect to making dispositions and arrangementswith the other Lenders, where such Lender’s share of any payment received,whether by setoff or otherwise, is in excess of its proratashare of such payments due and payable to all of the Lenders, in each case as,when and to the full extent required by the provisions of this CreditAgreement, shall be deemed delinquent (a “DelinquentLender”) andshall be deemed a Delinquent Lender until such time as such delinquency issatisfied.  A Delinquent Lender shall bedeemed to have assigned any and all payments due to it from the Borrowers,whether on account of outstanding Revolving Credit Loans, Unpaid ReimbursementObligations, interest, fees or otherwise, to the remaining nondelinquentLenders for application to, and reduction of, their respective proratashares of all outstanding Revolving Credit Loans and Unpaid ReimbursementObligations.  The Delinquent Lenderhereby authorizes the Administrative Agent to distribute such payments to thenondelinquent Lenders in proportion to their respective proratashares of all outstanding Revolving Credit Loans and Unpaid ReimbursementObligations.  A Delinquent Lender shallbe deemed to have satisfied in full a delinquency when and if, as a result ofapplication of the assigned payments to all outstanding Revolving Credit Loansand Unpaid Reimbursement Obligations of the nondelinquent Lenders, the Lenders’respective prorata shares of all outstanding Revolving CreditLoans and Unpaid Reimbursement Obligations have returned to those in effectimmediately prior to such delinquency and without giving effect to thenonpayment causing such delinquency.  Atany time before a Delinquent Lender shall have satisfied in full a delinquencyas provided in the foregoing sentence, the Borrowers shall have the same rightsand remedies with respect to such Delinquent Lender as the Borrowers have withrespect to any Affected Lender set forth in §6.8(c) hereof.

 

**15.6.****                     Reimbursementby Lenders.**  To theextent that the Borrowers for any reason fails to indefeasibly pay any amountrequired under §17.2 or §17.3 to be paid by it to the Administrative Agent (orany sub-agent thereof) or any Related Party of any of the foregoing, eachLender severally agrees to pay to the Administrative Agent (or any suchsub-agent) or such Related Party, as the case may be, such Lender’s RevolvingCredit Commitment Percentage (determined as of the time that the applicableunreimbursed expense or indemnity payment is sought) of such unpaid amount, providedthat the unreimbursed expense or indemnified loss, claim, damage, liability orrelated expense, as the case may be, was incurred by or asserted against theAdministrative Agent (or any such sub-agent) in its capacity as such, oragainst any Related Party acting for the

 

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AdministrativeAgent (or any such sub-agent) in connection with such capacity.  The obligations of the Lenders under this§15.6 are several and the failure or refusal of any Lender to reimburse theAdministrative Agent for its portion of such unpaid amount shall not relieveany other Lender from its several obligation hereunder.  The undertaking in this §15.6 shall survivetermination of the Total Revolving Credit Commitment, the payment of all otherObligations and the resignation of the Administrative Agent.

 

**15.7.****                     Resignation by Administrative Agent.**  The Administrative Agent may at any time giveat least sixty (60) days notice of its resignation to the Lenders and theBorrowers.  Upon receipt of any suchnotice of resignation, the Required Lenders shall have the right, inconsultation with the Borrowers, to appoint a successor, which shall be a bankwith an office in the United States, or an Affiliate of any such bank with anoffice in the United States.  Unless aDefault or an Event of Default shall have occurred and be continuing, suchsuccessor shall be reasonably acceptable to the Borrowers.  If no such successor shall have been soappointed by the Required Lenders and shall have accepted such appointmentwithin thirty (30) days after the retiring Administrative Agent gives notice ofits resignation, then the retiring Administrative Agent may on behalf of theLenders, appoint a successor Administrative Agent having a rating of “A” or itsequivalent by S&P and meeting the qualifications set forth above.  Upon the acceptance of a successor’sappointment as Administrative Agent hereunder, such successor shall succeed toand become vested with all of the rights, powers, privileges and duties of theretiring Administrative Agent and the term “Administrative Agent” shall meansuch successor administrative agent****and****the retiring Administrative Agent shall bedischarged from its duties and obligations hereunder and under the other LoanDocuments. The Borrowers agrees to pay the fees of the successor AdministrativeAgent as may be agreed between the Borrowers and such successor AdministrativeAgent.  After any retiring AdministrativeAgent’s resignation hereunder and under the other Loan Documents, theprovisions of this §15 and §§17.2 and 17.3 shall continue in effect for thebenefit of the retiring Administrative Agent, its sub-agents and theirrespective Related Parties in respect of any actions taken or omitted to betaken by any of them while the retiring Administrative Agent was acting asAdministrative Agent.

 

Anyresignation by Fleet as Administrative Agent pursuant to this §15 shall alsoconstitute its resignation as issuer of Letters of Credit.  Upon the acceptance of a successor’sappointment as Administrative Agent hereunder, (a) such successor shall succeedto and become vested with all of the rights, powers, privileges and duties ofthe retiring issuer of Letters of Credit, (b) the retiring issuer of Letters ofCredit shall be discharged from all of its respective duties and obligationshereunder or under the other Loan Documents, and (c) the successor issuer ofLetters of Credit shall issue letters of credit in substitution for the Lettersof Credit, if any, outstanding at the time of such succession or make otherarrangement satisfactory to the retiring issuer of Letters of Credit toeffectively assume the obligations of the retiring issuer of Letters of Creditwith respect to such Letters of Credit

 

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**15.8.****                     AdministrativeAgent May File Proof of Claims.**  In case of the pendency of any receivership,insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,composition or other judicial proceeding relative to the Parent, the Borrowersor any Subsidiary, the Administrative Agent (irrespective of whether theprincipal of any Revolving Credit Loan or Reimbursement Obligation shall thenbe due and payable as herein expressed or by declaration or otherwise andirrespective of whether the Administrative Agent shall have made any demand onthe Borrower or any other Person primarily or secondarily liable) shall beentitled and empowered, by intervention in such proceeding or otherwise

 

(a)          to file and prove aclaim for the whole amount of the principal and interest owing and unpaid in respectof the Revolving Credit Loans, Reimbursement Obligations and all otherObligations that are owing and unpaid and to file such other documents as maybe necessary or advisable in order to have the claims of the Lenders and theAdministrative Agent (including any claim for the reasonable compensation,expenses, disbursements and advances of the Lenders and the AdministrativeAgent and their respective agents and counsel and all other amounts due theLenders and the Administrative Agent under §5.6, §6 and §17.2) allowed in suchjudicial proceeding; and

 

(b)         to collect and receiveany monies or other property payable or deliverable on any such claims and todistribute the same

 

and any custodian, receiver, assignee,trustee, liquidator, sequestrator or other similar official in any suchjudicial proceeding is hereby authorized by each Lender to make such paymentsto the Administrative Agent and, in the event that the Administrative Agentshall consent to the making of such payments directly to the Lenders, to pay tothe Administrative Agent any amount due for the reasonable compensation,expenses, disbursements and advances of the Administrative Agent and its agentsand counsel, and any other amounts due the Administrative Agent under §6 and§17.2.

 

Nothing contained herein shall be deemed toauthorize the Administrative Agent to authorize or consent to or accept oradopt on behalf of any Lender any plan of reorganization, arrangement,adjustment or composition affecting the Obligations or the rights of any Lenderor to authorize the Administrative Agent to vote in respect of the claim of anyLender in any such proceeding.

 

**15.9.****                     No OtherDuties, Etc..** Anything herein to the contrary notwithstanding, none of the arrangerslisted on the cover page hereof shall have any powers, duties orresponsibilities under this Credit Agreement or any of the other LoanDocuments, except in its capacity, as applicable, as the Administrative Agentor a Lender hereunder.

 

**16.****                               ASSIGNMENT AND PARTICIPATION**.

 

**16.1.****                     Successorsand Assigns; Conditions to Assignment.**  (a)                                Theprovisions of this Credit Agreement shall be binding upon and inure to thebenefit

 

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of the partieshereto and their respective successors and assigns permitted hereby, exceptthat (x) the Borrowers may not assign or otherwise transfer any of its rightsor obligations hereunder without the prior written consent of each Lender; provided, that notwithstanding the foregoing,each Borrower may, at any time and from time to time, assign or otherwisetransfer to one or more of the other Borrowers, its obligations, as “primaryobligor” for any Obligations under any Loan Document; provided further that no such assignment or transfer shall have anyimpact whatsoever on any Borrower’s joint and several liability (as set forthin §6.11 and elsewhere in this Credit Agreement) for all Obligations and (y) noLender may assign or otherwise transfer any of its rights or obligationshereunder except (i) to an Eligible Assignee in accordance with the provisionsof clause (b) of this §16.1, (ii) by way of participation in accordance withthe provisions of §16.3, or (iii) by way of pledge or assignment of a securityinterest subject to the restrictions of §16.5 (and any other attemptedassignment or transfer by any party hereto shall be null and void).  Nothing in this Credit Agreement, expressedor implied, shall be construed to confer upon any Person (other than theparties hereto, their respective successors and assigns permitted hereby,Participants to the extent provided in §16.3 and, to the extent expresslycontemplated hereby, an Indemnified Person) any legal or equitable right,remedy or claim under or by reason of this Credit Agreement.

 

(a)          Any Lender may at anytime assign to one or more Eligible Assignees all or a portion of its rightsand obligations under this Credit Agreement (including all or a portion of itsRevolving Credit Commitment and the Revolving Credit Loans (including forpurposes of this clause (b), participations in Reimbursement Obligations) atthe time owing to it); provided that (i) except in the case of anassignment of the entire remaining amount of the assigning Lender’s RevolvingCredit Commitment and the Revolving Credit Loans at the time owing to it or inthe case of an assignment to a Lender or an Affiliate of a Lender or anApproved Fund with respect to a Lender, the aggregate amount of the RevolvingCredit Commitment (which for this purpose includes Revolving Credit Loansoutstanding thereunder) subject to each such assignment, determined as of thedate the Assignment and Acceptance (as defined below) with respect to suchassignment is delivered to the Administrative Agent or, if “Effective Date” isspecified in the Assignment and Acceptance, as of the Effective Date, shall notbe less than $2,000,000, in respect of assignments of Revolving CreditCommitments and/or Revolving Credit Loans unless, in each case, each of theAdministrative Agent and, so long as no Event of Default has occurred and is continuing,the Borrowers otherwise consents (each such consent not to be unreasonablywithheld or delayed); (ii) each partial assignment shall be made as anassignment of a proportionate part of all the assigning Lender’s rights andobligations under this Credit Agreement with respect to the Revolving CreditLoans or the Revolving Credit Commitment assigned; (iii) any assignment of aRevolving Credit Commitment must be approved by the Administrative Agent unlessthe Person that is the proposed assignee is itself a Lender (whether or not theproposed assignee would otherwise qualify as an Eligible Assignee); and (iv)the parties to

 

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eachassignment shall execute and deliver to the Administrative Agent an Assignmentand Acceptance substantially in the form of ExhibitE hereto (an “Assignment and Acceptance”), together with aprocessing and recordation fee of $3,500 and the Eligible Assignee, if not aLender, shall deliver to the Administrative Agent an administrativequestionnaire in the form supplied by the Administrative Agent, provided,further, that no Lender may assign its interest, rights and obligationsunder this Credit Agreement to a competitor of the Borrowers or any of theirSubsidiaries, or an adverse party in any legal or arbitration proceeding withthe Borrowers or any of their Subsidiaries (as determined by theBorrowers).  Subject to acceptance andrecording thereof by the Administrative Agent pursuant to §16.2, from and afterthe effective date specified in each Assignment and Acceptance, the EligibleAssignee thereunder shall be a party to this Credit Agreement and, to theextent of the interest assigned by such Assignment and Acceptance, have therights and obligations of a Lender under this Credit Agreement, and theassigning Lender thereunder shall, to the extent of the interest assigned bysuch Assignment and Acceptance, be released from its obligations under thisCredit Agreement (and, in the case of an Assignment and Acceptance covering allof the assigning Lender’s rights and obligations under this Credit Agreement,such Lender shall cease to be a party hereto but shall continue to be entitledto the benefits of §§6.2, 6.6, 6.7, 6.9, 17.2 and 17.3 with respect to factsand circumstances occurring prior to the effective date of suchassignment).  Upon request, the Borrower(at its expense) shall execute and deliver a Note(s) to the assigneeLender.  Any assignment or transfer by aLender of rights or obligations under this Credit Agreement that does notcomply with this clause (b) shall be treated for purposes of this CreditAgreement as a sale by such Lender of a participation in such rights andobligations in accordance with §16.3.

 

**16.2.****                     CertainRepresentations and Warranties; Limitations; Covenants.**  By executing and delivering an Assignment andAcceptance, the parties to the assignment thereunder confirm to and agree witheach other and the other parties hereto as follows:

 

(a)          other than therepresentation and warranty that it is the legal and beneficial owner of theinterest being assigned thereby free and clear of any adverse claim, theassigning Lender makes no representation or warranty, express or implied, andassumes no responsibility with respect to any statements, warranties or representationsmade in or in connection with this Credit Agreement or the execution, legality,validity, enforceability, genuineness, sufficiency or value of this CreditAgreement, the other Loan Documents or any other instrument or documentfurnished pursuant hereto or the attachment, perfection or priority of anysecurity interest or mortgage,

 

(b)         the assigning Lendermakes no representation or warranty and assumes no responsibility with respectto the financial condition of the Borrowers and their Subsidiaries or any otherPerson primarily or secondarily liable in respect of any

 

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of theObligations, or the performance or observance by the Borrowers and theirSubsidiaries or any other Person primarily or secondarily liable in respect ofany of the Obligations of any of their obligations under this Credit Agreementor any of the other Loan Documents or any other instrument or documentfurnished pursuant hereto or thereto;

 

(c)          such assignee confirmsthat it has received a copy of this Credit Agreement, together with copies ofthe most recent financial statements referred to in §8.4 and §9.4 and suchother documents and information as it has deemed appropriate to make its owncredit analysis and decision to enter into such Assignment and Acceptance;

 

(d)                                 suchassignee will, independently and without reliance upon the assigning Lender,the Administrative Agent or any other Lender and based on such documents andinformation as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under this Credit Agreement;

 

(e)                                  suchassignee appoints and authorizes the Administrative Agent to take such actionas agent on its behalf and to exercise such powers under this Credit Agreementand the other Loan Documents as are delegated to the Administrative Agent bythe terms hereof or thereof, together with such powers as are reasonablyincidental thereto;

 

(f)            such assignee agreesthat it will perform in accordance with the Credit Agreement and the other LoanDocuments all of the obligations that by the terms thereof are required to beperformed by it as a Lender;

 

(g)         such assignee representsand warrants that it is legally authorized to enter into such Assignment andAcceptance;

 

(h)         such assigneeacknowledges that it has made arrangements with the assigning Lendersatisfactory to such assignee with respect to its prorata shareof Letter of Credit Fees in respect of outstanding Letters of Credit; and

 

(i)             such assignee acknowledgesthat it has complied with the provisions of §6.2.3 to the extent applicable.

 

**16.3.****                     Register.**  The AdministrativeAgent, acting solely for this purpose as an agent of the Borrowers, shallmaintain at the Administrative Agent’s Office a copy of each Assignment andAcceptance delivered to it and a register for the recordation of the names andaddresses of the Lenders, and the Revolving Credit Commitments of, andprincipal amounts of the Revolving Credit Loans and Reimbursement Obligationsowing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall beconclusive, in the absence of manifest error, and the Borrowers, theAdministrative Agent and the Lenders shall treat each Person whose name is

 

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recorded inthe Register pursuant to the terms hereof as a Lender hereunder for allpurposes of this Credit Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspectionby the Borrowers at any reasonable time and from time to time upon reasonableprior notice.  In addition, at any timethat a request for a consent for a material or other substantive change to theLoan Documents is pending, any Lender wishing to consult with other Lenders inconnection therewith may request and receive from the Administrative Agent acopy of the Register.  Upon its receiptof an Assignment and Acceptance executed by the parties to such assignment,together with each Note subject to such assignment, the Administrative Agentshall (a) record the information contained therein in the Register, and (b)give prompt notice thereof to the Borrowers and the Lenders (other than theassigning Lender). Within five (5) Business Days after receipt of such notice,the Borrowers, at their own expense, shall execute and deliver to theAdministrative Agent, in exchange for each surrendered Note, a new Note to theorder of such Assignee in an amount equal to the amount assumed by suchAssignee pursuant to such Assignment and Acceptance and, if the assigningLender has retained some portion of its obligations hereunder, a new Note tothe order of the assigning Lender in an amount equal to the amount retained byit hereunder.  Such new Notes shallprovide that they are replacements for the surrendered Notes, shall be in anaggregate principal amount equal to the aggregate principal amount of thesurrendered Notes, shall be dated the effective date of such Assignment andAcceptance and shall otherwise be in substantially the form of the assignedNotes. The surrendered Notes shall be cancelled and returned to the Borrowers.

 

**16.4.****                     Participations.**  (a)                                            AnyLender may at any time, without the consent of, or notice to, the Borrowers orthe Administrative Agent, sell participations to any Person (other than anatural person or the Borrowers or any of the Borrowers’ Affiliates orSubsidiaries) (each, a “Participant”) in all or a portion of suchLender’s rights and/or obligations under this Credit Agreement (including allor a portion of its Revolving Credit Commitment and/or the Revolving CreditLoans (including such Lender’s Letter of Credit Participations) owing to it); providedthat (i) each such participation shall be in an amount of not less than$2,000,000, (ii) such Lender’s obligations under this Credit Agreement shallremain unchanged, (iii) such Lender shall remain solely responsible to theother parties hereto for the performance of such obligations, and (iv) theBorrowers, the Administrative Agent and the other Lenders shall continue todeal solely and directly with such Lender in connection with such Lender’srights and obligations under this Credit Agreement; provided, further, no Lender maysell a participation to a competitor of the Borrowers or any of theirSubsidiaries, or an adverse party in any legal or arbitration proceeding withthe Borrowers or any of their Subsidiaries (as determined by theBorrowers).  Any agreement or instrumentpursuant to which a Lender sells such a participation shall provide that suchLender shall retain the sole right to enforce this Credit Agreement and toapprove any amendment, modification or waiver of any  provision of this Credit Agreement; providedthat such agreement or instrument may provide that such

 

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Lender willnot, without the consent of the Participant, agree to any amendment, waiver orother modification described in clauses (a) and (b) of §17.12 that directlyaffects such Participant.  Subject toclause (b) of this §16.4, the Borrower agrees that each Participant shall beentitled to the benefits of §§6.2, 6.6, 6.7 and 6.9 to the same extent as if itwere a Lender and had acquired its interest by assignment pursuant to§16.1.  To the extent permitted by law, eachParticipant also shall be entitled to the benefits of §17.1**as though it were a Lender, providedsuch Participant agrees to be subject to §17.1 as though it were a Lender.

 

(a)          A Participant shall notbe entitled to receive any greater payment under §6.2, §6.6, or §6.7 than theapplicable Lender would have been entitled to receive with respect to theparticipation sold to such Participant, unless the sale of the participation tosuch Participant is made with the Borrower’s prior written consent.  A Participant that would be a Non-U.S. Lenderif it were a Lender shall not be entitled to the benefits of §6.2 unless theBorrower is notified of the participation sold to such Participant and suchParticipant agrees, for the benefit of the Borrower, to comply with §6.3.3 asthough it were a Lender.

 

**16.5.****                     Assigneeor Participant Affiliated with the Borrowers.**  If any Eligible Assignee is an Affiliate ofthe Borrowers or any of their Subsidiaries, then any such assignee Lender shallhave no right to (a) attend meetings of the Lenders or (b) vote as a Lenderhereunder or under any of the other Loan Documents for purposes of grantingconsents or waivers or for purposes of agreeing to amendments or othermodifications to any of the Loan Documents or for purposes of making requeststo the Administrative Agent pursuant to §14.1 or §14.2, and the determinationof the Required Lenders shall for all purposes of this Credit Agreement and theother Loan Documents be made without regard to such Eligible Assignee’sinterest in any of the Revolving Credit Loans or ReimbursementObligations.  If any Lender sells aparticipating interest in any of the Revolving Credit Loans or ReimbursementObligations to the Borrowers or an Affiliate of any Borrower, then suchtransferor Lender shall promptly notify the Administrative Agent of the sale ofsuch participation and such transferor Lender shall have no right to vote as aLender hereunder or under any of the other Loan Documents for purposes ofgranting consents or waivers or for purposes of agreeing to amendments ormodifications to any of the Loan Documents or for purposes of making requeststo the Administrative Agent pursuant to §14.1 or §14.2 to the extent that suchparticipation is beneficially owned by the Borrowers or any Affiliate of anyBorrower, and the determination of the Required Lenders shall for all purposesof this Credit Agreement and the other Loan Documents be made without regard tothe interest of such transferor Lender in the Revolving Credit Loans orReimbursement Obligations to the extent of such participation.

 

**16.6.****                     MiscellaneousAssignment Provisions.** Any Lender may at any time pledge or assign a security interest in allor any portion of its rights under this Credit Agreement to secure obligationsof such Lender, including any pledge or assignment to secure obligations to aFederal Reserve Bank; provided that no

 

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such pledge orassignment shall release such Lender from any of its obligations hereunder orsubstitute any such pledgee or assignee for such Lender as a party hereto.

 

**16.7.****                     Syndication**.  TheBorrowers hereby agree to use commercially reasonable efforts to assist andcooperate with the Arranger in efforts to complete the syndication of theRevolving Credit Commitment and Revolving Credit Loans hereunder, including,but not limited to, promptly preparing and providing materials and informationreasonably deemed necessary by the Arranger to successfully complete andotherwise facilitate such syndication, including, without limitation, allprojections required to be delivered pursuant to §§8.4.3, 9.4(b) and9.4(g).  The Borrowers and each of theirdirectors, officers, employees and agents shall, at the reasonable request ofthe Arranger, use commercially reasonable efforts to meet with potentiallenders and provide such additional information as such Persons may reasonablyrequest.  The terms of the Fee Lettershall survive the Closing Date.

 

**17.****                               PROVISIONS OF GENERAL APPLICATIONS**.

 

**17.1.****                     Setoff.**  The Borrowers hereby grant to theAdministrative Agent and each of the Lenders a continuing lien, securityinterest and right of setoff as security for all liabilities and obligations tothe Administrative Agent and each Lender, whether now existing or hereafter arising,upon and against all deposits, credits, collateral and property, now orhereafter in the possession, custody, safekeeping or control of theAdministrative Agent or such Lender or any Lender Affiliate and theirsuccessors and assigns or in transit to any of them.  Regardless of the adequacy of any collateral,if any of the Obligations are due and payable and have not been paid or anyEvent of Default shall have occurred, any deposits or other sums credited by ordue from any of the Lenders to any of the Borrowers and any securities or otherproperty of any of the Borrowers in the possession of such Lender may beapplied to or set off by such Lender against the payment of Obligations and anyand all other liabilities, direct, or indirect, absolute or contingent, due orto become due, now existing or hereafter arising, of the Borrowers to suchLender.  ANY AND ALL RIGHTS TO REQUIREANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHERCOLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OFSETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWERARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.  Each of the Lenders agrees with each otherLender that (a) if an amount to be set off is to be applied to Indebtedness ofany of the Borrowers to such Lender, other than Indebtedness evidenced by theNotes held by such Lender or constituting Reimbursement Obligations owed tosuch Lender, such amount shall be applied ratably to such other Indebtednessand to the Indebtedness evidenced by all such Notes held by such Lender orconstituting Reimbursement Obligations owed to such Lender, and (b) if such Lendershall receive from any of

 

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the Borrowers,whether by voluntary payment, exercise of the right of setoff, counterclaim,cross action, enforcement of the claim evidenced by the Notes held by, orconstituting Reimbursement Obligations owed to, such Lender by proceedingsagainst such Borrower at law or in equity or by proof thereof in bankruptcy,reorganization, liquidation, receivership or similar proceedings, or otherwise,and shall retain and apply to the payment of the Note or Notes held by, orReimbursement Obligations owed to, such Lender any amount in excess of itsratable portion of the payments received by all of the Lenders with respect tothe Notes held by, and Reimbursement Obligations owed to, all of the Lenders,such Lender will make such disposition and arrangements with the other Lenderswith respect to such excess, either by way of distribution, protantoassignment of claims, subrogation or otherwise as shall result in each Lenderreceiving in respect of the Notes held by it or Reimbursement Obligations owedit, its proportionate payment as contemplated by this Credit Agreement; providedthat if all or any part of such excess payment is thereafter recovered fromsuch Lender, such disposition and arrangements shall be rescinded and theamount restored to the extent of such recovery, but without interest.

 

**17.2.****                     Expenses**.  The Borrowers jointly and severally agree topay, upon receipt of an invoice therefor, (a) the reasonable costs of producingand reproducing this Credit Agreement, the other Loan Documents and the otheragreements and instruments mentioned herein, (b) any stamp, documentary orsimilar taxes (including any interest and penalties in respect thereto) payableby the Administrative Agent or any of the Lenders on or with respect to thetransactions contemplated by this Credit Agreement (the Borrowers herebyjointly and severally agreeing to indemnify the Administrative Agent and eachLender with respect thereto), (c) the reasonable fees, expenses anddisbursements of the Administrative Agent’s Special Counsel or any local counselto the Administrative Agent incurred in connection with the preparation,syndication, administration or interpretation of the Loan Documents and otherinstruments mentioned herein, each closing hereunder, any amendments,modifications, approvals, consents or waivers hereto or hereunder, or thecancellation of any Loan Document upon payment in full in cash of all of theObligations or pursuant to any terms of such Loan Document for providing forsuch cancellation, (d) the reasonable fees, expenses and disbursements of theAdministrative Agent or any of its affiliates incurred by the AdministrativeAgent or such affiliate in connection with the preparation, syndication,administration or interpretation of the Loan Documents and other instrumentsmentioned herein, including all title insurance premiums and surveyor,engineering, appraisal and examination charges,**(e) any reasonable fees, costs, expenses and bank charges, includingbank charges for returned checks, incurred by the Administrative Agent inestablishing, maintaining or handling any agency accounts, lock box accountsand other accounts for the collection of any of the Collateral, (f) allreasonable out-of-pocket expenses (including without limitation reasonableattorneys’ fees and costs, which attorneys may be employees of any Lender orthe Administrative Agent, and reasonable consulting, accounting, appraisal,investment banker and

 

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similarprofessional fees and charges) incurred by any Lender or the AdministrativeAgent in connection with (i) the enforcement of or preservation of rights underany of the Loan Documents against the Borrowers or any of their Subsidiaries orthe administration thereof after the occurrence of a Default or Event of Defaultand (ii) any litigation, proceeding or dispute whether arising hereunder orotherwise, in any way related to any Lender’s or the Administrative Agent’srelationship with the Borrowers or any of their Subsidiaries and (g) allreasonable fees, expenses and disbursements of any Lender or the AdministrativeAgent incurred in connection with Uniform Commercial Code searches, UniformCommercial Code filings, intellectual property searches, intellectual propertyfilings or mortgage recordings.  Thecovenants contained in this §17.2 shall survive payment or satisfaction in fullof all other Obligations.

 

**17.3.****                     Indemnification**.  The Borrowers jointly and severally agree toindemnify and hold harmless the Administrative Agent, its affiliates and eachof the Lenders and their respective affiliates, officers, and directors (eachsuch Person an “Indemnified Person”) fromand against any and all claims, actions and suits whether groundless orotherwise, and from and against any and all liabilities, losses, damages and expensesof every nature and character arising out of this Credit Agreement or any ofthe other Loan Documents or the transactions contemplated hereby including,without limitation, (a) any actual or proposed use by any of the Borrowers orany of their Subsidiaries of the proceeds of any of the Revolving Credit Loansor Letters of Credit, (b) the reversal or withdrawal of any provisional creditsgranted by the Administrative Agent to the Borrowers upon the transfer of fundsfrom lock box, bank agency, concentration accounts or otherwise under any cashmanagement arrangements with any of the Borrowers or any of their Subsidiariesor in connection with the provisional honoring of funds transfers, checks orother items, (c) any actual or alleged infringement of any patent, copyright,trademark, service mark or similar right of any of the Borrowers or any oftheir Subsidiaries comprised in the Collateral, (d) any of the Borrowers or anyof their Subsidiaries entering into or performing this Credit Agreement or anyof the other Loan Documents or (e) with respect to each of the Borrowers andtheir Subsidiaries and their respective properties and assets, the violation ofany Environmental Law, the presence, disposal, escape, seepage, leakage,spillage, discharge, emission, release or threatened release of any HazardousSubstances or any action, suit, proceeding or investigation brought orthreatened with respect to any Hazardous Substances (including, but not limitedto, claims with respect to wrongful death, personal injury or damage toproperty), in each case including, without limitation, the reasonable fees anddisbursements of counsel and allocated costs of internal counsel incurred inconnection with any such investigation, litigation or other proceeding (all theforegoing, collectively, the “Indemnified Liabilities”), except to theextent any of the foregoing Indemnified Liabilities result from the grossnegligence or willful misconduct of any such Indemnified Person.  In litigation, or the preparation therefor, suchIndemnified Person shall be entitled to select its own counsel provided;thatnotwithstanding the foregoing indemnity, the Borrowers shall jointly and

 

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severally beliable to pay promptly the reasonable fees and expenses for only one suchcounsel for the Administrative Agent, its affiliates and the Lenders.  If, and to the extent that the obligations ofthe Borrowers under this §17.3 are unenforceable for any reason, the Borrowershereby agree to make the maximum contribution to the payment in satisfaction ofsuch obligations which is permissible under applicable law.  The covenants contained in this §17.3 shallsurvive payment or satisfaction in full of all other Obligations.

 

**17.4.****                     Treatmentof Certain Confidential Information**.

 

**17.4.1.****           Confidentiality.**  Each of the Lenders and the AdministrativeAgent agrees, on behalf of itself and each of its affiliates, directors,officers, employees, representatives and any person who manages theAdministrative Agent or such Lender, to use reasonable precautions to keepconfidential, in accordance with their customary procedures for handlingconfidential information of the same nature and in accordance with safe andsound banking and financial industry practices, any non-public informationsupplied to it by any of the Sponsors, the Borrowers or any of theirSubsidiaries or Affiliates pursuant to this Credit Agreement that is identifiedby such Person as being confidential at the time the same is delivered to the Lendersor the Administrative Agent, provided that nothing herein shall limitthe disclosure of any such information (a) after such information shall havebecome public other than through a violation of this §17.4, or becomesavailable to any of the Lenders or the Administrative Agent on anonconfidential basis from a source other than the Borrowers, (b) to the extentrequired by statute, law, rule, regulation or judicial process, (c) to counselor financial advisers for any of the Lenders or the Administrative Agent, (d)to bank examiners or any other regulatory or self-regulatory authority havingor reasonably claiming to have jurisdiction over any Lender or theAdministrative Agent, or to auditors or accountants, (e) to the AdministrativeAgent, any Lender or any Financial Affiliate, (f) in connection with anylitigation to which any one or more of the Lenders, the Administrative Agent orany Financial Affiliate is a party, or in connection with the enforcement ofrights or remedies hereunder or under any other Loan Document, (g) to a LenderAffiliate or a Subsidiary or affiliate of the Administrative Agent, (h) to anyactual or prospective assignee, pledgee or participant or any actual orprospective counterparty (or its advisors) to any swap or derivative transactionsreferenced to credit or other risks or events arising under this CreditAgreement or any other Loan Document so long as such assignee, participant orcounterparty, as the case may be, agrees to be bound by the provisions of §17.4or (i) with the prior written consent of the Borrowers.  Moreover, each of the Administrative Agent,the Lenders and any Financial Affiliate is hereby expressly permitted by theBorrowers to refer to any of the Borrowers and their Subsidiaries in connectionwith any advertising, promotion or marketing undertaken by the Administrative

 

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Agent, suchLender or such Financial Affiliate and, for such purpose, the AdministrativeAgent, such Lender or such Financial Affiliate may utilize any trade name,trademark, logo or other distinctive symbol associated with the Borrowers orany of their Subsidiaries or any of their businesses.

 

**17.4.2.****           PriorNotification.**  Unlessspecifically prohibited by applicable law or court order, each of the Lendersand the Administrative Agent shall, prior to disclosure thereof, notify theBorrowers of any request for disclosure of any such non-public information byany Governmental Authority representative thereof (other than any such requestin connection with an examination of the financial condition of such Lender bysuch Governmental Authority) or pursuant to legal process.

 

**17.4.3.****           Other.**  In no event shall any Lender or theAdministrative Agent be obligated or required to return any materials furnishedto it or any Financial Affiliate by the Borrowers or any of theirSubsidiaries.  The obligations of eachLender under this §17.4 shall supersede and replace the obligations of suchLender under any confidentiality letter in respect of this financing signed anddelivered by such Lender to the Borrowers prior to the date hereof and shall bebinding upon any assignee of, or purchaser of any participation in, anyinterest in any of the Revolving Credit Loans or Reimbursement Obligations fromany Lender. The covenants contained in this §17.4 shall survive payment orsatisfaction in full of all of the Obligations.

 

**17.5.****                     Survivalof Covenants, Etc.** All covenants, agreements, representations and warranties made herein,in the Notes, in any of the other Loan Documents or in any documents or otherpapers delivered by or on behalf of the Borrowers or any of their Subsidiariespursuant hereto shall be deemed to have been relied upon by the Lenders and theAdministrative Agent, notwithstanding any investigation heretofore or hereaftermade by any of them, and shall survive the making by the Lenders of any of theRevolving Credit Loans and the issuance, extension or renewal of any Letters ofCredit, as herein contemplated, and shall continue in full force and effect solong as any Letter of Credit or any amount due under this Credit Agreement orthe Notes or any of the other Loan Documents remains outstanding or any Lenderhas any obligation to make any Revolving Credit Loans or the AdministrativeAgent has any obligation to issue, extend or renew any Letter of Credit, andfor such further time as may be otherwise expressly specified in this CreditAgreement.  All statements contained inany certificate or other paper required to be delivered to any Lender or the AdministrativeAgent at any time by or on behalf of any of the Borrowers or any of theirSubsidiaries pursuant hereto or in connection with the transactionscontemplated hereby shall constitute representations and warranties by suchBorrower or such Subsidiary hereunder.

 

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**17.6.****                     Notices.**  Except as otherwise expressly provided inthis Credit Agreement, all notices and other communications made or required tobe given pursuant to this Credit Agreement or the Notes or any Letter of CreditApplications shall be in writing and shall be delivered by hand, mailed byUnited States registered or certified first class mail, postage prepaid, sentby overnight courier, or sent by telecopy or facsimile and confirmed bydelivery via courier or postal service, addressed as follows:

 

(a)          if to any Borrower orthe Parent, c/o Bruckmann, Rosser, Sherill & Co., Inc., 126 East 56thStreet, New York, New York 10022, Attention: Harold O. Rosser, J. Rice Edmondsand Kristen Ankerbrandt, fax: (212) 521-3799; with copies to Castle HarlanPartners, III, L.P., 150 East 58th St., New York, New York 10155,Attention: David B. Pittaway and Justin Wender, fax: (212) 207-8042; and copiesto Kirkland & Ellis LLP, Citigroup Center, 153 East 53rd St.,New York, New York 10022-4675, Attention: Kim Taylor, fax: (212) 446-4900; andcopies to Schulte, Roth & Zabel LLP, 919 Third Ave., New York, New York10022, Attention: Marc Weingarten, fax: (212) 593-5955, Stoel Rives LLP, 900 SWFifth Avenue, Suite 2600, Portland, Oregon 97204-1268, Attention: Robert J.Moorman and James M. Kearney, fax: (503) 220-2480 or at such other address fornotice as such Borrower or the Parent, as applicable, shall last have furnishedin writing to the Person giving the notice;

 

(b)         if to the AdministrativeAgent, at 100 Federal Street, Boston, Massachusetts 02110, USA, Attention:Cristin O’Hara, Director, fax: (617) 434-0637, with copies to Bingham McCutchenLLP, 150 Federal Street, Boston, Massachusetts 02110, Attention: Sula R.Fiszman, Esq., fax: (617) 951-8736, or such other address for notice as theAdministrative Agent shall last have furnished in writing to the Person givingthe notice; and

 

(c)          if to any Lender, atsuch Lender’s address set forth on Schedule 1 hereto, orsuch other address for notice as such Lender shall have last furnished inwriting to the Person giving the notice.

 

Any suchnotice or demand shall be deemed to have been duly given or made and to havebecome effective (i) if delivered by hand, overnight courier or facsimile to aresponsible officer of the party to which it is directed, at the time of thereceipt thereof by such officer or the sending of such facsimile and (ii) ifsent by registered or certified first-class mail, postage prepaid, on the thirdBusiness Day following the mailing thereof. Any notice or other communication to be made hereunder or under theNotes or any Letter of Credit Applications, even if otherwise required to be inwriting under other provisions of this Credit Agreement, the Notes or anyLetter of Credit Applications, may alternatively be made in an electronicrecord transmitted electronically under such authentication and otherprocedures as the parties hereto may from time to time agree in writing (butnot an electronic record), and such electronic transmission shall be effectiveat the time set forth in such procedures. Unless otherwise expressly provided in such procedures, such anelectronic record shall be equivalent to a writing under the other

 

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provisions of this Credit Agreement, theNotes or any Letter of Credit Applications, and such authentication, if made incompliance with the procedures so agreed by the parties hereto in writing (butnot an electronic record), shall be equivalent to a signature under the otherprovisions of this Credit Agreement, the Notes or any Letter of CreditApplications.

 

**17.7.****                     GoverningLaw**.  **THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDEDTHEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THECOMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED INACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW).  EACH PARTY HERETO AGREES THAT ANY SUIT FORTHE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAYBE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERALCOURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCHCOURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PERSON BYMAIL AT THE ADDRESS SPECIFIED IN §17.6. EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW ORHEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCHSUIT IS BROUGHT IN AN INCONVENIENT COURT.**

 

**17.8.****                     Headings.**  The captions in this Credit Agreement are forconvenience of reference only and shall not define or limit the provisionshereof.

 

**17.9.****                     Counterparts.**  This Credit Agreement and any amendmenthereof may be executed in several counterparts and by each party on a separatecounterpart, each of which when executed and delivered shall be an original,and all of which together shall constitute one instrument.  In proving this Credit Agreement it shall notbe necessary to produce or account for more than one such counterpart signed bythe party against whom enforcement is sought. Delivery by facsimile by any of the parties hereto of an executedcounterpart hereof or of any amendment or waiver hereto shall be as effectiveas an original executed counterpart hereof or of such amendment or waiver andshall be considered a representation that an original executed counterparthereof or such amendment or waiver, as the case may be, will be delivered.

 

**17.10.****              EntireAgreement, Etc.**  TheLoan Documents and any other documents executed in connection herewith ortherewith express the entire understanding of the parties with respect to thetransactions contemplated hereby.

 

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Neither thisCredit Agreement nor any term hereof may be changed, waived, discharged orterminated, except as provided in §17.12.

 

**17.11.****              Waiver of Jury Trial.**  **EACH PARTYHERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION ORCLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS CREDIT AGREEMENT, THENOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDEROR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSEOF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) ORACTIONS OF ANY PARTY, INCLUDING ANY COURSE OF CONDUCT, COURSE OF DEALINGS,STATEMENTS OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY LENDER RELATING TO THEADMINISTRATION OF THE REVOLVING CREDIT LOANS OR ENFORCEMENT OF THE LOANDOCUMENTS AND AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITHANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.**  Except as prohibited by law, each partyhereto hereby waives any right it may have to claim or recover in anylitigation referred to in the preceding sentence any special, exemplary,punitive or consequential damages or any damages other than, or in addition to,actual damages.  Each party hereto (a)certifies that no representative, agent or attorney of any other party hasrepresented, expressly or otherwise, that such other party would not, in theevent of litigation, seek to enforce the foregoing waivers and (b) acknowledgesthat each party has been induced to enter into this Credit Agreement, the otherLoan Documents to which it is a party by, among other things, the waivers andcertifications contained herein.

 

**17.12.****              Consents,Amendments, Waivers, Etc.**  Anyconsent or approval required or permitted by this Credit Agreement to be givenby the Lenders may be given, and any term of this Credit Agreement, the otherLoan Documents or any other instrument related hereto or mentioned herein maybe amended, and the performance or observance by any of the Borrowers or any oftheir Subsidiaries of any terms of this Credit Agreement, the other LoanDocuments or such other instrument or the continuance of any Default or Eventof Default may be waived (either generally or in a particular instance and eitherretroactively or prospectively) with, but only with, the written consent of theBorrowers and the written consent of the Required Lenders. Notwithstanding theforegoing, no amendment, modification or waiver shall:

 

(a)          without the writtenconsent of the Borrowers and each Lender:

 

(i)                                     reduceor forgive the principal amount of any Revolving Credit Loans or ReimbursementObligations, or reduce the rate of interest

 

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on the Notesor the amount of the Commitment Fee, the Letter of Credit Fees or any otherfees payable for the account of all of the Lenders (other than (A)**interest accruing pursuant to §6.10following the effective date of any waiver by the Required Lenders of theDefault or Event of Default relating thereto or (B) as a result of a change inthe definition of Adjusted Leverage Ratio or any of the components thereof orthe method of calculation thereof);

 

(ii)                                  (A)increase the amount of such Lender’s Revolving Credit Commitment (other than inaccordance with §3), (b) extend the expiration date of such Lender’s RevolvingCredit Commitment or (C) change the requirement that any scheduled payments ofprincipal of the Revolving Credit Loans or voluntary or mandatory prepaymentsof the Revolving Credit Loans or reductions in the Revolving Credit Commitmentsbe applied pro rata to all Revolving CreditLoans outstanding within the outstanding Revolving Credit Commitments;

 

(iii)                               postponeor extend the Maturity Date or any other regularly scheduled dates for paymentsof principal of, or interest on, the Revolving Credit Loans or ReimbursementObligations or any Fees or other amounts payable to such Lender (it beingunderstood that (A) a waiver of the application of the default rate of interestpursuant to §6.10 and******(B)any vote to rescind any acceleration made pursuant to §14.1 of amounts owingwith respect to the Revolving Credit Loans and other Obligations**shall require only the approval of theRequired Lenders);

 

(iv)                              otherthan pursuant to a transaction permitted by the terms of this Credit Agreement,release all or any portion of the Collateral with a book value equal to orgreater than 50% of the aggregate book value of the Collateral prior to suchrelease (excluding, if any Borrower becomes a debtor under the federalBankruptcy Code, the release of “cashcollateral”, as defined in Section 363(a) of the federal Bankruptcy Codepursuant to a cash collateral stipulation with the debtor approved by theRequired Lenders) or the Parent from its obligations under the Parent Guaranty;

 

(v)                                 amendor waive any provision of this Credit Agreement which requires pro-ratadistributions to each of the Lenders by the Administrative Agent of paymentsand/or proceeds received from the Borrowers or the Parent by the AdministrativeAgent hereunder; and

 

(vi)                              amendor waive this §17.12 or the definition of Required Lenders;

 

(b)         without the writtenconsent of the Administrative Agent, amend or waive §15, the amount or time ofpayment of any Letter of Credit Fees or other

 

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fees payablefor the Administrative Agent’s account or any other provision applicable to theAdministrative Agent.

 

No waiver shall extend to or affect anyobligation not expressly waived or impair any right consequent thereon.  No course of dealing or delay or omission onthe part of the Administrative Agent or any Lender in exercising any rightshall operate as a waiver thereof or otherwise be prejudicial thereto.  No notice to or demand upon the Borrowersshall entitle the Borrowers to other or further notice or demand in similar orother circumstances.

 

Notwithstanding the foregoing, the partieshereto acknowledge and agree that the Administrative Agent may, without theconsent of any Lender, (x) release its liens on the Collateral solely to theextent that such Collateral is sold or otherwise disposed of in accordance withthe terms of this Credit Agreement, including without limitation, §10.5.2 or(y) take any and all action necessary, including, without limitation, enteringinto joinder and accession agreements with additional Subsidiaries andamendments to any of the Security Documents, all in furtherance of theprovisions of §9.17.

 

**17.13.****              Borrowers’Representative.**  Each of theBorrowers hereby irrevocably appoints MSAC as such Borrower’s representativeand agent for all purposes under this Credit Agreement and authorizes MSAC, onbehalf of each such Borrower and in each such Borrower’s name to give andreceive all notices and documents, certificates and instruments to be given orreceived by the Borrowers or any of them in connection with this CreditAgreement and the other Loan Documents, including receipt of service of legalprocess in connection with any suit or proceeding arising under, or in connectionwith the transactions contemplated by this Credit Agreement, delivery of LoanRequests, Conversion Requests, Compliance Certificates and requests for waiversand amendments and to acknowledge or consent to any amendments, waivers orassignments.

 

**17.14.****              Severability.**  The provisions of this Credit 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 thisCredit Agreement in any jurisdiction.

 

**17.15.****              USA Patriot ActNotice.**  Each Lender that issubject to the Act (as hereinafter defined) and the Administrative Agent (foritself and not on behalf of any Lender) hereby notifies the Borrowers thatpursuant to the requirements of the USA Patriot Act (Title III of Pub. L.107-56 (signed into law October 26, 2001)) (the “Act”), it is requiredto obtain, verify and record information that identifies the Borrowers, whichinformation includes the name and address of the Borrowers and otherinformation that will allow such Lender or the

 

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AdministrativeAgent, as applicable, to identify the Borrowers in accordance with the Act.

 

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**INWITNESS WHEREOF**, the undersigned have duly executedthis Credit Agreement as a sealed instrument as of the date first set forthabove.

 
|   | **MCCORMICK & SCHMICK  ACQUISITION CORP.**          |
|--------|---------------------------------------------------------|
|   |                                                    |   |   |
|   |                                                    |   |   |
|   | By:                                                     | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                    | Name:   Douglas L. Schmick |   |
|   |                                                    | Title:   President |   |
|   |                                                    |   |   |
|   | **MCCORMICK & SCHMICK  RESTAURANT CORP.**           |
|   |                                                    |   |   |
|   |                                                    |   |   |
|   | By:                                                     | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                    | Name:   Douglas L. Schmick |   |
|   |                                                    | Title:   President |   |
|   |                                                    |   |   |
|   | **MCCORMICK & SCHMICK  MARYLAND LIQUOR, INC.**      |
|   |                                                    |   |   |
|   |                                                    |   |   |
|   | By:                                                     | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                    | Name:   Douglas L. Schmick |   |
|   |                                                    | Title:   President |   |
|   |                                                    |   |   |
|   | **MCCORMICK & SCHMICK  ACQUISITION I TEXAS, INC.**  |
|   |                                                    |   |   |
|   |                                                    |   |   |
|   | By:                                                     | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                    | Name:   Douglas L. Schmick |   |
|   |                                                    | Title:   President |   |
|   |                                                    |   |   |
|   | **MCCORMICK & SCHMICK  ACQUISITION II TEXAS, INC.** |
|   |                                                    |   |   |
|   |                                                    |   |   |
|   | By:                                                     | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                    | Name:   Douglas L. Schmick |   |
|   |                                                    | Title:   President |   |

 

----

 
|   | **MCCORMICK &  SCHMICK  ACQUISITION TEXAS LP**       |
|--------|----------------------------------------------------------|
|   |                                                     |   |   |
|   | By:                                                      | McCormick & Schmick Acquisition I |
|   |                                                     | Texas, Inc., its General Partner |
|   |                                                     |   |   |
|   |                                                     |   |   |
|   | By:                                                      | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                     | Name:  Douglas L. Schmick |   |
|   |                                                     | Title:  President |   |
|   |                                                     |   |   |
|   | **MCCORMICK & SCHMICK  ACQUISITION III TEXAS, INC.** |
|   |                                                     |   |   |
|   |                                                     |   |   |
|   | By:                                                      | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                     | Name:   Douglas L. Schmick |   |
|   |                                                     | Title:   President |   |
|   |                                                     |   |   |
|   | **MCCORMICK & SCHMICK’S  ATLANTA II, LLC**      |
|   |                                                     |   |   |
|   |                                                     |   |   |
|   | By:                                                      | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                     | Name:   Douglas L. Schmick |   |
|   |                                                     | Title:   President |   |
|   |                                                     |   |   |
|   | **MCCORMICK & SCHMICK’S  HACKENSACK, LLC**      |
|   |                                                     |   |   |
|   |                                                     |   |   |
|   | By:                                                      | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                     | Name:   Douglas L. Schmick |   |
|   |                                                     | Title:   President |   |
|   |                                                     |   |   |
|   | **MCCORMICK & SCHMICK  ORLANDO, LLC**                |
|   |                                                     |   |   |
|   |                                                     |   |   |
|   | By:                                                      | /s/ DOUGLAS L. SCHMICK |   |
|   |                                                     | Name:   Douglas L. Schmick |   |
|   |                                                     | Title:   President |   |
|        |                                                          |  |  |  |

 

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|   | **MCCORMICK & SCHMICK DALLAS,  LP**          |
|--------|--------------------------------------------------|
|   |                                             |   |   |
|   |                                             |   |   |
|   | By:                                              | McCormick & Schmick Acquisition I  Texas, Inc., its General Partner |
|   |                                             |   |   |
|   | By:                                              | /s/ DOUGLAS L. SCHMICK |   |
|   |                                             | Name:  Douglas L. Schmick |   |
|   |                                             | Title:  President |   |
|   |                                             |   |   |
|   | **MCCORMICK & SCHMICK DALLAS  LIQUOR, INC.** |
|   |                                             |   |   |
|   |                                             |   |   |
|   | By:                                              | /s/ DOUGLAS L. SCHMICK |   |
|   |                                             | Name:   Douglas L. Schmick |   |
|   |                                             | Title:   President |   |
|   |                                             |   |   |
|   | **MCCORMICK & SCHMICK AUSTIN,  LP**          |
|   |                                             |   |   |
|   | By:                                              |  McCormick & Schmick Acquisition I  Texas, Inc., its General Partner |
|   |                                             |   |   |
|   |                                             |   |   |
|   | By:                                              | /s/ DOUGLAS L. SCHMICK |   |
|   |                                             | Name:   Douglas L. Schmick |   |
|   |                                             | Title:   President |   |
|   |                                             |   |   |
|   | **MCCORMICK & SCHMICK AUSTIN  LIQUOR, INC.** |
|   |                                             |   |   |
|   |                                             |   |   |
|   | By:                                              | /s/ DOUGLAS L. SCHMICK |   |
|   |                                             | Name:   Douglas L. Schmick |   |
|   |                                             | Title:   President |   |

 

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|   | **FLEET NATIONAL BANK**, individually  and as Administrative Agent |
|--------|--------------------------------------------------------------------|
|   |                                                               |   |   |
|   |                                                               |   |   |
|   | By:                                                                | /s/ CRISTIN O’HARA |   |
|   |                                                               | Cristin O’Hara |   |
|   |                                                               | Director |   |

 

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October 12, 2004

 

 

McCormick & SchmickAcquisition Corp.

McCormick & SchmickRestaurant Corp.

McCormick & SchmickMaryland Liquor, Inc.

McCormick & Schmick AcquisitionTexas, LP

McCormick & SchmickAcquisition I Texas, Inc.

McCormick & SchmickAcquisition II Texas, Inc.

McCormick & SchmickAcquisition III Texas, Inc.

McCormick & Schmick’sAtlanta II, LLC

McCormick & Schmick’sHackensack, LLC

McCormick & Schmick Orlando,LLC

McCormick & Schmick Dallas,LP

McCormick & Schmick DallasLiquor, Inc.

McCormick & Schmick Austin,LP

McCormick & Schmick Austin Liquor, Inc.

c/o McCormick & Schmick Management Group

720 Southwest Washington Street

Suite 550

Portland, Oregon 97205

Attn: Emanuel N. Hilario

 

Re:          Amendment toPost-Closing Delivery Requirements

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain Revolving Credit Agreement,dated as of July 23, 2004 (as amended and in effect from time to time, the “CreditAgreement”), among each of you, as Borrowers, the lenders from time totime party thereto, Fleet National Bank, as Administrative Agent and Banc ofAmerica Securities LLC, as arranger. Terms defined in the Credit Agreement and used without definition hereinshall have the same respective meanings herein as in the Credit Agreement.

 

As evidenced by their signature below, the Borrowers and the RequiredLenders hereby agree that Section 9.20(a), (b) and (c) ofthe Credit Agreement are hereby deleted in their entirety and substituted withthe following therefor:

 

“(a)         No later than ninety (90) days afterthe Closing Date, the Borrowers shall have delivered to the AdministrativeAgent, Agency Account Agreements, in form and substance reasonably satisfactoryto the Administrative Agent, for each depository

 

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account of theBorrowers and each of their Subsidiaries and as identified on Schedule 8.20 ofthe Credit Agreement.

 

(b)           The Borrowers will use theircommercially reasonable efforts to execute and deliver to the AdministrativeAgent, in form reasonably acceptable to the Administrative Agent, no later thanninety (90) days after the Closing Date, leasehold mortgages or leasehold deedsof trust (and related consents), as applicable, for the following locations (i)Providence Biltmore Hotel, Kennedy Plaza, Providence, RI; (ii) 235 SW FirstAvenue, Portland, OR; (iii) Pittsburgh, PA; (iv) CNN Center, Atlanta, GA; (v)8100 East Union Avenue, Denver, CO; and (vi) Mall at the Millenia, 4200 ConroyRoad, Space A-146, Orlando, FL.

 

(c)           The Borrowers will use theircommercially reasonable efforts to execute and deliver to the AdministrativeAgent, in form reasonably acceptable to the Administrative Agent, no later thanninety (90) days after the Closing Date, landlord subordination agreements,landlord consents and/or lien waivers, as applicable, for the following leasedlocations: (i) North Park Shopping Center, Dallas, TX; (ii) Providence BiltmoreHotel, Kennedy Plaza, Providence, RI; (iii) 235 SW First Avenue, Portland, OR;(iv) Bridgewater Mall, NJ; (v) Pittsburgh, PA; (vi) CNN Center, Atlanta, GA;(vii) 8100 East Union Avenue, Denver, CO; and (viii) Mall at the Millenia, 4200Conroy Road, Space A-146, Orlando, FL.”

 

This letter agreement may be executed in any number of counterparts,which shall together constitute but one and the same agreement.  THIS LETTER AGREEMENT SHALL FOR ALL PURPOSESBE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THECOMMONWEALTH OF MASSACHUSETTS.  Thisletter agreement shall take effect as a sealed instrument as of the date firsthereinabove written.  This letteragreement shall be binding on the parties hereto and their respectivesuccessors and assigns.

 

*[Signature page follows]*

 

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Please indicate your agreement with the foregoing by signing thisletter agreement where indicated below and returning it to Cristin O’Hara atFleet National Bank, 100 Federal Street, Boston, Massachusetts 02110.

 
|   |   |   |   |   |   | Very truly yours,                              |
|--------|--------|--------|--------|--------|--------|------------------------------------------------|
|   |   |   |   |   |   |                                           |   |   |   |
|   |   |   |   |   |   | FLEET NATIONAL BANK, as                        |
|   |   |   |   |   |   |   Administrative Agent and as Lender |
|   |   |   |   |   |   |                                           |
|   |   |   |   |   |   |                                           |   |   |   |
|   |   |   |   |   |   | By:                                            |   | /s/ CRISTIN O’HARA |
|   |   |   |   |   |   |                                           |   | Name: | Cristin O’Hara |
|   |   |   |   |   |   |                                           |   | Title: | Director |
|        |        |        |        |        |        |                                                |  |  |  |  |

 

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| MCCORMICK  & SCHMICK ACQUISITION CORP.           |   |
|------------------------------------------------------|--------|
|                                                 |   |
| By:                                                  | /s/    |   |   |
|                                                 | Name:  |   |   |
|                                                 | Title: |   |   |
|                                                 |   |
|                                                 |   |
| MCCORMICK  & SCHMICK RESTAURANT CORP.            |   |
|                                                 |   |
| By:                                                  | /s/    |   |   |
|                                                 | Name:  |   |   |
|                                                 | Title: |   |   |
|                                                 |   |
|                                                 |   |
| MCCORMICK  & SCHMICK MARYLAND LIQUOR, INC.       |   |
|                                                 |   |
| By:                                                  | /s/    |   |   |
|                                                 | Name:  |   |   |
|                                                 | Title: |   |   |
|                                                 |   |
|                                                 |   |
| MCCORMICK  & SCHMICK ACQUISITION I TEXAS, INC.   |   |
|                                                 |   |
| By:                                                  | /s/    |   |   |
|                                                 | Name:  |   |   |
|                                                 | Title: |   |   |
|                                                 |   |
|                                                 |   |
| MCCORMICK  & SCHMICK ACQUISITION II TEXAS, INC.  |   |
|                                                 |   |
| By:                                                  | /s/    |   |   |
|                                                 | Name:  |   |   |
|                                                 | Title: |   |   |
|                                                 |   |
|                                                 |   |
| MCCORMICK  & SCHMICK ACQUISITION III TEXAS, INC. |   |
|                                                 |   |
| By:                                                  | /s/    |   |   |
|                                                 | Name:  |   |   |
|                                                 | Title: |   |   |

 

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| MCCORMICK  & SCHMICK ACQUISITION TEXAS, LP |                                                |
|------------------------------------------------|-----------------------------------------------------|
| By:                                            | McCormick  & Schmick Acquisition I Texas, Inc., |   |
|                                           | its General  Partner                                |   |   |
|                                           |                                                |   |   |
| By:                                            | /s/                                                 |   |   |
|                                           | Name:                                               |   |   |
|                                           | Title:                                              |   |   |

 

 

MCCORMICK & SCHMICK’SATLANTA II, LLC

 
| By:    | /s/    |   |   |
|--------|--------|--------|--------|
|   | Name:  |   |   |
|   | Title: |   |   |

 

 

MCCORMICK & SCHMICK’SHACKENSACK, LLC

 
| By:    | /s/    |   |   |
|--------|--------|--------|--------|
|   | Name:  |   |   |
|   | Title: |   |   |

 

MCCORMICK & SCHMICKORLANDO, LLC

 
| By:    | /s/    |   |   |
|--------|--------|--------|--------|
|   | Name:  |   |   |
|   | Title: |   |   |

 

 
| MCCORMICK  & SCHMICK DALLAS, LP |                                                |
|-------------------------------------|-----------------------------------------------------|
| By:                                 | McCormick  & Schmick Acquisition I Texas, Inc., |   |
|                                | its General  Partner                                |   |   |
|                                     |                                                     |  |  |

 

 
| By:    | /s/    |   |   |
|--------|--------|--------|--------|
|   | Name:  |   |   |
|   | Title: |   |   |

 

MCCORMICK & SCHMICK DALLASLIQUOR, INC.

 
| By:    | /s/    |   |   |
|--------|--------|--------|--------|
|   | Name:  |   |   |
|   | Title: |   |   |

 

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| MCCORMICK  & SCHMICK AUSTIN, LP |                                                |
|-------------------------------------|-----------------------------------------------------|
| By:                                 | McCormick  & Schmick Acquisition I Texas, Inc., |   |
|                                | its General  Partner                                |   |   |
|                                     |                                                     |  |  |

 

 
| By:    | /s/    |   |   |
|--------|--------|--------|--------|
|   | Name:  |   |   |
|   | Title: |   |   |

 

 

MCCORMICK & SCHMICK AUSTIN LIQUOR, INC.

 
| By:    | /s/    |   |   |
|--------|--------|--------|--------|
|   | Name:  |   |   |
|   | Title: |   |   |

 

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