Document:

EX-10.14

Exhibit 10.14

	
Execution Copy
          $1,600,000
   CREDIT AGREEMENT between
KFLG WATERTOWN, INC. as Borrower,
              and
  TD BANKNORTH, N.A.,
           as Lender Dated as of May 27, 2005
EXHIBIT 10.14
Execution Copy

 

 

	
                                                         TABLE OF CONTENTS
                                                                                                          Page
  SECTION 1.                                     DEFINITIONS                                                  1
        1.1     Certain Defined Terms                                                                         1
        1.2     Other Definitional Provisions                                                                11
SECTION 2.           AMOUNT AND TERMS OF COMMITMENTS                                                         12
        2.1     Initial Term Loan                                                                            12
        2.2      Additional Term Loans                                                                       12
        2.3     Procedure for Term Loan Borrowing                                                            12
        2.4      Fees                                                                                        12
        2.5     Repayment of the Loans                                                                       13
        2.6     Prepayment Penalty                                                                           13
        2.7      Mandatory Prepayments                                                                       13
        2.8      Interest Rates and Payment Dates; Payments                                                  14
        2.9      Computation of Interest and Fees                                                            14
        2.10     Requirements of Law                                                                         15
        2.11     Taxes                                                                                       15
        2.12     Indemnity                                                                                   16
SECTION 3.            REPRESENTATIONS AND WARRANTIES                                                         16
        3.1      Financial Condition                                                                         16
        3.2      No Change                                                                                   17
        3.3      Existence; Compliance with Law                                                              17
        3.4      Power; Authorization; Enforceable Obligations                                               17
        3.5      No Legal Bar                                                                                17
        3.6      Litigation                                                                                  18
        3.7      No Default                                                                                  18
        3.8      Ownership of Property; Liens                                                                18
        3.9      Intellectual Property; Licenses                                                             18
        3.10     Taxes                                                                                       18
        3.11     Federal Regulations                                                                         18
        3.12     ERISA                                                                                       18
        3.13     Investment Company Act; Other Regulations                                                   19
        3.14     Subsidiaries                                                                                19
        3.15     Use of Proceeds                                                                             19
        3.16     Environmental Matters                                                                       19
        3.17     Accuracy of Information, etc.                                                               20
        3.18     Security Documents                                                                          21
        3.19     Solvency                                                                                    21
        3.20     Regulation H                                                                                21
        3.21     Indebtedness Outstanding                                                                    21
        3.22     Anti-Terrorism Laws                                                                         21
        3.23     Depository and Other Accounts                                                               22
        3.24     Obligations to Seller                                                                       22

 

 

	
SECTION 4.            CONDITIONS PRECEDENT                                                                    22
        4.1      Conditions to Initial Extension of Credit                                                    22
        4.2      Conditions to Each Extension of Credit                                                       24
SECTION 5.            AFFIRMATIVE COVENANTS                                                                   24
        5.1      Financial Statements; Field Audits                                                           24
        5.2      Certificates; Other Information                                                              26
        5.3      Payment of Obligations                                                                       26
        5.4      Maintenance of Existence; Compliance                                                         27
        5.5      Maintenance of Property; Insurance                                                           27
        5.6      Inspection of Property; Books and Records; Discussions                                       27
        5.7      Notices                                                                                      27
        5.8      Compliance with Laws                                                                         28
        5.9      Additional Collateral; Subsidiaries; New Units                                               28
        5.10     Depository Accounts; Additional Accounts                                                     28
        5.11     Communications with Accountants                                                              28
SECTION 6.            NEGATIVE COVENANTS                                                                      28
        6.1       Financial Condition Covenants                                                               29
        6.2       Indebtedness                                                                                29
        6.3      Liens                                                                                        30
        6.4       Fundamental Changes                                                                         30
        6.5       Disposition of Property                                                                     30
        6.6       Restricted Payments                                                                         30
        6.7       Stock                                                                                       31
        6.8       Investments                                                                                 31
        6.9       Modifications of Certain Debt Instruments                                                   31
        6.10      Transactions with Affiliates and Insiders                                                   31
        6.11      Sales and Leasebacks                                                                        32
        6.12      Changes in Fiscal Periods                                                                   32
        6.13      Negative Pledge Clauses                                                                     32
        6.14      Clauses Restricting Subsidiary Distributions                                                32
        6.15      Lines of Business; Location of Business                                                     32
        6.16      Use of Proceeds                                                                             32
        6.17      Full Funding                                                                                32
SECTION 7.             EVENTS OF DEFAULT                                                                      32
SECTION 8.             MISCELLANEOUS                                                                          35
        8.1       Amendments and Waivers                                                                      35
        8.2       Notices                                                                                     35
        8.3       No Waiver; Cumulative Remedies                                                              35
        8.4       Survival of Representations and Warranties                                                  35
        8.5       Payment of Expenses and Taxes                                                               36
        8.6       Successors and Assigns; Participations and Assignments                                      36
        8.7       Adjustments; Set-off.                                                                       37
        8.8       Counterparts

 

 

	
 8.9      Severability                                                       37
 8.10     Integration                                                        37
 8.11     Governing Law                                                      38
 8.12     Submission To Jurisdiction; Waivers                                38
 8.13     Acknowledgements                                                   38
 8.14     WAIVERS OF JURY TRIAL                                              38
 8.15     USA Patriot Act Notice                                             38
 8.16     Replacement Note                                                   39

 

 

	
 SCHEDULES:
 3.4 Consents, Authorizations, Filings and Notices
 3.6 Litigation
 3.14 Subsidiaries and Capital Stock
 3.18 UCC Filings
 3.21 (a) Indebtedness to Remain Outstanding
 3.21 (b) Indebtedness to be Paid
 3.21 (c) Liens to be Terminated
 3.21 (d) Liens to Remain Outstanding
 3.23 Deposit Accounts
 6.2(c) Existing Indebtedness
 6.3(e) Existing Liens
EXHIBITS:
 A Form of Security Agreement
 B Form of Guarantee and Security Agreement
 C Form of Compliance Certificate
 D Form of Closing Certificate
 E Form of Term Note
 F Form of Subordination Agreement
 G Form of Notice of Borrowing

 

 

	
CREDIT AGREEMENT (this "Agreement"), dated as of May 27, 2005, between KPLG WATERTOWN, INC., a Massachusetts
corporation (the "Borrower"), and TD BANKNORTH, N.A., as lender (the "Lender").
WHEREAS, the Borrower and the Lender wish to enter into this Agreement to establish the credit facilities
described herein, and to set forth the terms, conditions and covenants to apply to the Borrower and any subsidiary or
subsidiaries the Borrower may form or acquire after the date hereof,
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the
respective meanings set forth in this Section 1.1.
"Additional Term Loans": as defined in Section 2.2.
"Affiliate": as to any Person, any other Person that, directly or indirectly (including through any Relative (as
defined below)), is in control of, is controlled by, or is under common control with, such Person and, in the case of a Person
who is a natural person, any spouse, child, grandparent, or grandchild (each, a "Relative") of such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct
or cause the direction of the management and policies of such Person, whether by contract or otherwise.
"Applicable Margin": the Applicable Margin will be determined pursuant to the table set forth below:
Before New Equity Date, as to
Prime Rate Loans: 1.5%
On and after New Equity Date, as
to Prime Rate Loans: 0%
Before New Equity Date, as to
COF Loans: 4.0%
On or after New Equity Date, as to
COF Loans: 2.5%
Changes in the Applicable Margin resulting from the contribution of the New Equity shall become effective on the date (the
"Adjustment Date") that is three Business Days after the date on which financial statements are delivered to the Lender
reflecting such new cash equity.
"Asset Purchase Agreements": the Asset Purchase Agreement dated as of August 11, 2004, by and among the
Guarantor and the Seller, as assigned to Borrower by Guarantor as of August 11, 2004, and the Asset Purchase Agreement dated as
of January 28, 2005 by and among the Guarantor and the Seller, each as assigned to Borrower by Guarantor as of January 28, 2005.

 

 

	
"Board"; the Board of Governors of the Federal Reserve System of the United States (or any successor).
"Borrowing Date": any Business Day specified by the Borrower in its Notice of Borrowing as a date on which
such Borrower requests the Lender to make Loans hereunder.
"Business": as defined in Section 3.16(b).
"Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in Boston,
Massachusetts are authorized or required by law to close.
"Capital Expenditures": for any period, with respect to any Person, the aggregate of all expenditures by such
Person and its Subsidiaries for the acquisition, rental, construction, use, leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that
should be reflected in the category of property, plant or equipment or intangibles under GAAP on a consolidated balance sheet of
such Person and its Subsidiaries, but excluding expenditures for equipment installed at the site of, and leased to, any customer
of such Person or any of such Person's Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of such Person to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and,
for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent ownership interests in a Person other than a corporation and any and all
warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits or overnight bank deposits
having maturities of six months or less from the date of acquisition issued by the Lender; (c) commercial paper of an issuer
rated at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's Investors Service, Inc. ("Moody's"). or
carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; or (d) money market
mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (c) of this
definition.
"Change of Control": the occurrence of any of the following:
(a) (i) George Naddaff and Eric Spitz directly and Tim Kurtz directly or indirectly through Seller (which is
controlled by Tim Kurtz) shall cease to own, beneficially and of record, in the aggregate not less than the shares such
individuals own on the Closing Date, and George Naddaff, Eric Spitz and Gary Jacobus directly and Tim Kurtz directly or
indirectly through Seller (which is controlled by Tim Kurtz) shall cease to own not less than 40% of all of the outstanding
Capital Stock of the Guarantor entitled to vote for the Board of Directors (or other major decision) on a fully diluted basis, or
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(ii) any Person shall acquire a Lien on any Capital Stock of the Guarantor if a Change of Control under the foregoing clause (i)
would result from the ownership by such Person of such Capital Stock;
(b) during any period of up to 24 consecutive months, commencing after the date of this
Agreement, individuals who at the beginning of such 24-month period were directors of the Borrower or
the Guarantor shall cease for any reason to constitute a majority of the board of directors of the Borrower
or the Guarantor, as applicable; or
(c) any Person or two or more Persons acting in concert other than George Naddaff and
Eric Spitz shall have acquired by contract or otherwise, or shall have ventured into a contract or
arrangement that, upon consummation, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence over the management or policies of the Borrower or the
Guarantor or to control voting interests of the Borrower or the Guarantor representing 30% or more of the
combined voting power of all voting interests of the Borrower or the Guarantor; or
(d) George Naddaff or Eric Spitz shall cease to (i) exercise the primary management
functions of the Guarantor and the Borrower and (ii) make all significant decisions for the Guarantor and
the Borrower, each as determined by the Lender, unless in the case of the death or permanent disability of
either such individual another individual satisfactory to Lender in writing has replaced any such
individual; or
(e) the Guarantor shall fail to own 100% of the issued and outstanding Capital Stock of
the Borrower, free and clear of all Liens (other than Liens of the Loan Documents), or shall otherwise fail
to control the Borrower.
"Closing Date": the date on which the conditions precedent set forth in Section 4.1 shall have been satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"CQF Loan": any Loan the interest on which is calculated by reference to the COF Rate.
"COF Rate": the per annum rate of interest, as quoted and offered by the Lender to the Borrower from time to
time, which the Lender is required to pay, or is offering to pay, for wholesale liabilities of the like tenor (including for any
regularly-scheduled principal amortization with respect thereto) for the remaining term of the Loan, adjusted for reserve
requirements and requirements of such other local government and regulatory agencies, all as conclusively determined by the
Lender, as quoted and offered by the Lender to the Borrower from time to time.
"Collateral": all property, now owned or hereafter acquired, upon which a Lien is purported to be created
by any Security Document.
"Commitment": the Lender's commitment to make the Initial Term Loan and the Additional Term Loans in an
aggregate principal amount not to exceed $1,600,000.
"Commonly Controlled Entity": an entity, whether or not incorporated, that is under common control with any
Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes any Borrower and that is treated as a
single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a Responsible Officer substantially in the
form of Exhibit C.
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"Consolidated Capital Expenditures": for any period, the consolidated Capital Expenditures of the Borrower and
its Subsidiaries for such period, determined in accordance with GAAP.
"Consolidated Debt Service": for any period, the sum (without duplication) of (a) all amounts paid or payable in
respect of principal, interest and fees on Indebtedness (other than Subordinated Debt) of the Borrower and its Subsidiaries
during such period, on a consolidated basis, and (b) Capitalized Lease Obligations of the Borrower and its Subsidiaries for such
period.
"Consolidated Debt Service Coverage Ratio": at any date, the ratio of (a) Consolidated Operating Cash Flow for
the four-quarter period ending on the last day of the fiscal quarter most recently ended to (b) Consolidated Debt Service for
such period.
"Consolidated EBITDA": for any period, Consolidated Net Income for such period plus, without duplication and to
the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax
expense, (b) interest expense, (c) depreciation and amortization expense, (d) expenses constituting Specified Consulting Fees
paid to the Seller for consulting services and, (e) to the extent approved by the Lender, extraordinary, unusual or
non-recurrirtg expenses or losses, and minus, to the extent included in the statement of such Consolidated Net Income for such
period, the sum of (i) interest income, (ii) any extraordinary, unusual or non-recurring income or gains (including, whether or
not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales
of assets outside of the ordinary course of business) and (iii) any other non-cash income, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Maintenance Capital Expenditures": for any period, the Consolidated Capital Expenditures for
the maintenance of Existing Units.
"Consolidated New Unit Capital Expenditures": for any period, the Consolidated Capital Expenditures for the
building or purchasing or maintaining of new Units prior to their becoming Existing Units.
"Consolidated Net Income": for any period, the consolidated net income (or loss) of the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income
(or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated
with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a wholly-owned Subsidiary of
the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of dividends or other distributions and (c) the
undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or other
distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any
Loan Document) or Requirement of Law applicable to such Subsidiary.
"Consolidated Operating Cash Flow": for any period, Consolidated EBITDA for such period minus, the sum of (i)
cash taxes paid in such period, (ii) any Restricted Payments or loans by the Borrower to the Guarantor (except for those
expressly permitted hereunder) and (iii) Consolidated Maintenance Capital Expenditures for such period.
"Consolidated Senior Funded Debt": at any date, the consolidated Indebtedness of the Borrower and its
Subsidiaries less, Subordinated Debt at such date and less at any date prior to September 30, 2006, Consolidated Unrestricted
Cash at such date.
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"Consolidated Senior Funded Debt to EBITDA Ratio": at any date, the ratio of (a) the Consolidated Senior
Funded Debt at such date to (b) Consolidated EBITDA for the four-quarter period ending on the last day of the fiscal quarter
most recently ended.
"Consolidated Unrestricted Cash": all cash and Cash Equivalents of the Borrower and the Guarantor, excluding any
cash or Cash Equivalents subject to any Lien or other restriction or the use thereof.
"Consulting Agreements": the Management Consulting Agreement dated as of August 11, 2004, by and among the
Borrower and the Seller and the Management Consulting Agreement dated as of January 28, 2005 by and among the Guarantor and the
Seller, as assigned to Borrower by Guarantor as of January 28, 2005.
"Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
"Covered Parties": the Guarantor, the Borrower and any Subsidiaries of either thereof formed or acquired by
the Borrower after the date hereof. "Covered Party" shall have a corresponding meaning.
"Default": any of the events specified in Section 7, whether or not any requirement for the giving of notice,
the lapse of time, or both, has been satisfied.
"Disposition": with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance,
transfer or other disposition thereof. The terms "Dispose" and "Disposed of shall have corresponding meanings.
"Dollars" and "$": dollars in lawful currency of the United States. "Drawdown Period":
within one year of the Closing Date.
"Environmental Laws": any and all foreign, Federal, state, local or municipal Jaws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common
law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time.
"Event of Default": any of the events specified in Section 7, provided that any requirement for the
giving of notice, the lapse of time, or both, has been satisfied.
"Existing Unit": any Unit that has been operating for six months or more.
"Facility": each of the Initial Term Loan and the Additional Term Loans made thereunder.
"GAAP": generally accepted accounting principles in the United States as in effect from time to time, except
that for purposes of Section 6.1, GAAP shall be determined on the basis of such
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principles in effect on the date hereof and consistent with those used in the preparation of the most recent reviewed financial
statements referred to in Section 3.1. In the event that any accounting change shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Lender agree to
enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such accounting changes
with the desired result that the criteria for evaluating the Borrower's financial condition shall be the same after such
accounting changes as if such accounting changes had not been made. Until such time as such an amendment shall have been executed
and delivered by the Borrower and the Lender, all financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such accounting changes had not occurred
"Governmental Authority": any nation or government, any state or other political subdivision thereof, any
agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any
self-regulatory organization.
"Guarantee and Security Agreement": the Guaranty and Security Agreement, to be executed by the Guarantor,
substantially in the form of Exhibit B.
"Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing
person or (b) another Person (including any bank under any letter of credit) to induce the creation of which the guaranteeing
person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii)
to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary course of business.
"Guarantor": Knowfat Franchise Company, Inc.
"Indebtedness": of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed
money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade
payables incurred in the ordinary course of such Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease
Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under
or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) all Guarantee Obligations of such
Person in respect of obligations of the kind referred to in clauses (a) through (f) above and (h) all obligations of the kind
referred to in clauses (a) through (g) above secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable for the payment of such

 

 

	
obligation. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in
or other relationship with such entity, except to the extent the terms of such indebtedness expressly provide that such Person is
not liable therefor.
"Indebtedness to be Paid": as defined in Section 3.21. "Initial Term Loan":
as defined in Section 2.1.
"Insolvent": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the
meaning of Section 4245 of ERISA, and "Insolvency" shall have a corresponding meaning.
"Intellectual Property": all rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
"Interest Payment Date": as to any Loan, the first day of each calendar month to occur while such Loan is
outstanding and the final maturity date of such Loan, and the date of any repayment or prepayment made in respect thereof.
"Investments": as defined in Section 6.8.
"Leased Properties": the real properties from time to time leased by the Covered Parties.
"Leasehold Security Document": with respect to any Leased Property, such leasehold mortgage, landlord consent
and waiver, leasehold assignment or similar document as the Lender may require.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any of the foregoing).
"Liens to be Terminated": as defined in Section 3.21. "Loan": as defined in
Section 2.2.
"Loan Documents": this Agreement, the Security Documents, the Subordination Agreement, any other subordination
agreement executed in connection with any Subordinated Debt, the Notes, any interest rate hedging agreement entered into by the
Borrower and the Lender (or any Affiliate of the Lender) and each other certificate, document or instrument executed and
delivered in connection with any of the foregoing.
"Loan Party" or "Loan Parties": each Covered Party or Affiliate thereof that is a party to a Loan Document, or
all of them, as the case may be.
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"Material Adverse Effect": a material adverse effect on (a) the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise), profits or prospects of any Loan Party or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents, the ability of any Loan Party to perform hereunder or
thereunder, or the rights or remedies of the Lender hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum (including crude oil or any fraction thereof) or
petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any
Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date": the fifth anniversary of the Closing Date. "Mortgage": as defined
in Section 5.9.
"Multiemplover Plan": a Plan that is a multiemployer plan as defined in Section 4001(a)(3)of ERISA.
"Net Cash Proceeds": (a) in connection with any Recovery Event, the proceeds thereof in the form of cash and
Cash Equivalents of such Recovery Event, net of amounts required to be applied to the repayment of Indebtedness secured by a Lien
expressly permitted hereunder on any asset that is the subject of such Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably
estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax
sharing arrangements) and (b) in connection with any incurrence of Indebtedness or issuance of any new equity or additional
capital contributions, the cash proceeds received from such incurrence or issuance, net of attorneys' fees, accountants' fees,
commissions and other customary fees and expenses actually incurred in connection therewith.
"New Equity": new equity of the Guarantor, consisting of either common or preferred stock, or additional capital
contributions, in either case resulting in the receipt by the Guarantor of unrestricted Net Cash Proceeds of at least $3,000,000.
"New Equity Date": the date on which the Borrower has received the Net Cash Proceeds of the New Equity required
by Section 6.1 (a).
"Note": the promissory note, in substantially the form of Exhibit E hereto evidencing the Loans.
"Notice of Borrowing": as specified in Section 2.3.
"Obligations": the unpaid principal of and interest on (including interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities of the Borrower to the Lender, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.
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"Operating Account": the Borrower's operating account with the Lender as designated by the Lender, established
for the purpose of effecting Loans hereunder.
"Other Taxes": as defined in Section 2.1 l(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any
successor).
"Person": an individual, partnership, corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that is covered by ERISA and in respect of which the
Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate": for any day, the rate per annum established by the Lender from time to time as its "prime rate".
Any change in the Prime Rate shall be effective as of the opening of business on the effective day of such change in the Prime
Rate.
"Prime Rate Loan": any Loan the interest on which is calculated by reference to the Prime Rate.
"Properties": as defined in Section 3.16(a).
"Recovery Event": any settlement of or payment in respect of any property or casualty insurance claim or any
condemnation proceeding relating to any asset of any Covered Party.
"Regulation U": Regulation U of the Board as in effect from time to time.
"Reinvestment Deferred Amount": with respect to any Reinvestment Event, the
aggregate Net Cash Proceeds received by any Covered Party in connection therewith that are not applied to prepay the Loans as a
result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Recovery Event in respect of which the Borrower has delivered a Reinvestment
Notice.
"Reinvestment Notice": a written notice executed by a Responsible Officer certifying that no Event of Default
has occurred and is continuing and that the Borrower intends and expects to use all or a specified portion of the Net Cash
Proceeds of a Recovery Event to acquire or repair assets replacing or repairing those that were subject to the applicable
Recovery Event.
"Reinvestment Prepayment Amount": with respect to any Reinvestment Event, the Reinvestment Deferred Amount
relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire or repair assets
useful in the applicable Covered Party's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment Event, the earliest of (a) the date occurring
90 days after such Reinvestment Event, (b) any date on or following the date of the applicable Reinvestment Notice on which any
Event of Default shall have occurred and be continuing,
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designated as a Reinvestment Prepayment Date in a notice by the
Lender to the Borrower, and (c) the date on which the Borrower
shall have determined not to, or shall have otherwise ceased to,
acquire or repair the assets subject to the applicable Recovery
Event with all or any portion of the relevant Reinvestment
Deferred Amount.
"Reorganization": with respect to any
Multiemployer Plan, the condition that such plan is in
reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth
in Section 4043(c) of ERISA, other than those events as to which
the thirty day notice period is waived under subsections .27,
..28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. ss. 4043.
"Requirement of Law": as to any Person, the
Certificate of Incorporation and By-Laws or other organizational
or governing documents of such Person, and any law, treaty, rule
or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such
Person or any of its property is subject.
"Responsible Officer": a Chief Executive
Officer, Chief Financial Officer, President or Controller of the
Borrower.
"Restricted Payments": as defined in Section 6.6.
"Satisfactory Equity Commitment": a
commitment by a Person to purchase Capital Stock of the
Guarantor, such commitment (and the terms thereof) and
Person to be in all respects satisfactory to the Lender in
its sole discretion.
"Security Agreement": the Security
Agreement to be executed and delivered by the Borrower and
the Lender, substantially in the form of Exhibit A.
"Security Documents": the Security Agreement,
the Guarantee and Security Agreement, any Mortgage, any Leasehold
Security Document, and all other security documents hereafter
delivered to the Lender granting a Lien on any property of any
Person to secure the obligations and liabilities of any Loan
Party under any Loan Document, collectively.
"Seller": Low Fat No Fat Gourmet Cafe, Inc., a
Massachusetts corporation.
"Seller Debt": the regularly scheduled payments
owed by Borrower to Seller pursuant to the Asset Purchase
Agreements and the Consulting Agreements.
"Single Employer Plan": any Plan that is covered
by Title IV of ERISA, but that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person,
means that, as of any date of determination, (a) the amount of
the "present fair saleable value" of the assets of such Person
will, as of such date, exceed the amount of all "liabilities of
such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of
debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of
capital with which to conduct its business, and (d) such Person
will be able to pay its debts as they mature. For purposes of
this definition, (i) "debt" means liability on a "claim",
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and (ii) "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed, undisputed, secured or unsecured.
"Specified Consulting Fees": amounts paid to the
Seller under the Consulting Agreement that constitute
Subordinated Debt, as defined under the Subordination Agreement.
"Subordinated Debt": Indebtedness of the
Borrower approved by the Lender and subject to a written
subordination agreement in favor of, and in all respects
satisfactory to, the Lender, each in the sole discretion of the
Lender, including without limitation the Indebtedness owed to
Seller subordinated pursuant to the Subordination Agreement.
"Subordination Agreement": shall mean the
subordination agreement to be executed by the Seller, the
Borrower and the Lender, substantially in the form of Exhibit F.
"Subsidiary": as to any Person, a corporation,
partnership, limited liability company or other entity of which
shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity
are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries"
in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower. Until the Borrower shall have any Subsidiaries,
references to the Borrower and its Subsidiaries shall be
construed as references to the Borrower.
"Taxes": as defined in Section 2.11 (a).
"Unit": a singular restaurant in which the
Guarantor or the Borrower has any equity interest direct or
indirect.
"United
States":
the
United
States
of
America.
1.2
Other
Definitional
Provisions.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the
defined meanings when used in the other Loan Documents or any
certificate or other document made or
delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other
document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to any Covered Party not defined in
Section 1.1 and accounting terms partly defined in Section 1.1,
to the extent not defined, shall have the respective meanings
given to them under GAAP, (ii) the words "include", "includes"
and "including" shall be deemed to be followed by the phrase
"without limitation", (iii) the word "incur" shall be construed
to mean incur, create, issue, assume, become liable in respect of
or suffer to exist (and the words "incurred" and "incurrence"
shall have correlative meanings), (iv) the words "asset" and
"property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and
properties, including cash, Capital Stock, securities, revenues,
accounts, leasehold interests and contract rights, and (v)
references to agreements or other Contractual Obligations shall,
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unless otherwise specified, be deemed to refer to such agreements
or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof, "herein" and "hereunder" and words of
similar import, when
used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to
this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the
singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Initial Term Loan. Subject to the terms and conditions
hereof, the Lender agrees
to make a term loan in the principal amount of $1,000,000 on the
Closing Date (the "Initial Term Loan").
2.2 Additional Term Loans. Subject to the terms and
conditions hereof, the Lender
agrees to lend to Borrower additional term loans, in minimum
increments of $100,000, in an amount not
to exceed $600,000, which together with the Initial Term Loan
does not exceed the Commitment (the
"Additional Term Loans" and, together with the Initial Term Loan,
the "Loans"), provided that (i) such
Additional Term Loans shall be advanced only during the Drawdown
Period; (ii) the Borrower shall be in
compliance with this Agreement before and after the funding of
the requested Additional Term Loan and
shall have supplied the Lender a certificate detailing such
compliance; and (in) if such Additional Term
Loan is requested prior to the [New Equity Date], the Borrower
shall have obtained Satisfactory Equity
Commitments in an amount not less than ten times the aggregate
principal amount of all Additional Term
Loans outstanding after giving effect to the advancement of such
Additional Term Loans.
2.3 Procedure for Term Loan Borrowing. The Borrower shall
give the Lender
irrevocable notice in the form of Exhibit G (a "Notice of
Borrowing"), which notice must be received by
the Lender prior to 11:00 A.M., Boston time, on the Borrowing
Date as to the Initial Term Loan or on the
fifth Business Day prior to the Borrowing Date as to Additional
Term Loans. The Notice of Borrowing
will specify the amount of Loan to be borrowed and the requested
Borrowing Date.
2.4 Fees.
(a) The Borrower agrees to pay to the Lender a closing fee
of $15,000 on the Closing
Date. Such fee shall be earned in full when paid and shall not be
refundable under any circumstances.
(b) On any Borrowing Date in which Borrower requests that
Lender make an Additional
Term Loan, Borrower shall pay an administrative fee of $250 upon
the closing of such Additional Term
Loan.
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(c) The Borrower agrees to pay a fee to the
Lender on the seventh day after the New Equity Date, calculated
as follows based on the aggregate principal amount of Loans
advanced prior to such date:
 Total Amount Borrowed                            Fee Owed to Lender
 $1,000,000 or less                                     $ 0
 $1,000,001 to $1,150,000                               $20,000
 $1,150,001 to $1,300,000                               $40,000
 $1,301,000 to $1,450,000                               $55,000
  $1,451,000 to $1,600,000                              $70,000
Such fee shall be earned in full when paid and shall not be
refundable under any circumstances.
2.5 Repayment of the Loans. The Loans shall be payable in
consecutive monthly
installments of $33,333.33 commencing on June 1,2006 and on the
first Business Day of each calendar
month thereafter. The remaining outstanding principal amount of
the Loan shall be payable in full on the
Maturity Date. Amounts paid or prepaid with respect to the Loans
may not be reborrowed. The amount
of any principal prepayment of the Loans shall be applied to
reduce the then remaining installments of the
Loans in inverse order of maturity.
2.6 Prepayment Penalty. The Borrower may at any time and
from time to time
prepay the Loans, in whole or in part, without premium or
penalty except for any prepayment fee that
may be due under the following sentence. Any such prepayment
shall be made together with all other
amounts due and owing under the Loan Documents at the time of
prepayment (including, without
limitation, any amounts owing pursuant to Section 2.12) and, if
the date of such prepayment is on or
before the second anniversary of the date hereof, a prepayment
fee in the amount of $80,000.
Prepayments shall be made upon irrevocable notice by the
Borrower delivered to the Lender no later than
11:00 A.M., Boston time, one Business Day prior thereto, which
notice shall specify the date and amount
of prepayment. If any such notice is given, the amount specified
in such notice shall be due and payable
on the date specified therein, together with accrued and unpaid
interest to such date on the amount
prepaid. Partial prepayments of any Loan shall be in an
aggregate principal amount of $100,000 or a
whole multiple of $50,000 in excess thereof.
2.7 Mandatory Prepayments.
(a) Except for Indebtedness expressly permitted under
Section 6.2, if any Indebtedness
described in clause (a) or (c) of the definition of
"Indebtedness" shall be issued or incurred by any
Covered Party, then, an amount equal to 100% of the Net Cash
Proceeds thereof shall be applied on the
date of such incurrence toward the prepayment of the Loans.
(b) If on any date any Covered Party shall receive Net Cash
Proceeds from any Recovery
Event then, unless (i) no Event of Default has occurred and is
continuing and (ii) a Reinvestment Notice
shall be delivered in respect thereof, such Net Cash Proceeds
shall be applied on such date toward the
prepayment of the Loans. In addition, on each Reinvestment
Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied
toward the prepayment of the Loans.
(c) If at any time the aggregate outstanding
principal amount of the Loans exceeds the
Commitment, the Borrower will immediately prepay or repay the
Loans in an amount necessary to cause
the outstanding principal amount of the Loans not to exceed the
Commitment.
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(d) Each such prepayment of the Loans under this Section 2.6
shall be accompanied by
accrued interest to the date of such prepayment on the amount
prepaid and all amounts due and owing in
respect thereof under Section 2.12.
(e) Any prepayment or repayment of COF Loans on any date
other than the regularly
scheduled payments of principal thereof on the scheduled dates
due hereunder or on the Maturity Date
shall also be accompanied by a fee equal to the "Yield
Maintenance Fee" in an amount computed as
follows:
The current cost of funds, specifically the bond
equivalent yield for United States Treasury
securities (bills on a discounted basis shall be
converted to a bond equivalent yield) with a
maturity date closest to the remaining term of such
COF Loans, shall be subtracted from the COF Rate, or
default rate if applicable. If the result is zero or
a negative number, there shall be no Yield
Maintenance Fee due and payable. If the result is a
positive number, then the resulting percentage shall
be multiplied by the scheduled outstanding principal
balance for each remaining monthly period of this
note. Each resulting amount shall be divided by 360
and multiplied by the number of days in the monthly
period. Said amounts shall be reduced to present
values calculated by using the above reference
current costs of funds divided by 12 and the COF
Loan's remaining term in months. The resulting sum
of present values shall be the yield maintenance fee
due to the Lender upon prepayment of the principal
of the COF Loans plus any accrued interest due as of
the prepayment date.
Unless the Lender expressly agrees
otherwise, partial payments will not affect the payment
schedule required hereunder.
2.8 Interest Rates and Payment Dates; Payments.
(a) Until the date on which the Loan is fully advanced, each
Loan shall bear interest at a
rate per annum equal to the Prime Rate plus the Applicable
Margin. On and after the date on which the
Loan is fully advanced, interest on the unpaid principal balance
of the Loan shall accrue, at the
Borrower's option, at the Prime Rate plus the Applicable Margin
or at the COF Rate, plus the Applicable
Margin, in any case as selected by the Borrower pursuant to a
Notice of Conversion to COF Rate,
provided such Notice of Conversion to COF Rate is delivered to
the Lender within 60 days after the date
on which the Loan is fully advanced and provided no Event of
Default then exists hereunder.
(b) If any Event of Default shall have occurred and be
continuing, all outstanding
Obligations (whether or not overdue) shall bear interest at a
rate per annum equal to the rate that would
otherwise be applicable to the Loans pursuant to the foregoing
provisions of this Section plus 5.00%
during the continuance of such Event of Default (both before and
after judgment).
(c) Interest shall be payable in arrears on each Interest
Payment Date, provided that
interest accruing pursuant to paragraph (b) of this Section shall
be payable from time to time on demand.
(d) The Borrower hereby authorizes the Lender to charge, on
each date on which any
amount is due hereunder, the Borrower's Operating Account or any
other deposit accounts from time to
time maintained by the Borrower with the Lender for the purpose
of effecting payments of amounts due
to the Lender hereunder.
2.9 Computation of Interest and Fees.
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(a) Interest and fees payable pursuant hereto shall be
calculated on the basis of a 360-day
year. Any change in the interest rate on a Loan resulting from a
change in the Prime Rate shall become
effective as of the opening of business on the day on which such
change becomes effective.
(b) Each determination of an interest rate by the Lender
pursuant to any provision of this
Agreement shall be conclusive and binding on the Borrower in the
absence of manifest error.
2.10 Requirements of Law.
(a) If the adoption of or any change in any
Requirement of Law or in the interpretation or
application thereof or compliance by the Lender with any request
or directive (whether or not having the
force of law) from any central bank or other Governmental
Authority:
(i) shall subject the Lender to any
tax of any kind whatsoever with respect to
this Agreement or any Loan made by it, or
change the basis of taxation of payments to
such Lender in respect thereof (except for
Taxes covered by Section 2.11 and changes
in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold
applicable any reserve, special deposit,
compulsory loan or similar requirement
against assets held by, deposits or other
liabilities in or for the account of,
advances, loans or other extensions of
credit by, or any other acquisition of
funds by, any office of the Lender; or
(iii) shall impose on the Lender any
other condition;
and the result of any of the foregoing is to increase the cost to
the Lender of making, converting into, continuing or maintaining
Loans, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, fee Borrower shall promptly pay
the Lender, upon its demand, any additional amounts necessary to
compensate the Lender for such increased cost or reduced amount
receivable.
(b) If the Lender shall have determined that the adoption of
or any change in any
Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or
compliance by the Lender or any corporation controlling the
Lender with any request or directive
regarding capital adequacy (whether or not having the force of
law) from any Governmental Authority
made subsequent to the date hereof shall have the effect of
reducing the rate of return on the Lender's or
such corporation's capital as a consequence of its obligations
hereunder to a level below that which the
Lender or such corporation could have achieved but for such
adoption, change or compliance (taking into
consideration the Lender's or such corporation's policies with
respect to capital adequacy), then from
time to time the Borrower shall pay to such Lender upon demand
such additional amount or amounts as
will compensate the Lender or such corporation for such reduction.
(c) A certificate as to any additional amounts payable
pursuant to this Section submitted
by the Lender to the Borrower shall be conclusive in the absence
of manifest error. The obligation of the
Borrower pursuant to this Section shall survive the termination
of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
2.11 Taxes.
(a) Any and all payments by the Borrower
hereunder or under the other Loan Documents shall be made free
and clear of and without deduction for any and all present or
future taxes, levies,
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imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding taxes that are imposed on the
Lender's overall net income by the United States and taxes that
are imposed on its overall net income (and franchise taxes
imposed in lieu thereof) by the state under the laws of which the
Lender is organized (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under the other Loan Documents
being hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any other Loan Document to the
Lender, (i) the sum payable by the Borrower shall be increased as
may be necessary so that after the Borrower has made all required
deductions (including deductions applicable to additional sums
payable under this Section 2.11), the Lender receives an amount
equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make all such deductions and
(iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, the Borrower shall pay any present or
future stamp, documentary, excise,
property or similar taxes, charges or levies that arise from any
payment made hereunder or under the other
Loan Documents or from the execution, delivery or registration
of, performance under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to
as "Other Taxes").
(c) The Borrower shall indemnify the Lender for and hold it
harmless against the full
amount of Taxes and Other Taxes, and for the full amount of taxes
of any kind imposed by any
jurisdiction on amounts payable under this Section 2.11, imposed
on or paid by the Lender and any
liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 10 days from
the date the Lender makes written
demand therefor.
(d) Within 30 days after the date of any payment of Taxes,
the Borrower shall furnish to
the Lender the original or a certified copy of a receipt
evidencing such payment.
(e) The agreements in this Section shall survive the
termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
2.12 Indemnity. The Borrower agrees to indemnify
the Lender for, and to hold the Lender harmless from, any loss or
expense that the Lender may sustain or incur as a consequence of
default by the Borrower in making any prepayment of Loans after
the Borrower has given a notice thereof in accordance with the
provisions of this Agreement. If the Lender elects to declare the
Loans to be immediately due and payable, then any amounts payable
under this Section 2.12 shall become due and payable in the same
manner as though the Borrower had exercised such right of
prepayment. A certificate as to any amounts payable pursuant to
this Section submitted to the Borrower by the Lender shall be
conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to
make the Loans, the Borrower hereby represents and warrants to
the Lender that:
3.1 Financial Condition. The consolidated
balance sheet of the Guarantor as at December 31, 2004, and the
related consolidated statements of income and cash flows for the
fiscal year ended on such date, reviewed and accompanied by a
report in form and substance satisfactory to the Lender from
Carlin, Charron & Rosen, LLP, present fairly the consolidated
financial condition of the Guarantor as at such date, and the
consolidated results of its operations and cash flows for the
fiscal year
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then ended. The unaudited consolidated balance sheets of each of
the Guarantor and the Borrower as at March 31, 2005, and, in each
case, the related unaudited consolidated statements of income and
cash flows for the month ended on such date, present fairly the
consolidated financial condition the Guarantor and the Borrower,
as applicable, as at such date, and the consolidated results of
its operations and its cash flows for the month then ended. All
such financial statements have been prepared in accordance with
GAAP (subject to normal year-end audit adjustments and the
absence of footnotes) applied consistently throughout the periods
involved (except as approved by the aforementioned firm of
accountants and disclosed therein). The Borrower has no material
Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any long-term leases or unusual forward or long-term
commitments, including any interest rate or foreign currency swap
or exchange transaction or other obligation in respect of
derivatives, or other material obligations that are not reflected
in the most recent financial statements referred to in this
paragraph. During the period from December 31, 2004 to and
including the date hereof there has been no Disposition by any
Covered Party of any material part of its business or property.
3.2 No Change. Since December 31, 2004, there have been no
developments or
events that, individually or in the aggregate, have had or could
reasonably be expected to have a Material
Adverse Effect.
3.3 Existence; Compliance with Law. Each Covered Party (a)
is duly organized or
formed, as the case may be, validly existing and in good standing
under the laws of the jurisdiction of its
organization or formation, (b) has the power and authority, and
the legal right, to own and operate its
property, to lease the property it operates as lessee and to
conduct the business in which it is currently
engaged, (c) is duly qualified as a foreign corporation,
partnership or limited liability company, as the
case may be, and in good standing under the laws of each
jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires
such qualification and (d) is in compliance
with all Requirements of Law, except to the extent that the
failure to comply therewith could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
3.4 Power; Authorization; Enforceable Obligations. Each Loan
Party has the power
and authority, and the legal right, to execute, deliver and
perform the Loan Documents to which it is a
party and, in the case of the Borrower, to obtain extensions of
credit hereunder. Each Loan Party has
taken all necessary organizational action to authorize the
execution, delivery and performance of the Loan
Documents to which it is a party and, in the case of the
Borrower, to authorize the extensions of credit on
the terms and conditions of this Agreement. No consent or
authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other
Person is required in connection with the
Loans hereunder or with the execution, delivery, performance,
validity or enforceability of this
Agreement or any of the other Loan Documents, except (i)
consents, authorizations, filings and notices
described in Schedule 3.4, which consents, authorizations,
filings and notices have been obtained or made
and are in full force and effect and (ii) the filings referred to
in Section 3.18. Each Loan Document has
been duly executed and delivered on behalf of each Loan Party
party thereto. This Agreement constitutes,
and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of
each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at
law).
3.5 No Legal Bar. The execution, delivery and performance of
this Agreement and
the other Loan Documents, the borrowings hereunder and the use of
the proceeds thereof will not violate
any Requirement of Law or any Contractual Obligation of any Loan
Party and will not result in, or
require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant
to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the
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Security Documents). No Requirement of Law or Contractual
Obligation applicable to any Loan Party could reasonably be
expected to have a Material Adverse Effect.
3.6 Litigation. No litigation, action, investigation or
proceeding of or before any
arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower or the Guarantor,
threatened by or against any Loan Party or against any of their
respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b)
that could reasonably be expected to have a Material Adverse
Effect. As of the Closing Date, all pending
or, to the knowledge of the Borrower or the Guarantor, threatened
litigations, actions, investigations or
proceedings by or against any Loan Party are listed on Schedule
3.6.
3.7 No Default. No Loan Party is in default under or with
respect to any of its
Contractual Obligations in any respect that could reasonably
be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is
continuing.
3.8 Ownership of Property; Liens. Each Covered Party has
title in fee simple to, or a
valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its
other property, including without limitation all assets covered
by the Asset Purchase Agreements.
Borrower holds title to all such assets covered by the Asset
Purchase Agreements. None of such property
is subject to any Lien except as would be permitted by Section
6.3.
3.9 Intellectual Property; Licenses. Each Loan Party owns,
or is licensed to use, all
Intellectual Property and other licenses necessary for the
conduct of its business as currently conducted.
No material claim has been asserted and is pending by any Person
challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does any Loan
Party know of any valid basis for any such claim. The use of
Intellectual Property by each Loan Party
does not infringe on the rights of any Person in any material
respect.
3.10 Taxes. Each Loan Party has filed or caused to be filed
all Federal, state and other
material tax returns that are required to be filed and has paid
all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its
property and all other taxes, fees or other
charges imposed on it or any of its property by any Governmental
Authority; no tax Lien has been filed,
and, to the knowledge of the Borrower or the Guarantor, no claim
is being asserted, with respect to any
such tax, fee or other charge.
3.11 Federal Regulations. No part of the proceeds of any
Loans, and no other
extensions of credit hereunder, will be used for "buying" or
"carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation
U as now and from time to time
hereafter in effect or for any purpose that violates the
provisions of the Regulations of the Board. If
requested by the Lender, the Borrower will furnish to the Lender
a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1,
as applicable, referred to in
Regulation U.
3.12 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the
five-year period prior to the date on which this representation
is made or deemed made with respect to
any Plan, and each Plan has complied in all material respects
with the applicable provisions of ERISA and
the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a
Plan has arisen, during such five-year period. The present value
of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual
valuation date prior to the date on which this representation is
made or deemed made, exceed the value of
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the assets of such Plan allocable to such accrued benefits by a
material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and
neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the
Borrower or any such Commonly Controlled Entity were to withdraw
completely from all Multiemployer Plans as of the valuation date
most closely preceding the date on which this representation is
made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
3.13 Investment Company Act; Other Regulations.
No Loan Party is (a) an
"investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of
1940, as amended or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company
Act of 1935 or the Federal Power Act, as amended. No Loan Party
is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur
Indebtedness.
3.14 Subsidiaries.
(a) (i) The Borrower has no Subsidiaries, (ii)
as of the date hereof, the
authorized, issued and outstanding Capital Stock of each of
the Borrower and the Guarantor is as set forth on, Schedule
3.14 and (ii) the ownership interests in the Borrower and
the Guarantor are duly authorized, validly issued, fully
paid and nonassessable and, as of the date hereof, are owned
beneficially and of record by the Persons set forth on
Schedule 3.14, free and clear of all Liens other than Liens
of the Security Documents.
(b) Except as set forth on Schedule 3.14 or the
issuance of New Equity
contemplated hereunder, no Covered Party has issued any
securities convertible into, or options or warrants for, any
common or preferred equity securities thereof and there are
no agreements, voting trusts or understandings binding upon
any Covered Party with respect to the voting securities of
any Covered Party or affecting in any manner the sale,
pledge, assignment or other disposition thereof, including
any right of first refusal, option, redemption, call or
other right with respect thereto, whether similar or
dissimilar to any of the foregoing.
(c) The organizational documents of each Covered
Party that is:
(i) a corporation, business trust,
joint stock company or similar Person,
provide that all Capital Stock issued by it
must be represented by a certificate; or
(ii) a partnership or limited
liability company, do not provide that
any Capital Stock issued by such
Subsidiary constitutes a security
governed by Article 8 of the UCC.
3.15 Use of Proceeds. The proceeds of the Initial Term Loan
shall be used to pay the
Indebtedness to be Paid and for general corporate purposes
(excluding the building of any new Units).
The proceeds of the Additional Term Loans shall be used for
general corporate purposes (excluding the
building of new Units other than one new Unit) and, to the extent
permitted herein, to make loans to the
Guarantor.
3.16 Environmental Matters.
(a) The facilities and properties owned, leased
or operated by any Covered Party (the "Properties") do not
contain, and have not previously contained, any Materials of
Environmental Concern
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in amounts or concentrations or under circumstances that
constitute or constituted a violation of, or could give rise to
liability under, any Environmental Law;
(b) no Loan Party has received or to the knowledge of
Borrower or Guarantor is aware of
any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the
business operated by any Covered Party (the "Business"), nor does
the Borrower or the Guarantor have
knowledge or reason to believe that any such notice will be
received or is being threatened;
(c) Materials of Environmental Concern have not been
transported or disposed of from
the Properties in violation of, or in a manner or to a location
that could give rise to liability under, any
Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation
of, or in a manner that could give rise to
liability under, any applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative
action is pending or, to the
knowledge of the Borrower or the Guarantor, threatened, under any
Environmental Law to which any
Covered Party is or will be named as a party with respect to the
Properties or the Business, nor are there
any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to the
Properties or the Business;
(e) there has been no release or threat of release of
Materials of Environmental Concern
at or from the Properties, or arising from or related to the
operations of any Covered Party in connection
with the Properties or otherwise in connection with the Business,
in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws;
(f) the Properties and all operations at the Properties are
in compliance, and have in the
last five years been in compliance, with all applicable
Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or
the Business; and
(g) no Covered Party has assumed any liability of any other
Person under Environmental
Laws.
3.17 Accuracy of Information, etc. No statement
or information contained in this Agreement, any other Loan
Document or any other document, certificate or statement
furnished by or on behalf of any Loan Party to the Lender for use
in connection with the transactions contemplated by this
Agreement or the other Loan Documents contains or contained any
untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein
or therein not misleading. The projections and pro forma
financial information furnished to the Lender are based upon good
faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized
by the Lender that such financial information as it relates to
future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial
information may differ from the projected results set forth
therein. There is no fact known to the Borrower or the Guarantor
that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other
Loan Documents or m any other documents, certificates and
statements furnished to the Lender for use in connection with the
transactions contemplated hereby and by the other Loan Documents.
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3.18 Security Documents. Each of the Security Documents is
effective to create in
favor of the Lender a legal, valid and enforceable security
interest in the Collateral described therein and
proceeds thereof. When financing statements in appropriate form
are filed in the offices specified on
Schedule 3.18, the Security Documents shall each constitute a
fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in
such Collateral and the proceeds thereof, as
security for the Obligations, in each case prior and superior in
right to any other Person (except, in the
case of Collateral other than Pledged Stock, Liens permitted by
Section 6.3).
3.19 Solvency. Each Loan Party is, and after giving effect to
the incurrence of all
Indebtedness and obligations being incurred in connection
herewith and therewith will be and will
continue to be, Solvent.
3.20 Regulation H. No Leased Property or property subject to
any Mortgage involves
improved real property that is located in an area that has been
identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in
which flood insurance has been made
available under the National Flood Insurance Act of 1968.
3.21 Indebtedness Outstanding.
(a) Set forth on Schedule 3.21 (a) hereto is a list and
description of all Indebtedness of the
Borrower (other than the Loans) that will be outstanding
immediately after the Closing Date.
(b) Set forth on Schedule 3.2 l(b) hereto is a list and
description of all Indebtedness of
the Borrower that will be repaid, defeased, transferred or
otherwise terminated on or prior to the Closing
Date (the "Indebtedness to Be Paid").
(c) Set forth on Schedule 3.21(c) hereto is a list and
description of all Liens of the
Borrower that will be repaid, defeased, transferred or otherwise
terminated on or prior to the Closing Date (the "Liens to be
Terminated").
(d) Set forth on Schedule 3.2 l(d) hereto is a
list and description of all Liens of the
Borrower (other than the Liens of the Loan Documents) that will
be outstanding immediately after the
Closing Date.
3.22 Anti-Terrorism Laws.
(a) No Loan Party and, to the knowledge of the Borrower or
the Guarantor, no Affiliate
of any Loan Party is in violation of any laws relating to
terrorism or money laundering ("Anti-Terrorism
Laws"), including Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the
"Executive Order"), and the Uniting and Strengthening America by
Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public
Law 107-56.
(b) No Loan Party and, to the knowledge of the Borrower or
the Guarantor, no Affiliate
of any Loan Party, and none of their respective brokers or other
agents acting or benefiting in any
capacity in connection with the Loans, is any of the following:
(i) a Person or entity that is
listed in the annex to, or is otherwise
subject to the provisions of, the
Executive Order;
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(ii) a Person or entity owned or
controlled by, or acting for or on behalf
of, any Person or entity that is listed in
the annex to, or is otherwise subject to
the provisions of, the Executive Order;
(iii) a Person or entity with
which any Lender is prohibited from
dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law;
(iv) a Person or entity that
commits, threatens or conspires to
commit or supports "terrorism" as
defined in the Executive Order, or
(v) a Person or entity that is
named as a "specially designated
national and blocked person" on the
most current list published by the
U.S. Treasury Department Office of
Foreign Assets Control at its official
website or any replacement website or
other replacement official publication
of such list.
(c) No Loan Party and, to the knowledge of the
Borrower or the Guarantor, no Affiliate of any Loan Party, and
none of their respective brokers or other agents acting in any
capacity in connection with the Loans, (i) conducts any business
or engages in making or receiving any contribution of funds,
goods or services to or for the benefit of any Person described
in clause (b) above, (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property
blocked pursuant to the Executive Order, or (iii) engages in or
conspires to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in any Anti-Terrorism Law.
3.23 Depository and Other Accounts. Schedule 3.23 attached
hereto lists all banks
and other financial institutions and depositories at which the
Covered Parties maintain or will maintain
deposit accounts, trust accounts, tax or trust receivable
accounts or other accounts of any kind or nature
into which funds of the Covered Parties (including funds in which
any Covered Party maintains a
contingent or residual interest) are from time to time deposited,
and such Schedule 3.23 correctly
identifies the name and address of each depository, the name in
which each account is held, the purpose
of the account and the complete account number.
3.24 Obligations to Seller. Other than the payment of the
Seller Debt subordinated
pursuant to the Subordination Agreement, neither Borrower nor
Guarantor owe any obligations or
liabilities to Seller (other than in its capacity solely as a
shareholder of Guarantor) and all other
obligations of Borrower or Guarantor under the Asset Purchase
Agreements have been performed in full.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Extension of Credit.
The agreement of the Lender to make the Initial Term Loan
requested to be made by it is subject to the satisfaction, prior
to or concurrently with the making of such extension of credit on
the Closing Date, of the following conditions precedent:
(a) Credit Agreement and Other Loan
Documents. The Lender shall have received (i) this
Agreement, executed and delivered by the Borrower, (ii) the
Security Agreement, executed and delivered by the Borrower
and the Lender, (iii) the Guarantee and Security Agreement,
executed by the Guarantor, (v) the Subordination Agreement,
executed and delivered by the Borrower and the Seller, and
(vi) other documents required by the Lender as listed on the
closing agenda distributed by Lender's counsel in connection
therewith.
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(b) Indebtedness to be Paid. The Lender shall have received
satisfactory
evidence that the Indebtedness to be Paid shall have been paid in
full and that any related credit,
loan or similar agreements, together with any related guarantees
and other documentation, shall
have been terminated, and arrangements satisfactory to the Lender
shall have been made for the
termination of all Liens to be Terminated, including without
limitation all Liens granted in
connection with the Indebtedness to be Paid.
(c) Insurance. The Lender shall have received insurance
certificates satisfying
the requirements of the Security Agreement and the Guarantee and
Security Agreement.
(d) Financial Statements. The Lender shall have received (i)
the financial
statements referred to in Section 3.1, (ii) a monthly budget of
the Borrower and its Subsidiaries
for the fiscal year ending December 31, 2005, (iii) satisfactory
projections for the Borrower
through the 2010 fiscal year, and (iv) a pro forma Compliance
Certificate. The pro forma
Compliance Certificate referred to in clause (iv) above shall
give effect to the Initial Term Loan
hereunder and the repayment of the Indebtedness to be Paid. All
materials furnished pursuant to
this Section 4.1(d) shall be satisfactory to the Lender.
(e) Approvals. All governmental and material third party
approvals necessary in
connection with the continuing operations of the Covered Parties
and the transactions
contemplated hereby shall have been obtained and be in full force
and effect.
(f) Lien Searches. The Lender shall have received the
results of a recent lien
search in each of the jurisdictions where assets of the Loan
Parties are located and the jurisdiction
where each Loan Party is located under Article 9 of the UCC, and
such search shall reveal no
liens on any of the assets of the Loan Parties except for Liens
to be Terminated and Liens that
would be permitted by Section 6.3.
(g) Fees. The Lender shall have received all fees required
to be paid, and all
expenses for which invoices have been presented (including the
reasonable fees and expenses of
legal counsel), on or before the Closing Date. All such amounts
will be paid with proceeds of
Loans made on the Closing Date and will be reflected in the
funding instructions given by the
Borrower to the Lender on or before the Closing Date.
(h) Closing Certificate; Certified Certificate
of Incorporation; Good Standing Certificates. The Lender shall
have received (i) a certificate of the Borrower, dated the
Closing Date, substantially in the form of Exhibit D, with
appropriate insertions and attachments, including the certificate
of incorporation of the Borrower, certified by the relevant
authority of the jurisdiction of organization of such Loan Party,
and (ii) a good standing certificate for the Borrower from its
jurisdiction of organization and each jurisdiction where it is
required to be qualified as a foreign corporation.
(i) Legal Opinions. The Lender shall have
received a favorable legal opinion satisfactory to Lender, from
Robinson & Cole, LLP, counsel to the Borrower and the Guarantor.
(j) Pledged Stock; Stock Powers; Pledged Notes.
The Lender shall have received (i) the certificates representing
the shares of Capital Stock (if any) pledged pursuant to the
Security Agreement and pursuant to the Guarantee and Security
Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor thereof and (ii) each promissory note (if any) pledged to
the Lender pursuant to the
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Security Agreement and pursuant to the Guarantee and
Security Agreement, endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank) by the
pledgor thereof.
(k) Filings, Registrations and
Recordings. Each document (including any Uniform
Commercial Code financing statement) required by the
Security Documents or under law or reasonably requested
by the Lender to be filed, registered or recorded in
order to create in favor of the Lender a perfected Lien
on the Collateral described therein, prior and superior
in right to any other Person (other than with respect
to Liens that would be expressly permitted by Section
6.3), shall be in proper form for filing, registration
or recordation.
(1) Solvency Certificate. The Lender shall
have received a satisfactory solvency certificate from a
Responsible Officer that shall demonstrate that, after
giving effect to the transactions contemplated hereby, the
Borrower is Solvent.
(m) Operating Account. The Borrower
shall have opened the Operating Account at the Lender.
The Guarantor shall have opened an operating account at
the Lender.
4.2 Conditions to Each Extension of Credit. The
agreement of the Lender to make any extension of credit requested
to be made by it on any date (including its initial extension of
credit) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties
made by any Loan Party in or pursuant to the Loan
Documents shall be true and correct in all
material respects on and as of such date as if made on
and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be
continuing on such date or after giving effect to the
extensions of credit requested to be made on
such date.
(c) Compliance Certificate. The Borrower shall have
submitted to the Lender a
Compliance Certificate showing on a pro forma basis the
making of any Loans requested, in form
required by the Lender.
Each borrowing hereunder shall constitute a representation and
warranty by the Borrower as of the date of such extension of
credit that the conditions contained in this Section 4.2 have
been satisfied.
SECTIONS. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any Loan or
other amount is owing to the Lender hereunder, the Borrower shall
and shall cause each of the other Covered Parties to:
5.1 Financial Statements; Field Audits.
(a) Furnish to the Lender:
(i) as soon as available, but in any event
within 120 days after the end of each fiscal year of the
Borrower, a copy of the consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such
year and the related consolidated statements of income
and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous
year, which shall be prepared by management and
accompanied by a certificate of the chief financial
officer, in form and substance reasonably satisfactory
to the Lender;
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(ii) as soon as available, but in any event
within 120 days after the end of each fiscal year of the
Guarantor, a copy of the consolidated balance sheet of
the Guarantor and its Subsidiaries as at the end of such
year and the related consolidated statements of income
and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous
year, audited by and accompanied by a report, in form and
substance reasonably satisfactory to the Lender, from
Carlin, Charron & Rosen, LLP, or other independent
certified public accountants satisfactory to the Lender;
(iii) as soon as available, but in any event
not later than 45 days after the end of each quarterly
period of each fiscal year of the Borrower, the unaudited
consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income and
of cash flows for such quarter and the portion of the
fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for
the previous year and the corresponding figures from the
Borrower's budget for such period, in each case certified
by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit
adjustments);
(iv) as soon as available, but in any event
not later than 45 days after the end of each quarterly
period of each fiscal year of the Guarantor, the
unaudited consolidated balance sheet of the Guarantor and
its Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income and
of cash flows for such quarter and the portion of the
fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for
the previous year and the corresponding figures from the
Guarantor's budget for such period together with a report
on franchisee royalties received with respect to such
quarter and a statement as to the number of franchise
agreements in effect and whether any of such franchise
agreements are then in default, in each case certified by
a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit
adjustments);
(v) as soon as available, but in any event
within 120 days after the end of each fiscal year of the
Borrower and the Guarantor, a listing of the equity
owners of the Borrower and the Guarantor and their
respective ownership interests;
(vi) as soon as available, but in any event
within 120 days after the end of each fiscal year of the
Borrower and the Guarantor, a copy of any additional
leases (both Capitalized Lease Obligations and operating
leases) entered into by the Borrower and the Guarantor
during the fiscal year;
(vii) as soon as available, but in any
event on or before April 15 of each fiscal year of the
Borrower and the Guarantor (or such later date to which
the filing thereof has been extended), a copy of the
filed tax returns of the Borrower and Guarantor; and
(viii) as soon as available, but in any
event within 15 days after the end of each month, cash
flow and income statements on a per Unit basis for the
Borrower and the Guarantor.
All such financial statements shall be complete and correct in
all material respects and shall be prepared in reasonable detail
and in accordance with GAAP applied (except as approved by such
accountants or officer, as the case may be, and disclosed in
reasonable detail therein) consistently throughout the periods
reflected therein and with prior periods.
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(b) The Covered Parties will permit the
Lender to inspect and audit the books and records and any of
the properties or assets of the Covered Parties (in each
instance, at the Borrower's expense).
5.2 Certificates; Other Information. Furnish to
the Lender:
(a) concurrently with the delivery of the financial
statements referred to in
Section 5.1(a)(ii) and, if applicable, Section
5.1(a)(i), a certificate of the independent certified
public accountants reviewing such financial statements
stating that in making the examination
necessary therefor no knowledge was obtained of any
Default or Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of any financial
statements pursuant to Section
5.1(a)(iii) and (iv), (i) a certificate of a Responsible
Officer stating that, to the best of each such
Responsible Officer's knowledge, each Loan Party during such
period has observed or performed
all of its covenants and other agreements, and satisfied
every condition contained in this
Agreement and the other Loan Documents to which it is a
party to be observed, performed or
satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or
Event of Default except as specified in such certificate and
(ii) (x) a Compliance Certificate
containing all information and calculations necessary for
determining compliance by each
Covered Party with the provisions of this Agreement and the
Guarantee and Security Agreement
referred to therein as of the last day of the month, fiscal
quarter or fiscal year of the Borrower, as
the case may be, and (y) to the extent not previously
disclosed to the Lender, a description of any
change in the jurisdiction of organization of any Loan Party
(or, if such Loan Party is not a
registered organization (as defined in Article 9 of the UCC
as in effect in any applicable
jurisdiction) its chief executive office) and a list of any
Intellectual Property acquired by any
Loan Party since the date of the most recent report
delivered pursuant to this clause (y) (or, in the
case of the first such report so delivered, since the
Closing Date);
(c) as soon as available, and in any event no later than 30
days before the end of
each fiscal year of the Borrower, a detailed monthly budget
for the Borrower (with Unit by Unit
detail) in form and substance reasonably satisfactory to the
Lender for the following fiscal year
(including a projected consolidated balance sheet of the
Borrower and its Subsidiaries as of the
end of the following fiscal year, the related consolidated
statements of projected cash flow,
projected changes in financial position and projected income
and a description of the underlying
assumptions applicable thereto), and, as soon as available,
significant revisions, if any, of such
budget;
(d) promptly upon the effectiveness thereof, copies of any
formal, material
modification to any business plan of the Borrower;
and
(e) promptly, such additional financial and other
information as the Lender may from
time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or
otherwise satisfy at or before maturity
or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where
the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been
provided on the books of the relevant
Covered Party and except where the failure to do so would not,
individually or in the aggregate, have a
Material Adverse Effect.
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5.4 Maintenance of Existence; Compliance. Preserve, renew
and keep in full force
and effect its organizational existence; maintain all rights,
privileges and franchises necessary or desirable
in the normal conduct of its business; and comply in all material
respects with all Contractual Obligations
and Requirements of Law, except where the failure to do so would
not, individually or in the aggregate,
have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance. (a) Keep all
material property useful and
necessary in its business in good working order and condition,
ordinary wear and tear excepted and
(b) maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts
and against at least such risks (but including in any event
public liability, product liability and business interruption) as
are usually insured against in the same general area by companies
engaged in the same or a similar business.
5.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books
of records and account in which full, true and correct entries in
conformity with GAAP and all
Requirements of Law shall be made of all dealings and
transactions in relation to its business and
activities and (b) permit representatives of the Lender to visit
and inspect any of its properties and
examine and make abstracts from any of its books and records at
any reasonable time and as often as may
reasonably be desired and to discuss the business, operations,
properties and financial and other condition
of the Covered Parties with officers and employees of the Covered
Parties and with their independent
certified public accountants.
5.7 Notices. Promptly give notice to the Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) material default or material event of default
under any Contractual
Obligation of any Covered Party or (ii) material
litigation, investigation or proceeding that may
exist at any time between any Covered Party and any
Governmental Authority;
(c) any litigation or proceeding affecting any Covered Party
(i) in which the
uninsured amount involved is $50,000 or more, (ii) in which
injunctive or similar relief is sought
or (iii) which relates to any Loan Document;
(d) the following events, as soon as possible and in any
event within 30 days
after any Covered Party knows or has reason to know thereof:
(i) the occurrence of any
Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan,
the creation of any Lien in favor of the PBGC or a Plan or
any withdrawal from, or the
termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC,
any Covered Party or any Commonly
Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan;
(e) the occurrence of any event requiring a prepayment of
the Loans;
(f) the acquisition of any real or personal property, or the
acquisition or
formation of any Subsidiary, requiring action
under Section 5.9;
(g) any development or event that has had or could
reasonably be expected to have a
Material Adverse Effect; or
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(h) the occurrence of any default under any
franchise agreement or material lease or other material
agreement.
Each notice pursuant to this Section 5.7 shall be accompanied by
a statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the
relevant Covered Party proposes to take with respect thereto.
5.8 Compliance with Laws. (a) Comply in all
material respects with all
Requirements of Law, including without limitation all applicable
health, securities and franchise laws and regulations, and all
applicable restrictions imposed by all Governmental Authorities,
applicable to it and its property, (b) conform with and duly
observe in all material respects all laws, rules and regulations
and all other valid requirements of any regulatory authority with
respect to the conduct of its business; and (c) obtain and
maintain all material licenses, permits, certifications and
approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted
and herein contemplated.
5.9 Additional Collateral; Subsidiaries; New
Units.
(a) With respect to any property (or leasehold interest
therein) acquired after the Closing
Date by any Covered Party, execute and deliver any documentation
(which, in the case of any owned real
property, may include a first priority mortgage, in form and
substance satisfactory to the Lender (a
"Mortgage")) as the Lender may deem necessary or advisable to
grant to the Lender a perfected first
priority security interest in such property (or leasehold
interest).
(b) Not form or acquire any direct or indirect Subsidiary,
except the Borrower as a
wholly-owned Subsidiary of the Guarantor.
(c) Use its best efforts, before entering into any new lease
with respect to any Leased
Properties, obtain from the landlord relating thereto a lien
waiver and consent in favor of the Lender, in
form and substance satisfactory to the Lender.
(d) Insure that all Units opened after the date hereof are
owned by the Borrower. Any
interest in any restaurant or Unit now or hereafter acquired by
the Guarantor shall be an asset owned
directly by the Borrower.
5.10 Depository Accounts; Additional Accounts. Commencing on
the 30th day after
the Closing Date, maintain all operating, depository and
disbursement bank accounts with the Lender,
except as otherwise permitted by Section 4(j) of the Security
Agreement.
5.11 Communications with Accountants. The Borrower authorizes
the Lender to
communicate directly with the Borrower's independent certified
public accountants and has instructed
those accountants in writing to disclose to and discuss with the
Lender any and all prepared financial
statements and all other supporting financial documents and
schedules delivered to the Lender by any
Loan Party.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any Loan
or other amount is owing to the Lender hereunder, the
Borrower shall not, and shall not permit any of the other
Covered Parties to, directly or indirectly:
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6.1 Financial Condition Covenants.
(a) Minimum New Equity. Fail to cause the Guarantor to raise
the New Equity by
September 30, 2005.
(b) Consolidated Debt Service Coverage Ratio. Commencing
with the four-quarter
period ending December 31, 2005 and for each four-quarter period
thereafter, permit the Consolidated
Debt Service Coverage Ratio at any time to be less than 1.25 to
1.0, tested on the last day of each fiscal
quarter of the Borrower.
(c) Consolidated Senior Funded Debt to EBITDA Ratio. Permit
the Consolidated Senior
Funded Debt to EBITDA Ratio (i) at any time during the period
from December 31, 2005 to December
30, 2006 to be more than 2.5 to 1 and (ii) at any time during the
period after December 31, 2006 to be
more than 2.0 to 1.0, tested, in each case, on the last day of
each fiscal quarter of the Borrower.
(d) Consolidated Maintenance Capital Expenditures. Permit
the Consolidated
Maintenance Capital Expenditures of the Borrower for any
four-quarter period to exceed the product of $20,000 times the
number of Existing Units as of the last day of such four-quarter
period, tested on the last day of such four-quarter period;
provided, however, for the purposes of this Section 6.1(d) there
shall be excluded from the calculation of Consolidated
Maintenance Capital Expenditures (i) the aggregate amount thereof
incurred prior to the date of this Agreement on the Existing Unit
in Watertown, Massachusetts and (ii) $50,000 per each Existing
Unit existing as of the date of this Agreement incurred in the
fiscal year ending December 31, 2005.
(e) Consolidated New Unit Capital Expenditures.
Until the New Equity Date, the
Borrower will not make any Consolidated New Unit Capital
Expenditures. After the New Equity Date,
the Borrower will not build, purchase or otherwise acquire or
develop new Units unless (i) all
expenditures in connection therewith are fully funded by Borrower
in a manner reasonably satisfactory to
the Lender, (ii) both before and after giving effect to such
activity, no Default or Event of Default shall
have occurred and be continuing and (iii) prior to undertaking
the same, the Borrower shall have supplied
the Lender with a certificate, executed by a Responsible Officer,
detailing such compliance.
6.2 Indebtedness. Create, issue, incur, assume,
become liable in respect of or suffer
to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness to the Borrower, provided that the
aggregate principal amount
of the Indebtedness of the Guarantor to the Borrower shall
not exceed the lesser of $400,000 or
the aggregate amount of Additional Term Loans, and the
Guarantor shall have no Indebtedness to
the Borrower prior to the New Equity Date;
(c) Indebtedness outstanding on the date hereof and listed
on Schedule 6.2(c),
but not any refinancings, refundings, renewals or
extensions thereof;
(d) Subordinated Debt;
(e) the Seller Debt, in an outstanding principal amount not
exceeding the
outstanding principal amount otherwise due or to become due
thereunder, as in effect on the date hereof; and
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(f) Indebtedness (including, without
limitation, Capital Lease Obligations) secured by Liens
permitted by Section 6.3(f) in an aggregate principal
amount not to exceed 100,000 at any one time
outstanding with respect to Existing Units existing as
of the date hereof and $200,000 at any one time
outstanding with respect to new Units opening after the
date hereof.
6.3 Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property,
whether now owned or hereafter acquired, except:
(a) Liens for taxes not yet due or that are being contested
in good faith by
appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on
the books of the Borrower or its Subsidiaries, as the
case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other
like Liens arising in the ordinary course of business
that are not overdue for a period of more than
30 days or that are being contested in good faith by
appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation,
unemployment insurance and other social security
legislation, other than any Lien imposed by
ERISA;
(d) deposits to secure the performance of bids, trade
contracts (other than for
borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and
other obligations of a like nature incurred in the
ordinary course of business;
(e) Liens in existence on the date hereof listed on Schedule
6.3(e), securing
Indebtedness permitted by Section 6.2(c), provided that
no such Lien is spread to cover any
additional property after the Closing Date and that the
amount of Indebtedness secured thereby is
not increased;
(f) Liens securing Indebtedness of any Covered Party
incurred as permitted
under Section 6.2(f) to finance the acquisition of
fixed or capital assets, provided that (i) such
Liens shall be created substantially simultaneously
with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any
property other than the property financed
by such Indebtedness, and (iii) the amount of
Indebtedness secured thereby is not increased; and
(g) Liens created pursuant to the Security Documents.
6.4 Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution), or Dispose of all or
substantially all of its property or business.
6.5 Disposition of Property. Dispose of any of its property,
whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital
Stock to any Person, except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of
business; and
(b) the sale of inventory in the ordinary course of business.
6.6 Restricted Payments.
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(a) Without the prior written consent of the
Lender, declare, make, or pay any
distribution of any kind whatsoever or dividend (other than
dividends payable solely in common stock (or equivalent
interests) of the Person making such dividend) on, or make any
payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of any
Covered Party, whether now or hereafter outstanding; or
(b) make any other distribution in respect
thereof, either directly or indirectly, whether in
cash or property or in obligations of any Covered Party
(collectively, "Restricted Payments"), except that
any Subsidiary of the Borrower may make Restricted Payments to
the Borrower.
6.7 Stock. Issue or permit to be outstanding any Capital
Stock not expressly
provided for in its certificate of incorporation as in
effect on the Closing Date (or, in the case of any
Subsidiary, as approved by the Lender).
6.8 Investments. Make any advance, loan, extension of credit
(by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other
debt securities of, or any assets constituting a business unit
of, or make any other investment in, any
Person (all of the foregoing, "Investments") except:
(a) extensions of trade credit in the ordinary course of
business;
(b) Investments in Cash Equivalents;
(c) loans and advances from the Guarantor to employees of
Guarantor not to
exceed $100,000 in the aggregate in the ordinary
course of business (including for travel,
entertainment and relocation expenses) at any one time
outstanding; and
(d) in the case of the Borrower, loans to the Guarantor
after the New Equity Date
to the extent allowed under Section 6.2(b), provided that
the aggregate principal amount of all
loans extended by the Borrower to the Guarantor shall be
evidenced by demand promissory notes
endorsed over to the Lender as Collateral, in form and
substance satisfactory to the Lender, and
shall not exceed the lesser of (i) $400,000 or (ii) the
aggregate principal amount of Additional
Term Loans advanced hereunder.
6.9 Modifications of Certain Debt Instruments. Amend,
modify, waive or otherwise
change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms
of any Indebtedness.
6.10 Transactions with Affiliates and Insiders. Enter into
any transaction, including
any purchase, sale, lease or exchange of property, the rendering
of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other
than the Borrower or the Guarantor) of
such Covered Party except:
(a) normal and reasonable compensation of officers and other
employees, and
normal and reasonable reimbursement of expenses and
indemnification of officers and directors;
(b) any consulting agreement with Seller, provided that such
payments to Seller
will be subordinated on the terms set forth in the
Subordination Agreement; and
(c) any such other transaction not covered by subsection (a)
or (b) above that is
(i) otherwise permitted under this Agreement, (ii) in the
ordinary course of business of the
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relevant Covered Party, and (iii) upon fair and
reasonable terms no less favorable, in the
reasonable judgment of the Lender, to the relevant
Covered Party than it would obtain in a comparable
arm's length transaction with a Person that is not
an Affiliate.
6.11 Sales and Leasebacks. Enter into any arrangement with
any Person providing for
the leasing by any Covered Party of real or personal property
that has been or is to be sold or transferred
by such Covered Party to such Person or to any other Person to
whom funds have been or are to be
advanced by such Person on the security of such property or
rental obligations of such Covered Party.
6.12 Changes in Fiscal Periods. Permit the fiscal year of the
Borrower to end on a day
other than December 31 or change the Borrower's method of
determining fiscal quarters.
6.13 Negative Pledge Clauses. Enter into or suffer to exist
or become effective any
agreement that prohibits or limits the ability of any Covered
Party to create, incur, assume or suffer to
exist any Lien upon any of its property or revenues, whether now
owned or hereafter acquired, other than
(a) this Agreement and the other Loan Documents and (b) any
agreements governing any purchase money
Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or
limitation may only be effective against the assets financed
thereby).
6.14 Clauses Restricting Subsidiary Distributions. Enter into
or suffer to exist or
become effective any consensual encumbrance or restriction on the
ability of any Subsidiary of the
Borrower to (a) make Restricted Payments in respect of any
Capital Stock of such Subsidiary held by, or
pay any Indebtedness owed to, the Borrower or any other
Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other
Subsidiary of the Borrower or (c) transfer
any of its assets to the Borrower or any other Subsidiary of the
Borrower, except for such encumbrances
or restrictions existing under or by reason of any restrictions
existing under the Loan Documents.
6.15 Lines of Business; Location of Business. Enter into any
business, either directly
or through any Subsidiary, except for those businesses in such
Covered Party is engaged on the date of
this Agreement, or conduct any part of its business outside of
the United States of America.
6.16 Use of Proceeds. Use the proceeds of the Loans, whether
directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase
or carry margin stock (within the
meaning of Regulation U of the Board) or to extend credit to
others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally
incurred for such purpose.
6.17 Full Funding. Fail to satisfy the conditions to draw
down or fail to draw down
the entire Commitment by the last day of the Drawdown Period.
SECTION 7. EVENTS OF DEFAULT If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of or
interest on any Loan when
due in accordance with the terms hereof; or the Borrower
shall fail to pay any other amount
payable hereunder or under any other Loan Document, within
three Business Days after any such
other amount becomes due in accordance with the terms
hereof; or
(b) any representation or warranty made or deemed made by
any Loan Party
herein or in any other Loan Document or that is
contained in any certificate, document or
financial or other statement furnished by it at any
time under or in connection with this
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Agreement or any such other Loan Document shall prove to have
been inaccurate in any material respect on or as of the date made
or deemed made; or
(c) any Loan Party shall default in the observance or
performance of any
agreement contained in Section 5 or 6 of this Agreement or
Section 4 of the Security Agreement;
or
(d) any Loan Party shall default in the observance or
performance of any other
agreement contained in this Agreement or any other Loan Document
(other than as provided in
paragraphs (a) through (c) of this Section), and such default
shall continue unremedied for a
period of 15 days; or
(e) any Covered Party shall (i) default in making any
payment of any principal
of any Indebtedness (including any Guarantee Obligation, but
excluding the Loans) on the
scheduled or original due date with respect thereto; or (ii)
default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if
any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii)
default in the observance or
performance of any other agreement or condition relating to any
such Indebtedness or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall
occur or condition exist, the effect of which default or other
event or condition is to cause, or to
permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such
holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become
due prior to its stated maturity or (in the case of any such
Indebtedness constituting a Guarantee
Obligation) to become payable; provided, that a default, event or
condition described in clause (i),
(ii) or (iii) of this paragraph (e) shall not at any time
constitute an Event of Default unless, at such
time, one or more defaults, events or conditions of the type
described in clauses (i), (ii) and (iii)
of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate
$25,000; or
(f) (i) any Covered Party shall commence any case,
proceeding or other action
(A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or
other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for
all or any substantial part of its assets,
or any Covered Party shall make a general assignment for the
benefit of its creditors; or (ii) there
shall be commenced against any Covered Party any case, proceeding
or other action of a nature
referred to in clause (i) above that (A) results in the entry of
an order for relief or any such
adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period
of 60 days; or (iii) there shall be commenced against any Covered
Party any case, proceeding or
other action seeking issuance of a warrant of attachment,
execution, distraint or similar process
against all or any substantial part of its assets that results in
the entry of an order for any such
relief that shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60
days from the entry thereof; or (iv) any Covered Party shall take
any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any
of the acts set forth in clause (i),
(ii), or (iii) above; or (v) any Covered Party shall generally
not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become
due; or
(g) (i) any Person shall engage in any
"prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated
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funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan
or any Lien in favor of the PBGC or a Plan shall arise on
the assets of any Covered Party or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or
to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, (iv) any Single Employer
Plan shall terminate for purposes of Title IV of ERISA, (v)
any Covered Party or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Required Lenders is
likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each
case in clauses (i) through (vi) above, such event or
condition, together with all other such events or
conditions, if any, could, in the sole judgment of the
Lender, reasonably be expected to have a Material Adverse
Effect; or
(h) one or more judgments or decrees shall
be entered against any Covered Party involving in the
aggregate a liability (not paid or fully covered by
insurance as to which the relevant insurance company has
acknowledged coverage) of $50,000 or more, and all such
judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
(i) any of the Security Documents shall
cease, for any reason, to be in full force and effect, or
any Loan Party or any Affiliate of any Loan Party shall so
assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or
(j) the guarantee contained in the
Guarantee and Security Agreement or in any other guarantee
of the Obligations shall cease, for any reason, to be in
full force and effect or any Covered Party shall so assert;
or
(k) any Change of Control shall occur; or
(1) any obligations subordinated pursuant
to any Subordination Agreement or any other subordination
agreement executed in favor of the Lender shall cease, for
any reason, to be validly subordinated to the obligations of
the Loan Parties under the Loan Documents as provided in the
applicable Subordination Agreement or other subordination
agreement or any Covered Party or Person who is a party to
it shall so assert; or
(m) the Landlord under any real property
lease for any Unit shall take any action to terminate such
lease, without the prior written consent of Lender;
then, and in any such event, (A) if such event is an Event of
Default specified in clause (i) or (ii) of paragraph (f) above
with respect to the Borrower, automatically the Loans shall
immediately terminate (with accrued interest thereon) and all
other amounts owing under this Agreement and the other Loan
Documents shall immediately become due and payable, and (B) if
such event is any other Event of Default, either or both of the
following actions may be taken: the Lender may, by notice to the
Borrower declare the Loans (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan
Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable. Except as expressly
provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived by the
Borrower.
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SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this Agreement, any
other Loan Document,
nor any terms hereof or thereof may be amended, supplemented,
waived or modified except by a writing
duly executed by the Borrower and the Lender.
8.2 Notices. All notices, requests and demands to or upon
the respective parties
hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when
delivered, or three Business Days after
being deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when received, addressed
as follows in the case of the Borrower or the Lender, or to such
other address as may be hereafter notified
by the parties hereto:
      Borrower:                           KFLG Watertown, Inc.
                                          20 Guest Street, Suite
                                          450
                                          Brighton
                                          Landing
                                          East
                                          Brighton,
                                          MA
                                          02135
                                          Attention:
                                          Eric
                                          Spitz
                                          Telecopy:
                                          617-787-6010
                                          Telephone:
                                          617-787-6000
      Lender:                             TD Banknorth, N.A.
                                          370 Mam Street
                                          Worcester, MA 01608
                                          Attention: Douglas
                                          Bulfinch
                                          Telecopy:
                                          978-524-2071
                                          Telephone:
                                          978-524-2075
       With a copy to:                    Edwards & Angell, LLP
                                          101 Federal Street
                                          Boston, Massachusetts
                                          02110
                                          Attention:
                                          Susan
                                          E.
                                          Siebert,
                                          Esq.
                                          Telecopy:
                                          (888)325-9131
                                          Telephone:
                                          (617)
                                          951-2220
provided that any notice, request or demand to or upon the Lender
shall not be effective until received.
The Lender or the Borrower may, in their
discretion, agree to accept notices and other communications to
it hereunder by electronic communications pursuant to procedures
approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
8.3 No Waiver; Cumulative Remedies. No failure
to exercise and no delay in
exercising on the part of the Lender any right, remedy, power or
privilege hereunder or under the other
Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
8.4 Survival of Representations and Warranties.
All representations and warranties
made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered
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pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
8.5 Payment of Expenses and Taxes. The Borrower
agrees (a) to pay or reimburse the Lender for all its
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith
or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the
reasonable fees and disbursements of counsel to the Lender and
filing and recording fees and expenses, with statements with
respect to the foregoing to be submitted to the Borrower prior to
the Closing Date (in the case of amounts to be paid on the
Closing Date) and from time to time thereafter on a quarterly
basis or such other periodic basis as the Lender shall deem
appropriate, (b) to pay or reimburse the Lender for all its costs
and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including the fees and
disbursements of counsel (including the allocated fees and
expenses of in-house counsel) to the Lender, (c) to pay,
indemnify, and hold the Lender harmless from, any and all
recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise
and other taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement,
the other Loan Documents and any such other documents, and (d) to
pay, indemnify, and hold the Lender and its respective officers,
directors, employees, affiliates, agents and controlling persons
(each, an "Indemnitee") harmless from and against any and all
other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever with respect to the negotiation,
execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and any such other
documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the
operations of any Covered Party or any of the Properties and the
reasonable fees and expenses of legal counsel in connection with
claims, actions or proceedings by any Indemnitee against any Loan
Party under any Loan Document (all the foregoing in this clause
(d), collectively, the "Indemnified Liabilities"), provided, that
the Borrower shall have no obligation hereunder to any Indemnitee
with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such
Indemnitee under the Loan Documents. Without limiting the
foregoing, and to the extent permitted by applicable law, the
Borrower agrees not to assert and to cause its Subsidiaries not
to assert, and hereby waives and agrees to cause its Subsidiaries
to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever
kind or nature, under or related to Environmental Laws, that any
of them might have by statute or otherwise against any
Indemnitee. All amounts due under this Section 8.5 shall be
payable not later than 30 days after written demand therefor. The
agreements in this Section 8.5 shall survive repayment of the
Loans and all other amounts payable hereunder.
8.6 Successors and Assigns; Participations and
Assignments.
(a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns permitted hereby, except
that the Borrower may not assign or otherwise transfer any of
their respective rights or obligations hereunder without the
prior written consent of the Lender (and any attempted
assignment or transfer by the Borrower without such consent
shall be null and void).
-36-

 

 

	
(b) (i) The Lender may assign to one or more
assignees (each, an "Assignee") all or a
portion of its rights and obligations under this Agreement
(including Loans at the time owing to it);
provided, however in the event the Assignee is not a financial
institution and no Event of Default then
exists hereunder, the Lender shall obtain Borrower's consent to
such Assignee (which consent shall not be
unreasonably withheld or delayed).
(ii) The Lender may sell participations to
one or more participants (each, a
"Participant"), all or a portion of its rights and obligations
under this Agreement. The Borrower agrees that each
Participant shall be entitled to the benefits of this
Agreement to the same extent as if it held its interest
directly.
(c) The Lender may at any time pledge or assign
a security interest in all or any portion
of its rights under this Agreement to secure obligations of the
Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank, and this Section
shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge
or assignment of a security interest shall
release the Lender from any of its obligations hereunder or
substitute any such pledgee or Assignee for
the Lender as a party hereto. The Borrower, upon receipt of
written notice from the Lender, agrees to
issue Notes to the Lender to facilitate transactions of the type
described in this Section.
8.7 Adjustments; Setoff. In addition to any rights and
remedies of the Lender
provided by law, the Lender shall have the right, without prior
notice to the Borrower, any such notice
being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount
becoming due and payable by the Borrower hereunder (whether at
the stated maturity, by acceleration or
otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or
special, time or demand, provisional or final), in any currency,
and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect,
absolute or contingent, matured or
unmatured, at any time held or owing by the Lender, any of its
affiliates or any branch or agency of either
thereof to or for the credit or the account of any Covered Party,
whether or not the Lender is otherwise
fully secured. The Lender agrees promptly to notify the Borrower
after any such setoff and application
made by the Lender, provided that the failure to give such notice
shall not affect the validity of such setoff
and application.
8.8 Counterparts. This Agreement may be executed by one or
more of the parties to
this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall
be deemed to constitute one and the same instrument. Delivery of
an executed signature page of this
Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart
hereof.
8.9 Severability- Any provision of this Agreement that is
prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such
provision in any other jurisdiction.
8.10 Integration. This Agreement and the other Loan Documents
represent the entire
agreement of the Borrower and the Lender with respect to the
subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by
the Lender relative to the subject matter
hereof not expressly set forth or referred to herein or in the
other Loan Documents.
-37-

 

 

	
8.11 Governing Law. This Agreement and the rights and
obligations of the parties
under this Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of
The Commonwealth of Massachusetts.
8.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to
this Agreement and the other Loan Documents to which it is a
party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the
courts of The Commonwealth of Massachusetts, the courts of
the United States for the District of
Massachusetts, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts
and waives any objection that it may now or hereafter
have to the venue of any such action or
proceeding in any such court or that such action or
proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be
effected by mailing a copy thereof by registered or
certified mail (or any substantially similar
form of mail), postage prepaid, to the Borrower at its
address specified hereunder;
(d) agrees that nothing herein shall affect the right to
effect service of process in
any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have
to claim or recover in any legal action or proceeding
referred to in this Section any special,
exemplary, punitive or consequential damages.
8.13 Acknowledgements. The Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of
this Agreement and the other Loan Documents;
(b) the Lender has no fiduciary relationship with or duty to
the Borrower or any
other Covered Party arising out of or in connection with
this Agreement or any of the other Loan
Documents, and the relationship between the Lender, on one
hand, and the Covered Parties, on
the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or
otherwise exists by virtue of the transactions contemplated
hereby among Covered Parties and the
Lender.
8.14 WAIVERS OF JURY TRIAL. THE BORROWER AND THE
LENDER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 USA Patriot Act Notice. The Lender hereby
notifies the Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26,
2001)) (the "Act"), it is required to obtain, verify and record
information that identifies the Borrower,
-38-

 

 

	
which information includes the name and address of the Borrower
and other information that will allow the Lender to identify the
Borrower in accordance with the Act.
8.16 Replacement Note. Upon receipt of an
appropriate and reasonably acceptable affidavit of an officer of
the Lender as to the loss, theft, destruction or mutilation of
any Note or of any other Loan Document which is not of public
record and, in the case of any such mutilation, upon surrender
and cancellation of such Note or other Loan Document and receipt
of the indemnity described below, the Borrower will, and will
cause other Loan Parties to, issue, in lieu thereof, a
replacement Note or other Loan Document in the same principal
amount (as to any Note) and in any event of like tenor and upon
such issuance the original Note or other Loan Document shall be
deemed cancelled. In connection with any such issuance of a
replacement Note or other Loan Document, the Lender shall issue a
written indemnification (which need not be secured) in favor of
the Loan Parties with respect to such lost, stolen or destroyed
Note or other Loan Document in form and substance reasonably
satisfactory to the Loan Parties.
-39-

 

 

	
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first
above written.
KFLG
WATERTOWN,
INC.
By:
Name:
Title:
TD
BANKNORTH,
N.A
By:
Name:
Title:
Signature
Page to
Credit
Agreement

 

 

	
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as
of the day and year first above written.
KFLG
WATERTOWN,
INC.
By:
Name:
Title:
TD
BANKNORTH,
N.A.
By:
Name:
Title:
Signature
Page
to
Credit
Agreement

 

 

	
SCHEDULE 3.4
TO
CREDIT
AGREEMENT
Consents, Authorizations, Filings
and Notices None.

 

 

	
None.
Schedule 3.6
to
Credit Agreement
Litigation

 

 

	
Schedule 3.14
To
Credit Agreement
Subsidiaries and Capital Stock
Borrower: Guarantor owns 100% of the issued and
outstanding capital stock of the
Borrower.
200,000 shares of common stock, par value $.01
per share, are authorized. 1,000 shares are
issued and outstanding.
Guarantor: The owners of the issued and outstanding capital stock
of the Guarantor are as follows: See Attached
Authorized and Issued and Outstanding Shares are
as follows:
4,000,000 shares of common stock, par value
$.001 per share, are authorized 1,000,000 shares
of preferred stock, par value $.001 per share,
are authorized (which may be issued from time to
time in one or more series, of which one series
shall be known as the Series A Convertible
Preferred Stock).

 

 

	
                                                     KNOWFAT FRANCHISE COMPANY
                                                         LIST OF INVESTORS
                                                                    Series A      $2.90       Total
                                        Founder's
                                         Shares        Options           $      Shares           $      Shares            %
George Naddaff                          1,000,000                     50,000     17,241      50,000    1,017,241      20.12%
Eric Spitz                               500,000                      25,000      8,621      25,000    508,621        13.05%
Gary Jacobus                             500,000                     25,000       8,621      25,000    508,621        13.06%
LFNF                                     545,454                                                        545,454       14 01%
Tim Kurtz                                102,871       21,053         25,000      8,621      25,000     132,545       3.40%
Tom Mackey                               84,211        31,579                                           115,780        2.97%
Bob Graysop                              15,000                      25,000       6,621      25,000     23,621        0.81%
Greg Horn                                15,000                      25,000       8,621      25,000     23,621        0.81%
Intercontinental Capital                                             200,000    68,066      200,000     68,683         1.77%
Willie Goldwasser                                                    100,000     34,483     100,000     34,483         0.89%
Vivian Goldwasser                                                    100,000     34,483     100,000     34,483         0 89%
MiKe Frieze                                                          100,000     34,483     100,000     34,483         0.89%
Jeffrey ROSS                                             3,000       100,000     34,4S3     100,000     37,483         0.96%
MDR LLC                                                              100,000     34,483     100,000     34,483         0.89%
Moorea, LLC                                                          100,000     34,483     100,000     34,483         0.89%
Jeff Davis                                                           100,000     34,483     100,000     34,483         0.89%
Len Lodish                                                           75,000      25,862      75,000     25,862         0.86%
Courtland Investments                                                75,000      25,862      75,000     25,862         0 66%
Sunup Enterprises                                                    65,000      22,414      65,000     22,414         0.58%
Wayne Tanzer                                                         65,000      22,414      65,000     22,414         0.58%
Richard Krantz                                                       60,001      20,690      60,0014    20,690         0.53%
Michael Cronin                                                       58,000      20,000      58,000     20,000         0.51%
Erlbaum Family Partnership                                           50,025      17,250      50,025     17,250         0.44%
Chris Kitchen                                                        50,025      17,250      50,026     17,250         0 44%
Steve Solomon                                                        50,000      17,241      50,000     17,241         0.44%
Steven Spivak                                                        50,000      17,241      50,000     17,241         0 44%
Edward Bernstein                                                     50,000      17,241      50,000     17,241         0.44%
Peter Kadas                                                          50,000      17,241      50,000     17,241         0.44%
Jim Magllozzi                                                        50,000      17,241      50,000     17,241         0.44%
CCM Really, LLC                                                      50,000      17,241      50,000     17,241         0.44%
Alex D'Arbeloff                                                      60,000      17,241      50,000     17,241         O.44%
Jim Connelly                                                         50,000      17,241      50,000     17,241         0.44%
Mustugest Development LLC                                            50,000      17,241      50,000     17,241        0 44"/,
Ashton Holdings                                                      50,000      17,241      50,000     17,241         0.44%
Mike Thurz                                                           50,000      17,241      50,000     17,241         044%
Bill Stone                                                           50,000      17,241      50,000     17,241         0 44%
Bruce Johnslone                                                      49,996      17,240      49,996     17,240         0.44%
Sean Frazier                                                         40,000      13,763      40,000     13,793         0.35%
Paul Hummel                                                          35,003      12,070      35,003     12,070         0.31%
Adam young                                                           33,577      11,578      33,577     11,578         0.30%
Mark Cohen                                                           33,577      11,578      33,577     11,578         0 30%
Carter Winstanley                                                    30,000      10,345      30,000     10,345         0.27%
Daniel Erlbaum                                                       25,013      8,625       25,013     8,625          0.22%
George Mueller                                                       25,001      8,621       25,001     8,621          0.22%
George Greenfield                                                    25,001      8,621       25,001     8,621         0.22ft
Scott Sherman                                                        25,000      8,621       25,000     8,621          0.22%
Doug Wolf                                                            25,000      8,621       25,000     8,621          0 22%
Bill Keravouri                                                       25,000      8,621       25,000     8,621          0 22%
Bill Lamberton                                                       25,000      8,621       25,000     8,621          0.22%
Pat Languzzi                                                         25,000      8,621       25,000     8,621          0.22%
Jim Schwebel                                                         25,000      8,621       25,000     8,621          0.22%
Renee Kasner                                                         25,000      8,621       25,000     8,621          0.22%
Brian Kerwin                                                         25,000      8,621       25,000     8,621          0.22%
Neal Pruchansky                                                      25,000      8,621       25,000     8,621          0.22%
Semyon Dukach                                                        25,000      8,621       25,000     8,821          0.22%
Robert Fletcher                                                      25,000      8,621       25,000     8,621          0 22%
Neal Rubin                                                           25,000      8,621       25,000     8,621          0,22%
Henry Nasetta                                                        25,000      8,621       25,000     8,621          022%
Blair LaCorte                                                        25,000      8,621       25,000     8,621          0.22%
Mike Trager                                                          25,000      8,621       25,000     8,621          0.22%
Mark Komanecky                                                       24,998      8,020       24,998     8,620          0.22%
Lajos Varga                                                          24,980      8,614       24,960     8,614          0.22%
Jim Conant                                                           14,500      5,000       14,500     5,000          0.13%
Mike Ciacciarell                                                     10,150      3,500       10,150     3,500          0.09%
Bob McCarthy                                                         10,150      3,500       10,150     3,500          0.09%
Francis Kurtz                                                        10,000      3,446       10,000     3,448          0 09%
Demian Gage                                             3,000        10,000      3,448       10,000     8,448          0.17%
Paul Kinnaly                                                         10,000      3,448       10,000     3,448          0.09%
Ken Rose                                                             10,000      3,449       10,000     3,448          0 09%
Scott Crenshaw                                                       10,000      3,448       10,000     3,448          0.09%
David Parsona                                                        10,000      3,448       10,000     3,448          0.09%
John Trimble                                                         10,000       3,448      10,000     3,448          0.09%
John Bello                                              3,000                                           3,000          0.08%
Mark Selbert                                            3,000                                           3,000          0.08%
Karl Guggenmos                                          3,000                                            3,000         0.08%
McDenmott Yelen                                          10,000                                          10,000        0.26%
Bob Nasella                                             5,000                                           5,000          0.13%
Bill Fry                                                 10,000                                          10,000        0 26%
lima Norton
                                                        5,000                                            5,000         0.13%
(Illegible)                                          (Illegible)   (Illegible) (Illegible) (Illegible)(Illegible)   (Illegible)

 

 

	
                                               SCHEDULE 3.18
                                                       TO CREDIT AGREEMENT
                                                 UCC Filings Borrower:      Massachusetts Secretary of the Commonwealth

 

 

	
                                              SCHEDULE 3.21(A)

                                                       TO CREDIT AGREEMENT

                                   Indebtedness to Remain Outstanding Obligations to Seller under Consulting Agreement and Asset
Purchase Agreement.

 

 

	
                                          Schedule 3.21 (b)
                                                  to Credit Agreement
                                      Indebtedness to be Paid
1.       $96,078 note payable to Guarantor.
2.       All outstanding loan amounts due to Citizens Bank of Massachusetts.

 

 

	
                                                          SCHEDULE 3.21(C)
                                                         TO CREDIT AGREEMENT
                                                       Liens to be Terminated
 Liens in favor of Citizens Bank of Massachusetts filed against Borrower at Massachusetts Secretary of the Commonwealth.
 Liens in favor of Highland Capital Corp. filed against Low Fat No Fat Gourmet Cafe, Inc. at the Massachusetts Secretary of the
 Commonwealth
 Liens in favor of Sovereign Bank filed against Low Fat No Fat Gourmet Cafe, Inc. at the Massachusetts Secretary of the
 Commonwealth
 Liens in favor of Citizens Bank of Massachusetts filed against Low Fat No Fat Gourmet Cafe, Inc. at the Massachusetts Secretary
 of the Commonwealth

 

 

	
                                                          SCHEDULE 3.21(D)
                                                         TO CREDIT AGREEMENT
                                                     Liens to Remain Outstanding
See attached UCC Financing Statements.*
 * The UCC filed against Low Fat No Fat Gourmet Cafe, Inc. in favor of Cummings Properties, LLC shall be subordinated to the liens
         granted by the Borrower and the Guarantor to the Lender pursuant to such subordination agreements and other documents as
         are satisfactory to the Lender.

 

 

	
                 MA SOC    Ring Number: 200433410140    Date: 10/5/2004 827.00 AM
                                                             UCC-1 Form
 FILER INFORMATION
   Full name. B DAVID SANDBERG      Phone: 617 492-1027 CONTACT INFORMATION
   Contact name: DAVID SANDBERG
   Street #1: 166 CHESTNUT STREET
   City. CAMBRIDGE     State: MA      ZIP: 02139      Country: USA
  Notification Method: E-Mail     Email: dsandberg@speakeasy net
 DEBTOR INFORMATION Org. Name: KFLG WATERTOWN, INC. Org. Type: CORP
  Jurisdiction: MA     Org. ID. applied for Mailing Address!: 20 GUEST STREET
  Mailing Address2: SUITE 450 City: WATERTOWN     State-MA    ZIP: 02135
  Country: USA
 SECURED PARTY INFORMATION Org. Name: LOW FAT NO FAT GOURMET CAFE, INC. Mailing
  Addressl: 98 B BOSTON TURNPIKE RD-City: SHREWSBURY    State: MA    ZIP:
  01545     Country USA
 TRANSACTION TYPE: STANDARD
 COLLATERAL
All fixtures and tangible and intangible personal property of the Debtor, to the extent that it is located at, or is used in
connection with or arises fiom the business located at, 222 Arsenal Street, Watertown, Massachusetts, whether now owned or
hereafter acquired or in which the Debtor may now have or hereafter acquire an interest, including, without limitation, (a) all
equipment {including all machinery, tools and furniture), inventory and goods, (b) all accounts, accounts receivable, other
receivables, contract rights, chattel paper, and general intangibles of The Debtor (including Debtor's rights under ail
authorizations, permits and licenses), (c) all instruments, documents of title, policies and certificates of insurance, bank
deposits, deposit accounts, checking accounts and cash, (d) all accessions, additions or improvements to, replacements and
substitutions for, and all products of; all of the foregoing, (e) all books, records and documents relating to all the foregoing
and (f) all other properties and assets of every type used or useful in connection with the ownership and operation of the
Debtor's business.

 

 

	
UCC FINANCING STATEMENT AMENDMENT
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER [optional]
B. SEND ACKNOWLEDGEMENT TO: (Name and Address)
Eric T. Shediae, Esq.
Rudolph Friedman LLP
92 State Street
Boston, MA 02109
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1a. INITIAL FINANCING STATEMENT FILES
200433410140 10/5/04
1b.  This FINANCING STATEMENT AMENDMENT is to be filed for record] (or recorded) in the REAL ESTATE RECORDS.
2. TERMINATION: (illegible) of the Financing Statement identified above is terminated with respect to security interest(s) of the
Secured Party (illegible) this (illegible) Statement.
3. CONTINUATION: Effectiveness  of the Financing Statement identified above with respect to security interest(s) of the Secured
Party authorizing this Continuation Statement is (illegible) for the additional period provided by applicable law.
4. ASSIGNMENT ((illegible) or (illegible)): Give name of assignee in item 7a or 7b and address of  assignee in item 7c. and also
give name of (illegible) in item 9.
5. AMENDMENT (PARTY INFORMATION): This Amendment affects [ ] (illegible) or Secured Party of record. Check only (illegible) of
these two (illegible).
Also check (illegible) of the following three boxesand provide appropriate information in (illegible) (illegible) (illegible) 7.
[ ] CHANGE (illegible) address: Please refer to the detailed instructions
in requests (illegible) of a party
[ ] DELETE name: Give record name to the disclosed in item (illegible)
[ ] ADD name: Complete item 7a or 7b and also item 7c. also (illegible) 7e-7g (if applicable)
6. CURRENT RECORD INFORMATION:
6a.  ORGANIZATIONS NAME
KFLG Watertown, Inc.
OR
6b. INDIVIDUAL'S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
7. CHANGED (NEW) OR ADDED INFORMATION:
7a. ORGANIZATION NAME
OR
7b. INDIVIDUAL'S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
7c. MAILING ADDRESS
CITY
STATE
POSTAL CODE COUNTRY
7d. SEE INSTRUCTIONS
ASSL INFORE ORGANIZATION DEBTOR
7a. TYPE OF ORGANIZATION
7b. JURISDICTION OF ORGANIZATION
7g. ORGANIZATION ID (illegible) any    [ ] NONE
8. AMENDMENT (COLLATERAL CHANGE). Check only one box.
Describe collateral [ ] deleted or [ ] added or give extra [ ] restated collateral description, or describe collatered [ ]
assigned
SUBORDINATION:
In accordance with a certain Subordination Agreement dated January14, 2005, by and among the Secured Party, the Debtor and
Citizens Bank of Massachesetts, the Secured Party has subordinated and security interest or lien that Secured Party may have in
any property of the Debtor to the security interest of Citizens Bank of Massachnsetts in all assets of the Debtor,
notwithstanding the respective dates of attachments or perfection of the security interest of the Secured Party and Citizens Bank
of Massachusetts
9. NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT( NAME (illegible)  [ ] AND (illegible) NAME OF DEBTOR (illegible)
this Amedment.
9a. ORGANZATION'S NAME
Low Fat No Fat Gourmet Cafe, Inc.
OR
9b. INDIVIDUAL'S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
10. OPTIONAL FLEX REFERENCE DATA
FILING OFFICE COPY- UCC FINANCING STATEMENT AMENDMENT (FORM UCC3) REV. 05/22/02)
International Association of Commercial Adminstrators (IACA)

 

 

	
                               Delaware  PAGE 1
                                       The First State
                                    CERTIFICATE
       SEARCHED MAY 18r   2005,   AT  11:39 A.M.
       FOR  DEBTOR   "KNOWFAT FRANCHISE COMPANY INC. . "
     1   OF       2        FINANCING STATEMENT                                50508342
                 EXPIRATION DATE:   FEBRUARY 15,   2010 DEBTOR:   KNOWFAT FRANCHISE COMPANY INC
               305 WALNUT ST                                                      ADDED 02-15-05
               NEWTON                                    MA     02460
 SECURED:   MARLIN LEASING CORP.
               124  GAITHER  DRIVE,   SUITE 170                                   ADDED 02-15-05
               MOUNT LAUREL                              NJ     08054
                         FILING       HISTORY
 50508342     FILED  02-15-05                 AT    2:27 P.M.      FINANCING STATEMENT
     2   OF        2        FINANCING STATEMENT                               50710740
                 EXPIRATION DATE:   MARCH 4,   2010 DEBTOR:   KNOWFAT FRANCHISE COMPANY INC
               2O  GUEST ST. ,   SUITE  450                                       ADDED   03-04-05
               BRIGHTON                                  MA     02135
 SECURED:   IRWIN BUSINESS  FINANCE CORPORATION
               330   120TH AVENUE NE                                              ADDED   03-04-05
               SUITE 110
               BELLEVUE                                  WA     98005
                         FILING       HISTORY
 50710740     FILED   03-04-05                AT     7:07 P.M.      FINANCING STATEMENT
                 END        OF       FILING       HISTORY
       THE   UNDERSIGNED  FILING OFFICER  HEREBY CERTIFIES   THAT  THE ABOVE LISTING IS A  RECORD OF ALL PRESENTLY EFFECTIVE
FINANCING STATEMENTS,   FEDERAL  TAX LIENS AND  UTILITY SECURITY INSTRUMENTS FILED  IN THIS  OFFICE  WHICH NAME  THE ABOVE
DEBTOR,   AS  OF MAY 5, 2005 AT 11:59 P.M.
20051531194UCXN 050407457
Harriet Smith Windsor. Secretary of State AUTHENTICATION:   3887330
DATE:   05-18-05

 

 

	
UCC FINANCING STATEMENT
FOLLOW INSTRUCTION (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER (optional)
8008335778
B. SEND ACKNOWLEDGMENT O: (Name and Address)
OCC DIRECT SERVICES
2727 ALLEN PARKWAY
SUITE 1000
HOUSTON TX 77019
DELAWARE DEPARTMENT OF STATE
U.C.C. FILING SECTION
FILED 02:27 PM 02/15/2005
INITIAL FILING NUM: 5050834 2
AMENDMENT NUMBER: 0000000
SRV: 050123373
1. DEBTORS EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b) - do not (illegible) or combine names
1a. ORGANIZATION'S NAME
KNOWFAT FRANCHISE COMPANY INC
OR
1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
1c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
305 WALNUT ST NEWTON MA 02460 US
i.e. TYPE OF ORGANIZATION IF JURISDICTION OF ORGANIZATION
CORPORATION DE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) - do not (illegible) or combine names
2a.ORGANIZATION'S NAME
OR
2b. INDIVIDUAL'S LAST NAME FIRSTNAME....... MIDDLE NAME SUFFIX
2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
2e. TYPE OF ORGANIZATION 2f. JURISDICTION OF ORGANIZATION
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) - insert only one secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
MARLIN LEASING CORP.
OR
3b. INDIVIDUAL'S LAST NAME FIRST NAME....... MIDDLE NAME SUFFIX
3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
124 GAITHER DRIVE, SUITE 170 MOUNT LAUREL NJ 08054
US
6. This FINANCING' STATEMENT is to be filed (for record) (or recorded) in the REAL
ESTATE RECORDS. Attach Addendum [if applicable]
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [optional] All Debtors Debtor 1 Debtor 2
8. OPTIONAL FILER REFERENCE DATA
DE-0-13472680-1-295515-3

 

 

	
UCC FINANCING STATEMENT ADDENDUM - COLLATERAL
FOLLOW INSTRUCTION (front and back) CAREFULLY
9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT
9a. ORGANIZATIONS NAME
OR
KNOWFAT FRANCHISE COMPANY INC
9b. INDIVIDUAL'S LAST NAME FIRST NAME------- MIDDLE NAME SUFFIX
This FINANCING STATEMENT covers the following collateral
POINT OF SALE SYSTEM INCLUDING: (4) NCR REALFOS 70 ENHANCED WORKSTATIONS, S/N IP42916,917, 918, 919, (1) SYMBOL IS 9208 HIGH
PERFORM OMNI DIRECTIONAL SCANNER,(3) SYMBOL LC 2208 HAND HELD SCANNER, (1) ZEBRA LP 2844 DIRECT TERMINAL BAR CODE, PRINTER, (1)
SYMBOL MCSO HAND HELD SCANNER COMPUTER W/ACCESSORY PACKAGE, (4) NCR INTEGRATED DISPLAYS, S/M DS11189, 91, 93,95 (3) EPSON REMOTE
PRINTERS, (1) XPIENT SOFTWARE, (4) WINXP PRO SQL LICENSE, (12) EREWARDS SOFTWARE, (4) NCR LOCAL THERMAL CHECK PRINTERS, (4) NCR
CASH DRAWERS, (12) EINTELLIGENCE SOFTWARE, "and all replacements, substitutions, accessions, add-ons, and all proceeds and
accounts of the Debtor arising out of or related to the foregoing. This financing statement relates to an equipment lease between
the Debtor (as lessee) and the secured Party (as lessor). The lease is a "true lease", and this financing statement is filed to
give notice of Secured Party's ownership interest in the collateral and also as a precautionary measure in the event the lease is
determined to be other than a true lease."

 

 

	
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER (optional)
8008335778
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
UCC DIRECT SERVICES
2727 ALLEN PARKWAY
SUITE 1000
HOUSTON TX 77019
DELWARE DEPARTMENT OF STATE
U.C.C. FILING SECTION
FILED 07:07 PM 03/04/2005
INITIAL FILING NUM: 5071074 0
AMENDMENT NUMBER: 0000000
SRV: 050188637
1. DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (1a or 1b) do not (illegiable) or combine names
1a. ORGANIZATION'S NAME
KNOWFAT FRANCHISE COMPANY, INC.
OR
1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
1c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
20 GUEST ST., SUITE 450 BRIGHTON MA 02135 US
1.e. TYPE OF ORGANIZATION If JURISDICTION OF ORGANIZATION
CORPORATION DE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (2a or 2b) do not (illegible) or combine names
2a.ORGANIZATION'S NAME
OR
2b. INDIVIDUAL'S LAST NAME FIRST NAME...... MIDDLE NAME SUFFIX
2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
2e. TYPE OF ORGANIZATION 2f. JURISDICTION OF ORGANIZATION
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
IRWIN BUSINESS FINANCE CORPORATION
OR
3b. INDIVIDUAL'S LAST NAME FIRST NAME....... MIDDLE NAME SUFFIX
3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
330 120TH AVENUE NE SUITE 110 BELLEVUE MA 99005
US
5. ALTERNATIVE DESIGNATION - Lessee-Lessor
6. This FINANCING STATEMENT is to be filled (for record) in the REAL
ESTATE RECORDS. Attach Addendum [if applicable]
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [optional] All Debtors Debtor 1 Debtor 2
8. OPTIONAL FILER REFERENCE DATA
DE-0-13670766-032/BK 40146264 (illegible) 1

 

 

	
UCC FINANCING STATEMENT ADDENDUM - COLLATERAL
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
9.       NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT
9a. ORGZNIZATION NAME
KNOWFAT FRACHISE COMPANY, INC.
OR
9b. INDIVIDUAL  LAST NAME  FIRST NAME.......---------MIDDLE NAME SUFFIX
This FINANCING STATEMENT covers the following collateral
Contract # 40146264 bkTwo (2) Serving Hot Food Steam Table, ElectricTwo (2) Well
Drain w/shut off Valve, For (3) WellsTwo (2) Cutting Board on Operator side one(1) Food Warmer, Contertop, electricone (1) Work
Table, 120" Longone (1) Oven, Microwaveone (1) Shelf, Wall- Moountedone (1) Dishwaster, undercounterTwo (2) Trash containerTwo
(2) Refrigerated Counter, Work Toptogether with all accessions, attachments and additions thereto and replacement thereof.

 

 

UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER (optional)
  George I. Schaefer (617) 876-1370
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
George I. Schaefer
2343 Massachusetts Avenue
Cambridge, MA 02140
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1. DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (1a or 1b) do not (illegiable) or combine names
1a. ORGANIZATION'S NAME
KNOWFAT FRANCHISE COMPANY, INC.
OR
1b. INDIVIDUAL'S LAST NAME FIRST NAME      MIDDLE NAME           SUFFIX
1c. MAILING ADDRESS               CITY              STATE         POSTAL CODE     COUNTRY
     20 GUEST STREET, SUITE 450       BRIGHTON        MA                    02135                   USA
1d. TAX ID #: SSN OR EIN
20-0812982
 ADD'L (illegible) FOR ORGANIZATON DEBTOR
1.e. TYPE OF ORGANIZATION     1f. JURISDICTION OF ORGANIZATION
      CORPORATION                               DELAWARE
1g. ORGANIZATIONAL ID # IF ANY
NONE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (2a or 2b) do not (illegible)  or combine names
2a.ORGANIZATION'S NAME
OR
2b. INDIVIDUAL'S LAST NAME  FIRSTNAME          MIDDLE NAME   SUFFIX
2c. MAILING ADDRESS          CITY       STATE        POSTAL CODE        COUNTRY
2d. TAX ID #: SSN OR EIN
AOOL INFO RE ORGANIZATION DEBTOR
2e. TYPE OF ORGANIZATION  2f. JURISDICTION OF ORGANIZATION
2g. ORGANIZATIONAL ID #, if any [ ] None
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
IRWIN BUSINESS FINANCE CORPORATION
OR
3b. INDIVIDUAL'S LAST NAME FIRST NAME             MIDDLE NAME   SUFFIX
  Badrikian                                           Michael
3c. MAILING ADDRESS                           CITY                    STATE     POSTAL CODE      COUNTRY
152 Mallard Way                                      Waltham                     MA             02152
USA
4. This FINANCING STATEMENT (illegible) the following  (illegible)
equipment, inventory, furniture, computers, machinery after acquiring property
5. ALTERNATIVE DESIGNATION - Lessee-Lessor(illegible)
6. This FINANCING' STATEMENT is to be filled (for record) in the REAL
ESTATE RECORDS.  Attach Addendum   [if applicable]
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [optional] All Debtors Debtor 1 Debtor 2
8. OPTIONAL FILER REFERENCE DATA

 

 

UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER (optional)
  Phone :(800) 331-3282     Fax: (818) 662-4141
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
UCC Direct Services
P.O. Box 29071
Glendale, CA 91208-9071
510968 IMARLIN
5647596
MAMA
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1. DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtors name (1a or 1b) do not (illegiable) or combine names
1a. ORGANIZATION'S NAME
LOW FAT NO FAT GOURMET CAFE INC
OR
1b. INDIVIDUAL'S LAST NAME FIRST NAME      MIDDLE NAME           SUFFIX
1c. MAILING ADDRESS                  CITY                     STATE         POSTAL CODE     COUNTRY
988 BOSTON TURNPIKE ROAD       SHREWSBURY   MA                    02472
1d. TAX ID #: SSN OR EN
ADDL INFO RE ORGANIZATON DEBTOR
1.e. TYPE OF ORGANIZATION     1f. JURISDICTION OF ORGANIZATION
      CORPORATION                               MA
1g. ORGANIZATION ID #: IF ANY
|X| NONE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (2a or 2b) do not abbreviate or combine names
2a.ORGANIZATION'S NAME
OR
2b. INDIVIDUAL'S LAST NAME  FIRSTNAME          MIDDLE NAME   SUFFIX
2c. MAILING ADDRESS          CITY       STATE        POSTAL CODE        COUNTRY
2a. TAX ID #: SSN OR EN
ADDL INFO RE ORGANIZATION DEBTOR
2c. TYPE OF ORGANIZATION     2f. JURISDICTION OF ORGANIZATION
2g. ORGANIZATION ID #:, IF ANY,
NONE
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
Marlin Leasing Corp.
OR
3b. INDIVIDUAL'S LAST NAME FIRST NAME             MIDDLE NAME   SUFFIX
3c. MAILING ADDRESS                           CITY                    STATE     POSTAL CODE      COUNTRY
124 Gaither Drive Suite 170                    Mount Laurel           NJ                08054
4. This FINANCING STATEMENT (illegible) the following  (illegible)
POSITOUCH POINT OF SALE SYSTEM INCLUDING : (6) IBM SURE POS500 TOUCH SCREEN. (6) POS-T88 SERIAL THERMAL PRINTER W/CUTTER (6)
POS-SCANNER HAND HELD SCANNERS. (6) POS-IBMCO IBM CASH DRAWERS, (1) POS-PENT 1.5 PENTIUM PC. (1) BACKOFFICE MONITOR, (1)
POS-PENT800 PENTIUM 800 MHZ AND ALL REPLACEMNETS, SUBSTITUTIONS, ACCESSIONS, ADD-ONS, AND ALL PROCEEDS AND ACCOUNTS OF THE DEBTOR
ARISING OUT OF OR RELATED TO THE FOREGOING. THIS FINANCING STATEMENT RELATES TO AN EQUIPMENT LEASE BETWEEN THE DEBTOR (AS LESSEE)
AND THE SECURED PARTY (AS LESSOR). THE LEASE IS A TRUE LEASE, AND THEIS FINANCING STATEMENT IS FILED TO GIVE NOTICE OF SECURED
PARTY'S OWNERSHIP INTEREST IN THE COLLATERAL AND ALSO AS A PRECAUTIONARY MESAURE IN THE EVENT THE LEASE DETERMINED TO BE OTHER
THAN A TRUE LEASE.
5. ALTERNATIVE DESIGNATION - Lessee/Lessor
CONSIGNEECONSIGNOR SELLER/BUYER AG.LIEN NON-UCC FIL NO
6. This FINANCING' STATEMENT is to be filled (for record) in the REAL
ESTATE RECORDS.  Attach (illegible)   [if applicable]
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [optional] All Debtors Debtor 1 Debtor 2
8. OPTIONAL FILER REFERENCE DATA
564-734438-45-354775
FILING OFFICE COPY-NATIONAL UCC FINANCING STATEMENT (FORUM UCC1) (REV.07/29/98) (illegible)

 

 

                                                  UCC-1 Form
                                                                  Filing Number: 200325163480    Filing Date: 11/07/2003 1:04:28 PM
FILER INFORMATION
   Full name: CUMMINGS PROPERTIES, LLC      Phone:. 781-935-8000 CONTACT INFORMATION
   Contact name:. LEGAL DEPT.
   Street #1: 200 WEST CUMMINGS PARK
   City: WOBURN      State: MA     ZIP: 01801      Country: USA
   Notification Method: E-Mail     Email: legal@cummings.com
 DEBTOR INFORMATION
  Org. Name: LOW FAT NO FAT GOURMET CAFE, INC. Org. Type: CORP     Jurisdiction: MA     Org. ID: None
  Mailing Address: 340 WEST CUMMINGS PARK City: WOBURN     State: MA    ZIP: 01801     Country: USA
 SECURED PARTY INFORMATION Org. Name: CUMMINGS PROPERTIES, LLC Mailing Address 1: 200 WEST CUMMINGS
  PARK City: WOBURN    State: MA    ZIP: 01801     Country: USA
 TRANSACTION TYPE: STANDARD
 COLLATERAL
 All office and other equipment, furniture, inventory, and other property, whether existing
 or after acquired, of Debtor located at all premises leased by secured party to Debtor, now
 or hereafter.

 

 

                                                SCHEDULE 3.23
                                                       TO CREDIT AGREEMENT
                                              Deposit Accounts See attached and Accounts to be Opened at TD BankNorth, N.A.

 

 

                                                                                                                           Accounts
List of deposits, securities and commodity accounts
 KFLG Watertown, Inc
Watertown Savings Bank 321 Arsenal Street Watertown, MA 02472 Account #0684001409 Checking account
 Sovereign Bank 98 Boston Turnpike Shrewsbury, MA 01545 Account ft 98500925635 Checking account
 Danvers Bank 400 West Cummings Park Woburn, MA 01801 Account # 35006146 Checking account
 KmowFat Franchise Company
 Citizens Bank* 605 Walnut Street Newtonvillc, MA 02460 Accounts 1139993981 Checking account
 Citizens Bank* 605 Walnut Street Newtonville, MA 02460 Account # 1139994392 Money Market account
* Account will be closed upon approval of loan agreement.

 

 

                                          SCHEDULE 6.2(C)
                                                  TO CREDIT AGREEMENT
                                       Existing Indebtedness
1.       $136,000 Loan by Guarantor to Michael Badrikian, as evidenced by a Promissory
         Note in the original principal amount of $136,000 dated February 4, 2005.
2.                                                 Obligations to Seller under Asset Purchase Agreements and Consulting Agreements.
3.       Lease obligations to Marlin Leasing Corp., Cummings Properties, LLC and Irwin
         Business Finance Corporation previously disclosed to Lender.

 

 

                                                           SCHEDULE 6.3(E)
                                                         TO CREDIT AGREEMENT
                                                           Existing Liens
See attached UCC Financing Statements.*
 * The UCC filed against Low Fat No Fat Gourmet Cafe, Inc. in favor of Cummings Properties, LLC shall be subordinated to the liens
         granted by the Borrower and the Guarantor to the Lender pursuant to such subordination agreements and other documents as
         are satisfactory to the Lender.

 

 

                                                             UCC-1 Form
 FILER INFORMATION
   Full name: B. DAVID SANDBERG      Phone; 617 492-1027 CONTACT INFORMATION
   Contact name: DAVID SANDBERG
   Street #1: 166 CHESTNUT STREET
   City: CAMBRIDGE     State: MA     ZIP: 02139     Country: USA
   Notification Method: E-Mail     Email: dsandberg@speakeasy.net
 DEBTOR INFORMATION Org. Name: KFLG WATERTOWN, INC. Org. Type: CORP
  Jurisdiction: MA     Org. ID applied for Mailing Addressl: 20 GUEST STREET
  Mailing Address2: SUITE 450 City:WATERTOWN    State: MA    ZIP: 02135
  Country: USA
 SECURED PARTY INFORMATION Org. Name: LOW FAT NO FAT GOURMET CAFE, INC. Mailing
  Addressl: 98 B BOSTON TURNPIKE RD. City: SHREWSBURY    State: MA    ZIP:
  01545     Country: USA
 TRANSACTION TYPE: STANDARD
 COLLATERAL
All fixtures and tangible and intangible personal property of the Debtor, to the extent that it is located at, or is used in
connection with or arises fiom the business located at, 222 Arsenal Street, Watertown, Massachusetts, whether now owned or
hereafter acquired or in which, the Debtor may now have or hereafter acquire an interest, including, without limitation, (a) all
equipment (including all machinery, tools and furniture), inventory and goods, (b) all accounts, accounts receivable, other
receivables, contract rights, chattel paper, and general intangibles of the Debtor (including Debtor's rights under all
authorizations, permits and licenses), (c) all instruments, documents of title, policies and certificates of insurance, bank
deposits, deposit accounts, checking accounts and cash, (d) all accessions, additions or improvements to, replacements and
substitutions for, and all products of, all of the foregoing, (e) all books, records and documents relating to all the foregoing
and (f) all other properties and assets of every type used or useful in connection with the ownership and operation of the
Debtor's business.

 

 

UCC FINANCING STATEMENT AMENDMENT
FOLLOW INSTURCTION (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILLER [optional]
Eric T. Shediae, Esq.
Rudolph Friedman LLP
92 State Street
Boston, MA 02109
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1a. INITIAL FINANCING STATEMENT FILES
200433410140 10/5/04
1b.  This FINANCING STATEMENT AMENDMENT is to be fied per record  (or recorded) in the REAL ESTATE RECORDS.
2. TERMINATION: effectiveness of the Financing Statement identified above is terminated with respect to security interest(s) of
the Secured Party authorizing this termination Statement.
3. CONTINUATION: Effectiveness  of the Financing Statement identified above with respect to security interest(s) of the Secured
Party authorizing this Continuation Statement is continued for the additional period provided by applicable law.
4. ASSIGNMENT ((illegible) or partial): Give name of assignee in item 7a or 7b and address of  assignee in item 7c. and also give
name of (illegible) in item 9.
5. AMENDMENT (PARTY INFORMATION): This Amendment affects (illegible) of Secured Party of record. Check only onen of these two
boxes.
CHANGE illegible and for address: Please refer to the detailed instructions
in requests to changing the new address of a party
DELETE name: Gives record name to the disclosed in item (illegible)
ADD name: Complete item 7a or 7b and also item 7c. also (illegible) 7e-7g (if applicable)
6. CURRENT RECORD INFORMATION:
6a.  ORGANIZATIONS NAME
KFLG Watertown, Inc.
OR
6b. INDIVIDUAL'S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
7. CHANGED (NEW) OR ADDED INFORMATION:
7a. ORGANIZATION NAME
OR
7b. INDIVIDUAL'S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
7c. MAILING ADDRESS
CITY
STATE
POSTAL CODE COUNTRY
7d. SEE INSTRUCTIONS
(illegible) INFORE ORGANIZATON DEBTOR
7a. TYPE OF ORGANIZATION
7b. JURISDICTION OF ORGANIZATION
7g. ORGANIZATION ID if it any    NONE
8. AMENDMENT (COLLATERAL CHANGE). Check only one box.
Describe collateral deleted of added or give extra restated collateral description, or describe collatered assigned.
SUBORDINATION:
In accordance with a certain Subordination Agreement dated January14, 2005, by and among the Secured Party, the Debtor and
Citizens Bank of Massachesetts, the Secured Party has subordinated and security interest or lien that secured party may have in
any property of the Debtor to the security interest of citizens Bank of Massachusetts in all assets of the Debtor,
notwithstanding the respective dates of attachments or perfection of the Security interest of the Secured party and citizens Bank
of Massachusetts
9. NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT NAME of (illegible)  AND NAME OF DEBTOR aouthorizing this Amedment.
9a. ORGANZATION'S NAME
Low Fat No Fat Gourmet Cafe, Inc.
OR
9b. INDIVIDUAL'S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
10. OPTIONAL FLEX REFERENCE DATA
FILING OFFICE COPY- UCC FINANCING STATEMENT AMENDMENT (FORM UCC3) REV. 05/22/02)
International Association of Commercial Adminstrators (IACA)

 

 

                                                             Delaware
                                                              PAGE 1
                                                          The First State
                                                            CERTIFICATE
                                               SEARCHED MAY 18, 2005, AT 11:39 A.M.
                                           FOR DEBTOR " KNOWFAT FRANCHISE COMPANY INC."
                                                    1 OF 2 FINANCING STATEMENT
                                                EXPIRATION DATE: FEBRUARY 15, 2010
                                               DEBTOR: KNOWFAT FRACHISE COMPANY INC
                                                           305 WALNUT ST
                                                  NEWTON MA 02460 ADDED 02-15-05
                                                   SECURED: MARLIN LEASING CORP.
                                                   124 GAITHER DRIVE, SUITE 170
                                                          ADDED 02-15-05
                                                       MOUNT LAUREL NJ 08054
                                                          FILING HISTORY
                                     50508342 FILED 02-15-05 AT 2:27 P.M. FINANCING STATEMENT
                                                2 OF 2 FINANCING STATEMENT 50710740
                                                  EXPIRATION DATE: MARCH 4, 2010
                                               DEBTOR: KNOWFAT FRACHISE COMPANY INC
                                                      20 GUEST ST., SUITE 450
                                                         BRIGHTON MA 02135
                                            SECURED: IRWIN BUSINESS FINANCE CORPORATION
                                                        330 120TH AVENUE NE
                                                          ADDED 03-04-05
                                                         BELLEVUE WA 98005
                                                          FILING HISTORY
                                     50710740 FILED 03-04-05 AT 7:07 P.M. FINANCING STATEMENT
                                                       END OF FILING HISTORY
     THE UNDERSIGNED FILING OFFFICER HEREBY CERTIFIES THAT THE ABOVE LISTING IS A RECORD OF ALL PRESENTLY EFFECTIVE FINANCING
  STATEMENTS, FEDERAL TAX LIENS AND UTITLITY SECURITY INSTRUMENTS FILED IN THIS OFFICE WHICH NAME THE ABOVE DEBTOR, AS OF MAY 5,
                                                        2005 AT 11:59 P.M.

 

 

UCC FINANCING STATEMENT
FOLLOW INSTRUCTION (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER optional
8008335778
B. SEND ACKNOWLEDGMENT O: (Name and Address)
UCC Direct Services
2727 ALLEN PARKWAY
SUITE 1000
HOUSTON TX 77019
DELAWARE DEPARTMENT OF STATE
U.C.C. FILING SECTION
FILED 02:27 PM 02/15/2005
INITIAL FILING NUM: 505834 2
AMENDMENT NUMBER: 0000000
SRV: 0501233373
1. DEBTORS EXACT FULL LEGAL NAME insert only one debtors name (1a or 1b) do not (illegiable) or combine names
1a. ORGANIZATION'S NAME
KNOWFAT FRANCHISE COMPANY INC
OR
1b. INDIVIDUAL'S LAST NAME_FIRST NAME      MIDDLE NAME           SUFFIX
1c. MAILING ADDRESS                  CITY                     STATE         POSTAL CODE     COUNTRY
305 WALNUT ST______________         NEWTON  MA-------02460                      US
1.a. TYPE OF ORGANIZATION     1f. JURISDICTION OF ORGANIZATION
      CORPORATION                               DE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (2a or 2b)- do not abbreviate or combine names
2a.ORGANIZATION'S NAME
OR
2b. INDIVIDUAL'S LAST NAME_ FIRSTNAME          MIDDLE NAME   SUFFIX
2c. MAILING ADDRESS          CITY       STATE        POSTAL CODE        COUNTRY
2c. TYPE OF ORGANIZATION     2f. JURISDICTION OF ORGANIZATION
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
MARLIN LEASING CORP.
OR
3b. INDIVIDUAL'S LAST NAME_FIRST NAME             MIDDLE NAME   SUFFIX
3c. MAILING ADDRESS                           CITY                    STATE     POSTAL CODE      COUNTRY
124 Gaither Drive Suite 170                    Mount Laurel           NJ                08054
US
6. This FINANCING' STATEMENT is to be filled (for record) in the REAL
ESTATE RECORDS.  Amend Addendum   [if applicable]
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [optional] All Debtors Debtor 1 Debtor 2
8. OPTIONAL FILER REFERENCE DATA
DE-0-13472680-1-265515-3

 

 

UCCC FINANCING STATEMENT ADDENDUM - COLLATERAL
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT
9a. ORGANIZATION'S NAME
KNOWFAT FRACHISE COMPANY INC
OR 9b. INDVIDUAL'S LAST NAME
FIRST NAME
MIDDLE NAME SUFFIX
This FINANCING STATEMENT covers the following collateral
POINT OF SALE SYSTEM INCLUDING: (4) NCR REALFOS 70 ENCHANCED WORKSTATIONS, S/N R P42916, 917, 918, 919, (1) SYMBOL IS 9208 HIGH
PERFORM OMNI DIRECTIONAL SCANNER, (3) SYMBOL LC 2208 HAND HEID SCANNNER, (1) ZEBRA LP 2844 DIRECT THERMAN BAR CODE PRINTER, (1)
SYMBOL MC50 HAND HEID SCANNER COMPUTER W/ACCESSORY PACKAGE, (4) NCR INTEGRATED DISPLAYS, S/N DS11189, 91, 93, 95, (3) EPSON
REMOTE PRINTERS, (1) XPIENT SOFTWARE, (4) NCR CASH DRAWERS, (12) EREWARDS SOFTWARE, (4) NCR LOCAL THERMAL CHECK PRINTERS, (4)
WINXP PRO SQL LICENSE, (12) EINTELLIGENCE SOFTWARE, "and all replacements, substitutions, accessions, add-ons, and all proceeds
and accounts of the Debtor arising out of or related to the foregoing. This financing statement relates to an equipment lease
between the Debtor (as lessee) and the secured party (as lessor). The lease is a "true lease", and this financing statement is
filed to give notice of secured party's ownership interest in the collateral and also as a precautionary measure in the event the
lease is determined to be other than a true lease."

 

 

UCC FINANCING STATEMENT
FOLLOW INSTRUCTION (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER (optional)
8008335778
B. SEND ACKNOWLEDGMENT O: (Name and Address)
UCC DIRECT SERVICES
2727 ALLEN PARKWAY
SUITE 1000
HOUSTON TX 77019
DELAWARE DEPARTMENT OF STATE
U.C.C. FILING SECTION
FILED 07:07 PM 03/04/2005
INITIAL FILING NUM: 5071074 0
AMENDMENT NUMBER: 0000000
SRV: 050188637
1. DEBTOR'S EXACT FULL LEGAL NAME insert only one debtors name (1a or 1b) do not abbreviate or combine names
1a. ORGANIZATION'S NAME
KNOWFAT FRANCHISE COMPANY, INC
OR
1b. INDIVIDUAL'S LAST NAME_FIRST NAME      MIDDLE NAME           SUFFIX
1c. MAILING ADDRESS                  CITY                     STATE         POSTAL CODE COUNTRY
20 GUEST ST., SUITE 450____         BRIGHTON            MA              02135   US
1.a. TYE OF ORGANIZATION     1f. JURISDICTION OF ORGANIZATION
      CORPORATION                               DE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (2a or 2b) - do not abbreviate or combine names
2a.ORGANIZATION'S NAME
OR
2b. INDIVIDUAL'S LAST NAME_ FIRSTNAME          MIDDLE NAME   SUFFIX
2c. MAILING ADDRESS          CITY       STATE        POSTAL CODE        COUNTRY
2c. TYPE OF ORGANIZATION     2f. JURISDICTION OF ORGANIZATION
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
IRWIN BUSINESS FINANCE CORPORATION
OR
3b. INDIVIDUAL'S LAST NAME_FIRST NAME             MIDDLE NAME   SUFFIX
3c. MAILING ADDRESS                           CITY                    STATE     POSTAL CODE      COUNTRY
330 120TH AVENUE NE SUTIE 110         BELLEVUE          WA              98005
US
5. ALTERNATIVE DESIGNATION - Lessee-Lessor
6. This FINANCING STATEMENT is to be filled (for record) in the REAL
ESTATE RECORDS.  Amend Addendum   [if applicable]
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [optional] All Debtors Debtor 1 Debtor 2
8. OPTIONAL FILER REFERENCE DATA
DE-0-13670766-032/bk 40146264 UCC1

 

 

UCC FINANCING STATEMENT ADDENDUM - COLLATERAL
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT?
9a. ORGANIZATION'S NAME
KNOWFAT FRANCHISE COMPANY, INC.
9b. INDIVIDUAL'S LAST NAME
FIRST NAME MIDDLE NAME SUFFIX
This FINANCING STATEMENT covers the following collateral
Contract# 40146264 bkTwo (2) Serving Bot Food Steam Table, ElectricTwo (2) Well Drain w/shut off valve, For (3) WellsTwo (2)
outing Board on operator sideone  (1) Food Warner, Countertop, electricone (1) Work Table, 120" Longone (1) oven microwaveOne (1)
shelf, Wall-Mountedone (1) Dishwaster, undercounterTwo (2) Trash containerTwo (2) Refrigerated Counter, Work Toptogether with all
accessions, attachments and additions thereto and replacements thereof.

 

 

UCC FINANCING STATEMENT
FOLLOW INSTRUCTION (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER [optional]
George I. Schaefer (617) 876-1370
B. SEND ACKNOWLEDGMENT O: (Name and Address)
George I. Schaefer
2343 Massachusetts Avenue
Cambridge, Ma 02140
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1. DEBTORS EXACT FULL LEGAL NAME insert only one debtors name (1a or 1b) do not abbreviate or combine names
1a. ORGANIZATION'S NAME
KNOWFAT FRANCHISE COMPANY, INC
OR
1b. INDIVIDUAL'S LAST NAME_FIRST NAME      MIDDLE NAME           SUFFIX
1c. MAILING ADDRESS                  CITY                     STATE         POSTAL CODE     COUNTRY
20 GUEST STREET, SUITE 450_         BRIGHTON            MA              02135
USA
1d. TAX OF SSN OR EIN
20-0812982
ADDOL INFOR RE ORGANIZATION DEBTOR
1.a. TYE OF ORGANIZATION     1f. JURISDICTION OF ORGANIZATION
      CORPORATION                               DELAWARE
19. ORGANIZATION OF IF ANY NONE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (2a or 2b) do not abbreviate or combine names
2a.ORGANIZATION'S NAME
OR
2b. INDIVIDUAL'S LAST NAME_ FIRSTNAME          MIDDLE NAME   SUFFIX
2c. MAILING ADDRESS          CITY       STATE        POSTAL CODE        COUNTRY
2c. TYPE OF ORGANIZATION     2f. JURISDICTION OF ORGANIZATION
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
OR
3b. INDIVIDUAL'S LAST NAME_FIRST NAME             MIDDLE NAME   SUFFIX
Badrikian                                            Michael
3c. MAILING ADDRESS                           CITY                    STATE     POSTAL CODE      COUNTRY
152 Mallard Way                                         Waltham               MA               02152
USA
4. This FINANCING STATEMENT (illegible) the following (illegible)
equipment, inventory, furniture, computers, machinery after acquiring property
5. ALTERNATIVE DESIGNATION - Lessee-Lessor  (illegible)
6. This FINANCING STATEMENT is to be filled (for record) in the REAL
ESTATE RECORDS.  Amend Addendum   [if applicable]
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [optional] All Debtors Debtor 1 Debtor 2
8. OPTIONAL FILER REFERENCE DATA
FILING OF THIS COPY - NATIONAL UCC FINANCING STATEMENT (FORMUCCI) (REV.07/29/98)

 

 

UCC FINANCING STATEMENT
FOLLOW INSTRUCTION (front and back) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER [optional]
Phone (800) 331-3282 Fax: (818) 662-4141
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
UCC Direct Service
P.O. Box 29071
Glendale, CA 91209-9071
510868 IMARLIN
5647596
MAMA
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1. DEBTORS EXACT FULL LEGAL NAME insert only one debtors name (1a or 1b) do not abbreviate or combine names
1a. ORGANIZATION'S NAME
LOW FAT NO FAT GOURMET CAFE INC
OR
1b. INDIVIDUAL'S LAST NAME_FIRST NAME      MIDDLE NAME           SUFFIX
1c. MAILING ADDRESS                  CITY                     STATE         POSTAL CODE     COUNTRY
988 BOSTON TURNPIKE ROAD     SHREWSBURY     MA               02472
1d. TAX OF SSN OR EIN
ADDOL INFOR RE ORGANIZATION DEBTOR
1.a. TYE OF ORGANIZATION     1f. JURISDICTION OF ORGANIZATION
      CORPORATION                               MA
19. ORGANIZATION OF IF ANY NONE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (2a or 2b) do not abbreviate or combine names
2a.ORGANIZATION'S NAME
OR
2b. INDIVIDUAL'S LAST NAME_ FIRSTNAME          MIDDLE NAME   SUFFIX
2c. MAILING ADDRESS          CITY       STATE        POSTAL CODE        COUNTRY
2d. TAX ID # SSN OR EIN____ADD'L INFO FOR ORGANISATION OBETOR
2e. TYPE OF ORGANIZATION     2f. JURISDICTION OF ORGANIZATION
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
Marlin Leasing Corp.
OR
3b. INDIVIDUAL'S LAST NAME_FIRST NAME             MIDDLE NAME   SUFFIX
3c. MAILING ADDRESS                           CITY                    STATE     POSTAL CODE      COUNTRY
124 Gaither Drive Suite 170                           Mount Laurel    NJ                         08054
4. This FINANCING STATEMENT (illegible) the following (illegible)
POSITOUGH POINT OF SALE SYSTEM INCLUDING: (6) IBM SURE POS500 TOUCH SCREEN (6) POS-T88 SERIAL THERMANL PRINTER W/CUTTER (6)
POS-SCANNER HAND HELD SCANNERS. (6) POS-IBMCD IBM CASH DRAWERS (1) POS-PENT 1.5 PENTIUM PC. (1)
BAKCOFFICE MONITOR (1) POS-PENT800 PENTIUM 800 MHZ AND ALL REPLACEMENTS SLUBSTITUTIONS, ACCESSIONS, ADD-ONS, AND ALLL PROCEEDS
AND ACOUNTS OF THE DEBTOR ARISING OUT OF OR RELATED TO THE FOREGOING THIS FINANCING STATEMENT RELATES TO AN EQUIPMENT LEASE
BETWEEN THE DEBTOR (AS LESEE) AND THE SECURED PARTY (AS LESSOR). THE LEASE IS A TRUE LEASE, AND THIS FINANCING STATEMENT IS
FILLED TO GIVE NOTICE OF SECURED PARTY'S OWNERSHIP INTEREST IN THE COLLATERAL AND ALSO AS A PRECAUTIONARY MEAUSRE IN THE EVENT
THE LEASE IS DETERMINED TO BE OTHER THAN A TRUE LEASE."
5. ALTERNATIVE DESIGNATION - Lessee-Lessor   (illegible) (illegible) (illegible) SELLER/BUYER (illegible) NON-UCC FILING
6. This FINANCING' STATEMENT is to be filled (for record) in the REAL
ESTATE RECORDS.  Amend Addendum   [if applicable]
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [optional] All Debtors Debtor 1 Debtor 2
(illegible)
8. OPTIONAL FILER REFERENCE DATA
FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT (FORM UCCI) (REV. 07/29/98)           (illegible)

 

 

                                                  UCC-1 Form
                                                                     Filing Number: 200325163480 Filing Date: 11/07/2003 1:04:28 PM
FILER INFORMATION
   Full name: CUMMINGS PROPERTIES, LLC Phone: 781-935-8000 CONTACT INFORMATION
   Contact name: LEGAL DEPT.
   Street #1: 200 WEST CUMMINGS PARK
   City: WOBURN State: MA ZIP: 01801 Country: USA
   Notification Method: E-Mail Email: legal@cummings.com
 DEBTOR INFORMATION
  Org. Name: LOW FAT NO FAT GOURMET CAFE, INC.
  Org. Type: CORP Jurisdiction: MA Org. ID; None
  Mailing Address1: 340 WEST CUMMINGS PARK City.WOBURN State: MA ZIP: 01801 Country: USA
 SECURED PARTY INFORMATION
  Org, Name: CUMMINGS PROPERTIES, LLC
  Mailing Address1: 200 WEST CUMMINGS PARK
  City- WOBURN State: MA ZIP: 01801 Country: USA
 TRANSACTION TYPE: STANDARD
 COLLATERAL
 All office and other equipment, furniture, inventory, and other property, whether existing
 or after acquired, of Debtor located at all premises leased by secured party to Debtor, now
 or hereafter.

 

 

                                                             EXHIBIT A
                                                     FORM OF SECURITY AGREEMENT
         This SECURITY AGREEMENT, dated as of May 27, 2005 (this "Agreement"), by and between KFLG WATERTOWN, INC., a
Massachusetts corporation (the "Borrower") and TD BANKNORTH, N.A. (the "Lender ").
         WHEREAS, the Borrower and the Lender are entering into a Credit Agreement of even date herewith (the "Credit Agreement";
 capitalized terms used herein and not otherwise defined have the meanings specified in the Credit Agreement), pursuant to which
 the Lender is making term loans in an aggregate principal amount not to exceed $1,600,000; and
         WHEREAS,  as a condition  to the Lender  entering  into the Credit  Agreement  and making the Loans  thereunder,  the
 Lender requires that the Borrower grant to the Lender a security interest in the Collateral (as defined in Section 1);
         NOW, THEREFORE, in consideration of the aforesaid agreements and for other good and valuable consideration, the receipt
 and sufficiency of which are hereby acknowledged, the parties hereby act and agree as follows:
          1. Definitions. As used in this Agreement, the following terms have the following
 meanings:
         "Collateral": all of the following now or hereafter existing or owned by the Borrower or in which the Borrower
 shall now or hereafter have any interest:
         (a)      all Equipment;
         (b)      all Receivables;
         (c)      all contracts and contract rights (to the extent assignable); all rights to the payment of
 money; all obligations owing to the Borrower of every kind and nature; and all tax refunds of every kind
 and nature, including, without limitation, loss carryback refunds; and all of the foregoing whether now
 existing or hereafter acquired or arising;
         (d)      all Inventory;
         (e)      all Intellectual Property Rights;
         (f)      all general intangibles, goodwill, customer lists, choses in action, chattel paper,
 insurance policies, bank deposits, deposit accounts, checking accounts, certificates of deposit, money,
 cash, investment property, securities (whether certificated or uncertificated), securities accounts, security
 entitlements, commodity contracts, commodity accounts, documents and instruments (whether negotiable
 or non-negotiable and regardless of attachment to chattel paper), whether arising out of, relating to or
 evidencing all or any of the foregoing Collateral or otherwise, and all whether now existing and owned
 by the Borrower or hereafter acquired or arising;

 

 

         (g) all Commercial Tort Claims, Letter-of-Credit Rights and Supporting Obligations (each as defined in the UCC), all
 whether now existing and owned by the Borrower or hereafter acquired or arising;
         (h) all other property not otherwise described above and all liens, guaranties, securities, rights, remedies and
privileges pertaining to, and all products and proceeds (including, without limitation, insurance proceeds) of and all accessions
to, any of the foregoing items of Collateral (all whether now existing and owned by the Borrower or hereafter arising or
acquired); and
         (i) all information, data, files, writings, correspondence, books and records (including, without limitation, all
 electronically recorded data) relating to any of the foregoing items of Collateral (all whether now existing and owned by the
 Borrower or hereafter arising or acquired).
         "Equipment": all of the Borrower's machinery, equipment, tools, furniture, furnishings and fixtures, including, without
 limitation, all data processing and computer equipment, furniture, tools, dies, molds, motor vehicles, trailers, and other
 equipment of every kind and description, and all accessions, additions, substitutions or replacements to or for any of the
 foregoing and all attachments, components, accessories, parts and supplies relating thereto; all whether now owned or existing or
 hereafter arising or acquired, whether movable or affixed, and wherever located.
         "Intellectual Property Rights": all of the Borrower's know-how, trade secrets, copyrights, patents, trade names,
 trademarks (whether owned or licensed), servicemarks and licenses and the goodwill of the business associated with the foregoing,
 including, without limitation, the registered (or applied for) trademarks, patents and copyrights (if any) described on Exhibit A
 hereto and the goodwill of the business associated therewith, together with all right, title and interest of the Borrower
 therein, including, without limitation, all common law rights, registrations, renewals of registrations, applications for new
 uses, the right to sue for past, present and future infringements thereof, and all other intellectual property rights necessary
 and proper to the continuation of the business associated with and symbolized by said trademarks, patents and copyrights.
         "Inventory": all goods now owned or hereafter acquired by the Borrower and intended for sale, all raw materials, parts,
 work-in-process, finished goods, and all materials and supplies which are used or which may be used in manufacturing, selling,
 packing, shipping, advertising or furnishing of goods, whether now owned or hereafter acquired or created and wherever located,
 as well as all proceeds (including, without limitation, insurance proceeds) of any of the foregoing.
         "Perfection Certificate": the Perfection Certificate executed and delivered by the Borrower on the Closing Date.
         "Premises": all locations owned, leased, operated or used by the Borrower, all of which are listed on Exhibit B hereto
 together with the record owner of each such location and a brief description of any lease.

         "Receivables": all of the Borrower's accounts (as defined in the UCC), accounts receivable, notes, bills, drafts,
 acceptances, instruments, documents, chattel paper and all other debts, obligations and liabilities in whatever form owing to the
 Borrower from any Person for goods (as defined in the UCC) sold by it or for services rendered by it, or however otherwise
 established or created, all guaranties and security therefor, all right, title and interest of the Borrower in the goods or
 services which have given rise thereto, including rights to reclamation and stoppage in transit and all rights of an unpaid seller

                                                  -2-

 

 

of goods or services; all whether any of the foregoing be now existing or hereafter arising, now or hereafter received by or
owing or belonging to the Borrower.

         "UCC": the Uniform Commercial Code as in effect from time to time in The Commonwealth of
 Massachusetts.

         Any defined term used in the plural preceded by the definite article shall be taken to encompass all members of the
 relevant class. Any defined term used in the singular preceded by "any" shall be taken to indicate any number of the members of
 the relevant class.

         2.       Grant of Security Interest. As security for the full and timely satisfaction of the
 Obligations, the Borrower hereby grants to the Lender a continuing security interest in the Collateral, and
 in each item thereof, all to the maximum extent that the Borrower has an interest therein or at any time in
 the future obtains such an interest.

         3.       Representations and Warranties. The Borrower represents and warrants to the Lender
 that:

         (a)      All information set forth on the Perfection Certificate, as updated from time to time by
 the Borrower, is true, correct and complete in all material respects.

         (b)      The principal place of business and chief executive offices of the Borrower are currently
 located at the location described on Exhibit B hereto, and all of the books and records of the Borrower
 are currently kept at that location or the other locations listed on Exhibit B. All of the tangible Collateral
 is and will be kept at that location or at another location included in the Premises.

         (c)      The Borrower owns the Collateral free and clear of all Liens except (i) Liens under the
 Loan Documents and (ii) Liens expressly permitted by Section 6.3 of the Credit Agreement.

         (d)      Except as shown on Exhibit A hereto, none of the Intellectual Property Rights owned or
 licensed by the Borrower is the subject of any state or federal registration or any application therefor.

         (e)      This Security Agreement, coupled with the filing of appropriate UCC financing
 statements with the Secretary of State of The Commonwealth of Massachusetts (being the only location
 in which such filing is required by the Uniform Commercial Code of Massachusetts in order to perfect
 the security interests granted herein to the extent that such security interest may be perfected by filing of
 a UCC financing statement), creates in favor of the Lender a valid and perfected first priority security
 interest in all of the Collateral to the extent that such security interest may be perfected by filing, which
 security interest secures the Obligations.

         4. Covenants, (a) Payment and Performance. The Borrower will unconditionally pay
 when due or within any applicable grace period (or on demand, if so payable) each Obligation and will
 duly and punctually perform each Obligation.

          (b) Further Assurances. The Borrower will from time to time, at its expense, upon the Lender's request, promptly execute
 and deliver all such further instruments and documents, and take all such further action, as may be necessary or that the Lender
 may reasonably request in order to perfect and/or protect the security interests granted or intended to be granted hereby or to
 enable the Lender to enforce its rights and remedies hereunder with respect to any Collateral, including, without limitation:
 furnishing copies of customer invoices and original shipping documents; marking or otherwise

                                                  -3-

 

 

identifying Equipment; furnishing the originals of all bills of Jading, trust receipts and warehousemen's receipts, with such
endorsements as may be required by the Lender; stamping chattel paper to reflect the Lender's security interest or delivering
same to the Lender; taking such actions as the Lender may reasonably require to obtain possession or control of any Collateral to
the extent necessary to perfect Lender's security interest; and filing financing statements. The Borrower hereby authorizes the
Lender to file financing or continuation statements and amendments thereto relating to Collateral without the signature of the
Borrower. The Borrower will use its best efforts to provide landlord's waivers reasonably satisfactory to the Lender with respect
to any premises not owned by the Borrower where any material amount of Collateral may be located. With respect to such contracts
and contract rights as are by their terms non-assignable, the Borrower agrees: (i) to hold same in trust for the benefit of the
Lender, to the extent such terms are valid and effective, (ii) at any time or from time to time (if the Lender shall so request)
to use its reasonable efforts to seek the approval of the other parties to the relevant contracts so that assignment to the
Lender will be permitted and (iii) at the request of the Lender, to assign to the Lender all rights in and to said contracts and
contract rights to the maximum extent that same may from time to time be assignable.

          (c)     Information. The Borrower shall maintain complete and accurate records of all of its
 Collateral and its dealings with respect thereto. Upon reasonable notice from time to time (and. at any
 time and without notice after the occurrence and during the continuance of any Event of Default), the
 Borrower shall permit the Lender and its employees, representatives and agents access to the Premises
 and the Lender shall have the right to inspect the Collateral and make copies of such books and records.
 The Borrower shall from time to time furnish to the Lender such information concerning the Collateral as
 the Lender may reasonably request, and will promptly notify the Lender if any representation or warranty
 of the Borrower in Section 3 hereof becomes inaccurate, incomplete or misleading in any material
 respect. Without limiting the generality of the foregoing, the Borrower will upon the Lender's request,
 with reasonable promptness, provide the Lender with a written listing of all Collateral, and will provide
 the Lender with such a listing immediately upon the occurrence and during the continuance of any Event
 of Default.

          (d)     Insurance.

                  (i) Property Insurance. The Borrower shall keep its assets which are of an insurable character insured by
          financially sound and reputable insurers against theft and fraud and against loss or damage by fire, explosion and
          hazards insured against by extended coverage to the extent, in amounts and with deductibles at least as favorable as
          those generally maintained by businesses of similar size engaged in similar activities.

                   (ii) Liability Insurance. The Borrower shall maintain with financially sound and reputable insurers insurance
          against liability for hazards, risks and liability to persons and property, to the extent, in amounts and with
          deductibles at least as favorable as those generally maintained by businesses of similar size engaged in similar
          activities and at least in the amounts set forth in the certificates of insurance delivered to Lender.

                  (iii) All such insurance shall (A) provide that no cancellation, material reduction in amount or material
          change in coverage thereof shall be effective until at least 30 days after receipt by the Lender of written notice
          thereof, (B) name the Lender as insured party or loss payee pursuant to a loss payable endorsement issued in favor of,
          delivered to and in form reasonably satisfactory to, the Lender, and (C) be reasonably satisfactory in all material
          respects to the Lender.

                                                   -4-

 

 

         (e)      Receivables. The Borrower shall notify the Lender promptly of all material returns and
recoveries of merchandise and claims. The Borrower shall not without prior written notice to the Lender
settle or adjust any dispute or claim which (together with all other such settlements or adjustments
relating to the Receivables of the Borrower) would exceed $10,000 in the aggregate per fiscal quarter of
the Borrower, nor shall the Borrower grant any discount, credit or allowance except in the ordinary
course of the Borrower's business nor accept any return of merchandise except in the ordinary course of
the Borrower's business without the Lender's consent. Upon the occurrence and during the continuance
of any Event of Default, the Lender may settle or adjust disputes or claims directly with customers or
account debtors for amounts and upon terms which it considers reasonably advisable; in all such cases,
the Borrower will be credited only with amounts actually received by the Lender; and where the
Borrower receives collateral of any kind by reason of transactions between itself and its customers or
account debtors, it will hold the same on the Lender's behalf, subject to the Lender's instructions, and as
properly forming part of the Collateral. Upon the occurrence and during the continuance of an Event of
Default, the Lender or its designee may at any time notify the Borrower's customers or account debtors
of the Lender's security interest in Receivables, collect the same directly and charge the collection costs
and expenses to the Borrower; whenever the Lender deems it desirable that any legal or other action be
instituted in order to collect any Receivable, the Lender may at its option reassign any such Receivable to
the Borrower (and any such reassignment shall be deemed to be without recourse to the Lender in any
event) and require the Borrower to proceed with such legal or other action at the Borrower's sole
liability, cost and expense, in which event all amounts collected by the Borrower on such Receivable
shall nevertheless be subject to this Security Agreement; and the Borrower agrees to pay to the Lender a
reasonable collection charge on all Receivables collected by the Lender under this Security Agreement.
If the Lender elects that the Borrower continue to collect the Receivables after the occurrence of an
Event of Default, the Borrower will collect its Receivables as the Lender's collection agent, hold such
collections in trust for the Lender without commingling the same with other funds of the Borrower and, if
requested by the Lender, will promptly, on the day of receipt thereof, transmit such collections to the
Lender in the identical form in which they were received by the Borrower, with such endorsements as
may be appropriate.

         (f)      Title; Sale or Removal of Collateral. The Borrower shall not Create or suffer to exist any
Lien in or on any of the Collateral, except the Liens of the Loan Documents and other Liens expressly
permitted by Section 6.3 of the Credit Agreement. Except for Dispositions expressly permitted by the
Credit Agreement, the Borrower shall not, without the Lender's prior written approval, sell, transfer or
remove from the Premises or otherwise dispose of any of the Collateral. No Collateral will be located at
any premises other than as described in Subsection 3(b) above. The Borrower (i) shall maintain books
and records relating to Collateral only as described in Subsection 3(b) above, (ii) will not move its chief
executive office from the existing location described in Subsection 3(b) above, (iii) will not change its
name or identity, and (iv) shall give the Lender 20 days prior written notice of any proposed change in its
corporate structure or jurisdiction of incorporation.

         (g)      Maintenance and Use of Equipment. The Borrower will maintain all Equipment in good
order and condition, reasonable wear and tear excepted, making all necessary repairs thereto. The
Borrower will not suffer any waste or destruction of any Inventory or Equipment, nor use any Equipment
in violation of any applicable law or any insurance thereon. The Borrower will promptly restore or
replace any Inventory or Equipment damaged or destroyed by fire or other casualty, and this obligation
will not be limited by the availability or sufficiency of insurance proceeds. The Borrower shall promptly
furnish to the Lender a statement as to any casualty, loss or damage in excess of $10,000 to any Inventory
or Equipment.

                                                  -5-

 

 

         (h) Taxes. The Borrower promptly shall pay, as they become due and payable, all taxes, unemployment contributions and
all other charges of any kind or nature levied, assessed or claimed against the Borrower or the Collateral by any Person whose
claim could result in a Lien upon any of the Collateral, except to the extent such taxes, contributions or other charges are
being contested in good faith and by appropriate proceedings which operate as a matter of law to stay the enforcement of any such
Lien and adequate reserves have been established and are maintained by the Borrower.

         (i) Intellectual Property Rights. The Borrower agrees that it will not dispose of any of the Intellectual Property
Rights or any interest therein or grant a security interest in any of the Intellectual Property Rights (other than pursuant to
the Loan Documents) or suffer or permit to exist any other encumbrance thereon without, in each instance, the prior written
consent of the Lender. The Borrower warrants that the Borrower has unencumbered title to or a license to use the Intellectual
Property Rights now being used by it and full right and authority to grant to the Lender its security interests in the
Intellectual Property Rights. The Borrower agrees to defend its title to (or license of) the Intellectual Property Rights and to
take all steps reasonably necessary to preserve its title to (or license of) the Intellectual Property Rights and ability to use
same, including defense of any claims of infringement and action against any infringers, all to the extent that such defense or
action against infringers is reasonably necessary in order to maintain the value and use of all material Intellectual Property
Rights. If, during the term of this Security Agreement, the Borrower shall obtain rights to any new or additional United States
trademark registrations, trademark applications, patents, patent applications or copyrights, the same shall automatically
constitute Intellectual Property Rights subject to this Security Agreement, and the Borrower agrees to give the Lender prompt
written notice thereof, describing and identifying such Intellectual Property Rights in the same manner as on Exhibit A hereto.
Upon the occurrence of any Event of Default, the Borrower will assemble and make available to the Lender all books, records and
data, whether in written form or electronically recorded, representing any of the Intellectual Property Rights.

         (j) Deposit Accounts. The Borrower will maintain all deposit accounts with the Lender except for one deposit account for
 each Unit which accounts shall be used for deposit only (the "Deposit Accounts"). Such Deposit Accounts will be required to be
 swept on each Business Day of all available cash in excess of $1,000 from the sale of Inventory and any other assets, all
 collections of Accounts, and all other cash payments received by or for the account of the Borrower (such cash receipts and
 collections, "Cash Receipts") to a designated account maintained with the Lender. At the Lender's request, the Borrower will
 execute any agreements to cause all Cash Receipts to be swept to a concentration account with the Lender. After the occurrence of
 a Default, the Borrower shall cause all Cash Receipts, at the Lender's option, to be deposited directly to a blocked account with
 the Lender.

         5. Lender Appointed Attorney-in-Fact. (a) The Borrower hereby irrevocably appoints the Lender as the Borrower's
attorney-in-fact, with full authority in the name, place and stead of the Borrower, from time to time after the occurrence and
during the continuance of an Event of Default in the Lender's discretion, to take any action and to execute any instrument which
the Lender may deem necessary or advisable to accomplish the purposes of this Security Agreement, including, without limitation:

                  (i) to obtain and adjust any insurance required pursuant to this Security Agreement and/or the Credit Agreement;

                 (ii) to ask, demand, collect, sue for, recover, compromise, receive and give acquittances for monies due
         and to become due under or in respect of any of the Collateral;

                                                  -6-

 

 

                (iii) to receive, endorse and collect any notes, drafts or other instruments, documents and chattel paper;

                 (iv) to file any claims or take any action or institute any proceedings for the collection of any of the
         Collateral or otherwise to enforce the rights of the Lender with respect to any of the Collateral;

                 (v) to sign the name of the Borrower on invoices or bills of lading, drafts against customers, notices of
         assignment, verifications and schedules;

                 (vi) to defend any suit, action or proceeding brought against the Borrower in respect of any Collateral, to
         settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, to give such discharges or
         releases as the Lender may deem appropriate;

                (vii) to notify the U.S. Postal Service authorities to change the address for delivery of mail to an address
         designated by the Lender and to open and dispose of mail addressed to the Borrower; and, generally,

               (viii) to do all things necessary to carry out the intent of this Security Agreement.

         (b) The power of attorney granted pursuant to this Section 5 is a power coupled with an interest and shall be
irrevocable until the Obligations are paid indefeasibly in full.

         6.       Lender May Perform. If the Borrower fails to perform any agreement contained herein,
the Lender may itself perform, or cause performance of, such agreement, and the expenses of the Lender
incurred in connection therewith shall be payable by the Borrower as provided under Section 9 hereof,
with interest at the rate provided for in Section 2.8(b) of the Credit Agreement.

         7.       Lender's Duties. The powers conferred on the Lender hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral actually in its possession and the accounting for monies actually
received by it hereunder, the Lender shall have no duty as to any Collateral. The Lender shall not be
liable for any acts, omissions, errors of judgment or mistakes of fact or law including, without limitation,
acts, omissions, errors or mistakes with respect to the Collateral, except for those arising out of or in
connection with the Lender's gross negligence or willful misconduct. The Lender shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the Lender accords its own like
property, it being understood that the Lender shall be under no obligation to take any necessary steps to
collect any Collateral or preserve rights against prior parties or any other rights pertaining to any
Collateral, but may do so at its option, and all expenses incurred in connection therewith shall be for the
sole account of the Borrower and shall be added to the Obligations.

         8.       Remedies. If any Event of Default shall have occurred and be continuing:

         (a) The Lender may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured party under the UCC and also may without limitation:

                  (i) require the Borrower to, and the Borrower hereby agrees that it will, at its expense and the upon
         reasonable request of the Lender, forthwith assemble all or any part of the

                                                  -7-

 

 

         Collateral as directed by the Lender and make it available to the Lender at a place or places to be designated by the
         Lender which is or are reasonably convenient to the respective parties;

                 (ii) itself or through agents, without notice to any Person and without judicial process of any kind, enter the
         Borrower's Premises (or any other premises or location where any Collateral may be) and take physical possession of any
         Collateral or disassemble, render unusable and/or repossess any of the same, and the Borrower shall peacefully and
         quietly yield up and surrender the same; and

                (iii) without notice except as specified below, sell, lease, assign, grant an option or options to purchase or
         otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any
         exchange, broker's board or at the Lender's offices or elsewhere, for cash, on credit or for future delivery, and upon
         such other terms as are commercially reasonable.

         (b)      The Lender may maintain possession of Collateral at the Premises or remove the same or
any part thereof to such places as the Lender may elect. The Borrower waives all rights which it would
otherwise have under any applicable law to prohibit entry to any premises or to require notice of any
such action, to the maximum extent permitted by applicable law. The Borrower agrees that, to the extent
notice of sale shall be required by law, seven (7) days' prior written notice to the Borrower shall
constitute reasonable notification. Notice of any public sale shall be sufficient if it describes the
Collateral to be sold in general terms, stating the items or amounts thereof and the location and nature
thereof, and is published at least once in any newspaper selected by the Lender and of general circulation
in the locale of such sale, not less than seven (7) days prior to the sale. The Lender shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given and may be the purchaser at
any such sale, if public, to the extent permitted by applicable law, free from any right of redemption. The
Borrower shall be fully liable for any deficiency. The Lender may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

         (c)      Any cash held by the Lender as Collateral and all cash or other proceeds received by the
Lender in respect of any sale of, collection from, or other realization upon all or any part of the
Collateral, shall be applied by the Lender in the following order of priority:

         First, to the payment of the reasonable costs and expenses of any sale or other expenses (including, without limitation,
 reasonable legal fees and expenses), liabilities and advances made or incurred by the Lender in connection therewith or referred
 to in Section 9 or provided for by the Credit Agreement or arising in connection with any other facilities now or hereafter
 provided by the Lender to or for the benefit of the Borrower;

         Next, to payment of interest on and principal of the Loans (in such order as may be provided for in the Credit Agreement
 or as otherwise determined by the Lender);

         Next, to the payment of any other Obligations (or may be held by the Lender as security for any other such Obligations
 not yet due and payable); and

         Finally, after payment in full of all Obligations and termination of all credit facilities and other facilities now or
 hereafter provided by the Lender to the Borrower, to the payment to the Borrower or its successors or assigns, or to whomsoever
 may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, of any surplus then remaining of
 such cash.

                                                  -8-

 

 

         9.       Expenses and Indemnification. The Borrower agrees to reimburse the Lender for and to
indemnify and hold harmless the Lender from and against any and all liability, loss, damage, and all costs
or expenses (including, without limitation, reasonable fees and disbursements of counsel, experts and
agents) imposed on, incurred by or asserted against the Lender arising out of or in connection with:
preparation of this Security Agreement, the documents relating hereto, or amendments, modifications or
waivers hereof; taxes (excluding any corporate excise or income taxes payable by the Lender by reason
hereof or otherwise) and other governmental charges in connection with this Security Agreement and the
Collateral; exercise of the Lender's rights with respect to this Security Agreement and the Collateral; any
enforcement, collection or other proceedings resulting therefrom or any negotiations or other measures to
preserve the Lender's rights hereunder; the custody or preservation of, or the sale of or other realization
upon, any of the Collateral; any failure by the Borrower to perform or observe any of the provisions of
this Security Agreement; any investigative, administrative or judicial proceeding (whether or not the
Lender is designated a party thereto) relating to or arising out of this Security Agreement; or any
bankruptcy, insolvency or other similar proceeding relating to the Borrower, unless the Lender was at
fault with respect to such liability, loss, damage, cost or expense or acted in bad faith with respect
thereto. The Borrower's obligations under the preceding sentence shall constitute Obligations and shall
survive the termination of this Security Agreement. In no event will the Borrower be liable for any claim
to the extent determined, by a final, non-appealable judgment of a court of competent jurisdiction, to
have arisen out of the gross negligence or willful misconduct of the Lender.

         10.      Termination. This Security Agreement shall remain in full force and effect so long as
any Loan and/or any other Obligation remains outstanding, any Commitment shall remain effective
and/or any credit facility or other facility remains in effect. Upon the satisfaction in full of all of the
Obligations and the termination or expiration of all credit and other facilities now or hereafter provided
by the Lender for the Borrower, the Lender shall, at the Borrower's expense, execute and deliver to the
Borrower all instruments of assignment or otherwise as may be necessary to establish full title of the
Borrower to any of the Collateral, subject to any prior sale or other disposition thereof pursuant to
Section 8. Until then, this Security Agreement shall itself constitute conclusive evidence of the validity,
effectiveness and continuing force hereof, and any Person may rely hereon.

          11. Waiver; Rights Cumulative. No failure to exercise and no delay in exercising, on the
 part of the Lender, any right or remedy hereunder or otherwise shall operate as a waiver thereof, nor shall
 any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any
 other right or remedy. Waiver by the Lender of any right or remedy on any one occasion shall not be
 construed as a bar to or waiver thereof or of any other right or remedy on any future occasion. The
 Lender's rights and remedies hereunder and under the Loan Documents shall be cumulative, may be
 exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.

          The provisions of this Security Agreement are not in derogation or limitation of any obligations, liabilities or duties
 of the Borrower under any of the other Loan Documents or any other agreement with or for the benefit of the Lender. No
 inconsistency in default provisions between this Security Agreement and any of the other Loan Documents or any such other
 agreement will be deemed to create any additional grace period or otherwise derogate from the express terms of each such default
 provision. No covenant, agreement or obligation of the Borrower contained herein, nor any right or remedy of the Lender
 contained herein, shall in any respect be limited by or be deemed in limitation of any inconsistent or additional provisions
 contained in any of the other Loan Documents or any such other agreement.

          12. Severability. In the event that any provision of this Security Agreement or the
 application thereof to any Person, property or circumstance shall be held to any extent to be invalid or
 unenforceable, the remainder of this Security Agreement and the application of such provision to

                                                  -9-

 

 

Persons, properties and circumstances other than those as to which it has been held invalid or unenforceable shall not be
affected thereby, and each provision of this Security Agreement shall be valid and enforceable to the fullest extent permitted by
law.

         13.      Binding Effect; Assignment. This Security Agreement shall be binding upon the
 Borrower and its successors and assigns and shall inure to the benefit of the Borrower and the Lender and
 their respective successors and assigns.

         14.      Notices. All notices and other communications under or relating to this Security
 Agreement shall be given and effective in the manner and to the addresses of the parties provided for in
 the Credit Agreement.

         15.      Headings. Section headings in this Security Agreement are included herein for
 convenience of reference only and shall not constitute a part of this Security Agreement for any other
 purpose.

         16.      Governing Law. This Security Agreement shall be governed by, and construed and
 enforced in accordance with, the laws of The Commonwealth of Massachusetts.

                                              [ The next page is the signature page ]

                                                  -10-

 

 

         IN WITNESS  WHEREOF,  the Borrower and the Lender have caused this  Security  Agreement to be executed,  as an instrument
under seal, by their respective officers thereunto duly authorized, as of the date first above written

                                                    KPLG WATERTOWN, INC.
                                                    By:
                                                        Name: Title:

                                                    TD BANKNORTH, N.A.
                                                    By:
                                                        Name: Title:

                                           [Signature Page to Borrower Security Agreement]

 

 

                                                                                                                       EXHIBIT LIST

EXHIBIT A - Intellectual Property EXHIBIT

B - Locations of Collateral

 

 

          EXHIBIT A Intellectual Property

[To be provided by Borrower]

 

 

          EXHIBIT B Locations of Collateral

[To be provided by Borrower]

 

 

                                                             EXHIBIT B

FORM OF GUARANTEE AND SECURITY AGREEMENT
       GUARANTEE AND SECURITY AGREEMENT
                            made by KNOWFAT FRANCHISE COMPANY, INC.

                                                            in favor of

                                            TD BANKNORTH, N.A., Dated as of May 27, 2005

 

 

                                          TABLE OF CONTENTS                                                 Page
SECTION 1. DEFINED TERMS                                                                        1
1.1 Definitions                                                                                 1
1.2 Other Definitional Provisions                                                               4
SECTION 2. GUARANTEE                                                                            4
2.1 Guarantee                                                                                   4
2.2 No Subrogation Until All Payments Made                                                      4
2.3 Amendments, etc. with respect to the Borrower Obligations                                   5
2.4 Guarantee Absolute and Unconditional                                                        5
2.5 Reinstatement                                                                               6
2.6 Payments                                                                                    6
SECTION 3. GRANT OF SECURITY INTEREST                                                           6
SECTION 4. REPRESENTATIONS AND WARRANTIES                                                       7
4.1 Title; No Other Liens                                                                       7

4.2 Perfected First Priority Liens                                                              7
4.3 Chief Executive Office                                                                      7
4.4 Inventory and Equipment                                                                     7
4.5 Investment Property                                                                         7
4.6 Receivables                                                                                 8
4.7 Intellectual Property                                                                       8
4.8 Existence; Compliance with Law                                                              8
4.9 Power; Authorization; Enforceability Obligations                                            8
4.10 No Legal Impediment                                                                        9
SECTION 5. COVENANTS                                                                            9
5.1 Minimum Cash Balance                                                                        9
5.2 Requirement that Units Be Owned by the Borrower                                             9
5.3 Financial Information                                                                       9
5.4 Delivery of Instruments, Certificated Securities and Chattel Paper                          9
5.5 Maintenance of Insurance                                                                    10
5.6 Payment of Obligations                                                                      10
5.7 Maintenance of Perfected Security Interest; Further Documentation                           10
5.8 Changes in Locations, Name, etc.                                                            11
5.9 Notices                                                                                     11
5.10 Investment Property                                                                        11
5.11 Receivables                                                                                12
5.12 Intellectual Property                                                                      12
5.13 Compliance with Credit Agreement                                                           13
5.14 Post Default Actions                                                                       13
SECTION 6. REMEDIAL PROVISIONS                                                                  14
6.1 Certain Matters Relating to Receivables                                                     14
6.2 Communications with Obligors; Grantors Remain Liable                                        14
6.3 Pledged Stock                                                                               15
6.4 Proceeds to be Turned Over To Lender                                                        15
6.5 Application of Proceeds                                                                     16
6.6 Code and Other Remedies                                                                     16
6.7 Registration Rights                                                                         17
6.8 Deficiency                                                                                  18
SECTION 7. THE LENDER                                                                           18
7.1 Lender's Appointment as Attorney-in-Fact, etc.                                              18
7.2 Duty of Lender                                                                              19
7.3 Execution of Financing Statements                                                           19
SECTION 8. MISCELLANEOUS                                                                        20

 

 

 8.1 Amendments in Writing                                                               20
 8.2 Notices                                                                             20
 8.3 No Waiver by Course of Conduct; Cumulative Remedies                                 20
 8.4 Enforcement Expenses; Indemnification                                               20
 8.5 Successors and Assigns                                                              20
 8.6 Set-Off                                                                             20
 8.7 Counterparts                                                                        21
 8.8 Severability                                                                        21
 8.9 Section Headings                                                                    21
 8.10 Integration                                                                        21
 8.11 Governing Law                                                                      21
 8.12 Submission To Jurisdiction; Waivers                                                21
 8.13 Acknowledgments                                                                    22
 8.14 Waiver Of Jury Trial                                                               22

                                                             SCHEDULES

Schedule A Notice Address
Schedule B Investment Property

Schedule C Filings and Other Actions Required to Perfect Security Interests
 Schedule D Jurisdictions of Organization, etc.
 Schedule E Inventory and Equipment Locations
 Schedule F Intellectual Property

                                                 -II -

 

 

                                                 GUARANTEE AND SECURITY AGREEMENT

         GUARANTEE AND SECURITY AGREEMENT,  dated as of May 27, 2005, made by KNOWFAT FRANCHISE COMPANY, INC. (the "Grantor"),  in
favor of TD BANKNORTH, N.A. (the "Lender").

                                                            WITNESSETH

         WHEREAS,  KFLG Watertown,  Inc. (the "Borrower") and the Lender are entering into a Credit Agreement of even date herewith
 (as the same may be amended,  restated,  renewed,  replaced,  supplemented  or otherwise  modified from time to time, the "Credit
 Agreement"). Capitalized terms used herein without definition have the meanings assigned to them in the Credit Agreement;

         WHEREAS,  pursuant to the Credit  Agreement,  the Lender has agreed to make  extensions of credit to the Borrower upon the
 terms and subject to the conditions set forth therein;

         WHEREAS,  the Borrower is a  wholly-owned  Subsidiary  of the Grantor and the Grantor will derive  substantial  direct and
 indirect benefit from the making of the extensions of credit under the Credit Agreement;

         WHEREAS,  it is a condition  precedent to the willingness of the Lender to enter into the Credit  Agreement and provide to
 the Borrower the financing contemplated thereby that the Grantor shall have executed and delivered this Agreement to the Lender;

         NOW,  THEREFORE,  in  consideration  of the premises and to induce the Lender to enter into the Credit  Agreement  and to
 induce the Lender to make the  extensions of credit to the Borrower  thereunder,  the Grantor  hereby agrees with the Lender,  as
 follows:

                                                      SECTION 1. DEFINED TERMS

          1.1 Definitions.

          (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
 shall have the meanings given to them in the Credit Agreement, and the following terms are used herein
 as defined in the Massachusetts UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort
 Claims, Documents, Equipment, Farm Products, General Intangibles, Instruments, Inventory, Letter-of-
 Credit Rights, Registered Organization and Supporting Obligations.

          (b) The following terms shall have the following meanings:

                  "Agreement":  this  Guarantee  and  Security  Agreement,  as the same may be amended,  supplemented  or otherwise
          modified from time to time.

                  "Borrower  Obligations":  the collective  reference to the unpaid  principal of and interest on the Loans and all
         other  obligations  and  liabilities  of the  Borrower  (including,  without  limitation,  interest  accruing  at the then
         applicable  rate  provided  in the Credit  Agreement  after the  maturity of the Loans and  interest  accruing at the then
         applicable rate provided in the Credit  Agreement after the filing of any petition in bankruptcy,  or the  commencement of
         any insolvency,  reorganization  or like proceeding,  relating to the Borrower,  whether or not a claim for post-filing or
         post-petition interest is allowed in such proceeding) to the Lender,  whether direct or indirect,  absolute or contingent,
         due or to become due, or now existing or hereafter  incurred,  which may arise under,  out of, or in connection  with, the
         Credit Agreement, the other Loan Documents, any letter of credit or any other document made, delivered or given in

 

 

connection with any of the foregoing,  in each case whether on account of principal,  interest,  reimbursement  obligations,  fees,
indemnities,  costs,  expenses or otherwise  (including,  without  limitation,  all fees and disbursements of counsel to the Lender
that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements).

         "Collateral": as defined in Section 3.

         "Collateral Account": any collateral account established by the Lender as provided in Section 6.1 or 6.4.

         "Contracts":  any  contract or  agreement  between the  Grantor  and any Person,  or an invoice  sent or to be sent by the
 Grantor, pursuant to or under which a Receivable shall arise or be created, or which evidences a Receivable.

         "Copyrights":  (i) all  copyrights  arising  under the laws of the United  States,  any other  country  or any  political
 subdivision  thereof,  whether  registered or unregistered and whether published or unpublished  (including,  without  limitation,
 those listed in Schedule F), all registrations and recordings thereof,  and all applications in connection  therewith,  including,
 without  limitation,  all registrations,  recordings and applications in the United States Copyright Office, and (ii) the right to
 obtain all renewals thereof.

          "Copyright  Licenses":  any written agreement naming the Grantor as licensor or licensee (including,  without limitation,
 those listed in Schedule  F),  granting  any right under any  Copyright,  including,  without  limitation,  the grant of rights to
 manufacture, distribute, exploit and sell materials derived from any Copyright.

          "Deposit  Account":  as  defined  in the  Uniform  Commercial  Code of any  applicable  jurisdiction  and,  in any event,
 including, without limitation, any demand, time, savings, passbook or like account maintained with a depositary institution.

          "Grantor  Obligations":  all  obligations and liabilities of the Grantor which may arise under or in connection with this
 Agreement  (including,  without  limitation,  Section 2) or any other Loan Document to which the Grantor is a party,  in each case
 whether on  account of  guarantee  obligations,  reimbursement  obligations,  fees,  indemnities,  costs,  expenses  or  otherwise
 (including,  without  limitation,  all fees and disbursements of counsel to the Lender that are required to be paid by the Grantor
 pursuant to the terms of this Agreement or any other Loan Document).

          "Intellectual  Property":  the collective  reference to all rights,  priorities and privileges  relating to  intellectual
 property,  whether arising under United States,  multinational or foreign laws or otherwise,  including,  without limitation,  the
 Copyrights,  the Copyright Licenses,  the Patents, the Patent Licenses,  the Trademarks and the Trademark Licenses, and all rights
 to sue at law or in equity for any  infringement  or other  impairment  thereof,  including  the right to receive all proceeds and
 damages therefrom.

          "Intercompany Note": any promissory note evidencing loans made by the Grantor to any of its Subsidiaries.

          "Investment  Property":  the  collective  reference  to (i) all  "investment  property"  as such term is  defined  in the
 Massachusetts  UCC and (ii) whether or not  constituting  "investment  property" as so defined,  all Pledged Notes and all Pledged
 Stock.

          "Issuers": the collective reference to each issuer of any Investment Property.

                                          -2-

 

 

         "Massachusetts UCC": the Uniform Commercial Code as from time to time in effect in the Commonwealth of Massachusetts.

         "Patents":  (i) all letters  patent of the United  States,  any other country or any political  subdivision  thereof,  all
 reissues and  extensions  thereof and all goodwill  associated  therewith,  including,  without  limitation,  any of the foregoing
 referred to in Schedule F, (ii) all  applications  for letters patent of the United States or any other country and all divisions,
 continuations and continuations-in-part  thereof,  including,  without limitation, any of the foregoing referred to in Schedule F,
 and (iii) all rights to obtain any reissues or extensions of the foregoing.

         "Patent License":  all agreements,  whether written or oral,  providing for the grant by or to the Grantor of any right to
 manufacture,  use or sell  any  invention  covered  in  whole or in part by a Patent  including,  without  limitation,  any of the
 foregoing referred to in Schedule F.

         "Pledged Notes":  all promissory notes listed on Schedule B, all Intercompany  Notes at any time issued to the Grantor and
 all other  promissory  notes issued to or held by the Grantor (other than promissory notes issued in connection with extensions of
 trade credit by the Grantor in the ordinary course of business).

         "Pledged  Securities":  the  collective  reference to the Pledged  LLC/Partnership  Interests,  the Pledged  Stock and the
 Pledged Notes, together with any Proceeds thereof.

         "Pledged  Stock":  the shares of Capital Stock listed on Schedule B, together with any other shares,  stock  certificates,
 options,  interests or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted
 to, or held by, the Grantor while this Agreement is in effect.

         "Proceeds":  all  "proceeds" as such term is defined in the  Massachusetts  UCC and, in any event,  shallinclude,  without
 limitation,  all dividends or other income from the investment  Property,  collections  thereon or  distributions or payments with
 respect thereto.

          "Receivable":  any right to  payment  for goods  sold or leased or for  services  rendered,  whether or not such right is
 evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance  (including,  without limitation,
 any Account).

          "Restricted Account": as defined in Section 8.6. "Securities Act": the Securities Act of
          1933, as amended.

          "Trademarks":  (i) all trademarks,  trade names,  corporate names,  company names,  business names,  fictitious  business
 names, trade styles,  service marks, logos and other source or business identifiers,  and all goodwill associated  therewith,  now
 existing or hereafter  adopted or  acquired,  all  registrations  and  recordings  thereof,  and all  applications  in  connection
 therewith,  whether in the United States Patent and Trademark Office or in any similar office or agency of the United States,  any
 State thereof or any other country or any political subdivision thereof, or otherwise,  and all common-law rights related thereto,
 including, without limitation, any of the foregoing referred to in Schedule F, and (ii) the right to obtain all renewals thereof.

          "Trademark  License":  any agreement,  whether written or oral, providing for the grant by or to the Grantor of any right
 to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule F.

                                          -3-

 

 

         1.2 Other Definitional Provisions.

         The words  "hereof,"  "herein",  "hereto" and  "hereunder"  and words of similar import when used in this Agreement  shall
refer to this  Agreement as a whole and not to any  particular  provision  of this  Agreement,  and  Section,  Schedule and Exhibit
references  are to this  Agreement  unless  otherwise  specified.  The  meanings  given to terms  defined  herein  shall be equally
applicable to both the singular and plural forms of such terms.

                                                       SECTION 2. GUARANTEE

         2.1 Guarantee.

         (a) The Grantor hereby unconditionally and irrevocably guarantees to Lender and its successors,
 endorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower
 when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations.

         (b) Anything herein or in any other Loan Document to the contrary notwithstanding, the
 maximum liability of the Grantor hereunder and under the other Loan Documents shall in no event
 exceed the amount which can be guaranteed by such Grantor under applicable federal and state laws
 relating to the insolvency of debtors.

         (c)  The Grantor agrees that the Borrower Obligations may at any time and from time to time
 exceed the amount of the liability of the Grantor hereunder without impairing the guarantee contained in
 this Section 2 or affecting the rights and remedies of the Lender hereunder.

         (d)  The guarantee contained in this Section 2 shall remain in full force and effect until all the
 Borrower Obligations and the obligations of the Grantor under the guarantee contained in this Section 2
 shall have been satisfied by indefeasible payment in full in cash, no letters of credit shall be outstanding
 and the Commitments shall be terminated, notwithstanding that from time to time during the term of the
 Credit Agreement the Borrower may be free from any Borrower Obligations.

         (e)  No payment made by the Borrower, the Grantor, any other guarantor or any other Person or
 received or collected by the Lender from the Borrower, the Grantor, any other guarantor or any other
 Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or
 from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify,
 reduce, release or otherwise affect the liability of the Grantor hereunder which shall, notwithstanding any
 such payment (other than any payment made by the Grantor in respect of the Borrower Obligations or
 any payment received or collected from the Grantor in respect of the Borrower Obligations), remain
 liable for the Borrower Obligations up to the maximum liability of the Grantor hereunder until the
 Borrower Obligations are indefeasibly paid in full in cash, no letters of credit shall be outstanding and
 the Commitments are terminated.

         (f) Any of the indebtedness of any Covered Party now or hereafter owing to the Borrower or
 the Grantor is hereby subordinated and junior to the Borrower Obligations or the Grantor Obligations, as
 applicable, and all such indebtedness of such Covered Party shall not be paid, or, at the Lender's option,
 shall be collected, enforced and received for the benefit of the Lender on account of the Borrower
 Obligations or the Grantor Obligations, as applicable, but without affecting or impairing in any manner
 the liability of the Borrower or the Grantor under the other provisions of this Agreement and the other
 Loan Documents.

         2.2 No Subrogation Until All Payments Made. Notwithstanding the payment made by the
 Grantor hereunder or any set-off or application of funds of the Grantor by the Lender, the Grantor shall
 not be entitled to be subrogated to any of the rights of the Lender against the Borrower or any collateral
 security or guarantee or right of offset held by the Lender for the payment of the Borrower Obligations,

                                                  -4-

 

 

 nor shall the Grantor seek or be entitled to seek any  contribution or  reimbursement  from the Borrower or any other guarantor in
 respect of  payments  made by the  Grantor  hereunder,  until all  amounts  owing to the Lender by the  Borrower on account of the
 Borrower  Obligations  are  indefeasibly  paid in full in cash, no letters of credit shall be outstanding  and the Commitments are
 terminated.  If any amount shall be paid to the Grantor on account of the subrogation  rights at any time when all of the Borrower
 Obligations  shall not have been  indefeasibly  paid in full in cash,  the  amount  shall be held by the  Grantor in trust for the
 Lender,  segregated  from other funds of the Grantor,  and shall,  forthwith  upon  receipt by the Grantor,  be turned over to the
 Lender in the exact form received by the Grantor (duly endorsed by the Grantor to the Lender, if required),  to be applied against
 the Borrower Obligations, whether matured or unmatured, in the order as the Lender may determine.

         2.3   Amendments, etc. with respect to the Borrower Obligations. The Grantor shall remain
 obligated hereunder notwithstanding that, without any reservation of rights against the Grantor and
 without notice to or further assent by the Grantor, any demand for payment of any of the Borrower
 Obligations made by the Lender may be rescinded by the Lender and any of the Borrower Obligations
 continued, and the Borrower Obligations, or the liability of any other Person upon or for any part thereof,
 or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to
 time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived,
 surrendered or released by the Lender, and the Credit Agreement and the other Loan Documents and any
 other documents executed and delivered in connection therewith may be amended, modified,
 supplemented or terminated, in whole or in part, as the Lender may deem advisable from time to time,
 and any collateral security, guarantee or right of offset at any time held by the Lender for the payment of
 the Borrower Obligations may be sold, exchanged, waived, surrendered or released. The Lender shall
 have no obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the
 Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

         2.4   Guarantee Absolute and Unconditional. The Grantor waives any and all notice of the
 creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of
 reliance by the Lender upon the guarantee contained in this Section 2 or acceptance of the guarantee
 contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to
 have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon
 the guarantee contained in this Section 2; and all dealings between the Borrower and the Grantor, on the
 one hand, and the Lender, on the other hand, likewise shall be conclusively presumed to have been had or
 consummated in reliance upon the guarantee contained in this Section 2. The Grantor waives diligence,
 presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower
 or the Grantor with respect to the Borrower Obligations. The Grantor understands and agrees that the
 guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional
 guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any
 other Loan Document, any of the Borrower Obligations or any other collateral security therefor or
 guarantee or right of offset with respect thereto at any time or from time to time held by the Lender, (b)
 any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any
 time be available to or be asserted by the Borrower or any other Person against the Lender, or (c) any
 other circumstance whatsoever (with or without notice to or knowledge of the Borrower or the Grantor)
 which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for
 the Borrower Obligations, or of the Grantor under the guarantee contained in this Section 2, in
 bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its
 rights and remedies hereunder against the Grantor, the Lender may, but shall be under no obligation to,
 make a similar demand on or otherwise pursue the rights and remedies as it may have against the
 Borrower, any other guarantor or any other Person or against any collateral security or guarantee for the
 Borrower Obligations or any right of offset with respect thereto, and any failure by the Lender to make
 any demand, to pursue the other rights or remedies or to collect any payments from the Borrower, any
 other gurarantor or any other Person or to realize upon any collateral security or guarantee or to exercise
 any right of offset, or any release of the Borrower, any other guarantor or any other Person or any

                                                  -5-

 

 

collateral  security,  guarantee or right of offset,  shall not relieve the Grantor of any obligation or liability  hereunder,  and
shall not impair or affect the rights  and  remedies,  whether  express,  implied or  available  as a matter of law,  of the Lender
against the Grantor.  For the purposes of this Section 2.4 only,  "demand" shall include the  commencement  and  continuance of any
legal proceedings.

         2.5 Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or
 be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower
 Obligations is rescinded or must otherwise be restored or returned by the Lender upon the insolvency,
 bankruptcy, dissolution, liquidation or reorganization of the Borrower, the Grantor or any other
 guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee
 or similar officer for, the Borrower or the Grantor or any substantial part of its property, or otherwise, all
 as though such payments had not been made.

         2.6 Payments. The Grantor hereby guarantees that payments hereunder will be paid to the
 Lender without set-off or counterclaim in Dollars at its office at 370 Main Street, Worcester, MA 01608,
 or at such other office as the Lender may designate from time to time in writing.

                                  SECTION 3. GRANT OF SECURITY INTEREST

         The Grantor hereby assigns and transfers to the Lender,  and hereby grants to the Lender,  a security  interest in, all of
 the following  property now owned or at any time hereafter  acquired by the Grantor or in which the Grantor now has or at any time
 in the future may acquire any right, title or interest  (collectively,  the "Collateral"),  as collateral  security for the prompt
 and complete  payment and  performance  when due (whether at the stated  maturity,  by  acceleration  or otherwise) of the Grantor
 Obligations:

                  (a)all Accounts;
                  (b)all Chattel Paper;
                  (c)all Contracts;
                  (d)all Deposit Accounts;
                  (e)all Documents;
                  (f)all Equipment;
                  (g)all General Intangibles;
                  (h) all Instruments;
                  (i) all Intellectual Property;
                  (j) all Inventory;
                  (k) all Investment Property;
                  (1) all Letter of Credit Rights;
                  (m) all Receivables;

                  (n) all other property not otherwise described above;

                                                   -6-

 

 

                  (o) all books and records pertaining to the Collateral; and

                  (p) to the extent not  otherwise  included,  all Proceeds,  Supporting  Obligations,  Commercial  Tort Claims and
         products of any and all of the foregoing and all collateral  security and  guarantees  given by any Person with respect to
         any of the foregoing;

 provided,  however,  that  notwithstanding  any of the other  provisions  set forth in this  Section 3, this  Agreement  shall not
 constitute a grant of a security  interest in any property to the extent that such grant of a security  interest is prohibited by,
 or  constitutes  a breach or default  under or results in the  termination  of, or requires  any consent not obtained  under,  any
 contract,  license,  agreement,  instrument  or other  document  evidencing or giving rise to such property or, in the case of any
 Investment  Property,  Pledged Stock or Pledged Note, any applicable  shareholder or similar agreement,  except to the extent that
 the term in such contract,  license,  agreement,  instrument or other document or shareholder or similar  agreement  providing for
 such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law.

                                             SECTION 4. REPRESENTATIONS AND WARRANTIES

         To induce  the  Lender to enter into the Credit  Agreement  and to induce the Lender to make  extensions  of credit to the
 Borrower under the Credit Agreement, the Grantor hereby represents and warrants to the Lender that:

         4.1  Title; No Other Liens. Except for the security interest granted to the Lender pursuant to this
 Agreement and the other Liens permitted to exist on the Collateral by the Credit Agreement, the Grantor
 owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing
 statement or other public notice with respect to all or any part of the Collateral is on file or of record in
 any public office, except such as have been filed in favor of the Lender, pursuant to this Agreement or as
 are permitted by the Credit Agreement.

         4.2  Perfected First Priority Liens. The security interests granted pursuant to this Agreement (a)
 upon completion of the filings and other actions specified on Schedule C (which, in the case of all filings
 and other documents referred to on said Schedule, have been delivered to the Lender in completed and
 duly executed form) will constitute valid perfected security interests in all of the Collateral in which a
 security interest can be perfected by the filing of a financing statement and/or the other filings and
 actions specified on Schedule C in favor of the Lender, as collateral security for the Grantor Obligations,
 enforceable in accordance with the terms hereof against all creditors of the Grantor and any Persons
 purporting to purchase any Collateral from the Grantor and (b) are prior to all other Liens on the
 Collateral in existence on the date hereof except to the extent otherwise permitted by the Credit
 Agreement.

         4.3  Chief Executive Office. On the date hereof, the Grantor's type of organization, jurisdiction
 of organization, identification number from the jurisdiction of organization (if any) and the location of
 the Grantor's chief executive office or sole place of business, as the case maybe, are specified on
 Schedule D. The Grantor has furnished to the Lender a certified charter, certificate of incorporation or
 other organization document and long-form good standing certificate as of a date which is recent to the
 date hereof.

         4.4  Inventory and Equipment. On the date hereof, the Inventory and the material Equipment
 (other than mobile goods) are kept at the locations listed on Schedule E.

         4.5 Investment Property. The shares of Pledged Stock pledged by the Grantor hereunder
 constitute all the issued and outstanding shares of all classes of Capital Stock of each Issuer owned by the
 Grantor. All the shares of the Pledged Stock have been duly and validly issued and are fully paid and

                                                 -7-

 

 

nonassessable,  and,  if  issued  by a Person  other  than a  partnership  or  limited  liability  company,  are  represented  by a
certificate.  No shares of Pledged Stock held by the Grantor constitute "uncertificated  securities" as defined in Article 8 of the
Massachusetts  UCC To the Grantor's  knowledge,  each of the Pledged Notes constitutes the legal,  valid and binding  obligation of
the obligor with respect  thereto,  enforceable in accordance  with its terms,  subject to the effects of  bankruptcy,  insolvency,
fraudulent conveyance,  reorganization,  moratorium and other similar laws relating to or affecting creditors' rights generally and
general  equitable  principles  (whether  considered in a proceeding in equity or at law). The Grantor is the record and beneficial
owner of, and has good and  marketable  title to, the  Investment  Property  pledged by it hereunder,  free of any and all Liens or
options in favor of, or claims of, any other Person, except the security interest created by this Agreement.

         4.6 Receivables, (a) No amount payable to the Grantor under or in connection with any
 Receivable is evidenced by any Instrument or Chattel Paper which has not been delivered to the Lender.

         (b)      None of the obligors on any Receivable is a Governmental Authority.

         (c)      The amounts represented by the Grantor to the Lender from time to time as owing to the
 Grantor in respect of the Receivables will at such times be accurate in all material respects.

         (d) To the Grantor's  knowledge,  each Receivable  constitutes  the bona fide obligation of the account debtor  thereunder
 and was originated in the ordinary course of the Grantor's business.

         4.7  Intellectual Property. Schedule F lists all Intellectual Property owned by the Grantor in its
 own name on the date hereof. On the date hereof, all material Intellectual Property is valid, subsisting,
 unexpired and enforceable, has not been abandoned and does not infringe the intellectual property rights
 of any other Person. Except as set forth in Schedule F, on the date hereof, none of the Intellectual
 Property is the subject of any licensing or franchise agreement pursuant to which the Grantor is the
 licensor or franchisor. No holding, decision or judgment has been rendered by any Governmental
 Authority which would limit, cancel or question the validity of, or the Grantor's rights in, any Intellectual
 Property in any respect that could reasonably be expected to have a Material Adverse Effect. No action
 or proceeding is pending, or, to the knowledge of the Grantor, threatened, on the date hereof (i) seeking
 to limit, cancel or question the validity of any Intellectual Property or the Grantor's ownership interest
 therein, or (ii) which, if adversely determined, would have a material adverse effect on the value of any
 Intellectual Property.

         4.8  Existence; Compliance with Law. The Grantor (a) is duly organized, validly existing and in
 good standing under the laws of the jurisdiction of its organization, (b) has the requisite power and
 authority, and the legal right, to own and operate its properties and to conduct its business in which it is
 currently engaged and (c) is in compliance with all Legal Requirements except to the extent that the
 failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material
 Adverse Effect.

         4.9  Power; Authorization; Enforceabilitv of Obligations. The Grantor has the requisite power
 and authority, and the legal right, to make, deliver and perform this Agreement. The Grantor has taken
 all necessary action to authorize the execution, delivery and performance of this Agreement. No consent
 or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or
 any other Person is required in connection with the execution, delivery, performance, validity or
 enforceability of this Agreement. This Agreement constitutes a legally valid and binding obligation of
 the Grantor, enforceable against the Grantor in accordance with its terms, except as enforceability may be
 limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
 enforcement of creditors' rights generally and by general equitable principles (whether enforcement is
 sought by proceedings in equity or at law).

                                                  -8-

 

 

         4.10 No Legal  Impediment.  The  execution,  delivery  and  performance  of this  Agreement  will not  violate  any  Legal
Requirement  or any other  contractual  obligation  binding on the  Grantor,  and will not result in, or require,  the  creation or
imposition of any Lien on any of its properties or revenues pursuant to any Legal Requirement or any such contractual obligation.

                                                       SECTION 5. COVENANTS

         The Grantor  covenants  and agrees with the Lender  that,  from and after the date of this  Agreement  until the  Borrower
 Obligations  and the  Grantor  Obligations  shall have been  indefeasibly  paid in full in cash,  no  letters  of credit  shall be
 outstanding and the Commitments shall have terminated:

         5.1  Minimum Cash Balance. Grantor acknowledges and agrees that the New Equity must be
 raised and received by the Grantor on or before the New Equity Date as required by Section 6.1 (a) of the
 Credit Agreement. If the Grantor raises more than the New Equity but less than $5,000,000 by the New
 Equity Date, then the Grantor will maintain a minimum cash balance of $800,000 at all times (the
 "Minimum Cash Balance") in a designated operating account with the Lender. Upon request of the
 Lender, the Minimum Cash Balance will be pledged to the Lender. If the ratio of (a) the sum of the
 Borrower's Consolidated Senior Funded Debt as of the last day of any four-quarter period ending after
 the date hereof to (b) the Borrower's EBITDA for such four-quarter period is less than 2.0 to 1.0, such
 Minimum Cash Balance will not be required at any time thereafter, provided no other Event of Default
 then or thereafter exists. For purposes of this Section 5.1, "Consolidated Senior Funded Debt" shall
 mean at any date, the consolidated Indebtedness of the Borrower and its Subsidiaries less, Subordinated
 Debt at such date.

         5.2  Requirement that Units Be Owned by Borrower. The ownership of any interest in any Unit
 shall be held by Borrower and not directly by the Grantor or any other party.

         5.3  Financial Information. Furnish to the Lender:
                  (a)  as soon as available, but in any event within 120 days after the end of each fiscal
 year of the Grantor, a copy of the audited consolidated and unaudited consolidating balance sheet of the
 Grantor as at the end of such year and the related audited consolidated and unaudited consolidating
 statements of income and of cash flows for such year, setting forth in each case in comparative form the
 figures for the previous year, and, in the case of the audited statements, reported on without a "going
 concern" or like qualification or exception, or qualification arising out of the scope of the audit by Carlin,
 Charron & Rosen, LLP or other independent certified public accountants satisfactory to the Lender;

                  (b)  as soon as available, but in any event not later than 45 days after the end of each
 quarterly period of each fiscal year of the Grantor, the unaudited consolidated and consolidating balance
 sheet of the Grantor as at the end of such quarter and the related unaudited consolidated and
 consolidating statements of income and of cash flows for such quarter and the portion of the fiscal year
 through the end of such quarter, setting forth in each case in comparative form the figures for the
 previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to
 normal year-end audit adjustments); and

                  (c) promptly, such additional financial and other information as the Lender may
 from time to time reasonably request.

 All such  financial  statements  referred to in Sections  5.3(a) above shall be complete and correct in all material  respects and
 shall be prepared in reasonable detail and in accordance with GAAP applied  consistently  throughout the periods reflected therein
 and with prior periods.

         5.4 Delivery of Instruments, Certificated Securities and Chattel Paper, (a) The Grantor will,
 and will cause each of its Subsidiaries to:

                                                  -9-

 

 

                 (i) provide in its charter or other applicable organization document that all Capital Stock issued by such party
         will be represented by a certificate; and

                 (ii) if any such Subsidiary is a partnership or limited liability company, not provide in its partnership
         agreement, limited liability company agreement or other applicable organization document that any Capital Stock issued by
         such Subsidiary will be securities governed by Article 8 of the Massachusetts UCC.

         The Grantor  shall  deliver all  certificates  evidencing  the Capital  Stock issued to the Grantor by the Borrower to the
Lender, together with any appropriate instruments of transfer.

         (b) If any  amount  payable  under  or in  connection  with any of the  Collateral  shall be or  become  evidenced  by any
Instrument,  Certificated  Security or Chattel Paper,  such  Instrument,  Certificated  Security or Chattel Paper shall be promptly
delivered  to the  Lender,  duly  endorsed  in a manner  satisfactory  to the  Lender,  to be held as  Collateral  pursuant to this
Agreement.

         5.5 Maintenance of Insurance. The Grantor will maintain, with financially sound and reputable
 companies, insurance policies (i) insuring the Inventory and Equipment against loss by fire, explosion,
 theft and such other casualties as may be reasonably satisfactory to the Lender and (ii) insuring the
 Grantor and the Lender against liability for personal injury and property damage relating to such
 Inventory and Equipment, such policies to be in such form and amounts and having such coverage as may
 be reasonably satisfactory to the Lender. All insurance required to be maintained by the Grantor
 hereunder and pursuant to the Credit Agreement shall (i) provide that no cancellation, material reduction
 in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by
 the Lender of written notice thereof, (ii) name the Lender as Joss payee pursuant to a loss payable
 endorsement issued in favor of and delivered to the Lender and (iii) be reasonably satisfactory in all other
 respects to the Lender.

         5.6 Payment of Obligations. The Grantor will pay and discharge or otherwise satisfy at or
 before maturity or before they become delinquent, as the case may be, all taxes, assessments and
 governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom,
 as well as all claims of any kind (including, without limitation, claims for labor, materials and supplies)
 against or with respect to the Collateral, except that no such charge need be paid if the amount or validity
 thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with
 GAAP with respect thereto have been provided on the books of the Grantor and such proceedings could
 not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral
 or any interest therein.

         5.7 Maintenance of Perfected Security Interest; Further Documentation.

         (a)  The Grantor shall maintain the security interest created by this Agreement as a perfected
 security interest having at least the priority described in Section 4.2 and shall defend such security
 interest against the claims and demands of all Persons whomsoever, subject to the rights of the Grantor
 under the Loan Documents to dispose of the Collateral and subject to Permitted Liens.

         (b)  The Grantor will furnish to the Lender from time to time statements and schedules further
 identifying and describing the assets and property of the Grantor and such other reports in connection
 therewith as the Lender may reasonably request, all in reasonable detail.

         (c)  At any time and from time to time, upon the written request of the Lender, and at the sole
 expense of the Grantor, the Grantor will promptly and duly execute and deliver, and have recorded, such
 further instruments and documents and take such further actions as the Lender may reasonably request
 for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and

                                                 - 10-

 

 

powers herein granted,  including,  without limitation,  (i) filing any financing  statements under the Uniform Commercial Code (or
other similar laws) in effect in any  jurisdiction  with respect to the security  interests  created hereby and (ii) in the case of
Investment Property,  Deposit Accounts,  Letter of Credit Rights, and any other, relevant Collateral,  taking any actions necessary
to enable the Lender to obtain  "control"  (within the meaning of the applicable  Uniform  Commercial  Code) with respect  thereto.
Without limiting the generality of the foregoing:

                  (i) unless the Lender  shall  otherwise  consent in writing  (which  consent may be revoked),  the Grantor  shall
         deliver to the Lender all  Collateral  consisting  of negotiable  Documents,  certificated  securities,  Chattel Paper and
         Instruments  (in each case,  accompanied by stock powers,  allonges or other  instruments  of transfer  executed in blank)
         promptly after the Grantor receives the same; and

         (ii) upon  request by the Lender  after the  occurrence  and during the  continuance  of an Event of Default,  the Grantor
 shall obtain signed acknowledgements of the Lender's Liens from bailees having possession of the Grantor's goods.

         5.8 Changes in Locations. Name, etc. The Grantor wilI not, except upon 20 days' prior written
 notice to the Lender and delivery to the Lender of (a) all additional financing statements and other
 documents reasonably requested by the Lender to maintain the validity, perfection and priority of the
 security interests provided for herein and (b) if applicable, a written supplement to Schedule E showing
 any additional location at which Inventory or Equipment shall be kept:

                  (i) permit any of the  Inventory  or  Equipment  (other than  isolated  items of  Equipment  which are not in the
         aggregate material) to be kept at a location other than those listed on Schedule E;

                  (ii) change its jurisdiction of organization; or (iii) change its
                  name.

         5.9 Notices. The Grantor will advise the Lender promptly, in reasonable detail, of:

         (a)  any Lien (other than security interests created hereby or Liens permitted under the Credit
 Agreement) on any of the Collateral which would adversely affect the ability of the Lender to exercise
 any of its remedies hereunder; and

         (b)  of the occurrence of any other event which could reasonably be expected to have a material
 adverse effect on the aggregate value of the Collateral or on the security interests created hereby.

         5.10 Investment Property.

         (a) If the Grantor shall become entitled to receive or shall receive any certificate (including,  without limitation,  any
 certificate  representing a dividend or a distribution in connection with any  reclassification,  increase or reduction of capital
 or any certificate issued in connection with any reorganization),  option or rights in respect of the Capital Stock of any Issuer,
 whether in addition to, in substitution  of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise
 in respect  thereof,  the  Grantor  shall  accept the same as the agent of the  Lender,  hold the same in trust for the Lender and
 deliver the same  forthwith  to the Lender in the exact form  received,  duly  endorsed by the Grantor to the Lender if  required,
 together with an undated stock or transfer power covering such  certificate duly executed in blank by the Grantor and with, if the
 Lender so  requests,  signature  guaranteed,  to be held by the Lender,  subject to the terms  hereof,  as  additional  collateral
 security for the Grantor  Obligations and the Borrower  Obligations.  Any sums paid upon or in respect of such Investment Property
 upon the liquidation or dissolution of any Issuer shall be paid over to the Lender to be held by it

                                                 -11 -

 

 

 hereunder  as  additional  collateral  security  for  the  Grantor  Obligations  and the  Borrower  Obligations,  and in case  any
 distribution  of capital shall be made on or in respect of the Investment  Property or any property  shall be distributed  upon or
 with respect to the Investment  Property  pursuant to the  recapitalization  or  reclassification  of the capital of any Issuer or
 pursuant to the  reorganization  thereof,  the property so distributed  shall,  unless otherwise  subject to a perfected  security
 interest in favor of the Lender, be delivered to the Lender to be held by it hereunder as additional  collateral  security for the
 Grantor  Obligations  and the Borrower  Obligations.  If any sums of money or property so paid or  distributed  in respect of such
 Investment Property shall be received by the Grantor,  the Grantor shall, until such money or property is paid or delivered to the
 Lender, hold such money or property in trust for the Lender,  segregated from other funds of the Grantor, as additional collateral
 security for the Grantor Obligations and the Borrower Obligations.

         (b)  Without the prior written consent of the Lender, the Grantor will not (i) vote to enable, or
 take any other action to permit, any Issuer to issue any Capita] Stock, to issue any other securities
 convertible into or granting the right to purchase or exchange for any Capital Stock of any Issuer, (ii) sell,
 assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Investment
 Property or Proceeds thereof (except pursuant to a transaction expressly permitted by the Credit
 Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any
 Person with respect to, any of the Investment Property or Proceeds thereof, or any interest therein, except
 for the security interests created by this Agreement or (iv) enter into any agreement or undertaking
 restricting the right or ability of the Grantor or the Lender to sell, assign or transfer any of the Investment
 Property or Proceeds thereof.

         (c)  In the case of the Grantor in its capacity as an Issuer, such Issuer agrees that (i) it will be
 bound by the terms of this Agreement relating to the Investment Property issued by it and will comply
 with such terms insofar as such terms are applicable to it.

         5.11 Receivables.

         (a) Other than in the ordinary course of business consistent with its past practice, the Grantor
 will not (i) grant any extension of the time of payment of any Receivable, (ii) compromise or settle any
 Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for
 the payment of any Receivable, (iv) allow any credit or discount whatsoever on any Receivable or (v)
 amend, supplement or modify any Receivable in any manner that could adversely affect the value
 thereof.

         (b) The Grantor will deliver to the Lender a copy of each material demand, notice or document
 received by it that questions or calls into doubt the validity or enforceability of more than 5% of the
 aggregate amount of the then outstanding Receivables.

         5.12 Intellectual Property.

         (a) The Grantor  (either  itself or through  licensees)  will (i)  continue  to use each  material  Trademark  in order to
 maintain  such  Trademark  in full force free from any claim of  abandonment  for  non-use,  except to the extent that the Grantor
 elects to discontinue use in the ordinary course of business,  (ii) use such Trademark with the appropriate notice of registration
 and all other  notices  and  legends  required  by  applicable  Requirements  of Law,  (iii)  not  adopt or use any mark  which is
 confusingly similar or a colorable  imitation of any such Trademark unless the Lender,  shall obtain a perfected security interest
 in such mark  pursuant  to this  Agreement,  and (iv) not (and not permit any  licensee or  sublicensee  thereof to) do any act or
 knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any way.

                                                 -12-

 

 

         (b) The Grantor (either itself or through licensees) will not do any act, or omit to do any act,
whereby any material Patent may become forfeited, abandoned or dedicated to the public.

         (c) The Grantor (either itself or through licensees) (i) will employ each material Copyright and
(ii) will not (and will not permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any material portion of the Copyrights may become invalidated or otherwise
impaired. The Grantor will not (either itself or through licensees) do any act whereby any material
portion of the Copyrights may fall into the public domain.

         (d) The Grantor (either itself or through licensees) will not do any act that knowingly uses any
material Intellectual Property to infringe the intellectual property rights of any other Person.

         (e) The Grantor will notify the Lender immediately if it knows, or has reason to know, that any
application or registration relating to any material Intellectual Property may become forfeited, abandoned
or dedicated to the public, or of any adverse determination or development (including, without limitation,
the institution of, or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country)
regarding the Grantor's ownership of, or the validity of, any material Intellectual Property or the
Grantor's right to register the same or to own and maintain the same.

         (f) Whenever the Grantor, either by itself or through any agent, employee, licensee or designee,
shall file an application for the registration of any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, the Grantor shall report such filing to the Lender within five
Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the
Lender, the Grantor shall execute and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Lender may request to evidence the Lender's security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of the Grantor relating thereto
or represented thereby.

         (g) The Grantor will take all reasonable and necessary steps, including, without limitation, in any
proceeding before the United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political subdivision thereof, to maintain and
pursue each application (and to obtain the relevant registration) and to maintain each registration of the
material Intellectual Property, including, without limitation, filing of applications for renewal, affidavits
of use and affidavits of incontestability.

         (h) In the event that any material  Intellectual  Property is infringed,  misappropriated or diluted by a third party, the
 Grantor shall (i) take such actions as the Grantor shall  reasonably  deem  appropriate  under the  circumstances  to protect such
 Intellectual  Property and (ii) if such Intellectual  Property is of material economic value,  promptly notify the Lender after it
 learns thereof and sue for infringement,  misappropriation or dilution, to seek injunctive relief where appropriate and to recover
 any and all damages for such infringement, misappropriation or dilution.

         5.13   Compliance with Credit Agreement. The Grantor shall comply with all of the covenants
 and other provisions of the Credit Agreement which apply to it by their terms.

         5.14   Post Default Actions. If an Event of Default shall occur and be continuing, the Grantor
 shall not (x) take any action which would have a Material Adverse Effect, (y) take any action that is
 prohibited or (z) fail to perform any action required of the Grantor hereunder or under any other Loan
 Document to which the Grantor is a party.

                                                 -13-

 

 

                                                  SECTION 6. REMEDIAL PROVISIONS

         6.1 Certain Matters Relating to Receivables.

         (a)  The Lender shall have the right to make test verifications of the Receivables in any manner
and through any medium that it reasonably considers advisable, and the Grantor shall furnish all such
assistance and information as the Lender may require in connection with such test verifications. At any
time and from time to time, upon the Lender's request and at the expense of the Grantor, the Grantor
shall cause a Responsible Officer (or at the election of the Lender during an Event of Default,
independent public accountants) to furnish to the Lender reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.

         (b)  The Lender hereby authorizes the Grantor to collect the Grantor's Receivables, subject to the
Lender's direction and control, and the Lender may curtail or terminate said authority at any time after
the occurrence and during the continuance of an Event of Default. If required by the Lender at any time
after the occurrence and during the continuance of an Event of Default, any payments of Receivables,
when collected by the Grantor, (i) shall be forthwith (and, in any event, within two Business Days)
deposited by the Grantor in the exact form received, duly endorsed by the Grantor to the Lender if
required, in a deposit account (each, a "Collateral Account") maintained under the sole dominion and
control of the Lender as security for the Grantor Obligations and the Borrower Obligations, subject to
withdrawal by the Lender in payment of the Grantor Obligations and the Borrower's Obligations only as
provided in Section 6.5, and (ii) until so turned over, shall be held by the Grantor in trust for the Lender,
segregated from other funds of the Grantor. Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source of the payments included
in the deposit.

         (c)  At any time after the occurrence and during the continuance of an Event of Default, upon
Lender's request, the Grantor shall deliver to the Lender all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the Receivables, including, without
limitation, all original orders, invoices and shipping receipts.

         (d) At any time after the occurrence and during the continuance of an Event of Default, to
 the extent that, because of a conflict with applicable Requirements of Law, the proceeds of any
 Receivable cannot be applied in accordance with paragraphs (a) and (b) above, the Grantors shall take
 such actions as may be necessary to deposit such proceeds in a Collateral Account as promptly as
 possible, subject to compliance with applicable Requirements of Law.

         6.2 Communications with Obligors; Grantor Remains Liable.

         (a)  The Lender in its own name or in the name of others may, at any time after the occurrence
and during the continuance of an Event of Default, communicate with obligors under the Receivables and
parties to the Contracts to verify with them to the Lender's satisfaction the existence, amount and terms
of any Receivables or Contracts.

         (b)  Upon the request of the Lender, at any time after the occurrence and during the continuance
of an Event of Default, the Grantor shall notify obligors on the Receivables and parties to the Contracts
that the Receivables and the Contracts have been assigned to the Lender and that payments in respect
thereof shall be made directly to the Lender.

         (c)  Anything herein to the contrary notwithstanding, the Grantor shall remain liable under each
of the Receivables and Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise
thereto. The Lender shall have no obligation or liability under any Receivable (or any agreement giving

                                                 -14-

 

 

rise  thereto)  or Contract by reason of or arising  out of this  Agreement  or the receipt by the Lender of any payment  relating
thereto,  nor shall the Lender be obligated in any manner to perform any of the  obligations  of the Grantor  under or pursuant to
any Receivable (or any agreement  giving rise thereto) or Contract,  to make any payment,  to make any inquiry as to the nature or
the sufficiency of any payment received by it or as to the sufficiency of any performance by any party  thereunder,  to present or
file any claim,  to take any action to enforce  any  performance  or to collect  the  payment of any  amounts  which may have been
assigned to it or to which it may be entitled at any time or times.

         6.3 Pledged Stock.

         (a) Unless an Event of Default shall have occurred and be continuing and the Lender shall have
 given notice to the Grantor of the Lender's intent to exercise its corresponding rights pursuant to Section
 6.3(b), the Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Stock
 and all payments made in respect of the Pledged Notes, to the extent permitted in the Credit Agreement,
 and to exercise all voting and corporate or other organizational rights with respect to the Investment
 Property; provided, however, that no vote shall be cast or corporate right exercised or other action taken
 which, in the Lender's reasonable judgment, would impair the Collateral or which would be inconsistent
 with or result in any violation of any provision of the Credit Agreement, this Agreement or any other
 Loan Document.

          (b) If an Event of Default shall occur and be continuing and the Lender shall give notice of its
 intent to exercise such rights to the Grantor, (i) the Lender shall have the right to receive any and all cash
 dividends, payments, or other Proceeds paid in respect of the Investment Property and make application
 thereof to the Grantor Obligations and the Borrower's Obligations in such order as the Lender may
 determine, and (ii) any or all of the Investment Property shall be registered in the name of the Lender or
 its nominee, and the Lender or its nominee may thereafter exercise (x) all voting, corporate and other
 rights pertaining to such Investment Property at any meeting of shareholders or other equityholders of the
 relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription
 and any other rights, privileges or options pertaining to such Investment Property as if it were the
 absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of
 the Investment Property upon the merger, consolidation, reorganization, recapitalization or other
 fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise
 by the Grantor or the Lender of any right, privilege or option pertaining to such Investment Property, and
 in connection therewith, the right to deposit and deliver any and all of the Investment Property with any
 committee, depositary, transfer agent, registrar or other designated agency upon such terms and
 conditions as the Lender may determine), all without liability except to account for property actually
 received by it, but the Lender shall have no duty to the Grantor to exercise any such right, privilege or
 option and shall not be responsible for any failure to do so or delay in so doing.

          (c) The Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged
 by the Grantor hereunder to (i) comply with any instruction received by it from the Lender in writing that
 (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with
 the terms of this Agreement, without any other or further instructions from or consent of the Grantor, and
 the Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise
 expressly permitted hereby, pay any dividends or other payments with respect to the Investment Property
 directly to the Lender.

          6.4 Proceeds to be Turned Over To Lender. In addition to the rights of the Lender specified in
 Section 6.1 with respect to payments of Receivables, if an Event of Default shall occur and be
 continuing, all Proceeds received by the Grantor consisting of cash, checks and other cash equivalents
 shall be held by the Grantor in trust for the Lender, segregated from other funds of the Grantor, and shall
 upon the request of the Lender, forthwith upon receipt by the Grantor, be turned over to the Lender in the
 exact form received by the Grantor (duly endorsed by the Grantor to the Lender, if required). All

                                                  -15-

 

 

Proceeds received by the Lender hereunder shall be held by the Lender in a Collateral  Account  maintained under its sole dominion
and control.  All  Proceeds  while held by the Lender in a  Collateral  Account (or by the Grantor in trust for the Lender)  shall
continue to be held as collateral  security for all the Grantor  Obligations  and Borrower  Obligations  and shall not  constitute
payment thereof until applied as provided in Section 6.5.

         6.5 Application of Proceeds. At such intervals as may be agreed upon by the Grantor and the
 Lender, or, if an Event of Default shall have occurred and be continuing, at any time at the Lender's
 election, the Lender may apply all or any part of Proceeds constituting Collateral, whether or not held in
 any Collateral Account, and any proceeds of the guarantee set forth in Section 2, in payment of the
 Grantor Obligations and the Borrower Obligations in the following order:

         First, to the payment of the reasonable costs and expenses of any sale or other expenses  (including,  without limitation,
 reasonable legal fees and expenses),  liabilities and advances made or incurred by the Lender in connection  therewith or provided
 for by the Credit Agreement or arising in connection with any other  facilities now or hereafter  provided by the Lender to or for
 the benefit of the Borrower;

         Next, to payment of interest on and  principal of the Loans (in such order as may be provided for in the Credit  Agreement
 or as otherwise determined by the Lender);

         Next, to the payment of any other Borrower  Obligations and Grantor  Obligations (or may be held by the Lender as security
 for any other such Obligations not yet due and payable); and

         Finally,  after  payment in full of all  Bororwer  Obligations  and  Grantor  Obligations  and  termination  of all credit
 facilities  and other  facilities now or hereafter  provided by the Lender to the Borrower,  to the payment to the Borrower or its
 successors or assigns,  or to whomsoever may be lawfully entitled to receive the same or as a court of competent  jurisdiction may
 direct, of any surplus then remaining of such cash.

         6.6 Code and Other Remedies.

         (a) If an Event of Default shall occur and be  continuing,  the Lender may  exercise,  in addition to all other rights and
 remedies  granted to them in this  Agreement  and in any other  instrument  or agreement  securing,  evidencing or relating to the
 Grantor  Obligations or the Borrower  Obligations,  all rights and remedies of a secured party under the  Massachusetts UCC or any
 other  applicable  law.  Without  limiting the  generality of the  foregoing,  the Lender,  without demand of performance or other
 demand,  presentment,  protest,  advertisement or notice of any kind (except any notice required by law referred to below),  to or
 upon the Grantor or any other Person (all and each of which demands, defenses,  advertisements and notices are hereby waived), may
 in such circumstances  forthwith collect,  receive,  appropriate and realize upon the Collateral,  or any part thereof, and/or may
 forthwith sell, lease, assign, give option or options to purchase,  or otherwise dispose of and deliver the Collateral or any part
 thereof (or contract to do any of the  foregoing),  in one or more parcels at public or private  sale or sales,  at any  exchange,
 broker's  board or office of the Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as
 it may deem best, for cash or on credit or for future  delivery  without  assumption of any credit risk. The Lender shall have the
 right upon any such public sale or sales,  and, to the extent  permitted by law, upon any such private sale or sales,  to purchase
 the whole or any part of the Collateral so sold,  free of any right or equity of redemption in the Grantor,  which right or equity
 is hereby waived and released.  The Grantor  further  agrees,  at the Lender's  request,  to assemble the  Collateral  and make it
 available to the Lender at places which the Lender shall reasonably select,  whether at the Grantor's  premises or elsewhere.  The
 Lender shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, after  deducting all reasonable  costs
 and expenses of every kind incurred in

                                                  -16-

 

 

connection  therewith or incidental to the care or  safekeeping  of any of the  Collateral or in any way relating to the Collateral
or the rights of the Lender  hereunder,  including,  without  limitation,  reasonable  attorneys'  fees and  disbursements,  to the
payment in whole or in part of the Grantor  Obligations and the Borrower  Obligations,  in accordance with the Loan Documents,  and
only after such  application  and after the payment by the Lender of any other amount  required by any  provision of law,  need the
Lender account for the surplus,  if any, to the Grantor.  To the extent  permitted by  Requirements  of Law, the Grantor waives all
claims,  damages and demands it may acquire against the Lender arising out of the exercise by them of any rights hereunder.  If any
notice of a proposed sale or other  disposition of Collateral shall be required by law, such notice shall be deemed  reasonable and
proper if given at least seven (7) days before such sale or other disposition.

         6.7 Registration  Rights,  (a) If the Lender shall determine to exercise its right to sell any or all of the Pledged Stock
 pursuant to Section 6.6, and if in the opinion of the Lender it is  necessary  or  advisable  to have the Pledged  Stock,  or that
 portion  thereof to be sold,  registered  under the provisions of the Securities Act, the Grantor will cause the Issuer thereof to
 (i) execute and deliver,  and cause the directors  and officers of such Issuer to execute and deliver,  all such  instruments  and
 documents,  and do or cause to be done all such other acts as may be, in the  opinion of the Lender,  necessary  or  advisable  to
 register the Pledged Stock,  or that portion  thereof to be sold,  under the  provisions of the Securities  Act, (ii) use its best
 efforts to cause the registration  statement relating thereto to become effective and to remain effective for a period of one year
 from the date of the first  public  offering  of the  Pledged  Stock,  or that  portion  thereof  to be sold,  and (iii)  make all
 amendments  thereto  and/or to the related  prospectus  which,  in the opinion of the Lender,  are necessary or advisable,  all in
 conformity with the  requirements  of the Securities Act and the rules and  regulations of the Securities and Exchange  Commission
 applicable thereto.  The Grantor agrees to cause such Issuer (if such Issuer is a direct or indirect Subsidiary of the Grantor) to
 comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions  which the Lender shall designate and
 to make available to its security holders,  as soon as practicable,  an earnings  statement (which need not be audited) which will
 satisfy the provisions of Section 11 (a) of the Securities Act.

          (b)     The Grantor recognizes that the Lender may be unable to effect a public sale of any or all
 the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state
 securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a
 restricted group of purchasers which will be obliged to agree, among other things, to acquire such
 securities for their own account for investment and not with a view to the distribution or resale thereof.
 The Grantor acknowledges and agrees that any such private sale may result in prices and other terms less
 favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any
 such private sale shall be deemed to have been made in a commercially reasonable manner. The Lender
 shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary
 to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under
 applicable state securities laws, even if such Issuer would agree to do so.

          (c)     The Grantor agrees to use its best efforts to do or cause to be done all such other acts as
 may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this
 Section 6.7 valid and binding and in compliance with any and all other applicable Requirements of Law.
 The Grantor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause
 irreparable injury to the Lender, that the Lender has no adequate remedy at law in respect of such breach
 and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically
 enforceable against the Grantor, and the Grantor hereby waives and agrees not to assert any defenses
 against an action for specific performance of such covenants except for a defense that no Event of
 Default has occurred under the Credit Agreement.

                                                 -17-

 

 

         6.8  Deficiency.  The Grantor shall remain liable for any  deficiency if the proceeds of any sale or other  disposition of
the Collateral are  insufficient to pay the Grantor  Obligations and the fees and  disbursements  of any attorneys  employed by the
Lender to collect such deficiency.

                                        SECTION 7. THE LENDER 7.1 Lender's Appointment as
         Attorney-in-Fact. etc.

         (a) The Grantor hereby irrevocably  constitutes and appoints the Lender and any officer or agent thereof,  with full power
 of substitution,  as its true and lawful  attorney-in-fact with full irrevocable power and authority in the place and stead of the
 Grantor  and in the name of the  Grantor or in its own name,  to take any and all  appropriate  action and to execute  any and all
 documents and  instruments,  in each case after the  occurrence and during the  continuance  of an Event of Default,  which may be
 necessary or desirable to accomplish the purposes of this Agreement,  and, without  limiting the generality of the foregoing,  the
 Grantor hereby gives the Lender the power and right, on behalf of the Grantor,  without notice to or assent by the Grantor,  to do
 any or all of the following:

                  (i) in the name of the Grantor or its own name,  or  otherwise,  take  possession  of and endorse and collect any
         checks, drafts, notes,  acceptances or other instruments for the payment of moneys due under any Receivable or Contract or
         with respect to, any other  Collateral  and file any claim or take any other action or  proceeding  in any court of law or
         equity or otherwise  deemed  appropriate by the Lender for the purpose of collecting any and all such moneys due under any
         Receivable or Contract or with respect to any other Collateral whenever payable;

                  (ii) in the case of any Intellectual  Property,  execute and deliver, and have recorded,  any and all agreements,
         instruments,  documents  and  papers as the  Lender may  request  to  evidence  the  Lender's  security  interest  in such
         Intellectual Property and the goodwill and general intangibles of the Grantor relating thereto or represented thereby;

                  (iii) pay or  discharge  taxes and Liens levied or placed on or  threatened  against the  Collateral,  effect any
         repairs or any insurance  called for by the terms of this  Agreement and pay all or any part of the premiums  therefor and
         the costs thereof;

                  (iv) execute,  in connection with any sale provided for in Sections 6.6 or 6.7, any endorsements,  assignments or
         other instruments of conveyance or transfer with respect to the Collateral; and

                  (v) (1) direct any party  liable  for any  payment  under any of the  Collateral  to make  payment of any and all
         moneys due or to become due  thereunder  directly  to the Lender or as the Lender  shall  direct;  (2) ask or demand  for,
         collect,  and receive  payment of and receipt  for, any and all moneys,  claims and other  amounts due or to become due at
         any time in respect of or arising out of any  Collateral;  (3) sign and endorse any  invoices,  freight or express  bills,
         bills of lading,  storage or warehouse receipts,  drafts against debtors,  assignments,  verifications,  notices and other
         documents in connection  with any of the Collateral;  (4) commence and prosecute any suits,  actions or proceedings at law
         or in equity in any court of competent  jurisdiction  to collect the Collateral or any portion  thereof and to enforce any
         other right in respect of any  Collateral;  (5) defend any suit,  action or  proceeding  brought  against the Grantor with
         respect to any  Collateral;  (6) settle,  compromise  or adjust any such suit,  action or  proceeding  and, in  connection
         therewith,  give such  discharges  or releases as the Lender may deem  appropriate;  (7) assign any  Copyright,  Patent or
         Trademark  (along  with the  goodwill  of the  business  to which  any such  Copyright,  Patent  or  Trademark  pertains),
         throughout  the world for such term or terms,  on such  conditions,  and in such  manner,  as the Lender shall in its sole
         discretion  determine;  (8) vote any claim of the Grantor in any bankruptcy  proceeding  with respect to any  Indebtedness
         owed to

                                                 -18-

 

 

              Grantor by any other Covered Party and (9) generally,  sell, transfer,  pledge and make any agreement with respect to
              or otherwise  deal with any of the  Collateral as fully and  completely as though the Lender were the absolute  owner
              thereof for all  purposes,  and do, at the Lender's  option and the Grantor's  expense,  at any time, or from time to
              time,  all acts and things which the Lender deems  necessary to protect,  preserve or realize upon the Collateral and
              the Lender's security  interests therein and to effect the intent of this Agreement,  all as fully and effectively as
              the  Grantor  might do. The  provisions  of clauses  (1)  through (4) and (9) shall not permit the Lender to take any
              action with respect to any Receivable,  to the extent that such action would  contravene  applicable  Requirements of
              Law.

              Anything in this Section 7.1 (a) to the  contrary  notwithstanding,  the Lender  agrees that it will not exercise any
     rights under the power of attorney  provided for in this Section  7.1(a) unless an Event of Default shall have occurred and be
     continuing.

              (b)  If the Grantor fails to perform or comply with any of its agreements contained herein, the
     Lender, at its option, but without any obligation so to do, may perform or comply, or otherwise cause
     performance or compliance, with such agreement.

              (c)  The expenses of the Lender incurred in connection with actions undertaken as provided in
     this Section 7.1, together with interest thereon at a rate per annum equal to the highest rate per annum at
     which interest would then be payable on any category of Prime Rate Loans under the Credit Agreement
     during the continuance of an Event of Default, from the date of payment by the Lender to the date
     reimbursed by the Grantor, shall be payable by the Grantor to the Lender on demand.

              (d)  The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by
     virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an
     interest and are irrevocable until this Agreement is terminated and the security interests created hereby
     are released.

              7.2 Duty of Lender. The Lender's sole duty with respect to the custody, safekeeping and
     physical preservation of the Collateral in its possession shall be to deal with it in the same manner as the
     Lender deals with similar property for its own account. Neither the Lender nor any of its officers,
     directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the
     Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any
     Collateral upon the request of the Grantor or any other Person or to take any other action whatsoever
     with regard to the Collateral or any part thereof. The powers conferred on the Lender hereunder are
     solely to protect the Lender's interests in the Collateral and shall not impose any duty upon the Lender to
     exercise any such powers. The Lender shall be accountable only for amounts that it actually receives as a
     result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents
     shall be responsible to the Grantor for any act or failure to act hereunder, except for their own gross
     negligence or willful misconduct.

              7.3 Execution of Financing Statements. Pursuant to applicable law, the Grantor authorizes the
      Lender to file or record financing statements and other filing or recording documents or instruments with

 respect  to the  Collateral  without  the  signature  of the  Grantor in such form and in such  offices  as the Lender  determines
      appropriate to perfect the security  interests of the Lender under this Agreement.  A photographic  or other  reproduction of
      this Agreement  shall be sufficient as a financing  statement or other filing or recording  document or instrument for filing
      or recording in any jurisdiction.  The Grantor  authorizes the Lender to use the collateral  description "all assets" or "all
      personal property" in any such financing  statements.  The Grantor hereby ratifies and authorizes the filing by the Lender of
      any financing statement with respect to the Collateral made prior to the date hereof

                                                      -19-

 

 

                                                     SECTION 8. MISCELLANEOUS

         8.1  Amendments in Writing. None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except in accordance with Section 8.1 of the Credit
Agreement.

         8.2  Notices. All notices, requests and demands to or upon the Lender or the Grantor hereunder
shall be effected in the manner provided for in Section 8.2 of the Credit Agreement; provided that any
such notice, request or demand to or upon the Grantor shall be addressed to the Grantor at its notice
address set forth on Schedule A.

         8.3  No Waiver by Course of Conduct; Cumulative Remedies. The Lender shall not by any act
(except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Lender of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Lender would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by law.

         8.4  Enforcement Expenses; Indemnification.

         (a)  The Grantor agrees to pay or reimburse the Lender for all its costs and expenses incurred in
 collecting against the Grantor under the guarantee contained in Section 2 or otherwise enforcing or
 preserving any rights under this Agreement and the other Loan Documents to which the Grantor is a
 party, including, without limitation, the reasonable fees and disbursements of counsel (including the
 allocated fees and expenses of in-house counsel) to the Lender.

         (b)  The Grantor agrees to pay, and to save the Lender harmless from, any and all liabilities with
 respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which
 may be payable or determined to be payable with respect to any of the Collateral or in connection with
 any of the transactions contemplated by this Agreement.

         (c) The Grantor agrees to pay, and to save the Lender harmless from, any and all liabilities,
 obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any
 kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and
 administration of this Agreement to the extent any Borrower would be required to do so pursuant to
 Section 8.5 of the Credit Agreement.

          (d) The agreements in this Section 8.4 shall survive repayment of the Grantor  Obligations,  the Borrower Obligations and
 all other amounts payable under the Credit Agreement and the other Loan Documents.

         8.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns
of the Grantor and shall inure to the benefit of the Lender and its successors and assigns; provided that
the Grantor may not assign, transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Lender.

         8.6 Set-Off. The Grantor hereby grants to the Lender, a continuing lien, security interest and
 right of setoff as security for all liabilities and obligations to the Lender, whether now existing or
 hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the
 possession, custody, safekeeping or control of the Lender, or any entity controlled by, controlling, or

                                                 -20-

 

 

under the control of, the Lender and its  successors  and assigns,  or in transit to any of them.  The Grantor  hereby  irrevocably
authorizes  the Lender at any time and from time to time when an Event of Default  shall have occurred and be  continuing,  without
demand or notice to the Grantor or any other  guarantor,  any such notice being  expressly  waived by the  Grantor,  to set-off and
appropriate and apply any and all deposits (general or special,  time or demand,  provisional or final),  in any currency,  and any
other credits,  indebtedness or claims, in any currency, in each case whether direct or indirect,  absolute or contingent,  matured
or unmatured,  and  regardless of the adequacy of any other  Collateral  securing any Loan, at any time held or owing by the Lender
to or for the credit or the account of the Grantor,  or any part  thereof in such  amounts as the Lender may elect,  against and on
account of the  obligations  and  liabilities of the Grantor to the Lender  hereunder and claims of every nature and description of
the Lender against the Grantor,  in any currency,  whether arising hereunder,  under the Credit Agreement,  any other Loan Document
or otherwise,  as the Lender may elect,  whether or not the Lender has made any demand for payment and although  such  obligations,
liabilities  and claims may be contingent  or  unmatured.  The rights of the Lender under this Section 8,6 are in addition to other
rights and remedies  (including,  without  limitation,  other rights of set-off)  which the Lender may have.  ANY AND ALL RIGHTS TO
REQUIRE THE LENDER TO  EXERCISE  ITS RIGHTS OR REMEDIES  WITH  RESPECT TO ANY OTHER  COLLATERAL  WHICH  SECURES ANY LOAN,  PRIOR TO
EXERCISING ITS RIGHTS OF SETOFF WITH RESPECT TO SUCH  DEPOSITS,  CREDITS OR OTHER  PROPERTY OF ANY GRANTOR,  ARE HEREBY  KNOWINGLY,
VOLUNTARILY  AND  IRREVOCABLY  WAIVED.  The  right of setoff  set forth in this  Section  8.6  shall  not apply to any  account  (a
"Restricted  Account")  maintained  solely to comply with applicable  Requirements of Law where such application  would violate any
applicable Requirement of Law.

         8.7 Counterparts. This Agreement may be executed by one or more of the parties to this
 Agreement on any number of separate counterparts (including by telecopy or e-mail image), and all of
 said counterparts taken together shall be deemed to constitute one and the same instrument.

         8.8  Severability. Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

         8.9  Section Headings. The Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into consideration in the
interpretation hereof.

         8.10 Integration. This Agreement and the other Loan Documents represent the agreement of the
 Grantor and the Lender with respect to the subject matter hereof and thereof, and there are no promises,
 undertakings, representations or warranties by the Lender relative to subject matter hereof and thereof
 not expressly set forth or referred to herein or in the other Loan Documents.

         8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND

 CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
 COMMONWEALTH OF MASSACHUSETTS.

         8.12 Submission To Jurisdiction; Waivers. The Grantor hereby irrevocably and unconditionally:

         (a) submits for itself and its property in any legal action or  proceeding  relating to this  Agreement and the other Loan
 Documents to which it is a party,  or for recognition and  enforcement of any judgment in respect  thereof,  to the  non-exclusive
 general  jurisdiction  of the courts of the  Commonwealth  of  Massachusetts,  the courts of the United  States of America for the
 District of Massachusetts, and appellate courts from any thereof;

                                                 -21 -

 

 

         (b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;

         (c) agrees that service of process in any such action or proceeding may be effected by mailing a
copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to
the Grantor at its address referred to in Section 8.2 or at such other address of which the Lender shall
have been notified pursuant thereto;

         (d)  agrees that nothing herein shall affect the right to effect service of process in any other
 manner permitted by law or shall limit the right to sue in any other jurisdiction; and

         (e)  waives, to the maximum extent not prohibited by law, any right it may have to claim or
 recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or
 consequential damages.

         8.13 Acknowledgments. The Grantor hereby acknowledges that:

         (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement
 and the other Loan Documents to which it is a party;

         (b)  the Lender has no fiduciary relationship with or duty to the Grantor arising out of or in
 connection with this Agreement or any of the other Loan Documents, and the relationship between the
 Grantor, on the one hand, and the Lender, on the other hand, in connection herewith or therewith is solely
 that of guarantor and lender; and

         (c)  no joint venture is created hereby or by the other Loan Documents or otherwise exists by
 virtue of the transactions contemplated hereby between the Grantor and the Lender.

         8.14 WAIVER OF JURY TRIAL. THE GRANTOR AND, BY ITS ACCEPTANCE
 HEREOF, THE LENDER, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
 WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
 HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT,
 THE CREDIT AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENTS
 CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF
 CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
 ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF
 CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE LENDER
 RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THE
 LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY
 SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
 HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, THE GRANTOR HEREBY
 WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY
 SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
 OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE GRANTOR CERTIFIES
 THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS
 REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE THE LENDER WOULD NOT,
 IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS
 WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE LENDER TO ACCEPT
 THIS AGREEMENT AND MAKE THE LOANS.

                                                 -22-

 

 

         IN WITNESS WHEREOF, the undersigned has caused this Guarantee and Security Agreement to be duly executed and delivered
as of the date first above written.

                                                    KNOWFAT FRANCHISE COMPANY, INC.

                                                    By:
                                                        Name: Title:

 

 

                                                                                                                         Schedule B

                            DESCRIPTION OF INVESTMENT PROPERTY PLEDGED STOCK:

Issuer Class of Stock Stock Certificate No. No. of Shares
    Name of Limited Liability
      Company or Partnership Type of Interest Percentage Interest
 PLEDGED NOTES:
               Issuer Payee Principal Amount

 

 

                                                                                                                         Schedule C

           FILINGS AND OTHER ACTIONS REQUIRED TO PERFECT SECURITY INTERESTS

            Uniform Commercial Code Filings

               Patent and Trademark Filings Actions with respect to Pledged Stock

                        Other Actions

 

 

                                                                                             Schedule D

JURISDICTION OF
                       ORGANIZATION, ETC.
Type of Organization: Jurisdiction of Incorporation:
Identification Number (if any):
Chief Executive Office/Sole Place of Business:

 

 

                                                                          Schedule E LOCATIONS OF INVENTORY AND EQUIPMENT

 

 

                                                                        Schedule F COPYRIGHTS AND COPYRIGHT LICENSES
       PATENTS AND PATENT LICENSES TRADEMARKS AND TRADEMARK LICENSES

 

 

                                               [FORM OF] ACKNOWLEDGMENT AND CONSENT

         The undersigned  hereby  acknowledges  receipt of a copy of the Guarantee and Security  Agreement dated as of May 27, 2005
(the "Agreement"),  made by the Grantor for the benefit of TD Banknorth,  N.A. The undersigned agrees for the benefit of the Lender
as follows:

         1.      The undersigned will be bound by the terms of the Agreement and will comply with such
 terms insofar as such terms are applicable to the undersigned.

         2.      The undersigned will notify the Lender promptly in writing of the occurrence of any of
 the events described in Section 5.8 of the Agreement.

         3.      The terms of Sections 6.3(c) and 6.7 of the Agreement shall apply to it, mutatis
 mutandis, with respect to all actions that may be required of it pursuant to Section 6.3(c) or 6.7 of the
 Agreement.

                                                    [NAME OF ISSUER]
                                                    By:

                                                          Name: Title:

                                                    Address for Notices: Fax:

 

 

                                             EXHIBIT C FORM OF COMPLIANCE CERTIFICATE

                                                  [on the Borrower's letterhead]

To: TD Banknorth, N.A. 370 Main Street Worcester, MA 01608
         Attn: Douglas L. Bulfinch

                  Re: Compliance Certificate dated
 Ladies and Gentlemen:

                  Reference is made to the Credit Agreement, dated May , 2005 between KFLG
 Watertown,  Inc., a Massachusetts corporation (the "Borrower") and TD Banknorth, N.A. (as in effect from time to time, the "Credit
 Agreement").  Capitalized  terms used in this Compliance  Certificate  have the meanings set forth in the Credit  Agreement unless
 specifically defined herein.

                  Pursuant to Schedule 5.3 of the Credit Agreement, the undersigned officer in its
 capacity as [ ], of the Borrower hereby certifies that:

                  1.      The financial Information of the Borrower and Its Subsidiaries furnished in
 Schedule i attached hereto, has been prepared in accordance with GAAP (except for year-end
 adjustments and the lack of footnotes), and fairly presents in all material respects the financial
 condition of the Borrower and its Subsidiaries.

                  2.      Such officer has reviewed the terms of the Credit Agreement and has
 made, or caused to be made under his/her supervision, a review in reasonable detail of the
 transactions and condition of the Borrower and its Subsidiaries during the accounting period
 covered by the financial statements delivered pursuant to Schedule 5.1 of the Credit Agreement.

                  3.      Such review has not disclosed the existence on and as of the date hereof,
 and the undersigned does not have knowledge of the existence as of the date hereof, of any event
 or condition that constitutes a Default or Event of Default, except for such conditions or events
 listed on Schedule 2 attached hereto, specifying the nature and period of existence thereof and
 what action the Borrower and its Subsidiaries have taken, are taking, or propose to take with
 respect thereto.

 

 

                 4. The Borrower and its Subsidiaries are in compliance with the applicable  covenants  contained in Section 6.1 of
the Credit Agreement as demonstrated on Schedule 3 hereof.

                  IN WITNESS WHEREOF, this Compliance Certificate is executed by the
 undersigned this day of , .

                                                    KFLG WATERTOWN, INC.
                                                    By:
                                                    Name:
                                                    Title:

 

 

     SCHEDULE 1 Financial Information

 

 

        SCHEDULE 2 Default or Event of Default

 

 

                                               SCHEDULE 3 FINANCIAL COVENANTS

Financial Statement Date:

 6.1 (a) MINIMUM NEW EQUITY:

  1)    Cash from issuance of Common Stock since the Closing Date:
  2)    Cash from issuance of Preferred Stock since the Closing Date:
  Total Cash from issuance of Common and Preferred Stock (1+2):
  Minimum Total Cash from issuance of Common and Preferred Stock): $3,000,000
  Test Date: No Later than 9/30/05
  Compliance (yes/no)

 6.1 (B) CONSOLIDATED DEBT SERVICE COVERAGE RATIO (QUARTERLY TEST BASED ON
 LAST 12 MONTHS PERFORMANCE):

 Consolidate Operating Cash Flow divided by Consolidated Debt Service:

 Minimum Consolidated Operating Cash Flow divided by Consolidated Debt
 Service: 1.25

 Compliance Test Date: Quarterly

                                                                                              beginning on 12/31/05

 Compliance (yes/no)

 6.2 (C) CONSOLIDATED FUNDED DEBT TO EBITDA RATIO (QUARTERLY TEST BASED
 ON LAST 12 MONTHS PERFORMANCE)

 Consolidated Funded Debt divided by Consolidated EBITDA:

 Maximum Consolidated Funded Debt divided by Consolidated EBITDA Ratio
 (from 12/31/05 to 12/30/06): 2.5x
 (from 12/31/06 and thereafter): 2.0x

 Test Date: Quarterly

                                                  -4-

 

 

                                                                                             beginning on 12/31/05

Compliance (yes/no)

 6.2 (D) MAXIMUM CONSOLIDATED MAINTENANCE CAPITAL EXPENDITURES:

Total Consolidated Maintenance Capital Expenditures:
Total Existing Units times $20,000:

 Compliance (yes/no)

 6.2(E) CONSOLIDATED NEW UNIT CAPITAL EXPENDITURES:
 Total Expenditures on New Units:
 Debt Funding for New Units:

 Equity Funding for New Units:
 Total Funding for New Units:

 Compliance(yes/no)

 DEFINITIONS

 CONSOLIDATED EBITDA (LAST 12 MONTHS RESULTS):

 Net Income:
     plus Income Tax Expense
     plus Interest Expense

     plus Depreciation and Amortization Expense
     plus Specified Consulting Fees

     plus Extraordinary, unusual Expenses (approved by Lender)
     minus Interest Income
     minus extraordinary, unusual or non recurring income
     minus other non-cash income

     A) Consolidated EBITDA:

                                                  -5-

 

 

CONSOLIDATED OPERATING CASH PLOW (LAST 12 MONTHS RESULTS):

     Consolidated EBITDA (A)
     minus Cash Income Taxes

     minus Restricted Payments (dividends, distributions, loans)
     minus Maintenance Capital Expenditures:

     B) Consolidated Operating Cash Flow:

 CONSOLIDATED DEBT SERVICE (LAST 12 MONTHS RESULTS):

     Senior Debt Interest and Fees
     Senior Debt Maturities
     Capitalized Lease Payments

     C) Consolidated Debt Service:

 TOTAL CONSOLIDATED MAINTENANCE CAPITAL EXPENDITURES:

 CAPITAL EXPENDITURES SPENT OVER THE LAST 12 MONTHS ON EXISTING UNITS:

 Existing Units:

     As of the Covenant Compliance Date:

     The number of Units that have been opened more than 6-months:

 CONSOLIDATED NEW UNITS EXPENDITURES:

 Commitments for New Units:
 Capital Expenditures Spent on New Units:
 Other Expenditures on New Units:
 Total Expenditures or Commitments on New Units:

 CONSOLIDATED SENIOR FUNDED DEBT (FROM CLOSING TO 9/29/06):

     Total Debt as of the Covenant Compliance Date:
     Plus Capitalized Leases as of the Covenant Compliance Date:
     Less Consolidated Unrestricted Cash as of the Covenant Compliance Date:
     Less Subordinated Debt:
     Total Consolidated Debt:

 CONSOLIDATED SENIOR FUNDED DEBT (FROM 9/30/06 AND THEREAFTER):

      Total Debt as of the Covenant Compliance Date:
      Plus Capitalized Leases as of the Covenant Compliance Date:

                                                  -6-

 

 

     Less Subordinated Debt:
     Total Consolidated Debt;

CONSOLIDATED UNRESTRICTED CASH:

     Unrestricted Cash of the Borrower as of the Covenant Compliance Date:
     Unrestricted Cash of the Guarantor as of the Covenant Compliance Date:
     Total Unrestricted Cash as of the Covenant Compliance Date:

 

 

                                                              EXHIBIT D

                                          FORM OF CLOSING CERTIFICATE KFLG WATERTOWN, INC.

         I, the undersigned, Eric Spitz, am the President of KFLG Watertown, Inc., a Massachusetts corporation (the
"BORROWER"), and, as such, DO HEREBY CERTIFY that:

         1.  This Certificate is furnished in connection with that certain Credit Agreement, dated
the date hereof between the Borrower and TD Banknorth, N.A. (as in effect from time to time,
the "CREDIT AGREEMENT"). Unless otherwise defined herein, capitalized terms used in this
Certificate have the meanings assigned to those terms in the Credit Agreement.

         2.  The Borrower has performed and complied in all material respects with all terms and
conditions required to be performed or complied with by it prior to or on the date hereof.

         3.  On the date hereof, after giving effect to the Loans to be made on the date hereof, no
Default exists. I have no knowledge of any circumstances or events from which a Default is
likely to arise.

         4.  I know of no proceeding for the dissolution or liquidation of the Borrower or the
Guarantor or threatening the existence of the Borrower or the Guarantor.

         6. As of the date hereof, and since December 31, 2004, no event or circumstance has occurred which could reasonably be
 expected to result in a Material Adverse Effect, including without limitation any litigation or claims against the Borrower or
 the Guarantor or other Affiliates of the Borrower.

          IN WITNESS WHEREOF, I have hereunto set my hand as of May 27, 2005.

                                                    Eric Spitz President

 

 

                                                                                              EXECUTION COPY

                                                   EXHIBIT E FORM OF TERM NOTE

THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE
CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE
REGISTER MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.

 $1,600,000 Boston, Massachusetts

                                                                                                 May _, 2005
         FOR VALUE RECEIVED, the undersigned, KFLG WATERTOWN, INC., a Massachusetts corporation {the "Borrower"), hereby promises
 to pay to TD BANKNORTH, N.A. (the "Lender"') or its registered assigns at the office specified in the Credit Agreement (as
 hereinafter defined) in lawful money of the United States and in immediately available funds, the principal amount of (a) ONE
 MILLION SLX HUNDRED THOUSAND DOLLARS ($1,600,000), or, if less, (b) the amount of Loans made by the Lender pursuant to Section
 2.1 and Section 2.2 of the Credit Agreement. The principal amount shall be paid in the amounts and on the dates specified in
 Section 2.5 of the Credit Agreement. The Borrower further agrees to pay interest in like money at such office on the unpaid
 principal amount hereof from time to time outstanding at the rates and on the dates specified in the Credit Agreement.

         The holder of this Note is authorized to indorse on the schedules annexed hereto and made a part hereof or on a
 continuation thereof which shall the attached hereto and made a part hereof the date, type and amount of the Loan made by the
 Lender and the date and amount of each payment or prepayment of principal with respect thereto, each conversion of all or a
 portion thereof to another type, each continuation of all or a portion thereof as the same type and, in the case of COF Loans,
 the length of each Interest Period with respect thereto. Each such indorsement shall constitute prima facie evidence of the
 accuracy of the information indorsed. The failure to make any such indorsement or any error in any such indorsement shall not
 affect the obligations of the Borrower in respect of such Loan.

         This Note (a) is one of the Notes referred to in the Credit Agreement dated as of May , 2005
 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), between the Borrower and the Lender,
 (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in
 part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Loan Documents. Reference is
 hereby made to the Loan Documents for a description of the properties and assets in which a security interest has been granted,
 the nature and extent of the security and the guarantees, the terms and conditions upon which the security interests and each
 guarantee were granted and the rights of the holder of this Note in respect thereof.

         Upon the occurrence of any one or more of the Events of Default, all principal and all accrued interest then remaining
 unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.

         All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, indorser or
 otherwise, hereby waive presentment, demand, protest and all other notices of any kind.

 

 

         Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.

         NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED
 EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE ASSIGNMENT AND OTHER PROVISIONS OF SECTION 8.6 OF THE CREDIT AGREEMENT.

         THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF
 MASSACHUSETTS

                                                            KFLG WATERTOWN, INC.
                                                            By:

                                                            Name: Title:

 

 

                                                                                                                                               Schedule
                                                                                                                                               A
                                                                                                                                               To
                                                                                                                                               Note
                                        LOANS, CONVERSIONS AND REPAYMENTS OF PRIME RATE LOANS
   Date         Amount of Prime       Amount of Principal     Amount of Prime Rate       Unpaid Principal         Notation Made By
                Rate Loans            of Prime Rate Loans     Loans Converted to COF     Balance of Prime
                                      Repaid                  Loans                      Rate Loans

 

 

                                                                                                                                       Schedule
                                                                                                                                       B
                                                                                                                                       To
                                                                                                                                       Term
                                                                                                                                       Note
                                    LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF COF LOANS
  Date        Amount of        Interest Period and   Amount of Principal      Unpaid Pnncipal          Notation Made By
              COF Loans        COF with Respect      of COF Loans Repaid      Balance of COF
                               Thereto                                        Loans

 

 

                                             EXHIBIT F FORM OF SUBORDINATION AGREEMENT

         This  Subordination  Agreement  is  made  as of May  27,  2005,  by and  between  Low Fat No Fat  Gourmet  Cafe,  Inc.,  a
Massachusetts  corporation,  with a principal place of business at 98B Boston Turnpike Road,  Shrewsbury,  Massachusetts 01545 (the
"Creditor"),  and TD BankNorth,  N.A.,  with its principal  place of business at 370 Main Street,  Worcester,  Massachusetts  01608
(together with its successors and assigns, the "Lender").

                                                             Recitals

         KFLG Watertown, Inc., a Massachusetts corporation (the "Borrower"), and the Lender are parties to a Credit Agreement
 dated as of May 27, 2005 (the "Credit Agreement", as the same may be amended, extended, renewed, restated, replaced or otherwise
 modified from time to time in accordance with its terms).

         The Borrower is the wholly owned subsidiary of Knowfat Franchise Company, a Delaware corporation (the "Guarantor" and,
 together with the Borrower, the "Debtors"). The Guarantor has guaranteed the Borrower's obligations under the Credit Agreement
 and the other Loan Documents (as defined therein) to which the Borrower is a party pursuant to the Guarantor's Guarantee and
 Security Agreement dated as of the date hereof in favor of the Lender (the "Guarantee").

         The Guarantor entered into certain Asset Purchase Agreements with the Creditor dated, respectively, August 11, 2004 and
 January 28, 2005 (the "Asset Purchase Agreements") At the closing under each Asset Purchase Agreement the Borrower, as assignee
 of Guarantor, acquired the Purchased Assets referred to therein, with the exception of certain assets purchased and retained by
 Guarantor. The Guarantor and the Borrower also entered into certain Management Consulting Agreements with the Creditor dated,
 respectively, August 11, 2004 and January 28, 2005 (the "Management Agreements", together with the Asset Purchase Agreements and
 all agreements and instruments entered into in connection therewith, each as amended or otherwise modified from time to time,
 being referred to herein as the "Subordinated Documents").

         The Senior Debt (as defined below) owed to the Lender is secured by, among other things,  first priority  security
 interests in and liens on (the "Senior Liens") the Collateral (as defined in the Credit Agreement).

         In order to induce the Lender to enter into the Credit  Agreement,  to make the loans and other  financial  accommodations
 contemplated  thereunder  and to grant such  renewals or  extensions  thereof as the Lender may deem  advisable,  the  Creditor is
 willing to  subordinate:  (i) all  indebtedness  and  obligations of each Debtor to the Creditor,  whether  presently  existing or
 arising in the future (the  "Subordinated  Debt"),  to all Senior Debt and (ii) any security  interests  and liens  granted to the
 Creditor from time to time (the "Junior Liens") in respect of the Collateral to the Senior Liens.

 NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

 

 

       The Creditor hereby subordinates the Junior Liens to the Senior Liens and agrees that, notwithstanding the relative times
of attachment or perfection of the Senior Liens and the Junior Liens, the Senior Liens shall in all respects be senior to the
Junior Liens.

         All Subordinated Debt is subordinated in right of payment to all  indebtedness,  liabilities and obligations of Debtors to
 the Lender now existing or hereafter  arising under the Credit  Agreement,  the Guarantee and the other Loan Documents,  including
 without limitation unpaid principal,  interest  (including without limitation interest accruing after the maturity of indebtedness
 thereunder  and interest  accruing after the filing of any petition in bankruptcy or other similar  proceeding  relating to either
 Debtor,  whether or not allowed in such proceeding and whether the Lender is oversecured or undersecured with respect to its loans
 or other financial  accommodations to either Debtor), all fees,  indemnities and expenses payable under the Loan Documents and all
 costs of collecting such indebtedness, liabilities and obligations (including attorneys' fees) (collectively, the "Senior Debt").

         The Creditor will not demand or receive from either  Debtor (and neither  Debtor will pay to the Creditor) all or any part
 of the Subordinated Debt, by way of payment,  prepayment,  setoff, lawsuit or otherwise, nor will the Creditor exercise any remedy
 with respect to the  Collateral,  nor will the Creditor  accelerate  the  Subordinated  Debt,  or commence,  or cause to commence,
 prosecute or participate in any  administrative,  legal or equitable action against either Debtor, in each case until such time as
 all Senior Debt is fully paid in cash.  The  foregoing  notwithstanding,  the  Creditor  shall be entitled to receive when due the
 regularly  scheduled  payments as set forth in the Asset Purchase  Agreements and the regularly  scheduled  consulting fees as set
 forth in the  Management  Agreements,  provided  that (a) the  Lender  has not made  demand to either  Debtor  and (b) no Event of
 Default, as defined in the Credit Agreement, has occurred and is continuing or would exist immediately after such payment.

         The Creditor shall promptly deliver to the Lender in the form received (except for endorsement or assignment by the
 Creditor where required by the Lender) for application to the Senior Debt any payment, distribution, security or proceeds
 received by the Creditor with respect to the Subordinated Debt other than in accordance with this Agreement or pursuant to the
 exercise of its rights and remedies in enforcement of the Subordinated Debt, whether or not permitted under this Agreement. If
 the Creditor shall fail to make such endorsement or assignment, the Lender (or any of its officers) is hereby irrevocably
 authorized to make the same. Until so delivered, the Creditor shall hold such payment or distribution in trust as the property of
 the Lender, segregated from all other funds and property held by the Creditor.

          In the event of either Debtor's dissolution,  winding up or liquidation or any insolvency,  reorganization or any case or
 proceeding  under any  bankruptcy  or  insolvency  law or laws for the  benefit of or  relating  to the relief of  debtors,  these
 provisions  shall  remain in full force and  effect,  and the Senior Debt shall be paid in full in cash before any payment is made
 to the Creditor.

          Until the Senior Debt is fully paid in cash, the Creditor irrevocably appoints the Lender as the Creditor's
 attorney-in-fact, and grants to the Lender a power of attorney with full power of

                                                  -2-

 

 

substitution, in the name of the Creditor or in the name of the Lender, for the use and benefit of the Lender, without notice to
the Creditor, to perform at the Lender's option the following acts in any bankruptcy, insolvency, liquidation or similar
proceeding involving either Debtor:

         (a)      To file the appropriate claim or claims in respect of the Subordinated Debt on
behalf of the Creditor if Creditor does not do so prior to 30 days before the expiration of the time
to file claims in such proceeding and if the Lender elects, in its sole discretion, to file such claim
or claims;

         (b)      To accept or reject any plan of reorganization or arrangement on behalf of the
Creditor and to otherwise vote Creditor's claims in respect of any Subordinated Debt in any
manner that the Lender deems appropriate for the enforcement of its rights hereunder; and

         (c)      Take any other action in connection with any such proceeding that the Creditor
could take but for this Agreement:

 provided that in no event shall the Lender be liable to the Creditor for any failure to prove the Subordinated Debt, to exercise
 any right with respect thereto or to collect any funds payable in respect thereof.

         The Creditor agrees duly and promptly to take any such action as may be reasonably requested by the Lender to assist in
 the collection of the Subordinated Debt for the Lender's account and/or to file appropriate proofs of claim in respect of the
 Subordinated Debt and to execute and deliver to the Lender, on demand, such powers of attorney, assignments, proofs of claim or
 other instruments as the Lender may reasonably request to enable the Lender to enforce any and all claims upon or with respect to
 the Subordinated Debt and to collect and receive any and all payments and distributions which may be payable or deliverable at
 any time upon or with respect to the Subordinated Debt.

         The Creditor shall immediately affix a legend to the instruments evidencing the Subordinated Debt stating that the
 instruments are subject to the terms of this Agreement and agrees to execute such other documents reasonably requested by the
 Lender further to evidence the senior priority of the Senior Debt and Senior Liens provided herein. By the execution of this
 Agreement, the Creditor hereby authorizes the Lender to amend any financing statements filed by the Creditor against Debtors as
 follows: "In accordance with a certain Subordination Agreement by and among the Secured Party, the Debtor and TD BankNorth.,
 N.A., the Secured Party has subordinated any security interest or lien that Secured Party may have in any property of the Debtor
 to the security interest of TD BankNorth, N.A. in all assets of the Debtor, notwithstanding the respective dates of attachment or
 perfection of the security interest of the Secured Party and TD BankNorth, N.A  "

         No amendment of the documents evidencing or relating to the Subordinated Debt shall directly or indirectly modify the
 provisions of this Agreement (a) if such change or amendment could materially increase either Debtor's obligations or the
 Creditor's rights in a manner adverse to either Debtor or the Lender or (b) in any manner which might terminate or impair the
 subordination of the Subordinated Debt or the subordination of the security interest or lien that

                                                  -3-

 

 

 the Creditor may have in any property of either Debtor. By way of example, such instruments shall not be amended to (i) increase
 the rate of interest with respect to the Subordinated Debt, or (ii) accelerate the payment of the principal or interest or any
 other portion of the Subordinated Debt.

         In foreclosing on the Senior Liens, so long as the Lender proceeds in a commercially reasonable manner, the Lender may
 proceed to foreclose on the Senior Liens in any manner which the Lender, in its discretion, choose even though a higher price
 might have been realized if the Lender had proceeded to foreclose on the Senior Liens in another manner.

         Without limiting the foregoing, the Lender shall have no duty to the Creditor with respect to the preservation or
 maintenance of the Collateral or the manner in which the Lender enforces its rights in such Collateral or to preserve or maintain
 the rights of any Person in the Collateral and the Creditor hereby waives (a) any claims which it may now or hereafter have
 against the Lender which relate to such preservation, maintenance or enforcement and (b) the right to require the Lender to
 marshal any Collateral, to enforce any security interest or lien the Lender may now or hereafter have in any Collateral securing
 the Senior Debt or to pursue any claim it may have against any guarantor of the Senior Debt, as a condition to the Lender's
 entitlement to receive any payment on account of the Subordinated Debt.

         Without  limiting any of the Lender's  foreclosure or other rights under any of the Loan  Documents or applicable  law, in
 the event that, at the Borrower's  request in connection  with a sale by the Borrower or its  stockholders of any of its assets or
 ownership  interests,  the Lender  releases or discharges any of its Senior Liens on any  Collateral  which is subject to a Junior
 Lien,  such  Collateral  shall thereupon be deemed to have been released from all Junior Liens and the Creditor shall be deemed to
 have  consented  to such sale;  provided,  however,  that (a) the Lender  believes in good faith that any  released or  discharged
 Collateral is being sold or transferred in the ordinary course for cash consideration  reasonably  equivalent to the fair value of
 such  Collateral  and (b) the  proceeds  of such sale are  applied to repay  Senior  Debt,  with any  balance to be applied to the
 Subordinated Debt. The Creditor agrees that, within ten days following the Lender's  reasonable written request,  it will execute,
 deliver, file and record any and all such termination statements,  lien releases,  discharges and other agreements and instruments
 necessary to give effect to the foregoing and hereby irrevocably authorizes the Lender to file and record same.

         If at any time any  payment of the  Senior  Debt must be  disgorged  by the  Lender  for any  reason  (including,  without
 limitation,  the bankruptcy of either  Debtor),  this  Agreement and the relative  rights and priorities set forth herein shall be
 reinstated as to all such  disgorged  payments as though such payments had not been made and the Creditor  shall  immediately  pay
 over to the Lender all payments  received with respect to the  Subordinated  Debt to the extent that such payments would have been
 prohibited  hereunder.  At any time and from time to time,  without notice to the Creditor,  the Lender may take such actions with
 respect  to the  Senior  Debt as the  Lender,  in its  sole  discretion,  may deem  appropriate,  including,  without  limitation,
 terminating  advances to either Debtor,  increasing the principal  amount,  extending the time of payment,  increasing  applicable
 interest  rates,  renewing,  compromising  or otherwise  amending  the terms of any  documents  affecting  the Senior Debt and any
 collateral securing the Senior Debt, and

                                                  -4-

 

 

enforcing  or failing to enforce any rights  against the Debtors or any other  person.  No such action or inaction  shall impair or
otherwise affect the Lender's rights hereunder.

         In addition to its agreements set forth above, the Creditor, in its capacity as a holder of Subordinated Debt, agrees to
take such actions as may be reasonably necessary or appropriate, and otherwise to cooperate with the Lender to effectuate the
subordination provided hereby, in furtherance thereof, the Creditor agrees (a) not to oppose any motion filed or supported by the
Lender for relief from stay or for adequate protection in respect of the Senior Debt; (b) not to oppose any motion supported by
the Lender for either Debtor's use of cash collateral or post-petition borrowing from the Lender; (c) not to institute against
either Debtor any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any
United States Federal or state bankruptcy or similar law, until such time as the Senior Debt has been paid in full in cash; and
(d) not otherwise to (i) impede, interfere with or restrict or restrain the Lender's exercise of its rights and remedies under
the Loan Documents or (ii) take or permit any action prejudicial to or inconsistent with the priority position over the Creditor
that is created in favor of the Lender by this Agreement.

         If the Creditor shall commence,  prosecute or participate in any suit, action or proceeding  against either Debtor or take
 any other action in any legal proceeding  involving  either Debtor in violation of this Agreement,  such Debtor may interpose this
 Agreement as a defense or plea and the Lender is irrevocably  authorized to intervene and to interpose such defense or plea in its
 or either Debtor's name.

         This  Agreement  shall bind any successors or assignees of the Creditor and shall benefit any successors or assigns of the
 Lender.  This Agreement shall remain effective until terminated in writing by the Lender. This Agreement is solely for the benefit
 of the Creditor and the Lender and, except as provided in the immediately  preceding  paragraph,  is not for the benefit of either
 Debtor or any other party.  The Creditor will not sell,  assign or transfer any of its interest in the Subordinated  Debt,  unless
 the Lender  consents  thereto in writing,  and the buyer,  assignee or  transferee  thereof  agrees to be bound by this  Agreement
 pursuant to a written agreement in form and substance  satisfactory to the Lender. The Creditor further agrees that if one or both
 of the Debtors are in the process of refinancing a portion of the Senior Debt with one or more new financial institutions,  and if
 the Lender makes a request of the Creditor,  the Creditor  shall agree to enter into a new  subordination  agreement with such new
 financial institution(s) substantially the terms and conditions of this Agreement.

         This  Agreement  may be executed in two or more  counterparts,  each of which shall be deemed an original and all of which
 together shall constitute one instrument.

         This  Agreement  shall be governed by and  construed in accordance  with the laws of The  Commonwealth  of  Massachusetts,
 without giving effect to conflicts of laws  principles.  The Creditor and the Lender submit to the exclusive  jurisdiction  of the
 state and federal courts located in Boston,  Massachusetts in any action,  suit, or proceeding of any kind, against it that arises
 out of or by reason of this Agreement.  THE CREDITOR AND THE LENDER WAIVE THEIR RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
 CAUSE OF

                                                  -5-

 

 

 ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

         This Agreement represents the entire agreement with respect to the subject matter hereof, and supersedes all prior
 negotiations, agreements and commitments. The Creditor is not relying on any representations by the Lender or the Borrower in
 entering into this Agreement, and the Creditor has kept and will continue to keep itself fully apprised of the financial and
 other condition of the Borrower. This Agreement may be amended only by written instrument signed by the Creditor and the Lender.
 Creditor and each Debtor waive any defense based on the adequacy of a remedy at law that might be asserted as a bar to the remedy
 of specific performance of this Agreement in any action brought therefor by the Lender.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

 "Creditor" "Lender"

 Low Fat No Fat Gourmet Cafe, Inc. TD BankNorth, N.A.
 By: By:

                                                  -6-

 

 

JOINDER OF DEBTORS

By its execution of this Joinder, each of the undersigned Debtors acknowledges and agrees to all of the terms and conditions of
this Agreement, covenants not to make any distribution or payment to the Creditor in violation of the terms of this Agreement and
otherwise agrees to comply with such of the provisions of this Agreement as apply to it from time to time.

 "Borrower"

 KFLG Watertown, Inc.

 By:

      Eric Spitz, President
 "Guarantor"
 KNOWFAT FRANCHISE COMPANY, INC.

 By:

                             COMMONWEALTH OF MASSACHUSETTS
 COUNTY OF

 On this day of May, 2005, before me, the undersigned notary public, personally appeared
  , President of Low Fat No Fat Gourmet Cafe, Inc., proved to me though

 satisfactory evidence of identification, which was , to be the person
 whose name is signed on the preceding or attached document, and acknowledged to me that he signed it voluntarily for its stated
 purpose.

                                                    Notary Public:
                                                    My Commission Expires

                                                  -7-

 

 

                                                              EXHIBIT G

                                        FORM OF NOTICE OF BORROWING FOR ADDITIONAL TERM LOAN

   TO: TD Banknorth, N A. 370 Main Street Worcester, MA
           01608

         1. Reference is made to the Credit Agreement (as in effect from time to time, the "Credit
Agreement"), dated May, 2005 between KFLG Watertown, Inc., a Massachusetts corporation

 (the "Borrower") and TD Banknorth, N.A. (the "Lender'). Capitalized terms used in this Notice of Borrowing have the meanings set
 forth in the Credit Agreement unless specifically defined herein.
         2. This Notice of Borrowing is executed and delivered pursuant to Section 2.3 of the
Credit Agreement. The Borrower hereby requests that the Lender make an Additional Term Loan
to the Borrower, as follows:

                    a. Amount of requested Additional Term Lo an:
                            $

                    b. Date of requested Additional Term Loan:

                    c. Disbursement Account into which such Additional Term Loan is to be
                            made:

                            Account No:
                            TD Banknorth, N.A.

                             370 Main Street, Worcester, MA 01608

                            ABA#

                             Attention:

            3. In connection with the Additional Term Loan herein, the Borrower hereby represents, warrants and certifies to the
   Lender that, as of the requested date of such Additional Term Loan:

                    a. The  representations and warranties of each Covered Party contained in the Credit Agreement and in all other
   Loan  Documents are true and correct,  except to the extent that any such  representation  or warranty  expressly  relates to an
   earlier date and except for changes therein expressly permitted or expressly contemplated by the Credit Agreement; and

 

 

                  b. No Default or Event of Default has occurred and is continuing, or would
result after giving effect to the funding of such Additional term Loan; and

                  c. After giving effect to such Additional Term Loan, the outstanding
principal amount of the aggregate Additional Term Loans will not exceed the Commitment.

                  d. The Company has either:

                           (i) raised the New Equity and has supplied the Lender with evidence of its receipt; or

                           (ii)  commitments to raise  additional  equity and attaches the equity  commitments as Schedule I hereto

 for approval by the Lender as Satisfactory  Equity  Commitments;  and attaches as Schedule II hereto the calculation of the amount
 of Additional Term Loan requested, in accordance with Section 2.2(iii) of the Credit Agreement

 3. This Notice of Borrowing is to be telecopied to the Lender as indicated  below no later than 11:00 a.m.  (Boston time) five (5)
 Business Days prior to the proposed Additional Term Loan.

            To:

            Telecopier Number:

            CC:

            Telecopier Number:

                                                  -2-

 

 

         In WITNESS WHEREOF, the undersigned has executed this Notice of Borrowing in
his aforesaid capacity this day of , 200 .

                                                            KFLG WATERTOWN, INC.

                                                            By:
                                                                  Name: Title:

 

 

     SCHEDULEI Equity Commitments

        (Attached)

 

 

                                           SCHEDULE II ADDITIONAL TERM LOAN CALCULATION

1)    Total Equity Commitments:
2)    (multiplied by 10%):

3)    Total Additional Term Loans Available (1 multiplied by 2)
4)    Outstanding Additional Term Loans
5)    Available Additional Term Loans for Borrowing (3 minus 4)

 Requested Additional Term Loan Amount
 (not less than $100,000)
                                                 -5-EX-10.15

Exhibit 10.15

 

 

GUARANTEE AND SECURITY AGREEMENT

made by

KNOWFAT OF LANDMARK CENTER, INC.

in favor of

TD BANKNORTII, N.A.,

Dated as of September 6, 2006

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	SECTION 1. DEFINED TERMS	 	 	1	 
	1.1
	 	Definitions	 	 	1	 
	1.2
	 	Other Definitional Provisions	 	 	4	 
	 
	 	 	 	 	 	 
	SECTION 2. GUARANTEE	 	 	4	 
	2.1
	 	Guarantee	 	 	4	 
	2.2
	 	No Subrogation Until All Payments Made	 	 	5	 
	2.3
	 	Amendments. etc. with respect to the Borrower Obligations	 	 	6	 
	2.4
	 	Guarantee Absolute and Unconditional	 	 	6	 
	2.5
	 	Reinstatement	 	 	7	 
	2.6
	 	Payments	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 3. GRANT OF SECURITY INTEREST	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 4. REPRESENTATIONS AND WARRANTIES	 	 	8	 
	4.1
	 	Title; No Other Liens	 	 	8	 
	4.2
	 	Perfected First Priority Liens	 	 	8	 
	4.3
	 	Chief Executive Office	 	 	9	 
	4.4
	 	Inventory and Equipment	 	 	9	 
	4.5
	 	Investment Property	 	 	9	 
	4.6
	 	Receivables	 	 	9	 
	4.7
	 	Intellectual Property	 	 	9	 
	4.8
	 	Existence; Compliance with Law	 	 	10	 
	4.9
	 	Power; Authorization; Enforceability of Obligations	 	 	10	 
	4.10
	 	No Legal Impediment	 	 	10	 
	 
	 	 	 	 	 	 
	SECTION 5. COVENANTS	 	 	10	 
	5.1
	 	Financial Information	 	 	10	 
	5.2
	 	Delivery of Instruments	 	 	10	 
	5.3
	 	Maintenance of Insurance	 	 	11	 
	5.4
	 	Payment of Obligations	 	 	11	 
	5.5
	 	Maintenance of Perfected Security Interest: Further Documentation	 	 	11	 
	5.6
	 	Changes in Locations, Name, etc.	 	 	12	 
	5.7
	 	Notices	 	 	12	 
	5.8
	 	Investment Property	 	 	13	 
	5.9
	 	Receivables	 	 	14	 
	5.10
	 	Intellectual Property	 	 	14	 
	5.11
	 	Compliance with Credit Agreement	 	 	15	 
	5.12
	 	Post Default Actions	 	 	15	 
	 
	 	 	 	 	 	 
	SECTION 6. REMEDIAL PROVISIONS	 	 	15	 
	6.1
	 	Certain Matters Relating to Receivables	 	 	15	 
	6.2
	 	Communications with Obligors; Grantor Remains Liable	 	 	16	 
	6.3
	 	Pledged Stock	 	 	17	 

-i-

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	6.4
	 	Proceeds to be Turned Over To Lender	 	 	18	 
	6.5
	 	Application of Proceeds	 	 	18	 
	6.6
	 	Code and Other Remedies	 	 	18	 
	6.7
	 	Registration Rights	 	 	19	 
	6.8
	 	Deficiency	 	 	20	 
	 
	 	 	 	 	 	 
	SECTION 7. THE LENDER	 	 	20	 
	7.1
	 	Lender’s Appointment as Attorney-in-Fact, etc.	 	 	20	 
	7.2
	 	Duty of Lender	 	 	22	 
	7.3
	 	Execution of Financing Statements	 	 	22	 
	 
	 	 	 	 	 	 
	SECTION 8. MISCELLANEOUS	 	 	22	 
	8.1
	 	Amendments in Writing	 	 	22	 
	8.2
	 	Notices	 	 	22	 
	8.3
	 	No Waiver by Course of Conduct; Cumulative Remedies	 	 	23	 
	8.4
	 	Enforcement Expenses: Indemnification	 	 	23	 
	8.5
	 	Successors and Assigns	 	 	23	 
	8.6
	 	Set-Off	 	 	23	 
	8.7
	 	Counterparts	 	 	24	 
	8.8
	 	Severability	 	 	24	 
	8.9
	 	Section Headings	 	 	24	 
	8.10
	 	Integration	 	 	24	 
	8.11
	 	GOVERNING LAW	 	 	24	 
	8.12
	 	Submission To Jurisdiction; Waivers	 	 	25	 
	8.13
	 	Acknowledgments	 	 	25	 
	8.14
	 	WAIVER OF JURY TRIAL	 	 	25	 

	 	 	 
	SCHEDULES
	 	 
	Schedule A
	 	Notice Address
	Schedule B
	 	Investment Property
	Schedule C
	 	Filings and Other Actions Required to Perfect Security Interests
	Schedule D
	 	Jurisdictions of Organization, etc.
	Schedule E
	 	Inventory and Equipment Locations
	Schedule F
	 	Intellectual Property

-ii-

 

GUARANTEE AND SECURITY AGREEMENT

     GUARANTEE AND SECURITY AGREEMENT, dated as of September 6, 2006, made by KNOWFAT OF LANDMARK
CENTER, INC. (the “Grantor”), in favor of TD BANKNORTH, N.A. (the “Lender”).

WITNESSETH

     WHEREAS, KFLG Watertown, Inc., a Massachusetts corporation (the “Borrower”) and the
Lender entered into a Credit Agreement dated as of May 27, 2005 (as the same may be amended,
restated, renewed, replaced, supplemented or otherwise modified from time to time, the “Credit
Agreement”) Capitalized terms used herein without definition have the meanings assigned to them
in the Credit Agreement;

     WHEREAS, pursuant to the Credit Agreement, the Lender has agreed to make extensions of credit
to the Borrower upon the terms and subject to the conditions set forth therein;

     WHEREAS, pursuant to the Credit Agreement, the Borrower is not permitted to create any new
subsidiaries without the prior written consent of the Lender;

     WHEREAS, in connection with the acquisition of an additional restaurant location (the
“Landmark Center Restaurant”), the Borrower requested that the Lender permit the Borrower
to form the Grantor as a wholly owned subsidiary of the Borrower to acquire the Landmark Center
Restaurant; and

     WHEREAS, the Lender agreed to the formation of the Grantor and the acquisition of the Landmark
Center Restaurant by the Grantor on the condition that, among other things, the Grantor executed
and deliver this Agreement to the Lender.

     NOW, THEREFORE, in consideration of the premises and to induce the Lender to agree to the
formation of the Grantor and to the acquisition of the Landmark Center Restaurant by the Grantor,
the Grantor hereby agrees with the Lender, as follows:

SECTION 1. DEFINED TERMS

     1.1 Definitions.

          (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement, and the following terms are used
herein as defined in the Massachusetts UCC: Accounts, Certificated Security, Chattel Paper,
Commercial Tort Claims, Documents, Equipment, Farm Products, General Intangibles, Instruments,
Inventory, Letter-of- Credit Rights, Registered Organization and Supporting Obligations.

          (b) The following terms shall have the following meanings:

 

 

          “Agreement”: this Guarantee and Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.

          “Borrower Obligations”: the collective reference to the unpaid principal of and
interest on the Loans and all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the Credit Agreement after
the maturity of the Loans and interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) to the Lender, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, the Credit Agreement, the other Loan Documents, any
letter of credit or any other document made, delivered or given in connection with any of the
foregoing, in each case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Lender that are required to be paid by the Borrower pursuant to the
terms of any of the foregoing agreements).

          “Collateral”: as defined in Section 3.

          “Collateral Account”: any collateral account established by the Lender as provided in
Section 6.1 or 6.4.

          “Contracts”: any contract or agreement between the Grantor and any Person, or an
invoice sent or to be sent by the Grantor, pursuant to or under which a Receivable shall arise or
be created, or which evidences a Receivable.

          “Copyrights”: (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished (including, without limitation, those listed in Schedule F), all
registrations and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United States Copyright
Office, and (ii) the right to obtain all renewals thereof.

          “Copyright Licenses”: any written agreement naming the Grantor as licensor or
licensee (including, without limitation, those listed in Schedule F) granting any right
under any Copyright, including, without limitation, the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.

          “Deposit Account”: as defined in the Uniform Commercial Code of any applicable
jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook
or like account maintained with a depositary institution.

          “Grantor Obligations”: all obligations and liabilities of the Grantor which may arise
under or in connection with this Agreement (including, without limitation, Section 2) or any other
Loan Document to which the Grantor is a party, in each case whether on account of

-2-

 

guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel to the Lender that
are required to be paid by the Grantor pursuant to the terms of this Agreement or any other Loan
Document).

          “Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses,
the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue
at law or in equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.

          “Intercompany Note”: any promissory note evidencing loans made by the Grantor to any
of its Subsidiaries.

          “Investment Property”: the collective reference to (i) all “investment property” as
such term is defined in the Massachusetts UCC and (ii) whether or not constituting “investment
property” as so defined, all Pledged Notes and all Pledged Stock.

          “Issuers”: the collective reference to each issuer of any Investment Property.

          “Massachusetts UCC”: the Uniform Commercial Code as from time to time in effect in
the Commonwealth of Massachusetts.

          “Patents”: (i) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof and all goodwill associated
therewith, including, without limitation, any of the foregoing referred to in Schedule F,
(ii) all applications for letters patent of the United States or any other country and all
divisions, continuations and continuations-in-part thereof, including, without limitation, any of
the foregoing referred to in Schedule F, and (iii) all rights to obtain any reissues or
extensions of the foregoing.

          “Patent License”: all agreements, whether written or oral, providing for the grant by
or to the Grantor of any right to manufacture, use or sell any invention covered in whole or in
part by a Patent including, without limitation, any of the foregoing referred to in Schedule
F.

          “Pledged Notes”: all promissory notes listed on Schedule B, all Intercompany
Notes at any time issued to the Grantor and all other promissory notes issued to or held by the
Grantor (other than promissory notes issued in connection with extensions of trade credit by the
Grantor in the ordinary course of business).

          “Pledged Securities”: the collective reference to the Pledged Stock and the Pledged
Notes, together with any Proceeds thereof.

          “Pledged Stock”: the shares of Capital Stock listed on Schedule B, together
with any other shares, stock certificates, options, interests or rights of any nature whatsoever in

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respect of the Capital Stock of any Person that may be issued or granted to, or held by, the
Grantor while this Agreement is in effect.

          “Proceeds”: all “proceeds” as such term is defined in the Massachusetts UCC and, in
any event, shall include, without limitation, all dividends or other income from the Investment
Property, collections thereon or distributions or payments with respect thereto.

          “Receivable”: any right to payment for goods sold or leased or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including, without limitation, any Account).

          “Restricted Account”: as defined in Section 8.6.

          “Securities Act”: the Securities Act of 1933, as amended.

          “Trademarks”: (i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos and other source or
business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political subdivision thereof or
otherwise, and all common-law rights related thereto, including, without limitation, any of the
foregoing referred to in Schedule F, and (ii) the right to obtain all renewals thereof.

          “Trademark License”: any agreement, whether written or oral, providing for the grant
by or to the Grantor of any right to use any Trademark, including, without limitation, any of the
foregoing referred to in Schedule F.

     1.2 Other Definitional Provisions.

     The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified. The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

SECTION 2. GUARANTEE

     2.1 Guarantee.

          (a) The Grantor hereby unconditionally and irrevocably guarantees to Lender and its
successors, endorsees, transferees and assigns, the prompt and complete payment and performance by
the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations.

          (b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum
liability of the Grantor hereunder and under the other Loan

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Documents shall in no event exceed the amount which can be guaranteed by such Grantor under
applicable federal and state laws relating to the insolvency of debtors.

          (c) The Grantor agrees that the Borrower Obligations may at any time and from time to time
exceed the amount of the liability of the Grantor hereunder without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of the Lender hereunder.

          (d) The guarantee contained in this Section 2 shall remain in full force and effect until all
the Borrower Obligations and the obligations of the Grantor under the guarantee contained in this
Section 2 shall have been satisfied by indefeasible payment in full in cash, no letters of credit
shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to
time during the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.

          (e) No payment made by the Borrower, the Grantor, any other guarantor or any other Person or
received or collected by the Lender from the Borrower, the Grantor, any other guarantor or any
other Person by virtue of any action or proceeding or any set-off or appropriation or application
at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of the Grantor hereunder which
shall, notwithstanding any such payment (other than any payment made by the Grantor in respect of
the Borrower Obligations or any payment received or collected from the Grantor in respect of the
Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of
the Grantor hereunder until the Borrower Obligations are indefeasibly paid in full in cash, no
letters of credit shall be outstanding and the Commitments are terminated.

          (f) Any of the indebtedness of any Covered Party now or hereafter owing to the Borrower or the
Grantor is hereby subordinated and junior to the Borrower Obligations or the Grantor Obligations,
as applicable, and all such indebtedness of such Covered Party shall not be paid, or, at the
Lender’s option, shall be collected, enforced and received for the benefit of the Lender on account
of the Borrower Obligations or the Grantor Obligations, as applicable, but without affecting or
impairing in any manner the liability of the Borrower or the Grantor under the other provisions of
this Agreement and the other Loan Documents.

     2.2 No Subrogation Until All Payments Made. Notwithstanding the payment made by the
Grantor hereunder or any set-off or application of funds of the Grantor by the Lender, the Grantor
shall not be entitled to be subrogated to any of the rights of the Lender against the Borrower or
any collateral security or guarantee or right of offset held by the Lender for the payment of the
Borrower Obligations, nor shall the Grantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other guarantor in respect of payments made by the Grantor
hereunder, until all amounts owing to the Lender by the Borrower on account of the Borrower
Obligations are indefeasibly paid in full in cash, no letters of credit shall be outstanding and
the Commitments are terminated. If any amount shall be paid to the Grantor on account of the
subrogation rights at any time when all of the Borrower Obligations shall not have been
indefeasibly paid in full in cash, the amount shall be held by the Grantor in trust for the Lender,
segregated from other funds of the Grantor, and shall, forthwith upon receipt by the

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Grantor, be turned over to the Lender in the exact form received by the Grantor (duly endorsed
by the Grantor to the Lender, if required), to be applied against the Borrower Obligations, whether
matured or unmatured, in the order as the Lender may determine.

     2.3 Amendments. etc. with respect to the Borrower Obligations. The Grantor shall
remain obligated hereunder notwithstanding that, without any reservation of rights against the
Grantor and without notice to or further assent by the Grantor, any demand for payment of any of
the Borrower Obligations made by the Lender may be rescinded by the Lender and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any other Person upon or
for any part thereof, or any collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by the Lender, and the Credit
Agreement and the other Loan Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Lender
may deem advisable from time to time, and any collateral security, guarantee or right of offset at
any time held by the Lender for the payment of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released. The Lender shall have no obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Borrower Obligations or for the
guarantee contained in this Section 2 or any property subject thereto.

     2.4 Guarantee Absolute and Unconditional. The Grantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or
proof of reliance by the Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended
or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the
Borrower and the Grantor, on the one hand, and the Lender, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the guarantee contained in
this Section 2. The Grantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or the Grantor with respect to the Borrower
Obligations. The Grantor understands and agrees that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of payment without regard
to (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of
the Borrower Obligations or any other collateral security therefor or guarantee or right of offset
with respect thereto at any time or from time to time held by the Lender, (b) any defense, set-off
or counterclaim (other than a defense of payment or performance) which may at any time be available
to or be asserted by the Borrower or any other Person against the Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower or the Grantor)
which constitutes, or might be construed to constitute, an equitable or legal discharge of the
Borrower for the Borrower Obligations, or of the Grantor under the guarantee contained in this
Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise
pursuing its rights and remedies hereunder against the Grantor, the Lender may, but shall be under
no obligation to, make a similar demand on or otherwise pursue the rights and remedies as it may
have against the Borrower, any other guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the

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Lender to make any demand, to pursue the other rights or remedies or to collect any payments
from the Borrower, any other guarantor or any other Person or to realize upon any collateral
security or guarantee or to exercise any right of offset, or any release of the Borrower, any other
guarantor or any other Person or any collateral security, guarantee or right of offset, shall not
relieve the Grantor of any obligation or liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law, of the Lender
against the Grantor. For the purposes of this Section 2.4 only, “demand” shall include the
commencement and continuance of any legal proceedings.

     2.5 Reinstatement. The guarantee contained in this Section 2 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the
Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower,
the Grantor or any other guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or the Grantor or any
substantial part of its property, or otherwise, all as though such payments had not been made.

     2.6 Payments. The Grantor hereby guarantees that payments hereunder will be paid to
the Lender without set-off or counterclaim in Dollars at its office at 370 Main Street, Worcester,
MA 01608, or at such other office as the Lender may designate from time to time in writing.

SECTION 3. GRANT OF SECURITY INTEREST

     The Grantor hereby assigns and transfers to the Lender, and hereby grants to the Lender, a
security interest in, all of the following property now owned or at any time hereafter acquired by
the Grantor or in which the Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the “Collateral”), as collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Grantor Obligations:

          (a) all Accounts;

          (b) all Chattel Paper;

          (c) all Contracts;

          (d) all Deposit Accounts;

          (e) all Documents;

          (f) all Equipment;

          (g) all General Intangibles;

          (h) all Instruments;

          (i) all Intellectual Property;

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          (j) all Inventory;

          (k) all Investment Property;

          (l) all Letter of Credit Rights;

          (m) all Receivables;

          (n) all other property not otherwise described above;

          (o) all books and records pertaining to the Collateral; and

          (p) to the extent not otherwise included, all Proceeds, Supporting Obligations, Commercial
Tort Claims and products of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing;

provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security interest in any property
to the extent that such grant of a security interest is prohibited by, or constitutes a breach or
default under or results in the termination of, or requires any consent not obtained under, any
contract, license, agreement, instrument or other document evidencing or giving rise to such
property or, in the case of any Investment Property, Pledged Stock or Pledged Note, any applicable
shareholder or similar agreement, except to the extent that the term in such contract, license,
agreement, instrument or other document or shareholder or similar agreement providing for such
prohibition, breach, default or termination or requiring such consent is ineffective under
applicable law.

SECTION 4. REPRESENTATIONS AND WARRANTIES

     To induce the Lender to enter into the Credit Agreement and to induce the Lender to make
extensions of credit to the Borrower under the Credit Agreement, the Grantor hereby represents and
warrants to the Lender that:

     4.1 Title; No Other Liens. Except for the security interest granted to the Lender
pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit
Agreement, the Grantor owns each item of the Collateral free and clear of any and all Liens or
claims of others. No financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have been filed in
favor of the Lender, pursuant to this Agreement or as are permitted by the Credit Agreement.

     4.2 Perfected First Priority Liens. The security interests granted pursuant to this
Agreement (a) upon completion of the filings and other actions specified on Schedule C
(which, in the case of all filings and other documents referred to on said Schedule, have been
delivered to the Lender in completed and duly executed form) will constitute valid perfected
security interests in all of the Collateral in which a security interest can be perfected by the
filing of a financing statement and/or the other filings and actions specified on Schedule
C in favor of the Lender, as collateral security for the Grantor Obligations, enforceable in
accordance with the terms hereof against all creditors of the Grantor and any Persons purporting to
purchase any Collateral from

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the Grantor and (b) are prior to all other Liens on the Collateral in existence on the date
hereof except to the extent otherwise permitted by the Credit Agreement.

     4.3 Chief Executive Office. On the date hereof, the Grantor’s type of organization,
jurisdiction of organization, identification number from the jurisdiction of organization (if any)
and the location of the Grantor’s chief executive office or sole place of business, as the case
maybe, are specified on Schedule D. The Grantor has furnished to the Lender a certified
charter, certificate of incorporation or other organization document and long-form good standing
certificate as of a date which is recent to the date hereof.

     4.4 Inventory and Equipment. On the date hereof, the Inventory and the material
Equipment (other than mobile goods) are kept at the locations listed on Schedule E.

     4.5 Investment Property. The shares of Pledged Stock pledged by the Grantor hereunder,
if any, constitute all the issued and outstanding shares of all classes of Capital Stock of each
Issuer owned by the Grantor. All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable, and, if issued by a Person other than a partnership or
limited liability company, are represented by a certificate. No shares of Pledged Stock held by the
Grantor constitute “uncertificated securities” as defined in Article 8 of the Massachusetts UCC. To
the Grantor’s knowledge, each of the Pledged Notes, if any, constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors’ rights generally and general equitable
principles (whether considered in a proceeding in equity or at law). The Grantor is the record and
beneficial owner of, and has good and marketable title to, the Investment Property pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement.

     4.6 Receivables. (a) No amount payable to the Grantor under or in connection with any
Receivable is evidenced by any Instrument or Chattel Paper which has not been delivered to the
Lender.

          (b) None of the obligors on any Receivable is a Governmental Authority.

          (c) The amounts represented by the Grantor to the Lender from time to time as owing to the
Grantor in respect of the Receivables will at such times be accurate in all material respects.

          (d) To the Grantor’s knowledge, each Receivable constitutes the bona fide
obligation of the account debtor thereunder and was originated in the ordinary course of the
Grantor’s business.

     4.7 Intellectual Property. Schedule F lists all Intellectual Property owned
by the Grantor in its own name on the date hereof. On the date hereof, all material Intellectual
Property is valid, subsisting, unexpired and enforceable, has not been abandoned and does not
infringe the intellectual property rights of any other Person. Except as set forth in Schedule
F, on the date hereof, none of the Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which the Grantor is the licensor or franchisor. No holding,
decision or judgment has

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been rendered by any Governmental Authority which would limit, cancel or question the validity
of, or the Grantor’s rights in, any Intellectual Property in any respect that could reasonably be
expected to have a Material Adverse Effect. No action or proceeding is pending, or, to the
knowledge of the Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or the Grantor’s ownership interest therein, or (ii)
which, if adversely determined, would have a material adverse effect on the value of any
Intellectual Property.

     4.8 Existence; Compliance with Law. The Grantor (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, (b) has the
requisite power and authority, and the legal right, to own and operate its properties and to
conduct its business in which it is currently engaged and (c) is in compliance with all Legal
Requirements except to the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

     4.9 Power; Authorization; Enforceability of Obligations. The Grantor has the requisite
power and authority, and the legal right, to make, deliver and perform this Agreement. The Grantor
has taken all necessary action to authorize the execution, delivery and performance of this
Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of,
any Governmental Authority or any other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement. This Agreement constitutes a
legally valid and binding obligation of the Grantor, enforceable against the Grantor in accordance
with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
and by general equitable principles (whether enforcement is sought by proceedings in equity or at
law).

     4.10 No Legal Impediment. The execution, delivery and performance of this Agreement
will not violate any Legal Requirement or any other contractual obligation binding on the Grantor,
and will not result in, or require, the creation or imposition of any Lien on any of its properties
or revenues pursuant to any Legal Requirement or any such contractual obligation.

SECTION 5. COVENANTS

     The Grantor covenants and agrees with the Lender that, from and after the date of this
Agreement until the Borrower Obligations and the Grantor Obligations shall have been indefeasibly
paid in full in cash, no letters of credit shall be outstanding and the Commitments shall have
terminated:

     5.1 Financial Information. Furnish to the Lender such financial and other
information as the Lender may from time to time reasonably request.

     5.2 Delivery of Instruments. Certificated Securities and Chattel Paper (a) The
Grantor will, and will cause each of its Subsidiaries to:

               (i) provide in its charter or other applicable organization document that all Capital Stock
issued by such party will be represented by a certificate; and

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               (ii) if any such Subsidiary is a partnership or limited liability company, not provide in its
partnership agreement, limited liability company agreement or other applicable organization
document that any Capital Stock issued by such Subsidiary will be securities governed by Article 8
of the Massachusetts UCC.

     The Grantor shall deliver all certificates evidencing any Capital Stock issued to the Grantor
by the Borrower to the Lender, together with any appropriate instruments of transfer.

          (b) If any amount payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument, Certificated Security or Chattel Paper, such Instrument, Certificated
Security or Chattel Paper shall be promptly delivered to the Lender, duly endorsed in a manner
satisfactory to the Lender, to be held as Collateral pursuant to this Agreement.

     5.3 Maintenance of Insurance. The Grantor will maintain, with financially sound and
reputable companies, insurance policies (i) insuring the Inventory and Equipment against loss by
fire, explosion, theft and such other casualties as may be reasonably satisfactory to the Lender
and (ii) insuring the Grantor and the Lender against liability for personal injury and property
damage relating to such Inventory and Equipment, such policies to be in such form and amounts and
having such coverage as may be reasonably satisfactory to the Lender. All insurance required to be
maintained by the Grantor hereunder and pursuant to the Credit Agreement shall (i) provide that no
cancellation, material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Lender of written notice thereof, (ii) name
the Lender as loss payee pursuant to a loss payable endorsement issued in favor of and delivered to
the Lender and (iii) be reasonably satisfactory in all other respects to the Lender.

     5.4 Payment of Obligations. The Grantor will pay and discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all taxes, assessments
and governmental charges or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except that no such charge need
be paid if the amount or validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books
of the Grantor and such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest therein.

     5.5 Maintenance of Perfected Security Interest: Further Documentation.

          (a) The Grantor shall maintain the security interest created by this Agreement as a perfected
security interest having at least the priority described in Section 4.2 and shall defend such
security interest against the claims and demands of all Persons whomsoever, subject to the rights
of the Grantor under the Loan Documents to dispose of the Collateral and subject to Permitted
Liens.

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          (b) The Grantor will furnish to the Lender from time to time statements and schedules further
identifying and describing the assets and property of the Grantor and such other reports in
connection therewith as the Lender may reasonably request, all in reasonable detail.

          (c) At any time and from time to time, upon the written request of the Lender, and at the sole
expense of the Grantor, the Grantor will promptly and duly execute and deliver, and have recorded,
such further instruments and documents and take such further actions as the Lender may reasonably
request for the purpose of obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, including, without limitation, (i) filing any financing
statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby and (ii) in the case of Investment Property,
Deposit Accounts, Letter of Credit Rights, and any other, relevant Collateral, taking any actions
necessary to enable the Lender to obtain “control” (within the meaning of the applicable Uniform
Commercial Code) with respect thereto. Without limiting the generality of the foregoing:

               (i) unless the Lender shall otherwise consent in writing (which consent may be revoked), the
Grantor shall deliver to the Lender all Collateral consisting of negotiable Documents, certificated
securities, Chattel Paper and Instruments (in each case, accompanied by stock powers, allonges or
other instruments of transfer executed in blank) promptly after the Grantor receives the same; and

               (ii) upon request by the Lender after the occurrence and during the continuance of an Event of
Default, the Grantor shall obtain signed acknowledgements of the Lender’s Liens from bailees having
possession of the Grantor’s goods.

     5.6 Changes in Locations, Name, etc. The Grantor will not, except upon 20 days’ prior
written notice to the Lender and delivery to the Lender of (a) all additional financing statements
and other documents reasonably requested by the Lender to maintain the validity, perfection and
priority of the security interests provided for herein and (b) if applicable, a written supplement
to Schedule E showing any additional location at which Inventory or Equipment shall be
kept:

               (i) permit any of the Inventory or Equipment (other than isolated items of Equipment which are
not in the aggregate material) to be kept at a location other than those listed on Schedule
E;

               (ii) change its jurisdiction of organization; or

               (iii) change its name.

     5.7 Notices. The Grantor will advise the Lender promptly, in reasonable detail, of:

          (a) any Lien (other than security interests created hereby or Liens permitted under the Credit
Agreement) on any of the Collateral which would adversely affect the ability of the Lender to
exercise any of its remedies hereunder; and

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          (b) of the occurrence of any other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the Collateral or on the security interests created
hereby.

     5.8 Investment Property.

          (a) If the Grantor shall become entitled to receive or shall receive any certificate
(including, without limitation, any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital Stock of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any
shares of the Pledged Stock, or otherwise in respect thereof, the Grantor shall accept the same as
the agent of the Lender, hold the same in trust for the Lender and deliver the same forthwith to
the Lender in the exact form received, duly endorsed by the Grantor to the Lender if required,
together with an undated stock or transfer power covering such certificate duly executed in blank
by the Grantor and with, if the Lender so requests, signature guaranteed, to be held by the Lender,
subject to the terms hereof, as additional collateral security for the Grantor Obligations and the
Borrower Obligations. Any sums paid upon or in respect of such Investment Property upon the
liquidation or dissolution of any Issuer shall be paid over to the Lender to be held by it
hereunder as additional collateral security for the Grantor Obligations and the Borrower
Obligations, and in case any distribution of capital shall be made on or in respect of the
Investment Property or any property shall be distributed upon or with respect to the Investment
Property pursuant to the recapitalization or reclassification of the capital of any Issuer or
pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject
to a perfected security interest in favor of the Lender, be delivered to the Lender to be held by
it hereunder as additional collateral security for the Grantor Obligations and the Borrower
Obligations. If any sums of money or property so paid or distributed in respect of such Investment
Property shall be received by the Grantor, the Grantor shall, until such money or property is paid
or delivered to the Lender, hold such money or property in trust for the Lender, segregated from
other funds of the Grantor, as additional collateral security for the Grantor Obligations and the
Borrower Obligations.

          (b) Without the prior written consent of the Lender, the Grantor will not (i) vote to enable,
or take any other action to permit, any Issuer to issue any Capital Stock, to issue any other
securities convertible into or granting the right to purchase or exchange for any Capital Stock of
any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option
with respect to, the Investment Property or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the Investment Property or
Proceeds thereof, or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right or ability of the
Grantor or the Lender to sell, assign or transfer any of the Investment Property or Proceeds
thereof.

          (c) In the case of the Grantor in its capacity as an Issuer, such Issuer agrees that (i) it
will be bound by the terms of this Agreement relating to the Investment Property issued by it and
will comply with such terms insofar as such terms are applicable to it.

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     5.9 Receivables.

          (a) Other than in the ordinary course of business consistent with its past practice, the
Grantor will not (i) grant any extension of the time of payment of any Receivable, (ii) compromise
or settle any Receivable for less than the full amount thereof, (iii) release, wholly or partially,
any Person liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever
on any Receivable or (v) amend, supplement or modify any Receivable in any manner that could
adversely affect the value thereof.

          (b) The Grantor will deliver to the Lender a copy of each material demand, notice or document
received by it that questions or calls into doubt the validity or enforceability of more than 5% of
the aggregate amount of the then outstanding Receivables.

     5.10 Intellectual Property.

          (a) The Grantor (either itself or through licensees) will (i) continue to use each material
Trademark in order to maintain such Trademark in full force free from any claim of abandonment for
non-use, except to the extent that the Grantor elects to discontinue use in the ordinary course of
business, (ii) use such Trademark with the appropriate notice of registration and all other notices
and legends required by applicable Requirements of Law, (iii) not adopt or use any mark which is
confusingly similar or a colorable imitation of any such Trademark unless the Lender, shall obtain
a perfected security interest in such mark pursuant to this Agreement, and (iv) not (and not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.

          (b) The Grantor (either itself or through licensees) will not do any act, or omit to do any
act, whereby any material Patent may become forfeited, abandoned or dedicated to the public.

          (c) The Grantor (either itself or through licensees) (i) will employ each material Copyright
and (ii) will not (and will not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any material portion of the Copyrights may become invalidated
or otherwise impaired. The Grantor will not (either itself or through licensees) do any act whereby
any material portion of the Copyrights may fall into the public domain.

          (d) The Grantor (either itself or through licensees) will not do any act that knowingly uses
any material Intellectual Property to infringe the intellectual property rights of any other
Person.

          (e) The Grantor will notify the Lender immediately if it knows, or has reason to know, that
any application or registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or development in,
any proceeding in the United States Patent and Trademark Office, the United States Copyright Office
or any court or tribunal in any country) regarding the Grantor’s ownership of, or the validity of,
any material Intellectual Property or the Grantor’s right to register the same or to own and
maintain the same.

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          (f) Whenever the Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual Property with the
United States Patent and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, the Grantor shall report such
filing to the Lender within five Business Days after the last day of the fiscal quarter in which
such filing occurs. Upon request of the Lender, the Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the Lender may request to
evidence the Lender’s security interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of the Grantor relating thereto or represented thereby.

          (g) The Grantor will take all reasonable and necessary steps, including, without limitation,
in any proceeding before the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in any other country or any political subdivision thereof,
to maintain and pursue each application (and to obtain the relevant registration) and to maintain
each registration of the material Intellectual Property, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of incontestability.

          (h) In the event that any material Intellectual Property is infringed, misappropriated or
diluted by a third party, the Grantor shall (i) take such actions as the Grantor shall reasonably
deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the Lender after it learns
thereof and sue for infringement, misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement, misappropriation or dilution.

     5.11 Compliance with Credit Agreement. The Grantor shall comply with all of the
covenants and other provisions of the Credit Agreement which apply to it by their terms.

     5.12 Post Default Actions. If an Event of Default shall occur and be continuing, the
Grantor shall not (x) take any action which would have a Material Adverse Effect, (y) take any
action that is prohibited or (z) fail to perform any action required of the Grantor hereunder or
under any other Loan Document to which the Grantor is a party.

SECTION 6. REMEDIAL PROVISIONS

     6.1 Certain Matters Relating to Receivables.

          (a) The Lender shall have the right to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and the Grantor shall furnish
all such assistance and information as the Lender may require in connection with such test
verifications. At any time and from time to time, upon the Lender’s request and at the expense of
the Grantor, the Grantor shall cause a Responsible Officer (or at the election of the Lender during
an Event of Default, independent public accountants) to furnish to the Lender reports showing
reconciliations, aging and test verifications of, and trial balances for, the Receivables.

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          (b) The Lender hereby authorizes the Grantor to collect the Grantor’s Receivables, subject to
the Lender’s direction and control, and the Lender may curtail or terminate said authority at any
time after the occurrence and during the continuance of an Event of Default. If required by the
Lender at any time after the occurrence and during the continuance of an Event of Default, any
payments of Receivables, when collected by the Grantor, (i) shall be forthwith (and, in any event,
within two Business Days) deposited by the Grantor in the exact form received, duly endorsed by the
Grantor to the Lender if required, in a deposit account (each, a “Collateral Account”)
maintained under the sole dominion and control of the Lender as security for the Grantor
Obligations and the Borrower Obligations, subject to withdrawal by the Lender in payment of the
Grantor Obligations and the Borrower’s Obligations only as provided in Section 6.5, and (ii) until
so turned over, shall be held by the Grantor in trust for the Lender, segregated from other funds
of the Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included in the deposit.

          (c) At any time after the occurrence and during the continuance of an Event of Default, upon
Lender’s request, the Grantor shall deliver to the Lender all original and other documents
evidencing, and relating to, the agreements and transactions which gave rise to the Receivables,
including, without limitation, all original orders, invoices and shipping receipts.

          (d) At any time after the occurrence and during the continuance of an Event of Default, to the
extent that, because of a conflict with applicable Requirements of Law, the proceeds of any
Receivable cannot be applied in accordance with paragraphs (a) and (b) above, the Grantors shall
take such actions as may be necessary to deposit such proceeds in a Collateral Account as promptly
as possible, subject to compliance with applicable Requirements of Law.

     6.2 Communications with Obligors; Grantor Remains Liable.

          (a) The Lender in its own name or in the name of others may, at any time after the occurrence
and during the continuance of an Event of Default, communicate with obligors under the Receivables
and parties to the Contracts to verify with them to the Lender’s satisfaction the existence, amount
and terms of any Receivables or Contracts.

          (b) Upon the request of the Lender, at any time after the occurrence and during the
continuance of an Event of Default, the Grantor shall notify obligors on the Receivables and
parties to the Contracts that the Receivables and the Contracts have been assigned to the Lender
and that payments in respect thereof shall be made directly to the Lender.

          (c) Anything herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Receivables and Contracts to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. The Lender shall have no obligation or liability under any Receivable (or any
agreement giving rise thereto) or Contract by reason of or arising out of this Agreement or the
receipt by the Lender of any payment relating thereto, nor shall the Lender be obligated in any
manner to perform any of the obligations of the Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto) or Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the

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sufficiency of any performance by any party thereunder, to present or file any claim, to take
any action to enforce any performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

     6.3 Pledged Stock.

          (a) Unless an Event of Default shall have occurred and be continuing and the Lender shall have
given notice to the Grantor of the Lender’s intent to exercise its corresponding rights pursuant to
Section 6.3(b), the Grantor shall be permitted to receive all cash dividends paid in respect of the
Pledged Stock and all payments made in respect of the Pledged Notes, to the extent permitted in the
Credit Agreement, and to exercise all voting and corporate or other organizational rights with
respect to the Investment Property; provided, however that no vote shall be cast or corporate right
exercised or other action taken which, in the Lender’s reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document.

          (b) If an Event of Default shall occur and be continuing and the Lender shall give notice of
its intent to exercise such rights to the Grantor, (i) the Lender shall have the right to receive
any and all cash dividends, payments, or other Proceeds paid in respect of the Investment Property
and make application thereof to the Grantor Obligations and the Borrower’s Obligations in such
order as the Lender may determine, and (ii) any or all of the Investment Property shall be
registered in the name of the Lender or its nominee, and the Lender or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such Investment Property at any
meeting of shareholders or other equityholders of the relevant Issuer or Issuers or otherwise and
(y) any and all rights of conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Investment Property as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the Investment Property
upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the
corporate or other organizational structure of any Issuer, or upon the exercise by the Grantor or
the Lender of any right, privilege or option pertaining to such Investment Property, and in
connection therewith, the right to deposit and deliver any and all of the Investment Property with
any committee, depositary, transfer agent, registrar or other designated agency upon such terms and
conditions as the Lender may determine), all without liability except to account for property
actually received by it, but the Lender shall have no duty to the Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so or delay in so
doing.

          (c) The Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged
by the Grantor hereunder to (i) comply with any instruction received by it from the Lender in
writing that (x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or further instructions
from or consent of the Grantor, and the Grantor agrees that each Issuer shall be fully protected in
so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other
payments with respect to the Investment Property directly to the Lender.

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     6.4 Proceeds to be Turned Over To Lender. In addition to the rights of the Lender
specified in Section 6.1 with respect to payments of Receivables, if an Event of Default shall
occur and be continuing, all Proceeds received by the Grantor consisting of cash, checks and other
cash equivalents shall be held by the Grantor in trust for the Lender, segregated from other funds
of the Grantor, and shall upon the request of the Lender, forthwith upon receipt by the Grantor, be
turned over to the Lender in the exact form received by the Grantor (duly endorsed by the Grantor
to the Lender, if required). All Proceeds received by the Lender hereunder shall be held by the
Lender in a Collateral Account maintained under its sole dominion and control. All Proceeds while
held by the Lender in a Collateral Account (or by the Grantor in trust for the Lender) shall
continue to be held as collateral security for all the Grantor Obligations and Borrower Obligations
and shall not constitute payment thereof until applied as provided in Section 6.5.

     6.5 Application of Proceeds. At such intervals as may be agreed upon by the Grantor
and the Lender, or, if an Event of Default shall have occurred and be continuing, at any time at
the Lender’s election, the Lender may apply all or any part of Proceeds constituting Collateral,
whether or not held in any Collateral Account, and any proceeds of the guarantee set forth in
Section 2, in payment of the Grantor Obligations and the Borrower Obligations in the following
order:

     First, to the payment of the reasonable costs and expenses of any sale or other
expenses (including, without limitation, reasonable legal fees and expenses), liabilities and
advances made or incurred by the Lender in connection therewith or provided for by the Credit
Agreement or arising in connection with any other facilities now or hereafter provided by the
Lender to or for the benefit of the Borrower;

     Next, to payment of interest on and principal of the Loans (in such order as may be
provided for in the Credit Agreement or as otherwise determined by the Lender);

     Next, to the payment of any other Borrower Obligations and Grantor Obligations (or may
be held by the Lender as security for any other such Obligations not yet due and payable); and

     Finally, after payment in full of all Borrower Obligations and Grantor Obligations and
termination of all credit facilities and other facilities now or hereafter provided by the Lender
to the Borrower, to the payment to the Borrower or its successors or assigns, or to whomsoever may
be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, of any
surplus then remaining of such cash.

     6.6 Code and Other Remedies.

          (a) If an Event of Default shall occur and be continuing, the Lender may exercise, in addition
to all other rights and remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Grantor Obligations or the Borrower Obligations,
all rights and remedies of a secured party under the Massachusetts UCC or any other applicable law.
Without limiting the generality of the foregoing, the Lender, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except any notice required
by law referred to below), to or upon the Grantor or any

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other Person (all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to
do any of the foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of the Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption
in the Grantor, which right or equity is hereby waived and released. The Grantor further agrees, at
the Lender’s request, to assemble the Collateral and make it available to the Lender at places
which the Lender shall reasonably select, whether at the Grantor’s premises or elsewhere. The
Lender shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, after
deducting all reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Lender hereunder, including, without limitation, reasonable
attorneys’ fees and disbursements, to the payment in whole or in part of the Grantor Obligations
and the Borrower Obligations, in accordance with the Loan Documents, and only after such
application and after the payment by the Lender of any other amount required by any provision of
law, need the Lender account for the surplus, if any, to the Grantor. To the extent permitted by
Requirements of Law, the Grantor waives all claims, damages and demands it may acquire against the
Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least seven (7) days before such sale or other disposition.

     6.7 Registration Rights. (a) If the Lender shall determine to exercise its right to
sell any or all of the Pledged Stock pursuant to Section 6.6, and if in the opinion of the Lender
it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Grantor will cause the Issuer thereof to
(i) execute and deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Lender, necessary or advisable to register the Pledged Stock, or that
portion thereof to be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to remain effective
for a period of one year from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus
which, in the opinion of the Lender, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. The Grantor agrees to cause such Issuer (if such Issuer is a direct
or indirect Subsidiary of the Grantor) to comply with the provisions of the securities or “Blue
Sky” laws of any and all jurisdictions which the Lender shall designate and to make available to
its security holders, as soon as practicable, an earnings statement (which need not be audited)
which will satisfy the provisions of Section 11(a) of the Securities Act.

          (b) The Grantor recognizes that the Lender may be unable to effect a public sale of any or all
the Pledged Stock, by reason of certain prohibitions contained in the Securities

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Act and applicable state securities laws or otherwise, and may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for investment and not with a
view to the distribution or resale thereof. The Grantor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner. The Lender shall be under no obligation to
delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act, or under applicable
state securities laws, even if such Issuer would agree to do so.

          (c) The Grantor agrees to use its best efforts to do or cause to be done all such other acts
as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant
to this Section 6.7 valid and binding and in compliance with any and all other applicable
Requirements of Law. The Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Lender, that the Lender has no adequate
remedy at law in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.7 shall be specifically enforceable against the Grantor, and the
Grantor hereby waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.

     6.8 Deficiency. The Grantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay the Grantor Obligations and
the fees and disbursements of any attorneys employed by the Lender to collect such deficiency.

SECTION 7. THE LENDER

     7.1 Lender’s Appointment as Attorney-in-Fact, etc.

          (a) The Grantor hereby irrevocably constitutes and appoints the Lender and any officer or
agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Grantor and in the name of the
Grantor or in its own name, to take any and all appropriate action and to execute any and all
documents and instruments, in each case after the occurrence and during the continuance of an Event
of Default, which may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, the Grantor hereby gives the Lender the power and
right, on behalf of the Grantor, without notice to or assent by the Grantor, to do any or all of
the following:

               (i) in the name of the Grantor or its own name, or otherwise, take possession of and endorse
and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys
due under any Receivable or Contract or with respect to, any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or otherwise deemed appropriate
by the Lender for the purpose of collecting any and all such moneys due under any Receivable or
Contract or with respect to any other Collateral whenever payable;

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               (ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and
all agreements, instruments, documents and papers as the Lender may request to evidence the
Lender’s security interest in such Intellectual Property and the goodwill and general intangibles
of the Grantor relating thereto or represented thereby;

               (iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay
all or any part of the premiums therefor and the costs thereof

               (iv) execute, in connection with any sale provided for in Sections 6.6 or 6.7, any
endorsements, assignments or other instruments of conveyance or transfer with respect to the
Collateral; and

               (v) (1) direct any party liable for any payment under any of the Collateral to make payment of
any and all moneys due or to become due thereunder directly to the Lender or as the Lender shall
direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect of or arising out of any
Collateral; (3) sign and endorse any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions
or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral
or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any
suit, action or proceeding brought against the Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Lender may deem appropriate; (7) assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions, and in such manner, as
the Lender shall in its sole discretion determine; (8) vote any claim of the Grantor in any
bankruptcy proceeding with respect to any Indebtedness owed to Grantor by any other Covered Party
and (9) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Lender were the absolute owner
thereof for all purposes, and do, at the Lender’s option and the Grantor’s expense, at any time, or
from time to time, all acts and things which the Lender deems necessary to protect, preserve or
realize upon the Collateral and the Lender’s security interests therein and to effect the intent of
this Agreement, all as fully and effectively as the Grantor might do. The provisions of clauses (1)
through (4) and (9) shall not permit the Lender to take any action with respect to any Receivable,
to the extent that such action would contravene applicable Requirements of Law.

     Anything in this Section 7.1(a) to the contrary notwithstanding, the Lender agrees that it
will not exercise any rights under the power of attorney provided for in this Section 7.1(a) unless
an Event of Default shall have occurred and be continuing.

          (b) If the Grantor fails to perform or comply with any of its agreements contained herein, the
Lender, at its option, but without any obligation so to do, may perform or comply, or otherwise
cause performance or compliance, with such agreement.

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          (c) The expenses of the Lender incurred in connection with actions undertaken as provided in
this Section 7.1, together with interest thereon at a rate per annum equal to the highest rate per
annum at which interest would then be payable on any category of Prime Rate Loans under the Credit
Agreement during the continuance of an Event of Default, from the date of payment by the Lender to
the date reimbursed by the Grantor, shall be payable by the Grantor to the Lender on demand.

          (d) The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the security interests
created hereby are released.

     7.2 Duty of Lender. The Lender’s sole duty with respect to the custody, safekeeping
and physical preservation of the Collateral in its possession shall be to deal with it in the same
manner as the Lender deals with similar property for its own account. Neither the Lender nor any of
its officers, directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the Grantor or any other Person or
to take any other action whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Lender hereunder are solely to protect the Lender’s interests in the Collateral
and shall not impose any duty upon the Lender to exercise any such powers. The Lender shall be
accountable only for amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be responsible to the
Grantor for any act or failure to act hereunder, except for their own gross negligence or willful
misconduct.

     7.3 Execution of Financing Statements. Pursuant to applicable law, the Grantor
authorizes the Lender to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the signature of the Grantor in
such form and in such offices as the Lender determines appropriate to perfect the security
interests of the Lender under this Agreement. A photographic or other reproduction of this
Agreement shall be sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction. The Grantor authorizes the Lender to use
the collateral description “all assets” or “all personal property” in any such financing
statements. The Grantor hereby ratifies and authorizes the filing by the Lender of any financing
statement with respect to the Collateral made prior to the date hereof.

SECTION 8. MISCELLANEOUS

     8.1 Amendments in Writing. None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except in accordance with Section 8.1 of the
Credit Agreement.

     8.2 Notices. All notices, requests and demands to or upon the Lender or the Grantor
hereunder shall be effected in the manner provided for in Section 8.2 of the Credit Agreement;
provided that any such notice, request or demand to or upon the Grantor shall be addressed to the
Grantor at its notice address set forth on Schedule A.

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     8.3 No Waiver by Course of Conduct; Cumulative Remedies. The Lender shall not by any
act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of
the Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A waiver by the Lender of
any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Lender would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.

     8.4 Enforcement Expenses: Indemnification.

          (a) The Grantor agrees to pay or reimburse the Lender for all its costs and expenses incurred
in collecting against the Grantor under the guarantee contained in Section 2 or otherwise enforcing
or preserving any rights under this Agreement and the other Loan Documents to which the Grantor is
a party, including, without limitation, the reasonable fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to the Lender.

          (b) The Grantor agrees to pay, and to save the Lender harmless from, any and all liabilities
with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.

          (c) The Grantor agrees to pay, and to save the Lender harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent any Borrower would be
required to do so pursuant to Section 8.5 of the Credit Agreement.

          (d) The agreements in this Section 8.4 shall survive repayment of the Grantor Obligations, the
Borrower Obligations and all other amounts payable under the Credit Agreement and the other Loan
Documents.

     8.5 Successors and Assigns. This Agreement shall be binding upon the successors and
assigns of the Grantor and shall inure to the benefit of the Lender and its successors and assigns;
provided that the Grantor may not assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the Lender.

     8.6 Set-Off. The Grantor hereby grants to the Lender, a continuing lien, security
interest and right of setoff as security for all liabilities and obligations to the Lender, whether
now existing or hereafter arising, upon and against all deposits, credits, collateral and property,
now or hereafter in the possession, custody, safekeeping or control of the Lender, or any entity
controlled by, controlling, or under the control of, the Lender and its successors and assigns, or
in transit to any of them. The Grantor hereby irrevocably authorizes the Lender at any time and

-23-

 

from time to time when an Event of Default shall have occurred and be continuing, without
demand or notice to the Grantor or any other guarantor, any such notice being expressly waived by
the Grantor, to set-off and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent, matured or
unmatured, and regardless of the adequacy of any other Collateral securing any Loan, at any time
held or owing by the Lender to or for the credit or the account of the Grantor, or any part thereof
in such amounts as the Lender may elect, against and on account of the obligations and liabilities
of the Grantor to the Lender hereunder and claims of every nature and description of the Lender
against the Grantor, in any currency, whether arising hereunder, under the Credit Agreement, any
other Loan Document or otherwise, as the Lender may elect, whether or not the Lender has made any
demand for payment and although such obligations, liabilities and claims may be contingent or
unmatured. The rights of the Lender under this Section 8.6 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the Lender may have. ANY
AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES ANY LOAN, PRIOR TO EXERCISING ITS RIGHTS OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY GRANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED. The right of setoff set forth in this Section 8.6 shall not apply to any
account (a “Restricted Account”) maintained solely to comply with applicable Requirements of Law
where such application would violate any applicable Requirement of Law.

     8.7 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts (including by telecopy or e-mail image), and
all of said counterparts taken together shall be deemed to constitute one and the same instrument.

     8.8 Severability. Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.

     8.9 Section Headings. The Section headings used in this Agreement are for convenience
of reference only and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.

     8.10 Integration. This Agreement and the other Loan Documents represent the agreement
of the Grantor and the Lender with respect to the subject matter hereof and thereof, and there are
no promises, undertakings, representations or warranties by the Lender relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents.

     8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS.

-24-

 

     8.12 Submission To Jurisdiction; Waivers. The Grantor hereby irrevocably and
unconditionally:

          (a) submits for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the
Commonwealth of Massachusetts, the courts of the United States of America for the District of
Massachusetts, and appellate courts from any thereof;

          (b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

          (c) agrees that service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar form of mail), postage
prepaid, to the Grantor at its address referred to in Section 8.2 or at such other address of which
the Lender shall have been notified pursuant thereto;

          (d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

          (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.

     8.13 Acknowledgments. The Grantor hereby acknowledges that:

          (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;

          (b) the Lender has no fiduciary relationship with or duty to the Grantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the relationship between the
Grantor, on the one hand, and the Lender, on the other hand, in connection herewith or therewith is
solely that of guarantor and lender; and

          (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby between the Grantor and the Lender.

     8.14 WAIVER OF JURY TRIAL. THE GRANTOR AND, BY ITS ACCEPTANCE HEREOF, THE LENDER,
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE CREDIT
AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH
OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF

-25-

 

ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF
THE LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, THE
GRANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR. IN ADDITION TO, ACTUAL
DAMAGES. THE GRANTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE LENDER TO
ACCEPT THIS AGREEMENT AND MAKE THE LOANS.

[NEXT PAGE IS SIGNATURE PAGE]

-26-

 

     IN WITNESS WHEREOF, the undersigned has caused this Guarantee and Security Agreement to be
duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	KNOWFAT OF LANDMARK CENTER, INC.

 	 
	 	By:  	/s/ Eric Spitz
 	 
	 	 	Name:  	Eric Spitz 	 
	 	 	Title:  	President 	 

[Signature Page to Guarantee and Security Agreement]

 

 

Schedule A

to

Guarantee and Security Agreement

Notice Address

KnowFat of Landmark Center, Inc.

c/o KnowFat Franchise Company, Inc.

255 Washington Street, Suite 290

Newton, MA 02458

 

 

Schedule B

to

Guarantee and Security Agreement

Investment Property

None

 

 

Schedule C

to

Guarantee and Security Agreement

Filings and Other Actions Required to Perfect Security Interests

	1.	 	Filing of UCC Financing Statement in the form attached hereto with the Delaware Secretary of
State.

 

 

EXHIBIT A

	 	 	 
	DEBTOR:
	 	KnowFat of Landmark Center, Inc.
	 
	 	255 Washington Street
	 
	 	Suite 290
	 
	 	Newton, Massachusetts 02458
	 
	 	 
	SECURED PARTY:
	 	TD Banknorth, N.A.
	 
	 	370 Main Street
	 
	 	Worcester, Massachusetts 01608

The following terms shall have the following meanings:

     “Contracts”: any contract or agreement between the Debtor and any person, or an
invoice sent or to be sent by the Debtor, pursuant to or under which a Receivable shall arise or be
created, or which evidences a Receivable.

     “Copyrights”: (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof; and all applications in
connection therewith, including, without limitation, all registrations, recordings and applications
in the United States Copyright Office, and (ii) the right to obtain all renewals thereof.

     “Copyright Licenses”: any written agreement naming the Debtor as licensor or licensee
granting any right under any Copyright, including, without limitation, the grant of rights to
manufacture, distribute, exploit and sell materials derived from any Copyright.

     “Deposit Account”: as defined in the Uniform Commercial Code of any applicable
jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook
or like account maintained with a depositary institution.

     “Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses,
the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue
at law or in equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.

     “Intercompany Note”: any promissory note evidencing loans made by the Debtor to any
of its subsidiaries.

     “Investment Property”: the collective reference to (i) all “investment property” as
such term is defined in the Massachusetts UCC and (ii) whether or not constituting “investment
property” as so defined, all Pledged Notes and all Pledged Stock.

 

 

     “Massachusetts UCC”: the Uniform Commercial Code as from time to time in effect in
the Commonwealth of Massachusetts.

     “Patents”: (i) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof and all goodwill associated
therewith, (ii) all applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, and (iii) all rights to obtain any
reissues or extensions of the foregoing.

     “Patent License”: all agreements, whether written or oral, providing for the grant by
or to the Debtor of any right to manufacture, use or sell any invention covered in whole or in part
by a Patent including.

     “Pledged Notes”: all promissory notes, all Intercompany Notes at any time issued to
the Debtor and all other promissory notes issued to or held by the Debtor (other than promissory
notes issued in connection with extensions of trade credit by the Debtor in the ordinary course of
business).

     “Pledged Securities”: the collective reference to the Pledged Stock and the Pledged
Notes, together with any Proceeds thereof.

     “Pledged Stock”: the shares of capital stock, together with any other shares, stock
certificates, options, interests or rights of any nature whatsoever in respect of the capital stock
of any person that may be issued or granted to, or held by, the Debtor while the Guarantee and
Security Agreement dated on or about September 6, 2006 between Debtor and Security Party, is in
effect.

     “Proceeds”: all “proceeds” as such term is defined in the Massachusetts UCC and, in
any event, shall include, without limitation, all dividends or other income from the Investment
Property, collections thereon or distributions or payments with respect thereto.

     “Receivable”: any right to payment for goods sold or leased or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including, without limitation, any Account).

     “Trademarks”: (i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos and other source or
business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, and (ii) the right to obtain all renewals
thereof.

     “Trademark License”: any agreement, whether written or oral, providing for the grant
by or to the Debtor of any right to use any Trademark.

 

 

Schedule D

to

Guarantee and Security Agreement

Jurisdiction of Organization

Grantor is a Delaware corporation with its chief executive office at 255 Washington Street, Suite
290, Newton, Massachusetts 02458. Its organizational identification number is __________________.

 

 

Schedule E

to

Guarantee and Security Agreement

Inventory and Equipment Locations

Landmark Center, 2001 Brookline Avenue, Boston, Massachusetts.

 

 

Schedule F

to

Guarantee and Security Agreement

Intellectual Property

	1.	 	Trademarks-See Attached with respect to Trademarks, all of which Trademarks are licensed to
the Grantor pursuant to a License Agreement dated ________________________.
	 
	2.	 	Copyrights — NONE.
	 
	3.	 	Patents —NONE.

 

 

KnowFat Franchise Company, Inc.

Trademarks

	 	 	 	 	 	 	 	 	 
	Mark	 	Reg./Serial No.	 	Status	 	Owner of Record
	 
	 	 	 	 	 	 	 	 
	KNOWFAT! LIFESTYLE
GRILLE! (design)

	 	 	78/595,036	 	 	Application filed
3/25/05. Non-final
action was mailed
on 5/5/06. No final
determination as to
register the mark.
	 	KnowFat Franchise
Company, Inc.,
Brighton
	 
	 	 	 	 	 	 	 	 
	KNOWFAT! LIFESTYLE
GRILLE! (stylized)

	 	 	78/595,034	 	 	Application filed
3/25/05. Non-final
action was mailed
on 5/5/06. No final
determination as to
register the mark.
	 	KnowFat Franchise
Company, Inc.,
Brighton
	 
	 	 	 	 	 	 	 	 
	KNOWFAT! LIFESTYLE
GRILLE! (design)

	 	 	78/595,033	 	 	Application filed
3/25/05. Non-final
action was mailed
on 5/5/06. No final
determination as to
register the mark.
	 	KnowFat Franchise
Company, Inc.,
Brighton
	 
	 	 	 	 	 	 	 	 
	KNOWFAT (stylized)

	 	 	3,049,293	 	 	Registered 1/24/06
	 	KnowFat Franchise
Company, Inc.,
Newton
	 
	 	 	 	 	 	 	 	 
	PROLATTA

	 	 	2,971,449	 	 	Registered 7/19/05
	 	KnowFat Franchise
Company, Inc.,
Newton
(assignment from
Timothy Kurtz
recorded 3/18/05)
	 
	 	 	 	 	 	 	 	 
	LOFAT KNOWFAT

	 	 	2,952,347	 	 	Registered 5/17/05
	 	KnowFat Franchise
Company, Inc.,
Newton
(assignment from
Timothy Kurtz
recorded 3/18/05)
	 
	 	 	 	 	 	 	 	 
	PROCCINO

	 	 	78/835,432	 	 	Application Filed

3/17/06
	 	KnowFat Franchise
Company, Inc.,
Brighton

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