Document:

Exhibit
10.56

 

TERM
LOAN AGREEMENT

 

Dated as of December
17th, 2002

 

Between

 

S&W
OF LAS VEGAS, L.L.C.

 

as  Borrower,

 

THE
SMITH & WOLLENSKY RESTAURANT GROUP, INC.

 

and

 

DALLAS
S&W, L.P.

 

as Guarantors

 

and

MORGAN
STANLEY DEAN WITTER

COMMERCIAL
FINANCIAL SERVICES, INC.

 

as  Lender

 

 

BASIC LOAN TERMS

 

	
  Loan Amount:

  	
   

  	
  $1,900,000.00 (the “Advance”).  References in this Agreement to the “Loan”
  are deemed to be references to the Advance.

  
	
   

  	
   

  	
   

  
	
  Use of Proceeds:

  	
   

  	
  $1,350,000.00 of the proceeds of the Advance shall be
  available (and the Borrower agrees that it shall use such proceeds or cause
  such proceeds to be used) solely for lawful business purposes.  $550,000.00 of the proceeds of the Advance
  shall be available (and the Borrower agrees that it shall use such proceeds
  or cause such proceeds to be used) for the sole purpose of prepaying the
  first principal installment due under the First Dallas Deed of Trust.  No proceeds of the Loan will be used to
  purchase or carry any such margin stock or to extend credit to others for the
  purpose of purchasing or carrying any such margin stock.

  
	
   

  	
   

  	
   

  
	
  Application Fee:

  	
   

  	
  The Borrower has paid to the Lender an application
  fee in the amount of $5,000.00, which fee shall be non-refundable, but will
  be credited against the facility fee (described below) when due.

  
	
   

  	
   

  	
   

  
	
  Facility Fee:

  	
   

  	
  The Borrower has or will pay to the Lender, on or
  before the date hereof, a facility fee in the amount of $19,000.00.  The application fee of $5,000.00 paid by
  the Borrower shall be credited against such $19,000.00 facility fee when due.

  
	
   

  	
   

  	
   

  
	
  Unused Availability

  	
   

  	
   

  
	
  Fee:

  	
   

  	
  Not Applicable.

  
	
   

  	
   

  	
   

  
	
  Interest Rate:

  	
   

  	
  As provided in the Note.

  
	
   

  	
   

  	
   

  
	
  Late Charge; Default

  Rate of Interest:

  	
   

  	
  As provided in the Note.

  
	
   

  	
   

  	
   

  
	
  Optional Prepayments:

  	
   

  	
  As provided in the Note.

  
	
   

  	
   

  	
   

  
	
  Payments and

  	
   

  	
   

  
	
  Computations:

  	
   

  	
  The Borrower hereby irrevocably authorizes Morgan
  Stanley DW from time to time to pay to the Lender on behalf of the Borrower
  any amount due hereunder or under the Note by application of funds from any
  Free Credit Balance existing at such time or from redemption or other
  disposition of any MS BusinesScape Funds or under the Note in the 

  

 

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  Borrower’s MS BusinesScape Account; and the Borrower
  hereby authorizes Morgan Stanley DW from time to time to redeem or otherwise
  dispose of such MS BusinesScape Funds for the purpose of obtaining funds to
  make such payment.  The Borrower
  agrees to deposit or otherwise make available to the Borrower’s MS
  BusinesScape Account for the account of the Lender on the day when due, the
  amount necessary for the purpose of making payment of any amount due
  hereunder or under the Note.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Borrower shall make each payment under the Note
  in respect of interest on, principal of, or other amount related to the Loan,
  not later than 12:00 noon (New York City time) on the day when due in United
  States Dollars in same day funds, with payments being so received by the
  Lender after such time being deemed to have been made on the next succeeding
  Business Day.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All computations of
  interest under the Note shall be made by the Lender on the basis of a year of
  360 days, as the case may be, in each case for the actual number of days
  (including the first day but excluding the last day) occurring in the period
  for which such interest is payable. 
  Each determination by the Lender of an interest rate under the Note
  shall be conclusive and binding for all purposes, absent manifest error.  Whenever any payment hereunder or under
  the Note shall be stated to be due on a day other than a Business Day, such
  payment shall be made on the next succeeding Business Day, and such extension
  of time shall in such case be included in the computation of payment of
  interest.

  
	
   

  	
   

  	
   

  
	
  Notices, Etc.:

  	
   

  	
  All notices and other communications provided for
  hereunder shall be in writing (including fax communication and any other
  method of communication authorized by the Lender) and mailed, faxed, or
  otherwise sent or delivered, if to the Borrower or either of the Guarantors,
  at its address at c/o The Smith & Wollensky Restaurant Group, Inc., 1114
  First Avenue, New York, New York 10021, or fax number (212) 758-6028,
  Attention: Alan M. Mandel, CFO; if to the Lender, at its address at 825 Third
  Avenue, New York, New York 10022, or fax number (212) 310-6256, Attention:
  Director of Credit; or, as to the Borrower, either of the Guarantors or the
  Lender at such other address or fax number as shall be designated by such
  party in a written notice to the other party.  All such notices and communications shall, when mailed, faxed,
  or otherwise sent or delivered, be effective when deposited in the mails,
  faxed, or otherwise sent or delivered, respectively, except that notices and
  communications to the Lender pursuant to Article II shall not be effective until
  received by the Lender.  Delivery by
  fax of an executed counterpart of any amendment or waiver of any provision of
  this Agreement or of any schedule or exhibit hereto to be executed and
  delivered hereunder shall be effective as delivery of an original executed
  counterpart thereof.

  

 

 

2

 

 

	
   

  	
   

  	
   

  
	
  Purchase of Fee at

  	
   

  	
   

  
	
  Las Vegas Property

  	
   

  	
  If the Borrower, S&W Restaurant Group or any
  Affiliate acquires fee ownership of the Las Vegas Property during the term of
  this Agreement, the Lender shall, simultaneously with such acquisition,
  receive (in substitution of the Lender’s leasehold deed of trust) a fee deed
  of trust (the “Las Vegas Fee Deed of Trust”) encumbering the Las Vegas
  Property and securing, among other things, the Loan, which Las Vegas Fee Deed
  of Trust shall be in form and substance satisfactory to the Lender.  The Las Vegas Fee Deed of Trust shall have
  such priority with respect to the Lender’s other fee deed(s) of trust on the
  Las Vegas Property as the Lender shall determine; or, at the Lender’s option,
  the Lender may consolidate the Las Vegas Fee Deed of Trust with one or more
  of the Lender’s other fee deed(s) of trust. 
  In addition, upon the making of the Las Vegas Fee Deed of Trust, the
  Lender shall receive a reaffirmation from the Borrower and the Guarantors of
  their respective obligations under the Loan Documents, in form and substance
  satisfactory to the Lender.  To the
  extent the Lender determines that the acquisition of the fee interest in the
  Las Vegas Property has any bearing on the Lender’s security with respect to
  the Loan, the Lender shall be entitled to a new (or amended) title insurance
  policy, a new survey and such other documents or due diligence items with
  respect to the Loan as are parallel with those being delivered in connection
  with the balance advance to be made under the Other Loan Agreement.

  

 

The foregoing Basic Loan Terms are incorporated into and made a part of
this Term Loan Agreement.  All
capitalized terms used, but not defined in the foregoing Basic Loan Terms shall
have the meanings given to such terms in Schedule I annexed to this Agreement.

 

3

 

TERM LOAN AGREEMENT

 

TERM LOAN AGREEMENT, dated as of December 17th, 2002
between S&W OF LAS VEGAS, L.L.C., a Delaware limited liability company (the
“Borrower”), THE SMITH & WOLLENSKY RESTAURANT GROUP, INC., a
Delaware corporation (the “S&W Restaurant Group”), DALLAS S&W,
L.P., a Texas limited partnership (“S&W Dallas”; and together with
S&W Restaurant Group, the “Guarantors”), and MORGAN STANLEY DEAN
WITTER COMMERCIAL FINANCIAL SERVICES, INC., a Delaware corporation (the “Lender”).

 

PRELIMINARY STATEMENTS:

 

(1)                                  The
Borrower and the Guarantors have requested that the Lender make the Advance to
the Borrower.

(2)                                  The
Lender has agreed to make the Advance to the Borrower on the terms and
conditions hereinafter set forth.

 

NOW, THEREFORE,
based on the foregoing premises and in consideration of the mutual covenants
and agreements contained herein, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS, BASIC LOAN
AND ACCOUNTING TERMS

 

Section 1.01  Certain Defined Terms.  In addition to the terms defined elsewhere
in this Agreement, the terms used herein shall have the meanings given thereto
in Schedule I annexed hereto and incorporated by reference herein.

 

Section 1.02  Basic Loan Terms, Schedules and Exhibits.  The Basic Loan Terms and all exhibits and
schedules referred to herein are incorporated herein by reference as though set
forth herein in full.

 

Section 1.03  Accounting Terms.  All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Paragraph (a) of Schedule II (“GAAP”).

 

ARTICLE II

 

THE LOAN

 

Section 2.01  The Loan.  The Lender agrees, on the terms and conditions hereinafter set
forth, to make the Advance to the Borrower on the Effective Date hereof as described
in the Basic Loan Terms.  Amounts
borrowed under this Agreement and repaid or prepaid may not be reborrowed.

 

1

 

Section 2.02  Making the Advance.  The obligation of the Lender to make the
Advance is subject to fulfillment of the conditions set forth in Article III
hereof.  Upon fulfillment of the
conditions set forth in Article III, the Advance will be funded.

 

Section 2.03  Terms of Loan and Repayment.  The Loan shall bear interest and be repaid in
accordance with the terms and conditions set forth in the Note.

 

Section 2.04  Taxes.  The Borrower shall pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise from any payment made hereunder or from the execution, delivery or
registration or recording of, performing under, or otherwise with respect to,
this Agreement, the Note, the Deeds of Trust, or any other Loan Document.

 

Section 2.05  Evidence of Debt.  The Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Borrower to the Lender resulting from the Loan from time to time, including the
amounts of principal and interest payable and paid to the Lender from time to
time under the Note.  Entries made in
good faith by the Lender in such account or accounts shall be prima facie
evidence of the amount of principal and interest due and payable or to become
due and payable from the Borrower to the Lender under this Agreement, absent
manifest error; provided, however, that the failure of the Lender to make an
entry, or any finding that an entry is incorrect, in such account or accounts
shall not limit or otherwise affect the obligations of the Borrower under the
Note, this Agreement or any other Loan Document.

 

ARTICLE III

 

CONDITIONS OF LENDING

 

Section 3.01  Conditions Precedent to Advance.  The Lender shall make the Advance on and as
of the first date (the “Effective Date”) on which all of the following
conditions precedent have been satisfied:

 

(a)  Each of
the Borrower and the Guarantors shall have established the MS BusinesScape
Account.

 

(b)  The Lender
shall have received, and be satisfied with, the Lender’s BusinesScape Credit
Application for S&W Dallas and the Real Estate Transaction Screen with
respect to the Dallas Property.

 

(c)  The Lender
shall have received, and be satisfied with, a Phase I environmental site
assessment of the Las Vegas Property prepared by an environmental consultant
satisfactory to the Lender.

 

(d)  The
Borrower shall have paid the facility fee payable pursuant to the Basic Loan
Terms, as well as the other payment items set forth on the Closing Agenda.

 

(e)  The Lender
shall have received, and be satisfied with, the documents and other items
listed on the Closing Agenda.

 

(f)  The Lender
shall have received, and be satisfied with, (i) a consent from the

 

2

 

holder of the First Dallas Deed of Trust to the making and recording of
the Dallas Deed of Trust, (ii) evidence satisfactory to the Lender that S&W
Dallas is not in default under the First Dallas Deed of Trust or the note
secured thereby and (iii) a true and complete copy of the First Dallas Deed if
Trust and any amendments thereto.

 

(g)  The
following statements shall be true (and the acceptance by the Borrower of the
proceeds of the Advance shall constitute a representation and warranty by the
Borrower that on the date of the Advance such statements are true):

 

(i)  the representations and warranties of the
Borrower and the Guarantors contained in Section 4.01 hereof and in each other
Loan Document are correct on and as of the date of the Advance, before and
after giving effect to the Advance and to the application of the proceeds
therefrom, as though made on and as of such date, and

 

(ii)  no event has occurred and is continuing, or
would result from the Advance or from the application of the proceeds
therefrom, that constitutes a Default.

 

(h)  The Lender
shall have received such other approvals, opinions and documents as the Lender
may reasonably request.

 

Upon satisfaction of such conditions, the Borrower hereby authorizes
the Lender to insert the Effective Date (of this Agreement) on page 1 hereof,
whereupon the Advance shall be made available to the Borrower in accordance
with the terms and conditions hereof.

 

ARTICLE IV

 

REPRESENTATIONS AND
WARRANTIES

 

Section 4.01  Representations and Warranties of the
Borrower and the Guarantors.  Each
of the Borrower and the Guarantors represents and warrants as follows:

 

(a)  The
Borrower and the Guarantors (i) are each duly organized, validly existing and
in good standing under the laws of the state of its organization, (ii) are each
duly qualified and in good standing as a foreign limited liability company,
limited partnership or corporation (as applicable) in each other jurisdiction
(including Nevada, in the case of the Borrower) in which it owns or leases
property or in which the conduct of its business requires it to so qualify,
except where the failure to so qualify would not be reasonably likely to have a
Material Adverse Effect, and (iii) has all requisite organizational power and
authority (including, without limitation, all governmental licenses, agreements
and other approvals) to own and lease and operate its respective properties and
to carry on its respective business as now conducted and as proposed to be
conducted.

 

(b)  The
execution, delivery and performance by the Borrower and the Guarantors of the
Loan Documents to which each of them is a party are within their respective
organizational powers, have been duly authorized by all necessary limited
liability company, limited partnership or corporate action (as applicable), and
do not contravene (i) the Borrower’s or either Guarantor’s charter, by-laws,
partnership agreement, articles or organization or limited liability company
agreement (as applicable), (ii) any law or any contractual restriction binding
on or affecting the Borrower or the Guarantors, (iii) result in the breach of,
or constitute a default or require any payment to be made under, any loan
agreement, credit agreement, indenture,

 

3

 

 mortgage, deed of trust, bond,
note, lease or other instrument or agreement binding on or affecting the
Borrower, the Guarantors or any of their properties, or (iv) except for the
Liens created under the Loan Documents, result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of the
Borrower or the Guarantors.

 

(c)  No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or any other third party is
required for (i) the due execution, delivery and performance by the Borrower or
the Guarantors of the Loan Documents to which any of them is a party, or (ii)
the grant by the Borrower or S&W Dallas of the Liens granted by it pursuant
to the Collateral Documents to which it is a party.

 

(d)  The Loan
Documents to which the Borrower or the Guarantors are a party have been duly
executed and delivered by the Borrower and the Guarantors, and are the legal,
valid and binding obligations of the Borrower and the Guarantors enforceable
against the Borrower and the Guarantors in accordance with their respective
terms.

 

(e)  There is
no pending or threatened action or other proceeding affecting the Borrower or
the Guarantors before any court, governmental agency or arbitrator that (i)
could be reasonably likely to have a Material Adverse Effect, or (ii) purports
to affect the legality, validity or enforceability of this Agreement, the Note,
the Deeds of Trust or any other Loan Document to which the Borrower or the
Guarantors is a party, or the consummation of the transactions contemplated
hereby or thereby, and there has been no adverse change in the status, or
financial effect on the Borrower or either of the Guarantors from the date of
the financial statements, if any, delivered to the Lender.

 

(f)  The
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, as defined in Regulation U issued by the
Board of Governors of the Federal Reserve System, and no proceeds of the Loan
will be used to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock.

 

(g)  S&W
Restaurant Group owns all of the issued and outstanding membership interests in
the Borrower and partnership (general and limited) interests in S&W Dallas,
and is the sole manager of the Borrower and the general partner of S&W
Dallas.  Neither the Borrower nor
S&W Dallas has any Subsidiaries.

 

(h)  Each of
the properties comprising the Trust Property is in compliance with all
applicable laws, rules, regulations and orders including, without limitation,
those relating to use, occupancy, fire, safety and zoning including, without
limitation, those in respect of parking and set-back requirements.  Neither of the properties comprising the
Trust Property is the subject of any noted violation of law.

 

(i)  There have
been no exterior changes to the buildings or improvements located at the Las
Vegas Property (and no additions at the Las Vegas Property) since the date of
the survey certified to the Lender and insured by the Lender’s existing title
policy issued in connection with the Other Loan Agreement.

 

(j)  The
License Agreement and the Sublicense Agreements are in full force and effect
and there are no defaults thereunder, or events which with the giving of notice
and/or the passage of time, could result in a default thereunder.

 

4

 

ARTICLE V

 

COVENANTS OF THE BORROWER

 

Section 5.01  Affirmative Covenants.  So long as any portion of the Loan shall
remain unpaid, the Borrower (and, where specifically indicated, the Guarantors)
will:

 

(a)  Compliance
with Laws, Etc.  The Borrower and
S&W Dallas shall each comply with all applicable laws, rules, regulations
and orders, such compliance to include, without limitation, compliance with
ERISA.  Within sixty (60) days after the
date hereof, the Borrower and S&W Dallas shall obtain and deliver to the
Lender a letter from the appropriate governmental entity stating that the
Dallas Property and the improvements thereon, and their use as a restaurant,
are in compliance with all zoning laws and ordinances.  In addition, prior to its use of the Dallas
Property as a Smith & Wollensky Restaurant, S&W Dallas shall obtain and
deliver to the Lender a valid, permanent certificate of occupancy permitting
the use thereof.

 

(b)  Payment
of Taxes, Etc.  The Borrower and
S&W Dallas shall each pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property subject to the right to contest as set
forth in the Deeds of Trust and (ii) all lawful claims that, if unpaid, might
by law become a Lien upon its property.

 

(c)  Maintenance
of Insurance.  The Borrower and
S&W Dallas shall each maintain insurance as required under the Deeds of
Trust and the Security Agreements, and otherwise with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower
operates.  Each of the Borrower and the
Guarantors shall maintain insurance coverage which complies with the workers’
compensation and employees’ liability laws of all states in which the Borrower
and the Guarantors shall be required to maintain such insurance.

 

(d)  Preservation
of Corporate or Limited Liability Company Existence, Etc.  Preserve and maintain, the Borrower’s
limited liability company existence, S&W Dallas’ limited partnership
existence and S&W Restaurant Group’s corporate existence, as well as their
respective rights (charter and statutory) and franchises.

 

(e)  Visitation
Rights.  Each of the Borrower and
the Guarantors shall at any reasonable time and from time to time, upon reasonable
notice during normal business hours, permit the Lender or any agents or
representatives thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
the Guarantors and to discuss the affairs, finances and accounts of the
Borrower and the Guarantors with any of their officers or directors and with
their independent certified public accountants.

 

(f)  Keeping
of Books.  In the case of the
Borrower and the Guarantors, keep proper books of record and account, in which
full and correct entries shall be made of all financial transactions and the
assets and business of the Borrower and the Guarantors in accordance with GAAP.

 

(g)  Maintenance
of Properties, Etc.  Each of the
Borrower and S&W Dallas shall

 

5

 

maintain and preserve, all of its properties that are used or useful in
the conduct of its business (i) as required under the Deeds of Trust with
respect to the Trust Property, (ii) as required under the Security Agreements,
where applicable, and (iii) otherwise in good working order and condition,
ordinary wear and tear excepted.

 

(h)  Transactions
with Affiliates.  Each of the
Borrower and S&W Dallas shall conduct business otherwise permitted under
the Loan Documents with any of the Borrower’s and S&W Dallas’ Affiliates on
terms that are fair and reasonable and no less favorable to the Borrower or
S&W Dallas than it would obtain in a comparable arm’s-length transaction with
a Person not an Affiliate.

 

(i)  Reporting
Requirements. In the case of the Borrower and the Guarantors, furnish to
the Lender all financial statements, reports, documents and other information
at the times and in accordance with the requirements set forth in Paragraph (b)
of Schedule II.

 

(j)  Maintenance
of MS BusinesScape Account.  In the
case of the Borrower and the Guarantors, maintain its MS BusinesScape Account.

 

(k)  Further
Assurances.  In the case of the
Borrower and the Guarantors, promptly upon request by the Lender, do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register any and all such further acts, deeds, conveyances, pledge
agreements, mortgages, deeds of trust, trust deeds, assignments, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments as the
Lender may reasonably require from time to time in order to (i) carry out more
effectively the purposes of the Loan Documents, (ii) to the fullest extent
permitted by applicable law, subject the Borrower’s and S&W Dallas’
properties, assets, rights or interests to the Liens now or hereafter intended
to be covered by any of the Collateral Documents, (iii) perfect and maintain
the validity, effectiveness and priority of any of the Collateral Documents and
any of the Liens intended to be created thereunder and (iv) assure, convey,
grant, assign, transfer, preserve, protect and confirm more effectively unto
the Lender the rights granted or now or hereafter intended to be granted to the
Lender under any Loan Document or under any other instrument executed in
connection with any Loan Document to which the Borrower or either of the
Guarantors is or is to be a party.

 

(l)  Subordination
of Borrower Obligations.  At the
request of the Lender, all obligations of the Borrower to either of the
Guarantors will be subordinated to the obligations of the Borrower to the
Lender under the Loan Documents, which subordination shall be pursuant to
documentation in form and substance satisfactory to the Lender.

 

(m)  In the
case of the Borrower and the Guarantors, preserve, protect, renew and keep in
full force and effect its rights, licenses, permits, patents, trademarks, trade
names and franchises, including, without limitation, the rights granted under
the License Agreement and the Sublicense Agreements, and shall not amend,
restate or terminate such agreements without the Lender’s consent.

 

Section 5.02  Negative Covenants.  So long as any portion of the Loan shall
remain unpaid, neither the Borrower nor S&W Dallas will:

 

(a)  Liens,
Etc.  Create or suffer to exist, any
Lien on or with respect to any of its properties, whether now owned or
hereafter acquired, other than as set forth in Paragraph (c) of Schedule II.

 

6

 

(b)  Mergers,
Etc.  Merge or consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets to, any Person.

 

(c)  Debt.  Create, incur, assume or suffer to exist any
Debt other than as set forth in Paragraph (d) of Schedule II.

 

(d)  Change
in Nature of Business, Management or Ownership.  Make any material change in the nature of its business as carried
on at the date hereof, in the identity of the manager of the Borrower (under
its limited liability company agreement) or the general partner of S&W
Dallas (under its limited partnership agreement), or in the composition of the
current executive management of the Borrower or S&W Dallas or in its equity
ownership, or operate the restaurant at either of the properties comprising the
Trust Property under any name other than “Smith & Wollensky”.

 

(e)  Sales,
Etc., of Assets.  Sell, lease,
transfer or otherwise dispose of any assets, or grant any option or other right
to purchase, lease or otherwise acquire any assets other than (i) assets to be
sold in the ordinary course of business and (ii) assets to be sold or disposed
of in the ordinary course of business which are no longer necessary or required
in the conduct of its business. The forgoing exceptions (i) and (ii) are
subject to compliance with the applicable Collateral Documents.

 

(f)  Investments
in Other Persons.  Make or hold any
Investment in any Person.

 

(g)  Restricted
Payments.  Declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its membership or partnership (as applicable) interests now or hereafter
outstanding, return any capital to its members or partners (as applicable) [or
the equivalent Persons thereof] as such, make any distribution of assets,
membership interests, obligations or securities to its members or partners (as
applicable) [or the equivalent Persons thereof] as such, or issue or sell any
membership interests.

 

(h)  Lease
Obligations.  Create, incur, assume
or suffer to exist any obligations as lessee other than as set forth in
Paragraph (e) of Schedule II.

 

(i)  Fee
Ownership of Property.  Acquire, or
permit S&W Restaurant Group or any Affiliate to acquire, fee ownership of
the property leased under the Subject Lease (and the improvements and equipment
thereon) unless simultaneously with such acquisition, the Lender obtains a
first priority fee deed of trust encumbering such property, improvements and
equipment in form and substance satisfactory to the Lender.

 

Section 5.03  Financial
Covenants.  So long as any portion
of the Loan shall remain unpaid, the Borrower and S&W Dallas will comply
with the covenants set forth in Paragraph (f) of Schedule II.

 

7

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

Section 6.01  Events of Default.  If any of the following events (“Events
of Default”) shall occur and be continuing:

 

(a)  The Borrower
shall fail to pay any principal of or interest on the Loan when the same
becomes due and payable; or the Borrower shall fail to make any other payment
of fees or other amounts payable under this Agreement or the Note when the same
becomes due and payable; or

 

(b)  Any
representation or warranty made by the Borrower or either Guarantor (or by any
of their respective officers, partners or members) herein or in any other Loan
Document, or in connection with this Agreement or any other Loan Document, shall
prove to have been incorrect or misleading in any material respect when made or
as of the date of the Loan; or

 

(c)  (i) The
Borrower or either Guarantor (as applicable) shall fail to perform or observe
any term, covenant or agreement contained in Section 5.01(b), (c), (d), (e),
(h), (i), (j), (k), (l), or (m), 5.02, 5.03, 6.01(j) or 6.01(k); or (ii) the
Borrower or either Guarantor (as applicable) shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement on its part
to be performed or observed if such failure described in this subsection
(c)(ii) shall remain unremedied for 10 business days after the earlier of (x)
the time the Borrower or such Guarantor (as applicable) becomes aware or should
have reasonably become aware of such failure, or (y) notice from the Lender; or
(iii) S&W Restaurant Group shall at any time cease to own all of the
membership or partnership (as applicable) interests in the Borrower and in
S&W Dallas; or (iv) an “Event of Default” (as defined therein, where
applicable) or a default beyond applicable periods of notice and grace, if any,
shall occur under a Loan Document other than this Agreement; or

 

(d)  (i) The
Borrower or either Guarantor shall fail to pay any principal of or premium or
interest on any Debt (other than the Debt outstanding hereunder) of the
Borrower or either Guarantor (as the case may be), when the same becomes due
and payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such
Debt; or (ii) any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be declared to
be due and payable, or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or defeased,
or an offer to prepay, redeem, purchase or defease such Debt shall be required
to be made, in each case prior to the stated maturity thereof.  The provisions of clause (i) of this
subparagraph (d) shall apply to (x) any Debt of the Borrower or either
Guarantor to the Lender or any of its Affiliates in any amount, (y) the
$1,650,000.00 Debt in favor of the holder of the First Dallas Deed of Trust and
(z) any Debt to any other creditor for borrowed money in excess of $100,000
with respect to the Borrower and S&W Dallas, and $1,000,000 with respect to
S&W Restaurant Group, unless the Lender determines, in its reasonable
judgment, that the default to such other creditor is subject to a bona fide
dispute; or

 

8

 

(e)           Any
of the Borrower or either Guarantor shall voluntarily dissolve, liquidate or
terminate operations, or shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower or either Guarantor seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
(A) such proceeding shall remain undismissed or unstayed for a period of 10
days, or (B) any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or either
Guarantor shall take any action to authorize any of the actions set forth above
in this subsection (e); or

 

(f)            Any
judgment or order for the payment of money in excess of $100,000 shall be
rendered against either the Borrower or S&W Dallas, or in excess of
$200,000 shall be rendered against S&W Restaurant Group and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of ten (10) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or

 

(g)           The
Borrower, either Guarantor or any of the Borrower’s or S&W Dallas’ ERISA
Affiliates shall incur one or more of the following:  (i) the occurrence of any ERISA Event; (ii) the partial or
complete withdrawal of the Borrower, S&W Dallas or any of their ERISA
Affiliates from a Multiemployer Plan; or (iii) the reorganization or
termination of a Multiemployer Plan; or

 

(h)           Any
Lien granted pursuant to any Collateral Document shall for any reason cease to
be a valid and perfected first priority lien on and security interest in the
Collateral purported to be covered thereby; or

 

(i) (i) The Guaranty or either of the Environmental
Guaranties shall for any reason cease to be a valid and binding obligation or
enforceable against the Guarantors (or the Borrower, in the case of the
Environmental Guaranties), or (ii) either or both of the Guarantors shall
repudiate, revoke or deny any liability under the Guaranty or either of the
Environmental Guaranties (or the Borrower shall do the same with respect to the
Environmental Guaranties); or

 

(j)            A
default beyond any applicable notice and/or grace period shall have occurred
under the Sale and License Agreement (the “License Agreement”) dated
August 16, 1996 between St. James Associates and The New York Restaurant Group,
LLC, or the Sublicense Agreement dated August 23, 2002 between S&W
Restaurant Group and the Borrower or the Sublicense Agreement of even date
herewith between S&W Restaurant Group and S&W Dallas (collectively, the
“Sublicense Agreements”); or

 

(k)           A
Change in Control with respect to S&W Restaurant Group shall have occurred;

 

then, and in any such event, the Lender may, by notice to the Borrower
and the Guarantors,

 

9

 

declare the Loan, all interest thereon and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon the Loan, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower; provided, however,
that upon the occurrence of any event described in subsection (e) above, the
Loan, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower and the
Guarantors.

 

ARTICLE VII

 

MISCELLANEOUS

Section 7.01  Amendments, Etc.  No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower or either Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, the Borrower and the Guarantors, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.

 

Section 7.02  Notices, Etc.  All notices and other communications
provided for hereunder shall be in writing (including fax communication and any
other method of communication authorized by the Lender) and mailed, faxed, or
otherwise sent or delivered as described in the Basic Loan Terms.

 

Section 7.03  No Waiver; Remedies.  No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.  The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

 

Section 7.04  Costs and Expenses; Indemnification.

 

(a)  The
Borrower and the Guarantors jointly and severally agree to pay on demand all
fees, costs and expenses of the Lender in connection with the preparation,
negotiation, execution, delivery, administration, modification and amendment of
this Agreement, the Note, the Collateral Documents and the other Loan
Documents, including, without limitation, search, filing and recording fees and
taxes, costs of reappraisals required by the Lender and the reasonable fees and
expenses of counsel for the Lender with respect thereto, and with respect to
advising the Lender as to its rights and responsibilities under such
documents.  The Borrower and the
Guarantors further jointly and severally agree to pay on demand all fees, costs
and expenses of the Lender, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Note, the
Collateral Documents and the other Loan Documents, including, without
limitation, reasonable fees and expenses of counsel for the Lender in
connection with the enforcement of rights under this Section 7.04(a).  Each of the Borrower and the Guarantors
hereby authorizes the Lender and its Affiliates at any time and from time to
time, without notice to the Borrower or the Guarantors, and whether or not the 

 

10

 

Lender shall have made any demand or an Event of Default shall have
occurred, to charge any account of the Borrower or either of the Guarantors
maintained by the Lender or its Affiliates against such fees, costs and
expenses.  The rights of the Lender and
its Affiliates under this Section are in addition to other rights and remedies
(including, without limitation, rights of set-off) that the Lender and its
Affiliates may have.

 

(b)  The
Borrower and the Guarantors agree to indemnify and hold harmless the Lender and
each of its Affiliates and officers, directors, employees, agents and advisors
(each, an “Indemnified Party”) from and against any and all claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) this Agreement, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loan except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party’s gross negligence or willful misconduct.  In the case of an investigation, litigation
or other proceeding to which the indemnity in this Section 7.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors, equityholders or
creditors or an Indemnified Party or any other Person, whether or not any
Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated.  Each of the Borrower and the Guarantors also agrees not to assert
any claim against the Lender, any of its Affiliates, or any of their directors,
officers, employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or
otherwise relating to this Agreement, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loan.

 

(c)  Without
prejudice to the survival of any other agreement of the Borrower or the
Guarantors hereunder, the agreements and obligations of the Borrower and the
Guarantors contained in this Section 7.04 shall survive the payment in full of
principal, interest and all other amounts payable hereunder, under the Note and
the other Loan Documents.

 

Section 7.05  Right of Set-off.  Upon the occurrence and during the
continuance of any Event of Default, the Lender and its Affiliates are hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to sell, liquidate, transfer or otherwise apply any assets or
securities of the Borrower or either of the Guarantors held by the Lender or
any of its Affiliates and set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Lender or such Affiliates to or for the
credit or the account of the Borrower or either of the Guarantors against any
and all of the respective obligations of the Borrower or either Guarantor now
or hereafter existing under this Agreement, the Note, the Guaranty, the
Environmental Guaranties or any other Loan Document, whether or not the Lender
shall have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. 
The rights of the Lender and its Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that the Lender and its Affiliates may have.

 

11

 

Section 7.06  Binding Effect; Successors and Assigns.  This Agreement shall become effective on the
Effective Date and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Guarantors, the Lender and their respective successors and
assigns, except that neither the Borrower nor the Guarantors shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender.

 

Section 7.07  Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

 

Section 7.08  Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Agreement by fax shall be effective as delivery of an
original executed counterpart of this Agreement.

 

Section 7.09  Interest Rate Limitation.  Anything herein to the contrary
notwithstanding, if at any time the applicable interest rate, together with all
fees and charges that are treated as interest under applicable law
(collectively, the “Charges”), as provided for herein or in any other
Loan Document, or otherwise contracted for, charged, received, taken or reserved
by the Lender, shall exceed the maximum lawful rate (the “Maximum Rate”)
that may be contracted for, charged, taken, received or reserved by the Lender
in accordance with applicable law, the rate of interest payable on the Loan,
together with all Charges payable to the Lender, shall be limited to the
Maximum Rate.  Neither the Borrower nor
the Guarantors shall ever be liable for unearned interest thereon or shall ever
be required to pay interest thereon in excess of the maximum amount that may be
lawfully charged under applicable law from time to time in effect, and the
provisions of this Section 7.09 shall control over all other provisions of the
Loan Documents that may be in conflict. 
If (a) the maturity of the obligations of the Borrower under Note or
this Agreement is accelerated for any reason, (b) any of such obligations are
prepaid and as a result any amounts held to constitute interest are determined
to be in excess of the legal maximum or (c) the Lender or any other holder of
any or all of the obligations of the Borrower under this Agreement shall
otherwise collect moneys that are determined to constitute interest that would
otherwise increase the interest on any or all of such obligations to an amount
in excess of that permitted to be charged by applicable law then in effect,
then all such sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then
outstanding principal of such obligations or, at the Lender’s or such holder’s
option, promptly returned to the Borrower or the other payor thereof upon such
determination.

 

Section 7.10  Jurisdiction, Etc.

 

(a)  Each of
the parties hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or any other Loan Document, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New York State court
or, to the extent permitted by law, in such federal court.  Each of the parties hereto consents to the
service of copies of any and all process which may be served in any such action
or proceeding by the

 

12

 

mailing of copies of such process to such party at its address
specified in Section 7.02.  Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan Document shall affect
any right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document in the courts of any
other jurisdiction.

 

(b)  Each of
the parties hereto irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any New York
State or federal court.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

Section 7.11  Assignments and Participations.  The Lender may assign to one or more Persons
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of the Loan owing to it), without notice
to, or the consent of the Borrower or the Guarantors.  The Lender may sell participations to one or more Persons  (other than the Borrower or any of its
Affiliates) in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of the Loan owing to
it).  The Lender may, in connection with
any assignment or participation or proposed assignment or participation
pursuant to this Section, disclose to the assignee or participant or proposed
assignee or participant, any information relating to the Borrower and the
Guarantors furnished to the Lender by or on behalf of the Borrower or either
Guarantor.  In addition, the terms of
the Note relating to participations of the Note shall be applicable to
participations of the Lender’s rights and obligations under this
Agreement.  The Lender represents that
as of the date hereof, it has no present intention of assigning its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Loan owing to it); provided, however, the foregoing shall in no
way impair or otherwise alter the Lender’s rights under this Section.

 

Section 7.12  WAIVER OF JURY TRIAL.  EACH OF THE BORROWER, THE GUARANTORS AND THE
LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE
LOAN OR THE ACTIONS OF THE LENDER OR ANY OF ITS AFFILIATES IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.

 

Section 7.13  Severability of Provisions.  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 of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

Section 7.14  Headings.  Article, section and paragraph headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part hereof for any other purpose.

 

Section 7.15  Conflicts.  Conflicts between this Agreement and any of the Collateral

 

13

 

Documents shall be resolved in favor of the latter.

 

Section 7.16  Lender Action.  The Lender shall have the right, but not the
obligation, to take any action at the Borrower’s expense if the Lender
believes, in its reasonable discretion after consultation with Borrower or
either Guarantor, that such action is necessary to avoid the occurrence of a
Material Adverse Effect with respect to the Borrower or either Guarantor,
including, without limitation, curing any defaults under the License Agreement
or the Sublicense Agreements.

 

Section 7.17  Other Loan Agreement.  The parties agree that the Loan shall be a
permitted “Debt”, and the Collateral Documents (as they relate to the Borrower
and the Las Vegas Property) shall be permitted “Liens” as those terms are used
in that certain Term Loan Agreement dated as of August 23, 2002 among the
Borrower, S&W Restaurant Group and the Lender (the “Other Loan Agreement”).

 

Section 7.18  Secured Obligation under Security
Agreement.  The parties agree that
the obligations of the Borrower under this Agreement shall be one of the
“Secured Obligations” under the Las Vegas Security Agreement, and that (a) the
term “Deed of Trust” as used therein shall mean the Deed of Trust (as defined
in the Other Loan Agreement) and the Las Vegas Deed of Trust (as defined
herein), (b) the term “Assignment of Leases” as used therein shall mean the
Assignment of Leases (as defined in the Other Loan Agreement) and the Las Vegas
Assignment of Leases (as defined herein), (c) the term “Credit Agreement” as
used therein shall mean the Other Loan Agreement and this Agreement and (d) all
other capitalized terms used, but not defined in the Las Vegas Security
Agreement (including, without limitation, “Loan Documents” and “Note”) shall
have the meanings given to such terms in the Other Loan Agreement and in this
Agreement.

 

[Balance of Page
Intentionally Left Blank]

 

14

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective representatives thereunto duly authorized, as of the date first
above written.

 

	
   

  	
  S&W OF LAS VEGAS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Alan M. Mandel

  	
   

  
	
   

  	
   

  	
  Name: Alan M. Mandel

  
	
   

  	
   

  	
  Title: Chief Financial Officer & Secretary

  
	
   

  	
   

  
	
   

  	
  THE SMITH & WOLLENSKY

  RESTAURANT GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Alan M. Mandel

  	
   

  
	
   

  	
   

  	
  Name: Alan M. Mandel

  
	
   

  	
   

  	
  Title: Chief Financial Officer & Secretary

  
	
   

  	
   

  
	
   

  	
  DALLAS S&W, L.P.

  
	
   

  	
  By:  S&W
  of Dallas LLC, general partner

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Alan M. Mandel

  	
   

  
	
   

  	
   

  	
  Name: Alan M. Mandel

  
	
   

  	
   

  	
  Title: Chief Financial Officer & Secretary

  
	
   

  	
   

  
	
   

  	
  MORGAN STANLEY DEAN WITTER

  COMMERCIAL FINANCIAL SERVICES,

  INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Roman Mordkovich

  	
   

  
	
   

  	
   

  	
  Name: Roman Mordkovich

  
	
   

  	
   

  	
  Title: Vice President

  
							

 

15

 

STATE OF NEW YORK                     )

ss.:

COUNTY OF NEW YORK                  )

 

On the 17th day of December in the year 2002 before
me, the undersigned, a Notary Public in and for said State, personally appeared
Alan M. Mandel, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.

 

	
   

  	
  /s/ Angela L. Strobe

  	
   

  
	
   

  	
  Notary Public

  

 

 

STATE OF NEW YORK                     )

ss.:                                          No.
01ST6080923

COUNTY OF NEW YORK                  )                                               Expires
September 23, 2006

 

On the 17th day of December in the year 2002 before
me, the undersigned, a Notary Public in and for said State, personally appeared
Roman Mordkovich, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.

 

	
   

  	
  /s/ Angela L. Strobe

  	
   

  
	
   

  	
  Notary Public

  

 

 

16

 

SCHEDULE I

TO TERM LOAN AGREEMENT
WITH

S&W OF LAS VEGAS,
L.L.C., DALLAS S&W, L.P. AND

THE SMITH & WOLLENSKY
RESTAURANT GROUP, INC.

 

CERTAIN DEFINED TERMS

 

 As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

 

“Affiliate”
means, as to any Person, any other Person that, directly or indirectly,
controls, is controlled by or is under common control with such Person or is a
director or officer of such Person.  For
purposes of this definition, the term “control” (including the terms
“controlling”, “controlled by” and “under common control with”) of a Person
means the possession, direct or indirect, of the power to vote 5% or more of
the voting stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
stock, by contract or otherwise.

 

“Business Day”
means a day of the year on which banks are not required or authorized by law to
close in New York City.

 

“Change in Control” means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof)
of shares representing more than 33-1/3% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of S&W Restaurant
Group; or (b) occupation of a majority of the seats (other than vacant seats)
on the board of directors of S&W Restaurant Group by Persons who were
neither (i) nominated by the board of directors of S&W Restaurant Group nor
(ii) appointed by directors so nominated.

 

“Charges”
has the meaning specified in Section 7.09.

 

“Closing Agenda”
means the Closing Agenda prepared by the Lender and delivered to the Borrower
setting forth the documents and other items to be executed and/or delivered,
and payments to be made, by the parties in connection with this Agreement.

 

“Collateral”
means all “Collateral” referred to in the Collateral Documents and all other
property that is or is intended to be subject to any Lien in favor of the
Lender.

 

“Collateral
Documents” means the Security Agreements, the Deeds of Trust and the Las
Vegas Assignment of Leases.

 

“Dallas Deed of
Trust” means a Deed of Trust of even date herewith made by S&W Dallas
to the trustee thereunder for the benefit of the Lender and encumbering the
Dallas Property, as the same may be amended, replaced or restated from time to
time.

 

“Dallas
Environmental Guaranty” means the Joint and Several Hazardous Material
Guaranty and Indemnification Agreement of even date herewith made by the
Borrower and the 

 

1

 

Guarantors in favor of the Lender in respect of the Dallas Property, as
the same may be amended, replaced or restated from time to time..

 

“Dallas
Property” has the meaning given to the term “Trust Property” in the Dallas
Deed of Trust.

 

“Dallas
Security Agreement” means the Security Agreement of even date herewith made
by S&W Dallas to the Lender, as the same may be amended, replaced or
restated from time to time.

 

“Debt” of
any Person means, without duplication, (a) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(other than current trade payables incurred in the ordinary course of
business), (b) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (c) all capital lease obligations of
such Person, (d) all obligations of such Person, contingent or otherwise, in
respect of acceptances, letters of credits or similar extensions of credit, (e)
all liabilities secured by any Lien on any property owned by such Person, even
though such Person has not assumed or otherwise become liable for the payment
thereof, (f) all obligations of such Person in respect of interest rate or
currency protection agreements, and (g) all Debt of others guaranteed directly
or indirectly in any manner by such Person.

 

“Deeds of Trust”
means the Las Vegas Deed of Trust and the Dallas Deed of Trust.

 

“Default”
means any Event of Default or any event that would constitute an Event of
Default but for the requirement that notice be given or time elapse or both.

 

“EBIT” means net income (net loss), plus (a)
interest expense and (b) income tax expense.

 

“EBITDA” means net income (net loss), plus (a)
interest expense, (b) income tax expense, (c) depreciation expense and (d)
amortization expense.

 

“Effective Date”
has the meaning specified in Section 3.01.

 

“Environmental
Guaranties” means the Dallas Environmental Guaranty and the Las Vegas
Environmental Guaranty.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.

 

“ERISA
Affiliate” means any Person that for purposes of Title IV of ERISA is a
member of the Borrower’s or S&W Dallas’ (as applicable) controlled group,
or under common control with the Borrower or S&W Dallas (as applicable),
within the meaning of Section 414 of the Internal Revenue Code.

 

“ERISA Event”
means (a) (i) the occurrence of a reportable event, within the meaning of
Section 4043 of ERISA, with respect to any Plan unless the 30-day notice
requirement with respect to such event has been waived by the PBGC, or (ii) the
requirements of subsection (1) of Section 4043(b) of ERISA (without regard to
subsection (2) of such Section) are met with respect to a contributing sponsor,
as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described
in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Plan within the following 30
days; (b) the 

 

2

 

application for a minimum funding waiver with respect to a Plan; (c)
the provision by the administrator of any Plan of a notice of intent to
terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such
notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of the Borrower or
S&W Dallas or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by the Borrower or S&W Dallas or any
ERISA Affiliate from a Multiple Employer Plan during a plan year for which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the
conditions for the imposition of a lien under Section 302(f) of ERISA shall
have been met with respect to any Plan; (g) the adoption of an amendment to a
Plan requiring the provision of security to such Plan pursuant to Section 307
of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, a Plan.

 

“Events of
Default” has the meaning specified in Section 6.01.

 

“First Dallas
Deed of Trust” has the meaning specified in Schedule 5.02(a).

 

“Free Credit
Balance” means the amount of any cash that may be withdrawn from the
Borrower’s MS BusinesScape Account at any time without creating a negative
balance therein or giving rise to interest charges thereon.

 

“Funded Debt”
means all Debt, excluding (a) commitments and contingent obligations in respect
of undrawn letters of credit and guaranties (except, to the extent constituting
guaranties in respect of Funded Debt of a Person other than the Borrower,
either Guarantor or any Subsidiary), (b) hedging obligations and (c) accrued
liabilities incurred in the ordinary course of business.

 

“GAAP” has
the meaning specified in Section 1.03.

 

“Guaranty”
means the Guaranty of Payment of even date herewith made by the Guarantors in
favor of the Lender in respect of the Loan, as the same may be amended,
replaced or restated from time to time.

 

“Internal
Revenue Code” means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.

 

“Investment”
in any Person means any loan or advance to such Person, any purchase or other
acquisition of any capital stock or Debt or the assets comprising a division or
business unit for a substantial part or all of the business of such Person, any
capital contribution to such Person or any other direct or indirect investment
in such Person, including, without limitation, any acquisition by way of a
merger or consolidation.

 

“Las Vegas
Assignment of Leases” means the Absolute Assignment of Rents and Leases of
even date herewith made by the Borrower in favor of the Lender, as the same may
be amended, replaced or restated from time to time.

 

“Las Vegas Deed
of Trust” means a Leasehold Deed of Trust of even date herewith made by the
Borrower to the trustee thereunder for the benefit of the Lender and
encumbering the Las Vegas Property, as the same may be amended, replaced or
restated from time to time, and shall include any new (or replacement) fee deed
of trust entered into in the event the Borrower, S&W 

 

3

 

Restaurant Group or an Affiliate acquires the fee interest in the Las
Vegas Property.

 

“Las Vegas
Environmental Guaranty” means the Joint and Several Hazardous Material
Guaranty and Indemnification Agreement of even date herewith made by the
Borrower and the Guarantors in favor of the Lender in respect of the Las Vegas
Property, as the same may be amended, replaced or restated from time to time.

 

“Las Vegas
Property” has the meaning given to the term “Trust Property” in the Las Vegas
Deed of Trust.

 

“Las Vegas
Security Agreement” means the Security Agreement dated August 23, 2002 made
by the Borrower to the Lender, as the same may be amended, replaced or restated
from time to time.

 

“Lien”
means any lien, security interest or other charge or encumbrance of any kind,
or any other type of preferential arrangement having the effect of a lien or
security interest, including, without limitation, the lien or retained security
title of a conditional vendor and any easement, right of way or other
encumbrance on title to real property.

 

“Loan Documents”
means this Agreement, the Note, the Collateral Documents, the Guaranty, the
Environmental Guaranties and any other documents executed and/or delivered by
the Borrower or either Guarantor in connection therewith, in each case as
amended, supplemented, replaced, restated or otherwise modified from time to
time.

 

“Material
Adverse Change” means any material adverse change in the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower or either Guarantor, or the Borrower, or either
Guarantor and its Subsidiaries taken as a whole.

 

“Material
Adverse Effect” means a material adverse effect on (a) the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower or either Guarantor, or the Borrower or either
Guarantor and its Subsidiaries taken as a whole, (b) the rights and remedies of
the Lender under this Agreement or (c) the ability of the Borrower or either
Guarantor to perform its obligations under any Loan Document to which it is a
party.

 

“Maximum Rate”
has the meaning specified in Section 7.09.

 

“Morgan Stanley
DW” means Morgan Stanley DW Inc., a Delaware corporation, or any successor
thereof.

 

“MS
BusinesScape Account” means, in respect of the Borrower, the MS
BusinesScape Account for Business maintained by the Borrower at Morgan Stanley
DW, MS BusinesScape Account No. 476-027767-427, in respect of S&W Dallas,
the MS BusinesScape Account for Business maintained by S&W Dallas at Morgan
Stanley DW, MS BusinesScape Account No.:
                             ,
and in respect of the S&W Restaurant Group, the MS BusinesScape Account for
Business maintained by S&W Restaurant Group at Morgan Stanley DW, MS
BusinesScape Account No. 476-027766-427.

 

“MS
BusinesScape Account Agreement” means the respective agreements entered
into between the Borrower and Morgan Stanley DW or the Guarantors and Morgan
Stanley DW governing the applicable MS BusinesScape Account.

 

4

 

“MS
BusinesScape Funds” means any of the money market fund shares credited to
the Borrower’s MS BusinesScape Account.

 

“Multiemployer
Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of
ERISA, to which the Borrower, S&W Dallas or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.

 

“Multiple
Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower,
either Guarantor or any ERISA Affiliate and at least one Person other than the
Borrower, the Guarantors and the ERISA Affiliates or (b) was so maintained and
in respect of which the Borrower, either Guarantor or any ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.

 

“Note”
means the Promissory Note of even date herewith in the original principal
amount of $1,900,000.00 made by the Borrower in favor of the Lender.

 

“PBGC”
means the Pension Benefit Guaranty Corporation (or any successor).

 

“Person”
means an individual, partnership, corporation (including a business trust),
joint stock company, trust, unincorporated association, joint venture, limited
liability company or other entity, or a government or any political subdivision
or agency thereof.

 

“Plan”
means a Single Employer Plan or a Multiple Employer Plan.

 

“Security
Agreements” means the Dallas Security Agreement and the Las Vegas Security
Agreement.

 

“Single
Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower,
either Guarantor or any ERISA Affiliate and no Person other than the Borrower,
the Guarantors and the ERISA Affiliates or (b) was so maintained and in respect
of which the Borrower, either Guarantor or any ERISA Affiliate could have
liability under Section 4069 of ERISA in the event such plan has been or were
to be terminated.

 

“Subordinated Debt” of any Person means all
Debt completely subordinated to such Person’s obligations to the Lender
pursuant to a subordination agreement in form and substance satisfactory to the
Lender.

 

“Subsidiary”
of any Person means any corporation, partnership, joint venture, limited
liability company, trust or estate of which (or in which) more than 50% of (a)
the issued and outstanding voting stock of such corporation, (b) the interest
in the capital or profits of such limited liability company, partnership or
joint venture or (c) the beneficial interest in such trust or estate is at the
time directly or indirectly owned or controlled by such Person, by such Person
and one or more of its other Subsidiaries or by one or more of such Person’s
other Subsidiaries.

 

“Trust Property” means the Las Vegas Property
and the Dallas Property.

 

“Unsubordinated Funded Debt” means Funded Debt
that is not Subordinated Debt.

 

5

 

SCHEDULE II

TO TERM LOAN AGREEMENT
WITH

S&W OF LAS VEGAS,
L.L.C., DALLAS S&W, L.P.  AND

THE SMITH & WOLLENSKY
RESTAURANT GROUP, INC.

 

FINANCIAL
REPRESENTATIONS, COVENANTS AND REPORTING

 

(a)  Representation.  The Borrower represents and warrants that
the management prepared unaudited statements of operations for the periods
ended December, 1999, December 2000, December 2001, June 30, 2002 and September
30, 2002, copies of which have been furnished to the Lender, fairly present the
financial condition of the Borrower as at such dates, all in accordance with
GAAP consistently applied.  The
Guarantor represents and warrants that (i) the 10-K statement for the fiscal
year ended 2001 and (ii) the 10-Q statement for the fiscal quarter ended
September 30, 2002 fairly present the financial condition of the Guarantor as
at such dates, all in accordance with GAAP consistently applied.  The Guarantor represents and warrants that
the management prepared break-down of results for each individual restaurant
operated by the Guarantor and each of its Subsidiaries for the periods ended
January 3, 2000, January 1, 2001 and December 31, 2001, copies of which have
been furnished to the Lender, are true and complete in all material respects as
at such dates.  Since the date of such
statements, there has been no Material Adverse Change.

 

(b)  Reporting Requirements.  So long as any portion of the Loan shall
remain unpaid, the Borrower and the Guarantors (as applicable) will furnish to
the Lender:

 

(i)  For
S&W Restaurant Group:  as soon as
available and in any event within 45 days after the end of each quarter of each
fiscal year of S&W Restaurant Group, consolidated management prepared
(10-Q) financial statements of S&W Restaurant Group and its Subsidiaries as
of the end of such quarter, duly certified by the chief financial officer the
S&W Restaurant Group as having been prepared in accordance with GAAP,
together with a certificate of the chief financial officer of S&W
Restaurant Group setting forth in reasonable detail the calculations necessary
to demonstrate compliance with the applicable covenants set forth in Paragraph
(f) of this Schedule II;

 

(ii)  For the
Borrower and S&W Dallas:  as soon as
available and in any event within 45 days after the end of each quarter of each
fiscal year of the Borrower and S&W Dallas, management prepared financial
statements of the Borrower and S&W Dallas as of the end of such quarter,
duly certified by the managing member of the Borrower and the general partner of
S&W Dallas (as applicable) as having been prepared in accordance with GAAP,
together with a certificate of the managing member of the Borrower and the
general partner of S&W Dallas (as applicable) setting forth in reasonable
detail the calculations necessary to demonstrate compliance with the applicable
covenants set forth Paragraph (f) of this Schedule II;

 

(iii)  For
S&W Restaurant Group:  as soon as
available and in any event within 90 days after the end of each fiscal year of
S&W Restaurant Group, a copy of the annual audited financial statements for
such year for S&W Restaurant Group and its Subsidiaries (including the
Borrower and S&W Dallas), containing a consolidated balance sheet of

 

1

 

S&W Restaurant Group and its Subsidiaries as of
the end of such fiscal year and a consolidated statement of income and cash
flows of S&W Restaurant Group and its Subsidiaries for such fiscal year, in
each case accompanied by an opinion acceptable to the Lender and an accountant
letter, if issued, by independent public accountants acceptable to the Lender,
together with a certificate of the chief certified financial officer of S&W
Restaurant Group setting forth in reasonable detail the calculations necessary
to demonstrate compliance with the applicable covenants set forth Paragraph (f)
of this Schedule II;

 

(iv)  For the
Borrower and S&W Dallas:  as soon as
available and in any event within 90 days after the end of each fiscal year of
the Borrower and S&W Dallas, a copy of the annual reviewed financial
statements for such year for the Borrower and S&W Dallas, containing a
balance sheet of the Borrower and S&W Dallas as of the end of such fiscal
year and a statement of income and cash flows of the Borrower and S&W Dallas
for such fiscal year, in each case accompanied by an opinion acceptable to the
Lender and an accountant letter, if issued, by independent certified public
accountants acceptable to the Lender, together with a certificate of the
managing member of the Borrower and the general partner of S&W Dallas (as
applicable) setting forth in reasonable detail the calculations necessary to
demonstrate compliance with the applicable covenants set forth Paragraph (f) of
this Schedule II;

 

(v)  For the
Borrower and S&W Dallas:  not later
than 90 days after the end of each fiscal year of the Borrower and S&W
Dallas, a detailed rent roll for their respective Trust Properties in form
satisfactory to the Lender;

 

(vi)  as soon
as possible and in any event within five days after the occurrence of each
Default continuing on the date of such statement, a statement of the managing
member of the Borrower or the general partner of S&W Dallas or the chief
financial officer of S&W Restaurant Group (as applicable) setting forth
details of such Default and the action that the defaulting party has taken and
proposes to take with respect thereto;

 

(vii)  together
with the filing of each 10-K and 10-Q statement with the Securities and
Exchange Commission, a management prepared break-down of results for each
individual restaurant operated by S&W Restaurant Group or any of its
Subsidiaries duly certified by the chief financial officer of S&W
Restaurant Group as being true and complete; and

 

(viii)  such
other information respecting the Borrower or the Guarantors or any of S&W
Restaurant Group’s Subsidiaries as the Lender may from time to time reasonably
request.

 

(c)  Liens, Etc.  So long as any portion of the Loan shall remain unpaid, neither
the Borrower nor S&W Dallas will create or suffer to exist, any Lien on or
with respect to any of its properties, whether now owned or hereafter acquired,
or assign any right to receive income, other than: (i) Liens created or
expressly permitted under the Loan Documents, (ii) purchase money Liens upon or
in any real property or equipment acquired (or leased) or held by the Borrower
or S&W Dallas in the ordinary course of business to secure the purchase
price of such property or equipment or to secure Debt incurred solely for the
purpose of financing the acquisition (or lease) of such property or equipment,
or Liens existing on such property or 

 

2

 

equipment at the time of its acquisition or extensions, renewals or
replacements of any of the foregoing for the same or a lesser amount, provided,
however, that no such Lien shall extend to or cover any properties of
any character other than the real property or equipment being acquired, and no
such extension, renewal or replacement shall extend to or cover any properties
not theretofore subject to the Lien being extended, renewed or replaced,
provided further that the aggregate principal amount of the indebtedness
secured by the Liens referred to in this clause (ii) shall not exceed the
amount specified therefor in Paragraph (d) of this Schedule II at any time
outstanding, (iii) the Liens existing on the Effective Date and described on
Schedule 5.02(a) hereto and (iv) Liens held by the Lender.

 

(d)  Debt.  So long as any portion of the Loan shall remain unpaid, neither
the Borrower nor S&W Dallas will create, incur, assume or suffer to exist,
any Debt other than: (i) Debt existing on the Effective Date and described on
Schedule 5.02(c) hereto, (ii) Debt secured by Liens permitted by Paragraph
(c)(ii) of this Schedule II aggregating not more than $100,000.00 at any one
time outstanding, (iii) Debt under the Loan Documents, (iv) unsecured Debt
incurred in the ordinary course of business aggregating not more than
$200,000.00 at any one time outstanding and (v) Debt owing to the Lender.

 

(e)  Lease Obligations.  So long as any portion of the Loan shall
remain unpaid, neither the Borrower nor S&W Dallas will create, incur,
assume or suffer to exist, any obligations as lessee (i) for the rental or hire
of real or personal property in connection with any sale and leaseback
transaction, or (ii) except for the Subject Lease (as defined in the Las Vegas
Deed of Trust) and except for equipment leases made in the ordinary course of
business, for the rental or hire of other real or personal property of any kind
under leases or agreements to lease having an original term of one year or
more.

 

(f)  Financial Covenants. So long as any
portion of the Loan shall remain unpaid, the Borrower and the Guarantors (as
indicated below) shall comply with the following:

 

(i)  Debt
Service Coverage Ratio.  The
Borrower shall not permit the ratio of EBITDA excluding rent received from
tenants, minus maintenance capital expenditures, minus real estate taxes, to
interest expense plus current portion of long-term debt, to be less than 1.50
to 1.00 (measured on a rolling four quarter basis) as of the close of any
fiscal quarter; provided, however, the amount of any “balloon” payments due at
the maturity of the Note and due at the maturity of that certain Promissory
Note dated August 23, 2002 in the original principal amount of $4,000,000.00
made by the Borrower to the Lender shall not be included for the purposes of
the calculation of Debt Service Coverage Ratio.

 

(ii)  Minimum
Liquidity.  S&W Restaurant Group
shall maintain a minimum liquidity of $5,000,000 (free and clear of all Liens)
or more as of the close of each fiscal
quarter ending after the date hereof through (and including) the sooner of (x)
June 30, 2003 or (y) the close of the first fiscal quarter prior to September
30, 2003 provided that at the time of the close of the first fiscal quarter
prior to September 30, 2003, S&W Restaurant Group is in compliance with the
covenants set forth in (iii) below (Senior Leverage Ratio) and (iv) below (Interest
Coverage Ratio).

 

(iii)  Senior Leverage Ratio. 
Subject to (v) below, S&W Restaurant Group, on a consolidated basis,
shall not permit the ratio of total Unsubordinated Funded Debt to

 

3

 

EBITDA to exceed 3.00 to 1.00 (measured on a rolling
four quarter basis) as of the close of any fiscal quarter.  Any purchase money mortgage debt incurred by
a Subsidiary (other than the Borrower and S&W Dallas) of S&W Restaurant
Group which is not guaranteed by S&W Restaurant Group, the Borrower or
S&W Dallas shall not be deemed to be a part of Unsubordinated Funded Debt
of S&W Restaurant Group for the purposes of the calculation of Senior
Leverage Ratio to the extent that such purchase money debt is less than $5,000,000.00
in the aggregate.

 

(iv)  Interest
Coverage Ratio.  Subject to (v)
below, S&W Restaurant Group, on a
consolidated basis, shall not permit the ratio of EBIT to interest
expense to be less than 2.0 to 1.0 (measured on a rolling four quarter basis)
as of the close of any fiscal quarter.

 

(v)  Loan
Repayment.  Prior to the end of each
calendar month, S&W Restaurant Group shall repay any loans owing to the
Borrower to the extent required for the Borrower to make all payments then due
and payable under the Note and the other Loan Documents.

 

(vi)  General.  S&W Restaurant Group shall not be
required to be in compliance with the covenant set forth in (iii) above (Senior
Leverage Ratio) or the covenant set forth in (iv) above (Interest Coverage
Ratio) until September 30, 2003, provided that it maintains compliance with the
covenant set forth in (ii) above (Minimum Liquidity).  However, in all events, S&W Restaurant Group will be required
to be in compliance with the covenant set forth in (iii) above (Senior Leverage
Ratio) and the covenant set forth in (iv) above (Interest Coverage Ratio) by
not later than the sooner of (x) September 30, 2003 or (y) the close of the
first fiscal quarter following the fiscal quarter in which S&W Restaurant
Group first complied with the covenants set forth in (iii) above (Senior
Leverage Ratio) and (iv) above (Interest Coverage Ratio). All calculations of
EBITDA and EBIT will exclude from the determination of earnings, (a) amounts
attributable to pre-opening expenses associated with new restaurants, which
expenses are approved by the Lender in its reasonable discretion and (b)
operating losses (up to $150,000.00 per new restaurant) incurred by a new
restaurant during the first full month after the opening of such new
restaurant.  The negative (financial)
covenants of S&W Restaurant Group will be determined on the basis of the
consolidated results reflected on S&W Restaurant Group’s financial
statements. Accounting terms which are not otherwise defined shall have the
meanings ascribed to them under GAAP.

 

4

 

SCHEDULE 5.02(a)

TO TERM LOAN AGREEMENT
WITH

S&W OF LAS VEGAS,
L.L.C., DALLAS S&W, L.P. AND

THE SMITH & WOLLENSKY
RESTAURANT GROUP, INC.

EXISTING LIENS

 

Deed of Trust
dated October 9, 2002 in the amount of $1,650,000.00 encumbering the Dallas
Property made by S&W Dallas for the benefit of Toll Road Texas Land
Company, L.P. (the “First Dallas Deed of Trust”).

 

1

 

SCHEDULE 5.02(c)

TO TERM LOAN AGREEMENT
WITH

S&W OF LAS VEGAS,
L.L.C., DALLAS S&W, L.P.  AND

THE SMITH & WOLLENSKY
RESTAURANT GROUP, INC.

EXISTING DEBT

 

Loan in the amount
of $1,650,000.00 made by Toll Road Texas Land Company, L.P. to S&W Dallas
on October 9, 2002, secured by the First Dallas Deed of Trust.

 

That certain loan
in the principal amount of $1,900,000.00 made by the Borrower to S&W
Dallas, as evidenced by that certain promissory note of even date herewith
executed by S&W Dallas.

 

 

1Exhibit 10.57

 

PROMISSORY NOTE

 

 

	
  $1,900,000.00

  	
   

  	
  New York, New York

  
	
   

  	
   

  	
  December 24, 2002

  

 

FOR VALUE
RECEIVED, S&W OF LAS VEGAS, L.L.C., a Delaware limited liability company,
having an office at c/o The Smith & Wollensky Restaurant Group, Inc., 1114
First Avenue, New York, New York 10021 (the “Maker”),
promises to pay to MORGAN STANLEY DEAN WITTER COMMERCIAL FINANCIAL SERVICES,
INC., a Delaware corporation, having an office at 825 Third Avenue, New York,
New York 10022 (the “Payee”), or
order, at said office, or at such place as may be designated from time to time
in writing by the Payee, the principal sum of One Million Nine Hundred Thousand
and No/100 Dollars ($1,900,000.00) in lawful money of the United States of
America in Federal funds or other immediately available New York City funds,
with interest thereon from and including the date of this Note to, but not
including, the date this Note is paid in full calculated in the manner
hereinafter set forth, as follows:

 

(i)            equal monthly
installments of principal in the amount of $15,833.33 each commencing on
January 24, 2003 and on the 24th day of each succeeding calendar month
thereafter to and including the Maturity Date;

 

(ii)           interest on the
Principal Balance calculated in the manner hereinafter set forth commencing on
January 24, 2003, and on the 24th day of each calendar month thereafter to and
including the Maturity Date; and

 

(iii)          the entire
Principal Balance, together with all interest accrued and unpaid thereon
calculated in the manner hereinafter set forth and all other sums due under
this Note, shall be due and payable on the Maturity Date.

 

1.             The following terms as used in this
Note shall have the following meanings:

 

(i)            The term “Business Day” shall mean any day on which
the Payee is open for business in New York City.

 

(ii)           The term “Debt” shall mean all principal, interest,
additional interest and other sums of any nature whatsoever which may or shall
become due to the Payee in accordance with the provisions of this Note, the
Deed of Trust or Other Security Documents.

 

(iii)          The term “Deed of Trust” shall mean a certain
Leasehold Deed of Trust, dated the date hereof in the principal sum of
$1,900,000.00 given by the Maker to the trustee thereunder for the benefit of
the Payee covering the leasehold estate of the Maker

 

 

in certain
premises located in Clark County, Nevada, as more particularly described
therein, and intended to be duly recorded in said County, as the same has been
or may be amended or restated from time to time.

 

(iv)          The term “Fixed Rate” shall mean 6.36% per
annum.  The Fixed Rate shall be
calculated for the actual number of days elapsed on the basis of a 360-day year
and as otherwise set forth in the Loan Agreement.

 

(v)           The term “Guarantor Deed of Trust” shall mean a
certain Deed of Trust, dated the date hereof in the principal sum of
$1,900,000.00 given by Dallas S&W, L.P. to the trustee thereunder for the
benefit of the Payee covering the fee estate of Dallas S&W, L.P. in certain
premises located in Collin County, Texas, as more particularly described
therein, and intended to be duly recorded in said County, as the same has been
or may be amended or restated from time to time, which Guarantor Deed of Trust
secures the obligations of Dallas S&W, L.P. under the Guaranty of Payment
made by Dallas S&W, L.P. and The Smith & Wollensky Restaurant Group,
Inc. to the Payee to secure the Loan.

 

(vi)          The term “Loan” shall mean the loan in the principal
sum of $1,900,000.00 made by the Payee to the Maker which is evidenced by this
Note and secured by the Deed of Trust and the Other Security Documents.

 

(vii)         The term “Loan Agreement” shall mean the Term Loan
Agreement dated the date hereof between the Maker, the Payee, Dallas S&W,
L.P. and The Smith & Wollensky Restaurant Group, Inc., as the same has been
or may be amended or restated from time to time.

 

(viii)        The term “Maturity Date” shall mean December 24,
2007.

 

(ix)           The term “Other Security Documents” shall mean all
and any of the documents other than this Note or the Deed of Trust, now or
hereafter executed by the Maker or others, and by or in favor of the Payee,
which wholly or partially secure or guarantee payment of this Note, or which
otherwise pertain to the Loan, including, without limitation, the Loan
Agreement and the Guarantor Deed of Trust, as the same have been or may be
amended or restated from time to time.

 

(x)            The term “Participant” shall have the meaning given
to such term in paragraph 6 of this Note.

 

(xi)           The term “Principal Balance” shall mean the
outstanding principal balance of this Note from time to time.

 

2

 

2.             Subject to the provisions of this
Note hereinafter set forth, the entire Principal Balance shall bear interest at
the Fixed Rate.

 

3.             Subject to the following provisions
of this subparagraph, the Maker shall have the right to prepay the Principal
Balance in whole, or in multiples of $1,000.00 (with a minimum of $10,000.00),
upon not less than five (5) Business Days’ prior irrevocable written notice to
the Payee specifying the intended date of prepayment, and the amount to be
prepaid, provided that such prepayment is accompanied by payment of accrued
interest to and including the date of prepayment and other sums then due and
payable pursuant to the provisions of this Note, the Deed of Trust or the Other
Security Documents.  Any prepayments
permitted hereunder shall be applied in reduction of the Principal Balance in
inverse order of maturity.  The Maker
shall pay to the Payee contemporaneously with any such voluntary prepayment a
Yield Maintenance Premium  (as
hereinafter defined).  Any payment of
the then outstanding principal indebtedness by virtue of a sale or after the
Payee shall have declared the principal indebtedness immediately due and
payable, or after the Payee shall have commenced an action or proceeding to
foreclose the Deed of Trust as a result of a default thereunder, shall be
deemed a voluntary prepayment for the purposes of this subparagraph and a Yield
Maintenance Premium calculated pursuant to the provisions of this subparagraph
shall be payable with respect thereto based upon the interest rate specified
herein applicable to the then outstanding principal indebtedness immediately
prior to such default, declaration or commencement.  The portion of the Principal Balance specified in any such
irrevocable notice of prepayment shall, notwithstanding anything to the
contrary contained in this Note, the Deed of Trust or the Other Security
Documents, be absolutely and unconditionally due and payable on the date
specified in such notice.  Amounts
prepaid may not be re-borrowed. 
Notwithstanding anything to the contrary contained in this paragraph,
the Payee shall not be obligated to accept a partial prepayment of the
Principal Balance in accordance with the provisions of this subparagraph if any
default shall have occurred and shall be continuing beyond applicable periods
of notice and grace under this Note, the Deed of Trust or the Other Security
Documents unless the Payee shall otherwise agree to the contrary in its sole
and absolute discretion.

 

“Yield Maintenance Premium” shall mean an
amount equal to the present value as of the Prepayment Date of the Calculated
Payments from the Prepayment Date through the Maturity Date determined by
discounting such payments at the Discount Rate.  The term “Prepayment Date”
shall mean the date on which prepayment is made.  The term “Calculated Payments”
shall mean the monthly payments of interest only which would be due based on
the principal amount being prepaid on the Prepayment Date and assuming an
interest rate per annum equal to the difference (if such difference is greater
than zero) between (y) the applicable interest rate and (z) the Yield
Maintenance Treasury Rate.  The term “Discount Rate” shall mean the rate which,
when compounded monthly, is equivalent to the Yield Maintenance Treasury Rate,
when compounded semi-annually.  The term
“Yield Maintenance Treasury Rate”
shall mean the yield calculated by the Payee by the linear interpolation of the
yields, as reported in the Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading U.S.

 

3

 

Government Securities/Treasury
Constant Maturities for the week ending prior to the Prepayment Date, of U.S.
Treasury Constant Maturities with maturity dates (one longer or one shorter)
most nearly approximating the maturity date. 
In the event Release H.15 is no longer published, the Payee shall select
a comparable publication to determine the Yield Maintenance Treasury Rate.  In no event, however, shall the Payee be
required to reinvest any prepayment proceeds in U.S. Treasury obligations or
otherwise.

 

4.             Anything in this Note, the Deed of
Trust or any of the Other Security Documents to the contrary notwithstanding,
the Maker shall indemnify and hold the Payee harmless and defend the Payee at
the Maker’s sole cost and expense against any loss or liability, cost or
expense (including, without limitation, reasonable attorneys’ fees and
disbursements of the Payee’s counsel, whether in-house staff, retained firms or
otherwise), and all claims, actions, procedures and suits arising out of or in
connection with:

 

(i)            any ongoing matters
arising out of this Note, the Deed of Trust, any of the Other Loan Documents or
the transaction contemplated hereby or thereby, including, but not limited to,
all costs of appraisal or reappraisal of all or any portion of any collateral
for the Debt or of the granting by the Payee, in its sole and absolute
discretion, of any lease non-disturbance agreements,

 

(ii)           any amendment to,
or restructuring of, the Debt, this Note, the Deed of Trust or any of the Other
Loan Documents, and

 

(iii)          any and all lawful
action that may be taken by the Payee in connection with the enforcement of the
provisions of this Note, the Deed of Trust or any of the Other Loan Documents,
whether or not suit is filed in connection with the same, or in connection with
the Maker, any guarantor of all or any portion of the Debt and/or any partner,
joint venturer or shareholder thereof becoming subject of a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding.

 

All sums expended by the Payee
on account of any of the foregoing shall be reimbursable on demand, and until
reimbursed by the Maker pursuant hereto, shall be deemed additional principal
evidenced hereby and shall bear interest at the default interest rate
hereinbelow set forth.  The obligations
of the Maker under this paragraph shall, notwithstanding any exculpatory or
other provisions of any nature whatsoever which may be set forth herein, in the
Deed of Trust or the Other Loan Documents, constitute the personal recourse
undertakings, obligations and liabilities of the Maker and shall be secured by
the Deed of Trust.

 

5.             Intentionally Omitted.

 

6.             The Maker acknowledges that the
Payee may after the date of this Note sell and assign participation interests
in the Loan to such domestic or foreign banks, insurance

 

4

 

companies, pension funds,
trusts or other institutional lenders or other persons, parties or investors
(including, but not limited to, grantor trusts, owner trusts, special purpose
corporations, REMIC’s, real estate investment trusts or other similar or
comparable investment vehicles) as may be selected by the Payee in its sole and
absolute discretion and on terms and conditions satisfactory to the Payee in
its sole and absolute discretion (any such bank, insurance company, pension
fund, trust or other institutional lender or other person, party or investor to
whom a participation interest in the Loan is so sold and assigned is herein
referred to as a “Participant”).
The Payee shall at all times during the term of the Loan act as lead lender and
servicer for Participants in accordance with participation agreements in form
and substance satisfactory in all respects to the Payee and its counsel.  Subject to the applicable terms and
provisions of the participation agreements, the Payee shall retain all rights
with respect to the enforcement, collection and administration of the Loan and
the security therefor and shall service the Loan throughout the term
thereof.  The Maker shall cooperate, and
shall cause each guarantor, indemnitor and other person or party associated or
connected with the Loan or the collateral therefor to cooperate, in all
respects with the Payee in connection with the sale of participation interests
in the Loan in the manner contemplated by this paragraph, and shall, in
connection therewith, execute and deliver such estoppels, certificates,
instruments and documents as may be requested by the Payee.  The Maker grants to the Payee, and shall
cause each guarantor, indemnitor and other person or party associated or connected
with the Loan or the collateral therefor to grant to the Payee, the right to
distribute on a confidential basis financial and other information concerning
the Maker, each such guarantor, indemnitor and other person or party and the
property encumbered by the Deed of Trust and other pertinent information with
respect to the Loan to any party who has purchased a participation interest in
the Loan or who has expressed a serious interest in purchasing a participation
interest in the Loan.  The Maker shall
execute and deliver, and shall cause each guarantor, indemnitor and other
person or party associated or connected with the Loan or the collateral
therefor to execute and deliver, such documents and instruments as may be
necessary to split the Loan into two or more loans evidenced, secured and advanced
by and pursuant to separate sets of notes, deeds of trust and other related
loan documents to the full extent required by the Payee to facilitate the sale
of participation interests in the Loan in the manner contemplated by this
paragraph, it being agreed that (i) any such splitting of the Loan will not
adversely affect or diminish the rights of the Maker as presently set forth in
this Note, the Deed of Trust or the Other Security Documents and will not
increase the respective obligations and liabilities of the Maker or any such
guarantor, indemnitor or other person or party above those presently set forth
in this Note, the Deed of Trust or the Other Security Documents, (ii) the deeds
of trust and other documents securing the Loan as so split will have such
priority of lien as may be specified by the Payee, and (iii) the retained
interest of the Payee in the Loan as so split shall be allocated to or among
one or more of such separate loans in a manner specified by the Payee in its
sole and absolute discretion.  If the
Maker shall default in the performance of its obligation as set forth in this
paragraph, and if such default shall not be remedied by the Maker within ten
(10) days after notice by the Payee, the Payee shall have the right in its
discretion to declare the Debt immediately due and payable.  The Payee also reserves the right at any
time during the term of the Loan in its sole and absolute 

 

5

 

discretion to effect a
so-called securitization of the Loan in such a manner and on such terms and
conditions as the Payee shall deem to be appropriate in its sole and absolute
discretion and with such domestic or foreign banks, insurance companies,
pension funds, trusts or other institutional lenders or other persons, parties
or investors (including, but not limited to, grantor trusts, owner trusts,
special purpose corporations, REMIC’s, real estate investment trusts or other
similar or comparable investment vehicles) as may be selected by the Payee in its
sole and absolute discretion.

 

7.             It is hereby expressly agreed that
the entire Debt shall become immediately due and payable at the option of the
Payee on the happening of any default or event by which, under the terms of
this Note, the Deed of Trust or the Other Security Documents, the Debt may or
shall become due and payable, and that all of the terms, covenants and
provisions contained in the Deed of Trust and the Other Security Documents
which are to be kept and performed by the Maker are hereby made part of this
Note to the same extent and with the same force and effect as if they were
fully set forth herein.

 

8.             If any installment of principal,
interest, additional interest or other sum payable under this Note is not paid
within fifteen (15) days after the date which it is due, the Maker shall pay to
the Payee upon demand an amount equal to 5% of such unpaid installment as a
late payment charge.

 

9.             In addition to any late payment
charge which may be due under this Note, if the Debt is declared immediately
due and payable by the Payee pursuant to the provisions of this Note, the Deed
of Trust or the Other Security Documents, or if the Debt is not paid in full on
the Maturity Date, or if an event of default shall occur and be continuing
under this Note, the Deed of Trust or the Other Security Documents, the Maker
shall pay interest on the Principal Balance from the date of such declaration,
event of default or the Maturity Date (as the case may be), until the date the
Principal Balance is paid in full or until such event of default is cured (as
the case may be) at a rate per annum (calculated for the actual number of days
elapsed on the basis of a 360-day year) equal to 2% plus the interest rate then
applicable under this Note, provided, however, that such interest rate shall in
no event exceed the maximum interest rate which the Maker may by law pay.

 

10.           The Maker hereby waives presentment
and demand for payment, notice of dishonor, protest and notice of protest of
this Note.  If any payment under this Note
is not made when due, the Maker agrees to pay all costs of collection when
incurred, including reasonable attorneys’ fees (which costs shall be added to
the amount due under this Note and shall be receivable therewith).  The Maker agrees to perform and comply with
each of the terms, covenants and provisions contained in this Note, the Deed of
Trust and the Other Security Documents on the part of the Maker to be observed
or performed.  No release of any
security for the payment of this Note or extension of time for payment of this
Note, or any installment hereof, and no alteration, amendment or waiver of any
provision of this Note, the Deed of Trust

 

6

 

or the Other Security Documents
made by agreement between the Payee and any other person or party shall
release, discharge, modify, change or affect the liability of the Maker under
this Note, the Deed of Trust or the Other Security Documents.

 

11.           This Note is subject to the express
condition that at no time shall the Maker be obligated or required to pay
interest on the Principal Balance at a rate which could subject the Payee to
either civil or criminal liability as a result of being in excess of the
maximum rate which the Maker is permitted by law to contract or agree to
pay.  If by the terms of this Note, the
Maker is at any time required or obligated to pay interest on the Principal
Balance at a rate in excess of such maximum rate, the rate of interest under
this Note shall be deemed to be immediately reduced to such maximum rate and
interest payable hereunder shall be computed at such maximum rate and the
portion of all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the Principal
Balance.

 

12.           If the Maker consists of more than
one person or party, the obligations and liabilities of each such person or
party hereunder shall be joint and several.

 

13.           This Note is secured by the Deed of
Trust and the Other Security Documents.

 

14.           This Note is and shall be deemed
entered into in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York and no defense given or
allowed by the laws of any state or country shall be interposed in any action
or proceeding hereon unless such defense is either given or allowed by the laws
of the State of New York.

 

15.           This Note may only be modified,
amended, changed or terminated by an agreement in writing signed by the Payee
and the Maker.  No waiver of any term,
covenant or provision of this Note shall be effective unless given in writing
by the Payee and if so given by the Payee shall only be effective in the
specific instance in which given.

 

16.           The Maker acknowledges that this Note
and the Maker’s obligations under this Note are and shall at all times continue
to be absolute and unconditional in all respects, and shall at all times be
valid and enforceable irrespective of any other agreements or circumstances of
any nature whatsoever which might otherwise constitute a defense to this Note
and the obligations of the Maker under this Note or the obligations of any
other person or party relating to this Note or the obligations of the Maker
hereunder or otherwise with respect to the Loan.  This Note sets forth the entire agreement and understanding of
the Payee and the Maker, and the Maker absolutely, unconditionally and
irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to this Note
or the obligations of the Maker under this Note or the obligations of any other
person or party relating to this Note or the obligations of the Maker hereunder
or otherwise with respect to the Loan in

 

7

 

any action or proceeding
brought by the Payee to collect the Debt, or any portion thereof, or to
enforce, foreclose and realize upon the liens and security interests created by
the Deed of Trust and the Other Security Documents.  The Maker acknowledges that no oral or other agreements,
understandings, representations or warranties exist with respect to this Note
or with respect to the obligations of the Maker under this Note, except those
specifically set forth in this Note.

 

17.           No delay on the part of the Payee in
exercising any right or remedy under this Note, the Deed of Trust or the Other
Security Documents or failure to exercise the same shall operate as a waiver in
whole or in part of any such right or remedy. 
No notice to or demand on the Maker shall be deemed to be a waiver of
the obligation of the Maker or of the right of the Payee to take further action
without further notice or demand as provided in this Note, the Deed of Trust
and Other Security Documents.

 

18.           The Maker agrees to submit to
personal jurisdiction in the State of New York in any action or proceeding
arising out of this Note and, in furtherance of such agreement, the Maker
hereby agrees and consents that without limiting other methods of obtaining
jurisdiction, personal jurisdiction over the Maker in any such action or
proceeding may be obtained within or without the jurisdiction of any court
located in New York and that any process or notice of motion or other
application to any such court in connection with any such action or proceeding
may be served upon the Maker by registered or certified mail to or by personal
service at the last known address of the Maker, whether such address be within
or without the jurisdiction of any such court.

 

19.           The Maker (and the undersigned
representative of the Maker, if any) represents that the Maker has full power,
authority and legal right to execute and deliver this Note and that the debt
hereunder constitutes a valid and binding obligation of the Maker.

 

20.           Whenever used, the singular number
shall include the plural, the plural the singular, and the words “Payee” and “Maker” shall include their respective successors and assigns,
provided, however, that the Maker shall in no event or under any circumstance
have the right without obtaining the prior written consent of the Payee to
assign or transfer its obligations under this Note, the Deed of Trust or the
Other Security Documents, in whole or in part, to any other person, party or
entity.

 

21.          The
Maker hereby irrevocably and unconditionally waives, and the Payee by its
acceptance of this Note irrevocably and unconditionally waives, any and all
right to trial by jury in any action, suit or counterclaim arising in
connection with, out of or otherwise relating to the Loan, this Note, the Deed
of Trust or the Other Security Documents.

 

8

 

IN WITNESS
WHEREOF, the Maker has duly executed this Note the day and year first above
written.

 

	
   

  	
  S&W OF
  LAS VEGAS, L.L.C.

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan M.
  Mandel

  	
   

  
	
   

  	
   

  	
  Name Alan M.
  Mandel

  	
  :

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
						

 

 

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  ss.:

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

On the 19th day of December in the year 2002,
before me, the undersigned, a Notary Public in and for said State, personally
appeared Alan M. Mandel, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individuals, or the
person upon behalf of which the individual acted, executed the instrument.

 

 

	
   

  	
   

  	
   

  	
  /s/ Linda
  Marshall

  	
   

  
	
   

  	
   

  	
   

  	
  Notary Public

  	
   

  
	
   

  	
   

  	
  SEAL.

  	
  No. 41-4744180

  	
   

  
	
   

  	
   

  	
   

  	
  10/31/05

  	
   

  

 

9

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