Document:

Exhibit
10.3

 

WHEN RECORDED, HOLD FOR

PICK-UP BY:

 

Fennemore
Craig

Suite 2600

3003 North Central Avenue

Phoenix, Arizona 85012

Attention: William L. Kurtz

LOAN
NO. 122503

DEED OF
TRUST, ASSIGNMENT OF LEASES,

RENTS AND CONTRACTS, SECURITY AGREEMENT

AND

FIXTURE FILING

 

BETWEEN

AMERIVEST CAMELBACK INC., AN ARIZONA CORPORATION, AS TRUSTOR,

CHICAGO
TITLE INSURANCE COMPANY, A MISSOURI CORPORATION,

AS TRUSTEE

 

AND

 

ALLSTATE
LIFE INSURANCE COMPANY, AN ILLINOIS CORPORATION, AND

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,

A NEW YORK CORPORATION,

AS
BENEFICIARY

DATED: AUGUST 19, 2004

LOAN AMOUNT: $21,000,000

 

PROPERTY
ADDRESS:

2710-2850 EAST CAMELBACK ROAD

PHOENIX, ARIZONA

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE/SECTION

  	
  PAGE

  
	
  ARTICLE I COVENANTS OF
  TRUSTOR

  	
   

  
	
  1.1

  	
  Performance of
  Obligations Secured

  	
   

  
	
  1.2

  	
  Insurance

  	
   

  
	
  1.3 

  	
  Condemnation

  	
   

  
	
  1.4 

  	
  Damage to Property

  	
   

  
	
  1.5
  

  	
  Escrow
  Fund for Condemnation and Insurance Proceeds

  	
   

  
	
  1.6

  	
  Taxes, Liens and Other
  Items

  	
   

  
	
  1.7

  	
  Assignment
  of Leases, Contracts, Rents and Profits

  	
   

  
	
  1.8 

  	
  Due on Sale or Encumbrance

  	
   

  
	
  1.9

  	
  Preservation
  and Maintenance of Property

  	
   

  
	
  1.10 

  	
  Use
  of Property

  	
   

  
	
  1.11 

  	
  Alterations and Additions

  	
   

  
	
  1.12 

  	
  Offset Certificates

  	
   

  
	
  1.13 

  	
  Trustee’s Costs and
  Expenses

  	
   

  
	
  1.14 

  	
  Protection
  of Security; Costs and Expenses

  	
   

  
	
  1.15 

  	
  Trustor’s
  Covenants Respecting Collateral

  	
   

  
	
  1.16 

  	
  Covenants
  Regarding Financial Statements

  	
   

  
	
  1.17 

  	
  Environmental
  Covenants and Indemnities

  	
   

  
	
  1.18 

  	
  Further Assurances

  	
   

  
	
  1.19 

  	
  Trustor’s Continued
  Existence

  	
   

  
	
  ARTICLE II EVENTS OF
  DEFAULT

  	
   

  
	
  2.1 

  	
  Monetary and
  Performance Defaults

  	
   

  
	
  2.2

  	
  Bankruptcy,
  Insolvency, Dissolution

  	
   

  
	
  2.3

  	
  Misrepresentation

  	
   

  
	
  2.4

  	
  Default under
  Subordinate Loans

  	
   

  
	
  2.5 

  	
  Breach
  of Due on Sale or Encumbrance Provision

  	
   

  
	
  ARTICLE III REMEDIES

  	
   

  
	
  3.1

  	
  Acceleration

  	
   

  
	
  3.2 

  	
  Entry

  	
   

  
	
  3.3

  	
  Judicial
  Action

  	
   

  
	
  3.4 

  	
  Power
  of Sale

  	
   

  
	
  3.5

  	
  Rescission of Notice of
  Default

  	
   

  
	
  3.6

  	
  Beneficiary’s
  Remedies Respecting Collateral

  	
   

  
	
  3.7

  	
  Proceeds of Sales

  	
   

  
	
  3.8 

  	
  Condemnation and
  Insurance Proceeds

  	
   

  
	
  3.9 

  	
  Waiver of Marshaling, Rights of
  Redemption, Homestead and Valuation.

  	
   

  
	
  3.10 

  	
  Remedies Cumulative

  	
   

  
	
  3.11 

  	
  Nonrecourse

  	
   

  
	
  ARTICLE IV MISCELLANEOUS

  	
   

  
	
  4.1

  	
  Severability

  	
   

  
	
  4.2 

  	
  Certain Charges and
  Brokerage Fees

  	
   

  
						

 

i

 

 

	
  4.3

  	
  Notices

  	
   

  
	
  4.4

  	
  Trustor Not
  Released; Certain Trustee Acts

  	
   

  
	
  4.5

  	
  Inspection

  	
   

  
	
  4.6

  	
  Release or
  Reconveyance or Cancellation

  	
   

  
	
  4.7

  	
  Statute of Limitations

  	
   

  
	
  4.8

  	
  Interpretation

  	
   

  
	
  4.9

  	
  Captions

  	
   

  
	
  4.10
  

  	
  Consent

  	
   

  
	
  4.11 

  	
  Delegation to Subagents

  	
   

  
	
  4.12 

  	
  Successors and Assigns

  	
   

  
	
  4.13 

  	
  Governing
  Law

  	
   

  
	
  4.14 

  	
  Substitution of Trustee

  	
   

  
	
  4.15 

  	
  Changes in Taxation

  	
   

  
	
  4.16 

  	
  Maximum Interest Rate

  	
   

  
	
  4.17 

  	
  Time
  of Essence

  	
   

  
	
  4.18 

  	
  Reproduction of Documents

  	
   

  
	
  4.19 

  	
  No Oral Modifications

  	
   

  
	
  4.20 

  	
  Trustee Provisions

  	
   

  

 

 

ii

 

DEED OF
TRUST, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS,

SECURITY AGREEMENT AND FIXTURE FILING

 

 

THIS DEED OF TRUST,
ASSIGNMENT OF LEASES, RENTS AND CONTRACTS, SECURITY AGREEMENT AND FIXTURE
FILING (“Deed of Trust”) is made as of August 19, 2004, from AMERIVEST
CAMELBACK INC., an Arizona corporation, whose mailing address is 1780 South
Bellaire Street, Suite 100, Denver, Colorado 80222 (herein “Trustor”), to
CHICAGO TITLE INSURANCE COMPANY, a Missouri corporation, whose mailing address
is 2415 East Camelback Road, Suite 300, Phoenix, Arizona 85016 (herein “Trustee”),
in favor of ALLSTATE LIFE INSURANCE COMPANY, an Illinois corporation (“ALIC”),
and ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, a New York corporation (“ALNY”),
whose mailing address is Allstate Plaza South, 3075 Sanders Road, Suite G5C,
Northbrook, Illinois 60062 (ALIC and ALNY are sometimes hereinafter referred to
collectively as “Beneficiary”).

 

TRUSTOR, in consideration of
the indebtedness herein recited and the trust herein created, hereby
irrevocably grants, bargains, sells, mortgages, conveys, transfers and assigns
to Trustee, its successors and assigns, in trust, with power of sale and right
of entry and possession, all of Trustor’s estate, right, title and interest in,
to and under that certain real property located in Maricopa County, Arizona,
more particularly described in Exhibit A attached hereto and
incorporated herein by this reference (the “Land”);

 

TOGETHER with all of Trustor’s
now or hereafter acquired estate, right, title and interest in, to and under
all buildings, structures, improvements and fixtures now existing or hereafter
erected on the Land and all right, title and interest, if any, of Trustor in
and to the streets and roads, opened or proposed, abutting the Land to the
center lines thereof, and strips within or adjoining the Land, the air space
and right to use said air space above the Land, all rights of ingress and
egress on or within the Land, all easements, rights and appurtenances thereto
or used in connection with the Land, including, without limitation, all lateral
support, alley and drainage rights, all revenues, income, rents, cash or
security deposits, advance rental deposits, and other benefits thereof or
arising from the use or enjoyment of all or any portion thereof (subject
however to the rights and authorities given herein to Trustor to collect and
apply such revenues, and other benefits), all interests in and rights,
royalties and profits in connection with all minerals, oil and gas and other
hydrocarbon substances thereon or therein, and water stock, all options to
purchase or lease, all development or other rights relating to the Land or the
operation thereof, or used in connection therewith, including all Trustor’s
right, title and interest in all fixtures, attachments, partitions, machinery,
equipment, building materials, appliances and goods of every nature whatever
now or hereafter located on, or attached to, the Land, all of which, including
replacements and additions thereto, shall, to the fullest extent permitted by
law and for the purposes of this Deed of Trust, be deemed to be real property
and, whether affixed or annexed thereto or not, be deemed conclusively to be
real property; and Trustor agrees to execute and deliver, from time to time,
such further instruments and

 

 

 

documents as may be required by Beneficiary
to confirm the legal operation and effect of this Deed of Trust on any of the
foregoing. All of the foregoing property described in this section (the “Improvements”)
together with the Land, shall be hereinafter referred to as the “Property”.

 

TRUSTOR further hereby
grants to Beneficiary a security interest in, and assigns, all of Trustor’s now
existing or hereafter acquired right, title and interest in the following:

 

(A)          All equipment, fixtures, inventory, goods, instruments,
appliances, furnishings, machinery, tools, raw materials, component parts, work
in progress and materials, and all other tangible personal property of
whatsoever kind, used or consumed in the improvement, use or enjoyment of the
Property now or any time hereafter owned or acquired by Trustor, wherever
located and all products thereof whether in possession of Trustor or whether
located on the Property or elsewhere;

 

(B)           To the extent such general intangibles are assignable, all
general intangibles relating to design, development, operation, management and
use of the Property, including, but not limited to, (i) all names under which
or by which the Property may at any time be owned and operated or any variant
thereof, and all goodwill in any way relating to the Property and all service
marks and logotypes used in connection therewith, (ii) all permits, licenses,
authorizations, variances, land use entitlements, approvals, consents,
clearances, and rights obtained from governmental agencies issued or obtained
in connection with the Property, (iii) all permits, licenses, approvals,
consents, authorizations, franchises and agreements issued or obtained in
connection with the construction, use, occupation or operation of the Property,
(iv) all materials prepared for filing or filed with any governmental agency,
and (v) the books and records of Trustor relating to construction or operation
of the Property;

 

(C)            All shares of stock or partnership interest or other
evidence of ownership of any part of the Property that is owned by Trustor in
common with others, including all water stock relating to the Property, if any,
and all documents or rights of membership in any owners’ or members’
association or similar group having responsibility for managing or operating
any part of the Property provided, however, that the foregoing shall not include
any ownership interests in Trustor;

 

(D)            All accounts, deposit accounts, supporting obligations,
letter-of-credit rights, tax and insurance escrows held pursuant to this Deed
of Trust, accounts receivable, instruments, documents, documents of title, general
intangibles, payment intangibles, rights to payment of every kind, all of
Trustor’s rights, direct or indirect, under or pursuant to any and all
construction, development, financing, guaranty, indemnity, maintenance,
management, service, supply and warranty agreements, commitments, contracts,
subcontracts, insurance policies, licenses and bonds now or anytime hereafter
arising from construction on the Land or the use or enjoyment of the Property
to the extent such are assignable;

 

2

 

 

(E)           All condemnation proceeds (including
payments in lieu thereof) and insurance proceeds related to the Property;

 

TOGETHER with all additions
to, substitutions for and the products of all of the above, and all proceeds
therefrom, whether cash proceeds or noncash proceeds, received when any such
property (or the proceeds thereof) is sold, exchanged, leased, licensed, or
otherwise disposed of, whether voluntarily or involuntarily. Such proceeds
shall include any of the foregoing specifically described property of Trustor
acquired with cash proceeds. Together with, and without limiting the above
items, all Goods, Accounts, Documents, Instruments, Money, Chattel Paper,
Deposit Accounts, Letter-of-Credit Rights, Investment Property, Equipment and
General Intangibles arising from or used in connection with the Property, as
those terms are defined in the Uniform Commercial Code from time to time in
effect in the state in which the Property is located. (All of the foregoing
including such products and proceeds thereof, are collectively referred to as “Collateral”.)

 

The personal property in
which Beneficiary has a security interest includes goods which are or shall
become fixtures on the Property. This Deed of Trust is intended to serve as a
fixture filing pursuant to the terms of the applicable provisions of the
Uniform Commercial Code of the state in which the Property is located and the
provisions of Exhibit B are, for that purpose, incorporated herein. This filing
is to be recorded in the real estate records of the appropriate city, town or
county in which the Property is located. In that regard, the following
information is provided:

 

 

	
  Name of Debtor:

  	
   

  	
  AmeriVest Camelback Inc.,
  an Arizona corporation

  
	
   

  	
   

  	
   

  
	
  Address of Debtor:

  	
   

  	
  See Section 4.3 hereof

  
	
   

  	
   

  	
   

  
	
  Taxpayer Identification

  	
   

  	
   

  
	
  Number of Debtor:

  	
   

  	
  84-1240264

  
	
   

  	
   

  	
   

  
	
  Organizational

  	
   

  	
   

  
	
  Identification Number

  	
   

  	
   

  
	
  of Debtor:

  	
   

  	
  1113001-9

  
	
   

  	
   

  	
   

  
	
  Name of Secured Party: 

  	
   

  	
  Allstate Life Insurance
  Company,

  
	
   

  	
   

  	
  an Illinois corporation,
  and

  
	
   

  	
   

  	
  Allstate Life Insurance
  Company of New York, a New York corporation

  
	
   

  	
   

  	
   

  
	
  Address of Secured Party: 

  	
   

  	
  See Section 4.3 hereof.

  

 

Trustor warrants and agrees
that, to its knowledge, there is no financing statement covering the foregoing
Collateral, the Property, or any part thereof, on file in any public office.

 

3

 

HOWEVER, THIS IS A DEED OF
TRUST, AND THIS CONVEYANCE IS MADE IN TRUST FOR THE FOLLOWING USES AND TRUST,
AND FOR NO OTHER PURPOSES, AND FOR THE PURPOSE OF SECURING, IN SUCH ORDER OF
PRIORITY AS BENEFICIARY MAY ELECT:

 

(A)            The repayment of the indebtedness evidenced by (i) that
certain Mortgage Note (the “ALIC Note”) of even date herewith with a maturity
date of September 5, 2014, executed by Trustor and payable to the order of
ALIC, in the principal sum of SIXTEEN MILLION DOLLARS ($16,000,000), with
interest thereon, as provided therein and all late charges, loan fees,
commitment fees, Prepayment Premiums (as described in the ALIC Note), and all
extensions, renewals, modifications, amendments and replacements thereof; and
(ii) that certain Mortgage Note (the “ALNY Note”) of even date herewith with a
maturity date of September 5, 2014, executed by Trustor and payable to the
order of ALNY, in the principal sum of FIVE MILLION DOLLARS ($5,000,000), with
interest thereon, as provided therein and all late charges, loan fees,
commitment fees, Prepayment Premiums (as described in the ALNY Note), and all
extensions, renewals, modifications, amendments and replacements thereof (the
ALIC Note and the ALNY Note are sometimes hereinafter referred to individually
as a “Note” and collectively as the “Notes”);

 

(B)            The payment of all other sums which may be advanced by or
otherwise be due to Trustee or Beneficiary under any provision of this Deed of
Trust or under any other instrument or document referred to in Clause (C)
below, with interest thereon at the rate provided herein or therein;

 

(C)            The performance of each and every covenant and agreement
of Trustor contained (i) herein, in the Notes, or in any note evidencing a
Future Advance (as hereinafter defined), and (ii) in the obligations of Trustor
upon any and all pledge or other security agreements, loan agreements,
disbursement agreements, supplemental agreements (the foregoing shall not
include the Commitment Letter between Trustor and Beneficiary or that certain
Environmental Indemnity Agreement of even date herewith, among Trustor,
AMERIVEST PROPERTIES INC., a Maryland corporation, and Beneficiary),
assignments (both present and collateral) and all instruments of indebtedness
or security now or hereafter executed by Trustor in connection with any
indebtedness referred to in clauses (A), (B) or (D) of this section or for the
purpose of supplementing or amending this Deed of Trust or any instrument
secured hereby (all of the foregoing in this Clause (C), as the same may be
amended, modified or supplemented from time to time, being referred to
hereinafter as “Related Agreements”) and all costs and expenses, including
reasonable attorneys’ fees with respect to all such documents, including,
without limitation, the negotiation and drafting of any loan settlement or
workout agreement; and,

 

(D)            The repayment of any other loans or advances, with
interest thereon, hereafter made to Trustor (or any successor in interest to
Trustor as the owner of the Property or any part thereof) by Beneficiary when
the promissory note evidencing the

 

4

 

loan or advance specifically states that said
note is secured by this Deed of Trust, together with all extensions, renewals,
modifications, amendments and replacements thereof (herein and in the Related
Agreements “Future Advance”).

 

Trustor makes the foregoing
grant to Trustee to hold the Property and the Collateral in trust for the
benefit of Beneficiary and for the purposes and upon the terms and conditions
hereinafter set forth, subject to those exceptions (the “Permitted Exceptions”)
shown in the title policy (the “Title Policy”) issued to Beneficiary and
insuring the first lien position of this Deed of Trust.

 

TO HAVE AND TO HOLD THE
SAME, together with the possession and right of possession of the Property and
the Collateral, unto Beneficiary, its successors and assigns, forever.

 

ARTICLE I

COVENANTS OF TRUSTOR

 

To protect the security of
this Deed of Trust, Trustor covenants and agrees as follows:

 

1.1
Performance of Obligations
Secured.  Trustor
shall promptly pay when due the principal of and interest on the indebtedness
evidenced by the Notes, the principal of and interest on any Future Advance,
any Prepayment Premium and late charges provided for in the Notes or in any
note evidencing a Future Advance, and shall further perform fully and in a
timely manner all other obligations of Trustor contained herein or in the Notes
or in any note evidencing a Future Advance or in any of the Related Agreements.

 

1.2  Insurance.  For
all times during the period there remains any indebtedness under the Notes, or
any and all other indebtedness (including without limitation Future Advances)
secured by this Deed of Trust, Trustor shall keep the Property insured against
all risks or hazards as Beneficiary may require. Such insurance shall be in
policy form, amount and coverage satisfactory to Beneficiary, including, but
not limited to:

 

(A)            Fire and extended coverage on an “all risk” replacement
cost basis, in an amount equal to the insurable value of the Improvements,
without coinsurance or deducting for depreciation, containing a waiver of
subrogation clause and a deductible amount acceptable to Beneficiary;

 

(B)            General public liability insurance, in such form, amount
and deductible reasonably satisfactory to Beneficiary, and naming Beneficiary
c/o Beneficiary’s servicing agent, if any, as additional insured covering
Beneficiary’s interest in the Property;

 

5

 

(C)            Business interruption or rent loss insurance endorsement
in an amount at least equal to 100% of the sum of: annual debt service on the
Notes, the annual debt service on any other financing permitted by Beneficiary,
ground rents, if any, and operating expenses (without contribution from Trustor
for a period of twelve (12) months), including, without limitation, real estate
taxes and assessments and insurance, for the Property;

 

(D)            Flood insurance (whether or not available through the
National Flood Insurance Program) sufficient to cover any damage which may be
anticipated in the event of flood unless Trustor has provided Beneficiary
evidence satisfactory to Beneficiary that no portion of the Property is located
within the boundaries of the 100 year flood plain (Flood Zone A);

 

(E)           “Dram shop” insurance if alcoholic
beverages are sold on the Property;

 

(F)           Boiler and machinery insurance when
risks covered thereby are present and Beneficiary requires such insurance; and

 

(G)           Earthquake insurance if Beneficiary
requires such insurance.

 

The insurance coverages described in
subsections (A), (C), (D), (F) and (G) above shall name Beneficiary c/o
Beneficiary’s servicing agent, if any, under a standard noncontributory
mortgagee loss payable clause (and naming Beneficiary as loss payee for rent
loss coverage) or otherwise directly insure Beneficiary’s interest in the
Property. All losses under said insurance shall be payable to Beneficiary in
the manner provided in Sections 1.4 and 1.5 hereof. All policies of insurance
required under this Section 1.2 shall be with a company or companies with a
policy rating of A- and financial rating of at least Class X in the most
current edition of Best’s Key Rating Guide and authorized to do business in the
state in which the Property is located. All policies of insurance shall provide
that they will not be canceled or modified without thirty (30) days’ prior
written notice to Beneficiary. True copies of the above mentioned insurance
policies or evidence of such insurance (in the form of Acord Form 28)
satisfactory to Beneficiary shall be delivered to and held by Beneficiary. True
copies of all renewal and replacement policies or evidences of such insurance
forms (Acord Form 28) thereof shall be delivered to Beneficiary at least thirty
(30) days before the expiration of the expiring policies. If any renewal or
replacement policy is not obtained as required herein, Beneficiary is
authorized to obtain the same in Trustor’s name and at Trustor’s expense.
Beneficiary shall not by the fact of failing to obtain any insurance, incur any
liability for or with respect to the amount of insurance carried, the form or
legal sufficiency of insurance contracts, solvency of insurance companies, or
payment or defense of lawsuits, and Trustor hereby expressly assumes full
responsibility therefor and all liability, if any, with respect thereto.

 

 

6

 

 

 

1.3          Condemnation.

 

(A)          Immediately upon obtaining knowledge of the commencement or
threat of any action in connection with (i) any condemnation, (ii) any other
taking of the Property or any part thereof by any public authority or private
entity having the power of eminent domain, or (iii) any conveyance in lieu of
such condemnation or taking of the Property or any part thereof
(“Condemnation”), Trustor shall notify Beneficiary in writing but in no event
later than twenty (20) days after Trustor obtains knowledge of the commencement
of or threat of a Condemnation. Beneficiary shall have the right, but not the
obligation, to participate in any proceedings relating to any Condemnation and
may, in its sole discretion, consent or withhold its consent to any settlement,
adjustment, or compromise of any claims arising from the Condemnation and no
such settlement, adjustment or compromise shall be final or binding upon
Beneficiary without Beneficiary’s prior consent.

 

(B)            If all or part of the Property is taken by Condemnation
and Beneficiary in its reasonable judgment determines that the remainder of the
Property, if any, cannot be operated as an economically viable entity at
substantially the same level of operations as immediately prior to such
Condemnation, then all proceeds of the Condemnation (“Condemnation Proceeds”)
shall be paid over to Beneficiary and shall be applied first toward
reimbursement of the costs and expenses (including reasonable attorneys’ fees)
of Beneficiary, if any, in connection with the recovery of such Condemnation
Proceeds, and then, in the sole and absolute discretion of Beneficiary and
without regard to the adequacy of its security under this Deed of Trust, shall
be applied against all amounts due herein or under the Notes and any remaining
Condemnation Proceeds shall be released to Trustor. Provided there is no Event
of Default (as defined below) hereunder, full or partial prepayment of the
Notes under this Section 1.3(B) shall not be subject to the Prepayment Premium;
however, such partial prepayment shall not entitle Trustor to prepay the
portion of the Notes remaining unpaid after application of the Condemnation
Proceeds. Prepayment of the balance shall continue to be subject to the terms
and conditions of the Notes, including the No-Prepayment Period and the
Prepayment Premium described therein.

 

(C)            If less than all of the Property is taken by Condemnation
and Beneficiary in its reasonable judgment determines that the remainder of the
Property can be operated as an economically viable entity at substantially the
same level of operations as immediately prior to such Condemnation, then
Trustor shall diligently restore the Property to a condition and use as close
as possible to its condition immediately prior to the Condemnation and all Condemnation
Proceeds shall be made available to Trustor for such restoration. If the
estimated cost of restoration, as reasonably determined by Beneficiary, is
equal to or less than $500,000.00, all Condemnation Proceeds shall be released
directly to Trustor for restoration of the Property. If the estimated cost of
restoration exceeds $500,000.00, all Condemnation Proceeds shall be deposited
into an escrow fund in accordance with Section 1.5 below. Beneficiary shall
have the right to obtain an opinion of an independent contractor or engineer
satisfactory to Beneficiary, at Trustor’s expense, to estimate the cost to
restore

 

 

7

 

the remaining portion of the
Property. If the amount of the Condemnation Proceeds is not sufficient to
restore the Property based on the opinion of an independent contractor or
engineer, subject to revision as restorations are made, Trustor shall be
obligated to pay the difference toward the restoration of the Property, prior
to the disbursement of any Condemnation Proceeds to, or for the account of
Trustor.

 

(D)      If an Event of Default exists at any time
from the time of a Condemnation through the completion of restoration and
payment of any Condemnation Proceeds, the use of the Condemnation Proceeds
shall be governed by the remedies set forth in Article III below. If an event
has occurred which with notice, the passage of time, or both, could become an
Event of Default, then, the Condemnation Proceeds shall be held by Beneficiary
or in the Escrow Fund (as defined below), as applicable, pending cure of such
event prior to the expiration of any applicable cure or grace period. The
application of any Condemnation Proceeds to the indebtedness secured hereby
shall not cure or waive any Event of Default hereunder, or invalidate any act
done pursuant to any notice thereof.

 

1.4     Damage to Property.

 

(A)     Promptly upon obtaining knowledge of any
damage to the Property or any part thereof with an estimated cost of
restoration in excess of $25,000.00, but in no event later than five (5) days
after Trustor obtains such knowledge, Trustor shall notify Beneficiary of such
damage in writing. Trustor shall diligently restore the Property to the same
condition that existed immediately prior to the damage whether or not insurance
proceeds are sufficient for such restoration. All proceeds of any insurance on
the Property (“Insurance Proceeds”) received by Trustor shall be applied to
such restoration. Beneficiary shall have the right to obtain an opinion of an independent
contractor or engineer satisfactory to Beneficiary, at Trustor’s expense, to
estimate the cost to restore the Property to its original condition, which
opinion may be revised as restorations are made. If the amount of the insurance
proceeds is not sufficient to restore the Property based on an independent
contractor’s or engineer’s opinion, subject to revision as restorations are
made, Trustor shall be obligated to pay the difference toward the restoration
of the Property, prior to the application of any Insurance Proceeds to such
restoration as provided herein.

 

(B)      If the estimated cost of restoration is
equal to or less than $500,000.00, Trustor shall promptly settle and adjust any
claims under the insurance policies which insure against such risks and, upon
receipt of the Insurance Proceeds, Trustee and Beneficiary shall deliver such
to Trustor for use in restoration of the Property.

 

(C)       If the estimated cost of restoration is
greater than $500,000.00, Beneficiary shall have the right, but not the
obligation, to participate in the settlement of the insurance claims and may,
in its commercially reasonable discretion, consent or withhold its consent to
any settlement, adjustment, or compromise of such insurance claims and no such
settlement, adjustment, or compromise shall be final or binding

 

8

 

upon Beneficiary without its prior consent.
Upon settlement of insurance claims, and if Trustor can demonstrate to the
reasonable satisfaction of Beneficiary that the projected ratio of Net
Operating Income, as defined below, to annual debt service due under the Notes
and any other notes secured by the Property (“Debt Coverage Ratio”) will be at
least 105% for the twelve months immediately following reconstruction of the
Property, the insurance proceeds shall be deposited into an escrow fund in
accordance with Section 1.5 below, prior to the disbursement of any
Condemnation Proceeds to, or for the account of Trustor.

 

As used in this Deed of
Trust, “Net Operating Income” shall mean: (i) all gross operating revenues
anticipated to be received during the following twelve-month period based on
leases in effect as of the date of calculation and only for such time as those
leases are contracted to remain in effect without expiration by their terms or
optional termination by the tenant (unless the tenant has waived its
termination rights in writing or the term of the lease has been extended in
writing), including without limitation all amounts to be received from tenants
as payment of operating expenses but not including refundable deposits, lease
termination payments, excess tenant improvement and leasing commission payments
included as additional rent, principal or interest payments received by Trustor
on loans to tenants, and fees and reimbursements for work performed for tenants
by Trustor, less: (ii) all amounts, calculated on a pro forma basis, for
the operation or maintenance of the Property for the following twelve-month
period, including ground rents, the cost of property management (which shall be
no less than 4% of gross revenues), maintenance, cleaning, security,
landscaping, parking maintenance and utilities, and other costs and expenses
approved in writing by Beneficiary and amounts reasonably estimated by
Beneficiary for the payment of real estate taxes and assessments and other
taxes related to the operation of the Property, insurance premiums, necessary
repairs and future replacements of equipment; payments under the Notes shall
not be included in Net Operating Income. Notwithstanding the foregoing, if any
of the Related Agreements require a historical calculation of Net Operating
Income, it shall be calculated on a cash basis for the previous twelve-month
period as of the date of such calculation.

 

(D)            If in the reasonable judgment of Beneficiary the
conditions of Paragraph 1.4(C) cannot be satisfied, then at any time from and
after the occurrence of the damage, upon written notice to Trustor, Beneficiary
may declare the entire balance of the Notes and/or any Future Advances then
outstanding and accrued and unpaid interest thereon, and all other sums or
payments required thereunder or under this Deed of Trust, without any
Prepayment Premium (provided no Event of Default then exists hereunder), to be
immediately due and payable, and all insurance proceeds shall be applied by
Beneficiary first to the reimbursement of any costs or expenses incurred by
Beneficiary in connection with the damage or the determination to be made
hereunder, and then to the payment of the indebtedness secured by this Deed of
Trust in such order as Beneficiary may determine in its sole discretion.

 

(E)           Notwithstanding any provision herein
to the contrary, if an Event of Default exists at any time from the time of
damage through the completion of restoration

 

9

 

 

and the final release of any Insurance
Proceeds to Trustor, the use of the insurance proceeds shall be governed by the
remedies set forth in Article III below. If an event has occurred which with
notice, the passage of time, or both, could become an Event of Default, then
the Insurance Proceeds shall be held by Beneficiary or in the Escrow Fund, as
applicable, pending cure of such event prior to the expiration of any
applicable cure or grace period. The application of any Insurance Proceeds to
the indebtedness secured hereby shall not cure or waive any Event of Default
hereunder or invalidate any act done pursuant to any notice thereof.

 

1.5           Escrow Fund for Condemnation and Insurance Proceeds.

 

(A)            In the circumstances indicated above in Subsections
1.3(C) and 1.4(C), all Condemnation Proceeds and Insurance Proceeds
(“Proceeds”) shall be deposited in an interest bearing escrow fund (“Escrow
Fund”). The escrow agent and the form of the escrow agreement shall be
satisfactory to Beneficiary and Trustor. The costs and fees of such escrow
agent shall be paid by Trustor. If the amount of the Proceeds is not sufficient
to restore the Property based on an independent contractor’s or engineer’s
opinion obtained by Beneficiary at Trustor’s expense, subject to revision as
restorations are made, Trustor shall be obligated to deposit in the Escrow Fund
the difference between the contractor’s or engineer’s estimate and the amount
of the Proceeds or deliver to the escrow agent an irrevocable, unconditional
letter of credit issued in the amount of such difference in a form and by a
financial institution acceptable to Beneficiary or other cash equivalent
acceptable to Beneficiary. Trustor’s funds, if necessary, and the Proceeds
shall be deposited into the Escrow Fund and shall not be released by the escrow
agent unless used to restore the Property to its original condition and unless
a disbursement agent satisfactory to Beneficiary and Trustor approves such
disbursements from time to time. The escrow agreement shall provide that the
escrow agent shall only disburse funds to Trustor so long as the restoration
work is being diligently performed by Trustor and only after: (i) Trustor has
delivered to Beneficiary and Beneficiary has approved the plans and
specifications for the restoration of the Property; (ii) Trustor has executed a
contract acceptable to Beneficiary with a general contractor reasonably
acceptable to Beneficiary for the restoration of the Property; (iii) the
general contractor has submitted lien waivers and/or releases, executed by the
general contractor and all subcontractors which may be partial to the extent of
partial payments and which, in the case of releases, may be contingent upon payment
if the escrow agent makes payment directly to such contractor or subcontractor;
(iv) Trustor has furnished Beneficiary with an endorsement to the Title Policy
showing no additional exceptions; and (v) Trustor has deposited its funds in
the Escrow Fund as provided in this paragraph and has submitted such other
documents and information as may be requested by Beneficiary to determine that
the work to be paid for has been performed in accordance with the plans and
specifications approved by Beneficiary. If any requisition for payment of work
performed is for an amount which would result in the remaining balance of the
Escrow Fund to be insufficient to complete the remainder of the restoration,
Trustor shall advance the requisite amount in cash to the Escrow Fund
immediately upon written request from the disbursement agent or Beneficiary.
Any failure by Trustor to satisfy any of the

 

10

 

conditions to the disbursement of Proceeds
set forth in this Paragraph upon demand by Beneficiary shall constitute a
Performance Default, as hereinafter defined.

 

(B)            Any Proceeds and any interest thereon remaining in the
Escrow Fund after payment of the costs to complete the restoration of the
Property pursuant to the approved plans and specifications and the costs of the
escrow agent shall be paid first, to Trustor to the extent of any funds of
Trustor’s contributed to the restoration pursuant to Paragraph 1.5, provided
there is no Event of Default or an event which with notice, the passage of
time, or both, could become an Event of Default, and thereafter at
Beneficiary’s option, any remaining Proceeds may be applied to the prepayment
of the Notes without payment of any Prepayment Premium. Full or partial
prepayment of the Notes under the preceding sentences of this Section 1.5B
shall not be subject to the Prepayment Premium; however, any such partial
prepayment shall not entitle Trustor to prepay the portion of the Notes
remaining unpaid after application of the Proceeds. Prepayment of the balance
shall continue to be subject to the terms and conditions of the Notes,
including the No-Prepayment Period and the Prepayment Premium described
therein. If an Event of Default exists, the use of the Proceeds shall be
governed by Article III below. If, however, an event exists which with notice,
the passage of time, or both, could become an Event of Default, the remaining
balance in the Escrow Fund shall be held by the escrow agent pending cure of
the event prior to the expiration of any applicable cure or grace period.

 

1.6            Taxes, Liens and Other Items.

 

(A)            Trustor shall pay any and all taxes, bonds, assessments,
fees, liens, charges, fines, impositions and any accrued interest or penalty
thereon, and any and all other items which are attributable to or affect the
Property (collectively, “Impositions”) by making payment prior to delinquency
directly to the payee thereof and promptly furnish copies of paid receipts for
these to Beneficiary. Trustor shall promptly discharge or bond any lien or
encumbrance on the Property whether or not said lien or encumbrance has or may
attain priority over this Deed of Trust. This Deed of Trust shall be the sole
encumbrance on the Property (other than the Permitted Exceptions and the lien
for taxes not yet due and payable) and, if with the consent of Beneficiary it
is not the sole encumbrance, then it shall be prior to any and all other liens
or encumbrances on the Property. Trustor may in good faith and with due
diligence protest the payment of any Imposition which it believes unwarranted
or excessive and may defer payment of such Imposition pending conclusion of
such contest if legally permitted to do so, provided that the priority of this
Deed of Trust and Beneficiary’s security is not adversely affected and that
Trustor shall have furnished Beneficiary or the taxing authority such security
as may be required.

 

(B)            As further security for the payment of the Notes and the
payment of real estate taxes, regular or special assessments and insurance
premiums, Trustor shall deposit 1/12th of the annual amounts of such items as
estimated by Beneficiary, with each monthly payment on the Notes, so that
Beneficiary will hold a sufficient amount to pay all such charges not less than
thirty (30) days prior to the date on which such items

 

11

 

become due and payable. Beneficiary shall be
furnished evidence to allow it to estimate such amounts, including paid
receipts or annual insurance premium statements, assessment notices and tax
receipts. All funds so deposited shall, until applied to the payment of the
aforesaid items, as hereinafter provided, be held by Beneficiary without
interest (except to the extent required under applicable law) and may be
commingled with other funds of Beneficiary. All funds so deposited shall be
applied to the payment of the aforesaid items only upon the satisfaction of the
following conditions: (i) no Event of Default or event, which with notice or
the passage of time or both could become an Event of Default, shall have
occurred; (ii) Beneficiary shall have sufficient funds to pay the full amounts
of such items (which funds may include amounts paid solely for such purpose by
Trustor in addition to the escrowed funds); and (iii) Trustor shall have furnished
Beneficiary with prior written notification that such items are due and with
the bills and invoices therefor in sufficient time to pay the same before any
penalty or interest attaches and before policies of insurance lapse, as the
case may be, and shall have deposited any additional funds as Beneficiary may
determine as necessary to pay such items.

 

(C)            Beneficiary expressly disclaims any obligation to pay the
aforesaid items unless and until Trustor complies with all of the provisions
set forth in Subsections 1.6(A) and (B). Trustor hereby pledges and grants a
security interest in any and all monies now or hereafter deposited pursuant to
Subsection 1.6(B) as additional security for the Notes and Related Agreements.
If any Event of Default shall have occurred, or if the Notes shall be
accelerated as herein provided, all funds so deposited may, at Beneficiary’s
option, be applied as determined solely by Beneficiary or to cure said Event of
Default or as provided in this Section 1.6. In no event shall Trustor claim any
credit against the principal and interest due hereunder for any payment or
deposit for any of the aforesaid items.

 

1.7           Assiqnment of Leases, Contracts, Rents and Profits.

 

(A)            Trustor hereby absolutely, presently and unconditionally
grants, assigns, transfers, conveys and sets over to Beneficiary, subject to
all of the terms, covenants and conditions set forth herein, all of Trustor’s
right, title and interest in and to the following whether arising under the
“Leases” (as hereinafter defined), by statute, at law, in equity, or in any
other way:

 

(1)             All of the leases of the Property
which are in effect on the date hereof and all leases entered into or in effect
from time to time after the date hereof, including, without limitation, all amendments,
extensions, replacements, modifications and renewals thereof and all subleases,
concession agreements, and all other agreements affecting the same (the
“Leases”) and all guaranties thereunder;

 

(2)             All of the rents, income, profits,
revenue, security deposits, judgments, Condemnation Proceeds, Insurance
Proceeds, unearned insurance premiums, all termination and/or cancellation
payments received by Trustor in connection with any Lease, proceeds from the
surrender, sale or other disposition of

 

12

 

any Lease, any other fees or sums payable to
Trustor or any other person as landlord and any award or payment in connection
with any enforcement action of any Lease, including, without limitation, any
award to Trustor made hereafter in any court involving any of the tenants under
the Leases in any bankruptcy, insolvency, or reorganization proceeding in any
state or federal court, and Trustor’s right to appear in any action and/or to
collect any such award or payment, and all payments by any tenant in lieu of
rent (collectively, “Rents and Profits”); and

 

(3)             All contracts, agreements,
management, operating and maintenance agreements, warranties, licenses,
permits, guaranties and sales contracts relating to the Property and the
Collateral entered into by, or inuring to the benefit of, Trustor (the
“Contracts”).

 

(B)            Notwithstanding the provisions of Subsection 1.7(A), so
long as no Event of Default is continuing, and, subject to Subsection 1.7(F)
and Article III, Trustor shall have a license to manage the Property; to
collect, receive and use all Rents and Profits in accordance with the terms of
the Leases; to let the Property subject to the terms hereof and to take all
actions which a reasonable and prudent landlord would take in enforcing the
provisions of the Leases and Contracts; provided, however, that all amounts so
collected shall be applied toward operating expenses, real estate taxes and
insurance relating to the Property, capital repair items necessary to the
operation of the Property, and the payment of sums due and owing under the
Notes and this Deed of Trust prior to any other expenditure or distribution by
Trustor. During the continuation of an Event of Default (whether or not
Beneficiary shall have exercised Beneficiary’s option to declare the Notes
immediately due and payable), such license shall be automatically revoked
without any action required by Beneficiary. Any amounts received by Trustor or
its agents in the performance of any acts prohibited by the terms of this Deed
of Trust, including but not limited to any amounts received in connection with
any cancellation, modification or amendment of any of the Leases prohibited by
the terms of this Deed of Trust and any amounts received by Trustor as rents,
income, issues or profits from the Property from and after the occurrence of an
Event of Default under this Deed of Trust, the Notes, or any of the other
Related Agreements, shall be held by Trustor as trustee for Beneficiary and all
such amounts shall be accounted for to Beneficiary and shall not be commingled
with other funds of Trustor. Any person acquiring or receiving all or any
portion of such trust funds shall acquire or receive the same in trust for
Beneficiary as if such person had actual or constructive notice that such funds
were impressed with a trust in accordance herewith.

 

(C)            During the continuation of an Event of Default,
Beneficiary shall have the right but not the obligation to perform as landlord
under the Leases and as a party under the Contracts. The assignment of Rents
and Profits set forth herein constitutes an irrevocable direction and
authorization to all tenants under the Leases to pay all Rents and Profits to
Beneficiary upon demand and without further consent or other action by Trustor.
Trustor irrevocably appoints Beneficiary its true and lawful attorney, at the
option of Beneficiary at any time, to demand, receive and enforce payment, to
give receipts, releases and satisfactions, and to sue, either in the name of

 

13

 

Trustor or in the name of Beneficiary, for
all such Rents and Profits and apply the same to the indebtedness secured by
this Deed of Trust.

 

(D)            Neither the foregoing assignment of Rents and Profits,
Leases and Contracts to Beneficiary nor the exercise by Beneficiary of any of
its rights or remedies under Article III shall be deemed to make Beneficiary a
“mortgagee-in-possession” or otherwise liable in any manner with respect to the
Property, unless Beneficiary, in person or by agent, assumes actual possession
thereof. Nor shall appointment of a receiver for the Property by any court at
the request of Beneficiary or by agreement with Trustor, or the entering into
possession of the Property by such receiver, be deemed to make Beneficiary a
“mortgagee-in-possession” or otherwise liable in any manner with respect to the
Property.

 

(E) In the event Beneficiary
collects and receives any Rents and Profits under this Section 1.7 pursuant to
any Monetary or Performance Default as defined in Section 2.1 hereof, such
collection or receipt shall in no way constitute a curing of the Monetary or
Performance Default.

 

(F) Trustor shall not,
without the prior written consent of Beneficiary, (i) enter into any lease,
extend or renew any Lease (other than extensions or renewals in accordance with
the terms of a lease approved by Beneficiary), or consent to or permit the
assignment or subletting of any Leases (other than assignments or subleases in
accordance with the terms of a lease approved by Beneficiary), or amend or
terminate any Lease; (ii) alter, modify, change or terminate the terms of any
guaranties of any Leases; (iii) create or permit any lien or encumbrance which,
upon foreclosure, would be superior to any such Leases or in any other manner
impair Beneficiary’s rights and interest with respect to the Rents and Profits;
(iv) pledge, transfer, mortgage or otherwise encumber or assign the Leases, the
Contracts or the Rents and Profits; or (v) collect rents more than 30 days prior
to their due date. Notwithstanding the foregoing, so long as no Event of
Default has occurred hereunder, Trustor may enter into Leases, extend or renew
Leases, and permit the assignment or sublease of Leases which demise 20,000
rentable square feet or less for a term of five (5) years or less (“Non-material
Leases”), provided they are on rental rates, including rental concessions, at
least equal to that charged for comparable properties within the Property’s
submarket area, have been negotiated at arm’s length, and do not contain
material modifications to the form of lease previously approved by Beneficiary.
Trustor may also amend Non-material Leases without Beneficiary’s prior written
consent if, in Trustor’s prudent business judgment, such amendments are necessary
and do not impair the value of the Property. Beneficiary will not unreasonably
withhold or delay its consent to any lease submitted to it for approval. Any
lease submitted for Beneficiary’s consent shall, at Beneficiary’s option, be
accompanied by a Subordination, Non-Disturbance and Attornment Agreement in
Beneficiary’s then current form. Trustor may also terminate leases of less than
6,500 rentable square feet without Beneficiary’s prior written consent if, in
Trustor’s prudent business judgment, such termination is necessary and will not
impair the value of the Property.

 

14

 

 

(G)            Trustor shall promptly give notice to Beneficiary of any
and all monetary defaults or material non-monetary defaults of any of the
tenants under any of the Leases meeting the criteria of a lease for which
Beneficiary’s consent would have been required pursuant to Paragraph 1.7(F)
regardless of whether such leases were executed before or after the date of
this Deed of Trust, together with a complete copy of any notices delivered to
or by the tenant as a result of such default. Beneficiary shall have the right,
but not the obligation, to cure any default of Trustor under any of the Leases
and all amounts disbursed in connection with said cure shall be deemed to be
indebtedness secured hereby.

 

(H)            Beneficiary shall have the right to approve any lease
forms used by Trustor for lease of space in the Property, which approval shall
not be unreasonably withheld, conditioned or delayed.

 

(I)           Trustor hereby represents, warrants
and agrees that:

 

(1)               Trustor has the right, power and capacity to make this
assignment and that no person, firm or corporation or other entity other than
Trustor has or will have any right, title or interest in or to the Leases or
the Rents and Profits.

 

(2)               Trustor shall, at its sole cost and expense, perform
and discharge all of the obligations and undertakings of the landlord under the
Leases. Trustor shall enforce the performance of each obligation of the tenants
under the Leases and will appear in and prosecute or defend any action
connected with the Leases or the obligations of the tenants thereunder.

 

(J)             Beneficiary shall not be obligated to perform or
discharge, nor does it hereby undertake to perform or discharge, any
obligation, duty or liability under the Leases or under or by reason of this
assignment. Trustor shall and does hereby agree to indemnify Beneficiary for
and to defend and hold Beneficiary harmless from any and all liability, loss or
damage which Beneficiary may or might incur under the Leases or under or by
reason of this assignment, and from any and all claims whatsoever which may be
asserted against Beneficiary by reason of any alleged obligations or
undertakings on Beneficiary’s part to perform or discharge any of the terms,
covenants or agreements contained in the Leases. Should Beneficiary incur any
liability, loss or damage under the Leases or under or by reason of this
assignment, or in the defense of any of such claims or demands, the amount
thereof, including costs, expenses and reasonable attorneys’ fees, shall be
secured by this Deed of Trust; and Trustor shall reimburse Beneficiary therefor
immediately upon demand, and upon failure of Trustor to do so, Beneficiary may
declare all sums so secured to be immediately due and payable.

 

(K)            Beneficiary may take or release other security, may
release any party primarily or secondarily liable for any indebtedness secured
hereby, may grant extensions, renewals or indulgences with respect to such
indebtedness, and may apply any other security therefor held by it to the
satisfaction of such indebtedness, without prejudice to any of its rights
hereunder.

 

 

15

 

 

(L)             Nothing herein contained and no act done or omitted by
Beneficiary pursuant to the powers and rights granted it herein shall be deemed
to be a waiver by Beneficiary of its other rights and remedies under the Notes
and this Deed of Trust, and this assignment is made and accepted without
prejudice to any of the other rights and remedies possessed by Beneficiary
under the terms thereof. The right of Beneficiary to collect said indebtedness
and to enforce any other security therefor held by it may be exercised by
Beneficiary either prior to, simultaneously with, or subsequent to any action
taken by it hereunder. It is the intent of both Trustor and Beneficiary that this
assignment be supplementary to, and not in substitution or derogation of, any
other provision contained in this Deed of Trust giving Beneficiary any interest
in or rights with respect to the Leases or Rents and Profits.

 

(M)           Neither this assignment nor pursuit of any remedy
hereunder by Beneficiary shall cause or constitute a merger of the interests of
the tenant and Trustor under any of the Leases such that any of the Leases
hereby assigned are no longer valid and binding legal obligations of the parties
executing the same.

 

(N)            Trustor agrees, from time to time, to execute and
deliver, upon demand, all assignments and any and all other writings as
Beneficiary may reasonably deem necessary or desirable to carry out the purpose
and intent hereof, or to enable Beneficiary to enforce any right or rights
hereunder.

 

1.8
Due on Sale or Encumbrance.  Neither Trustor nor any principal
of Trustor shall, without the prior written consent of Beneficiary: (i) create,
effect, consent to, suffer to exist, assume, incur, permit (voluntarily or
involuntarily, by operation of law or otherwise) any direct or indirect
conveyance, sale, assignment, transfer, grant, lien, pledge, mortgage, security
interest or other encumbrance or disposition (each of the foregoing defined as
“Transfer”) of the Property or an interest therein; (ii) be divested of its
title to the Property or any interest therein; (iii) enter into a contract to
sell or grant an option to purchase all or any portion of the Property or any
interest therein that results in a transfer of possession or of equitable title
to the Property or any portion thereof prior to the payment of the Loan in
accordance with its terms; (iv) enter into any lease giving the tenant any
option to purchase the Property or any part thereof; (v) permit or suffer any
Transfer of any direct or indirect ownership interest in Trustor or any
indemnitor or guarantor under this Deed of Trust or any Related Agreement; (vi)
permit or suffer any Transfer of any ownership interest in any direct or indirect
owner of a legal or beneficial interest in Trustor (including, without
limitation its general partners, members, trustees, beneficiaries or
shareholders); (vii) permit or suffer the merger, dissolution, liquidation or
consolidation of Trustor or any of the direct or indirect owners of Trustor or
the conversion of one type of legal entity into another type of legal entity.
Except as expressly consented to in writing by Beneficiary, Trustor shall not
incur any additional indebtedness (secured or unsecured, direct or contingent)
other than unsecured debt or trade payables incurred in the ordinary course of
business in connection with the operation of the Property. Upon the occurrence
of any of the prohibited actions specified herein, then Beneficiary shall have
the right, at its option, to declare the

 

16

 

indebtedness secured by this Deed of Trust
immediately due and payable, irrespective of the maturity date specified in the
Notes.

 

Notwithstanding the foregoing, it is
understood and agreed by Beneficiary that AMERIVEST PROPERTIES INC., a Maryland
corporation (“Properties”), may engage in the issuance and trading of stock in
Properties as long as Properties maintains its status as a real estate
investment trust.

 

1.9
Preservation
and Maintenance  of Property.
Trustor shall hire competent and responsible property managers who shall be
reasonably acceptable to Beneficiary. Trustor, at its sole cost and expense,
shall keep the Property and every part thereof in good condition and repair
(subject to ordinary wear and tear), in such a fashion that the value and
utility of the Property will not be diminished and shall promptly and
faithfully comply with and obey all laws, ordinances, rules, regulations,
requirements and orders of every duly constituted governmental authority or
agent having jurisdiction with respect to the Property. All repairs,
replacements and renewals shall be at least equal in quality to the original
Improvements. Trustor shall not permit or commit any waste, impairment, or
deterioration of the Property, nor commit, suffer or permit any act upon or use
of the Property in violation of law or applicable order of any governmental
authority, whether now existing or hereafter enacted, or in violation of any
covenants, conditions or restrictions affecting the Property or bring or keep
any article in the Property or cause or permit any condition to exist thereon
which would be prohibited by or invalidate the insurance coverage required to
be maintained hereunder. Trustor shall promptly bond or discharge any
mechanics’ liens against the Property.

 

1.10
Use of Property.  Except as may have been
previously agreed in writing by Beneficiary, Trustor shall continue to operate
the Property for the purposes for which it was used on the date hereof and for
no other purpose. Trustor shall not make or suffer any improper or offensive
use of the Property or any part thereof and will not use or permit to be used
any part of the Property for any dangerous, noxious, offensive or unlawful
trade or business or for any purpose which will reduce the value of the
Property in any respect or will cause the Property or any part thereof or
interest therein to be subject to forfeiture. Trustor at its expense will
promptly comply with all rights of way or use, privileges, franchises,
servitudes, licenses, easements, tenements, hereditaments and appurtenances
forming a part of the Property and all instruments relating or evidencing the
same, in each case, to the extent compliance therewith is required of Trustor
under the terms thereof. Trustor will not take any action which results in a
forfeiture or termination of the rights afforded to Trustor under any such
instruments and will not, without the prior written consent of Beneficiary, amend
in any material respect any of such instruments. Trustor shall at all times
comply with all laws affecting the Property and comply with any instruments of
record at the time in force affecting the Property or any part thereof and
shall procure, maintain and comply with all permits, licenses, and other
authorizations required for any use of the Property or any part thereof then
being made, and for the proper erection, installation, operation and
maintenance of the Improvements or any part thereof. Trustor shall not
initiate, join in, acquiesce in, or consent to any change in any private
restrictive covenant, zoning law or

 

17

 

other
public or private restriction, limiting or defining the uses which may be made
of the Property or any part thereof. In furtherance of the foregoing sentence,
Trustor will not, by act or omission: (i) impair the integrity of the Property
as a single zoning lot separate and apart from all other premises; or (ii)
permit or suffer to permit the Property to be used by the public or any party
in such manner as might make possible a claim of adverse usage or possession or
any implied dedication or easement. If under applicable zoning provisions the
use of all or any portion of the Property is or shall become a nonconforming
use, Trustor will not cause or permit such nonconforming use to be discontinued
or abandoned without the express written consent of Beneficiary.

 

1.11
Alterations and Additions. Trustor shall not cause, suffer or permit:

 

(A)            Any material alterations of the
Property except (i) as required by any law, statute, ordinance, order, rule,
regulation, decree or other requirement of the United States, the applicable
state or county in which the Property is located or any political subdivision
of any of the foregoing, or any agency, department, commission, board, court,
bureau or instrumentality of any of them (“Governmental Authority”) or by any
condition of any approval, consent, registration, franchise, permit, license,
variance, certificate of occupancy or other authorization with regard to
zoning, landmark, ecological, environmental, air quality, subdivision,
planning, building or land use required by any Governmental Authority for the
construction, lawful occupancy and operation of the Property and the actual and
contemplated uses thereof, or (ii) as permitted or required to be made by the
terms of any Leases approved by Beneficiary (with respect to work in any space
demised thereunder);

 

(B)          Any demolition or removal of any portion
of the Property;

 

(C)          Any change which would increase the
risk of fire or other hazard;

 

(D)         Any zoning, reclassification with
respect to the Property; or

 

(E)          Any unlawful use of, or nuisance to
exist upon, the Property.

 

As
used herein, the term “material alteration” shall mean any alteration,
improvement or replacement (i) the cost of which (including any related
alteration, improvement or replacement) shall exceed $420,000 (excluding tenant
improvement work pursuant to Leases), or (ii) which materially and adversely
affects the mechanical, electrical, heating, ventilating, air-conditioning or
other building or operating systems of any of the Improvements, or materially
and adversely affects the cost of operation or maintenance of any such building
or operating systems, affects the structure or structural soundness of any of
the improvements of the Property, or the exterior or appearance of the
Property, or otherwise has a material adverse effect on the Property including
the use and/or value thereof.

 

1.12 Offset
Certificates.  Trustor,
within three (3) days upon request in person or within ten (10) days upon
request by mail, shall furnish a written statement duly

 

18

 

acknowledged and notarized, of all amounts
due on any indebtedness secured hereby or secured by any of the Related
Agreements, whether for principal or interest on the Notes or otherwise, and
stating whether any offsets or defenses exist against the indebtedness secured
hereby and covering such other matters with respect to any such indebtedness as
Beneficiary may reasonably require.

 

1.13
Trustee’s Costs and
Expenses.  Trustor
shall pay all costs, fees and expenses of Trustee, its agents and counsel, in
connection with the performance of its duties hereunder.

 

1.14  Protection of Security;
Costs and Expenses.

 

(A)            In addition to any other rights or remedies of
Beneficiary hereunder, under any of the Related Agreements, or in law or in
equity, upon the occurrence and during the continuation of an Event of Default
(or prior thereto after notice to Trustor, when possible, if Trustor is not
paying or performing the act itself and Beneficiary determines in its sole good
faith judgment that the same is necessary to preserve the Property or the lien
of this Deed of Trust or any other collateral securing the indebtedness
evidenced by the Notes, either before or after acceleration of the
indebtedness) Beneficiary may, but shall not be required to, make any payment
or perform any act required to be performed by Trustor hereunder or under any
of the Related Agreements in any form and manner deemed expedient to
Beneficiary, including, without limitation, if applicable: (i) paying any
Impositions which remain unpaid; (ii) procuring the release, discharge, compromise
or settlement of any lien filed or otherwise asserted against the Property
which has not been discharged by Trustor in accordance with the provisions of
this Deed of Trust or any of the other Related Agreements, and (iii) obtaining
insurance policies where insurance coverage was required to be obtained
hereunder and the required evidence that Trustor had obtained the same has not
been delivered to Beneficiary as required hereunder. Nothing herein shall be
construed to require Beneficiary to advance or expend monies for any purpose
mentioned herein, or for any other purpose.

 

(B)            Trustor and its property manager, if applicable, shall
appear in and defend any action or proceeding purporting to affect the security
of this Deed of Trust or any additional or other security for the obligations
secured hereby, or the rights or powers of Beneficiary or Trustee, and shall
pay all costs and expenses actually incurred, including, without limitation,
cost of evidence of title and actual attorneys’ fees, in any such action or
proceeding in which Beneficiary or Trustee may appear, and in any suit brought
by Beneficiary to foreclose this Deed of Trust or to enforce or establish any
other rights or remedies of Beneficiary hereunder or under any other security
for the obligations secured hereby. If Trustor fails to perform any of the
covenants or agreements contained in this Deed of Trust, or if any action or
proceeding is commenced which affects Beneficiary’s interest in the Property or
any part thereof, including, eminent domain, code enforcement, or proceedings
of any nature whatsoever under any federal or state law, whether now existing
or hereafter enacted or amended, relating to bankruptcy, insolvency,
arrangement, reorganization or other form of debtor

 

19

 

relief, or to a decedent, then Beneficiary
may, but without obligation to do so and without notice to or demand upon
Trustor, perform such covenant or agreement and compromise any encumbrance,
charge or lien which in the judgment of Beneficiary appears to be prior or
superior hereto. Trustor shall further pay all expenses of Beneficiary actually
incurred (including reasonable and actual fees and disbursements of counsel)
incident to the protection or enforcement of the rights of Beneficiary
hereunder, and enforcement or collection of payment of the Notes or any Future
Advance whether by judicial or nonjudicial proceedings, or in connection with
any bankruptcy, insolvency, arrangement, reorganization or other debtor relief
proceeding of Trustor, or otherwise.

 

(C)           Trustor shall pay to Beneficiary, immediately upon written
notice from Beneficiary: (i) all recordation, transfer, stamp, documentary or
other fees or taxes levied on Beneficiary (exclusive of Beneficiary’s income
taxes) by reason of the making or recording of the Notes, this Deed of Trust or
any Related Agreement, and (ii) all intangible property taxes levied upon any
holder of the Notes or Beneficiary under this Deed of Trust or secured party
under the Related Agreements.

 

Any amounts disbursed by
Beneficiary pursuant to this section or Section 1.13, including, without
limitation, reasonable attorneys’ fees, whether or not the indebtedness as a
result thereof shall exceed the face amount of the Notes, shall be additional
indebtedness of Trustor secured by this Deed of Trust and each of the Related
Agreements as of the date of disbursement shall become immediately due and
payable on demand and shall bear interest at the Default Rate set forth in the
Notes, from demand until paid. All such amounts shall be payable by Trustor
immediately upon demand. Nothing contained in this section shall be construed
to require Beneficiary to incur any expense, make any appearance, or take any
other action.

 

1.15
Trustor’s
Covenants Respecting Collateral.

 

(A)            Trustor authorizes Beneficiary to file financing and
continuation statements covering the Collateral from time to time and in such
form as Beneficiary may require to perfect and continue the perfection of
Beneficiary’s security interest with respect to such property, and Trustor
shall pay all reasonable costs and expenses of any record searches for
financing statements Beneficiary may require. For purpose of such filings,
Trustor agrees to furnish any information requested by Beneficiary promptly
upon request by Beneficiary describing the Collateral. Trustor hereby ratifies
and approves all filings of financing statements, amendments, and continuations
applicable to the Collateral made or filed by Beneficiary prior to the date of
this Deed of Trust.

 

(B)            Without the prior written consent of Beneficiary, Trustor
shall not create or suffer to be created any other security interest in the
Collateral, including replacements and additions thereto.

 

(C)           Without the prior written consent of
Beneficiary or except in the ordinary course of business, Trustor shall not
sell, transfer or encumber any of the

 

20

 

Collateral, or remove any of the Collateral
from the Property unless Trustor shall promptly substitute and replace the
property removed with similar property of at least equivalent value on which
Beneficiary shall have a continuing security interest ranking at least equal in
priority to Beneficiary’s security interest in the property removed.

 

(D)            Trustor shall (i) upon reasonable notice (unless an
emergency or Event of Default exists) permit Beneficiary and its
representatives to enter upon the Property to inspect the Collateral and
Trustor’s books and records relating to the Collateral and make extracts
therefrom and to arrange for verification of the amount of Collateral, under
procedures acceptable to Beneficiary, directly with Trustor’s debtors or
otherwise at Trustor’s expense; (ii) promptly notify Beneficiary of any
attachment or other legal process levied against any of the Collateral and any
information received by Trustor relative to the Collateral, Trustor’s debtors
or other persons obligated in connection therewith, which may in any way affect
the value of the Collateral or the rights and remedies of Beneficiary in
respect thereto; (iii) reimburse Beneficiary upon demand for any and all costs
actually incurred, including, without limitation, reasonable and actual
attorneys’ and accountants’ fees, and other expenses incurred in collecting any
sums payable by Trustor under any obligation secured hereby, or in the
checking, handling and collection of the Collateral and the preparation and
enforcement of any agreement relating thereto; (iv) notify Beneficiary of each
location at which the Collateral is or will be kept, other than for temporary
processing, storage or similar purposes, and of any removal thereof to a new
location, including, without limitation, each office of Trustor at which
records relating to the Collateral are kept; (v) provide, maintain and deliver
to Beneficiary originals or certified copies of the policies of insurance and
certificates of insurance insuring the Collateral against loss or damage by
such risks and in such amounts, form and by such companies as Beneficiary may
require and with loss payable to Beneficiary, and in the event Beneficiary
takes possession of the Collateral, the insurance policy or policies and any
unearned or returned premium thereon shall at the option of Beneficiary become
the sole property of Beneficiary; and (vi) do all acts necessary to maintain,
preserve and protect all Collateral, keep all Collateral in good condition and
repair and prevent any waste or unusual or unreasonable depreciation thereof.

 

(E)             Until Beneficiary exercises its right to collect
proceeds of the Collateral pursuant hereto, Trustor will collect with diligence
any and all proceeds of the Collateral. If an Event of Default exists, any
proceeds received by Trustor shall be held in trust for Beneficiary, and Trustor
shall keep all such collections separate and apart from all other funds and
property so as to be capable of identification as the property of Beneficiary
and shall deliver to Beneficiary such collections at such time as Beneficiary
may request in the identical form received, properly endorsed or assigned when
required to enable Beneficiary to complete collection thereof.

 

(F)             Beneficiary shall have all of the rights and remedies
granted to a secured party under the Uniform Commercial Code of the state in which
the Collateral is located, as well as all other rights and remedies available
at law or in equity. During the continuation of any Event of Default hereunder
or under either of the Notes, Beneficiary

 

21

 

shall have the right to take possession of
all or any part of the Collateral, to receive directly or through its agent(s)
collections of proceeds of the Collateral (including notification of the
persons obligated to make payments to Trustor in respect of the Collateral), to
release persons liable on the Collateral and compromise disputes in connection
therewith, to exercise all rights, powers and remedies which Trustor would
have, but for the security agreement contained herein, to all of the Collateral
and proceeds thereof, and to do all other acts and things and execute all
documents in the name of Trustor or otherwise, deemed by Beneficiary as
necessary, proper and convenient in connection with the preservation,
perfection or enforcement of its rights hereunder; and

 

(G)            During the continuation of any Event of Default hereunder
or under either of the Notes, Trustor shall, at the request of Beneficiary,
assemble and deliver the Collateral and books and records pertaining to the
Property at a place designated by Beneficiary, and Beneficiary may, with
reasonable notice to Trustor (unless an emergency or Event of Default exists,
in which case no notice shall be required), enter onto the Property and take
possession of the Collateral. It is agreed that public or private sales, for
cash or on credit to a wholesaler or retailer or investor, or user of
collateral of the types subject to the security agreement, or public auction,
are all commercially reasonable since differences in the sales prices generally
realized in the different kinds of sales are ordinarily offset by the
differences in the costs and credit risks of such sales. The proceeds of any
sale of the Collateral shall be applied first to the expenses of Beneficiary
actually incurred in retaking, holding, preparing for sale, or selling the
Collateral or similar matters, including reasonable and actual attorneys’ fees,
and then, as Beneficiary shall solely determine.

 

(H)            Trustor represents and warrants to Beneficiary that (i)
Trustor’s exact legal name is as set forth in the heading to the Deed of Trust;
(ii) if Trustor is an organization, Trustor’s type of organization and
jurisdiction of organization are as set forth in the heading to this Deed of
Trust, and Trustor’s chief executive office is located at the address set forth
for notices to Trustor in this Deed of Trust; (iii) if Trustor is an
individual, Trustor’s principal residence is at Trustor’s address for notices
set forth in the Deed of Trust; (iv) except as specifically disclosed by
Trustor to Beneficiary prior to the execution of this Deed of Trust, during the
five (5) years and six months prior to the date of this Deed of Trust, Trustor
has not been known by any legal name different from the one set forth in the
heading of the Deed of Trust nor has Trustor been the subject of any merger,
consolidation, or other corporate or organizational reorganization.

 

(I)              Trustor agrees that so long as this Deed of Trust
remains in effect, it will notify Beneficiary in writing at least sixty (60)
days in advance of: (i) any change whatsoever in the name of Trustor; (ii) any
change whatsoever in the state or jurisdiction in which Trustor is formed or,
if Trustor is an individual, in which Trustor’s principal residence is located,
or (iii) any change whatsoever in the name(s) under which Trustor conducts
business, any new names under which Trustor intends to do business; or, (iv)
any new addresses at or from which Trustor intends to do business or

 

22

 

to keep collateral of any kind. Trustor shall
in any event keep all collateral within one or more of the United States of
America.

 

1.16
Covenants
Regarding Financial Statements.

 

(A)            Trustor shall keep true books of record and account in
which full, true and correct entries in accordance with sound accounting
practice and principles applied on a consistent basis from year to year shall
be made of all dealings or transactions with respect to the Property.

 

(B)           (1)           Trustor shall deliver to Beneficiary:

 

(a)               Within sixty (60) days after the last day of each
fiscal year of Trustor during the term of the Notes, unaudited annual financial
reports prepared on an accrual basis, including balance sheets, income
statements and cash flow statements covering the operation of the Property, the
financial condition of Trustor, Trustor’s general partners(s), shareholder(s),
member(s) and such principals of Trustor as Beneficiary may from time to time
designate, for the previous fiscal year, all certified to Beneficiary to be
complete, correct and accurate by the individual, managing general partner,
manager or chief financial officer of the party whom the report concerns; and

 

(b)              if available, within thirty (30) days after receipt by
Trustor, original annual audit reports of an independent certified public
accountant prepared in accordance with generally accepted accounting principles
containing an unqualified opinion, including balance sheets, income statements
and cash flow statements covering the operation of the Property and the financial
condition of Trustor, Trustor’s general partner(s), shareholder(s), member(s)
and such principals of Trustor as Beneficiary may from time to time designate,
for the previous fiscal year;

 

(2)               If, in Beneficiary’s reasonable opinion, the loan to
value ratio is then seventy-five percent (75%) or greater, Trustor shall also
deliver, at Beneficiary’s request from time to time (but no more often than
once in each fiscal quarter of Trustor during the term of the Notes), unaudited
financial reports prepared on an accrual basis, including balance sheets,
income statements and cash flow statements covering the operation of the
Property and the financial condition of Trustor, Trustor’s general partner(s),
shareholder(s), member(s) and such principals of Trustor as Beneficiary may
from time to time request, for the previous fiscal quarter, a portfolio
analysis report covering the operation of all properties of which Trustor or
any of Trustor’s general partners, shareholder(s), member(s) or principals
designated by Beneficiary is the owner or a general partner of the owner,
setting out a cash flow statement (including debt service payments) for each
such property, and a current rent roll of the Property, all certified to
Beneficiary to be complete, correct and accurate by the individual, managing
general partner or chief financial officer of the party whom the report
concerns.

 

23

 

 

(3) All reports shall
include, without limitation, balance sheets and statements of income and of
partner’s equity, if applicable, setting forth in each case in comparative form
the figures for the previous fiscal quarter or year, as the case may be. The interim
quarterly reports shall also include a breakdown of all categories of revenues
and expenses, and any supporting schedules and data requested by Beneficiary.
Each set of annual or quarterly financial reports or quarterly rent rolls
delivered to Beneficiary pursuant to this Section 1.16 shall also be
accompanied by a certificate of the chief financial officer or the managing
general partner of Trustor, stating whether any condition or event exists or
has existed during the period covered by the annual or quarterly reports which
then constituted or now constitutes an Event of Default under either of the
Notes or this Deed of Trust, and if any such condition or event then existed or
now exists, specifying its nature and period of existence and what Trustor did
or proposes to do with respect to such condition or event.

 

(C)            In the event such statements are not in a form reasonably
acceptable to Beneficiary or Trustor fails to furnish such statements and
reports, then Beneficiary shall have the immediate and absolute right to audit
the respective books and records of the Property and Trustor at the expense of
Trustor.

 

1.17
Environmental
Covenants and Indemnities. Trustor
covenants:

 

(A)            That no Hazardous Materials (as defined below) shall be
installed, used, generated, manufactured, treated, handled, refined, produced,
processed, stored or disposed of, in, on or under the Property other than
Hazardous Materials in quantities and of types reasonably and customarily
associated with general office use which have been and are stored, used and
disposed of in compliance with Hazardous Material Laws (as defined below) and
the presence of which do not require compliance with any reporting requirements
under any Hazardous Material Laws;

 

(B)          That no activity shall be undertaken
on the Property which would cause:

 

(1)           the Property to become a hazardous
waste treatment, storage or disposal facility under any Hazardous Material Law,

 

(2)           a release or threatened release of
Hazardous Material from the Property in violation of any Hazardous Material
Law, or

 

(3)           the discharge of Hazardous Material
into any watercourse, body of surface or subsurface water or wetland, or the
discharge into the atmosphere of any Hazardous Material which would require a
permit under any Hazardous Material Law and for which no such permit has been
issued;

 

(C)          That no activity shall be undertaken
or permitted to be undertaken, by Trustor on the Property which would result in
a violation under any Hazardous Material Law;

 

 

24

 

(D)            To obtain and deliver to Beneficiary, within a reasonable
time following completion of actions required by an appropriate governmental
agency, certifications of engineers or other professionals reasonably
acceptable to Beneficiary, in form and substance satisfactory to Beneficiary,
certifying that all necessary and required actions to clean up, remove,
contain, prevent and eliminate all releases or threats of release of Hazardous
Materials on or about the Property to the levels required by the appropriate
governmental agencies have been taken and, to the knowledge of such
professional, the Property is then in compliance with applicable Hazardous
Material Laws as then in effect and applicable to such actions. For purposes of
this Deed of Trust, “Hazardous Materials” means and includes asbestos or any
substance containing asbestos, polychlorinated biphenyls, any explosives,
radioactive materials, chemicals known or suspected to cause cancer or
reproductive toxicity, pollutants, effluents, contaminants, emissions,
infectious wastes, any petroleum or petroleum-derived waste or product or
related materials and any items defined as hazardous, special or toxic
materials, substances or waste under any Hazardous Material Law, or any material
which shall be removed from the Property pursuant to any administrative order
or enforcement proceeding or in order to place the Property in a condition that
is suitable for ordinary use. “Hazardous Material Laws” means all federal,
state and local laws (whether under common law, statute or otherwise),
ordinances, rules, regulations and guidance documents now in force, as amended
from time to time, in any way relating to or regulating human health or safety,
industrial hygiene or environmental conditions, protection of the environment,
pollution or contamination of the air, soil, surface water or groundwater, and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. §9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. §6901, et seq., the Clean Water Act,
33 U.S.C. §1251, et seq., the Clean Air Act, 42 U.S.C. §7401, et seq., the
Occupational Safety and Health Act, 29 U.S.C. §651, et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. §1801, et seq., the Federal Water
Pollution Control Act, 33 U.S.C. §1321, et seq., and the Toxic Substances
Control Act, 15 U.S.C. §2601, et seq.

 

(E)             Trustor hereby agrees, at its sole cost and expense, to
unconditionally indemnify, defend, and hold Beneficiary, its directors,
officers, employees and agents harmless against any loss, liability, damage
(whether direct or consequential), expenses, claims, penalties, fines,
injunctions, suits, proceedings, disbursements or expenses (including, without
limitation, attorneys’ and experts’ fees and disbursements and court costs)
(collectively, the “Liabilities”) arising under any Hazardous Material Law, or
any other Liabilities which may be incurred by or asserted against Beneficiary
directly or indirectly resulting from the presence of Hazardous Material on the
Property. Trustor shall assume the burden and expense of defending all suits,
administrative proceedings and disputes of any description with all persons,
entities, political subdivisions or government agencies arising out of the
matters to be indemnified under this Deed of Trust. Trustor shall pay, promptly
upon entry, any nonappealable order, judgment or other final resolution of any
claim or dispute arising out of the matters to be indemnified under this Deed
of Trust and shall pay promptly

 

 

25

 

when due any fines, penalties or agreed
settlements arising out of the matters to be indemnified under this Deed of
Trust. In the event that such payment is not made, Beneficiary, at its sole
discretion, may proceed to file suit against Trustor to compel such payment.
Promptly following completion of any actions imposed upon Trustor under any
Hazardous Material Law, Trustor shall obtain and deliver to Beneficiary, an
environmental report in form and substance reasonably acceptable to Beneficiary
from an environmental consultant acceptable to Beneficiary, stating that all
required action has been taken, and that upon completion of such action, the
Property is, to the knowledge of such professional, then in compliance with the
applicable Hazardous Material Laws. Such indemnification shall survive payment
of the Notes, but shall become null and void and of no further force or effect
in the event Beneficiary or any other party obtains title to the Property
through foreclosure or exercise of power of sale under this Deed of Trust or
deed in lieu of foreclosure or exercise of power of sale.

 

1.18
Further Assurances. Trustor, from time to time, will execute, acknowledge,
subscribe and deliver to or at the direction of Beneficiary such documents and
further assurances as Beneficiary may reasonably require for the purpose of
evidencing, perfecting or confirming the lien and security interest created by
this Deed of Trust or the security to be afforded by the Related Agreements, or
both. Without limiting the foregoing and notwithstanding anything in this Deed
of Trust or the Related Agreements to the contrary, Trustor will defend,
indemnify and hold Beneficiary harmless with respect to any suit or proceeding
in which the validity, enforceability or priority of any such lien or security
interest, or both, is endangered or contested, directly or indirectly. If
Trustor fails to undertake the defense of any such claim in a timely manner,
or, in Beneficiary’s sole determination, fails to prosecute such defense with
due diligence, then Beneficiary is authorized to take, at the sole expense of
Trustor, all necessary and proper action in defense of any such claim,
including, without limitation, the retention of legal counsel, the prosecution
or defense of litigation and the compromise or discharge of claims, including
payment of all costs and attorneys’ and paralegals’ fees. All cost, expenses
and losses, if any, so incurred by Beneficiary, including all attorneys’ and
paralegals’ fees, regardless of whether suit is brought, for all
administrative, trial and appellate proceedings, if any, will constitute
advances by Beneficiary as provided in Section 1.14 hereinabove.

 

1.19
Trustor’s Continued
Existence. Trustor shall
at all times during the term of the Loan maintain its legal existence and
qualification to do or transact business in the state in which the Property or
any of the Collateral is located and shall maintain its legal existence and
good standing in the state in which Trustor was created.

 

ARTICLE II 

EVENTS
OF DEFAULT

 

Each of the following shall
constitute an event of default (“Event of Default”) hereunder:

 

2.1 Monetary and Performance Defaults.

 

 

26

 

(A)            Failure to make any payment due under either of the Notes
or any note evidencing a Future Advance, other than the final payment and
Prepayment Premium, or to make any payment due under this Deed of Trust to
Beneficiary or any other party, including without limitation, payment of escrow
deposits, real estate taxes, insurance premiums and ground rents, if any, on or
before the fourth day after such payment is due; or,

 

(B)            Failure to make the final payment or the Prepayment
Premium due under either of the Notes or any note evidencing a Future Advance when
such payment is due whether at maturity, by reason of acceleration, as part of
a prepayment or otherwise (the defaults in (A) and (B) hereinafter “Monetary
Default”); or

 

(C)            Breach or default in the performance of any of the
covenants or agreements of Trustor contained herein or in any Related Agreement
(“Performance Default”), if such Performance Default shall continue for fifteen
(15) days or more after written notice to Trustor from Beneficiary specifying
the nature of the Performance Default; provided, however, that if such
Performance Default is of a nature that it cannot be cured within the 15 day
period, then Trustor shall not be in default if it commences good faith efforts
to cure the Performance Default within the 15 day period, demonstrates continuous
diligent efforts to cure the Performance Default in a manner satisfactory to
Beneficiary and, within a reasonable period, not to exceed 180 days after the
date of the original written notice of the Performance Default, completes the
cure of such Performance Default. Notwithstanding the foregoing, if the breach
or default is one which is defined as an Event of Default elsewhere in this
Article II or in the default definition of any Related Agreement, then Trustor
shall not be entitled to any notice or cure period upon the occurrence of such
breach or default except for such notice and cure periods, if any, as may be
expressly granted in such other defined Event of Default.

 

2.2 Bankruptcy, Insolvency, Dissolution.

 

(A)            Any court of competent jurisdiction shall sign an order
(i) adjudicating Trustor, or any person, partnership or corporation holding an
ownership interest in Trustor or in any partnership comprising Trustor, or any
guarantor (which term when used in this Deed of Trust shall mean guarantor of
payment of the indebtedness) bankrupt or insolvent, (ii) appointing a receiver,
trustee or liquidator of the Property or of a substantial part of the property
of Trustor, or any person, partnership or corporation holding an ownership
interest in Trustor, or in any partnership comprising Trustor, or any
guarantor, or (iii) approving a petition for, or effecting an arrangement in
bankruptcy, or any other judicial modification or alteration of the rights of
Beneficiary or of other creditors of Trustor, or any person, partnership or
corporation holding an ownership interest in Trustor, or in any partnership
comprising Trustor or any guarantor; or

 

 

27

 

(B)            Trustor, any person, partnership or corporation holding
an ownership interest in Trustor or in any partnership comprising Trustor,
shall (i) apply for or consent to the appointment of a receiver, trustee or
liquidator for it or for any of its property, (ii) as debtor, file a voluntary
petition in bankruptcy, or petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation
law or statute, or an answer admitting the material allegations of a petition
filed against it and any proceeding under such law, (iii) admit in writing an
inability to pay its debts as they mature, or (iv) make a general assignment
for the benefit of creditors; or

 

(C)            An involuntary petition in bankruptcy is filed against
Trustor, or any person, partnership or corporation holding an ownership
interest in Trustor or in any partnership comprising Trustor and the same is
not vacated or stayed within 30 days of the filing date.

 

2.3
Misrepresentation.  Trustor makes or furnishes a
representation, warranty, statement, certificate, schedule and/or report to
Beneficiary in or pursuant to this Deed of Trust or any of the Related
Agreements which is false or misleading in any material respect as of the date
made or furnished.

 

2.4
Default under Subordinate
Loans.  An
occurrence of a default under any loan subordinate to this Deed of Trust which
is not an independent default under this Deed of Trust which results in the
commencement of foreclosure proceedings or the taking of any other remedial
action under such subordinate loan.

 

2.5
Breach of Due on Sale or
Encumbrance Provision.  Any
occurrence of a prohibited Transfer under Section 1.8 hereof.

 

ARTICLE III

REMEDIES

 

Notwithstanding any
provision to the contrary in the Notes, this Deed of Trust, or any of the
Related Agreements, upon the occurrence of an Event of Default, such Event of
Default shall be deemed to exist and be continuing unless and until (a)
applicable law requires Beneficiary to accept a cure by Trustor of such Event
of Default or (b) Beneficiary elects, in its sole and absolute discretion, to
accept a cure by Trustor of such Event of Default. During the continuation of
any Event of Default, Trustee and Beneficiary shall have the following rights
and remedies set forth in Sections 3.1 through 3.8:

 

3.1
Acceleration.  Notwithstanding the stated
maturity date in the Notes, or any note evidencing any Future Advance,
Beneficiary may without notice or demand, declare the entire principal amount
of the Notes and/or any Future Advances then outstanding and accrued and unpaid
interest thereon, and all other sums or payments required thereunder including,
but not limited to the Prepayment Premium described in the Notes, to be due and
payable immediately.

 

 

28

 

 

3.2
Entry.
Irrespective of whether Beneficiary exercises the option provided in
Section 3.1 above, Beneficiary in person or by agent or by court-appointed
receiver may, at its option, without any action on its part being required,
without in any way waiving such Event of Default, with or without the
appointment of a receiver, or an application therefor:

 

(A)            Take possession of the Property and conduct tests of,
manage or hire a manager to manage, lease and operate the Property or any part
thereof, on such terms and for such period of time as Beneficiary may deem
proper, with full power to make, from time to time, all alterations,
renovations, repairs or replacements thereto as may seem proper to Beneficiary;

 

(B)            With or without taking possession of the Property,
collect and receive all Rents and Profits, notify tenants under the Leases or
any other parties in possession of the Property to pay Rents and Profits
directly to Beneficiary, its agent or a court-appointed receiver and apply such
Rents and Profits to the payment of:

 

(1)
all costs and expenses incident to taking and retaining possession of the
Property (including the cost of any receivership), management and operation of
the Property, keeping the Property properly insured and all alterations,
renovations, repairs and replacements to the Property;

 

(2)
all taxes, charges, claims, assessments, and any other liens which may be prior
in lien or payment to this Deed of Trust or the Notes, and premiums for
insurance, with interest on all such items; and

 

(3)
the indebtedness secured hereby together with all costs and attorneys’ fees, in
such order or priority as to any of such items as Beneficiary in its sole
discretion may determine, any statute, law, custom or use to the contrary
notwithstanding;

 

(C)           Exclude Trustor, its agents and
servants, wholly from the Property;

 

(D)           Have joint access with Trustor to the
books, papers and accounts of Trustor relating to the Property, at the expense
of Trustor;

 

(E)             Commence, appear in and/or defend any action or
proceedings purporting to affect the interests, rights, powers and/or duties of
Beneficiary hereunder, whether brought by or against Trustor or Beneficiary;
and

 

(F)             Pay, purchase, contest or compromise any claim, debt, lien,
charge or encumbrance which in the judgment of Beneficiary may affect or appear
to affect the interest of Beneficiary or the rights, powers and/or duties of
Beneficiary hereunder.

 

 

 

29

 

 

Trustee or Beneficiary, as a
matter of right without notice to Trustor or anyone claiming under it and
without regard to the then value of the Property or the interest of Trustor
therein, shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers to take charge of the Property or any portion
thereof. Any such receiver or receivers shall have all of the usual and
customary powers and duties of receivers in like or similar cases and all of
the powers and duties of Beneficiary in case of entry as provided hereinabove,
including without limitation, the right to collect and receive Rents and
Profits. All such Rents and Profits paid to Trustee or Beneficiary or collected
by such receiver shall be applied as provided for in subparagraph 3.2(B) above.
Trustor for itself and any subsequent owner of the Property hereby waives any
and all defenses to the application for such receiver and hereby irrevocably
consents to such appointment without notice of any application therefor.

 

The receipt by Beneficiary of any Rents and
Profits pursuant to this Deed of Trust after the institution of foreclosure or
other proceedings under the Deed of Trust shall not cure any such Event of
Default or affect such proceedings or any sale pursuant thereto. After deducting
the expenses and amounts set forth above in this Section 3.2, as well as just
and reasonable compensation for all Beneficiary’s employees and other agents
(including, without limitation, reasonable and actual attorneys’ fees and
management and rental commissions) engaged and employed, the moneys remaining,
at the option of Beneficiary, may be applied to the indebtedness secured
hereby. Whenever all amounts due on the Notes and under this Deed of Trust
shall have been paid and all Events of Default have been cured and any such
cure has been accepted by Beneficiary, Beneficiary shall surrender possession
to Trustor. The same right of entry, however, shall exist if any subsequent
Event of Default shall occur; provided, however, neither Trustee nor Beneficiary
shall be under any obligation to make any of the payments or do any of the acts
referred to in this Section 3.2.

 

3.3
Judicial Action.  Beneficiary may bring an action
in any court of competent jurisdiction to foreclose this instrument or to
enforce any of the covenants and agreements hereof. The Property may be
foreclosed in parts or as an entirety.

 

3.4
Power of Sale.  Beneficiary may elect to cause
the Property or any part thereof to be sold under the power of sale herein
granted in any manner permitted by applicable law. Should Beneficiary elect to
sell the Property, or any part thereof, which is real property as provided
above, Beneficiary or Trustee shall give such notice of default and election to
sell as may then be required by law. Thereafter, upon the expiration of such
time and the giving of such notice of sale as may then be required by law, and
without the necessity of any demand on Trustor, Trustee, at the time and place
specified in the notice of sale, shall sell the Property or any part thereof at
public auction to the highest bidder for cash in lawful money of the United
States payable at time of sale, or as otherwise provided by applicable law.
Trustee may, and upon request of Beneficiary shall, from time to time, postpone
any sale hereunder in the manner required by law. If the Property consists of
several lots, parcels or items of property, Beneficiary may designate the order
in which such lots, parcels or items shall be offered for sale or sold. Any
person, including Trustor, Trustee or Beneficiary, may purchase at

 

 

 

30

 

 

any sale hereunder, and Beneficiary shall
have the right to purchase at any sale hereunder by crediting upon the bid
price the amount of all or any part of the indebtedness hereby secured plus
interest, late charges, prepayment fees, and reasonable attorneys’ fees and
trustees’ fees, as herein provided. Should Beneficiary desire that more than
one sale or other disposition of the Property be conducted, Beneficiary may, at
its option, cause the same to be conducted simultaneously, or successively, on
the same day, or at such different times and in such order as Beneficiary may
deem to be in its best interests, and no such sale shall terminate or otherwise
affect the lien of this Deed of Trust on any part of the Property not sold
until all indebtedness secured hereby has been fully paid. In the event of
default of any purchaser, Trustee shall have the right to resell the Property
as set forth above. Upon any sale hereunder, Trustee shall execute and deliver
to the purchaser or purchasers a deed or deeds conveying the property so sold,
but without any covenant or warranty whatever, express or implied, whereupon
such purchaser or purchasers shall be let into immediate possession; and the
recitals of facts in any such deed or deeds such as default, the giving of
notice of default and notice of sale, and other facts affecting the regularity
or validity of such sale or disposition, shall be conclusive proof of the truth
of such facts and any such deed or deeds shall be conclusive against all
persons as to such facts recited therein.

 

3.5
Rescission of Notice of
Default.  Beneficiary,
from time to time before Trustee’s sale, public sale or deed in lieu of
foreclosure, may rescind any such notice of breach or default and of election
to cause the Property to be sold by executing and delivering to Trustee a
written notice of such rescission, which notice, when recorded, shall also
constitute a cancellation of any prior declaration of default and demand for
sale or such documents as may be required by the laws of the state in which the
Property is located to effect such rescission. The exercise by Beneficiary of
such right of rescission shall not constitute a waiver of any breach or Event
of Default then existing or subsequently occurring, or impair the right of
Beneficiary to execute and deliver to Trustee, as above provided, other
declarations of default and demand for sale, and notices of breach or default,
and of election to cause the Property to be sold to satisfy the obligations
hereof, nor otherwise affect any provision, agreement, covenant or condition of
the Notes and/or of this Deed of Trust or any of the rights, obligations or
remedies of the parties hereunder.

 

3.6
Beneficiary’s
Remedies Respecting Collateral.
Beneficiary may realize upon the Collateral, enforce and exercise all of
Trustor’s rights, powers, privileges and remedies in respect of the Collateral,
dispose of or otherwise deal with the Collateral in such order as Beneficiary
may in its discretion determine, and exercise any and all other rights, powers,
privileges and remedies afforded to a secured party under the laws of the state
in which the Property is located as well as all other rights and remedies
available at law or in equity.

 

 

31

 

 

 

3.7
Proceeds of Sales.  The proceeds of any sale made
under or by virtue of this Article III, together with all other sums which then
may be held by Trustee or Beneficiary under this Deed of Trust, whether under
the provisions of this Article III or otherwise, shall be applied as follows:

 

(A)            To the payment of the costs, fees and expenses of sale
and of any judicial proceedings wherein the same may be made, including the
cost of evidence of title in connection with the sale, compensation to Trustee
and Beneficiary, and to the payment of all expenses, liabilities and advances
made or incurred by Trustee under this Deed of Trust, together with interest on
all advances made by Trustee at the interest rate applicable under the Notes,
but limited to any maximum rate permitted by law to be charged by Trustee;

 

(B)            To the payment of any and all sums expended by
Beneficiary under the terms hereof, not then repaid, with accrued interest at
the Default Rate set forth in the Notes, and all other sums (except advances of
principal and interest thereon) required to be paid by Trustor pursuant to any
provisions of this Deed of Trust, or the Notes, or any note evidencing any
Future Advance, or any of the Related Agreements, including, without
limitation, all expenses, liabilities and advances made or incurred by
Beneficiary under this Deed of Trust or in connection with the enforcement
thereof, together with interest thereon as herein provided; and

 

(C)            To the payment of the entire amount then due, owing or
unpaid for principal and interest upon the Notes, any notes evidencing any
Future Advance, and any other obligation secured hereby, with interest on the
unpaid principal at the rate set forth therein from the date of advancement
thereof until the same is paid in full; and then

 

(D)          The remainder, if any, to the person
or persons, including Trustor, legally entitled thereto.

 

3.8
Condemnation and Insurance
Proceeds.  All
Proceeds and any interest earned thereon shall be paid over either by the
condemning authority, insurance company or escrow agent to Beneficiary and
shall be applied first toward reimbursement of the costs and expenses of
Beneficiary (including reasonable attorneys’ fees), if any, in connection with
the recovery of such Proceeds, and then shall be applied in the sole and
absolute discretion of Beneficiary and without regard to the adequacy of its
security under this Deed of Trust:

 

(A)         to the payment or prepayment of all or
any portion of the Notes including the Prepayment Premium described in the
Notes;

 

(B)          to the reimbursement of expenses
incurred by Beneficiary in connection with the restoration of the Property; or

 

 

32

 

 

(C)            to the performance of any of the covenants contained in
this Deed of Trust as Beneficiary may determine. Any prepayment of the Notes or
portion thereof pursuant to Beneficiary’s election under this section shall be
subject to the Prepayment Premium described in the Notes.

 

3.9 Waiver of Marshaling,  Rights
of Redemption,  Homestead and  Valuation.

 

(A)            Trustor, for itself and for all persons hereafter
claiming through or under it or who may at any time hereafter become holders of
liens junior to the lien of this Deed of Trust, hereby expressly waives and
releases all rights to direct the order in which any of the Property shall be
sold in the event of any sale or sales pursuant hereto and to have any of the
Property and/or any other property now or hereafter constituting security for
any of the indebtedness secured hereby marshalled upon any foreclosure of this
Deed of Trust or of any other security for any of said indebtedness.

 

(B)            To the fullest extent permitted by law, Trustor, for
itself and all who may at any time claim through or under it, hereby expressly
waives, releases and renounces all rights of redemption from any foreclosure
sale, all rights of homestead, exception, monitoring reinstatements,
forbearance, appraisement, valuation, stay and all rights under any other laws
which may be enacted extending the time for or otherwise affecting enforcement
or collection of the Notes, the debt evidenced thereby, or this Deed of Trust.

 

3.10
Remedies Cumulative.  No remedy herein conferred upon
or reserved to Trustee or Beneficiary is intended to be exclusive of any other
remedy herein or by law provided, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. No delay or omission of Trustee or Beneficiary
to exercise any right or power accruing upon any Event of Default shall impair
any right or power or shall be construed to be a waiver of any Event of Default
or any acquiescence therein. Every power and remedy given by this Deed of Trust
to Trustee or Beneficiary may be exercised separately, successively or
concurrently from time to time as often as may be deemed expedient by Trustee
or Beneficiary. If there exists additional security for the performance of the
obligations secured hereby, Beneficiary, at its sole option, and without
limiting or affecting any of its rights or remedies hereunder, may exercise any
of the rights and remedies to which it may be entitled hereunder either
concurrently with whatever rights and remedies it may have in connection with
such other security or in such order as it may determine. Any application of
any amounts or any portion thereof held by Beneficiary at any time as
additional security or otherwise, to any indebtedness secured hereby shall not
extend or postpone the due dates of any payments due from Trustor to
Beneficiary hereunder or under the Notes, any Future Advance, or under any of
the Related Agreements, or change the amounts of any such payments or otherwise
be construed to cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to any such default or notice.

 

 

33

 

3.11
Nonrecourse.  Beneficiary acknowledges and
agrees that the liability of Trustor under the Notes, this Deed of Trust and
the Related Agreements is limited as provided in the Notes, the provisions of
which are hereby incorporated by this reference.

 

ARTICLE IV

MISCELLANEOUS

 

4.1
Severability.  In the event any one or more of
the provisions contained in this Deed of Trust shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Deed of Trust, but this Deed of Trust shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein, but only to
the extent that it is invalid, illegal or unenforceable.

 

4.2
Certain Charges and
Brokerage Fees.

 

(A)            Trustor agrees to pay Beneficiary a commercially
reasonable charge for each written statement requested of Beneficiary as to the
obligations secured hereby, furnished at Trustor’s request. Trustor further
agrees to pay the charges of Beneficiary for any other service rendered
Trustor, or on its behalf, connected with this Deed of Trust or the
indebtedness secured hereby, including, without limitation, the delivery to an
escrow holder of a request for full or partial release or reconveyance of this
Deed of Trust, transmittal to an escrow holder of moneys secured hereby,
changing its records pertaining to this Deed of Trust and indebtedness secured
hereby to show a new owner of the Property, and replacing an existing policy of
insurance held hereunder with another such policy.

 

(B)            Trustor agrees to indemnify and hold Beneficiary harmless
from any responsibility and/or liability for the payment of any commission
charge or brokerage fees to anyone which may be payable in connection with the
funding of the loan evidenced by the Notes and this Deed of Trust or
refinancing of any prior indebtedness, if applicable, based upon any action
taken by Trustor. It is understood that any such commission charge or brokerage
fees shall be paid directly by Trustor to the entitled parties.

 

4.3 Notices.

 

(A)            All notices expressly provided hereunder to be given by
Beneficiary to Trustor and all notices, demands and other communications of any
kind or nature whatever which Trustor may be required or may desire to give to
or serve on Beneficiary shall be in writing and shall be (i) hand-delivered,
effective upon receipt, (ii) sent by United States Express Mail or by private
overnight courier, effective upon receipt, or (iii) served by certified mail,
to the appropriate address set forth below, or at such other place as Trustor,
Beneficiary or Trustee, as the case may be, may from time to time designate in
writing by ten (10) days prior written notice thereof. Any such notice or
demand served by certified mail, return receipt requested, shall be deposited

 

34

 

in the United States mail, with postage
thereon fully prepaid and addressed to the party so to be served at its address
above stated or at such other address of which said party shall have
theretofore notified in writing, as provided above, the party giving such
notice. Service of any such notice or demand so made shall be deemed effective
on the day of actual delivery as shown by the addressee’s return receipt or the
expiration of three (3) business days after the date of mailing, whichever is
the earlier in time. Any notice required to be given by Beneficiary shall be
equally effective if given by Beneficiary’s agent, if any.

 

(B)            Trustor hereby requests that any notice, demand, request
or other communication (including any notice of an Event of Default and notice
of sale as may be required by law) desired to be given or required pursuant to
the terms hereof be addressed to Trustor as follows:

 

AmeriVest Camelback Inc.

1780 South Bellaire Street

Suite 100

Denver, Colorado 80222

 

With a copy to:

 

Stephen R. Voelker, Esq.

Jenkens & Gilchrist

1445 Ross Avenue

Suite 3200

Dallas, Texas 75202

 

All notices and other
communications to Beneficiary shall be addressed as follows:

 

Allstate Investments, LLC

Allstate Plaza South, Suite
G5C

3075 Sanders Road

Northbrook, Illinois 60062

Attention:  Commercial Mortgage Loan Servicing Manager

 

With a copy to:

 

Allstate Investments, LLC

Investment Law Division

Allstate Plaza South, Suite
G5A

3075 Sanders Road

Northbrook, Illinois 60062

 

35

 

All notices to Trustee shall
be addressed as follows:

 

Chicago Title Insurance
Company

2415 East Camelback Road

Suite 300

Phoenix, Arizona 85012

 

By acceptance of this Deed of Trust,
Beneficiary collectively represent and warrant to Trustor that they have
appointed Allstate Investments, LLC as their agent, investment advisor and
manager of their investment assets. Notwithstanding any contrary term or
provision in this Deed of Trust or in any Related Agreement, and until Trustor
receives written notice signed by Allstate Investments, LLC, (i) Trustor will
communicate only to Allstate Investments, LLC with respect to any and all
notices, consents, approvals, requests, modifications and agreements required
or otherwise relating to this Deed of Trust or the Loan (collectively “Approvals
and Requests”) and Allstate Investments, LLC shall communicate and act on
behalf of Beneficiary with respect to all Approvals and Requests, and (ii)
Trustor shall be entitled to rely on any communications from or actions by
Allstate Investments, LLC with respect to Beneficiary and all Approvals and
Requests made to Allstate Investments, LLC by Trustor or made by Allstate
Investments, LLC to Trustor shall be deemed to be made to or by Beneficiary, as
the case may be, and binding upon Beneficiary. In the event Allstate
Investments, LLC ceases to be the agent, investment advisor and investment
manager for one or more of the companies comprising Beneficiary, Beneficiary
collectively agree that they shall appoint another agent or shall designate one
of the companies comprising Beneficiary to communicate and act on behalf of
Beneficiary. Additionally, Beneficiary collectively represent and warrant that:
(i) there will always be one loan servicer in connection with the Loan; (ii)
Trustor shall be consistently directed to make all payments due under the Notes
to a single loan servicer; and (iii) Trustor shall have no responsibility for
allocating any such payments among the holders of the Notes. The Notes shall be
pari passu and the interests of each company comprising the Beneficiary or the
Lender under this Deed of Trust and the Related Agreements and in and to all
Loan Collateral shall be co-equal without any preference or priority over the
interests of any other company comprising Beneficiary.

 

4.4
Trustor Not Released;
Certain Trustee Acts.

 

(A)            Extension of the time for payment or modification of the
terms of payment of any sums secured by this Deed of Trust granted by
Beneficiary to any successor in interest of Trustor shall not operate to
release, in any manner, the liability of Trustor. Beneficiary shall not be
required to: commence proceedings against such successor or refuse to extend
time for payment or otherwise modify the terms of payment of the sums secured
by this Deed of Trust, by reason of any demand made by Trustor. Without
affecting the liability of any person, including Trustor, but subject to the
terms and provisions of Section 3.11, for the payment of any indebtedness
secured hereby, or the legal operation and effect of this Deed of Trust on the
remainder of the Property for the full amount of any such indebtedness and
liability unpaid, Beneficiary

 

36

 

and Trustee are respectively empowered as
follows: Beneficiary may from time to time and without notice (i) release any
person liable for the payment of any of the indebtedness; (ii) extend the time
or otherwise alter the terms of payment of any of the indebtedness; (iii)
accept additional real or personal property of any kind as security therefor,
whether evidenced by deeds of trust, mortgages, security agreements or any
other instruments of security; or (iv) alter, substitute or release any
property securing the indebtedness.

 

(B)            Beneficiary may, at any time, and from time to time, (i)
consent to the making of any map or plan of the Property or any part thereof;
(ii) join in granting any easement or creating any restriction thereon; (iii)
join in any subordination or other agreement affecting this Deed of Trust or
the legal operation and effect or charge hereof; or (iv) release or reconvey,
without any warranty, all or part of the Property from the lien of this Deed of
Trust.

 

4.5
Inspection.  Upon reasonable prior notice and
subject to the rights of tenants under the Leases, Beneficiary may at any
reasonable time make or cause to be made entry upon and make inspections,
reappraisals, surveys, construction and environmental testing of the Property
or any part thereof in person or by agent, and if Beneficiary has a reasonable
basis to believe that Trustor is in breach of any covenant of this Deed of
Trust in regard to the Property, the cost of any such inspection shall be borne
by Trustor.

 

4.6
Release
or Reconveyance or Cancellation.
Upon the payment in full of all sums secured by this Deed of Trust,
Beneficiary shall cancel this Deed of Trust or request Trustee to release this
Deed of Trust or reconvey the Property and shall surrender this Deed of Trust
and all notes evidencing indebtedness secured by this Deed of Trust to Trustee.
Upon payment of its fees and any other sums owing to it under this Deed of
Trust, Trustee shall release this Deed of Trust or reconvey the Property
without warranty to the person or persons legally entitled thereto. The duly
recorded release or reconveyance of the Property shall constitute a
reassignment of the Leases by Beneficiary to Trustor. Such person or persons
shall pay all fees of Trustee and costs of recordation, if any. The recitals in
such release or reconveyance of any matters or facts shall be conclusive proof
of the truthfulness thereof.

 

4.7
 Statute of Limitations.  Trustor hereby expressly waives
and releases to the fullest extent permitted by law, the pleading of any
statute of limitations as a defense to any and all obligations secured by this
Deed of Trust.

 

4.8
Interpretation.  Wherever used in this Deed of
Trust, unless the context otherwise indicates a contrary intent, or unless
otherwise specifically provided herein, the word “Trustor” shall mean and
include both Trustor and any subsequent owner or owners of the Property, and
the word “Beneficiary” shall mean and include not only the original Beneficiary
hereunder but also any future owner and holder, including pledgees, of the
Notes or other obligations secured hereby. In this Deed of Trust, the Notes and
the Related Agreements, whenever the context so requires, the masculine gender

 

37

 

includes the feminine and/or neuter, and the
neuter includes the feminine and/or masculine, and the singular number includes
the plural. In this Deed of Trust, the Notes and the Related Agreements, the
use of the word “including” shall not be deemed to limit the generality of the
term or clause to which it has reference, whether or not non-limiting language
(such as “without limitation,” or “but not limited to,” or words of similar
import) is used with reference thereto.

 

4.9
Captions.  The captions and headings of the
Articles and sections of this Deed of Trust, the Notes and the Related
Agreements, are for convenience only and are not to be used to interpret,
define or limit the provisions hereof.

 

4.10
Consent.  The granting or withholding of
consent by Beneficiary to any transaction as required by the terms hereof shall
not be deemed a waiver of the right to require consent to future or successive
transactions. Trustor covenants and agrees to reimburse Beneficiary promptly on
demand for all legal and other expenses incurred by Beneficiary or its
servicing agent in connection with all requests by Trustor for consent or
approval under this Deed of Trust.

 

4.11
Delegation to Subagents.  Wherever a power of attorney is
conferred upon Beneficiary hereunder, it is understood and agreed that such
power is conferred with full power of substitution, and Beneficiary may elect
in its sole discretion to exercise such power itself or to delegate such power,
or any part thereof, to one or more subagents.

 

4.12
Successors and Assigns.  All of the grants, obligations,
covenants, agreements, terms, provisions and conditions herein shall run with
the land and shall apply to, bind and inure to the benefit of, the heirs,
administrators, executors, legal representatives, successors and assigns of
Trustor (but this shall not permit any assignment prohibited hereby) and the
successors in trust of Trustee and the endorsees, transferees, successors and
assigns of Beneficiary. In the event Trustor is composed of more than one
party, the obligations, covenants, agreements, and warranties contained herein
and in the Related Agreements as well as the obligations arising therefrom are
and shall be joint and several as to each such party.

 

4.13
Governing Law.  THIS DEED OF TRUST AND THE
RELATED AGREEMENTS ARE INTENDED TO BE GOVERNED BY AND CONSTRUED UNDER THE LAWS
OF THE STATE IN WHICH THE PROPERTY IS LOCATED. TRUSTOR HEREBY WAIVES ITS RIGHT
TO A TRIAL BY JURY.

 

4.14
Substitution of Trustee.  Beneficiary may remove Trustee at
any time or from time to time and appoint a successor trustee, and upon such
appointment, all powers, rights, duties and authority of Trustee, as aforesaid,
shall thereupon become vested in such successor. Such substitute trustee shall
be appointed by written instrument duly recorded in the county or counties
where the real property covered hereby is located, which appointment may be
executed by any authorized agent of Beneficiary or in any other manner
permitted by applicable law.

 

38

 

4.15
Changes in Taxation.  If, after the date of this Deed
of Trust, any law is passed by the state in which the Property is located or by
any other governing entity, imposing upon Beneficiary any tax against the
Property, or changing in any way the laws for the taxation of mortgages or
deeds of trust or debts secured by mortgages or deeds of trust so that an
additional or substitute tax is imposed on Beneficiary or the holders of the
Notes, Trustor shall reimburse Beneficiary for the amount of such taxes
immediately upon receipt of written notice from Beneficiary. Provided, however,
that such requirement of payment shall be ineffective if Trustor is permitted
by law to pay the whole of such tax in addition to all other payments required
hereunder, without any penalty or charge thereby accruing to Beneficiary and if
Trustor in fact pays such tax prior to the date upon which payment is required
by such notice.

 

4.16
Maximum Interest Rate.  Trustor agrees to pay an
effective rate of interest which is the stated rate provided for in the Notes,
plus any additional rate of interest resulting from any charges of interest or
in the nature of interest paid or to be paid in connection with the loans
evidenced by the Notes, including without limitation, any amounts paid pursuant
to the provisions of the Notes, this Deed of Trust and that certain Commitment
Letter dated July 30, 2004, by and between Beneficiary and Trustor. No
provision of this Deed of Trust or of the Notes or of any note evidencing a
Future Advance shall require the payment or permit the collection of interest
in excess of the maximum non-usurious rate permitted by applicable law. In the
event such interest does exceed the maximum legal rate, it shall be canceled
automatically to the extent that such interest exceeds the maximum legal rate
and if theretofore paid, credited on the principal amount of the Notes or, if
the Notes have been prepaid, then such excess shall be rebated to Trustor and
Trustor hereby agrees to accept such rebate.

 

4.17
Time of Essence.  Time is of the essence of the
obligations of Trustor in this Deed of Trust and each and every term, covenant
and condition made herein by or applicable to Trustor.

 

4.18
Reproduction of Documents.  This Deed of Trust and all
documents relating thereto, specifically excluding the Notes but including,
without limitation, consents, waivers and modifications which may hereafter be
executed, financial and operating statements, certificates and other
information previously or hereafter furnished to Beneficiary, may be reproduced
by Beneficiary by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process and Beneficiary may destroy any
original document (“Master”) so reproduced. Trustor agrees and stipulates that
any such reproduction is an original and shall be admissible in evidence as the
Master in any judicial or administrative proceeding (whether or not the Master
is in existence and whether or not such reproduction was made or preserved by
Beneficiary in the regular course of business) and any enlargement, facsimile
or further reproduction of such a reproduction shall be no less admissible.

 

39

 

4.19
No Oral Modifications. This Deed of Trust may not be amended or modified orally,
but only by an agreement in writing signed by the party against whom
enforcement of any amendment or modification is sought.

 

4.20
Trustee Provisions.  Trustee accepts this Trust when
this Deed of Trust, duly executed and acknowledged is made a public record as
provided by law. The Trust created hereby is irrevocable by Trustor. Trustee,
upon presentation to it of an affidavit signed by or on behalf of Beneficiary,
setting forth any facts showing a default by Trustor under any of the terms or
conditions of this Deed of Trust, is authorized to accept as true and
conclusive all facts and statements in such affidavit and to act hereunder in
complete reliance thereon. Trustee shall be under no obligation to notify any
party hereof of any action or proceeding of any kind in which Trustor,
Beneficiary and/or Trustee shall be a party, unless brought by Trustee, or of
any pending sale under any other deed of trust. The necessity of Trustee’s
making oath, filing inventory or giving bond as security for the execution of
this Deed of Trust, as may now be or hereafter required by the laws of the
state in which the Property is located, is hereby expressly waived.

 

IN WITNESS WHEREOF, the
undersigned has executed this Deed of Trust as of the day and year first
hereinabove written.

 

	
   

  	
  AMERIVEST CAMELBACK INC.,
  an

  
	
   

  	
  Arizona corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ John B. Groonman

  
	
   

  	
   

  	
  John B. Groonman

  
	
   

  	
   

  	
  Its

  	
  Vice President

  

 

40

 

	
  STATE OF COLORADO

  	
  )

  
	
   

  	
  ) ss.

  
	
  County of Denver

  	
  )

  

 

                The
foregoing instrument was acknowledged before me this 20th day of August, 2004,
by John B. Groonman, the Vice President of AMERIVEST CAMELBACK INC., an Arizona
corporation, on behalf of the corporation.

 

                Witness
my hand and official seal.

 

	
  [SEAL]

  	
  /s/ Loretta J. Zerbe

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
   

  	
   

  
	
  3/17/2005

  	
   

  	
   

  
			

 

41

 

 

EXHIBIT
“A”

(Property Description)

 

The land referred to in this document is
situated in the State of Arizona, County of Maricopa, and described as follows:

 

PARCEL NO. 1:

 

Parcel 40, ARIZONA BILTMORE ESTATES, a
subdivision recorded in Book 183 of Maps, page 35, records of Maricopa County,
Arizona

 

PARCEL NO. 2:

 

Lot 2, CAMELBACK LAKES CORPORATE CENTER -
PARCEL 38, a subdivision recorded in Book 449 of Maps, page 14, records of
Maricopa County, Arizona

 

PARCEL NO. 3:

 

Non-exclusive easement for vehicular and
pedestrian ingress and egress and parking for the benefit of Parcel 2, as set
forth in EASEMENT AGREEMENT recorded in Docket 13151, page 1055.

 

PARCEL NO. 4:

 

Non-exclusive easement for ingress and egress
for reasonable vehicular and pedestrian traffic and parking for the benefit of
Parcel 1 and 2, as set forth in GRANT OF EASEMENT recorded in Docket 14716,
page 929.

 

PARCEL NO. 5:

 

Non-exclusive easement for ingress and egress
for vehicular traffic and for surface water drainage and for existing stop sign
as set forth in RESTATED DECLARATION OF EASEMENTS AND MAINTENANCE, recorded in
Recording No. 97-639191.

 

PARCEL NO. 6:

 

All easements, rights and benefits set forth
in Parking Easement and Agreement recorded May 18, 1998 in Recording No.
98-0412811.

 

PARCEL NO. 7:

 

All easements, rights and benefits set forth
in Declaration of Covenants, Conditions and Restrictions recorded in Docket
12246, page 1155.

 

 

 

 

EXHIBIT
“B” 

(Fixture Filing)

 

 

Pursuant to the security
agreement contained in this Deed of Trust (“Security Agreement”) and the
appropriate Uniform Commercial Code (“UCC”) sections in the State in which the
Fixtures are located, as amended and recodified from time to time, this Deed of
Trust shall constitute a Fixture Filing.

 

1.               Description of Fixtures
“Fixtures” shall include all articles of personal property now or hereafter
attached to, placed upon for an indefinite term or used in connection with said
real property, appurtenances and improvements together with all goods and other
property which are or at any time become so related to the Property that an
interest in them arises under real estate law.

 

2.               Description of Collateral
The Collateral, as defined in the Security Agreement, includes, without
limitation, the following items and types of Collateral as well as certain
other items and types of Collateral:

 

All equipment, fixtures, goods, inventory and
all present and future accessions and products thereof and thereto as defined
in the UCC, now or at any time acquired, used, or to be used for or in
connection with the construction, use or enjoyment of the Property by Trustor,
whether in the possession of Trustor, warehousemen, bailees or any other person
and whether located at the Property or elsewhere, including without limitation:

 

(A)            all building, maintenance or service equipment; building,
maintenance or raw materials or supplies; component parts or work in process;
appliances; furnishings; machinery; and tools; and

 

(B)            all goods and property covered by any warehouse receipts,
bills of lading and other documents evidencing any goods or other tangible
personal property of any kind (including any Collateral) in which Trustor now
or at any time hereafter has any interest in connection with any or all of the
Property or Collateral; and

 

(C)          any and all products of any accessions
to any such Collateral which may exist at any time.

 

Part of the above described goods are or are
to become Fixtures on the Property. As used in this Exhibit to qualify the
scope of Beneficiary’s security interest in any of the Collateral, the phrase “in
connection with any or all of the Property or Collateral” shall be used in its
broadest and most comprehensive sense and shall include without limitation
property used or acquired (or to be used or acquired) in connection with the
improvement, development, construction, repair or remodeling of any or all of
the Property, property arising from or in connection with the operation, use,
maintenance, occupancy, sale, lease or disposition of any or all of the
Property or Collateral, property

 

 

 

used or acquired (or to be used or acquired)
in connection with Trustor’s performance of any of its obligations to
Beneficiary, and property acquired with any loan proceeds. If any property is
used (or to be used) for multiple or different purposes, and one such purpose
relates to any aspect of the Property or collateral, such property shall
constitute Collateral hereunder, unless Beneficiary shall release such property
from this Fixture Filing and Beneficiary’s security interest in a duly executed
written instrument.

 

3.             Relation of Fixture filing
to Deed of Trust:  Some or all of the Collateral described in
Section 2 above may be or become Fixtures in which Beneficiary has a security
interest under the Security Agreement. However, nothing herein shall be deemed
to create any lien or interest in favor of Trustee under this Deed of Trust in
any such Collateral which is not a fixture, and the purpose of this Exhibit B
is to create a fixture filing under the appropriate Uniform Commercial Code
sections in the State in which the Fixtures are located, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust are independent and cumulative, and there shall be no
merger of any lien hereunder with any security interest created by the Security
Agreement. Beneficiary may elect to exercise or enforce any of its rights,
remedies, or interests under this Deed of Trust as Beneficiary may from time to
time deem appropriate.

 

4.             Name and Address
of Beneficiary:

 

Allstate
Life Insurance Company

Allstate Life Insurance Company of New York
 c/o Allstate Investments, LLC

Allstate Plaza South, Suite G5C 

3075 Sanders Road

Northbrook, Illinois 60062

Attention: Commercial Mortgage Loan Servicing Manager

 

5.             Other Fixture
Financing and Removal of Fixtures

 

(A)          Beneficiary has not consented to any
other security interest of any other person in any Fixtures and has not
disclaimed any interest in any Fixtures; and

 

(B)            Beneficiary has not agreed or consented to the removal of
any Fixtures from the Property, and any such consent by Trustor shall not be
binding on Beneficiary. Beneficiary reserves the right to prohibit the removal
of any Fixtures by any person with the legal right to remove any Fixtures from the
Property unless and until such person makes arrangements with (and satisfactory
to) Beneficiary for the payment to Beneficiary of all costs of repairing any
physical injury to the Property which may be caused by the removal of such
Fixtures. Any such payment shall be made directly to Beneficiary at its
request, and Beneficiary may hold such payment as additional collateral under
this Deed of Trust. Failure by Trustor to cause the delivery to Beneficiary of
any such payment shall constitute both: (i) waste under (and breach of)

 

 

ii

 

 

 

this Deed of Trust; and (ii) conversion of
Collateral under (and a breach of) the Security Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iiiExhibit 10.1

 

EXECUTION COPY

 

REVOLVING
CREDIT AGREEMENT

 

Dated as of July 23, 2004

 

among

 

MCCORMICK
& SCHMICK ACQUISITION CORP.,

MCCORMICK
& SCHMICK RESTAURANT CORP.,

MCCORMICK
& SCHMICK MARYLAND LIQUOR, INC.,

MCCORMICK
& SCHMICK ACQUISITION I TEXAS, INC.,

MCCORMICK
& SCHMICK ACQUISITION II TEXAS, INC.,

MCCORMICK
& SCHMICK ACQUISITION TEXAS LP,

MCCORMICK
& SCHMICK ACQUISITION III TEXAS, INC.,

MCCORMICK
& SCHMICK’S ATLANTA II, LLC,

MCCORMICK
& SCHMICK’S HACKENSACK, LLC,

MCCORMICK
& SCHMICK ORLANDO, LLC,

MCCORMICK
& SCHMICK DALLAS, LP,

MCCORMICK
& SCHMICK DALLAS LIQUOR, INC.,

MCCORMICK
& SCHMICK AUSTIN, LP,

MCCORMICK
& SCHMICK AUSTIN LIQUOR, INC.,

 

(collectively, the “Borrowers”)

 

THE LENDERS
LISTED ON SCHEDULE 1 HERETO,

 

FLEET
NATIONAL BANK, as Administrative Agent,

 

with

 

BANC OF
AMERICA SECURITIES LLC, as Arranger

 

TABLE OF CONTENTS

 

 

	
  1.

  	
  DEFINITIONS AND RULES OF INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2.

  	
  Rules of Interpretation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  THE REVOLVING CREDIT FACILITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  Commitment to Lend Revolving Credit Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2.

  	
  Commitment
  Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3.

  	
  Reduction of Total Revolving Credit
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4.

  	
  The
  Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5.

  	
  Interest on Revolving Credit Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.6.

  	
  Requests for Revolving Credit Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.7.

  	
  Conversion Options

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.7.1.

  	
  Conversion to Different Type of Revolving
  Credit Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.7.2.

  	
  Continuation of Type of Revolving Credit
  Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.7.3.

  	
  Eurodollar Rate Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.8.

  	
  Funds for Revolving Credit Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.8.1.

  	
  Funding Procedures

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.8.2.

  	
  Advances by Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.9.

  	
  Repayment of Revolving Credit Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.9.1.

  	
  Maturity

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.9.2.

  	
  Mandatory Repayments of the Revolving
  Credit Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.9.3.

  	
  Optional Repayments of the Revolving Credit
  Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.9.4.

  	
  Application of Payments Prior to an Event
  of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  ADDITIONAL FINANCING

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  MANDATORY REPAYMENT OF REVOLVING CREDIT
  LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Intentionally Omitted

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2.

  	
  Proceeds of Certain Events

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3.

  	
  Application of Payments

  	
   

  
						

 

i

 

	
   

  	
  4.4.

  	
  Delivery of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  LETTERS
  OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Letter of Credit Commitments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1.1.

  	
  Commitment to Issue Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1.2.

  	
  Letter of Credit Applications

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1.3.

  	
  Terms of Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1.4.

  	
  Reimbursement Obligations of Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1.5.

  	
  Participations of Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2.

  	
  Reimbursement Obligation of the Borrowers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3.

  	
  Letter of Credit Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4.

  	
  Obligations Absolute

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5.

  	
  Reliance by Issuer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6.

  	
  Letter of Credit Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7.

  	
  Existing Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  CERTAIN GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2.

  	
  Funds for Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.2.1.

  	
  Payments to Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.2.2.

  	
  No
  Offset, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.2.3.

  	
  Non-U.S.
  Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.2.4.

  	
  Exclusion

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3.

  	
  Computations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4.

  	
  Inability to Determine Eurodollar Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5.

  	
  Illegality

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.6.

  	
  Additional Costs, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.7.

  	
  Capital
  Adequacy

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.8.

  	
  Certificate; Replacement of Lenders

  	
   

  

 

ii

 

	
   

  	
  6.9.

  	
  Indemnity

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.10.

  	
  Interest After Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.10.1.

  	
  Overdue
  Amounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.10.2.

  	
  Amounts Not Overdue

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.10.3.

  	
  Letters
  of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.11.

  	
  Concerning Joint and Several Liability of
  the Borrowers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  COLLATERAL SECURITY AND PARENT GUARANTY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Security of Borrowers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2.

  	
  Parent Guaranty and Parent Pledge Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Corporate Authority

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.1.1.

  	
  Incorporation; Good Standing

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.1.2.

  	
  Authorization

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.1.3.

  	
  Enforceability

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2.

  	
  Governmental Approvals

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3.

  	
  Title to Properties; Leases

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4.

  	
  Financial Statements and Projections

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.1.

  	
  Fiscal Year; Fiscal Quarters

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.2.

  	
  Financial Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.3.

  	
  Pro Forma Balance Sheet and Projections

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5.

  	
  No Material Adverse Changes, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6.

  	
  Franchises, Patents, Copyrights, Liquor
  Management Agreements, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.7.

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.8.

  	
  Material Contracts; No Materially Adverse
  Contracts, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.9.

  	
  Compliance with Other Instruments, Laws,
  etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.10.

  	
  Tax
  Status

  	
   

  

 

iii

 

	
   

  	
  8.11.

  	
  No Event of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.12.

  	
  Holding Company and Investment Company Acts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.13.

  	
  Absence of Financing Statements, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.14.

  	
  Perfection of Security Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.15.

  	
  Certain Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.16.

  	
  Employee
  Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.16.1.

  	
  In
  General

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.16.2.

  	
  Terminability
  of Welfare Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.16.3.

  	
  Guaranteed Pension Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.16.4.

  	
  Multiemployer
  Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.17.

  	
  Use
  of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.17.1.

  	
  General

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.17.2.

  	
  Regulations
  U and X

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.17.3.

  	
  Ineligible
  Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.18.

  	
  Environmental
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.19.

  	
  Subsidiaries,
  etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.20.

  	
  Bank
  Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.21.

  	
  Subordinated
  Debt Documents; Equity Documents; Warrant Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.22.

  	
  Solvency

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.23.

  	
  Restaurants

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.24.

  	
  Franchise Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.25.

  	
  Leases

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.26.

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.27.

  	
  Change
  of Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Punctual
  Payment

  	
   

  

 

iv

 

	
   

  	
  9.2.

  	
  Maintenance
  of Office

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3.

  	
  Records and Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4.

  	
  Financial Statements, Certificates and Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.5.1.

  	
  Defaults

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.5.2.

  	
  Environmental
  Events

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.5.3.

  	
  Notification
  of Claim against Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.5.4.

  	
  Notice of Litigation and Judgments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.5.5.

  	
  Notice
  of Bank Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.5.6.

  	
  Notice
  of Real Estate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6.

  	
  Legal
  Existence; Maintenance of Properties

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7.

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.7.1.

  	
  Required Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.7.2.

  	
  Insurance Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.7.3.

  	
  Notice of Cancellation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8.

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9.

  	
  Inspection
  of Properties and Books, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.9.1.

  	
  General

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.9.2.

  	
  Environmental Assessments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.9.3.

  	
  Communications with Accountants

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.10.

  	
  Compliance with Laws, Contracts, Licenses, and Permits

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.11.

  	
  Employee
  Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.12.

  	
  Use of
  Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.13.

  	
  Additional Mortgaged Property; Notice of Leases

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.14.

  	
  Conduct of Business; Restaurants

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.15.

  	
  Intentionally
  Omitted

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.16.

  	
  Bank
  Accounts

  	
   

  

 

v

 

	
   

  	
  9.17.

  	
  Additional Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.18.

  	
  Amendments
  to Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.19.

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.20.

  	
  Post-Closing Delivery Requirements

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  CERTAIN
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Restrictions
  on Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2.

  	
  Restrictions
  on Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.2.1.

  	
  Permitted
  Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.2.2.

  	
  Restrictions on Negative Pledges and Upstream Limitations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3.

  	
  Restrictions on Investments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4.

  	
  Restricted Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5.

  	
  Mergers; Disposition of Assets; Acquisitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.5.1.

  	
  Mergers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.5.2.

  	
  Disposition
  of Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.5.3.

  	
  Acquisitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.6.

  	
  Sale and Leaseback

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.7.

  	
  Compliance with Environmental Laws

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.8.

  	
  Employee
  Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.9.

  	
  Business
  Activities

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.10.

  	
  Fiscal Year; Fiscal Quarters

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.11.

  	
  Transactions with Affiliates

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.12.

  	
  Bank
  Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.13.

  	
  Franchises

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.14.

  	
  Restrictions on Amendments to Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.14.1.

  	
  Warrant Documents; Equity Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.14.2.

  	
  Acquisition Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.14.3.

  	
  Subordinated
  Debt

  	
   

  

 

vi

 

	
   

  	
   

  	
  10.14.4.

  	
  Certain Amendments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.15.

  	
  Capitalization

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.16.

  	
  Maximum Number of Unprofitable Restaurants

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  FINANCIAL COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1.

  	
  Adjusted Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2.

  	
  Consolidated
  Cash Flow Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3.

  	
  Growth Capital Expenditures

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  CLOSING CONDITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1.

  	
  Loan
  Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2.

  	
  Certified Copies of Governing Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3.

  	
  Corporate or Other Action

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.4.

  	
  Incumbency
  Certificate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.5.

  	
  Validity
  of Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.6.

  	
  Perfection
  Certificates and Uniform Commercial Code Search Results

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.7.

  	
  Landlord
  Consents; Mortgages

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.8.

  	
  Certificates of Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.9.

  	
  Solvency Certificate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.10.

  	
  Opinion of Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.11.

  	
  Capital
  Structure

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.12.

  	
  Minimum Consolidated EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.13.

  	
  No Material Adverse Change

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.14.

  	
  Financial Statements and Projections

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.15.

  	
  No Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.16.

  	
  Consents and Approvals

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.17.

  	
  Employment Agreements; Employee Incentive Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.18.

  	
  Other Documentation

  	
   

  

 

vii

 

	
   

  	
  12.19.

  	
  Payoff and Termination of Existing Credit Agreement; Refinancing of
  Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.20.

  	
  Consummation of Initial Public Offering

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.21.

  	
  Maximum Borrowing on Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.22.

  	
  Payment of Fees and Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.23.

  	
  Disbursement
  Instructions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  CONDITIONS TO ALL
  BORROWINGS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1.

  	
  Representations True; No Event of
  Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2.

  	
  No Legal Impediment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3.

  	
  Proceedings
  and Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  EVENTS OF DEFAULT; ACCELERATION; ETC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1.

  	
  Events of Default and Acceleration

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.2.

  	
  Termination of Commitments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.3.

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.4.

  	
  Distribution
  of Collateral Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  THE
  AGENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1.

  	
  Appointment
  and Authority

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.2.

  	
  Rights
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.3.

  	
  Exculpatory
  Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.4.

  	
  Reliance by Administrative
  Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.4.1.

  	
  General

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.4.2.

  	
  Non-Reliance on
  Administrative Agent and Other Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.4.3.

  	
  Delegation
  of Duties

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.5.

  	
  Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.5.1.

  	
  Payments to Administrative
  Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.5.2.

  	
  Distribution
  by Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.5.3.

  	
  Delinquent Lenders

  	
   

  

 

viii

 

	
   

  	
  15.6.

  	
  Reimbursement by Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.7.

  	
  Resignation by
  Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.8.

  	
  Administrative Agent May File
  Proof of Claims

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.9.

  	
  No
  Other Duties, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  ASSIGNMENT
  AND PARTICIPATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.1.

  	
  Successors and Assigns;
  Conditions to Assignment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.2.

  	
  Certain Representations
  and Warranties; Limitations; Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.3.

  	
  Register

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.4.

  	
  Participations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.5.

  	
  Assignee or Participant
  Affiliated with the Borrowers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.6.

  	
  Miscellaneous Assignment
  Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.7.

  	
  Syndication

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  PROVISIONS OF GENERAL
  APPLICATIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.1.

  	
  Setoff

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.2.

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.3.

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.4.

  	
  Treatment of Certain Confidential
  Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  17.4.1.

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  17.4.2.

  	
  Prior Notification

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  17.4.3.

  	
  Other

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.5.

  	
  Survival of Covenants, Etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.6.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.7.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.8.

  	
  Headings

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.9.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.10.

  	
  Entire Agreement, Etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.11.

  	
  Waiver
  of Jury Trial

  	
   

  

 

ix

 

	
   

  	
  17.12.

  	
  Consents,
  Amendments, Waivers, Etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.13.

  	
  Borrowers’ Representative

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.14.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.15.

  	
  USA
  Patriot Act Notice

  	
   

  

 

x

 

	
   

  	
  Exhibits

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Note

  
	
  Exhibit B

  	
  Form of Loan Request

  
	
  Exhibit C

  	
  Form of Compliance Certificate

  
	
  Exhibit D

  	
  Form of Agency Account Agreement

  
	
  Exhibit E

  	
  Form of Assignment and Acceptance

  
	
  Exhibit F

  	
  Form of Landlord Waiver

  
	
  Exhibit G

  	
  Form of Instrument of Accession

  
	
   

  	
   

  
	
   

  	
  Schedules

  
	
   

  	
   

  
	
  Schedule 1

  	
  Lenders and Commitments

  
	
  Schedule 1.1

  	
  MS Division Restaurants

  
	
  Schedule 8.3

  	
  Title to Properties; Leases

  
	
  Schedule 8.4.2

  	
  Financial Statement Exceptions

  
	
  Schedule 8.6(a)

  	
  Franchises, Patents, Copyrights, etc.

  
	
  Schedule 8.6(b)

  	
  Liquor Management Agreements

  
	
  Schedule 8.7

  	
  Litigation

  
	
  Schedule 8.8

  	
  Material Contracts

  
	
  Schedule 8.15

  	
  Certain Transactions

  
	
  Schedule 8.16

  	
  Employee Benefit Plans

  
	
  Schedule 8.18

  	
  Environmental Compliance

  
	
  Schedule 8.19

  	
  Subsidiaries, Etc.

  
	
  Schedule 8.20

  	
  Bank Accounts

  
	
  Schedule 8.23

  	
  Restaurants

  
	
  Schedule 8.25

  	
  Leases

  
	
  Schedule 10.1

  	
  Existing Indebtedness

  
	
  Schedule 10.2

  	
  Existing Liens

  
	
  Schedule 10.3

  	
  Existing Investments

  
	
  Schedule 12.7

  	
  Leasehold Mortgages Delivered on the Closing Date

  

 

 

REVOLVING CREDIT AGREEMENT

 

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

 

1.             DEFINITIONS AND RULES OF
INTERPRETATION.

 

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

 

A&M Acquisition.  The
acquisition by the Borrowers of three full-service Angelo and Maxie’s
restaurants in New York, Washington, D.C. and Virginia from Angelo and Maxie’s
Inc., a Delaware corporation.

 

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

 

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

 

 

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

 

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

 

Acquired Assets.  See
§10.5.

 

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

 

Acquisition Documents.  Each
of the 2001 Acquisition Documents, the A&M Acquisition Documents, and all
other agreements, side letters and documents executed in connection with any
Acquisition together with amendments or modifications thereto permitted
pursuant to §10.14.2.

 

Additional Security
Documents.  All mortgages, pledge agreements, security
agreements and other security documents and all guarantees of the Obligations
entered into after the date hereof pursuant to §§9.17 and/or 9.19.

 

Adjusted Leverage Ratio.  As
at any date of determination, the ratio of (a) Consolidated Rental Expense for
the Reference Period ending on such date (multiplied
by eight (8)) plus Consolidated Funded
Indebtedness outstanding on such date to (b) Consolidated EBITDAR for the
Reference Period ending on such date.

 

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

 

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

 

Administrative Agent’s
Office.  The Administrative Agent’s office located at
100 Federal Street, Boston, Massachusetts 02110, or at such other location as
the Administrative Agent may designate in writing from time to time.

 

Administrative Agent’s
Special Counsel.  Bingham McCutchen LLP or such other counsel
as may be approved by the Administrative Agent.

 

2

 

Affected Lenders.  See
§6.8(c).

 

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

 

Agency Accounts.  See
§9.16.

 

Agency Account Agreements.  See
§9.16.

 

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

 

	
   

  	
   

  	
   

  	
   

  	
  Revolving Credit Loans

  	
   

  
	
  Level

  	
   

  	
  Adjusted Leverage Ratio

  	
   

  	
  Base Rate Loans

  	
   

  	
  Eurodollar Rate

  Loans and Letters

  of Credit

  	
   

  
	
  I

  	
   

  	
  < 3.00:1

  	
   

  	
  0.25

  	
  %

  	
  1.75

  	
  %

  
	
  II

  	
   

  	
  > 3.00:1

  	
   

  	
  0.75

  	
  %

  	
  2.25

  	
  %

  

 

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

 

Applicable Pension
Legislation.  At any time, any pension or retirement
benefits legislation (be it national, federal, provincial, territorial or
otherwise) then applicable to any Borrower.

 

3

 

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

 

Arranger. Banc of America Securities LLC.

 

Asset Sale.  Any
one or series of related transactions in which a Borrower or any Subsidiary of
a Borrower conveys, sells, leases, licenses or otherwise disposes of, directly
or indirectly, any of its properties, businesses or assets (including in
connection with a sale and leaseback transaction and the sale or issuance of
Equity Interests of any Subsidiary other than to a Borrower or any wholly-owned
Subsidiary of a Borrower but excluding any dispositions included in the
definition of “Casualty Event”) whether
owned on the Closing Date or thereafter acquired.

 

Assignment and Acceptance.  See
§16.1.

 

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

 

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

 

Balance Sheet Date. 
December 27, 2003.

 

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

 

Base Rate.  The
higher of (a) the variable annual rate of interest so announced from time to
time by the Administrative Agent as its “prime
rate”, such rate being a reference rate and not necessarily representing
the lowest or best rate being charged to any customer, and (b) one-half of one
percent (0.5%) above the Federal Funds Effective Rate.  For the purposes of this definition, “Federal
Funds  Effective  Rate” shall mean for any day, the rate per
annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for such day on such transactions received by the
Administrative Agent from three funds brokers of recognized standing selected
by the Administrative Agent.  Changes in
the Base Rate resulting from any changes in the Administrative Agent’s “prime rate” shall take place immediately
without notice or demand of any kind.

 

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

 

4

 

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

 

Borrower(s).  As
defined in the preamble hereto.

 

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

 

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

 

Business Day.  Any
day on which banking institutions in Boston, Massachusetts and New York, New York, are open for the
transaction of banking business and, in the case of Eurodollar Rate Loans, also
a day which is a Eurodollar Business Day.

 

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

 

Capital Assets. 
Fixed assets, both tangible (such as land, buildings, fixtures, machinery
and equipment) and intangible (such as patents, copyrights, trademarks,
franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with GAAP.

 

Capital Expenditures. 
Amounts paid or Indebtedness incurred by the Borrowers or any of their
Subsidiaries (net of any tenant improvement allowances related to a Restaurant)
in connection with (i) the purchase or lease by a Borrower or any of its
Subsidiaries of Capital Assets that would be required to be capitalized and
shown on the balance sheet of such Person in accordance with GAAP, including
without limitation or duplication, maintenance capital, build-out and new store
expenditures, (ii) without duplication, Consolidated Restaurant Pre-Opening
Costs, and (iii) the lease of any assets by a Borrower or any of its
Subsidiaries as lessee under any Synthetic Lease to the extent that such assets
would have been Capital Assets had the Synthetic Lease been treated for
accounting purposes as a Capitalized Lease.

 

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

 

5

 

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

 

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

 

CERCLA.  See
§8.18(a).

 

Change of Control. At any time, the occurrence of one or more
of the following events:  (a) any “person”
or “group” (as such terms are used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”)), excluding any Sponsor, shall become, or obtain rights (whether by
means of warrants, options or otherwise) to become, the “beneficial owner” (as
defined in Rule 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of 20% or more of the Voting Stock of the Parent unless the
Sponsors own Voting Stock having a greater percentage of the general voting
power of the outstanding Voting Stock than that held by such person or group,
(b) the replacement of a majority of the board of directors of the Parent or
any of the Borrowers over a two-year period from the directors who constituted
the board of directors of such Person at the beginning of such period, and such
replacement shall not (i) have been approved by a vote of at least a majority
of the board of directors of such Person then still in office who either were
members of such board of directors at the beginning of such period or whose
election as a member of such board of directors was previously so approved, or
(ii) have been elected or nominated for election by a Sponsor which owns Voting
Stock of such Person; or (c) the Parent shall cease to own directly or through
a Borrower one hundred percent (100%) of the issued and outstanding Equity
Interests of the Borrowers.

 

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

 

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

 

6

 

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

 

Code.  The
Internal Revenue Code of 1986, as amended.

 

Collateral.  All
of the property, rights and interests of the Parent, the Borrowers and their
Subsidiaries that are or are intended to be subject to the Liens created by the
Security Documents.

 

Collateral Assignment of
Acquisition Documents.  The Collateral Assignment of Acquisition
Documents, dated as of the Closing Date, and as the same may be amended from
time to time hereafter, among MSAC and the Administrative Agent and in form and
substance satisfactory to the Administrative Agent.

 

Commitment Fee.  See
§2.2.

 

Compliance Certificate.  See
§9.4(d).

 

Concentration Account. 
Account number 3752149724 with Bank of America.

 

Consolidated or consolidated.  With
reference to any term defined herein, shall mean that term as applied to the
accounts of the Borrowers and their Subsidiaries, consolidated in accordance
with GAAP.

 

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

 

Consolidated Cash Flow Ratio.  As
at the end of any Reference Period, the ratio of (a) Consolidated Cash Flow for
such Reference Period to (b) Consolidated Financial Obligations for such
Reference Period plus Consolidated Rental
Expense for such Reference Period; provided that
for purposes of calculating the Consolidated Cash Flow Ratio for any Reference
Period ending prior to December 25, 2004, there shall be excluded from the
determination of “Financial Obligations” for such period all payments made by
the Borrowers in respect of principal, interest or fees pursuant to the 2001
Credit Agreement and the 2003 Credit Agreement.

 

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

 

7

 

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

 

Consolidated EBITDAR.  For
any period, the sum of (a) the Consolidated EBITDA of the Borrowers and their
Subsidiaries for such period, plus (b) Consolidated Rental Expense for
such period.

 

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

 

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

 

8

 

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

 

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

 

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

 

Consolidated Rental Expense.  For
any period, the sum of (a) all minimum rental expense of the Borrowers and
their Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, incurred under any rental agreements or leases of real or
personal property, including space leases and ground leases, other than
obligations in respect of any Capitalized Leases or any Synthetic Leases, minus (b) noncash charges for rental expenses
for such period, plus (c) any GAAP deferred
rent credits for such period deducted from Consolidated EBITDA pursuant to
clause (c) of the definition of ‘Consolidated
EBITDA’.

 

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

 

Consolidated Total Interest
Expense.  For any period, the aggregate amount of cash
interest required to be paid by the Borrowers and their Subsidiaries during
such period on all Indebtedness (including the Subordinated Debt) of the
Borrowers and their Subsidiaries outstanding during all or any part of such period,
whether such interest was or is required to be reflected as an item of expense
or capitalized, including (a) payments consisting of interest in respect of any
Capitalized Lease or any Synthetic Lease, (b) commitment fees and letter of
credit fees incurred in connection with the borrowing of money and (c) facility
fees, balance deficiency fees and similar fees or expenses in connection with
the borrowing of money other than the financing provided under this Credit
Agreement and the other Loan Documents.

 

9

 

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

 

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

 

Credit Agreement.  This
Revolving Credit Agreement, including the Schedules and Exhibits hereto.

 

Default.  See
§14.1.

 

Delinquent Lender.  See
§15.5.3.

 

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

 

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

 

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

 

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

 

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

 

EBITDA Margin.  As
at any date of determination, the percentage obtained by dividing (a) the
Consolidated EBITDA of the Borrowers as at the end of the most recently ended
Reference Period for which the Borrowers have delivered a Compliance
Certificate by (b) the consolidated revenue (as determined in accordance with
GAAP) of the Borrowers for such Reference Period.

 

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

 

10

 

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

 

Employee Benefit Plan.  Any
employee benefit plan within the meaning of §3(3) of ERISA maintained or
contributed to by the Borrowers, or any ERISA Affiliate if any Borrower has any
liability for such plan, other than a Guaranteed Pension Plan or a
Multiemployer Plan.

 

Environmental Laws.  See
§8.18(a).

 

EPA.  See
§8.18(b).

 

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

 

Equity Interests.  All
equity interests of a Person, including, without limitation, any (a) common or
preferred stock, (b) limited or general partnership interests, (c) limited
liability company membership interests, (d) options, warrants, or other rights
to purchase or acquire any Equity Interest, or (e) securities convertible into
any Equity Interest.

 

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

 

ERISA.  The
Employee Retirement Income Security Act of 1974, as amended.

 

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

 

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

 

Eurocurrency Reserve Rate.  For
any day with respect to a Eurodollar Rate Loan, the maximum rate (expressed as
a decimal) at which any bank subject thereto would be required to maintain
reserves under Regulation D of the Board of Governors of the Federal Reserve
System (or any successor or similar regulations relating to such reserve
requirements) against “Eurocurrency  Liabilities” (as that term is
used in Regulation D), if such liabilities were outstanding.  The Eurocurrency Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurocurrency Reserve Rate.

 

11

 

Eurodollar Business Day.  Any
day on which commercial banks are open for international business (including
dealings in Dollar deposits) in London or such other eurodollar interbank
market as may be selected by the Administrative Agent in its sole discretion
acting in good faith.

 

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

 

Eurodollar Rate.  For
any Interest Period with respect to a Eurodollar Rate Loan, the rate of
interest equal to (a) the rate at which Dollar deposits for such Interest
Period are offered based on information presented on the page of the Telerate
screen (or any successor thereto) that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for delivery on
the first day of such Interest Period) with a term equivalent to such Interest
Period and in an amount comparable to the amount of the Eurodollar Rate Loan of
the Administrative Agent to which such Interest Period applies as of 10:00 a.m.
(Boston time) two (2) Eurodollar Business Days prior to the beginning of such
Interest Period or (b) if such information on such Telerate Page (or any
successor thereto) is not available, the arithmetic average of the rates per
annum (rounded upwards to the nearest 1/16 of one percent) of the rate at which
the Reference Lender’s Eurodollar Lending Office is offered Dollar deposits two
Eurodollar Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations of such Eurodollar Lending Office are customarily
conducted, for delivery on the first day of such Interest Period for the number
of days comprised therein and in an amount comparable to the amount of the
Eurodollar Rate Loan of the Administrative Agent to which such Interest Period
applies; divided by in the case of a rate
determined by either clause (a) or clause (b) above, a number equal to 1.00 minus the Eurocurrency Reserve Rate, if
applicable.

 

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

 

Event of Default.  See
§14.1.

 

Existing Letters of Credit.  See
§5.7.

 

Fee Letter.  The
fee letter, dated on or prior to the Closing Date, between the Borrowers and
the Administrative Agent.

 

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

 

Financial Affiliate.  A
Subsidiary of the bank holding company controlling any Lender, which Subsidiary
is engaging in any of the activities permitted by §4(e) of the Bank Holding
Company Act of 1956 (12 U.S.C. §1843).

 

Fleet. 
Fleet National Bank, a national banking association.

 

12

 

FQ1, FQ2, FQ3, FQ4. The
first, second, third and fourth fiscal quarters, respectively, of a specified
fiscal year.

 

Franchise Agreement.  Each
franchise agreement between a Borrower or any Subsidiary of a Borrower and a
third Person which sets forth the terms and conditions for the operation by
such Person, as a franchisee, of a restaurant.

 

Fronting Fee. See §5.6.

 

GAAP or generally accepted
accounting principles.  (a) When used in §11, whether directly or
indirectly through reference to a capitalized term used therein, means (i)
principles that are consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, in effect for
the fiscal year ended on the Balance Sheet Date, and (ii) to the extent
consistent with such principles, the accounting practice of the Borrowers
reflected in the Audited Financials for the year ended on the Balance Sheet
Date, and (b) when used in general, other than as provided above, means
principles that are (i) consistent with the principles promulgated or adopted
by the Financial Accounting Standards Board and its predecessors, as in effect
from time to time, and (ii) consistently applied with past financial statements
of the Borrowers adopting the same principles, provided that in each case
referred to in this definition of “GAAP” a certified public accountant
would, insofar as the use of such accounting principles is pertinent, be in a
position to deliver an unqualified opinion (other than a qualification
regarding changes in GAAP) as to financial statements in which such principles
have been properly applied; provided, that
despite FASB 150, redeemable preferred stock of any Borrower shall not, for
purposes of this Credit Agreement, be treated as “Indebtedness”. In the event
any “Accounting Changes” (as defined below)
shall occur and such changes affect financing covenants, standards or terms in
this Credit Agreement, then the Borrowers and the Lenders agree to enter into
negotiations in order to amend such provisions of this Credit Agreement so as
to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of the Borrowers shall be the
same as if such Accounting Changes had not been made, and until such time as
such an amendment shall have been executed and delivered by the Borrowers and
the Required Lenders, (a) all financial covenants, standards and terms in this
Credit Agreement shall be calculated and/or construed as if such Accounting
Changes had not been made, and (b) the Borrowers shall prepare footnotes to the
financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes) and the basis for calculating
financial covenant compliance (without reflecting such Accounting
Changes).  “Accounting Changes” means: (x) changes in accounting principles
required by GAAP and implemented by the Company and (y) changes in accounting
principles recommended by the Borrowers’ certified public accountants.

 

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

 

13

 

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

 

Governmental Authority.  Any
foreign, federal, state, regional, local, municipal or other government, or any
department, commission, board, bureau, agency, public authority or
instrumentality thereof, or any court or arbitrator.

 

Growth Capital Expenditures. 
Without duplication, Capital Expenditures related to the construction,
acquisition or opening of new Restaurants during any fiscal year, plus Capital Expenditures relating to any
Permitted Acquisition during any fiscal year, plus to the extent not
included in the calculation of such Capital Expenditures, Consolidated
Restaurant Pre-Opening Costs plus Capital
Expenditures relating to the conversion and/or remodeling of any existing
Restaurant; provided, however, that
the purchase price paid by the Borrowers and/or their Subsidiaries for the
A&M Acquisition shall not constitute and shall not be included for purposes
of Growth Capital Expenditures.

 

Guaranteed Pension Plan.  Any
employee pension benefit plan within the meaning of §3(2) of ERISA maintained
or contributed to by any Borrower or any ERISA Affiliate the benefits of which
are guaranteed on termination in full or in part by the PBGC pursuant to Title
IV of ERISA, other than a Multiemployer Plan.

 

Hazardous Substances.  See
§8.18(b).

 

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

 

Indebtedness.  As
to any Person and whether recourse is secured by or is otherwise available
against all or only a portion of the assets of such Person and whether or not
contingent, but without duplication:

 

(a)   every obligation of such Person for money
borrowed,

 

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

 

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

 

(d)   every obligation of such Person issued or
assumed as the deferred purchase price of property or services (including
securities repurchase agreements but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good

 

14

 

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

 

(e)   every obligation of such Person under any
Capitalized Lease,

 

(f)    every obligation of such Person under any
Synthetic Lease,

 

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

 

(h)   every obligation of such Person (an “equity
related  purchase  obligation”) to purchase, redeem, retire
or otherwise acquire for value any Equity Interests of such Person or any
rights measured by the value of such Equity Interests,

 

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

 

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

 

(k)   every obligation, contingent or otherwise, of
such Person guaranteeing, or having the economic effect of guarantying or
otherwise acting as surety for, any obligation of a type described in any of
clauses (a) through (j) (the “primary  obligation”) of another
Person (the “primary  obligor”), in any manner, whether directly
or indirectly, and including, without limitation, any obligation of such Person
(i) to purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, (ii) to purchase property,
securities or services for the purpose of assuring the payment of such primary
obligation, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to enable
the primary obligor to pay such primary obligation.

 

15

 

The “amount” or “principal
amount” of any Indebtedness at any time of determination represented by
(i) any Indebtedness, issued at a price that is less than the principal amount
at maturity thereof, shall be the amount of the liability in respect thereof
determined in accordance with GAAP, (ii) any Capitalized Lease shall be the
principal component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (iii) any sale of receivables shall be the amount of unrecovered
capital or principal investment of the purchaser (other than any of the
Borrowers or any of their wholly-owned Subsidiaries) thereof, excluding amounts
representative of yield or interest earned on such investment, (iv) any
Synthetic Lease shall be the stipulated loss value, termination value or other
equivalent amount, (v) any derivative contract shall be the maximum amount of
any termination or loss payment required to be paid by such Person if such
derivative contract were, at the time of determination, to be terminated by
reason of any event of default or early termination event thereunder, whether
or not such event of default or early termination event has in fact occurred,
(vi) any equity related purchase obligation shall be the maximum fixed
redemption or purchase price thereof inclusive of any accrued and unpaid
dividends to be comprised in such redemption or purchase price and (vii) any
guaranty or other contingent liability referred to in clause (k) shall be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such guaranty or other contingent obligation is made or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.

 

Indemnified Liabilities.  See
§17.3.

 

Indemnified Person.  See
§17.3.

 

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

 

Initial Public Offering.  An
initial public offering by MSSR of the common stock of MSSR pursuant to an
effective S-1 Registration Statement under the Securities Act of 1933, as
amended, which consists of at least thirty-nine point six percent (39.6%) of
issued and outstanding capital stock of MSSR after giving effect to such
offering.

 

Instrument of Accession.  See
§3.

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

Interest Rate Agreement.  Any
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate futures contract, interest rate option agreement or
other similar agreement or arrangement to which any Borrower and any Lender is
a party and is designed to protect the Borrowers against fluctuations in
interest rates.

 

17

 

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

 

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

 

Lenders.  Each
of the lending institutions listed on Schedule 1 hereto and
any other Person who becomes an assignee of any rights and obligations of a
Lender pursuant to §16 or who agrees to advance additional Revolving Credit
Loans pursuant to §3 and is approved by the Borrowers.

 

Letter of Credit.  See
§5.1.1.

 

Letter of Credit Application.  See
§5.1.1.

 

Letter of Credit Fee.  See
§5.6.

 

Letter of Credit
Participation.  See §5.1.4.

 

Lien.  Any
mortgage, deed of trust, security interest, pledge, hypothecation, assignment,
attachment, deposit arrangement, encumbrance, lien (statutory, judgment or
otherwise), or other security agreement or preferential arrangement of any kind
or nature whatsoever (including any conditional sale or other title retention
agreement, any Capitalized Lease, any Synthetic Lease, any financing lease
involving substantially the same economic effect as any of the foregoing and
the filing of

 

18

 

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

 

Liquidity.  At
any time, the sum of (a) all cash and Cash Equivalents of the Borrowers plus
(b) the Total Revolving Credit Commitment, minus
the aggregate of (A) the Maximum Drawing Amount, (B) all Unpaid Reimbursement
Obligations, and (C) outstanding Revolving Credit Loans (after giving effect to
all amounts requested).

 

Liquor Management Agreement.  Any
agreement or contract between any of the Borrowers and any of the Sellers
pursuant to which such Borrower has obtained the consent of such Seller to use
liquor licenses issued to such Seller in the operation of a particular Restaurant
following the consummation of the 2001 Acquisition.

 

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

 

Loan Request.  See
§2.6.

 

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

 

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

 

Material Adverse Effect.  With
respect to any event or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental investigation or
proceeding):

 

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

 

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

 

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

 

19

 

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

 

Maturity Date. July 23, 2009.

 

Maximum Drawing Amount.  The
maximum aggregate amount that the beneficiaries may at any time draw under
outstanding Letters of Credit, as such aggregate amount may be reduced from
time to time pursuant to the terms of the Letters of Credit.

 

Membership Interest Pledge
Agreement. The
Membership Interest Pledge Agreement, dated as of the Closing Date, among MSAC
and the Administrative Agent, and as the same may be amended from time to time
hereafter, and in form and substance satisfactory to the Administrative Agent.

 

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

 

Mortgaged Property.  Any
Real Estate which is subject to any Mortgage.

 

Mortgages.  The
several mortgages and deeds of trust, executed and delivered from time to time
from and after the Closing Date, as the same may have been amended as of the
Closing Date and as each of the same may be amended from time to time
hereafter, from the Borrowers and their Subsidiaries to the Administrative
Agent with respect to the fee and leasehold interests of the Borrowers and
their Subsidiaries in the Real Estate and in form and substance reasonably
satisfactory to the Administrative Agent.

 

MSAC.  As
defined in the preamble hereto.

 

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

 

MS Acquisition II. 
McCormick & Schmick Acquisition II Texas, Inc., a Delaware
corporation.

 

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

 

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

 

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

 

20

 

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

 

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

 

MSRC.  As
defined in the preamble hereto.

 

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

 

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

 

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

 

Net Cash Sale Proceeds.  The
net cash proceeds received by a Person in respect of any Asset Sale, less the
sum of (a) all reasonable out-of-pocket fees, commissions and other reasonably
and customary direct expenses actually incurred in connection with such Asset
Sale, including the amount of any transfer or documentary taxes required to be
paid by such Person in connection with such Asset Sale, and (b) the aggregate
amount of cash so received by such Person which is required to be used to
retire (in whole or in part) any Indebtedness (other than under the Loan
Documents) of such Person permitted by this Credit Agreement that was secured
by a Lien permitted by this Credit Agreement having priority over the Liens (if
any) of the Administrative Agent (for the benefit of the Administrative Agent
and the Lenders) with respect to such assets transferred and which is required
to be repaid in whole or in part (which repayment, in the case of any other
revolving credit arrangement or multiple advance arrangement, reduces the
commitment thereunder) in connection with such Asset Sale.

 

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

 

New Lending Office. See §6.2.4.

 

Non-U.S. Lender. See §6.2.3.

 

21

 

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

 

Note Record.  A
Record with respect to a Note.

 

Notes. See §2.4.

 

Notice of Redemption.  The
letter, dated June 9, 2004 from MSAC to The Bell Atlantic Master Trust, c/o
Mellon Bank, N.A., with respect to the redemption of the Convertible Preferred
Stock.

 

Obligations.  All
indebtedness, obligations and liabilities of any of the Borrowers and their
Subsidiaries to any of the Lenders and the Administrative Agent, individually
or collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or any Interest Rate
Agreement or in respect of any of the Revolving Credit Loans made or
Reimbursement Obligations incurred or any of the Notes, Letter of Credit
Applications, Letters of Credit or other instruments at any time evidencing any
thereof.

 

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

 

outstanding.  With
respect to the Revolving Credit Loans, the aggregate unpaid principal thereof
as of any date of determination.

 

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

 

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

 

Parent Pledge Agreement.  The
Stock Pledge Agreement, dated as of the Closing Date, and as the same may be
amended from time to time hereafter, between the Parent and the Administrative
Agent and in form and substance satisfactory to the Administrative Agent.

 

22

 

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

 

PBGC.  The Pension Benefit Guaranty Corporation
created by §4002 of ERISA and any successor entity or entities having similar
responsibilities.

 

Perfection Certificates.  The Perfection Certificates as defined in the
Security Agreement.

 

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

 

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

 

(b)           any Indebtedness incurred or assumed
in connection with the Acquisition is Indebtedness permitted under §10.1 or its
incurrence is consented to by the Required Lenders;

 

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

 

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

 

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

 

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

 

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

 

(h)           the Administrative Agent shall have
received reasonably satisfactory evidence that the business to be acquired has
complied with, and, immediately

 

23

 

following the
consummation of the Acquisition, is in compliance with, in all material
respects, all applicable laws; and

 

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

 

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

 

Permitted Liens.  Liens permitted by §10.2.

 

Person.  Any individual, corporation, limited
liability company, partnership, limited liability partnership, trust, other
unincorporated association, business, or other legal entity, and any
Governmental Authority.

 

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

 

Pro Forma Balance Sheet.  See §8.4.3.

 

RCRA.  See §8.18(a).

 

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

 

Real Estate Documentation.
See §9.13(c).

 

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

 

Record.  The grid attached to a Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by any Lender with respect to any Revolving Credit Loan referred
to in such Note.

 

Reference Lender.  Fleet.

 

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

 

24

 

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

 

Register.  See §16.3.

 

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

 

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

 

Required Lenders.  As of any date, any combination of Lenders
the sum of whose aggregate Revolving Credit Commitments constitute at least
sixty-six and two-thirds percent (66 2/3%) of the sum of the Total Revolving
Credit Commitment, or, if the Total Revolving Credit Commitment has been
terminated or if the Maturity Date has occurred, any combination of Lenders
holding at least sixty-six and two-thirds percent (66 2/3%) of the total
outstanding principal amount of the Revolving Credit Loans on such date; provided that at any time when there are not
more than two (2) Lenders, “Required Lenders” shall mean all Lenders.

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

SARA.  See §8.18(a).

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

Subsidiary.  Any corporation, partnership, limited
liability company, association, trust, or other business entity of which the
designated parent shall at any time own directly or indirectly through a
Subsidiary or Subsidiaries at least a majority (by number of votes) of the
outstanding Voting Stock.

 

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

 

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

 

Total Revolving Credit Commitment.  The sum of the Revolving Credit Commitments
of the Lenders, as in effect from time to time, which as of the Closing Date
shall be equal to the aggregate principal amount of $40,000,000, as such amount
may be decreased from time to time pursuant to the terms hereof or increased
after the Closing Date pursuant to the terms and conditions set forth
in §3.

 

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

 

27

 

hereafter, made by the
Borrowers in favor of the Administrative Agent and the Assignment of Trademarks
executed in connection therewith, all in form and substance satisfactory to the
Administrative Agent.

 

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

 

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

 

2001 Acquisition Agreement.  Collectively, the (a) Asset Purchase
Agreement, dated as of June 7, 2001, among Sellers and MSAC, as
amended by the First Amendment of Asset Purchase Agreement, dated as of August
22, 2001, and (b) Bill of Sale and Assignment and Assumption Agreement, dated
December 10, 2001, among MSRC and Sellers, each as in effect without giving
effect to any additional amendments, modifications or waivers of the terms
thereof other than amendments, modifications and waivers permitted by §10.14.2,
certified copies of which have been delivered to the Administrative Agent.

 

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

 

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

 

2003 Credit Agreement.  The Amended and Restated Revolving
Credit  Agreement, dated as of October
28, 2003, by and among the Borrowers, Fleet and certain other lending
institutions party thereto.

 

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

 

Uniform Customs. See
§5.1.3.

 

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

 

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

 

28

 

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

 

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

 

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

 

1.2.         Rules of Interpretation.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

2.             THE REVOLVING CREDIT FACILITY.

 

2.1.         Commitment to Lend Revolving Credit
Loans.  Subject
to the terms and conditions set forth in this Credit Agreement, each of the
Lenders severally agrees to lend to the Borrowers, and the Borrowers may
borrow, repay and reborrow from time to time from the Closing Date up to but
not including the Maturity Date upon notice by the Borrowers to the
Administrative Agent given in accordance with §2.6, such sums as are requested
by the Borrowers up to a maximum aggregate amount outstanding (after giving
effect to all amounts requested) at any one time equal to such Lender’s
Revolving Credit Commitment minus such Lender’s Revolving Credit
Commitment Percentage of the sum of the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations, provided that the sum of the outstanding
amount of the Revolving Credit Loans (after giving effect to all amounts
requested) plus the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not at any time exceed the Total Revolving Credit Commitment
at such time.  The Revolving Credit Loans
shall be made pro  rata in accordance with each Lender’s Revolving
Credit Commitment Percentage.  Each
request for a Revolving Credit Loan hereunder shall constitute a representation
and warranty by the Borrowers that the conditions set forth in §12 and §13, in
the case of the initial Revolving Credit Loans to be

 

30

 

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

 

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

 

2.3.         Reduction of Total Revolving Credit
Commitment. 
The Borrowers shall have the right at any time and from time to time
upon five (5) Business Days prior written notice to the Administrative Agent to
reduce by $1,000,000 or an integral multiple of $500,000 in excess thereof or
to terminate entirely the Total Revolving Credit Commitment, whereupon the
Revolving Credit Commitments of the Lenders shall be reduced pro  rata
in accordance with their respective Revolving Credit Commitment Percentages of
the amount specified in such notice or, as the case may be, terminated.  Promptly after receiving any notice of the
Borrowers delivered pursuant to this §2.3, the Administrative Agent will notify
the Lenders of the substance thereof.  Upon
the effective date of any such reduction or termination, the Borrowers shall
pay to the Administrative Agent for the respective accounts of the Lenders the
full amount of any Commitment Fee then accrued on the amount of the
reduction.  No reduction or termination
of the Revolving Credit Commitments may be reinstated.  In addition, the Total Revolving Credit
Commitment shall be reduced in accordance with §4.3.

 

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

 

31

 

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

 

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

 

(a)           Each Base Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof and ending on
the last day of the Interest Period with respect thereto at the rate per annum
equal to the Base Rate plus the Applicable Margin with respect to Base
Rate Loans.

 

(b)           Each Eurodollar Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof and ending on
the last day of the Interest Period with respect thereto at the rate per annum
equal to the Eurodollar Rate determined for such Interest Period plus
the Applicable Margin with respect to Eurodollar Rate Loans.

 

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

 

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

 

2.7.         Conversion Options.

 

2.7.1.      Conversion to Different Type of
Revolving Credit Loan.  The Borrowers may elect from time to time to
convert any outstanding Revolving Credit Loan to a Revolving Credit Loan of
another Type,

 

32

 

provided that (a) with respect to
any such conversion of a Base Rate Loan to a Eurodollar Rate Loan, the
Borrowers shall give the Administrative Agent at least three (3) Eurodollar
Business Days prior written notice of such election; (b) with respect to any
such conversion of a Eurodollar Rate Loan into a Base Rate Loan, such
conversion shall only be made on the last day of the Interest Period with
respect thereto and (c) no Revolving Credit Loan may be converted into a
Eurodollar Rate Loan when any Default or Event of Default has occurred and is
continuing.  On the date on which such
conversion is being made each Lender shall take such action as is necessary to
transfer its Revolving Credit Commitment Percentage of such Revolving Credit
Loans to its Domestic Lending Office or its Eurodollar Lending Office, as the
case may be.  All or any part of
outstanding Revolving Credit Loans of any Type may be converted into a
Revolving Credit Loan of another Type as provided herein, provided that
any conversion of a Base Rate Loan into a Eurodollar Rate Loan shall be in an
aggregate principal amount of $500,000 or an integral multiple of $500,000 in
excess thereof.  Each Conversion Request
relating to the conversion of a Revolving Credit Loan to a Eurodollar Rate Loan
shall be irrevocable by the Borrowers.

 

2.7.2.      Continuation of Type of Revolving
Credit Loan. 
Any Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period with
respect thereto by compliance by the Borrowers with the notice provisions
contained in §2.7.1; provided that no Eurodollar Rate Loan may be
continued as such when any Default or Event of Default has occurred and is
continuing, but shall be automatically converted to a Base Rate Loan on the
last day of the first Interest Period relating thereto ending during the
continuance of any Default or Event of Default of which officers of the
Administrative Agent active upon the Borrowers’ account have actual
knowledge.  In the event that the
Borrowers fail to provide any such notice with respect to the continuation of
any Eurodollar Rate Loan as such, then such Eurodollar Rate Loan shall be
automatically converted to a Base Rate Loan on the last day of the first
Interest Period relating thereto.  The
Administrative Agent shall notify the Lenders promptly when any such automatic
conversion contemplated by this §2.7 is scheduled to occur.

 

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

 

33

 

2.8.         Funds for Revolving Credit Loan.

 

2.8.1.      Funding Procedures.  Not later than 3:00 p.m. (Boston time) on the
proposed Drawdown Date of any Revolving Credit Loans, each of the Lenders will
make available to the Administrative Agent, at the Administrative Agent’s
Office, in immediately available funds, the amount of such Lender’s Revolving
Credit Commitment Percentage of the amount of the requested Revolving Credit
Loans.  Upon receipt from each Lender of
such amount, and upon receipt of the documents required by §§12 and 13 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Administrative Agent will make available to the Borrowers the
aggregate amount of such Revolving Credit Loans made available to the
Administrative Agent by the Lenders.  The
failure or refusal of any Lender to make available to the Administrative Agent
at the aforesaid time and place on any Drawdown Date the amount of its
Revolving Credit Commitment Percentage of the requested Revolving Credit Loans
shall not relieve any other Lender from its several obligation hereunder to
make available to the Administrative Agent the amount of such other Lender’s
Revolving Credit Commitment Percentage of any requested Revolving Credit Loans.

 

2.8.2.      Advances by Administrative Agent.  The Administrative Agent may, unless notified
to the contrary by any Lender prior to a Drawdown Date, assume that such Lender
has made available to the Administrative Agent on such Drawdown Date the amount
of such Lender’s Revolving Credit Commitment Percentage of the Revolving Credit
Loans to be made on such Drawdown Date, and the Administrative Agent may (but
it shall not be required to), in reliance upon such assumption, make available to
the Borrowers a corresponding amount.  If
any Lender makes available to the Administrative Agent such amount on a date
after such Drawdown Date, such Lender shall pay to the Administrative Agent on
demand an amount equal to the product of (a) the average computed for the
period referred to in clause (c) below, of the weighted average interest rate
paid by the Administrative Agent for federal funds acquired by the
Administrative Agent during each day included in such period, times (b)
the amount of such Lender’s Revolving Credit Commitment Percentage of such
Revolving Credit Loans, times (c) a fraction, the numerator of which is
the number of days that elapse from and including such Drawdown Date to the
date on which the amount of such Lender’s Revolving Credit Commitment
Percentage of such Revolving Credit Loans shall become immediately available to
the Administrative Agent, and the denominator of which is 360.  A statement of the Administrative Agent
submitted to such Lender with respect to any amounts owing under this paragraph
shall be prima  facie evidence of the amount due and owing to the
Administrative Agent by such Lender.  If
the amount of such Lender’s Revolving Credit Commitment Percentage of

 

34

 

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

 

2.9.         Repayment of Revolving Credit Loans.

 

2.9.1.      Maturity.  The Borrowers jointly
and severally promise to pay on the Maturity Date, and there shall become
absolutely due and payable on the Maturity Date, all of the Revolving Credit
Loans outstanding on such date, together with any and all accrued and unpaid
interest thereon.

 

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

 

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

 

35

 

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

 

2.9.4.      Application of Payments Prior to an
Event of Default.  Prior to the occurrence of an Event of
Default, if, and solely to the extent that, after giving effect to the prepayment
of any Base Rate Loans then outstanding, any prepayment required to be made
pursuant to §4.2 would require the Borrowers to compensate any Lender pursuant
to §6.9 with respect to any breakage costs associated with Eurodollar Rate
Loans, the Borrowers may at their option deposit in their Concentration Account
on the date of prepayment required under §4.2, as applicable, cash in an amount
equal to the aggregate amount of the Eurodollar Rate Loans otherwise required
to be prepaid on such date.  On the last
day of each Interest Period applicable to any such Eurodollar Rate Loans, the
Borrowers shall withdraw and pay in immediately available funds to the
Administrative Agent amounts then held in the Concentration Account and
deposited therein pursuant to this §2.9.4 sufficient to repay such Eurodollar
Rate Loans of each Lender.

 

3.             ADDITIONAL
FINANCING.

 

At any time, and from time to time, the
Borrowers may solicit the Lenders and any other lending institutions to provide
the Borrowers with additional commitments to make Revolving Credit Loans under
this Credit Agreement in an aggregate amount not to exceed ten million dollars
($10,000,000), subject to the limitations set forth below.  Neither the Administrative Agent nor any
Lender shall have any obligation to provide the Borrowers with all or any part
of such additional Revolving Credit Commitment; provided that by
execution of this Credit Agreement, the Administrative Agent and the Lenders
shall be deemed to have consented, without the need for further or subsequent
consent, (a) to such additional Revolving Credit Commitments which any other
Lender or lending institution may agree to provide for the Revolving Credit
Loans which may be advanced in respect thereof and any resulting changes in the
Revolving Credit Commitment Percentage, and (b) any amendments which may be
made to the Loan Documents in order to evidence and document such Revolving
Credit Commitments and Revolving Credit Loans to the extent that any such
amendment (i) does not amend any of the provisions specified in §17.12(a) as
requiring the consent of each Lender affected thereby, (ii) does not modify the
relative priority of the Revolving Credit Loans (including any such new
Revolving Credit Loans) and Revolving Credit Commitments (including any such
new Revolving Credit Commitments) with respect to the payment,

 

36

 

guarantees, collateral or other collateral
support, and (iii) is consistent with all other requirements of this §3.  Any such additional Revolving Credit
Commitments (and the revolving Credit Loans funded pursuant thereto) shall be
otherwise treated (and be subject to the same as terms and conditions) as
Revolving Credit Commitments and Revolving Credit Loans hereunder. Notwithstanding
anything to the contrary set forth herein, no additional Revolving Credit
Commitments shall be permitted hereunder and no additional Revolving Credit
Loans may be advanced in respect thereof unless (1) no Default or Event of
Default shall have occurred and be then continuing or would result immediately
after giving effect to such additional Revolving Credit Commitments and the
Revolving Credit Loans to be advanced in respect thereof, assuming that such
Revolving Credit Loans were fully advanced on the effective date of such
additional commitments, (2) the Borrowers shall have delivered to the
Administrative Agent a Compliance Certificate demonstrating compliance with the
terms of the Credit Agreement immediately after giving pro forma effect to such loans to be advanced in respect of the
additional commitment and the application of the proceeds thereof, such
compliance to be calculated based on the Borrowers’ Consolidated EBITDAR
reported in connection with the preparation of the Borrowers’ Compliance Certificate
most recently delivered to the Administrative Agent, (3) with respect to each
lending institution not yet a party hereto providing additional Revolving
Credit Commitments, such lending institution shall have become a party to this
Credit Agreement (and become subject to all the rights and obligations of a
Lender hereunder) by executing and delivering to the Administrative Agent an
original, executed Instrument of Accession in the form of Exhibit  G
hereto (an “Instrument  of  Accession”), (4) the Borrowers
shall have delivered to the Administrative Agent and the Lenders notice that
such solicitation has been made and, prior to the effectiveness of such
additional Revolving Credit Commitment, copies of all documents and instruments
related thereto and (5) the Borrowers shall have delivered to the
Administrative Agent copies of updated financial projections through the
Maturity Date.

 

4.             MANDATORY REPAYMENT OF REVOLVING
CREDIT LOANS.

 

In addition to payments in respect of
Revolving Credit Loans pursuant to §2.9, the Revolving Credit Loans shall be
repaid as follows:

 

4.1.         Intentionally Omitted.

 

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

 

(a)           subject to the reinvestment
provisions of §10.5.2, Net Cash Sale Proceeds in excess of $500,000 per annum
from Asset Sales (other than proceeds from the sale, lease, license or other
disposition of assets in the ordinary course of business consistent with past
practices);

 

(b)           Net Cash Equity Issuance Proceeds
from an Equity Issuance by the Parent, the Borrowers or any of their
Subsidiaries (other than amounts not to

 

37

 

exceed $500,000 in the aggregate after the date hereof
arising from (i) any such sale or issuance to its existing shareholders other
than in connection with a public offering of the equity securities of any
Borrower and (ii) the sale or issuance to any employee or director of such
Borrower or such Subsidiary pursuant to any stock option plan or compensatory
arrangement approved by the board of directors of such Person in the ordinary
course of business and consistent with past practices);

 

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

 

(d)           Net Cash Debt Proceeds from an
issuance by the Parent, the Borrowers or any of their Subsidiaries of
Subordinated Debt;

 

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

 

4.3.         Application of Payments.  All mandatory prepayments pursuant to §4.2
shall be applied to the principal of the outstanding Revolving Credit Loans for
application in accordance with the provisions of §2.9.2 and concurrently with
such prepayment, to reduce permanently the Total Revolving Credit Commitment in
an amount equal to such prepayment.  In
the event that at the time of such mandatory prepayment event, there are no
outstanding Revolving Credit Loans, the Total Revolving Credit Commitment shall
be permanently reduced by the amount that would otherwise have been prepaid
pursuant to §4.2 had Revolving Credit Loans been outstanding.  Any prepayment of principal of the Revolving
Credit Loans shall include all interest accrued to the date of such prepayment.

 

4.4.         Delivery of Proceeds.  The Borrowers shall deliver to the
Administrative Agent, promptly upon receipt thereof, all Net Cash Sale Proceeds
or proceeds relating to Casualty Events that may have to be applied to prepay
the

 

38

 

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

 

5.             LETTERS
OF CREDIT.

 

5.1.         Letter of Credit Commitments.

 

5.1.1.      Commitment to Issue Letters of Credit.  Subject to the terms and conditions hereof
and the execution and delivery by the Borrowers of a letter of credit
application on the Administrative Agent’s customary form (a “Letter  of
Credit  Application”), the Administrative Agent on behalf of the
Lenders and in reliance upon the agreement of the Lenders set forth in §5.1.4
and upon the representations and warranties of the Borrowers contained herein,
agrees, in its individual capacity, to issue, extend and renew for the account
of a Borrower one or more standby or documentary letters of credit (individually,
a “Letter  of  Credit”), in such form as may be requested
from time to time by such Borrower and agreed to by the Administrative Agent; provided,
however, that, after giving effect to such request, (a) the sum of the
aggregate Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall
not exceed $10,000,000 at any one time and (b) the sum of (i) the Maximum
Drawing Amount on all Letters of Credit, (ii) all Unpaid Reimbursement
Obligations, and (iii) the amount of all Revolving Credit Loans outstanding
shall not exceed the Total Revolving Credit Commitment at such time.  Notwithstanding the foregoing, the
Administrative Agent shall have no obligation to issue any Letter of Credit to
support or secure any Indebtedness of a Borrower or any of its Subsidiaries to
the extent that such Indebtedness was incurred prior to the proposed issuance
date of such Letter of Credit, unless in any such case such Borrower
demonstrates to the satisfaction of the Administrative Agent that (x) such
prior incurred Indebtedness was then fully secured by a prior perfected and
unavoidable security interest in collateral provided by such Borrower or such
Subsidiary to the proposed beneficiary of such Letter of Credit or (y) such
prior incurred Indebtedness was then secured or supported by a letter of credit
issued for the account of such Borrower or such Subsidiary and the
reimbursement obligation with respect to such letter of credit was fully
secured by a prior perfected and unavoidable security interest in collateral
provided to the issuer of such letter of credit by such Borrower or such
Subsidiary.

 

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

 

39

 

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

 

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

 

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

 

5.1.5.      Participations of Lenders.  Each such payment made by a Lender shall be
treated as the purchase by such Lender of a participating interest in the
Borrowers’ Reimbursement Obligation under §5.2 in an amount equal to such
payment.  Each Lender shall share in
accordance with its participating interest in any interest which accrues
pursuant to §5.2.

 

5.2.         Reimbursement Obligation of the
Borrowers.  In
order to induce the Administrative Agent to issue, extend and renew each Letter
of Credit and the Lenders to participate therein, the Borrowers hereby jointly
and severally agree to

 

40

 

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

 

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

 

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

 

(c)           upon the termination of the Total
Revolving Credit Commitment, or the acceleration of the Reimbursement
Obligations with respect to all Letters of Credit in accordance with §14, an
amount equal to the then Maximum Drawing Amount on all Letters of Credit, which
amount shall be held by the Administrative Agent for the benefit of the Lenders
and the Administrative Agent as cash collateral for all Reimbursement
Obligations.

 

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

 

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

 

41

 

Agent, at the Administrative Agent’s Office, in
immediately available funds, such Lender’s Revolving Credit Commitment
Percentage of such Unpaid Reimbursement Obligation, together with an amount
equal to the product of (a) the average, computed for the period referred to in
clause (c) below, of the weighted average interest rate paid by the
Administrative Agent for federal funds acquired by the Administrative Agent
during each day included in such period, times (b) the amount equal to
such Lender’s Revolving Credit Commitment Percentage of such Unpaid
Reimbursement Obligation, times (c) a fraction, the numerator of which
is the number of days that elapse from and including the date the
Administrative Agent paid the draft presented for honor or otherwise made
payment to the date on which such Lender’s Revolving Credit Commitment
Percentage of such Unpaid Reimbursement Obligation shall become immediately
available to the Administrative Agent, and the denominator of which is
360.  The responsibility of the
Administrative Agent to the Borrowers and the Lenders shall be only to
determine that the documents (including each draft) delivered under each Letter
of Credit in connection with such presentment shall be in conformity in all
material respects with such Letter of Credit.

 

5.4.         Obligations Absolute.  The Borrowers’ obligations under this §5
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to
payment which the Borrowers may have or have had against the Administrative
Agent, any Lender or any beneficiary of a Letter of Credit.  Each of the Borrowers further agrees with the
Administrative Agent and the Lenders that the Administrative Agent and the
Lenders shall not be responsible for, and the Borrowers’ Reimbursement
Obligations under §5.2 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among any Borrower, the
beneficiary of any Letter of Credit or any financing institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of the Borrowers against the beneficiary of any Letter of Credit or
any such transferee.  The Administrative
Agent and the Lenders shall not be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of Credit.  Each of the Borrowers agrees that any action
taken or omitted by the Administrative Agent or any Lender under or in
connection with each Letter of Credit and the related drafts and documents, if
done in good faith, shall be binding upon the Borrowers and shall not result in
any liability on the part of the Administrative Agent or any Lender to the
Borrowers.

 

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

 

42

 

message, statement, order or other document believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Administrative Agent.  The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Credit Agreement
unless it shall first have received such advice or concurrence of the Required
Lenders as it reasonably deems appropriate or it shall first be indemnified to
its reasonable satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action.  The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Credit Agreement in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Lenders and all future holders of the
Notes or of a Letter of Credit Participation.

 

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

 

5.7.         Existing Letters of Credit.  The Borrowers and the Lenders each agree that
(a) any letter of credit which has been previously issued by Fleet under the
2003 Credit Agreement (the “Existing Letters of
Credit”) for the account of a Borrower or any Subsidiary of a Borrower,
shall be deemed a Letter of Credit issued under and governed by this Credit
Agreement, (b) this Credit Agreement supercedes any and all prior agreements
between the Borrowers or any of their Subsidiaries and Fleet with respect to
the Existing Letters of Credit, and (c) all Existing Letters of Credit, from
and after the Closing Date, shall be subject to and governed by the terms of
this Credit Agreement.

 

43

 

6.             CERTAIN GENERAL PROVISIONS.

 

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

 

6.2.         Funds for Payments.

 

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

 

6.2.2.      No Offset, etc.  All payments by the Borrowers hereunder and
under any of the other Loan Documents shall be made without recoupment, setoff
or counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, compulsory
loans, restrictions or conditions of any nature now or hereafter imposed or
levied by any jurisdiction or any political subdivision thereof or taxing or
other authority therein (other than any such deductions or withholdings which
the Borrowers are compelled by law to make on or with respect to, or measured
by, the income of the Administrative Agent, any Lender, any assignee or any
participant, including without limitation, franchise taxes imposed on or with
respect to, or measured by, net income of such Person, in each case by any
jurisdiction, subdivision thereof or taxing or other Governmental Authority
therein in which the Administrative Agent, such Lender, such assignee or such
participant is organized, has its principal place of business, maintains a
lending office or is otherwise subject to tax) and other deductions, or
withholdings which the Borrowers are compelled by law to make such deduction or
withholding.  If any such obligation is
imposed upon the Borrowers with respect to any amount payable by them hereunder
or under any of the other Loan Documents, the Borrowers will pay to the
Administrative Agent, for the account of the Lenders or (as the case may be)
the Administrative Agent, on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount in Dollars
as shall be necessary to enable the Lenders or the Administrative Agent to
receive the same net amount which the Lenders or the Administrative Agent would
have received on such due date had no such obligation been imposed upon the
Borrowers. The 

 

44

 

Borrowers will deliver promptly to the Administrative
Agent certificates or other evidence reasonably acceptable to the
Administrative Agent for all taxes or other charges deducted from or paid with
respect to payments made by the Borrowers hereunder or under such other Loan
Document.

 

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

 

45

 

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

 

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

 

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

 

6.4.         Inability to Determine Eurodollar
Rate.  In the event, prior to the commencement of
any Interest Period relating to any Eurodollar Rate Loan, the Administrative
Agent shall determine or be notified
by the Required Lenders that (a) adequate and reasonable methods do not exist
for ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Loan during any Interest
Period or (b) the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to the Lenders
of making or maintaining their Eurodollar Rate Loans during such period, the
Administrative Agent shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrowers and the Lenders) to the
Borrowers and the Lenders.  In

 

46

 

such event (i) any Loan Request or Conversion Request
with respect to Eurodollar Rate Loans shall be automatically withdrawn and
shall be deemed a request for Base Rate Loans, (ii) each Eurodollar Rate Loan
will automatically, on the last day of the then current Interest Period
relating thereto, become a Base Rate Loan, and (iii) the obligations of the
Lenders to make Eurodollar Rate Loans shall be suspended until the
Administrative Agent or the Required Lenders determine that the circumstances
giving rise to such suspension no longer exist, whereupon the Administrative
Agent or, as the case may be, the
Administrative Agent upon the instruction of the Required Lenders, shall so
notify the Borrowers and the Lenders.

 

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

 

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

 

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

 

47

 

(b)           materially change the basis of
taxation (except for changes in taxes based on or measured by net income or
profits) of payments to any Lender of the principal of or the interest on any
Revolving Credit Loans or any other amounts payable to any Lender or the
Administrative Agent under this Credit Agreement or any of the other Loan
Documents, or

 

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

 

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

 

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

 

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

 

(iii)          to require such Lender or the
Administrative Agent to make any payment or to forego any interest or
Reimbursement Obligation or other sum payable hereunder, the amount of which
payment or foregone interest or Reimbursement Obligation or other sum is
calculated by reference to the gross amount of any sum receivable or deemed
received by such Lender or the Administrative Agent from the Borrowers
hereunder,

 

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

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

 

48

 

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

 

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

 

(a)           Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of §§6.2.2, 6.6 or 6.7
with respect to such Lender, it will, if requested in writing by the Borrowers,
use commercially reasonable efforts (subject to overall policy considerations
of such Lender) to designate another lending office for any Revolving Credit
Loans affected by such event with the object of avoiding the consequences of
such event; provided, that such designation
is made on terms that, in the sole judgment of such Lender, cause such Lender
and its lending office(s) to suffer no material economic, legal or regulatory
disadvantage; provided, further, that nothing in this §6.8 shall
affect or postpone any of the obligations of the Borrowers or the rights of any
Lender or the Administrative Agent pursuant to §§6.2.2, 6.6 or 6.7.

 

(b)           Upon receipt by the Borrowers from
any Lender (an “Affected Lender”) of a
claim under §§6.2.2, 6.6 or 6.7, the Borrowers may:

 

49

 

(i)            request one or more of the other
Lenders to acquire and assume all or part of such Affected Lender’s Revolving
Credit Loans and Revolving Credit Commitment, as applicable, provided that no
Lender shall be required to accede to any such request; or

 

(ii)           replace such Affected Lender with
another Lender; provided that (A) such
other Lender agrees to be the replacement Lender, (B) such replacement does not
conflict with any requirement of law, (C) no Default or Event of Default shall
have occurred and be continuing at the time of such replacement, (D) the
Borrowers shall repay, or the replacement Lender shall purchase, at the full
principal or face amount of all Revolving Credit Loans, accrued interest, fees
and other amounts owing to such replaced Lender prior to the date of
replacement, (E) the Borrowers shall be liable to such replaced Lender in
accordance with §6.9 with respect to any prepayment or purchase of Eurodollar
Rate Loans, (F) the replacement Lender, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent, (G) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions
of §16 (provided that the Borrowers or the
replacement Lender shall be obligated to pay the registration and processing
fee) and (H) the Borrowers shall pay all additional amounts (if any) required
pursuant to §§6.2.2, 6.6 or 6.7, as the case may be, to the extent such
additional amounts were incurred on or prior to the consummation of such
replacement.

 

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

 

6.10.       Interest After Default.

 

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

 

50

 

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

 

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

 

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

 

6.11.       Concerning Joint and Several
Liability of the Borrowers.

 

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

 

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

 

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

 

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

 

51

 

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

 

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

 

(e)           Except as otherwise expressly
provided herein, each Borrower hereby waives promptness, diligence,
presentment, demand, protest, notice of acceptance of its joint and several
liability, notice of any and all advances of the Revolving Credit Loans made
under this Credit Agreement and the Notes, notice of occurrence of any Default
or Event of Default (except to the extent notice is expressly required to be
given pursuant to the terms of this Credit Agreement or any of the other Loan
Documents), or of any demand for any payment under this Credit Agreement,
notice of any action at any time taken or omitted by the Administrative Agent
or the Lenders under or in respect of any of the Obligations hereunder, any
requirement of diligence and, generally, all demands, notices and other
formalities of every kind in connection with this Credit Agreement and the
other Loan Documents.  Each Borrower
hereby waives all defenses which may be available by virtue of any valuation,
stay, moratorium law or other similar law now or hereafter in effect, any right
to require the marshaling of assets of the Borrowers and any other entity or
Person primarily or secondarily liable with respect to any of the Obligations,
and all suretyship defenses generally. 
Each Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment, or place or manner for payment,
compromise, refinancing, consolidation or renewals of any of the Obligations
hereunder, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by the Administrative Agent and the Lenders at
any time or times in respect of any default by any Borrower in the performance
or satisfaction of any term, covenant, condition or provision of this Credit
Agreement and the other Loan Documents, any and all other indulgences
whatsoever by the Administrative Agent and the Lenders in respect of any of the
Obligations hereunder, and the taking, addition, substitution or release, in
whole or in part, at any time or times, of any security for any of such
Obligations or the addition, substitution or release, in whole or in part, of
any Borrower or any other entity or Person primarily or secondarily liable for
any Obligation.  Such Borrower further
agrees that its Obligations shall not be released or discharged, in whole or in
part, or otherwise affected by the adequacy of any rights which the
Administrative Agent or any Lender may have against any collateral security or
other means of obtaining repayment of any of the Obligations, the impairment of
any collateral security securing the Obligations, including, without
limitation, the failure to protect or preserve any rights which the
Administrative Agent or any Lender may have in such collateral security or the
substitution, exchange, surrender, release, loss or

 

52

 

destruction of any such collateral security, any other
act or omission which might in any manner or to any extent vary the risk of
such Borrower, or otherwise operate as a release or discharge of such Borrower,
all of which may be done without notice to such Borrower; provided, however,
that the foregoing shall in no way be deemed to create commercially
unreasonable standards as to the Administrative Agent’s duties as secured party
under the Loan Documents (as such rights and duties are set forth
therein).  If for any reason any of the
other Borrowers has no legal existence or is under no legal obligation to
discharge any of the Obligations, or if any of the Obligations have become
irrecoverable from any of the other Borrowers by reason of such other
Borrower’s insolvency, bankruptcy or reorganization or by other operation of
law or for any reason, this Credit Agreement and the other Loan Documents to
which it is a party shall nevertheless be binding on such Borrower to the same
extent as if such Borrower at all times had been the sole obligor on such
Obligations.  Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of the Administrative Agent and the
Lenders, including, without limitation, any failure strictly or diligently to
assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder which might, but for the provisions of this
§6.11, afford grounds for terminating, discharging or relieving such Borrower,
in whole or in part, from any of its obligations under this §6.11, it being the
intention of each Borrower that, so long as any of the Obligations hereunder
remain unsatisfied, the obligations of such Borrower under this §6.11 shall not
be discharged except by performance and then only to the extent of such
performance.  The Obligations of each
Borrower under this §6.11 shall not be diminished or rendered unenforceable by
any winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to any reconstruction or similar proceeding
with respect to any other Borrower, or any of the Lenders.  The joint and several liability of the
Borrowers hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
ownership, membership, constitution or place of formation of any Borrower or
the Lenders.  Each of the Borrowers
acknowledges and confirms that it has itself established its own adequate means
of obtaining from each of the other Borrowers on a continuing basis all
information desired by such Borrower concerning the financial condition of each
of the other Borrowers and that each such Borrower will look to each of the
other Borrowers and not to the Administrative Agent or any Lender in order for
such Borrower to keep adequately informed of changes in each of the other
Borrowers’ respective financial conditions.

 

(f)            The provisions of this §6.11 are
made for the benefit of the Lenders and the Administrative Agent and their
respective permitted successors and assigns, and may be enforced by it or them
from time to time against any or all of the Borrowers as often as occasion
therefor may arise and without requirement on the part of the Lenders or the
Administrative Agent or such successor or assign first to marshall any of its
or their claims or to exercise any of its or their rights

 

53

 

against any of the other Borrowers or to exhaust any
remedies available to it or them against any of the other Borrowers or to
resort to any other source or means of obtaining payment of any of the Obligations
hereunder or to elect any other remedy. 
The provisions of this §6.11 shall remain in effect until all of the
Obligations shall have been paid in full or otherwise fully satisfied.  If at any time, any payment, or any part
thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Lender or the Administrative Agent
upon the insolvency, bankruptcy or reorganization of any of the Borrowers, or
otherwise, the provisions of this §6.11 will forthwith be reinstated in effect,
as though such payment had not been made.

 

(g)           Each of the Borrowers hereby agrees
that it will not enforce any of its rights of reimbursement, contribution,
subrogation or the like against the other Borrowers with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments
made by it to any of the Lenders or the Administrative Agent with respect to
any of the Obligations or any collateral security therefor until such time as
all of the Obligations have been irrevocably paid in full in cash.  Any claim which any Borrower may have against
any other Borrower with respect to any payments to the Lenders or the
Administrative Agent hereunder or under any other Loan Documents are hereby
expressly made subordinate and junior in right of payment, without limitation
as to any increases in the Obligations arising hereunder or thereunder, to the
prior payment in full of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full before any payment or distribution of any character,
whether in cash, securities or other property, shall be made to any other
Borrower therefor.

 

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

 

7.             COLLATERAL SECURITY AND PARENT
GUARANTY.

 

7.1.         Security of Borrowers.  The Obligations shall be secured by a
perfected first priority security interest (subject only to Permitted Liens
entitled to

 

54

 

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

 

7.2.         Parent Guaranty and Parent Pledge
Agreement.  The
Obligations shall also be guaranteed pursuant to the terms of the Parent
Guaranty.  The obligations of the Parent
under the Parent Guaranty shall be in turn secured by a perfected first
priority security interest and pledge in all of the Equity Interests of MSAC,
whether now owned or hereafter acquired, pursuant to the terms of the Parent
Pledge Agreement.

 

8.             REPRESENTATIONS AND WARRANTIES.

 

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

 

8.1.         Corporate Authority.

 

8.1.1.      Incorporation; Good Standing.  Each of the Parent, the Borrowers and their
Subsidiaries (a) is a corporation, limited partnership or limited liability
company as shown on Schedule 8.19, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation, (b) has all requisite powers to own
its property and conduct its business as now conducted and as presently
contemplated, and (c) is in good standing as a foreign corporation, limited
partnership or limited liability company, as applicable, and is duly authorized
to do business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a Material Adverse
Effect.

 

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

 

55

 

8.1.3.      Enforceability.  The
execution and delivery of this Credit Agreement and the other Loan Documents to
which the Parent, any of the Borrowers or any of their Subsidiaries is or is to
become a party will result in valid and legally binding obligations of such
Person enforceable against it in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors’ rights and except to the
extent that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
therefor may be brought.

 

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

 

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

 

8.4.         Financial Statements and Projections.

 

8.4.1.      Fiscal Year; Fiscal Quarters.  Each of the Parent, the Borrowers and their
Subsidiaries has a fiscal year which
ends on the Saturday closest to December 31 of each calendar year.  The fiscal quarters of the Borrowers and
their Subsidiaries end on the Saturday closest to March 31, June 30, September
30 and December 31 of each calendar year.

 

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

 

56

 

8.4.3.      Pro Forma Balance Sheet and
Projections. 
The Borrowers have delivered to the Administrative Agent a consolidated pro
forma balance sheet as of June 26, 2004 reflecting the borrowings
hereunder on the Closing Date (the “Pro Forma
Balance Sheet”), which Pro Forma Balance Sheet has been prepared in good
faith on the basis of the assumptions stated therein.  The projections of the annual operating
budgets of the Borrowers and their Subsidiaries on a consolidated basis, balance
sheets and cash flow statements for the 2004 to 2009 fiscal years, copies of
which have been delivered to each Lender, disclose all assumptions made with
respect to general economic, financial and market conditions used in
formulating such projections.  To the
knowledge of the Borrowers or any of their Subsidiaries, no facts exist that
(individually or in the aggregate) would result in any material change in any
of such projections.  The projections are
based upon reasonable estimates and assumptions, have been prepared on the
basis of the assumptions stated therein and reflect the reasonable estimates of
the Borrowers of the results of operations and other information projected
therein.  There are no contingent liabilities
of the Borrowers or their Subsidiaries as of the Closing Date involving
material amounts, known to the officers of the Borrowers, which are not
disclosed in the Pro Forma Balance Sheet.

 

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

 

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

 

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

 

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

 

57

 

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

 

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

 

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

 

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

 

8.12.       Holding Company and Investment
Company Acts. 
None of the Parent, the Borrowers or any of their Subsidiaries is a “holding
company”, or a “subsidiary  company” of a “holding  company”,
or an “affiliate” of a “holding  company”, as such terms
are defined in the Public Utility Holding Company Act of 1935; nor is it an “investment
company”, or an “affiliated  company” or a “principal
underwriter” of an “investment  company”, as such terms are
defined in the Investment Company Act of 1940.

 

58

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

 

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

 

8.15.                     Certain
Transactions.  Except for the
transactions listed on Schedule 8.15 and
arm’s length transactions pursuant to which a Borrower or any of its
Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than such Borrower or such Subsidiary could obtain from third
parties, none of the officers, directors, or employees of any of the Borrowers,
any of their Subsidiaries or any Sponsor or any Affiliate of a Borrower, any
Subsidiary of a Borrower or any Sponsor is presently a party to any transaction
with any of the Borrowers or any of their Subsidiaries (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Borrowers, any corporation, partnership, trust or other entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.

 

8.16.                     Employee
Benefit Plans.

 

8.16.1.           In General.  Each Employee Benefit Plan and each
Guaranteed Pension Plan has been maintained and operated in compliance in all
material respects with the provisions of ERISA and all Applicable Pension
Legislation and, to the extent applicable, the Code, except where the failure
to comply could not reasonably be expected to have a Material Adverse
Effect.  The Borrowers have heretofore
delivered to the Administrative Agent the most recently completed annual
report, Form 5500, with all required attachments, and actuarial statements
required to be submitted under §103(d) of ERISA, with respect to each
Guaranteed Pension Plan maintained or contributed to by the Parent or any
Subsidiary of the Parent.

 

59

 

8.16.2.           Terminability of
Welfare Plans.  Except as set
forth on Schedule 8.16 hereto and except as
would not reasonably be expected to have a Material Adverse Effect, no Employee
Benefit Plan, which is an employee welfare benefit plan within the meaning of
§3(1) or §3(2)(B) of ERISA, provides benefit coverage subsequent to termination
of employment, except as required by Title I, Part 6 of ERISA or the applicable
state insurance laws.

 

8.16.3.           Guaranteed
Pension Plans.  Each
contribution required to be made to a Guaranteed Pension Plan, whether required
to be made to avoid the incurrence of an accumulated funding deficiency, the
notice or lien provisions of §302(f) of ERISA, or otherwise, has been timely
made.  No waiver of an accumulated
funding deficiency or extension of amortization periods has been received with
respect to any Guaranteed Pension Plan, and none of the Borrowers nor any ERISA
Affiliate is obligated to or has posted security in connection with an
amendment to a Guaranteed Pension Plan pursuant to §307 of ERISA or §401(a)(29)
of the Code.  No liability to the PBGC
(other than required insurance premiums, all of which have been paid) has been
incurred by the Borrowers or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event (other than an
ERISA Reportable Event as to which the requirement of thirty (30) days notice
has been waived), or any other event or condition which presents a material
risk of termination of any Guaranteed Pension Plan by the PBGC. Based on the
latest valuation of each Guaranteed Pension Plan (which in each case occurred
within twelve months of the date of this representation), and on the actuarial
methods and assumptions employed for that valuation, the aggregate benefit
liabilities of all such Guaranteed Pension Plans within the meaning of §4001 of
ERISA did not exceed the aggregate value of the assets of all such Guaranteed
Pension Plans, disregarding for this purpose the benefit liabilities and assets
of any Guaranteed Pension Plan with assets in excess of benefit liabilities.

 

8.16.4.           Multiemployer
Plans.  None of the Borrowers nor
any ERISA Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under §4201 of ERISA or as a result of
a sale of assets described in §4204 of ERISA. 
None of the Borrowers nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or insolvent under and within the
meaning of §4241 or §4245 of ERISA or is at risk of entering reorganization or
becoming insolvent, or that any Multiemployer Plan intends to terminate or has
been terminated under §4041A of ERISA.

 

60

 

8.17.                     Use of
Proceeds.

 

8.17.1.           General.  On the Closing Date, proceeds of the
Revolving Credit Loans shall be used to (a) refinance all outstanding loans
under the 2003 Credit Agreement, (b) pay the fees and expenses associated with
the execution of this Credit Agreement, (c) pay the fees associated with the
termination of the Management Agreements and the Officer Fees in an aggregate
amount of up to $3,000,000, and (d) redeem shares of the Convertible Preferred
Stock.  After the Closing Date, all future
Revolving Credit Loans shall be used for (a) Permitted Acquisitions, (b)
payment of fees associated with the termination of the Management Agreements
and the Officer Fees in an aggregate amount (when combined with any such fees
paid on the Closing Date) of up to $3,000,000, (c) the acquisition and/or
construction of new Restaurants and to upgrade existing Restaurants, in each
case in accordance with the terms hereof, and (d) for working capital and
general corporate purposes.  The
Borrowers will obtain Letters of Credit solely for working capital and general
corporate purposes.

 

8.17.2.           Regulations
U and X.  No portion of any Loan is
to be used, and no portion of any Letter of Credit is to be obtained, for the
purpose of purchasing or carrying any “margin  security” or “margin
stock” as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

 

8.17.3.           Ineligible Securities.  No portion of the proceeds of any Revolving
Credit Loans is to be used, and no portion of any Letter of Credit is to be
obtained, for the purpose of knowingly purchasing, or providing credit support
for the purchase of, during the underwriting or placement period or within
thirty (30) days thereafter, any Ineligible Securities underwritten or
privately placed by a Financial Affiliate.

 

8.18.                     Environmental
Compliance.  Except as
set forth on Schedule 8.18 hereto:

 

(a)          none of the Borrowers,
their Subsidiaries or any operator of the Real Estate or any operations thereon
is in violation, or alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and Recovery
Act (“RCRA”), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended (“CERCLA”), the Superfund Amendments
and Reauthorization Act of 1986 (“SARA”), the Federal Clean Water Act,
the Federal Clean Air Act, the Toxic Substances Control Act, or any state,
local or foreign law, statute, regulation, ordinance, order or decree relating
to health, safety or the environment (hereinafter “Environmental  Laws”),
which violation would reasonably be expected to have a material adverse effect
on the environment or a Material Adverse Effect;

 

61

 

(b)         none of the Borrowers nor
any of their Subsidiaries has received written notice from any third party
including, without limitation, any Governmental Authority, (i) that any one of
them has been identified by the United States Environmental Protection Agency (“EPA”)
as a potentially responsible party under CERCLA with respect to a site listed
on the National Priorities List, 40 C.F.R. Part 300 Appendix B, where such
circumstances would reasonably be expected to have a Material Adverse Effect;
(ii) that any hazardous waste, as defined by 42 U.S.C. §6903(5), any hazardous
substances as defined by 42 U.S.C. §9601(14), any pollutant or contaminant as
defined by 42 U.S.C. §9601(33) and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any Environmental Laws
(“Hazardous  Substances”) which any one of them has generated,
transported or disposed of has been found at any site at which a Governmental
Authority has conducted or has ordered that any Borrower or any of its
Subsidiaries conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law, where such circumstances would reasonably be
expected to have a Material Adverse Effect; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal or
administrative proceeding arising out of any third party’s incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the release
of Hazardous Substances where such circumstances would reasonably be expected
to have a Material Adverse Effect;

 

(c)          except as could not
reasonably be expected to result in a Material Adverse Effect, (i) no portion
of the Real Estate has been used for the handling, processing, storage or
disposal of Hazardous Substances except in accordance with applicable
Environmental Laws; and to the best of the Borrowers’ knowledge, no underground
tank or other underground storage receptacle for Hazardous Substances is
located on any portion of the Real Estate; (ii) in the course of any activities
conducted by the Borrowers, their Subsidiaries or operators of its properties,
no Hazardous Substances have been generated or are being used on the Real
Estate except in accordance with applicable Environmental Laws; (iii) there
have been no releases (i.e. any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Substances on, upon,
into or from the properties of any of the Borrowers or their Subsidiaries,
which releases would reasonably be expected to have a Material Adverse Effect;
and (iv) to the best of the Borrowers’ knowledge, there have been no releases
on, upon, from or into any real property in the vicinity of any of the Real
Estate which, through soil or groundwater contamination, may have come to be
located on, and which would reasonably be expected to have a Material Adverse
Effect; and

 

(d)         none of the Borrowers and
their Subsidiaries, any Mortgaged Property or any of the other Real Estate is
subject, as a result of the transactions contemplated hereby, to any applicable
Environmental Law requiring the performance of Hazardous Substances site
assessments, or the removal or

 

62

 

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

 

(e)          This §8.18 contains the
sole representations and warranties of the Borrowers with respect to
environmental matters.

 

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

 

8.20.                     Bank
Accounts.  Schedule 8.20, as such Schedule 8.20 may be updated from time to
time in accordance with the provisions of §9.5.5, sets forth the account
numbers and location of all bank accounts of each Borrower and its
Subsidiaries.

 

8.21.                     Subordinated
Debt Documents; Equity Documents; Warrant Documents.

 

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

 

(b)         The Equity Documents
previously furnished to the Administrative Agent have not subsequently been
amended, supplemented, or modified and constitute the complete understanding
among the parties thereto in respect of the matters and transactions covered
thereby except for amendments (i) prior to the Closing Date, delivered to the
Administrative Agent in accordance with §9.18 of the Existing Credit Agreement
and (ii) on or following the Closing Date, delivered to the Administrative
Agent in accordance with §9.18 hereof.

 

(c)                                  The
Warrant Documents previously furnished to the Administrative Agent have not
subsequently been amended, supplemented, or modified and constitute the
complete understanding among the parties thereto in respect of the matters and
transactions covered thereby except for amendments (i) prior to the

 

63

 

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

 

8.22.                     Solvency.  Both
before and after giving effect to the execution, delivery and performance of this
Credit Agreement and the other Loan Documents, the Borrowers and their
Subsidiaries, on a consolidated basis, are Solvent.  As used herein, “Solvent” shall mean
that each of the Borrowers and their Subsidiaries (i) have assets having a fair
value in excess of their liabilities, (ii) have assets having a fair value in
excess of the amount required to pay their liabilities on existing debts as
such debts become absolute and mature, and (iii) have, and expect to continue
to have, access to adequate capital for the conduct of their business and the
ability to pay their debts from time to time incurred in connection with the
operation of their business as such debts mature.

 

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

 

8.24.                     Franchise
Agreements.  The Borrowers
have delivered to the Administrative Agent true and complete copies of any
Franchise Agreements to which any of the Borrowers or any of their Subsidiaries
is party.

 

8.25.                     Leases. 
Except as set forth on Schedule 8.25
hereto, neither the execution, delivery and performance of this Credit
Agreement nor the other Loan Documents, nor any Subordinated Debt Documents (if
any), to which any of the Parent, the Borrowers or any of their Subsidiaries is
a party, including the pledge by the Parent and the Borrowers of all of the
issued and outstanding Equity Interests of the Borrowers and the exercise by
the Administrative Agent of its rights to take possession of, or otherwise
control, such Equity Interests, will create a default under any Real Estate
Lease under which any of the Borrowers or any of their Subsidiaries is
presently a lessee or sublessee, which is likely to have a Material Adverse
Effect.

 

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

 

64

 

8.27.                     Change
of Control.  After giving effect to the Initial Public
Offering and the redemption of the Convertible Preferred Stock pursuant to the
terms of the Notice of Redemption, if on the date hereof the holders of the
Warrant Documents elect to exercise all of their rights thereunder to acquire
shares of common stock of MSSR, no Change of Control (as defined herein) would
occur immediately upon and following such acquisition.

 

9.                                      AFFIRMATIVE COVENANTS.

 

Each of the
Borrowers covenants and agrees that, so long as any Revolving Credit Loan,
Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or any
Lender has any obligation to make any Revolving Credit Loan or the
Administrative Agent has any obligation to issue, extend or renew any Letters
of Credit:

 

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

 

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

 

9.3.                            Records and Accounts.  Each of the Borrowers will (a) keep, and
cause each of its Subsidiaries to keep, true and accurate records and books of
account in which complete, true and correct entries will be made in accordance
with GAAP, (b) maintain adequate accounts and reserves for all taxes (including
income taxes), depreciation, depletion, obsolescence and amortization of its
properties and the properties of its Subsidiaries, contingencies, and other
reserves, and (c) at all times engage PricewaterhouseCoopers or other
independent certified public accountants reasonably satisfactory to the
Required Lenders as the independent certified public accountants of the
Borrowers and their Subsidiaries and will not permit more than thirty (30) days
to elapse between the cessation of such firm’s (or any successor firm’s)
engagement as the independent certified public accountants of the Borrowers and
their Subsidiaries and the appointment in such capacity of a successor firm as
shall be reasonably satisfactory to the Administrative Agent.

 

9.4.                            Financial Statements, Certificates and
Information.  The Borrowers will
deliver to each of the Lenders:

 

65

 

(a)          as soon as practicable,
but in any event not later than ninety (90) days after the end of each fiscal
year of the Borrowers, the consolidated balance sheet of MSSR and its
Subsidiaries as at the end of such year, and the related consolidated statement
of income and consolidated statement of cash flow for such year, each setting
forth in comparative form the figures for the previous fiscal year and all such
consolidated statements to be in reasonable detail, prepared in accordance with
GAAP, and certified, without qualification and without an expression of
uncertainty as to the ability of MSSR or any of its Subsidiaries to continue as
going concerns, by PricewaterhouseCoopers or by other independent certified
public accountants reasonably satisfactory to the Required Lenders, together
with a written statement from such accountants to the effect that they have
read a copy of this Credit Agreement, and that, in making the examination
necessary to said certification, they have obtained no knowledge of any Default
or Event of Default, or, if such accountants shall have obtained knowledge of
any then existing Default or Event of Default they shall disclose in such
statement any such Default or Event of Default; provided that such
accountants shall not be liable to the Lenders for failure to obtain knowledge
of any Default or Event of Default;

 

(b)         as soon as practicable,
but in any event not later than forty-five (45) days after the end of each of
the fiscal quarters of the Borrowers, (i) copies of the unaudited consolidated
balance sheet of MSSR and its Subsidiaries as at the end of such quarter, and
the related consolidated statement of income and consolidated statement of cash
flow for such fiscal quarter and the portion of such Persons’ fiscal year then
elapsed, setting forth in each case in comparative form the figures for the
corresponding period or periods of the previous fiscal year and the comparisons
to projections for such period, all in reasonable detail and prepared in
accordance with GAAP (subject to year-end adjustments and footnote information
required by GAAP), together with a certification by the principal financial or
accounting officer of MSSR that the information contained in such financial
statements fairly presents in all material respects the financial position of
MSSR and its Subsidiaries on the date thereof (subject to year-end adjustments
and footnote information required by GAAP); and (ii) statements of sales and
statements of net earnings before interest, taxes, depreciation and
amortization expense, on a summarized Restaurant-by-Restaurant basis, for each
Restaurant operated by any of the Borrowers or their Subsidiaries, setting
forth in each case in comparative form the statements for the corresponding
period or periods of the prior fiscal year and a comparison to the projections
for such period, such statements to be in a form satisfactory to the Required
Lenders;

 

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

 

66

 

with GAAP
(subject to year-end adjustments and footnote information required by GAAP),
together with a certification by the principal financial or accounting officer
of MSSR that the information contained in such financial statements fairly
presents in all material respects the financial condition of MSSR and its
Subsidiaries on the date thereof (subject to year-end adjustments and footnote
information required by GAAP), including a list of any new Restaurant locations
as required pursuant to §9.14;

 

(d)         simultaneously with the
delivery of the financial statements referred to in subsections (a) and (b)
above, a statement certified by the principal financial or accounting officer
of the Borrowers in substantially the form of Exhibit C
hereto (a “Compliance  Certificate”) and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in §11 and (if applicable) reconciliations to reflect changes in GAAP
since the Balance Sheet Date;

 

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

 

(f)            contemporaneously with
the filing or mailing thereof, copies of all material of a financial nature
filed with the Securities and Exchange Commission or, sent to the equity
holders of the Parent or any of the Borrowers;

 

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

 

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

 

(i)                                     all
notices and other information sent to any holder of Subordinated Debt in its
capacity as such; and

 

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

 

67

 

9.5.                            Notices.

 

9.5.1.                  Defaults.  The Borrowers will notify the Administrative
Agent and each of the Lenders in writing of the occurrence of any Default or
Event of Default promptly upon becoming aware thereof, together with a
reasonably detailed description thereof, and the actions the Borrowers propose
to take with respect thereto.  If any
Person shall give any notice or take any other action in respect of a claimed
default (whether or not constituting an Event of Default) under this Credit
Agreement or any other note, evidence of indebtedness, indenture or other
obligation to which or with respect to which any of the Borrowers or any of
their Subsidiaries is a party or obligor in excess of $1,000,000, whether as
principal, guarantor, surety or otherwise, the Borrowers shall forthwith give
written notice thereof to the Administrative Agent and each of the Lenders,
describing the notice or action and the nature of the claimed default.

 

9.5.2.                  Environmental
Events.  The Borrowers will
promptly give notice to the Administrative Agent (a) of any violation of any
Environmental Law that the Borrowers or any of their Subsidiaries reports in
writing or is reportable by such Person in writing (or for which any written
report supplemental to any oral report is made) to any Governmental Authority
where such violation could reasonably be expected to have a Material Adverse
Effect, and (b) upon becoming aware of any inquiry, proceeding, investigation,
or other action, including a written notice from any agency of potential
environmental liability, of any Governmental Authority that could reasonably be
expected to have a Material Adverse Effect.

 

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

 

9.5.4.                  Notice
of Litigation and Judgments. 
The Borrowers will, and will cause each of their Subsidiaries to, give
notice to the Administrative Agent in writing within fifteen (15) days of
becoming aware of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting any of the Borrowers or any of
their Subsidiaries or to which any of the Borrowers or any of their
Subsidiaries is or becomes a party involving an uninsured claim against any of
the Borrowers or any of their Subsidiaries that could reasonably be expected to
have a Material Adverse Effect and stating the nature and status of such
litigation or proceedings.  The Borrowers
will, and will cause each of their Subsidiaries to, give notice to the
Administrative Agent, in writing, in form and detail satisfactory to the
Administrative Agent, within ten (10) days of any judgment not covered by
insurance,

 

68

 

final or
otherwise, against any of the Borrowers or any of their Subsidiaries in an
amount in excess of $1,000,000.

 

9.5.5.                  Notice of
Bank Accounts.  The
Borrowers will, and will cause each of their Subsidiaries to, give notice to
the Administrative Agent in writing of any such Person creating or opening any
additional bank accounts simultaneously with the delivery of the financial
statements referred to in §9.4(c) but in any event no later than one month
after the opening of such account.  In
such event, upon receipt by the Administrative Agent of such notice, Schedule 8.20 shall be deemed to have been
amended to include each such new bank account set forth in such notice.

 

9.5.6.                  Notice of
Real Estate.  Without
prejudice to §9.13, the Borrowers will, and will cause each of their Subsidiaries
to, give notice to the Administrative Agent in writing of any such Person
acquiring any additional (i) leased Real Estate to the extent such Real Estate
is leased for a term of five (5) years or longer or such leased Real Estate is
for office space where books and records relating to the Borrowers’ business
shall be maintained, or (ii) owned Real Estate, simultaneously with the
delivery of the financial statements referred to in §9.4(c) but in any event no
later than one month after such acquisition. In such event, upon receipt by the
Administrative Agent of such notice, Schedule
8.3 shall be deemed to have been amended to include each such additional
Real Estate set forth in such notice.

 

9.6.                            Legal Existence; Maintenance of Properties.  Each of the Borrowers will do or cause to be
done all things necessary to preserve and keep in full force and effect its
legal existence, rights and franchises and those of its Subsidiaries.  Each of the Borrowers (i) will cause all of
its properties and those of its Subsidiaries used or useful in the conduct of
its business or the business of its Subsidiaries to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment except where the failure to do so could not reasonably be expected to
result in a Material Adverse Effect, (ii) will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of such Borrower may be necessary so that the business carried
on in connection therewith may be properly conducted at all times, except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect, and (iii) will, and will cause each of its Subsidiaries to,
continue to engage primarily in the businesses now conducted by them and in
related businesses; provided that nothing in this §9.6 shall prevent any
of the Borrowers from discontinuing the operation and maintenance of any of its
properties or any of those of its Subsidiaries if such discontinuance is, in
the judgment of such Borrower, desirable in the conduct of its or their
business and that do not in the aggregate have a Material Adverse Effect.

 

69

 

9.7.                            Insurance.

 

9.7.1.                  Required
Insurance.  Each of the
Borrowers will, and will cause each of their Subsidiaries to, maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall be
in accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such terms,
in such forms and for such periods as may be reasonable and prudent.  Without limiting the foregoing, (a) such
insurance shall be in such minimum amounts that such Person will not be deemed
a co-insurer under applicable insurance laws, regulations and policies and
otherwise shall be in such amounts, contain such terms, be in such forms and be
for such periods as may be reasonably satisfactory to the Administrative Agent,
(b) all such insurance shall be payable (other than liability insurance, which
shall name the Administrative Agent as an additional insured) to the
Administrative Agent as loss payee under a “standard”
or “New York” loss payee clause for the
benefit of the Lenders and the Administrative Agent (c) each such Person will
(i) keep all of its physical property insured with casualty or physical hazard
insurance on an “all risks” basis, with
flood and earthquake coverages if available at commercially reasonable rates
and to the extent that a given property lies within either a flood and/or an
earthquake zone, as applicable, and electronic data processing coverage, with a
full replacement cost endorsement and an “agreed
amount” clause in an amount equal to one hundred percent (100%) of the full
replacement cost of such property, subject to aggregate sublimits for flood and
earthquake equal to those generally maintained by businesses engaged in similar
activities in similar geographic areas, (ii) maintain all such workers’
compensation or similar insurance as may be required by law and (iii) maintain,
in amounts and with deductibles
equal to those generally maintained by businesses engaged in similar activities
in similar geographic areas, general public liability insurance against claims
of bodily injury, death or property damage occurring, on, in or about the
properties of such Person; and business interruption insurance.  Each of the Borrowers will, and will cause
each of its Subsidiaries to, maintain insurance on the Mortgaged Properties in
accordance with the terms of the Mortgages.

 

9.7.2.                  Insurance
Proceeds.  The proceeds of
any casualty insurance in respect of any casualty loss of any of the Collateral
shall, subject to the rights, if any, of other parties with a prior interest in
the property covered thereby, (i) so long as no Event of Default has occurred
and is continuing and to the extent that the amount of such proceeds is less
than $2,500,000, be disbursed to the applicable Borrower for reinvestment in
such Borrower’s business and (ii) in all other circumstances, be held by the
Administrative Agent as cash collateral for the Obligations.  The

 

70

 

Administrative
Agent may, so long as no Event of Default has occurred and is continuing and
the Borrowers are not required to apply such proceeds to prepay the Obligations
pursuant to §4.2 or have not elected to reinvest such proceeds pursuant to
§§4.2 and 4.4, disburse from time to time all or any part of such proceeds so
held as cash collateral, upon such terms and conditions as the Administrative
Agent may reasonably prescribe, for direct application by such Borrower solely
to the repair or replacement of such Borrower’s property so damaged or
destroyed or other reinvestment in the Borrowers’ business; provided that, so long as no Event of Default
has occurred and is continuing, the Borrowers shall at all times and in any
event have the rights set forth in the last sentence of §4.4.  In the event that such proceeds have not been
reinvested in the Borrowers’ business within two hundred seventy (270) days
after the earlier to occur of receipt thereof by the Borrowers or receipt
thereof by the Administrative Agent, the Administrative Agent shall apply all
or any part of such proceeds to the Obligations as provided in §§4.2 and 4.3; provided that, if (A) within such 270-day
period after the earlier to occur of receipt of such proceeds by the Borrowers
or receipt of such proceeds by the Administrative Agent, the Borrowers enter
into an agreement (which may be a purchase order) pursuant to which such
reinvestment shall be made, a copy of which shall be provided to the
Administrative Agent, and (B) within four hundred five (405) days following
receipt of such proceeds by the Borrowers or the Administrative Agent, the
Borrowers shall have completed, or shall have made significant progress toward
completion of, such reinvestment with such proceeds, then the Borrowers shall
not be required to prepay the Revolving Credit Loans pursuant to §§4.2 and 4.3
but shall in any event comply with §4.4.

 

9.7.3.                  Notice
of Cancellation.  All
policies of insurance shall provide for at least thirty (30) days prior written
cancellation notice to the Administrative Agent; provided,
however, in the event of cancellation for
non-payment of premiums, such policies of insurance shall provided for at least
ten (10) days prior written cancellation notice to the Administrative
Agent.  In the event of failure by any
Borrower to provide and maintain insurance as herein provided, the
Administrative Agent may, at its option, provide such insurance and charge the
amount thereof to such Borrower; provided
that the Administrative Agent shall provide prompt notice to the Borrowers of
any such action taken by the Administrative Agent.  The Borrowers shall furnish to the
Administrative Agent, on an annual basis within thirty (30) days after the end
of each fiscal year, certificates of insurance and policies evidencing
compliance with the foregoing insurance provisions.

 

9.8.                            Taxes.  The
Borrowers will, and will cause each of their Subsidiaries to, duly pay and
discharge, or cause to be paid and discharged, before the same shall become
overdue, all taxes, assessments and other governmental

 

71

 

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

 

9.9.                            Inspection of Properties and Books, etc.

 

9.9.1.                  General.  No
more frequently than once during any fiscal quarter or, if a Default or Event
of Default shall have occurred and be continuing, from time to time upon the
request of the Administrative Agent or any Lender, each of the Borrowers shall
permit the Lenders, through the Administrative Agent or any of the Lenders’
other designated representatives, to visit and inspect any of the properties of
such Borrower or any of its Subsidiaries, to examine the books of account of
such Borrower and its Subsidiaries (and to make copies thereof and extracts
therefrom unless and to the extent that a confidentiality agreement with an
unaffiliated third party to which such Borrower or such Subsidiary is bound
would otherwise prohibit such disclosure, in which case such Borrower or such
Subsidiary agrees to use commercially reasonable efforts to obtain the consent
of such Person to such disclosure), and to discuss the affairs, finances and
accounts of such Borrower and its Subsidiaries with, and to be advised as to
the same by, its and their officers, all upon reasonable prior notice during
normal business hours at such reasonable times as the Administrative Agent or
any Lender may reasonably request.

 

9.9.2.                  Environmental
Assessments.  Upon the
occurrence and during the continuance of an Event of Default, the
Administrative Agent may require the Borrowers to obtain an environmental
assessment or audit reasonable under the circumstances, prepared by a
hydrogeologist, an independent engineer or other qualified consultant or expert
approved by the Administrative Agent to evaluate or confirm, (a) whether any
Hazardous Materials are present in the soil or water at any Mortgaged Property
and (b) whether the use and operation of any Mortgaged Property complies with all
Environmental Laws.  Environmental
assessments may include without limitation detailed visual inspections of any
Mortgaged Property including any and all storage areas, storage tanks, drains,
dry wells and leaching areas, and the taking of soil samples, surface water

 

72

 

samples and
ground water samples, as well as such other investigations or analyses as the
Administrative Agent deems appropriate. 
The reasonable costs of such environmental assessments shall be paid by
the Borrowers.

 

9.9.3.                  Communications
with Accountants.  The
Borrowers authorize the Administrative Agent and, if accompanied by the
Administrative Agent, the Lenders to communicate directly with the Borrowers’
independent certified public accountants and authorizes such accountants to
disclose to the Administrative Agent and the Lenders any and all financial
statements and other supporting financial documents and schedules including
copies of any management letter with respect to the business, financial
condition and other affairs of the Borrowers or any of their Subsidiaries to
the extent prepared for the Borrowers. 
At the reasonable request of the Administrative Agent, the Borrowers
shall deliver a letter addressed to such accountants instructing them to comply
with the provisions of this §9.9.3.

 

9.10.                     Compliance
with Laws, Contracts, Licenses, and Permits.  Each of the Borrowers will, and will cause
each of their Subsidiaries to, comply in all material respects with (a) the
applicable laws and regulations wherever its business is conducted, including
all Environmental Laws, (b) the provisions of its Governing Documents, (c) all
agreements and instruments by which it or any of its properties may be bound
and (d) all applicable decrees, orders, and judgments.  If any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any government
shall become necessary or required in order that the Borrowers or any of their
Subsidiaries may fulfill any of their obligations hereunder or any of the other
Loan Documents to which any Borrower or such Subsidiary is a party, the
Borrowers will, or (as the case may be) will cause such Subsidiary to,
immediately take or cause to be taken all reasonable steps within the power of
the Borrowers or such Subsidiary to obtain such authorization, consent,
approval, permit or license and furnish the Administrative Agent and the
Lenders with evidence thereof.  Without
limiting the foregoing, each of the Borrowers will, and will cause each of its
Subsidiaries to, obtain any and all approvals by any federal, state or local
liquor authority necessary for the continued operation at all times of any
Restaurant operated by any of the Borrowers or their Subsidiaries with full
liquor service unless the failure to obtain such approvals would not have a
Material Adverse Effect.

 

9.11.                     Employee
Benefit Plans.  The Borrowers
will (a) promptly upon request of the Administrative Agent, upon filing the
same with the Department of Labor or Internal Revenue Service a copy of the
most recent actuarial statement required to be submitted under §103(d) of ERISA
and Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan, and (b) promptly upon receipt or dispatch, furnish to
the Administrative Agent any notice, report or demand sent or received in
respect of a Guaranteed Pension Plan under

 

73

 

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

 

9.12.                     Use of
Proceeds.  The Borrowers will use
the proceeds of the Revolving Credit Loans and obtain Letters of Credit solely
for the purposes set forth in §8.17.1.

 

9.13.                     Additional
Mortgaged Property; Notice of Leases.

 

(a)          If, after the Closing
Date, any of the Borrowers or any of their Subsidiaries acquires a fee interest
in real estate that has a fair market value of $500,000 or more, such Borrower
shall, or shall cause such Subsidiary to, deliver forthwith to the
Administrative Agent for the benefit of the Lenders and the Administrative
Agent a fully executed valid and enforceable first priority mortgage or deed of
trust over such acquired real estate free and clear of all defects and
encumbrances except for Permitted Liens.

 

(b)         If, after the Closing
Date, any of the Borrowers or any of their Subsidiaries intends to lease real estate for a term in excess of five
(5) years, or to lease office space where they intend to maintain books and
records relating to their businesses, the Borrowers shall use reasonable best
efforts to ensure that such lease permits the Administrative Agent to obtain a
first priority leasehold mortgage over such leased real estate and to obtain
from the landlord a waiver substantially in the form of Exhibit F hereto.  Upon the
execution of such lease, the Borrowers or such Subsidiary shall promptly
deliver to the Administrative Agent a copy of such lease, and, to the extent
permitted by the applicable lease and required by the Administrative Agent, the
Borrowers or such Subsidiary shall deliver forthwith to the Administrative
Agent for the benefit of the Lenders and the Administrative Agent a fully
executed, valid and enforceable first priority leasehold mortgage over such
leased real estate, free and clear of all defects and encumbrances except for
Permitted Liens.

 

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

 

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

 

74

 

extent that a
notice of lease is not already recorded in respect of such lease) in form
meeting all statutory and recording requirements of the jurisdiction in which
the relevant real property is located.

 

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

 

9.15.                     Intentionally
Omitted.

 

9.16.                     Bank Accounts.  The Borrowers will, and will cause each of
their Subsidiaries to, cause all cash receipts, checks and cash proceeds of
accounts receivable and other Collateral of the Borrowers and their
Subsidiaries to be deposited only into (i) depository accounts with financial
institutions that have entered into agency account agreements in substantially
the form of Exhibit D hereto (such agency
account agreements referred to herein as “Agency
Account Agreements” and such depository accounts with financial
institutions that have entered into such Agency Account Agreements referred to
herein as “Agency Accounts”) or (ii) the
Concentration Account, in each case as such accounts are identified on Schedule 8.20 hereto.  The Agency Account Agreements shall provide
that at any time following the occurrence of a Default or an Event of Default,
the Administrative Agent shall be entitled to direct the financial institutions
party thereto to cause all funds of the Borrowers and their Subsidiaries held
in the Agency Accounts at such financial institutions to be transferred
immediately and at any time thereafter to the Agent to be applied to the
Obligations or held as Collateral, as the Administrative Agent deems
appropriate.  The Borrowers shall cause
(A) all cash receipts and checks in excess of $50,000 at each Restaurant to be
deposited into an Agency Account or a Concentration Account, on at least two (2)
separate Business Days during each week (a “week”,
for the purposes of this §9.16, being deemed to begin at the beginning of each
Monday and end at the end of the following Friday) and (B) all funds in each
Agency Account or any other account of the Borrowers or any of their
Subsidiaries in excess of $35,000 (or, to the extent that more than one
Restaurant makes deposits to one Agency Account, the sum of $35,000 multiplied by the number of Restaurants making
deposits into such Agency Account) to be deposited in the Concentration Account
on a daily basis on each Business Day.

 

75

 

The Borrowers
shall at all times maintain a Concentration Account with a financial
institution that has entered into an Agency Account Agreement with the
Administrative Agent and the Borrowers that is in all respects satisfactory to
the Administrative Agent.

 

9.17.                     Additional
Subsidiaries.  In the event
that, after the date hereof, any of the Borrowers or any of their Subsidiaries
creates any new Subsidiary or acquires a new Subsidiary in accordance with
§10.5.3, (a) such new Subsidiary shall, concurrently with such event or as soon
as practicable thereafter, execute and deliver to the Administrative Agent an
instrument of joinder and accession, in form and substance satisfactory to the
Administrative Agent, pursuant to which such new Subsidiary shall join the
Credit Agreement as a Borrower and the Security Documents as a grantor of
security thereunder as if such new Subsidiary was an original signatory hereto
and thereto, and (b) the Borrowers and/or such new Subsidiary (as the case may
be) shall deliver such other instruments and documents, including without
limitation allonges to the Notes in form and substance satisfactory to the Administrative
Agent, Perfection Certificates, Uniform Commercial Code financing statements
and stock or other certificates representing all of the issued and outstanding
Equity Interests of such new domestic Subsidiary and sixty-five percent (65%)
of non-U.S. Subsidiaries, with accompanying stock powers or other instruments
of transfer duly executed in blank, in each case required to be executed or
delivered pursuant to such Security Documents in order to grant to or maintain
the Administrative Agent’s first priority perfected security interest in and to
the assets of and the Equity Interests issued by such new Subsidiaries.  Further, contemporaneously with the formation
or acquisition of such new Subsidiary, the Borrowers and/or such new Subsidiary
shall execute and/or deliver to the Administrative Agent such other
documentation as the Administrative Agent may reasonably request in furtherance
of the intent of this §9.17, including without limitation an updated Schedule 8.19 hereto and documentation of the
type required to be supplied by the Borrowers and their Subsidiaries as a
condition precedent to the initial Revolving Credit Loans made hereunder
pursuant to §12, as applicable to such new Subsidiary or acquisition permitted
pursuant to §10.5.3.

 

9.18.                     Amendments
to Documents.  The
Borrowers will promptly furnish to the Administrative Agent any amendment,
supplement or modification to any of the Acquisition Documents, the Warrant
Documents, the Equity Documents or the Subordinated Debt Documents executed or
delivered following the Closing Date, as such documents may amended or modified
pursuant to §10.14.

 

9.19.                     Further
Assurances.  The Borrowers
will, and will cause each of their Subsidiaries to, cooperate with the Lenders
and the Administrative Agent and execute such further instruments and documents
as the Lenders or the Administrative Agent shall reasonably request to carry
out to their satisfaction the

 

76

 

transactions
contemplated by this Credit Agreement and the other Loan Documents.

 

9.20.                     Post-Closing Delivery Requirements.

 

(a)          No later than forty-five
(45) days after the Closing Date, the Borrowers shall have delivered to the
Administrative Agent, Agency Account Agreements, in form and substance reasonably
satisfactory to the Administrative Agent, for each depository account of the
Borrowers and each of their Subsidiaries and as identified on Schedule  8.20
of the Credit Agreement.

 

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

 

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

 

10.                               CERTAIN NEGATIVE COVENANTS.

 

The Borrowers
covenant and agree that, so long as any Revolving Credit Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Lender
has any obligation to make any Revolving Credit Loan or the Administrative
Agent has any obligations to issue, extend or renew any Letters of Credit:

 

10.1.                     Restrictions
on Indebtedness.  None
of the Borrowers will, nor will permit any of its Subsidiaries to, create,
incur, assume, guarantee or be or remain liable, contingently or otherwise,
with respect to any Indebtedness other than:

 

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

 

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

 

77

 

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

 

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

 

(e)          Indebtedness in respect
of interest rate agreements, swaps or similar arrangements entered into to
protect the Borrowers from changes in interest rates and not for speculative
purposes;

 

(f)            Indebtedness not
otherwise permitted by this §10.1 existing on the Closing Date and listed and
described on Schedule 10.1 hereto and any refinancings
thereof not to exceed such original principal amount and on terms and
conditions substantially similar thereto; and

 

(g)         Indebtedness of a
Subsidiary of a Borrower owing to such Borrower and Indebtedness of one
Borrower owing to another Borrower; provided
that all such intercompany Indebtedness permitted by this §10.1(g), and all
instruments (if any) evidencing any thereof, shall be pledged and delivered to
the Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, as security for the Obligations pursuant to the provisions of the applicable
Security Documents, and the Administrative Agent shall have a first priority
perfected lien and security interest therein; and provided  further
that all such intercompany Indebtedness shall be subordinated to the
Obligations on terms satisfactory to the Administrative Agent;

 

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

 

78

 

(i)             Indebtedness
consisting of contingent obligations of any Borrower or any of its Subsidiaries
to repurchase or otherwise redeem Equity Interests of MSSR from former
employees of MSSR, a Borrower or any of their Subsidiaries pursuant to the
terms of the Equity Documents or other employee compensation plans of the
Borrowers and their Subsidiaries and matured obligations to repurchase or
otherwise redeem such stock to the extent such repurchase or redemption is
permitted under §10.4(d); and

 

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

 

10.2.                     Restrictions
on Liens.

 

10.2.1.           Permitted
Liens.  None of the Borrowers
will, nor will permit any of its Subsidiaries to, (a) create or incur or suffer
to be created or incurred or to exist any Lien upon any of its property or
assets of any character whether now owned, leased or hereafter acquired, or
upon the income or profits therefrom; (b) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting the
same to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement; (d)
suffer to exist any claim or demand against it that if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever
over its general creditors; or (e)
sell, assign, pledge or otherwise transfer any “receivables” as defined
in clause (g) of the definition of the term “Indebtedness,” with or
without recourse; provided that the Borrowers or any of their
Subsidiaries may create or incur or suffer to be created or incurred or to
exist:

 

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

 

(ii)                                  deposits
or pledges made in connection with, or to secure payment of, workmen’s
compensation, unemployment insurance, old age pensions or other social security
obligations, statutory obligations, insurance contracts, performance bonds
issued in the ordinary course of business and other similar obligations;

 

79

 

(iii)                               Liens
on properties in respect of judgments or awards that have been in force for
less than the applicable period for taking an appeal so long as execution is
not levied thereunder or in respect of which such Borrower or such Subsidiary
shall at the time in good faith be prosecuting an appeal or proceedings for review
and in respect of which a stay of execution shall have been obtained pending
such appeal or review and for which adequate reserves have been set aside in
accordance with GAAP;

 

(iv)                              Liens
of carriers, warehousemen, mechanics and materialmen, and other like Liens on
properties in existence in respect of obligations not overdue or which are
being contested in good faith and for which adequate reserves have been set
aside in accordance with GAAP;

 

(v)                                 encumbrances
on Real Estate consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects and irregularities in the
title thereto, landlord’s or lessor’s liens, liens that would be disclosed by
an accurate survey, and other minor Liens, provided that none of such
Liens (A) interferes materially and adversely with the use of the property
affected in the ordinary conduct of the business of the Borrowers and their
Subsidiaries, and (B) individually or in the aggregate have a Material Adverse
Effect;

 

(vi)                              Liens
existing on the Closing Date and
listed on Schedule 10.2 hereto;

 

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

 

(viii)                        Liens on
each Mortgaged Property as and to the extent permitted by the Mortgage
applicable thereto;

 

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

 

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

 

80

 

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

 

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

 

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

 

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

 

(a)          Cash Equivalents;

 

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

 

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

 

(d)         Investments consisting of
Investments by a Borrower in another Borrower or by a Borrower in any of its
Subsidiaries, including Investments

 

81

 

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

 

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

 

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

 

(g)         securities (including
debt obligations) received in connection with the bankruptcy or reorganization
of suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course of
business;

 

(h)         Investments consisting of
Capitalized Leases permitted hereunder;

 

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

 

(j)             the Investments
related to the Santa Rosa Transaction, so long as such Investments are secured
by the Santa Rosa Pledge Agreement and any other Investment made by a Borrower
in connection with a restaurant management agreement pursuant to §9.14 provided (i) any such other Investment is
consented to by the Administrative Agent (such consent not to be unreasonably
withheld) and (ii) if requested by the Administrative Agent, the property or
assets which are the subject of such Investment are made part of the Collateral
subject to the Security Documents; and

 

(k)          Investments consisting
of performance bonds or advance payment bonds, in each case issued in the
ordinary course of business

 

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

 

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

 

82

 

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

 

(b)         payments by the Borrowers
to the Parent to enable the Parent to pay costs and expenses incurred in the
ordinary course of business as a holding company, including, without
limitation, payment of administrative costs and expenses; provided that (A) the aggregate amount of all such amounts payable
in any fiscal year of the Borrowers under this subparagraph (b) shall not exceed
$500,000 plus reasonable board fees payable
to members of the board of directors of the Parent, the Borrowers or MSSR who
are not part of the management of the Borrowers, the Parent or MSSR or
affiliated with the Sponsors and reasonable out of pocket expenses incurred by
members of the board of directors or observers of the Parent, the Borrowers or
MSSR and (B) the Administrative Agent shall have received a Compliance
Certificate for the Reference Period most recently ended;

 

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

 

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

 

(e)                                  Distributions
by any Borrower to the Parent solely for the purpose of paying interest on
Subordinated Debt incurred by the Parent so long as (i) no Default or
Event of Default shall have occurred and be continuing or would result after
giving effect to any such Distribution, (ii) the Borrowers shall have delivered
to the Administrative Agent a pro forma
Compliance Certificate demonstrating compliance with the financial covenants
set forth in §11 after giving effect to such Distribution, (iii) the aggregate
amount of such Distributions, together with any interest paid by the Borrowers
on Subordinated Debt incurred by the Borrowers pursuant to §10.1(c), shall not
exceed during any fiscal year that amount equal to interest which has accrued
on outstanding Subordinated Debt during such year, and (iv) such Distributions
are applied by the Parent solely to pay such interest expense not earlier than
the regularly scheduled payment date therefor; and

 

83

 

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

 

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

 

10.5.                     Mergers;
Disposition of Assets; Acquisitions.

 

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

 

10.5.2.           Disposition of Assets.  None of the Borrowers will, nor will permit
any of its Subsidiaries to, become a party to or agree to or effect any
disposition of assets (excluding any disposition included in the definition of “Casualty Event”), other than (a) the sale of
inventory or licensing of intellectual property in the ordinary course of business
and the disposition of obsolete assets, (b) the disposition of property as part
of a sale and leaseback transaction permitted under §10.6 in the ordinary
course of business consistent with past practices, (c) assignments,
dispositions or transfers by one Borrower to one or more of the other Borrowers
of any rights, property, Indebtedness, business or other asset of the
transferring Borrower (whether tangible or intangible and including, without
limitation, membership interests and goodwill), together with any liability
associated therewith; provided that the
Borrowers (i) provide at least thirty (30) days prior written notice to the
Administrative Agent (or such lesser period as may be consented to by the
Administrative Agent) and (ii) execute and deliver Security Documents and such
further instruments, if and to the extent requested by the Administrative
Agent, in form and substance satisfactory to the Administrative Agent, and do,
or cause to be done, such further acts as may be necessary or proper in the
opinion of the Administrative Agent to evidence, continue, preserve and perfect
the security for the Obligations provided by the Borrowers, and (d) the sale of
up to two (2) Unprofitable Restaurants in any year, provided that the proceeds of such sales of Unprofitable Restaurants
are reinvested in new or existing Restaurants within two hundred seventy (270)
days thereafter or are used to repay or prepay the Obligations pursuant to
§4.2(a); provided, further, that, if (A) within such 270-day period after receipt of
such proceeds by the Borrowers, the Borrowers enter into an agreement pursuant
to which such reinvestment shall be made, a copy of which shall be provided to
the Administrative Agent, and (B) within four

 

84

 

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

 

10.5.3.           Acquisitions.  None of the Borrowers will, nor will permit
any of its Subsidiaries to, agree to or effect any asset acquisition or stock
acquisition except (a) Growth Capital Expenditures permitted pursuant to §11.4,
(b) Maintenance Capital Expenditures incurred in the ordinary course of
business to maintain the assets of such Borrower and its Subsidiaries or to
insure compliance with applicable laws and regulations, (c) the acquisition of
inventory, equipment, furnishings and other similar assets (not including
Restaurants or real property) in the ordinary course of business consistent
with past practices, (d) acquisitions by a Borrower effected as a result of the
transfer of assets or obligations between Borrowers permitted pursuant to
§10.5.2(c) and (e) Permitted Acquisitions; provided
that during the period from the Closing Date through to the Maturity Date
the aggregate purchase price for all Permitted Acquisitions consummated by the
Borrowers during such period shall not exceed $10,000,000.

 

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

 

85

 

terms which
could be obtained in an arms length commercial operating lease among
unaffiliated parties and (c) the proceeds of such sale and leaseback
transaction are applied in accordance with §4.2.

 

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

 

10.8.                     Employee Benefit
Plans.  No Borrower nor any ERISA
Affiliate will:

 

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

 

(b)         permit any Guaranteed
Pension Plan to incur an “accumulated  funding  deficiency”,
as such term is defined in §302 of ERISA, whether or not such deficiency is or
may be waived; or

 

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

 

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

 

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

 

86

 

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

 

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

 

10.10.              Fiscal Year;
Fiscal Quarters.  None
of the Borrowers will, nor will permit any of its Subsidiaries to, change the
date of the end of its fiscal year or fiscal quarters from those set forth in
§8.4.1.

 

10.11.              Transactions
with Affiliates.  None
of the Borrowers will, nor will permit any of its Subsidiaries to, engage in
any transaction with any Affiliate or Sponsor or any officer, director or
employee of an Affiliate or a Sponsor, (other than for services as employees,
officers and directors or transactions with other Borrowers or any Subsidiary
of the Borrower), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such Person or, to the knowledge of such Borrower, any corporation,
partnership, trust or other entity in which any such Person has a substantial
interest or is an officer, director, trustee or partner, on terms more
favorable to such Person than would have been obtainable on an arm’s-length
basis in the ordinary course of business; provided that so long as no
Default or Event of Default has occurred and is continuing, the foregoing
restriction shall not apply to payments permitted under §10.4(b) and (c).  The Borrowers shall not pay any fees to
members of the board of directors other than reasonable fees payable to outside
non-affiliated board members of the board of directors who are not part of the
management of the Borrowers or affiliated with the Sponsors.

 

10.12.              Bank Accounts.  None of the Borrowers will, nor will permit
any of its Subsidiaries to, (a) establish any bank accounts after the Closing
Date other than the Agency Accounts and the Concentration Account without the
Administrative Agent’s prior written consent, (b) violate directly or
indirectly any Agency Account Agreement or other bank agency or lock box
agreement in favor of the Administrative Agent for the benefit of the Lenders
and the Administrative Agent with respect to such account; or (c) deposit into
Account No. 3750714986 with Bank of America, any amounts in excess of amounts
necessary to pay current payroll obligations (including payroll taxes) with
respect to management

 

87

 

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

 

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

 

10.14.              Restrictions
on Amendments to Documents.

 

10.14.1.    Warrant
Documents; Equity Documents. 
None of the Borrowers will, nor will permit any of its Subsidiaries to
amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the
terms of the Warrant Documents or the Equity Documents in any manner which
could have an adverse effect on the Lenders without the prior written consent
of the Administrative Agent.

 

10.14.2.    Acquisition
Documents.  None of the
Borrowers will, nor will permit any of its Subsidiaries to, amend, supplement
or otherwise modify (pursuant to a waiver or otherwise) any material term or
condition of any of the Acquisition Documents in any manner which could have an
adverse effect on the Lenders without the prior written consent of the
Administrative Agent.

 

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

 

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

 

88

 

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

 

10.15.              Capitalization.  None
of the Borrowers will issue any Equity Interests having debt-like features such
as mandatory cash dividends, mandatory redemption provisions or other
provisions which create monetary obligations on such Borrower that become due
and payable in cash during a period when any Revolving Credit Loans or Letters
of Credit are outstanding or any Revolving Credit Commitments are outstanding.

 

10.16.              Maximum
Number of Unprofitable Restaurants.  None of the Borrowers will, nor will permit
any of its Subsidiaries to, permit the ratio of (a) the aggregate number of
Unprofitable Restaurants to (b) the aggregate number of Restaurants to be more
than ten percent (10%) at any time.

 

11.                               FINANCIAL COVENANTS.

 

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

 

11.1.                     Adjusted
Leverage Ratio.  As at
the end of any fiscal quarter occurring after the Closing Date, the Adjusted
Leverage Ratio for the Reference Period then ended shall not exceed the ratio
set forth opposite such fiscal quarter in such table:

 

	
  Fiscal Quarter

  	
   

  	
  Ratio

  	
   

  
	
  Closing Date through FQ2 2005

  	
   

  	
  4.25:1.00

  	
   

  
	
  FQ3 2005 and Thereafter

  	
   

  	
  4.00:1.00

  	
   

  

 

11.2.                     Consolidated
Cash Flow Ratio.  As
at the end of any fiscal quarter referenced in the table below, the
Consolidated Cash Flow Ratio for the Reference Period then ended shall not be
less than the ratio set forth opposite such fiscal quarter in such table:

 

89

 

	
  Fiscal Quarter

  	
   

  	
  Ratio

  	
   

  
	
  FQ4 2004

  	
   

  	
  1.50:1.00

  	
   

  
	
  FQ1 2005 through FQ4 2005

  	
   

  	
  1.75:1.00

  	
   

  
	
  FQ1 2006 and Thereafter

  	
   

  	
  2.00:1.00

  	
   

  

 

11.3.                     Growth
Capital Expenditures.  The
Borrowers will not make, and will not permit any of their Subsidiaries to make,
aggregate Growth Capital Expenditures or construct, acquire or open new
Restaurants during any fiscal year that exceed the amounts and numbers set
forth in the table below opposite such fiscal year, provided that
notwithstanding the foregoing maximum amounts, commencing with the Borrowers’
2005 fiscal year, the maximum amount of Growth Capital Expenditures permitted
in each fiscal year shall be increased by (x) up to 100% of the Permitted ECF
Growth CapEx Amount for such fiscal year and (y) one hundred (100%) of the
unused Permitted ECF Growth CapEx Amounts from prior fiscal years:

 

	
  Period

  	
   

  	
  Maximum Growth

  Capital Expenditures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal year 2004

  	
   

  	
  $

  	
  21,000,000

  	
   

  
	
  Fiscal year 2005

  	
   

  	
  $

  	
  21,000,000

  	
   

  
	
  Fiscal year 2006

  	
   

  	
  $

  	
  23,000,000

  	
   

  
	
  Fiscal year 2007

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
  Fiscal year 2008

  	
   

  	
  $

  	
  30,000,000

  	
   

  

 

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

 

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

 

90

 

(B)                                which
would require their use of Permitted ECF Growth CapEx Amounts, at any time during
which the EBITDA Margin as at the end of the most recently ended Reference
Period for which the Borrowers have delivered a Compliance Certificate is then
less than ten percent (10%).

 

For purposes
of testing quarterly compliance with this §11.3, the Borrowers shall aggregate
Growth Capital Expenditures incurred year-to-date for the then current fiscal
year and the Growth Capital Expenditures projected in good faith and based on
reasonable assumptions to be made during the balance of such fiscal year after
taking into account the Borrowers’ outstanding commitments and projections
relating to the opening of new Restaurants.

 

12.                               CLOSING CONDITIONS.

 

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

 

12.1.                     Loan
Documents.  Each of Loan
Documents shall have been duly executed and delivered by the respective parties
thereto, and each Loan Document shall be in full force and effect and shall be
in form and substance satisfactory to each of the Lenders.  Each Lender shall have received a fully
executed copy of each such document.

 

12.2.                     Certified
Copies of Governing Documents.  Each of the Lenders shall have received from
each of the Borrowers and each of their Subsidiaries a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of its Governing Documents as in effect on such date of
certification.

 

12.3.                     Corporate
or Other Action.  All
corporate (or other) action necessary for the valid execution, delivery and
performance by each of the Borrowers and each of their Subsidiaries of this
Credit Agreement and the other Loan Documents to which it is or is to become a
party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Lenders shall have been provided to each of the Lenders.

 

12.4.                     Incumbency
Certificate.  Each of
the Lenders shall have received from each of the Borrowers and their
Subsidiaries an incumbency certificate, dated as of the Closing Date, signed by
a duly authorized officer of such Person, and giving the name and bearing a
specimen signature of each individual who shall be authorized: (a) to sign, in
the name and on behalf of such Person, each of the Loan Documents to which such
Person is or is to become a party on or after the Closing Date; (b) in the case
of the Borrowers, to make Loan Requests and Conversion Requests and to apply
for Letters of Credit; and (c) to give notices and to take other action on its
behalf under the Loan Documents.

 

91

12.5.                     Validity of
Liens.  The Security Documents
shall be effective to create, or to have created, in favor of the
Administrative Agent a legal, valid and enforceable first priority (except for
Permitted Liens entitled to priority under applicable law) security interest in
and Lien upon the Collateral.  All
filings, recordings, deliveries of instruments and other actions necessary or
desirable in the opinion of the Administrative Agent to protect and preserve
such security interests shall have been duly effected.  The Administrative Agent shall have received
evidence thereof in form and substance satisfactory to the Administrative
Agent.

 

12.6.                     Perfection
Certificates and Uniform Commercial Code Search Results.  The Administrative Agent shall have received
from the Parent and each of the Borrowers and their Subsidiaries a completed
and fully executed Perfection Certificate and the results of Uniform Commercial
Code searches (and the equivalent thereof in all applicable foreign
jurisdictions) with respect to the Collateral, indicating no Liens other than
Permitted Liens and otherwise in form and substance satisfactory to the
Administrative Agent.

 

12.7.                     Landlord
Consents; Mortgages. 
The Borrowers and their Subsidiaries shall have delivered to the
Administrative Agent the consents requested by the Administrative Agent to
receive, as part of the Security Documents, a collateral assignment of each
leasehold of personal property, and a mortgage of each leasehold of real
property identified on Schedule  12.7 hereto, together in each
case with such estoppel certificates as the Administrative Agent may request.

 

12.8.                     Certificates
of Insurance.  The
Administrative Agent shall have received (a) a certificate of insurance from an
independent insurance broker dated as of a date preceding the Closing Date by
not more than five (5) Business Days, identifying insurers, types of insurance,
insurance limits, and policy terms, and otherwise describing the insurance
obtained in accordance with the provisions of the Security Agreement and (b)
certified copies of all policies evidencing such insurance (or certificates
therefore signed by the insurer or an agent authorized to bind the insurer),
which certificates shall state that the Administrative Agent is an additional
insured and in respect of all insurance (other than liability insurance, which
shall state that the Administrative Agent as an additional insured) a loss
payee.

 

12.9.                     Solvency
Certificate.  Each of the
Lenders shall have received an officer’s certificate of the Borrowers dated as
of the Closing Date as to the solvency of the Borrowers on a consolidated basis
following the consummation of the transactions contemplated herein and in form
and substance satisfactory to the Lenders.

 

12.10.              Opinion of
Counsel.  Each of the Lenders
and the Administrative Agent shall have received a favorable legal opinion
addressed to the Lenders and

 

92

 

the
Administrative Agent, dated as of the Closing Date, in form and substance
satisfactory to the Administrative Agent, from:

 

(a)          Kirkland & Ellis
LLP,  counsel to the Borrowers and their
Subsidiaries with respect to the financing contemplated by this Credit
Agreement;

 

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

 

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

 

(d)                                 Ballard
Spahr Andrews & Ingersoll, LLP, special counsel to the Borrowers and their
Subsidiaries in Maryland.

 

12.11.              Capital
Structure.  The
Administrative Agent shall be satisfied with the capital structure of the
Borrowers and their Subsidiaries.

 

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

 

12.13.              No Material
Adverse Change.  The
Administrative Agent shall be satisfied that there shall have occurred no
material adverse change in the business, operations, assets, management,
properties, financial condition, income or prospects of the Borrowers and their
Subsidiaries taken as a whole since the Balance Sheet Date.

 

12.14.              Financial
Statements and Projections.  The Administrative Agent shall have received
copies of the financial statements and projections described in §8.4, and the
Administrative Agent shall be satisfied that such financial statements fairly
present in all material respects the financial condition of the Borrowers and
their Subsidiaries as at the close of business on the date thereof and the
results of operations for the fiscal period then ended and compliance with the
terms and conditions hereof.  The
Administrative Agent shall have received a certificate demonstrating that on
the Closing Date, the ratio of (a) Consolidated Funded Indebtedness of the
Borrowers on such date (after giving effect to all Revolving Credit Loans to be
made on the Closing Date) to (b) Consolidated EBITDA for the twelve (12) month period
ended June 26, 2004 is no more than 3.40:1.00. 
The Administrative Agent shall have received a statement of the sources
and uses of funds in connection with the financing contemplated by this Credit
Agreement and such statement of sources and uses shall be satisfactory in all
material respects to the Administrative Agent.

 

12.15.              No
Litigation.  No litigation,
inquiry, injunction or restraining order shall be pending, entered or
threatened against the Parent, any Borrower or

 

93

 

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

 

12.16.              Consents
and Approvals.  The
Administrative Agent shall have received evidence that all material
governmental and third-party approvals (including liquor licenses, Liquor
Management Agreements and other consents to the extent reasonably obtainable
and excluding landlord consents to the extent required under §12.7) necessary
or advisable in connection with and the credit facilities contemplated hereby
and the continuing operations of the Borrowers shall have been obtained and
shall be in full force and effect, and all applicable waiting periods shall
have expired without any action being taken or threatened by any competent
authority that would restrain, prevent or otherwise impose materially adverse
conditions on the Borrowers taken as a whole, or the credit facilities
contemplated hereby.

 

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

 

12.18.              Other
Documentation.  All other
material agreements, including any tax sharing agreements or other financing
arrangements of the Borrowers and their Subsidiaries, in each case, entered
into following the date of the 2003 Credit Agreement shall be reasonably
satisfactory in form and substance to the Administrative Agent.

 

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

 

94

 

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

 

12.21.              Maximum
Borrowing on Closing Date. 
After giving effect to all transactions to occur on the Closing Date,
not more than $25,000,000 of Revolving Credit Loans (excluding for such
purposes the Maximum Drawing Amount of all outstanding Letters of Credit) shall
be outstanding.

 

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

 

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

 

13.                               CONDITIONS
TO ALL BORROWINGS.

 

The
obligations of the Lenders to make any Revolving Credit Loan, and of the
Administrative Agent to issue, extend or renew any Letter of Credit, in each
case whether on or after the Closing Date, shall also be subject to the
satisfaction of the following conditions precedent:

 

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

 

95

 

respects, as
applicable,  at and as of the time of the
making of such Revolving Credit  Loan or
the issuance, extension or renewal of such Letter of Credit, with the same
effect as if made at and as of that time (except to the extent of changes
resulting from transactions contemplated or permitted by this Credit Agreement
and the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and to the
extent that such representations and warranties relate expressly to an earlier
date) and no Default or Event of Default shall have occurred and be continuing.

 

13.2.                     No
Legal Impediment.  No change
shall have occurred in any law or regulations thereunder or interpretations
thereof that in the reasonable opinion of any Lender would make it illegal for
such Lender to make such Revolving Credit Loan or to participate in the
issuance, extension or renewal of such Letter of Credit or in the reasonable
opinion of the Administrative Agent would make it illegal for the
Administrative Agent to issue, extend or renew such Letter of Credit.

 

13.3.                     Proceedings
and Documents.  All
proceedings in connection with the transactions contemplated by this Credit
Agreement, the other Loan Documents and all other documents incident thereto
shall be reasonably satisfactory in substance and in form to the Lenders and to
the Administrative Agent and the Administrative Agent’s Special Counsel, and
the Lenders, the Administrative Agent and such counsel shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Administrative Agent may reasonably request.

 

14.                               EVENTS OF DEFAULT; ACCELERATION; ETC.

 

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

 

(a)          the Borrowers shall fail
to pay any principal of the Revolving Credit Loans or any Reimbursement
Obligation when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other date fixed
for payment;

 

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

 

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

 

96

 

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

 

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

 

(e)                                  any
representation or warranty of the Parent, any Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents or in
any other document or instrument delivered pursuant to or in connection with
this Credit Agreement shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;

 

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

 

(g)         the Parent, any Borrower
or any of its Subsidiaries shall make an assignment for the benefit of
creditors, or admit in writing its inability to pay or generally fail to pay
its debts as they mature or become due, or shall petition or apply for the
appointment of a trustee or other custodian, liquidator or receiver of the
Parent, such Borrower or any of its Subsidiaries or of any substantial part of
the assets of the Parent, such Borrower or any of its Subsidiaries or shall
commence any case or other proceeding relating to the Parent, such Borrower or
any of its Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law of
any jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall be
commenced against the Parent, such Borrower or any of its Subsidiaries and the
Parent, such Borrower or any of its Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence

 

97

 

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

 

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

 

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

 

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

 

(k)          if any of the Loan
Documents shall be cancelled, terminated, revoked or rescinded or the
Administrative Agent’s security interests, mortgages or liens in a substantial
portion of the Collateral shall cease to be perfected, or shall cease to have
the priority contemplated by the Security Documents, in each case otherwise
than in accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Lenders, or any action at law, suit or in
equity or other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of the Parent, the Borrowers or
any of their respective stockholders, or any court or any other Governmental
Authority of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance with the
terms thereof;

 

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

 

98

 

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

 

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

 

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

 

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

 

(p)         a Change of Control shall
occur;

 

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

 

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

 

99

 

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

 

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

 

14.2.                     Termination
of Commitments.  If any one
or more of the Events of Default specified in §§14.1(g), 14.1(h) or 14.1(j)
shall occur, any unused portion of the credit hereunder shall forthwith
terminate and each of the Lenders shall be relieved of all further obligations
to make Revolving Credit Loans to the Borrowers and the Administrative Agent
shall be relieved of all further obligations to issue, extend or renew Letters
of Credit.  If any other Event of Default
shall have occurred and be continuing, the Administrative Agent may and, upon
the request of the Required Lenders shall, by notice to the Borrowers,
terminate the unused portion of the credit hereunder, and upon such notice
being given such unused portion of the credit hereunder shall terminate
immediately and each of the Lenders shall be relieved of all further
obligations to make Revolving Credit Loans and the Administrative Agent shall
be relieved of all further obligations to issue, extend or renew Letters of
Credit.  No termination of the credit
hereunder shall relieve the Borrowers or any of their Subsidiaries of any of
the Obligations.

 

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

 

100

 

legal or
equitable right of such Lender.  No
remedy herein conferred upon any Lender or the Administrative Agent or the
holder of any Note or purchaser of any Letter of Credit Participation is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or any other
provision of law.

 

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

 

(a)          First, to the payment of, or (as the case may be) the reimbursement
of the Administrative Agent for or in respect of all reasonable out-of-pocket
costs, expenses, disbursements and losses which shall have been incurred or
sustained by the Administrative Agent in connection with the collection of such
monies by the Administrative Agent, for the exercise, protection or enforcement
by the Administrative Agent of all or any of the rights, remedies, powers and
privileges of the Administrative Agent or the Lenders under this Credit
Agreement or any of the other Loan Documents or in respect of the Collateral or
in support of any provision of adequate indemnity to the Administrative Agent
against any taxes or liens which by law shall have, or may have, priority over
the rights of the Administrative Agent to such monies;

 

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

 

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

 

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

 

101

 

15.                               THE AGENT.

 

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

 

15.2.                     Rights as a Lender.  The Person serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as Lender
as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the
Person serving as the Administrative Agent hereunder in its individual
capacity.  Such Person and its Affiliates
may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Parent, the Borrowers or any Subsidiary or other Affiliate thereof as if
such Person were not the Administrative Agent hereunder and without any duty to
account therefor to the Lenders.

 

15.3.                     Exculpatory
Provisions.  The Administrative
Agent shall not have any duties or obligations except those expressly set forth
herein and in the other Loan Documents. 
Without limiting the generality of the foregoing, the Administrative
Agent:

 

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

 

(b)         shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that the Administrative Agent is required to exercise as
directed in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be expressly provided for herein or in the other Loan
Documents), provided that the Administrative Agent shall not be required
to take any action that, in its opinion or the opinion of its counsel, may
expose the Administrative Agent to liability or that is contrary to any Loan
Document or applicable law; and

 

(c)          shall not, except as
expressly set forth herein and in the other Loan Documents, have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Parent, the Borrowers or their Subsidiaries or any of their
respective Affiliates that is communicated to or obtained by the Person serving
as the Administrative Agent or any of its Affiliates in any capacity.

 

The
Administrative Agent shall not be liable for any action taken or not taken by
it (i) with the consent or at the request of the Required Lenders (or such
other number or

 

102

 

percentage of the Lenders as shall be
necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in §17.2 and §14.3) or (ii) in
the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until notice describing such
Default is given to the Administrative Agent by the Borrowers or a Lender.

 

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

 

15.4.                     Reliance
by Administrative Agent.

 

15.4.1.           General.  The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed
by it to be genuine and to have been signed, sent or otherwise authenticated by
the proper Person.  The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon.  In
determining compliance with any condition hereunder to the making of a Loan, or
the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender unless the Administrative Agent shall
have received notice to the contrary from such Lender prior to the making of
such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with
legal counsel (who may be counsel for the Borrowers or their Subsidiaries), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

 

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

 

103

 

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

 

15.4.3.           Delegation of Duties.  The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by
the Administrative Agent.  The
Administrative Agent and any such sub-agent may perform any and all of
its duties and exercise its rights and powers by or through their respective
Related Parties.  The exculpatory
provisions of this §15 shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as
Administrative Agent.

 

15.5.                     Payments.

 

15.5.1.           Payments
to Administrative Agent. 
A payment by the Borrowers to the Administrative Agent hereunder or
under any of the other Loan Documents for the account of any Lender shall
constitute a payment to such Lender.  The
Administrative Agent agrees promptly to distribute to each Lender such Lender’s
pro  rata share of payments received by the Administrative Agent
for the account of the Lenders except as otherwise expressly provided herein or
in any of the other Loan Documents.

 

15.5.2.           Distribution by
Administrative Agent.  If in the
opinion of the Administrative Agent the distribution of any amount received by
it in such capacity hereunder, under the Notes or under any of the other Loan
Documents might involve it in liability, it may refrain from making such
distribution until its right to make such distribution shall have been
adjudicated by a court of competent jurisdiction.  If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Administrative Agent is
to be repaid, each Person to whom any such distribution shall have been made
shall either repay to the Administrative Agent its proportionate share of the
amount so adjudged to be repaid or shall pay over the same in such manner and
to such Persons as shall be determined by such court.

 

104

 

15.5.3.           Delinquent
Lenders.  Notwithstanding
anything to the contrary contained in this Credit Agreement or any of the other
Loan Documents, any Lender that fails (a) to make available to the
Administrative Agent its pro  rata share of any Revolving Credit
Loan or to purchase any Letter of Credit Participation or (b) to comply with
the provisions of §17.1 with respect to making dispositions and arrangements
with the other Lenders, where such Lender’s share of any payment received,
whether by setoff or otherwise, is in excess of its pro  rata
share of such payments due and payable to all of the Lenders, in each case as,
when and to the full extent required by the provisions of this Credit
Agreement, shall be deemed delinquent (a “Delinquent  Lender”) and
shall be deemed a Delinquent Lender until such time as such delinquency is
satisfied.  A Delinquent Lender shall be
deemed to have assigned any and all payments due to it from the Borrowers,
whether on account of outstanding Revolving Credit Loans, Unpaid Reimbursement
Obligations, interest, fees or otherwise, to the remaining nondelinquent
Lenders for application to, and reduction of, their respective pro  rata
shares of all outstanding Revolving Credit Loans and Unpaid Reimbursement
Obligations.  The Delinquent Lender
hereby authorizes the Administrative Agent to distribute such payments to the
nondelinquent Lenders in proportion to their respective pro  rata
shares of all outstanding Revolving Credit Loans and Unpaid Reimbursement
Obligations.  A Delinquent Lender shall
be deemed to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Revolving Credit Loans
and Unpaid Reimbursement Obligations of the nondelinquent Lenders, the Lenders’
respective pro  rata shares of all outstanding Revolving Credit
Loans and Unpaid Reimbursement Obligations have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.  At
any time before a Delinquent Lender shall have satisfied in full a delinquency
as provided in the foregoing sentence, the Borrowers shall have the same rights
and remedies with respect to such Delinquent Lender as the Borrowers have with
respect to any Affected Lender set forth in §6.8(c) hereof.

 

15.6.                     Reimbursement
by Lenders.  To the
extent that the Borrowers for any reason fails to indefeasibly pay any amount
required under §17.2 or §17.3 to be paid by it to the Administrative Agent (or
any sub-agent thereof) or any Related Party of any of the foregoing, each
Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent) or such Related Party, as the case may be, such Lender’s Revolving
Credit Commitment Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) in its capacity as such, or
against any Related Party acting for the

 

105

 

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

 

15.7.                     Resignation by Administrative Agent.  The Administrative Agent may at any time give
at least sixty (60) days notice of its resignation to the Lenders and the
Borrowers.  Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrowers, to appoint a successor, which shall be a bank
with an office in the United States, or an Affiliate of any such bank with an
office in the United States.  Unless a
Default or an Event of Default shall have occurred and be continuing, such
successor shall be reasonably acceptable to the Borrowers.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent gives notice of
its resignation, then the retiring Administrative Agent may on behalf of the
Lenders, appoint a successor Administrative Agent having a rating of “A” or its
equivalent by S&P and meeting the qualifications set forth above.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring Administrative Agent and the term “Administrative Agent” shall mean
such successor administrative agent and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents. The Borrowers agrees to pay the fees of the successor Administrative
Agent as may be agreed between the Borrowers and such successor Administrative
Agent.  After any retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the
provisions of this §15 and §§17.2 and 17.3 shall continue in effect for the
benefit of the retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.

 

Any
resignation by Fleet as Administrative Agent pursuant to this §15 shall also
constitute its resignation as issuer of Letters of Credit.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, (a) such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of
the retiring issuer of Letters of Credit, (b) the retiring issuer of Letters of
Credit shall be discharged from all of its respective duties and obligations
hereunder or under the other Loan Documents, and (c) the successor issuer of
Letters of Credit shall issue letters of credit in substitution for the Letters
of Credit, if any, outstanding at the time of such succession or make other
arrangement satisfactory to the retiring issuer of Letters of Credit to
effectively assume the obligations of the retiring issuer of Letters of Credit
with respect to such Letters of Credit

 

106

 

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

 

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

 

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

 

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

 

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

 

15.9.                     No Other
Duties, Etc.. 
Anything herein to the contrary notwithstanding, none of the arrangers
listed on the cover page hereof shall have any powers, duties or
responsibilities under this Credit Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent
or a Lender hereunder.

 

16.                               ASSIGNMENT AND PARTICIPATION.

 

16.1.                     Successors
and Assigns; Conditions to Assignment.  (a)                                The
provisions of this Credit Agreement shall be binding upon and inure to the
benefit

 

107

 

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

 

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

 

108

 

each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance substantially in the form of Exhibit
E hereto (an “Assignment and Acceptance”), together with a
processing and recordation fee of $3,500 and the Eligible Assignee, if not a
Lender, shall deliver to the Administrative Agent an administrative
questionnaire in the form supplied by the Administrative Agent, provided,
further, that no Lender may assign its interest, rights and obligations
under this Credit Agreement to a competitor of the Borrowers or any of their
Subsidiaries, or an adverse party in any legal or arbitration proceeding with
the Borrowers or any of their Subsidiaries (as determined by the
Borrowers).  Subject to acceptance and
recording thereof by the Administrative Agent pursuant to §16.2, from and after
the effective date specified in each Assignment and Acceptance, the Eligible
Assignee thereunder shall be a party to this Credit Agreement and, to the
extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Credit Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Credit Agreement (and, in the case of an Assignment and Acceptance covering all
of the assigning Lender’s rights and obligations under this Credit Agreement,
such Lender shall cease to be a party hereto but shall continue to be entitled
to the benefits of §§6.2, 6.6, 6.7, 6.9, 17.2 and 17.3 with respect to facts
and circumstances occurring prior to the effective date of such
assignment).  Upon request, the Borrower
(at its expense) shall execute and deliver a Note(s) to the assignee
Lender.  Any assignment or transfer by a
Lender of rights or obligations under this Credit Agreement that does not
comply with this clause (b) shall be treated for purposes of this Credit
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with §16.3.

 

16.2.                     Certain
Representations and Warranties; Limitations; Covenants.  By executing and delivering an Assignment and
Acceptance, the parties to the assignment thereunder confirm to and agree with
each other and the other parties hereto as follows:

 

(a)          other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, the
assigning Lender makes no representation or warranty, express or implied, and
assumes no responsibility with respect to any statements, warranties or representations
made in or in connection with this Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or the attachment, perfection or priority of any
security interest or mortgage,

 

(b)         the assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers and their Subsidiaries or any other
Person primarily or secondarily liable in respect of any

 

109

 

of the
Obligations, or the performance or observance by the Borrowers and their
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of their obligations under this Credit Agreement
or any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;

 

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

 

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

 

(e)                                  such
assignee appoints and authorizes the Administrative Agent to take such action
as agent on its behalf and to exercise such powers under this Credit Agreement
and the other Loan Documents as are delegated to the Administrative Agent by
the terms hereof or thereof, together with such powers as are reasonably
incidental thereto;

 

(f)            such assignee agrees
that it will perform in accordance with the Credit Agreement and the other Loan
Documents all of the obligations that by the terms thereof are required to be
performed by it as a Lender;

 

(g)         such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance;

 

(h)         such assignee
acknowledges that it has made arrangements with the assigning Lender
satisfactory to such assignee with respect to its pro  rata share
of Letter of Credit Fees in respect of outstanding Letters of Credit; and

 

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

 

16.3.                     Register.  The Administrative
Agent, acting solely for this purpose as an agent of the Borrowers, shall
maintain at the Administrative Agent’s Office a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Revolving Credit Commitments of, and
principal amounts of the Revolving Credit Loans and Reimbursement Obligations
owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the
Administrative Agent and the Lenders shall treat each Person whose name is

 

110

 

recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Credit Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection
by the Borrowers at any reasonable time and from time to time upon reasonable
prior notice.  In addition, at any time
that a request for a consent for a material or other substantive change to the
Loan Documents is pending, any Lender wishing to consult with other Lenders in
connection therewith may request and receive from the Administrative Agent a
copy of the Register.  Upon its receipt
of an Assignment and Acceptance executed by the parties to such assignment,
together with each Note subject to such assignment, the Administrative Agent
shall (a) record the information contained therein in the Register, and (b)
give prompt notice thereof to the Borrowers and the Lenders (other than the
assigning Lender). Within five (5) Business Days after receipt of such notice,
the Borrowers, at their own expense, shall execute and deliver to the
Administrative Agent, in exchange for each surrendered Note, a new Note to the
order of such Assignee in an amount equal to the amount assumed by such
Assignee pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained some portion of its obligations hereunder, a new Note to
the order of the assigning Lender in an amount equal to the amount retained by
it hereunder.  Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be cancelled and returned to the Borrowers.

 

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

 

111

 

Lender will
not, without the consent of the Participant, agree to any amendment, waiver or
other modification described in clauses (a) and (b) of §17.12 that directly
affects such Participant.  Subject to
clause (b) of this §16.4, the Borrower agrees that each Participant shall be
entitled to the benefits of §§6.2, 6.6, 6.7 and 6.9 to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to
§16.1.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of §17.1 as though it were a Lender, provided
such Participant agrees to be subject to §17.1 as though it were a Lender.

 

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

 

16.5.                     Assignee
or Participant Affiliated with the Borrowers.  If any Eligible Assignee is an Affiliate of
the Borrowers or any of their Subsidiaries, then any such assignee Lender shall
have no right to (a) attend meetings of the Lenders or (b) vote as a Lender
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or other
modifications to any of the Loan Documents or for purposes of making requests
to the Administrative Agent pursuant to §14.1 or §14.2, and the determination
of the Required Lenders shall for all purposes of this Credit Agreement and the
other Loan Documents be made without regard to such Eligible Assignee’s
interest in any of the Revolving Credit Loans or Reimbursement
Obligations.  If any Lender sells a
participating interest in any of the Revolving Credit Loans or Reimbursement
Obligations to the Borrowers or an Affiliate of any Borrower, then such
transferor Lender shall promptly notify the Administrative Agent of the sale of
such participation and such transferor Lender shall have no right to vote as a
Lender hereunder or under any of the other Loan Documents for purposes of
granting consents or waivers or for purposes of agreeing to amendments or
modifications to any of the Loan Documents or for purposes of making requests
to the Administrative Agent pursuant to §14.1 or §14.2 to the extent that such
participation is beneficially owned by the Borrowers or any Affiliate of any
Borrower, and the determination of the Required Lenders shall for all purposes
of this Credit Agreement and the other Loan Documents be made without regard to
the interest of such transferor Lender in the Revolving Credit Loans or
Reimbursement Obligations to the extent of such participation.

 

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

 

112

 

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

 

16.7.                     Syndication.  The
Borrowers hereby agree to use commercially reasonable efforts to assist and
cooperate with the Arranger in efforts to complete the syndication of the
Revolving Credit Commitment and Revolving Credit Loans hereunder, including,
but not limited to, promptly preparing and providing materials and information
reasonably deemed necessary by the Arranger to successfully complete and
otherwise facilitate such syndication, including, without limitation, all
projections required to be delivered pursuant to §§8.4.3, 9.4(b) and
9.4(g).  The Borrowers and each of their
directors, officers, employees and agents shall, at the reasonable request of
the Arranger, use commercially reasonable efforts to meet with potential
lenders and provide such additional information as such Persons may reasonably
request.  The terms of the Fee Letter
shall survive the Closing Date.

 

17.                               PROVISIONS OF GENERAL APPLICATIONS.

 

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

 

113

 

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

 

17.2.                     Expenses.  The Borrowers jointly and severally agree to
pay, upon receipt of an invoice therefor, (a) the reasonable costs of producing
and reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any stamp, documentary or
similar taxes (including any interest and penalties in respect thereto) payable
by the Administrative Agent or any of the Lenders on or with respect to the
transactions contemplated by this Credit Agreement (the Borrowers hereby
jointly and severally agreeing to indemnify the Administrative Agent and each
Lender with respect thereto), (c) the reasonable fees, expenses and
disbursements of the Administrative Agent’s Special Counsel or any local counsel
to the Administrative Agent incurred in connection with the preparation,
syndication, administration or interpretation of the Loan Documents and other
instruments mentioned herein, each closing hereunder, any amendments,
modifications, approvals, consents or waivers hereto or hereunder, or the
cancellation of any Loan Document upon payment in full in cash of all of the
Obligations or pursuant to any terms of such Loan Document for providing for
such cancellation, (d) the reasonable fees, expenses and disbursements of the
Administrative Agent or any of its affiliates incurred by the Administrative
Agent or such affiliate in connection with the preparation, syndication,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, including all title insurance premiums and surveyor,
engineering, appraisal and examination charges, (e) any reasonable fees, costs, expenses and bank charges, including
bank charges for returned checks, incurred by the Administrative Agent in
establishing, maintaining or handling any agency accounts, lock box accounts
and other accounts for the collection of any of the Collateral, (f) all
reasonable out-of-pocket expenses (including without limitation reasonable
attorneys’ fees and costs, which attorneys may be employees of any Lender or
the Administrative Agent, and reasonable consulting, accounting, appraisal,
investment banker and

 

114

 

similar
professional fees and charges) incurred by any Lender or the Administrative
Agent in connection with (i) the enforcement of or preservation of rights under
any of the Loan Documents against the Borrowers or any of their Subsidiaries or
the administration thereof after the occurrence of a Default or Event of Default
and (ii) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Lender’s or the Administrative Agent’s
relationship with the Borrowers or any of their Subsidiaries and (g) all
reasonable fees, expenses and disbursements of any Lender or the Administrative
Agent incurred in connection with Uniform Commercial Code searches, Uniform
Commercial Code filings, intellectual property searches, intellectual property
filings or mortgage recordings.  The
covenants contained in this §17.2 shall survive payment or satisfaction in full
of all other Obligations.

 

17.3.                     Indemnification.  The Borrowers jointly and severally agree to
indemnify and hold harmless the Administrative Agent, its affiliates and each
of the Lenders and their respective affiliates, officers, and directors (each
such Person an “Indemnified Person”) from
and against any and all claims, actions and suits whether groundless or
otherwise, and from and against any and all liabilities, losses, damages and expenses
of every nature and character arising out of this Credit Agreement or any of
the other Loan Documents or the transactions contemplated hereby including,
without limitation, (a) any actual or proposed use by any of the Borrowers or
any of their Subsidiaries of the proceeds of any of the Revolving Credit Loans
or Letters of Credit, (b) the reversal or withdrawal of any provisional credits
granted by the Administrative Agent to the Borrowers upon the transfer of funds
from lock box, bank agency, concentration accounts or otherwise under any cash
management arrangements with any of the Borrowers or any of their Subsidiaries
or in connection with the provisional honoring of funds transfers, checks or
other items, (c) any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of any of the Borrowers or any of
their Subsidiaries comprised in the Collateral, (d) any of the Borrowers or any
of their Subsidiaries entering into or performing this Credit Agreement or any
of the other Loan Documents or (e) with respect to each of the Borrowers and
their Subsidiaries and their respective properties and assets, the violation of
any Environmental Law, the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release or threatened release of any Hazardous
Substances or any action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances (including, but not limited
to, claims with respect to wrongful death, personal injury or damage to
property), in each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding (all the
foregoing, collectively, the “Indemnified Liabilities”), except to the
extent any of the foregoing Indemnified Liabilities result from the gross
negligence or willful misconduct of any such Indemnified Person.  In litigation, or the preparation therefor, such
Indemnified Person shall be entitled to select its own counsel provided; that
notwithstanding the foregoing indemnity, the Borrowers shall jointly and

 

115

 

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

 

17.4.                     Treatment
of Certain Confidential Information.

 

17.4.1.           Confidentiality.  Each of the Lenders and the Administrative
Agent agrees, on behalf of itself and each of its affiliates, directors,
officers, employees, representatives and any person who manages the
Administrative Agent or such Lender, to use reasonable precautions to keep
confidential, in accordance with their customary procedures for handling
confidential information of the same nature and in accordance with safe and
sound banking and financial industry practices, any non-public information
supplied to it by any of the Sponsors, the Borrowers or any of their
Subsidiaries or Affiliates pursuant to this Credit Agreement that is identified
by such Person as being confidential at the time the same is delivered to the Lenders
or the Administrative Agent, provided that nothing herein shall limit
the disclosure of any such information (a) after such information shall have
become public other than through a violation of this §17.4, or becomes
available to any of the Lenders or the Administrative Agent on a
nonconfidential basis from a source other than the Borrowers, (b) to the extent
required by statute, law, rule, regulation or judicial process, (c) to counsel
or financial advisers for any of the Lenders or the Administrative Agent, (d)
to bank examiners or any other regulatory or self-regulatory authority having
or reasonably claiming to have jurisdiction over any Lender or the
Administrative Agent, or to auditors or accountants, (e) to the Administrative
Agent, any Lender or any Financial Affiliate, (f) in connection with any
litigation to which any one or more of the Lenders, the Administrative Agent or
any Financial Affiliate is a party, or in connection with the enforcement of
rights or remedies hereunder or under any other Loan Document, (g) to a Lender
Affiliate or a Subsidiary or affiliate of the Administrative Agent, (h) to any
actual or prospective assignee, pledgee or participant or any actual or
prospective counterparty (or its advisors) to any swap or derivative transactions
referenced to credit or other risks or events arising under this Credit
Agreement or any other Loan Document so long as such assignee, participant or
counterparty, as the case may be, agrees to be bound by the provisions of §17.4
or (i) with the prior written consent of the Borrowers.  Moreover, each of the Administrative Agent,
the Lenders and any Financial Affiliate is hereby expressly permitted by the
Borrowers to refer to any of the Borrowers and their Subsidiaries in connection
with any advertising, promotion or marketing undertaken by the Administrative

 

116

 

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

 

17.4.2.           Prior
Notification.  Unless
specifically prohibited by applicable law or court order, each of the Lenders
and the Administrative Agent shall, prior to disclosure thereof, notify the
Borrowers of any request for disclosure of any such non-public information by
any Governmental Authority representative thereof (other than any such request
in connection with an examination of the financial condition of such Lender by
such Governmental Authority) or pursuant to legal process.

 

17.4.3.           Other.  In no event shall any Lender or the
Administrative Agent be obligated or required to return any materials furnished
to it or any Financial Affiliate by the Borrowers or any of their
Subsidiaries.  The obligations of each
Lender under this §17.4 shall supersede and replace the obligations of such
Lender under any confidentiality letter in respect of this financing signed and
delivered by such Lender to the Borrowers prior to the date hereof and shall be
binding upon any assignee of, or purchaser of any participation in, any
interest in any of the Revolving Credit Loans or Reimbursement Obligations from
any Lender. The covenants contained in this §17.4 shall survive payment or
satisfaction in full of all of the Obligations.

 

17.5.                     Survival
of Covenants, Etc. 
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrowers or any of their Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Lenders and the
Administrative Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by the Lenders of any of the
Revolving Credit Loans and the issuance, extension or renewal of any Letters of
Credit, as herein contemplated, and shall continue in full force and effect so
long as any Letter of Credit or any amount due under this Credit Agreement or
the Notes or any of the other Loan Documents remains outstanding or any Lender
has any obligation to make any Revolving Credit Loans or the Administrative
Agent has any obligation to issue, extend or renew any Letter of Credit, and
for such further time as may be otherwise expressly specified in this Credit
Agreement.  All statements contained in
any certificate or other paper required to be delivered to any Lender or the Administrative
Agent at any time by or on behalf of any of the Borrowers or any of their
Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by such
Borrower or such Subsidiary hereunder.

 

117

 

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

 

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

 

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

 

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

 

Any such
notice or demand shall be deemed to have been duly given or made and to have
become effective (i) if delivered by hand, overnight courier or facsimile to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer or the sending of such facsimile and (ii) if
sent by registered or certified first-class mail, postage prepaid, on the third
Business Day following the mailing thereof. 
Any notice or other communication to be made hereunder or under the
Notes or any Letter of Credit Applications, even if otherwise required to be in
writing under other provisions of this Credit Agreement, the Notes or any
Letter of Credit Applications, may alternatively be made in an electronic
record transmitted electronically under such authentication and other
procedures as the parties hereto may from time to time agree in writing (but
not an electronic record), and such electronic transmission shall be effective
at the time set forth in such procedures. 
Unless otherwise expressly provided in such procedures, such an
electronic record shall be equivalent to a writing under the other

 

118

 

provisions of this Credit Agreement, the
Notes or any Letter of Credit Applications, and such authentication, if made in
compliance with the procedures so agreed by the parties hereto in writing (but
not an electronic record), shall be equivalent to a signature under the other
provisions of this Credit Agreement, the Notes or any Letter of Credit
Applications.

 

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

 

17.8.                     Headings.  The captions in this Credit Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.

 

17.9.                     Counterparts.  This Credit Agreement and any amendment
hereof may be executed in several counterparts and by each party on a separate
counterpart, each of which when executed and delivered shall be an original,
and all of which together shall constitute one instrument.  In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought. 
Delivery by facsimile by any of the parties hereto of an executed
counterpart hereof or of any amendment or waiver hereto shall be as effective
as an original executed counterpart hereof or of such amendment or waiver and
shall be considered a representation that an original executed counterpart
hereof or such amendment or waiver, as the case may be, will be delivered.

 

17.10.              Entire
Agreement, Etc.  The
Loan Documents and any other documents executed in connection herewith or
therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby.

 

119

 

Neither this
Credit Agreement nor any term hereof may be changed, waived, discharged or
terminated, except as provided in §17.12.

 

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

 

17.12.              Consents,
Amendments, Waivers, Etc.  Any
consent or approval required or permitted by this Credit Agreement to be given
by the Lenders may be given, and any term of this Credit Agreement, the other
Loan Documents or any other instrument related hereto or mentioned herein may
be amended, and the performance or observance by any of the Borrowers or any of
their Subsidiaries of any terms of this Credit Agreement, the other Loan
Documents or such other instrument or the continuance of any Default or Event
of Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Borrowers and the written consent of the Required Lenders. Notwithstanding the
foregoing, no amendment, modification or waiver shall:

 

(a)          without the written
consent of the Borrowers and each Lender:

 

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

 

120

 

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

 

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

 

(iii)                               postpone
or extend the Maturity Date or any other regularly scheduled dates for payments
of principal of, or interest on, the Revolving Credit Loans or Reimbursement
Obligations or any Fees or other amounts payable to such Lender (it being
understood that (A) a waiver of the application of the default rate of interest
pursuant to §6.10 and (B)
any vote to rescind any acceleration made pursuant to §14.1 of amounts owing
with respect to the Revolving Credit Loans and other Obligations shall require only the approval of the
Required Lenders);

 

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

 

(v)                                 amend
or waive any provision of this Credit Agreement which requires pro-rata
distributions to each of the Lenders by the Administrative Agent of payments
and/or proceeds received from the Borrowers or the Parent by the Administrative
Agent hereunder; and

 

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

 

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

 

121

 

fees payable
for the Administrative Agent’s account or any other provision applicable to the
Administrative Agent.

 

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

 

Notwithstanding the foregoing, the parties
hereto acknowledge and agree that the Administrative Agent may, without the
consent of any Lender, (x) release its liens on the Collateral solely to the
extent that such Collateral is sold or otherwise disposed of in accordance with
the terms of this Credit Agreement, including without limitation, §10.5.2 or
(y) take any and all action necessary, including, without limitation, entering
into joinder and accession agreements with additional Subsidiaries and
amendments to any of the Security Documents, all in furtherance of the
provisions of §9.17.

 

17.13.              Borrowers’
Representative.  Each of the
Borrowers hereby irrevocably appoints MSAC as such Borrower’s representative
and agent for all purposes under this Credit Agreement and authorizes MSAC, on
behalf of each such Borrower and in each such Borrower’s name to give and
receive all notices and documents, certificates and instruments to be given or
received by the Borrowers or any of them in connection with this Credit
Agreement and the other Loan Documents, including receipt of service of legal
process in connection with any suit or proceeding arising under, or in connection
with the transactions contemplated by this Credit Agreement, delivery of Loan
Requests, Conversion Requests, Compliance Certificates and requests for waivers
and amendments and to acknowledge or consent to any amendments, waivers or
assignments.

 

17.14.              Severability.  The provisions of this Credit Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Credit Agreement in any jurisdiction.

 

17.15.              USA Patriot Act
Notice.  Each Lender that is
subject to the Act (as hereinafter defined) and the Administrative Agent (for
itself and not on behalf of any Lender) hereby notifies the Borrowers that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies the Borrowers, which
information includes the name and address of the Borrowers and other
information that will allow such Lender or the

 

122

 

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

 

123

 

IN
WITNESS WHEREOF, the undersigned have duly executed
this Credit Agreement as a sealed instrument as of the date first set forth
above.

 

	
   

  	
  MCCORMICK & SCHMICK

  ACQUISITION CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK

  RESTAURANT CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK

  MARYLAND LIQUOR, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK

  ACQUISITION I TEXAS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK

  ACQUISITION II TEXAS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  

 

 

	
   

  	
  MCCORMICK &
  SCHMICK

  ACQUISITION TEXAS LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  McCormick & Schmick Acquisition I

  
	
   

  	
   

  	
  Texas, Inc., its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name:  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title:  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK

  ACQUISITION III TEXAS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK’S

  ATLANTA II, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK’S

  HACKENSACK, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK

  ORLANDO, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
					

 

 

	
   

  	
  MCCORMICK & SCHMICK DALLAS,

  LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  McCormick & Schmick Acquisition I

  Texas, Inc., its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name:  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title:  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK DALLAS

  LIQUOR, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK AUSTIN,

  LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   McCormick & Schmick Acquisition I

  Texas, Inc., its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MCCORMICK & SCHMICK AUSTIN

  LIQUOR, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS L. SCHMICK

  	
   

  
	
   

  	
   

  	
  Name: 
  Douglas L. Schmick

  	
   

  
	
   

  	
   

  	
  Title: 
  President

  	
   

  

 

 

	
   

  	
  FLEET NATIONAL BANK, individually

  and as Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CRISTIN O’HARA

  	
   

  
	
   

  	
   

  	
  Cristin O’Hara

  	
   

  
	
   

  	
   

  	
  Director

  	
   

  

 

 

October 12, 2004

 

 

McCormick & Schmick
Acquisition Corp.

McCormick & Schmick
Restaurant Corp.

McCormick & Schmick
Maryland Liquor, Inc.

McCormick & Schmick Acquisition
Texas, LP

McCormick & Schmick
Acquisition I Texas, Inc.

McCormick & Schmick
Acquisition II Texas, Inc.

McCormick & Schmick
Acquisition III Texas, Inc.

McCormick & Schmick’s
Atlanta II, LLC

McCormick & Schmick’s
Hackensack, LLC

McCormick & Schmick Orlando,
LLC

McCormick & Schmick Dallas,
LP

McCormick & Schmick Dallas
Liquor, Inc.

McCormick & Schmick Austin,
LP

McCormick & Schmick Austin Liquor, Inc.

c/o McCormick & Schmick Management Group

720 Southwest Washington Street

Suite 550

Portland, Oregon 97205

Attn: Emanuel N. Hilario

 

Re:          Amendment to
Post-Closing Delivery Requirements

 

Ladies and Gentlemen:

 

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

 

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

 

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

 

 

account of the
Borrowers and each of their Subsidiaries and as identified on Schedule 8.20 of
the Credit Agreement.

 

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

 

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

 

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

 

[Signature page follows]

 

 

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

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  FLEET NATIONAL BANK, as

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
    Administrative Agent and as Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ CRISTIN O’HARA

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Cristin O’Hara

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  
											

 

 

	
  MCCORMICK
  & SCHMICK ACQUISITION CORP.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MCCORMICK
  & SCHMICK RESTAURANT CORP.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MCCORMICK
  & SCHMICK MARYLAND LIQUOR, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MCCORMICK
  & SCHMICK ACQUISITION I TEXAS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MCCORMICK
  & SCHMICK ACQUISITION II TEXAS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MCCORMICK
  & SCHMICK ACQUISITION III TEXAS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

	
  MCCORMICK
  & SCHMICK ACQUISITION TEXAS, LP

  	
   

  
	
  By:

  	
  McCormick
  & Schmick Acquisition I Texas, Inc.,

  	
   

  
	
   

  	
  its General
  Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

MCCORMICK & SCHMICK’S
ATLANTA II, LLC

 

	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

MCCORMICK & SCHMICK’S
HACKENSACK, LLC

 

	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

MCCORMICK & SCHMICK
ORLANDO, LLC

 

	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

	
  MCCORMICK
  & SCHMICK DALLAS, LP

  	
   

  
	
  By:

  	
  McCormick
  & Schmick Acquisition I Texas, Inc.,

  	
   

  
	
   

  	
  its General
  Partner

  	
   

  	
   

  
				

 

 

	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

MCCORMICK & SCHMICK DALLAS
LIQUOR, INC.

 

	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

	
  MCCORMICK
  & SCHMICK AUSTIN, LP

  	
   

  
	
  By:

  	
  McCormick
  & Schmick Acquisition I Texas, Inc.,

  	
   

  
	
   

  	
  its General
  Partner

  	
   

  	
   

  
				

 

 

	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

MCCORMICK & SCHMICK AUSTIN LIQUOR, INC.

 

	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}]]