Intercompany Credit Agreement

INTERCOMPANY CREDIT AGREEMENT


This INTERCOMPANY CREDIT AGREEMENT (this "Agreement") by and between Carlson Companies, Inc., a Minnesota corporation ("CCI"), and Carlson Restaurants Worldwide Inc., a Delaware corporation ("CRW"), is effective as of August 19, 1999.


ARTICLE I


DEFINITIONS


SECTION 1.01 DEFINITIONS. The following terms, as used herein, have the following meanings:


(a) "ADVANCE" means, an advance by CCI or CRW, as applicable, pursuant to Section 2.01 or 2.02, which shall include, without limitation, advances by CCI to CRW or on behalf of CRW and amounts owed by CRW and its Subsidiaries for fees, costs and expenses under the Services Agreement between the parties.


(b) "CCI BALANCE" means, with respect to an Interest Period, the net daily balance of funds owed by CCI to CRW as set forth in the intercompany account maintained by CCI pursuant to Section 2.05 hereof.


(c) "CODE" means, the Internal Revenue Code of 1986 as amended.


(d) "CRW BALANCE" means, with respect to an Interest Period, the net daily balance of funds owed by CRW to CCI as set forth in the intercompany account maintained by CCI pursuant to Section 2.05 hereof.


(e) "CRW PROMISSORY NOTE" means, that certain Promissory Note dated December 31, 1998 issued by CRW in the amount of approximately $70.4 million to Carlson Companies, Inc.


(f) "DIVIDEND PROMISSORY NOTE" means, that certain Promissory Note dated June 28, 1999 issued by CRW in the amount of $120 million to Carlson Hospitality Group, Inc.


(g) "ERISA" means, the Employee Retirement Income Security Act of 1974, together with all amendments from time to time thereto.


(h) "ERISA AFFILIATE" means, any trade or business (whether or not incorporated) which is under common control with CRW within the meaning of the regulations promulgated under the Internal Revenue Code of 1986 as amended.


(i) "EVENT OF DEFAULT" means, any material default of the terms of this Agreement or the Services Agreement.


(j) "INDEBTEDNESS" means, with respect to any Person at any time, without duplication, all obligations of such Person which, in accordance with generally accepted accounting principles, consistently applied, should be classified as liabilities on a consolidated balance sheet of such Person prepared in accordance with generally accepted accounting principles, consistently applied, but in any event shall include: (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid or accrued, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than accounts payable on normal payment terms to suppliers incurred in the ordinary course of business), (f) all obligations of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all capitalized lease obligations of such Person, (h) all obligations of any partnership or joint venture as to which such Person is or may become personally liable, (i) all guarantees by such Person of Indebtedness of others, and (j) all contingent obligations of such Person.


(k) "INTEREST PERIOD" means, the period commencing on the date of an Advance and ending on the date the Advance is paid.


(l) "INTEREST RATE" has the meaning ascribed to it in Section 2.03.


(m) "INVESTMENT" means, any investment in any Person, whether by means of share purchase, capital contribution, loan or otherwise; in determining from time to time the amount of Investments, share purchases and capital contributions shall be taken at the original cost thereof regardless of any subsequent appreciation or depreciation therein and loans shall be taken at the principal amount thereof remaining unpaid.


(n) "LIBOR RATE" means, a rate equal to the LIBOR Rate, as the rate for the Interest Period shall be published from time to time in the Money Rates column of the "Money & Investing Section" of the WALL STREET JOURNAL as the "LIBOR Rate" for three month borrowings.


(o) "MULTIEMPLOYER PLAN" means, the term as defined in Section 4001 (a)(3) of ERISA to which CRW or and Subsidiary is making or accruing an obligation to make contributions or has within any of the preceding three plan years made or accrued an obligation to make contributions.


(p) "PLAN" means, each employee benefit plan (whether now in existence or hereafter instituted), as such term is defined in Section 3 of ERISA, maintained for the benefit of employees, officers or directors of CRW or any Subsidiary.


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(q) "LIEN" means, any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument, in, of, or on any of the assets or properties, now owned or hereafter acquired, of CRW or any Subsidiary, whether arising by agreement or operation of law.


(r) "PERSON" means, any natural person, corporation, partnership, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity.


(s) "SERVICES AGREEMENT" means, the Services Agreement effective as of August 19, 1999, between CCI and CRW, as it may be amended from time to time. If the Services Agreement is terminated prior to the termination of this Agreement, any references to the Services Agreement after its termination shall mean the version of the Services Agreement in effect immediately prior to the termination of the Services Agreement.


(t) "SUBSIDIARY" means, any corporation a majority of the shares of the outstanding stock of which have ordinary voting power for the election of directors is owned by the CRW, either directly or through one or more of its Subsidiaries.


ARTICLE II


ADVANCES AND CASH MANAGEMENT


SECTION 2.01 ADVANCES FROM CRW TO CCI. Any funds of CRW and its Subsidiaries that are not required to meet the daily cash requirements of CRW and its Subsidiaries will be transferred to CCI through a concentration account on a daily basis as an Advance hereunder and/or applied at the discretion of CRW, to decrease the outstanding balance of Advances from CCI pursuant to Section 2.02, as applicable. Any funds transferred from CRW to CCI will be deemed as either an Advance to CCI, if there are no outstanding Advances from CCI to CRW, or a decrease of Advances from CCI to CRW, if such Advances exist. Any interest payable by CCI on an Advance from CRW (other than interest payable upon or after termination of this Agreement) shall be treated (effective as of the first day of the following Interest Period) as an Advance from CRW for the purposes of this Agreement. Each Advance by CRW under this Section 2.01 shall be deemed to be made by CRW notwithstanding the fact that such Advance may involve cash of one or more subsidiaries of CRW. All funds which constitute Advances to CCI pursuant to this Section 2.01(and not decreases in Advances from CCI to CRW) shall bear interest at the LIBOR Rate.


SECTION 2.02 ADVANCES FROM CCI TO CRW. Subject to the following limit, any funds needed by CRW and its subsidiaries in order to meet daily cash requirements of CRW and its subsidiaries will be advanced by CCI. In addition, subject to repayment as provided in Section 2.04 and simultaneously with the execution of this Agreement,


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CCI will advance funds hereunder to CRW in an amount necessary to fully satisfy the outstanding balance of the Dividend Promissory Note and CRW Promissory Note. The outstanding balance of all Advances from CCI to CRW and all of its Subsidiaries shall never exceed (i) $225,000,000 in the aggregate at any time prior to an initial public offering of stock of CRW, or (ii) $105,000,000 in the aggregate at any time after the application of the proceeds of such initial public offering of stock of CRW. Any funds transferred from CCI to CRW will be deemed as either an Advance to CRW, if there are no outstanding Advances from CRW to CCI, or a decrease of the Advances from CRW, if such Advances to CCI exist. Any interest payable by CRW on an Advance from CCI (other than interest payable upon or after termination of this Agreement) shall be treated (effective as of the first day of the following Interest Period) as an Advance from CCI for the purposes of this Agreement. Interest that accrues after the maximum borrowing amount has been reached shall be considered an Advance notwithstanding the limits set forth in this Section. Each Advance by CCI under this Section 2.02 shall be deemed made by CCI notwithstanding the fact that such Advance may involve cash of one or more subsidiaries of CCI.


SECTION 2.03 INTEREST.


(a) Subject to the other provisions of this Section 2.03, interest shall accrue on Advances at the rate (the "Interest Rate") of 125 basis points over the LIBOR Rate in effect on the date of the Advance. Interest shall be calculated on the basis of a 360 day year for the actual number of days elapsed. Interest payments for Interest Periods ending (i) prior to the termination of this Agreement shall be treated as Advances pursuant to Sections 2.01 and 2.02 herein, as applicable, on the first day of the following Interest Period and (ii) on the termination of this Agreement shall be payable immediately (each an "Interest Payment"). Outstanding Advances and Interest Payments for the final Interest Period not repaid when they become due and payable upon the termination of this Agreement as provided in Section 4.03 shall bear interest from and after the required date of payment to the date of payment at an annual rate equal to two and one-half percent (2-1/2 %) per annum in excess of the rate applicable to the unpaid principal amount immediately before it became due.


(b) The interest payable by CCI under this Agreement shall be calculated by multiplying the Interest Rate by the CCI Balance for the applicable days in the Interest Period. The interest payable by CRW under this Agreement shall be calculated by multiplying the Interest Rate by the CRW Balance for the applicable days in the Interest Period. The Interest Payment required to be made by each party is independent of the Interest Payment required to be paid by the other party, and interest may be paid by both CCI and CRW for any given Interest Period. CCI shall calculate the amount of interest payable by both CCI and CRW for each Interest Period and, upon request, shall provide notice thereof to CRW, together with supporting calculations.


(c) All calculations shall be performed by CCI and shall be subject to the dispute resolution mechanisms provided for in Section 4.01.


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SECTION 2.04 REPAYMENT. During the term of this Agreement, all Advances received by either party under this Agreement shall be offset against and shall be treated as repaid to the extent of any Advances made by such party to the other party. Repayments can be made at any time by either party with interest payable up to the date of repayment. No prepayment penalty may be levied. Upon termination of this Agreement, any Advances that have not theretofore been repaid, together with accrued interest, will be payable in full immediately following termination of this Agreement.


SECTION 2.05 INTERCOMPANY ACCOUNT. CCI shall maintain a ledger in which all CCI Advances and CRW Ad ...