Exhibit 10.3


 




 





This agreement is subject to the terms of the Subordination Agreement
(as defined herein).  New

World Restaurant Group, Inc. shall furnish a copy of such Subordination
Agreement to any

lender hereunder upon written request and without charge.


 


 


$25,000,000


 


CREDIT AGREEMENT


 


among


 


NEW WORLD
RESTAURANT GROUP, INC.,


 


as Borrower,


 


GREENLIGHT
CAPITAL, L.P.


 


GREENLIGHT CAPITAL
QUALIFIED, L.P.


 


and


 


The Other Lenders


 


from Time to Time
Parties Hereto,


 


 


Dated as of
January 26, 2006


 




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1. DEFINITIONS

  	
  1

  
	
  1.1

  	
  Defined Terms

  	
  1

  
	
  1.2

  	
  Other Definitional Provisions

  	
  17

  
	
   

  	
   

  	
   

  
	
  SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS

  	
  18

  
	
  2.1

  	
  Term Commitments

  	
  18

  
	
  2.2

  	
  Procedure for Loan Borrowing

  	
  18

  
	
   

  	
   

  	
   

  
	
  SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS

  	
  18

  
	
  3.1

  	
  Optional Prepayments

  	
  18

  
	
  3.2

  	
  Mandatory Prepayments and Commitment Reductions

  	
  18

  
	
  3.3

  	
  Interest Rates and Payment Dates

  	
  19

  
	
  3.4

  	
  Computation of Interest and Fees

  	
  19

  
	
  3.5

  	
  Pro Rata Treatment and Payments

  	
  20

  
	
  3.6

  	
  Taxes

  	
  20

  
	
  3.7

  	
  Change of Lending Office

  	
  21

  
	
  3.8

  	
  Replacement of Lenders

  	
  22

  
	
  3.9

  	
  Evidence of Debt

  	
  22

  
	
   

  	
   

  	
   

  
	
  SECTION 4. REPRESENTATIONS AND WARRANTIES

  	
  23

  
	
  4.1

  	
  Financial Condition

  	
  23

  
	
  4.2

  	
  No Change

  	
  24

  
	
  4.3

  	
  Corporate Existence; Compliance with Law

  	
  24

  
	
  4.4

  	
  Power; Authorization; Enforceable Obligations

  	
  24

  
	
  4.5

  	
  No Legal Bar

  	
  24

  
	
  4.6

  	
  Litigation

  	
  25

  
	
  4.7

  	
  No Default

  	
  25

  
	
  4.8

  	
  Ownership of Property; Liens

  	
  25

  
	
  4.9

  	
  Intellectual Property

  	
  25

  
	
  4.10

  	
  Taxes

  	
  25

  
	
  4.11

  	
  Federal Regulations

  	
  25

  
	
  4.12

  	
  Labor Matters

  	
  26

  
	
  4.13

  	
  ERISA

  	
  26

  
	
  4.14

  	
  Investment Company Act; Other Regulations

  	
  26

  
	
  4.15

  	
  Subsidiaries

  	
  26

  
	
  4.16

  	
  Use of Proceeds

  	
  26

  
	
  4.17

  	
  Environmental Matters

  	
  26

  
	
  4.18

  	
  Accuracy of Information, etc

  	
  27

  
	
  4.19

  	
  Solvency

  	
  28

  
	
  4.20

  	
  Inactive Subsidiaries

  	
  28

  
	
  4.21

  	
  Material Contracts

  	
  28

  
	
  4.22

  	
  Insurance

  	
  28

  
	
   

  	
   

  	
   

  
	
  SECTION 5. CONDITIONS PRECEDENT

  	
  28

  
	
  5.1

  	
  Conditions to the Closing Date

  	
  28

  
				



 


i

















 


	
  5.2

  	
  Conditions to the Borrowing Date

  	
  30

  
	
   

  	
   

  	
   

  
	
  SECTION 6. AFFIRMATIVE COVENANTS

  	
  31

  
	
  6.1

  	
  Financial Statements

  	
  31

  
	
  6.2

  	
  Certificates; Other Information

  	
  32

  
	
  6.3

  	
  Payment of Obligations

  	
  32

  
	
  6.4

  	
  Maintenance of Existence; Compliance

  	
  33

  
	
  6.5

  	
  Maintenance of Property; Insurance

  	
  33

  
	
  6.6

  	
  Notices

  	
  33

  
	
  6.7

  	
  Environmental Laws

  	
  34

  
	
  6.8

  	
  Further Assurances

  	
  34

  
	
   

  	
   

  	
   

  
	
  SECTION 7. NEGATIVE COVENANTS

  	
  34

  
	
  7.1

  	
  Consolidated Leverage Ratio.

  	
  34

  
	
  7.2

  	
  Indebtedness

  	
  35

  
	
  7.3

  	
  Liens

  	
  36

  
	
  7.4

  	
  Fundamental Changes

  	
  38

  
	
  7.5

  	
  Disposition of Property

  	
  38

  
	
  7.6

  	
  Restricted Payments

  	
  39

  
	
  7.7

  	
  Investments

  	
  39

  
	
  7.8

  	
  Optional
  Payments and Modifications of Certain Debt Instruments

  	
  40

  
	
  7.9

  	
  Transactions with Affiliates

  	
  41

  
	
  7.10

  	
  Sale and Leasebacks.

  	
  41

  
	
  7.11

  	
  Hedge Agreements

  	
  41

  
	
  7.12

  	
  Changes in Fiscal Periods

  	
  41

  
	
  7.13

  	
  Negative Pledge Clauses

  	
  41

  
	
  7.14

  	
  Clauses Restricting Subsidiary Distributions

  	
  41

  
	
  7.15

  	
  Lines of Business

  	
  42

  
	
  7.16

  	
  Amendments, Modifications and Supplements to the First Lien
  Documents and the Second Lien Document

  	
  42

  
	
  7.17

  	
  Inactive Subsidiaries

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 8. EVENTS OF DEFAULT

  	
  42

  
	
  8.1

  	
  Events of Default

  	
  42

  
	
  8.2

  	
  Application of Funds

  	
  45

  
	
  8.3

  	
  Several Obligations; No Liability

  	
  45

  
	
   

  	
   

  	
   

  
	
  SECTION 9. MISCELLANEOUS

  	
  45

  
	
  9.1

  	
  Amendments and Waivers.

  	
  45

  
	
  9.2

  	
  Notices.

  	
  46

  
	
  9.3

  	
  No Waiver; Cumulative Remedies

  	
  47

  
	
  9.4

  	
  Survival of Representations and Warranties

  	
  47

  
	
  9.5

  	
  Payment of Expenses and Taxes

  	
  48

  
	
  9.6

  	
  Successors and Assigns; Participations and Assignments

  	
  49

  
	
  9.7

  	
  Adjustments; Set off

  	
  50

  
	
  9.8

  	
  Counterparts; Electronic Execution

  	
  50

  
	
  9.9

  	
  Severability

  	
  51

  
	
  9.10

  	
  Integration

  	
  51

  
	
  9.11

  	
  GOVERNING LAW

  	
  51

  
	
  9.12

  	
  Submission To Jurisdiction; Waivers

  	
  51

  



 


ii

















 


	
  9.13

  	
  Acknowledgments

  	
  51

  
	
  9.14

  	
  Confidentiality

  	
  52

  
	
  9.15

  	
  WAIVERS OF JURY TRIAL

  	
  52

  
	
  9.16

  	
  Revival and Reinstatement of Obligations

  	
  53

  



 


iii

















 


	
  ANNEX:

  	
   

  
	
   

  	
   

  
	
  1

  	
   

  	
  Loan Commitments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  
	
   

  	
   

  
	
  4.4

  	
   

  	
  Consents, Authorizations, Filings and Notices

  	
   

  
	
  4.15

  	
   

  	
  Subsidiaries

  	
   

  
	
  4.20

  	
   

  	
  Inactive Subsidiaries

  	
   

  
	
  4.22

  	
   

  	
  Insurance

  	
   

  
	
  7.2(e)

  	
   

  	
  Existing Indebtedness

  	
   

  
	
  7.3(f)

  	
   

  	
  Existing Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  A

  	
   

  	
  Form of Addendum

  	
   

  
	
  B

  	
   

  	
  Form of Assignment and Assumption

  	
   

  
	
  C

  	
   

  	
  Form of Compliance Certificate

  	
   

  
	
  D

  	
   

  	
  Form of Guarantee Agreement

  	
   

  
	
  E

  	
   

  	
  Form of Exemption Certificate

  	
   

  
	
  F

  	
   

  	
  Form of Term Note

  	
   

  
	
  G

  	
   

  	
  Form of Secretary Certificate

  	
   

  
	
  H

  	
   

  	
  Form of Legal Opinion of Holme Roberts & Owen LLP

  	
   

  
	
  I

  	
   

  	
  Form of Solvency Certificate

  	
   

  



 


iv

















 


CREDIT
AGREEMENT, dated as of January 26, 2006, among NEW WORLD RESTAURANT GROUP,
INC., a Delaware corporation (the “Borrower”),
GREENLIGHT CAPITAL, L.P., GREENLIGHT CAPITAL QUALIFIED, L.P., and any other
lenders from time to time parties to this Agreement (the “Lenders”,
together with the Borrower, the “Parties”).


 


W I T N E S S E T H:


 


WHEREAS, the Borrower wishes to refinance (the “Refinancing”) its (a) 13% Senior Notes due 2008 (the “Senior Notes”) in the aggregate principal amount of
approximately $160,000,000 and (b) credit facilities available under the
Existing Credit Facility;


 


WHEREAS, the Borrower has requested that the Lenders
make available a $25,000,000 (less original issue discount) term loan described
in this Agreement in order to finance the Refinancing and to pay fees and
expenses related to the Refinancing and to provide for the working capital
needs of Borrower; and


 


WHEREAS, the Lenders are willing to make such term
loan available upon and subject to the terms and conditions hereinafter set
forth;


 


NOW, THEREFORE, in consideration of the premises and
the agreements hereinafter set forth, the Parties hereby agree as follows:


 


SECTION 1.


 


DEFINITIONS


 


1.1                   Defined Terms. 
As used in this Agreement, the terms listed in this Section 1.1  shall have the respective
meanings set forth in this Section 1.1.


 


“Acquisition” shall
mean as to any Person, (a) the acquisition of all of the Capital Stock of
another Person, (b) the acquisition of all or substantially all of the assets
of any other Person or (c) the acquisition of all or substantially all of the
assets constituting a business line or division of any other Person.


 


“Addendum” shall
mean an instrument, substantially in the form of Exhibit A, by which a
Lender becomes a party to this Agreement as of the date of the Assignment and
Assumption Agreement.


 


“Affiliate” shall
mean as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such
Person.  For purposes of this definition,
“control” of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the
election of directors (or persons performing similar functions) of such Person
or (b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.


 


“Agreement” shall
mean this Credit Agreement.


 


1

















 


“Approved Fund”
means a CLO and with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other 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.


 


“Asset Sale” shall
mean any Disposition of Property or series of related Dispositions of Property
(excluding any such Disposition permitted by paragraphs (a), (b), (c), (d),
(e) and (h) of Section 7.5) that yields
gross proceeds to any Group Member (valued at the initial principal amount
thereof in the case of non-cash proceeds consisting of notes or other debt
securities and valued at fair market value in the case of other non-cash
proceeds) in excess of $500,000.


 


“Assignee” shall
have the meaning defined in Section 9.6(b).


 


“Assignment and Assumption”
shall mean an Assignment and Assumption, substantially in the form of Exhibit B.


 


“Benefited Lender” shall have the meaning given such
term in Section 9.7.


 


“Board” shall mean the Board of Governors of
the Federal Reserve System of the United States (or any successor).


 


“Borrower” shall
have the meaning defined in the preamble to this Agreement.


 


“Borrowing Date”
shall mean the first date occurring on or after February 28, 2006 on which all
the conditions precedent set forth in Sections 5.1
and 5.2  shall have been
satisfied and that a Borrowing Notice shall have been delivered by the Borrower
two days prior; provided that such date shall occur no later than 40 days after
the Closing Date.


 


“Business” shall
have the meaning defined in Section 4.17(b).


 


“Business Day”
shall mean a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close.


 


“Capital Expenditures”
shall mean for any period, with respect to any Person, without duplication, (i)
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements) during such period, in each
case, that should be capitalized under GAAP on a consolidated balance sheet of
such Person and its Subsidiaries and (ii) Capital Lease Obligations incurred by
such Person and its Subsidiaries during such period, provided that (a)
the cost of any Investment permitted under Section 7.7(j) shall not
constitute a Capital Expenditure by the Borrower or any of its Subsidiaries and
(b) Capital Expenditures funded with Reinvestment Deferred Amounts shall not be
deemed to be Capital Expenditures.


 


“Capital Lease Obligations”
shall mean, as to any Person, the obligations of such Person to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP and,


 


2

















 


for the purposes of this
Agreement, the amount of such obligations at any time shall be the capitalized
amount thereof at such time determined in accordance with GAAP.


 


“Capital
Stock” shall mean any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of the
foregoing.


 


“Cash
Collateralized Surety Bonds” shall mean Indebtedness of the
Borrower and its Subsidiaries in respect of surety bonds permitted under Section
7.2(j)(A) to the extent such Indebtedness is cash collateralized with cash
or Cash Equivalents subject to a Lien in favor of the holders of such
Indebtedness.


 


“Cash
Component Interest” shall have the meaning assigned to it in the
definition of Interest Rate.


 


“Cash Equivalents” shall mean (a) marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one calendar year
from the date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States or any state
thereof having combined capital and surplus of not less than $500,000,000; (c)
commercial paper of an issuer rated at least A-1 by Standard & Poor’s
Ratings Services (“S&P”) or P-1 by Moody’s Investors Service,
Inc. (“Moody’s”),
or carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within six months from the date of
acquisition; (d) repurchase obligations of any Lender or of any commercial bank
satisfying the requirements of clause (b) of this definition, having a
term of not more than 30 days, with respect to securities issued or fully
guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s;
(f) securities with maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f)
of this definition or money market funds that (i) comply with the criteria set
forth in Securities and Exchange Commission Rule 2a-7 under the Investment
Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s
and (iii) have portfolio assets of at least $5,000,000,000.


 


“CLO” means any entity (whether a
corporation, partnership, trust or otherwise) that is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar


 


3

















 


extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or
an affiliate of such Lender.


 


“Closing
Date” shall mean the date on which the conditions precedent set
forth in Section 5.1 shall have been
satisfied.


 


“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.


 


“Coke
Beverage Marketing Agreement” shall mean that certain Beverage
Marketing Agreement, dated as of December 30, 2004, among the Borrower, The
Coca-Cola Company and Odwalla Inc., as amended from time to time.


 


“Commonly Controlled Entity” shall mean an entity,
whether or not incorporated, that is under common control with the Borrower
within the meaning of Section 4001 of ERISA or is part of a group that includes
the Borrower and that is treated as a single employer under Section 414(b)
or (c) of the Code (and, solely for purposes of Section 412 of the Code, under
Section 414(m), (n), and (o) of the Code).


 


“Compliance
Certificate” shall mean a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit C.


 


“Consolidated
EBITDA” shall mean, for any period, Consolidated Net Income for
such period plus, without duplication and
to the extent deducted in determining Consolidated Net Income for such period,
the sum of (a) income tax expense, (b) interest expense, amortization or
writeoff of debt discount and debt issuance costs and commissions, discounts
and other fees and charges associated with Indebtedness (including the Loans,
the Second Lien Loans and the First Lien
Loans), (c) depreciation and amortization expense, (d) amortization of
intangibles (including, but not limited to, goodwill) and organization costs,
(e) any extraordinary charges or extraordinary losses determined in accordance
with GAAP, (f) non-cash compensation expenses arising from the issuance of stock,
options to purchase stock and stock appreciation rights to the employees of the
Borrower, (g) reasonable legal, accounting, financing, consulting, advisory and
out-of-pocket fees and expenses incurred in connection with the initial
consummation of permitted incurrences of Indebtedness by the Borrower or any of
its Subsidiaries after the date hereof under Sections 7.2(a), 7.2(b),
7.2(f), 7.2(k) or 7.2(l), issuances of Capital Stock of the
Borrower, permitted Dispositions under Sections 7.5(f), 7.5(g) or 7.5(i)
and permitted Investments under Section 7.7(j), (h) fees and expenses
related to store closures incurred during the first three fiscal years ending
after the Initial Borrowing Date and not exceeding $1,000,000 per fiscal year,
(i) non-cash charges related to changes in the exposure of the Borrower and its
Subsidiaries under Hedge Agreements, (j) reorganization costs, expenses or
charges recorded during the fiscal year ended December 31, 2005 not exceeding
$1,600,000 in the aggregate (with such amounts to be added back in the quarter
(and any four quarter period which includes such quarter) during which the
cost, expense or charge was recorded and only the amount recorded during such
quarter), (k) cash expenses related to the “Ruskin Moscou Faltischek, P.C.
v. New World Restaurant Group, Inc.” litigation in an aggregate amount not to
exceed $500,000 (with such expenses to be added back in the quarter (and any
four quarter period which includes such quarter) during which such expense is
recorded and only the amount recorded during such quarter) and (l) any
other non-cash charges, non-cash expenses or non-cash losses of the


 


4

















 


Borrower or any of its
Subsidiaries for such period (excluding any such charge, expense or loss
incurred in the ordinary course of business that constitutes an accrual of or a
reserve for cash charges for any future period), provided,
however,
that cash payments made in such period or in any future period in respect of
such non-cash charges, expenses or losses (excluding any such charge, expense
or loss incurred in the ordinary course of business that constitutes an accrual
of or a reserve for cash charges for any future period) shall be subtracted
from Consolidated Net Income in calculating Consolidated EBITDA in the period
when such payments are made, and minus, to the extent
included in determining such Consolidated Net Income for such period, the sum
of (a) interest income, (b) any extraordinary income or gains determined in
accordance with GAAP and (c) any other non-cash income (excluding any items
that represent the reversal of any accrual of, or cash reserve for, anticipated
cash charges in any prior period that are described in the parenthetical to clause
(l) above), all as determined on a consolidated basis.  For the purposes of calculating Consolidated
EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”)
pursuant to any determination of the Consolidated Leverage Ratio, (i) if at any
time during such Reference Period the Borrower or any Subsidiary shall have
made any Material Disposition, the Consolidated EBITDA for such Reference
Period shall be reduced by an amount equal to the Consolidated EBITDA (if
positive) attributable to the property that is the subject of such Material
Disposition for such Reference Period or increased by an amount equal to the
Consolidated EBITDA (if negative) attributable thereto for such Reference
Period and (ii) if during such Reference Period the Borrower or any Subsidiary
shall have made a Material Acquisition, Consolidated EBITDA for such Reference
Period shall be calculated after giving pro forma
effect thereto as if such Material Acquisition occurred on the first day of
such Reference Period.  As used in this
definition, “Material
Acquisition” means any Acquisition that involves the
payment of consideration by the Borrower and its Subsidiaries in excess of
$2,500,000; and “Material
Disposition” means any Disposition of property or series
of related Dispositions of property that yields gross proceeds to the Borrower
or any of its Subsidiaries in excess of $2,500,000.


 


“Consolidated Leverage Ratio” shall
mean, at any time, the ratio of (a) Consolidated Total Debt at such time to (b)
Consolidated EBITDA for the most recent period of four consecutive fiscal
quarters for which financial statements have been delivered.


 


“Consolidated Net Income” shall mean,
for any period, the consolidated net income (or loss) of the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded (a) the income (or deficit) of any Person (other
than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (b) the undistributed earnings of any
Subsidiary of the Borrower (other than a Subsidiary Guarantor) to the extent
that the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Requirement of Law
applicable to such Subsidiary, provided, that this clause (b)
shall not apply to customary surplus requirements under applicable law related
to the payment of dividends.


 


“Consolidated Total Debt” shall mean,
at any date, the aggregate principal amount of all Indebtedness of the Borrower
and its Subsidiaries as set forth on a consolidated balance sheet of the
Borrower at such date in accordance with GAAP, determined on a consolidated
basis in


 


5

















 


accordance with GAAP, excluding
(i) the Excluded Items and (ii) items that appear solely in the footnotes
thereto.


 


“Contractual Obligation” shall mean,
as to any Person, any provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.


 


“Control Investment Affiliate” shall
mean, as to any Person, any other Person that (a) directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person and
(b) is organized by such Person primarily for the purpose of making equity or
debt investments in one or more companies. 
For purposes of this definition, “control” of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.


 


“Cross Acceleration”
shall have the meaning given such term in Section 8.1(e) hereof.


 


“Debtor
Relief Laws” shall mean the Bankruptcy Code and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.


 


“Default”
shall mean any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.


 


“Default Cash Component Interest” shall have the
meaning assigned to it in the definition of Default Rate.


 


“Defaulting Lender”
shall have the meaning assigned to such term in Section 3.8 hereof.


 


“Default Rate”
shall mean 15.75% per annum, of which 7.5% per annum shall be payable in cash
on the relevant Interest Payment Date (the “Default
Cash Component Interest”), and 8.25% per annum shall be
capitalized by adding such amount to the outstanding principal balance on the
relevant Interest Payment Date (the “Default
PIK Component Interest”).


 


“Default PIK Component Interest”
shall have the meaning assigned to it in the definition of Default Rate.


 


“Disposition” shall
mean, with respect to any Property, any sale, lease, license, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof.  The terms “Dispose”
and “Disposed of” shall have
correlative meanings.


 


“Dollars” and “$” shall mean dollars in lawful currency of the United
States.


 


“Domestic Subsidiary”
shall mean any Subsidiary of the Borrower organized under the laws of any
jurisdiction within the United States.


 


6

















 


“Environmental Laws”
shall mean any and all foreign, Federal, state, local or municipal laws, rules,
orders, regulations, statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirements of Law (including common law)
regulating, relating to or imposing liability or standards of conduct
concerning protection of human health or the environment, as now or may at any
time hereafter be in effect.


 


“ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as amended from time to
time.


 


“Event of Default”
shall mean any of the events specified in Section 8,
provided that any requirement for the
giving of notice, the lapse of time, or both, has been satisfied.


 


“Excluded Items”
shall mean, collectively, (i) the Series Z Preferred, (ii) the NJEDA Debt,
(iii) the Indebtedness under the Coke Beverage Marketing Agreement and (iv)
Cash Collateralized Surety Bonds, provided, that (x) the NJEDA Debt
shall constitute an Excluded Item only to the extent cash reserves are
maintained exclusively for the purpose of repaying the NJEDA Debt at its
maturity and (y) the Coke Beverage Marketing Agreement shall only constitute an
Excluded Item to the extent a default shall not have occurred and be continuing
thereunder which permits The Coca-Cola Company to terminate such agreement
(after giving effect to any applicable cure periods) and to cause the “Advance”
or similar advances thereunder to become due and payable unless the parties to
the Coke Beverage Marketing Agreement are negotiating in good faith to resolve
such default in accordance with the dispute resolution provisions in such
agreement (in which case the Coke Beverage Marketing Agreement shall remain an
Excluded Item until the parties are no longer engaged in such negotiations in
accordance with such provisions).


 


“Existing Credit Facility”
shall mean that certain the Loan and Security Agreement, dated as of July 8,
2003, among the Borrower, Manhattan Bagel Company, Inc., Chesapeake Bagel
Franchise Corp., Willoughby’s Incorporated, Einstein and Noah Corp.,
Einstein/Noah Bagel Partners, Inc. and I. & J. Bagel, Inc., as borrowers,
the financial institutions party thereto and AmSouth Capital Corp., as
administrative agent, as amended, modified and restated.


 


“First Lien Credit Agreement”
shall mean that certain Credit Agreement, dated the date hereof, by and between
Borrower, Wells Fargo Foothill, Inc. and the lenders party thereto.


 


“First Lien Documents”
shall have the same meaning as Loan Documents as defined in the First Lien
Credit Agreement.


 


“First Lien Loans”
shall mean the loans made under the First Lien Credit Agreement.


 


“Foreign Subsidiary”
shall mean any Subsidiary of the Borrower that is not a Domestic Subsidiary.


 


“Funding Office”
shall mean the office of each Lender specified in Section
9.2 or such other office as may be specified from time to time by
each Lender as its funding office by written notice to the Borrower.


 


7

















 


“GAAP” shall mean
generally accepted accounting principles in the United States as in effect from
time to time.


 


“Governmental Authority”
shall mean any nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization (including the
National Association of Insurance Commissioners).


 


“Group Members”
shall mean the collective reference to the Borrower and its Subsidiaries.


 


“Guarantee Agreement”
shall mean the Guarantee Agreement to be executed and delivered by the Borrower
and each Subsidiary Guarantor, substantially in the form of Exhibit D.


 


“Guarantee Obligation”
shall mean, as to any Person (the “Guaranteeing Person”),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the “Primary Obligations”) of any other third Person (the “Primary Obligor”) in any manner, whether directly or
indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such Primary Obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such Primary Obligation against loss in respect
thereof; provided, however,
that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person’s maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.


 


“Guaranteeing Person” shall have the meaning assigned to it in
the definition of Guarantee Obligation.


 


“Hedge Agreements”
shall have the meaning given to it in the Intercreditor Agreement.


 


“Inactive Subsidiary”
shall mean the Subsidiaries listed on Schedule 4.20, attached hereto.


 


8

















 


Indebtedness” shall mean, of any Person at any date,
without duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price of property
or services (other than trade payables incurred in the ordinary course of such
Person’s business that are not outstanding after the later of (i) 60 days after
the invoice date or (ii) 30 days after payment is due), (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments,
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations of such Person, (f) all
obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds
or similar arrangements, (g) for the purpose of Section 7.2
and the definition of Replacement Equity only, the liquidation value of all
mandatorily redeemable preferred Capital Stock of such Person, (h) all
Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above, (i) all obligations of the
kind referred to in clauses (a) through (h) above secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise,
to be secured by) any Lien on property (including accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become liable
for the payment of such obligation, (j) for the purposes of Sections 7.2 and
8.1(e) only, all obligations of such Person
in respect of Hedge Agreements and (k) other than with respect to Section 8.1(e)
only, all obligations under the Coke Beverage Marketing Agreement or other
similar agreements to the extent such obligations constitute “take-or-pay”
arrangements, provided, that for the purposes of this definition, the “principal
amount” of the obligations of such Person in respect of any Hedge Agreement at
any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that such Person would be required to pay if such Hedge Agreement
were terminated at such time.  The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness expressly provide that such Person is not liable
therefor.


 


“Indemnitee”
shall have the meaning given such term in Section 9.5.


 


“Indemnified Liabilities”
shall have the meaning given such term in Section 9.5.


 


“Insolvency”
shall mean, with respect to any Multiemployer Plan, the condition that such
Plan is insolvent within the meaning of Section 4245 of ERISA.


 


“Insolvent”
shall mean pertaining to a condition of Insolvency.


 


“Intellectual
Property” shall mean the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or
in equity for any infringement or other impairment thereof, including the right
to receive all proceeds and damages therefrom.


 


9

















 


“Intercreditor
Agreement” shall mean that certain Intercreditor Agreement to be
executed and delivered by the Borrower, each Subsidiary Guarantor, the
Administrative Agent (as defined in the First Lien Credit Agreement) and the
Administrative Agent (as defined in the Second Lien Credit Agreement) dated the
date hereof.


 


“Interest
Payment Date” shall mean the last day of each March, June,
September and December to occur while such Loan is outstanding and the Maturity
Date of such Loan.


 


“Interest
Rate” shall mean 13.75% per annum, of which 6.5% per annum shall
be payable in cash on the relevant Interest Payment Date (the “Cash Component Interest”), and 7.25% per annum shall be
capitalized by adding such amount to the outstanding principal balance on the
relevant Interest Payment Date (the “PIK
Component Interest”).


 


“Investments”
shall have the meaning defined in Section 7.7.


 


“Lenders”
shall have the meaning defined in the preamble hereto.


 


“Lien”
shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease
having substantially the same economic effect as any of the foregoing).


 


“Loan”
(a) before the Borrowing Date, shall mean any loan or extension of credit by
any Lender to the Borrower under Section 2.1
in the form of a term loan, and (b) after the Borrowing Date, shall mean the
Outstanding Amount.


 


“Loan
Commitment” shall mean, as to any Lender, the obligation of such
Lender, if any, to make a Loan to the Borrower hereunder in a principal amount
not to exceed the amount set forth under the heading “Loan Commitment” under
such Lender’s name on Annex 1, attached hereto.  The aggregate amount of all such Loan
Commitments is $24,375,000.


 


“Loan
Commitment Period” shall mean the period from and including the
Closing Date to and including the Borrowing Date.


 


“Loan
Documents” shall mean this Agreement, the Guarantee Agreement
and the Notes.


 


“Loan
Parties” shall mean each Group Member that is a party to a Loan
Document.


 


“Material
Acquisition” shall have the meaning assigned to it in the
definition of Consolidated EBITDA.


 


“Material
Adverse Effect” shall mean a material adverse effect on (a) as
of the Borrowing Date, the Refinancing, (b) the business, assets, property,
condition (financial or otherwise) or results of operations of the Borrower and
its Subsidiaries taken as a whole or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or remedies of the
Lenders hereunder or thereunder.


 


10

















 


“Material
Disposition” shall have the meaning assigned to it in the
definition of Consolidated EBITDA.


 


“Materials
of Environmental Concern” shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.


 


“Maturity
Date” shall mean the earlier of (i) February 28, 2013 and (ii)
the date the Loans are accelerated under the terms of this Agreement.


 


“Multiemployer
Plan” shall mean a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.


 


“Net
Cash Proceeds” shall mean (a) in connection with any Asset Sale
or any Recovery Event, the proceeds thereof received by any Group Member in the
form of cash and Cash Equivalents (including any such proceeds received by way
of deferred payment of principal pursuant to a note or installment receivable
or purchase price adjustment receivable or by the Disposition of any non-cash
consideration received in connection therewith or otherwise, but only as and
when received) of such Asset Sale or Recovery Event, net of attorneys’ fees,
accountants’ fees, other consultants’ fees, investment banking or brokerage
fees, amounts required to be applied to the repayment of Indebtedness secured
by a Lien expressly permitted hereunder on any asset that is the subject of
such Asset Sale or Recovery Event and other customary fees and expenses
actually incurred in connection therewith and net of taxes paid or reasonably
estimated to be payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements) and net
of reserve amounts established by the Borrower or any Subsidiary for
liabilities reasonably anticipated in connection with such Asset Sale or
Recovery Event so long as such reserve amounts are comprised of segregated cash
or Cash Equivalents and will constitute Net Cash Proceeds to the extent such
reserve amounts are no longer required to be maintained and (b) in connection
with any issuance or sale of Capital Stock, any capital contribution or any
incurrence of Indebtedness, the cash proceeds received by any Group Member from
such issuance, contribution or incurrence, net of attorneys’ fees, other
consultants’ fees, investment banking or brokerage fees, accountants’ fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.


 


“NJEDA
Debt” shall mean the New Jersey Economic Development Authority
Notes in a principal amount (including accrued interest) not to exceed
$1,268,000.


 


“Non-Excluded
Taxes” shall have the meaning defined in Section
3.6(a).


 


“Non-U.S.
Lender” shall have the meaning defined in Section
3.6(d).


 


“Notes”
shall mean the collective reference to any promissory note evidencing Loans.


 


“Other
Taxes” shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made


 


11

















 


hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.


 


“Outstanding
Amount” means with respect to the Loans on any date, $25,000,000
less any prepayments or repayments of the Loans that have been made on or prior
to such date plus any accrued and unpaid PIK Component Interest plus any other
amounts due hereunder.


 


“Parties”
shall have the meaning ascribed to it in the preamble of this agreement.


 


“PBGC”
shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor).


 


“Permitted
Investors” shall reference to the Sponsor.


 


“Permitted
Refinancing Indebtedness” shall mean Indebtedness of any Group
Member which satisfies each of the following conditions:  (i) (A) to the extent that the Net Cash
Proceeds of such Indebtedness are used to refinance or prepay the First Lien
Loans (or any other Indebtedness used to refinance or prepay the First Lien
Loans), the terms of such Permitted Refinancing Indebtedness do not prohibit
the Borrower from complying with its obligations under Sections 3.2 and 3.3,
other than any such prohibitions under the terms of the Subordination
Agreement, as may be amended from time to time (including any replacement
subordination agreement, with substantially similar or lesser prohibitions
relating to the ability of the Borrower to comply with Sections 3.2 or 3.3,
that is executed by the Lenders) and (B) to the extent that the Net Cash
Proceeds of such Indebtedness are used to refinance or prepay the Second Lien
Loans (or any other Indebtedness used to refinance or prepay the Second Lien
Loans), the terms of such Permitted Refinancing Indebtedness do not prohibit
the Borrower from complying with its obligations under Sections 3.2 and 3.3,
other than any such prohibitions under the terms of the Subordination
Agreement, as may be amended from time to time (including any replacement
subordination agreement, with substantially similar or lesser prohibitions
relating to the ability of the Borrower to comply with Sections 3.2 or 3.3,
that is executed by the Lenders); (ii) no Event of Default shall have occurred
and be continuing or would result from the incurrence of such Indebtedness;
(iii) the Lenders shall have each received a copy of all the documents relating
to such Indebtedness at least five days prior to the funding of any such
Indebtedness; (iv) other than in the case of the First Lien Loans and the
Second Lien Loans and any Permitted Refinancing Indebtedness in respect
thereof, the terms and conditions of any such Indebtedness shall not be
materially more restrictive taken as a whole to the Borrower and its Subsidiaries
than the terms of the Indebtedness being refinanced as determined in good faith
by the Borrower; (v) other than in the case of the First Lien Loans and the
Second Lien Loans and any Permitted Refinancing Indebtedness in respect
thereof, such Indebtedness shall not have a stated final maturity before the
maturity date of the Indebtedness being refinanced thereby and shall not be
subject to any amortization or required repurchase or redemption obligations on
or prior to such date; (vi) the Net Cash Proceeds of such Indebtedness are
concurrently applied to the prepayment of the Indebtedness to be refinanced
with such Net Cash Proceeds; and (vii) the Lenders shall have received a
certificate of a Responsible Officer certifying compliance with the conditions
set forth in this definition (and attaching reasonable detailed supporting
calculations and other information reasonably required by the Required
Lenders).


 


12

















 


“Person”
shall mean an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.


 


“PIK
Component Interest” shall have the meaning given to it in the
definition of Interest Rate.


 


“Plan”
shall mean, at a particular time, any employee benefit plan that is covered by
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.


 


“Primary Obligations” shall have the meaning given it in the
definition of Guarantee Obligation.


 


“Primary
Obligor” shall have the meaning given it in the definition of
Guarantee Obligation.


 


“Pro
Forma Balance Sheet” shall have the meaning defined in Section 4.1.


 


“Properties”
shall have the meaning defined in Section4.17(a).


 


“Property”
shall mean, as to any Person, any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock of any Subsidiary of
such Person but excluding any Capital Stock of such Person.


 


“Public
Filings” shall mean the Borrower’s most recent filings on forms
10 K and 10 Q with the SEC since the Closing Date.


 


“Recovery
Event” shall mean any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of any Group Member that yields gross proceeds to any Group Member in
excess of $500,000.


 


“Reference
Period” shall have the meaning given it in the definition of
Guarantee Obligation.


 


“Refinancing”
shall have the meaning defined in the recitals to this Agreement.


 


“Register”
shall have the meaning defined in Section 3.9(a).


 


“Regulation
U” shall mean Regulation U of the Board as in effect from time
to time.


 


“Reinvestment
Deferred Amount” shall mean, with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by any Group Member in
connection therewith that are not applied to prepay the First Lien Loans, the
Second Lien Loans or the Loans, as applicable, or reduce the Revolving
Commitments (as defined in the First Lien Credit Agreement or any Permitted
Refinancing Indebtedness in respect thereof).


 


13

















 


“Reinvestment
Event” shall mean any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.


 


“Reinvestment
Notice” shall mean a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and
that the Borrower (directly or through a Subsidiary) intends and expects to use
all or a specified portion of the Net Proceeds of an Asset Sale or Recovery
Event to acquire or repair fixed or capital assets useful in its business.


 


“Reinvestment
Prepayment Amount” shall mean, with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire or
repair fixed or capital assets useful in the Borrower’s business.


 


“Reinvestment
Prepayment Date” shall mean, with respect to any Reinvestment
Event, the earlier of (a) the date occurring six months after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire or repair fixed or capital assets
useful in the Borrower’s business with all or any portion of the relevant
Reinvestment Deferred Amount, provided that to the extent the Borrower
or any of its Subsidiaries has entered a binding agreement within six months
after such Reinvestment Event has occurred to acquire or repair fixed or
capital assets useful in the Borrower’s business, the six month period in clause
(a) shall be extended for an additional period of six months (or, if
earlier, the expiration or termination of such binding agreement).


 


“Reorganization”
shall mean, with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.


 


“Replacement
Equity” shall mean the collective reference to any Capital Stock
issued by the Borrower after the Closing Date, the Net Cash Proceeds of which
are used substantially concurrently, after giving effect to any required notice
of redemption, to redeem all or a portion of the outstanding Series Z Preferred
so long as such Capital Stock consists of either:  (a) preferred stock of the Borrower (not
constituting Indebtedness), the terms of which are (i) no less favorable to the
Lenders, taken as a whole, than the Series Z Preferred and, in any event, the
terms of which do not require cash payment of dividends or mandatory redemption
or repurchase thereof prior to the date that is seven years and six months
after the Closing Date, or (ii) otherwise reasonably satisfactory to the
Lenders or (b) common stock of the Borrower.


 


“Reportable
Event” shall mean any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
§ 4043.


 


“Required
Lenders” shall mean, at any time, the holders of more than 50%
of (a) until the Borrowing Date, the Loan Commitments then in effect and (b)
thereafter, the aggregate unpaid principal amount of the Loans then
outstanding.


 


“Requirement
of Law” shall mean, as to any Person, the certificate of
incorporation and bylaws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in


 


14

















 


each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.


 


“Responsible
Officer” shall mean the chief executive officer, president or
chief financial officer of the Borrower, but in any event, with respect to financial
matters, the chief financial officer of the Borrower.


 


“Restricted
Payments” shall have the meaning defined in Section 7.6.


 


“SEC”
shall mean the Securities and Exchange Commission, any successor thereto and
any analogous Governmental Authority.


 


“Second
Lien Credit Agreement” shall mean the Second Lien Credit
Agreement, dated as of the date hereof, among the Borrower, the several banks
and other financial institutions from time to time parties thereto, and Bear
Stearns Corporate Lending, Inc., as administrative agent.


 


“Second
Lien Loans” shall mean the term loans made under the Second Lien
Credit Agreement.


 


“Second
Lien Documents” shall have the meaning of the Loan Documents as
that term is defined in the Second Lien Credit Agreement.


 


“Secured
Parties” shall have the meaning defined in the Guarantee
Agreement.


 


“Senior
Loan Default” means a Default, as defined in the First Lien
Credit Agreement and the Second Lien Credit Agreement.


 


“Senior Loan Event of
Default” means an Event of Default, as defined in the First Lien
Credit Agreement and the Second Lien Credit Agreement


 


“Senior Notes” shall have the meaning defined in the
recitals hereto.


 


“Series
Z Preferred” shall mean the 57,000 shares of Series Z Preferred
Stock issued by the Borrower, par value $0.001 per share.


 


“Single
Employer Plan” shall mean any Plan that is covered by Title IV
of ERISA, but that is not a Multiemployer Plan.


 


“Solvent”
shall mean, when used with respect to any Person, means that, as of any date of
determination, (a) the fair value of the assets of such Person will, as of such
date, exceed the amount of all debts of such Person, contingent or otherwise”,
as of such date, (b) the fair value of the assets of such Person will, as of
such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, and (d) such Person will
be able to pay its debts as they mature. 
For purposes of this definition, (i) “debt” means liability on a “claim”,
and (ii) “claim” means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or


 


15

















 


unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed,
secured or unsecured.


 


“S&P”
shall have the meaning assigned to it in the definition of Cash Equivalents.


 


“Sponsor”
shall mean Greenlight Capital, Inc. and its Control Investment Affiliates.


 


“Subordination Agreement” shall mean that certain
Subordination Agreement, dated the date hereof, by and among the Lenders hereto
and Wells Fargo Foothill, Inc. as administrative
agent for the lenders party to the First Lien Credit Agreement and Bear Stearns
Corporate Lending Inc. as administrative agent for the lenders party to the
Second Lien Credit Agreement.


 


“Subsidiary” shall mean, as to any Person, a
corporation, partnership, limited liability company or other entity of which
shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity
are at the time owned by such Person, or (b) the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person, but only if, in the case of this clause
(b), such entity is treated as a consolidated subsidiary under GAAP.  Unless otherwise qualified, all references to
a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower. 
Inactive Subsidiaries shall not be “Subsidiaries” of the Borrower for
purposes of Section 4 (other than Section 4.20), Section 6
or Section 7 (other than Section 7.17).


 


“Subsidiary
Guarantor” shall mean each Domestic Subsidiary of the Borrower
other than any Foreign Subsidiary or any Inactive Subsidiary.


 


“United
States” shall mean the United States of America.


 


“Updated
Projections” shall mean the updated projections delivered by the
Borrower to the Lenders in November 2005 in connection with this Agreement.


 


“Voidable
Transfer” shall have the meaning assigned to it in Section 9.16.


 


“Wholly
Owned Subsidiary” shall mean, as to any Person, any other Person
all of the Capital Stock of which (other than directors’ qualifying shares
required by law or shares held by nominees as required by law) is owned by such
Person directly and/or through other Wholly Owned Subsidiaries.


 


“Wholly
Owned Subsidiary Guarantor” shall mean any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.


 


16

















 


1.2                   Other Definitional
Provisions.


 


(a)           Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used
in the other Loan Documents or any certificate or other document made or
delivered pursuant hereto or thereto.


 


(b)           As used herein and in the other Loan
Documents, and any certificate or other document made or delivered pursuant
hereto or thereto, (i) accounting terms relating to any Group Member not
defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under
GAAP, (ii) the words “include,” “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”, (iii) the word “incur” shall be
construed to mean incur, create, issue, assume, become liable in respect of or
suffer to exist (and the words “incurred” and “incurrence” shall have
correlative meanings), (iv) the words “asset” and “property” (when used in the
lower case) shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
Capital Stock, securities, revenues, accounts, leasehold interests and contract
rights, and (v) references to agreements or other Contractual Obligations
shall, unless otherwise specified, be deemed to refer to such agreements or
Contractual Obligations as amended, supplemented, restated or otherwise modified
from time to time (subject to any applicable restrictions hereunder).


 


(c)           The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.


 


(d)           The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of
such terms.


 


(e)           Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP; provided
that, if the Borrower notifies the Lenders that such Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if any Lender notifies the Borrower that the
Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.


 


(f)            References herein to fiscal periods
ending on March 31, June 30, September 30 or December 31 during any fiscal year
of the Borrower, shall mean the applicable fiscal period of the Borrower ending
on or about such date.


 


17

















 


SECTION 2.


 


AMOUNT AND TERMS OF TERM COMMITMENTS


 


2.1                   Term Commitments. 
Subject to the terms and conditions hereof, each Lender severally but
not jointly agrees to make a term loan (a “Loan”)
to the Borrower on the Borrowing Date in an amount equal to such Lender’s Loan
Commitment as of the Closing Date, provided that at the end of the last day of
the Loan Commitment Period, the Loan Commitment of each Lender, if any, shall
automatically be reduced to zero.  The
Loans shall be made in a single drawing and shall be made on the Borrowing
Date.


 


2.2                   Procedure for
Loan Borrowing.  The Borrower has informed the
Lenders that, in connection with the consummation of the Refinancing, it will
require that the Loans be made available to it prior to 10 A.M., New York City
time, on the Borrowing Date.  The
Borrower shall notify the Lenders of the anticipated Borrowing Date at least
two Business Days prior to the occurrence thereof and shall give them a notice
specifying the amount of the Loans to be borrowed.  In the event that, on the second Business Day
following the date of delivery of the notice of borrowing, the conditions set
forth in Section 5.2 are satisfied, each Lender shall make available to
the Borrower the amounts of their respective Loan Commitments in immediately
available funds on the Borrowing Date in accordance with the irrevocable
instructions provided by the Borrower in connection with its notice of
borrowing.


 


SECTION 3.


 


GENERAL PROVISIONS APPLICABLE

TO LOANS


 


3.1                   Optional
Prepayments.  The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to each of the Lenders no later than 11:00 A.M.,
New York City time, three Business Days prior thereto, which notice shall
specify the date and amount of prepayment. 
If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with accrued
interest to such date on the amount prepaid. 
Partial prepayments of the Outstanding Amount shall be in an aggregate
principal amount of $1,000,000 or a whole multiple thereof.


 


3.2                   Mandatory
Prepayments and Commitment Reductions.


 


(a)           If (i) any common stock shall be
issued by the Borrower and (ii) (A) the Consolidated Leverage Ratio at
such time and after giving effect thereto is equal to or less than 3.25 to 1.00
and (B) no Event of Default under this Agreement, Senior Loan Default or Senior
Loan Event of Default shall have occurred and be continuing or would result
therefrom, the Net Cash Proceeds thereof shall be applied on the date of
receipt of such Net Cash Proceeds toward the prepayment of the Loans with each
such prepayment being accompanied by accrued interest to the date of such
prepayment on the amount prepaid; provided, that, if a Senior Loan
Default exists at the time Net Cash Proceeds are received by the Borrower, but
such Senior Loan Default is cured before it becomes an Event of Default under
the First Lien Credit Agreement or the


 


18

















 


Second Lien Credit Agreement,
as the case may be, such Senior Loan Default shall not operate to prohibit the
application of such Net Cash Proceeds as contemplated by this Section 3.2(a)
once such Senior Loan Default has been cured; provided, further, that such Net
Cash Proceeds shall be deposited and maintained in a segregated account with
the Lenders during such grace period.


 


(b)           At any time after the payment in full
of the First Lien Loans and Second Lien Loans and any Permitted Refinancing
Indebtedness in respect thereof, any Group Member shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event; then, unless a Reinvestment
Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be
applied on such date toward the prepayment of the Loans; provided,
that, notwithstanding the foregoing, on each Reinvestment Prepayment Date, an
amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied toward the prepayment of the Loans, with
each such prepayment being accompanied by accrued interest to the date of such
prepayment on the amount prepaid.


 


3.3                   Interest Rates
and Payment Dates.


 


(a)           The Loans shall bear interest, and
the Borrower agrees to pay interest on the Loans, at a rate equal to the
Interest Rate, except upon the occurrence and continuation of an Event of
Default under Section 8.1(a), then the Loans will bear interest at
the Default Rate.


 


(b)           The Cash Component Interest and the
Default Cash Component Interest, as applicable, on each Loan shall be due and
payable in arrears on each Interest Payment Date applicable thereto and at such
other times as may be specified herein. 
PIK Component Interest and Default PIK Component Interest, as
applicable, shall be calculated on each Interest Payment Date and shall be
capitalized by adding it to the outstanding principal amount of the Loans on
such Interest Payment Date.  Interest
hereunder shall be due and payable in accordance with the terms hereof before
and after judgment and before and after the commencement of any proceeding
under any Debtor Relief Law.


 


(c)           The
outstanding principal amount of the Loans together with all other Outstanding
Amounts, including all accrued and unpaid interest, shall be due and payable,
and paid by the Borrower, on the Maturity Date, provided that, if the
Borrower has not, on or prior to June 29, 2009, either (i) extended the
mandatory redemption date of the Series Z Preferred to a date that is on or
after the date that is seven years and six months after the Closing Date or
(ii) redeemed all the outstanding Series Z Preferred with the proceeds of an
issuance of Replacement Equity, the Borrower shall repay the remaining
outstanding balance of the Loans on June 29, 2009, provided, that in the
event that the mandatory redemption date of the Series Z Preferred is extended
after the date hereof, then the reference to June 29, 2009 shall be deemed to
be a reference to the date which is one day prior to the then effective
mandatory redemption date of the Series Z Preferred (it being understood, for
the avoidance of doubt, that, for purposes of this proviso, any extension of
the scheduled redemption date of the Series Z Preferred must be effective and
not subject to any conditions (which have not been satisfied) or acceleration
provisions).


 


3.4                   Computation of
Interest and Fees.  All computations of interest
for the Loans shall be made on the basis of a 360-day year and actual days
elapsed (which results in


 


19

















 


more fees or interest, as
applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the
day on which the Loan is made, and shall not accrue on a Loan, or any portion
thereof, for the day on which the Loan or such portion is paid; provided
that any Loan that is repaid on the same day on which it is made shall, bear
interest for one day.  Each determination
by the Required Lenders of an interest rate or fee hereunder shall be
conclusive and binding for all purposes, absent manifest error.


 


3.5                   Pro Rata
Treatment and Payments.


 


(a)           Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Loans shall be made pro rata according to the respective outstanding principal
amounts of the Loans then held by the Lenders. 
Amounts prepaid on account of the Loans may not be reborrowed.


 


(b)           All payments (including prepayments)
to be made by the Borrower hereunder, whether on account of principal,
interest, fees or otherwise, shall be made without setoff or counterclaim and
shall be made prior to 12:00 Noon, New York City time, on the due date thereof
to the Lenders, for the account of the Lenders, at the Funding Office, in
Dollars and in immediately available funds. 
If any payment hereunder becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business
Day.  In the case of any extension of any
payment of principal pursuant to the preceding two sentences, interest thereon
shall be payable at the then applicable rate during such extension.


 


3.6                   Taxes.


 


(a)           All payments made by the Borrower
under this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on any Lender as a result of a present or
former connection between such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any other Loan Document).  If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be
withheld from any amounts payable to any Lender hereunder, the amounts so
payable to such Lender shall be increased to the extent necessary to yield to
such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, provided, however, that the Borrower shall not be required
to increase any such amounts payable to any Lender with respect to any
Non-Excluded Taxes (i) that are attributable to such Lender’s failure to comply
with the requirements of paragraph (d) or (e) of this Section 3.6
or (ii) that are United States withholding taxes imposed on amounts payable to
such Lender at the time such Lender becomes a party to this Agreement, except
to the extent that such Lender’s assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to
such Non-Excluded Taxes pursuant to this paragraph (a).


 


20

















 


(b)           In addition, the Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.


 


(c)           Whenever any Non-Excluded Taxes or
Other Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Lenders for their own account, a certified copy of
an original official receipt received by the Borrower showing payment
thereof.  If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Lenders the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lenders for any
incremental taxes, interest or penalties that may become payable by any Lender
as a result of any such failure.


 


(d)                   Each Lender (or Assignee)
that is not a “U.S. Person” as defined in Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower (or, in
the case of a Assignee, to the Lender from which the related participation
shall have been purchased) two copies of either U.S. Internal Revenue Service
Form W-8BEN or Form W-8ECI, or, in the case of a Non U.S. Lender claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of “portfolio interest”, a statement
substantially in the form of Exhibit E and a Form W-8BEN, or any
subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by the Borrower under
this Agreement and the other Loan Documents. 
Such forms shall be delivered by each Non U.S. Lender on or before the
date it becomes a party to this Agreement (or, in the case of any Assignee, on
or before the date such Assignee purchases the related participation).  In addition, each Non U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non U.S. Lender. 
Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any other provision of this paragraph
(d), a Non U.S. Lender shall not be required to deliver any form pursuant
to this paragraph (d) that such Non U.S. Lender is not legally able to
deliver.


 


(e)           A Lender that is entitled to an
exemption from or reduction of non-U.S. withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver
to the Borrower, at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided
that such Lender is legally entitled to complete, execute and deliver such
documentation and in such Lender’s judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.


 


(f)            The agreements in this Section 3.6 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.


 


3.7                   Change of
Lending Office.  Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 3.6(a)
with respect to such Lender, it will, if


 


21

















 


requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that no such
designation shall be required unless such designation can be made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and
provided, further, that nothing in this Section 3.7
shall affect or postpone any of the obligations of the Borrower or the rights
of any Lender pursuant to Section 3.6(a).


 


3.8                   Replacement of
Lenders     . 
The Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 3.6(a) or (b)
defaults in its obligation to make Loans hereunder (a “Defaulting
Lender”), with a replacement financial institution; provided
that (i) such replacement does not conflict with any Requirement of Law, (ii)
no Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have failed
to take the actions required to be taken by such Lender under Section 3.7
so as to eliminate the continued need for payment of amounts owing pursuant to Section
3.6(a), (iv) the replacement financial institution shall purchase, at par,
all Loans and other amounts owing to such replaced Lender on or prior to the
date of replacement, (v) the replacement financial institution, if not already
a Lender, shall be reasonably satisfactory to the Required Lenders, (vi) the replaced
Lender shall be obligated to make such replacement in accordance with the
provisions of Section 9.6 (provided that the Borrower shall be
obligated to pay the registration and processing fee referred to therein),
(vii) until such time as such replacement shall be consummated, the Borrower
shall pay all additional amounts (if any) required pursuant to Section
3.6(a), as the case may be, and (viii) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower or any Lender shall have
against the replaced Lender.


 


3.9                   Evidence of Debt.


 


(a)           Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from each Loan of such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement (each a “Register”).


 


(b)           Each Lender shall record (i) the
amount of each Loan made hereunder and any Note evidencing such Loan and each
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by the Lender
hereunder from the Borrower in its respective Register.


 


(c)           The entries made in each Register
maintained pursuant to Section 3.9(a)
shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts
of the obligations of the Borrower therein recorded; provided,
however, that the failure of any Lender to
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Borrower to repay (with applicable
interest) the Loans made to the Borrower by such Lender in accordance with the
terms of this Agreement.


 


22

















 


(d)           The Borrower agrees that, upon the
request by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing any Loans of such Lender,
substantially in the forms of Exhibit F with appropriate insertions as
to date and principal amount.


 


SECTION
4.


 


REPRESENTATIONS
AND WARRANTIES


 


To induce the Lenders to enter into this Agreement and
to make the Loans, the Borrower hereby represents and warrants to each Lender
that:


 


4.1                   Financial Condition.


 


(a)           The unaudited pro forma consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at September
30, 2005 (including the notes thereto) (the “Pro
Forma Balance Sheet”), copies of which have heretofore been
furnished to each Lender, has been prepared giving effect (as if such events
had occurred on such date) to (i) the consummation of the Refinancing (ii) the
consummation of the borrowings under the First Lien Loans and the Second Lien
Loans, (iii) the Loans to be made on the Borrowing Date and the use of proceeds
thereof and (iv) the payment of fees and expenses in connection with the
foregoing.  The Pro Forma Balance Sheet has
been prepared in good faith and was based upon assumptions which, in light of
the circumstances under which they were made, were believed by the Borrower in
good faith to be reasonable (it being understood that projections by their
nature are inherently uncertain, actual results may differ from projections and
such differences may be material) and presents fairly on a pro forma basis the
estimated financial position of the Borrower and its consolidated Subsidiaries
at its fiscal quarter ending September 30, 2005, assuming that the events
specified in the preceding sentence had actually occurred at such date.


 


(b)           The audited consolidated balance
sheets of the Borrower and its consolidated Subsidiaries as at December 31,
2003 and December 31, 2004, and the related consolidated statements of
operations, changes in stockholders’ equity and of cash flows for each of the
three years in the period ended December 31, 2004, reported on by and
accompanied by the report from Grant Thornton LLP, present fairly the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as at
such date, and the consolidated results of its operations and its consolidated
cash flows for the respective fiscal years then ended.  The unaudited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at its fiscal quarter ending
September 30, 2005, and the related unaudited consolidated (i) statements of
operations and cash flows for the three-month and year-to-date periods ended on
such date and (ii) the statement of stockholders’ equity for the year-to-date
period ended on such date, present fairly the consolidated financial condition
of the Borrower and its consolidated Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
three-month period then ended (subject to normal-year end audit adjustments and
the absence of footnotes).  All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein).  No Group Member
has any material Guarantee Obligations, contingent liabilities and


 


23

















 


liabilities for taxes, or any
long-term leases or unusual forward or long-term commitments, including any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives that are not reflected in the most recent
financial statements referred to in this paragraph (b).  During the period from December 31, 2004 to
and including the date hereof there has been no Disposition by the Borrower and
its Subsidiaries of any material part of its business or property.


 


4.2                   No Change. 
Since December 31, 2004, there has been no development or event that has
had or would reasonably be expected to have a Material Adverse Effect.


 


4.3                   Corporate Existence;
Compliance with Law.  Each Group Member (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except, individually or in the aggregate,
where the failure to be so qualified or in good standing could reasonably not
be expected to have, a Material Adverse Effect, and (d) is in compliance with
all Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.


 


4.4                   Power;
Authorization; Enforceable Obligations.  Each Loan Party has the power
and authority, and the legal right, to make, deliver and perform the Loan
Documents to which it is a party and, in the case of the Borrower, to obtain
extensions of credit hereunder.  Each
Loan Party has taken all necessary organizational action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party and, in the case of the Borrower, to authorize the extensions of credit
on the terms and conditions of this Agreement. 
No consent or authorization of, filing with, notice to or other act by
or in respect of, any Governmental Authority or any other Person is required in
connection with the Refinancing and the extensions of credit hereunder or with
the execution, delivery, performance, validity or enforceability of this
Agreement or any of the Loan Documents, except consents, authorizations,
filings and notices described in Schedule 4.4,
which consents, authorizations, filings and notices have been obtained or made
and are in full force and effect.  Each
Loan Document has been (or on the Borrowing Date will be) duly executed and
delivered on behalf of each Loan Party party thereto.  This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).


 


4.5                   No Legal Bar.  The
execution, delivery and performance of this Agreement and the other Loan
Documents, the borrowings hereunder and the use of the proceeds thereof, in
each case in accordance with the terms hereof, will not violate any Requirement
of Law or any Contractual Obligation of any Group Member and will not result
in, or require, the


 


24

















 


creation or imposition of any
Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation.


 


4.6                   Litigation.  No
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against any Group Member or against any of their respective
properties or revenues (a) with respect to the Refinancing or any of the Loan
Documents or any of the transactions contemplated hereby or thereby, or (b)
that could reasonably be expected to have a Material Adverse Effect.


 


4.7                   No Default.  No
Group Member is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect.  No Default or Event of
Default has occurred and is continuing.


 


4.8                   Ownership of
Property; Liens.  Each Group Member has title in fee simple to,
or a valid leasehold interest in, all its real property and good title to, or a
valid leasehold interest in, all its other property, except to the extent
failure to have such title in fee simple to, or a valid leasehold interest in,
such property could not reasonably be expected to have a Material Adverse
Effect, and none of such property is subject to any Lien except as permitted by
Section 7.3.


 


4.9                   Intellectual
Property.  Each Group Member owns, or is licensed to use
or is otherwise lawfully permitted to use, all material Intellectual Property
necessary for the conduct of its business as currently conducted; no material
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does the Borrower know of any valid basis for any
such claim; and to the knowledge of the Borrower the use of such Intellectual
Property by each Group Member does not infringe on the rights of any Person in
any material respect.


 


4.10                 Taxes.  Each
Group Member has filed or caused to be filed all Federal, state and other
material tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any the amount or
validity of that are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have
been provided on the books of the Borrower or its Subsidiaries, as the case may
be or to the extent the failure to file or pay could not reasonably be expected
to have a Material Adverse Effect); no tax Lien has been filed, and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge.


 


4.11                 Federal Regulations.  No
part of the proceeds of any Loans, and no other extensions of credit hereunder,
will be used for “buying” or “carrying” any “margin stock” within the
respective meanings of each of the quoted terms under Regulation U as now and
from time to time hereafter in effect or for any purpose that violates the
provisions of the Regulations of the Board. 
If requested by any Lender, the Borrower will furnish to each Lender a
statement to the foregoing effect in conformity with the requirements of FR
Form G-3 or FR Form U 1, as applicable, referred to in Regulation U.


 


25

















 


4.12                 Labor Matters. 
Except as, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect:  (a) there are
no strikes or other labor disputes against any Group Member pending or, to the
knowledge of the Borrower, threatened; (b) hours worked by and payment made to
employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.


 


4.13                 ERISA. 
Neither a Reportable Event nor an “accumulated funding deficiency”
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code.  No termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period. 
The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. 
Neither the Borrower nor any Commonly Controlled Entity has incurred any
withdrawal liability under Title IV of ERISA which remains unsatisfied
that would reasonably be expected to have a Material Adverse Effect and neither
the Borrower nor any Commonly Controlled Entity would become subject to any
withdrawal liability under ERISA that would reasonably be expected to have a
Material Adverse Effect if the Borrower or any such Commonly Controlled Entity
were to engage in a complete withdrawal (as defined in Section 4203 of ERISA)
or partial withdrawal (as defined in Section 4205 of ERISA) from any
Multiemployer Plan as of the valuation date most closely preceding the date on
which this representation is made or deemed made.  No such Multiemployer Plan is in
Reorganization or Insolvent.


 


4.14                 Investment Company
Act; Other Regulations.  No Loan Party is an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.  No Loan Party is subject to regulation under
any Requirement of Law (other than Regulation X of the Board) that limits its
ability to incur Indebtedness.


 


4.15                 Subsidiaries.  Except as disclosed to the Lenders by the
Borrower in writing from time to time after the Closing Date, (a) Schedule 4.15
sets forth the name and jurisdiction of incorporation of each Subsidiary and,
as to each such Subsidiary, the percentage of each class of Capital Stock owned
by any Loan Party and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock
options granted to employees or directors and directors’ qualifying shares) of
any nature relating to any Capital Stock of any Subsidiary, except as created
by the Loan Documents.


 


4.16                 Use of Proceeds.  The
proceeds of the Loans shall be used (i) to finance the Refinancing and to pay
related fees and expenses and (ii) for general corporate purposes.


 


4.17                 Environmental
Matters.  Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:


 


26

















 


(a)           the facilities
and properties owned, leased or operated by any Group Member (the “Properties”) do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances that constitute or constituted a violation of, or could
give rise to liability under, any Environmental Law;


 


(b)           no Group Member
has received or is aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws with regard to any of the
Properties or the business operated by any Group Member (the “Business”), nor does the Borrower have knowledge or
reason to believe that any such notice will be received or is being threatened;


 


(c)           Materials of
Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location that could give
rise to liability under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could give rise to
liability under, any applicable Environmental Law;


 


(d)           no judicial
proceeding or governmental or administrative action is pending or, to the
knowledge of the Borrower, threatened, under any Environmental Law to which any
Group Member is or will be named as a party with respect to the Properties or
the Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business;


 


(e)           there has been
no release or threat of release of Materials of Environmental Concern at or
from the Properties, or arising from or related to the operations of any Group
Member in connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws;


 


(f)            the Properties
and all operations at the Properties are in compliance, and have in the last
five years been in compliance, with all applicable Environmental Laws, and
there is no contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the Business; and


 


(g)           no Group Member
has assumed any liability of any other Person under Environmental Laws.


 


4.18                 Accuracy of
Information, etc.  No statement or
information contained in this Agreement, any other Loan Document or any other
document, certificate or statement (other than projections) furnished by or on
behalf of any Loan Party to the Lenders, or any of them, for use in connection
with the transactions contemplated by this Agreement or the other Loan
Documents, when taken as a whole in light of the circumstances under which it
was provided, contained as of the date such statement, information, document or
certificate was so furnished, any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements contained
herein or therein not misleading.  The
Updated Projections were prepared based upon good faith estimates and
assumptions that, in light of the circumstances under which


 


27

















 


they were made, were believed
by management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount.


 


4.19                 Solvency.  Each
Loan Party is, and after giving effect to the Refinancing and the incurrence of
all Indebtedness and obligations being incurred in connection herewith and
therewith will be Solvent.


 


4.20                 Inactive
Subsidiaries.  No Inactive Subsidiary is (a) engaged in any
active business or (b) except as disclosed on Schedule 4.20 owns any
property or assets or has incurred, directly or indirectly, liabilities or
obligations in excess of $100,000 in the aggregate.


 


4.21                 Material Contracts.  All material contracts required to be filed
by the Borrower in connection with the Public Filings under applicable
Requirements of Law have been filed.


 


4.22                 Insurance.  Schedule 4.22 lists the insurance maintained
by the Borrower and the Subsidiary Guarantors as of the Closing Date.


 


SECTION 5.


 


CONDITIONS PRECEDENT


 


5.1                   Conditions to the
Closing Date.  The occurrence of the Closing Date and the
effectiveness of this Agreement are subject to the satisfaction of the
following conditions precedent:


 


(a)           Credit
Agreement. 
The Lenders shall have received this Agreement, executed and delivered
by the Borrower as of the Closing Date.


 


(b)           First
Lien Credit Agreement and Second Lien Credit Agreement.
The Lenders shall have received satisfactory evidence that the First Lien
Credit Agreement, the Second Lien Credit Agreement and all related agreements
thereto shall have been duly executed and delivered by all parties thereto and
that the Closing Date has occurred thereunder (such satisfaction to be
evidenced by the Lenders’ execution of this Agreement).


 


(c)           The
Senior Notes. 
The Lenders shall have received satisfactory evidence that the Borrower
shall have issued on or prior to the Closing Date an irrevocable instruction to
the trustee for the Senior Notes directing the trustee to issue an irrevocable
notice to the holders of the Senior Notes redeeming the outstanding principal
amount of such Senior Notes.


 


(d)           Capital
Structure. 
The capital and ownership structure of the Borrower and its Subsidiaries
shall be reasonably satisfactory to the Lenders after giving effect to the
Refinancing (such satisfaction to be evidenced by the Lenders’ execution of
this Agreement).


 


(e)           Pro
Forma Balance Sheet; Financial Statements.  The Lenders shall have received the financial
statements described in Section 4.1, and such financial statements shall
not, in the reasonable judgment of the Lenders, reflect any material adverse
change in the


 


28

















 


consolidated financial
condition of the Borrower and its Subsidiaries, as reflected in the financial
statements or projections most recently delivered by the Borrower to the Lenders
(such receipt and judgment to be evidenced by each Lender’s execution of this
Agreement).


 


(f)            Approvals.  All material governmental and third party
approvals necessary in connection with the Refinancing, the continuing
operations of the Group Members and the transactions contemplated hereby shall
have been obtained and be in full force and effect.


 


(g)           Lien
Searches. 
The Lenders shall have received the results of a recent lien search in
each of the jurisdictions where the Loan Parties are organized, and such lien search
shall reveal no liens on any of the assets of the Loan Parties except for liens
permitted by Section 7.3 or to be discharged
on or prior to the Borrowing Date pursuant to documentation satisfactory to the
Lenders (such satisfaction to be evidenced by the Lenders’ execution of this
Agreement).


 


(h)           Closing
and Secretary Certificates.  The Lenders shall have received (i) (A) a
certificate of each Loan Party, dated the Closing Date, substantially in the
form of Exhibit G, with appropriate insertions and attachments including
the certificate of incorporation of each Loan Party (which will include, where
applicable, the certificate of designation for the Series Z Preferred) that
is a corporation certified by the relevant authority of the jurisdiction of
organization of such Loan Party, and (B) a long form good standing certificate
for each Loan Party from its jurisdiction of organization and (ii) a certificate
of the Borrower certifying that (i) the conditions precedent set forth in Section
5.1 of the Credit Agreement have been satisfied or waived as of the Closing
Date (as defined in the First Lien Credit Agreement), (ii) no Default or Event
of Default has occurred and is continuing as of the date thereof, and (iii) the
representations and warranties of the Borrower set forth in each of the Loan
Documents to which it is a party or which are contained in any certificate
furnished by or on behalf of the Borrower pursuant to any of the Loan Documents
to which it is a party are true and correct in all material respects on and as
of the Closing Date with the same effect as if made on the Closing Date, except
for representations and warranties expressly stated to relate to a specific
earlier date, in which case such representations and warranties were true and
correct in all material respects as of such earlier date.


 


(i)            PATRIOT
Act. 
The Lenders shall have received, sufficiently in advance of the Closing
Date, all documentation and other information required by bank regulatory
authorities under applicable “know your customer” and anti-money laundering
rules and regulations, including without limitation the United States PATRIOT
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) in each
case if requested by such Lender (such satisfaction to be evidenced by each
Lender’s execution of this Agreement).


 


(j)            Coke
Contract. 
The Lenders shall have received a copy of the Coke Beverage Marketing
Agreement, together with a certificate of a Responsible Officer of the Borrower
certifying such document as being a true, correct, and complete copy thereof.


 


(k)           Legal Opinion. 
The Lenders shall have received the executed legal opinion of Holme
Roberts & Owen LLP, counsel to the Borrower and its Subsidiaries,
substantially in the form of Exhibit H-1.


 


29

















 


(l)            Subordination Agreement. 
The Lenders shall have received satisfactory evidence that the
Subordination Agreement shall have been duly executed and delivered by all
parties thereto.


 


(m)          Independent Committee Approval. 
The Lenders shall have received a copy of resolutions of the committee
of the board of directors of the Borrower consisting of directors not affiliated
with the Lenders that approve the Loan Documents.


 


5.2                   Conditions to the
Borrowing Date.  The agreement of each Lender to make the
initial extension of credit requested to be made by it is subject to the
satisfaction, prior or concurrently with the making of such extension of credit
on the Borrowing Date, of the following conditions precedent:


 


(a)           Guarantee
and other Agreements.  The Lenders shall have received (i) the
Guarantee Agreement, executed and delivered by the Borrower and each Subsidiary
Guarantor, (ii) the First Lien Documents (except to the extent previously
delivered pursuant to Section 5.1(b) above)
and (iii) the Second Lien Documents (except to the extent previously delivered
pursuant to Section 5.1(b) above).


 


(b)           First
Lien Loans and Second Lien Loans.  The Borrower shall have received at least $80,000,000
in gross proceeds from borrowings of the First Lien Loans under the First Lien
Credit Agreement and (ii) $65,000,000 in gross cash proceeds from borrowings of
the Second Lien Loans under the Second Lien Credit Agreement.


 


(c)           Existing
Credit Facility.  (i) The Lenders shall have received or shall
concurrently receive satisfactory evidence that the Existing Credit Facility
shall have been terminated and all amounts thereunder shall have been paid in
full and (ii) satisfactory arrangements shall have been made for the
termination of all Liens granted in connection therewith.


 


(d)           The
Senior Notes. 
(i) The Lenders shall have received or shall concurrently receive
satisfactory evidence that the redemption price for all Senior Notes outstanding
on the Borrowing Date has been irrevocably deposited with the trustee for the
Senior Notes and the Borrower shall have discharged its obligations under the
related indenture (except for obligations that by the terms thereof survive)
and all amounts otherwise due and payable thereunder shall have been paid in
full and (ii) satisfactory arrangements shall have been made for the
termination of all Liens granted in connection therewith.


 


(e)           Solvency
Certificate. 
The Lenders shall have received a solvency certificate from the chief
financial officer of the Borrower in the form of Exhibit I.


 


(f)            Insurance.  The Lenders shall have received insurance
certificates satisfying the requirements of Section 4.2
of the Guarantee Agreement.


 


(g)           Representations
and Warranties.  Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and
correct in all material aspects (except that such materiality qualifier shall
not be applicable to any representations and warranties that are already
qualified or modified by materiality in the text


 


30

















 


thereof) on and as of such date
as if made on and as of such date, except to the extent such representations
and warranties related solely to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
aspects (except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) on and as of such earlier date.


 


(h)           No
Default. 
No Event of Default shall have occurred and be continuing on such date
or after giving effect to the Loans to be made on such date.


 


(i)            Legal Opinions. 
The Lenders shall have received (i) the executed legal opinion of local
counsel in New Jersey and of such other special and local counsel as may be
reasonably required by the Lenders, in a form satisfactory to the Lenders, and
(ii) the executed legal opinion of Holme Roberts & Owen LLP, counsel to the
Borrower and its Subsidiaries, regarding the Guarantee Agreement, in a form
satisfactory to the Lenders.


 


SECTION 6.


 


AFFIRMATIVE COVENANTS


 


The Borrower hereby agrees that, so long as any Loan
or other amount is owing to any Lender hereunder, the Borrower shall and shall
cause each of its Subsidiaries to:


 


6.1                   Financial Statements. 
Furnish to each Lender:


 


(a)           as soon as
available, but in any event within 90 days (or such earlier date specified for
the filing of annual reports on Form 10-K under Section 13 of the Exchange Act)
after the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such fiscal year and the related audited consolidated statements
of income and of cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, reported on without
a “going concern” or like qualification or exception, or qualification arising
out of the scope of the audit, by Grant Thornton LLP or other independent
certified public accountants of nationally recognized standing; and


 


(b)           as soon as available,
but in any event not later than 45 days (or such earlier date specified for the
filing of quarterly reports on Form 10-Q under Section 13 of the Exchange Act)
after the end of each of the first three quarterly periods of each fiscal year
of the Borrower, the unaudited consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous fiscal year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year end audit adjustments and the absence of
footnotes).


 


All such financial statements shall be complete and correct in all
material respects (subject to normal year-end audit adjustments and the absence
of footnotes, in each case if applicable), and shall be prepared in reasonable
detail and in accordance with GAAP applied consistently


 


31

















 


throughout the periods
reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein).


 


Information required to be delivered pursuant to this Section 6.1 shall be deemed to have been
delivered to the Lenders on the date on which the Borrower provides written
notice to the Lenders that such information has been posted on the Borrower’s
website on the Internet at http://www. nwrgi.com or is available on the website
of the SEC at http://www.sec.gov (to the extent such information has been
posted or is available as described in such notice).  Information required to be delivered pursuant
to this Section 6.1 may also be
delivered by electronic communication pursuant to procedures approved by the Required
Lenders pursuant to Section 9.2.


 


6.2                   Certificates; Other
Information.  Furnish to each Lender:


 


(a)           concurrently
with the delivery of any financial statements pursuant to Section  6.1, (i) a certificate of a
Responsible Officer stating that, to the best of each such Responsible Officer’s
knowledge, each Loan Party during such period has observed or performed all of
its covenants and other agreements, and satisfied every condition, contained in
this Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate and (ii) in the case of quarterly or annual financial
statements, a Compliance Certificate containing all information and
calculations necessary for determining compliance by each Group Member with the
provisions of this Agreement referred to therein as of the last day of the
fiscal quarter or fiscal year of the Borrower, as the case may be;


 


(b)           if the Borrower
is not then a reporting company under the Securities Exchange Act of 1934, as
amended, within 45 days after the end of each fiscal quarter of the Borrower
(or 90 days, in the case of the last fiscal quarter of any fiscal year), a
narrative discussion and analysis of the financial condition and results of
operations of the Borrower and its Subsidiaries for such fiscal quarter and for
the period from the beginning of the then current fiscal year to the end of
such fiscal quarter;


 


(c)           no later than
ten Business Days prior to the effectiveness thereof, copies of substantially
final drafts of any proposed amendment, supplement, waiver or other
modification with respect to the Series Z Preferred; and


 


(d)           within five
days after the same are sent, copies of all financial statements and reports
that the Borrower sends to the holders of any class of its debt securities or
public equity securities and, within five days after the same are filed, copies
of all financial statements and reports that the Borrower may make to, or file
with, the SEC.


 


6.3                   Payment of
Obligations.  Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the relevant Group Member or to the extent failure to pay,


 


32

















 


discharge or satisfy such
obligations could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.


 


6.4                   Maintenance of
Existence; Compliance.  (a) 
(i)  Preserve, renew and keep in
full force and effect its organizational existence and (ii) take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business, except, in each case, as otherwise
permitted by Section 7.4 and except, in the case of clause (ii)
above, to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect; and (b) comply with all Contractual Obligations
and Requirements of Law except to the extent that failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.


 


6.5                   Maintenance of
Property; Insurance.  (a) 
Keep all property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted and (b) maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business.


 


6.6                   Notices. 
Promptly give notice to each Lender of:


 


(a)           the occurrence
of any Default or Event of Default;


 


(b)           any (i) default
or event of default under any Contractual Obligation of any Group Member or
(ii) litigation, investigation or proceeding that may exist at any time between
any Group Member and any Governmental Authority, that in either case has a
reasonable likelihood of being adversely determined and, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have
a Material Adverse Effect;


 


(c)           any litigation
or proceeding affecting any Group Member (i) in which the amount involved is $3,000,000
or more and not covered by insurance, (ii) in which injunctive or similar
relief is sought that, if adversely determined, could reasonably be expected to
have a Material Adverse Effect or (iii) which relates to any Loan Document;


 


(d)           the following
events, as soon as possible and in any event within 30 days after the Borrower
knows or has reason to know thereof:  (i)
the occurrence of any Reportable Event with respect to any Plan, a failure to
make any required contribution to a Plan, the creation of any Lien in favor of
the PBGC or a Plan or any withdrawal from, or the termination, Reorganization
or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings
or the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Plan; and


 


(e)           any development
or event that has had or could reasonably be expected to have a Material
Adverse Effect.


 


33

















 


Each notice pursuant to this Section 6.6
shall be accompanied by a statement of a Responsible Officer setting forth
details of the occurrence referred to therein and stating what action the
Borrower or the relevant Subsidiary proposes to take with respect thereto.


 


6.7                   Environmental Laws.


 


(a)           Comply in all
material respects with, and take all commercially reasonable efforts to ensure
compliance in all material respects by all tenants and subtenants, if any,
with, all applicable Environmental Laws, and obtain and comply in all material
respects with and maintain, and ensure that all tenants and subtenants obtain
and comply in all material respects with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable
Environmental Laws.


 


(b)           Conduct and
complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and promptly comply
in all material respects with all lawful orders and directives of all
Governmental Authorities regarding Environmental Laws.


 


6.8                   Further Assurances.  Upon
the exercise by any Lender of any power, right, privilege or remedy expressly
provided pursuant to this Agreement or the other Loan Documents which requires
any consent, approval, recording qualification or authorization of any
Governmental Authority, the Borrower will execute and deliver, or will cause
the execution and delivery of, all applications, certifications, instruments
and other documents and papers that the Lenders may be required to obtain from
the Borrower or any of its Subsidiaries for such governmental consent,
approval, recording, qualification or authorization.


 


SECTION 7.


 


NEGATIVE COVENANTS


 


The Borrower hereby agrees that, so long as any Loan
or other amount is owing to any Lender hereunder, the Borrower shall not, and
shall not permit any of its Subsidiaries (or in the case of Section 7.17, Inactive Subsidiaries) to, directly
or indirectly:


 


7.1                   Consolidated
Leverage Ratio.  At any time after
the payment in full of the First Lien Loans and Second Lien Loans and any
Permitted Refinancing Indebtedness in respect thereof, permit the Consolidated
Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of the Borrower ending with any fiscal quarter set forth below to
exceed the ratio set forth below opposite such fiscal quarter:


 


	
  Fiscal Quarter

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  
	
  March 31,
  2006

  	
   

  	
  5.75 to 1:00

  	
   

  
	
  June 30,
  2006

  	
   

  	
  5.75 to 1:00

  	
   

  
	
  September
  30, 2006

  	
   

  	
  5.75 to 1:00

  	
   

  
	
  December 31,
  2006

  	
   

  	
  5.50 to 1:00

  	
   

  



 


34

















 


	
  Fiscal Quarter

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  
	
  March 31,
  2007

  	
   

  	
  5.25 to 1:00

  	
   

  
	
  June 30,
  2007

  	
   

  	
  5.25 to 1:00

  	
   

  
	
  September
  30, 2007

  	
   

  	
  5.00 to 1:00

  	
   

  
	
  December 31,
  2007

  	
   

  	
  4.75 to 1:00

  	
   

  
	
  March 31,
  2008

  	
   

  	
  4.50 to 1:00

  	
   

  
	
  June 30,
  2008

  	
   

  	
  4.50 to 1:00

  	
   

  
	
  September
  30, 2008

  	
   

  	
  4.25 to 1:00

  	
   

  
	
  December 31,
  2008

  	
   

  	
  4.25 to 1:00

  	
   

  
	
  March 31,
  2009

  	
   

  	
  4.00 to 1:00

  	
   

  
	
  June 30,
  2009

  	
   

  	
  4.00 to 1:00

  	
   

  
	
  September
  30, 2009

  	
   

  	
  3.75 to 1:00

  	
   

  
	
  December 31,
  2009

  	
   

  	
  3.75 to 1:00

  	
   

  
	
  March 31, 2010

  	
   

  	
  3.75 to 1:00

  	
   

  
	
  June 30,
  2010 and each fiscal quarter thereafter

  	
   

  	
  3.50 to 1:00

  	
   

  



 


7.2                   Indebtedness. 
Create, issue, incur, assume, become liable in respect of or suffer to
exist any Indebtedness, except:


 


(a)           Indebtedness of
any Loan Party pursuant to any Loan Document;


 


(b)           Indebtedness of
any Loan Party under the First Lien Documents, the Second Lien Documents and
any Permitted Refinancing Indebtedness in respect thereof, provided that the aggregate principal amount of
such Indebtedness may not exceed $180,000,000 at any time outstanding, and may
not be reborrowed after repayment thereof except for $25,000,000 of Revolving
Commitments (as defined in the First Lien Credit Agreement);


 


(c)           Indebtedness
(i) of the Borrower to any Subsidiary, (ii) of any Subsidiary Guarantor to the
Borrower or any other Subsidiary, (iii) of any Foreign Subsidiary to any other
Foreign Subsidiary and (iv) to the extent permitted by Section 7.7(j), of
any Foreign Subsidiary to the Borrower or any Subsidiary Guarantor;


 


(d)           Guarantee
Obligations incurred in the ordinary course of business by the Borrower or any
of its Subsidiaries of (i) obligations of the Borrower, any Subsidiary
Guarantor and, to the extent permitted by Section 7.7(j), of any Foreign
Subsidiary and (ii) operating lease obligations of the Borrower or any such
Subsidiary assumed by a third party in connection with a store closure or
conversion, in each case consistent with past practice;


 


(e)           Indebtedness and
Guarantee Obligations outstanding on the date hereof and listed on Schedule 7.2(e) and any refinancings, refundings,
renewals or extensions thereof (without increasing, or shortening the maturity
of, the principal amount thereof);


 


(f)            Indebtedness
(including, without limitation, Capital Lease Obligations) secured by Liens
permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $3,600,000 at any one time outstanding to the
extent the terms of such Indebtedness do not prohibit the Borrower from
complying with its obligations under Sections 3.2 and 3.3, other
than


 


35

















 


any such prohibitions under the
terms of the Subordination Agreement, as may be amended from time to time
(including any replacement subordination agreement, with substantially similar
or lesser prohibitions relating to the ability of the Borrower to comply with Sections
3.2 or 3.3, that is executed by the Lenders);


 


(g)           Indebtedness of
the Borrower in respect of the Series Z Preferred and any Replacement Equity
consisting of preferred stock of the Borrower;


 


(h)           Hedge
Agreements permitted under the First Lien Documents or by the documents
evidencing Permitted Refinancing Indebtedness in respect thereof;


 


(i)            until the
Borrowing Date, (i) Indebtedness of the Borrower in respect of the Existing
Credit Facility and the Senior Notes and (ii) Guarantee Obligations of any
Subsidiary in respect of such Indebtedness;


 


(j)            Indebtedness
resulting from (A) surety and appeal bonds incurred in the ordinary course of
business and (B) the honoring of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business so long as, in
the case of this clause (B), such Indebtedness is repaid within three
Business Days;


 


(k)           Indebtedness in
respect of the “Advance” or similar advances (including advances made
subsequent to the Closing Date) under the Coke Beverage Marketing Agreement (as
in effect on the date hereof) and up to $1,200,000 in additional outstanding
advances under the Coke Beverage Marketing Agreement; and


 


(l)            additional
Indebtedness of the Borrower or any of its Subsidiaries (not otherwise
permitted under this Section 7.2) in an aggregate principal amount
(for the Borrower and all Subsidiaries) not to exceed $6,000,000 at any one
time outstanding to the extent the terms of such Indebtedness do not prohibit
the Borrower from complying with its obligations under Sections 3.2 and 3.3,
other than any such prohibitions under the terms of the Subordination
Agreement, as may be amended from time to time (including any replacement
subordination agreement, with substantially similar or lesser prohibitions relating
to the ability of the Borrower to comply with Sections 3.2 or 3.3,
that is executed by the Lenders).


 


7.3                   Liens. 
Create, incur, assume or suffer to exist any Lien upon any of its
property, whether now owned or hereafter acquired, except for:


 


(a)           Liens for taxes
not yet due or that are being contested or disputed in good faith by
appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;


 


(b)           carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlords’ or other
like Liens arising in the ordinary course of business that are not overdue for
a period of more than 45 days or that are being contested in good faith by
appropriate proceedings;


 


(c)           pledges or
deposits in connection with workers’ compensation, unemployment insurance and
other social security legislation;


 


36

















 


(d)           deposits to
secure the performance of bids, trade contracts (other than for borrowed
money), obligations for utilities, leases, statutory obligations, surety and
appeal bonds, replevin bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;


 


(e)           zoning
restrictions, easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and minor irregularities
of title that, in the aggregate, are not substantial in amount and that do not
in any case materially detract from the value of the property subject thereto
or materially interfere with the ordinary conduct of the business utilizing the
property subject to such encumbrances and restrictions;


 


(f)            Liens in
existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(e); provided that no such Lien is spread to cover any
additional property after the Closing Date and that the amount of Indebtedness
secured thereby is not increased (other than accrual of interest, fees and
costs in accordance with the terms thereof);


 


(g)           Liens securing
Indebtedness of the Borrower or any other Subsidiary incurred pursuant to Section
7.2(f) to finance the acquisition of fixed or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and (iii) the amount of Indebtedness
secured thereby is not increased (other than accrual of interest, fees and
costs in accordance with the terms thereof);


 


(h)           judgment Liens
in respect of judgments not constituting Events of Default under Section 8.1(h)
so long as (A) such judgment Liens are released within 90 days after the
entry thereof or (B) the aggregate amount covered by all such judgment
Liens does not exceed $3,000,000 at any time;


 


(i)            Liens on the
Collateral securing the Indebtedness of the Borrower and its Subsidiaries
permitted by Section 7.2(b);


 


(j)            any interest or
title of a lessor or any lessor’s lender under any lease entered into by the
Borrower or any other Subsidiary in the ordinary course of its business and
covering only the assets so leased;


 


(k)           Liens not
otherwise permitted by this Section 7.3 so long as (i) the
aggregate outstanding principal amount of the obligations secured thereby does not
exceed $1,200,000 at any time and (ii) the aggregate fair market value
(determined as of the date such Lien is incurred) of the assets encumbered
thereby does not exceed (as to the Borrower and all Subsidiaries) $1,800,000 at
any one time;


 


(l)            Liens existing
on fixed or capital assets at the time of the acquisition thereof by the
Borrower or any Subsidiary, provided, that (x) neither (i) the aggregate
outstanding principal amount of the obligations secured thereby nor (ii) the
aggregate fair market value (determined as of the date such Lien is incurred)
of the assets thereto exceeds (as to the Borrower and all Subsidiaries) $1,200,000
at any one time, (y) such Liens were not created in connection with or in
contemplation of such acquisition and (z) such Liens do not cover any
additional property and the obligations secured thereby are not increased;


 


37

















 


(m)          Liens resulting
from the granting of licenses in the ordinary course of business to any Person
to use any Intellectual Property; and


 


(n)           until the
Borrowing Date, Liens securing Indebtedness of the Borrower or any of the
Subsidiary Guarantors in respect of the Existing Credit Facility, the Senior
Notes and any Guarantee Obligations of any Subsidiary in respect of such
Indebtedness.


 


7.4                   Fundamental Changes.  Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:


 


(a)           any Subsidiary
of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Subsidiary Guarantor (provided that the Subsidiary Guarantor shall be
the continuing or surviving corporation) or, subject to Section 7.7(j),
with or into any Foreign Subsidiary;


 


(b)           (i) any
Subsidiary of the Borrower may Dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any Subsidiary Guarantor
or, to the extent permitted by Section 7.7(j), any Foreign
Subsidiary and (ii) following the Disposition of all of its assets in
accordance with clause (i) above such Subsidiary may liquidate, wind up
or dissolve;


 


(c)           any Subsidiary
may merge with another Person to effect a transaction permitted under Section 7.7(j); and


 


(d)           transactions
permitted under Section 7.5 shall be
permitted.


 


7.5                   Disposition of
Property.  Dispose of
any of its property, whether now owned or hereafter acquired, or, in the case
of any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock
to any Person, except:


 


(a)           the Disposition
(including abandonment of Intellectual Property) of obsolete or worn out
property or of property no longer useful or used in the Borrower’s or any of the
Subsidiaries’ business, in each case, in the ordinary course of business,
whether now owned or hereafter acquired;


 


(b)           the sale of
inventory in the ordinary course of business;


 


(c)           Dispositions
permitted by Section 7.4(b);


 


(d)           the sale or
issuance of any Subsidiary’s Capital Stock to the Borrower or any Wholly Owned
Subsidiary Guarantor;


 


(e)           the sale or
discount without recourse of accounts receivable or notes receivable arising in
the ordinary course of business, or the conversion or exchange of accounts
receivable into or for notes receivable, in connection with the compromise or
collection thereof;


 


38

















 


(f)            the Disposition
of the Capital Stock or the assets of Manhattan Bagels Company, Inc., provided that the consideration received in any
such Disposition shall be in an amount at least equal to the fair market value
of such Property;


 


(g)           the Disposition
of assets of the New World Coffee business and the Capital Stock or assets of Chesapeake
Bagel Franchise Corp.;


 


(h)           subleases,
licenses, franchises and dispositions or cancellations of leases, licenses or franchise
agreements in the ordinary course of business; and


 


(i)            the Disposition
of other property for consideration not to exceed $6,000,000 in the aggregate
for any calendar year of the Borrower.


 


7.6                   Restricted Payments. 
Declare or pay any dividend (other than dividends payable solely in
common stock, or options, warrants or other rights to purchase common stock, of
the Person making such dividend) on, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock
of any Group Member, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary (collectively, “Restricted Payments”), except that:


 


(a)           any Subsidiary
may make Restricted Payments to the Borrower or any Wholly Owned Subsidiary
Guarantor; and


 


(b)           so long as no
Default or Event of Default shall have occurred and be continuing or would
result therefrom, the Borrower may purchase the Borrower’s common stock or common
stock options from present or former officers, consultants or employees of any
Group Member upon the death, disability or termination of employment of such
officer, consultant or employee, provided,
that the aggregate amount of payments hereunder after the date hereof (net of
any proceeds received by the Borrower after the date hereof in connection with
resales of any common stock or common stock options so purchased) shall not
exceed $1,200,000.


 


7.7                   Investments.  Make
any advance, loan or extension of credit (by way of guaranty or otherwise) to
any other Person (all of the foregoing, “Investments”),
except:


 


(a)           extensions of
trade credit in the ordinary course of business;


 


(b)           Investments in cash
and Cash Equivalents;


 


(c)           Guarantee
Obligations permitted by Section 7.2;


 


(d)           loans and
advances to officers, directors, consultants, employees of any Group Member of
the Borrower in the ordinary course of business (including for indemnification,
travel, entertainment and relocation expenses) in an aggregate amount for all
Group Members not to exceed $600,000 at any one time outstanding;


 


39

















 


(e)           Investments in
notes receivable and other instruments and securities obtained in connection
with transactions permitted by Section 7.5(e).


 


(f)            intercompany
Investments by (i) any Group Member in the Borrower or any Person that, prior
to such Investment, is a Subsidiary Guarantor or (ii) any Foreign Subsidiary in
any Foreign Subsidiary;


 


(g)           Investments
resulting from payments required under Hedge Agreements permitted under Section
7.11;


 


(h)           Investments
resulting from non-cash consideration received in connection with Asset Sales
so long as the aggregate outstanding amount of such Investments does not exceed
$9,000,000 at any time;


 


(i)             loans to
franchisees and area developers in an amount not to exceed $300,000 in any
fiscal year and (ii) existing loans to franchisees not to exceed $300,000
in the aggregate;


 


(j)            in addition to Investments otherwise
expressly permitted by this Section 7.7, Investments (including Acquisitions)
by the Borrower or any of its Subsidiaries in an aggregate principal amount
outstanding (valued at cost) not to exceed at any one time the sum of (i) $1,200,000
plus (ii) the product of (x) $1,200,000 and (y) the number of calendar years
ended after the Closing Date.


 


(k)           deposits permitted by Section 7.3(d);


 


(l)            any Capital Expenditure; and


 


(m)          any Permitted Refinancing Indebtedness
used to refinance or prepay the First Lien Loans or Second Lien Loans.


 


7.8                   Optional Payments
and Modifications of Certain Debt Instruments.


 


(a) Make or offer to make any optional or
voluntary payment, optional or voluntary prepayment, optional or voluntary repurchase
or optional or voluntary redemption of or otherwise optionally or voluntarily
defease or segregate funds with respect to the Series Z Preferred or any
Replacement Equity (other than with the Net Cash Proceeds of any Replacement
Equity that is not required to prepay the Loans hereunder), or (b) amend, modify,
waive or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Series Z Preferred or any
Replacement Equity consisting of preferred stock (other than any such
amendment, modification, waiver or other change that (A) would extend or
eliminate the scheduled redemption date or reduce the amount of any scheduled
redemption payment or reduce the rate or extend any date for payment of
dividends thereon and (B) does not involve the payment of a consent fee other
than any consent fees paid in connection with the extension of the scheduled
redemption date in an aggregate amount not exceeding $250,000).


 


40

















 


7.9                   Transactions with
Affiliates.  Enter into any transaction, including any
purchase, sale, lease or exchange of property, the rendering of any service or
the payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise not prohibited under this Agreement, and (b) upon
fair and reasonable terms no less favorable to the relevant Group Member, than
it would obtain in a comparable arm’s length transaction with a Person that is
not an Affiliate.


 


7.10                 Sale
and Leasebacks.Enter into any arrangement with any Person providing for the
leasing by any Group Member of real or personal property that has been or is to
be sold or transferred by such Group Member to such Person or to any other Person
to whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of such Group Member.


 


7.11                 Hedge Agreements. 
Enter into any Hedge Agreement, except Hedge Agreements entered into in
order to effectively cap, collar or exchange interest rates from floating to
fixed rates with respect to any interest-bearing liability or investment of the
Borrower or any Subsidiary.


 


7.12                 Changes in Fiscal
Periods.  Permit the fiscal year of the Borrower to end
on a day other than December 31st (subject to Section 1.2(f))
or change the Borrower’s method of determining fiscal quarters; provided,
that, with the prior written consent of the Required Lenders (such consent not
to be unreasonably withheld), the Borrower may change its fiscal year-end, provided,
that, in connection with such change, no fiscal year may include more than five
fiscal quarters without the prior written consent of the Required Lenders.


 


7.13                 Negative Pledge
Clauses.  Enter into or suffer to exist or become
effective any agreement that prohibits, limits or imposes any condition upon
the ability of any Group Member to create, incur, assume or suffer to exist any
Lien upon any of its property or revenues, whether now owned or hereafter
acquired, to secure its obligations under the Loan Documents or any refinancing
thereof other than (a) this Agreement and the other Loan Documents, (b) the First
Lien Documents, (c) the Second Lien Documents, (d) any provisions in any
Permitted Refinancing Indebtedness so long as such provisions are no more
restrictive than the provisions in the First Lien Credit Agreement or the
Second Lien Credit Agreement, as applicable, (e) any agreements governing any utility
bonds, industrial revenue or development bonds, purchase money Liens or Capital
Lease Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby) (f)
until the Borrowing Date, the Existing Credit Facility and the Senior Notes, (g)
restrictions on assets subject to agreements for permitted Dispositions under Section 7.5
 (such restrictions to be limited to
the assets subject to such Dispositions) and (h) restrictions in lease
agreements restricting the Group Members from assigning or pledging their
rights under such lease agreements.


 


7.14                 Clauses Restricting
Subsidiary Distributions.  Enter into or suffer to exist or become
effective any consensual encumbrance or restriction on the ability of any
Subsidiary of the Borrower to (a) make Restricted Payments in respect of any
Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the
Borrower or any other Subsidiary of the Borrower,


 


41

















 


(b) make loans or advances to,
or other Investments in, the Borrower or any other Subsidiary of the Borrower
or (c) transfer any of its assets to the Borrower or any other Subsidiary of
the Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents, (ii) the First
Lien Documents, (iii) the Second Lien Documents and any provisions in any
Permitted Refinancing Indebtedness so long as such provisions are no more
restrictive than the provisions in the First Lien Credit Agreement or the Second
Lien Credit Agreement, as applicable, (iv) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement that has been entered into in
connection with the Disposition of all or substantially all of the Capital
Stock or assets of such Subsidiary and (v) until the Borrowing Date, the
Existing Credit Facility and the Senior Notes.


 


7.15                 Lines of Business. 
Enter into any business, either directly or through any Subsidiary,
except for those businesses in which the Borrower and its Subsidiaries are
engaged on the date of this Agreement or that are reasonably related thereto.


 


7.16                 Amendments,
Modifications and Supplements to the First Lien Documents and the Second Lien
Document.  Amend, modify or supplement the First Lien
Documents, the Second Lien Documents or any Permitted Refinancing Indebtedness if
such amendment, modification or supplement prohibits the Borrower from
complying with its obligations under Sections 3.2 and 3.3 other
than any such prohibitions under the terms of the Subordination Agreement, as
may be amended from time to time (including any replacement subordination
agreement, with substantially similar or lesser prohibitions relating to the
ability of the Borrower to comply with Sections 3.2 or 3.3, that
is executed by the Lenders).


 


7.17                 Inactive
Subsidiaries.  With respect to Inactive Subsidiaries, (a)
engage in an active business or (b) except as disclosed on Schedule 4.20
own any property or assets or incur, directly or indirectly, liabilities or obligations
in excess of $100,000 in the aggregate.


 


SECTION 8.


 


EVENTS OF DEFAULT


 


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


 


(a)           the Borrower
shall fail to pay any principal of any Loan when due in accordance with the
terms hereof, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; or the Borrower
shall fail to pay any interest on any Loan, or any other amount payable hereunder
or under any other Loan Document, within five days after any such interest or
other amount becomes due in accordance with the terms hereof; or


 


(b)           any
representation or warranty made or deemed made by any Loan Party herein or in
any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect (except that such materiality qualifier
shall not be applicable to any representations and


 


42

















 


warranties that are already
qualified or modified by materiality in the text thereof) on or as of the date
made or deemed made; or


 


(c)           any Loan Party
shall default in the observance or performance of any agreement contained in clause
(i) or (ii) of Section 6.4(a) (with
respect to the Borrower only), Section 6.5(b),
Section 6.6(a) or Section
7  of this Agreement; or


 


(d)           any Loan Party
shall default in the observance or performance of any other agreement contained
in this Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section 8.1), and such default shall
continue unremedied for a period of 30 days after notice to the Borrower from the
Required Lenders; or


 


(e)           any Group
Member (other than an Inactive Subsidiary) (i) defaults in making any payment
of any principal of any Indebtedness (including the First Lien Loans, the Second
Lien Loans and any Guarantee Obligation, but excluding the Loans) on the
scheduled or original due date with respect thereto; or (ii) defaults in making
any payment of any interest on any such Indebtedness beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) defaults in the observance or performance of
any other agreement or condition relating to any such Indebtedness or contained
in any instrument or agreement (including the First Lien Credit Agreement and
the Second Lien Credit Agreement) evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which default or
other event or condition is to result in, whether by election of the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such
holder or beneficiary) or otherwise, such Indebtedness becoming due prior to
its stated maturity or becoming subject to a mandatory offer to purchase by the
obligor thereunder or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable (a “Cross
Acceleration”); provided,
that a default, event or condition described in clause (i), (ii) or (iii)
of this paragraph (e) shall not at any time constitute an Event of
Default unless, at such time, one or more defaults, events or conditions of the
type described in clauses (i), (ii) and (iii) of this paragraph (e)
shall have occurred and be continuing with respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate $3,000,000 (it
being understood that the references to clause (iii) in this proviso
only address a default or event or condition that results in a Cross
Acceleration); or


 


(f)            (i) any Group
Member (other than an Inactive Subsidiary) shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official for it
or for all or any substantial part of its assets, or any Group Member shall
make a general assignment for the benefit of its creditors; or (ii) there shall
be commenced against any Group Member (other than an Inactive Subsidiary) any
case, proceeding or other action of a nature referred to in clause (i)
above that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against any
Group Member (other than an Inactive Subsidiary)


 


43

















 


any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets that results
in the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Group Member (other than an Inactive Subsidiary) shall
take any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) any Group Member (other than an Inactive Subsidiary) shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or


 


(g)           (i)  any Person shall engage in any “prohibited transaction”
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of any Group Member or
any Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) any
Group Member or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to
a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any, could,
in the sole judgment of the Required Lenders, reasonably be expected to have a
Material Adverse Effect; or


 


(h)           one or more
judgments or decrees shall be entered against any Group Member involving in the
aggregate a liability (not paid or fully covered by insurance as to which the
relevant insurance company has acknowledged coverage) of $3,000,000 or more,
which such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 30 days from the entry thereof; or


 


(i)            after the
Borrowing Date, the guarantee contained in Section 2 of the Guarantee
Agreement shall cease, for any reason, to be in full force and effect or any
Loan Party or any Affiliate of any Loan Party shall so assert.


 


then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with
respect to the Borrower, automatically the Loan Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents shall
immediately become due and payable, and (B) if such event is any other
Event of Default and such Event of Default is in existence, upon written
request of the Required Lenders, by notice to the Borrower, the Required
Lenders may declare all of the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement and the other Loan Documents
to be due and payable forthwith, whereupon the same shall immediately become
due and payable.  Except as expressly
provided above in this Section 8.1, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.


 


44

















 


8.2                   Application of Funds. 
After the exercise of remedies provided for in this Article 8
(or after the Loans have automatically become immediately due and payable as
set forth in Section 8.1), any amounts received by the Lenders on
account of the Outstanding Amount shall be applied by each Lender in the
following order:


 


First, to payment of that portion of the Outstanding
Amount constituting fees, indemnities and other amounts (other than principal
and interest) payable to the Lenders (including fees, charges and disbursements
of counsel);


 


Second, to
payment of that portion of the Outstanding Amount constituting accrued and unpaid
interest;


 


Third, to
payment of that portion of the Outstanding Amount constituting unpaid principal
of the Loans; and


 


Last, the balance, if any, after all of the
Outstanding Amount has been indefeasibly paid in full, to the Borrower or as
otherwise required by law.


 


8.3                   Several Obligations;
No Liability.  Any and all obligations on the part of the
Lenders to make any credit available hereunder shall constitute the several
(and not joint) obligations of the respective Lenders on a ratable basis,
according to their respective Loan Commitments, to make an amount of such
credit not to exceed, in principal amount, at any one time outstanding, the
amount of their respective Loan Commitments. 
Nothing contained herein shall confer upon any Lender any interest in,
or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender.  Each Lender shall be solely responsible for
notifying its Assignees of any matters relating to the Loan Documents to the
extent any such notice may be required, and no Lender shall have any obligation,
duty, or liability to any Assignee of any other Lender.  No Lender shall have any liability for the
acts of any Lender.  No Lender shall be
responsible to the Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Loan Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.


 


SECTION 9.


 


MISCELLANEOUS


 


9.1                   Amendments and
Waivers.  Neither this
Agreement, any other Loan Document, nor any terms hereof or thereof may be
amended, supplemented or modified except in accordance with the provisions of
this Section 9.1.  The Required Lenders and each Loan Party
party to the relevant Loan Document may, or, with the written consent of the
Required Lenders and each Loan Party party to the relevant Loan Document may,
from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Required Lenders, as the case


 


45

















 


may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided, however,
that no such waiver and no such amendment, supplement or modification shall:


 


(i)            forgive
the principal amount or extend the final scheduled date of maturity of any
Loan, extend the scheduled date of any amortization payment in respect of any
Loan, reduce the stated rate of any interest or fee payable hereunder (except
(x) in connection with the waiver of applicability of any post-default increase
in interest rates, which waiver shall be effective with the consent of the
Required Lenders and (y) that any amendment or modification of defined terms
used in the financial covenants in this Agreement shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (i))
or extend the scheduled date of any payment thereof, in each case without the
written consent of each Lender directly affected thereby;


 


(ii)           release
all or substantially all of the Subsidiary Guarantors from their obligations in
respect of the Loans, in each case without the written consent of all the
Lenders;


 


(iii)          eliminate
or reduce the voting rights of any Lender under this Section 9.1 without the
written consent of such Lender;


 


(iv)          reduce
any percentage specified in the definition of Required Lenders or consent to
the assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, in each case without the
written consent of all Lenders; or


 


(v)           reduce
the amount of Net Cash Proceeds required to be applied to prepay Loans under
this Agreement without the written consent of all the Lenders party hereto.


 


Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Loan Parties, the Lenders and all future
holders of the Loans.  In the case of any
waiver, the Loan Parties and the Lenders shall be restored to their former
position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.


 


9.2                   Notices.  All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows, or to such other address as may be
hereafter notified by the respective parties hereto:


 


46

















 


	
  The
  Borrower:

  	
   

  	
  New
  World Restaurant Group, Inc.

  
	
   

  	
   

  	
  1687
  Cole Boulevard

  
	
   

  	
   

  	
  Golden,
  CO 80401

  
	
   

  	
   

  	
  Attention:

  	
  Richard
  P. Dutkiewicz, Chief

  
	
   

  	
   

  	
   

  	
  Financial
  Officer

  
	
   

  	
   

  	
  Telecopy:
  

  	
  (303)568-8402

  
	
   

  	
   

  	
  Telephone:

  	
  (303)
  568-8004

  
	
   

  	
   

  	
   

  
	
  Greenlight
  Capital, L.P.:

  	
   

  	
  c/o
  Greenlight Capital, Inc.

  
	
   

  	
   

  	
  140
  East 45th Street, 24th Floor

  
	
   

  	
   

  	
  New
  York, NY 10017

  
	
   

  	
   

  	
  Attention:

  	
  General
  Counsel

  
	
   

  	
   

  	
  Telecopy:

  	
  (212)
  973-9219

  
	
   

  	
   

  	
  Telephone:

  	
  (212)
  973-1900

  
	
   

  	
   

  	
   

  
	
  Greenlight
  Capital Qualifed, L.P.:

  	
   

  	
  c/o
  Greenlight Capital, Inc.

  
	
   

  	
   

  	
  140
  East 45th Street, 24th Floor

  
	
   

  	
   

  	
  New
  York, NY 10017

  
	
   

  	
   

  	
  Attention:

  	
  General
  Counsel

  
	
   

  	
   

  	
  Telecopy:

  	
  (212)
  973-9219

  
	
   

  	
   

  	
  Telephone:

  	
  (212)
  973-1900

  
					



 


provided that any notice, request or demand to or upon any
Lender shall not be effective until received by such Lender nor shall any party
that is no longer a Lender be entitled to any further notices under this Agreement
except to the extent provided otherwise in this Agreement.


 


Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communications pursuant
to procedures approved by the Lenders; provided
that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the
applicable Lender.  The Borrower may, in
its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.


 


9.3                   No Waiver;
Cumulative Remedies.  No failure to exercise and no delay in
exercising, on the part of any Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.


 


9.4                   Survival of
Representations and Warranties.  All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of
the Loans and other extensions of credit hereunder.


 


47

















 


9.5                   Payment of Expenses
and Taxes.  The Borrower agrees (a) to pay or reimburse
the Lenders for all its reasonable out of pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including the reasonable fees and disbursements of counsel to the
Lenders and filing and recording fees and expenses, with statements with
respect to the foregoing initially expected (assuming the Closing Date occurs) to
be submitted to the Borrower prior to the Borrowing Date (in the case of
amounts to be paid on the Borrowing Date) and from time to time thereafter on a
quarterly basis or such other periodic basis as the Lenders shall deem appropriate,
(b) to pay or reimburse each Lender for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Lender, (c) to pay, indemnify, and hold each Lender
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, that may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment, supplement
or modification of, or any waiver or consent under or in respect of, this
Agreement, the other Loan Documents and any such other documents, and (d) to
pay, indemnify, and hold each Lender and their respective officers, directors,
employees, affiliates, agents and controlling persons (each, an “Indemnitee”) harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents (regardless of whether any Loan
Party is or is not a party to any such actions or suits) and any such other
documents, including any of the foregoing relating to the use of proceeds of
the Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of any Group Member or any of
the Properties and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against any
Loan Party under any Loan Document (all the foregoing in this clause (d),
collectively, the “Indemnified Liabilities”), provided, that the Borrower shall have no
obligation hereunder to any Indemnitee with respect to Indemnified Liabilities
to the extent such Indemnified Liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee.  Without limiting the foregoing, and to the
extent permitted by applicable law, the Borrower agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee.  All
amounts due under this Section 9.5
shall be payable not later than ten days after written demand therefor.  Statements payable by the Borrower pursuant
to this Section 9.5 shall be submitted
to Chief Financial Officer (Telephone No. (303) 568-8004) (Telecopy No. (303)
568-8402), at the address of the Borrower set forth in Section
9.2, or to such other Person or address as may be hereafter
designated by the Borrower in a written notice to the Lenders.  The


 


48

















 


agreements in this Section 9.5 shall survive repayment
of the Loans and all other amounts payable hereunder.


 


9.6                   Successors and
Assigns; Participations and Assignments.


 


(a)           The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except
that (i) the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of all Lenders (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section 9.6.  Notwithstanding anything in this Section
9.6 to the contrary, no Lender shall have the ability to assign any of its
obligations under Section 2.1.


 


(b)           (i)  Subject to the conditions set forth in
paragraph (b)(ii) below, any Lender may assign to one or more assignees (each,
an “Assignee”) all or a portion of its
rights and obligations under this Agreement (including all or a portion of the
Loans at the time owing to it) with the prior written consent (any such consent
not to be unreasonably withheld) of the Borrower, provided that no
consent of the Borrower shall be required for an assignment to a Lender, an
affiliate of a Lender, an Approved Fund or, if an Event of Default under
Sections 8(a) or 8(f) has occurred and is continuing, any other Person;


 


(ii)  Assignments
shall be subject to the following conditions: (a) except in the case of an
assignment to a Lender, an affiliate of a Lender or an assignment of the entire
remaining amount of the assigning Lender’s Loans, the amount of the Loans of
the assigning Lender subject to each such assignment (determined as of the date
of the Assignment and Assumption with respect to such assignment is delivered
to the other Lenders) shall not be less than $1,000,000 and, after giving effect
thereto, the assigning Lender (if it shall retain any Loans) shall have Loans
aggregating at least $1,000,000, unless the Borrower otherwise consents, provided that (1) no such consent of the Borrower
shall be required if an Event of Default under Sections
8.1(a) or 8.1(f) has occurred and is continuing and (2) such
amounts shall be aggregated in respect of each Lender and its affiliates, if
any, and (b) the parties to such Assignment and Assumption shall deliver to the
Borrower and the other remaining Lenders an executed Assignment and Assumption
and an executed Lender’s Addendum.


 


(iii)          From and after
the effective date specified in each Assignment and Assumption the Assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.6 and 9.14).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 9.6 shall be treated for


 


49

















 


purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with this Section 9.6.


 


(c)           Any Lender may
at any time pledge or assign a security interest in all or any portion of its
rights under this Agreement to secure obligations of such Lender and this Section
9.6 shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or Assignee for such
Lender as a party hereto.


 


(d)           The Borrower,
upon receipt of written notice from the relevant Lender, agrees to issue Notes
to any Lender requiring Notes to facilitate transactions of the type described
in paragraph (c) above.


 


9.7                   Adjustments; Set off.


 


(a)           Except to the
extent that this Agreement expressly provides for payments to be allocated to a
particular Lender, if any Lender (a “Benefited
Lender”) shall receive any payment of all or part of the Outstanding
Amount owing to it under the Loan Documents, in a greater proportion than any
such payment to any other Lender, if any, in respect of the Outstanding Amount under
the Loan Documents owing to such other Lender, such Benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of the Outstanding Amount under the Loan Documents owing to each such
other Lender, as shall be necessary to cause such Benefited Lender to share the
excess payment with each of the Lenders; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such Benefited
Lender, such purchase shall be rescinded, and the purchase price returned, to
the extent of such recovery, but without interest.


 


(b)           In addition to
any rights and remedies of the Lenders provided by law, each Lender shall have
the right, without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law, upon
the occurrence and during the continuance of an Event of Default under Section 8.1(a) hereof, to set off and appropriate
and apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or
the account of the Borrower, as the case may be.  Each Lender agrees promptly to notify the
Borrower after any such setoff and application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such setoff and application.


 


9.8                   Counterparts;
Electronic Execution.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same
Agreement.  Delivery of an executed
counterpart of this Agreement by telefacsimile or other electronic method of
transmission shall be equally as effective as delivery of an original executed
counterpart of this Agreement.  Any party
delivering an executed counterpart of this Agreement by telefacsimile or other
electronic method of


 


50

















 


transmission also shall deliver
an original executed counterpart of this Agreement but the failure to deliver
an original executed counterpart shall not affect the validity, enforceability,
and binding effect of this Agreement. 
The foregoing shall apply to each other Loan Document mutatis mutandis.


 


9.9                   Severability.  Each
provision of this Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal enforceability of any
specific provision.


 


9.10                 Integration.  This
Agreement, together with the other Loan Documents, reflects the entire
understanding of the parties with respect to the transactions contemplated
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, before the date hereof.  Each
Lender is authorized to enter into the Subordination Agreement and hereby
approves and agrees to be bound by the terms of the Subordination Agreement.


 


9.11                 GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


9.12                 Submission To
Jurisdiction; Waivers.  The Borrower hereby irrevocably and
unconditionally:


 


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


 


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


 


(c)           agrees that
service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the Borrower at its address set forth in Section 9.2 or at such other address of which the
Lenders shall have been notified pursuant thereto;


 


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


 


(e)           waives, to the
maximum extent not prohibited by law, any right it may have to claim or recover
in any legal action or proceeding referred to in this Section 9.12 any
special, exemplary, punitive or consequential damages.


 


9.13                 Acknowledgments.  The
Borrower hereby acknowledges that:


 


51

















 


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


 


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


 


(c)           no joint
venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Lenders or among the
Borrower and the Lenders.


 


9.14                 Confidentiality.  The
Lenders each individually (and not jointly or jointly and severally) agree that
material, non-public information regarding Borrower and its Subsidiaries, their
operations, assets, and existing and contemplated business plans shall be
treated by the Lenders in a confidential manner, and shall not be disclosed by
the Lenders to Persons who are not parties to this Agreement, except:  (a) to attorneys for and other advisors,
accountants, auditors, and consultants to any Lender (it being understood that
the persons to whom such disclosure is made will be informed of the
confidential nature of such information and that any such disclosing Lender
shall be responsible for the compliance of such person with this Section
9.14), (b) to Subsidiaries and Affiliates of any Lenders, provided that any
such Subsidiary or Affiliate shall have agreed to receive such information
hereunder subject to the terms of this Section 9.14,
(c) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (d) as may be agreed to in writing in advance by the
Borrower or its Subsidiaries or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, (e) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by the Lenders), (f) in connection with any
assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of any Lender’s
interest under this Agreement, provided that any such assignee, prospective
assignee, purchaser, prospective purchaser, participant, prospective
participant, pledgee, or prospective pledgee shall have agreed in writing to
receive such information hereunder subject to the terms of this Section 9.14,
and (g) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves
claims related to the rights or duties of such parties under this Agreement or
the other Loan Documents.  Each Lender
agrees that in the event such Lender is requested or required to disclose such
information pursuant to clause (a) or (d) above, such Lender shall, to the
extent practicable, provide the Borrower with notice of any such request or
requirement.  The provisions of this Section 9.14 shall survive for 2 calendar years
after the payment in full of the Loans.


 


9.15                 WAIVERS OF JURY TRIAL.  THE BORROWER AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.


 


52

















 


9.16                 Revival
and Reinstatement of Obligations.  If
the incurrence or payment of the Outstanding Amount by the Borrower or the
transfer to the Lenders of any property should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors’ rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a “Voidable
Transfer”), and if the Lenders are required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of their respective counsel, then, as to any Voidable
Transfer, or the amount thereof that the Lenders are required or elect to repay
or restore, and as to all reasonable costs, expenses and attorneys fees of the
Lenders related thereto, the liability of the Borrower automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.


 


53

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.


 


	
   

  	
  NEW
  WORLD RESTAURANT GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Paul J.B. Murphy, III

  	
   

  
	
   

  	
   

  	
  Paul
  J.B. Murphy, III

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GREENLIGHT
  CAPITAL, L.P

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Greenlight
  Capital, L.L.C.

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Einhorn

  	
   

  
	
   

  	
   

  	
  David Einhorn

  
	
   

  	
   

  	
  Senior Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GREENLIGHT CAPITAL QUALIFIED, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Greenlight
  Capital, L.L.C.

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Einhorn

  	
   

  
	
   

  	
   

  	
  David Einhorn

  
	
   

  	
   

  	
  Senior Managing Member

  
							



 


 


Signature Page to the Credit Agreement


 

















 


Annex 1


 


Loan Commitments


 


	
  Lender

  	
   

  	
  Loan Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greenlight Capital, L.P.

  	
   

  	
  $

  	
  18,951,562

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greenlight Capital Qualified, L.P.

  	
   

  	
  $

  	
  5,423,438

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
  24,375,000