EXHIBIT 10.59


 


EXECUTION COPY


 




 





 


INTERCREDITOR AGREEMENT


 


among


 


AMSOUTH BANK,


As Agent and Lender,


 


 


THE BANK OF NEW YORK,


As Trustee and Subordinated Creditor


 


 


AMSOUTH BANK,


as Lender Collateral Agent


 


 


THE BANK OF NEW YORK,


as Subordinated Creditor Collateral Agent,


 


 


and, solely for the purposes stated on the
signature pages herein,


 


NEW WORLD RESTAURANT GROUP, INC.


and certain of its SUBSIDIARIES,


 


as Borrower and Active Subsidiaries


 


Dated as of July 8, 2003


 


 




 




















 


INTERCREDITOR AGREEMENT


 


THIS INTERCREDITOR
AGREEMENT dated as of July 8, 2003 (this “Agreement”) is made by
and among (i) AmSouth Bank, in its capacity as senior secured lender (together
with any future holder of any Senior Liabilities (as hereinafter defined), the
“Lender”) under and pursuant to the Lender Credit Agreement (as
hereinafter defined); (ii) The Bank of New York, solely in its capacity as
trustee (together with any successor trustee, the “Subordinated Creditor”)
under and pursuant to the Subordinated Creditor Indenture (as hereinafter
defined); (iii) AmSouth Bank, in its capacity as agent for the Lender (together
with any successor agent, the “Lender Collateral Agent”) under and
pursuant to the Lender Credit Agreement; (iv) The Bank of New York, in its
capacity as Trustee, as collateral agent (together with any successor
collateral agent, the “Subordinated Creditor Collateral Agent”) under
one or more of the Subordinated Creditor Loan Documents (as hereinafter
defined); and (v) solely for the purposes stated on the signature pages herein,
New World Restaurant Group, Inc., a Delaware corporation (the “Borrower”),
and those certain subsidiaries of the Borrower party hereto (together with any
future subsidiaries of the Borrower that are not “Non-Restricted Subsidiaries”
(as defined in the Lender Credit Agreement (as hereinafter defined)), the “Active
Subsidiaries”).


 


RECITALS


 


A.            Simultaneously with the execution
and delivery of this Agreement, Borrower, Active Subsidiaries and the
Subordinated Creditor have entered into an Indenture, dated as of July 8,
2003 (as amended, modified, supplemented, extended, renewed, refunded or
refinanced from time to time, the “Subordinated Creditor Indenture”),
pursuant to which and upon the terms and conditions stated therein indebtedness
is being incurred by the Borrower (together with all other “Secured
Obligations” as defined in the Security Agreement (defined below), the “Subordinated
Indenture Indebtedness”), the repayment of which is secured by security
interests in and liens on the assets and properties (the “Collateral”)
described in the Pledge and Security Agreement (the “Security Agreement”)
and certain real property mortgages (each a “Mortgage” and together with
the Subordinated Creditor Indenture and the Security Agreement the “Subordinated
Indenture Agreements”) in favor of the Subordinated Creditor Collateral
Agent.


 


B.                                     Simultaneously
with the execution and delivery of this Agreement, the Borrower, the Active
Subsidiaries existing on the date hereof (as additional borrowers), the Lender,
the Lender Collateral Agent and AmSouth Capital Corp., as administrative agent,
have entered into a Loan and Security Agreement (as amended, modified,
supplemented, extended, renewed, refunded or refinanced from time to time, the
“Lender Credit Agreement”) pursuant to which the Lender or the Lender
Collateral Agent, as the case may be, has agreed, upon the terms and conditions
stated therein, to make loans and advances to and to issue or cause to be
issued letters of credit on account of the Borrower


 

















 


and the Active Subsidiaries in
an aggregate principal amount and face amount, as the case may be, not to
exceed in the aggregate $15,000,000 (such aggregate principal and face amount,
together with all interest and fees and expenses payable thereon or with respect
thereto, and all other “Obligations” as defined in the Lender Credit Agreement
being the “Senior Loan Indebtedness”), secured by security interests in
and liens on the Collateral pursuant to the Lender Credit Agreement and the
collateral security documents executed and delivered in connection therewith,
including, without limitation, the “blocked account agreements”, the
“Mortgages”, the “Patent and Trademark Agreement” and the “Pledge Agreement” (
all as defined in the Lender Credit Agreement and all such collateral security
documents referred to herein collectively as the “Senior Security Agreements”
and together with the Lender Credit Agreement, the “Senior Loan Agreements”)
in favor of the Lender Collateral Agent.


 


C.                                     The
Borrower and the Active Subsidiaries have entered into the Security Agreement
and, to the extent applicable, the Mortgages, pursuant to which the Borrower
and the Active Subsidiaries have granted to the Subordinated Creditor
Collateral Agent for the benefit of the Subordinated Creditor and the other
“Secured Parties” (as defined in the Security Agreement) a security interest in
and lien upon the Collateral and the Borrower and the Active Subsidiaries have
entered into the Senior Loan Agreements pursuant to which the Borrowers and the
Active Subsidiaries have granted to the Lender Collateral Agent for the benefit
of the Lender a security interest in and lien upon the Lender Collateral (as
hereinafter defined).


 


D.                                    One
of the conditions of the Lender Credit Agreement is that the priority of the
security interests in and liens on the Lender Collateral securing the Senior
Liabilities be senior to the security interests in and liens on the Collateral
securing the Subordinated Liabilities (except to the limited extent of the
Subordinated Creditor Pari-Passu Liens (as hereinafter defined)), in the manner
and to the extent provided in this Agreement.


 


E.                                      The
Lender, the Subordinated Creditor, the Lender Collateral Agent and the
Subordinated Creditor Collateral Agent desire to enter into this Agreement
concerning the respective rights of the Lender, the Subordinated Creditor, the
Lender Collateral Agent and the Subordinated Creditor Collateral Agent with
respect to the priority of their respective security interests in and liens on
the Lender Collateral.


 


F.                                      The
terms of Section 10.02 of the Subordinated Creditor Indenture and Section 10.1
of the Lender Credit Agreement contemplate the execution and delivery of this
Agreement.


 


G.                                     In
order to induce the Lender to extend credit to the Borrower and the Active
Subsidiaries and for purposes of certain conditions precedent and covenants of
the Senior Loan Agreements, the Subordinated Creditor and the Subordinated
Creditor Collateral Agent hereby agree with the Lender and the Lender
Collateral Agent, and in order to induce the Subordinated Creditor to approve
the Senior Loan Indebtedness and


 


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the Lender’s and the Lender
Collateral Agent’s security interests in and liens on the Lender Collateral for
purposes of certain conditions precedent and covenants of the Subordinated
Indenture Agreements, the Lender, the Subordinated Creditor, the Lender
Collateral Agent and the Subordinated Creditor Collateral Agent hereby agree as
follows:


 


ARTICLE I


 


DEFINITIONS


 


Section 1.01                                Terms
Defined Above and in the Recitals. 
As used in this Agreement, the following terms shall have the respective
meanings indicated in the opening paragraph hereof and in the above Recitals:


 


“Agreement”


“Borrower”


“Collateral”


“Lender”


“Lender Credit Agreement”


“Senior Loan Indebtedness”


“Senior Security Agreements”


“Senior Loan Agreements”


“Subordinated Creditor”


“Subordinated Creditor Indenture”


“Subordinated Indenture Indebtedness” 


“Subordinated Indenture Agreements”


 


Section 1.02                                Lender
Credit Agreement Definitions.  All
capitalized terms which are used but not defined herein shall have the same
meaning as in the Lender Credit Agreement.


 


Section 1.03                                Other
Definitions.  As used in this
Agreement, the following terms shall have the meanings set forth below:


 


“Collateral
Agent” shall mean each of the Subordinated Creditor Collateral Agent and
the Lender Collateral Agent.


 


“Contingent
Indemnification Obligation” shall mean, as of the relevant date of
determination, any contingent indemnification obligation of the Borrower or any
Active Subsidiary under any Lender Loan Document with respect to any event, act
or condition that is not known to Lender or Lender Collateral Agent to exist or
have occurred as of such date of determination.


 


“Enforcement
Action” shall mean the taking of any one or more of the following actions
by the Lender, Lender Collateral Agent, Subordinated Creditor or Subordinated
Creditor Collateral Agent, as the case may be: (a) the commencement or
maintenance of


 


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any receivership or foreclosure
proceeding against, or any other sale, collection or disposition of, any Lender
Collateral or any Proceeds thereof or the commencement of an Insolvency
Proceeding; (b) the notification of any third party account debtors that such
account debtor shall make payment directly to it or any of its agents or other
Persons acting on its behalf; or (c) the exercise of  any other default rights or remedies otherwise available to it
under any of the Lender Loan Documents or Subordinated Creditor Loan Documents,
as the case may be.


 


“Fully Paid”
shall mean the payment in cash in full of all Senior Liabilities at such time
when there shall no longer be any obligation of the Lender to make advances or
issue letters of credit and there shall no longer be any letter of credit
outstanding thereunder or such letter of credit shall have been cash
collateralized in the amounts required by, and in accordance with the terms of,
the Lender Credit Agreement; provided that for purposes of this defined term
only, Senior Liabilities shall exclude all Contingent Indemnification
Obligations owing by the Borrower or any Active Subsidiary on the date all
requirements of this defined term (other than the payment of such Contingent
Indemnification Obligations) have been satisfied.


 


“Insolvency
Proceeding” shall mean any proceeding for the purposes of dissolution,
winding up, liquidation, arrangement or reorganization of the Borrower, any
Active Subsidiary or their successors or assigns, whether in bankruptcy,
insolvency, arrangement, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshaling of the assets
and liabilities of the Borrower, any Active Subsidiary or their successors or
assigns, including, without limitation, the filing of a petition by or against
Borrower or any Active Subsidiary under Title 11 of the U.S.C.


 


“Lender
Collateral” shall mean all of Borrower’s and each Active Subsidiary’s
right, title and interest in, to, and under all real and personal property and
assets of the Borrower and each Active Subsidiary, including without
limitation, all Collateral, all “Collateral” ( as defined in the Lender Credit
Agreement), all “Pledged Collateral” (as defined in the Pledge Agreement), all
“Collateral” (as defined in the Patent and Trademark Agreement and all Proceeds
and products of any of the foregoing.


 


“Lender
Collateral Agent” shall mean AmSouth Bank in its capacity as agent under
the Lender Credit Agreement and any successor or replacement Lender Collateral
Agent appointed pursuant to the terms of the Lender Credit Agreement.


 


“Lender
Loan Documents” shall mean the Senior Loan Agreements, the “Loan Documents”
as defined in the Lender Credit Agreement, the collateral documents and
instruments executed and delivered in connection therewith, and such other
agreements, instruments and certificates as defined or referred to in the
Lender Credit Agreement, as any or all of the same may be amended or supplemented
from time to time.


 


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“Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction, excluding
true lease and consignment filings).


 


“Lien
Priority” shall mean with respect to any Lien of the Lender Collateral
Agent or the Subordinated Creditor Collateral Agent in the Lender Collateral,
the order of priority of such Lien as specified in Section 2.01.


 


“Loan
Documents” shall mean the Lender Loan Documents and the Subordinated
Creditor Loan Documents.


 


“Maximum
Aggregate Principal Amount” shall mean a principal amount of Senior
Liabilities equal to the greater of (x) $15 million and (y) the maximum
aggregate principal amount permitted to be incurred under clause (i) of the
defined term “Permitted Indebtedness” (as defined in the Subordinated Creditor
Indenture as in effect on the date of execution thereof).


 


“Notice of
Trigger Event” shall mean a notice given by the Requisite Party to the
Collateral Agents, stating that a Trigger Event has occurred.  A Notice of Trigger Event shall be deemed to
have been given when the notice referred to in the preceding sentence has actually
been received by a Collateral Agent and to have been rescinded when such
Collateral Agent has actually received from the notifying party a notice
withdrawing such notice.  A Notice of
Trigger Event shall be deemed to be outstanding at all times after such notice
has been given until such time, if any, as such notice has been rescinded.  The Requisite Party may rescind a Notice of
Trigger Event during an Insolvency Proceeding.


 


“Pari-Passu
Lien Recovery Allocation Percentage” shall mean, at any time, a fraction
(expressed as a percentage), the numerator of which is the lesser of (x) the
aggregate amount of unpaid fees and expenses (including attorneys’ fees) of the
Subordinated Creditor and the Subordinated Creditor Collateral Agent owing
under the Subordinated Creditor Loan Documents at such time and (y) that amount
(not less than zero) which is the excess of $40,000 over the aggregate of all
amounts paid to or for the benefit of the Subordinated Creditor or the
Subordinated Creditor Collateral Agent prior to such time from the realization,
collection or recovery of any Lender Collateral, and the denominator of which
is the sum of (x) the above numerator and (y) the outstanding Senior
Liabilities at such time.


 


“Pari-Passu
Maximum Recovery Amount” shall mean, at any time, that amount set forth in
the numerator of the defined term Pari-Passu Lien Recovery Allocation
Percentage at such time.


 


“Party”
shall mean any signatory to this Agreement.


 


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“Pledged Collateral”
shall mean any tangible property in the possession of the Lender Collateral
Agent (or its agents or bailees) in which a security interest is perfected
solely by such possession, including, without limitation, stock certificates.


 


“Proceeds”
shall mean (i) all “Proceeds” as defined in Article 9 of the Uniform
Commercial Code, (ii) whatever is recoverable or recovered when Lender
Collateral is sold, exchanged, collected, or disposed of, whether voluntarily
or involuntarily and (iii) all cash and cash equivalents or non-cash
distributions collected or generated by or from any Lender Collateral in whole
or in part in the operation of, recapitalization or reorganization of the
business of Borrower or any Active Subsidiary.


 


“Requisite
Party” shall mean AmSouth Bank, as agent, or its successors or assigns from
time to time or any future Lender Collateral Agent, until such time as all of
the Senior Liabilities shall have been indefeasibly and fully paid and/or
performed in full by the Borrower and the Active Subsidiaries and all
commitments to lend under the Lender Credit Agreement are terminated and,
thereafter, shall mean the Subordinated Creditor.


 


“Secured
Obligations” shall mean collectively, the Senior Liabilities and the
Subordinated Liabilities.


 


“Security
Documents” shall mean any instrument or agreement pursuant to which a Lien
in Lender Collateral is created or arises to secure the Senior Loan
Indebtedness or the Subordinated Indenture Indebtedness.


 


“Senior
Liabilities” shall mean all amounts owed to Lender and/or the Lender
Collateral Agent under the Lender Loan Documents or this Agreement consisting
of all Senior Loan Indebtedness, contingent or otherwise, of the Borrower and
the Active Subsidiaries to the Lender and/or the Lender Collateral Agent,
including interest, early termination fees or penalties, fees (including,
without limitation, attorneys fees), indemnification obligations, costs and
expenses both prior to and after the initiation of any Insolvency Proceeding,
and including the claims of the Lender and/or the Lender Collateral Agent in
respect of the Lender Collateral in any Insolvency Proceeding whether or not
allowed or allowable in any Insolvency Proceeding.


 


“Subordinated
Creditor Collateral Agent” shall mean The Bank of New York, in its capacity
as Trustee, as collateral agent under the Subordinated Creditor Indenture and
any successor or replacement Subordinated Creditor Collateral Agent appointed
pursuant to the terms of the Subordinated Creditor Indenture.


 


“Subordinated
Creditor Enforcement Event” shall mean the occurrence and continuance of an
“Event of Default’ under Section 6.01 of the Subordinated Creditor Indenture.


 


“Subordinated
Creditor Loan Documents” shall mean the Subordinated Indenture Agreements,
the Collateral Agreements (as defined in the Subordinated Creditor


 


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Indenture), the Subordinated
Creditor Notes, the real property mortgages referred to in the Subordinated
Creditor Indenture (now existing or hereafter negotiated, executed, delivered
and recorded), and such other agreements, instruments and certificates as
defined or referred to in the Subordinated Creditor Indenture, as any or all of
the same may be amended or supplemented from time to time.


 


“Subordinated Creditor Notes” shall mean the Notes issued to the
holders thereof pursuant to the Subordinated Creditor Indenture.


 


“Subordinated Creditor Pari-Passu Liens” shall mean Liens of the
Subordinated Creditor and the Subordinated Creditor Collateral Agent in the
Lender Collateral that shall secure solely that portion (and only that portion)
of the Subordinated Liabilities that constitute fees and expenses (including
attorneys’ fees) of the Subordinated Creditor and the Subordinated Creditor
Collateral Agent owing under the Subordinated Creditor Loan Documents in an
aggregate amount not to exceed at any time the lesser of  $40,000 and the Pari-Passu Maximum Recovery
Amount at such time (it being understood, acknowledged and agreed that (x) the
Liens of the Subordinated Creditor and the Subordinated Creditor Collateral
Agent in the Lender Collateral securing any other Subordinated Liabilities
(including, without limitation, any and all Subordinated Liabilities evidenced
by the Subordinated Creditor Notes and any portion of any fees and expenses
(including attorneys’ fees) of the Subordinated Creditor and the Subordinated
Creditor Collateral Agent owing under the Subordinated Creditor Loan Documents
in an aggregate amount in excess of the lesser of $40,000 and the Pari-Passu
Maximum Recovery Amount at the relevant time) shall be subject and subordinate
to the Liens of the Lender and Lender Collateral Agent in the Lender Collateral
and shall not constitute Subordinated Creditor Pari-Passu Liens and (y) the
maximum aggregate recovery by the Subordinated Creditor and the Subordinated
Creditor Collateral Agent from the realization of the Subordinated Creditor
Pari-Passu Liens at any time shall be the lesser of $40,000 and the Pari-Passu
Maximum Recovery Amount at such time).


 


“Subordinated Liabilities” shall mean all Subordinated Indenture
Indebtedness, contingent or otherwise, of the Borrower and the Active
Subsidiaries to the Subordinated Creditor, the Subordinated Creditor Collateral
Agent and the holders of the Subordinated Creditor Notes, including interest,
premiums, indemnities, fees (including, without limitation, attorneys fees),
costs and expenses both before and after the initiation of any Insolvency
Proceeding, and including the claims of the Subordinated Creditor in respect of
the Lender Collateral whether accrued or incurred before or after any
Insolvency Proceeding regardless of whether or not allowed or allowable in any
Insolvency Proceeding.


 


“Trigger Event” shall mean any of (a) the acceleration of
or demand for payment on the Lender Loan Documents by the Lender following the
occurrence of an Event of Default under the applicable section of the Lender
Loan Documents pursuant to the applicable section of the Lender Credit
Agreement, (b) the commencement of any action


 


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by the Lender or Lender
Collateral Agent, whether judicial or otherwise, for the enforcement of the
Lender’s or Lender Collateral Agent’s rights and remedies under any of the Loan
Documents following the acceleration of or demand for payment of the Lender
Loan Documents by the Lender, including (i) commencement of any
receivership or foreclosure proceedings against or any other sale of,
collection on or disposition of any Lender Collateral, including any
notification to third parties to make payment directly to the Lender or Lender
Collateral Agent, (ii) exercise of any right of set-off, and
(iii) the commencement of any action or proceeding against the Borrower or
any Active Subsidiary to recover all or any part of the Senior Liabilities or
(c) commencement of any Insolvency Proceeding.


 


Section 1.04                                Singular
and Plural.  All definitions herein
(whether set forth herein directly or by reference to definitions in other
documents) shall be equally applicable to both the singular and the plural
forms of the terms defined.


 


Section 1.05                                Miscellaneous.  The words “hereof,” “herein” or “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.  Article and section
references are to articles and sections of this Agreement unless otherwise
specified.  The term “including,” shall
mean “including, without limitation.”


 


ARTICLE II


 


LIEN PRIORITY


 


Section 2.01                                Agreement
to Subordinate.  Each of the
Subordinated Creditor Collateral Agent and the Subordinated Creditor hereby
agrees that the Liens of the Subordinated Creditor and the Subordinated
Creditor Collateral Agent in the Lender Collateral are and shall be subordinate
in priority of Lien to the Lender’s and the Lender Collateral Agent’s Liens in
the Lender Collateral to secure Senior Liabilities up to and not exceeding the
Maximum Aggregate Principal Amount plus the amount of all interest, early
termination fees or penalties, fees (including attorneys fees), indemnification
obligations, costs and expenses thereof whether accrued or incurred before or
after an Insolvency Proceeding and regardless of whether or not allowed or
allowable in any Insolvency Proceeding; provided that the Subordinated Creditor
Pari-Passu Liens (which Liens shall secure solely Subordinated Liabilities that
constitute fees and expenses (including attorneys’ fees) of the Subordinated
Creditor and the Subordinated Creditor Collateral Agent owing under the
Subordinated Creditor Loan Documents up to an aggregate amount not to
exceed  the lesser of $40,000 and the
Pari-Passu Maximum Recovery Amount at the relevant time) shall be pari passu in
priority with the Liens of the Lender and the Lender Collateral Agent in the
Lender Collateral (it being understood, acknowledged and agreed that the Liens
of the Subordinated Creditor and the Subordinated Creditor Collateral Agent in
the Lender Collateral securing any other Subordinated Liabilities (including,
without limitation, any and all Subordinated


 


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Liabilities evidenced by the
Subordinated Creditor Notes and any portion of any fees and expenses (including
attorneys’ fees) of the Subordinated Creditor and the Subordinated Creditor
Collateral Agent owing under the Subordinated Creditor Loan Documents in an
aggregate amount in excess of the lesser of $40,000 and the Pari-Passu Maximum
Recovery Amount at such time) shall be subject and subordinate to the Liens of
the Lender and Lender Collateral Agent in the Lender Collateral).  The subordination of Liens in favor of the
Lender and Lender Collateral Agent herein shall not be deemed to subordinate
the Subordinated Creditor’s Liens to the Liens of any other Person. It is the
intent  and the agreement of the parties
hereto that (i) except as expressly provided in the last sentence of this
Section 2.01, before the Subordinated Liabilities are paid from the Lender
Collateral, the Senior Liabilities shall be Fully Paid (or in a manner
otherwise satisfactory to the Lender in its sole and absolute discretion),
(ii) if the Lender or Lender Collateral Agent receives any non-cash
distributions or Proceeds in respect of the Lender Collateral, then, unless the
Senior Loan Agreements expressly provide to the contrary, the Lender or Lender
Collateral Agent shall hold such non-cash distributions and Proceeds as Lender
Collateral upon the terms of this Agreement until converted to cash and
thereupon distributed in accordance with this Section 2.01,
(iii) except as expressly provided in the last sentence of this Section
2.01, if the Subordinated Creditor or Subordinated Creditor Collateral Agent
receives any cash or property as Proceeds of or otherwise attributable to the Lender
Collateral, then all Lender Collateral received by the Subordinated Creditor or
the Subordinated Creditor Collateral Agent shall be turned over to the Lender
Collateral Agent to be applied to the Senior Liabilities until Fully Paid and
thereafter shall be turned over to the Subordinated Creditor Collateral Agent
to be applied to the Subordinated Liabilities until Fully Paid, and (iv) the
Lien Priority established pursuant to this Agreement shall be applicable
irrespective of the time, order or method of attachment or perfection of the
security interests of the Lender or the Lender Collateral Agent for the benefit
of the Lender or the Subordinated Creditor or the Subordinated Creditor
Collateral Agent for the benefit of the Subordinated Creditor and holders of
Subordinated Creditor Notes, the time or order of filing or recording financing
statements or other Liens or security interests with respect to the Lender
Collateral, or whether the Liens of the Lender, the Lender Collateral Agent,
the Subordinated Creditor or the Subordinated Creditor Collateral Agent or any
holder of any Secured Obligations are filed, recorded, or otherwise perfected
or perfectable in any manner.  The
Lender, the Lender Collateral Agent, the Subordinated Creditor and the Subordinated
Creditor Collateral Agent agree that in the event any such Party shall
foreclose or realize on any Lender Collateral (subject in any case to the
standstill and other provisions of this Agreement), then (i) until such time as
the Subordinated Creditor and the Subordinated Creditor Collateral Agent
receive in the aggregate from all such foreclosures and realizations on Lender
Collateral an amount equal to the lesser of $40,000 and the Pari-Passu Maximum
Recovery Amount at such time, the Subordinated Creditor and the Subordinated
Creditor Collateral Agent collectively shall be entitled to receive and retain
from the Proceeds of such foreclosure or realization that portion of the
Proceeds thereof equal to the product of (x) the Pari-Passu Lien Recovery Allocation
Percentage at the time of such foreclosure or realization and (y) the amount of
such Proceeds and the


 


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Lender and the Lender
Collateral Agent shall be entitled to receive and retain the remaining Proceeds
of such foreclosure or realization until all Senior Liabilities are Fully
Paid  (provided that in any event the
aggregate maximum amount of Lender Collateral or Proceeds that the Subordinated
Creditor or the Subordinated Creditor Collateral Agent shall be entitled to
receive and retain until the Senior Liabilities are Fully Paid is $40,000) and
(ii) at all times after clause (i) is not applicable, the Lender and the Lender
Collateral Agent shall be entitled to receive and retain all the Lender Collateral
and Proceeds until all Senior Liabilities are Fully Paid.


 


Section 2.02                                Standstill
Period.  If a Subordinated Creditor
Enforcement Event has occurred and is continuing and the Subordinated Creditor
has accelerated or demanded payment of the Subordinated Indenture Indebtedness
in accordance with the terms of the Subordinated Creditor Indenture, the
Subordinated Creditor may give the Lender and Lender Collateral Agent written
notice thereof, specifying the nature of the Subordinated Creditor Enforcement
Event in reasonable detail.  If such
Subordinated Creditor Enforcement Event is continuing for more than 30 days
after the delivery of such notice, and if the Lender or Lender Collateral Agent
has not prior to the expiration of such 30-day period notified the Subordinated
Creditor that the Lender or Lender Collateral Agent has commenced one or more
Enforcement Actions, then (and only then) the Subordinated Creditor and
Subordinated Creditor Collateral Agent may, subject to the Lien Priority and
prior application of the Lender Collateral to the Senior Liabilities (except to
the extent expressly provided otherwise in the last sentence of Section 2.01),
as provided herein, take one or more Enforcement Actions.  If Lender or Lender Collateral Agent has
taken or commenced any such Enforcement Action within such period and
thereafter discontinues such Enforcement Action and no other Enforcement Action
is then being taken by the Lender or Lender Collateral Agent, and such
Subordinated Creditor Enforcement Event is then continuing, then the
Subordinated Creditor and Subordinated Creditor Collateral Agent may, subject
to the Lien Priority and prior application of the Lender Collateral to the
Senior Liabilities (except to the extent expressly provided otherwise in the last
sentence of Section 2.01), as provided herein, take one or more Enforcement
Actions.


 


Section 2.03                                Exercise
of Rights.


 


(a)                                  Nothing
herein shall be deemed to restrict the right of the Subordinated Creditor to
accelerate or demand payment of the Subordinated Indenture Indebtedness in
accordance with the terms of the Subordinated Creditor Indenture.


 


(b)                                 The
Subordinated Creditor may make such demands or file such claims in respect of
the Subordinated Liabilities as may be necessary to prevent the waiver or bar
of such claims under applicable statutes of limitations or other statutes,
court orders or rules of procedure, but except as provided in this Section
2.03, the Subordinated Creditor shall not take any actions restricted by
Article 3 in respect of such claims until the Senior Liabilities are Fully
Paid.


 


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Section 2.04                                Priority
of Liens.  Irrespective of the order
of recording of mortgages, financing statements, security agreements or other
instruments, and irrespective of the descriptions of the Lender Collateral
contained in the Loan Documents, including any financing statements, the
Parties agree among themselves that their respective liens and security
interests in the Lender Collateral and the Proceeds shall be governed by the
Lien Priority, which shall be controlling in the event of any conflict between
this Agreement and any of the Loan Documents.


 


Section 2.05                                Notice
of Trigger Event.  The Lender agrees
that it will notify the other Parties hereto if it (i) receives actual notice
of the occurrence of a Trigger Event or (ii) has actual knowledge of a
Trigger Event arising out of the failure to pay principal, premium, interest or
reimbursement obligations, in each case not later than 30 days after the date
of any such occurrence, in accordance with Section 8.06.  The Subordinated Creditor agrees that it
will notify the other Parties hereto if it receives actual notice of the
occurrence of a Subordinated Creditor Enforcement Event not later than 30 days
after the date of any such occurrence, in accordance with Section 8.06.


 


Section 2.06                                Bailee
for Perfection.


 


(a)                                  The
Lender Collateral Agent agrees to hold the Pledged Collateral in its possession
or control (or in the possession or control of its agents or bailees) as bailee
for the Subordinated Creditor Collateral Agent solely for the purpose of
perfecting the security interest granted in such Pledged Collateral pursuant to
the Security Agreement, subject to the terms and conditions of this Section and
the other provisions of this Agreement.


 


(b)                                 Until
the Senior Liabilities are Fully Paid, the Lender Collateral Agent shall be
entitled to deal with the Pledged Collateral in accordance with the terms of
the Lender Loan Documents as if the Lien of the Subordinated Creditor and the
Subordinated Creditor Collateral Agent under the Security Agreement and all
other Subordinated Creditor Loan Documents did not exist.  The rights of the Subordinated Creditor
Collateral Agent and Subordinated Creditor shall at all times be subject to the
terms of this Agreement.


 


(c)                                  The
Lender Collateral Agent shall have no obligation whatsoever to the Subordinated
Creditor Collateral Agent or the Subordinated Creditor to assure that the
Pledged Collateral is genuine or owned by the Borrower or any Active Subsidiary
or to preserve rights or benefits of any Person except as expressly set forth
in this Section.  The duties or
responsibilities of the Lender Collateral Agent under this Section shall be
limited solely to holding the Pledged Collateral as bailee for the Subordinated
Creditor Collateral Agent for purposes of perfecting the Lien held by the
Subordinated Creditor Collateral Agent.


 


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(d)                                 The
Lender Collateral Agent shall not have by reason of the Security Agreement or
this Agreement or any other document a fiduciary relationship in respect of the
Subordinated Creditor Collateral Agent or the Subordinated Creditor.


 


(e)                                  Once
the Senior Liabilities are Fully Paid, the Lender Collateral Agent shall, to
the extent permitted by applicable law, deliver to the Subordinated Creditor
Collateral Agent the Pledged Collateral together with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct.


 


Section 2.07                                Certain
Cash Delivered to Subordinated Creditor. 
This Agreement is not intended to govern, and shall not govern, the
right of the Subordinated Creditor to retain payments of cash it receives from
the Borrower to pay, when due, scheduled payments of interest and principal on
the Subordinated Creditor Notes and fees owing to the Subordinated Creditor
under the Subordinated Creditor Indenture or to reimburse the Subordinated
Creditor for costs and expenses incurred by the Subordinated Creditor in the ordinary
course of business pursuant to the terms of the Subordinated Creditor
Indenture, in each instance, so long as such payment does not constitute
Proceeds from (x) the liquidation, foreclosure, collection or other realization
on any Lender Collateral or (y) the sale, transfer, lease or other disposition
by the Borrower or any Active Subsidiary of Lender Collateral the Proceeds of
which sale, transfer, lease or other disposition are required, pursuant to the
terms of any of the Lender Loan Documents, to be paid or remitted to the Lender
or the Lender Collateral Agent.


 


Section 2.08                                Liquidation.
Dissolution. Bankruptcy.  In the
event of any Insolvency Proceeding involving the Borrower or any Active
Subsidiary:


 


(a)                                  Each
of Lender and the Lender Collateral Agent agrees not to initiate, prosecute or
participate in any claim, action or other proceeding challenging the
enforceability, validity, perfection or priority of the Subordinated
Liabilities or any liens and security interests securing the Subordinated Liabilities
other than to enforce the terms of this Agreement. Each of the Subordinated
Creditor Collateral Agent and the Subordinated Creditor agrees not to initiate,
prosecute or participate in any claim, action or other proceeding challenging
the enforceability, validity, perfection or priority of the Senior Liabilities
or any liens and security interests securing the Senior Liabilities other than
to enforce the terms of this Agreement.


 


(b)                                 Each
of the Subordinated Creditor Collateral Agent and the Subordinated Creditor
agrees that Lender and the Lender Collateral Agent may consent to the use of
cash collateral or provide financing to the Borrower and/or any one or more
Active Subsidiaries on such terms and conditions and in such amounts as Lender
and Lender Collateral Agent, in their sole discretion, may decide and, in
connection therewith, the Borrower and one or more of the Active Subsidiaries
may grant to Lender and the Lender Collateral Agent liens and security
interests upon any or all of the property of the Borrower and such Active
Subsidiaries, which liens and security interests (i) shall secure payment of
financing provided by Lender during such Insolvency


 


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Proceeding and (ii) shall be
superior in priority to the liens and security interests, if any, in favor of
Subordinated Creditor and Subordinated Creditor Collateral Agent on the
property of the Borrower and such Active Subsidiaries; provided  however,
that (x) such agreement of the Subordinated Creditor Collateral Agent and the
Subordinated Creditor shall only be applicable if the aggregate maximum
outstanding principal amount of all such loans and other financing provided by
Lender secured by liens and security interests superior in priority to the
liens and security interests in favor of Subordinated Creditor and Subordinated
Creditor Collateral Agent shall not exceed $25,000,000 and (y) to the extent
such loans and other financing comply with the above requirements, each of
Subordinated Creditor and Subordinated Creditor Collateral Agent  waives any claim or objection it may now or
hereafter have arising out of Lender’s provision of such financing or consent
to such use of cash collateral. 
Notwithstanding anything herein to the contrary, Subordinated Creditor
and Subordinated Creditor Collateral Agent may assert, and neither Lender nor
Lender Collateral Agent shall oppose, any claim by Subordinated Creditor or
Subordinated Creditor Collateral Agent for “adequate protection” of its
interest under the Subordinated Liabilities in any Lender Collateral in any
Insolvency Proceeding due to diminution of value of the Subordinated Creditor’s
and Subordinated Creditor Collateral Agent’s interest in the Lender Collateral,
provided that the adequate protection sought is limited to (x)
replacement liens subject to the same priorities as set forth at subsection
2.01 hereof and (y) administrative priority claims under Section 507(a) of the Bankruptcy Code; provided
further that any failure of Subordinated Creditor and Subordinated
Creditor Collateral Agent to obtain any or all of the foregoing forms of
adequate protection shall not impair Lender and the Lender Collateral Agent’s
rights hereunder, or create any liability to Lender or the Lender Collateral
Agent with respect to such failure. 
Notwithstanding anything herein to the contrary, the Lender and the
Lender Collateral Agent may assert and bring, and neither the Subordinated
Creditor nor the Subordinated Creditor Collateral Agent shall oppose, any
motion, application, action, defense, claim or proceeding by or approved by the
Lender or the Lender Collateral Agent regarding the modification or lifting of
the automatic stay, the use of cash or the grant of adequate protection
necessary to prevent any diminution in the value of the Lender’s or Lender
Collateral Agent’s interest in the Lender Collateral or similar rights or
relief under the Bankruptcy Code with respect to the Lender Collateral.  Nothing contained in this Section 2.08 shall
constitute a commitment or agreement of the Lender or the Lender Collateral
Agent to provide any financing to the Borrower or any Active Subsidiary during
an Insolvency Proceeding.


 


(c)                                  In
an Insolvency Proceeding involving the Borrower or any Active Subsidiary, with
respect to the approval of any plan of reorganization (a “Plan”) proposed
during such Insolvency Proceeding, Subordinated Creditor and Subordinated
Creditor Collateral Agent shall be entitled to vote their claims under the
Subordinate Liabilities (the “Subordinate Claims”) in connection with any such
Plan.  Subordinated Creditor and
Subordinate Creditor Collateral Agent shall be entitled to execute, verify,
deliver and file any proofs of claim in respect of the Subordinated Claims in
connection with any such Insolvency Proceeding.


 


13

















 


ARTICLE III


 


ACTIONS OF THE PARTIES


 


Section 3.01                                Limitation on Certain Actions.  Subject
to Section 2.02, so long as any of the Senior Liabilities are not Fully Paid or
any commitments under the Senior Loan Agreements remain outstanding, neither
the Subordinated Creditor nor the Subordinated Creditor Collateral Agent will,
without the consent of the Lender, take any Enforcement Actions.


 


Section 3.02                                Notices.  The Lender Collateral Agent shall provide
the Subordinated Creditor with written notice (a) not later than 15 days prior
to the Lender Collateral Agent’s disposition of Lender Collateral pursuant to
foreclosure remedies with respect to the Lender Collateral, and (b) not later
than 10 days prior to the filing by the Lender or Lender Collateral Agent of an
involuntary bankruptcy petition with respect to the Borrower or any of its
Active Subsidiaries.


 


Section 3.03                                Release
of Liens Upon Request.  Upon the
request of the Lender or the Lender Collateral Agent, each of the Subordinated
Creditor and the Subordinated Creditor Collateral Agent shall promptly release
or otherwise terminate its Lien in the Lender Collateral or any part thereof to
the extent that such Lender Collateral or any part thereof is sold or otherwise
disposed of by the Lender or the Lender Collateral Agent in accordance with the
terms of the Lender Loan Documents, and Lender and Lender Collateral Agent
agree to release or otherwise terminate their liens on the Lender Collateral so
sold or otherwise disposed of upon the consummation of such sale or other
disposition, and each of the Subordinated Creditor and the Subordinated
Creditor Collateral Agent will promptly execute, without recourse or
representation and warranty of any kind, such release documents as the Lender
or the Lender Collateral Agent may reasonably request in connection therewith
at the sole cost and expense of the Borrower or the Active Subsidiary, as
applicable.


 


Section 3.04                                Release
of Liens Under Certain Cases.  If
the Borrower or any Active Subsidiary sells, transfers or otherwise disposes of
a portion of the Lender Collateral and either (x) such sale, transfer or other
disposition is permitted by the terms of the Subordinated Creditor Indenture or
(y) the consideration for such sale, transfer or other disposition satisfies
the “fair market value” requirement in clause (i) of the first paragraph of
Section 4.15 of the Subordinated Creditor Indenture, the net cash proceeds of
such sale, transfer or other disposition are applied to the payment of the
Senior Liabilities and the commitments to lend under the Lender Credit
Agreement are permanently reduced by the amount of such payment, and, in either
instance under clause (x) or clause (y), the Lender and Lender Collateral Agent
each agrees to release its Lien on the Lender Collateral to be sold,
transferred or otherwise disposed of upon the consummation of such sale,
transfer or other disposition, then the Subordinated Creditor and the
Subordinated Creditor Collateral Agent, notwithstanding anything to the
contrary


 


14

















 


contained in the Loan
Documents, each agrees to release its Lien on such Lender Collateral and shall
thereupon execute at the request of the Borrower or any such Active Subsidiary
termination statements or other Lien releases reasonably necessary to release
its Liens upon such Lender Collateral.


 


ARTICLE IV


 


ENFORCEMENT OF PRIORITIES


 


Section 4.01                                In
Furtherance of Lien Priorities.  The
Lender Collateral Agent, the Lender, the Subordinated Creditor Collateral Agent
and the Subordinated Creditor agree as follows:


 


(a)                                  Upon
any distribution of all or any of the assets of the Borrower or any Active
Subsidiary (whether in cash, securities or other property) in connection with
any Insolvency Proceeding or which otherwise would be payable or deliverable
upon or with respect to the Lender Collateral securing the Subordinated
Liabilities and the Senior Liabilities, the parties hereto agree that such
assets shall be paid or delivered by the Subordinated Creditor Collateral Agent
and/or Subordinated Creditor directly to the Lender Collateral Agent (or may be
retained by the Lender or Lender Collateral Agent) for application (in the case
of cash) to or as collateral (in the case of securities or other non-cash
property) to the payment or prepayment of the Senior Liabilities until the
Maximum Aggregate Principal Amount plus the amount of all interest, early
termination fees or penalties, fees (including attorney fees), indemnification
obligations, costs and expenses thereof whether accrued or incurred before or
after an Insolvency Proceeding and regardless of whether or not allowed or
allowable in any Insolvency Proceeding shall have been Fully Paid.  In addition, the Lender Collateral Agent
shall be permitted to retain an amount equal to the amount of obligations
(including attorneys’ fees), expense reimbursements and indemnities which the
Lender Collateral Agent in good faith estimates will become due from the Borrower
and/or the Active Subsidiaries in the future; provided that, upon the Senior
Liabilities being Fully Paid, all such retained amounts that remain unspent
shall, to the extent permitted by applicable law, be turned over to the
Subordinated Creditor.


 


(b)                                 If
any Insolvency Proceeding is commenced by or against the Borrower or any Active
Subsidiary, the Subordinated Creditor and the Subordinated Creditor Collateral
Agent, to the extent either has commenced any action permitted hereunder, shall
use their commercially reasonable efforts, at the expense of the Borrower and
Active Subsidiaries, to duly and promptly take such action as the Lender or the
Lender Collateral Agent may reasonably request (i) to collect the Proceeds
of Lender Collateral securing the Subordinated Liabilities and the Senior
Liabilities for the account of the Lender and to file appropriate claims or
proofs of claim in respect of the Subordinated Liabilities and the Senior
Liabilities and (ii) to collect and receive any and all payments or
distributions which may be payable or deliverable upon or with respect to


 


15

















 


the Lender Collateral and the
Proceeds securing the Subordinated Liabilities and the Senior Liabilities and
to hold such payments or distributions in trust for the Lender to the extent
set forth herein; provided, however, the Subordinated Creditor
and the Subordinated Creditor Collateral Agent shall have no liability to the
Lender or the Lender Collateral Agent regarding the adequacy of any such
Proceeds or for any such action.


 


(c)                                  All
payments or distributions upon or with respect to the Subordinated Liabilities
which are received by the Subordinated Creditor or Subordinated Creditor
Collateral Agent contrary to the provisions of this Agreement shall be
segregated from other funds and property held by the Subordinated Creditor or
Subordinated Creditor Collateral Agent and shall be held for the Lender and
shall be forthwith paid over to the Lender Collateral Agent in the same form as
so received (with any necessary endorsement) to be applied (in the case of
cash) to or held as Lender Collateral (in the case of non-cash property or
securities) for the payment or prepayment of the Senior Liabilities in
accordance with the terms of the Lender Credit Agreement; provided, however,
after such application of Proceeds so that the Senior Liabilities are Fully
Paid to the extent of the maximum amount set forth herein (including the Lender
Collateral Agent’s holding of cash and other property as set forth in the last
sentence of Section 4.01(a)), the Lender and Lender Collateral Agent shall
segregate any remaining payments and distributions from the Lender’s and Lender
Collateral Agent’s other funds and properties and shall hold such payments and
distributions in trust for the Subordinated Creditor and shall be forthwith
paid over to the Subordinated Creditor Collateral Agent in the same form as so
received (with any necessary endorsement) to be applied (in the case of cash)
to or held as Collateral (in the case of non-cash property or securities) for
the payment or prepayment of the Subordinated Liabilities in accordance with
the terms of the Subordinated Creditor Indenture, as further provided in
Section 8.14.


 


(d)                                 Each
of (x) the Lender, the Lender Collateral Agent, the Subordinated Creditor and
the Subordinated Creditor Collateral Agent, and (y) additionally with respect
to the obligations in favor of the Borrower and the Active Subsidiaries under
Section 3.04 hereof, the Borrower and each Active Subsidiary, is hereby
authorized to demand specific performance of this Agreement, whether or not the
Borrower or any Active Subsidiary shall have complied with any of the
provisions hereof applicable to it, at any time when any other Party shall have
failed to comply with any of the provisions of this Agreement applicable to
it.  Each of the Lender, the Lender
Collateral Agent, the Subordinated Creditor and the Subordinated Creditor
Collateral Agent hereby irrevocably waives any defense based on the adequacy of
a remedy at law, which might be asserted as a bar to such remedy of specific
performance.


 


(e)                                  This
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Senior Liabilities is rescinded or
must otherwise be returned by the Lender or the Lender Collateral Agent upon
the


 


16

















 


insolvency, bankruptcy or
reorganization of the Borrower or any Active Subsidiary or otherwise, all as
though such payment had not been made.


 


ARTICLE V


 


CONCERNING THE COLLATERAL AGENTS


 


Section 5.01                                [Intentionally
omitted]


 


Section 5.02                                Recourse
of Secured Parties; Other Collateral.


 


(a)                                  Each
of the Lender and the Subordinated Creditor acknowledges and agrees that except
as provided in part (b) of this Section 5.02, (i) it shall only
have recourse to the Lender Collateral and the Proceeds through its respective
Collateral Agent and that it shall have no independent recourse to the Lender
Collateral and the Proceeds and (ii) its respective Collateral Agent shall
have no obligation to take any action, or refrain from taking any action,
except upon written instructions from the Requisite Party in accordance with
Section 5.03 hereof.


 


(b)                                 Nothing
contained herein shall restrict (i) the Lender’s right to exercise the
right of setoff, (ii) the Lender’s right to give notice under the Senior
Loan Agreements, and to apply all amounts received from the depository accounts
covered by the Senior Loan Agreements to payment of the Senior Liabilities or
(iii) except as expressly set forth herein, the Lender’s and the
Subordinated Creditor’s rights to pursue remedies, by proceedings in law and
equity, to collect principal of or interest on the Senior Liabilities or, as
the case may be, the Subordinated Liabilities or to enforce the performance of
and provisions of the Senior Liabilities or, as the case may be, the
Subordinated Liabilities as against the Borrower or any Active Subsidiary to
the extent that such remedies do not (1) seek recovery from the Lender
Collateral; (2) interfere with the Collateral Agents’ rights to take
action hereunder or under the Senior Loan Agreements and Subordinated Indenture
Agreements, respectively, or (3) contravene the written instructions of
the Requisite Party.


 


Section 5.03                                Acts
of Secured Parties.  Any request,
demand, authorization, direction, notice, consent, waiver or other action
permitted or required by this Agreement to be given or taken by the Requisite
Party, may be and, at the request of the relevant Collateral Agent, shall be
embodied in and evidenced by one or more instruments reasonably satisfactory in
form to such Collateral Agent and signed by or on behalf of the Requisite Party
and, except as otherwise expressly provided in any such instrument, any such
action shall become effective when such instrument or instruments shall have
been delivered to such Collateral Agent. 
The instrument or instruments evidencing any action (and the action
embodied therein and evidenced thereby) are sometimes referred to herein as an
“Act” of the persons signing such instrument or instruments.   Each Collateral Agent shall be entitled to
rely absolutely upon an Act of the Requisite Party if such Act purports to be
taken by or on behalf of the Requisite Party.


 


17

















 


Section 5.04                                Notices.  Each Collateral Agent shall within
five (5) business days following receipt thereof furnish to each of
the Lender, Subordinated Creditor and the Borrower:


 


(a)                                  a copy of each Notice
of Trigger Event received by such Collateral Agent;


 


(b)                                 a copy of each
certificate received by such Collateral Agent rescinding a Notice of Trigger
Event; and


 


(c)                                  written notice of any
release or subordination by such Collateral Agent of any Lender Collateral.


 


Section 5.05                                Actions
Under Security Documents.  Each
Collateral Agent shall take any reasonable action under or with respect to its
Security Documents which is requested by the Requisite Party and which request
does not contravene the provisions of this Agreement.  Each Collateral Agent shall exercise or refrain from exercising
all such rights, powers and remedies as shall be available to it under its
Security Documents or any of them in accordance with any written instructions
received from the Requisite Party.  In
the absence of written instructions (which may relate to the exercise of
specific remedies or to the exercise of remedies in general) from the Requisite
Party, neither Collateral Agent shall exercise remedies available to it under
any of its Security Documents with respect to the Lender Collateral and the
Proceeds or any part thereof.


 


Section 5.06                                Limitations
on Responsibility of Collateral Agents. 
Neither Collateral Agent shall be responsible in any manner whatsoever
for the correctness of any recitals, statements, representations or warranties
contained herein or in any Loan Document, except for those made by it
herein.  Neither Collateral Agent makes
any representation as to the value or condition of the Lender Collateral or any
part thereof, as to the title of the Borrower or any Active Subsidiary to the
Lender Collateral, as to the security afforded by this Agreement or any Loan
Document or, except as set forth in Article VI, as to the validity, execution,
enforceability, legality or sufficiency of this Agreement or any Loan Document,
and neither Collateral Agent shall incur any liability or responsibility in
respect of any such matters.  Neither
Collateral Agent shall be responsible for insuring the Lender Collateral, for
the payment of taxes, charges, assessments or liens upon the Lender Collateral
or otherwise as to the maintenance of the Lender Collateral, except as provided
in the immediately following sentence when such Collateral Agent has possession
of the Lender Collateral.  Neither
Collateral Agent shall have any duty to the Borrower or to any Active
Subsidiary or to the holders of any of the Secured Obligations as to any Lender
Collateral in its possession or control or in the possession or control of any
agent or nominee of such Collateral Agent or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto, except the duty to accord such of the Lender Collateral as may be in
its possession substantially the same care as it accords its own assets, the
duty to account for monies received by it and any other duties contained in its
respective Loan


 


18

















 


Documents.  Neither Collateral Agent shall be
responsible for any loss suffered with respect to any investment permitted to
be made under this Agreement or its Loan Documents and shall not be responsible
for the consequences of any oversight or error of judgment whatsoever, except
that such Collateral Agent shall be liable for losses due to its willful
misconduct or gross negligence.  Neither
Collateral Agent shall be required to ascertain or inquire as to the
performance by the Borrower  or any Active
Subsidiary of any of the covenants or agreements contained herein or in any of
the Loan Documents except for such person’s own gross negligence or willful
misconduct or breach of the express terms of this Agreement or as provided by
its respective Loan Documents.  Neither
Collateral Agent nor any officer, agent or representative of either of them
shall be personally liable for any action taken or omitted to be taken by any
such person in connection with this Agreement or any Loan Document, except as
may be provided by the respective Loan Documents.  Neither Collateral Agent nor any officer, agent or representative
of either of them shall be personally liable for any action taken by any such
person in accordance with any notice given by the Requisite Party pursuant to
the terms of this Agreement.  Notwithstanding any other provision of this
Agreement to the contrary, in no event shall either Collateral Agent, the
Lender or the Subordinated Creditor be liable for special, consequential or
punitive damages.


 


Section 5.07                                Reliance
by Collateral Agent; Etc.


 


(a)                                  Whenever
in the performance of its duties under this Agreement either Collateral Agent
shall deem it necessary or desirable that a matter be proved or established
with respect to any Person in connection with the taking, suffering or omitting
of any action hereunder by such Collateral Agent, such matter may be
conclusively deemed to be proved or established by a certificate executed by an
officer of such Person, and absent gross negligence or willful misconduct, such
Collateral Agent shall have no liability with respect to any action taken,
suffered or omitted in reliance thereon.


 


(b)                                 Each
Collateral Agent may consult with counsel and shall be fully protected in
taking any action hereunder in accordance with any advice of such counsel.  Each Collateral Agent shall have the right but
not the obligation at any time to seek instructions concerning the
administration of this Agreement, the duties created hereunder, or any of the
Lender Collateral from any court of competent jurisdiction.


 


(c)                                  Each
Collateral Agent shall be fully protected in relying upon any resolution,
statement, certificate, instrument, opinion, report, notice, request, consent,
order or other paper or document which it reasonably believes to be genuine and
to have been signed or presented by the proper party or parties.  In the absence of its gross negligence or
willful misconduct, each Collateral Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions furnished to such
Collateral Agent in connection with this Agreement.


 


(d)                                 Neither
Collateral Agent shall be deemed to have actual, constructive, direct or
indirect notice or knowledge of the occurrence of any Trigger


 


19

















 


Event unless and until such
Collateral Agent shall have received a Notice of Trigger Event.  Neither Collateral Agent shall have any
obligation whatsoever either prior to or after receiving such a Notice of
Trigger Event to inquire whether a Trigger Event has, in fact, occurred and
shall be entitled to rely conclusively, and shall be fully protected in so
relying, on any certificate so furnished to it and shall have no obligation,
absent written instructions from the Requisite Party, to take or omit to take
any action with respect to such Notice of Trigger Event.


 


Section 5.08                                Resignation
or Replacement of the Collateral Agent. 
Each Collateral Agent may at any time resign in accordance with the
terms of its respective Loan Documents. 
Upon the acceptance of any appointment as a Collateral Agent hereunder
by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations hereunder and under its
respective Loan Documents.  After any
retiring Collateral Agent’s resignation or removal, the provisions of this
Agreement and the Loan Documents shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as Collateral Agent and any successor Collateral Agent appointed in accordance
with the respective Loan Documents shall be a “Collateral Agent” for all
purposes under this Agreement entitled to all rights, privileges and benefits
and subject to all of the duties and obligations of such Collateral Agent
hereunder.


 


ARTICLE VI


 


REPRESENTATIONS AND WARRANTIES


 


Each of the Lender Collateral Agent, the Subordinated Creditor
Collateral Agent, the Subordinated Creditor, the Borrower, the Lender and each
Active Subsidiary represents and warrants to the other parties hereto that
(a) the execution, delivery and performance of this Agreement
(i) have been duly authorized by all requisite corporate action on its
part and (ii) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which it
is subject or any judgment, order, writ, injunction, license or permit
applicable to it and will not conflict with any provision of its corporate
charter or bylaws or any agreement or other instrument binding upon it; and
(b) this Agreement (i) has been duly executed and delivered by it, (ii)
constitutes its legal, valid and binding obligation, and (iii) is enforceable
against it in accordance with its terms. 
The Subordinated Creditor represents and warrants to the other parties
hereto that the holders of Subordinated Creditor Notes have agreed in the
Subordinated Creditor Indenture to be bound by the terms of this Agreement.


 


20

















 


ARTICLE VII


 


CERTAIN INTERCREDITOR ARRANGEMENTS


 


If the
Subordinated Creditor or Subordinated Creditor Collateral Agent acquires
custody, control or possession of any Lender Collateral, other than pursuant to
the terms of this Agreement, the Subordinated Creditor or Subordinated Creditor
Collateral Agent, as the case may be, shall promptly cause such Lender
Collateral or Proceeds to be delivered to or put in the custody, possession or
control of the Lender Collateral Agent or, if the Lender Collateral Agent shall
so designate, an agent of the Lender Collateral Agent (which agent may be a
branch or affiliate of the Lender Collateral Agent) in the same form of payment
received, with appropriate endorsements, in the country in which such Lender
Collateral is held, for distribution in accordance with the provisions of
Article IV.  Until such time as the
provisions of the immediately preceding sentence have been complied with, such
party shall be deemed to hold such Lender Collateral and Proceeds in trust for
the Lender Collateral Agent. 
Notwithstanding the foregoing, if the Requisite Party receives payments
or Proceeds of Lender Collateral in the form of cash, the Requisite Party may
apply such amounts to the payment of the Senior Liabilities (until the Senior
Liabilities shall have been Fully Paid) or the Subordinated Liabilities (after
the Senior Liabilities shall have been Fully Paid).


 


ARTICLE VIII


 


MISCELLANEOUS


 


Section 8.01                                Rights
of Subrogation.  The Subordinated
Creditor and Subordinated Creditor Collateral Agent each agrees that no payment
or distribution to the Lender or Lender Collateral Agent pursuant to the
provisions of this Agreement shall entitle such Party to exercise any rights of
subrogation in respect thereof until the Senior Liabilities shall have been
Fully Paid.


 


Section 8.02                                Further
Assurances.  The Parties will, at
their own expense and at any time and from time to time, promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that any Party may reasonably request,
in order to protect any right or interest granted or purported to be granted
hereby or to enable either Collateral Agent or the Lender or the Subordinated
Creditor to exercise and enforce its rights and remedies hereunder; provided,
however, that no Party shall be required to pay over any payment or
distribution, execute any instruments or documents, or take any other action
referred to in this Section 8.02 to the extent that such action would
contravene any law, order or other legal requirement, and in the event of a
controversy or dispute, such Party may interplead any payment or distribution
in any court of competent jurisdiction, without further responsibility in
respect of such payment or distribution under this Section 8.02.


 


Section 8.03                                Defenses
Similar to Suretyship Defenses.  All
rights and interests of the Lender and the Lender Collateral Agent hereunder,
and all agreements and obligations of the Subordinated Creditor and
Subordinated Creditor Collateral Agent under this Agreement, shall remain in
full force and effect irrespective of:


 


21

















 


(a)                                  any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Senior Liabilities, or any other amendment or waiver of or any
consent to departure from the Senior Loan Agreements, provided, however,
that this clause (a) shall not apply to, and the Subordinated Creditor Collateral
Agent’s liens and security interests in the Lender Collateral shall not be
subordinated in priority by virtue of this Agreement to the Lender Collateral
Agent’s liens and security interests therein to the extent that the principal
amount of Senior Loan Indebtedness (exclusive of interest, early termination
fees or penalties, fees (including attorneys’ fees), indemnification
obligations and costs and expenses) is increased by virtue of any amendment to
an amount in excess of the Maximum Aggregate Principal Amount, without the
express written consent of the Subordinated Creditor; or


 


(b)                                 any
exchange or release of any Lender Collateral, or any release, amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Senior Liabilities.


 


Section 8.04                                Waiver.  Except as otherwise provided herein, the
Subordinated Creditor and Subordinated Creditor Collateral Agent each hereby
waives, with respect to the Lender Collateral and the Proceeds to which the
Lien Priority hereunder relates (i) any failure, omission, delay or lack
on the part of the Lender or Lender Collateral Agent to enforce, assert or
exercise any right, power or remedy conferred on the Lender or Lender
Collateral Agent in any of the Lender Loan Documents or this Agreement or the
inability of the Lender or Lender Collateral Agent to enforce any provision of
the Lender Loan Documents or this Agreement, and (ii) without limiting the
generality of the foregoing, any requirement that the Lender or Lender
Collateral Agent protect or insure any Liens or other lien or any property
subject thereto or exhaust any right or take any action against the Borrower or
any Active Subsidiary or any other Person or any Lender Collateral.


 


Section 8.05                                Amendments,
Etc.  No amendment or waiver of any
provision of this Agreement nor consent to any departure by any Party hereto
shall in any event be effective unless the same shall be in writing and signed
by the other Parties, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.


 


Section 8.06                                Addresses
for Notices.  All demands, notices
and other communications provided for hereunder shall be in writing and, if to
the Subordinated Creditor, mailed or sent by telecopy or delivered to it,
addressed to it as follows:


 


The Bank of New York


101 Barclay Street – 8W 


New York, NY  10286


Attention: Corporate Trust Division/New World Restaurant


Telephone:  (212) 815-5733


Facsimile:  (212) 815-5707


 


22

















 


if to the Subordinated Creditor
Collateral Agent, mailed, sent or delivered thereto, addressed to it as
follows:


 


The Bank of New York


101 Barclay Street – 8W


New York, NY  10286


Attention: Corporate Trust Division/New World Restaurant


Telephone:  (212) 815-5733


Facsimile:  (212) 815-5707


 


With copies
to:


 


Winston & Strawn


200 Park Avenue


New York, NY  10166


Attention: Jeffrey Elkin


Telephone:  (212) 294-6711


Facsimile:  (212) 294-4700


 


if to the Lender, mailed, sent or delivered thereto, addressed to it as
follows:


 


AmSouth Bank


c/o AmSouth Capital Corp.


350 Park Avenue, 20th 
Floor


New York, New York 10022


Attention:  


Facsimile:  (212) 935-7458


 


With copies
to:


 


Kaye Scholer LLP


425 Park Avenue


New York, New York 10022


Attention:  Albert Fenster, Esq.


Facsimile:  (212) 836-8689


 


if to the Lender Collateral Agent, mailed, sent or delivered thereto,
addressed to it as follows:


 


AmSouth Bank


c/o AmSouth Capital Corp.


350 Park Avenue, 20th 
Floor


New York, New York 10022


Attention:  


Facsimile:  (212) 935-7458


 


23

















 


With copies
to:


 


Kaye Scholer LLP


425 Park Avenue


New York, New York 10022


Attention:  Albert Fenster, Esq.


Facsimile:  (212) 836-8689


 


if to Borrower or any Active Subsidiary, mailed, sent or delivered
thereto, addressed to any of them as follows:


 


New World Restaurant Group, Inc.


1687 Cole Blvd


Golden, CO 80401-3316


Attention:  Anthony Wedo


Facsimile:  (303) 568-8199


 


With copies
to:


 


Proskauer Rose LLP


1585 Broadway


New York, NY 10036-8299


Attention:  Julie Allen, Esq.


Facsimile:  (212) 969-2900


 


or as to any Party at such other address as shall be designated by such
party in a written notice to the other parties complying as to delivery with
the terms of this Section 8.06.  All
such demands, notices and other communications shall be effective, when mailed,
two business days after deposit in the mails, postage prepaid, when sent by
telecopy, when receipt is acknowledged by the receiving telecopy equipment (or
at the opening of the next business day if receipt is after normal business
hours), or when delivered, as the case may be, addressed as aforesaid; provided,
however, that notices to the Subordinated Creditor or the Subordinated
Creditor Collateral Agent shall not be deemed to have been given until actually
received by the Subordinated Creditor or the Subordinated Creditor Collateral
Agent.


 


Section 8.07                                No
Waiver, Remedies.  No failure on the
part of any Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.  The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.


 


Section 8.08                                Continuing
Agreement, Transfer of Senior Loan Agreements.  This Agreement is a continuing agreement and shall
(i) remain in full force and effect until the Senior Liabilities and,
solely for the purposes of Section 8.14, the Subordinated


 


24

















 


Liabilities shall have been
Fully Paid, (ii) be binding upon the Parties and their successors and
assigns, and (iii) inure to the benefit of and be enforceable by the
Parties (in the case of the Borrower or any Active Subsidiary, only Section
3.04 shall inure to and be enforceable by it) and their respective successors,
transferees and assigns.  Without
limiting the generality of the foregoing clause (iii), the Lender or the
Subordinated Creditor may assign or otherwise transfer its Senior Liabilities
(in accordance with the terms of the Senior Loan Agreements) or Subordinated
Liabilities (in accordance with the terms of the Subordinated Creditor Loan
Documents) to any other Person (other than Borrower or any Active Subsidiary or
any affiliate of Borrower and any Active Subsidiary), and such other Person
shall thereupon become vested with all the rights and obligations in respect
thereof granted to the Lender or Subordinated Creditor, as the case may be,
herein or otherwise.


 


Section 8.09                                Governing
Law: Entire Agreement.  This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York except as otherwise preempted by applicable federal
law.  This Agreement constitutes the
entire agreement and understanding among the Parties with respect to the
subject matter hereof and supersedes any prior agreements, written or oral,
with respect thereto.


 


Section 8.10                                Counterparts.  This Agreement maybe executed in any number
of counterparts, and it is not necessary that the signatures of all Parties be
contained on any one counterpart hereof, each counterpart will be deemed to be
an original, and all together shall constitute one and the same document.


 


Section 8.11                                No
Third Party Beneficiary.  This
Agreement is solely for the benefit of the Lender, the Lender Collateral Agent,
the Subordinated Creditor, the Subordinated Creditor Collateral Agent and, as
to Section 3.04 only, the Borrower and each Active Subsidiary (and their permitted
assignees).  No other Person shall be
deemed to be a third-party beneficiary of this Agreement.


 


Section 8.12                                Headings.  The headings of the articles and sections of
this Agreement are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof


 


Section 8.13                                Severability.  If any of the provisions in this Agreement
shall, for any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement and shall not invalidate the Lien Priority or
any other priority set forth in this Agreement.


 


Section 8.14                                Payment
in Full of Senior Liabilities.  From
and after the Senior Liabilities being Fully Paid up to the Maximum Aggregate
Principal Amount plus all interest, early termination fees or penalties, fees
(including, attorneys fees), indemnification obligations (other than Contingent
Indemnification Obligations then owing), costs and expenses thereof whether
accrued or incurred before or after an Insolvency Proceeding and regardless of
whether or not allowed or allowable in any


 


25

















 


Insolvency Proceeding, and the
Lender Collateral Agent having received any amounts required pursuant to the
last sentence of Section 4.01(a):


 


(a)                                  All
payments or distributions from the Borrower or any Active Subsidiary or with
respect to the Lender Collateral and the Proceeds received by the Lender or Lender
Collateral Agent shall be segregated from other funds and property held by the
Lender or Lender Collateral Agent and held in trust by the Lender or Lender
Collateral Agent for the Subordinated Creditor and Subordinated Creditor
Collateral Agent and shall be promptly paid over to the Subordinated Creditor
Collateral Agent in the same form as received (with any necessary endorsement
without recourse or warranty) to be applied to or held for the payment or
prepayment of the Subordinated Liabilities in accordance with the terms of the
Subordinated Creditor Indenture; and


 


(b)                                 The
Lender and Lender Collateral Agent will promptly execute and deliver all
further instruments and documents, and take all further acts that may be
necessary or desirable, or that the Subordinated Creditor or Subordinated
Creditor Collateral Agent may reasonably request, at the Subordinated
Creditor’s cost, to permit the Subordinated Creditor Collateral Agent to
enforce the Subordinated Liabilities or recover any Proceeds of the Lender
Collateral, provided, however, that the Lender and Lender
Collateral Agent shall not be required to pay over any payment or distribution,
execute any instruments or documents, or take any other action referred to in
this Section 8.14 to the extent that such action would contravene any law,
order or other legal requirement, and in the event of a controversy or dispute,
the Lender and Lender Collateral Agent may interplead any payment or
distribution in any court of competent jurisdiction, without further responsibility
in respect of such payment or distribution under this Section 8.14.


 


Section 8.15                                Subordinated
Creditor Trustee Status.  It is
acknowledged that the subordination and related agreements set forth herein by
the Subordinated Creditor and the Subordinated Creditor Collateral Agent are
made solely in its capacity as Trustee and as Collateral Agent under the
Subordinated Creditor Indenture and with respect to the Subordinated Creditor
Notes (and not in its individual capacity), and that the Subordinated Creditor
and the Subordinated Creditor Collateral Agent have entered into this Agreement
at the direction of the holders of the Subordinated Creditor Notes.


 


Section 8.16                                Amendments
to Loan Documents.  Each of the
Lender, the Lender Collateral Agent, the Subordinated Creditor and the
Subordinated Creditor Collateral Agent agree to provide each other with copies
of any amendments to the Loan Documents.


 


Section 8.17                                VENUE;
JURY TRIAL WAIVER.


 


(a)                                  THE
PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL
COURTS


 


26

















 


LOCATED IN THE CITY OF NEW YORK
OR THE SOUTHERN DISTRICT OF NEW YORK, PROVIDED, HOWEVER, THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY LENDER COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT LENDER COLLATERAL AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE LENDER COLLATERAL AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH LENDER
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. 
EACH PARTY HERETO WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM  NON  CONVENIENS
OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE
WITH THIS SECTION 8.17.


 


(b)                                 EACH
PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY HERETO REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


 


Section 8.18                                No
Marshaling.  The Subordinated
Creditor and Subordinated Creditor Collateral Agent hereby agree not to assert
and hereby waive, to the fullest extent permitted by law, any right to demand,
request, plead or otherwise claim the benefit of any marshaling, appraisal,
valuation or other similar doctrine or right that may otherwise be available
under applicable law or any other similar rights a junior secured creditor
might have under applicable law.


 


Section 8.19                                Certain
Conflicts.  In the event of any
conflict between the terms of this Agreement and the terms of any Loan Document
in respect of the rights and obligations of either Collateral Agent, the terms
of this Agreement shall control.


 


27

















 


IN WITNESS
WHEREOF, the Lender, the Subordinated Creditor, the Lender Collateral Agent and
the Subordinated Creditor Collateral Agent have caused this Agreement to be
duly executed and delivered as of the date first above written.


 


	
  LENDER:

  	
   

  	
  AMSOUTH BANK,

  
	
   

  	
   

  	
  solely in its capacity as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ MARK McNALLY

  	
   

  
	
   

  	
   

  	
  Name: Mark McNally

  
	
   

  	
   

  	
  Title: Attorney-in-fact

  



 

















 


	
  SUBORDINATED

  CREDITOR:

  	
   

  	
  THE BANK OF NEW YORK,

  solely in its capacity as Trustee (and not individually)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ MARGARET CIESMELEWSKI

  	
   

  
	
   

  	
   

  	
  Name: Margaret Ciesmelewski

  
	
   

  	
   

  	
  Title: Vice President

  



 

















 


	
  SUBORDINATED

  CREDITOR

  COLLATERAL

  AGENT:

  	
   

  	
  THE BANK OF NEW YORK,

  solely in its capacity as Subordinated Creditor Collateral

  Agent (and not individually)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ MARGARET CIESMELEWSKI

  	
   

  
	
   

  	
   

  	
  Name: Margaret Ciesmelewski

  
	
   

  	
   

  	
  Title: Vice President

  



 

















 


	
  LENDER

  COLLATERAL

  AGENT:

  	
   

  	
  AMSOUTH BANK,

  solely in its capacity as Lender Collateral Agent (and not

  individually)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ MARK McNALLY

  	
   

  
	
   

  	
   

  	
  Name: Mark McNally

  
	
   

  	
   

  	
  Title: Attorney-in-fact

  



 

















 


Each of the undersigned hereby (1)
acknowledges that it has received a copy of this Agreement and consents
thereto, and agrees to recognize all rights granted thereby to the Lender, the
Lender Collateral Agent, the Subordinated Creditor, the Subordinated Creditor
Collateral Agent and the Requisite Party, and will not do any act or perform
any obligation which is not in accordance with the agreements set forth in such
Agreement, (2) agrees to comply with its obligations under Sections 3.03 and
4.01(b), and (3) makes the representations and warranties applicable to it in
Article VI.


 


	
  BORROWER:

  	
  NEW WORLD RESTAURANT GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
  Anthony Wedo

  
	
   

  	
  Chief Executive Officer

  



 


 


	
  ACTIVE

  SUBSIDIARIES:

  	
  MANHATTAN BAGEL COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
  Anthony Wedo

  
	
   

  	
  Chief Executive Officer

  



 


	
   

  	
  CHESAPEAKE BAGEL FRANCHISE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
  Anthony Wedo

  
	
   

  	
  Chief Executive Officer

  



 


	
   

  	
  WILLOUHGBY’S INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
  Anthony Wedo

  
	
   

  	
  Chief Executive Officer

  



 


	
   

  	
  EINSTEIN AND NOAH CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
  Anthony Wedo

  
	
   

  	
  Chief Executive Officer

  



 

















 


	
   

  	
  EINSTEIN/NOAH BAGEL PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
  Anthony Wedo

  
	
   

  	
  Chief Executive Officer

  



 


 


	
   

  	
  I. & J. BAGEL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
  Anthony Wedo

  
	
   

  	
  Chief Executive Officer