Exhibit 10.57


 


SECURITY
AGREEMENT AND MORTGAGE - 

TRADEMARKS AND PATENTS


 


AGREEMENT made
this 8th day of July, 2003 (as amended, modified or supplemented from time to
time, this “Security Agreement”) among New World Restaurant Group, Inc.,
a Delaware corporation (“New World”), Manhattan Bagel Company, Inc., a
New Jersey corporation (“MBC”), Chesapeake Bagel Franchise Corp., a New
Jersey corporation (“Chesapeake”), Willoughby’s Incorporated, a
Connecticut corporation (“Willoughby’s”), Einstein and Noah Corp., a
Delaware corporation (“Einstein”), Einstein/Noah Bagels Partners, Inc.,
a Delaware corporation (“Einstein/Noah”), I. & J. Bagel, Inc., a
California corporation (“I&J”and together with New World, MBC,
Chesapeake, Willoughby’s, Einstein and Einstein/Noah, each a “Debtor”
and, collectively, the “Debtors”) and AmSouth Bank, as agent (in its
capacity as agent, together with any successor in such capacity, referred to
herein as the “Secured Party”) for the financial institutions (the “Lenders”)
now or hereafter being parties to the Loan and Security Agreement, dated as of
the date hereof (as amended, restated, modified or supplemented from time to
time in accordance with its terms, the “Loan Agreement”), among the
Lenders, the Secured Party, AmSouth Capital Corp., as the administrative agent,
the guarantors named therein and the Debtors;


 


WHEREAS, one
or more of the Debtors has adopted the trademarks, terms and designs described
in Schedule A annexed hereto and made a part hereof;


 


WHEREAS, one
or more of the Debtors is the owner and holder of the patents and patent
applications listed on Schedule B annexed hereto and made a part
hereof;


 


WHEREAS, the
Lenders have agreed to make Revolving Loans and issue or cause the issuance of
Letters of Credit on behalf of the Debtors, in each case pursuant to, and
subject to the terms and conditions of, the Loan Agreement; and


 


WHEREAS, as a
condition to the Lenders making any Revolving Loans or issuing or causing the
issuance of any Letters of Credit under the Loan Agreement, the Lenders and the
Secured Party have required the execution and delivery of this Security
Agreement by the Debtors;


 


NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


 


1.                                       Grant
of Security.  As collateral security
for the prompt and complete payment, performance and observance of (a) all
present and future Obligations whether at stated maturity, by acceleration or
otherwise (including, without limitation, all interest thereon, whether
accruing prior or subsequent to the commencement of a bankruptcy or similar
proceeding involving any Debtor as a


 

















 


debtor and
whether or not such interest is an allowed claim in any such proceeding) and
(b) all present and future obligations of each of the Debtors under each of the
Loan Documents whether at stated maturity, by acceleration or otherwise (all of
the foregoing being herein referred to as the “Secured Obligations”),
each Debtor hereby mortgages and pledges to the Secured Party for the benefit
of the Secured Party and the Lenders, and grants to the Secured Party for the
benefit of the Secured Party and the Lenders, a first priority security
interest in, all of its right, title and interest in and to (i) each of the
Trademarks (as hereinafter defined) of such Debtor, and the goodwill of the
business symbolized by each such Trademark, all customer lists and other
records of such Debtor relating to the distribution of products bearing the
Trademarks of such Debtor and each of the registrations of such Debtor
described in Schedule A annexed hereto and made a part hereof; (ii)
each of the Patents (as hereinafter defined) of such Debtor and each of the
Patent Applications (as hereinafter defined) of such Debtor listed on Schedule B
annexed hereto and made a part hereof; and (iii) any and all proceeds of the
foregoing, including, without limitation, any claims by such Debtor against
third parties for infringement of the Trademarks or the Patents of such Debtor
(collectively, the “Collateral”).


 


2.                                       Certain
Defined Terms.  Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
assigned to such terms in the Loan Agreement. 
As used in this Security Agreement, unless the context otherwise
requires:


 


“Patents”
means, with respect to a Debtor, all of such Debtor’s right, title and interest
in and to all United States and foreign patents and applications for letters
patent throughout the world, including, but not limited to each patent and
patent application referred to in Schedule B, all reissues,
divisions, continuations, continuations-in-part, extensions, renewals, and
reexaminations of any of the foregoing, all rights corresponding thereto
throughout the world, the right to sue for past infringements of any of the
foregoing, and all proceeds of the foregoing including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.


 


“Trademarks”
means, with respect to a Debtor, all of such Debtor’s right, title and interest
in and to all United States and foreign trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, certification marks, collective marks, logos, other source of
business identifiers, designs and general intangibles of a like nature, all
registrations and applications for any of the foregoing, including, but not
limited to the registrations and applications listed on Schedule A,
all extensions or renewals of any of the foregoing, all of the goodwill of the
business connected with the use of and symbolized by the foregoing, the right
to sue for past infringement or dilution of any of the foregoing or for any
injury to goodwill, and all proceeds of the foregoing, including, without
limitation, license royalties, income, payments, claims, damages, and proceeds
of suit.


 


3.                                       Representations,
Warranties and Covenants of each Debtor. 
Each Debtor hereby represents, warrants, covenants and agrees as
follows:


 


(a)                                  Title
to Trademarks.  Such Debtor has the
sole, full and clear title (subject only to Liens permitted under clauses (b)
and (j) of the definition of Permitted Liens) to any material


 


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registered
U.S. Trademarks of such Debtor for the goods and services covered by the
registrations thereof and such registrations are valid and subsisting and in
full force and effect.  Such Debtor
shall cause the filings in the United States Patent and Trademark Office listed
on Schedule 9.31 of the Loan Agreement applicable to such Debtor to
be terminated within sixty (60) days of the Closing Date.


 


(b)                                 Use
of Trademarks.  Other than with
respect to Trademarks that are no longer used or, in such Debtor’s reasonable
business judgment, useful in such Debtor’s business and except to the extent
that to do otherwise would not reasonably be expected to result in a Material
Adverse Effect, such Debtor (either itself or through licensees) will continue
to use its Trademarks on each and every trademark class of goods applicable to
its current line as reflected in its current catalogs, brochures and price
lists in order to maintain its Trademarks in full force free from any claim of
abandonment for nonuse and such Debtor will not (and will not permit any
licensee thereof to) do any act or knowingly omit to do any act whereby any
Trademark of such Debtor may become invalidated.


 


(c)                                  Title
to Patents; Etc.  Such Debtor has
the sole, full and clear title to each of the Patents of such Debtor shown on Schedule B
annexed hereto and made a part hereof. 
As of the date hereof, none of the Patents of such Debtor has been
abandoned or dedicated and, except with respect to Patents or Patent
Applications that are no longer used or, in such Debtor’s reasonable business
judgment, useful in such Debtor’s business and except to the extent that to do
otherwise would not reasonably be expected to result in a Material Adverse
Effect, such Debtor will not do any act, or knowingly omit to do any act,
whereby the Patents or Patent Applications of such Debtor may become abandoned
or dedicated.  Such Debtor shall notify
the Secured Party promptly if it knows or has any reason to know that any application
or registration may become abandoned or dedicated.


 


(d)                                 Further
Assurances.  Such Debtor will
perform all acts and execute all documents, including, without limitation,
assignments for security in form suitable for filing with the United States Patent
and Trademark Office, substantially in the forms of Exhibits 1 and 2
hereof, respectively, requested by the Secured Party at any time to evidence,
perfect, maintain, record and enforce the Secured Party’s interest in the
Collateral in which such Debtor granted a security interest hereunder in favor
of the Secured Party or otherwise in furtherance of the provisions of this
Security Agreement, and such Debtor hereby authorizes the Secured Party to
execute and file one or more financing statements (and similar documents) or
copies thereof or of this Security Agreement with respect to the Collateral in
which such Debtor granted a security interest hereunder in favor of the Secured
Party signed only by the Secured Party.


 


(e)                                  Costs
and Expenses.  Such Debtor, jointly
and severally with the other Debtors, shall be obligated to, upon demand, pay
to the Secured Party the amount of any and all reasonable costs, sums and
expenses which the Secured Party may pay or incur pursuant to the provisions of
this Security Agreement or in enforcing the Secured Obligations, the Collateral
or the security interests granted hereunder, including, but not limited to, all
reasonable filing or recording fees, court costs, collection charges, travel
expenses, computer fees, telephone fees, duplicating fees and reasonable
attorneys’ fees and expenses, such expenses shall include, without limitation,
any reasonable costs paid or incurred by the Secured Party in connection with
any waivers, amendments,


 


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modifications,
extensions, renewals or renegotiations. 
All of the foregoing, together with interest thereon at the rate
applicable to Revolving Loans at such time pursuant to Section 3.1 of the Loan
Agreement, shall be part of the Secured Obligations and shall be payable on
demand.


 


(f)                                    Pledge
of Additional Patents and Trademarks. 
In no event shall such Debtor, or such Debtor through any agent,
employee, licensee or designee, (i) file an application for the registration of
any Patent or Trademark of such Debtor with the United States Patent and
Trademark Office or any similar office or agency of the United States, any
State thereof, any other country or any political subdivision thereof or (ii)
file any assignment of any patent or trademark, which such Debtor may acquire
from a third party, with the United States Patent and Trademark Office or any
similar office or agency of the United States of America, any State thereof,
any other country or any political subdivision thereof, unless such Debtor
shall, on or prior to the date of such filing, notify the Secured Party
thereof, and, upon the request of the Secured Party, execute and deliver any
and all assignments, agreements, instruments, documents and papers as the
Secured Party may reasonably request to evidence the Secured Party’s interest
in such Patent or Trademark and the goodwill and general intangibles of such
Debtor relating thereto or represented thereby.


 


(g)                                 Secured
Party Appointed Attorney-in-Fact. 
Such Debtor hereby constitutes and appoints the Secured Party its
attorney-in-fact to execute and file, upon the occurrence and during the
continuance of an Event of Default, all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power being coupled with an interest is irrevocable until the Secured
Obligations are paid in full, all Revolving Commitments have expired or been
terminated and all Letters of Credit have been canceled.


 


(h)                                 Debtor
Authority; Etc.  Such Debtor has the
right and power to make the assignment and to grant the security interest
herein granted; and the Collateral of such Debtor is not now, and at all times
hereafter will not be, subject to any liens, mortgages, assignments, security
interests or encumbrances of any nature whatsoever, except in favor of the
Secured Party or as permitted under clauses (f) and (j) of the definition of
Permitted Liens, and such Debtor has not received any notice from any third
party claiming any right or interest in and to any of the Collateral of such
Debtor or that any of such Debtor’s use thereof infringes the rights of any
third party.


 


(i)                                     Negative
Pledge.  Except to the extent
permitted under the Loan Agreement or to the extent that Secured Party, upon
prior written notice from such Debtor, shall consent, such Debtor will not
assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a security
interest in or lien upon, encumber, grant an exclusive or non-exclusive
license, or otherwise dispose of any of the Collateral of such Debtor, and
nothing in this Security Agreement shall be deemed a consent by the Secured
Party or any Lender to any such action except as expressly permitted herein.


 


(j)                                     No
Additional Patents or Trademarks. 
As of the date hereof, neither such Debtor nor any Affiliate or
Subsidiary thereof owns any Patents or Trademarks or has any Patents or
Trademarks registered in, or the subject of pending applications in, the United
States Patent and Trademark Office or any similar office or agency of the United
States of America, any State thereof,


 


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any other country or any political
subdivision thereof, other than those described in Schedules A  and B annexed hereto and made a part
hereof.


 


(k)                                  Additional
Further Assurances.  Such Debtor
will take all necessary and reasonable steps in any proceeding before the
United States Patent and Trademark Office or any similar office or agency of
the United States, any State thereof, any other country or any political
subdivision thereof, to maintain each Patent and Trademark included within the
Collateral in which such Debtor granted a security interest hereunder in favor
of the Secured Party, including, without limitation, filing of renewals,
affidavits of use, and opposition, interference and cancellation proceedings,
except with respect to any Patent or Trademark that is no longer used or, in
such Debtor’s reasonable business judgment, useful in such Debtor’s business
and except to the extent that to do otherwise would not reasonably be expected
to result in a Material Adverse Effect.


 


(l)                                     Secured
Party Not Liable.  Such Debtor
assumes all responsibility and liability arising from the use of the Collateral
in which such Debtor granted a security interest hereunder in favor of the
Secured Party, and such Debtor hereby agrees to indemnify and hold the Secured
Party and each Lender harmless from and against any claim, suit, loss, damage
or reasonable expense (including reasonable attorneys’ fees) arising out of any
alleged defect in any product manufactured, promoted or sold by such Debtor (or
any Affiliate or Subsidiary thereof) in connection with any Collateral of such
Debtor or out of the manufacture, promotion, labeling, sale or advertisement of
any such product by such Debtor (or any Affiliate or Subsidiary thereof),
except as caused by the gross negligence or willful misconduct of any
Lender.  Such Debtor agrees that the
Secured Party does not assume, and shall have no responsibility for, the
payment of any sums due or to become due under any agreement or contract
included in the Collateral in which such Debtor has granted a security interest
hereunder in favor of the Secured Party or the performance of any obligations
to be performed under or with respect to any such agreement or contract by such
Debtor, and such Debtor hereby agrees to indemnify and hold the Secured Party
and each Lender harmless with respect to any and all claims by any Person
relating thereto.


 


(m)                               Secured
Party’s Rights.  Secured Party may,
in its reasonable discretion, pay any amount or do any act required of such
Debtor hereunder or requested by the Secured Party to preserve, defend,
protect, maintain, record or enforce such Debtors’ obligations contained
herein, the Secured Obligations, the Collateral of such Debtor, or the right,
title and interest granted the Secured Party herein, and which such Debtor
fails to do or pay, and any such payment shall be deemed an advance by the
Secured Party to such Debtor and shall be payable on demand together with
interest at the highest rate then applicable to Revolving Loans under the Loan
Agreement.


 


(n)                                 Protection
of Trademarks.  Such Debtor agrees
that if it, or any Affiliate or Subsidiary thereof, learns of any use by any
third party of any term or design likely to cause confusion with any Trademark
of such Debtor, it shall promptly notify the Secured Party of such use and, if
requested by Secured Party, shall join with the Secured Party, at its expense,
in such action as the Secured Party, in its reasonable discretion may deem
advisable for the protection of the Secured Party’s interest in and to such
Trademarks, it  being understood that
the foregoing shall not preclude


 


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such Debtor
from bringing any action against a third-party for the protection of such
Debtor’s interest in and to such Trademarks.


 


(o)                                 Licenses
of Trademarks and Patents.  All
licenses of its Trademarks and Patents which such Debtor has granted to third
parties are set forth in Schedule C annexed hereto and made a part
hereof.


 


4.                                       Remedies.  Upon the occurrence of and during the
continuation of an Event of Default, in addition to all other rights and
remedies of the Secured Party, whether under law, the Loan Agreement or
otherwise (all such rights and remedies being cumulative), not exclusive and
enforceable alternatively, successively or concurrently, without (except as
provided herein) notice to, or consent by, any of the Debtors, the Secured
Party shall have the following rights and remedies:


 


(a)                                  immediately
upon the Secured Party’s request, no Debtor shall make any further use of its
Patents or the Trademarks or any mark similar thereto for any purpose;


 


(b)                                 the
Secured Party may, at any time and from time to time, license, whether general,
special or otherwise, and whether on an exclusive or nonexclusive basis, any of
the Patents or Trademarks of a Debtor, throughout the world for such term or
terms, on such conditions, and in such manner, as the Secured Party shall in
its sole discretion determine; provided, that the term of any such
license shall automatically terminate if and when such Event of Default has
been cured or waived, subject, in the case of Trademarks to sufficient rights
to quality control and inspection in favor of such Debtor to avoid the risk of
invalidation of said Trademarks;


 


(c)                                  the
Secured Party may (without assuming any obligations or liability thereunder),
at any time, enforce (and shall have the exclusive right to enforce) against
any licensee or sublicensee all rights and remedies of the applicable Debtor
in, to and under any one or more license agreements with respect to the
Collateral in which such Debtor has granted a security interest hereunder in
favor of the Secured Party, and take or refrain from taking any action under
any thereof, and each Debtor hereby releases the Secured Party and each Lender
from, and agrees to hold the Secured Party and each Lender free and harmless
from and against any claims arising out of, any action taken or omitted to be
taken with respect to any such license agreement (except to the extent such
claims arise solely and directly from the gross negligence or willful
misconduct of Secured Party or the Lenders);


 


(d)                                 the
Secured Party may, at any time and from time to time, assign, sell, or
otherwise dispose of, the Collateral or any of it, either with or without
special or other conditions or stipulations, with power to buy the Collateral
or any part of it, and with power also to execute assurances, and do all other
acts and things for completing the assignment, sale or disposition which the
Secured Party shall, in its sole discretion, deem appropriate or proper; and


 


(e)                                  in
addition to the foregoing, in order to implement the assignment, sale or other
disposal of any of the Collateral pursuant to paragraph 4(d) hereof, the
Secured Party may, at any time, pursuant to the authority granted in the Powers
of Attorney described in paragraph 5 hereof (such


 


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authority
becoming effective upon the occurrence and remaining effective during the
continuation as hereinabove provided of an Event of Default), execute and
deliver on behalf of any Debtor, one or more instruments of assignment of the
Patents or Trademarks of such Debtor (or any application or registration
thereof), in form suitable for filing, recording or registration in any
country.  The Debtors agree, jointly and
severally, to pay when due all costs incurred in any such transfer of the Patents
or Trademarks of a Debtor, including any taxes, fees and attorneys’ fees, and
all such costs shall be added to the Secured Obligations.  The Secured Party may apply the proceeds
actually received from any such license, assignment, sale or other disposition
to the reasonable costs and expenses thereof, including, without limitation,
reasonable attorneys’ fees and all legal, travel and other expenses which may
be incurred by the Secured Party, and then to the Secured Obligations, in such
order as to principal, interest and other amounts as set forth in the Loan
Agreement; and the Debtors shall remain liable and will pay the Secured Party
on demand any deficiency remaining, together with interest thereon at a rate
equal to the highest rate then payable on the Secured Obligations pursuant to
the Loan Agreement and the balance of any expenses unpaid.  Nothing herein contained shall be construed
as requiring the Secured Party to take any such action at any time.  In the event of any such license,
assignment, sale or other disposition of the Collateral, or any of it, after
the occurrence or continuation as hereinabove provided of an Event of Default,
each Debtor shall supply its know-how and expertise relating to the manufacture
and sale of the products bearing or in connection with the Trademarks or Patents
of such Debtor, and its customer lists and other records relating to the
Trademarks or Patents of such Debtor and to the distribution of said products,
to the Secured Party or its designee.


 


5.                                       Delivery
of Powers of Attorney.  Concurrently
with the execution and delivery hereof, each Debtor is executing and delivering
to the Secured Party, in the form of Exhibit 3 hereto, five originals of
a Power of Attorney for the implementation of the assignment, sale or other
disposal of the Trademarks and Patents of such Debtor pursuant to paragraphs
4(d) and 4(e) hereof and each Debtor hereby releases the Secured Party and
each Lender from any claims, causes of action and demands at any time arising
out of or with respect to any actions taken or omitted to be taken by the
Secured Party under the powers of attorney granted herein, other than actions
taken or omitted to be taken through the gross negligence or willful misconduct
of the Secured Party.


 


6.                                       WAIVER OF JURY TRIAL AND SETOFF; CONSENT TO
JURISDICTION; ETC. 
(a)  In any litigation in any
court with respect to, in connection with, or arising out of this Security
Agreement, the Collateral, or any other Loan Document or any instrument or
document delivered pursuant to this Security Agreement, or the validity, protection,
interpretation, collection or enforcement thereof, or any other claim or
dispute howsoever arising, between any Debtor on the one hand and any one or
more of the Lenders or the Secured Party on the other hand, EACH DEBTOR, to the fullest extent it may
effectively do so, (i) waives the right to interpose any setoff, recoupment,
counterclaim or cross-claim in connection with any such litigation,
irrespective of the nature of such setoff, recoupment, counterclaim or
cross-claim, unless such setoff, recoupment, counterclaim or cross-claim could
not, by reason of any applicable Federal or State procedural laws, be
interposed, pleaded or alleged in any other action and (ii) WAIVES TRIAL BY JURY IN CONNECTION WITH ANY SUCH
LITIGATION AND ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY,


 


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PUNITIVE
OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.  EACH DEBTOR AGREES THAT THIS
PARAGRAPH 6 IS A SPECIFIC AND MATERIAL ASPECT OF THIS SECURITY AGREEMENT AND
ACKNOWLEDGES THAT NO LENDER WOULD EXTEND ANY FINANCIAL ACCOMMODATIONS TO A
DEBTOR UNDER THE LOAN AGREEMENT IF THIS PARAGRAPH 6 WERE NOT PART OF THIS
SECURITY AGREEMENT.


 


(b)                                 Each
Debtor hereby irrevocably consents to the non-exclusive jurisdiction of the
courts of the State of New York and of any Federal court located in the City of
New York in connection with any action or proceeding arising out of or relating
to this Security Agreement, the Collateral, any other Loan Document or any
document or instrument delivered pursuant to this Security Agreement.  In any such litigation, each Debtor waives,
to the fullest extent it may effectively do so, personal service of any
summons, complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to such Debtor at its address for
notice determined in accordance with paragraph 7 hereof.  Each Debtor hereby waives, to the fullest
extent it may effectively do so, the defenses of forum non conveniens and
improper venue.


 


7.                                       Security
Interest Absolute.  All rights of
the Secured Party hereunder, the security interests granted to the Secured
Party hereunder and all obligations of the Debtors hereunder, shall be absolute
and unconditional irrespective of:


 


(i)                                     any
lack of validity or enforceability of the Loan Agreement, any other Loan
Document, any other agreement with respect to any of the Secured Obligations or
any other agreement or instrument relating to any of the foregoing;


 


(ii)                                  any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Secured Obligations, or any other amendment or waiver of or
consent to any departure from the Loan Agreement, any other Loan Document or
any other agreement or instrument;


 


(iii)                               any
exchange, release or nonperfection of any other collateral, or any release or
amendment or waiver of or consent to or departure from any guaranty, for all or
any of the Secured Obligations; or


 


(iv)                              any
other circumstance which might otherwise constitute a defense available to, or
discharge of, a Debtor or any other obligor in respect of the Secured
Obligations or in respect of this Agreement.


 


If there is a
conflict between the terms and conditions of the Loan Agreement and this
Agreement, the terms and conditions of the Loan Agreement shall govern.


 


8.                                       Continuing
Security Interest.  This Security
Agreement shall create a continuing security interest in the Collateral and
shall remain in full force and effect until the later of (x) payment in full of
the Secured Obligations, (y) the expiration of or termination of the
Commitments and (z) the


 


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cancellation
of all Letters of Credit, at which time the Secured Party shall, at the
Debtors’ expense, execute and deliver to the applicable Debtors all Uniform
Commercial Code termination statements, terminations of grants and similar
documents which such Debtors shall reasonably request to evidence such termination,
including documents in a form to be filed with the Patent and Trademark Office;
provided, however, that all indemnities of the Debtors contained
in this Agreement shall survive, and remain operative and in full force and
effect regardless of, the termination of this Agreement. Notwithstanding the
foregoing, except as provided otherwise in the Loan Agreement, upon any sale or
other disposition by any Debtor of any Collateral in a transaction expressly
permitted under the Loan Agreement and the receipt by the Secured Party of the
proceeds of such sale or other disposition to the extent required by the Loan
Agreement, the Lien and security interest created by this Security Agreement in
and upon such Collateral shall be automatically released; and in connection
with any such release, the Secured Party, at the request and expense of the
applicable Debtor, will execute and deliver to such Debtor such documents and
instruments evidencing such release or termination as such Debtor may
reasonably request, without recourse and without representation or warranty.


 


9.                                       No
Waiver.  No failure on the part of
the Secured Party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy by the Secured Party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.  All remedies
hereunder are cumulative and are not exclusive of any other remedies provided
by law.  The Secured Party and the
Lenders shall not be deemed to have waived any rights hereunder or under any
other agreement or instrument unless such waiver shall be in writing and signed
by such parties.


 


10.                                 Binding
Effect.  This Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that no Debtor shall be permitted to assign this Agreement or any
interest herein or in the Collateral of such Debtor, or any part thereof, or
any cash or property held by the Secured Party as Collateral under this
Agreement.


 


11.                               GOVERNING
LAW.  THIS AGREEMENT SHALL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK; PROVIDED THAT THE SECURED PARTY
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.


 


12.                                 Address
for Notices.  All communications and
notices hereunder shall be in writing and given as provided in the Loan
Agreement.


 


13.                                 Severability.  In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable the
remaining provisions contained herein shall not in any way be affected or
impaired.


 


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14.                                 Section
Headings.  Section headings used
herein are for convenience only and are not to affect the construction of, or
to be taken into consideration in interpreting, this Agreement.


 


15.                                 Counterparts.  This Security Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all
of which, when taken together, shall constitute but one instrument.


 


16.                                 Admissibility
of Security Agreement.  Each Debtor
agrees that any copy of this Security Agreement signed by such Debtor and
transmitted by telecopier for delivery to the Secured Party shall be admissible
in evidence as the original itself if any judicial or administrative proceeding,
whether or not the original is in existence.


 


17.                                 Schedules.  The Secured Party is authorized to annex
hereto any schedules referred to herein.


 


18.                                 Acknowledgment
of Receipt.  Each Debtor
acknowledges receipt of a copy of this Security Agreement.


 


19.                                 Governance
of Loan Agreement.  The parties
hereto agree that to the extent any provisions herein conflict with the Loan
Agreement, the provisions of the Loan Agreement shall control.


 


20.                                 Intercreditor
Agreement.  The Secured Party’s
rights and remedies hereunder are subject to any applicable notice requirements
set forth in the Intercreditor Agreement.


 


[Remainder of
Page Intentionally Left Blank]


 


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IN WITNESS
WHEREOF, the Debtors and the Secured Party have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.


 


	
   

  	
  NEW WORLD
  RESTAURANT GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY
  D. WEDO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony Wedo

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MANHATTAN
  BAGEL COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY
  D. WEDO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony Wedo

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHESAPEAKE
  BAGEL FRANCHISE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY
  D. WEDO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony Wedo

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILLOUGHBY’S
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY
  D. WEDO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony Wedo

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EINSTEIN AND
  NOAH CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY
  D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Anthony Wedo

  
	
   

  	
   

  	
  Title: 

  	
  Chief
  Executive Officer

  
					



 


11

















 


	
   

  	
  EINSTEIN/NOAH
  BAGELS PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY
  D. WEDO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony Wedo

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  I. & J.
  BAGEL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY
  D. WEDO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony Wedo

  
	
   

  	
   

  	
  Title: 

  	
  Chief
  Executive Officer

  
					



 


Accepted and
Agreed:


 


AMSOUTH BANK, as Secured Party


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


12

















 


Schedule A
to Security Agreement


 


TRADEMARKS


 


	
  Trademark

  	
   

  	
  Reg. Date

  	
   

  	
  Reg. No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Servicemark

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tradenames

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TRADEMARK APPLICATIONS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  Filing Date

  	
   

  	
  Reg. No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


13

















 


Schedule B
to Security Agreement


 


PATENTS


 


14

















 


Schedule C to Security Agreement


 


LICENSES


 


15

















 


Exhibit 1 to 


Security
Agreement


 


 


ASSIGNMENT FOR
SECURITY


 


(PATENTS)


 


WHEREAS,
                                                                                                                      
(herein referred to as “Assignor”), owns the letters patent, and/or
applications for letters patent, of the United States, more particularly
described on Schedule 1-A annexed hereto as part hereof (the “Patents”);


 


WHEREAS,
Assignor, certain affiliates thereof, certain financial institutions named
therein (the “Lenders”), AmSouth Bank, as agent for the Lenders (in such
capacity, together with any successor agent, “Assignee”), AmSouth
Capital Corp., as administrative agent, and the guarantors named therein, are
parties to the Loan and Security Agreement dated as of the date hereof, and
Assignee and the Lenders are desirous of having a security interest and
mortgage in favor of Assignee on the above-identified property in order to
secure the payment of certain obligations of Assignor now or hereafter owing to
Assignee and the Lenders;


 


WHEREAS,
Assignor has entered into a Security Agreement and Mortgage-Trademarks and
Patents dated the date hereof (as it may hereafter be amended, supplemented or
otherwise modified from time to time, the “Agreement”) with Assignee;


 


WHEREAS,
pursuant to the Agreement, Assignor has granted to Assignee a security interest
in, and mortgage on, all right, title and interest of Assignor in and to the
Patents, together with any reissue, continuation, continuation-in-part or
extension thereof, and all proceeds thereof, including, without limitation, any
and all causes of action which may exist by reason of infringement thereof for
the full term of the Patents (the “Collateral”), to secure the prompt
payment, performance and observance of the Secured Obligations, as defined in
the Agreement; and


 


WHEREAS, when
the Secured Obligations have been paid and performed in full, the Commitments
have been terminated and all outstanding Letters of Credit have been canceled
or have expired, this Assignment for Security shall terminate and Assignee, at
the expense of Assignor, will execute and deliver to Assignor all instruments
reasonably requested by Assignor to acknowledge termination of this Assignment
for Security and will release the Patents from the security interest created
hereby and under the Agreement.


 


NOW,
THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Assignor does hereby further grant to Assignee a security
interest in, and mortgage on, the Collateral to secure the prompt payment,
performance and observance of the Secured Obligations.


 


1

















 


Assignor does
hereby further acknowledge and affirm that the rights and remedies of Assignee
with respect to the security interest in and mortgage on the Collateral made
and granted hereby are more fully set forth in the Agreement, the terms and
provisions of which are hereby incorporated herein by reference as if fully set
forth herein.


 


Assignee’s
address is c/o AmSouth Capital Corp., 350 Park Avenue, 20th Floor, New York,
New York 10022.


 


IN WITNESS
WHEREOF, Assignor has caused this Assignment to be duly executed by its officer
thereunto duly authorized as of the
          day of
              ,
200  .


 


 


	
   

  	
  [ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  



 


2

















 


SCHEDULE 1-A TO GRANT OF SECURITY


 


PATENTS


 


	
  File
  Number

  	
   

  	
  Serial/Patent No.

  	
   

  	
  Status

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


3

















 


Exhibit 2 to

Security Agreement


 


 


ASSIGNMENT FOR
SECURITY


 


(TRADEMARKS)


 


WHEREAS,
                                                                                                                      
(herein referred to as “Assignor”), has adopted, used and is using the
trademarks listed on the annexed Schedule 2-A, which trademarks are
registered or filed with the United States Patent and Trademark Office (the “Trademarks”);


 


WHEREAS,
Assignor, certain affiliates thereof, certain financial institutions named
therein (the “Lenders”), AmSouth Bank, as agent for the Lenders (in such
capacity, together with any successor agent, “Assignee”), AmSouth
Capital Corp., as administrative agent, and the guarantors named therein are
parties to the Loan and Security Agreement dated as of the date hereof, and
Assignee and the Lenders are desirous of having a security interest and
mortgage in favor of Assignee on the above-identified property in order to
secure the payment of certain obligations of Assignor now or hereafter owing to
Assignee and the Lenders;


 


WHEREAS,
Assignor has entered into a Security Agreement and Mortgage-Trademarks and
Patents dated the date hereof (as it may be amended, supplemented, or otherwise
modified from time to time, the “Agreement”) with Assignee;


 


WHEREAS,
pursuant to the Agreement, Assignor has granted to Assignee a security interest
in, and mortgage on, all right, title and interest of Assignor in and to the
Trademarks, together with the goodwill of the business symbolized by the
Trademarks and the applications and registrations thereof, and all proceeds
thereof, including, without limitation, any and all causes of action which may
exist by reason of infringement thereof (the “Collateral”), to secure
the payment, performance and observance of the Secured Obligations, as defined
in the Agreement; and


 


WHEREAS, when
the Secured Obligations have been indefeasibly paid and performed in full, the
Commitments have been terminated and all outstanding Letters of Credit have
been canceled or have expired, this Assignment for Security shall terminate and
Assignee, at the expense of Assignor, will execute and deliver to Assignor all
instruments reasonably requested by Assignor to acknowledge and evidence
termination of this Assignment for Security and will release the Trademarks
from the security interest created hereby and under the Agreement.


 


1

















 


NOW,
THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Assignor does hereby further grant to Assignee a security
interest in, and mortgage on, the Collateral to secure the prompt payment,
performance and observance of the Secured Obligations.


 


Assignor does
hereby further acknowledge and affirm that the rights and remedies of Assignee
with respect to the security interest in and mortgage on the Collateral made
and granted hereby are more fully set forth in the Agreement, the terms and
provisions of which are hereby incorporated herein by reference as if fully set
forth herein.


 


Assignee’s
address is c/o AmSouth Capital Corp., 350 Park Avenue, 20th Floor, New York,
New York 10022.


 


[Remainder of
Page Intentionally Left Blank]


 


2

















 


IN WITNESS
WHEREOF, Assignor has caused this Assignment to be duly executed by its officer
thereunto duly authorized as of the
         day of
               ,
200    .


 


 


	
   

  	
  [ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  



 


3

















 


SCHEDULE 2-A TO GRANT OF SECURITY


 


TRADEMARKS


 


	
  Trademark

  	
   

  	
  Reg. Date

  	
   

  	
  Reg. No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


4

















 


Exhibit 3 to 

Security Agreement


 


SPECIAL POWER
OF ATTORNEY


 


	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
  )  ss.:

  
	
  COUNTY OF
  NEW YORK

  	
  )

  



 


 


KNOW ALL MEN
BY THESE PRESENTS, THAT
                                    ,
a
                        
corporation, with its principal office at
[                                        ],
(hereinafter called the “Assignor”), hereby appoints and constitutes
AmSouth Bank as agent (in its capacity as agent, together with any successor in
such capacity, referred to herein as the “Assignee”) for the financial
institutions (the “Lenders”), now or hereafter being parties to the Loan
and Security Agreement, dated as of the date hereof (as amended, modified or
supplemented from time to time in accordance with its terms, the “Loan Agreement”),
among Assignor, certain affiliates of Assignor, the Lenders, the Assignee,
AmSouth Capital Corp., as administrative agent, and the guarantors named
therein, its true and lawful attorney, with full power of substitution, and
with full power and authority to perform the following acts on behalf of the
Assignor:


 


1.  For the purpose of
assigning, selling, licensing or otherwise disposing of all right, title and
interest of the Assignor in and to any letters patent of the United States or
any other country or political subdivision thereof, and all registrations,
recordings, reissues, continuations, continuations-in-part and extensions
thereof, and all pending applications therefor, and for the purpose of the
recording, registering and filing of, or accomplishing any other formality with
respect to, the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or advisable to
effect such purpose;


 


2.  For the purpose of
assigning, selling, licensing or otherwise disposing of all right, title and
interest of the Assignor in and to any trademarks, trade names, trade styles
and service marks, and all registrations, recordings, reissues, extensions and
renewals thereof, and all pending applications therefor, and for the purpose of
the recording, registering and filing of, or accomplishing any other formality
with respect to, the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or advisable to
effect such purpose;


 


1

















 


3.  To execute any and all
documents, statements, certificates or other papers necessary or advisable in
order to obtain the purposes described above as the Assignee may in its sole
discretion determine.


 


This power of
attorney is made pursuant to a Security Agreement and Mortgage - Trademarks and
Patents, dated the date hereof, between the Assignor and the Assignee and takes
effect solely for the purposes of paragraphs 4(d) and (e) thereof and is
subject to the conditions thereof. This power of attorney may not be revoked
until the payment in full of all “Secured Obligations” as defined in such
Security Agreement and Mortgage and the expiration or termination of all of the
Commitments (as defined in the Loan Agreement) of the Lenders under the Loan
Agreement and the cancellation of all letters of credit issued pursuant to the
Loan Agreement at which time this power of attorney shall automatically be
revoked and terminated.


 


 


	
  Dated:

  	
        
      , 200

  	
   

  
	
   

  	
   

  
	
   

  	
  [ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Corporate
  Seal]

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  



 


2

















 


	
  STATE OF 

  	
  )

  
	
   

  	
  )  ss.:

  
	
  COUNTY
  OF  

  	
  )

  



 


 


On this
          day of
          ,
200    , before me personally appeared
                                    ,
to me known, who, being by me duly sworn, did depose and say that such person
resides at
                                                                      
and that such person is
                               
of
                                                                                                                 
                                           ,
the
                    
corporation described in and which executed the foregoing instrument; that such
person knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was affixed pursuant to authority of
the Board of Directors of said corporation, and that such person’s signature
was affixed thereto pursuant to such authority.


 


 


	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  



 


3