EXHIBIT 10.56


 


EXECUTION COPY


 


LOAN AND SECURITY AGREEMENT


 


Dated as of July 8, 2003


 


Among


 


THE FINANCIAL INSTITUTIONS NAMED HEREIN

as the Lenders


 


and


 


AMSOUTH BANK

as the Agent


 


and


 


AMSOUTH CAPITAL CORP.

as the Administrative Agent


 


and


 


NEW WORLD RESTAURANT GROUP, INC.

MANHATTAN BAGEL COMPANY, INC.

CHESAPEAKE BAGEL FRANCHISE CORP.

WILLOUGHBY’S INCORPORATED

EINSTEIN AND NOAH CORP.

EINSTEIN/NOAH BAGEL PARTNERS, INC.

I. & J. BAGEL, INC.

as the Borrowers


 


and


 


THE GUARANTORS NAMED HEREIN

as the Guarantors


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE
  I 

  	
   

  	
  INTERPRETATION
  OF THIS AGREEMENT

  
	
   

  	
   

  	
  Section 1.1.Definitions

  
	
   

  	
   

  	
  Section 1.2.Accounting
  Terms

  
	
   

  	
   

  	
  Section 1.3.Interpretive
  Provisions

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
   

  	
  LOANS
  AND LETTERS OF CREDIT

  
	
   

  	
   

  	
  Section 2.1.Total
  Facility

  
	
   

  	
   

  	
  Section 2.2.Revolving
  Loans

  
	
   

  	
   

  	
  Section 2.3.[Intentionally
  Omitted.]

  
	
   

  	
   

  	
  Section 2.4.Letters
  of Credit

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
   

  	
  INTEREST
  AND FEES

  
	
   

  	
   

  	
  Section 3.1.Interest

  
	
   

  	
   

  	
  Section 3.2.[Intentionally
  Omitted.]

  
	
   

  	
   

  	
  Section 3.3.Maximum
  Interest Rate

  
	
   

  	
   

  	
  Section 3.4.Closing
  and Other Fees

  
	
   

  	
   

  	
  Section 3.5.Unused
  Line Fee

  
	
   

  	
   

  	
  Section 3.6.Letter
  of Credit Fee

  
	
   

  	
   

  	
  Section 3.7.Reduction
  of Revolving Credit Commitments

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
   

  	
  PAYMENTS
  AND PREPAYMENTS

  
	
   

  	
   

  	
  Section 4.1.Revolving
  Loans

  
	
   

  	
   

  	
  Section 4.2.Termination
  of Facility

  
	
   

  	
   

  	
  Section 4.3.Mandatory
  Payments

  
	
   

  	
   

  	
  Section 4.4.[Intentionally
  Omitted.]

  
	
   

  	
   

  	
  Section 4.5.[Intentionally
  Omitted.]

  
	
   

  	
   

  	
  Section 4.6.Payments
  by the Borrowers

  
	
   

  	
   

  	
  Section 4.7.Payments
  as Revolving Loans

  
	
   

  	
   

  	
  Section 4.8.Apportionment,
  Application and Reversal of Payments

  
	
   

  	
   

  	
  Section 4.9.Indemnity
  for Returned Payments

  
	
   

  	
   

  	
  Section 4.10.Agent’s
  and Lenders’ Books and Records; Monthly Statements

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
   

  	
  TAXES,
  YIELD PROTECTION AND ILLEGALITY

  
	
   

  	
   

  	
  Section 5.1.Taxes

  
	
   

  	
   

  	
  Section 5.2.Increased
  Costs

  
	
   

  	
   

  	
  Section 5.3.Reduction
  of Return

  



 


i

















 


	
   

  	
   

  	
  Section 5.4.Certificates
  of Lenders

  
	
   

  	
   

  	
  Section 5.5.Survival

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
   

  	
  COLLATERAL

  
	
   

  	
   

  	
  Section 6.1.Grant
  of Security Interest

  
	
   

  	
   

  	
  Section 6.2.Perfection
  and Protection of Security Interest

  
	
   

  	
   

  	
  Section 6.3.Location
  of Collateral

  
	
   

  	
   

  	
  Section 6.4.Jurisdiction
  of Organization

  
	
   

  	
   

  	
  Section 6.5.Title
  to, Liens on, and Sale and Use of Collateral

  
	
   

  	
   

  	
  Section 6.6.Field
  Examinations

  
	
   

  	
   

  	
  Section 6.7.Access
  and Examination; Confidentiality

  
	
   

  	
   

  	
  Section 6.8.Collateral
  Reporting

  
	
   

  	
   

  	
  Section 6.9.Accounts

  
	
   

  	
   

  	
  Section 6.10.Collection
  of Accounts; Payments

  
	
   

  	
   

  	
  Section 6.11.Inventory

  
	
   

  	
   

  	
  Section 6.12.Equipment

  
	
   

  	
   

  	
  Section 6.13.[Intentionally
  Omitted.]

  
	
   

  	
   

  	
  Section 6.14.Documents,
  Instruments, and Chattel Paper

  
	
   

  	
   

  	
  Section 6.15.Right
  to Cure

  
	
   

  	
   

  	
  Section 6.16.Power
  of Attorney

  
	
   

  	
   

  	
  Section 6.17.The
  Agent’s and Lenders’ Rights, Duties and Liabilities

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
   

  	
  BOOKS
  AND RECORDS; FINANCIAL INFORMATION; NOTICES

  
	
   

  	
   

  	
  Section 7.1.Books
  and Records

  
	
   

  	
   

  	
  Section 7.2.Financial
  Information

  
	
   

  	
   

  	
  Section 7.3.Notices
  to the Lenders

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
   

  	
  GENERAL
  WARRANTIES AND REPRESENTATIONS

  
	
   

  	
   

  	
  Section 8.1.Authorization,
  Validity, and Enforceability of this Agreement and the Other Transaction Documents

  
	
   

  	
   

  	
  Section 8.2.Validity
  and Priority of Security Interest

  
	
   

  	
   

  	
  Section 8.3.Organization
  and Qualification

  
	
   

  	
   

  	
  Section 8.4.Corporate
  Name; Prior Transactions

  
	
   

  	
   

  	
  Section 8.5.Subsidiaries

  
	
   

  	
   

  	
  Section 8.6.Financial
  Statements and Projections

  
	
   

  	
   

  	
  Section 8.7.Capitalization

  
	
   

  	
   

  	
  Section 8.8.Solvency

  
	
   

  	
   

  	
  Section 8.9.Debt

  
	
   

  	
   

  	
  Section 8.10.Title
  to Property

  



 


ii

















 


	
   

  	
   

  	
  Section 8.11.Real
  Estate; Leases

  
	
   

  	
   

  	
  Section 8.12.Proprietary
  Rights

  
	
   

  	
   

  	
  Section 8.13.Trade
  Names

  
	
   

  	
   

  	
  Section 8.14.Litigation

  
	
   

  	
   

  	
  Section 8.15.Restrictive
  Agreements

  
	
   

  	
   

  	
  Section 8.16.Labor
  Disputes

  
	
   

  	
   

  	
  Section 8.17.Environmental
  Laws

  
	
   

  	
   

  	
  Section 8.18.No
  Violation of Law

  
	
   

  	
   

  	
  Section 8.19.No
  Default

  
	
   

  	
   

  	
  Section 8.20.ERISA
  Compliance

  
	
   

  	
   

  	
  Section 8.21.Tax
  Filings

  
	
   

  	
   

  	
  Section 8.22.Regulated
  Entities

  
	
   

  	
   

  	
  Section 8.23.Use
  of Proceeds; Margin Regulations

  
	
   

  	
   

  	
  Section 8.24.Copyrights,
  Patents, Trademarks and Licenses, etc.

  
	
   

  	
   

  	
  Section 8.25.No
  Material Adverse Change

  
	
   

  	
   

  	
  Section 8.26.Full
  Disclosure

  
	
   

  	
   

  	
  Section 8.27.Material
  Agreements

  
	
   

  	
   

  	
  Section 8.28.Bank
  Accounts

  
	
   

  	
   

  	
  Section 8.29.Governmental
  Authorization

  
	
   

  	
   

  	
  Section 8.30.Restructuring

  
	
   

  	
   

  	
  Section 8.31.Subordinated
  Lien

  
	
   

  	
   

  	
  Section 8.32.Distributions

  
	
   

  	
   

  	
  Section 8.33.Franchises

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
   

  	
  AFFIRMATIVE
  AND NEGATIVE COVENANTS

  
	
   

  	
   

  	
  Section 9.1.Taxes
  and Other Obligations

  
	
   

  	
   

  	
  Section 9.2.Corporate
  Existence and Good Standing

  
	
   

  	
   

  	
  Section 9.3.Compliance
  with Law and Agreements; Maintenance of Licenses

  
	
   

  	
   

  	
  Section 9.4.Maintenance
  of Property

  
	
   

  	
   

  	
  Section 9.5.Insurance

  
	
   

  	
   

  	
  Section 9.6.Environmental
  Laws

  
	
   

  	
   

  	
  Section 9.7.Compliance
  with ERISA

  
	
   

  	
   

  	
  Section 9.8.Mergers,
  Consolidations or Sales

  
	
   

  	
   

  	
  Section 9.9.Distributions;
  Capital Change; Restricted Investments

  
	
   

  	
   

  	
  Section 9.10.Transactions
  Affecting Collateral or Obligations

  
	
   

  	
   

  	
  Section 9.11.Guaranties

  
	
   

  	
   

  	
  Section 9.12.Debt

  
	
   

  	
   

  	
  Section 9.13.Prepayment

  
	
   

  	
   

  	
  Section 9.14.Transactions
  with Affiliates

  
	
   

  	
   

  	
  Section 9.15.Investment
  Banking and Finder’s Fees

  



 


iii

















 


	
   

  	
   

  	
  Section 9.16.Negative
  Pledge

  
	
   

  	
   

  	
  Section 9.17.Business
  Conducted

  
	
   

  	
   

  	
  Section 9.18.Liens

  
	
   

  	
   

  	
  Section 9.19.Sale
  and Leaseback Transactions

  
	
   

  	
   

  	
  Section 9.20.New
  Subsidiaries; Activation Event

  
	
   

  	
   

  	
  Section 9.21.Fiscal
  Year

  
	
   

  	
   

  	
  Section 9.22.Capital
  Expenditures

  
	
   

  	
   

  	
  Section 9.23.Operating
  Lease Obligations

  
	
   

  	
   

  	
  Section 9.24.Minimum
  EBITDA

  
	
   

  	
   

  	
  Section 9.25.Operating
  Cash Flow Coverage Ratio

  
	
   

  	
   

  	
  Section 9.26.Minimum
  Net Worth

  
	
   

  	
   

  	
  Section 9.27.Use
  of Proceeds

  
	
   

  	
   

  	
  Section 9.28.Amendments

  
	
   

  	
   

  	
  Section 9.29.Maintain
  Operating Accounts

  
	
   

  	
   

  	
  Section 9.30.Further
  Assurances

  
	
   

  	
   

  	
  Section 9.31.Post-Closing

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  	
   

  	
  CONDITIONS
  OF LENDING

  
	
   

  	
   

  	
  Section 10.1.Conditions
  Precedent to Making of Loans on the Closing Date

  
	
   

  	
   

  	
  Section 10.2.Conditions
  Precedent to Each Loan

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI

  	
   

  	
  DEFAULT;
  REMEDIES

  
	
   

  	
   

  	
  Section 11.1.Events
  of Default

  
	
   

  	
   

  	
  Section 11.2.Remedies

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII

  	
   

  	
  TERM
  AND TERMINATION

  
	
   

  	
   

  	
  Section 12.1.Term
  and Termination

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII

  	
   

  	
  AMENDMENTS;
  WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

  
	
   

  	
   

  	
  Section 13.1.No
  Waivers; Cumulative Remedies

  
	
   

  	
   

  	
  Section 13.2.Amendments
  and Waivers

  
	
   

  	
   

  	
  Section 13.3.Assignments;
  Participations

  



 


iv

















 


	
  ARTICLE
  XIV

  	
   

  	
  THE
  AGENT

  
	
   

  	
   

  	
  Section 14.1.Appointment
  and Authorization

  
	
   

  	
   

  	
  Section 14.2.Delegation
  of Duties

  
	
   

  	
   

  	
  Section 14.3.Liability
  of Agent

  
	
   

  	
   

  	
  Section 14.4.Reliance
  by Agent

  
	
   

  	
   

  	
  Section 14.5.Notice
  of Default

  
	
   

  	
   

  	
  Section 14.6.Credit
  Decision

  
	
   

  	
   

  	
  Section 14.7.Indemnification

  
	
   

  	
   

  	
  Section 14.8.Each
  Agent in Its Individual Capacity

  
	
   

  	
   

  	
  Section 14.9.Successor
  Agent

  
	
   

  	
   

  	
  Section 14.10.Administrative
  Agent

  
	
   

  	
   

  	
  Section 14.11.Collateral
  Matters

  
	
   

  	
   

  	
  Section 14.12.Restrictions
  on Actions by Lenders; Sharing of Payments

  
	
   

  	
   

  	
  Section 14.13.Agency
  for Perfection

  
	
   

  	
   

  	
  Section 14.14.Payments
  by Agent to Lenders

  
	
   

  	
   

  	
  Section 14.15.Concerning
  the Collateral and the Related Loan Documents

  
	
   

  	
   

  	
  Section 14.16.Field
  Audit and Examination Reports; Disclaimer by Lenders

  
	
   

  	
   

  	
  Section 14.17.Relation
  Among Lenders

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XV

  	
   

  	
  MISCELLANEOUS

  
	
   

  	
   

  	
  Section 15.1.Recourse
  to Collateral

  
	
   

  	
   

  	
  Section 15.2.Severability

  
	
   

  	
   

  	
  Section 15.3.Governing
  Law; Choice of Forum; Service of Process; Jury Trial Waiver

  
	
   

  	
   

  	
  Section 15.4.WAIVER
  OF JURY TRIAL

  
	
   

  	
   

  	
  Section 15.5.Survival
  of Representations and Warranties

  
	
   

  	
   

  	
  Section 15.6.Other
  Security and Guaranties

  
	
   

  	
   

  	
  Section 15.7.Fees
  and Expenses

  
	
   

  	
   

  	
  Section 15.8.Notices

  
	
   

  	
   

  	
  Section 15.9.Waiver
  of Notices

  
	
   

  	
   

  	
  Section 15.10.Binding
  Effect

  
	
   

  	
   

  	
  Section 15.11.Indemnity
  of the Agent and the Lenders by the Loan Parties

  



 


v

















 


	
   

  	
   

  	
  Section 15.12.Limitation
  of Liability

  
	
   

  	
   

  	
  Section 15.13.Final
  Agreement

  
	
   

  	
   

  	
  Section 15.14.Counterparts

  
	
   

  	
   

  	
  Section 15.15.Captions

  
	
   

  	
   

  	
  Section 15.16.Right
  of Setoff

  
	
   

  	
   

  	
  Section 15.17.Joint
  and Several Liability

  
	
   

  	
   

  	
  Section 15.18.Effectiveness;
  Ratification and Confirmation

  
	
   

  	
   

  	
  Section 15.19.Covenant
  Calculation

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XVI

  	
   

  	
  GUARANTEES

  



 


vi

















 


	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  -

  	
  FORM OF
  NOTICE OF BORROWING

  
	
  EXHIBIT B

  	
  -

  	
  FINANCIAL
  STATEMENTS

  
	
  EXHIBIT C

  	
  -

  	
  FORM OF
  ASSIGNMENT AND ACCEPTANCE

  
	
  EXHIBIT D

  	
  -

  	
  FORM OF
  FINANCIAL COVENANT CALCULATION WORKSHEET

  
	
  EXHIBIT E

  	
  -

  	
  FORM OF
  ADDENDUM

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 6.3

  	
  -

  	
  Location of
  Collateral

  
	
  Schedule 6.4

  	
  -

  	
  Jurisdiction
  of Organization

  
	
  Schedule 8.3

  	
  -

  	
  Qualification
  in Foreign Jurisdictions

  
	
  Schedule 8.4

  	
  -

  	
  Corporate
  Names; Prior Transactions

  
	
  Schedule 8.5

  	
  -

  	
  Subsidiaries
  and Affiliates

  
	
  Schedule 8.7

  	
  -

  	
  Capitalization

  
	
  Schedule 8.9

  	
  -

  	
  Debt

  
	
  Schedule 8.10

  	
  -

  	
  Title to
  Property

  
	
  Schedule 8.11

  	
  -

  	
  Real Estate;
  Existing Leases

  
	
  Schedule 8.12

  	
  -

  	
  Proprietary
  Rights

  
	
  Schedule 8.13

  	
  -

  	
  Trade Names

  
	
  Schedule 8.27

  	
  -

  	
  Material
  Agreements

  
	
  Schedule 8.28

  	
  -

  	
  Bank
  Accounts

  
	
  Schedule 9.9

  	
  -

  	
  Restricted
  Investments

  
	
  Schedule 9.12

  	
  -

  	
  Debt

  
	
  Schedule 9.18

  	
  -

  	
  Liens

  
	
  Schedule 9.31

  	
  -

  	
  Trademark
  Filings

  



 


vii

















 


LOAN AND SECURITY AGREEMENT


 


Loan and Security
Agreement, dated as of July 8, 2003, among the financial institutions
listed on the signature pages hereof (such financial institutions, together
with their respective successors and assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”),
AmSouth Bank (“ASB”), with an office at 1900 5th Avenue North,
Birmingham, Alabama 35203, as agent (ASB in such capacity, together with any
successor in such capacity, the “Agent”), AmSouth Capital Corp., as
administrative agent (in such capacity, together with any successor in such
capacity, the “Administrative Agent”), New World Restaurant Group, Inc.,
a Delaware corporation (“New World”), Manhattan Bagel Company, Inc., a
New Jersey corporation (“Manhattan Bagel”), Chesapeake Bagel Franchise
Corp., a New Jersey corporation (“Chesapeake Bagel”), Willoughby’s
Incorporated, a Connecticut corporation (“Willoughby’s”), Einstein and
Noah Corp., a Delaware corporation (“Einstein”), Einstein/Noah Bagel
Partners, Inc., a California corporation (“Einstein/Noah”) and I. & J.
Bagel, Inc., a California corporation (“I&J”; New World, Manhattan
Bagel, Chesapeake Bagel, Willoughby’s, Einstein, Einstein/Noah and I&J,
each a “Borrower,” and, collectively, the “Borrowers”), and the
Guarantors named herein and signatories hereto.


 


W  I  T  N  E  S
S  E  T  H


 


WHEREAS, the
Borrowers have requested the Lenders to make available a revolving line of
credit for loans and letters of credit in an amount not to exceed $15,000,000,
which revolving line of credit will also be available for working capital needs
and general corporate purposes of the Borrowers; and


 


WHEREAS, the
Lenders have agreed to make available to the Borrowers a revolving credit
facility upon the terms and conditions set forth in this Agreement.


 


NOW,
THEREFORE, in consideration of the mutual conditions and agreements set forth
in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the Lenders, the Agent, the Administrative Agent
and the Borrowers hereby agree as follows:


 


ARTICLE
I




INTERPRETATION
OF THIS AGREEMENT


 


Section 1.1.                                   Definitions.
As used herein:


 


“Account
Debtor” means each Person obligated in any way on or in connection with an
Account.


 


“Accounts”
means all of each Loan Party’s now owned or hereafter acquired or arising
accounts, as defined in the UCC, and any other rights to payment for the sale
or lease of goods or rendition of services, whether or not they have been
earned by performance.


 

















 


“Activation
Event” means, at any time, in respect of any Subsidiary that is a
Non-Restricted Subsidiary at such time, the commencement of business operations
or obtaining of assets with a value in excess of $100,000 by such Subsidiary.


 


“Addendum”
has the meaning specified in Section 9.20(a).


 


“Adjusted
EBITDA” means, with respect to any Test Period, EBITDA of New World and its
Subsidiaries for such Test Period, except that the exclusion of the amounts
attributable to clauses (h), (i) and (k) of the definition of EBITDA shall not
exceed (x) $7 million on a 12 month trailing basis through the end of the
Fiscal Year ending December 31, 2003, (y) $4 million on a 12 month
trailing basis for the first fiscal quarter of the Fiscal Year ending
December 31, 2004, and (z) $2 million on a 12 month trailing basis for the
second fiscal quarter of the Fiscal Year ending December 31, 2004 and each
fiscal quarter thereafter.


 


“Administrative
Agent” has the meaning set forth in the introductory paragraph hereof.


 


“Affiliate”
means, as to any Person, any other Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person or
which owns, directly or indirectly, ten percent (10%) or more of the
outstanding equity interest of such Person. 
A Person shall be deemed to control another Person if the controlling
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether through
the ownership of voting securities, by contract, or otherwise.


 


“Agent”
has the meaning set forth in the introductory paragraph hereof.


 


“Agent
Advances” has the meaning specified in Section 2.2(i).


 


“Agent-Related
Persons” means the Agent and any successor agent, together with their
respective Affiliates (including, without limitation, AmSouth Capital Corp.
individually and in its capacity as Administrative Agent), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.


 


“Agent’s
Liens” means the Liens granted to the Agent, for the benefit of the Agent
and the Lenders, pursuant to this Agreement and the other Loan Documents.


 


“Agreement”
means this Loan and Security Agreement.


 


“Anniversary
Date” means each anniversary of the Closing Date.


 


“Applicable
Letter of Credit Rate” means (a) prior to the first Margin Adjustment
Period beginning after the Closing Date, 2.50% and (b) during each Margin
Adjustment Period beginning after the Closing Date, the percentage per annum
set forth below opposite the respective Level indicated to have been achieved
on the applicable Test Date for such Margin Adjustment Period (as shown on the
respective officer’s certificate delivered pursuant to


 


2

















 


Section 7.2(e),
in accordance with the Fixed Charge Coverage Ratio for the applicable Margin
Adjustment Test Period):


 


	
  Level

  	
   

  	
  Fixed Charge Coverage Ratio

  	
   

  	
  Applicable

  Letter of

  Credit Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Less than
  1.00:1

  	
   

  	
  4.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Greater than
  or equal to

  	
   

  	
  2.50

  	
  %

  
	
   

  	
   

  	
  1.00:1 but
  less than 1.20:1

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Greater than
  or equal to

  	
   

  	
  2.00

  	
  %

  
	
   

  	
   

  	
  1.20:1

  	
   

  	
   

  	
   

  



 


“Applicable Margin” means (a) prior to the first Margin
Adjustment Period beginning after the Closing Date, 1.00% and (b) during each
Margin Adjustment Period beginning after the Closing Date, the percentage per
annum set forth below opposite the respective Level indicated to have been
achieved on the applicable Test Date for such Margin Adjustment Period (as
shown on the respective officer’s certificate delivered pursuant to Section 7.2(e),
in accordance with the Fixed Charge Coverage Ratio for the applicable Margin
Adjustment Test Period ):


 


	
  Level

  	
   

  	
  Fixed Charge Coverage Ratio

  	
   

  	
  Applicable

  Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Less than
  1.00:1

  	
   

  	
  2.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Greater than
  or equal to

  	
   

  	
  1.00

  	
  %

  
	
   

  	
   

  	
  1.00:1 but
  less than 1.20:1

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Greater than
  or equal to

  	
   

  	
  .50

  	
  %

  
	
   

  	
   

  	
  1.20:1

  	
   

  	
   

  	
   

  



 


“ASB” has the meaning set forth in the introductory paragraph
hereof.


 


“ASB Loan” and “ASB Loans” have the meanings specified in
Section 2.2(h).


 


“Asset Sale” means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business, and sales or other dispositions of Equipment),
assignment or other transfer for value by any Loan Party (including any sale
and leaseback transaction) to any Person other than a Loan Party or a
Subsidiary of a Loan Party of (a) any Capital Stock of any Subsidiary of New
World that is not a Loan Party or (b) any other property or assets of any Loan
Party other than in the ordinary course of business.


 


3

















 


“Assignee”
has the meaning specified in Section 13.3(a).


 


“Assignment
and Acceptance” has the meaning specified in Section 13.3(a).


 


“Attorney
Costs” means and includes all reasonable fees, expenses and disbursements
of any law firm or other external counsel engaged by the Agent, the allocated
cost of internal legal services of the Agent and all expenses and disbursements
of internal counsel of the Agent.


 


“Availability”
means, with respect to the Borrowers, at any time, (a) the Maximum Revolver
Amount at such time minus (b) the Total Exposure at such time.


 


“Bankruptcy Code” means Title 11 of the United States Code (11
U.S.C. § 101 et seq.).


 


“Base Rate”
means, for any day, the rate of interest in effect for such day as publicly
announced from time to time by AmSouth Bank, as its “prime rate” (the “prime
rate” being a rate set by AmSouth Bank based upon various factors including
AmSouth Bank’s costs and desired return, general economic conditions and other
AmSouth Bank factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate).  Any change in the reference rate announced
by AmSouth Bank shall take effect at the opening of business on the day
specified in the public announcement of such change.  Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.


 


“Borrower”
and “Borrowers” have the meanings set forth in the introductory
paragraph hereof.


 


“Borrowing” means a borrowing hereunder consisting of Revolving
Loans made on the same day by the Lenders to a Borrower (or by ASB in the case
of a Borrowing funded by ASB Loans) or by the Agent in the case of a Borrowing
consisting of an Agent Advance or the issuance of a Letter of Credit hereunder.


 


“Business Day” means any day that is not a Saturday, Sunday, or
a day on which banks in Birmingham, Alabama or New York, New York, are required
or permitted to be closed.


 


“Capital Adequacy Regulation” means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.


 


“Capital Expenditures” means all payments due (whether or not
paid during any fiscal period) in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year, including, without limitation, those costs
arising in connection with the direct or indirect acquisition of such asset by


 


4

















 


way of increased
product or service charges or offset items or in connection with a Capital
Lease, in each case in accordance with GAAP, net of the net proceeds from
franchising of company-operated stores during the applicable period.


 


“Capital
Lease” means any lease of property by any Person which, in accordance with
GAAP, is or should be reflected as a capital lease on the balance sheet of such
Person.


 


“Capital Stock” means, with respect to any Person, any and all
shares, interests, participations, rights or other equivalents of corporate
stock and any and all warrants, options and rights with respect thereto,
including, without limitation, each class of common stock and preferred stock,
partnership interests and other indicia of ownership of such Person.


 


“Change of
Control” means any transaction or event occurring on or after the date
hereof as a direct or indirect result of which (a) any Person or any group
(other than the Permitted Holders) shall (A) beneficially own (directly or
indirectly) in the aggregate capital stock of New World having more than 50% of
the aggregate voting power of all capital stock of New World at the time
outstanding or (B) have the right or power to appoint a majority of the board
of directors of New World; (b) during any period of two consecutive years,
individuals who at the beginning of such period constituted the board of
directors of New World (together with any new directors whose election by such
board of directors or whose nomination for election by the shareholders of New
World was approved by a vote of a majority of the directors of New World then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute at least a majority of the board of directors of New
World then in office; (c) any event or circumstance constituting a “change of
control” under any documentation evidencing or governing any Debt of any Loan
Party in a principal amount in excess of $10,000,000 shall occur which results
in an obligation of any Loan Party to prepay (by acceleration or otherwise),
purchase, offer to purchase redeem or defease all or a portion of such Debt; or
(d) New World shall cease to own, directly or indirectly, 100% of the Equity
Interests of any of the other Borrowers or the Guarantors.


 


The terms
“beneficially own,” “beneficial owner” and “Group” shall have the meanings
ascribed to such terms in Sections 13(d) and 14(d) of the Exchange Act, provided,
however, that, for the purposes of this definition of “Change of Control”
only any Person or Group other than the Permitted Holders shall be deemed to be
the current beneficial owner of any shares of Voting Stock of New World, or any
interests or participations in, or measured by the profits of, New World, that
are issuable upon the exercise of any option, warrant or similar right, or upon
the conversion of any convertible security, in either case owned by such Person
or Group without regard to whether such option, warrant or convertible security
is currently exercisable or convertible or will become convertible or
exercisable within 60 days if the exercise or conversion price thereof at the
time of grant was lower than the fair market value of the underlying security
at the time of grant.


 


“Chattel Paper” means all of each Loan Party’s now owned or
hereafter acquired chattel paper, as defined in the UCC, including electronic
chattel paper.


 


5

















 


“Chesapeake Bagel” has the meaning set forth in the introductory
paragraph hereof.


 


“Closing
Date” means the date of this Agreement. 


 


“Coca-Cola
Equipment” has the meaning specified in Section 6.1.


 


“Code” means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, and regulations promulgated
thereunder.


 


“Collateral”
has the meaning specified in Section 6.1.


 


“Committed Capital Expenditures” means those anticipated Capital
Expenditures relating to new store openings for which any Borrower has entered
into a written commitment.


 


“Concentration Account” means the account of New World (account
number 4120901491) at Wells Fargo Bank, N.A., which account is subject to the
“control” (as defined in the UCC) of the Agent pursuant to documentation in
form and substance satisfactory to the Agent.


 


“Contaminant” means any material regulated or controlled under
Environmental Laws as a pollutant, hazardous substance, toxic substance,
hazardous waste, special waste, petroleum or petroleum-derived substance or
waste, asbestos in any form or condition or polychlorinated biphenyls (“PCBs”).


 


“Credit
Support” has the meaning specified in Section 2.4(a).


 


“Debt”
means all liabilities, obligations and indebtedness of any Borrower or any of
its Subsidiaries to any Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise, and
including, without in any way limiting the generality of the foregoing:  (i) the liabilities and obligations of the
Borrowers or any of their Subsidiaries to trade creditors; (ii) all
Obligations; (iii) all obligations and liabilities of any Person secured by any
Lien on property of the Borrowers or any of their Subsidiaries, even though the
Borrowers or such Subsidiary, as the case may be, shall not have assumed or
become liable for the payment thereof; provided,  however, that
all such obligations and liabilities which are limited in recourse to such
property shall be included in Debt only to the extent of the lesser of (a) the
amount of such obligations or liabilities secured by such Lien or (b) the book
value of such property as would be shown on a balance sheet of the Borrowers or
such Subsidiary, as the case may be, prepared in accordance with GAAP; (iv) all
obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to property
used or acquired by the Borrowers or any of their Subsidiaries, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; provided,  however, that all such
obligations and liabilities which are limited in recourse to such property
shall be included in Debt only to the extent of the lesser of (a) the amount of
such obligations or


 


6

















 


liabilities or
(b) the book value of such property as would be shown on a balance sheet of the
Borrowers or such Subsidiary, as the case may be, prepared in accordance with
GAAP; (v) all accrued pension fund and other employee benefit plan obligations
and liabilities; (vi) all obligations and liabilities under Guaranties; (vii)
deferred taxes and (viii) all Senior Secured Debt, provided that “Debt” shall
not include obligations as a lessee under any lease treated as an operating
lease under GAAP.


 


“Default”
means any event or circumstance which, with the giving of notice, the lapse of
time, or both, would (if not cured or otherwise remedied during such time)
constitute an Event of Default.


 


“Default
Rate” means a fluctuating per annum interest rate at all times equal to the
sum of the Interest Rate, calculated as if such Loan was at Level I as set
forth in the Applicable Margin table plus two percent (2.0%).  In addition, with respect to Letters of
Credit, the Default Rate shall mean an amount equal to the sum of the
Applicable Letter of Credit Rate calculated at Level I as set forth in the
Applicable Letter of Credit Rate table plus two percent (2.0%).


 


“Defaulting
Lender” has the meaning specified in Section 2.2(g)(ii).


 


“Disqualified Capital Stock” means any Capital Stock that, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the Maturity Date (as defined in the Senior Secured Debt Documents).


 


“Distribution” means, in respect of any Person:  (a) the payment or making of any dividend or
other distribution of property in respect of Equity Interests (or any options
or warrants for such Equity Interests) of such Person, other than distributions
in Equity Interests (or any options or warrants for such Equity Interests) that
are not Disqualified Capital Stock; or (b) the redemption or other acquisition
of any Equity Interests (or any options or warrants for such Equity Interests)
of such Person.


 


“Documentary
Letter of Credit” means a Letter of Credit covering the importation of
goods constituting Inventory.


 


“Documents”
means all documents as such term is defined in the UCC, including bills of
lading, warehouse receipts or other documents of title, now owned or hereafter
acquired by any Loan Party.


 


“DOL”
means the United States Department of Labor or any successor department or
agency.


 


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


 


“EBITDA”
means, with respect to any fiscal period of New World and its


 


7

















 


Subsidiaries,
the net income of New World and its consolidated Subsidiaries after provision
for income taxes for such fiscal period, as determined in accordance with GAAP
on a consolidated basis and reported on the Financial Statements for such
period, excluding the effect of any and all of the following included in the
calculation of such net income: (a) gain arising from the sale or other disposal
of any capital assets; (b) gain arising from any write-up in the book value of
any asset; (c) earnings or losses of any corporation or other Person,
substantially all the assets of which have been acquired by New World or any of
its consolidated Subsidiaries in any manner, to the extent realized by such
other corporation or Person prior to the date of acquisition; (d) earnings or
losses of any business entity (other than New World’s consolidated
Subsidiaries) in which New World or any of its consolidated Subsidiaries has an
ownership interest to the extent such earnings or losses are not actually
received or paid for by New World or any of its consolidated Subsidiaries in
the form of cash; (e) earnings or losses of any Person to which assets of New World
or any of its consolidated Subsidiaries shall have been sold, transferred or
disposed of, or into which New World or any of its consolidated Subsidiaries
shall have been merged, or which has been a party with New World or any of its
consolidated Subsidiaries to any consolidation or other form of reorganization,
prior to the date of such transaction; (f) gain or loss arising from the
acquisition of debt or equity securities of New World or any of its
consolidated Subsidiaries or from cancellation or forgiveness of Debt; (g) gain
and non-cash losses arising from extraordinary items, as determined in
accordance with GAAP; (h) legal, accounting, financing, consulting, advisory
and other out-of-pocket fees and expenses incurred in connection with debt financings,
equity financing, acquisitions and/or divestitures (including, without
limitation, the offering of notes under the Indenture and the Equity
Restructuring), whether or not such transactions are consummated; (i) fees and
expenses related to store closures; (j) legal fees related to pending SEC and
DOJ investigations and other litigation pending as of the Closing Date and
litigation related to the subject matter thereof or related thereto commenced
after the Closing Date; (k) expenses relating to the cumulative change in the
fair value of derivatives, extinguishments of debt or equity (including,
without limitation, in connection with current recapitalization efforts of the
Borrowers), impairments, other income/expense, and reorganization costs, expenses
or provisions; (l) any other non-recurring expenses; and (m) the sum of the
provisions for income tax, interest expense, depreciation and amortization
expense, in each case, to the extent deducted in determining net income for
such period. Net income for any period will be determined by expensing (and not
capitalizing) all costs associated with the opening of new retail locations
other than Capital Expenditures consisting of fixtures, furniture, leasehold
and improvements and equipment; and (n) any other non-cash charge or expense to
the extent such charge or expense does not relate to a future cash payment
obligation, including, without limitation, non-cash compensation expense.


 


“Einstein”
has the meaning set forth in the introductory paragraph hereof.


 


“Einstein/Noah”
has the meaning set forth in the introductory paragraph hereof.


 


“Eligible Assignee” means (a) a commercial bank, commercial
finance company or other asset based lender, having total assets in excess of
$100,000,000, which is acceptable to the Agent and, unless a Default or an
Event of Default has occurred and is continuing, consented to by New World
(which consent shall not be unreasonably withheld); (b) any Lender; (c) any


 


8

















 


Affiliate of
any Lender; and (d) if a Default or an Event of Default has occurred and is
continuing, any Person acceptable to the Agent.


 


“Environmental Laws” means all federal, state or local laws,
statutes, common law requirements or duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, licenses and
permits of, and written agreements with, any Governmental Authority, in each
case relating to environmental, health and safety matters.


 


“Environmental Lien” means a Lien in favor of any Governmental
Authority for (a) any liability under any Environmental Laws, or (b) damages
arising from, or costs incurred by such Governmental Authority in response to,
a Release or threatened Release of a Contaminant into the environment.


 


“Equipment” means all of each Loan Party’s now owned and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and
other tangible personal property (except Inventory), including embedded
software, motor vehicles with respect to which a certificate of title has been
issued to the relevant Loan Party, aircraft, dies, tools, jigs, molds and
office equipment, as well as all of such types of property leased by any Loan
Party and all of each Loan Party’s rights and interests with respect thereto
under such leases (including, without limitation, options to purchase);
together with all present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and supplies used or to be
used in connection therewith, and all substitutes for any of the foregoing, and
all manuals, drawings, instructions, warranties and rights with respect
thereto; wherever any of the foregoing is located.


 


“Equity
Interest” means, collectively, all of the issued and outstanding shares,
interests or other equivalents of capital stock of any corporation at any time
now or hereafter owned by any Loan Party (including, without limitation, any
corporation that is or hereafter becomes a Subsidiary of such Loan Party),
whether voting or non-voting and whether common or preferred, all partnership,
joint venture, limited liability company or other equity interests in any
person not a corporation at any time now or hereafter owned by any Loan Party
(including, without limitation, any such Person that is or hereafter becomes a
Subsidiary of such Loan Party), all options, warrants and other rights to
acquire, and all securities convertible into, any of the foregoing, all rights
to receive interest, income, dividends, distributions, returns of capital and
other amounts (whether in cash, securities, property, or a combination
thereof), and all additional stock, warrants, options, securities, interests
and other property, from time to time paid or payable or distributed or
distributable in respect of any of the foregoing, including, without
limitation, all rights of such Loan Party to receive amounts due and to become
due under or in respect of any Investment Agreement or upon the termination
thereof, all rights of access to the books and records of any such Person, and
all other rights, powers, privileges, interests, claims and other property in
any manner arising out of or relating to any of the foregoing, of whatever kind
or character (including any tangible or intangible property or interests therein),
and whether provided by contract or granted or available under applicable law
in connection therewith, including, without limitation, such Loan Party’s right
to vote and to manage and administer the business of any such Person pursuant
to any applicable Investment Agreement, together with all certificates,
instruments and entries upon the books of financial intermediaries at any time


 


9

















 


evidencing any
of the foregoing, in each case whether now owned or existing or hereafter
acquired or arising.


 


“Equity Restructuring” means the equity restructuring
contemplated by the Equity Restructuring Agreement.


 


“Equity
Restructuring Agreement” means the Equity Restructuring Agreement dated
June 26, 2003, among New World, Halpern Denny III, L.P. and Greenlight
Capital, L.P., Greenlight Capital Qualified, L.P., Greenlight Capital Offshore,
Ltd., Brookwood New World Investors, L.L.C. and NWCI Holdings, LLC.


 


“ERISA” means the Employee Retirement Income Security Act of 1974,
as amended, and regulations promulgated thereunder.


 


“ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with New World or any of its Subsidiaries
within the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).


 


“ERISA
Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Loan Party or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan
is in reorganization under Section 4241 of ERISA; (d) the filing of a
notice of intent to terminate a Pension Plan (other than in a “standard
termination” within the meaning of Section 4041 of ERISA which would not
result in a material liability to any Loan Party), the treatment of a Pension
Plan amendment as a termination (other than such a “standard termination”)
under Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multi-employer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multi-employer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon any Loan Party or
any ERISA Affiliate.


 


“Event of
Default” has the meaning specified in Section 11.1.


 


“Exchange
Act” means the Securities and Exchange Act of 1934, and regulations
promulgated thereunder.


 


“Excluded
Agreements” has the meaning specified in Section 6.1(a).


 


“Federal
Funds Rate” means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal


 


10

















 


Reserve Bank
of New York (including any such successor, “H.15(519)”) on the preceding
Business Day opposite the caption “Federal Funds (Effective)”; or, if for any
relevant day such rate is not so published on any such preceding Business Day,
the rate for such day will be the arithmetic mean as determined by the Agent of
the rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.


 


“Federal Reserve Board” means the Board of Governors of the
Federal Reserve System or any successor thereto.


 


“Fee Letter”
has the meaning specified in Section 3.4.


 


“Financial Statements” means, according to the context in which
it is used, the financial statements referred to in Section 7.2 or Section 8.6.


 


“Fiscal Year” means, with respect to the Borrowers and their
Subsidiaries, each fiscal year ending on December 31 of each year.


 


“Fixed
Assets” means Equipment and Real Estate of the Loan Parties.


 


“Fixed
Charge Coverage Ratio” means, for any Test Period, the ratio of (a) EBITDA
for such Test Period over (b) the sum of (i) cash interest expense of the
Borrowers and their Subsidiaries for such Test Period, (ii) taxes (other than
sales taxes) of the Borrowers and their Subsidiaries paid or required to be
paid in cash during such Test Period, (iii) Capital Expenditures of the
Borrowers and their Subsidiaries paid in cash during such Test Period, and (iv)
scheduled principal payments of Debt of the Borrowers and their Subsidiaries
due during such Test Period.


 


“Funding
Date” means the date on which a Borrowing occurs.


 


“GAAP”
means generally accepted accounting principles set forth from time to time in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S.
accounting profession), consistently applied.


 


“General Intangibles” means all of each Loan Party’s now owned
or hereafter acquired general intangibles, chooses in action and causes of
action and all other intangible personal property of each Loan Party of every
kind and nature (other than Accounts), including, without limitation, all
contract rights, payment intangibles, Proprietary Rights, corporate or other
business records, inventions, designs, blue-prints, plans, specifications,
patents, patent applications, trademarks, service marks, trade names, trade
secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to any Loan Party in connection with the termination of any Plan or other
employee benefit plan or any rights thereto and any other amounts payable to a
Loan Party from


 


11

















 


any Plan or
other employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds
thereof, extra expense insurance and proceeds thereof, property, casualty or
any similar type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which a Loan Party is beneficiary, and
any letter of credit, guarantee, claim, security interest or other security
held by or granted to a Loan Party.


 


“Government Contract” means any contract entered into between a
Loan Party and the government of the United States of America, or any
department, agency, public corporation or other instrumentality thereof.


 


“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.


 


“Guarantors” means, collectively, New World and each Subsidiary
of any of the Loan Parties, including, without limitation, each Subsidiary
that, after the date hereof, executes an Addendum, in each case other than any
Non-Restricted Subsidiary.


 


“Guaranty” means, with respect to any Person, all obligations of
such Person which in any manner directly or indirectly guarantee or assure, or
in effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the “guaranteed
obligations”), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise:  (a) to purchase the guaranteed obligations
or any property constituting security therefor; (b) to advance or supply funds
for the purchase or payment of the guaranteed obligations or to maintain a
working capital or other balance sheet condition; or (c) to lease property or
to purchase any debt or equity securities or other property or services.


 


“I&J”
has the meaning set forth in the introductory paragraph hereof.


 


“Inactive Subsidiary” means each of Manhattan Bagel Construction
Corp., Bay Area Bagel, Inc., CR Bagel Leases, Inc., DAB Industries, Inc., MBC
Tonowanda, LLC, MBC North Buffalo, LLC, MBC Northtown, LLC, MBC Cheekotowaga,
LLC, MBC Elmwood, LLC, MBC Main Place, LLC, MBC Maple, LLC, MBC Orchard Park,
LLC, MBC Amherst, LLC, MBC Snyder, LLC, MBC Transit, LLC, MBC Genesee, LLC,
Paragon Bakeries, Inc. and MBC East Aurora, LLC, in each case with respect to
which an Activation Event shall not have occurred and, to the extent that an
Activation Event shall have occurred with respect to any of the foregoing, such
Subsidiary shall cease to be an Inactive Subsidiary for the purposes of this
Agreement and such Subsidiary shall comply with the provisions of Section 9.20.


 


“Indemnified
Liabilities” has the meaning specified in Section 15.11.


 


12

















 


“Indenture” means the Indenture, dated as of the Closing Date,
among the Borrowers and The Bank of New York, as trustee, as the same may be
amended, restated, supplemented or otherwise modified in accordance with the
terms hereof and thereof.


 


“Instruments” means all instruments, as such term is defined in
the UCC, now owned or hereafter acquired by any Loan Party.


 


“Intercompany Accounts” means all assets and liabilities,
however arising, which are due to any of the Loan Parties from, which are due
from any of the Loan Parties to, or which otherwise arise from any transaction
by any Loan Party with, any Affiliate.


 


“Intercreditor Agreement” means the Intercreditor Agreement,
dated the Closing Date, among ASB, as lender, The Bank of New York, as Trustee
and Subordinated Creditor, the Agent, as Lender Collateral Agent, The Bank of
New York, as Subordinated Creditor Collateral Agent and the Borrowers, as the
same may be amended, restated, supplemented or otherwise modified from time to
time in accordance with its terms.


 


“Interest
Rate” means each or any of the interest rates, including the Default Rate,
set forth in Section 3.1.


 


“Inventory” means all of each Loan Party’s now owned and
hereafter acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, all returned
goods, raw materials, other materials and supplies of any kind, nature or
description which are or might be consumed in any Loan Party’s business or used
in connection with the packing, shipping, advertising, selling or finishing of
such goods, merchandise and such other personal property, and all documents of
title or other documents representing them.


 


“Investment
Agreement” means any articles or certificate of incorporation, partnership
agreement, joint venture agreement, limited liability company operating
agreement, stockholders agreement or other agreement creating, governing or
evidencing any Equity Interests and to which any Loan Party is now or hereafter
becomes a party, as any such agreement may be amended, modified, supplemented,
restated or replaced from time to time.


 


“Investment
Property” means all of each Loan Party’s right, title and interest in and
to any and all:  (a) securities whether
certificated or uncertificated; (b) securities entitlements; (c) securities
accounts; (d) commodity contracts; or (e) commodity accounts.


 


“IRS”
means the Internal Revenue Service and any Governmental Authority succeeding to
any of its principal functions under the Code.


 


“Latest Projections” means the projections most recently
received by the Agent pursuant to Section 7.2(f).


 


13

















 


“Lender”
and “Lenders” have the meanings specified in the introductory paragraph
hereof and shall include the Agent to the extent of any Agent Advance
outstanding and ASB to the extent of any ASB Loan outstanding; provided
that no such Agent Advance or ASB Loan shall be taken into account in determining
any Lender’s Pro Rata Share.


 


“Letter of Credit” means a letter of credit issued or caused to
be issued for the account of a Borrower pursuant to Section 2.4.


 


“Letter of
Credit Exposure” means, with respect to the Borrowers, at any time, the sum
of (a) the aggregate undrawn amount of all outstanding Letters of Credit plus
(b) the aggregate unpaid reimbursement obligations with respect to all Letters
of Credit, in each case, as of such time.


 


“Letter of
Credit Fee” has the meaning specified in Section 3.6.


 


“Lien”
means:  (a) any interest in property
securing an obligation owed to, or a claim by, a Person other than the owner of
the property, whether such interest is based on the common law, statute, or
contract, and including, without limitation, a security interest, charge,
claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for security
purposes; and (b) to the extent not included under clause (a), any reservation,
exception, encroachment, easement, right-of-way, covenant, condition,
restriction, lease or other title exception or encumbrance affecting property.


 


“Loan Account” means, with respect to a Borrower, the loan
account of such Borrower, which account shall be maintained by the Agent.


 


“Loan
Documents” means this Agreement, the Fee Letter, the Pledge Agreement, the
Patent and Trademark Agreement, and any other agreements, instruments and
documents heretofore, now or hereafter evidencing, securing, guaranteeing or
otherwise relating to the Obligations, the Collateral or any other aspect of
the transactions contemplated by this Agreement (including, without limitation,
any Mortgage at any time entered into by any of the Borrowers or any of their
Subsidiaries).


 


“Loan Party” means each of the following:  each Guarantor, each Borrower and each of
their respective Subsidiaries other than a Non-Restricted Subsidiary.


 


“Loans”
means, collectively, all loans and advances provided for in Article II.


 


“Major Premises” means the Real Property leased by New World
located in Hamilton, New Jersey, Golden, Colorado (Cole Boulevard), Whittier,
California and Los Angeles, California.


 


“Majority
Lenders” means at any time (i) while the Revolving Commitments shall then
be in effect, Lenders whose Revolving Commitments aggregate more than 51% of
the sum


 


14

















 


of the
Revolving Commitments of all Lenders and (ii) if no Revolving Commitments shall
then be in effect, Lenders who hold more than 51% of the aggregate principal
amount of the Loans then outstanding.


 


“Manhattan
Bagel” has the meaning set forth in the introductory paragraph hereof.


 


“Margin
Adjustment Period” means each period which shall commence the first day of
the month beginning immediately after the earlier of the date of delivery and
the date required for delivery pursuant to Section 7.2(a) of the
financial statements for the Fiscal Year ending December 31, 2003 and each
fiscal quarter and Fiscal Year thereafter and which Margin Adjustment Period
shall end on the earlier of (i) the last day of the month of actual delivery of
the next financial statements pursuant to Section 7.2(a) or Section 7.2(c)
(as the case may be) and (ii) the last day of the month during which the next
financial statements are required to be delivered pursuant to Section 7.2(a)
or Section 7.2(c) (as the case may be).


 


“Margin
Adjustment Test Period” means, with respect to each Margin Adjustment
Period, the Fiscal Year or period of four consecutive fiscal quarters for which
financial statements were last delivered or required to be delivered pursuant
to Section 7.2(a) or Section 7.2(c), as the case may
be, ending on the Test Date for such Margin Adjustment Period.


 


“Margin
Stock” means “margin stock” as such term is defined in Regulation T, U or X
of the Federal Reserve Board.


 


“Material
Adverse Effect” means (a) a material adverse change in, a material
impairment of, or a material adverse effect upon the operations, business,
properties, performance or condition (financial or otherwise) of the Loan
Parties (taken as a whole) or the Collateral; (b) a material impairment in the
ability of the Loan Parties (taken as a whole) to perform in any material
respect their obligations under the operative Loan Documents; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
(except as limited by bankruptcy, insolvency, reorganization or moratorium or
other similar laws relating to the enforcement of creditors’ rights generally)
against any Loan Party of any operative Loan Document.


 


“Maximum
Rate” has the meaning specified in Section 3.3.


 


“Maximum
Revolver Amount” means $15,000,000 or such lesser amount as the sum of the
Revolving Commitments of all Lenders shall have been reduced to in accordance
with this Agreement.


 


“Mortgages”
means all real property mortgages, leasehold mortgages, assignments of leases,
mortgage deeds, deeds of trust, deeds to secure debt, security agreements, and
other similar instruments at any time entered into which provide the Agent a
Lien, for the benefit of the Agent and Lenders, on or other interest in any
portion of the Premises or the Real Estate or which relate to any such Lien or
interest.


 


15

















 


“Multi-employer Plan” means a “multi-employer plan” as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by any
Loan Party or any ERISA Affiliate.


 


“New World”
has the meaning set forth in the introductory paragraph hereof.


 


“Non-Restricted
Subsidiary” means (i) New World EnbcDeb Corp. and each Inactive Subsidiary,
and (ii) any Subsidiary that is designated by the board of directors of New
World as a Non-Restricted Subsidiary pursuant to a resolution of such board,
but only to the extent that such Subsidiary: 
(a) has no Debt other than Debt both that is non-recourse to any
Borrower or Guarantor, and with respect to which no Borrower or Guarantor
provides any credit support; (b) is not party to any agreement, contract,
arrangement or understanding with any Borrower or any Guarantor unless the
terms of any such agreement, contract, arrangement or understanding are no less
favorable to such Borrower or Guarantor than those that might be obtained at
the time from Persons who are not Affiliates of any Borrower; (c) is a Person
with respect to which neither any Borrower nor any Guarantor has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person’s financial condition or to cause such Person
to achieve any specified levels of operating results; and (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Debt of any Borrower or any Guarantor. 
Any such designation by the board of directors of New World shall be
evidenced to the Agent by filing with the Agent a certified copy of such board
resolution and an officers’ certificate certifying that such designation
complied with the foregoing conditions and the other terms and conditions of
this Agreement, such designation does not cause a Default or Event of Default,
and no Activation Event with respect to such Subsidiary would be deemed to have
occurred.  If, at any time, any
Non-Restricted Subsidiary would fail to meet the foregoing requirements or an
Activation Event shall occur with respect thereto, it shall thereafter cease to
be a Non-Restricted Subsidiary for purposes of this Agreement and such
Subsidiary shall comply with the provisions of Section 9.20.


 


“Notice of
Borrowing” has the meaning specified in Section 2.2(b).


 


“Obligations”
means all present and future loans, advances, liabilities, obligations,
covenants, duties, and debts owing by any one or more of the Loan Parties to
the Agent and/or any Lender, arising under or pursuant to this Agreement or any
of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, including, without limitation, the Letters of Credit,
acceptance, loan, guaranty, indemnification or otherwise, whether direct or
indirect (including, without limitation, those acquired by assignment from
others, and any participation by the Agent and/or any Lender in a Loan Party’s
debts owing to others), absolute or contingent, due or to become due, primary
or secondary, as principal or guarantor, and including, without limitation, all
principal, interest, charges, expenses, fees, attorneys’ fees, filing fees and
any other sums chargeable to any of the Loan Parties hereunder or under any of
the other Loan Documents (including, without limitation, all interest thereon,
whether accruing prior or subsequent to the commencement of a bankruptcy or
similar proceeding involving any Loan Party as a debtor and whether or not such
interest is an allowed claim in any such proceeding).


 


16

















 


“Operating Cash Flow Coverage Ratio” means, for any Test Period,
the ratio of (a)(i) Adjusted EBITDA for such Test Period minus (ii) Capital
Expenditures of the Borrowers and their Subsidiaries paid in cash during such
Test Period over (b) the sum of (i) cash interest expense of the Borrowers and
their Subsidiaries for such Test Period, (ii) taxes (other than sales taxes) of
the Borrowers and their Subsidiaries paid or required to be paid in cash during
such Test Period, (iii) scheduled principal payments of Debt of the Borrowers
and their Subsidiaries due during such Test Period (other than Debt being
repaid on the Closing Date), (iv) management fees paid by the Borrowers during
such Test Period and (v) Distributions paid in cash during such Test Period.


 


“Other Taxes” means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.


 


“Participant”
has the meaning specified in Section 13.3(e).


 


“Patent and
Trademark Agreement” means the Security Agreement and Mortgage — Trademarks
and Patents, dated the Closing Date, executed and delivered by each Loan Party
to the Agent to evidence and perfect the Agent’s security interest (on behalf
of the Agent and the Lenders) in each Loan Party’s present and future patents,
trademarks, and related licenses and rights, together with all related
assignments for security and special powers of attorney, as the same may be
amended, restated, supplemented or otherwise modified from time to time.


 


“Payment
Account” means each bank account established pursuant to this Agreement, to
which the funds of any of the Borrowers (including, without limitation,
proceeds of Accounts and other Collateral) are deposited or credited, and which
is maintained in the name of the Agent or any Borrower, as the Agent may
determine, on terms acceptable to the Agent.


 


“PBGC” means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.


 


“Pension Plan” means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which any Loan Party
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan, has made contributions
at any time during the immediately preceding five (5) plan years.


 


“Permitted Distributions” means Distributions (or similar
distribution or act, if not a corporation), to a Borrower by its Subsidiaries.


 


“Permitted Holders” means each of Halpern Denny & Co., NWCI
Holdings, LLC, Brookwood New World Investors, LLC, Greenlight Capital, L.P.,
Greenlight Capital Qualified, L.P., Greenlight Capital Offshore, Ltd., Thomas
Weisel Capital Partners LLC and Bruckmann, Rosser, Sherrill & Co. L.L.C.,
Triarc Companies, Inc. and their respective Affiliates.


 


17

















 


“Permitted
Liens” means:


 


(a)                                  Liens imposed by any
Governmental Authority for taxes not delinquent or statutory Liens for taxes in
an amount not to exceed $1,000,000 provided that the payment of such taxes
which are due and payable is being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate financial reserves have
been established on a Loan Party’s books and records and for which no
enforcement order has been entered or enforcement action has been taken with
respect to any such Lien;


 


(b)                                 the
Agent’s Liens;


 


(c)                                  pledges or deposits
under worker’s compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure indemnity, performance
or other similar bonds for the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure statutory obligations
(other than liens arising under ERISA or Environmental Liens) or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business;


 


(d)                                 Liens
securing the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, provided that if any
such Lien arises from the nonpayment of such claims or demand when due, such
claims and demands are being contested in good faith by the applicable Loan
Party and such claims or demands do not exceed (i) for the period commencing on
the Closing Date and ending on the first Anniversary Date, $500,000 in the
aggregate, (ii) for the period commencing on the day after the first
Anniversary Date and ending on the second Anniversary Date, $750,000 in the
aggregate and (iii) for the period after the day after the second Anniversary
Date, $1,000,000 in the aggregate;


 


(e)                                  reservations,
exceptions, encroachments, easements, rights of way, covenants running with the
land, and other similar title exceptions or encumbrances affecting any Real
Estate; provided that they do not in the aggregate materially detract
from the value of such Real Estate or materially interfere with its use in the
ordinary conduct of a Loan Party’s business;


 


(f)                                    judgment
and other similar Liens arising in connection with judgments that would not
result in an Event of Default pursuant to Section 11.1(k);


 


(g)                                 Purchase
Money Liens;


 


(h)                                 any interest or title
of a lessor under any Capital Lease permitted hereunder; provided, that
(i) such Liens only serve to secure the payment arising under such Capital
Lease and (ii) such Liens do not extend to any property or assets of any Loan
Party which are not leased property subject to such Capital Lease; 


 


(i)                                     Liens
existing on the Closing Date and set forth on Schedule 9.18; provided,
however, that such Liens shall secure only those obligations that they
secure on the


 


18

















 


Closing Date
and such Liens shall attach only to those assets that such Liens attach to on
the Closing Date;


 


(j)                                     Liens
securing Debt of the Loan Parties under the Senior Secured Debt Documents,
which Liens shall be subject to the Intercreditor Agreement;


 


(k)                                  rights of setoff or
brokers’ Liens upon deposits of cash (other than on proceeds of Collateral) at
financial institutions or upon deposits of cash in a deposit account subject to
a blocked account agreement with the Agent;


 


(l)                                     the replacement,
extension or renewal of any Lien on Fixed Assets permitted by clauses (g), (h)
or (i) of this definition; provided,  however, that such Lien
shall at no time be extended to cover any assets or property other than such
Fixed Assets subject thereto on the Closing Date or the date such Fixed Asset
was acquired, as applicable; and


 


(m)                               Liens securing
obligations of any Loan Party in respect of any interest rate swaps, caps,
floors, collars or similar agreements to which such Loan Party is a party, to
the extent permitted pursuant to clause (i) of the definition of “Restricted
Investment”.


 


“Permitted
Rentals” has the meaning specified in Section 9.23.


 


“Person”
means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, Governmental Authority,
limited liability company or any other entity.


 


“Plan”
means an employee benefit plan (as defined in Section 3(3) of ERISA) which
any Loan Party sponsors or maintains or to which any Loan Party makes, is
making, or is obligated to make contributions and includes any Pension Plan. 


 


“Pledge
Agreement” means the Pledge Agreement, dated as of the Closing Date,
pursuant to which the shares of capital stock or other Equity Interests of each
of the Loan Parties (other than New World) are pledged to the Agent, for the
benefit of the Agent and the Lenders, as the same may be amended, restated,
supplemented or otherwise modified from time to time.


 


“Premises”
means the land identified by addresses on Schedule 8.11, together
with all buildings, improvements and fixtures thereon and all tenements,
hereditaments and appurtenances belonging or in any way appertaining thereto,
and which constitutes all of the real property in which any Loan Party has any
interests on the Closing Date.


 


“Primary
Offering” means, with respect to any Person, an underwritten public
offering of Capital Stock that is not Disqualified Capital Stock of such Person
pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (other than a registration statement on Form S-8 or otherwise relating
to equity securities under any employee benefit plans), or pursuant to an
exemption from the registration requirements thereof.


 


19

















 


“Pro Rata Share” means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender’s Revolving Commitment and the denominator of which is the sum of the
amounts of all of the Lenders’ Revolving Commitments, or if no Revolving
Commitments are outstanding, a fraction (expressed as a percentage), the
numerator of which is the amount of Obligations owed to such Lender and the
denominator of which is the aggregate amount of the Obligations owed to the
Lenders.


 


“Proprietary Rights” means all of each Loan Party’s now owned
and hereafter arising or acquired: 
franchises, permits, patents, patent applications, patent rights,
copyrights, works which are the subject matter of copyrights, trademarks,
service marks, trade names, trade styles, patent, trademark and service mark
applications, and all licenses and rights related to any of the foregoing,
including, without limitation, those patents, trademarks, service marks, trade
names and copyrights set forth on Schedule 8.12 hereto, and
all other rights under any of the foregoing, all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing, and all rights to sue for past, present and future infringement of
any of the foregoing and licenses to any of the foregoing.


 


“Purchase Money Lien” means a Lien granted on a fixed asset to
secure a Purchase Money Obligation permitted to be incurred hereunder, and
incurred solely to finance the acquisition of such asset; provided, however,
that such Lien encumbers only such asset and is granted within 10 days of such
acquisition.


 


“Purchase Money Obligations” of any Person means any obligations
of such Person to any seller or any other Person incurred or assumed to finance
the acquisition of a fixed asset to be used in the business of such Person or
any of its Subsidiaries in an amount that is not more than 100% of the cost of
such asset, and incurred within 10 days after the date of such acquisition
(excluding accounts payable to trade creditors incurred in the ordinary course
of business).


 


“Qualified Recapitalization” means the conversion of all of the
shares of series F preferred stock, par value $0.001 per share of New World,
Common Stock of New World and warrants to purchase Common Stock of New World
held by Halpern Denny Fund III, L.P. into shares of newly issued non-interest
bearing preferred stock of New World having a face amount of $57.0 million,
which is mandatorily redeemable by New World in five and one-half years.


 


“Real
Estate” means all of the present and future interests of each Loan Party,
as owner, lessee or otherwise (but not including any interest arising solely
from such Loan Party’s position as franchisor), in the Premises or other real
property, including, without limitation, any interest arising from an option to
purchase or lease the Premises or any such other real property, or any portion
thereof.


 


“Release” means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.


 


20

















 


“Rentals”
has the meaning specified in Section 9.23.


 


“Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA
or the regulations thereunder, other than any such event for which the 30-day
notice requirement under ERISA has been waived in regulations issued by the
PBGC.


 


“Requirement of Law” means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.


 


“Responsible
Officer” means, with respect to a Loan Party, the chief executive officer
or the president of such Loan Party, as the case may be, or any other officer
having substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer of such Loan
Party, as the case may be, or any other officer having substantially the same
authority and responsibility.


 


“Restricted
Equipment” has the meaning specified in Section 6.1(a).


 


“Restricted
Investment” means any acquisition of property (including, without
limitation, any Equity Interest) by a Loan Party in exchange for cash or other
property, whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other
property, or a loan, advance, joint venture, capital contribution, or
subscription, except the following:  (a)
acquisitions of equipment, other assets or Real Estate to be used in the
business of a Borrower or a Subsidiary thereof so long as the acquisition costs
thereof constitute Capital Expenditures permitted hereunder and such
acquisition is otherwise permitted hereunder; (b) acquisitions by a Borrower or
a Subsidiary thereof of Inventory in the ordinary course of business; (c)
acquisitions by a Borrower or a Subsidiary thereof of current assets arising
from the sale or lease of goods or the rendition of services in the ordinary
course of business of such Loan Party; (d) acquisitions by a Borrower or a
Subsidiary thereof of direct obligations of the United States of America, or
any agency thereof, or obligations guaranteed by the United States of America, provided
that such obligations mature within one year from the date of acquisition
thereof; (e) acquisitions by a Borrower or a Subsidiary thereof of certificates
of deposit maturing within one year from the date of acquisition, bankers’
acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case
issued by, created by, or with a bank or trust company organized under the laws
of the United States or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) acquisitions by a Borrower or a
Subsidiary thereof of commercial paper given a rating of “A2” or better by
Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies,
Inc., or “P2” or better by Moody’s Investors Service, Inc. and maturing not
more than 90 days from the date of creation thereof; (g) Debt permitted
pursuant to Section 9.12(e); (h) investments by a Loan Party, in
its wholly-owned Subsidiaries in existence on the Closing Date and in Persons
that, following such investment, are wholly-owned Subsidiaries; provided,
that the no further investments shall be made in a Subsidiary that is not a
Borrower or a Guarantor hereunder; (i) acquisitions of interest rate swaps,
caps, floors, collars or similar agreements; provided, that the
aggregate amount of


 


21

















 


such
investments for all Loan Parties under this clause (i) shall not exceed
$500,000; (j) investments in securities of trade creditors received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors solely in exchange for a claim against any
such trade creditor; (k) investments in the notes issued pursuant to the
Indenture; and (l) acquisitions by a Loan Party in any of the agreements,
instruments, obligations or funds described in clauses (iv), (v), (vi) or (vii)
of the definition of “Cash Equivalents” in the Indenture.  Any property excluded from this definition
of “Restricted Investment” shall only be excluded if it is subject to the
Agent’s Liens.


 


“Restructuring”
means, collectively, the issuance by New World of the Senior Secured Debt to
refinance (i) the existing $140,000,000 Senior Secured Notes of New World, plus
accrued interest thereon, (ii) the existing $7,500,000 working capital facility
of New World and (iii) outstanding promissory notes of New World having an
aggregate outstanding balance of approximately $1,700,000.


 


“Revolving
Commitment” means, with respect to each Lender, the amount set forth
opposite such Lender’s name on the signature pages hereto next to the line
entitled “Revolving Commitment,” or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.3, as such commitment
may be adjusted from time to time in accordance with the provisions of Section 3.7
or Section 13.2.


 


“Revolving
Loans” has the meaning specified in Section 2.2(a) and includes
each Agent Advance and ASB Loan.


 


“Senior
Secured Debt” has the meaning specified in Section 10.1(o).


 


“Senior
Secured Debt Documents” means all documents, instruments and agreements
evidencing, governing or otherwise relating to any of the Senior Secured Debt
including, without limitation, the Indenture and any notes evidencing the Senior
Secured Debt.


 


“Settlement” and “Settlement Date” have the meanings
specified in Section 2.2(j)(i).


 


“Solvent”
means when used with respect to any Person that at the time of determination:


 


(a)                                  the assets of such
Person, at a fair valuation, are in excess of the total amount of its debts
(including, without limitation, contingent liabilities); and


 


(b)                                 the present fair
saleable value of its assets is greater than its probable liability on its
existing debts as such debts become absolute and matured; and


 


(c)                                  it is then able and
expects to be able to pay its debts (including, without limitation, contingent
debts and other commitments) as they mature; and


 


22

















 


(d)                                 it has capital
sufficient to carry on its business as conducted and as proposed to be
conducted.


 


For purposes
of determining whether a Person is Solvent, the amount of any contingent
liability shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.


 


“Standby
Letter of Credit” means all Letters of Credit other than Documentary
Letters of Credit.


 


“Stated
Termination Date” means the earlier to occur of (i) July 8, 2006 and
(ii) six months prior to the stated maturity of the Senior Secured Debt.


 


“Subsidiary” of a Person means any corporation, association,
partnership, joint venture, limited liability company or other business entity
of which more than fifty percent (50%) of the voting stock or other Equity
Interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a “Subsidiary” refer to a
Subsidiary of New World.


 


“Supporting
Letter of Credit” has the meaning specified in Section 2.4(j).


 


“Supporting Obligations” means all supporting obligations, as
such term is defined in the UCC, including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments or Investment Property.


 


“Taxes” means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender’s net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Lender or the Agent, as the case may be,
is organized or maintains a lending office.


 


“Termination
Date” means the earliest to occur of (a) the Stated Termination Date, (b)
the date the Total Facility is terminated either by the Borrowers pursuant to Section 4.2
or by the Majority Lenders pursuant to Section 11.2, and (c) the
date the Total Facility or this Agreement is otherwise terminated for any
reason whatsoever.


 


“Test Date”
means, with respect to any Margin Adjustment Period, the last day of New
World’s fiscal quarter or Fiscal Year, as applicable, ending immediately prior
to the commencement of such Margin Adjustment Period.


 


23

















 


“Test Period” means, for any determination required under this
Agreement, the period of four consecutive fiscal quarters of New World ended at
the end of the relevant fiscal quarter or Fiscal Year of New World.


 


“Total Exposure” means, with respect to the Borrowers, at any
time, the sum of (i) the Letter of Credit Exposure at such time plus (b)
the sum of outstanding Revolving Loans at such time.


 


“Total
Facility” has the meaning specified in Section 2.1.


 


“Transaction Documents” means, collectively, the Loan Documents,
the Senior Secured Debt Documents, the Intercreditor Agreement and all other
documents, instruments and agreements executed and/or delivered in connection
therewith.


 


“UCC” means the Uniform Commercial Code (or any successor
statute) of the State of New York or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.


 


“Unfunded Pension Liability” means the excess of a Pension
Plan’s benefit liabilities under Section 4001(a)(16) of ERISA over the
current value of that Pension Plan’s assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412 of
the Code for the applicable plan year.


 


“Unused
Letter of Credit Subfacility” means, at any time, an amount equal to
$2,500,000 minus the Letter of Credit Exposure at such time.


 


“Unused
Line Fee” has the meaning specified in Section 3.5.


 


“Voting Stock” means, with respect to any Person, one or more
classes of the Capital Stock of such Person having general voting power under
ordinary circumstances to elect at least a majority of the Board of Directors,
managers or trustees of such Person (irrespective of whether or not at the time
Capital Stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).


 


“Willoughby’s”
has the meaning set forth in the introductory paragraph hereof.


 


Section 1.2.                                   Accounting
Terms.  Any accounting term used in
this Agreement shall have, unless otherwise specifically provided herein, the
meaning customarily given in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically
provided herein, in accordance with GAAP as consistently applied and using the
same method for inventory valuation as used in the preparation of the Financial
Statements referred to in Section 8.6.  In the event that any accounting change of the Financial
Accounting Standards Board shall be promulgated resulting in a change in the
method of calculation of financial covenants, financial standards or other
terms in this Agreement, then the Loan Parties, the Agent and the Majority
Lenders agree to enter into good faith negotiations in


 


24

















 


order to amend
such provisions of this Agreement so as to equitably reflect such accounting
changes to the effect that the criteria for evaluating the financial condition
and performance of the Borrowers and their Subsidiaries shall be the same after
such accounting changes as if such accounting changes had not been made.  Until such time as such an amendment shall
have been executed and delivered by the Loan Parties, the Agent and the
Majority Lenders, all financial covenants, financial standards and other terms
in this Agreement shall continue to be calculated or construed as if such
accounting changes had not occurred.


 


Section 1.3.                                   Interpretive
Provisions.  (a)  The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.


 


(b)                                 The words “hereof,”
“herein,” “hereunder” and similar words refer to this Agreement as a whole and
not to any particular provision of this Agreement; and Subsection, Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.


 


(c)                                  (i)                                     The term
“documents” includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced.


 


(ii)                                  The term “including”
is not limiting and means “including without limitation.”


 


(iii)                               In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including,” the words “to” and “until”
each mean “to but excluding” and the word “through” means “to and including.”


 


(d)                                 Unless otherwise
expressly provided herein, (i) references to agreements (including this
Agreement) and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.


 


(e)                                  The captions and
headings of this Agreement are for convenience of reference only and shall not
affect the interpretation of this Agreement.


 


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


 


(g)                                 This Agreement and the
other Loan Documents are the result of negotiations among and have been
reviewed by each party’s counsel and are the products of all parties.  Accordingly, they shall not be construed
against the Lenders or the Agent merely because of the Agent’s or Lenders’ involvement
in their preparation.


 


25

















 


ARTICLE
II


 


LOANS
AND LETTERS OF CREDIT


 


Section 2.1.                                   Total
Facility.  Subject to all of the
terms and conditions of this Agreement, the Lenders severally agree to make available
a total credit facility of $15,000,000 (the “Total Facility”) for the
Borrowers’ use from time to time during the term of this Agreement.  The Total Facility shall be comprised of a
revolving line of credit consisting of revolving loans and letters of credit up
to the Maximum Revolver Amount, as described in Sections 2.2 and 2.4.


 


Section 2.2.                                   Revolving
Loans.


 


(a)                                  Amounts.  Subject to the satisfaction of the
conditions precedent set forth in Article X, each Lender severally
agrees, upon a Borrower’s request from time to time on any Business Day during
the period from the Closing Date to the Termination Date, to make revolving
loans (the “Revolving Loans”) to such Borrower, in amounts not to exceed
on an aggregate basis (except for ASB with respect to ASB Loans or Agent
Advances) the lesser of (i) such Lender’s Revolving Commitment and (ii) such
Lender’s Pro Rata Share of the Borrowers’ Availability.  If the Total Exposure exceeds the
Availability, the Lenders may refuse to make or otherwise restrict the making
of Revolving Loans as the Lenders determine until such excess has been
eliminated, subject to the Agent’s authority, in its sole discretion, to make
Agent Advances pursuant to the terms of Section 2.2(i).


 


(b)                                 Procedure
for Borrowing.  Each Borrowing by a
Borrower shall be made upon such Borrower’s irrevocable written notice
delivered to the Agent in the form of a notice of borrowing substantially in
the form of Exhibit A (a “Notice of Borrowing”), which must be
received by the Agent no later than 11:00 a.m. on the requested Funding Date,
specifying:


 


(i)                                     the
amount of the Borrowing by such Borrower; 


 


(ii)                                  the
requested Funding Date, which shall be a Business Day; and


 


(iii)          the Availability as of such date.


 


(c)                                  Reliance
upon Authority.  On or prior to the
Closing Date and thereafter prior to any change with respect to any of the
information contained in the following clauses (i) and (ii) with respect to
such Borrower, each Borrower shall deliver to the Agent a writing setting forth
(i) the account of such Borrower to which the Agent is authorized to transfer
the proceeds of the Revolving Loans requested by such Borrower pursuant to this
Section 2.2, and (ii) the names of the officers authorized to
request Revolving Loans on behalf of such Borrower, and shall provide the Agent
with a specimen signature of each such officer.  The Agent shall be entitled to rely conclusively on such
officer’s authority to request Revolving Loans on behalf of


 


26

















 


the applicable
Borrower, the proceeds of which are to be transferred to any of the accounts
specified by such Borrower pursuant to the immediately preceding sentence,
until the Agent receives written notice from such Borrower to the contrary.  The Agent shall have no duty to verify the
identity of any individual representing him or herself as one of the officers
authorized by the applicable Borrower to make such requests on its behalf.


 


(d)                                 No
Liability.  The Agent shall not
incur any liability to any Loan Party as a result of acting upon any notice
referred to in Sections 2.2(b) and (c), which notice the Agent
believes in good faith to have been given by an officer duly authorized by any
Borrower to request Revolving Loans on its behalf or for otherwise acting in
good faith under this Section 2.2, and the crediting of Revolving
Loans to such Borrower’s deposit account, or transmittal to such Person as such
Borrower shall direct, shall conclusively establish the obligation of such
Borrower to repay such Revolving Loans as provided herein.


 


(e)                                  Notice
Irrevocable.  Any Notice of
Borrowing made by a Borrower pursuant to Section 2.2(b) shall be
irrevocable and such Borrower shall be bound to borrow the funds requested
therein in accordance therewith.


 


(f)                                    Agent’s
Election.  Promptly after receipt of
a Notice of Borrowing (or telephonic notice in lieu thereof) pursuant to Section 2.2(b),
the Agent shall elect, in its discretion, (i) to have the terms of Section 2.2(g)
apply to such requested Borrowing, or (ii) to request ASB to make an ASB Loan
pursuant to the terms of Section 2.2(h) in the amount of the
requested Borrowing; provided, however, that if ASB declines in
its sole discretion to make an ASB Loan pursuant to Section 2.2(h),
the Agent shall elect to have the terms of Section 2.2(g) apply to
such requested Borrowing.


 


(g)                                 Making
of Revolving Loans.  (i)  In the event that the Agent shall elect to
have the terms of this Section 2.2(g) apply to a requested
Borrowing as described in Section 2.2(f), then promptly after
receipt of a Notice of Borrowing, the Agent shall notify the Lenders by
telecopy, telephone or other similar form of transmission, of the requested
Borrowing.  Each Lender shall make the
amount of such Lender’s Pro Rata Share of the requested Borrowing available to
the Agent in same day funds, to such account of the Agent as the Agent may
designate, not later than 11:00 a.m. (New York City time), on the Funding Date
applicable thereto.  After the Agent’s
receipt of the proceeds of such Revolving Loans, upon satisfaction of the
applicable conditions precedent set forth in Article X, the Agent
shall make the proceeds of such Revolving Loans available to the applicable
Borrower on the applicable Funding Date by transferring same day funds equal to
the proceeds of such Revolving Loans received by the Agent to the account of
such Borrower, designated in writing by such Borrower and acceptable to the
Agent; provided,  however, that the amount of Revolving Loans so
made on any date shall in no event exceed Availability on such date.


 


(ii)                                  Unless the Agent
receives notice from a Lender on or prior to the Closing Date or, with respect
to any Borrowing after the Closing Date, at least one Business Day prior to the
date of such Borrowing, that such Lender will not make available as and when
required hereunder to the Agent for the account of the applicable Borrower the
amount of that


 


27

















 


Lender’s Pro
Rata Share of the Borrowing, the Agent may assume that each Lender has made
such amount available to the Agent in immediately available funds on the
Funding Date and the Agent may (but shall not be so required), in reliance upon
such assumption, make available to such Borrower on such date a corresponding
amount.  If and to the extent any Lender
shall not have made its full amount available to the Agent in immediately
available funds and the Agent in such circumstances has made available to such
Borrower such amount, that Lender shall on the Business Day following such
Funding Date make such amount available to the Agent, together with interest at
the Federal Funds Rate for each day during such period.  A notice of the Agent submitted to any
Lender with respect to amounts owing under this subsection shall be conclusive,
absent manifest error.  If such amount
is so made available, such payment to the Agent shall constitute such Lender’s
Loan on the date of Borrowing for all purposes of this Agreement.  If such amount is not made available to the
Agent on the Business Day following the Funding Date, the Agent will notify the
applicable Borrower of such failure to fund and, upon demand by the Agent, such
Borrower shall pay such amount to the Agent for the Agent’s account, together
with interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.  The failure
of any Lender to make any Loan on any Funding Date (any such Lender, prior to
the cure of such failure, being hereinafter referred to as a “Defaulting
Lender”) shall not relieve any other Lender of any obligation hereunder to
make a Loan on such Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Loan to be made by such other Lender on
any Funding Date.


 


(iii)                               The
Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by a Borrower to the Agent for the Defaulting Lender’s benefit; nor shall
a Defaulting Lender be entitled to the sharing of any payments hereunder.  Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. 
The Agent may hold and, in its discretion, re-lend to a Borrower the
amount of all such payments received or retained by it for the account of such
Defaulting Lender.  For purposes of
voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
“Lender” and such Lender’s Revolving Commitment shall be deemed to be zero
(-0-).  Until a Defaulting Lender cures
its failure to fund its Pro Rata Share of any Borrowing (1) such Defaulting
Lender shall not be entitled to any portion of the Unused Line Fee and (2) the
Unused Line Fee shall accrue in favor of the Lenders which have funded their
respective Pro Rata Shares of such requested Borrowing, shall be allocated
among such performing Lenders ratably based upon their relative Revolving
Commitments, and shall be calculated based upon the average amount by which the
aggregate Revolving Commitments of such performing Lenders exceeds the sum of
outstanding Revolving Loans and the undrawn face amount of all outstanding
Letters of Credit (and all unpaid reimbursement obligations in respect of
Letters of Credit).  This section shall
remain effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under this
Agreement.  The terms of this
Section shall not be construed to increase or otherwise affect the
Revolving Commitment of any Lender, or relieve or excuse the performance by any
Borrower of its duties and obligations hereunder.


 


28

















 


(h)                                 Making
of ASB Loans.  (i)  In the event the Agent shall elect, with the
consent of ASB, to have the terms of this Section 2.2(h) apply to a
requested Borrowing as described in Section 2.2(f), ASB shall make
a Revolving Loan in the amount of such Borrowing (any such Revolving Loan made
solely by ASB pursuant to this Section 2.2(h) being referred to as
an “ASB Loan” and such Revolving Loans being referred to collectively as
“ASB Loans”) available to the applicable Borrower on the Funding Date
applicable thereto by transferring same day funds to an account of such
Borrower, designated in writing by such Borrower and reasonably acceptable to
the Agent.  Each ASB Loan is a Revolving
Loan hereunder and shall be subject to all the terms and conditions applicable
to other Revolving Loans except that all payments thereon shall be payable to
ASB solely for its own account (and for the account of the holder of any
participation interest with respect to such Revolving Loan).  The Agent shall not request ASB to make any
ASB Loan if (i) the Agent shall have received written notice from any Lender,
or otherwise has actual knowledge, that one or more of the applicable
conditions precedent set forth in Article X will not be satisfied
on the requested Funding Date for the applicable Borrowing, (ii) the requested
Borrowing would exceed Availability on such Funding Date or (iii) after giving
effect to such ASB Loan, the aggregate amount of ASB Loans would exceed
$2,500,000.  ASB shall not otherwise be
required to determine whether the applicable conditions precedent set forth in Article X
have been satisfied or the requested Borrowing would exceed the Availability on
the Funding Date applicable thereto prior to making, in its sole discretion,
any ASB Loan.


 


(ii)                                  The
ASB Loans shall be secured by the Collateral, shall constitute Revolving Loans
and Obligations hereunder, and shall bear interest at the rate applicable to
Revolving Loans from time to time.


 


(i)                                     Agent Advances.  (i) 
Subject to the limitations set forth in the provisos contained in
this Section 2.2(i), the Agent is hereby authorized by the
Borrowers and the Lenders, from time to time in the Agent’s sole discretion,
(1) after the occurrence of a Default or an Event of Default, or (2) at any
time that any of the other applicable conditions precedent set forth in Article X
have not been satisfied, to make Revolving Loans to one or more of the
Borrowers on behalf of the Lenders which the Agent, in its reasonable business
judgment, deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, or (C) to
pay any other amount chargeable to one or more of the Borrowers pursuant to the
terms of this Agreement, including, without limitation, costs, fees and expenses
as described in Section 15.7 (any of the advances described in this
Section 2.2(i) being hereinafter referred to as “Agent Advances”);
provided, that the Majority Lenders may at any time revoke the Agent’s
authorization contained in this Section 2.2(i) to make Agent
Advances, any such revocation to be in writing and to become effective
prospectively upon the Agent’s receipt thereof; and provided  further,
that the Agent shall not make Agent Advances for purposes described in clauses
(B) and (C) above which would cause Total Exposure to exceed the Availability
of the Borrowers.


 


(ii)                                  The Agent Advances
shall be repayable on demand and secured by the Collateral, shall constitute
Revolving Loans and Obligations hereunder, and shall bear


 


29

















 


interest as
Revolving Loans from time to time.  The
Agent shall notify each Lender in writing of each such Agent Advance.


 


(j)                                     Settlement.  It is agreed that each Lender’s funded
portion of the Revolving Loans is intended by the Lenders to be equal at all
times to such Lender’s Pro Rata Share of the outstanding Revolving Loans.  Notwithstanding such agreement, the Agent,
ASB and the Lenders agree (which agreement shall not be for the benefit of or
enforceable by the Borrowers) that in order to facilitate the administration of
this Agreement and the other Loan Documents, settlement among them as to the
Revolving Loans, the ASB Loans and the Agent Advances shall take place on a
periodic basis in accordance with the following provisions:


 


(i)                                     The Agent shall
request settlement (“Settlement”) with the Lenders on a weekly basis, or
on a more frequent basis if so determined by the Agent, (A) on behalf of ASB,
with respect to each outstanding ASB Loan, (B) for itself, with respect to each
Agent Advance, and (C) with respect to collections received, in each case, by
notifying the Lenders of such requested Settlement by telecopy, telephone or
other similar form of transmission, of such requested Settlement, no later than
11:00 a.m. (New York City time) on the date of such requested Settlement (the “Settlement
Date”).  Each Lender (other than ASB
in the case of ASB Loans and the Agent in the case of Agent Advances) shall
make the amount of such Lender’s Pro Rata Share of the outstanding principal
amount of the ASB Loans and Agent Advances with respect to which Settlement is
requested available to the Agent, for itself or for the account of ASB, in same
day funds, to such account of the Agent as the Agent may designate, not later
than 2:00 p.m. (New York City time), on the Settlement Date applicable thereto,
regardless of whether the applicable conditions precedent set forth in Article X
have then been satisfied.  Such amounts
made available to the Agent shall be applied against the amounts of the
applicable ASB Loan or Agent Advance and, together with the portion of such ASB
Loan or Agent Advance representing ASB’s Pro Rata Share thereof, shall
constitute Revolving Loans of such Lenders. 
If any such amount is not made available to the Agent by any Lender on
the Settlement Date applicable thereto, the Agent shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three (3) days from and after the Settlement Date
and thereafter at the Interest Rate then applicable to the Revolving Loans.


 


(ii)                                  Notwithstanding the
foregoing, not more than one (1) Business Day after demand is made by the Agent
(whether before or after the occurrence of a Default or an Event of Default and
regardless of whether the Agent has requested a Settlement with respect to an
ASB Loan or Agent Advance), each other Lender shall irrevocably and
unconditionally purchase and receive from ASB or the Agent, as applicable,
without recourse or warranty, an undivided interest and participation in such
ASB Loan or Agent Advance to the extent of such Lender’s Pro Rata Share thereof
by paying to the Agent, in same day funds, an amount equal to such Lender’s Pro
Rata Share of such ASB Loan or Agent Advance. 
If such amount is not in fact made available to the Agent by any Lender,
the Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the first three
(3) days from and after such demand and thereafter at the Interest Rate then
applicable to the Revolving Loans.


 


30

















 


(iii)                               From
and after the date, if any, on which any Lender purchases an undivided interest
and participation in any ASB Loan or Agent Advance pursuant to subsection (ii)
above, the Agent shall promptly distribute to such Lender at such address as
such Lender may request in writing, such Lender’s Pro Rata Share of all
payments of principal and interest and all proceeds of Collateral received by
the Agent in respect of such ASB Loan or Agent Advance.


 


(iv)                              Between Settlement Dates,
the Agent, to the extent no Agent Advances or ASB Loans are outstanding, may
pay over to ASB any payments received by the Agent, which in accordance with
the terms of this Agreement would be applied to the reduction of the Revolving
Loans, for application to ASB’s other outstanding Revolving Loans.  If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date have been applied
to ASB’s other outstanding Revolving Loans other than to ASB Loans or Agent
Advances, as provided for in the previous sentence, ASB shall pay to the Agent
for the accounts of the Lenders, to be applied to the outstanding Revolving
Loans of such Lenders, an amount such that each Lender shall, upon receipt of
such amount, have, as of such Settlement Date, its Pro Rata Share of the
Revolving Loans.  During the period
between Settlement Dates, ASB with respect to ASB Loans, the Agent with respect
to Agent Advances, and each Lender with respect to the Revolving Loans other
than ASB Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the actual average
daily amount of funds employed by ASB, the Agent and the other Lenders. 


 


(k)                                  Notation.  The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender, including the ASB
Loans owing to ASB, and the Agent Advances owing to the Agent, from time to
time.  In addition, each Lender is
authorized, at such Lender’s option, to note the date and amount of each
payment or prepayment of principal of such Lender’s Revolving Loans in its
books and records, including computer records, such books and records
constituting rebuttably presumptive evidence, absent manifest error, of the
accuracy of the information contained therein.


 


(l)                                     Lenders’
Failure to Perform.  All Revolving
Loans (other than ASB Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares.  It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its obligation to
make any Revolving Loans hereunder, nor shall any Revolving Commitment of any
Lender be increased or decreased as a result of any failure by any other Lender
to perform its obligation to make any Loans hereunder, (ii) no failure by any
Lender to perform its obligation to make any Revolving Loans hereunder shall
excuse any other Lender from its obligation to make any Revolving Loans
hereunder, and (iii) the obligations of each Lender hereunder shall be several,
not joint and several.


 


Section 2.3.                                   [Intentionally
Omitted.]


 


31

















 


Section 2.4.                                   Letters
of Credit.


 


(a)                                  Agreement
to Cause Issuance.  Subject to the
terms and conditions of this Agreement, and in reliance upon the
representations and warranties of the Loan Parties herein set forth, the Agent
agrees to take reasonable steps to cause to be issued for the account of the
requesting Borrower and to provide credit support or other enhancement to banks
acceptable to the Agent (and reasonably acceptable to the Borrowers), which
issue Letters of Credit for the account of such Borrower and for the benefit of
such Borrower (any such credit support or enhancement being herein referred to
as “Credit Support”) in accordance with this Section 2.4
from time to time during the term of this Agreement.


 


(b)                                 Amounts;
Outside Expiration Date.  The Agent
shall not have any obligation to take steps to cause to be issued any Letter of
Credit or to provide Credit Support for any Letter of Credit at any time
if:  (i) the maximum undrawn amount of
the requested Letter of Credit and all commissions, fees, and charges due from
the applicable Borrower in connection with the opening is greater than the
Unused Letter of Credit Subfacility at such time; or (ii) such Letter of Credit
has an expiration date later than thirty (30) days prior to the Stated Termination
Date or more than twelve (12) months from the date of issuance.


 


(c)                                  Other
Conditions.  In addition to being
subject to the satisfaction of the applicable conditions precedent contained in
Article X, the obligation of the Agent to take reasonable steps to
cause to be issued any Letter of Credit or to provide Credit Support for any
Letter of Credit is subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent:


 


(i)                                     The applicable
Borrower shall have delivered to the proposed issuer of such Letter of Credit,
at such times and in such manner as such proposed issuer may prescribe, an
application in form and substance satisfactory to such proposed issuer and to
the Agent for the issuance of the Letter of Credit and such other documents as
may be required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit shall be satisfactory to such proposed issuer and to
the Agent; and


 


(ii)                                  As of the date of
issuance, no order of any court, arbitrator or Governmental Authority shall
purport by its terms to enjoin or restrain money center banks generally from
issuing letters of credit of the type and in the amount of the proposed Letter
of Credit, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such Letter of
Credit refrain from, the issuance of letters of credit generally or the
issuance of such Letters of Credit.


 


32

















 


(d)                                 Issuance
of Letters of Credit.


 


(i)                                     Request for
Issuance.  The Borrower for whose
account the Letter of Credit is to be issued shall give the Agent five (5)
Business Days’ prior written notice of such Borrower’s request for the issuance
of a Letter of Credit.  Such notice
shall be irrevocable and shall specify the original face amount of the Letter
of Credit requested, the effective date (which date shall be a Business Day) of
issuance of such requested Letter of Credit, whether such Letter of Credit may
be drawn in a single or in partial draws, the date on which such requested
Letter of Credit is to expire (which date shall be a Business Day), the purpose
for which such Letter of Credit is to be issued, and the beneficiary of the
requested Letter of Credit.  The
applicable Borrower shall attach to such notice the proposed form of the Letter
of Credit.


 


(ii)                                  Responsibilities
of the Agent; Issuance.  The Agent
shall determine, as of the Business Day immediately preceding the requested
effective date of issuance of the Letter of Credit set forth in the notice from
the applicable Borrower pursuant to Section 2.4(d)(i), (A) the
amount of the Unused Letter of Credit Subfacility at such time and (B) the
Availability as of such date.  If (x)
the undrawn amount of the requested Letter of Credit is not greater than the
Unused Letter of Credit Subfacility at such time and (y) the issuance of such
requested Letter of Credit and all commissions, fees, and charges due from the
applicable Borrower in connection with the opening thereof would not exceed
Availability at such time, the Agent shall take reasonable steps to cause such
issuer to issue the requested Letter of Credit on such requested effective date
of issuance.


 


(iii)                               Notice
of Issuance.  On each Settlement
Date the Agent shall give notice to each Lender of the issuance of all Letters
of Credit issued since the last Settlement Date.


 


(iv)                              No
Extensions or Amendment.  The Agent
shall not be obligated to cause any Letter of Credit to be extended or amended
unless the requirements of this Section 2.4(d) are met as though a
new Letter of Credit were being requested and issued.  With respect to any Letter of Credit which contains any
“evergreen” or automatic renewal provision, each Lender shall be deemed to have
consented to any such extension or renewal unless any such Lender shall have
provided to the Agent, not less than 30 days prior to the last date on which
the applicable issuer can in accordance with the terms of the applicable Letter
of Credit decline to extend or renew such Letter of Credit, written notice that
it declines to consent to any such extension or renewal, provided, that
if all of the requirements of this Section 2.4 are met and no
Default or Event of Default exists, no Lender shall decline to consent to any
such extension or renewal.


 


(e)                                  Payments
Pursuant to Letters of Credit.


 


(i)                                     Payment
of Letter of Credit Obligations. 
Each Borrower agrees to reimburse the issuer for any draw under any
Letter of Credit issued for the account of such Borrower and the Agent for the
account of the Lenders upon any payment pursuant to any Credit Support related
to such Letter of Credit immediately upon demand, and to pay the issuer of the
Letter of Credit the amount of all other obligations and other amounts payable
to such issuer


 


33

















 


under or in
connection with any Letter of Credit issued for the account of such Borrower
immediately when due, irrespective of any claim, setoff, defense or other right
which such Borrower may have at any time against such issuer or any other
Person.


 


(ii)                                  Revolving Loans to
Satisfy Reimbursement Obligations. 
In the event that the issuer of any Letter of Credit honors a draw under
such Letter of Credit or the Agent shall have made any payment pursuant to any
Credit Support and the applicable Borrower shall not have repaid such amount to
the issuer of such Letter of Credit or the Agent, as applicable, pursuant to Section 2.4(e)(i),
the Agent shall, upon receiving notice of such failure, notify each Lender of
such failure, and each Lender shall unconditionally pay to the Agent, for the
account of such issuer or the Agent, as applicable, as and when provided
hereinbelow, an amount equal to such Lender’s Pro Rata Share of the amount of
such payment in Dollars and in same day funds. 
If the Agent so notifies the Lenders prior to 11:00 a.m. (New York City
time) on any Business Day, each Lender shall make available to the Agent the
amount of such payment, as provided in the immediately preceding sentence, on
such Business Day.  Such amounts paid by
the Lenders to the Agent shall constitute Revolving Loans which shall be deemed
to have been requested by the applicable Borrower pursuant to Section 2.2
as set forth in Section 4.7.


 


(f)                                    Participations.


 


(i)                                     Purchase of
Participations.  Immediately upon
issuance of any Letter of Credit in accordance with Section 2.4(d),
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received without recourse or warranty, an undivided interest and
participation in the Letter of Credit or the Credit Support provided through
the Agent to such issuer in connection with the issuance of such Letter of
Credit, equal to such Lender’s Pro Rata Share of the face amount of such Letter
of Credit or the amount of such Credit Support (including, without limitation,
all obligations of the applicable Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).


 


(ii)                                  Sharing of
Reimbursement Obligation Payments. 
Whenever the Agent receives a payment from any Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit Support as
to which the Agent has previously received for the account of the issuer
thereof payment from a Lender pursuant to Section 2.4(e)(ii), the
Agent shall promptly pay to such Lender such Lender’s Pro Rata Share of such
payment from such Borrower in Dollars. 
Each such payment shall be made by the Agent on the Business Day on
which the Agent receives immediately available funds paid to such Person
pursuant to the immediately preceding sentence, if received prior to 2:00 p.m.
(New York City time) on such Business Day and otherwise on the next succeeding
Business Day.


 


(iii)                               Documentation.  Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, reimbursement
agreements executed in connection therewith, application for any Letter of
Credit and credit support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.


 


34

















 


(iv)                              Obligations
Irrevocable.  The obligations of
each Lender to make payments to the Agent with respect to any Letter of Credit
or with respect to any Credit Support provided through the Agent with respect
to a Letter of Credit, and the obligations of the Borrowers to make payments to
the Agent, for the account of the Lenders, shall be irrevocable, not subject to
any qualification or exception whatsoever, including, without limitation, any
of the following circumstances:


 


(A)                              any
lack of validity or enforceability of this Agreement or any of the other Loan
Documents;


 


(B)                                the
existence of any claim, setoff, defense or other right which a Borrower may
have at any time against a beneficiary named in a Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom any such transferee
may be acting), any Lender, the Agent, the issuer of such Letter of Credit, or
any other Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions (including
any underlying transactions between any Borrower or any other Person and the
beneficiary named in any Letter of Credit);


 


(C)                                any
draft, certificate or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;


 


(D)                               the
surrender or impairment of any security for the performance or observance of
any of the terms of any of the Loan Documents; or


 


(E)                                 the
occurrence of any Default or Event of Default.


 


(g)                                 Recovery
or Avoidance of Payments.  In the
event any payment by or on behalf of any Borrower received by the Agent with
respect to any Letter of Credit or Credit Support provided for any Letter of
Credit (or any guaranty by any Borrower or reimbursement obligation of any
Borrower relating thereto) and distributed by the Agent to the Lenders on
account of their respective participations therein is thereafter set aside,
avoided or recovered from the Agent in connection with any receivership,
liquidation or bankruptcy proceeding, the Lenders shall, upon demand by the
Agent, pay to the Agent their respective Pro Rata Shares of such amount set
aside, avoided or recovered, together with interest at the rate required to be
paid by the Agent upon the amount required to be repaid by it.


 


35

















 


(h)                                 Compensation
for Letters of Credit.


 


(i)                                     Letter
of Credit Fee.  Each Borrower agrees
to pay to the Agent, for the account of the Lenders, with respect to each
Letter of Credit issued for the account of such Borrower, the Letter of Credit
Fee specified in, and in accordance with the terms of, Section 3.6.


 


(ii)                                  Issuer Fees and
Charges.  Each Borrower shall pay to
the issuer of any Letter of Credit issued for the account of such Borrower, or
to the Agent, for the account of the issuer of any such Letter of Credit,
solely for such issuer’s account, such fees and other charges as are charged by
such issuer for letters of credit issued by it, including, without limitation,
its standard fees for issuing, administering, amending, renewing, paying and
canceling letters of credit and all other standard fees associated with issuing
or servicing letters of credit, as and when assessed.


 


(i)                                     Indemnification;
Exoneration; Power of Attorney.


 


(i)                                     Indemnification.  In addition to amounts payable as elsewhere
provided in this Section 2.4, each Borrower hereby agrees to
protect, indemnify, pay and save the Lenders and the Agent harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys’ fees) which any Lender or
the Agent may incur or be subject to as a consequence, direct or indirect, of
the issuance of any Letter of Credit for the account of such Borrower or the
provision of any credit support or enhancement in connection therewith.  The Agreement in this Section 2.4(i)(i)
shall survive payment of all Obligations.


 


(ii)                                  Assumption
of Risk by the Borrowers.  As among
the Borrowers, the Lenders, and the Agent, each Borrower assumes all risks of
the acts and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Lenders and the Agent shall not be responsible
for:  (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any Person in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit, even if it
should prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B)  the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary of any Letter of
Credit to comply duly with conditions required in order to draw upon such
Letter of Credit; (D) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of any
document required in order make a drawing under any Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Lenders or the
Agent, including, without limitation, any act or omission, whether rightful or
wrongful, of any present or future de  jure or de  facto
Governmental


 


36

















 


Authority.  None of the foregoing shall affect, impair
or prevent the vesting of any rights or powers of the Agent or any Lender under
this Section 2.4(i).


 


(iii)                               Exoneration.  In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken or
omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not put the Agent or
any Lender under any resulting liability to any Borrower or relieve any
Borrower of any of its obligations hereunder to any such Person.


 


(iv)                              Power of Attorney.  In connection with all Inventory financed by
Letters of Credit, each Loan Party hereby appoints the Agent, or the Agent’s
designee, as its attorney, with full power and authority:  (A) to sign and/or endorse such Loan Party’s
name upon any warehouse or other receipts; (B) to sign such Loan Party’s name
on bills of lading and other negotiable and non-negotiable documents; (C) to
clear Inventory through customs in the Agent’s or such Loan Party’s name, and
to sign and deliver to customs officials powers of attorney in such Loan
Party’s name for such purpose; (D) to complete in such Loan Party’s or the
Agent’s name, any order, sale, or transaction, obtain the necessary documents
in connection therewith, and collect the proceeds thereof; and (E) to do such
other acts and things as are necessary in order to enable the Agent to obtain
possession of the Inventory and to obtain payment of the Obligations.  Neither the Agent nor its designee, as any
Loan Party’s attorney, will be liable for any acts or omissions, nor for any
error of judgement or mistakes of fact or law. 
This power, being coupled with an interest, is irrevocable until all
Obligations have been paid and satisfied and this Agreement is terminated.


 


(v)                                 Account
Party.  Each Loan Party hereby
authorizes and directs any issuer of a Letter of Credit for the account of such
Loan Party to name such Borrower as the “Account Party” therein and to deliver
to the Agent all instruments, documents and other writings and property
received by the issuer pursuant to the Letter of Credit, and to accept and rely
upon the Agent’s instructions and agreements with respect to all matters
arising in connection with the Letter of Credit or the application therefor.


 


(vi)                              Control
of Inventory.  In connection with
all Inventory financed by Letters of Credit, each Loan Party will, at the
Agent’s request, instruct all suppliers, carriers, forwarders, warehouses or
others receiving or holding cash, checks, Inventory, documents or instruments
in which the Agent holds a security interest to deliver them to the Agent
and/or subject to the Agent’s order, and if they shall come into such Loan
Party’s possession, to deliver them, upon request, to the Agent in their original
form.  Each Loan Party shall also, at
the Agent’s request, designate the Agent as the consignee on all bills of
lading and other negotiable and non-negotiable documents.


 


(j)                                     Supporting
Letter of Credit; Cash Collateral. 
If, notwithstanding the provisions of Section 2.4(b) and Section 12.1
any Letter of Credit is outstanding on the Termination Date, then on such date
the Borrowers shall deposit with the Agent, for the ratable benefit of the
Agent and the Lenders, with respect to each Letter of Credit then outstanding,
as


 


37

















 


the Majority
Lenders, in their discretion shall specify, either (i) a standby letter of
credit (a “Supporting Letter of Credit”) in form and substance
satisfactory to the Agent issued by an issuer satisfactory to the Agent in an
amount equal to the greatest amount for which such Letter of Credit may be
drawn plus any fees and expenses associated with such Letter of Credit (but, in
any event, in an amount not less than 105% of the amount of such Letter of
Credit), under which Supporting Letter of Credit the Agent is entitled to draw
amounts necessary to reimburse the Agent and the Lenders for payments made by
the Agent and the Lenders under such Letter of Credit or under any credit support
or enhancement provided through the Agent with respect thereto and any fees and
expenses associated with such Letter of Credit, or (ii) cash in amounts
necessary to reimburse the Agent and the Lenders for payments made by the Agent
or the Lenders under such Letter of Credit or under any credit support or
enhancement provided through the Agent with respect thereto and any fees and
expenses associated with such Letter of Credit (which amounts, in any event,
shall not be less than 105% of the amount of such Letter of Credit).  Such Supporting Letter of Credit or deposit
of cash shall be held by the Agent, for the ratable benefit of the Agent and
the Lenders, as security for, and to provide for the payment of, the aggregate
undrawn amount of such Letters of Credit remaining outstanding and all fees and
expenses associated with such Letters of Credit.


 


ARTICLE III


 


INTEREST AND FEES


 


Section 3.1.                                   Interest.


 


(a)                                  Interest Rates.  All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a fluctuating per annum rate equal to the Base
Rate plus the Applicable Margin. 
Each change in the Base Rate shall be reflected in the interest rate
described above as of the effective date of such change.  All interest charges shall be computed on
the basis of a year of 360 days and actual days elapsed.  Interest accrued on all Revolving Loans will
be payable in arrears on the first day of each month hereafter.


 


(b)                                 Default Rate.  If any Default or Event of Default occurs
and is continuing, and the Majority Lenders in their discretion so elect, then,
while any such Default or Event of Default is continuing, all of the Obligations
shall bear interest at the Default Rate applicable thereto and such interest
shall be payable upon demand.


 


Section 3.2.                                   [Intentionally
Omitted.]


 


Section 3.3.                                   Maximum
Interest Rate.  In no event shall
any interest rate provided for hereunder exceed the maximum rate legally
chargeable by the Lenders under applicable law for loans of the type provided
for hereunder (the “Maximum Rate”). 
If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then


 


38

















 


the interest
rate for that month shall be the Maximum Rate, and, if in future months, that
interest rate would otherwise be less than the Maximum Rate, then that interest
rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. 
In the event that, upon payment in full of the Obligations, the total
amount of interest paid or accrued under the terms of this Agreement is less
than the total amount of interest which would, but for this Section 3.3,
have been paid or accrued if the interest rates otherwise set forth in this
Agreement had at all times been in effect, then the applicable Borrower shall,
to the extent permitted by applicable law, pay the Agent, for the account of
the Lenders, an amount equal to the difference between (a) the lesser of (i)
the amount of interest which would have been charged if the Maximum Rate had,
at all times, been in effect or (ii) the amount of interest which would have
accrued had the interest rates otherwise set forth in this Agreement, at all
times, been in effect and (b) the amount of interest actually paid or accrued
under this Agreement.  In the event that
a court determines that the Agent and/or any Lender has received interest and
other charges hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse order of maturity, and if there
are no Obligations outstanding, the Agent and/or such Lender shall refund to
the applicable Borrower such excess.


 


Section 3.4.                                   Closing
and Other Fees.  The Borrowers
agree, jointly and severally, to pay those fees and other compensation and
perform all other obligations set forth in that certain fee and payment
agreement entered into among ASB and the Borrowers dated the Closing Date (the
“Fee Letter”).


 


Section 3.5.                                   Unused
Line Fee.  Until the Obligations
have been paid in full and this Agreement is terminated, the Borrowers agree,
jointly and severally, to pay, subject to Section 2.2(g)(iii), on
the first day of each month and on the Termination Date, to the Agent, for the ratable
account of the Lenders, an unused line fee (the “Unused Line Fee”) equal
to the product of 0.50% per annum multiplied by the amount by which the Maximum
Revolver Amount exceeded the sum of the average daily outstanding amount of
Revolving Loans (other than ASB Loans and Agent Advances, so long as ASB is not
the only Lender) and the average daily undrawn face amount of all outstanding
Letters of Credit during the immediately preceding month or shorter period if
calculated for the first month hereafter or on the Termination Date. The Unused
Line Fee shall be computed on the basis of a 360-day year for the actual number
of days elapsed.


 


The above Unused Line Fee and all other fees hereunder and under the
Fee Letter shall be fully earned and non-refundable for any reason upon payment
thereof.


 


Section 3.6.                                  Letter
of Credit Fee.  Each Borrower agrees
to pay to the Agent, for the ratable account of the Lenders, for each Letter of
Credit issued for the account of such Borrower, a fee (the “Letter of Credit
Fee”) equal to the Applicable Letter of Credit Rate then in effect per
annum of the average daily undrawn face amount of each Letter of Credit issued
for such Borrower’s account, plus, in each case, all out-of-pocket costs, fees
and expenses incurred by the Agent in connection with the application for,
issuance of, or amendment to such Letter of


 


39

















 


Credit, plus a
“fronting fee” payable to the issuing bank of .25% of the principal amount of
all applicable Letters of Credit.  The
Letter of Credit Fee shall be payable monthly in arrears on the first day of
each month following any month in which a Letter of Credit was issued and/or in
which a Letter of Credit remains outstanding and on the Termination Date.  The Letter of Credit Fee shall be computed
on the basis of a 360-day year for the actual number of days elapsed.


 


Section 3.7.                                   Reduction
of Revolving Credit Commitments. 
(a)  The Borrowers may at any
time terminate, or from time to time reduce, the Revolving Commitments; provided
that (i) each reduction of the Revolving Commitments shall be in an amount that
is an integral multiple of $100,000 and not less than $500,000, and (ii) the
Borrowers shall not terminate or reduce the Revolving Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with Section 4.3,
Availability would be less than zero.


 


(b)                                 The Borrowers shall
notify the Agent of any election to terminate or reduce the Revolving
Commitments under paragraph (a) of this Section at least ten (10) Business
Days prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. 
Promptly following receipt of any notice, the Agent shall advise the
applicable Lenders of the contents thereof. 
Each notice delivered by the Borrowers pursuant to this
Section shall be irrevocable; provided that a notice of termination
of the Revolving Commitments delivered by the Borrowers may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrowers (by notice to the Agent
on or prior to the specified effective date) if such condition is not
satisfied.  Any termination or reduction
of the Revolving Commitments shall be permanent. Each reduction of the
Revolving Commitments shall be made ratably among the Lenders with Revolving
Commitments in accordance with their respective Revolving Commitments.


 


ARTICLE IV


 


PAYMENTS
AND PREPAYMENTS


 


Section 4.1.                                   Revolving
Loans.  The Borrowers shall repay
the outstanding principal balance of the Revolving Loans, plus all accrued but
unpaid interest thereon, on the Termination Date.  The Borrowers may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement; provided that each
prepayment of Revolving Loans shall be in an amount that is an integral
multiple of $100,000 and not less than $1,000,000.  In addition, and without limiting the generality of the
foregoing, upon demand each Borrower promises, jointly and severally, to pay to
the Agent, for the ratable account of the Lenders, the amount, without
duplication, by which Total Exposure exceeds Availability.


 


Section 4.2.                                   Termination
of Facility.  (a)  The Borrowers may terminate this Agreement
upon at least ten (10) Business Days’ notice to the Agent and the Lenders, upon
(i) the payment in full of all outstanding Revolving Loans, together with
accrued interest thereon, and the cancellation of all outstanding Letters of
Credit, (ii) the payment of the early termination


 


40

















 


fee, if any,
required pursuant to Section 4.2(b),  and (iii) the payment in full in cash of all other Obligations
together with accrued interest thereon.


 


(b)                                 If
this Agreement is terminated by the Borrowers at any time on or prior to the
Stated Termination Date, in addition to all other Obligations which shall then
be due and payable the Borrowers shall pay to the Agent an early termination
fee determined as follows:


 


	
  Period during
  which early termination occurs

  	
   

  	
  Early termination fee

  
	
   

  	
   

  	
   

  
	
  On or prior
  to the first Anniversary Date

  	
   

  	
  $

  	
  450,000

  
	
   

  	
   

  	
   

  
	
  After the
  first Anniversary Date but on or prior to the second Anniversary Date

  	
   

  	
  $

  	
  300,000

  
	
   

  	
   

  	
   

  
	
  After the
  second Anniversary Date but on or prior to January 8, 2006

  	
   

  	
  $

  	
  150,000

  



 


The above
early termination fees shall not apply if the Borrowers prepay the Loans in
full and terminate this Agreement in connection with (x) a Primary Offering of
Capital Stock of New World, and no senior, secured debt financing remains
outstanding, or (y) a refinancing under which ABS or its Affiliates remain as
agent under such new financing facility.


 


Section 4.3.                                   Mandatory
Payments.  (a)  Following receipt thereof by any Loan Party
of the cash proceeds from any permitted sale of assets (other than sales of
inventory in the ordinary course of business) at any time that the Total
Exposure is $5,000,000 or more, the Borrowers shall, subject to
Section 6.12(c), pay to the Agent an amount equal to the lesser of (x) the
difference between the then existing Total Exposure and $5,000,000 and (y) 100%
of the net cash proceeds from such asset sale, and such payment shall be
applied as a mandatory repayment of principal of the then outstanding Revolving
Loans; provided, however, that, to the extent, and only to the
extent, necessary to avoid any requirement under Section 4.15 of the
Indenture that New World offer to purchase any Senior Secured Debt in
accordance with the terms thereof (and notwithstanding the parenthetical
above), (i) the Borrowers shall apply the cash proceeds from any permitted sale
of assets that constitutes an “Asset Sale” (as such term is defined in the
Indenture) to the payment of the Revolving Loans and (ii) there shall be a
permanent reduction of the Revolving Commitments and the Maximum Revolver
Amount in the amount of any such application to the Revolving Loans (such
permanent reduction to be made concurrently with such application to the
Revolving Loans and such reduction to result in each Lender’s Revolving
Commitment to be permanently reduced by its Pro Rata Share of such reduction).


 


(b)                                 Subsequent to the
Closing Date, on the tenth day following the receipt thereof (with respect to
clause (i) below, promptly (but in no event later than one Business Day) after
receipt thereof) by any Loan Party at any time that the Total Exposure is
$5,000,000 or more, the Borrowers shall pay to the Agent an amount equal to (i)
100% of the cash proceeds (net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith) of any sale or
issuance of equity of any Loan Party (other than to another


 


41

















 


Loan Party)
and (ii) 100% of the net cash proceeds of the issuance of any Debt by any Loan
Party, and such payment shall be applied as a mandatory repayment of principal
of the then outstanding Revolving Loans.


 


(c)                                  Any amounts prepaid
pursuant hereto may be immediately reborrowed (subject to the borrowing
limitations otherwise set forth herein).


 


Section 4.4.                                   [Intentionally
Omitted.]


 


Section 4.5.                                   [Intentionally
Omitted.]


 


Section 4.6.                                   Payments
by the Borrowers.  (a)  All payments to be made by each Borrower
shall be made without set-off, recoupment or counterclaim.  Except as otherwise expressly provided
herein, all payments by each Borrower shall be made to the Agent for the
account of the Lenders at the Agent’s address set forth in Section 15.8,
and shall be made in Dollars and in immediately available funds, no later than
1:00 p.m. (New York City time) on the date specified herein.  Any payment received by the Agent later than
1:00 p.m. (New York City time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to accrue.


 


(b)                                 Whenever any payment
is due on a day other than a Business Day, such payment shall be made on the
following Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.


 


(c)                                  Unless the Agent
receives notice from the applicable Borrower prior to the date on which any
payment is due to the Lenders that such Borrower will not make such payment in
full as and when required, the Agent may assume that such Borrower has made
such payment in full to the Agent on such date in immediately available funds
and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender.  If and to
the extent a Borrower has not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.


 


Section 4.7.                                   Payments
as Revolving Loans.  All payments of
principal, interest, reimbursement obligations in connection with Letters of
Credit, fees, premiums and other sums payable hereunder, including all
reimbursement for expenses pursuant to Section 15.7, may, at the
option of the Agent, in its sole discretion, subject only to the terms of this Section 4.7,
be paid from the proceeds of Revolving Loans made hereunder, whether made
following a request by a Borrower pursuant to Section 2.2 or a
deemed request as provided in this Section 4.7.  Each Borrower hereby irrevocably authorizes
the Agent to charge the Loan Account of such Borrower for the purpose of paying
principal, interest, reimbursement obligations in connection with Letters of
Credit, fees, premiums and other sums payable hereunder owing by such Borrower,
including reimbursing expenses pursuant to Section 15.7, and agrees
that all such amounts charged shall constitute Revolving Loans (including ASB
Loans and Agent Advances) of such


 


42

















 


Borrower and
that all such Revolving Loans so made shall be deemed to have been requested by
such Borrower pursuant to Section 2.2.


 


Section 4.8.                                   Apportionment,
Application and Reversal of Payments. Aggregate principal and interest
payments shall be apportioned ratably among the Lenders (according to the
unpaid principal balance of the Loans to which such payments relate held by
each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders.  All payments
shall be remitted to the Agent and all such payments not relating to principal
or interest of specific Loans, or not constituting payment of specific fees,
and all proceeds of Accounts or other Collateral received by the Agent, shall
be applied, ratably, subject to the provisions of this Agreement, first,
to pay any fees, indemnities or expense reimbursements then due to the Agent
from any of the Borrowers; second, to pay any fees or expense
reimbursements then due to the Lenders from any of the Borrowers; third,
to pay interest due in respect of all Revolving Loans, including ASB Loans and
Agent Advances; fourth, to pay or prepay principal of the ASB Loans and
Agent Advances; fifth, to pay or prepay principal of the Revolving Loans
(other than ASB Loans and Agent Advances) and unpaid reimbursement obligations
in respect of Letters of Credit; and sixth, to the payment of any other
Obligations due to the Agent or any Lender by any of the Borrowers.  The Agent shall promptly distribute to each
Lender, pursuant to the applicable wire transfer instructions received from
each Lender in writing, such funds as it may be entitled to receive, subject to
a Settlement delay as provided for in Section 2.2(j).  The Agent and the Lenders shall have the
continuing and exclusive right to apply and reverse and reapply any and all
such proceeds and payments to any portion of the Obligations.


 


Section 4.9.                                   Indemnity
for Returned Payments.  If, after
receipt of any payment of, or proceeds applied to the payment of, all or any
part of the Obligations, the Agent or any Lender is for any reason compelled to
surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continue and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender, and the applicable Borrower or
Borrowers shall be liable to pay to the Agent, and hereby do indemnify the
Agent and the Lenders and hold the Agent and the Lenders harmless for, the
amount of such payment or proceeds surrendered.  The provisions of this Section 4.9 shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent’s and the Lenders’ rights under this Agreement and shall be deemed to
have been conditioned upon such payment or application of proceeds having
become final and irrevocable. The provisions of this Section 4.9
shall survive the termination of this Agreement.


 


Section 4.10.                             Agent’s
and Lenders’ Books and Records; Monthly Statements. Each Borrower agrees
the Agent’s and the Lender’s books and records showing the Obligations and the
transactions pursuant to this Agreement and the other Loan Documents shall be
admissible in any action or proceeding arising therefrom, and shall constitute
rebuttably


 


43

















 


presumptive
proof thereof, irrespective of whether any Obligation is also evidenced by a
promissory note or other instrument. 
The Agent will provide to the Borrowers a monthly statement of Loans,
payments, and other transactions pursuant to this Agreement.  Such statement shall be deemed correct,
accurate, and binding on the Borrowers and an account stated (except for
reversals and reapplications of payments made as provided in Section 4.8
and corrections of errors discovered by the Agent), unless the applicable
Borrower notifies the Agent in writing to the contrary within thirty (30) days
after such statement is rendered.  In
the event a timely written notice of objections is given by a Borrower, only
the items to which exception is expressly made will be considered to be
disputed by the Borrowers.


 


ARTICLE V


 


TAXES, YIELD PROTECTION AND ILLEGALITY


 


Section 5.1.                                   Taxes.  (a) 
Any and all payments by each Borrower to each Lender or the Agent under
this Agreement and any other Loan Document shall be made free and clear of, and
without deduction or withholding for any Taxes.  In addition, the Borrowers shall pay all Other Taxes.


 


(b)                                 Each Borrower agrees
to indemnify and hold harmless each Lender and the Agent for the full amount of
Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 5.1(b)) paid by
the Lender or the Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted.  Payment under this
indemnification shall be made within 30 days after the date such Lender or the Agent
makes written demand therefor.


 


(c)                                  If
a Borrower shall be required by law to deduct or withhold any Taxes or Other
Taxes from or in respect of any sum payable hereunder to any Lender or the
Agent, then:


 


(i)                                     the sum payable
shall be increased as necessary so that after making all required deductions
and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) such Lender or the Agent, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made;


 


(ii)                                  such
Borrower shall make such deductions and withholdings;


 


(iii)                               such
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with applicable law; and


 


(iv)                              such Borrower shall also
pay to each Lender or the Agent for the account of such Lender, at the time
interest is paid, all additional amounts which the respective


 


44

















 


Lender
specifies as necessary to preserve the after-tax yield the Lender would have
received if such Taxes or Other Taxes had not been imposed.


 


(d)                                 Within 30 days after
the date of any payment by a Borrower of Taxes or Other Taxes, such Borrower
shall furnish the Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to the
Agent.


 


(e)                                  If
a Borrower is required to pay additional amounts to any Lender or the Agent
pursuant to subsection (c) of this Section, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its lending office so as to eliminate any such
additional payment by the Borrowers which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.


 


(f)                                    Each Lender (or
transferee or assignee) and the Agent shall, prior to the due date of the first
payment by any Borrower to such Person hereunder, deliver to the Borrowers such
certificates, documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including Internal Revenue Service Form
W8-BEN, W8-ECI or W8-IMY and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1(a)
or Section 1.441-6(c) or any subsequent version thereof, properly
completed and duly executed by such Person establishing that such payment is
(i) not subject to withholding (including backup withholding) because such
payment is made (and beneficially received) by a United States person, (ii) not
subject to withholding under the Code because such payment is effectively
connected with the conduct by such Person of a trade or business in the United
States, (iii) not subject to withholding under the Code because of the
portfolio interest exception or (iv) totally exempt from United States tax
under a provision of an applicable tax treaty. 
Each such Person that changes its funding office shall promptly notify
the Borrowers of such change and upon written request from the Borrowers, shall
deliver any new certificates, documents or other evidence required pursuant to
the preceding sentence prior to the immediately following due date of any
payment by any Borrower hereunder. 
Unless the Borrowers have received forms or other documents satisfactory
to them indicating that payments hereunder are not subject to United States
withholding tax, the Borrowers shall withhold taxes from such payments at the
applicable statutory rate, as required by law. 


 


Section 5.2.                                  Increased
Costs.  If any Lender determines in
good faith that, due to either (i) the introduction of or any change in the
interpretation of any law or regulation (other than in each case any
introduction or change in interpretation relating to withholding taxes, which
is governed by Section 5.1) or (ii) the compliance by that Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of participating in, issuing or maintaining any
Letter of Credit or Credit Support, then the Borrowers shall be, jointly and
severally, liable for, and shall from time to time, upon demand (with a copy of
such demand to be sent to the Agent), pay to the Agent for the account of such
Lender, additional amounts as are sufficient to compensate such Lender for such
increased costs.


 


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Section 5.3.                                   Reduction
of Return.  If any Lender shall have
determined that (i) the introduction of any Capital Adequacy Regulation, (ii)
any change in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Lender or any corporation or
other entity controlling the Lender with any Capital Adequacy Regulation,
affects or would affect the amount of capital required or expected to be
maintained by the Lender or any corporation or other entity controlling the
Lender and (taking into consideration such Lender’s or such corporation’s or
other entity’s policies with respect to capital adequacy and such Lender’s
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitments, loans, credits or obligations
under this Agreement, then, upon demand of such Lender to the Borrowers through
the Agent, the Borrowers agree, jointly and severally, to pay to the Lender,
from time to time as specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.


 


Section 5.4.                                   Certificates
of Lenders.  Any Lender claiming
reimbursement or compensation under this Article V shall deliver to
the Borrowers (with a copy to the Agent) a certificate setting forth in
reasonable detail the amount payable to the Lender hereunder and the
calculation thereof and such certificate shall be conclusive and binding on the
Borrowers in the absence of manifest error.


 


Section 5.5.                                   Survival.  The agreements and obligations of the
Borrowers in this Article V shall survive the payment of all other
Obligations.


 


ARTICLE VI


 


COLLATERAL


 


Section 6.1.                                   Grant
of Security Interest.  (a)  As security for all present and future
Obligations, each Loan Party hereby grants to the Agent, for the ratable
benefit of the Agent and the Lenders, a continuing security interest in, lien
on, and right of set-off against, all of the following property and assets of
such Loan Party, whether now owned or existing or hereafter acquired or
arising, regardless of where located:


 


(i)                                     all
Accounts;


 


(ii)                                  all
Inventory;


 


(iii)                               all
contract rights;


 


(iv)                              all
Chattel Paper;


 


(v)                                 all
Documents;


 


46

















 


(vi)                              all
Equity Interests;


 


(vii)                           all
Instruments;


 


(viii)                        all
Supporting Obligations;


 


(ix)                                all
General Intangibles;


 


(x)                                   all
Equipment;


 


(xi)                                all
Investment Property;


 


(xii)                             all
money, cash, cash equivalents, securities and other property of any kind of
such Loan Party held directly or indirectly by or in the control of the Agent
or any Lender, any assignee of or participant in any of the Obligations, or a
bailee of any such party or such party’s affiliates;


 


(xiii)                          all
deposit accounts, credits and balances with and other claims against the Agent
or any Lender or any of its Affiliates or any other financial institution with
which such Loan Party maintains deposits, including any Payment Accounts;


 


(xiv)                         all other
assets and property of such Loan Party;


 


(xv)                            all
books, records and other property related to or referring to any of the
foregoing, including, without limitation, books, records, account ledgers, data
processing records, computer software and other property and General Intangibles
at any time evidencing or relating to any of the foregoing; and


 


(xvi)                         all
accessions to, substitutions for and replacements, products and proceeds of any
of the foregoing, including, but not limited to, proceeds of any insurance
policies, claims against third parties, and condemnation or requisition
payments with respect to all or any of the foregoing.


 


All of the
foregoing, together with the Real Estate covered by the Mortgage(s), and all
other property of any Loan Party in which the Agent or any Lender may at any
time be granted a Lien as collateral for any or all of the Obligations, is
herein collectively referred to as the “Collateral”. Notwithstanding the
foregoing, “Collateral” shall not include (i) any Equipment financed by a Loan
Party with purchase money Debt or Capital Leases permitted hereunder (provided
that such exclusion shall only apply to the extent such Loan Party is
prohibited from granting a security interest under the terms of such Debt or
Capital Lease and only so long as such Debt or Capital Lease remains
outstanding) (such Equipment being “Restricted Equipment”), (ii) any
contract rights or General Intangibles which by their express terms prohibit
the applicable Loan Party from granting a security interest therein, but only
to the extent that such prohibition would be enforceable notwithstanding the
provisions of Section 9-406, 9-407 or 9-408 of the UCC (such contract
rights or General Intangibles being “Excluded Agreements”) and (iii) all
equipment


 


47

















 


purchased by
the Borrowers under the agreement, dated September 27, 1996 (as amended,
supplemented or modified from time to time), among Coca-Cola USA, Coca-Cola
Foods and Einstein/Noah, concerning the competitive marketing program to be
made available in connection with the purchase and promotion of Coca-Cola
Company beverages by Einstein/Noah (the ”Coca-Cola Equipment”).


 


(b)                                 As
security for all present and future Obligations, each Loan Party shall, with
respect to the Major Premises, use its commercially reasonable efforts to
deliver Mortgages with respect to such Major Premises to the Agent within sixty
(60) days of the Closing Date; provided, further, however,
that in no event shall any Loan Party be required to incur any unreasonable
expense, or agree to any significant increase in the applicable Loan Parties’
obligations thereunder, in order to obtain any such Mortgage. 


 


(c)                                  All
of the Obligations shall be secured by all of the Collateral.


 


(d)                                 Each
Loan Party will, and will cause each of its Subsidiaries (other than
Non-Restricted Subsidiaries) to, at the expense of such Loan Party, (i) grant
to the Agent Mortgages in such Real Estate in which such Loan Party or any of
its Subsidiaries acquires an ownership interest after the Closing Date (other
than fee-owed Real Estate having a value less than $1,000,000 and with respect
to which no Loan Party is required to deliver a mortgage under the Senior
Secured Debt Documents) and (ii) grant to the Agent Mortgages in such Real
Estate in which such Loan Party or any of its Subsidiaries acquires a leasehold
interest after the Closing Date; provided, however that if after using
commercially reasonable efforts, such Loan Party is unable to obtain Mortgages
on Real Estate leased after the Closing Date having an aggregate value not in
excess of 15% of all of the Loan Parties’ Real Estate leased after the Closing
Date, such failure shall not constitute a breach of this provision.  Such Mortgages shall be in form and
substance satisfactory to the Agent and shall constitute valid and enforceable
Liens superior to and prior to the rights of all third Persons (other than
holders of Permitted Liens) and subject to no other Liens except Permitted
Liens.  The Mortgages or instruments
related thereto shall be duly recorded or filed in such manner and in such
places as are required by law to establish, perfect, preserve and protect the
Liens in favor of the Agent required to be granted pursuant to the Mortgages
and all taxes, fees and other charges payable in connection therewith shall
have been paid in full by the applicable Loan Parties.  In connection with any such Mortgage in
respect of Real Estate owned by any Loan Party, the applicable Loan Party
shall, at its expense, cause to be delivered to the Agent (i) a mortgagee title
insurance policy issued by a title insurer satisfactory to the Agent (a “Mortgage
Policy”) in an amount satisfactory to the Agent and assuring the Agent that
such Mortgage is a valid and enforceable first priority mortgage Lien (subject
only to Permitted Liens) on the Real Estate covered thereby, free and clear of
all defects and encumbrances except Permitted Liens (such Mortgage Policy to be
in form and substance satisfactory to the Agent and to include an endorsement
for future advances under this Agreement and the Mortgages, for mechanics liens
and for any other matter that the Agent in its discretion may reasonably
request); (ii) a survey, in form and substance satisfactory to the Agent, to
the Real Estate covered by such Mortgage, certified by a licensed professional
surveyor satisfactory to the Agent and revealing no facts which would
materially interfere with the use of such property by such Loan Party or any of
its Subsidiaries, or an update of an existing survey


 


48

















 


provided the
title company will delete the exception for existing facts which a current
survey would disclose, and (iii) such conveyances, financing statements,
transfers, endorsements, powers of attorney, certificates, reports, consents,
non-disturbance agreements, estoppel agreements and other assurances or
instruments, and shall take such further steps relating to such Real Estate, in
each instance, as the Agent may reasonably require.  Furthermore, each Loan Party shall cause to be delivered to the
Agent such opinions of counsel and other documents as may be requested by the
Agent to assure the Agent that this Section 6.1(d) has been
complied with.  In the event that the
Agent at any time determines in its good faith reasonable discretion that real
estate appraisals satisfying the requirements set forth in 12 C.F.R., Part
34-Subpart C, or any successor or similar statute, rule, regulation, guideline
or order (any such appraisal a “Required Appraisal”) are or were required
to be obtained, or should be obtained, in connection with any or all of the
Real Estate of a Loan Party or any of its Subsidiaries relating to a Mortgage,
then, such Required Appraisal shall be delivered, at the reasonable expense of
such Loan Party, to the Agent, which Required Appraisal, and the respective
appraiser, shall be satisfactory to the Agent. 
All of the foregoing shall be complied with by no later than sixty (60)
days after the Agent’s request therefor.


 


(e)                                  With respect to any
Real Property with respect to which any Loan Party obtains a leasehold interest
after the Closing Date, prior to the effective date of any such lease, such
Loan Party shall use its commercially reasonable efforts to provide to the
Agent all of the items described in the third sentence of clause (d) above and
in addition, in respect of each such Real Property with respect to which it
obtains a Mortgage, shall provide an agreement, in form and substance
satisfactory to the Agent, and executed by the lessor of such lease, whereby
the lessor consents to the Mortgage and waives or subordinates its landlord
Lien (whether granted by the instrument creating the leasehold estate or by
applicable law).  The Loan Parties shall
use their commercially reasonable efforts to deliver such an agreement as to
each of the Major Premises and all of the items described in clause (d) above
contemporaneously with the delivery of the Mortgages described in clause (b)
above; provided, however, that in no event shall any Loan Party
be required to incur any unreasonable expense, or agree to any significant
increase in the lessee’s obligations thereunder, in order to obtain any
lessor’s consent.  The Loan Parties
shall perform all of their obligations required hereunder at their sole cost
and expense.


 


(f)                                    No Loan Party shall
execute and deliver any mortgage in respect of any Real Property (owned or
leased) in favor of the holders of the Senior Secured Debt unless and until a
Mortgage is delivered hereunder with respect to such Real Property.


 


Section 6.2.                                   Perfection
and Protection of Security Interest. 
(a)  Each Loan Party shall, at
its expense, perform all steps requested by the Agent at any time to perfect,
maintain, protect, and enforce the Agent’s Liens subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally, including, without limitation:  (i) executing, delivering and/or filing and
recording of the Mortgage(s), the Patent and Trademark Agreements, filing or
authorizing the Agent to file financing or continuation statements, and
amendments thereof, and executing and delivering and/or filing all documents in
respect of assignments of Government Contracts, all of the foregoing to be in
form and substance satisfactory to the Agent; (ii) delivering to the Agent the
originals of all


 


49

















 


Instruments,
Documents, and Chattel Paper, and all other Collateral of such Loan Party of
which the Agent determines it should have physical possession in order to
perfect and protect the Agent’s security interest therein or the first priority
nature thereof, duly pledged, endorsed or assigned to the Agent without
restriction; (iii) delivering to the Agent warehouse receipts covering any
portion of the Collateral of such Loan Party located in warehouses and for
which warehouse receipts are issued and certificates of title covering any
portion of the Collateral of such Loan Party for which certificates of title
have been issued; (iv) when an Event of Default has occurred and is continuing,
transferring Inventory of such Loan Party to warehouses or other locations
designated by the Agent; (v) placing notations on such Loan Party’s books of
account to disclose the Agent’s security interest; (vi) obtaining control
agreements from securities intermediaries with respect to financial assets of
such Loan Party in the possession of securities intermediaries; (vii) assigning
and delivering to the Agent all Supporting Obligations of such Loan Party,
including letters of credit on which such Loan Party is named beneficiary with
written consent of the issuer thereof; and (viii) taking such other steps as
are deemed necessary or desirable by the Agent to maintain and protect the
Agent’s Liens.  Each Loan Party hereby
authorizes the Agent to file one or more financing statements and amendments
thereto disclosing the Agent’s Liens. 
Each Loan Party agrees that a carbon, photographic, photostatic, or
other reproduction of this Agreement or of a financing statement is sufficient
as a financing statement.


 


(b)                                 If any Collateral of a
Loan Party is at any time in the possession or control of any warehouseman,
bailee or any of a Loan Party’s agents or processors, then such Loan Party
shall notify the Agent thereof and shall obtain a bailee letter acknowledged by
the bailee that notifies such Person of the Agent’s security interest in such
Collateral and instructs such Person to hold all such Collateral for the
Agent’s account subject to the Agent’s reasonable instructions. If at any time
any Collateral of a Loan Party is located on any operating facility of such or
any other Loan Party which is not owned by such Loan Party, then such Loan
Party shall use its commercially reasonable efforts (not including any
obligation to pay money) to obtain written landlord lien waivers or
subordinations, in form and substance satisfactory to the Agent, of all present
and future Liens which the owner or lessor of such premises may be entitled to
assert against the Collateral. 


 


(c)                                  From time to time,
each Loan Party shall, upon the Agent’s request, execute and deliver
confirmatory written instruments pledging to the Agent, for the ratable benefit
of the Agent and the Lenders, the Collateral in which such Loan Party has an
interest, but a Loan Party’s failure to do so shall not affect or limit the
Agent’s security interest or the Agent’s other rights in and to the Collateral
with respect to such Loan Party.  So
long as this Agreement is in effect and until all Obligations (other than
contingent indemnification obligations) have been fully satisfied the Agent’s
Liens shall continue in full force and effect in all Collateral.


 


Section 6.3.                                  Location
of Collateral.  Each Loan Party
represents and warrants to the Agent and the Lenders that:  (a) Schedule 6.3 is a correct
and complete list of such Loan Party’s chief executive office, the location of
its books and records, the locations of the Collateral, and the locations of
all of its other places of business; and (b) Schedule 6.3 correctly
identifies any of such facilities and locations that are not owned by such Loan
Party and sets forth the names of the owners and lessors or sublessors of such
facilities and locations.  Each Loan


 


50

















 


Party
covenants and agrees that it will not (i) maintain any Collateral at any
location other than those locations listed for such Loan Party on Schedule 6.3,
(ii) otherwise add to or change any of such locations or (iii) change the
location of its jurisdiction of incorporation or formation from the
jurisdiction for such Loan Party identified in Schedule 6.4, unless
in the case of (iii) above it gives the Agent at least thirty (30) days’ prior
written notice thereof and executes any and all financing statements and other
documents that the Agent requests in connection therewith.  In no event shall any Loan Party move any
Collateral to a location outside the continental United States.  Without limiting the foregoing, each Loan
Party represents that all of its Inventory (other than Inventory in transit)
is, and covenants that all of its Inventory will be, located either (x) on
premises owned by such Loan Party, (y) on premises leased by such Loan Party, provided
that such Loan Party shall have used its commercially reasonable efforts (not
including any obligation to pay money) to cause to be delivered to the Agent an
executed landlord waiver from the landlord of such premises in form and
substance satisfactory to the Agent, or (z) in a public warehouse, provided
that the Agent has received an executed bailee letter from the applicable
Person in form and substance satisfactory to the Agent.


 


Section 6.4.                                   Jurisdiction
of Organization.  Schedule 6.4
hereto identifies each Loan Party’s corporate name, its jurisdiction of
incorporation or organization, the type of entity it was organized as and the
state organization identification number of such Loan Party (if the state of
its incorporation or organization provides such organization number).


 


Section 6.5.                                   Title
to, Liens on, and Sale and Use of Collateral.  Each Loan Party represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that:  (a) all of the Collateral in which such Loan
Party has an interest is and will continue to be owned by such Loan Party free
and clear of all Liens whatsoever, except for Permitted Liens; (b) the Agent’s
Liens in the Collateral in which such Loan Party has an interest will not be
subject to any prior Lien (except, with respect to Fixed Assets, for those
Liens identified in clauses (c), (d), (e), (g), (h) and (k) (but only to the
extent set forth in the related financial institution account agreement or
blocked account agreement) of the definition of Permitted Liens); (c) such Loan
Party will use, store, and maintain the Collateral in which such Loan Party has
an interest with all reasonable care and will use such Collateral for lawful
purposes only; and (d) such Loan Party will not, without the Agent’s prior
written approval, sell or dispose of or permit the sale or disposition of any
of the Collateral in which such Loan Party has an interest except for sales of
Inventory in the ordinary course of business and sales of Equipment as
permitted by Section 6.12 or otherwise under this Agreement.  The inclusion of proceeds in the Collateral
shall not be deemed to constitute the Agent’s or any Lender’s consent to any
sale or other disposition of the Collateral except as expressly permitted
herein.


 


Section 6.6.                                   Field
Examinations.  Whenever a Default or
an Event of Default exists, and at such other times not more frequently than
twice in every calendar year in the case of field examinations and accounting
reviews, as the Agent requests, each Loan Party shall, at its expense and upon
the Agent’s request, permit the Agent to audit the existence and condition of
the Accounts, Inventories and books and records of such Loan Party and each
Subsidiary thereof and to review their compliance with the terms and conditions
of this Agreement and the other Loan Documents.  Notwithstanding the foregoing, the Agent may perform more than
two field


 


51

















 


examinations
and accounting reviews in any calendar year at the Agent’s expense (and at the
Borrowers’ expense whenever a Default or an Event of Default exists).


 


Section 6.7.                                   Access
and Examination; Confidentiality. 
(a)  The Agent, accompanied by
any Lender which so elects, may, upon prior notice, at reasonable intervals
during regular business hours (and at any time and without prior notice when a
Default or an Event of Default exists) have access to, examine, audit, make
extracts from or copies of and inspect any or all of the records, files, and
books of account and the Collateral and other properties of each Loan Party,
and discuss the affairs of each Loan Party with the officers and management of
such Loan Party.  Each Loan Party will
deliver (or cause to be delivered) to the Agent any instrument necessary for
the Agent to obtain records from any service bureau maintaining records for
such Loan Party.  The Agent may, and at
the direction of the Majority Lenders shall, at any time when a Default or an
Event of Default exists, and at each Loan Party’s expense, make copies of all
of such Loan Party’s books and records, or require each Loan Party to deliver
such copies to the Agent.  The Agent
may, without expense to the Agent, use such of the Loan Parties’ respective
personnel, supplies and Real Estate as may be reasonably necessary for
maintaining or enforcing the Agent’s Liens. 
The Agent shall have the right at the site of any Loan Party with such
Loan Party, at any time during regular business hours, upon prior notice, in
the Borrower’s name or in the name of a nominee of the Borrower, to verify the
validity, amount or any other matter relating to the Accounts, Inventory or
other Collateral, by mail, telephone or otherwise. 


 


(b)                                 Each
Loan Party agrees that, subject to such Loan Party’s prior consent for uses
other than in a traditional tombstone, which consent shall not be unreasonably
withheld or delayed, the Agent and each Lender may use such Loan Party’s name
in advertising and promotional material and in conjunction therewith disclose
the general terms of this Agreement. The Agent and each Lender agree to take
normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information provided to the Agent or such Lender by or
on behalf of the Loan Parties, under this Agreement or any other Loan Document,
and neither the Agent, nor such Lender nor any of their respective Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents, except to the extent that such
information (i) was or becomes generally available to the public other than as
a result of disclosure by the Agent or such Lender or their respective
Affiliates, or (ii) was or becomes available on a nonconfidential basis from a
source other than a Loan Party, provided that such source is not bound
by a confidentiality agreement with a Loan Party known to the Agent or such
Lender or their respective Affiliates; provided, however, that
the Agent and any Lender may disclose such information (1) at the request or
pursuant to any requirement of any Governmental Authority to which the Agent or
such Lender is subject or in connection with an examination of the Agent or
such Lender by any such Governmental Authority; (2) pursuant to subpoena or
other court process; (3) when required to do so in accordance with the
provisions of any applicable requirement of law; (4) to the extent reasonably
required in connection with any litigation or proceeding (including, but not
limited to, any bankruptcy proceeding) to which the Agent, any Lender or their
respective Affiliates may be party; (5) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (6) to the Agent’s or such Lender’s independent auditors,
accountants, attorneys and


 


52

















 


other professional
advisors; (7) to any prospective Participant or Assignee under any Assignment
and Acceptance, actual or potential, provided that such prospective
Participant or Assignee agrees to keep such information confidential to the
same extent required of the Agent and the Lenders hereunder; (8) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which a Loan Party is party or is deemed party with the
Agent or such Lender, and (9) to its Affiliates provided that such
parties are advised of the confidential nature of such information and agree to
keep such information confidential to the same extent required of the Agent and
the Lenders hereunder.  Notwithstanding
anything to the contrary contained herein, from the commencement of discussions
with respect to the revolving credit facility established by this Agreement
(the “Facility”), the Borrowers, the Lenders, ASB and the Agent (and
each of their respective employees, representatives, or agents) are permitted
to disclose to any and all Persons, without limitations of any kind, the tax
treatment and tax structure of the Facility and all materials of any kind
(including opinions or other tax analyses) that are or have been provided to
the Borrowers, such Lender, ASB or the Agent related to such tax treatment and
tax structure.


 


Section 6.8.                                   Collateral
Reporting.  Each Loan Party shall
provide the Agent with the following documents at the following times in form
reasonably satisfactory to the Agent: (a) upon request, a statement of the
balance of each of the Intercompany Accounts; (b) upon five (5) Business Days
prior notice, such other reports as to the Collateral of such Loan Party as the
Agent shall reasonably request from time to time; and (c) with the delivery of
each of the foregoing, a certificate of such Loan Party executed by an officer
thereof certifying as to the accuracy and completeness of the foregoing.  If any of such records or reports of the
Collateral are prepared by an accounting service or other agent, the Loan
Parties hereby authorize such service or agent to deliver such records,
reports, and related documents to the Agent, for distribution to the Lenders. 


 


Section 6.9.                                   Accounts.  (a) 
Each Loan Party hereby represents and warrants to the Agent and the
Lenders that:  (i) each existing Account
represents, and each future Account will represent, a bona  fide
sale and delivery of goods by such Loan Party, or rendition of services by such
Loan Party, in the ordinary course of such Loan Party’s business; (ii) each
existing Account is, and each future Account will be, for a liquidated amount
payable by the Account Debtor thereon on the terms set forth in the invoice
therefor or in the schedule thereof delivered to the Agent, except for any
offset, deduction, defense, or counterclaim known to such Loan Party and
disclosed to the Agent and the Lenders pursuant to this Agreement; (iii) each
copy of an invoice delivered to the Agent, if any, by such or any other Loan
Party will be a genuine copy of the original invoice sent to the Account Debtor
named therein; and (iv) all goods described in each invoice, if any, will have
been delivered to the Account Debtor and all services of such Loan Party
described in each invoice will have been performed.


 


(b)                                 No Loan Party shall
re-date any invoice or sale or make sales on extended dating beyond that
customary in such Loan Party’s business or extend or modify any Account other
than in a manner customary in its business or consistent with its historical
practice.  If a Loan Party becomes aware
of any matter materially and adversely affecting the collectability of any
Account or Account Debtor involving an amount greater than $100,000, including


 


53

















 


information
regarding the Account Debtor’s creditworthiness, such Loan Party will promptly
so advise the Agent.


 


(c)                                  No Loan Party shall
accept any note or other instrument (except a check or other instrument for the
immediate payment of money) with respect to any Account without the Agent’s
prior written consent, which shall not be unreasonably withheld or
delayed.  If the Agent consents to the
acceptance of any such instrument (except a check or other instrument for the
immediate payment of money), it shall be considered as evidence of the Account
and not payment thereof and such Loan Party will promptly deliver such
instrument to the Agent, endorsed by such Loan Party to the Agent in a manner
reasonably satisfactory in form and substance to the Agent. 


 


(d)                                 Each Loan Party shall
notify the Agent promptly of all disputes and claims with respect to Accounts
in excess of $100,000 individually, or $250,000 in the aggregate, with any
Account Debtor, and agrees to settle, contest, or adjust such dispute or claim
at no expense to the Agent or any Lender. 
No discount, credit or allowance shall be granted to any such Account
Debtor without the Agent’s prior written consent, except for discounts, credits
and allowances made or given in the ordinary course of a Loan Party’s business
when no Event of Default exists hereunder. 
Each Loan Party shall send the Agent a copy of each credit memorandum in
excess of $100,000 as soon as issued. 
The Agent may, and at the direction of the Majority Lenders shall, at
all times when an Event of Default exists hereunder, settle or adjust disputes
and claims directly with Account Debtors for amounts and upon terms which the
Agent or the Majority Lenders, as applicable, shall consider advisable and, in
all cases, the Agent will credit the applicable Loan Party’s Loan Account with
only the net amounts received by the Agent in payment of any Accounts owing to
such Loan Party.


 


Section 6.10.                            Collection
of Accounts; Payments.  (a)  Each Loan Party shall make collection of all
Accounts and other Collateral for the Agent, shall receive all payments as the
Agent’s trustee, and shall promptly (but in no event later than one Business
Day after such receipt) deliver all payments in their original form duly
endorsed in blank (or otherwise cause the deposit of all such payments (in a
manner consistent with past practices)) into either (i) a Payment Account
established for the account of a Loan Party at ASB (or with the prior written
consent of the Agent, at another bank acceptable to the Agent (Wells Fargo
Bank, N.A. being deemed acceptable to the Agent) and subject to documentation
acceptable to Agent) or (ii) to the Concentration Account; provided, however,
after giving effect to the foregoing delivery (or deposit) into a Payment
Account or the Concentration Account, in no event shall the balance in any
account that is not subject to the “control” (as defined in the UCC) of the
Agent exceed $10,000.  On or prior to
the date hereof, New World shall enter into a restricted account agreement with
Wells Fargo Bank, N.A. in respect of the Concentration Account, pursuant to
documentation and otherwise in form and substance satisfactory to the
Agent.  Each Loan Party shall instruct
all Account Debtors to make all payments directly to the address established
for such service.  If, notwithstanding
such instructions, a Loan Party receives any proceeds of Accounts, it shall
receive such payments as the Agent’s trustee, and shall immediately deliver
such payments to the Agent in their original form duly endorsed in blank or
deposit them into a Payment Account, as the Agent may direct.  All collections received in any such
restricted


 


54

















 


account or
Payment Account or directly by a Loan Party or the Agent, and all funds in any
Payment Account or other account to which such collections are deposited shall
upon the request of the Agent be remitted to the Agent to be applied to the
payment of the Obligations (or if the restricted account and/or Payment Account
is maintained at a bank other than ASB, such service and/or Payment Account, as
appropriate, shall be subject to blocked account arrangements acceptable to the
Agent, which will provide that upon the request of the Agent all collections
shall be remitted to the Agent for application to the payment of the
Obligations).  The Agent or the Agent’s
designee may, at any time during the continuation of an Event of Default,
notify Account Debtors that the Accounts have been assigned to the Agent and of
the Agent’s security interest therein, and may collect them directly and charge
the collection costs and expenses to any one or more Loan Party’s Loan Accounts
as a Revolving Loan.  So long as an
Event of Default has occurred and is continuing, each Loan Party, at the
Agent’s request, shall execute and deliver to the Agent such documents as the
Agent shall require to grant the Agent access to any post office box in which
collections of Accounts are received.


 


(b)                                 If sales of Inventory
are made or services are rendered for cash, each Loan Party shall promptly (but
in any event no later than one Business Day thereafter) deliver to the Agent or
deposit into a Payment Account any cash which such Loan Party receives.


 


(c)                                  All payments,
including immediately available funds received by the Agent at a bank
designated by it, received by the Agent on account of Accounts or as proceeds
of other Collateral will be the Agent’s sole property for its benefit and the
benefit of the Agent and the Lenders and will be credited to the applicable
Loan Party’s Loan Account (conditional upon final collection) upon the date of
receipt by the Agent if received prior to 2:00 p.m. New York City time and on
the Business Day following receipt by the Agent if received after 2:00 p.m. New
York City time.


 


Section 6.11.                            Inventory.
 Each Loan Party represents and warrants
to the Agent and the Lenders and agrees with the Agent and the Lenders that all
of the Inventory owned by such Loan Party is and will be held for sale in the
ordinary course of such Loan Party’s business, and is and will be fit for such
purposes (except for damaged or defective Inventory arising in the ordinary
course of business of such Loan Party). 
Each Loan Party will keep its Inventory in good and marketable condition
(except for damaged or defective Inventory arising in the ordinary course of
business of such Loan Party), at its own expense.  Each Loan Party will not, without the prior written consent of
the Agent, acquire or accept any Inventory on consignment or approval. Each
Loan Party agrees that all Inventory produced in the United States by such Loan
Party will be produced in accordance with the Federal Fair Labor Standards Act
of 1938, as amended, and all rules, regulations, and orders thereunder.  Each Loan Party will maintain a perpetual
inventory reporting system at all times.


 


Section 6.12.                             Equipment.  (a) 
All of the Equipment owned by such Loan Party is and will be used or
held for use in such Loan Party’s business, and is and will be fit for such
purposes (ordinary wear and tear excepted). 
Each Loan Party shall keep and maintain its Equipment in good operating
condition and repair subject to ordinary wear and tear.


 


55

















 


(b)                                 Each Loan Party shall
promptly inform the Agent of any material additions to or deletions from the
Equipment owned by such Loan Party. 
Each Loan Party shall not permit any Equipment owned by such Loan Party
to become a fixture with respect to real property or to become an accession
with respect to other personal property with respect to which real or personal
property the Agent does not have a Lien. 
Each Loan Party will not, without the Agent’s prior written consent,
alter or remove any identifying symbol or number on any of such Loan Party’s
Equipment constituting Collateral.


 


(c)                                  Each
Loan Party shall not, without the Majority Lenders’ prior written consent,
sell, lease as a lessor, or otherwise dispose of any of such Loan Party’s
Equipment or other assets; provided, however, that the Loan
Parties may dispose of (A) any or all obsolete or no longer used or useful
Equipment or other assets or (B) any other Equipment or other assets having a
fair market value not to exceed (i) $500,000 in the aggregate for all Loan
Parties in any Fiscal Year and (ii) $1,500,000 in the aggregate for all Loan
Parties during the term of this Agreement, without the Majority Lenders’
consent.  In the event any asset having
a fair market value in excess of $10,000 is sold, transferred or otherwise
disposed of pursuant to clause (B) of the proviso contained in the immediately
preceding sentence, (1) if such sale, transfer or disposition is effected
without replacement of or commitment to replace such assets with like assets or
other assets used or useful in the business of such Loan Party, or such asset
is replaced by an asset leased by a Loan Party or by assets purchased by a Loan
Party subject to a Lien, then, if required by the provisions of Section 4.3,
the applicable Loan Party shall deliver all of the net cash proceeds of any
such sale, transfer or disposition to the Agent, which proceeds shall be
applied to the reduction of the Revolving Loans in the manner set forth in Section 4.3(a)
(and which may thereafter be reborrowed, subject to the borrowing limitations
set forth herein), or (2) if such sale, transfer or disposition is made in
connection with the purchase by a Loan Party of replacement or other assets,
then such Loan Party shall use the proceeds of such sale, transfer or
disposition to purchase such replacement or other assets and shall deliver to
the Agent written evidence of the use of the proceeds for such purchase.  All replacement or other assets purchased by
any Loan Party shall be free and clear of all Liens except Permitted Liens.


 


Section 6.13.                             [Intentionally
Omitted.]


 


Section 6.14.                             Documents,
Instruments, and Chattel Paper. 
Each Loan Party represents and warrants to the Agent and the Lenders
that (a) all Documents, Instruments and Chattel Paper owned by such Loan Party
describing, evidencing, or constituting Collateral, and, to the best of such
Loan Party’s knowledge, all signatures and endorsements thereon, are and will
be complete, valid, and genuine, and (b) all goods evidenced by such Documents,
Instruments and Chattel Paper owned by such Loan Party are and will be owned by
such Loan Party, free and clear of all Liens other than Permitted Liens.


 


Section 6.15.                             Right
to Cure.  Upon prior notice to the
applicable Loan Party (such notice not being required if an Event of Default is
continuing), the Agent may, in its discretion, and shall, at the direction of
the Majority Lenders, pay any amount or do any act required of a Loan Party
hereunder or under any other Loan Document in order to preserve, protect,
maintain or enforce the Obligations, the Collateral or the Agent’s Liens
therein, and


 


56

















 


which such
Loan Party fails to pay or do, including, without limitation, payment of any
judgment against such Loan Party, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord’s claim, and any other Lien
upon or with respect to the Collateral. 
All payments that the Agent makes under this Section 6.15
and all out-of-pocket costs and expenses that the Agent pays or incurs in
connection with any action taken by it hereunder shall be charged to the
applicable Loan Party’s Loan Account (or if such Loan Party is not a Borrower,
to the Loan Account of New World) as a Revolving Loan.  Any payment made or other action taken by
the Agent under this Section 6.15 shall be without prejudice to any
right to assert an Event of Default hereunder and to proceed thereafter as
herein provided.


 


Section 6.16.                             Power
of Attorney.  Each Loan Party hereby
appoints the Agent and the Agent’s designee as such Loan Party’s attorney:  (a) to endorse such Loan Party’s name on any
checks, notes, acceptances, money orders, or other forms of payment or security
that come into the Agent’s or any Lender’s possession; (b) to sign such Loan
Party’s name on any invoice, bill of lading, warehouse receipt or other
document of title relating to any Collateral, on drafts against customers, on
assignments of Accounts, on notices of assignment, financing statements and
other public records and to file any such financing statements by electronic
means with or without a signature as authorized or required by applicable law
or filing procedure; (c) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys, due or to become due
under or with respect to any of the Collateral; (d) so long as any Event of
Default has occurred and is continuing, to notify the post office authorities
to change the address for delivery of such Loan Party’s mail to an address
designated by the Agent and to receive, open and dispose of all mail addressed
to such Loan Party; (e) to send requests for verification of Accounts to
customers or Account Debtors; (f) to complete in such Loan Party’s name or the
Agent’s name, any order, sale or transaction, obtain the necessary Documents in
connection therewith, and collect the proceeds thereof; (g) to clear Inventory,
the purchase of which was financed with Letters of Credit, through customs in
such Loan Party’s name, the Agent’s name or the name of the Agent’s designee,
and to sign and deliver to customs officials powers of attorney in such Loan
Party’s name for such purpose; and (h) to do all things reasonably necessary to
carry out this Agreement.  Each Loan
Party ratifies and approves all acts of such attorney.  None of the Lenders or the Agent nor their
attorneys will be liable for any acts or omissions or for any error of judgment
or mistake of fact or law.  This power,
being coupled with an interest, is irrevocable until this Agreement has been
terminated and the Obligations have been fully satisfied.


 


Section 6.17.                             The
Agent’s and Lenders’ Rights, Duties and Liabilities.  Each Loan Party assumes all responsibility
and liability arising from or relating to the use, sale or other disposition of
the Collateral.  The Obligations shall
not be affected by any failure of the Agent or any Lender to take any steps to
perfect the Agent’s Liens or to collect or realize upon the Collateral, nor
shall loss of or damage to the Collateral release any Loan Party from any of
the Obligations.  Following the
occurrence and continuation of an Event of Default, the Agent may (but shall
not be required to), and at the direction of the Majority Lenders shall,
without notice to or consent from any of the Loan Parties, sue upon or
otherwise collect, extend the time for payment of, modify or amend the terms
of, compromise or settle for cash, credit, or otherwise upon any terms, grant
other indulgences, extensions, renewals, compositions, or releases, and


 


57

















 


take or omit
to take any other action with respect to the Collateral, any security therefor,
any agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of the Loan Parties for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and any Loan Party.


 


ARTICLE VII


 


BOOKS AND RECORDS; FINANCIAL INFORMATION;
NOTICES


 


Section 7.1.                                   Books
and Records.  Each Loan Party shall
maintain, at all times, correct and complete books, records and accounts in
which complete, correct and timely entries are made of its transactions in
accordance with GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to Section 7.2(a).  Each Loan Party shall, by means of
appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance with
GAAP.  Each Loan Party shall maintain at
all times books and records pertaining to the Collateral in such detail, form and
scope as the Agent or any Lender shall reasonably require, including, but not
limited to, records of (a) all payments received and all credits and extensions
granted with respect to the Accounts; (b) the return, rejection, repossession,
stoppage in transit, loss, damage, or destruction of any Inventory; and (c) all
other dealings affecting the Collateral. 


 


Section 7.2.                                   Financial
Information.  Each Loan Party shall
promptly furnish to each Lender all such financial information as the Agent or
any Lender shall reasonably request, and notify its auditors and accountants
that the Agent, on behalf of the Lenders, is authorized to obtain such
information directly from them.  Without
limiting the foregoing, each Loan Party will furnish (or cause to be furnished)
to the Agent, in sufficient copies for distribution by the Agent to each
Lender, in such detail as the Agent or the Lenders shall reasonably request,
the following:


 


(a)                                  As soon as available,
but in any event not later than 120 days after the close of each Fiscal Year,
consolidated audited and consolidating audited balance sheets, and statements
of income and expense, cash flow and of stockholders’ equity for New World and
its Subsidiaries for such Fiscal Year and figures from the Latest Projections,
and the accompanying notes thereto, setting forth in each case in comparative
form figures for the previous Fiscal Year and figures from the Latest
Projections, all in reasonable detail, fairly presenting the financial position
and the results of operations of New World and its Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP consistently applied. Such statements shall be examined in accordance with
generally accepted auditing standards by and, in the case of such statements
performed on a consolidated basis, accompanied by an unqualified report thereon
of independent certified public accountants selected by New World and
reasonably satisfactory to the Agent. 


 


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(b)                                 As
soon as available, but in any event not later than 45 days after the end of
each fiscal month (including, without limitation, in the case of any month that
is also a fiscal quarter end) of New World, consolidated and consolidating
unaudited balance sheets of New World and its Subsidiaries as at the end of
such month, and consolidated and consolidating unaudited statements of income
and expense and cash flow for New World and its Subsidiaries for such month and
for the period from the beginning of the then current Fiscal Year to the end of
such month, setting forth in each case in comparative form figures from the
Latest Projections together with an analysis and reconciliation of material
variances, all in reasonable detail, fairly presenting the financial position
and results of operations of New World and its Subsidiaries as at the date
thereof and for such periods, and prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a) with such changes as may be required by
GAAP.  New World shall certify by a
certificate signed on behalf of New World by a Responsible Officer that all
such statements have been prepared in accordance with GAAP and present fairly,
subject to year-end adjustments in accordance with GAAP and the lack of
footnote disclosure, each Loan Party’s financial position and New World’s
consolidated financial position, as at the dates thereof, and its results of
operations for the periods then ended.


 


(c)                                  As soon as available,
but in any event not later than 45 days after the close of each fiscal quarter,
consolidated and consolidating unaudited balance sheets of New World and its
consolidated and consolidating Subsidiaries as at the end of such quarter, and
consolidated and consolidating unaudited statements of income and expense and
statement of cash flows for New World and its Subsidiaries for such quarter and
for the period from the beginning of the then current Fiscal Year to the end of
such quarter, setting forth in each case in comparative form figures from the
Latest Projections together with an analysis and presentation of material
variances, all in reasonable detail, fairly presenting the financial position
and results of operation of New World and its Subsidiaries as at the date thereof
and for such periods, prepared in accordance with GAAP consistent with the
audited Financial Statements required to be delivered pursuant to Section 7.2(a)
with such changes as may be required by GAAP. 
The Loan Parties shall certify by a certificate signed on their behalf
by a Responsible Officer of each such Person that all such statements have been
prepared in accordance with GAAP and present fairly, subject to normal year-end
adjustments and the lack of footnote disclosure, each Loan Party’s financial
position and New World’s consolidated financial position, as at the dates
thereof, and its results of operations for the periods then ended.


 


(d)                                 With each of the
audited Financial Statements delivered pursuant to Section 7.2(a),
a certificate of the independent certified public accountants that examined
such statement to the effect that they have reviewed and are familiar with this
Agreement and that, in examining such Financial Statements, they did not become
aware of any fact or condition which then constituted a Default or Event of
Default with respect to a financial covenant, except for those, if any,
described in reasonable detail in such certificate.


 


(e)                                  With each of the
annual audited Financial Statements delivered pursuant to Section 7.2(a),
and within forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year, a certificate of the chief financial officer of
each Loan Party


 


59

















 


(i) setting
forth in reasonable detail the calculations required to establish that the Loan
Parties were in compliance with the covenants set forth in Sections 9.24,
9.25 (if applicable) and 9.26 as at the end of the applicable
Test Period, (ii) commencing with the first Margin Adjustment Test Period,
setting forth in reasonable detail the calculation of the Fixed Charge Coverage
Ratio for the Test Period ended on the last day of the Fiscal Year or fiscal
quarter for which such certificate is being delivered and (iii) stating that, except
as explained in reasonable detail in such certificate, (A) all of the
representations and warranties of the Borrowers contained in this Agreement and
the other Loan Documents are correct and complete in all material respects as
at the date of such certificate as if made at such time (except to the extent
such representations and warranties specifically relate solely to an earlier
date), (B) the Borrowers are, at the date of such certificate, in compliance in
all material respects with all of their respective covenants and agreements in
this Agreement and the other Loan Documents, (C) no Default or Event of Default
then exists or existed during the period covered by such Financial Statements,
(D) describing and analyzing in reasonable detail all material trends, changes,
and developments in each and all Financial Statements; and (E) explaining the
material variances of the figures in the corresponding budgets and prior Fiscal
Year financial statements.  If such certificate
discloses that a representation or warranty is not correct or complete, or that
a covenant has not been complied with (other than financial covenants), a
Default or Event of Default existed or exists, such certificate shall set forth
what action New World has taken or proposes to take with respect thereto, if
any.


 


(f)                                    No later than
December 31st of each year (commencing December 31, 2003), a budget
which has been approved by New World’s Board of Directors (to include
consolidated and consolidating balance sheets, statements of income and
expenses and statement of cash flow) for New World and its Subsidiaries on a
combined basis as at the end of and for each month of such Fiscal Year,
together with forecasts prepared by management of each of the Borrowers, in
form and substance satisfactory to Agent, including balance sheets, income
statements and cash flow statements of a quarterly basis for the following
Fiscal Year together with a five year financial model of New World and its
Subsidiaries based on a fiscal year ended on the last day of each December,
including, without limitation, monthly projections for the next two years and
other financial information, in substantially the form delivered at or prior to
the Closing Date pursuant to Section 10.1(x).


 


(g)                                 Promptly upon the
filing thereof, copies of all reports, if any, to or other documents filed by
New World or any of its Subsidiaries with the Securities and Exchange
Commission under the Exchange Act, and promptly upon the receipt or sending
thereof, as applicable, copies of all reports, notices, or statements sent or
received by New World or any of its Subsidiaries to or from the holders of any
Debt or Equity Interests of New World or any of its Subsidiaries or to or from
the trustee under any indenture under which the same is issued.


 


(h)                                 As soon as available,
but in any event not later than 15 days after any Loan Party’s receipt thereof,
a copy of all management reports and management letters prepared for New World
or any of its Subsidiaries by any independent certified public accountants of
New World or any of its Subsidiaries.


 


60

















 


(i)                                     Promptly after
their preparation, copies of any and all proxy statements and financial
statements which New World or any of its Subsidiaries makes available to its
shareholders.


 


(j)                                     Upon request by
the Agent, a copy of each tax return filed by New World or by any of its
Subsidiaries.


 


(k)                                  Promptly after their
receipt or delivery, all notices, financial statements and other reporting
requirements received pursuant to the Senior Secured Debt Documents to the
extent not otherwise delivered hereunder or under the Intercreditor Agreement.


 


(l)                                     As soon as
available, in any event not later than 30 days after the end of each fiscal
quarter of the Borrowers, detailed reports, in form and substance satisfactory
to the Agent, regarding the Borrowers’ aggregate Committed Capital Expenditures
associated with future store openings and purchases of Fixed Assets, in each
case, as of the end of such quarter.


 


(m)                               Such additional
information as the Agent and/or any Lender may from time to time reasonably
request regarding the financial and business affairs of New World or any of its
Subsidiaries.


 


Section 7.3.                                   Notices
to the Lenders.  Each Loan Party
shall notify the Agent in writing of the following matters at the following
times:


 


(a)                                  Immediately
after becoming aware of any Default or Event of Default.


 


(b)                                 Immediately after
becoming aware of the assertion by the holder of any capital stock or Debt of
New World or of any Subsidiary thereof that a default exists with respect
thereto or that New World or any Subsidiary thereof is not in compliance with
the terms thereof, or the threat or commencement by such holder of any
enforcement action because of such asserted default or non-compliance.


 


(c)                                  Immediately after
becoming aware of the occurrence of a Material Adverse Effect.


 


(d)                                 Immediately
after becoming aware of any pending or threatened action, suit, proceeding or
counterclaim by any Person, or any pending or threatened investigation by a
Governmental Authority, which would reasonably be expected to have a Material
Adverse Effect.


 


(e)                                  Immediately
after becoming aware of any pending or threatened strike, work stoppage, unfair
labor practice claim, or other labor dispute affecting New World or any of its
Subsidiaries in a manner which would reasonably be expected to have a Material
Adverse Effect.


 


61

















 


(f)                                    Immediately
after becoming aware of any violation of any law, statute, regulation, or
ordinance of a Governmental Authority affecting New World or any of its
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect.


 


(g)                                 Immediately after
receipt of any notice from a Governmental Authority of any violation by New
World or any of its Subsidiaries of any Environmental Law which could
reasonably be expected to result in liability in excess of $200,000 or that any
Governmental Authority has asserted in writing that New World or any Subsidiary
thereof is not in compliance with any Environmental Law, where the subject
noncompliance would reasonably be expected to result in liability in excess of
$200,000.


 


(h)                                 Immediately after
receipt of any written notice that New World or any of its Subsidiaries is or
may be liable to any Person as a result of the Release or threatened Release of
any Contaminant or that New World or any Subsidiary is subject to investigation
by any Governmental Authority evaluating whether any remedial action is needed
to respond to the Release or threatened Release of any Contaminant which, in
either case, is reasonably likely to give rise to liability in excess of
$200,000.


 


(i)                                     Immediately
promptly after receipt of any written notice of the imposition of any
Environmental Lien against any property of New World or any of its
Subsidiaries.


 


(j)                                     Any change in a
Loan Party’s name, state of organization, or form of organization, trade names
or styles under which a Loan Party will sell Inventory or create Accounts, or
to which instruments in payment of Accounts may be made payable, in each case
at least thirty (30) days prior thereto.


 


(k)                                  Within ten (10)
Business Days after any Loan Party or any ERISA Affiliate knows or has reason
to know of the occurrence of (i) an ERISA Event, or (ii) a non-exempt
prohibited transaction (as defined in Section 406 of ERISA and 4975 of the
Code) that could reasonably be expected to subject any Loan Party to a material
excise tax, and (promptly after any Loan Party is notified in writing or
otherwise, of) any action taken or threatened by the IRS, the DOL or the PBGC
with respect thereto.


 


(l)                                     Upon request, or,
in the event that such filing reflects a significant adverse change with
respect to the matters covered thereby, within three (3) Business Days after
the filing thereof with the PBGC, the DOL or the IRS, as applicable, copies of
the following:  (i) each annual report
(Form 5500 Series), including Schedule B thereto, filed with the PBGC, DOL
or the IRS with respect to each Pension Plan, (ii) a copy of each funding
waiver request filed with the PBGC, the DOL or the IRS with respect to any
Pension Plan and all communications received by any Loan Party or any ERISA
Affiliate from the PBGC, the DOL or the IRS with respect to such request, and
(iii) a copy of each other filing or notice filed with the PBGC, the DOL or the
IRS, with respect to each Pension Plan of any Loan Party or any ERISA
Affiliate.


 


(m)                               Upon request, copies of
each actuarial report for any Pension Plan or Multi-employer Plan and annual
report for any Multi-employer Plan (to the extent such Multi-


 


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employer Plan
documents are reasonably available to a Loan Party or ERISA Affiliate); and
within three (3) days after receipt thereof by any Loan Party or any ERISA
Affiliate, copies of the following:  (i)
any notices of the PBGC’s intention to terminate a Pension Plan or to have a
trustee appointed to administer such Pension Plan pursuant to Section 4042
of ERISA; (ii) any unfavorable determination letter from the IRS regarding the
qualification of a Pension Plan under Section 401(a) of the Code; or (iii)
any notice from a Multi-employer Plan regarding the imposition of withdrawal
liability.


 


(n)                                 Within three (3)
Business Days after the occurrence thereof: 
(i) any changes in the benefits of any existing Pension Plan which
increase any Loan Party’s annual contributions with respect thereto by an
amount in excess of $200,000, or the establishment of any new Pension Plan or
the commencement of contributions to any Pension Plan or Multi-employer Plan to
which any Loan Party or any ERISA Affiliate was not previously contributing,
which results in an increase in the annual contributions of any Loan Party to
all Pension Plans in excess of $200,000; or (ii) any failure by any Loan Party
or any ERISA Affiliate to make a required installment or any other required
payment under Section 412 of the Code on or before the due date for such
installment or payment provided that, if any such failure would result in a Lien
being placed upon any assets of any Loan Party or any ERISA Affiliate, notice
shall be given within three (3) Business Days after any Loan Party or any ERISA
Affiliate knows that such installment or other required payment will not be
made.


 


(o)                                 Within three (3)
Business Days after any Loan Party or any ERISA Affiliate knows that any of the
following events has or will occur:  (i)
a Multi-employer Plan has been or will be terminated; or (ii) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multi-employer Plan.


 


(p)                                 Not later than the
last day of each month, a list of all store locations that (i) were closed or
otherwise ceased operations or (ii) relocated or opened, in each case, during
such month.


 


Each notice given under this Section shall describe the subject
matter thereof in reasonable detail, and shall set forth the action that the
applicable Loan Party or any ERISA Affiliate, as applicable, has taken or
proposes to take with respect thereto.


 


ARTICLE
VIII


 


GENERAL
WARRANTIES AND REPRESENTATIONS


 


Each Loan Party, jointly and severally, warrants and represents to the
Agent and the Lenders that except as hereafter disclosed to and accepted by the
Agent and the Majority Lenders in writing:


 


Section 8.1.                                   Authorization,
Validity, and Enforceability of this Agreement and the Other Transaction
Documents.  Such Loan Party has the
corporate power and authority to


 


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execute,
deliver and perform this Agreement and the other Transaction Documents to which
it is a party, to incur or guaranty, as applicable, the Obligations, and to
grant to the Agent Liens upon and security interests in the Collateral in which
it has an interest.  Such Loan Party has
taken all necessary corporate (including without limitation, obtaining approval
of its stockholders if necessary) to authorize its execution, delivery, and
performance of this Agreement and the other Transaction Documents to which it
is a party.  No consent, approval, or
authorization of, or declaration or filing with, any Governmental Authority,
and no consent of any other Person, is required in connection with such Loan
Party’s execution, delivery and performance of this Agreement or any of the
other Transaction Documents to which it is a party except for those already
duly obtained or made and which are in full force and effect.  This Agreement and the other Transaction
Documents to which such Loan Party is a party have been duly executed and
delivered by such Loan Party, and constitute the legal, valid and binding
obligations of such Loan Party, enforceable against it in accordance with their
respective terms without defense, setoff or counterclaim.  Such Loan Party’s execution, delivery, and
performance of this Agreement and the other Transaction Documents to which it
is a party do not and will not conflict with, or constitute a violation or
breach of, or constitute a default under, or result in the creation or
imposition of any Lien upon the property of such Loan Party or any of its
Subsidiaries by reason of the terms of (a) any material contract, mortgage,
Lien, lease, agreement, indenture, or instrument to which such Loan Party or
any Subsidiary is a party or which is binding upon it (other than pursuant to
the Loan Documents and the Senior Secured Debt Documents), (b) any Requirement
of Law applicable to such Loan Party or any of its Subsidiaries, or (c) the
certificate or articles of incorporation or by-laws of such Loan Party or any
of its Subsidiaries.


 


Section 8.2.                                   Validity
and Priority of Security Interest. 
The provisions of this Agreement, the Patent and Trademark Agreement and
the other Loan Documents create legal and valid Liens on all the Collateral in
favor of the Agent, for the ratable benefit of the Agent and the Lenders, and
when (a) financing statements in appropriate form are filed in the appropriate
offices, (b) any Mortgage is filed in the land records of the appropriate
registry office, (c) the Patent and Trademark Agreement (or any assignments
required thereunder) are filed and recorded with the United States Patent and
Trademark Office, (d) the Agent has possession of Collateral which can be
perfected by possession only and (e) the Agent has “control” (as defined in the
UCC) of any Collateral which can be perfected by “control” (as defined in the
UCC) only, such Liens shall constitute perfected and continuing Liens on all
the Collateral, having priority over all other Liens on such Collateral
(except, with respect to Fixed Assets, for those Liens identified in clauses
(c), (d), (e), (g), (h) and (k) (but only to the extent set forth in the
related financial institution account agreement or blocked account agreement)
of the definition of Permitted Liens), securing all the Obligations, and
enforceable against the Loan Parties and all third parties.


 


Section 8.3.                                   Organization
and Qualification.  Such Loan Party
(a) is duly organized and validly existing in good standing under the laws of
the state of its organization, (b) is qualified to do business as a foreign corporation
and is in good standing in the jurisdictions set forth on Schedule 8.3
which are the only jurisdictions in which qualification is necessary in order
for it to own or lease its property and conduct its business except where the
failure to so


 


64

















 


qualify could
not reasonably be expected to result in a Material Adverse Effect and (c) has
all requisite power and authority to conduct its business and to own its
property.


 


Section 8.4.                                   Corporate
Name; Prior Transactions.  Except as
set forth on Schedule 8.4, such Loan Party has not, during the past
five (5) years from the date hereof, been known by or used any other corporate
or fictitious name, or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property outside of the ordinary course of business.


 


Section 8.5.                                   Subsidiaries.  Schedule 8.5 is a correct and
complete list of the name and relationship to each Loan Party of each and all
of such Loan Party’s Subsidiaries.  No
Activation Event has occurred or exists with respect to any Non-Restricted
Subsidiary.


 


Section 8.6.                                   Financial
Statements and Projections. 
(a)  The Loan Parties have
delivered to the Agent and the Lenders consolidated and consolidating audited
financial statements of New World for the fiscal year ended December 31,
2002.  Such financial statements are
attached hereto as Exhibit B. 
All such financial statements have been prepared in accordance with GAAP
and present fairly in all material respects the results of operations and
financial position of New World and its Subsidiaries for the periods then ended
and at the end of such periods.


 


(b)                                 The Latest Projections
when submitted to the Lenders as required herein represent the Loan Parties’
reasonable estimate as of the date submitted of the future financial
performance of New World and its Subsidiaries for the periods set forth
therein.  The Latest Projections have
been prepared on the basis of the assumptions set forth therein, which each
Loan Party believes are fair and reasonable in light of current and reasonably
foreseeable business conditions at the time submitted to the Lenders.  It is understood that (i) any projections
furnished to the Agent or any Lender are subject to significant uncertainties
and contingencies, which may be beyond each Borrower’s and its Subsidiaries’
control, (ii) no assurance is given by a Borrower and its Subsidiaries that
such projections will be realized, and (iii) the actual results may differ from
such projections and such differences may be material.


 


(c)                                  The Loan Parties have
delivered to the Agent and the Lenders a copy of the unaudited quarterly
balance sheets and income statements of New World and its Subsidiaries for the
fiscal quarter ended March 31, 2003, which present, fairly, in all
material respects, New World’s and its Subsidiaries financial condition as at
such date, and has been prepared in accordance with GAAP (except for footnote
disclosures and year-end adjustments in accordance with GAAP).


 


Section 8.7.                                  Capitalization.  Schedule 8.7 is a correct and
complete description of the capitalization of each of the Loan Parties, and,
such Schedule 8.7 sets forth the number of authorized, issued and
outstanding shares of stock or other Equity Interests in each such Loan
Party.  All issued and outstanding
shares of stock or other Equity Interests are fully paid and non-assessable and
are owned beneficially and of record by the Persons set forth on such Schedule 8.7.


 


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Section 8.8.                                   Solvency.  (a) 
The Loan Parties taken as a whole are Solvent prior to and after giving
effect to the making of each Revolving Loan and the issuance of each Letter of
Credit.


 


(b)                                 Such Loan Party is
Solvent prior to and after giving effect to the making of the Revolving Loans
to be made on the Closing Date and the issuance of any Letters of Credit to be
issued on the Closing Date, and shall remain Solvent during the term of this
Agreement, in each case, without giving effect to any intercompany liabilities
among Loan Parties and after giving effect to any right of contribution with
respect to any debt under which it is a joint and several obligor with another
Loan Party.


 


Section 8.9.                                  Debt.  After giving effect to the making of the
Revolving Loans to be made on the Closing Date, such Loan Party and its
Subsidiaries will have no Debt, except (a) the Obligations, (b) the Senior
Secured Debt, (c) trade payables and other contractual obligations arising in
the ordinary course of business and (d) Debt described on Schedule 9.12.


 


Section 8.10.                             Title
to Property.  Such Loan Party has
good and marketable title in fee simple to its real property listed on Schedule 8.10
hereto, and such Loan Party has good, indefeasible and merchantable title to
all of its other property, free of all Liens except Permitted Liens.


 


Section 8.11.                             Real
Estate; Leases.  Schedule 8.11
sets forth, as of the Closing Date, a correct and complete list of all real
property owned by such Loan Party, and all leases and subleases of real or
personal property by such Loan Party as lessee or sublessee (other than leases
of personal property as to which such Loan Party is lessee or sublessee for
which the value of such personal property is less than $50,000 individually or
$100,000 in the aggregate), and all leases and subleases of real or personal
property by such Loan Party as lessor or sublessor.  To the knowledge of such Loan Party, each of such leases and
subleases is valid and enforceable in accordance with its terms and is in full
force and effect, and no default by any party to any such lease or sublease
exists except for those defaults which could not reasonably be expected to have
a Material Adverse Effect.


 


Section 8.12.                             Proprietary
Rights.  Schedule 8.12
sets forth a correct and complete list of all of such Loan Party’s Proprietary
Rights.  None of the Proprietary Rights
is subject to any licensing agreement or similar arrangement except as set
forth on Schedule 8.12. To the best of such Loan Party’s knowledge,
none of the Proprietary Rights infringes on or conflicts with any other
Person’s property, and no other Person’s property infringes on or conflicts
with the Proprietary Rights.  The
Proprietary Rights described on Schedule 8.12 constitute all of the
property of such type necessary to the current and anticipated future conduct
of such Loan Party’s business.


 


Section 8.13.                             Trade
Names.  All trade names or styles
under which such Loan Party will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule 8.13.


 


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Section 8.14.                             Litigation.  There is no pending or threatened action,
suit, proceeding, or counterclaim by any Person or investigation by any
Governmental Authority, or any basis for any of the foregoing, which could
reasonably be expected to have a Material Adverse Effect.


 


Section 8.15.                             Restrictive
Agreements.  Such Loan Party is not
a party to any contract or agreement, or subject to any charter or other
corporate restriction, which affects its ability to execute, deliver, and
perform the Loan Documents or any other Transaction Documents to which it is a
party and repay the Obligations or which materially and adversely affects or,
insofar as such Loan Party can reasonably foresee, could reasonably be expected
to have a Material Adverse Effect.


 


Section 8.16.                             Labor
Disputes.  (a) There is no
collective bargaining agreement or other labor contract covering employees of
such Loan Party, (b) no such collective bargaining agreement or other labor
contract is scheduled to expire during the term of this Agreement, (c)  no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of such Loan Party or for any similar purpose, and (d) there is no
pending or (to the best of such Loan Party’s knowledge) threatened, strike,
work stoppage, unfair labor practice claim, or other labor dispute against or
affecting such Loan Party or its employees.


 


Section 8.17.                             Environmental
Laws.  Except as could not be
reasonably likely to have a Material Adverse Effect:  (a)  Such Loan Party is
and has complied with all Environmental Laws applicable to its Real Estate and
business, and neither such Loan Party nor any of its present Real Estate or
operations nor its past property or operations, is subject to any written
enforcement order from or liability agreement with any Governmental Authority
or private Person respecting (i) non-compliance with any Environmental Law or
(ii) any potential liabilities and costs or remedial action arising from the
Release or threatened Release of a Contaminant.


 


(b)                                 Such Loan Party has
obtained or applied for all permits necessary for its current operations under
Environmental Laws, and all such applications and permits are in good standing
and such Loan Party is in compliance with all terms and conditions of such
permits.


 


(c)                                  Neither such Loan
Party nor, to the best of such Loan Party’s knowledge, any of its
predecessors-in-interest, has stored, treated or disposed of any hazardous
waste on any Real Estate, so as to require a hazardous waste treatment, storage
or disposal facility permit pursuant to 40 C.F.R. Part 261 or any equivalent
Environmental Law.


 


(d)                                 Such Loan Party has
not received any summons, complaint, order or similar written notice that it is
not currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may
be liable to any other Person as a result of a Release or threatened Release of
a Contaminant.


 


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(e)                                  To
such Loan Party’s knowledge, none of the present or past operations of such
Loan Party is the subject of any investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to a Release or
threatened Release of a Contaminant.


 


(f)                                    There is not now,
nor to the best of such Loan Party’s knowledge has there ever been, on or in
any of the Real Estate:


 


(i)                                     any
underground storage tanks or surface impoundments,


 


(ii)                                  any
asbestos-containing material, or


 


(iii)                               any
polychlorinated biphenyls (PCB’s) used in hydraulic oils, electrical
transformers or other equipment.


 


(g)                                 Such Loan Party has
not filed any notice under any requirement of Environmental Law reporting a
spill or accidental and unpermitted release or discharge of a Contaminant into
the environment.


 


(h)                                 Such Loan Party has
not entered into any settlement agreements with any Person (including, without
limitation, the prior owner of its property) imposing obligations or
liabilities on such Loan Party with respect to any remedial action in response
to the Release of a Contaminant or environmentally related claim.


 


(i)                                     No Environmental
Lien has attached to any Real Estate of such Loan Party.


 


Section 8.18.                             No
Violation of Law.  Such Loan Party
is not in violation of any law, statute, regulation, ordinance, judgment,
order, or decree applicable to it which violation could reasonably be expected
to have a Material Adverse Effect.


 


Section 8.19.                             No
Default.  Such Loan Party is not in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which such Loan Party or any of its Subsidiaries is
a party or by which it is bound, which default could reasonably be expected to
have a Material Adverse Effect.


 


Section 8.20.                             ERISA
Compliance.  (a)  (i) Each Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
applicable federal or state law; (ii) each Plan which is intended to qualify
under Section 401(a) of the Code has received a favorable determination
letter from the IRS and, to the best knowledge of such Loan Party, nothing has
occurred which would cause the loss of such Plan’s qualification; and (iii)
each Loan Party and each ERISA Affiliate has made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a
funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.


 


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(b)                                 There are no pending
or, to the knowledge of such Loan Party, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.  There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect.


 


(c)                                  (i) No ERISA Event
has occurred or is reasonably expected to occur; (ii) no Pension Plan has any
Unfunded Pension Liability in excess of $250,000; (iii) no Loan Party or ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (iv) no Loan Party or ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multi-employer Plan; and (v) no Loan Party or ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.


 


Section 8.21.                            Tax
Filings.  Such Loan Party has filed
all federal, state income and other tax returns and reports required to be
filed, and have paid all federal, state income and other taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those being
contested in good faith by appropriate proceedings.


 


Section 8.22.                             Regulated
Entities.  None of such Loan Party,
any Person controlling such Loan Party, or any Subsidiary thereof, is an
“Investment Company” within the meaning of the Investment Company Act of
1940.  Neither such Loan Party nor any
Subsidiary thereof is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other Federal or state statute or
regulation limiting its ability to incur indebtedness.


 


Section 8.23.                             Use
of Proceeds; Margin Regulations. 
The proceeds of Revolving Loans are to be used for working capital and
other general business purposes of the Loan Parties permitted hereunder.  Such Loan Party is not engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.


 


Section 8.24.                             Copyrights,
Patents, Trademarks and Licenses, etc. 
Such Loan Party owns or is licensed or otherwise has the right to use
all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of its businesses, without conflict with the rights
of any other Person.  To the best
knowledge of such Loan Party, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now contemplated
to be employed, by such Loan Party infringes upon any rights held by any other
Person.  No claim or litigation
regarding any of the foregoing is ending or threatened, and no patent,
invention, device, application, principle or any statue, law, rule, regulation,
standard or code is


 


69

















pending or, to the knowledge of such Loan Party, proposed, which, in
any case, could reasonably be expected to have a Material Adverse Effect.


 


Section 8.25.                             No
Material Adverse Change.  No
Material Adverse Effect has occurred since December 31, 2002.


 


Section 8.26.                             Full
Disclosure.  None of the
representations or warranties made by such Loan Party in any of the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of such Loan Party in connection with any
of the Loan Documents (including the offering and disclosure materials
delivered by or on behalf of such Loan Party to the Lenders prior to the
Closing Date), contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.


 


Section 8.27.                             Material
Agreements.  Schedule 8.27
hereto sets forth all material agreements and contracts to which such Loan
Party is a party or is bound as of the date hereof.


 


Section 8.28.                             Bank
Accounts. Schedule 8.28 
contains a complete and accurate list of all bank accounts maintained by
such Loan Party with any bank or other financial institution.


 


Section 8.29.                             Governmental
Authorization.  No approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority is necessary or required in connection with
the execution, delivery or performance by, or enforcement against, such Loan
Party of this Agreement or any other Loan Document.


 


Section 8.30.                             Restructuring.  The transactions contemplated by the Senior
Secured Debt Documents have been duly and validly consummated, without any
material modification, amendment or waiver (except as reasonably approved in
writing by the Majority Lenders), in accordance with the terms, conditions and
provisions of such agreement. Each of the representations and warranties made
by any Loan Party in the Senior Secured Debt Documents is true and correct in
all material respects. To the best of the Loan Parties’ knowledge, each of the
representations and warranties made by any party (other than a Loan Party) to
the Senior Secured Debt Documents is true and correct in all material respects.
Neither the transactions contemplated by this Agreement and the other Loan Documents
nor the Senior Secured Debt Documents shall result in a breach of any of the
representations and warranties contained in any of the Transaction Documents.


 


Section 8.31.                             Subordinated
Lien.  The Liens granted pursuant to
the Senior Secured Debt Documents are effectively subordinated to the Agent’s
Liens, other than certain liens in favor of The Bank of New York, as
Subordinated Creditor Collateral Agent under, and as set forth in, the
Intercreditor Agreement.


 


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Section 8.32.                             Distributions.  Since the Closing Date, no Distribution has
been declared, paid, or made upon or in respect of any capital stock or other
securities of such Loan Party or any of its Subsidiaries, other than
Distributions permitted to be made pursuant to Section 9.9.


 


Section 8.33.                             Franchises.  Each franchise agreement to which any Loan
Party is party constitutes the valid, binding and enforceable obligation of
each party thereto. There is no pending or threatened action or suit by any of
the Loan Parties’ franchisees involving any of the Loan Parties.


 


ARTICLE IX


 


AFFIRMATIVE
AND NEGATIVE COVENANTS


 


Each Loan
Party covenants to the Agent and each Lender that, so long as any of the
Obligations remain outstanding or this Agreement is in effect:


 


Section 9.1.                                   Taxes
and Other Obligations.  Such Loan
Party shall, and shall cause each of its Subsidiaries to, (a) file when due all
federal, state income and other tax returns and other reports which it is
required to file; (b) pay, or provide for the payment, when due, of all taxes
(including, without limitation, sales tax), fees, assessments and other
governmental charges against it or upon its property, income and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and provide to the Agent and the
Lenders, upon request, satisfactory evidence of its timely compliance with the
foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons, and all other indebtedness owed by it and perform and discharge in a
timely manner all other obligations undertaken by it; provided, however,
so long as such Loan Party has notified the Agent in writing, neither such Loan
Party nor any of its Subsidiaries need pay any such amount (i) that it is
contesting in good faith by appropriate proceedings diligently pursued, (ii)
with respect to which such Loan Party or its Subsidiary, as the case may be,
has established proper reserves for as provided in GAAP, and (iii) for which no
Lien (other than a Permitted Lien) results from such non-payment.


 


Section 9.2.                                   Corporate
Existence and Good Standing.  Such
Loan Party shall maintain its corporate existence, its rights, privileges and
franchises necessary in the ordinary conduct of its business and its
qualification and good standing in all jurisdictions in which the failure to
maintain such qualification or good standing could reasonably be expected to have
a Material Adverse Effect.


 


Section 9.3.                                   Compliance
with Law and Agreements; Maintenance of Licenses.  Such Loan Party shall comply in all material respects with (i)
all Requirements of Law of any Governmental Authority having jurisdiction over
it or its business (including the Federal Fair Labor Standards Act) and (ii)
the terms of its obligations under all material agreements to which it is a
party. Such Loan Party shall obtain and maintain all licenses, permits,
franchises, and


 


71

















 


governmental
authorizations necessary to own its property and to conduct its business,
except where the failure to so obtain or maintain the foregoing could not
reasonably be expected to have a Material Adverse Effect. Such Loan Party shall
not modify, amend or alter its certificate or article of incorporation other
than in a manner which could not reasonably be expected to adversely affect the
rights of the Lenders or the Agent (in their capacity as such).


 


Section 9.4.                                   Maintenance
of Property.  Such Loan Party shall
maintain all of its property necessary in the conduct of its business as
currently conducted, in good operating condition and repair, ordinary wear and
tear excepted.


 


Section 9.5.                                   Insurance.  (a) Such Loan Party shall maintain, with
financially sound and reputable insurers having a rating of at least A-VII or
better by Best Rating Guide, insurance against loss or damage by fire with
extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types as is customary
for Persons engaged in the same or similar business, as the Agent, in its
discretion, or acting at the direction of the Majority Lenders, shall specify,
in amounts, and under policies acceptable to the Agent and the Majority
Lenders. Without limiting the foregoing, such Loan Party shall also maintain
flood insurance, in the event of a designation of the area in which any Real
Estate covered by the Mortgages and any of the Equipment and Inventory located
on such Real Estate is located as “flood prone” or a “flood risk area,”
(hereinafter “SFHA”) as defined by the Flood Disaster Protection Act of
1973, as amended, in an amount to be reasonably determined by the Agent, and
shall comply with the additional requirements of the National Flood Insurance
Program as set forth in said Act. Upon the Majority Lenders’ request, such Loan
Party shall maintain flood insurance for its Inventory and Equipment which is,
at any time, located in a SFHA.


 


(b)                                 Such
Loan Party shall cause the Agent, for the benefit of the Agent and the Lenders,
to be named in each such policy as secured party or mortgagee and sole loss
payee or additional insured in a manner reasonably acceptable to the Agent.
Each policy of insurance shall contain a clause or endorsement requiring the
insurer to give not less than thirty (30) days’ prior written notice to the
Agent in the event of cancellation of the policy for any reason whatsoever and
a clause or endorsement stating that the interest of the Agent shall not be
impaired or invalidated by any act or neglect of any Loan Party or the owner of
any premises for purposes more hazardous than are permitted by such policy. All
premiums for such insurance shall be paid by such Loan Party when due, and
certificates of insurance and, if requested by the Agent or any Lender,
photocopies of the policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the Lenders. If a
Loan Party fails to procure such insurance or to pay the premiums therefor when
due, the Agent may, and at the direction of the Majority Lenders shall, do so
from the proceeds of Revolving Loans.


 


(c)                                  Such
Loan Party shall promptly notify the Agent and the Lenders of any loss, damage,
or destruction to the Collateral having a value greater than $250,000 in the
aggregate for all Loan Parties, whether or not covered by insurance. Such Loan
Party shall, immediately upon learning of the institution of any proceeding for
the condemnation or other


 


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taking of any
of its property, notify the Agent of the pendency of such proceeding, and
agrees that the Agent may participate in any such proceeding, and such Loan
Party from time to time will deliver to the Agent all instruments reasonably
requested by the Agent to permit such participation. The Agent is hereby
authorized to collect all insurance and/or condemnation proceeds in respect of
the Collateral or other property of such Loan Party directly, and to apply or
remit them as follows:


 


(i)                                     With
respect to insurance and/or condemnation proceeds less than $250,000 in the
aggregate in any Fiscal Year relating to property other than Collateral, after
deducting from such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall promptly remit to
the applicable Loan Party such proceeds. With respect to insurance and/or
condemnation proceeds greater than or equal to $250,000 in the aggregate in any
Fiscal Year relating to property other than Collateral, after deducting from
such proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds to the
reduction of the Loans as if such proceeds constituted proceeds of asset sales.


 


(ii)                                  With
respect to insurance and/or condemnation proceeds relating to Collateral other
than Fixed Assets, after deducting from such proceeds the reasonable expenses,
if any, incurred by the Agent in the collection or handling thereof, the Agent
shall apply such proceeds, ratably, to the reduction of the Obligations.


 


(iii)                               With
respect to insurance and/or condemnation proceeds relating to Collateral
consisting of Fixed Assets, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent shall apply such proceeds to the reduction of the Loans as if such
proceeds constituted proceeds of asset sales, or at the option of the Majority
Lenders, may permit or require the applicable Loan Party to use such money, or
any part thereof, to replace, repair, restore or rebuild the relevant Fixed
Assets in a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss, damage, destruction
or condemnation; provided, however, that so long as there does
not then exist any Default or Event of Default, such Loan Party shall be
permitted to use insurance or condemnation proceeds relating to Collateral
consisting of Fixed Assets in an aggregate amount not to exceed $250,000 with
respect to any occurrence, to replace, repair, restore or rebuild the relevant
Fixed Assets in the manner set forth in this sentence; and loss, damage,
destruction or condemnation or purchase other Collateral used or useful in its
business; provided, that such Loan Party first (x) provides the Agent
and the Majority Lenders with plans and specifications for any such repair or
restoration which shall be reasonably satisfactory to the Agent and the
Majority Lenders and (y) demonstrates to the reasonable satisfaction of the
Agent and the Majority Lenders that the funds available to it will be
sufficient to complete such project in the manner provided therein.


 


Section 9.6.                                   Environmental
Laws.  (a) Such Loan Party shall
conduct its business in material compliance with all Environmental Laws
applicable to it, including, without limitation, those relating to the
generation, handling, use, storage, and disposal of any Contaminant, except for
such non-compliances for which the aggregate liability of the Loan


 


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Parties for
all currently pending non-compliances is not reasonably likely to exceed
$250,000. Such Loan Party shall take prompt and appropriate action to respond
to any non-compliance with Environmental Laws, and shall regularly report to
the Agent on such response, except for such non-compliances for which the
aggregate liability of the Loan Parties for all such non-compliances is not
reasonably likely to exceed $250,000.


 


(b)                                 Without
limiting the generality of the foregoing, each Loan Party shall submit to the
Agent and the Lenders annually, commencing on the first Anniversary Date, and
on each Anniversary Date thereafter, an update of the status of each
environmental compliance or environmental liability issue which is reasonably
likely to result in liability in excess of $250,000. The Agent or any Lender
may request copies of technical reports prepared by any Loan Party and its
communications with any Governmental Authority to determine whether such Loan
Party or any of its Subsidiaries is proceeding reasonably to correct, cure or
contest in good faith any alleged non-compliance or environmental liability as
required hereunder. Each Loan Party shall, at the Agent’s or the Majority
Lenders’ reasonable written request and at such Loan Party’s expense, (i)
retain an independent environmental engineer reasonably acceptable to the Agent
to evaluate such non-compliance or liability matters and prepare and deliver to
the Agent, in sufficient quantity for distribution by the Agent to the Lenders,
a report setting forth the results of such evaluation and, if required by
Environmental Law, a proposed plan for responding to such non-compliance or
liability matter described therein, and an estimate of the costs thereof, and
(ii) provide to the Agent and the Lenders a supplemental report of such
engineer whenever the scope of the environmental problems, or the response
thereto or the estimated costs thereof, shall change in any material respect.


 


Section 9.7.                                   Compliance
with ERISA.  Such Loan Party shall,
and shall cause each of its Subsidiaries to: (a) maintain each Plan in material
compliance with the applicable provisions of ERISA, the Code and other
applicable law; (b) make all required contributions to any Plan subject to
Section 412 of the Code; (c) not engage in a transaction that reasonably
could be expected to be subject to Section 4069 or 4212(c) of ERISA; and
(d) promptly file the annual report (IRS Form 5500) for all Plans.


 


Section 9.8.                                   Mergers,
Consolidations or Sales.  Such Loan
Party shall not enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except (a) for sales of Inventory in the ordinary course of
its business; (b) for sales or other dispositions of assets as and to the
extent permitted by Section 6.12 and Section 4.3; (c)
for licenses of Proprietary Rights in the ordinary course of business, provided
that no such sales or licenses could reasonably be expected to have a Material
Adverse Effect; (d) any Subsidiary of a Loan Party may merge into or
consolidate with a Loan Party so long as no Default or Event of Default is existing
and the resulting merger or consolidation would not have a Material Adverse
Effect; (e) any Asset Sale with respect to which the Loan Parties receive
aggregate consideration of less than $1,000,000 (so long as no Default or Event
of Default then exists or would result therefrom); (f) any Asset Sale with
respect to which the Loan Parties receive aggregate consideration of $1,000,000
or more pursuant to which (i) such Loan Party receives consideration at the
time of such Asset Sale at least equal to the fair market value


 


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(evidenced by
a resolution of the board of directors of New World set forth in an officers’
certificate delivered to the Agent) of the assets or properties issued or sold
or otherwise disposed of and (ii) at least 85% of the consideration therefor
received by such Loan Party is in the form of cash or cash equivalents (provided
that the amount of (x) any liabilities (as shown on such Loan Party’s most
recent balance sheet) of such Loan Party (other than contingent liabilities and
liabilities that are by their terms subordinated to the Obligations) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases such Loan Party from further liability and (y) any
notes or other obligations received by such Loan Party from such transferee
that are converted by such Loan Party into cash within 360 days of the closing
of such Asset Sale (to the extent of the cash received) shall be deemed to be cash
for purposes of this provisions) (so long as no Default or Event of Default
then exists or would result therefrom); and (g) a Primary Offering of Capital
Stock of Einstein (as long as (i) no Default or Event of Default then exists or
would result therefrom and (ii) Einstein remains a Guarantor). The inclusion of
proceeds in the definition of Collateral shall not be deemed to constitute the
Agent’s or any Lender’s consent to any sale or other disposition of the
Collateral except as expressly permitted herein.


 


Section 9.9.                                   Distributions;
Capital Change; Restricted Investments. 
Neither such Loan Party nor any of its Subsidiaries shall (a) directly
or indirectly declare or make, or incur any liability to make, any
Distribution, except Permitted Distributions, (b) make any change in its
capital structure which could reasonably be expected to have a Material Adverse
Effect or (c) make any Restricted Investment, except (x) for loans to
franchisees and area developers in an amount not to exceed $250,000 in the aggregate
for all Loan Parties in any Fiscal Year and (y) the existing loans to
franchisees set forth on Schedule 9.9 hereto. Notwithstanding the
foregoing, New World may (x) consummate a Qualified Recapitalization or (y)
redeem Series Z Preferred Stock to be issued pursuant to a Qualified
Recapitalization; provided that in the case of each of the foregoing (i)
no Default or Event of Default then exists or would result therefrom and (ii)
after giving effect thereto the Total Exposure will not exceed $5,000,000.


 


Section 9.10.                             Transactions
Affecting Collateral or Obligations. 
Neither such Loan Party nor any of its Subsidiaries shall enter into any
transaction which would be reasonably expected to have a Material Adverse
Effect.


 


Section 9.11.                             Guaranties.  Neither such Loan Party nor any of its
Subsidiaries shall make, issue, or become liable on any Guaranty, except
Guaranties of the Obligations in favor of the Agent and Guaranties of
obligations under the Senior Secured Debt Documents.


 


Section 9.12.                             Debt.  Neither such Loan Party nor any of its
Subsidiaries shall incur or maintain any Debt, other than without duplication:
(a) the Obligations; (b) the Senior Secured Debt other than in connection with
the issuance of any “Additional Notes” pursuant to (and as defined in) the
Senior Secured Debt Documents; (c) other Debt existing on the Closing Date and
described on Schedule 9.12; (d) in the case of the Borrowers and
their Subsidiaries, Purchase Money Obligations in an aggregate principal amount
for all Loan Parties not to exceed $3,000,000 at any time outstanding during
the term of this Agreement; (e) Debt between and


 


75

















 


among Loan Parties (which Debt shall be
subordinated to the Obligations on terms and conditions satisfactory to the
Agent and which shall be pledged under the Pledge Agreement); (f) trade
payables and contractual obligations to suppliers and customers incurred in the
ordinary course of business; (g) renewals, extensions or refinancings of Debt
referred to in clauses (b), (c) and (f), provided that such renewals,
extensions or refinancings (i) do not result in an increase in the outstanding
principal balances thereof, (ii) are on terms which are not less favorable to
the Loan Parties than those in effect prior to such renewal, extension or
refinancing and (iii) are otherwise on terms reasonably acceptable to the
Agent; (h) Guaranties permitted pursuant to Section 9.11; (i)
Capital Leases of Fixed Assets; provided, that (x) Liens securing the
same attach only to the Fixed Assets acquired with the proceeds of such Debt,
(y) the acquisition of any Fixed Asset that is financed pursuant to a Capital
Lease is otherwise permitted hereunder, and (z) the aggregate amount of Debt
permitted by this clause (i) shall not exceed $3,000,000; (j) interest rate
swap obligations (to the extent such obligations arise in connection with
interest rate or similar agreements permitted pursuant to clause (i) of the
definition of Restricted Investment); (k) the issuance of Disqualified Stock in
connection with a Qualified Recapitalization; and (l) other unsecured Debt in
an aggregate principal amount not exceeding $2,000,000 at any time outstanding.


 


Section 9.13.                             Prepayment.  Neither such Loan Party nor any of its
Subsidiaries shall voluntarily prepay, redeem or acquire any Debt other than
pursuant to a refinancing thereof, permitted under Section 9.12 of
this Agreement, except the prepayment of the Obligations in accordance with the
terms of this Agreement.  No Loan Party
shall make any principal or interest payment on account of any Senior Secured
Debt, or acquire any Senior Secured Debt, except for payments of scheduled
interest on the dates set forth therefor in the Senior Secured Debt Documents.


 


Section 9.14.                             Transactions with
Affiliates.  Except as set forth
below, no Loan Party shall sell, transfer, distribute, or pay any money or
property, including, but not limited to, any fees or expenses of any nature
(including, but not limited to, any fees or expenses for management services),
to any Affiliate, or lend or advance money or property to any Affiliate, or
invest in (by capital contribution or otherwise) or purchase or repurchase any
stock or indebtedness, or any property, of any Affiliate, or become liable on
any Guaranty of the indebtedness, dividends, or other obligations of any
Affiliate.  Notwithstanding the
foregoing, while no Default or Event of Default has occurred and is continuing
a Loan Party may engage in transactions with Affiliates in the ordinary course
of business, in amounts and upon terms fully disclosed to the Agent and the
Lenders, and no less favorable to such Loan Party than would be obtained in a
comparable arm’s-length transaction with a third party who is not an Affiliate,
and may consummate the transactions contemplated by the Equity Restructuring
Agreement (so long as no Default or Event of Default shall result therefrom).


 


Section 9.15.                             Investment Banking and
Finder’s Fees.  Such Loan Party
shall not pay or agree to pay, or reimburse any other party with respect to,
any investment banking or similar or related fee, underwriter’s fee, finder’s
fee, or broker’s fee to any Person in connection with this Agreement.  Each Loan Party shall defend and indemnify
the Agent and the Lenders against and hold them harmless from all claims of any
Person that the Agent or any Lender is


 


76

















 


obligated to
pay for any such fees, and all costs and expenses (including without
limitation, attorneys’ fees) incurred by the Agent and/or any Lender in
connection therewith.


 


Section 9.16.                             Negative
Pledge.  Such Loan Party shall not
enter into an agreement with any Person other than the Agent and the Lenders
pursuant to which such Loan Party is not permitted to grant a Lien to the Agent
on all of its then owned and thereafter acquired assets.


 


Section 9.17.                             Business
Conducted.  Such Loan Party shall
not engage, directly or indirectly, in any line of business other than the
businesses in which such Loan Party is engaged on the Closing Date and other
businesses reasonably related thereto.


 


Section 9.18.                             Liens.  Such Loan Party shall not create, incur,
assume or permit to exist any Lien on any property now owned or hereafter
acquired by any of them, except Permitted Liens.


 


Section 9.19.                             Sale
and Leaseback Transactions.  Such
Loan Party shall not, directly or indirectly, enter into any arrangement with
any Person providing for such Loan Party to lease or rent property that such
Loan Party has sold or will sell or otherwise transfer to such Person other
than any such transaction permitted by Section 9.8(e).


 


Section 9.20.                             New
Subsidiaries; Activation Event. 
(a)  The Loan Parties shall (i)
inform the Agent within three (3) Business Days of the creation or acquisition
of any direct or indirect Subsidiary (provided, that nothing in this Section 9.20
shall be deemed to permit any Loan Party to create or acquire any Subsidiary in
contravention of Section 9.9), (ii) cause each direct or indirect
Subsidiary not in existence on the date hereof (other than a Non-Restricted
Subsidiary) to execute and deliver to the Agent an addendum, in the form of Exhibit
E hereto (an “Addendum”), pursuant to which such Subsidiary shall
become a Guarantor and pledge all of its assets as security for its Obligations
hereunder and under the other Loan Documents, (iii) cause such Subsidiary to
execute the Pledge Agreement, as a pledgor, and (iv) cause the direct parent of
each such Subsidiary to pledge all of the Equity Interests of such Subsidiary
pursuant to the Pledge Agreement.  In
connection therewith, the Loan Parties or any applicable Subsidiary shall
provide such resolutions, certificates and opinions of counsel as shall be
reasonably requested by the Agent.


 


(b)                                 The
Loan Parties shall (i) inform the Agent within three (3) Business Days of the
occurrence of an Activation Event with respect to any Non-Restricted
Subsidiary, (ii) cause such Subsidiary to execute and deliver to the Agent an
Addendum, pursuant to which such Subsidiary shall become a Guarantor and pledge
all of its assets as security for its Obligations hereunder and under the other
Loan Documents, (iii) cause such Subsidiary to execute the Pledge Agreement, as
a pledgor, and (iv) cause the direct parent of each such Subsidiary to pledge
all of the Equity Interests of such Subsidiary pursuant to the Pledge
Agreement.  In connection therewith, the
Loan Parties or any applicable Subsidiary shall provide such resolutions,
certificates and opinions of counsel as shall be reasonably requested by the
Agent.


 


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Section 9.21.                             Fiscal Year.  Such Loan Party shall not change its Fiscal
Year.  All Loan Parties shall maintain
the same Fiscal Year end (which shall be December 31 of each year), fiscal
quarter end and fiscal month end.


 


Section 9.22.                             Capital
Expenditures.  The aggregate amount
of the Borrowers’ Committed Capital Expenditures at any time shall not exceed
the greater of (x) $15,000,000 and (y) 35% of New World’s and its Subsidiaries’
EBITDA for the most recent Test Period.


 


Section 9.23.                             Operating Lease
Obligations.  Such Loan Party shall
not enter into, or suffer to exist, any lease of real or personal property as
lessee or sublessee (other than a Capital Lease, but in any event including
such Loan Party’s operating leases in existence on the Closing Date with
respect to its office and manufacturing space and equipment), provided that
such Loan Party may do so if, after giving effect thereto, the aggregate amount
of Rentals (as hereinafter defined) payable by the Borrowers and their
Subsidiaries in any Fiscal Year in respect of such lease and all other such
leases would not exceed $40,000,000 (such amount being referred to herein as “Permitted
Rentals”).  The term “Rentals”
means all payments due from the lessee or sublessee under a lease, including,
without limitation, basic rent, percentage rent, property taxes, utility or
maintenance costs, and insurance premiums.


 


Section 9.24.                             Minimum
EBITDA.  New World and its
Subsidiaries will maintain EBITDA for each Test Period ended at the end of each
fiscal quarter, commencing with the fiscal quarter ending June 30, 2003 of
not less than $33,000,000.


 


Section 9.25.                             Operating Cash Flow
Coverage Ratio.  New World and its
consolidated Subsidiaries will maintain an Operating Cash Flow Coverage Ratio
(i) of not less than 1.0:1 for the Test Period ended at the end of the fiscal
quarter immediately preceding any fiscal quarter in which Total Exposure is
$10,000,000 or more at any time (such immediately preceding fiscal quarter
being an “OCF Test Period”) and (ii) of not less than 1.1:1 for each
Test Period ended at the end of each fiscal quarter thereafter; provided,
however, if Total Exposure is $7,500,000 or less for any 60 consecutive
calendar day period following an OCF Test Period, then the provisions of this Section 9.25
shall not apply as of the Test Period ended at the end of the fiscal quarter in
which such 60 day period ends and thereafter (unless and until another OCF Test
Period occurs, in which case the provisions set forth in Section 9.25
shall apply).


 


Section 9.26.                             Minimum Net Worth.  To the extent that the net worth of New
World and its Subsidiaries is reduced in any Fiscal Year (or the period
June 30, 2003 through December 31, 2003) from the amount of net worth
from the prior Fiscal Year, the amount of any such reduction shall not exceed
$5,000,000 (the following non-cash charges in net worth calculation shall be
excluded: deemed dividends, non-cash interest, write-offs of goodwill,
cumulative change in derivatives, extinguishments of Debt, impairments and
reorganization provisions); provided, however, if the net worth
of New World and its Subsidiaries declines during any Fiscal Year (or the
period June 30, 2003 through December 31, 2003) (excluding write-offs
of goodwill and debt origination costs), the write-off of net property, plant
and equipment will not exceed $10,000,000 in such Fiscal Year.


 


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Section 9.27.                             Use
of Proceeds.  Such Loan Party shall
not use any portion of the Loan proceeds, directly or indirectly, (a) to
purchase or carry Margin Stock, (b) to repay or otherwise refinance
indebtedness of a Loan Party or others incurred to purchase or carry Margin
Stock, (c) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (d) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.


 


Section 9.28.                             Amendments.  Such Loan Party shall not, directly or
indirectly, amend, modify, supplement, terminate, waive compliance with, or
assent to non-compliance with, any material term or provision of (a) such Loan
Party’s certificate of incorporation or by-laws in a manner that materially
affects the Loan Parties or the Lenders and (b) any of the Senior Secured Debt
Documents, except (x) in connection with any transaction otherwise permitted by
this Agreement or (y) for any such amendment, modification, supplement, waiver
or assent to any term or provision of any Senior Secured Debt Document which
would not have the effect of (i) increasing the principal amount or applicable
interest rate (payable in cash or otherwise) or advancing the maturity date or
any payment date of any Senior Secured Debt or changing any pay-in-kind
interest provisions, (ii) changing any provisions therein relating to the
subordination of the Senior Secured Debt, (iii) imposing any additional event
of default, right of acceleration, obligation, restriction, covenant or
condition upon any Loan Party, (iv) changing in a manner more adverse to any
Loan Party than that existing on the Closing Date, or adding, any event of
default, covenant, restriction or condition, (v) further restricting the
ability of any Loan Party to amend, modify, supplement, waive compliance with
or assent to noncompliance with any term, provision or condition of any Loan
Document or (vi) otherwise materially adversely affecting the Loan Parties or
the Lenders.


 


Section 9.29.                             Maintain
Operating Accounts.  Such Loan Party
shall maintain all of its operating accounts and cash management arrangements
with the Agent or with other financial institutions approved by the Agent and
on terms (which shall include obtaining lockbox and blocked account agreements)
satisfactory to the Agent in its reasonable discretion.


 


Section 9.30.                             Further Assurances.  Such Loan Party shall execute and deliver,
or cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time, reasonably request to carry out
the terms and conditions of this Agreement and the other Loan Documents.


 


Section 9.31.                             Post-Closing.  Within 60 days of the Closing Date, the Loan
Parties shall cause the filings in the United States Patent and Trademark
Office listed on Schedule 9.31 to be terminated (and the Loan
Parties hereby represent and warrant that there is no Debt or other obligation
owing by any Loan Party to any of the Persons identified in such filings as
“assignee” or “secured party”).


 


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ARTICLE X


 


CONDITIONS OF LENDING


 


Section 10.1.                             Conditions Precedent to
Making of Loans on the Closing Date. The obligation of the Lenders to make
the initial Revolving Loans on the Closing Date, and the obligation of the
Agent to cause to be issued or provide Credit Support for any Letter of Credit
on the Closing Date and the obligation of the Lenders to participate in Letters
of Credit issued on the Closing Date or in Credit Support for any such Letters
of Credit, are subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent and each Lender:


 


(a)                                  This
Agreement and the other Loan Documents have been executed by each party thereto
and the Loan Parties shall have performed and complied with, in all respects,
all covenants, agreements and conditions contained herein and in the other Loan
Documents which are required to be performed or complied with by the Loan
Parties before or on such Closing Date.


 


(b)                                 All
representations and warranties made by the Loan Parties hereunder and in the
other Transaction Documents shall be true and correct as of the Closing Date as
if made on such date.


 


(c)                                  Upon
making the Revolving Loans on the Closing Date (including such Revolving Loans
made to finance all fees or otherwise, pursuant to Section 4.7, as
reimbursement for fees, costs and expenses then payable under this Agreement
and the other Loan Documents) and with all of its obligations current, after
giving effect to the consummation of the transactions contemplated by the
Transaction Documents on the Closing Date, the Borrowers would have not more
than $4,000,000 in Revolving Loans outstanding.


 


(d)                                 Upon
the issuance of the Letters of Credit or Credit Support on the Closing Date,
the Borrowers would have not more than $2,500,000 in Letter of Credit Exposure.


 


(e)                                  No
Default or Event of Default shall exist on the Closing Date, or would exist
after giving effect to the Loans to be made on such date or the Letters of Credit
or Credit Support to be issued on such date.


 


(f)                                    The
Agent and the Lenders shall have received customary opinions of counsel for the
Loan Parties and their Subsidiaries, each such opinion to be in a form, scope
and substance reasonably satisfactory to the Agent, the Lenders and their
respective counsel.


 


(g)                                 The
Agent shall have received:


 


(i)                                     acknowledgment
copies of proper UCC financing statements, duly filed on or prior to the
Closing Date, under the UCC of all jurisdictions that the Agent may reasonably
deem necessary or desirable in order to perfect the Agent’s Lien and evidence


 


80

















 


satisfactory to the Agent of compliance with
the Federal Assignment of Claims Act, if applicable;


 


(ii)                                  UCC-3
Termination Statements and such other instruments, in form and substance
satisfactory to the Agent, to evidence the repayment in full of, or the
existence of arrangements satisfactory to the Agent for the repayment in full
of, existing credit arrangements to the extent necessary to terminate all Liens
on the Collateral and the termination of all commitments to lend thereunder to
the Borrowers, and the termination of all security interests on the Collateral
securing such indebtedness;


 


(iii)                               evidence
of filing and recording of the Patent and Trademark Agreement; and


 


(iv)                              evidence
that each other document required by law or requested by the Agent to be filed,
registered or recorded in order to create in favor of the Agent (for its own
benefit and for the benefit of the Lenders) a first priority perfected Lien in
the Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested.


 


(h)                                 All
Equity Interests of New World’s Subsidiaries shall be owned by New World or one
or more of New World’s Subsidiaries, in each case free and clear of any Lien,
charge or encumbrance (other than the Liens granted pursuant to the Senior
Secured Debt Documents); the Agent, on behalf of itself and the Lenders, shall
have a valid and perfected first priority lien and security interest in such
Equity Interests and in the other Collateral. 
All filings, recordations and searches necessary or desirable in
connection with such Liens and security interests shall have been duly made;
and all filings and recording fees and taxes in respect thereof shall have been
duly paid.  Without limiting the
generality of the foregoing, the Agent shall have received favorable title or
search reports, prepared by one or more nationally recognized title insurance
companies and covering such real properties of the Borrowers and their
Subsidiaries as the Agent shall have requested, and with respect to such of the
real properties of the Borrowers and their Subsidiaries, such other information
as the Agent shall have requested and such consents and estoppel letters from
lessors of leased property as the Agent shall have requested.


 


(i)                                    The
Agent shall have received:  (i) a copy
of the certificate or articles of incorporation or constitutive documents, in
each case amended to date, of each of the Loan Parties, certified as of a
recent date by the Secretary of State or other appropriate official of the
state of its organization and dated as of a recent date; (ii) a certificate of
the Secretary of each of the Loan Parties, dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of such Loan
Party’s by-laws as in effect on the date of such certificate and at all times
since a date prior to the date of the resolution described in item (B) below,
(B) that attached thereto is a true and complete copy of a resolution adopted
by such Loan Party’s Board of Directors authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party and that such resolution has not been modified, rescinded or amended and
is in full force and effect, (C) that such Loan Party’s certificate or articles
of incorporation or constitutive documents has not been amended since the date
of the last


 


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amendment thereto shown on the certificate of
good standing furnished hereinabove, and (D) as to the incumbency and specimen
signature of each of such Loan Party’s officers executing this Agreement or any
other Loan Document delivered in connection herewith or therewith, as
applicable; (iii) a certificate of another of such Loan Party’s officers as to
incumbency and signature of its Secretary; and (iv) such other corporate
resolutions, certificates and other documents as the Agent or any Lender may
request.


 


(j)                                     The
Agent shall have received certificates of good standing, existence or its
equivalent with respect to each Loan Party certified as of a recent date by the
appropriate Governmental Authorities of the state or other jurisdiction of
organization and in each other jurisdiction in which qualification is necessary
in order for such Loan Party to own or lease its property and conduct its
business.


 


(k)                                  The
Agent shall have received and been satisfied with the results of the accounting
review and due diligence report prepared by Freed Maxick relating to the
Borrowers.


 


(l)                                     The
Borrowers shall have paid all fees and expenses of the Agent, and the Attorney
Costs incurred in connection with any of the Loan Documents and the
transactions contemplated thereby.


 


(m)                               The
Agent shall be satisfied with the amount, type and terms and conditions of all
insurance maintained by the Borrowers and their Subsidiaries, and the Agent
shall have received endorsements naming the Agent, on behalf of itself and the
other Lenders, as an additional insured or loss payee, as the case may be,
under all insurance policies to be maintained with respect to the Collateral.


 


(n)                                 The
Agent shall be satisfied with the final terms and conditions of the
Restructuring, including, without limitation, all legal and tax aspects thereof
and all documentation with respect thereto shall be in form and substance
reasonably satisfactory to the Agent.


 


(o)                                 The
Agent shall have received evidence satisfactory to it that New World shall have
received no less than $155,000,000 in cash as proceeds from the issuance by New
World of secured subordinated promissory notes (the greater of such amount and
the actual proceeds from such issuance, the “Senior Secured Debt”)
pursuant to the Senior Secured Debt Documents, on terms and conditions
satisfactory to the Agent, including, but not limited to, the subordination
provisions and a maximum coupon rate, which on a pro forma basis as of the
Closing Date, will result in the ratio of EBITDA of New World and its
Subsidiaries for the twelve month period ending April 30, 2003 to the
total cash interest expense of New World and its Subsidiaries for such period
being at least 1.5:1.0.


 


(p)                                 The
Agent shall have received evidence that New World and its Subsidiaries had, on
a consolidated basis, EBITDA for the twelve consecutive calendar month period
ended April 30, 2003 of not less than $37,500,000.


 


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(q)                                 The
Agent shall have completed and been satisfied with its assessment of the Loan
Parties’ management team and with its site visits to the Loan Parties.


 


(r)                                    The
Agent and its counsel shall have completed a due diligence investigation of
each Loan Party and any of their Subsidiaries in scope, and with results,
satisfactory to the Agent and shall have been given such access to the
management, records, books of account, contracts and properties of the Loan
Parties and their respective Subsidiaries and shall have received such
financial, business and other information regarding the Loan Parties and their
respective Subsidiaries as they shall have requested, including, without
limitation, information as to contingent liabilities (including without limitation
actuarial dates relating to tax matters, environmental matters (including Phase
I environmental reports, if applicable), obligations under ERISA and welfare
plans, collective bargaining agreements and other arrangements with employees).


 


(s)                                 All
proceedings taken in connection with the execution of this Agreement and all
other Transaction Documents and all documents and papers relating thereto shall
be satisfactory in form, scope, and substance to the Agent.


 


(t)                                   The
Agent shall be reasonably satisfied with the corporate and legal structure and
capitalization of the Borrowers and the other Loan Parties, including, without
limitation, the charter and bylaws (or operating agreement, as the case may be)
of the Borrowers and the other Loan Parties and each agreement and instrument
relating thereto.


 


(u)                                There
shall have occurred no Material Adverse Effect and all information provided by
or on behalf of any Loan Party to the Agent or the Lenders shall be true and
correct in all material aspects.  There shall
have occurred no material adverse change in the capital markets (as determined
by the Agent in its reasonable discretion). 
There shall have occurred no material adverse change in the facts and
information presented to the Agent or any Lender in connection with any Loan
Party, any of the Collateral, any of the Transaction Documents or any of the
transactions contemplated thereby or in the Agent’s or any Lender’s
understanding of same.


 


(v)                                There
shall exist no action, suit, investigation, litigation or proceeding pending or
threatened in any court or before any arbitrator or governmental
instrumentality that (i) could reasonably be expected to have a Material
Adverse Effect or (ii) purports to affect the Restructuring, any of the Loan
Documents or other Transaction Documents or any of the transactions
contemplated thereby in any material respect.


 


(w)                              All
governmental, if any, and third party consents and approvals necessary in
connection with the Loan Documents, the other Transaction Documents, the Restructuring
and the other transactions contemplated by the Transaction Documents shall have
been obtained and shall remain in effect; all applicable waiting periods shall
have expired without any action being taken by any competent authority; and no
law or regulation shall be applicable in the reasonable judgment of the Agent
that restrains, prevents or imposes materially adverse conditions upon the


 


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Restructuring or any of the Transaction
Documents or any of the transactions contemplated thereby.


 


(x)                                   The
Agent shall have received and been reasonably satisfied with the audited
financial statements of New World and its Subsidiaries for the Fiscal Year
ended December 31, 2002, as well as the interim monthly financial
statements for the Borrowers dated the end of the most recent month and
year-to-date periods for which financial statements are available and forecasts
prepared by management of the Borrowers, in form and substance reasonably
satisfactory to the Agent, including balance sheets, income statements and cash
flow statements on a monthly basis for the first twelve calendar months
following the Closing Date and on an annual basis for each Fiscal Year
thereafter.


 


(y)                                 The
Borrowers shall have demonstrated to the Agent’s reasonable satisfaction (i)
that the operations of the Borrowers and their respective Subsidiaries comply
with applicable environmental, health and safety statutes and regulations; (ii)
that such operations are not the subject of any federal, state or local
investigation evaluating the need for remedial action, involving a material
expenditure, to respond to a release or threatened release of any toxic or
hazardous waste or substance in the environment; and (iii) that no Borrower has
any contingent liability deemed material by the Agent in connection with any
release or threatened release of any toxic or hazardous waste or substance into
the environment.


 


(z)                                   The
Agent shall be reasonably satisfied that the Borrowers will be able to meet their
obligations under all employee and retiree welfare plans, that each Borrower’s
employee benefit plans are, in all material respects, funded in accordance with
the minimum statutory requirements, that no material “reportable event” (as
defined in ERISA, but excluding events for which reporting has been waived) has
occurred as to any such employee benefit plan and that no termination of, or
withdrawal from, any such employee benefit plan has occurred or is contemplated
that could reasonably be expected to result in a material liability.


 


(aa)                            The
Agent shall have received blocked account agreements, each in form and
substance satisfactory to the Agent, with respect to such bank accounts of the
Loan Parties as requested by the Agent.


 


(bb)                          The
Agent shall have received the Intercreditor Agreement, duly executed by the
parties thereto, and the Agent shall be satisfied with the terms and conditions
thereof, including, but not limited to, the subordination provisions contained
therein, whereby the security interests securing the Senior Secured Debt will
be subordinated in right of priority and payment, in all circumstances, to the
Agent’s Liens.


 


(cc)                           The
Borrowers shall have satisfied such other conditions precedent reasonably
requested by the Agent.


 


The acceptance
by the Borrowers of any Revolving Loans made on the Closing Date or the
issuance of any Letters of Credit or Credit Support on the Closing Date shall
be deemed to be a representation and warranty made by each Borrower to the
effect that all of the


 


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conditions precedent to the making of such
Loans or the issuance of such Letters of Credit or Credit Support have been
satisfied, with the same effect as delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of such Borrower, dated as of the
Closing Date, to such effect.


 


Execution and
delivery to the Agent by a Lender of a counterpart of this Agreement shall be
deemed confirmation by such Lender that (i) all conditions precedent in this Section 10.1
have been fulfilled to the satisfaction of such Lender or waived by such Lender
and (ii) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently
and without reliance on any Agent or any other Lender as to the satisfaction of
any condition precedent set forth in this Section 10.1.


 


Section 10.2.                             Conditions Precedent to
Each Loan.  The obligation of the
Lenders to make each Loan, including the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause to be issued or to provide
Credit Support for any Letter of Credit, shall be subject to the further
conditions precedent that on and as of the date of any such extension of
credit:


 


(a)                                  the
following statements shall be true, and the acceptance by any Borrower of any
extension of credit shall be deemed to be a statement to the effect set forth
in clauses (i), (ii), (iii), (iv) and (v), with the same effect as the delivery
to the Agent and the Lenders of a certificate signed on behalf of such Borrower
by a Responsible Officer of such Borrower, dated the date of such extension of
credit, stating that:


 


(i)                                     the
representations and warranties contained in this Agreement and the other Loan
Documents are correct in all material respects on and as of the date of such
extension of credit as though made on and as of such date, other than any such
representation or warranty which relates to a specified prior date; and


 


(ii)                                  no
Material Adverse Effect has occurred since December 31, 2002; and


 


(iii)                              no
event has occurred and is continuing, or would result from such extension of
credit, which constitutes a Default or an Event of Default; and


 


(iv)                             the
aggregate Dollar amount that the Loan Parties are obligated to pay or have the
right to receive under the Excluded Agreements does not exceed $1,000,000 on
and as of the date of such extension of credit; and


 


(v)                                the
aggregate Dollar amounts of the book value of the Coca-Cola Equipment does not
exceed $200,000 on and as of the date of such extension of credit; and


 


(b)                                the
amount of the Availability shall be sufficient to make such Revolving Loan or
permit the issuance of such Letter of Credit or Credit Support without
exceeding the Availability; provided, however, that the foregoing
conditions precedent are not conditions to


 


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each Lender participating in or reimbursing
ASB or the Agent for such Lenders’ Pro Rata Share of any ASB Loan or Agent
Advance as provided in Sections 2.2(h), (i) and (j) or
participating in any Letter of Credit or Credit Support as provided in Section 2.4(f).


 


ARTICLE XI


 


DEFAULT; REMEDIES


 


Section 11.1.                             Events of Default.  It shall constitute an event of default (“Event
of Default”) if any one or more of the following shall occur for any
reason:


 


(a)                                  any
failure to pay the principal of or interest or premium on any of the
Obligations when due or any fees when due, whether upon demand or otherwise;


 


(b)                                 any
representation or warranty made or deemed made by any Loan Party in this
Agreement or by any Loan Party in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by any Loan Party at any time
to the Agent or any Lender shall prove to be untrue in any material respect as
of the date on which made, or deemed made, or furnished;


 


(c)                                  (i)
any default shall occur in the observance or performance of any of the
covenants and agreements contained in this Agreement any other Loan Document,
or any other agreement entered into at any time to which any Borrower or any
other Loan Party and the Agent or any Lender are party and such default shall
continue for a period of 20 days after the earlier of knowledge thereof by a
Loan Party or notice thereof having been given to any Loan Party by the Agent
for all such covenants and agreements other than those contained in Article VII
and Article IX (excluding Sections 9.1, 9.4 and the
first sentence of Section 9.6(b), in which case such 20-day cure
period shall apply) for which no grace period shall apply, or (ii) if any such
agreement or document shall terminate (other than in accordance with its terms
or the terms hereof or with the written consent of the Agent and the Majority
Lenders) or become void or unenforceable, without the written consent of the
Agent and the Majority Lenders;


 


(d)                                 default
shall occur with respect to any Debt (other than the Obligations) in an
outstanding principal amount which exceeds $1,000,000 or under any agreement or
instrument under or pursuant to which any such Debt may have been issued,
created, assumed, or guaranteed by any Loan Party, and such default shall
continue for more than the period of grace, if any, therein specified, if the
effect thereof (with or without the giving of notice or further lapse of time
or both) is to accelerate, or to permit the holders of any such Debt to
accelerate, the maturity of any such Debt; or any such Debt shall be declared
due and payable or be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or any such Debt
shall not be paid upon the scheduled maturity thereof;


 


(e)                                  any
Loan Party shall (i) file a voluntary petition in bankruptcy or file a
voluntary petition or an answer or otherwise commence any action or proceeding
seeking


 


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reorganization, arrangement or readjustment
of its debts or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state, federal
or foreign, now or hereafter existing, or consent to, approve of, or acquiesce
in, any such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;


 


(f)                                    an
involuntary petition or proposal shall be filed or an action or proceeding
otherwise commenced seeking reorganization, arrangement, consolidation or
readjustment of the debts of any Loan Party or for any other relief under the
federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state, federal or foreign, now or hereafter existing and
either (i) such petition, proposal, action or proceeding shall not have been
dismissed within a period of sixty (60) days after its commencement or (ii) an
order for relief against such Loan Party shall have been entered in such
proceeding;


 


(g)                                 a
receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee or
similar officer for any Loan Party or for all or any part of its property shall
be appointed and shall continue undischarged for sixty (60) days or more; or a
warrant of attachment, execution or similar process shall be issued against all
or any part of the property of any Loan Party;


 


(h)                                 any
Loan Party shall file a certificate of dissolution under applicable state or
foreign law or shall be liquidated, dissolved or wound-up or shall commence or
have commenced against it any action or proceeding for dissolution, winding-up
or liquidation, or shall take any corporate action in furtherance thereof;


 


(i)                                     all
or any material part of the property of any Loan Party shall be nationalized,
expropriated or condemned, seized or otherwise appropriated, or custody or
control of such property or of any Loan Party shall be assumed by any
Governmental Authority or any court of competent jurisdiction at the instance
of any Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;


 


(j)                                    any
guaranty of the Obligations shall be terminated, revoked or declared void or
invalid;


 


(k)                                 one
or more judgments or orders for the payment of money aggregating in excess of
$1,000,000, shall be rendered against any Loan Party (to the extent not covered
by independent third party insurance as to which the insurer does not dispute
coverage), and the same shall remain unsatisfied, unvacated or unstayed pending
appeal for a period of sixty (60) days after the entry thereof;


 


(l)                                    any
loss, theft, damage or destruction of any item or items of Collateral or other
property of any Loan Party occurs which (i) could reasonably be expected to
cause a Material Adverse Effect or (ii) is material in amount and is not
adequately covered by insurance;


 


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(m)                               there
occurs a Material Adverse Effect;


 


(n)                                 there
is filed against any Loan Party any civil or criminal action, suit or
proceeding under any federal, state or foreign racketeering statute (including,
without limitation, the Racketeer Influenced and Corrupt Organization Act of
1970), which action, suit or proceeding (1) is not dismissed within sixty (60)
days, and (2) could result in the confiscation or forfeiture of any material
portion of the Collateral;


 


(o)                                 for
any reason other than the failure of the Agent to take any action available to
it to maintain perfection of the Agent’s Liens, pursuant to the Loan Documents,
any Loan Document ceases to be in full force and effect or any Lien with
respect to any material portion of the Collateral intended to be secured
thereby ceases to be, valid, perfected and prior to all other Liens (other than
Permitted Liens) or is terminated, revoked or declared void;


 


(p)                                 (i)
an ERISA Event shall occur with respect to a Pension Plan or Multi-employer
Plan which has resulted or could reasonably be expected to result in liability
of any Loan Party under Title IV of ERISA to the Pension Plan, Multi-employer
Plan or the PBGC (other than premiums due and not delinquent under
Section 4007 of ERISA) in an aggregate amount in excess of $250,000; (ii)
the aggregate amount of Unfunded Pension Liability among all Pension Plans at
any time exceeds $250,000; or (iii) any Loan Party or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of
ERISA under a Multi-employer Plan in an aggregate amount in excess of $250,000;


 


(q)                                there
occurs a Change of Control; or


 


(r)                                   the
subordination provisions of the Intercreditor Agreement or of any Senior
Secured Debt shall for any reason be revoked or invalidated or the validity or
enforceability thereof be contested in a court of law by appropriate
proceedings or an event of default occurs under any agreement or instrument evidencing
any Senior Secured Debt.


 


Section 11.2.                            Remedies.  (a) 
If an Event of Default exists, the Agent may, in its discretion, and
shall, at the direction of the Majority Lenders, do one or more of the
following at any time or times and in any order, without notice to or demand on
any Loan Party:  (i) reduce the Maximum
Revolver Amount; (ii) restrict the amount of or refuse to make Revolving Loans;
and (iii) restrict or refuse to arrange for or provide Letters of Credit or
Credit Support.  If an Event of Default
exists, the Agent shall, at the direction of the Majority Lenders, do one or
more of the following, in addition to the actions described in the preceding
sentence, at any time or times and in any order, without notice to or demand on
any Loan Party:  (x) terminate the
Revolving Commitments and this Agreement; (y) declare any or all Obligations to
be immediately due and payable; provided, however, that upon the
occurrence of any Event of Default described in Section 11.1(e), 11.1(f),
11.1(g) or 11.1(h), the Revolving Commitments shall automatically
and immediately expire and all Obligations shall automatically become


 


88

















 


immediately due and payable without notice or
demand of any kind; and (z) pursue its other rights and remedies under the Loan
Documents and applicable law.


 


(b)                                 If
an Event of Default exists:  (i) the
Agent shall have for the benefit of the Agent and the Lenders, in addition to
all other rights of the Agent and the Lenders, the rights and remedies of a
secured party under the UCC; (ii) the Agent may, at any time, take possession
of the Collateral and keep it on any Loan Party’s premises, at no cost to the
Agent or any Lender, or remove any part of it to such other place or places as the
Agent may desire, or the Loan Parties shall, upon the Agent’s demand, at the
Loan Parties’ cost, assemble the Collateral and make it available to the Agent
at a place reasonably convenient to the Agent; and (iii) the Agent may sell and
deliver any Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Agent deems advisable, in
its sole discretion, and may, if the Agent deems it reasonable, postpone or
adjourn any sale of the Collateral by an announcement at the time and place of
sale or of such postponed or adjourned sale without giving a new notice of
sale.  Without in any way requiring
notice to be given in the following manner, each Loan Party agrees that any
notice by the Agent of sale, disposition or other intended action hereunder or
in connection herewith, whether required by the UCC or otherwise, shall
constitute reasonable notice to such Loan Party if such notice is mailed by
registered or certified mail, return receipt requested, postage prepaid, or is
delivered personally against receipt, at least ten (10) days prior to such
action to such Loan Party’s address specified in or pursuant to Section 15.8.  If any Collateral is sold on terms other
than payment in full at the time of sale, no credit shall be given against the
Obligations until the Agent or the Lenders receive payment, and if the buyer
defaults in payment, the Agent may resell the Collateral without further notice
to the Loan Parties.  In the event the
Agent seeks to take possession of all or any portion of the Collateral by
judicial process, each Loan Party irrevocably waives:  (x) the posting of any bond, surety or security with respect
thereto which might otherwise be required; (y) any demand for possession prior
to the commencement of any suit or action to recover any or all of the
Collateral; and (z) any requirement that the Agent retain possession and not
dispose of any Collateral until after trial or final judgment.  Each Loan Party agrees that the Agent has no
obligation to preserve rights to the Collateral or marshal any Collateral for
the benefit of any Person.  Upon and
during the continuance of an Event of Default, the Agent shall be granted a
license or other right to use during an Event of Default, without charge, each
Loan Party’s labels, patents, copyrights, name, trade secrets, trade names,
trademarks, and advertising matter, or any similar property owned by such Loan
Party, in completing production of, advertising or selling any Collateral, and
each Loan Party’s rights under all licenses and all franchise agreements shall
inure to the Agent’s benefit for such purpose. 
The proceeds of sale shall be applied as set forth in Section 4.8.  Subject to the terms and provisions of the
Intercreditor Agreement, the Agent will return any excess to the applicable
Loan Parties and the Loan Parties shall remain liable, jointly and severally,
for any deficiency.


 


(c)                                  If
an Event of Default occurs, each Loan Party hereby waives except as provided
herein and except as prohibited by law, all rights to notice and hearing prior
to the exercise by the Agent of the Agent’s rights to repossess the Collateral
without judicial process or to replevy, attach or levy upon the Collateral
without notice or hearing.


 


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ARTICLE XII


 


TERM AND TERMINATION


 


Section 12.1.                             Term and Termination.  The term of this Agreement shall end on the
Stated Termination Date or earlier as herein provided and all Obligations owing
with respect to the revolving line of credit shall be due and payable, and all
outstanding Letters of Credit shall be cancelled, on the Stated Termination
Date or such earlier date.  The Agent,
upon direction from the Majority Lenders, may terminate this Agreement without
notice upon the occurrence of an Event of Default.  Upon the effective date of termination of this Agreement for any
reason whatsoever, all Obligations (including, without limitation, all unpaid
principal, accrued interest and any early termination or prepayment fees or
penalties) shall become due and payable and the Borrowers shall immediately
arrange for the cancellation of all Letters of Credit then outstanding.  Notwithstanding the termination of this
Agreement, until all Obligations are indefeasibly paid and performed in full in
cash, the Loan Parties shall remain bound by the terms of this Agreement and
shall not be relieved of any of the Obligations hereunder, and the Agent and
the Lenders shall retain all their rights and remedies hereunder (including,
without limitation, the Agent’s Liens in and all rights and remedies with
respect to all then existing and after-arising Collateral).


 


ARTICLE XIII


 


AMENDMENTS; WAIVER; PARTICIPATIONS;
ASSIGNMENTS; SUCCESSORS


 


Section 13.1.                             No
Waivers; Cumulative Remedies.  No
failure by the Agent or any Lender to exercise any right, remedy or option
under this Agreement or any present or future supplement thereto, or in any
other agreement between or among any Loan Party and the Agent and/or any
Lender, or delay by the Agent or any Lender in exercising the same, will
operate as a waiver thereof.  No waiver
by the Agent or any Lender will be effective unless it is in writing, and then
only to the extent specifically stated. 
No waiver by the Agent or the Lenders on any occasion shall affect or
diminish the Agent’s and each Lender’s rights thereafter to require strict
performance by the Loan Parties of any provision of this Agreement.  The Agent’s and each Lender’s rights under
this Agreement will be cumulative and not exclusive of any other right or
remedy which the Agent or any Lender may have.


 


Section 13.2.                             Amendments
and Waivers.  No amendment or waiver
of any provision of this Agreement, and no consent with respect to any
departure by a Loan Party therefrom, shall be effective unless the same shall
be in writing and signed by the Majority Lenders (or by the Agent at the
written request of the Majority Lenders) and the Loan Parties and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such
waiver, amendment or consent shall, unless in writing and signed by all the
Lenders and the Loan Parties and acknowledged by the Agent, do any of the
following:


 


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(a)                                  increase
or extend the Revolving Commitment of any Lender or add an additional loan
facility under this Agreement or add an additional Borrower hereunder;


 


(b)                                 postpone
or delay any date fixed by this Agreement for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder
or under any other Loan Document;


 


(c)                                  reduce
the principal of, or the rate of interest specified herein on, any Loan, or any
fees or other amounts payable hereunder or under any other Loan Document;


 


(d)                                 change
the percentage of the Revolving Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Lenders or any of them
to take any action hereunder;


 


(e)                                  amend
this Section or any provision of this Agreement providing for consent or
other action by all Lenders;


 


(f)                                    release
Collateral other than as permitted by Section 14.11 or release any
Guaranty of the Obligations; or


 


(g)                                 change
the definition of “Majority Lenders”


 


and, provided
further, that no amendment, waiver or consent shall, unless in writing
and signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document.


 


Section 13.3.                             Assignments;
Participations.  (a)  Any Lender may, with the written consent of
the Agent, assign and delegate to one or more Eligible Assignees (each an “Assignee”)
all, or any ratable part of all, of the Loans, the Revolving Commitment and the
other rights and obligations of such Lender hereunder, in a minimum amount of
$1,000,000 or such lesser amount if (i) such assignment and delegation is of
all of the Loans, the Revolving Commitment and other rights and obligations of
such Lender hereunder or (ii) such assignment is to another Lender; provided,
that the Borrowers and the Agent may continue to deal solely and directly with
such Lender in connection with the interest so assigned to an Assignee until
(x) written notice of such assignment, together with payment instructions and
addresses of such Assignee, such forms as may be required from the Assignee by Section 5.1(f)
and related information with respect to the Assignee, shall have been given to
the Borrowers and the Agent by such Lender and the Assignee (as applicable);
(y) such Lender and its Assignee shall have delivered to the Borrowers and the
Agent an Assignment and Acceptance in the form of Exhibit C (“Assignment
and Acceptance”), which shall contain, among other things, a provision
giving ASB the right to repurchase at anytime all of the Loans, the Revolving Commitment
and other rights and obligations of the Assignee at par plus accrued interest
and fees and (z) the assignor Lender or Assignee has paid to the Agent a
processing fee in the amount of $5,000.


 


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(b)                                 From
and after the date that the Agent notifies the assignor Lender that it has
received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support, have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement and the other Loan Documents (and in the
case of an Assignment and Acceptance covering all or the remaining portion of
an assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).


 


(c)                                  By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: 
(i) other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or any
other Loan Party or the performance or observance by the Borrowers or any other
Loan Party of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (iii) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents; (v) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; and (vi) such
Assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Loan Documents
are required to be performed by it as a Lender.


 


(d)                                Immediately
upon each Assignee’s making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Revolving Commitments arising therefrom.  The Revolving  Commitment allocated to each Assignee shall reduce such
Revolving Commitments of the assigning Lender pro  tanto.


 


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(e)                                  Any
Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons not Affiliates of the Borrowers (a “Participant”)
participating interests in any Loans, the Revolving Commitment of that Lender
and the other interests of that Lender (the “originating Lender”)
hereunder and under the other Loan Documents; provided, however,
that (i) the originating Lender’s obligations under this Agreement shall remain
unchanged, (ii) the originating Lender shall remain solely responsible for the
performance of such obligations, (iii) the Loan Parties and the Agent shall
continue to deal solely and directly with the originating Lender in connection
with the originating Lender’s rights and obligations under this Agreement and
the other Loan Documents, and (iv) no Lender shall transfer or grant any
participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document (except for any such amendment, consent or waiver that
reduces or postpones any amounts payable in which such Participant is
participating or releases all or substantially all of the Collateral), and all
amounts payable by the Borrowers hereunder (including, without limitation,
amounts payable under Section 5.1 and Section 5.3)
shall be determined as if such Lender had not sold such participation; except
that, if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement.


 


(f)                                    Notwithstanding
any other provision in this Agreement, any Lender may at any time create a
security interest in, or pledge, all or any portion of its rights under and
interest in this Agreement held by it in favor of any Federal Reserve Bank in
accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR
§203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.


 


(g)                                 The
Agent shall maintain a register (the “Register”) showing each Lender of
a Loan hereunder.


 


ARTICLE XIV


 


THE AGENT


 


Section 14.1.                             Appointment and
Authorization.  Each Lender hereby
designates and appoints AmSouth Bank as Agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes the Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.  The Agent agrees to act as such on the
express conditions contained in this Article XIV.  The provisions of this Article XIV
are solely for the benefit of the Agent and the Lenders, and the Borrowers
shall have no rights as a third party beneficiary of any of the provisions
contained herein.


 


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Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.  Without limiting the generality
of the foregoing sentence, the use of the term “agent” in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting parties.
Except as expressly otherwise provided in this Agreement, the Agent shall have
and may use its sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining from taking any
actions which the Agent is expressly entitled to take or assert under this
Agreement and the other Loan Documents, including, without limitation, (a) the
making of Agent Advances pursuant to Section 2.2(i), and (b) the
exercise of remedies pursuant to Section 11.2, and any action so
taken or not taken shall be deemed consented to by the Lenders.


 


Section 14.2.                             Delegation
of Duties.  The Agent may execute
any of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.  The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.


 


Section 14.3.                             Liability
of Agent.  None of the Agent-Related
Persons shall (a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document
or the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (b) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by any Borrower or
any Subsidiary or Affiliate of the Borrowers, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of any Borrower
or any other party to any Loan Document to perform its obligations hereunder or
thereunder.  No Agent-Related Person
shall be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any of the Borrowers or any of the Borrower’s
Subsidiaries or Affiliates.


 


Section 14.4.                             Reliance
by Agent.  (a)  The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by


 


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the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Borrowers),
independent accountants and other experts selected by the Agent.  The Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Majority
Lenders as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.  The Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Majority Lenders and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Lenders.


 


(b)                                 For
purposes of determining compliance with the conditions specified in Section 10.1,
each Lender that has executed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
either sent by the Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to such Lender.


 


Section 14.5.                             Notice of Default.  The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
unless the Agent shall have received written notice from a Lender or a Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default.”  The Agent will notify the Lenders of its receipt of any such
notice.  The Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Majority Lenders in accordance with Article XI; provided,
however, that unless and until the Agent has received any such request,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable.


 


Section 14.6.                             Credit Decision.  Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of a
Borrower, its Subsidiaries or any other Loan Party, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender.  Each Lender represents to the
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers, their respective Subsidiaries and all other
Loan Parties, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrowers.  Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers
and the other Loan Parties.  Except for
notices, reports and other documents expressly herein required to be furnished
to the Lenders by the Agent, the Agent


 


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shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Borrowers or any other Loan Party which may come into
the possession of any of the Agent-Related Persons.


 


Section 14.7.                             Indemnification.  Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrowers or any other Loan Party and without limiting the obligation of the
Borrowers and other Loan Parties to do so), pro  rata (giving
effect to all Loans), from and against any and all Indemnified Liabilities as
such term is defined in Section 15.11; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such Person’s
gross negligence or willful misconduct. 
Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on
behalf of the Borrowers or any other Loan Party.  The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of the Agent.


 


Section 14.8.                             Each Agent in Its
Individual Capacity.  ASB and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
each Borrower and its Subsidiaries and Affiliates as though ASB were not the
Agent hereunder and without notice to or consent of the Lenders.  The Lenders acknowledge that, pursuant to
such activities, ASB or its Affiliates may receive information regarding a
Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Borrower or such Affiliate) and
acknowledge that the Agent shall be under no obligation to provide such
information to them.  With respect to
its Loans, ASB shall have the same rights and powers under this Agreement as
any other Lender and may exercise the same as though it were not the Agent, and
the terms “Lender” and “Lenders” include ASB in its individual capacity.


 


Section 14.9.                             Successor
Agent.  The Agent may resign as
Agent upon 30 days’ notice to the Lenders and the Borrowers.  If the Agent resigns under this Agreement,
the Majority Lenders shall appoint from among the Lenders a successor agent for
the Lenders.  If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the
Agent may appoint, after consulting with the Lenders and the Borrowers, a
successor agent from among the Lenders. 
Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term “Agent” shall mean such successor agent and the
retiring Agent’s appointment, powers and duties as Agent shall be terminated.
After any retiring Agent’s resignation hereunder as Agent, the provisions of
this Article XIV shall inure to its benefit as to any actions taken
or omitted to be


 


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taken by it
while it was Agent under this Agreement. 
If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Lenders appoint a successor agent as provided for
above.


 


Section 14.10.                       Administrative Agent.  AmSouth Capital Corp. as the Administrative
Agent shall not have any right, power, obligation, liability, responsibility or
duty under this Agreement.  Without limiting
the foregoing, AmSouth Capital Corp. as the Administrative Agent shall not have
or be deemed to have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not
relied, and will not rely, on AmSouth Capital Corp. in deciding to enter into
this Agreement or in taking or not taking action hereunder.


 


Section 14.11.                       Collateral
Matters.  (a)  The Lenders hereby irrevocably authorize the
Agent, at its option and in its sole discretion, to release, any Agent’s Lien
upon any Collateral (i) upon the termination of the Revolving Commitments and
payment and satisfaction in full by the Borrowers of all Loans and
reimbursement obligations in respect of Letters of Credit and Credit Support,
and the termination of all outstanding Letters of Credit (whether or not any of
other Obligations are due) and all other Obligations (ii) constituting property
being sold or disposed of if the Borrowers certify to the Agent that the sale
or disposition is made in compliance with Section 9.8 (and the Agent
may rely conclusively on any such certificate, without further inquiry); (ii)
constituting property in which the Loan Parties owned no interest at the time
the Lien was granted or at any time thereafter; or (iii) constituting property
leased to a Loan Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement. 
Except as provided above, the Agent will not release any of the Agent’s
Liens without the prior written authorization of the Lenders; provided
that the Agent may, in its discretion, release the Agent’s Liens on Collateral
valued in the aggregate not in excess of $500,000 without the prior written
authorization of the Lenders.  Upon
request by the Agent or a Borrower at any time, the Lenders will confirm in
writing the Agent’s authority to release any Agent’s Liens upon particular
types or items of Collateral pursuant to this Section 14.11.


 


(b)                                 Upon
receipt by the Agent of any authorization required pursuant to Section 14.12(a)
from the Lenders of the Agent’s authority to release any Agent’s Liens upon
particular types or items of Collateral, and upon at least five (5) Business
Days’ prior written request by a Borrower, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Agent’s Liens upon such Collateral; provided,
however, that (i) the Agent shall not be required to execute any such
document on terms which, in the Agent’s opinion, would expose the Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens
(other than those expressly being released) upon (or obligations of the Loan
Parties in respect of) all interests retained by the Loan Parties, including
(without limitation) the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.


 


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(c)                                  The
Agent shall have no obligation whatsoever to any of the Lenders to assure that
the Collateral exists or is owned by a Borrower or other applicable Loan Party
or is cared for, protected or insured or has been encumbered, or that the
Agent’s Liens have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Agent pursuant to any of the
Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion given the Agent’s
own interest in the Collateral in its capacity as one of the Lenders and that
the Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing.


 


Section 14.12.                       Restrictions on Actions by
Lenders; Sharing of Payments. 
(a)  Each of the Lenders agrees
that it shall not, without the express consent of all Lenders, and that it
shall, to the extent it is lawfully entitled to do so, upon the request of all
Lenders, set off against the Obligations, any amounts owing by such Lender to
any of the Loan Parties or any accounts of any of the Loan Parties now or
hereafter maintained with such Lender. 
Each of the Lenders further agrees that it shall not, unless
specifically requested to do so by the Agent, take or cause to be taken any
action to enforce its rights under this Agreement or against any of the Loan
Parties, including, without limitation, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.


 


(b)                                 If
at any time or times any Lender shall receive (i) by payment, foreclosure,
setoff or otherwise, any proceeds of Collateral or any payments with respect to
the Obligations of a Loan Party to such Lender arising under, or relating to,
this Agreement or the other Loan Documents, except for any such proceeds or
payments received by such Lender from the Agent pursuant to the terms of this
Agreement, or (ii) payments from the Agent in excess of such Lender’s ratable
portion of all such distributions by the Agent, such Lender shall promptly (x)
turn the same over to the Agent, in kind, and with such endorsements as may be
required to negotiate the same to the Agent, or in same day funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(y) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that if all or
part of such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be rescinded in
whole or in part, as applicable, and the applicable portion of the purchase
price paid therefor shall be returned to such purchasing party, but without
interest except to the extent that such purchasing party is required to pay
interest in connection with the recovery of the excess payment.


 


Section 14.13.                       Agency
for Perfection.  Each Lender hereby
appoints each other Lender as agent for the purpose of perfecting the Lenders’
security interest in assets which, in accordance with Article 9 of the
UCC, can be perfected only by possession. 
Should any Lender (other than the Agent) obtain possession of any such
Collateral, such Lender shall notify the


 


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Agent thereof and, promptly upon the Agent’s
request therefor, shall deliver such Collateral to the Agent or in accordance
with the Agent’s instructions.


 


Section 14.14.                       Payments by Agent to Lenders.  All payments to be made by the Agent to the
Lenders shall be made by bank wire transfer or internal transfer of immediately
available funds to:


 


if to the
Agent:


 


AmSouth Bank


Clearing
Account No. 00110245 - 0400100


Routing No.
062000019


Attn:  Becky Dempsey


Reference:  New World Restaurant


 


or pursuant to
such other wire transfer instructions as each party may designate for itself by
written notice to the Agent. 
Concurrently with each such payment, the Agent shall identify whether such
payment (or any portion thereof) represents principal, premium or interest on
the Revolving Loans or otherwise.


 


Section 14.15.                       Concerning the Collateral and
the Related Loan Documents.  Each
Lender authorizes and directs the Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the ratable benefit of the
Agent and the Lenders.  Each Lender
agrees that any action taken by the Agent or Majority Lenders, as applicable,
in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral, and the exercise by the Agent or the Majority
Lenders, as applicable, of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall
be binding upon all of the Lenders.


 


Section 14.16.                       Field Audit and Examination
Reports; Disclaimer by Lenders.  By
signing this Agreement, each Lender:


 


(a)                                  is
deemed to have requested that the Agent furnish such Lender, promptly after it
becomes available, a copy of each field audit or examination report (each a “Report”
and collectively, “Reports”) prepared by the Agent;


 


(b)                                 expressly
agrees and acknowledges that neither ASB nor the Agent (i) makes any
representation or warranty as to the accuracy of any Report, or (ii) shall be
liable for any information contained in any Report;


 


(c)                                  expressly
agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that the Agent or other party performing any audit or examination
will inspect only specific information regarding the Borrowers and other Loan
Parties and will rely significantly upon each Loan Party’s books and records,
as well as on representations of each Loan Party’s personnel;


 


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(d)                                 agrees
to keep all Reports confidential and strictly for its internal use, and not to
distribute except to its participants or use any Report in any other manner;
and


 


(e)                                  without
limiting the generality of any other indemnification provision contained in
this Agreement, agrees:  (i) to hold the
Agent and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to any of the
Borrowers, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of, a loan or loans of any of the Borrowers; and (ii) to pay
and protect, and indemnify, defend and hold the Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses and other amounts (including, without limitation,
Attorney Costs) incurred by the Agent and any such other Lender preparing a
Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.


 


Section 14.17.                       Relation Among Lenders.  The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.


 


ARTICLE XV


 


MISCELLANEOUS


 


Section 15.1.                             Recourse to Collateral.  The enumeration herein of the Agent’s and
each Lender’s rights and remedies is not intended to be exclusive, and such
rights and remedies are in addition to and not by way of limitation of any
other rights or remedies that the Agent and the Lenders may have under the UCC
or other applicable law.  The Agent and
the Lenders shall have the right, in their sole discretion, to determine which
rights and remedies are to be exercised and in which order.  The exercise of one right or remedy shall
not preclude the exercise of any others, all of which shall be cumulative.  The Agent and the Lenders may, without
limitation, proceed directly against any Borrower or any other Loan Party to
collect the Obligations without any prior recourse to the Collateral.  No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.


 


Section 15.2.                             Severability.  The illegality or unenforceability of any
provision of this Agreement or any other Loan Document or any instrument or
agreement required hereunder shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement, any other Loan
Document or any instrument or agreement required hereunder.


 


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Section 15.3.                             Governing Law; Choice
of Forum; Service of Process; Jury Trial Waiver.  (a)  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, PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE
UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET
FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED THAT THE
AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.


 


(b)                                 ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, THE AGENT AND EACH LENDER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS.  EACH LOAN
PARTY, THE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM  NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO. 
NOTWITHSTANDING THE FOREGOING: 
(i) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST ANY LOAN PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (ii) EACH
OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED
IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE THOSE JURISDICTIONS.


 


(c)                                  EACH
LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL
(RETURN RECEIPT REQUESTED) DIRECTED TO SUCH LOAN PARTY AT ITS ADDRESS SET FORTH
IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS.  NOTHING CONTAINED HEREIN SHALL AFFECT THE
RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER
PERMITTED BY LAW.


 


Section 15.4.                             WAIVER OF JURY TRIAL.  EACH LOAN PARTY, EACH LENDER AND THE AGENT
WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER


 


101

















 


LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
EACH LOAN PARTY, EACH LENDER AND THE AGENT AGREES THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF.  THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.


 


Section 15.5.                            Survival of
Representations and Warranties.  All
of each Loan Party’s representations and warranties contained in this Agreement
shall survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.


 


Section 15.6.                             Other
Security and Guaranties.  The Agent
may, without notice or demand and without affecting the Loan Parties’
obligations hereunder, from time to time: (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or any part of
the Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of all
or any part of the Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.


 


Section 15.7.                             Fees and Expenses.  Each Borrower agrees, jointly and severally,
to pay to the Agent, for its benefit, on demand, all reasonable out of pocket
costs and expenses that the Agent pays or incurs in connection with the
negotiation, preparation, consummation, administration, syndication,
enforcement, and termination of this Agreement or any of the other Loan
Documents, including, without limitation: 
(a) Attorney Costs with respect thereto; (b) reasonable out of pocket costs
and expenses (including reasonable attorneys’ and paralegals’ fees and
disbursements, which shall include the allocated cost of the Agent’s in-house
counsel fees and disbursements) for any amendment, supplement, waiver, consent,
or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches, title insurance and other due diligence; (d) taxes, fees and other
charges for recording Mortgages, filing financing statements and continuations,
and other actions to perfect, protect, and continue the Agent’s Liens
(including reasonable costs and expenses paid or incurred by the Agent in
connection with the consummation of this Agreement); (e) to the extent herein
provided, sums paid or incurred to pay any amount or take any action required
of any Loan Party under the Loan Documents that such Loan Party fails to pay or
take; (f) costs of appraisals, inspections, and verifications of the
Collateral, including, without limitation, travel, lodging, and meals for
inspections of the Collateral and any Loan Party’s


 


102

















 


operations by the Agent plus the Agent’s then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $800 per day (or portion thereof) for
each agent or employee of the Agent with respect to each field examination or
audit); of Collateral by the Agent shall be limited to two times each fiscal
year (or as often as the Agent may request upon the occurrence and continuance
of an Event of Default ; (g) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
Payment Accounts and lock boxes; (h) costs and expenses of preserving and
protecting the Collateral; and (i) costs and expenses (including attorneys’ and
paralegals’ fees and disbursements) paid or incurred to obtain payment of the
Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Agent or any Lender arising
out of the transactions contemplated hereby (including without limitation,
preparations for and consultations concerning any such matters).  Each Borrower further agrees, jointly and
severally, to pay each Lender on demand all costs and expenses that such Lender
pays or incurs in connection with the enforcement or protection of such
Lender’s rights under this Agreement or the other Loan Documents.  The foregoing shall not be construed to
limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Borrowers.  All of the
foregoing costs and expenses may, at the option of the Agent in its sole
discretion, be charged to any one or more Loan Accounts of the Borrowers as
Revolving Loans as described in Section 4.7.


 


Section 15.8.                             Notices.  Except as otherwise provided herein, all
notices, demands and requests that any party is required or elects to give to
any other shall be in writing, or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, but not limited to, delivery by overnight
mail and courier service, (b) four (4) days after it shall have been mailed by
United States mail, first class, certified or registered, with postage prepaid,
or (c) in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:


 


If to the
Agent:


 


AmSouth Bank


c/o AmSouth
Capital Corp.


350 Park
Avenue, 20th Floor


New York, New
York  10022


Attention:
Kevin Rogers


Telecopy
No.:  (212) 935-7458


 


103

















 


with copies
to:


 


Kaye Scholer
LLP


425 Park
Avenue


New York, New
York  10022


Attention:  Albert Fenster, Esq.


Telecopy
No.:  (212) 836-8689


 


If to ASB:


 


AmSouth Bank


c/o AmSouth
Capital Corp.


350 Park
Avenue, 20th Floor


New York, New
York  10022


Attention:
Kevin Rogers


Telecopy
No.:  (212) 935-7458


 


with copies
to:


 


Kaye Scholer
LLP


425 Park
Avenue


New York, New
York  10022


Attention:  Albert Fenster, Esq.


Telecopy
No.:  (212) 836-8689


 


If to any other Lender:  at such address for such Lender as set forth
on the applicable Assignment and Acceptance pursuant to which such Assignee
became a Lender.


 


If to any Loan
Party:


 


c/o New World
Restaurant Group, Inc.


1687 Cole
Boulevard


Golden,
Colorado  80401-3316


Attention:  Anthony Wedo


Telecopy
No.:  (303) 568-8199


 


with copies
to:


 


Proskauer Rose
LLP


1585 Broadway


New York, New
York  10036


Attention:  Julie Allen, Esq.


Telecopy
No.:  (212) 969-2900


 


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or to such other address as each party may
designate for itself by like notice. 
Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons designated
above to receive copies shall not adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.


 


Section 15.9.                             Waiver
of Notices.  Unless otherwise
expressly provided herein, each Loan Party waives presentment, protest and
notice of demand or dishonor and protest as to any instrument, notice of intent
to accelerate the Obligations and notice of acceleration of the Obligations, as
well as any and all other notices to which it might otherwise be entitled.  No notice to or demand on any Loan Party
which the Agent or any Lender may elect to give shall entitle any Loan Party to
any or further notice or demand in the same, similar or other circumstances.


 


Section 15.10.                       Binding Effect.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors and assigns of the parties hereto; provided, however,
that no interest herein may be assigned by any Loan Party without prior written
consent of the Agent and each Lender. 
The rights and benefits of the Agent and the Lenders hereunder shall, if
such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.


 


Section 15.11.                       Indemnity of the Agent and
the Lenders by the Loan Parties. 
Each Loan Party agrees, jointly and severally, to defend indemnify and
hold the Agent-Related Persons, each Lender and its Affiliates and each of the
foregoing Persons’ respective officers, directors, employees, Affiliates’
counsel, agents and attorneys-in-fact (each, an “Indemnified Person”)
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in any
way relating to or arising out of this Agreement, any other Transaction
Document, any document contemplated by or referred to herein or therein, any of
the transactions contemplated hereby or thereby, the Restructuring or any
similar transaction or any acquisition or proposed acquisition or similar
business combination by a Loan Party or any action taken or omitted by any Loan
Party under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any insolvency
proceeding or appellate proceeding) related to or arising out of this
Agreement, any other Transaction Document, the Loans, the use of the proceeds
thereof or the actual or alleged presence of Contaminants on any Real Estate,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the “Indemnified Liabilities”); provided, that the
Loan Parties shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities to the extent such Indemnified Liabilities
result from the gross negligence or willful misconduct of any Indemnified
Person.  The agreements in this
Section shall survive payment of all other Obligations. The Loan Parties
further agree that no Indemnified Person shall have any liability (whether direct
or indirect, in contract or tort or otherwise) to the Loan Parties or any of
their


 


105

















 


Subsidiaries
or to their respective security holders or creditors arising out of, related to
or in connection with the Restructuring, except for direct, as opposed to
consequential, damages determined in a final nonappealable judgement by a court
of competent jurisdiction to have resulted from such Indemnified Person’s bad
faith, gross negligence or willful misconduct.


 


Section 15.12.                       Limitation
of Liability.  No claim may be made
by any Loan Party, any Lender or other Person against the Agent, any Lender, or
the affiliates, directors, officers, employees, or agents of any of them for
any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other Loan
Document, or any act, omission or event occurring in connection therewith, and
each Loan Party and each Lender hereby waive, release and agree not to sue upon
any claim for such damages, whether or not accrued and whether or not know or
suspected to exist in its favor, and agree that the only liability therefor
against the Agent, any Lender or the affiliates, directors, officers, employees
or agents of any of them shall be for direct damages determined in a final
nonappealable judgment by a court of competent jurisdiction to have resulted
from such Person’s bad faith, gross negligence or willful misconduct.


 


Section 15.13.                       Final
Agreement.  This Agreement, the Fee
Letter and the other Loan Documents are intended by each Loan Party, the Agent
and the Lenders to be the final, complete, and exclusive expression of the
agreement between them.  This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof.  No modification,
rescission, waiver, release, or amendment of any provision of this Agreement or
any other Loan Document shall be made, except by a written agreement signed by
the Loan Parties and a duly authorized officer of each of the Agent and the
requisite Lenders.


 


Section 15.14.                       Counterparts.  This Agreement may be executed in any number
of counterparts, and by the Agent, the Administrative Agent, each Lender and
each Loan Party in separate counterparts, each of which shall be an original,
but all of which shall together constitute one and the same agreement.


 


Section 15.15.                       Captions.  The captions contained in this Agreement are
for convenience of reference only, are without substantive meaning and should
not be construed to modify, enlarge, or restrict any provision.


 


Section 15.16.                       Right of Setoff.  In addition to any rights and remedies of
the Lenders provided by law, if an Event of Default exists or the Loans have
been accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Loan Party, any such notice being waived by the
Loan Parties to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing by, such Lender to
or for the credit or the account of any Loan Party against any and all
Obligations owing to such Lender, now or hereafter existing, irrespective of
whether or not the Agent or such Lender shall have made demand under this
Agreement or any other Loan Document and although such Obligations may be
contingent or unmatured.  Each Lender
agrees promptly to notify the Borrowers and the Agent


 


106

















 


after any such set-off and application made
by such Lender; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. 


 


NOTWITHSTANDING THE FOREGOING, NO LENDER
SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER’S LIEN, OR THE LIKE AGAINST ANY
DEPOSIT ACCOUNT OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER
WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.


 


Section 15.17.                       Joint and Several Liability.  The Borrowers shall be liable for all
amounts due to the Agent and/or any Lender under this Agreement, regardless of
which Borrower actually receives Loans or other extensions of credit hereunder
or the amount of such Loans received or the manner in which the Agent and/or
such Lender accounts for such Loans or other extensions of credit on its books
and records.  Each Borrower’s
Obligations with respect to Loans made to it, and each Borrower’s Obligations
arising as a result of the joint and several liability of the Borrowers
hereunder, with respect to Loans made to the other Borrower hereunder, shall be
separate and distinct obligations, but all such Obligations shall be primary
obligations of each Borrower.


 


A Borrower’s
Obligations arising as a result of the joint and several liability of the
Borrowers hereunder with respect to Loans or other extensions of credit made to
the other Borrowers hereunder shall, to the fullest extent permitted by law, be
unconditional irrespective of (i) the validity or enforceability, avoidance or
subordination of the Obligations of any of the other Borrowers or of any
promissory note or other document evidencing all or any part of the Obligations
of any of the other Borrowers, (ii) the absence of any attempt to collect the
Obligations from any other Borrower, any other guarantor, or any other security
therefor, or the absence of any other action to enforce the same, (iii) the
waiver, consent, extension, forbearance or granting of any indulgence by the
Agent and/or any Lender with respect to any provision of any instrument
evidencing the Obligations of any of the other Borrowers, or any part thereof,
or any other agreement now or hereafter executed by any of the other Borrowers
and delivered to the Agent and/or any Lender, (iv) the failure by the Agent
and/or any Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Obligations of any of the other Borrowers, (v) the Agent’s and/or any Lender’s
election, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any
borrowing or grant of a security interest by any of the other Borrowers, as
debtors-in-possession under Section 364 of the Bankruptcy Code, (vii) the
disallowance of all or any portion of the Agent’s and/or any Lender’s claim(s)
for the repayment of the Obligations of any of the other Borrowers under
Section 502 of the Bankruptcy Code, or (viii) any other circumstances
which might constitute a legal or equitable discharge or defense of a guarantor
or of any of the other Borrowers.  With
respect to a Borrower’s Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder, each Borrower
waives, until the Obligations shall have been paid in full and this Agreement shall
have been terminated, any right to enforce any right of subrogation or any
remedy which the Agent and/or any Lender now has or may hereafter have against
any Borrower, any endorser or any guarantor of all or any part of the
Obligations, and any benefit of, and any right to participate in, any security
or collateral


 


107

















 


given to the
Agent and/or any Lender to secure payment of the Obligations or any other
liability of any Borrower to the Agent and/or any Lender.


 


Upon any Event
of Default, the Agent may proceed directly and at once, without notice, against
any Borrower to collect and recover the full amount, or any portion of the
Obligations, without first proceeding against any of the other Borrowers or any
other Person, or against any security or collateral for the Obligations.  Each Borrower consents and agrees that the
Agent shall not be under any obligation to marshal any assets in favor of any
Borrower or against or in payment of any or all of the Obligations.


 


Section 15.18.                       Effectiveness; Ratification
and Confirmation.  This Agreement
shall become effective on the date on which (i) each of the Lenders, the Agent,
the Administrative Agent, the Borrowers and the other Loan Parties shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered the same to the Agent and (ii) the conditions contained in
Article X are satisfied or waived. 
Each of the Loan Parties hereby (i) ratifies and confirms its grant of
security interests and liens in the Collateral in which it has rights and
confirms and agrees that such Collateral secures any and all of the
Obligations, including, without limitation, the Revolving Loans and (ii)
ratifies and confirms its guarantee pursuant to this Agreement of any and all
of the Obligations, including, without limitation, the Revolving Loans.


 


Section 15.19.                       Covenant
Calculation.  The parties hereto
hereby agree that the financial covenants under each of Sections 9.24, 9.25
and 9.26 and shall be calculated in a manner consistent with the
calculation thereof on the Financial Covenant Calculation Worksheet attached
hereto as Exhibit D.


 


ARTICLE XVI


 


GUARANTEES


 


Each Guarantor
party hereto unconditionally guarantees, as a primary obligor and not merely as
a surety, jointly and severally with each other Guarantor party hereto, the due
and punctual payment of the principal of and interest on the Revolving Loans
and of all other Obligations, when and as due, whether at maturity, by
acceleration, by notice or prepayment or otherwise.  Each Guarantor party hereto further agrees that the Obligations
may be extended and renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee notwithstanding
any extension or renewal of any Obligations.


 


The
Obligations of each Guarantor hereunder will be limited to the maximum amount
which, after giving effect to all other contingent and fixed liabilities of
such Guarantor and after giving effect to any collections from or payments made
by or on behalf of any other Guarantor in respect of the Obligations of such
Guarantor hereunder or pursuant to its contribution Obligations hereunder, will
result in the Obligations of such Guarantor hereunder not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.  The


 


108

















 


net worth of any Guarantor for the purposes
of this Article XVI shall include any claim of such Guarantor
against the Borrowers for reimbursement and any claim against any other
Guarantor for contribution.


 


To the fullest
extent permitted by law, each Guarantor party hereto waives presentment to,
demand of payment from and protest to the Borrowers or any other Person of any
of the Obligations, and also waives notice of acceptance of its guarantee and
notice of protest for nonpayment.  To
the fullest extent permitted by law, the obligations of a Guarantor party
hereto hereunder shall not be affected by (a) the failure of the Agent or any
Lender to assert any claim or demand or to enforce any right or remedy against
any Borrower or any other Guarantor under the provisions of this Agreement or
any of the other Loan Documents or otherwise; (b) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Agreement, any of the
other Loan Documents, any guarantee or any other agreement; (c) the release of
any security held by the Agent or any Lender for the Obligations or any of
them; or (d) the failure of the Agent or any Lender to exercise any right or
remedy against any other Guarantor of the Obligations.


 


Each Guarantor
party hereto further agrees that its guarantee constitutes a guarantee of
payment when due and not of collection, and waives any right to require that
any resort be had by the Agent or any Lender to any security (if any) held for
payment of the Obligations or to any balance of any deposit account or credit
on the books of the Agent or any Lender in favor of any Borrower or any other
Person.


 


To the fullest
extent permitted by law, the obligations of each Guarantor party hereto
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of any of the Obligations or
otherwise.  Without limiting the
generality of the foregoing, to the fullest extent permitted by law, the
obligations of each Guarantor party hereto hereunder shall not be discharged or
impaired or otherwise affected by the failure of the Agent or any Lender to
assert any claim or demand or to enforce any remedy under this Agreement or
under any other Loan Document, any guarantee or any other agreement, by any
waiver or modification of any provision thereof, by any default, failure or
delay, willful or otherwise, in the performance of any of the Obligations, or
by any other act or omission which may or might in any manner or to any extent
vary the risk of such Guarantor or otherwise operate as a discharge of such
Guarantor as a matter of law or equity.


 


Each Guarantor
party hereto further agrees that its guarantee shall remain in full force and
effect until the indefeasible payment and satisfaction in full of the
Obligations and the termination of the Revolving Commitments and shall continue
to be effective or be reinstated, as the case may be, if at any time payment,
or any part thereof, of principal or of interest on any Obligation or of any
other Obligation is rescinded or must otherwise be returned by the Agent or any
Lender upon the bankruptcy or reorganization of any Borrower, Guarantor or
otherwise.


 


109

















 


Each Guarantor
party hereto hereby waives and releases all rights of subrogation against each
Loan Party and its property and all rights of indemnification, contribution and
reimbursement from each Loan Party and its property, in each case in connection
with this guarantee and any payments made hereunder, and regardless of whether
such rights arise by operation of law, pursuant to contract or otherwise.


 


The Guarantors
hereby agree as among themselves that, if any Guarantor shall make an Excess
Payment (as defined below), such Guarantor shall have a right of contribution
from each other Guarantor in an amount equal to such other Guarantor’s
Contribution Share (as defined below) of such Excess Payment.  The payment obligations of any Guarantor
under this paragraph shall be subordinate and subject in right of payment to
the Obligations until such time as the Obligations have been paid in full and
all Revolving Commitments have been terminated, and none of the Guarantors
shall exercise any right or remedy under this paragraph against any other
Guarantor until the Obligations have been paid in full and all Revolving
Commitments have been terminated.  For
purposes of this paragraph, (a) “Excess Payment” shall mean the amount
paid by any Guarantor in excess of its Pro Rata Share of any Obligations; (b) “Pro
Rata Share” shall mean, for any Guarantor in respect of any payment of
Obligations by such Guarantor, the ratio (expressed as a percentage) as of the
date of such payment of Obligations of (i) the amount by which the aggregate
present fair salable value of all of its assets and properties exceeds the
amount of all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of such Guarantor hereunder) to (ii) the amount by which the
aggregate present fair salable value of all assets and other properties of all
of the Guarantors exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities,
but excluding the obligations of the Guarantors hereunder) of the Guarantors; provided,
however, that, for purpose of calculating the Pro Rata Shares of the
Guarantors in respect of any payment of Obligations, any Guarantor that became
a Guarantor subsequent to the date of any such payment shall be deemed to have
been a Guarantor on the date of such payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor shall be
utilized for such Guarantor in connection with such payment; and (c) “Contribution
Share” shall mean, for any Guarantor in respect of any Excess Payment made
by any other Guarantor, the ratio (expressed as a percentage) as of the date of
such Excess Payment of (i) the amount by which the aggregate present fair
salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Guarantors other than the
maker of such Excess Payment exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of the
Guarantors other than the maker of such Excess Payment; provided, however,
that, for purposes of calculating the Contribution Shares of the Guarantors in
respect of any Excess Payment, any Guarantor that became a Guarantor subsequent
to the date of any such Excess Payment shall be deemed to have been a Guarantor
on the date of such Excess Payment and the financial information for such
Guarantor as of the date such Guarantor became a Guarantor shall be utilized
for such Guarantor in connection with such Excess Payment.


 


110

















 


(Signature
pages to follow)


 


111

















 


IN WITNESS
WHEREOF, the parties have entered into this Agreement on the date first above
written.


 


	
   

  	
  “BORROWERS” AND “GUARANTORS”

  
	
   

  	
   

  
	
   

  	
  NEW WORLD RESTAURANT GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: Anthony D. Wedo

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  MANHATTAN BAGEL COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: Anthony D. Wedo

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  CHESAPEAKE BAGEL FRANCHISE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: Anthony D. Wedo

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  WILLOUGHBY’S INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: Anthony D. Wedo

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  EINSTEIN AND NOAH CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: Anthony D. Wedo

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  EINSTEIN/NOAH BAGEL PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: Anthony D. Wedo

  
	
   

  	
   

  	
  Title: CEO

  



 


112

















 


	
   

  	
  I. & J. BAGEL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: Anthony D. Wedo

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  “AGENT”

  
	
   

  	
   

  
	
   

  	
  AMSOUTH BANK, as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEVIN R. ROGERS

  	
   

  
	
   

  	
   

  	
  Name: Kevin R. Rogers

  
	
   

  	
   

  	
  Title: Attorney-in-fact

  
	
   

  	
   

  
	
   

  	
  “ADMINISTRATIVE AGENT”

  
	
   

  	
   

  
	
   

  	
  AMSOUTH CAPITAL CORP.,

  as the Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARK McNALLY

  	
   

  
	
   

  	
   

  	
  Name: Mark McNally

  
	
   

  	
   

  	
  Title: Assistant Vice President

  
	
   

  	
   

  
	
   

  	
  “LENDERS”

  
	
   

  	
   

  
	
  Revolving
  Commitment:  $15,000,000

  	
  AMSOUTH BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARK McNALLY

  	
   

  
	
   

  	
   

  	
  Name: Mark McNally

  
	
   

  	
   

  	
  Title: Attorney-in-fact

  



 


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