Exhibit 10.3


 




 





 


GUARANTEE AGREEMENT


 


made by


 


certain Subsidiaries of


 


NEW WORLD RESTAURANT GROUP,
INC.


 


 


in favor of


 


GREENLIGHT CAPITAL, L.P.


and


GREENLIGHT CAPITAL
QUALIFIED, L.P.


 


Dated as of February 28,
2006




 





 

















 


THIS INSTRUMENT IS SUBJECT
TO THE TERMS OF A SUBORDINATION AGREEMENT, DATED AS OF JANUARY 26, 2006, BY AND
AMONG NEW WORLD RESTAURANT GROUP, INC., ITS SUBSIDIARIES AND GREENLIGHT
CAPITAL, L.P. AND GREENLIGHT CAPITAL QUALIFIED, L.P., AS THE SENIOR
SUBORDINATED CREDITORS, IN FAVOR OF WELLS FARGO FOOTHILL, INC., AS AGENT FOR
THE FIRST LIEN LENDERS, AND BEAR STEARNS CORPORATE LENDING INC., AS AGENT FOR
THE SECOND LIEN LENDERS.  NEW WORLD
RESTAURANT GROUP, INC. SHALL FURNISH A COPY OF SUCH SUBORDINATION AGREEMENT TO
THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE


GUARANTEE AGREEMENT, dated
as of February 28, 2006, made by each of the signatories hereto (together with
any other entity that may become a party hereto as provided herein, the “Guarantors”), in favor of GREENLIGHT
CAPITAL, L.P. and GREENLIGHT CAPITAL QUALIFIED, L.P. (collectively, the “Lenders”), as lenders to New World
Restaurant Group, Inc. (the “Borrower”).


W
I T N E S S E T H:


WHEREAS, pursuant to the
Credit Agreement, dated as of January 26, 2006 (as amended, supplemented, revised,
replaced, restated or otherwise modified from time to time, the “Credit Agreement”), among the Borrower
and Lenders, the Lenders have severally agreed to make Loans to the Borrower
upon the terms and subject to the conditions set forth therein;


WHEREAS, the Borrower is a
member of an affiliated group of companies that includes each Guarantor; and


WHEREAS, it is a condition
precedent to the obligation of the Lenders to make their respective extensions
of credit to the Borrower under the Credit Agreement that the Guarantors shall
have executed and delivered this Agreement to the Lenders;


NOW, THEREFORE, in
consideration of the premises and to induce the Lenders to enter into the
Credit Agreement and to induce the Lenders to make the Loans thereunder, each Guarantor
hereby agrees with the Lenders, for the ratable benefit of the Lenders, as
follows:


SECTION 1.  DEFINED
TERMS


1.1.          Definitions.


(a)           Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.


(b)           The following terms shall have the following meanings:


“Agreement”
shall mean this Guarantee Agreement, as the same may be amended, supplemented,
revised, restated or otherwise modified from time to time.


 


1

















 


“Borrower
Obligations” shall mean the collective reference to the Outstanding
Amount and any other obligations of the Borrower under the Credit Agreement and
the Loan Documents.


“Intercompany
Note” shall mean any promissory note evidencing loans made by
any Guarantor to any of its Subsidiaries or other Indebtedness owing by any of
its Subsidiaries to any Guarantor.


1.2.          Other Definitional Provisions.


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


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


SECTION 2. 
GUARANTEE


2.1.          Guarantee.


(a)           Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Lenders and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.


(b)           Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).


(c)           Each Guarantor agrees that the Borrower Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this Section
2.1 or affecting the rights and remedies of any Lender hereunder.


(d)           The guarantee contained in this Section 2.1 shall
remain in full force and effect until the conditions set forth in Section
5.15 hereof shall have been satisfied.


(e)           No payment made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by any Lender from
the Borrower, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in respect of
the Borrower Obligations or any 


 


2

















 


payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the conditions set forth in Section
5.15 shall have been satisfied.


2.2.          Right of Contribution.  Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has
not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall
be subject to the terms and conditions of Section 2.3.  The provisions of this Section 2.2
shall in no respect limit the obligations and liabilities of any Guarantor to
the Lenders, and each Guarantor shall remain liable to the Lenders for the full
amount guaranteed by such Guarantor hereunder.


2.3.          No Subrogation. 
Notwithstanding any payment made by any Guarantor hereunder or
application of funds of any Guarantor by any Lender, no Guarantor shall be
entitled to be subrogated to any of the rights of any Lender against the
Borrower or any other Guarantor or guarantee held by any Lender for the payment
of the Borrower Obligations, nor shall any Guarantor seek or be entitled to
seek any contribution or reimbursement from the Borrower or any other Guarantor
in respect of payments made by such Guarantor hereunder, in either case, until
all amounts owing to the Lenders by the Borrower on account of the Borrower
Obligations are paid in full.  If any
amount shall be paid to any Guarantor on account of such subrogation rights at
any time when all of the Borrower Obligations shall not have been paid in full,
such amount shall be held by such Guarantor in trust for the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to the Lenders in the exact form
received by such Guarantor, to be applied against the Borrower Obligations,
whether matured or unmatured, in accordance with the provisions of Section
8.2 of the Credit Agreement.


2.4.          Amendments, etc. with respect to the Borrower
Obligations.  Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of
rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by
any Lender may be rescinded by such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or guarantee therefor, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Lender, and the Credit
Agreement and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Borrower or the Required Lenders or all
Lenders, as the case may be, may deem advisable from time to time, and any
guarantee at any time held by the Lenders for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released.


2.5.          Guarantee Absolute and Unconditional.  Each Guarantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Borrower Obligations
and notice of or proof of reliance by any Lender upon the guarantee contained
in this Section 2 or acceptance of the guarantee contained in this Section
2; the Borrower Obligations, and any of them, shall conclusively be deemed
to have been created, contracted or incurred, or renewed, 


 


3

















 


extended, amended or waived,
in reliance upon the guarantee contained in this Section 2; and all
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Lenders, on the other hand, likewise shall be conclusively presumed to have
been had or consummated in reliance upon the guarantee contained in this Section
2.  To the extent permitted by
applicable law, each Guarantor waives diligence, presentment, protest, demand
for payment and notice of default or nonpayment to or upon the Borrower or any
of the Guarantors with respect to the Borrower Obligations.  Each Guarantor understands and agrees that,
to the extent permitted by applicable law, the guarantee contained in this Section
2 shall be construed as a continuing, absolute and unconditional guarantee
of payment without regard to (1) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or guarantee at any time or from time to time
held by any Lender, (2) any defense,
set-off or counterclaim (other than a defense of payment or performance) which
may at any time be available to or be asserted by the Borrower or any other
Person against any Lender, or (3) any
other circumstance whatsoever (other than defenses of performance) (with or
without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any
other instance.  When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, any Lender may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, any other Guarantor or any other Person or against any guarantee
for the Borrower Obligations, and any failure by any Lender to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Borrower, any other Guarantor or any other Person or to realize upon any
guarantee, or any release of the Borrower, any other Guarantor or any other
Person or guarantee, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of any Lender against any
Guarantor.  For the purposes hereof ”demand”
shall include the commencement and continuance of any legal proceedings.


2.6.          Reinstatement. 
The guarantee contained in this Section 2 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Borrower Obligations is rescinded or must otherwise
be restored or returned by any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.


2.7.          Payments. 
Each Guarantor hereby guarantees that payments hereunder will be paid to
the Lenders without set-off or counterclaim in Dollars at the Funding Office.


SECTION 3. 
REPRESENTATIONS AND WARRANTIES


To induce the Lenders to
enter into the Credit Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Guarantor hereby
represents and warrants to each Lender that:


 


4

















 


3.1.          Representations in Credit Agreement.  In the case of each Guarantor, the
representations and warranties set forth in Section 4 of the Credit
Agreement as they relate to such Guarantor or to the Loan Documents to which
such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct in all material respects, and each Lender shall
be entitled to rely on each of them as if they were fully set forth herein,
provided that each reference in each such representation and warranty to the
Borrower’s or to any Loan Party’s knowledge shall, for the purposes of this Section
3.1, be deemed to be a reference to such Guarantor’s knowledge.


SECTION 4. 
COVENANTS


Each Guarantor covenants and
agrees with the Lenders, from and after the date of this Agreement until all
the conditions set forth in Section 5.15 shall have been completely
satisfied, that:


4.1.          Covenants in Credit Agreement.  In the case of each Guarantor, such Guarantor
shall take, or shall refrain from taking, as the case may be, each action that
is necessary to be taken or not taken, as the case may be, so that no Default
or Event of Default is caused by the failure to take such action or to refrain
from taking such action by such Guarantor or any of its Subsidiaries.


4.2.          Maintenance of Insurance.  Such Guarantor will maintain, with
financially sound and reputable companies, insurance policies as may be
required by Section 6.5 of the Credit Agreement.


SECTION 5. 
MISCELLANEOUS


5.1.          Amendments in Writing.  None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 9.1 of the Credit Agreement.


5.2.          Notices.  All
notices, requests and demands to or upon the Lenders or any Guarantor hereunder
shall be effected in the manner provided for in Section 9.2 of the
Credit Agreement; provided that any such notice, request or demand to or upon
any Guarantor shall be addressed to such Guarantor at its notice address set
forth on Schedule 1 or to such other address for notice, request or
demand which a Guarantor may designate by written notice to the Lenders.


5.3.          No Waiver by Course of Conduct; Cumulative Remedies.  No Lender shall by any act (except by a
written instrument pursuant to Section 5.1), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. 
No failure to exercise, nor any delay in exercising, on the part of any Lender,
any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  A waiver by any Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which any Lender would otherwise have on any future occasion.  The rights and 


 


5

















 


remedies herein may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.


5.4.          Enforcement Expenses; Indemnification.


(a)           Each Guarantor agrees to pay, or reimburse each Lender for
all its costs and expenses incurred in collecting against such Guarantor under
the guarantee contained in Section 2 or otherwise enforcing or
preserving any rights under this Agreement and the other Loan Documents to
which such Guarantor is a party, including, without limitation, the fees and
disbursements of counsel to each Lender.


(b)           Each Guarantor agrees to pay, and to hold the Lenders harmless
from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 9.5 of the Credit
Agreement.


(c)           The agreements in this Section 5.4 shall survive
repayment of the Loans and all other amounts payable under the Credit Agreement
and the other Loan Documents.


5.5.          Successors and Assigns.  This Agreement shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of the Lenders
and their successors and permitted assigns; provided that no Guarantor may
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Lenders.


5.6.          Counterparts. 
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.


5.7.          Severability. 
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


5.8.          Section Headings. 
The Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.


5.9.          Integration.  This
Agreement and the other Loan Documents represent the agreement of the Guarantors
and the Lenders with respect to the subject matter hereof and thereof, and
there are no promises, undertakings, representations or warranties by the any Lender
relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.


5.10.        GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


6

















 


5.11.        Submission To Jurisdiction; Waivers.  Each Guarantor hereby irrevocably and
unconditionally:


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


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


(c)           agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such Guarantor
at its address referred to in Section 5.2 or at such other address of
which the Lenders shall have been notified pursuant thereto;


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


(e)           waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section 5.12 any special, exemplary, punitive or
consequential damages.


5.12.        Acknowledgments. 
Each Guarantor hereby acknowledges that:


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


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


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


5.13.        Additional Guarantors. 
Each Subsidiary of the Borrower that is required to become a party to
this Agreement pursuant to Section 5.2 of the Credit Agreement shall
become a Guarantor for all purposes of this Agreement upon execution and
delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1
hereto.


5.14.        WAIVER OF JURY TRIAL.  EACH GUARANTOR AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, EACH LENDER, HEREBY IRREVOCABLY AND 


 


7

















 


UNCONDITIONALLY WAIVES TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.


5.15.        Releases of Guarantees.  At such time as the Borrower Obligations
shall have been paid in full and the Loan Commitments shall have been
terminated, all obligations (other than those expressly stated to survive such
termination) of each Guarantor under this Agreement shall terminate, all
without delivery of any instrument or performance of any act by any Person.


 


[SIGNATURE PAGE FOLLOWS]


 


8

















 


IN WITNESS WHEREOF, each of
the undersigned has caused this Guarantee Agreement to be duly executed and
delivered as of the date first above written.


 


	
   

  	
  EINSTEIN
  AND NOAH CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul J.B. Murphy, III

  
	
   

  	
   

  	
  Paul J.B. Murphy, III

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  MANHATTAN
  BAGEL COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul J.B. Murphy, III

  
	
   

  	
   

  	
  Paul J.B. Murphy, III

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  CHESAPEAKE
  BAGEL FRANCHISE CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul J.B. Murphy, III

  
	
   

  	
   

  	
  Paul J.B. Murphy, III

  
	
   

  	
   

  	
  President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EINSTEIN/NOAH
  BAGEL PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul J.B. Murphy, III

  
	
   

  	
   

  	
  Paul J.B. Murphy, III

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  I.
  & J. BAGEL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul J.B. Murphy, III

  
	
   

  	
   

  	
  Paul J.B. Murphy, III

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  



 


Signature
Page to Guarantee Agreement


 


9

















 


Schedule 1


NOTICE ADDRESSES OF
GUARANTORS


	
  Einstein and Noah Corp.

  	
   

  	
  c/o
  New World Restaurant Group, Inc.

  
	
   

  	
   

  	
  1687
  Cole Boulevard

  
	
   

  	
   

  	
  Golden,
  CO 80401

  
	
   

  	
   

  	
  Attention:
  Richard P. Dutkiewicz, Chief Financial Officer

  
	
   

  	
   

  	
  Telecopy:
  (303) 568-8402

  
	
   

  	
   

  	
  Telephone:
  (303) 568-8004

  
	
   

  	
   

  	
   

  
	
  Manhattan Bagel Company,
  Inc.

  	
   

  	
  c/o
  New World Restaurant Group, Inc.

  
	
   

  	
   

  	
  1687
  Cole Boulevard

  
	
   

  	
   

  	
  Golden,
  CO 80401

  
	
   

  	
   

  	
  Attention:
  Richard P. Dutkiewicz, Chief Financial Officer

  
	
   

  	
   

  	
  Telecopy:
  (303) 568-8402

  
	
   

  	
   

  	
  Telephone:
  (303) 568-8004

  
	
   

  	
   

  	
   

  
	
  Chesapeake Bagel Franchise
  Corp.

  	
   

  	
  c/o
  New World Restaurant Group, Inc.

  
	
   

  	
   

  	
  1687
  Cole Boulevard

  
	
   

  	
   

  	
  Golden,
  CO 80401

  
	
   

  	
   

  	
  Attention:
  Richard P. Dutkiewicz, Chief Financial Officer

  
	
   

  	
   

  	
  Telecopy:
  (303) 568-8402

  
	
   

  	
   

  	
  Telephone:
  (303) 568-8004

  
	
   

  	
   

  	
   

  
	
  Einstein/Noah Bagel
  Partners, Inc.

  	
   

  	
  c/o
  New World Restaurant Group, Inc.

  
	
   

  	
   

  	
  1687
  Cole Boulevard

  
	
   

  	
   

  	
  Golden,
  CO 80401

  
	
   

  	
   

  	
  Attention:
  Richard P. Dutkiewicz, Chief Financial Officer

  
	
   

  	
   

  	
  Telecopy:
  (303) 568-8402

  
	
   

  	
   

  	
  Telephone:
  (303) 568-8004

  
	
   

  	
   

  	
   

  
	
  I. & J. Bagel, Inc.

  	
   

  	
  c/o
  New World Restaurant Group, Inc.

  
	
   

  	
   

  	
  1687
  Cole Boulevard

  
	
   

  	
   

  	
  Golden,
  CO 80401

  
	
   

  	
   

  	
  Attention:
  Richard P. Dutkiewicz, Chief Financial Officer

  
	
   

  	
   

  	
  Telecopy:
  (303) 568-8402

  
	
   

  	
   

  	
  Telephone:
  (303) 568-8004

  



 

















 


Annex I
 to

Guarantee Agreement


ASSUMPTION AGREEMENT, dated
as of                      ,
200   , made by                                           ,
a                       
corporation (the “Additional Guarantor”), in
favor of the Lenders.  All capitalized
terms not defined herein shall have the meaning ascribed to them in such Credit
Agreement.


W I T N E S S E T H:


WHEREAS, New World
Restaurant Group, Inc., a Delaware corporation (the “Borrower”)
and the Lenders have entered into a Credit Agreement, dated as of January 26,
2006 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”);


WHEREAS, in connection with
the Credit Agreement, the Borrower and certain of their Affiliates (other than
the Additional Guarantor) have entered into the (i) Guarantee Agreement, dated
as of February     , 2006 (as amended, supplemented or
otherwise modified from time to time, the “Guarantee Agreement”)
in favor of the Lenders;


WHEREAS, the Credit
Agreement requires the Additional Guarantor to become a party to the Guarantee
Agreement; and


WHEREAS, the Additional Guarantor
has agreed to execute and deliver this Assumption Agreement in order to become
a party to the Guarantee Agreement;


NOW, THEREFORE, IT IS AGREED:


1.  Guarantee Agreement.  By executing and delivering this Assumption
Agreement, the Additional Guarantor, as provided in Section 5.13 of
the Guarantee Agreement, the undersigned hereby becomes a party to the
Guarantee Agreement as a Guarantor thereunder with the same force and effect as
if originally named therein as a Guarantor and, without limiting the generality
of the foregoing, hereby expressly assumes all obligations and liabilities of a
Guarantor thereunder.  The information
set forth in Annex 1-A hereto is hereby added to the information set forth
in the Schedules to the Guarantee Agreement. 
The Additional Guarantor hereby represents and warrants that each of the
representations and warranties contained in Section 3 of the
Guarantee Agreement is true and correct as to the Additional Guarantor on and
as the date hereof (after giving effect to this Assumption Agreement) as if
made on and as of such date.


2.  GOVERNING LAW.  THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

















 


IN WITNESS WHEREOF, the
undersigned has caused this Assumption Agreement to be duly executed and
delivered as of the date first above written.


	
   

  	
  [ADDITIONAL
  GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


Annex 1-A to

Assumption Agreement


Supplement
to Schedule 1