Exhibit
10.43




 





NEW WORLD RESTAURANT GROUP,
INC.,


MANHATTAN
BAGEL COMPANY, INC.


and


THE BANK OF NEW YORK


	
   

  	
  ESCROW DEPOSIT AGREEMENT

  	
   

  



 


Dated: June 10, 2003




 




















 


THIS
ESCROW DEPOSIT AGREEMENT


(the
“Agreement”), made and dated this 8th day of July, Two Thousand and Three


AMONG


NEW WORLD RESTAURANT GROUP, INC. a Delaware
corporation, (the “Company”),


MANHATTAN BAGEL COMPANY, INC., a New Jersey
corporation (“MBC”)


AND


THE BANK OF NEW YORK, a New York banking
corporation authorized to conduct corporate trust business in the State of New
Jersey and having a corporate trust office in West Paterson, New Jersey (the
“Escrow Agent”),


WITNESSETH:


WHEREAS, the Company is duly
organized and existing under the laws of the State of Delaware; and


WHEREAS, MBC is duly
organized and existing under the laws of the State of New Jersey; and


WHEREAS, MBC is a wholly
owned subsidiary of the Company; and


WHEREAS, the Escrow Agent is duly
organized and existing under the laws of the State of New York, having a
corporate trust office and place of business in West Paterson, New Jersey and
authorized to conduct corporate trust business in the State of New Jersey; and


WHEREAS, on
December 23, 1998, the New Jersey Economic Development Authority (the
“Authority”) issued $2,800,000 aggregate principal amount of its Economic
Development Bonds (Manhattan Bagel Company, Inc. Project) Refunding Series 1998
(the “Bonds”) for the benefit of MBC pursuant to an Indenture of Trust, dated
as of December 1, 1998 (the “Indenture”), by and between the Authority and The
Bank of New York, as trustee thereunder; and


WHEREAS, MBC
is obligated pursuant to a Bond Agreement, dated as of December 1, 1998 (the
“Bond Agreement”), by and between the Authority and MBC, to make loan
repayments to the Authority at such times and in such amounts as are necessary
to make debt service payments with respect to the Bonds; and


WHEREAS, the
Company agreed to guarantee all of the obligations of MBC under the Bond
Agreement; and


WHEREAS, as
of the date of this Agreement, the Bonds are outstanding in the principal
amount of $1,680,000 (the “Outstanding Bonds”) and bear interest at the rate of
nine per centum (9%) per annum; and

















 


WHEREAS, the
Bonds mature on December 1, 2008, and are subject to mandatory sinking fund
redemption at par in the principal amount of $280,000 on December 1 in each of
the years 2003 to 2007, inclusive, together with interest accrued to the date
fixed for redemption; and


WHEREAS, the
Company and MBC are desirous of defeasing the Outstanding Bonds pursuant to
Section 12.01 of the Indenture; and


WHEREAS, pursuant to the terms of
the Indenture, the Escrow Agent, as trustee and paying agent thereunder is the
entity with which moneys and securities are to be deposited to effectuate the
defeasance of the lien of the Outstanding Bonds; and


WHEREAS, the Company has provided
for an irrevocable deposit of moneys with the Escrow Agent (upon such deposit
such moneys shall be the absolute property of the Escrow Agent and shall not be
subject to any lien, claim or right of the Company or any of its creditors in
any bankruptcy, insolvency, liquidation or other similar proceeding) to pay the
Outstanding Bonds as aforesaid and to defease the lien of the Outstanding Bonds
and has authorized such other action as shall be necessary and sufficient to
cause the Outstanding Bonds to be deemed no longer outstanding under the
Indenture and wishes to enter into this Agreement to effectuate the foregoing
purposes;


NOW, THEREFORE, in consideration of the
foregoing and of the mutual covenants, agreements and representations herein
set forth, the Company, MBC and the Escrow Agent hereby agree as follows:


Section 1.              (A)  In order to
secure the payment of the principal or redemption price, if any, of and
interest on the Outstanding Bonds, the Company hereby pledges and sets over to
the Escrow Agent concurrently with the execution of this Agreement, in trust
for the benefit and security of the holders from time to time of the
Outstanding Bonds (the “Bondholders”) subject to the terms and conditions
hereinafter set forth, in immediately available moneys, the sum of
$2,027,625.21, to the extent of $151,418.00 from funds currently available in
accounts held by the Trustee under the Indenture (the Company and MBC hereby
direct the Trustee to withdraw such funds from such accounts) and, to the
extent of $1,876,207.21, from funds made available to the Trustee by the
Company (collectively the “Escrow Sum”), receipt of which the Escrow Agent
hereby acknowledges.  Subject to Section
2(A) below, the Escrow Agent shall immediately upon receipt deposit the Escrow
Sum directly into the Escrow Account hereinafter established and created.  The Company represents that the Escrow Sum
is sufficient to purchase on the date hereof Escrow Securities (as referred to
in Section 2 of this Agreement), which will bear interest and mature at such
times and in such amounts as will be sufficient, together with cash of $0.21 on
deposit in said Escrow Account as of the date of this Agreement, to pay when
due the principal or redemption price, if any, of and interest on the
Outstanding Bonds from the date hereof to and including the date or dates on
which the Outstanding Bonds will, if not purchased as provided herein, mature
or be called for redemption (the “Escrow Requirement”), as set forth in the
verification report of Grant Thornton LLP, annexed hereto as Exhibit A
and by this reference incorporated herein. 
If, for any reason, at any time, the moneys, Escrow Securities and
Substitute Escrow Securities (as referred to in Section 3 of this Agreement) on
deposit in the Escrow Account shall be insufficient to meet the 


 


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Escrow Requirement, the
Company shall deposit in the Escrow Account, from any legally available funds
of the Company, such additional sums or Substitute Escrow Securities as may be
required to provide for the Escrow Requirement in full.  The Escrow Agent shall have no liability in
connection with any error in the numerical calculations set forth in Exhibit
A.


(B)           There is hereby created and
established with the Escrow Agent a special and irrevocable trust fund
designated: “New World Restaurant Group, Inc. 2003 Defeasance Escrow Account”
(the “Escrow Account”) to be held in the custody of the Escrow Agent as a trust
fund separate and apart from all other funds of the Company or of the Escrow
Agent for the sole benefit of the Bondholders, subject to Sections 2, 3, 4
and 7 of this Agreement.


Section 2.              (A) 
Simultaneously with the execution of this Agreement, the Escrow Agent
shall apply the Escrow Sum, to the extent of $2,027,625 to the purchase of
direct obligations of the United States of America, in such amounts, bearing
interest at such rates and maturing on such dates as set forth in Exhibit B
annexed hereto and by this reference incorporated herein (the “Escrow
Securities”) and shall deposit any remaining moneys, viz. $0.21, into the Escrow Account.  The Escrow Securities and any Substitute
Escrow Securities or evidence of either thereof will be so completed as to
reflect that they are held by the Escrow Agent as trustee under the Indenture,
subject to the provisions of this Agreement. 
Immediately after the acquisition of the Escrow Securities as set forth
in this Section 2 or any Substitute Escrow Securities as set forth in
Section 3 of this Agreement, the Escrow Agent shall deposit or, in the
case of book-entry securities, credit the Escrow Securities or Substitute
Escrow Securities or evidence of either thereof in the Escrow Account.


(B)           The deposit of the moneys, Escrow
Securities and Substitute Escrow Securities in the Escrow Account for the
Outstanding Bonds shall constitute an irrevocable deposit of said moneys in
trust solely (except as provided in Sections 3, 4 and 7 of this Agreement)
for, and such moneys, Escrow Securities and Substitute Escrow Securities,
together with any income or interest earned thereon, shall be held in trust and
(except as provided in Sections 3, 4 and 7 of this Agreement) applied solely
to, the payment of the principal or redemption price if any, of and interest
due and to become due on the Outstanding Bonds; provided, however, that any
cash received from principal or interest payments on Escrow Securities and
Substitute Escrow Securities if not then needed for the payment of principal or
redemption price, if any, and interest on the Outstanding Bonds, shall, as
provided in Section 3 of this Agreement or otherwise to the extent practicable
and under written instruction from the Company, be reinvested in Substitute
Escrow Securities at rates as provided in Section 3 of this Agreement and
maturing at times and in amounts sufficient to pay when due the principal of
and interest to become due on the Outstanding Bonds, as more fully provided
therein.


Section 3.               (A)  Except as
provided in Sections 2, 3, 4 and 7 of this Agreement, neither the Escrow Agent
nor the Company shall have any power or duty to invest any funds held under
this Agreement or to sell, transfer, request the redemption of or otherwise
dispose of or make substitutions for the Escrow Securities held under this
Agreement.


(B)           Upon the written direction of the
Company and subject to the conditions and limitations herein set forth, the
Escrow Agent shall sell, transfer, request the redemption of or otherwise
dispose of the Escrow Securities and Substitute Escrow Securities, and
substitute 


 


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therefor other Escrow
Securities (together with the “other Escrow Securities” referred to in Section
3(C) below, the “Substitute Escrow Securities”), which must be Government
Obligations, as such term is defined in the Indenture.  The Company hereby covenants and agrees that
it will not request the Escrow Agent to exercise any of the powers described in
the preceding sentence in any manner if such exercise of powers would adversely
affect the exclusion of interest on the Outstanding Bonds from gross income for
federal income tax purposes pursuant to Section 103 of the Internal Revenue
Code of 1986, as amended, or any successor legislation then in effect (the
“Code”).  The Escrow Agent shall
purchase such Substitute Escrow Securities with the proceeds derived from the
sale, transfer, redemption or other disposition of the Escrow Securities and
Substitute Escrow Securities.  Such
sale, transfer, redemption or other disposition of Escrow Securities and
Substitute Escrow Securities and the substitution therefor of Substitute Escrow
Securities may be effected only by a simultaneous transaction and only if (i)  a firm of
independent certified public accountants acceptable to the Company shall
certify in writing that the Substitute Escrow Securities, together with the
moneys and Escrow Securities and Substitute Escrow Securities which will
continue to be held in the Escrow Account immediately following such sale,
transfer, redemption or other disposition, will mature and bear interest in
such amounts and at such times to provide sufficient moneys to pay when due,
all principal or redemption price, if any, of and interest on the Outstanding
Bonds which have not theretofore been paid or purchased from the date thereof
to and including the date or dates on which the Outstanding Bonds will mature
or be redeemed and (ii)  the Escrow Agent shall receive an unqualified written opinion of
Hawkins, Delafield & Wood or other recognized bond counsel to the effect
that such sale, transfer, redemption or other disposition of Escrow Securities
and Substitute Escrow Securities and substitution therefor of Substitute Escrow
Securities will not adversely affect the exclusion of interest on the
Outstanding Bonds from gross income for federal income tax purposes pursuant to
Section 103 of the Code.


(C)           Upon the written direction of the
Company and subject to the conditions and limitations herein set forth, the
Escrow Agent shall reinvest amounts received from the maturing principal of or
interest on Escrow Securities or Substitute Escrow Securities in other Escrow
Securities (together with the “other Escrow Securities” referred to in Section
3(B) above, the “Substitute Escrow Securities”), which must be Government
Obligations, as such term is defined in the Indenture.  Such Substitute Escrow Securities shall
mature no later than the next interest payment date, redemption date or
principal payment date for the Outstanding Bonds, and the amount receivable by
the Escrow Agent from any such Substitute Escrow Securities on and prior to the
maturity thereof shall equal or exceed the amount invested therein by the
Escrow Agent.  The Company hereby
covenants and agrees that it will not request the Escrow Agent to exercise any
of the powers described in the preceding sentence in any manner, which would
adversely affect the exclusion of interest on the Outstanding Bonds from gross
income for federal income tax purposes pursuant to Section 103 of the
Code.  Such reinvestment may be effected
only if (i) 
a firm of independent certified public accountants acceptable to the
Company shall certify in writing that such Substitute Escrow Securities,
together with the moneys, Escrow Securities and Substitute Escrow Securities,
which will continue to be held in the Escrow Account immediately following such
reinvestment, will mature and bear interest in such amounts and at such times
to provide sufficient moneys to pay when due all principal or redemption price,
if any, of and interest on the Outstanding Bonds, which have not theretofore
been paid or purchased from the date thereof to and including the date or dates
on which the Outstanding Bonds will mature or be redeemed and (ii)  the Escrow
Agent shall receive an unqualified written 


 


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opinion of Hawkins,
Delafield & Wood or other recognized bond counsel to the effect that such
reinvestment will not adversely affect the exclusion of interest on the Outstanding
Bonds from gross income for federal income tax purposes pursuant to
Section 103 of the Code.


(D)          Notwithstanding the foregoing
provisions of this Section 3, upon the written direction of the Company,
the Escrow Agent shall sell, transfer, request the redemption of, or otherwise
dispose of Escrow Securities or Substitute Escrow Securities, and apply the
proceeds of such sale, transfer, redemption or other disposition to the
purchase of Outstanding Bonds in accordance with Section 4(B) hereof; provided, however, that such sale,
transfer, Redemption or other disposition may be effected only if (i)  a firm of
independent certified public accountants acceptable to the Company shall
certify in writing that the amount of moneys and Escrow Securities and Substitute
Escrow Securities remaining on deposit in the Escrow Account immediately
following such sale, transfer, redemption or other disposition and application
of such proceeds would mature at such times and bear interest in such amounts
at least sufficient to pay when due the principal or redemption price, if any,
of and interest on the Outstanding Bonds, which have not theretofore been paid
from the date thereof to and including the date or dates on which the
Outstanding Bonds will mature or be redeemed and (ii)  the Escrow Agent shall receive an
unqualified written opinion of Hawkins, Delafield & Wood or other
recognized bond counsel to the effect that such sale, transfer, redemption of
other disposition of Escrow Securities or Substitute Escrow Securities would
not adversely affect the exclusion for federal income tax purposes of interest
on the Outstanding Bonds under Section 103 of the Code.


Section 4.               (A)  The Escrow
Agent shall collect on the due dates thereof the principal of and interest on
the Escrow Securities and Substitute Escrow Securities, as the case may be, on
deposit with it in the Escrow Account and shall apply the principal and
interest so received in accordance with the provisions of Section 3 of this
Agreement and this Section 4.


(B)           If so directed in writing by the
Company, prior to each principal payment date or redemption date for the
Outstanding Bonds next occurring, and subject to the provisions of
Section 3(D) of this Agreement, the Escrow Agent shall apply moneys from
the Escrow Account to the purchase of Outstanding Bonds maturing or being
redeemed on such future date.  The price
paid for such Outstanding Bonds shall not exceed the principal or redemption
price, if any, of such Outstanding Bonds, plus interest accrued to the date of
purchase.  Any Outstanding Bonds so
purchased shall reduce the amount of Outstanding Bonds to be paid or redeemed
on such future date, and such Outstanding Bonds may be purchased from any
seller, including the Company.


(C)           On each interest payment date,
principal payment date or redemption date for the Outstanding Bonds, the Escrow
Agent shall apply sufficient moneys from the matured principal of and interest
on the Escrow Securities and Substitute Escrow Securities, as the case may be,
or other funds on deposit in the Escrow Account, to pay the principal or
redemption price, if any, of and interest on the Outstanding Bonds becoming due
on such date in accordance with the terms of this Agreement reduced by the
amount, which would have been due on such date with respect to Outstanding
Bonds purchased in accordance with Section 4(B) above.  After payment of the principal or redemption
price, if any, of and interest on the Outstanding Bonds (or after provision therefor
is made) to and including December 1, 2008 all remaining moneys, 


 


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Escrow Securities and
Substitute Escrow Securities (if any) in the Escrow Account shall upon the
written instruction of the Company be repaid by the Escrow Agent to the Company
as the Company’s property, free and clear of the lien of any pledge, any pledge
or any trust created by the Indenture and this Agreement.


Section 5.              The Escrow
Securities, Substitute Escrow Securities, moneys representing the principal of
and interest on the Escrow Securities and Substitute Escrow Securities and
other moneys on deposit in the Escrow Account shall be subject to an express
lien and trust for the sole benefit of the Bondholders until used and applied
in accordance with the terms of this Agreement subject to the provisions of
Sections 2, 3, 4 and 7 hereof.


Section 6.              The liability
of the Escrow Agent to make payments required by this Agreement with respect to
the Outstanding Bonds shall be limited to the principal of and interest on the
Escrow Securities or Substitute Escrow Securities and other moneys on deposit
in the Escrow Account.  The Escrow Agent
shall not be liable for any loss resulting from any investment made pursuant to
this Agreement or any supplemental agreement unless caused by its willful
neglect or gross negligence.


Section 7.              This Agreement
shall terminate when all Outstanding Bonds have been paid as provided in this
Section 7; provided that, unless otherwise provided by the provisions of
N.J.S.A. 46:30B-1, moneys held by the Escrow Agent in trust for the payment and
discharge of any of the Outstanding Bonds, which remain unclaimed for nine (9)
months after the date when such bonds shall have become due and payable by
maturity or redemption shall be repaid by the Escrow Agent to the Company as
the Company’s property, free from the trust created by the Indenture and this
Agreement.  The Escrow Agent shall
thereupon be released and discharged with respect thereto and hereto and the
holders of the Outstanding Bonds payable from such moneys shall look only to
the Company for the payment of the Outstanding Bonds.  No such termination of this Agreement shall affect the rights or
liabilities theretofore accrued by either party to this Agreement.  In addition, the provisions of
Sections 12, 13 and 14 hereof relating to indemnification of the Escrow
Agent shall survive the termination of this Agreement and resignation or
removal of the Escrow Agent.


Section 8.               (A)  The Escrow
Agent hereby agrees to perform all the duties and obligations imposed upon it
by this Agreement as well as those provisions of the Indenture applicable to
the performance of this Agreement.


(B)           The Escrow Agent, or any successor
thereof, may at any time resign and be discharged of its duties and obligations
created by this Agreement in the same manner as provided for under the
Indenture for resignation of the Trustee (as defined in the Indenture).


(C)           The Escrow Agent, or any successor
thereof, may be removed at any time by the holders of a majority in principal
amount of Outstanding Bonds then outstanding, excluding any Outstanding Bonds
held by or for the account of the Company, by an instrument or concurrent
instruments in writing signed and duly acknowledged by such Bondholders or by
their attorneys duly authorized in writing and delivered to the Company.


 


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Section 9.              If any one or
more of the covenants or agreements provided in this Agreement on the part of
the Company or the Escrow Agent to be performed should be determined by a court
of competent jurisdiction to be contrary to law, such covenant or agreement
shall be deemed and construed to be severable from the remaining covenants and
agreements herein contained and shall in no way affect the validity of the remaining
provisions of this Agreement.


Section 10.            The Company
shall continue to pay from time to time to the Escrow Agent all reasonable
fees, expenses, charges, including attorneys’ fees and other disbursements and
those of their agents and employees incurred in and about the performance of
their powers and duties with respect to the Outstanding Bonds; provided, however, that such payment shall
not under any circumstances be made from funds on deposit in the Escrow Account
and the Escrow Agent shall have no claim or lien on or interest in the funds on
deposit in the Escrow Account for any such payment.


Section 11.            This Agreement
shall not be repealed, revoked, rescinded, altered, amended or supplemented in
whole or in part without (i) the written consent of the holders of a majority
in principal amount of the Outstanding Bonds outstanding at the time such
repeal, revocation, rescission, alteration, amendment or supplement, is
effective (excluding any Outstanding Bonds held by or for the account of the
Company), and (ii) the written consent of the Escrow Agent; provided, however, that the Company and
the Escrow Agent may, without consent of or notice to the Bondholders, enter
into such agreements supplemental to or amendatory of this Agreement as shall,
in the opinion of Hawkins, Delafield & Wood or other recognized bond
counsel, not materially adversely affect the rights of the Bondholders
hereunder or under the terms and provisions of the Indenture.  The Escrow Agent shall be entitled to rely
exclusively upon such opinion of counsel with respect to compliance with this
Section, including the extent, if any, to which any change, modification,
addition or elimination affects the rights of the Bondholders or that any
instrument executed hereunder complies with the conditions or provisions of
this Section.


Section 12.            The recitals of
fact in this Agreement shall be taken as the statements of the Company and MBC,
and the Escrow Agent assumes no responsibility for the correctness of the
same.  The Escrow Agent shall be under
no obligation or duty to perform any act which would involve it in expense or
liability or to institute or defend any suit in respect of this Agreement or to
advance any of its own moneys, unless properly indemnified.  The Escrow Agent shall not be liable in
connection with the performance of its duties hereunder except for its own
gross negligence or willful misconduct.


Section 13.            The Escrow
Agent shall be fully protected in acting upon any notice, resolution, request,
consent, order, certificate, report, opinion, bond or other paper or document
reasonably believed by it to be genuine, and to have been signed and presented
by the proper party or parties, and may consult with counsel, who may or may
not be of counsel to the Company or MBC, and the opinion of such counsel shall
be full and complete authorization and protection in respect of any action
taken or suffered by it in good faith and in accordance therewith.  Whenever the Escrow Agent shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering any action under this Agreement, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be 


 


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conclusively proved and
established by a certificate signed by an Authorized Company Representative (as
defined in the Bond Agreement) and such certificate shall be full warrant for
any action taken or suffered in good faith under the provisions of this
Agreement upon the faith thereof, but in its discretion the Escrow Agent may in
lieu thereof accept other evidence of such fact or matter or may require such
further or additional evidence as may seem reasonable to it.  Except as otherwise expressly provided
herein, any request, order, notice or other direction required or permitted to
be furnished pursuant to any provision hereof by the Company to the Escrow
Agent shall be sufficiently executed if executed in the name of the Company by
an Authorized Company Representative.


Section 14.            The Company
shall indemnify and hold harmless the Escrow Agent against any loss, liability
or expense, which it may incur in the exercise and performance of its powers
and duties hereunder and which are not due to its gross negligence or willful
misconduct.


Section 15.            This Agreement
shall, to the fullest extent permitted by law, be interpreted, construed and
enforced pursuant to the laws of the State of New Jersey.


Section 16.            This Agreement
is made for the sole and exclusive benefit of the parties hereto and the
Bondholders.  Nothing contained in this
Agreement expressed or implied is intended or shall be construed to confer
upon, or to give to any person other than the Company, the Escrow Agent and the
Bondholders any right, remedy or claim under or by reason of this Agreement.


Section 17.            This Agreement
may be executed in several counterparts, and when at least one counterpart has
been fully executed by each party hereto, this Agreement shall become binding
on the parties hereto.  All or any of
the said counterparts shall be regarded for all purposes as one original and
shall constitute and be but one and the same instrument.


Section 18.            This Agreement
shall completely and fully supersede all other prior and contemporaneous
understandings or agreements, both written and oral, between the parties hereto
relating to the transactions contemplated hereby.


Section 19.            This Agreement
shall be binding upon the Escrow Agent and the Company and MBC and upon their
respective successors, transferees and assigns, and shall inure to the benefit
of and be enforceable by the Escrow Agent and the Company and MBC and their
respective successors, transferees and assigns.  This Agreement may not be assigned by the Company, MBC or the
Escrow Agent without the prior written consent of the nonassigning parties
hereto.


 


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IN WITNESS WHEREOF, the parties hereto have
caused this Escrow Deposit Agreement to be executed by their duly authorized
officers, all as of the date and year first above written.


	
   

  	
  NEW WORLD
  RESTAURANT GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  Anthony D. Wedo

  
	
   

  	
  Title:    Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
  MANHATTAN
  BAGEL COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  Anthony D. Wedo

  
	
   

  	
  Title:    Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
  THE BANK
  OF NEW YORK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  Joseph Mate

  
	
   

  	
  Title:    Assistant Vice
  President

  



 


 


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EXHIBIT A


VERIFICATION REPORT

















 


EXHIBIT B


ESCROW SECURITIES