Exhibit 10.47


 


June 27, 2003


 


$160,000,000


 


NEW WORLD RESTAURANT GROUP, INC.


 


13.0% Senior Secured Notes due 2008


 


PURCHASE AGREEMENT


 


 


JEFFERIES &
COMPANY, INC.


11100 Santa Monica
Blvd., 10th Floor


Los Angeles,
California  90025


Ladies and
Gentlemen:


 


New World
Restaurant Group, Inc., a Delaware corporation (the “Company”), agrees
with you as follows:


 


1.             Issuance of
Notes.  Subject to the terms and
conditions herein contained, the Company proposes to issue and sell to
Jefferies & Company, Inc. (the “Initial Purchaser”), $160,000,000
aggregate principal amount of 13.0% Senior Secured Notes due 2008
(collectively, the “Notes”).  The
Notes will be issued pursuant to an indenture (the “Indenture”) to be
dated as of the Closing Date (as defined in Section 3 hereof) by and
among the Company, each of the Subsidiary Guarantors (as defined below), party
thereto, and The Bank of New York, as trustee (the “Trustee”).  Capitalized terms used but not defined
herein shall have the meaning set forth in the Indenture.


 


In connection with
the sale of the Notes, the Company will concurrently enter into a new
$15,000,000 aggregate principal amount senior credit facility among the
Company, the guarantors named therein and AmSouth Bank, as agent (the “Senior
Credit Facility”).


 


Pursuant to the
Collateral Agreements (as defined in the Indenture) to be entered into by the
Company and the Trustee on the Closing Date, the Company will grant and pledge
to the Trustee, for the equal and ratable benefit of the holders of the Notes,
a security interest in substantially all assets of the Company and its
subsidiaries (other than non-restricted subsidiaries) to secure the payment and
performance of the obligations of the Company and the Subsidiary Guarantors
under the Indenture and the Notes.  The
security interests in the collateral securing the Notes will be subordinated to
a lien securing the obligations under the Senior Credit Facility.


 


Pursuant to the
Indenture, all current and future subsidiaries of the Company (other than
non-restricted subsidiaries), jointly and severally, shall fully and
unconditionally guarantee, on a senior secured basis, to each holder of Notes
and the Trustee, the payment and performance of the Company’s obligations under
the Indenture


 

















 


and the Notes (each such subsidiary being referred to herein as a “Subsidiary
Guarantor” and each such guarantee being referred to herein as a “Guarantee”).


 


This Agreement,
the Indenture, the Collateral Agreements, the Notes, the Exchange Notes, the
Private Exchange Notes, the Guarantees and the Registration Rights Agreement
may hereinafter be referred to as the “Transaction Documents.”


 


The Notes are
being offered and sold to the Initial Purchaser without being registered under
the Securities Act of 1933, as amended (the “Act”), in reliance on
certain exemptions therefrom.


 


In connection with
the offer and sale of the Notes (the “Offering”), the Company has
prepared a preliminary offering circular, dated May 15, 2003, a preliminary
offering circular, dated June 26, 2003 (the “Preliminary Offering Circular”),
and a final offering circular dated June 27, 2003 (the “Final Offering
Circular”), setting forth a description of the terms of the Notes and the
Collateral Agreements, the terms of the Offering and a description of the business
of the Company.  “Offering Circular”
means, as of any date or time referred to in this Agreement, the most recent
offering circular (whether the Preliminary Offering Circular or the Final
Offering Circular, or any amendment or supplement to either such document),
including exhibits and schedules thereto, if any.


 


The Company
understands from the Initial Purchaser that the Initial Purchaser proposes to
make the Offering on the terms and in the manner set forth herein and in the
Final Offering Circular as soon as the Initial Purchaser deems advisable after
this Agreement has been executed and delivered.  The Company also understands from the Initial Purchaser that, at
such time, the Initial Purchaser intends to make an offering of the Notes (i)
to persons in the United States whom the Initial Purchaser reasonably believes
to be qualified institutional buyers (“QIBs”) as defined in Rule 144A
under the Act, as such rule may be amended from time to time (“Rule 144A”),
(ii) in transactions to a limited number of persons whom the Initial Purchaser
reasonably believes (based upon written representations made by such persons to
the Initial Purchaser) to be institutional “accredited investors” (“Accredited
Investors”) as defined in Rule 501(a)(1), (2), (3) or (7) under the Act and
(iii) outside the United States in compliance with Regulation S under the Act.


 


The Initial
Purchaser and its direct and indirect transferees of the Notes will be entitled
to the benefits of a registration rights agreement, substantially in the form
attached hereto as Exhibit A (the “Registration Rights Agreement”),
pursuant to which the Company shall agree, among other things, to file a
registration statement with the Securities and Exchange Commission (the “Commission”)
registering under the Act the Notes, the Exchange  Notes or the Private Exchange Notes (the Exchange Notes,
together with the Private Exchange Notes, shall sometimes be referred to
hereinafter as the “New Notes”).


 


2.             Representations and Warranties.  The
Company, on behalf of itself and each of its Subsidiaries (as defined in the
Indenture), represents and warrants to and


 


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agrees with the
Initial Purchaser that as of the date hereof and as of the Closing Date (as
defined in Section 3):


 


(a)           Neither the
Preliminary Offering Circular, the Final Offering Circular, nor any amendment
or supplement thereto, as of the date thereof and at all times subsequent
thereto up to the Closing Date, contained or contains any untrue statement of a
material fact, or omitted or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this Section 2(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the Initial
Purchaser and furnished to the Company in writing by the Initial Purchaser
expressly for use in the Preliminary Offering Circular or the Final Offering
Circular or any amendment or supplement thereto.  No injunction or order has been issued that either
(i) asserts that any of the transactions contemplated by the Transaction
Documents is subject to the registration requirements of the Act or (ii) would
prevent or suspend the issuance or sale of the Notes or the use of the
Preliminary Offering Circular, the Final Offering Circular or any amendment or
supplement thereto, in any jurisdiction. 
Each of the
Preliminary Offering Circular and the Final Offering Circular, as of their
respective dates, contained, and the Final Offering Circular, as amended or
supplemented as of the Closing Date, will contain, all the information
specified in, and meet the requirements of, Rule 144A(d)(4) under the Act.


 


(b)           The Company has the
authorized capitalization set forth in the Final Offering Circular, and the
authorized capital stock of the Company conforms to the statements relating
thereto contained in the Final Offering Circular.  All of the outstanding shares of capital stock of the Company and
its Subsidiaries have been duly authorized and, on the Closing Date, will be
validly issued, fully paid and nonassessable and will not have been issued in
violation of any preemptive or similar rights. 
Except as disclosed in the Final Offering Circular, (i) all of the
outstanding shares of capital stock of each of the Subsidiaries of the Company
are owned, directly or indirectly, by the Company, free and clear of all liens,
security interests, mortgages, pledges, charges, equities, claims or
restrictions on transferability or encumbrances of any kind (collectively, “Encumbrances”),
other than those imposed by the Act and the securities or “Blue Sky” laws of
certain jurisdictions, (ii) there are no outstanding (A) options, warrants or
other rights to purchase from the Company or any of its Subsidiaries, (B)
agreements, contracts, arrangements or other obligations of the Company or any
of its Subsidiaries to issue or (C) other rights to convert any obligation into
or exchange any securities for, in the case of each of clauses (A)
through (C), shares of capital stock of or other ownership interests (“Equity
Interests”) in the Company or any of its Subsidiaries.  Except as set forth in the Final Offering
Circular, the Company does not own and does not have any Subsidiaries that own,
directly or indirectly, any Equity Interests of any kind in any firm,
partnership, joint venture or other entity.


 


(c)           Each of the Company
and the Subsidiary Guarantors is duly formed, validly existing and in good
standing under the laws of its jurisdiction of formation, with all requisite
power and authority to own its properties and conduct its business as now
conducted, and as described in the Final Offering Circular.  Each of the


 


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Company and the
Subsidiary Guarantors is duly licensed or qualified to do business and is in
good standing in all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed or qualified would
not, individually or in the aggregate, result in a Material Adverse
Effect.  For the purposes of this Agreement,
a “Material Adverse Effect” shall mean a material adverse effect on (i) the
management, business, condition (financial or otherwise), prospects or results
of operations of the Company and the Subsidiary Guarantors, taken as a whole,
or (ii) the Company’s ability to perform any of its material obligations under
any of the agreements, documents or instruments contemplated to be entered into
by the Company hereby, by the Transaction Documents or by the Final Offering
Circular.


 


(d)           The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under the Notes, the Exchange Notes and the Private Exchange
Notes.  Each of the Subsidiary
Guarantors has all requisite power and authority to execute, deliver and perform
each of its obligations under its Guarantee and the guarantee of the Exchange
Notes and the Private Exchange Notes. 
The Notes, the Exchange Notes and the Private Exchange Notes have been
duly and validly authorized by the Company and the Guarantees and the
guarantees of the Exchange Notes and the Private Exchange Notes have each been
duly and validly authorized by each of the Subsidiary Guarantors, when executed
by the Company and the Subsidiary Guarantors and authenticated by the Trustee
in accordance with the provisions of the Indenture, and, in the case of the
Notes, when delivered to and paid for by the Initial Purchaser in accordance
with the terms of this Agreement and the Indenture, will have been duly
executed, issued and delivered and will constitute valid and legally binding
obligations of the Company and the Subsidiary Guarantors, entitled to the
benefits of the Indenture, the Collateral Agreements and the Registration
Rights Agreement, enforceable against the Company and the Subsidiary Guarantors
in accordance with their respective terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors’ rights generally and (ii) general principles of
equity (whether applied by a court of law or equity) and the discretion of the
court before which any proceeding therefore may be brought.


 


(e)           Each of the Company
and the Subsidiary Guarantors has all requisite power and authority to execute,
deliver and perform each of its obligations under the Indenture and the
Collateral Agreements.  The Indenture
conforms in all material respects to the requirements for qualification under
the Trust Indenture Act of 1939, as amended (the “TIA”).  The Indenture and the Collateral Agreements
have been duly and validly authorized by the Company and each Subsidiary
Guarantor party thereto and, when executed and delivered by the Company, each
such Subsidiary Guarantor and each of the other parties thereto, will each
constitute a valid and legally binding agreement of the Company and each
Subsidiary Guarantor, enforceable against the Company and each Subsidiary
Guarantor in accordance with its respective terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors’ rights generally and (ii) general
principles of equity


 


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(whether applied
by a court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought.


 


(f)            Each of the Company
and the Subsidiary Guarantors has all requisite power and authority to execute,
deliver and perform its obligations under the Registration Rights
Agreement.  The Registration Rights
Agreement has been duly and validly authorized by the Company and each of the
Subsidiary Guarantors and when executed and delivered by the Company and each
of the Subsidiary Guarantors, will constitute a valid and legally binding
agreement of the Company and each of the Subsidiary Guarantors, enforceable
against the Company and each of the Subsidiary Guarantors in accordance with
its terms, except that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors’ rights generally, and (ii) general principles of equity (whether
applied by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal or state securities laws or public
policy considerations.


 


(g)           The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.  This Agreement has
been duly and validly authorized, executed and delivered by the Company.


 


(h)           No consent,
approval, authorization or order of any court or governmental agency or body,
or third party (in each case, a “Consent”) is required for the
performance of this Agreement by the Company or the consummation by the Company
and the Subsidiary Guarantors of the transactions contemplated hereby, except
such Consents as have been obtained or as may be required under the Act or
state securities or “Blue Sky” laws in connection with the purchase and resale
of the Notes by the Initial Purchaser.


 


(i)            Neither the Company
nor any Subsidiary Guarantor is (i) in violation of its certificate of
incorporation or bylaws or other organizational documents, (ii) in breach or
violation of any statute, judgment, decree, order, rule or regulation
applicable to it or any of its properties or assets, except for any such breach
or violation which would not, individually or in the aggregate, have a Material
Adverse Effect or (iii) in breach of or default under (nor has any event
occurred which, with notice or passage of time or both, would constitute a
breach of or default under) or in violation of any of the terms or provisions
of any indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate, contract or other agreement
or instrument to which the Company or any Subsidiary Guarantor is a party or to
which the Company or any Subsidiary Guarantor or any of their properties or
assets are subject, except for any such breach, default, violation or event
which would not, individually or in the aggregate, have a Material Adverse
Effect.


 


(j)            The execution,
delivery and performance by the Company and the Subsidiary Guarantors of the
Transaction Documents and the consummation of the


 


5

















 


transactions
contemplated thereby, and the fulfillment of the terms thereof, will not
conflict with or constitute or result in a breach of or a default under (or an
event which with notice of passage of time or both would constitute a breach of
or default under) or violation of (i) any indenture, mortgage, deed of trust,
loan agreement, note, lease, license, franchise agreement, permit, certificate,
contract or other agreement or instrument to which the Company or any of the
Subsidiary Guarantors is a party or to which the Company or any of its
Subsidiary Guarantors or any of their respective properties or assets is
subject other than any such breaches, defaults, violations or events which would
not, individually or in the aggregate, have a Material Adverse Effect, (ii) the
certificate of incorporation or bylaws or other organizational documents of the
Company or any of its Subsidiary Guarantors, or (iii) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of its
Subsidiary Guarantors or any of their respective properties or assets other
than any such breaches, defaults, violations or events which would not,
individually or in the aggregate, have a Material Adverse Effect.


 


(k)           The audited
consolidated financial statements and related notes of the Company included in
the Final Offering Circular present fairly in all material respects the
consolidated financial position, the results of operations and cash flows of
the Company and its Subsidiaries as of the dates and for the periods to which
they relate and have been prepared in conformity with generally accepted
accounting principles (“GAAP”), consistently applied, except as
otherwise stated therein.  The unaudited
consolidated financial statements and related notes and schedules of the
Company and its Subsidiaries included in the Final Offering Circular present
fairly the consolidated financial position, results of operations and cash
flows of the Company and its Subsidiaries at the dates and for the periods to
which they relate, subject to year-end audit adjustments, and have been
prepared on a basis consistent with the audited consolidated financial
statements of the Company and its Subsidiaries and in conformity with GAAP,
consistently applied.  The summary and
selected historical financial data in the Final Offering Circular present
fairly in all material respects the financial information shown therein and
have been prepared and compiled on a basis consistent with the audited and
unaudited financial statements included therein, except as otherwise stated
therein.


 


(l)            The pro forma
financial information (including the notes thereto) included in the Final
Offering Circular have been properly computed on the bases described
therein.  The estimates and assumptions
used by the Company in the preparation of the pro forma financial information
(including the notes thereto) included in the Final Offering Circular are
believed in good faith by the Company to be reasonable, the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein, and the Company believes that such information is
reasonably based on the facts and circumstances existing on the Closing Date
and the assumptions stated therein.


 


(m)          Grant Thornton LLP,
which firm has audited certain of such financial statements as set forth in its
reports included in the Final Offering Circular, is an independent public
accounting firm within the meaning of the Act.


 


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(n)           Except as described
in the Final Offering Circular, there is not pending or, to the best knowledge
of the Company, threatened against the Company or any of its Subsidiaries, any
action, suit or proceeding, to which the Company or any Subsidiary of the
Company is a party, or to which any of the property or assets of the Company or
any Subsidiary of the Company are subject, before or brought by any court or
governmental agency or body (i) which, if determined adversely to the
Company or such Subsidiary, would have, individually or in the aggregate, a
Material Adverse Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the Notes to be
sold hereunder or the consummation of any other transaction contemplated by the
Transaction Documents or (ii) which is required to be disclosed in the
Preliminary Offering Circular or the Final Offering Circular.


 


(o)           Except as described
in the Final Offering Circular, each of the Company its Subsidiaries owns or
possesses adequate licenses or other rights to use all material trademarks,
service marks, trade names, patents, trade secrets and know-how necessary to
conduct the businesses as now conducted or as proposed to be conducted as
described in the Final Offering Circular, and the consummation of the
transactions contemplated by each of the Transaction Documents will not alter
or impair any of such rights.  Except as
described in the Final Offering Circular, no claims have been asserted, and the
Company has not received any notice of conflict with (or knows of any such
conflict with) asserted rights of others with respect to the use, validity or
the effectiveness of any trademarks, service marks, trade names, patents, trade
secrets or know-how which, if such claim or assertion of conflict were the
subject of an unfavorable decision, ruling or finding would, individually or in
the aggregate, have a Material Adverse Effect.


 


(p)           Each of the Company
and its Subsidiaries possesses all licenses, permits, certificates, consents,
orders, approvals and other authorizations from, and has made all declarations
and filings with, all federal, state, local and foreign governmental
authorities with jurisdiction, all self-regulatory organizations and all courts
and other tribunals, presently required or necessary for the Company and each
of the Company’s Subsidiaries own or lease, as the case may be, and to possess
or operate its properties and to carry on its business as now conducted or
proposed to be conducted as set forth in the Final Offering Circular, except
where the failure to obtain such licenses, permits, certificates, consents,
orders, approvals and other authorizations, or to make all declarations and
filings (collectively, “Permits”), would not, individually or in the
aggregate, have a Material Adverse Effect; and the Company has fulfilled and
performed all of its obligations with respect to such Permits except
obligations which the failure to fulfill or perform would not have a Material
Adverse Effect, and no event has occurred that allows, or after notice or lapse
of time would allow, revocation or termination thereof, or results in any
material impairment of the rights of the holder of any such Permit; and neither
the Company nor any of its Subsidiaries has received any notice of any
proceeding relating to revocation or modification of any such Permit, except as
described in the Final Offering Circular or except where such revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect.


 


(q)           Since the respective
dates as of which information is given in the Final Offering Circular, except
as described therein or contemplated thereby, (i) neither


 


7

















 


the Company nor
any Subsidiary of the Company has incurred any liabilities or obligations,
direct or contingent, or entered into or agreed to enter into any transactions
or contracts (written or oral) not in the ordinary course of business and (ii)
the Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on
its capital stock or otherwise (other than dividends on the Series F Preferred
Stock paid-in-kind).


 


(r)            Each of the Company
and its Subsidiaries has filed all necessary federal, state and foreign income
and franchise tax returns that are required to be filed and, when filed, all
such returns were true, correct and complete, except where the failure to so
duly and timely file correct and complete returns would not, individually or in
the aggregate, have a Material Adverse Effect, and, except as set forth in the
Final Offering Circular, has paid all taxes, assessments, fees and other
charges (including, without limitation, withholding taxes, penalties and
interest) due or claimed to be due thereon that are due and payable; other than
tax deficiencies which (i) the Company or any Subsidiary of the Company is
contesting in good faith and for which the Company or such Subsidiary has
provided adequate reserves in accordance with GAAP or (ii) the failure to pay
would not have a Material Adverse Effect. 
There is no tax deficiency or actual or proposed tax assessment that has
been asserted against the Company or any Subsidiary of the Company that would
have, individually or in the aggregate, a Material Adverse Effect.


 


(s)           None of the Company
or any agent acting on its behalf has taken or will take any action that could
cause the transactions contemplated by the Final Offering Circular or any of
the Transaction Documents to, and none of the execution, delivery and
performance of this Agreement, the application of the proceeds from the
issuance and sale of the Notes and the consummation of the transactions contemplated
by the Transaction Documents will, violate Section 7 of the Exchange Act
or any regulation promulgated thereunder, Regulation T, U or X promulgated by
the Board of Governors of the Federal Reserve System, in each case as in
effect, or as the same may hereafter be in effect, on the Closing Date.


 


(t)            Each of the Company
and its Subsidiaries has (a) good and marketable title to all real property and
other material assets (personal, tangible, intangible or mixed) described in
the Final Offering Circular as owned by them, and, good and marketable title to
all leasehold estates in the real and personal property described in the Final
Offering Circular as being leased by them, and such title will be free and
clear of all Liens (as defined in the Indenture) except Permitted Liens (as
defined in the Indenture) with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and (b)
peaceful and undisturbed possession under all leases to which it is a party as
lessee or sublessee, except for such defects in title or lack of possession
that, individually or in the aggregate, would not have a Material Adverse
Effect.  Each of the Company and its
Subsidiaries operates all real and personal property leased by it under valid
and enforceable leases and has performed in all material respects the
obligations required to be performed by it with respect to each such lease
except for such leases and obligations which, in the aggregate, would not have
a Material Adverse Effect.  As to leases
with respect to which the Company or any of its


 


8

















 


Subsidiaries is
the lessor, the lessees and other parties under such leases are in compliance
with all material terms and conditions thereunder and such leases are in full
force and effect except for such leases which, if not in full force and effect,
would not, individually or in the aggregate, have Material Adverse Effect.  All tangible assets and properties of the
Company and its Subsidiaries are in good working order (subject to ordinary
wear and tear) and are adequate for the uses to which they are being put or
would be put in the ordinary course of business except for such assets and
properties as are not material, individually or in the aggregate, to the
business, condition (financial or otherwise) or results of operations of the
Company and Subsidiaries, taken as a whole.


 


(u)           Except as described
in the Final Offering Circular, there are no consensual encumbrances or
restrictions on the ability of any Subsidiary Guarantor (x) to pay dividends or
make any other distributions on such Subsidiary Guarantor’s capital stock or to
pay any indebtedness owed to the Company or any other Subsidiary Guarantor, (y)
to make any loans or advances to, or investments in, the Company or any other
Subsidiary or (z) to transfer any of its property or assets to the Company or
any other Subsidiary.


 


(v)           Except as stated in
the Final Offering Circular, there are no outstanding claims for services, either
in the nature of a finder’s fee, financial advisory fee, origination fee or
similar fee, with respect to the transactions contemplated by the Transaction
Documents (other than the Engagement Letter dated January 30, 2002 between the
Company and Jefferies & Company, Inc. and Amendment No. 1 to the Note
Purchase and Security Agreement among the Company, New World EnbcDeb Corp. and
Jefferies & Company, Inc. dated May 16, 2003 (collectively, the “ENBC
Documents”)).


 


(w)          Except as described
in the Final Offering Circular, each of the Company and the Subsidiary
Guarantors is in compliance in all material respects with all existing and
applicable domestic and foreign laws, rules or regulations relating to
pollution or protection of public or employee health or the environment (“Environmental
Law”) and with the terms and conditions of any material Permit, issued to
the Company or the Subsidiary Guarantors thereunder in connection with the
ownership, operation or use of its business, property and assets, except where
the failure to be in such compliance would not, individually or in the
aggregate, have a Material Adverse Effect; except as disclosed in the Final
Offering Circular, none of the Company or the Subsidiary Guarantors is subject
to any known liability, absolute or contingent, under any Environmental Law
except for any such liability which would not, individually or in the
aggregate, have a Material Adverse Effect; except as disclosed in the Final
Offering Circular, there is no civil, criminal or administrative action, suit,
demand, hearing, notice of violation or deficiency, investigation, proceeding
or notice of potential responsibility or demand letter or request for
information pending or, to the knowledge of the Company threatened against the
Company or any of the Subsidiary Guarantors under any Environmental Law which,
if determined adversely to the Company or any Subsidiary Guarantor would,
individually or in the aggregate, result in a Material Adverse Effect.


 


(x)            Each of the Company
or the Subsidiary Guarantors carries insurance (including self insurance) in
such amounts and covering such risks as is


 


9

















 


adequate for the
conduct of its business and the value of its properties and as shall be
customary for companies similarly situated within the industry of the Company.


 


(y)           (i) None of the
Company or its Subsidiaries has any liability for any prohibited transaction or
funding deficiency or any complete or partial withdrawal liability with respect
to any pension, profit sharing, 401(K) plan or other plan which is subject to
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
and (ii) the fair market value of the assets of any such employee pension
benefit plan equals or exceeds the present value of the liabilities of such
plan (as determined in accordance with the actuarial methods and assumptions
set forth in the latest actuarial report for such employee pension benefit
plan), in each case, to which the Company or any of its Subsidiaries makes or
ever has made a contribution and in which any employee of the Company or any of
its Subsidiaries makes or ever has made a contribution and in which any
employee of the Company or any of its Subsidiaries is or has ever been a
participant.  With respect to such
plans, the Company and each of its Subsidiaries is in compliance in all
material respects with all applicable provisions of ERISA.  The execution and delivery of this Agreement
by the Company and the consummation of the transactions contemplated hereby and
by the Transaction Documents will not involve any prohibited transaction
(within the meaning of Section 406 of ERISA).  Neither the Company nor any of its “Affiliates” is a “party in
interest” or a “disqualified person” with respect to any employee benefit
plans.  No condition exists or event or
transaction has occurred in connection with any employee benefit plan that
could result in the Company or any such “Affiliate” incurring any liability,
fine or penalty that singly or in the aggregate, would have a Material Adverse
Effect.  The terms “employee benefit
plan,” “employee pension benefit plan,” and “party in interest” shall have the
meanings assigned to such terms in Section 3 of ERISA, the term
“Affiliate” shall have the meaning assigned to such term in
Section 407(d)(7) of ERISA, and the term “disqualified person” shall have
the meaning assigned to such term in section 4975 of the Internal Revenue
Code of 1986, as amended, or the rules, regulations and published interpretations
promulgated thereunder.


 


(z)            The Company is not
and, after giving effect to the Offering, the Company will not be, an
“investment company” or a company “controlled by” an “investment company” or
“promoter” or “principal underwriter” for an “investment company,” as such
terms are defined in the Investment Company Act of 1940, as amended, and the
rules and regulations thereunder.


 


(aa)         Except as disclosed
in the Final Offering Circular, no holder of securities of the Company or any
Subsidiary of the Company will be entitled to have such securities registered
under the registration statements required to be filed by the Company pursuant
to the Registration Rights Agreement.


 


(bb)         As of the Closing
Date and immediately after the consummation of the transactions contemplated by
the Transaction Documents, the fair value and current fair saleable value of
the assets of the Company (on a consolidated basis) will exceed the sum of its
stated liabilities and identified contingent liabilities.  The Company (on a consolidated basis) is
not, after giving effect to the execution, delivery and performance


 


10

















 


of this Agreement
and the consummation of the transactions contemplated hereby and by the
Transaction Documents, (a) left with unreasonably small capital with which to
carry on its business as it is proposed to be conducted as described in the
Final Offering Circular, (b) unable to pay its debts (contingent or otherwise)
as they mature or (c) otherwise insolvent.


 


(cc)         Neither the Company
nor any person acting on its behalf (other than the Initial Purchaser, as to
whom the Company makes no representation) has offered or sold the Notes by
means of any general solicitation or general advertising within the meaning of
Rule 502(c) under the Act or, with respect to Notes sold outside the United
States to non-U.S. persons (as defined in Rule 902 under the Act), by means of
any directed selling efforts within the meaning of Rule 902 under the Act, and
the Company, any affiliate of the Company and any person acting on its or their
behalf (other than the Initial Purchaser, as to whom the Company makes no
representation) have complied with and will implement the “offering
restrictions” within the meaning of such Rule 902.


 


(dd)         Except as disclosed
in the Final Offering Circular, neither the Company nor any other person acting
on behalf of the Company (other than the Initial Purchaser, as to whom the
Company makes no representation) has solicited offers to buy or offered or sold
or otherwise negotiated in respect of any security (as defined in the Act) that
is or could be integrated with the sale of the Notes in a manner that would
require the registration under the Act of any of the Notes; and the Company
will take reasonable precautions designed to insure that any offer or sale,
direct or indirect, in the United States or to any U.S. person (as defined in
Rule 902 under the Act) of any Notes or any substantially similar security
issued by the Company, within six months subsequent to the date on which the
distribution of the Notes has been completed, is made under restrictions and
other circumstances reasonably designed not to affect the status of the offer
and sale of the Notes in the United States and to U.S. persons contemplated by
this Agreement as transactions exempt from the registration requirements of the
Act.


 


(ee)         Neither the Company
nor any of its affiliates does business with the government of Cuba or with any
person or affiliate located in Cuba within the meaning of Section 517.075, Florida
Statutes.


 


(ff)           Assuming the
accuracy of and compliance with the representations and warranties of the
Initial Purchaser in Section 8 hereof, it is not necessary in connection
with the offer, sale and delivery of the Notes to the Initial Purchaser in the
manner contemplated by this Agreement to register any of the Notes under the
Act or to qualify the Indenture under the TIA.


(gg)         After the
consummation of the Offering and the use of proceeds therefrom, no other
securities of the Company are of the same class (within the meaning of Rule
144A under the Act) as the Notes and listed on a national securities exchange
registered under Section 6 of the Exchange Act, or quoted in a U.S. automated
inter-dealer quotation system.


 


11

















 


(hh)         None of the Company
or its Subsidiaries has taken, nor will any of them take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Notes.


 


(ii)           Upon (i) execution
and delivery of the Collateral Agreements by the Company, the Subsidiary
Guarantors parties thereto and the Trustee, (ii) the execution and filing of
all appropriate forms as required under the Uniform Commercial Code and (iii)
in the case of the Pledged Securities (as defined in the Collateral Agreements)
pledged to the Trustee, the delivery to and possession by the Trustee of such
Pledged Securities, duly endorsed for transfer in accordance with Article 8 of
the Uniform Commercial Code, the Collateral Agreements will create and
constitute a valid and enforceable pledge of and perfected security interest in
the Collateral; provided, however,
that the security interest securing the Notes will be subject to the terms of
the Intercreditor Agreement and subordinated to liens securing $1.6 million of
other existing indebtedness.


 


(jj)           The statistical and
market-related data included in the Final Offering Circular are based on or
derived from sources that the Company and the Subsidiaries believe to be
reliable and accurate.


 


(kk)         Except as described
in the Final Offering Circular, (i) neither the Company nor any of its
Subsidiaries is engaged in any unfair labor practice; (ii) there is no
unfair labor practice complaint or other proceeding pending or, to the best
knowledge of the Company, threatened against the Company or any of its
Subsidiaries before the National Labor Relations Board or any state, local or
foreign labor relations board or any industrial tribunal, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending or threatened, that would, singly or in the aggregate,
have a Material Adverse Effect; (iii) no strike, labor dispute, slowdown
or stoppage is pending or, to the best knowledge of the Company, threatened
against the Company or any of its Subsidiaries; and (iv) no union
representation question existing with respect to the employees of the Company
or any of its Subsidiaries, and, to the best of the Company’s knowledge, no
union organizing activities are taking place that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.


 


(ll)           The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) material transactions are executed in
accordance with management’s general or specific authorization,
(ii) material transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP, and to maintain asset
accountability, and (iii) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any material differences.


 


(mm)       The Notes and each of
the Transaction Documents conform in all material respect to the descriptions
thereof in the Final Offering Circular.


 


12

















 


(nn)         Each of the Inactive
Subsidiaries has no operations or assets. 
“Inactive Subsidiaries” shall mean those subsidiaries of the Company set
forth in Exhibit B hereto.  Other
than Inactive Subsidiaries, all Subsidiaries of the Company are listed on Exhibit
C hereto.


 


3.             Purchase, Sale and Delivery of the Notes. 
On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to the Initial Purchaser, and the
Initial Purchaser agrees to purchase from the Company, $160,000,000 aggregate
principal amount of the Notes at a purchase price that is equal to (i) with
respect to $130.0 million aggregate principal amount of the Notes, 97.0% of the
aggregate principal amount thereof and (ii) with respect to $30.0 million
aggregate principal amount of the Notes, (x) 97.0% of the aggregate principal
amount of such Notes for which the Put Option has not been exercised and (y)
94.0% of the aggregate principal amount of such Notes for which the Put Option
has been exercised.  “Put Option” shall
have the meaning set forth in the Note Purchase and Put Agreement, dated June
27, 2003 among the Initial Purchaser, the purchasers set forth on Annex A
thereto and the Company.


 


One or more certificates in definitive form for the Notes that the
Initial Purchaser has agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchaser
requests upon notice to the Company at least 24 hours prior to the Closing
Date, shall be delivered by or on behalf of the Company to the Initial
Purchaser, against payment by or on behalf of the Initial Purchaser of the
purchase price for the Notes.  Such
delivery to the Initial Purchaser of and payment for the Notes shall be made at
the New York offices of Mayer, Brown, Rowe & Maw at 10:00 a.m., New York
City time, on July 8, 2003 (the “Closing Date”).  With respect to Notes to be delivered in
definitive certificated form, the Company will make certificates for such Notes
available for checking and packaging by the Initial Purchaser at the offices of
Jefferies & Company, Inc. in New York, New York, or at such other place as
the Initial Purchaser may designate, on the business day next preceding the
Closing Date.  Notes to be represented
by one or more definitive global Notes in book-entry form will be deposited on
the Closing Date, by or on behalf of the Company, with The Depository Trust
Company (“DTC”) or its designated custodian, and registered in the name
of Cede & Co.


 


4.             Offering by the Initial Purchaser. 
The Initial Purchaser proposes to make an offering of the Notes at the
price and upon the terms set forth in the Final Offering Circular, as soon as
practicable after this Agreement is entered into and as in the judgment of the
Initial Purchaser is advisable.


 


5.             Covenants of the Company. 
The Company covenants and agrees with the Initial Purchaser that:


 


(a)           The Company shall
not make any amendment or supplement to the Final Offering Circular of which
the Initial Purchaser shall not previously have been advised and furnished a
copy for a reasonable period of time prior to the proposed


 


13

















 


amendment or
supplement and as to which the Initial Purchaser shall not have given its
consent, which shall not be unreasonably withheld.  The Company shall promptly, upon the reasonable request of the
Initial Purchaser, make any amendments or supplements to the Final Offering
Circular that may be necessary or advisable in connection with the resale of
the Notes by the Initial Purchaser.


 


(b)           The Company shall
use its best efforts, in cooperation with the Initial Purchaser, to arrange for
the qualification of the Notes for offering and sale under the securities or
“Blue Sky” laws of such jurisdictions as the Initial Purchaser may designate
and shall continue such qualifications in effect for as long as may be
necessary to complete the resale of the Notes; provided, that the Company shall
not be required to qualify as a foreign corporation in any jurisdiction in
which it is not qualified or, to take any action that would subject it to
general service of process in any jurisdiction where it was not so subject on
the Closing Date or subject itself to taxation in any such jurisdiction where
it is not then subject.


 


(c)           If, at any time
prior to the completion of the initial resale of the Notes by the Initial
Purchaser to persons other than affiliates of the Initial Purchaser (as
determined by the Initial Purchaser), any event occurs as a result of which the
Final Offering Circular as then amended or supplemented would include any
untrue statement of a material fact, or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Final Offering Circular to comply with
applicable law, the Company will promptly notify the Initial Purchaser thereof
and will prepare, at the expense of the Company, an amendment or supplement to
the Final Offering Circular that corrects such statement or omission or effects
such compliance.


 


(d)           The Company will,
without charge, provide to the Initial Purchaser and to counsel for the Initial
Purchaser as many copies of the Final Offering Circular or any amendment or
supplement thereto as the Initial Purchaser or such counsel may reasonably
request.


 


(e)           For so long as any
of the Notes remain outstanding, the Company will furnish to the Initial
Purchaser copies of all reports and other communications (financial or
otherwise) furnished by the Company to the Trustee or the holders of the Notes
and, as soon as available, copies of any reports or financial statements
furnished to or filed by the Company with the Commission or any national securities
exchange on which any class of securities of the Company may be listed.


 


(f)            Except as described
in the Final Offering Circular, none of the Company or any of its affiliates
will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any “security” (as defined in the Act) which could be integrated with the
sale of the Notes in a manner which would require the registration of the Notes
under the Act.


 


14

















 


(g)           The Company will not
solicit any offer to buy or offer to sell the Notes by means of any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act.


 


(h)           For so long as any
of the Notes remain outstanding, the Company will make available, upon request,
to any seller or prospective purchaser of such Notes, the information specified
in Rule 144A(d)(4) under the Act to permit resales of the Notes in compliance
with Rule 144, unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.


 


(i)            The Company will
use its best efforts to (i) permit the Notes to be designated PORTAL securities
in accordance with the rules and regulations adopted by the NASD relating to
trading in the Private Offering, Resales and Trading through Automated Linkages
market (the “PORTAL Market”) and (ii) permit the Notes to be eligible
under Rule 144A for clearance and settlement through DTC.


 


(j)            During the two-year
period after the Closing Date (or such shorter period as may be provided for in
Rule 144(k) under the Act, as the same may be in effect from time to time), the
Company will not, and will not permit any of its Subsidiaries or other
affiliates (as defined in Rule 144A under the Act) controlled by it to, resell
any of the Notes, which constitute “restricted securities” under Rule 144 that
have been acquired by any of them, except pursuant to an effective registration
statement under the Act or any exemption from the Act.


 


(k)           The Company shall
pay all stamp, documentary and transfer taxes and other duties, if any, which
may be imposed by the United States or any political subdivision thereof or
taxing authority thereof or therein with respect to the issuance of any of the
Notes.


 


(l)            For so long as the
Initial Purchaser shall hold any Notes, the Company shall notify the Initial
Purchaser promptly in writing if the Company or any of its “Affiliates” becomes
a “party in interest” or a “disqualified person” with respect to any “employee
benefit plan.”  The terms “Affiliates,”
“party in interest,” “disqualified person” and “employee benefit plan” shall
have the meanings as set forth in Section 2(bb) hereof.


 


(m)          The Company agrees to
use its best efforts to comply with all agreements set forth in the letter of
representations of the Company to DTC relating to the approval of the Notes by
DTC for “book entry” transfer.


 


(n)           Except as stated in
this Agreement, the Company has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Notes to
facilitate the sale or resale of the Notes.


 


(o)           The Company agrees
to use the proceeds of the Offering in the manner described in the Final
Offering Circular under the caption “Use
of Proceeds.”


 


15

















 


6.             Expenses.  The Company agrees to
pay all costs and expenses incident to the performance of its obligations under
the Transaction Documents, whether or not the transactions contemplated herein
are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses related or incident to:


 


(a)(i) the printing, word processing or other production of
documents with respect to the transactions contemplated hereby, including any
costs of preparing and printing the Preliminary Offering Circular and the Final
Offering Circular and any amendment or supplement thereto; (ii) all
arrangements relating to the delivery to the Initial Purchaser of copies of the
foregoing documents; (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company;
(iv) the preparation, issuance and delivery to the Initial Purchaser of
the Notes; (v) the qualification for the Notes under state securities and
“Blue Sky” laws, including filing fees and fees and disbursements of counsel
incurred by the Initial Purchaser relating thereto; (vi) fees and expenses of
the Trustee, including fees and expenses of its counsel; (vii) all expenses and
listing fees incurred in connection with the application for quotation of the
Notes on the PORTAL Market; and (x) any fees charged by investment rating
agencies for the rating of any of the Notes.


 


(b)           In addition, the
Company shall pay to the Initial Purchaser $1.0 million to reimburse the
Initial Purchaser for all fees, disbursements and out-of-pocket expenses and
other costs or losses incurred by the Initial Purchaser in connection with its
services to be rendered hereunder and under any prior engagements and related
transactions.


 


7.             Conditions of the Initial Purchaser’s Obligations. 
The obligation of the Initial Purchaser to purchase and pay for the Notes
shall be subject to the satisfaction or waiver of the following conditions on
or prior to the Closing Date:


 


(a)           On the Closing Date,
the Initial Purchaser shall have received an opinion, dated as of the Closing
Date and addressed to the Initial Purchaser, of Proskauer Rose LLP, counsel for
the Company, in form and substance satisfactory to counsel for the Initial
Purchaser, substantially to the effect that:


 


(i)  Each of the Company, a Delaware corporation,
Einstein and Noah Corp., a Delaware corporation (“ENC”), Einstein/Noah
Bagel Partners, Inc., a California corporation (“E/N”),
I. & J. Bagel, Inc., a California corporation (“I&J”
and with ENC and E/N, the “CD Subsidiary Guarantors”) is duly
incorporated or formed, validly existing and in good standing under the laws of
its jurisdiction of incorporation.


 


(ii)  To such counsel’s knowledge, the Company is
not obligated to have any of its securities registered under a registration
statement filed by the Company under the Act with respect to any of the Notes
other than pursuant to the Registration Rights Agreement.


 


(iii)  The Company has the corporate power and
authority to enter into and perform its obligations under the Notes and the
Transaction


 


16

















 


Documents. 
Each CD Subsidiary Guarantor has the requisite corporate power to enter
into and perform its obligations under its Guarantee and the Transaction
Documents to which it is a party.


 


(iv)  The Notes are in the form contemplated by
the Indenture.  The Notes have been duly
authorized for issuance and sale pursuant to this Agreement and the Indenture,
and when executed by the Company and when duly authenticated by the Trustee in
accordance with the Indenture, assuming the due authorization, execution and
delivery of the Indenture by the Trustee, and when delivered by the Company and
paid for by the Initial Purchaser in accordance with the terms of this
Agreement, the Notes will constitute the valid and binding obligations of the
Company, enforceable in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency
(including all laws relating to fraudulent transfer), reorganization,
receivership, moratorium, or other similar laws now or hereafter in effect relating
to creditors’ rights generally and (ii) general principles of equity
(whether applied by a court of law or equity) and the discretion of the court
before which any proceeding therefor may be brought; and the holders of the
Notes will be entitled to the benefits of the Indenture.  All conditions to the issuance and
authentication of the Notes set forth in the Indenture have been satisfied in
full.


 


(v)  The Guarantees are in the form contemplated
by the Indenture.  The Guarantees have
been duly authorized, executed and delivered by each CD Subsidiary Guarantor,
and when the Notes are duly issued and authenticated in accordance with the
Indenture and when delivered to and paid for by the Initial Purchaser in
accordance with the terms of this Agreement, will constitute the valid and
binding obligation of each CD Subsidiary Guarantor, enforceable against each CD
Subsidiary Guarantor in accordance with its terms except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency (including all laws
relating to fraudulent transfer), reorganization, receivership, moratorium or
other similar laws now or hereafter in effect relating to creditors’ rights
generally and (ii) general principles of equity (whether applied by a
court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought.


 


(vi)  The Exchange Notes and the Private Exchange
Notes have been duly authorized for issuance by the Company, (A) and when
the Exchange Notes and the Private Exchange Notes have been duly executed and
delivered by the Company in accordance with the terms of the Registration
Rights Agreement and the Indenture (assuming the due authorization, execution
and delivery of the Indenture by the Trustee and due authentication and delivery
of the Exchange Notes and the Private Exchange Notes by the Trustee in
accordance with the Indenture) will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency (including all laws relating to fraudulent transfer),
reorganization, receivership, moratorium, or other similar laws now or
hereafter in effect relating to creditors’ rights generally


 


17

















 


and (ii) general principles of equity (whether
applied by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought; and (B) the holders of the
Exchange Notes and Private Exchange Notes will be entitled to the benefits of
the Indenture.


 


(vii)  The guarantees of the Exchange Notes and the
Private Exchange Notes have been duly authorized by each CD Subsidiary
Guarantor, and when such guarantees have been duly executed and delivered in
accordance with the Indenture, will constitute valid and binding obligation of
each CD Subsidiary Guarantor, enforceable against each CD Subsidiary Guarantor
in accordance with its terms, except that the enforcement thereof may be subject
to (i) bankruptcy, insolvency (including all laws relating to fraudulent
transfer), reorganization, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors’ rights generally and
(ii) general principles of equity (whether applied by a court of law or
equity) and the discretion of the court before which any proceeding therefor
may be brought.


 


(viii)  The Indenture is in sufficient form for
qualification under the TIA.  The
Indenture has been duly authorized, executed and delivered by the Company and
each of the CD Subsidiary Guarantors, and, assuming due authorization,
execution and delivery by the Trustee, constitutes a valid and binding
obligation of the Company and the CD Subsidiary Guarantors, enforceable against
the Company and the CD Subsidiary Guarantors in accordance with its terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency (including all laws relating to fraudulent transfer),
reorganization, receivership, moratorium or other similar laws now or hereafter
in effect relating to creditors’ rights generally and (ii) general
principles of equity (whether applied by a court of law or equity) and the
discretion of the court before which any proceeding therefor may be brought.


 


(ix)  The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and each of the CD
Subsidiary Guarantors and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
that (A) the enforcement thereof may be subject to (i) bankruptcy,
insolvency (including all laws relating to fraudulent transfer),
reorganization, receivership, moratorium or other similar laws now or hereafter
in effect relating to creditors’ rights generally and (ii) general
principles of equity (whether applied by a court of law or equity) and
discretion of the court before which any proceeding therefor may be brought and
(B) any rights to indemnity or contribution thereunder may be limited by
federal or state securities laws or public policy considerations.


 


(x)  This Agreement has been duly authorized,
executed and delivered by the Company.


 


(xi)  The statements set forth in the Final
Offering Circular under the caption “Description of Capital Stock,”
“Description of Certain


 


18

















 


Indebtedness,” and “Description of Notes,” insofar as
such statements purport to constitute a summary of the legal matters and
documents referred to therein, fairly summarize in all material respects the
legal matters and documents referred to therein.


 


(xii)  Except as set forth in the Final Offering
Circular, such counsel has no knowledge of any legal or arbitral proceedings,
or any proceedings by or before any governmental authority, now pending or
threatened in writing against the Company or any Subsidiary, which, if
determined adversely to the Company or such Subsidiary, would result,
individually or in the aggregate, in a Material Adverse Effect, or which seeks
to restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Notes to be sold hereunder or the consummation of the
other transactions described in the Final Offering Circular.


 


(xiii)  Except as set forth in the Final Offering
Circular, the execution and delivery of each of the Transaction Documents and
the consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale of the Notes to the
Initial Purchaser) to such counsel’s knowledge will not conflict with or
constitute or result in a material breach or violation of or a default under
(or an event which with notice or passage of time or both would constitute a
material default under) (i) any of the terms or provisions of (A) any
material indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, Permit, or other agreement or instrument to which
the Company or any Subsidiary Guarantor is a party listed on a schedule to such
counsel’s opinion, except for any such conflict, breach, violation, default or
event which would not, individually or in the aggregate, have a Material
Adverse Effect (it being understood that such counsel need not express any
opinion with respect to any financial covenant in any agreement or instrument,
insofar as the covenant requires a computation), (ii) the certificate of
incorporation or bylaws of the Company or the certificate of incorporation or
bylaws or other organization documents of any CD Subsidiary Guarantor, or
(iii) any existing applicable Federal or New York statute, law, rule or
regulation or the Delaware General Corporation Law or the Delaware Limited
Liability Company Act, known by such counsel to be applicable to the Company or
any CD Subsidiary Guarantor (other than the securities or blue sky laws of the
various states, as to which, in each case, such counsel need express no
opinion), or (iv) any judgment, order or decree of any court, governmental
agency or body or arbitrator known by such counsel to be applicable to the
Company, the Subsidiary Guarantors or any of their respective properties or
assets, except for any such conflict, breach, violation, default or event would
not, individually or in the aggregate, have a Material Adverse Effect.


 


(xiv)  Assuming that the representations and
warranties of the Initial Purchaser contained in Section 8 of this
Agreement and of the Company contained in Sections 1 and 5 of
this Agreement are true, correct and complete and assuming compliance by the
Initial Purchaser with its agreements in


 


19

















 


Section 8 of this Agreement, to the knowledge of
such counsel, no consent, approval, authorization or order of any New York,
Delaware corporate or limited liability company or federal governmental
authority is required for the issuance and sale by the Company of the Notes to
the Initial Purchaser, except such as have previously been obtained and such as
may be required under applicable state securities or Blue Sky laws, as to which
such counsel need express no opinion pursuant to this clause (xiv).


 


(xv)  Assuming that the representations,
warranties and agreements of the Company in Sections 1 and 5
of this Agreement and of the Initial Purchaser in Section 8 of this
Agreement are true, correct and complete and assuming compliance by the Initial
Purchaser with its agreements in Section 8 of this Agreement, it is
not necessary in connection with the offer, sale and delivery of the Notes to
the Initial Purchaser under this Agreement or in connection with the initial
resale of such Notes by the Initial Purchaser in accordance with Section 4
of this Agreement to register the Notes under the Act, it being understood that
no opinion is expressed as to any subsequent resale of any Notes or prior to
the commencement of the Exchange Offer (as defined in the Registration Rights
Agreement) or the effectiveness of the Shelf Registration Statement (as defined
in the Registration Rights Agreement), to qualify the Indenture under the TIA.


 


(xvi)  Neither the consummation of the transactions
contemplated by the Transaction Documents nor the sale, issuance, execution or
delivery of the Notes will violate Regulation T, U or X promulgated by the
Board of Governors of the Federal Reserve System.


 


(xvii)  The Company is not and, after giving effect
to the Offering and sale of the Notes and the application of the net proceeds
from such sale (as described in the Final Offering Circular under the heading
“Use of Proceeds”), will not be an “investment company” as defined in the
Investment Company Act.


 


(xviii)  The Pledge and Security Agreement creates in
favor of the Collateral Agent, for the benefit of the Secured Parties (as
defined in the Pledge and Security Agreement) a security interest in the
Collateral (as defined in the Pledge and Security Agreement), to the extent the
Company has rights in, or the power to transfer rights in, the Collateral and
to the extent Article 9 of the New York Uniform Commercial Code as in effect in
New York (the “NYUCC”) is applicable thereto (the “Article 9
Collateral”).


 


(xix)  When each Grantor (as defined in the Pledge
and Security Agreement) delivers to the Collateral Agent in the State of New
York for the benefit of the Secured Parties the certificated securities
described in a schedule to the Pledge and Security Agreement (together with
duly authorized and executed stock powers or other instruments of transfer
executed in blank) (collectively, the “Pledged Collateral”), and,
assuming (A) continued possession


 


20

















 


of the Pledged Collateral by the Collateral Agent in
the State of New York and (B) that the Collateral Agent does not have
notice prior to or on the date of the delivery of such Pledged Collateral of any
“adverse claim” within the meaning of the NYUCC, the Collateral Agent’s
security interest in the Pledged Collateral will be free of adverse claims.


 


(xx)  Assuming that the financing statements to be
filed in the filing offices (as described in such counsel’s opinion) in the
state of New York and the state of California are duly and properly filed
in the Filing Offices in the Relevant Jurisdictions, the Collateral Agent will
have a perfected security interest in that part of the Article 9 Collateral
in which a security interest is perfected by filing a financing statement under
the Applicable UCC.  Counsel may base
its opinion in this paragraph (xx) exclusively upon (i) the
NYUCC and (ii) Division 9 of the Uniform Commercial Code as in effect
in the state of California on the date hereof (the “CA UCC”, and
together with the NYUCC, the “Applicable UCC”).


 


(xxi)  Except as set forth in the Final Offering
Circular, to such counsel’s knowledge (A) no options, warrants or other
rights to purchase from the Company any Equity Interests in the Company are
outstanding and (B) no agreements, contracts, arrangements or other
obligations of the Company to issue, or other rights granted by the Company to
cause the Company to convert, any obligations into, or exchange any securities
for, any Equity Interests in the Company are outstanding.


 


Such counsel shall
also state that it has participated in conferences with certain officers of the
Company and the Subsidiary Guarantors, representatives of the Company’s and
Subsidiary Guarantor’s independent public or certified public accountants, and
with representatives of the Initial Purchaser and its counsel, at which the
contents of the Offering Circular, and related matters were discussed and,
although such counsel need not pass upon and such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Circular (other than as expressly specified in paragraph
(xi) of this Section 7(a)), on the basis of the foregoing, nothing
has come to such counsel’s attention, which would lead such counsel to believe
that the Final Offering Circular (other than the financial statements and
related notes thereto and the other financial, statistical, and other
accounting data contained in the Final Offering Circular or omitted therefrom,
as to which such counsel expresses no view), as of its date or the Closing
Date, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.  In rendering such opinions, such counsel may
(i) rely with respect to matters of fact upon the representations and
warranties of the Company and its Subsidiaries set forth herein, upon
certificates of officers of the Company and its Subsidiaries and upon
information obtained from public officials, (ii) assume that all documents
submitted to such counsel as originals are authentic, that all copies submitted
to such counsel conform to the originals thereof, and that the signatures on
all documents examined by such counsel are genuine, (iii) state that such
counsel’s opinion is limited to the federal law of


 


21

















 


the United States and the laws of the State of New York and the General
Corporation Law and Limited Liability Company Law of the State of Delaware and
(iv) may make such other assumptions and qualifications as may be
reasonably acceptable to the Initial Purchaser and its counsel.  The opinion of Proskauer Rose LLP described
in this subsection (a) shall be rendered at the request of the Company
to, and may be relied upon solely by, the Initial Purchaser and shall so state
therein.


 


References to the
Final Offering Circular in this subsection (a) shall include any
amendment or supplement thereto prepared in accordance with the provisions of
this Agreement at the Closing Date.


 


(b)           On the Closing Date,
the Initial Purchaser shall have received an opinion, dated as of the Closing
Date and addressed to the Initial Purchaser, of Murtha Cullina LLP, special
counsel for Willoughby’s Incorporated (the “Connecticut Company”), in
form and substance satisfactory to counsel for the Initial Purchaser,
substantially to the effect that:


 


(i)  The Connecticut Company is a corporation,
validly existing under the laws of the State of Connecticut.


 


(ii)  The Connecticut Company has the requisite
corporate power and authority to enter into and perform its obligations under
the Transaction Documents to which it is a party.


 


(iii)  The Transaction Documents to which the
Connecticut Company is a party have been duly authorized, executed and
delivered by the Connecticut Company.


 


(iv)  The execution and delivery by the Connecticut
Company of each of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated thereby to our knowledge will not
conflict with or constitute or result in a material breach or violation of or a
default under (i) the certificate of incorporation or bylaws of the
Connecticut Company, or (ii) any existing applicable Connecticut statute,
law, rule or regulation known to such counsel to be applicable to the
Connecticut Company; provided, however, such counsel expresses no opinion
as to the securities or blue sky laws of Connecticut.


 


(v)  Under the Uniform Commercial Code (the “UCC”)
as in effect in the State of Connecticut (the “Connecticut UCC”) (i) the
Office of the Secretary of the State is the only location in the State of
Connecticut in which a UCC-1 financing statement must be filed to perfect a
security interest in personal property (other than fixtures) in which a
security interest can be perfected by filing under the Connecticut UCC and (ii)
the land records of the town in which fixtures are located is the only location
in the State of Connecticut in which a UCC-1 financing statement must be filed
to perfect a security interest in fixtures located on real property located in
such town and described in such financing


 


22

















 


statement which can be perfected by recording under
the Connecticut UCC.  The CT Central
Financing Statement attached to such counsel’s opinion as Exhibit A
is in the proper form for filing in the Office of the Secretary of the State of
the State of Connecticut.


 


(c)           On the Closing Date,
the Initial Purchaser shall have received an opinion, dated as of the Closing
Date and addressed to the Initial Purchaser, of Brach, Eichler, Rosenberg,
Silver, Bernstein, Hammer & Gladstone, a Professional Corporation, special
counsel for Manhattan Bagel Company, Inc. and Chesapeake Bagel Franchise Corp.
(together, the “New Jersey Companies”), in form and substance
satisfactory to counsel for the Initial Purchaser, substantially to the effect
that:


 


(i)  Each New Jersey Company is duly
incorporated, validly existing and in good standing under the laws of the State
of New Jersey.


 


(ii)  Each New Jersey Company has the corporate
power and authority to enter into and perform its obligations under the
Guarantee and the Transaction Documents to which it is a party.


 


(iii)  The Guarantee has been duly authorized,
executed and delivered by each New Jersey Company, and when the Notes are duly
issued and authenticated in accordance with the Indenture and when delivered to
and paid for by the Initial Purchaser in accordance with the terms of the
Purchase Agreement, will constitute the valid and binding obligation of each
New Jersey Company, enforceable against each New Jersey Company in accordance
with its terms except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency (including all laws relating to fraudulent
transfer), reorganization, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors’ rights generally and
(ii) general principles of equity (whether applied by a court of law or
equity) and the discretion of the court before which any proceeding therefore
may be brought.


 


(iv)  The guarantees of the Exchange Notes and the
Private Exchange Notes have been duly authorized by each New Jersey Company,
and when such guarantees have been duly executed and delivered in accordance
with the Indenture, will constitute the valid and binding obligation of each
New Jersey Company, enforceable against each New Jersey Company in accordance
with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency (including all laws relating to fraudulent
transfer), reorganization, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors’ rights generally and
(ii) general principles of equity (whether applied by a court of law or
equity) and the discretion of the court before which any proceeding therefor
may be brought.


 


(v)  The Indenture has been duly authorized,
executed and delivered by each New Jersey Company, and, assuming due
authorization, execution and delivery by the Trustee, constitutes a valid and
binding obligation


 


23

















 


of each New Jersey Company, enforceable against each
New Jersey Company in accordance with its terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency (including all laws
relating to fraudulent transfer), reorganization, receivership, moratorium or
other similar laws now or hereafter in effect relating to creditors’ rights
generally and (ii) general principles of equity (whether applied by a
court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought.


 


(vi)  The Registration Rights Agreement has been
duly authorized, executed and delivered by each New Jersey Company.


 


(vii)  The execution and delivery by each New
Jersey Company of each of the Transaction Documents to which it is a party and
the consummation of the transactions contemplated thereby to such counsel’s
knowledge will not conflict with or constitute or result in a material breach
or violation of or a default under (i) the certificate of incorporation or
bylaws of each New Jersey Company, or (ii) any existing applicable Federal
or New Jersey statute, law, rule or regulation known to such counsel to be
applicable to each New Jersey Company (other than the securities or blue sky
laws of the various states, as to which, in each case, such counsel need not
express an opinion).


 


(viii)  Assuming that the financing statements to be
filed in the state of New Jersey are duly and properly filed in the Office of
the New Jersey Treasurer, the Collateral Agent will have a perfected security
interest in that part of the Collateral in which a security interest is
perfected by filing a financing statement under the New Jersey Uniform
Commercial Code (the “New Jersey  UCC”).  Counsel may base its opinion in this paragraph (vii)
exclusively upon the UCC as in effect in the state of New Jersey on the date
hereof.


 


(d)           On the Closing Date,
the Initial Purchaser shall have received an opinion, dated as of the Closing
Date and addressed to the Initial Purchaser, of Richards, Layton & Finger,
P.A., special counsel for the Company and Einstein and Noah Corp. (the “Delaware
Guarantor”, and together with the Company, the “Delaware Companies”),
in form and substance satisfactory to counsel for the Initial Purchaser,
substantially to the effect that:


 


(i)  Each of the financing statements in the
forms attached to such counsel’s opinion as Exhibit A and Exhibit B are in an
appropriate form for filing in the State of Delaware.


 


(ii)  Insofar as Article 9 of the Uniform
Commercial Code as in effect in the State of Delaware on the date hereof (the “Delaware
UCC”) is applicable (without regard to conflict of laws principles), upon
the filing of the Company financing statement with the Secretary of State of
Delaware (Uniform Commercial Code Section) (the “Division”), the
Trustee, as collateral agent, will have a perfected security interest in the
Company’s rights in that portion of the collateral described in the Company
financing statement that may be perfected by


 


24

















 


the filing of a UCC financing statement with the
Division and the proceeds (as defined in Section 9-102(a)(64) of the
Delaware UCC) thereof.


 


(iii)  Insofar as Article 9 of the Delaware
UCC is applicable (without regard to conflict of laws principles), upon the
filing of the Delaware Guarantor financing statement with the Division, the
Trustee, as collateral agent, will have a perfected security interest in the
Delaware Guarantor’s rights in that portion of the collateral described in the
Delaware Guarantor Financing Statement that may be perfected by the filing of a
UCC financing statement with the Division and the proceeds (as defined in
Section 9-102(a)(64) of the Delaware UCC) thereof.


 


(e)           On the Closing Date,
the Initial Purchaser shall have received the opinion, in form and substance
satisfactory to the Initial Purchaser, dated as of the Closing Date and
addressed to the Initial Purchaser, of Mayer, Brown, Rowe & Maw, counsel
for the Initial Purchaser, with respect to certain legal matters relating to
this Agreement and such other related matters as the Initial Purchaser may
require.  In rendering such opinion,
Mayer, Brown, Rowe & Maw shall have received and may rely upon such
certificates and other documents and information as it may reasonably request
to pass upon such matters.


 


(f)            The Initial
Purchaser shall have received from the Independent Accountant comfort letters
dated the date hereof and the Closing Date, respectively, in form and substance
satisfactory to the Initial Purchaser.


 


(g)           The representations
and warranties of the Company contained in this Agreement shall be true and
correct in all material respects on and as of the date hereof and on and as of
the Closing Date as if made on and as of the Closing Date (except for the
representations and warranties which were true and correct as of a certain
specified date which shall continue to be true and correct as of such
date).  The statements of the Company’s
officers made pursuant to any certificate delivered in accordance with the
provisions hereof shall be true and correct in all material respects on and as
of the date made and on and as of the Closing Date.  The Company shall have complied in all material respects with all
agreements and satisfied all conditions to be performed or satisfied hereunder
at or prior to the Closing Date.  Except
as described in the Final Offering Circular (exclusive of any amendment or
supplement thereto after the date hereof), subsequent to the date of the most
recent financial statements in such Final Offering Circular, there shall have
been no development that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect.


 


(h)           The sale of the
Notes shall not be enjoined (temporarily or permanently) on the Closing Date,
and no injunction or order shall have been issued that either (i) asserts that
any of the transactions contemplated by this Agreement or the Transaction
Documents is subject to the registration requirements of the Act or (ii) would
prevent or suspend the issuance or sale of the Notes or the use of the Final
Offering Circular or any amendment or supplement thereto in any jurisdiction.


 


25

















 


(i)            Subsequent to the
date of the most recent financial statements in the Final Offering Circular
(exclusive of any amendment or supplement thereto after the date hereof), other
than as described in such Final Offering Circular or contemplated hereby or
thereby, neither the Company nor any Subsidiary of the Company shall have
incurred any liabilities or obligations, direct or contingent not in the
ordinary course of business that are material to the Company and its
Subsidiaries, taken as a whole, or entered into any transactions not in the
ordinary course of business that are material to the business, condition
(financial or otherwise) or results of operations of the Company, taken as a
whole, and there shall not have been any adverse change in the capital stock or
long-term indebtedness of the Company or any Subsidiary of the Company that is
material to the business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole.


 


(j)            Subsequent to the
date of the most recent financial statements in the Final Offering Circular and
except as stated therein (exclusive of any amendment or supplement thereto
after the date hereof), the conduct of the business and operations of the
Company shall not have been interfered with by strike, fire, flood, hurricane,
accident or other calamity, including acts of terrorism (whether or not
insured), or by any court or governmental action, order or decree, and the
properties of the Company shall not have sustained any loss or damage (whether
or not insured) as a result of any such occurrence, except any such
interference, loss or damage, which would not, individually or in the
aggregate, have a Material Adverse Effect.


 


(k)           The Initial
Purchaser shall have received certificates of the Company, dated the Closing
Date, signed on behalf of the Company by the Chairman of the Board or Chief
Executive Officer and its Assistant Secretary, to the effect that:


 


(i)  the representations and warranties of the
Company and its Subsidiaries contained in this Agreement are true and correct
in all material respects as of the date hereof and as of the Closing Date
(except for the representations and warranties, which were true and correct as
of a certain specified date, which shall continue to be true and correct as of
such date), and the Company and its Subsidiaries have performed in all material
respects all covenants and agreements and satisfied in all material respects
all conditions on their part to be performed or satisfied hereunder at or prior
to the Closing Date;


 


(ii)  at the Closing Date, since the date hereof
or since the date of the most recent financial statements in the Final Offering
Circular (exclusive of any amendment or supplement thereto after the date
hereof), no event or events have occurred and no information has become known
that, individually or the aggregate, would have a Material Adverse Effect;


 


(iii)  since the date hereof or since the date of
the most recent financial statements in the Final Offering Circular (exclusive
of any amendment or supplement thereto after the date hereof), other than as
described in the Final Offering Circular or contemplated hereby, neither the
Company nor any Subsidiary of the Company has incurred any liabilities or
obligations, direct or


 


26

















 


contingent, not in the ordinary course of business,
that are material to the Company and its Subsidiaries, taken as a whole, or
entered into any transactions not in the ordinary course of business that are
material to the business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, and there has
not been any change in the capital stock or long-term indebtedness of the
Company or any Subsidiary of the Company that is material to the business,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole; and


 


(iv)  the sale of the Notes hereunder has not been
enjoined (temporarily or permanently).


 


(l)            On the Closing
Date, the Initial Purchaser shall have received the Registration Rights
Agreement executed by the Company and such agreement shall be in full force and
effect at all times from and after the Closing Date.


 


(m)          On the Closing Date,
the Company shall have paid in cash the $1.0 million reimbursement of Initial
Purchaser’s costs and expenses set forth in Section 6(b) hereof.


 


(n)           Concurrently with or
prior to the issuance and sale of the Notes, the Company shall have entered
into the Senior Credit Facility.


 


On or before the
Closing Date, the Initial Purchaser and counsel for the Initial Purchaser shall
each have received such further documents, opinions, certificates, letters and
schedules or instruments relating to the business, corporate, legal and
financial affairs of the Company and its Subsidiaries as they shall have
heretofore reasonably requested from the Company and its Subsidiaries.


 


All such
documents, opinions, certificates, letters, schedules or instruments delivered
pursuant to this Agreement shall be in a form which is reasonably satisfactory
in all respects to the Initial Purchaser and counsel for the Initial
Purchaser.  The Company shall furnish to
the Initial Purchaser such conformed copies of such documents, opinions,
certificates, letters, schedules and instruments in such quantities as the
Initial Purchaser shall reasonably request.


 


8.             Representations and Warranties by the Initial
Purchaser.  The Initial Purchaser represents and
warrants (as to itself only) that it is a QIB with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes.  The Initial Purchaser agrees with the
Company (as to itself only) that (a) it has not and will not solicit offers for,
or offer or sell, the Notes by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in
any manner involving a public offering within the meaning of Section 4(2)
of the Act and the rules and regulations promulgated thereunder and (b) it has
and will solicit offers for the Notes only from, and will offer and sell the
Notes only to (A) in the case of offers inside the United States, (i) persons
whom the Initial Purchaser reasonably believes to be QIBs or, if any such
person is buying for


 


27

















 


one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchaser that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A or (ii) a limited number of other institutional investors reasonably
believed by the Initial Purchaser to be Accredited Investors that, prior to
their purchase of the Notes, deliver to the Initial Purchaser a letter
containing the representations and agreements set forth in Annex A to the Final
Offering Circular and (B) in the case of offers outside the United States, persons
other than U.S. persons (“foreign purchaser”), which term shall include
dealers or other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust); provided, however, that, in the case of this clause
(b), in purchasing such Notes, such persons are deemed to have represented
and agreed as provided under the caption “Notice to Investors” contained in the
Final Offering Circular.  The Initial
Purchaser acknowledges and agrees that it will not offer, sell or deliver any
Notes in any jurisdiction outside of the United States, its territories or
possessions except under circumstances that will result in compliance with the
provisions of Regulation S under the Act and the applicable laws of such
jurisdiction.


 


9.             Indemnification and Contribution.  (a)  The Company agrees to indemnify and hold
harmless the Initial Purchaser, and each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities of any
kind to which the Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:


 


(i)  any untrue statement or alleged untrue
statement of any material fact contained in any Offering Circular or any
amendment or supplement thereto;


 


(ii)  the omission or alleged omission to state,
in any Offering Circular or any amendment or supplement thereto, a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; or


 


(iii)  any breach by the Company or any of its
Subsidiaries of their respective representations, warranties and agreements set
forth herein;


 


and, subject to
the provisions hereof, will reimburse, as incurred, the Initial Purchaser and
each such controlling person for any legal or other expenses reasonably
incurred by the Initial Purchaser or such controlling person in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof; provided, however, the Company will not be liable in any
such case to the extent (but only to the extent) that any such loss, claim,
damage or liability is finally judicially determined by a court of competent
jurisdiction in a final, unappealable judgment, to have resulted primarily from
any untrue statement or alleged untrue statement or omission or alleged
omission made in any Offering Circular


 


28

















 


or any amendment
or supplement thereto in reliance upon and in conformity with written
information concerning the Initial Purchaser furnished to the Company by the
Initial Purchaser specifically for use therein.  This indemnity agreement will be in addition to any liability
that the Company may otherwise have to the indemnified parties.  The Company shall not be liable under this Section
9 for any settlement of any claim or action effected without its prior
written consent, which shall not be unreasonably withheld; and provided
further, however, that this indemnity, as to the Preliminary Offering Circular,
shall not inure to the benefit of the Initial Purchaser (or any person
controlling such Initial Purchaser) on account of any loss, claim, damage or
liability arising from the sale of Notes to any person by such Initial
Purchaser if such Initial Purchaser failed to send or give a copy of the Final
Offering Circular (as the same may be supplemented or amended) to such person
at or prior to the written confirmation of the sale of the Notes to such
person, and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact in such Preliminary Offering Circular was
corrected in the Final Offering Circular, unless such failure resulted from noncompliance
by the Company with Section 5(d) of this Agreement.


 


(b)           The Initial
Purchaser agrees to indemnify and hold harmless each of the Company, its
directors, officers and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any losses, claims, damages or liabilities to which the Company or any such
director, officer or controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) are finally judicially determined
by a court of competent jurisdiction in a final, unappealable judgment, to have
resulted solely from (i) any untrue statement or alleged untrue statement of any
material fact contained in any Offering Circular or any amendment or supplement
thereto and (ii) the omission or the alleged omission to state therein a
material fact required to be stated in any Offering Circular or any amendment
or supplement thereto or necessary to make the statements therein not
misleading, in each case, to the extent (but only to the extent), that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such Initial Purchaser, furnished to the Company by the Initial Purchaser
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses incurred by the Company or any such director, officer or
controlling person in connection with any such loss, claim, damage, liability
or action in respect thereof.  This
indemnity agreement will be in addition to any liability that the Initial Purchaser
may otherwise have to the indemnified parties.


 


(c)           As promptly as
reasonably practical after receipt by an indemnified party under this Section 9
of notice of the commencement of any action for which such indemnified party is
entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying
party of the commencement thereof in writing; but the omission to so notify the
indemnifying party (i) will not relieve such indemnifying party from any
liability under paragraph (a) or (b) above unless and only
to the extent it is materially prejudiced as a result thereof and
(ii) will not, in any event, relieve the


 


29

















 


indemnifying party
from any obligations to any indemnified party other than the indemnification
obligation provided in paragraphs (a) and (b) above.  In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may determine, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties at the expense of the indemnifying party.  After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 9
for any legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchaser in the case
of paragraph (a) of this Section 9 or the Company in the case of paragraph
(b) of this Section 9, representing the indemnified parties under
such paragraph (a) or paragraph (b), as the case may be, who are
parties to such action or actions) or (ii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party. 
After such notice from the indemnifying party to such indemnified party,
the indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may
effect such a settlement without such consent.


 


(d)           No indemnifying
party shall be liable under this Section 9 for any settlement of any
claim or action (or threatened claim or action) effected without its written
consent, which shall not be unreasonably withheld, but if a claim or action
settled with its written consent, or if there is a final judgment for the
plaintiff with respect to any such claim or action, each indemnifying party
jointly and severally agrees, subject to the


 


30

















 


exceptions and
limitations set forth above, to indemnify and hold harmless each indemnified
party from and against any and all losses, claims, damages or liabilities (and
legal and other expenses as set forth above) incurred by reason of such
settlement or judgment.  No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement or
compromise of any pending or threatened proceeding in respect of which the
indemnified party is or could have been a party, or indemnity could have been
sought hereunder by the indemnified party, unless such settlement (A) includes
an unconditional written release of the indemnified party, in form and
substance satisfactory to the indemnified party, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of the indemnified party.


 


(e)           In circumstances in
which the indemnity agreement provided for in the preceding paragraphs of this Section 9
is unavailable to, or insufficient to hold harmless, an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof), each indemnifying party, in order to provide for just and equitable
contributions, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
(i) the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party on the other from the Offering or
(ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof).  The relative benefits received by the
Company on the one hand and the Initial Purchaser on the other shall be deemed
to be in the same proportion as the total proceeds from the Offering (before
deducting expenses) received by the Company to the total discounts and
commissions received by the Initial Purchaser. 
The relative fault of the parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand, or the Initial
Purchaser on the other, the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omissions, and any other equitable considerations
appropriate in the circumstances.


 


(f)            The Company and the
Initial Purchaser agree that it would not be equitable if the amount of such
contribution determined pursuant to the immediately preceding paragraph (e)
were determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of the immediately preceding paragraph (e).  Notwithstanding any other provision of this Section
9, the Initial Purchaser shall not be obligated to make contributions
hereunder that in the aggregate exceed the total discounts, commissions and
other compensation received by such Initial Purchaser under this Agreement,
less the aggregate amount of any damages that such Initial Purchaser has


 


31

















 


otherwise been
required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.  For purposes of the
immediately preceding paragraph (e), each person, if any, who controls
the Initial Purchaser within the meaning of Section 15 of the Act or Section 20
of the Exchange Act shall have the same rights to contribution as the Initial
Purchaser, and each director of the Company, each officer of the Company and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.


 


10.           Survival Clause.  The respective
representations, warranties, agreements, covenants, indemnities and other
statements of the Company and its officers and the Initial Purchaser set forth
in this Agreement or made by or on behalf of them pursuant to this Agreement
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company and its Subsidiaries, any of their respective
officers or directors, the Initial Purchaser or any controlling person referred
to in Section 9 hereof and shall survive delivery of and payment for the
Notes.  The respective agreements,
covenants, indemnities and other statements set forth in Sections 6, 9
and 14 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.


 


11.           Termination.  (a) 
This Agreement may be terminated in the sole discretion of
the Initial Purchaser by notice to the Company given prior to the Closing Date
in the event that the Company shall have failed, refused or been unable to
perform in all material respects all obligations and satisfy in all material
respects all conditions on its part to be performed or satisfied hereunder at
or prior thereto or, if at or prior to the Closing Date:


 


(i)  the Company shall have sustained any loss or
interference with respect to its businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any strike, labor dispute, slow down or work stoppage or any legal or
governmental proceeding, which loss or interference, in the sole judgment of
the Initial Purchaser, has had a Material Adverse Effect or there shall have
been, in the sole judgment of the Initial Purchaser, any event or development
involving or reasonably likely to cause or result in a Material Adverse Effect
(including without limitation a change in management or control of the
Company), except in each case as described in the Final Offering Circular (exclusive
of any amendment or supplement thereto);


 


(ii)  trading in securities generally on the New
York Stock Exchange, American Stock Exchange or the Nasdaq National Market
shall have been suspended or minimum or maximum prices shall have been
established on any such exchange or market;


 


32

















 


(iii)  a banking moratorium shall have been
declared by New York or United States authorities; or


 


(iv)  there shall have been (A) except as
existing on the date of this Agreement, an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) except
as existing on the date of this Agreement, an outbreak or escalation of any
other insurrection or armed conflict involving the United States or any other
national or international calamity or emergency, including acts of terrorism,
or (C) any material change in the financial markets of the United States
which, in the case of clause (A), (B) or (C) and in the
sole judgment of the Initial Purchaser, makes it impracticable or inadvisable
to proceed with the private offering or the delivery of the Notes as
contemplated by the Final Offering Circular.


 


(b)           Termination of this
Agreement pursuant to this Section 11 shall be without liability of any
party to any other party except as provided in Section 10 hereof.


 


12.           Information Supplied by the Initial Purchaser. 
The statements set forth on the cover page with respect to price and in
the first sentence of the third paragraph, the first and second sentences of
the sixth paragraph and the seventh paragraph under the heading “Plan of
Distribution” in the Offering Circular (to the extent such statements relate to
the Initial Purchaser) constitute the only information furnished by the Initial
Purchaser to the Company or its Subsidiaries for the purposes of Sections
2(a) and 9 hereof.


 


13.           Notices.  All communications
hereunder shall be in writing and, if sent to the Initial Purchaser, shall be
mailed or delivered or telecopied and confirmed in writing to (i) Jefferies
& Company, Inc., 11100 Santa Monica Boulevard, 10th Floor, Los Angeles,
CA  90025, Attention: M. Brent Stevens,
Telecopy No. (310) 575-5165; with a copy to Mayer, Brown, Rowe & Maw, 1675
Broadway, New York, New York 10019, Attention: Ronald S. Brody, Esq., and if
sent to the Company, shall be mailed or delivered or telecopied and confirmed
in writing to it at 1687 Cole Boulevard, Golden, Colorado 80401, Attention:
Chairman and Chief Executive Officer, Telecopy No. (303) 568-8039; with a copy
to Proskauer Rose LLP, 1585 Broadway, New York, New York 10036, Attention:  Julie M. Allen, Esq., Telecopy No. (212)
969-2900.


 


All such notices
and communications shall be deemed to have been duly given:  when delivered by hand, if personally
delivered; five business days after being deposited in the United States mail,
postage prepaid, if mailed; one business day after being timely delivered to a
next-day air courier; and when receipt is acknowledged by the addressee, if
telecopied.


 


14.           Successors.  This Agreement shall
inure to the benefit of and be binding upon the Initial Purchaser, the Company
and their respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained, this Agreement


 


33

















 


and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 9 of this Agreement
shall also be for the benefit of any person or persons who control the Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Initial Purchaser contained in Section
9 of this Agreement shall also be for the benefit of the directors of the
Company their respective officers and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act.  No purchaser of Notes
from the Initial Purchaser will be deemed a successor because of such purchase.


 


15.           APPLICABLE LAW.  THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.


 


16.           Counterparts. 
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.


 


34

















 


If the foregoing
correctly sets forth our understanding, please indicate your acceptance thereof
in the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among the Company and the Initial Purchaser.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  NEW
  WORLD RESTAURANT

  GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony D. Wedo

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief

  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  The foregoing Agreement
  is

  hereby confirmed and
  accepted

  as of the date first
  above written.

  	
   

  
	
   

  	
   

  
	
  JEFFERIES &
  COMPANY, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  M. Brent Stevens

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
								



 

















 


EXHIBIT A


 


 


 


 


REGISTRATION RIGHTS AGREEMENT


 








 


NEW WORLD
RESTAURANT GROUP, INC.


 


$160,000,000
SENIOR SECURED NOTES DUE 2008


REGISTRATION
RIGHTS AGREEMENT


July 8, 2002


JEFFERIES & COMPANY, INC.


11100 Santa Monica Boulevard


10th Floor


Los Angeles, CA 90025


 


Ladies and Gentlemen:


 


NEW WORLD RESTAURANT GROUP, INC., a Delaware corporation (the
“Company” or the “Issuer”), is issuing and selling to Jefferies & Company,
Inc. (the “Initial Purchaser”), upon the terms set forth in the Purchase
Agreement, dated June 27, 2003 between the Company and the Initial Purchaser
(the “Purchase Agreement”), $160 million aggregate principal amount of the
Company’s Senior Secured Notes due 2008 (the “Notes”).


 


1.             Definitions


 


Capitalized terms that are used herein without definition and are
defined in the Purchase Agreement shall have the respective meanings ascribed
to them in the Purchase Agreement.  As
used in this Agreement, the following terms shall have the following meanings:


 


Additional Interest:  See Section 4(a).


 


Advice:  See last paragraph of Section 6.


 


Agreement:  This Registration Rights Agreement, dated as
of the Closing Date, among the Company, the Subsidiary Guarantors and the
Initial Purchaser.


 


Applicable Period:  See Section 2(e).


 


Business Day:  A day that is not a Saturday, a Sunday or a
day on which banking institutions in the city of New York are authorized or
required by law or executive order to be closed.


 


Closing Date: July 8, 2003.


 


Collateral
Agreements: 
Has the meaning set forth in the Indenture.


 


Company:  See the first introductory paragraph to this
Agreement.


 


Day:  Unless otherwise expressly provided, a
calendar day.


 


Effectiveness
Date:  The  150th  day after the Closing Date.


 


Effectiveness
Period:  See Section 3(a).


 


2

















 


Event
Date:  See Section 4(b).


 


Exchange
Act:  The Securities Exchange
Act of 1934, as amended, and the rules and regulations of the SEC promulgated
thereunder.


 


Exchange
Note:  Senior Secured Notes due
2008,  Series B, of the Issuer,
including the guarantees endorsed thereon, identical in all material respects
to the Notes, except for references to series and restrictive legends.


 


Exchange
Offer:  See Section 2(a).


 


Exchange
Registration Statement: 
See Section 2(a).


 


Filing
Date:  The  90th  day after the Closing Date.


 


Holder:  Any registered holder of Registrable Notes.


 


Indemnified
Party:  See Section 8(c).


 


Indemnifying
Party:  See Section 8(c).


 


Indenture:  The Indenture, dated as of the Closing Date,
among the Company, the Subsidiary Guarantors and  The Bank  of New
York, as trustee, pursuant to which the Notes are being issued, as amended or supplemented
from time to time in accordance with the terms hereof.


 


Initial
Purchaser: 
See the first introductory paragraph to this Agreement.


 


Initial
Shelf Registration: 
See Section 3(a).


 


Inspectors:  See Section 6(o).


 


Issuer:  See the first introductory paragraph to this
Agreement.


 


Losses:  See
Section 8(a).


 


NASD:  National Association of Securities Dealers,
Inc.


 


Notes:  See the first introductory paragraph to this
Agreement.


 


Participating
Broker-Dealer: 
See Section 2(e).


 


Person:  An individual, trustee, corporation,
partnership, limited liability company, joint stock company, trust,
unincorporated association, union, business association, firm, government or
agency or political subdivision thereof, or other legal entity.


 


Private
Exchange: 
See Section 2(f).


 


Private
Exchange Notes: 
See Section 2(f).


 


3

















 


Prospectus:  The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Notes
covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.


 


Purchase
Agreement: 
See the first introductory paragraph to this Agreement.


 


Records:  See Section 6(o).


 


Registrable
Notes:  (i) Notes, (ii) Private
Exchange Notes and (iii) any Exchange Notes received in the Exchange Offer, in
each case, that may not be sold without restriction under federal or state
securities laws.


 


Registration
Statement: 
Any registration statement of the Issuer filed with the SEC under the
Securities Act (including, but not limited to, the Exchange Registration Statement,
the Shelf Registration and any subsequent Shelf Registration) that covers any
of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.


 


Rule
144:  Rule 144 promulgated
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not affiliates of
an issuer or such securities being free of the registration and prospectus
delivery requirements of the Securities Act.


 


Rule
144A:  Rule 144A promulgated
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144) or regulation hereafter adopted by the SEC.


 


Rule
415:  Rule 415 promulgated
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.


 


SEC:  The Securities and Exchange Commission.


 


Securities:  The Notes, the Private Exchange Notes and
the Exchange Notes.


 


Securities
Act:  The Securities Act of
1933, as amended, and the rules and regulations of the SEC promulgated
thereunder.


 


Security
Agreement: 
The Pledge and Security Agreement referred to in the Indenture.


 


Shelf
Notice:  See Section 2(j).


 


4

















 


Shelf
Registration: 
See Section 3(b).


 


Subsequent
Shelf Registration: 
See Section 3(b).


 


Subsidiary
Guarantor: 
Each subsidiary of the Issuer that guarantees the obligations of the
Issuer under the Notes and Indenture.


 


TIA:  The Trust Indenture Act of 1939, as amended.


 


Trustee:  The trustee under the Indenture and, if
existent, the trustee under any indenture governing the Exchange Notes and
Private Exchange Notes (if any).


 


Underwritten
Registration or Underwritten Offering:  A registration in which securities of the
Issuer are sold to an underwriter for reoffering to the public.


 


2.             Exchange Offer


 


(a)                                  The
Issuer shall (and shall cause any existing Subsidiary Guarantor to) (i) prepare
and file with the SEC promptly after the date hereof, but in no event later
than the Filing Date, a registration statement (the “Exchange Registration
Statement”) on an appropriate form under the Securities Act with respect to an
offer (the “Exchange Offer”) to the Holders of Registrable Notes to issue and
deliver to such Holders, in exchange for the Notes, a like aggregate principal
amount of Exchange Notes, (ii) use its best efforts to cause the Exchange
Registration Statement to become effective as promptly as practicable after the
filing thereof, but in no event later than the Effectiveness Date, (iii) keep
the Exchange Registration Statement effective until the consummation of the
Exchange Offer in accordance with its terms and (iv) unless the Exchange Offer
would not be permitted by a policy of the SEC, commence the Exchange Offer and
use its best efforts to issue on or prior to 30 Business Days after the date on
which the Exchange Registration Statement is declared effective, Exchange Notes
in exchange for all Notes tendered prior thereto in the Exchange Offer.  The Exchange Offer shall not be subject to
any conditions, other than that the Exchange Offer does not violate applicable
law or any applicable interpretation of the staff of the SEC.


 


(b)                                 The
Exchange Notes shall be issued under, and entitled to the benefits of,
(i) the Indenture or a trust indenture that is identical to the Indenture
(other than such changes as are necessary to comply with any requirements of
the SEC to effect or maintain the qualifications thereof under the TIA) and
(ii) the Security Agreement or a security agreement that is identical to the
Security Agreement.


 


(c)                                  Interest
on each Exchange Note and Private Exchange Note will accrue from the last
interest payment due date on which interest was paid on the Notes surrendered
in exchange therefor or, if no interest has been paid on the Notes, from the
date of original issue of the Notes. 
Each Exchange Note and Private Exchange Note shall bear interest at the
rate set forth thereon; provided,
that


 


5

















 


interest with
respect to the period prior to the issuance thereof shall accrue at the rate or
rates borne by the Notes from time to time during such period.


 


(d)                                 The
Issuer may require each Holder who participates in the Exchange Offer to
represent (i) that any Exchange Notes received by it will be acquired in the
ordinary course of its business, (ii) that at the time of the commencement of
the Exchange Offer such Holder has not entered into any arrangement or
understanding with any Person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes in violation of the
provisions of the Securities Act, (iii) that if such Holder is an affiliate of
the Issuer within the meaning of the Securities Act, that it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable to it, (iv) if such Holder is not a broker-dealer, that
it is not engaged in, and does not intend to engage in, the distribution of the
Notes and (v) if such Holder is a Participating Broker-Dealer, that it will
deliver a Prospectus in connection with any resale of the Exchange Notes.


 


(e)                                  The
Issuer shall include within the Prospectus contained in the Exchange
Registration Statement a section entitled “Plan of Distribution,” reasonably
acceptable to the Initial Purchaser, which shall contain a summary statement of
the positions taken or policies made by the staff of the SEC with respect to
the potential “underwriter” status of any broker-dealer that is the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes
received by such broker-dealer in the Exchange Offer for its own account in
exchange for Notes that were acquired by it as a result of market-making or
other trading activity (a “Participating Broker-Dealer”), whether such
positions or policies have been publicly disseminated by the staff of the SEC
or such positions or policies, in the reasonable judgment of the Initial
Purchaser, represent the prevailing views of the staff of the SEC.  Such “Plan of Distribution” section shall
also allow, to the extent permitted by applicable policies and regulations of
the SEC, the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including, to the extent so
permitted, all Participating Broker-Dealers, and include a statement describing
the manner in which Participating Broker-Dealers may resell the Exchange
Notes.  The Issuer shall use its best
efforts to keep the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein, in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes (the
“Applicable Period”).


 


(f)                                    If, upon
consummation of the Exchange Offer, the Initial Purchaser holds any Notes
acquired by it and having the status of an unsold allotment in the initial
distribution, the Issuer (upon the written request from the Initial Purchaser)
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to the Initial Purchaser, in exchange (the “Private
Exchange”) for the Notes held by the Initial Purchaser, a like principal amount
of debt


 


6

















 


securities of the
Issuer, guaranteed by any then existing Subsidiary Guarantors and secured by
the same collateral as the Exchange Notes, that are identical in all material
respects to the Exchange Notes except for the existence of restrictions on
transfer thereof under the Securities Act and securities laws of the several
states of the U.S. (the “Private Exchange Notes”) (and which are issued
pursuant to the same indenture as the Exchange Notes). The Private Exchange
Notes shall bear the same CUSIP number as the Exchange Notes.


 


(g)                                 In
connection with the Exchange Offer, the Issuer shall:


 


(i)                                     mail
to each Holder a copy of the Prospectus forming part of the Exchange
Registration Statement, together with an appropriate letter of transmittal and
related documents;


 


(ii)                                  utilize
the services of a depository for the Exchange Offer with an address in the
Borough of Manhattan, the City of New York, which may be the Trustee or an
affiliate thereof;


 


(iii)                               permit
Holders to withdraw tendered Registrable Notes at any time prior to the close
of business, New York time, on the last Business Day on which the Exchange
Offer shall remain open; and


 


(iv)                              otherwise
comply in all material respects with all applicable laws.


 


(h)                                 As
soon as practicable after the close of the Exchange Offer or the Private
Exchange, as the case may be, the Issuer shall:


 


(i)                                     accept
for exchange all Notes validly tendered pursuant to the Exchange Offer or the
Private Exchange, as the case may be, and not validly withdrawn;


 


(ii)                                  deliver
to the Trustee for cancellation all Registrable Notes so accepted for exchange;
and


 


(iii)                               cause
the Trustee to authenticate and deliver promptly to each Holder tendering such
Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in
principal amount to the Notes of such Holder so accepted for exchange.


 


(i)                                     The
Exchange Notes and the Private Exchange Notes may be issued under (i) the
Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will be
deemed one class of security (subject to the provisions of the Indenture) and
entitled to participate in all the security granted by the Issuer pursuant to
the Collateral Agreements and in any Subsidiary Guarantee as such terms are
defined in the Indenture) on an equal and ratable basis.


 


7

















 


(j)            If, (i) prior
to the consummation of the Exchange Offer, either the Issuer or the Holders of
a majority in aggregate principal amount of the outstanding Registrable Notes
determines in its or their reasonable judgment that (A) the Exchange Notes
would not, upon receipt, be tradable by the Holders thereof without restriction
under the Securities Act, the Exchange Act or applicable Blue Sky or state
securities laws or (B) the interests of the Holders under this Agreement, taken
as a whole, would be materially and adversely affected by the consummation of
the Exchange Offer, (ii) applicable interpretations of the staff of the SEC
would not permit the consummation of the Exchange Offer prior to the
Effectiveness Date, (iii) the Exchange Offer is not consummated within 180 days
of the Closing Date for any reason, (iv) any holder of Private Exchange Notes
so requests in writing to the Issuer within 120 days after the consummation of
the Exchange Offer or (v) in the case of any Holder not permitted to
participate in the Exchange Offer or any Holder that participates in the
Exchange Offer but does not receive Exchange Notes on the date of the exchange
that may be sold without restriction under state and federal securities laws (other
than due solely to the status of such Holder as an affiliate of the Issuer
within the meaning of the Securities Act) and so notifies the Issuer within six
months of consummation of the Exchange Offer, then the Issuer (and any then
existing Subsidiary Guarantor) shall promptly deliver to the Holders and the
Trustee written notice thereof (the “Shelf Notice”) and shall file an Initial
Shelf Registration pursuant to Section 3.


 


3.             Shelf Registration


 


If a Shelf Notice is delivered pursuant to Section 2(j), then this
Section 3 shall apply to all Registrable Notes.  Otherwise, upon consummation of the Exchange Offer in accordance
with Section 2, the provisions of Section 3 shall apply solely with respect to
(i) Notes held by any Holder thereof not permitted to participate in the
Exchange Offer and (ii) Exchange Notes that are not freely tradeable as
contemplated by Section 2(j)(v) hereof, provided in each case that the relevant
Holder has duly notified the Issuer within six months of the Exchange Offer as
required by Section 2(j)(v).


 


(a)                                  Initial
Shelf Registration. 
The Issuer shall as promptly as practicable file (and shall cause any
then existing Subsidiary Guarantor to file) with the SEC a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415
covering all of the Registrable Notes (the “Initial Shelf Registration”).  If the Issuer (and any then existing
Subsidiary Guarantor) has not yet filed an Exchange Registration Statement, the
Issuer shall file (and shall cause any then existing Subsidiary Guarantor to
file) with the SEC the Initial Shelf Registration on or prior to the Filing
Date and shall use its best efforts to cause such Initial Shelf Registration to
be declared effective under the Securities Act on or prior to the Effectiveness
Date.  Otherwise, the Issuer shall use
its best efforts to file (and shall cause any then existing Subsidiary
Guarantor to file) with the SEC the Initial Shelf Registration within 20
Business Days of the delivery of the Shelf Notice and shall use its best
efforts to cause such Shelf Registration to be declared effective under the
Securities Act as promptly as practicable thereafter.  The Initial Shelf Registration shall be on Form S-1 or another appropriate
form


 


8

















 


permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings).  The Issuer and
Subsidiary Guarantors shall not permit any securities other than the
Registrable Notes to be included in any Shelf Registration.  No Holder of Registrable Notes shall be
entitled to include any of its Registrable Notes in any Shelf Registration
pursuant to this Agreement unless such Holder furnishes to the Issuer and the
Trustee in writing, within 20 Business Days after receipt of a request
therefor, such information as the Issuer and the Trustee after conferring with
counsel with regard to information relating to Holders that would be required
by the SEC to be included in such Shelf Registration or Prospectus included
therein, may reasonably request for inclusion in any Shelf Registration or
Prospectus included therein.  The Issuer
shall use its best efforts to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date that is 24 months from the
Closing Date (the “Effectiveness Period”), or such shorter period ending when
(i) all Registrable Notes covered by the Initial Shelf Registration have been
sold in the manner set forth and as contemplated in the Initial Shelf
Registration or (ii) a Subsequent Shelf Registration covering all of the
Registrable Notes has been declared effective under the Securities Act.


 


(b)                                 Subsequent
Shelf Registrations. 
If the Initial Shelf Registration or any Subsequent Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), the Issuer shall use its best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, and in any event
shall within 5 Business Days of such cessation of effectiveness amend such
Shelf Registration in a manner to obtain the withdrawal of the order suspending
the effectiveness thereof, or file (and cause any then existing Subsidiary
Guarantor to file) an additional “shelf” Registration Statement pursuant to
Rule 415 covering all of the Registrable Notes (a “Subsequent Shelf
Registration”).  If a Subsequent Shelf
Registration is filed, the Issuer shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf Registration
or any Subsequent Shelf Registration was previously continuously effective.  As used herein the term “Shelf Registration”
means the Initial Shelf Registration and any Subsequent Shelf Registrations


 


(c)                                  Supplements
and Amendments. 
The Issuer shall promptly supplement and amend any Shelf Registration if
required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if required by the
Securities Act, or if reasonably requested by the Holders of a majority in
aggregate principal amount of the Registrable Notes covered by such Shelf
Registration or by any underwriter of such Registrable Notes.


 


9

















 


4.             Additional Interest


 


(a)           The Issuer
acknowledges and agrees that the Holders of Registrable Notes will suffer
damages if the Issuer fails to fulfill its material obligations under Section 2
or Section 3 hereof and that it would not be feasible to ascertain the extent
of such damages with precision. Accordingly, the Issuer agrees to pay, as
liquidated damages, cash interest on the Notes (“Additional Interest”) under
the circumstances and to the extent set forth below (each of which shall be
given independent effect):


 


(i)                                     if
neither the Exchange Registration Statement nor the Initial Shelf Registration
has been filed on or prior to the Filing Date, Additional Interest shall accrue
on the Notes over and above any stated interest at a rate of 0.25% per annum of
the principal amount of such Notes for the first 90 days immediately following
the Filing Date, such Additional Interest rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day period;


 


(ii)                                  if
neither the Exchange Registration Statement nor the Initial Shelf Registration
is declared effective on or prior to the Effectiveness Date, Additional
Interest shall accrue on the Notes over and above any stated interest at a rate
of 0.25% per annum of the principal amount of such Notes for the first 90 days
immediately following the Effectiveness Date, such Additional Interest rate
increasing by an additional 0.25% per annum at the beginning of each subsequent
90-day period;


 


(iii)                               if
(A) the Issuer (and any then existing Subsidiary Guarantor) has not exchanged
Exchange Notes for all Notes validly tendered in accordance with the terms of
the Exchange Offer on or prior to the 180th day after the Closing
Date, (B) the Exchange Registration Statement ceases to be effective at any
time prior to the time that the Exchange offer is consummated, (C) if
applicable, a Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the Effectiveness Period
and is not declared effective again within 5 Business Days, or (D) pending the
announcement of a material corporate transaction, the Issuer issues a written
notice pursuant to Section 6(e)(v) or (vi) that a Shelf Registration Statement
or Exchange Registration Statement is unusable and the aggregate number of days
in any 365-day period for which all such notices issued or required to be
issued, have been, or were required to be, in effect exceeds 120 days in the
aggregate or 30 days consecutively, in the case of a Shelf Registration
statement, or 15 days in the aggregate in the case of an Exchange Registration
Statement, then Additional Interest shall accrue on the Notes over and above
any stated interest at a rate of 0.25% per annum of the principal amount of
such Notes for the first 90 days commencing on the (w) 181st day after the
Closing Date, in the case of (A) above, (x) the date the Exchange Registration
Statement ceases to be effective without being declared


 


10

















 


effective again
within 5 Business Days, in the case of clause (B) above, (y) the day such Shelf
Registration ceases to be effective in the case of (C) above, or (z) the day
the Exchange Registration Statement or Shelf Registration ceased to be usable
in case of clause (D) above, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each such subsequent 90-day
period;


 


provided, however, that the Additional
Interest rate on the Notes shall only accrue with respect to one default under
Sections 4(a)(i), (ii) or (iii) at a time (and shall accrue under the Section
affording the highest rate of Additional Interest) and the maximum Additional
Interest rate on the Notes may not exceed at any one time 1.00% per annum; and provided further, that (1) upon the filing
of the Exchange Registration Statement or Initial Shelf Registration (in the
case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or Initial Shelf Registration (in the case of (ii) above), or (3)
upon the exchange of Exchange Notes for all Notes tendered (in the case of
(iii)(A) above), or upon the effectiveness of the Exchange Registration
Statement that had ceased to remain effective (in the case of clause (iii)(B)
above), or upon the effectiveness of a Shelf Registration that had ceased to
remain effective (in the case of (iii)(C) above), Additional Interest on the
Notes as a result of such clause (or the relevant subclause thereof), as the
case may be, shall cease to accrue.


 


(b)                                 The
Issuer shall notify the Trustee within two Business Days after each and every
date on which an event occurs in respect of which Additional Interest is
required to be paid (an “Event Date”). 
Any amounts of Additional Interest due pursuant to clause (a)(i),
(a)(ii) or (a)(iii) of this Section 4 will be payable quarterly, on the dates and in the manner provided
in the Indenture and whether or not any cash interest would then be payable on
such date, commencing with the first such quarterly date occurring after any
such Additional Interest commences to accrue. 
The amount of Additional Interest will be determined by multiplying the
applicable Additional Interest rate by the principal amount of the Notes,
multiplied by a fraction, the numerator of which is the number of days such
Additional Interest rate was applicable during such semi-annual period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and
the denominator of which is 360.


 


5.             Hold-Back Agreements


 


The Issuer agrees that it will not effect any public or private
sale or distribution (including a sale pursuant to Regulation D under the
Securities Act) of any securities the same as or similar to those covered by a
Registration Statement filed pursuant to Section 2 or 3 hereof or any
securities convertible into or exchangeable or exercisable for such securities,
during the 10 days prior to, and during the 90-day period beginning on the
effective date of any Registration Statement filed pursuant to Sections 2 and 3
hereof unless the Holders of a majority in the aggregate principal amount of
the Registrable Notes to be included in such Registration Statement consent.


 


11

















 


6.             Notes Registration Procedures


 


In connection with the filing of any Registration Statement
pursuant to Section 2 or 3 hereof, the Issuer shall effect such
registrations to permit the sale of such securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Issuer hereunder, the Issuer shall:


 


(a)                                  Prepare
and file with the SEC as soon as practicable after the date hereof but in any
event on or prior to the Filing Date, the Exchange Registration Statement or if
the Exchange Registration Statement is not filed because of the circumstances
contemplated by Section 2(j)(ii), a Shelf Registration as prescribed by Section
3, and use its best efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; provided that, if (1) a Shelf Registration is filed pursuant
to Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto the Issuer shall, if
requested, furnish to and afford the Holders of the Registrable Notes to be
registered pursuant to such Shelf Registration statement, or each Participating
Broker-Dealer and to their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed.  The Issuer shall
not file any such Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must provide information
for inclusion therein without the Holders being afforded a reasonable
opportunity to review such documentation.


 


(b)                                 Provide
an indenture trustee for the Registrable Notes, the Exchange Notes or the
Private Exchange Notes, as the case may be, and cause the Indenture (or other
indenture relating to the Registrable Notes) to be qualified under the TIA not
later than the effective date of the first Registration Statement; and in
connection therewith, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable such indenture
to be so qualified in a timely manner.


 


(c)                                  Prepare
and file with the SEC such amendments and post-effective amendments to each
Shelf Registration or Exchange Registration Statement, as the case may be, as
may be necessary to keep such Registration Statement continuously effective for
the Effectiveness Period or the Applicable Period, as the case may be; cause
the related Prospectus to be supplemented by any Prospectus supplement required
by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or
any similar provisions then in force) promulgated under the Securities Act; and
comply with the provisions of the Securities Act and the


 


12

















 


Exchange Act
applicable to it with respect to the disposition of all securities covered by
such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus.  The Issuer shall not, during the Applicable
Period take any action that would result in selling Holders of the Registrable
Notes covered by a Registration Statement or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable Notes or
such Exchange Notes during that period, unless such action is required by
applicable law, rule or regulation.


 


(d)                                 Furnish
to such selling Holders and Participating Broker-Dealers who so request in
writing (i) upon the Company’s receipt, a copy of the order of the SEC
declaring such Registration Statement and any post-effective amendment thereto
effective and (ii) such reasonable number of copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
any documents incorporated therein by reference and all exhibits), (iii) such
reasonable number of copies of the Prospectus included in such Registration
Statement (including each preliminary Prospectus), and such reasonable number
of copies of the final Prospectus as filed by the Company pursuant to Rule
424(b) under the Securities Act, in conformity with the requirements of the
Securities Act, and (iv) such other documents, (including any amendments
required to be filed pursuant to clause (c) of this Section), as any such
Person may reasonably request.  The
Company hereby consents to the use of the Prospectus by each of the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as the
case may be, and the underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Registrable Notes covered by, or
the sale by Participating Broker-Dealers of the Exchange Notes pursuant to,
such Prospectus and any amendment thereto.


 


(e)                                  If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
the Company shall notify in writing the selling Holders of Registrable Notes,
or each such Participating Broker-Dealer, as the case may be, their counsel and
the managing underwriters, if any, promptly (but in any event within 2 Business
Days) (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective (including in such
notice a written statement that any Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules, documents incorporated
or deemed to be incorporated by reference and exhibits), (ii) of the issuance
by the SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any Prospectus or
the initiation of any proceedings for that purpose, (iii) if at any time when a
Prospectus is required by the Securities Act to be delivered in connection


 


13

















 


with sales of the
Registrable Notes the representations and warranties of the Issuer contained in
any agreement (including any underwriting agreement) contemplated by Section
6(n) hereof cease to be true and correct, (iv) of the receipt by the Issuer of
any notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose, (v) of the happening of any event, the existence
of any condition of any information becoming known that makes any statement
made in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in, or amendments
or supplements to, such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement and the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(vi) of any reasonable determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate.


 


(f)                                    Use
its best efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the qualification (or
exemption from qualification) of any of the Registrable Notes or the Exchange
Notes to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts to obtain
the withdrawal of any such order at the earliest possible date.


 


(g)                                 If
(A) a Shelf Registration is filed pursuant to Section 3 or (B) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period or
(C) requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information or revisions
to information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or their counsel reasonably
request to be included or made therein and (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Issuer has received notification of the matters to be
incorporated in such prospectus supplements or post-effective amendment.


 


(h)                                 Prior
to any public offering of Registrable Notes or any delivery of a Prospectus
contained in the Exchange Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
use its best efforts to register or qualify, and to cooperate with the selling
Holders of


 


14

















 


Registrable Notes
or each such Participating Broker-Dealer, as the case may be, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Notes or Exchange Notes, as the case may be, for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer or any managing
underwriter or underwriters, if any, reasonably request in writing; provided that where Exchange Notes held by
Participating Broker-Dealers or Registrable Notes are offered other than
through an underwritten offering, the Issuer agrees to cause its counsel to
perform Blue Sky investigations and file any registrations and qualifications
required to be filed pursuant to this Section 6(h); keep each such registration
or qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Exchange Notes held by Participating Broker-Dealers
or the Registrable Notes covered by the applicable Registration Statement; provided that neither the Issuer nor any
existing Subsidiary Guarantor shall be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such jurisdiction
where it is not then so subject or (C) subject itself to taxation in any such
jurisdiction where it is not then so subject.


 


(i)                                     If
(A) a Shelf Registration is filed pursuant to Section 3 or (B) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2 is
requested to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
cooperate with the selling Holders of Registrable Notes and the managing underwriter
or underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Notes to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registrable Notes to
be in such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably request.


 


(j)                                     Use
its best efforts to cause the Registrable Notes covered by any Registration
Statement to be registered with or approved by such governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or the
underwriter, if any, to consummate the disposition of such Registrable Notes,
except as may be required solely as a consequence of the nature of such selling
Holder’s business, in which case the Issuer will cooperate in all reasonable
respects with the filing of such Registration Statement and the granting of
such approvals.


 


(k)                                  If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
upon the


 


15

















 


occurrence of any
event contemplated by paragraph 6(e)(v) or 6(e)(vi) hereof, as promptly as
practicable prepare and file with the SEC, at the expense of the Issuer, a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, such Prospectus
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.


 


(l)                                     Use
its best efforts to cause the Registrable Notes covered by a Registration
Statement to be rated with appropriate rating agencies as may be reasonably
requested by the Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement or the managing
underwriter or underwriters, if any.


 


(m)                               Prior
to the initial issuance of the Exchange Notes, (i) provide the Trustee with one
or more certificates for the Registrable Notes in a form eligible for deposit
with The Depository Trust Company and (ii) provide a CUSIP number for the
Exchange Notes.


 


(n)                                 If a
Shelf Registration is filed pursuant to Section 3, enter into such agreements
(including an underwriting agreement in form, scope and substance as is
customary in underwritten offerings of debt securities similar to the Notes, as
may be appropriate in the circumstances) and take all such other actions in
connection therewith (including those reasonably requested by the managing
underwriters, if any, or the Holders of a majority in aggregate principal
amount of the Registrable Notes being sold) in order to expedite or facilitate
the registration or the disposition of such Registrable Notes, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, (i) make such
representations and warranties to the Holders and the underwriters, if any,
with respect to the business of the Company and its subsidiaries, and the
Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, as may be
appropriate in the circumstances, and confirm the same if and when reasonably
required; (ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold),
addressed to each selling Holder and each of the underwriters, if any, covering
the matters customarily covered in opinions of counsel to the Issuer requested
in underwritten offerings of debt securities similar to the Notes, as may be
appropriate in the circumstances; (iii) obtain “cold comfort” letters and
updates thereof (which


 


16

















 


letters and
updates (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters) from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the underwriters
and each selling Holder, such letters to be in customary form and covering
matters of the type customarily covered in “cold comfort” letters in connection
with underwritten offerings of debt securities similar to the Notes, as may be
appropriate in the circumstances, and such other matters as reasonably
requested by the underwriters; and (iv) deliver such documents and certificates
as may be reasonably requested by the Holders of a majority in principal amount
of the Registrable Notes being sold and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties of the
Company and its subsidiaries made pursuant to clause (i) above and to evidence
compliance with any conditions contained in the underwriting agreement or other
similar agreement entered into by the Company.


 


(o)                                 If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, make available
for inspection by any selling Holder of such Registrable Notes being sold, or
each such Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Notes, if any, and any
attorney, accountant or other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the “Inspectors”), at the offices where normally kept, during
reasonable business hours, all financial and other records and pertinent
corporate documents of the Issuer and its subsidiaries (collectively, the
“Records”) as shall be reasonably necessary to enable them to exercise any applicable
due diligence responsibilities, and cause the officers, directors and employees
of the Issuer and its subsidiaries to supply all information reasonably
requested by any such Inspector in connection with such Registration Statement.  Such Records shall be kept confidential by
each Inspector and shall not be disclosed by the Inspector unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, (iii) the information in such Records is public or has
been made generally available to the public other than as a result of a
disclosure or failure to safeguard by such Inspector or (iv) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary or
advisable in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and arising out
of, based upon, related to, or involving this Agreement, or any transaction
contemplated hereby or arising hereunder. 
Each selling Holder of such Registrable Notes and each such Participating
Broker-Dealer will be required to agree that information obtained by


 


17

















 


it as a result of
such inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Issuer unless
and until such is made generally available to the public.  Each selling Holder of such Registrable
Notes and each such Participating Broker-Dealer will be required to further
agree that it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Issuer and, to the extent
practicable, use its best efforts to allow the Issuer, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential at their expense.


 


(p)                                 Comply
with all applicable rules and regulations of the SEC and make generally
available to the security holders of the Company earning statements satisfying
the provisions of section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45
days after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Notes are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.


 


(q)                                 Upon
consummation of an Exchange Offer or Private Exchange, obtain an opinion of
counsel to the Company (in form, scope and substance reasonably satisfactory to
the Purchaser), addressed to the Trustee for the benefit of all Holders
participating in the Exchange Offer or Private Exchange, as the case may be, to
the effect that (i) the Company and the existing Subsidiary Guarantors have
duly authorized, executed and delivered the Exchange Notes or the Private
Exchange Notes, as the case may be, and the Indenture, (ii) the Exchange Notes
or the Private Exchange Notes, as the case may be, and the Indenture constitute
legal, valid and binding obligations of the Company and the existing Subsidiary
Guarantors, enforceable against the Company and the existing Subsidiary
Guarantors in accordance with their respective terms, except as such
enforcement may be subject to customary exceptions and (iii) all obligations of
the Company and the existing Subsidiary Guarantors under the Exchange Notes or
the Private Exchange Notes, as the case may be, and the Indenture are secured
by Liens on the assets securing the obligations of the Company under the Notes,
the Indenture and Collateral Agreements.


 


(r)                                    If
the Exchange Offer or a Private Exchange is to be consummated, upon delivery of
the Registrable Notes by the Holders to the Issuer (or to such other Person as
directed by the Issuer) in exchange for the Exchange Notes of the Private
Exchange Notes, as the case may be, the Issuer shall mark, or caused to be
marked, on such Registrable Notes that such Registrable Notes are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; provided that in
no event shall such Registrable Notes be marked as paid or otherwise satisfied.


 


18

















 


(s)                                  Cooperate
with each seller of Registrable Notes covered by any Registration Statement and
each underwriter, if any, participating in the disposition of such Registrable
Notes and their respective counsel in connection with any filings required to
be made with the NASD.


 


(t)                                    Use
its best efforts to take all other steps reasonably necessary to effect the
registration of the Registrable Notes covered by a Registration Statement
contemplated hereby.


 


(u)                                 The
Issuer may require each seller of Registrable Notes or Participating
Broker-Dealer as to which any registration is being effected to furnish to the
Issuer such information regarding such seller or Participating Broker-Dealer
and the distribution of such Registrable Notes as the Issuer may, from time to
time, reasonably request.  The Issuer
may exclude from such registration the Registrable Notes of any seller who
fails to furnish such information within a reasonable time (which time in no
event shall exceed 60 days) after receiving such request.


 


(v)                                 Each
Holder of Registrable Notes and each Participating Broker-Dealer agrees by
acquisition of such Registrable Notes or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Issuer of the happening of any event of the kind described in
Section 6(e)(ii), 6(e)(iv), 6(e)(v), or 6(e)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by a Registration
Statement and such Participating Broker-Dealer will forthwith discontinue
disposition of such Exchange Notes pursuant to any Prospectus and, in each
case, forthwith discontinue dissemination of such Prospectus until such
Holder’s or Participating Broker-Dealer’s receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(k), or until it is
advised in writing (the “Advice”) by the Issuer that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto and, if so directed by the Issuer, such Holder or
Participating Broker-Dealer, as the case may be, will deliver to the Issuer all
copies, other than permanent file copies, then in such Holder’s or
Participating Broker-Dealer’s possession, of the Prospectus covering such
Registrable Notes current at the time of the receipt of such notice.  In the event the Issuer shall give any such
notice, the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each Participating Broker-Dealer shall have received
(x) the copies of the supplemented or amended Prospectus contemplated by
Section 6(k) or (y) the Advice.


 


7.             Registration Expenses


 


(a)                                  All
fees and expenses incident to the performance of or compliance with this
Agreement by the Issuer shall be borne by the Issuer, whether or not the
Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees, including,
without limitation, 


 


19

















 


(A) fees with
respect to filings required to be made with the NASD in connection with any
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws as provided in Section 6(h) hereof, (ii) printing
expenses, including, without limitation, expenses of printing Prospectuses if
the printing of Prospectuses is requested by the managing underwriter or
underwriters, if any, or by the Holders of a majority in aggregate principal
amount of the Registrable Notes included in any Registration Statement or by
any Participating Broker-Dealer during the Applicable Period, as the case may
be, (iii) messenger, telephone and delivery expenses incurred in connection
with the performance of its obligations hereunder, (iv) fees and disbursements
of counsel for the Issuer, (v) fees and disbursements of all independent
certified public accountants referred to in Section 6(n)(iii) (including,
without limitation, the expenses of any special audit and “cold comfort”
letters required by or incident to such performance), (vi) rating agency fees,
(vii) Securities Act liability insurance, if the Issuer desires such insurance,
(viii) fees and expenses of all other Persons retained by the Issuers, (ix)
internal expenses of the Issuer (including, without limitation, all salaries
and expenses of officers and employees of the Issuer performing legal or
accounting duties), (x) the expense of any annual audit, (xi) the fees and
expenses of the Trustee and the Exchange Agent and (xii) the expenses relating
to printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.


 


(b)                                 The
Company shall reimburse the Holders for the reasonable fees and disbursements
of not more than one counsel (in addition to appropriate local counsel) chosen
by the Holders of a majority in aggregate principal amount of the Registrable
Notes to be included in any Registration Statement.  The Company shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of the Exchange
Notes or Private Exchange Notes in exchange for the Notes; provided that the Company shall not be
required to pay taxes payable in respect of any transfer involved in the issuance
or delivery of any Exchange Note or Private Exchange Note in a name other than
that of the Holder of the Note in respect of which such Exchange Note or
Private Exchange Note is being issued. 
The Company shall reimburse the Holders for fees and expenses (including
fees and expenses of counsel to the Holders) relating to any enforcement of any
rights of the Holders under this Agreement.


 


8.             Indemnification


 


(a)                                  Indemnification
by the Company. 
The Company shall (and shall cause each Subsidiary Guarantor, jointly
and severally, to), without limitation as to time, indemnify and hold harmless
each Holder of Registrable Notes, Exchange Notes or Private Exchange Notes and
each Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, each Person, if any, who controls each such Holder (within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) and
the officers, directors and partners of each such Holder, Participating
Broker-Dealer and controlling person, to the fullest extent lawful,


 


20

















 


from and against
any and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and reasonable attorneys’ fees as
provided in this Section 8) and expenses (including, without limitation,
reasonable costs and expenses incurred in connection with investigating,
preparing, pursuing or defending against any of the foregoing) (collectively,
“Losses”), as incurred, directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue or alleged untrue
statement of a material fact contained in any Registration Statement,
Prospectus or form of prospectus, or in any amendment or supplement thereto, or
in any preliminary prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such Losses are solely based upon information
relating to such Holder or Participating Broker-Dealer and furnished in writing
to the Company (or reviewed and approved in writing) by such Holder or
Participating Broker-Dealer or its counsel expressly for use therein; provided, however,
that the Company will not be liable to any Indemnified Party (as defined below)
under this Section 8 to the extent Losses were solely caused by an untrue
statement or omission or alleged untrue statement or omission that was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto if (i) the Prospectus does not contain
any other untrue statement or omission or alleged untrue statement or omission
of a material fact that was the subject matter of the related proceeding, (ii)
any such Losses resulted from an action, claim or suit by any Person who
purchased Registrable Notes or Exchange Notes that are the subject thereof from
such Indemnified Party and (iii) it is established in the related proceeding
that such Indemnified Party failed to deliver or provide a copy of the
Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Notes or Exchange Notes sold to
such Person if required by applicable law, unless such failure to deliver or
provide a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Issuer with Section 6 of this Agreement.  The Issuer shall also indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, their officers, directors,
agents and employees and each Person who controls such Persons (within the
meaning of Section 5 of the Securities Act or Section 20(a) of the Exchange
Act) to the same extent as provided above with respect to the indemnification
of the Holders or the Participating Broker-Dealer.


 


(b)                                 Indemnification
by Holder. 
In connection with any Registration Statement, Prospectus or form of
prospectus, any amendment or supplement thereto, or any preliminary prospectus
in which a Holder is participating, such Holder shall furnish to the Company in
writing such information as the Company reasonably requests for use in
connection with any Registration Statement, Prospectus or form of prospectus,
any amendment or supplement thereto, or any preliminary prospectus and shall,
without limitation as to time, indemnify and hold harmless the Company, its
directors and each Person, if any, who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20(a) of the


 


21

















 


Exchange Act), and
the directors, officers and partners of such controlling persons, to the
fullest extent lawful, from and against all Losses arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading to the extent, but only to the
extent, that such losses are finally judicially determined by a court of
competent jurisdiction in a final, unappealable order to have resulted solely
from an untrue statement or alleged untrue statement of a material fact or
omission or alleged omission of a material fact contained in or omitted from
any information so furnished in writing by such Holder to the Company expressly
for use therein.  Notwithstanding the
foregoing, in no event shall the liability of any selling Holder be greater in
amount than the dollar amount of the proceeds (net of payment of all expenses)
received by such Holder upon the sale of the Registrable Notes giving rise to
such indemnification obligation.


 


(c)                                  Conduct
of Indemnification Proceedings.  If any proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the party or parties from
which such indemnity is sought (the “Indemnifying Party” or “Indemnifying
Parties”, as applicable) in writing; provided,
that the failure to so notify the Indemnifying Parties shall not relieve the
Indemnifying Parties from any obligation or liability except to the extent (but
only to the extent) that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal) that the
Indemnifying Parties have been prejudiced materially by such failure.


 


The Indemnifying Party shall have the right, exercisable by giving
written notice to an Indemnified Party, within 20 Business Days after receipt
of written notice from such Indemnified Party of such proceeding, to assume, at
its expense, the defense of any such proceeding, provided, that an Indemnified Party shall have the right to
employ separate counsel in any such proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or parties unless:  (1) the Indemnifying Party has agreed to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume
the defense of such proceeding or shall have failed to employ counsel
reasonably satisfactory to such Indemnified Party; or (3) the named parties to any
such proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party or any of its affiliates or controlling
persons, and such Indemnified Party shall have been advised by counsel that
there may be one or more defenses available to such Indemnified Party that are
in addition to, or in conflict with, those defenses available to the
Indemnifying Party or such affiliate or controlling person (in which case, if
such Indemnified Party notifies the Indemnifying Parties in writing that it
elects to employ separate counsel at the expense of the Indemnifying Parties,
the Indemnifying Parties shall not have the right to assume the defense and the
reasonable fees and expenses of such counsel shall be at the expense of the Indemnifying
Party; it being understood, however, that, the Indemnifying Party shall not, in


 


22

















 


connection with any one such
proceeding or separate but substantially similar or related proceedings in the
same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for
such Indemnified Party).


 


No Indemnifying Party shall be liable for any settlement of any
such proceeding effected without its written consent, which shall not be
unreasonably withheld, but if settled with its written consent, or if there be
a final judgment for the plaintiff in any such proceeding, each Indemnifying
Party jointly and severally agrees, subject to the exceptions and limitations
set forth above, to indemnify and hold harmless each Indemnified Party from and
against any and all Losses by reason of such settlement or judgment.  The Indemnifying Party shall not consent to
the entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to each
Indemnified Party of a release, in form and substance reasonably satisfactory
to the Indemnified Party, from all liability in respect of such proceeding for
which such Indemnified Party would be entitled to indemnification hereunder
(whether or not any Indemnified Party is a party thereto).


 


(d)                                 Contribution.  If the indemnification provided for in this
Section 8 is unavailable to an Indemnified Party or is insufficient to hold
such Indemnified Party harmless for any Losses in respect of which this Section
8 would otherwise apply by its terms (other than by reason of exceptions
provided in this Section 8), then each applicable Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall have a joint and several
obligation to contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party, on the one hand, and Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such Indemnifying Party or
Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent any such statement or
omission.  The amount paid or payable by
an Indemnified Party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
proceeding, to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in Section 8(a) or 8(b) was
available to such party.


 


The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding
paragraph.  Notwithstanding the
provisions of this Section 8(d), a selling Holder shall not be required to
contribute, in the aggregate, any amount in excess of such Holder’s Maximum
Contribution Amount.  A selling Holder’s
“Maximum Contribution Amount” shall equal the excess of (i) the aggregate
proceeds received by such Holder pursuant to the sale of such


 


23

















 


Registrable Notes or Exchange Notes
over (ii) the aggregate amount of damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.  No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.


 


The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.


 


9.             Rules 144 and 144A


 


The Company covenants that it shall (a) file the reports required
to be filed by it (if so required) under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, it will, upon the request of any Holder of Registrable Notes, make
publicly available other information necessary to permit sales pursuant to Rule
144 and 144A and (b) take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Notes without registration under the Securities Act pursuant
to the exemptions provided by Rule 144 and Rule 144A.  Upon the request of any Holder, the Company shall deliver to such
Holder a written statement as to whether it has complied with such information and
requirements.


 


10.           Underwritten Registrations of Registrable Notes


 


If any of the Registrable Notes covered by any Shelf Registration
is to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering; provided,
however, that such investment
banker or investment bankers and manager or managers must be reasonably
acceptable to the Issuer.


 


No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder’s
Registrable Notes on the basis provided in any underwriting arrangements approved
by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.


 


11.           Miscellaneous


 


(a)                                  No
Inconsistent Agreements. 
The Issuer has not entered, as of the date hereof, and the Issuer shall
not enter, after the date of this Agreement, into any agreement with respect to
any of its securities that is inconsistent with the rights granted to the
Holders of Securities in this Agreement or otherwise conflicts with the
provisions hereof.  The Issuer has not
entered and will not enter into any agreement with respect to any of its
securities that will grant to any Person piggy-back rights with respect to a
Registration Statement.


 


24

















 


(b)                                 Adjustments
Affecting Registrable Notes.  The Company shall not, directly or
indirectly, take any action with respect to the Registrable Notes as a class
that would adversely affect the ability of the Holders to include such
Registrable Notes in a registration undertaken pursuant to this Agreement.


 


(c)                                  Amendments
and Waivers. 
The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of (A) in
circumstances that would adversely affect any Holders of Registrable Notes or
the Holders of not less than a majority in aggregate principal amount of the
then outstanding Registrable Notes, and (B) in circumstances that would
adversely affect Participating Broker-Dealers, the Participating Broker-Dealers
holding not less than a majority in aggregate principal amount of the Exchange
Notes held by all Participating Broker-Dealers; provided, however,
that Section 8 and this Section 11(c) may not be amended, modified or
supplemented without the prior written consent of each Holder and each
Participating Broker-Dealer (including any Person who was a Participating
Broker-Dealer Holder of Registrable Notes or Exchange Notes, as the case may
be, disposed of pursuant to any Registration Statement). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Notes whose securities are being tendered pursuant to the Exchange
Offer or sold pursuant to a Registration Statement and that does not directly
or indirectly affect, impair, limit or compromise the rights of other Holders
of Registrable Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being tendered or being
sold by such Holders pursuant to such Registration Statement.


 


(d)                                 Notices.  All notices and other communications
provided for or permitted hereunder shall be made in writing by hand delivery,
registered first-class mail, next-day air courier or telecopier:


 


(i)                                     if to
a Holder of Securities or to any Participating Broker-Dealer, at the most
current address of such Holder or Participating Broker-Dealer, as the case may
be, set forth on the records of the registrar of the Notes, with a copy in like
manner to the Initial Purchaser as follows:


 


JEFFERIES & COMPANY, INC.


11100 Santa Monica Boulevard, 10th Floor


Los Angeles, California 90025


Facsimile No.:  (310)
575-5166


Attention:  M. Brent Stevens


 


with a copy to:


 


Mayer, Brown, Rowe & Maw


1675 Broadway


 


25

















 


New York, New York  10019


Facsimile No.:  (212)
262-1910


Attention:  Ronald S. Brody


 


(ii)                                  if to
the Initial Purchaser, at the address specified in Section 12(d)(1);


 


(iii)                               if to
the Issuer, as follows:


 


New World Restaurants Group, Inc.


1687 Cole Boulevard


Golden, Colorado  80401


Facsimile No.:  (303)
568-8120


Attention:  Anthony D. Wedo


 


with a copy to:


 


Proskauer Rose LLP


1585 Broadway


New York, New York 10036


Facsimile No.: (212) 969-2900


Attention:  Julie M. Allen


 


All such notices and communications shall be deemed to have been
duly given:  when delivered by hand, if
personally delivered; five business days after being deposited in the United
States mail, postage prepaid, if mailed; one business day after being timely
delivered to a next-day air courier guaranteeing overnight delivery; and when
receipt is acknowledged by the addressee, if telecopied.


 


Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the Trustee under
the Indenture at the address specified in such Indenture.


 


(e)                                  Successors
and Assigns. 
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto, including, without
limitation and without the need for an express assignment, subsequent Holders
of Securities.


 


(f)                                    Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.


 


(g)                                 Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


(h)                                 Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF


 


26

















 


LAW.  THE COMPANY HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.  THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.  THE COMPANY
IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY
HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.


 


(i)                                     Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.


 


(j)                                     Securities
Held by the Issuer or Its Affiliates.  Whenever the consent or approval of Holders
of a specified percentage of Securities is required hereunder, Securities held
by the Issuer or its affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted for any purpose in determining whether
such consent or approval was given by the Holders of such required percentage.


 


27

















 


(k)                                  Third
Party Beneficiaries. 
Holders and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement and this Agreement may be enforced by such
Persons.


 


(l)                                     Entire
Agreement. 
This Agreement, together with the Purchase Agreement, the Indenture and
the Collateral Agreements, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein and any and all prior oral
or written agreements, representations, or warranties, contracts,
understanding, correspondence, conversations and memoranda between the Initial Purchaser
on the one hand and the Issuer on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof
are merged herein and replaced hereby.


 


28

















 


IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.


 


	
   

  	
  NEW WORLD RESTAURANT GROUP,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony D. Wedo

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief Executive

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHESAPEAKE BAGEL FRANCHISE

  CORP., a New Jersey corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILLOUGHBY’S INCORPORATED, a

  Connecticut corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						



 

















 


	
   

  	
  MANHATTAN BAGEL COMPANY, INC.,

  a New Jersey corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  I. & J. BAGEL, INC., a California

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 

















 


	
   

  	
  EINSTEIN/NOAH BAGEL PARTNERS,

  INC., a California Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EINSTEIN AND NOAH CORP., a

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 

















 


	
  ACCEPTED AND
  AGREED TO:

  	
   

  
	
   

  	
   

  
	
  JEFFERIES &
  COMPANY, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
  M. Brent Stevens

  	
   

  
	
  Title:

  	
  Managing Director

  	
   

  
					



 

















 


EXHIBIT B


 


INACTIVE SUBSIDIARIES


 


MBC Tonawanda, 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 East Aurorora, LLC


Manhattan Bagel
Construction Corp.


Bay Area Bagel, Inc.


DAB Industries, Inc.


CR Bagel Leases, Inc.


MBC Genesee, LLC


Paragon Bakeries, Inc.


 

















 


EXHIBIT
C


 


Manhattan Bagel Company,
Inc.


Chesapeake Bagel
Franchise Corp.


Willoughby’s Incorporated


Einstein and Noah Corp.


Einstein/Noah Bagel
Partners, Inc.


I.&J. Bagel, Inc.


New World ENBCDEB Corp.