<PAGE>

                                 LOAN AGREEMENT
                        NEW YORK BAGEL ENTERPRISES, INC.

THIS AGREEMENT is made and entered into by New York Bagel Enterprises, Inc., a
Kansas corporation, and Lots A' Bagels, Inc., a Kansas corporation
(collectively, the "BORROWER") and NationsBank, N.A. ("BANK").

WHEREAS, Borrower has requested Bank to lend it up to TEN MILLION AND NO/100
DOLLARS ($10,000,000.00) in the form of a revolving line of credit to be used
for the Borrower's general corporate activities, including, INTER ALIA, real
estate and equipment financing, funding of acquisitions and short term working
capital needs; and

WHEREAS, Bank is willing to make the loan to Borrower, subject to terms and
conditions acceptable to Bank, as set forth below and in the other Loan
Documents (as hereinafter defined).
 
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
contained herein, and the benefits to be derived herefrom, the parties agree as
follows:

ARTICLE 1.    DEFINITIONS.

Section 1.1.  DEFINITIONS.  The following terms, as used herein, have the
following meanings:

     ADVANCE means a disbursement by Bank of any of the proceeds of the Loan.

     AGREEMENT means this Loan Agreement executed by Borrower and Bank, as the
Agreement may from time to time be renewed, extended, modified, amended,
supplemented, replaced or restated.

     APPLICATION FOR ADVANCE means a Request for Advance, together with a
written application by Borrower to the Bank in form and substance satisfactory
to Bank, pursuant to which Borrower shall (a) specify the amount of the Advance
and the Business Day for which the Advance is requested, (b) certify to Bank
that as of the date of the Application for Advance, all representations and
warranties contained in the Loan Documents remain true and correct, (c) certify
to Bank that as of the date of the Application for Advance, Borrower is in
compliance with all covenants contained in the Loan Documents, and (d) no
Default or Event of Default has occurred or will occur as the result of the
requested Advance.

     ASSIGNMENT OF PERMITS, LICENSES AND AGREEMENTS means an assignment,
executed on even date herewith, for collateral purposes, of all permits,
licenses and agreements affecting the Collateral granted by Borrower in favor of
Bank, in form and substance acceptable to Bank, as the Assignment of Permits,
Licenses and Agreements may be renewed, extended, modified, amended,
supplemented, replaced and restated.

<PAGE>

     BORROWING BASE means an amount equal to the sum of 75% of Borrower's
Eligible Receivables, as defined below, PLUS 50% of Borrower's Eligible
Inventory, as defined below, PLUS 50% of Borrower's Eligible Equipment.

     BORROWING BASE CERTIFICATE means the certificate described in SECTION
4.3.b).

     BORROWING BASE REPORT means a written report prepared by Borrower and in
form and substance acceptable to Bank containing a statement of aging of
accounts receivable and listings of inventory and equipment.

     BUSINESS DAY means any day of the week other than Saturday, Sunday or any
other day on which Bank is required or authorized by law or executive order to
close.

     CLOSING DATE means the date of execution and delivery of this Agreement or
the date Bank makes its first Advance to Borrower, whichever occurs first.

     COLLATERAL means all of Borrower's personal property of any kind including,
but not limited to, Borrower's right, title and interest in the Secured
Collateral, securing or to secure the Loan pursuant to this Agreement or any of
the Security Documents, and, in the event Borrower hereafter acquires any real
property in connection with any Advance, Collateral shall also include such real
property.

     COMMITMENT FEE has the meaning set forth in SECTION 2.1.e).

     DEFAULT means any condition or event which with the giving of notice or
lapse of time or both would, unless cured or waived, become an Event of Default.

     ELIGIBLE EQUIPMENT means Borrower's equipment, furniture, trade fixtures,
machinery, appliances, and other personal property used or useful by Borrower in
the operation of its business, with the ineligibility of any and all items or
classes of equipment to be determined by the Bank in its sole discretion.

     ELIGIBLE INVENTORY shall mean Borrower's inventory of finished goods and
merchandise held for retail sale in the ordinary course of its business, all of
which inventory shall be owned solely by Borrower, free of liens, security
interests and encumbrances (except for the Bank's Lien and Permitted
Encumbrances) and shall be of good and merchantable quality, free from defects,
and saleable in the ordinary course of Borrower's business, and shall not
include damaged items, consigned inventory, or obsolete or slow-moving items,
with the ineligibility of any and all items or classes of inventory to be
determined by the Bank in its sole discretion.


                                                                 LOAN AGREEMENT
                                               NationsBank, N.A./New York Bagel
                                                                         Page 2

<PAGE>

     ELIGIBLE RECEIVABLES shall mean bona fide existing accounts receivable
owned solely by Borrower, with the ineligibility of any and all items or classes
of accounts to be determined by Bank in its sole discretion.

     EMPLOYEE BENEFIT PLAN means at any time an employee benefit plan as defined
in Section 3(3) of ERISA that is now or was previously maintained, sponsored or
contributed to by Borrower.

     ENVIRONMENTAL DAMAGES means all claims, demands, liabilities (including
strict liability), losses, damages (including consequential damages), causes of
action, judgments, penalties, fines, costs and expenses (including fees, costs
and expenses of attorneys, consultants, contractors, experts and laboratories)
of any and every kind or character, contingent or otherwise, matured or
unmatured, known or unknown, foreseeable or unforeseeable, made, incurred,
suffered, brought, or imposed at any time and from time to time, caused by or
related to any Hazardous Substance or the violation of any Environmental
Requirement at, above, over, under, on, from or otherwise pertaining to the
business operations of Borrower or the Collateral.

     ENVIRONMENTAL REQUIREMENT means any agreement or restriction or any
federal, state or local law, statute, ordinance, code, rule, regulation,
license, authorization, decision, order, injunction, decree, or rule of common
law (and any judicial interpretation of any of the foregoing) pertaining to any
Hazardous Substance or the environment (including, but not limited to, ground,
air, water or noise pollution or contamination, and underground or above ground
tanks) and shall include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, ET
SEQ., as amended by the Superfund Amendments and Reauthorization Act of 1986,
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, ET SEQ., the
Federal Water Pollution Control Act, 33 U.S.C. Section 1801 ET SEQ., the Toxic
Substance Control Act, 15 U.S.C. Section 2601, ET SEQ., the Clean Air Act, 42
U.S.C. Section 7401, ET SEQ., the Safe Drinking Water Act, 42 U.S.C. Section
300f, ET SEQ., the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901, ET SEQ. and the regulations, orders, decrees and publications promulgated
pursuant thereto, or any other federal, state or local governmental law,
ordinance, rule or regulation, regulating or imposing liability or standards of
conduct concerning, any hazardous, toxic or dangerous waste, substance or
material, as may now or at any time hereafter be changed, amended or come into
effect.  The term "underground storage tanks" shall have the same meaning and
definition set forth in paragraph (1) of 42 U.S.C. Section 6991.  The term
"above ground storage tanks" shall have the same meaning and definition set
forth in K.S.A. 65-34,102(a).  

     ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time, together with all regulations issued pursuant thereto.

     EVENT OF DEFAULT has the meaning set forth in SECTION 8.1.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                        Page 3

<PAGE>

     FINANCING STATEMENTS means collectively, all financing statements executed
or to be executed by Borrower to perfect the security interests granted to Bank
in any of the Collateral securing the Loan.

     GAAP means generally accepted accounting principles consistently applied as
in effect at the time of application of the provisions hereof.

     GOVERNMENTAL AUTHORITY means any government, any state or other political
subdivision thereof, or any Person exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

     GOVERNMENTAL REQUIREMENTS means Environmental Requirements, all laws,
ordinances, codes, rules, regulations, orders, writs, injunctions or decrees of
any Governmental Authority applicable to Borrower or the Collateral.

     HAZARDOUS SUBSTANCES means without limitation, asbestos, urea formaldehyde
foam insulation, any flammable, explosive, radioactive or corrosive materials,
petroleum hydrocarbons, polychlorinated biphenyls, hazardous materials,
hazardous wastes, hazardous or toxic substances, other elements, compounds,
pollutants, contaminants or related materials defined, regulated, controlled,
limited or prohibited in any of the Environmental Requirements. 

Notwithstanding the foregoing, the term "Hazardous Substances" shall not include
chemicals routinely used in office areas or janitorial supplies, cleaning fluids
or chemicals necessary for the day-to-day operation and maintenance of Borrower
or the Collateral; provided that such chemicals and cleaning fluids are used,
stored and disposed of in compliance with all Governmental Requirements of any
Governmental Authority claiming to have or having jurisdiction over Borrower or
the Collateral.

     IMPOSITIONS means all real estate and personal property taxes, charges for
any easement, license or agreement maintained for the benefit of the Collateral
or any part thereof, and all other Taxes, charges and assessments and any
interest, cost or penalties with respect thereto, general, special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature whatsoever, which
at any time prior to or after the execution of this Agreement may be assessed,
levied or imposed upon the Collateral or any part thereof, or the ownership,
use, sale, occupancy or enjoyment thereof.

     INSURANCE POLICIES means:

     (a)  Casualty insurance providing comprehensive coverage of the Collateral
against fire, windstorm, tornado and other casualty in an amount equal to one
hundred percent (100%) of the replacement cost of the Collateral;


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                        Page 4

<PAGE>

     (b)  Comprehensive General Liability Insurance for owners and contractors,
including blanket contractual liability, products and completed operations,
personal injury (including employees), independent contractors, explosion,
collapse and underground hazards with a minimum coverage amount of $5 million,
together with umbrella coverage in an amount acceptable to Bank, arising out of
any one occurrence or in any increased amount reasonably required by Bank;

     (c)  Comprehensive Automobile Liability Insurance in an amount acceptable
to Bank for bodily injury;

     (d)  Worker's Compensation Insurance for statutory limits; and

     (e)  Any other insurance, including business interruption insurance in such
amounts and as customarily carried by comparable companies engaged in business
similar to that of Borrower covering the Collateral as Bank may require.

All insurance policies shall be "occurrence" based policies, issued on forms and
with companies satisfactory to Bank.  Certificates of Insurance evidencing all
Insurance Policies shall be delivered to Bank at Bank's address for notices set
forth in this Agreement.  Copies of all insurance policies shall be made
available to Bank for inspection.  All Insurance Policies shall be in amounts,
with deductibles, and in form and substance otherwise satisfactory to Bank, and
shall have a provision giving Bank at least thirty (30) days' prior written
notice of change of coverage and at least ten (10) days' prior written notice of
cancellation or non-renewal.  Each all-risk policy issued with respect to the
Collateral shall have loss payable clauses in favor of Bank, with loss proceeds
payable to Bank.  

     LEGAL REQUIREMENTS means (a) any and all present and future judicial
decisions, permits, licenses or certificates, or Governmental Requirements in
any way applicable to Borrower or any Collateral, including the ownership,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction thereof; (b) the presently or subsequently effective bylaws,
articles of incorporation, operating agreement, articles of organization, or any
partnership, limited partnership, joint venture, trust or other form of business
association agreement of Borrower; (c) any and all covenants, conditions or
restrictions applicable to the Collateral or the ownership, use or occupancy
thereof; and (d) any and all leases or contracts (written or oral) of any nature
that relate in any way to the Collateral, or any such lease or contract to which
Borrower may be bound.

     LIEN means with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                        Page 5

<PAGE>

     LOAN means the loans contemplated under this Agreement.  The Loan is a
"business loan" within the meaning of K.S.A. 16-207(f). 

     LOAN DOCUMENTS means this Agreement, the Security Agreement, the Note, the
Assignment of Permits, Licenses and Agreements, the Financing Statements, and
such other documents, evidencing, securing or pertaining to the Loan as shall,
from time to time, be executed and delivered by Borrower or any other Person to
Bank pursuant to this Agreement, as any of them may from time to time be
renewed, extended, modified, amended, restated, replaced or supplemented, and
including further, without limitation, each Application for Advance, including
future amendments and supplements thereto.

     MATERIAL ADVERSE EFFECT means an effect resulting from any circumstance or
event of whatever nature (including, but not limited to, the filing of, or any
adverse determination or development in, any litigation, arbitration or
governmental investigation or proceeding) which (a) has any adverse effect
whatsoever upon the ability of Bank to enforce any material provisions of any of
the Loan Documents; (b) is material and adverse to any of the Collateral or the
business, financial condition or other property of Borrower; or (c) impairs the
ability of Borrower to fulfill any material obligation under the Loan Documents.

     MATURITY DATE means September 30, 1998.

     NOTE means each and every commercial promissory note, in form and substance
acceptable to Bank, executed by Borrower at any time during the term of the Loan
and payable to the order of Bank, the aggregate principal balance of which shall
not exceed TEN MILLION AND NO/100 DOLLARS ($10,000,000.00), and includes any
amendments thereto and all promissory notes given in renewal, extension,
modification, restatement, rearrangement or replacement thereof.

     OBLIGATIONS means all present and future indebtedness, obligations and
liabilities, or any part thereof, of Borrower now existing or hereafter arising
under or in connection with this Agreement, the Note or any of the other Loan
Documents (specifically including, without limitation, the principal amount
outstanding under the Note), pursuant to the Loan Documents, together with (a)
all interest accrued thereon; (b) all reasonable or necessary costs, expenses
and attorneys' fees of Bank incurred in connection with the preparation of the
Loan Documents and any amendments, waivers or extensions of the Loan Documents
and the administration thereof; (c) the reimbursement and payment of all sums
which are advanced by Bank, in accordance with the terms of this Agreement or
any other Loan Document, to pay or satisfy amounts required to be paid by
Borrower under this Agreement or under any other instrument, agreement or
document at any time executed in connection with or as security for any part of
the Loan, in accordance with the terms of this Agreement or any other Loan
Document, or any amounts which are advanced by Bank to pay any Taxes,
Impositions, insurance premiums, Liens, assignments, charges or claims against
any of the Collateral; and (d) all costs, charges, commissions, reasonable
attorneys' 


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                        Page 6

<PAGE>

fees and expenses owing and to become owing in connection with the 
enforcement and collection of the foregoing obligations and indebtedness, and 
those owing to or to become owing in connection with the repossession, 
operation, maintenance, preservation or foreclosure of any of the Collateral, 
regardless of whether such indebtedness, obligations and liabilities are 
direct, contingent, fixed, liquidated, unliquidated, joint, several or joint 
and several.  The Obligations shall include all renewals, extensions, 
modifications, amendments, rearrangements and replacements of any of the 
above-described obligations, liabilities and indebtedness.

     PENSION PLAN means any Employee Plan that is now or was previously covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Internal Revenue Code.

     PERMITTED ENCUMBRANCES mean:

     a)   Bank's Liens securing the Note;

     b)   Inchoate statutory or operators' liens securing obligations for labor,
services, materials and supplies furnished to Borrower, which (i) are not
delinquent; (ii) have not been filed of record with appropriate officers of
Sedgwick County, Kansas, or are only notices of a right to claim of lien in the
event of non-payment without references to any specific overdue sum; or (iii)
are being contested on behalf of Borrower in good faith and for which Borrower
has obtained a proper payment and performance bond in the amount of the
contested claim;

     c)   Mechanics', materialmen's, warehousemen's, journeymen's and carriers'
liens and other similar liens arising by operation of law or statute in the
ordinary course of business if (i) the underlying claim is not delinquent and
did not in any event cover a billing period exceeding sixty (60) days; (ii) the
liens have not been filed of record with appropriate officers of Sedgwick
County, Kansas or are only notices of a right to claim of lien in the event of
non-payment without references to any specific overdue sum; or (iii) the claim
giving rise to such lien is being contested on behalf of Borrower in good faith
and for which Borrower has obtained a proper payment and performance bond in the
amount of the contested claim;

     d)   Liens for Taxes or Impositions not yet due or not yet delinquent, or,
if delinquent, that are being contested on behalf of Borrower, as permitted by
and in accordance with the terms and conditions set forth in SECTION 6.8;

     e)   Valid licenses and grants by Borrower to the New York Bagel franchise,
and related tradenames, trademarks and trade dress existing as of the date of
this Agreement; and

     f)   Valid liens of any landlord of Borrower provided under any lease of
Borrower in effect as of the date of this Agreement as such lease exists as of
the date of this Agreement.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                        Page 7

<PAGE>

     PERSON means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.

     REQUEST FOR ADVANCE means each and every request for advance executed by
Borrower from time to time substantially in the form attached hereto as EXHIBIT
A.

     SECURED COLLATERAL means and refers to Borrower's deposits, accounts,
rents, revenues, income, fees, charges, accounts or other payments, accounts
receivable, instruments, documents, chattel paper, general intangibles,
tradenames, trademarks, trade dress, franchise rights, licenses, furniture,
trade fixtures, machinery, appliances, equipment, goods and inventory including
any additions or substitutions therefor and all cash and non-cash proceeds
(including insurance proceeds) therefrom whether now owned or hereafter
acquired, all other personal property located at, used or intended to be used in
connection with the Collateral, together with any other property heretofore or
hereinafter pledged or secured to Bank to secure this or any other obligation of
Borrower to Bank, and, in the event Borrower hereafter acquires any real
property in connection with any Advance, Secured Collateral shall also include
such real property. 

     SECURITY AGREEMENT means that certain security agreement, in form and
substance acceptable to Bank, executed on even date herewith by Borrower in
favor of Bank securing the payment of the Note and the payment and performance
of all obligations specified in the Security Agreement, this Agreement and the
other Loan Documents, and evidencing a valid and enforceable first priority
security interest in and to the Secured Collateral, as the Security Agreement
may from time to time be renewed, extended, modified, restated, replaced,
amended or supplemented, including, without limitation any and all mortgages
that may from time to time be executed by Borrower in favor of Bank to secure
Bank's lien in the Secured Collateral or any part thereof.

     SECURITY DOCUMENTS means collectively, this Agreement, the Security
Agreement, the Assignment of Permits, Licenses and Agreements and all other
documents or instruments granting a lien and/or security interest in favor of
Bank as collateral for the Loan, all Financing Statements related thereto, and
all modifications, renewals or extensions thereof and any documents executed in
modification, renewal, extension, amendment, supplement or replacement thereof.

     TAXES means all taxes, assessments, filing or other fees, levies, imposts,
duties, deductions, withholdings, stamp taxes, income taxes, interest
equalization taxes, capital transaction taxes, foreign exchange taxes or other
charges of any nature whatsoever, from time to time or at any time imposed by
law or any Governmental Authority; and TAX means any one of the foregoing.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                        Page 8

<PAGE>

     UCC means the Kansas uniform commercial code.

Section 1.2.  SINGULAR AND PLURAL OF DEFINITIONS.  Each term defined in the
singular form in SECTION 1.1. shall mean the plural thereof when the plural form
of such term is used in this Agreement, and each term defined in the plural form
in SECTION 1.1. shall mean the singular thereof when the singular form of such
term is used in this Agreement.

Section 1.3.  GENDER AND CONSTRUCTION.  Words of any gender shall be held and
construed to include any other gender.  The use of the words "herein," "hereof,"
"hereunder" and other similar compounds of the word "here" shall refer to this
entire Agreement and not to any particular section, paragraph or provision.  

Section 1.4.  CAPTIONS.  The captions in this Agreement are for the convenience
of reference only and shall not define, affect or limit any of the terms or
provisions of this Agreement and shall be disregarded in construing the language
of any such term or provision. 

Section 1.5.  CAPITALIZED TERMS.  Capitalized terms used herein shall have the
same meaning given to such terms in the other Loan Documents (copies of which
are attached as EXHIBIT B) unless otherwise defined herein or the context
clearly indicates otherwise.

ARTICLE 2.     THE LOAN.

Section 2.1.   GENERAL TERMS.  Bank agrees, on the terms and conditions of this
Agreement, to make a loan to Borrower in the aggregate principal amount of not
to exceed TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) at any given time, as
follows:

a)  NOTE.  The Loan shall be evidenced by the Note, which will be executed by
Borrower at the time of each authorized Advance in the amount of the Advance.

b)  MATURITY DATE, PAYMENT AND TERMINATION OF COMMITMENT.  Principal and
interest accruing on the Loan and the other Obligations shall be calculated, due
and payable as set forth in each Note.  Any unfunded commitment under any Note
shall expire and terminate automatically on the Maturity Date.  Subject to and
upon the terms, covenants and conditions as set forth in the Note and this
Agreement, Borrower may borrow, repay and reborrow under the Loan, at any time
and from time to time until the Maturity Date or the termination of the Bank's
commitment whichever is earlier.

c)  CONDITIONS TO ADVANCES.  Borrower shall not be entitled to any Advance,
unless and until Borrower shall have satisfied each of the applicable conditions
precedent set forth in ARTICLE 4.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                        Page 9

<PAGE>

d)  TERM.  The term of the Loan shall be governed by the Note, but in no event
shall exceed a period of fifteen (15) months from the date of the first Advance.

e)  FEES.  In consideration of Bank making the Loan, Borrower agrees to pay a
commitment fee ("COMMITMENT FEE") to Bank annually, in arrears, in accordance
with the following schedule:

     1)  one-quarter of one percent (.025%) on the entire $10,000,000.00 loan
     amount if the average outstanding principal balance of the Loan is
     $1,000,000.00 or less;

     2)  one-eighth of one percent (.0125%) on the entire $10,000,000.00 loan
     amount if the average outstanding principal balance of the Loan is at least
     $1,000,001.00, but less than or equal to $2,000,000.00; or

     3)  no commitment fee if the average outstanding principal balance of the
     Loan is greater than $2,000,000.00.

The average outstanding principal balance shall be calculated on an annual basis
beginning September 1, 1997, through the Maturity Date.

ARTICLE 3.  COLLATERAL TO SECURE THE LOAN.

Section 3.1.  COLLATERAL.  The Loan shall be secured by a security interest,
granted pursuant to the Security Agreement in favor of Bank, in all of the
Secured Collateral.

ARTICLE 4.  CONDITIONS TO CLOSING AND MAKING OF ADVANCES.

Section 4.1.  APPLICATIONS FOR ADVANCES.  At least ten (10) Business Days before
the requested date of each Advance, Borrower shall deliver to Bank an
Application for Advance.  Each Application for Advance shall be irrevocable and
shall specify the amount of the Advance and the Business Day for which the
Advance is requested.  Except as otherwise previously or concurrently disclosed
to Bank in writing, each Application for Advance by or on behalf of Borrower
shall be deemed to ratify and confirm that all representations and warranties in
this Agreement and the other Loan Documents remain true and correct as of the
date of the Application for Advance, and unless the Bank is notified to the
contrary before the Advance is made, Borrower's acceptance and use of the funds
so advanced shall be deemed to ratify and confirm that all such representations
and warranties remain true and correct on the date of such Advance.

Section 4.2.  CLOSING; INITIAL ADVANCE.  The obligation of Bank to close on the
Loan and make an initial Advance under this Agreement is subject to the
following conditions precedent:

a)  Borrower shall have delivered to Bank the duly and properly executed Loan
Documents;


                                                                 LOAN AGREEMENT
                                               NationsBank, N.A./New York Bagel
                                                                        Page 10

<PAGE>

b)  Borrower shall have delivered to Bank evidence satisfactory to Bank that all
Insurance Policies have been obtained and all premiums paid;

c)  Borrower shall have delivered to Bank duly executed and properly certified
copies of documents authorizing the execution of and performance by Borrower of
this Agreement and the other Loan Documents and all other documents or
instruments contemplated herein or therein;

d)  Borrower shall have delivered to Bank a current certificate of good standing
for Borrower issued by the Kansas Secretary of State;

e)  Borrower shall have provided to Bank, Borrower's Federal tax identification
number;

f)  Borrower shall have delivered to Bank, a current certified copy of
Borrower's articles of incorporation and a true, correct and complete copy of
Borrower's by-laws as currently in effect;

g)  Bank shall have received the opinion of Borrower's counsel in form and
substance acceptable to Bank; and

h)  Borrower shall have paid to Bank, Bank's costs and legal expenses incurred
in connection with the preparation of the Loan Documents and related legal
services.

Section 4.3.  CONDITIONS PRECEDENT TO ALL ADVANCES.  The obligation of Bank to
make each and every Advance under the Loan is subject to the following
conditions precedent:

a)  NO EVENT OF DEFAULT.  No Event of Default shall have occurred and be
continuing and no event which, with notice or lapse of time or both, would
become such an Event of Default, shall have occurred and be continuing;

b)  BORROWING BASE CERTIFICATE.  Borrower shall have submitted to Bank a
Borrowing Base Certificate, in form and substance acceptable to Bank, which
calculates the Borrowing Base and the amount of credit available to fund the
particular Advance being requested and the total amount of credit then available
under the Loan; PROVIDED, HOWEVER, that Advances for construction financing as
contemplated in SECTION 4.4(c), below, shall not require the submission of such
a certificate;

c)  NOTE.  Borrower shall have executed and delivered the Note and any other
documents requested by Bank applicable to the Advance; and

d)  SUBORDINATION OF LANDLORD'S LIEN.  To the extent any lease agreement entered
into by Borrower after the date of this Agreement purports to create a lien in
favor of any landlord in the 


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 11


<PAGE>


Collateral, and if requested by Bank, Borrower shall obtain a subordination 
of such lien to the Lien of Bank hereunder.

Section 4.4.  LIMITATIONS AS TO PARTICULAR ADVANCES.  The following conditions
precedent shall apply as to the particular types of Advances set forth below,
and the obligation of Bank to make such Advances is subject to the following:

a)  ADVANCES FOR WORKING CAPITAL.  Before Borrower shall be entitled to receive
any Advance for use as short term working capital, Borrower shall demonstrate to
Bank's satisfaction in the exercise of its sole discretion, the existence of a
clear repayment source that will enable Borrower to repay such Advance within
twelve (12) months from the date of the Advance.

b)  ADVANCES FOR EQUIPMENT PURCHASES.  Any Advance requested by Borrower to
finance its purchase of restaurant equipment packages, machinery and other
personal property for the conduct of Borrower's business, shall not exceed
seventy-five percent (75%) of the actual cost of the property being purchased
(as determined by Bank in the exercise of its sole discretion) and shall be
amortized for purposes of repayment over a period of no more than three (3)
years.

c)  CONSTRUCTION FINANCING.  With respect to Advances requested by Borrower to
finance new construction, remodeling or acquisition of restaurant locations:

     1)  the aggregate of all such Advances shall at no time exceed a
     $2,000,000.00 cap.  An Advance will not be included in the calculation of
     the cap if Borrower obtains a written commitment for permanent financing,
     in form and substance satisfactory to Bank, sufficient to repay the Advance
     in full on or before the Maturity Date;

     2)  Borrower agrees to execute and deliver to Bank, a mortgage and
     assignment of leases and rents, in form and substance satisfactory to Bank,
     covering any real property to be acquired for such construction or
     remodeling; and

     3)  Borrower agrees to execute and deliver to Bank any and all other
     documents as may be requested by Bank in its sole discretion in order to
     document said construction financing.

In the event that upon completion of construction, remodeling or acquisition
Borrower is unable to obtain long-term financing to replace the Advances of Bank
pursuant to this subsection, Bank will provide Borrower with "mini-perm"
financing with repayment terms based upon: i) a ten (10) year amortization
schedule; ii) a balloon maturity date of no more than five (5) years; and iii)
no commitment from Bank to renew.  Any "mini-perm" financing provided hereunder
shall likewise be included for purposes of calculating the $2,000,000.00 cap set
forth in SECTION 4.4. c) 1), above.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 12

<PAGE>

d)  ADVANCES IN EXCESS OF $2 MILLION OR FOR TERM EXCEEDING MATURITY DATE.  With
respect to Advances in an amount in excess of $2,000,000.00 or for a term that
would expire beyond the Maturity Date, Borrower shall be required to obtain the
prior written approval of Bank before a Request for Advance for such an amount
is submitted.

ARTICLE 5.  REPRESENTATIONS AND WARRANTIES.

To induce Bank to make the Loan, Borrower represents and warrants, and so long
as any of the Obligations remain due and owing by Borrower under the Loan
continuously represents and warrants to Bank as follows:

Section 5.1.  CORPORATE EXISTENCE.  Each corporation comprising the Borrower is
a corporation duly organized and existing under the laws of the State of Kansas
and is in good standing where required under the laws of the states of Alabama,
Colorado, Kentucky, Missouri, New Mexico, Oklahoma, South Carolina, Texas and
Kansas and each corporation is duly authorized to the extent required by
applicable law to transact business in all places in which it operates whether
as of the date of this Agreement or hereafter.

Section 5.2.  BORROWER'S AUTHORITY, ETC.  Borrower has the power and authority
to enter into and perform the Loan Documents, and all actions necessary or
required to be taken by Borrower for the execution, delivery and performance by
Borrower of the Loan Documents have been duly authorized and taken by Borrower,
and the Loan Documents have been duly executed and delivered by or on behalf of
Borrower.  The Loan Documents constitute legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms.  The execution
and delivery of the Loan Documents by or on behalf of Borrower does not conflict
with or constitute on the part of Borrower a breach of, or default under any of
the terms, conditions, provisions, or restrictions of its articles of
incorporation, by-laws or any mortgage, lease or other agreement or instrument
to which Borrower is subject or by which Borrower may be bound.  

Section 5.3.  ENFORCEABILITY.  This Agreement and the other Loan Documents
constitute legal, valid and binding obligations of Borrower, enforceable in
accordance with their respective terms.

Section 5.4.  TITLE TO COLLATERAL.  Subject only to the Permitted Encumbrances,
Borrower holds full legal and equitable title to the Collateral, including,
without limitation, all right, title and interest in the New York Bagel
franchise and related tradenames, trademarks, and trade dress.

Section 5.5.  FINANCIAL STATEMENTS.  Borrower's financial statements furnished
to Bank in connection with the Loan, including, without limitation, Borrower's
financial information filed pursuant to the Securities Exchange Act of 1934, as
amended, Borrower's monthly internal financial reports and Borrower's operating
plan for Borrower's current fiscal year, correctly reflect the financial
condition of Borrower, and no material adverse change has since occurred.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 13

<PAGE>

Section 5.6.  LITIGATION.  Borrower is not a party to any litigation which could
have a Material Adverse Effect on its financial condition, the Collateral or the
Loan.  Nor to the best of Borrower's knowledge, does there exist any basis upon
which such litigation could be instituted.

Section 5.7.  LIENS OR ENCUMBRANCES.  The Collateral is not subject to any Liens
or encumbrances, except the Permitted Encumbrances.

Section 5.8.  ERISA.  Borrower is in compliance in all material respects with
all applicable provisions of the ERISA, and Borrower has not incurred any
liability to the Pension Benefit Guaranty Corporation or any Person succeeding
to any or all of its functions thereunder.

Section 5.9.  TAXES.  Borrower has filed all required federal, state and local
tax returns and have timely paid all Taxes and Impositions shown on such returns
to be owing, and there are no claims for Taxes or Impositions which have been
asserted against Borrower and which are unpaid except those, if any, which have
been disclosed to Bank in writing.

Section 5.10.  BANK'S RELIANCE ON BORROWING BASE CERTIFICATE.   Borrower
understands and agrees that Bank intends to rely on the Borrowing Base
Certificates (delivered to Bank in accordance with SECTION 4.3.b) hereof), not
only in connection with determining the amount of credit available under the
Loan, but also in determining the creditworthiness of Borrower.

Section 5.11.  PRINCIPAL PLACE OF BUSINESS.  Borrower's principal place of
business and chief executive office is located at 300 IMA Plaza, 250 North Water
Street, Wichita, Kansas 67202-1213.

Section 5.12.  FRANCHISE AGREEMENTS.  All franchise agreements to which Borrower
is a party are in full force and effect and, to the best of Borrower's
knowledge, are free from any default by Borrower or any act or omission of
Borrower that with notice or passage of time or both would become a default by
Borrower thereunder; provided, that Borrower anticipates and Bank acknowledges
that Borrower may terminate certain franchise agreements from time to time.

ARTICLE 6.  AFFIRMATIVE COVENANTS.

To induce Bank to make the Loan, Borrower covenants and agrees, and so long as
any of the Obligations remain due and owing by Borrower under the Loan
continuously covenants and agrees as follows:

Section 6.1.  FINANCIAL COVENANTS.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 14

<PAGE>

a)   FINANCIAL RATIOS.  Borrower will maintain at all times:  (i) a ratio of
total debt to tangible net worth of no greater than 0.8 to 1; (ii) a current
ratio of no less than 1.2 to 1 (excluding current portions of long-term debt
from current liabilities and Advances hereunder); and (iii) earnings before
interest, taxes, depreciation and amortization ("EBITDA") to debt service ratio
of 1.5 to 1, after considering normalized repayment schedule of Borrower's short
and long term debt; all as determined in accordance with GAAP.

b)   BORROWER'S FINANCIAL STATEMENTS AND TAX RETURNS.  Borrower will furnish to
Bank the following:  

     1)  As soon as available, but in any event, within one hundred twenty (120)
     days after the close of each fiscal year, (i) a copy of its consolidated
     annual financial report for such year, prepared in accordance with GAAP by
     a firm of independent certified public accountants satisfactory to Bank;
     (ii) internal annual budget and projections as generally prepared by
     Borrower; and (iii) annual depreciation schedule of all fixed assets; 

     2)  As soon as available, but in any event within forty-five (45) days
     after the close of each fiscal quarter, a consolidated interim balance
     sheet and operating statement reflecting Borrower's financial condition as
     of the close of the quarter and results of its operation since the
     beginning of its fiscal year;

     3)  As soon as available, but in any event within thirty (30) days after
     the close of each fiscal quarter a Borrowing Base Report;

     4)  As soon as available, but in any event not later than ten (10) days
     from filing, copies of all information filed by Borrower with the
     Securities and Exchange Commission pursuant to the Securities Exchange Act
     of 1934, as amended;

     5)  As soon as available, but in any event upon Bank's request within
     thirty (30) days after the end of each month, Borrower's monthly financial
     statements as generally prepared by Borrower;

     6)  Within ten (10) days from the filing thereof, true, correct and
     complete copies of Borrower's Federal tax returns; and

     7)  Such additional information as the Bank, from time to time, may
     reasonably request.

Section 6.2.  INSPECTION AND AUDIT.  Borrower will permit any authorized
representative or agent of the Bank to examine, inspect, copy, verify and audit,
all in a reasonable manner, any of Borrower's facilities, its books and records
(including those electronically stored) and the Collateral.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 15

<PAGE>

Section 6.3.  CORPORATE EXISTENCE.  Borrower will conduct its business in an
orderly, efficient and regular manner, keep in full force and effect its
corporate existence and all rights, licenses, franchises and distributor
agreements necessary to conduct its business, and materially comply with all
applicable laws, ordinances, codes, rules, regulations, orders, writs,
injunctions or decrees of any government, state, political subdivision or court.

Section 6.4.  INSURANCE.  The risk of loss or damage to or destruction of the
Collateral shall at all times be borne by Borrower.  Borrower shall at all times
maintain or cause to be maintained in force the Insurance Policies, and shall
furnish to Bank upon request, a certificate or certificates from the respective
insurer(s) setting forth the nature and extent of all insurance maintained by
Borrower in accordance with this Agreement and the other Loan Documents. 
Borrower shall deliver to Bank certified copies of each renewal or substitute
Insurance Policy (and corresponding certificate with premiums fully paid) at
least ten (10) days before the termination of the policy it renews or replaces. 
All premiums on Insurance Policies required hereunder shall be paid as they
become due and payable, and evidence thereof shall be promptly delivered to
Bank.  Borrower shall comply or cause compliance at all times with the
provisions of any Insurance Policy covering or applicable to Borrower or the
Collateral or any portion thereof.

Section 6.5.  PRESERVE COLLATERAL.  Borrower shall do or cause to be done all
things necessary to preserve, protect, maintain, replace and repair the
Collateral and keep the same in good condition, ordinary wear and tear excepted.

Section 6.6.  EXISTENCE, FRANCHISES AND PERMITS.  Borrower shall do or cause to
be done at all times all things necessary to preserve, protect, defend, renew
and extend any and all franchises, tradenames, trademarks, trade dress, permits,
licenses, privileges, concessions and other material rights (including those
related to land use and development, construction, access, water rights and use,
noise, waste disposal and pollution control) that are or may be applicable from
time to time to Borrower for the conduct of its business.

Section 6.7.  COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS.  Borrower shall timely
comply with all material Governmental Requirements applicable to the Collateral,
the Loan or any Loan Documents, and all applicable organizational documents and
other agreements to which it is a party, and promptly deliver to Bank evidence
of such compliance upon request.  Borrower assumes full responsibility for the
compliance of the Collateral in all material respects with all Governmental
Requirements.  Promptly upon Borrower's receipt of any notice from a
Governmental Authority of noncompliance with any Governmental Requirements
applicable to the Collateral, the Loan or any of the Loan Documents, Borrower
shall provide Bank written notice thereof.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 16

<PAGE>

Section 6.8.  TAXES; CLAIMS FOR LABOR AND MATERIALS.  Borrower shall promptly
pay or cause to be paid when due all costs, Taxes, Impositions and other
expenses incurred in connection with the Collateral, and Borrower shall keep the
Collateral free and clear of any Lien, other than the Permitted Encumbrances. 
Notwithstanding anything to the contrary in this Agreement, Borrower may
contest, to the extent and in the manner permitted by law, the validity or
amount of any claim of any broker, contractor, consultant, architect or other
Person providing labor, materials or services with respect to the Collateral,
any Governmental Requirement or any Tax or Imposition levied by Governmental
Authority, and such contest on the part of the Borrower shall not be a Default
or an Event of Default hereunder and shall not release Bank from its obligation
to make Advances hereunder if and so long as (i) the amount, applicability or
validity thereof is being contested in good faith by appropriate action promptly
initiated and diligently conducted in accordance with good business practices
and no part of the Collateral or other material property or assets of Borrower
is subject to levy or execution, which, if taken, would have a Material Adverse
Effect; (ii) if reasonably requested by Bank, Borrower shall have established
cash reserves satisfactory to Bank with respect thereto; and (iii) Borrower
shall have notified Bank of such circumstances in detail satisfactory to Bank;
and provided, further, that in the event such contest is unsuccessful, then
Borrower shall promptly pay any such claim.

Section 6.9.  HOLD HARMLESS.  Borrower shall protect, indemnify, hold harmless
and defend, at Borrower's own cost and expense, Bank, any participants in the
Loan, and the officers, directors, partners, employees, agents, attorneys,
heirs, personal representatives, successors and assigns of each of the foregoing
Persons (each, an "Indemnified Person"), from and against, and if and to the
extent paid, reimburse each such Indemnified Person for, any and all losses,
liabilities, claims, damages, deficiencies, interest, judgments, costs and
expenses (including, but not limited to, all court costs and reasonable
attorneys' fees and expenses) of any and every kind and nature arising out of or
by reason of (a) any investigation, litigation, or other proceeding arising out
of or by reason of the execution of this Agreement or any other Loan Document by
Bank and the transactions contemplated thereby, including, but not limited to,
any use effected or proposed by Borrower of the proceeds of the Loan; (b) any
representation made by Borrower hereunder or under any of the other Loan
Documents; and (c) any Environmental Damages; provided, however, that nothing
contained in this SECTION 6.9 shall be construed as an agreement by Borrower to
indemnify and defend any Indemnified Person for such Indemnified Person's (a)
willful misconduct which directly or indirectly causes or results in the harm or
loss being indemnified or (b) any unexcused or unlawful breach by Bank of any of
its obligations under this Agreement or any of the other Loan Documents.

Section 6.10.  CHARACTER OF BUSINESS.  Borrower will continue to carry on
substantially the same types of business carried on at the date hereof and
businesses reasonably related thereto and will not engage in any business which
would materially change the general type of business previously conducted
without Bank's prior written approval which approval shall not be unreasonably
withheld or delayed.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 17

<PAGE>

Section 6.11.  FRANCHISEES.  Borrower agrees that following an Event of Default,
Bank shall have the right to notify all of Borrower's franchisees of the
occurrence of an Event of Default and request that any and all sums due or to
become due to Borrower from said franchisees shall be paid to Bank, and said
franchisees shall have no liability to Borrower as a result of making such
payments to Bank after the receipt of said notice.

ARTICLE 7.  NEGATIVE COVENANTS.

Borrower covenants and agrees that so long as any portion of the Loan remains
unpaid, Borrower will not, without the prior written consent of Bank which
consent shall not be unreasonably withheld or delayed:

Section 7.1.  RESTRICTION ON INDEBTEDNESS.  Create, guaranty, assume, permit to
exist or become liable, directly or indirectly, in respect of any indebtedness
of any kind or character (including, without limitation, any liability by way of
endorsement, guarantee, agreement to repurchase or to supply funds, extensions
or credit in support of the obligations or undertakings of others, and any
indebtedness secured by mortgages or other liens or encumbrances whether or not
assumed) other than the Loan and all current indebtedness of Borrower as such
indebtedness exists as of the date of this Agreement, including, without
limitation, the Permitted Encumbrances, and current operating liabilities
incurred in the ordinary course of business of Borrower.

Section 7.2.  RESTRICTION ON CAPITAL EXPENDITURES.  Engage in capital
expenditures in any one fiscal year in excess of $1,000,000.00 alone or in the
aggregate other than those consented to by Bank in an Advance.

Section 7.3.  RESTRICTIONS ON STOCK REPURCHASE.  Directly or indirectly
purchase, redeem, or retire any of the Borrower's common stock, or any warrants,
rights, or options to purchase (excluding specifically any expiration or
termination of any incentive stock option or non-qualified stock option granted
by Borrower).

Section 7.4.  LOANS AND ADVANCES.  Loan any amounts to officers, directors,
employees, stockholders or any member of their families, or to affiliates or
subsidiary companies during the term of the Loan that would exceed $100,000 in
the aggregate.

Section 7.5.  MERGER; SALES OF ASSETS.  Merge or consolidate in any individual
transaction valued at greater than $1,000,000.00 with any other Person or sell
substantially all of its assets to any other Person.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 18

<PAGE>

Section 7.6.  DISTRIBUTIONS.  Make distributions or pay dividends to
stockholders in any one fiscal year in excess of $1,000,000.00.

Section 7.7.  LIMITATIONS ON LIENS.  Create, incur, assume or permit to exist
any voluntary or involuntary Lien on the Collateral, with the exception of the
Permitted Encumbrances.

Section 7.8.  WASTE ASSETS OR ALTER THE COLLATERAL.  Commit or permit any waste
of the Collateral, or any portion thereof, or without the prior written consent
of Bank, make or permit to be made any alterations or additions to the
Collateral other than in the ordinary course of Borrower's business.

Section 7.9.  TRANSFER OF COLLATERAL.  Assign, sell, lease, license, pledge, or
otherwise transfer its interests in the Collateral other than in the ordinary
course of Borrower's business operations as they exist as of the date of this
Agreement or in excess of $100,000.00 for any one transaction not to exceed
$250,000.00 for all transactions in any given calendar year.  Borrower has not
performed, and will not perform, any act which might prevent Borrower from
performing its undertakings hereunder, impairing Bank's Lien in the Collateral
or which might prevent Bank from operating under or enforcing any of the terms
and conditions hereof or under the other Loan Documents which would materially
limit Bank in such operation or enforcement.

Section 7.10.  USE VIOLATIONS.  Use, maintain or operate or allow the use,
maintenance or operation of the Collateral in any manner which materially (i)
violates any Legal Requirement; (ii) may be dangerous unless safeguarded as
required by law; (iii) constitutes a public nuisance; (iv) makes void, voidable
or cancelable any insurance then in force with respect thereto; or (v) makes
void, voidable or cancelable any governmental permit.

Section 7.11.  ERISA.  With respect to any Employee Benefit Plan of Borrower (i)
violate or fail to be in full compliance with such Employee Benefit Plan in any
material respect; (ii) fail to timely file all reports and filings required by
the ERISA to be filed by Borrower; (iii) engage in any material "prohibited
transactions" (as defined in Part 4 of Title 1 of ERISA) or any material
"reportable events" (as described in Section 4043 of ERISA); (iv) engage in, or
commit, any act that could result in the imposition of a material tax or penalty
against Borrower; (v) incur any material accumulated funding deficiency (as
defined in Section 412 of the Internal Revenue Code of 1986, as amended); or
(vi) terminate any Employee Benefit Plan such that a lien could be asserted
against any assets of Borrower on account thereof pursuant to ERISA.

Section 7.12.  HAZARDOUS SUBSTANCES.  Place, install, dispose of or release or
cause, permit or allow the placing, installation, disposal, spilling, leaking,
dumping or release of any Hazardous Substance or storage tank (or similar
vessel) in violation of any Environmental Requirement.  


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 19

<PAGE>

Section 7.13.  CHANGE IN MANAGEMENT.  Change the current senior executive
management of Borrower.

Section 7.14.  NAME CHANGE.  Cause or permit any change to be made in its name
unless Borrower shall have notified Bank of such change prior to the effective
date of such change, and shall have first taken all action required by Bank for
the purpose of further perfecting or protecting Bank's security interest in the
Collateral.

Section 7.15.  BUSINESS LOCATION.  Change the location of its chief executive
office or principal place of business, which is currently located in Wichita,
Kansas.

ARTICLE 8.  EVENTS OF DEFAULT AND REMEDIES THEREFOR.

Section 8.1.  EVENTS OF DEFAULT.  The occurrence of any one or more of the
following shall constitute an event of default ("EVENT OF DEFAULT") under this
Agreement:

a)  FAILURE TO PAY.  Default in the payment when due of any portion of any
principal or interest or other sums due hereunder or under any of the Notes,
which default shall continue more than ten (10) days after written notice
thereof from Bank to Borrower; 

b)  DEFAULT IN OTHER OBLIGATIONS UNDER LOAN DOCUMENTS.  Default in the
performance or observance of any other covenant or agreement undertaken by
Borrower under this Agreement or the other Loan Documents, which default shall
not have been corrected within thirty (30) days after written notice thereof
from Bank to Borrower;

c)  REPRESENTATIONS.  Any statement, representation, certification or warranty
herein or in any of the Loan Documents, in any certificate, in any financial
statement or in any other writing heretofore or hereafter delivered to Bank in
connection with the Loan is false, fraudulent or misleading in any material
respect when given;

d)  DEFAULT UNDER OTHER OBLIGATIONS.  Default in the payment when due (subject
to applicable grace periods), whether by acceleration or otherwise, of any other
indebtedness or undertaking of Borrower or default in the performance or
observance of any obligation or condition with respect to any such other
indebtedness or undertaking, if the effect of such default is to accelerate the
maturity of such other indebtedness or undertaking or to permit the holder(s)
thereof, or any trustee or agent for such holder(s), to cause such other
indebtedness or undertaking to become due and payable prior to its expressed
maturity;

e)  FAILURE TO PAY TRADE CREDITORS.  Default in the payment of indebtedness to
trade creditors of Borrower when due, and such default shall continue for a
period of ninety (90) days; PROVIDED, HOWEVER, that, to the extent Borrower's
failure to make payment is the result of a valid dispute, 


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 20

<PAGE>

as determined by Bank in its reasonable discretion, said failure shall not 
constitute an Event of Default;

f)   BANKRUPTCY OR INSOLVENCY OF BORROWER.

     1)  Commencement of any voluntary proceedings under any bankruptcy or
     insolvency laws now or hereafter in effect or assignment for the benefit of
     creditors by Borrower;

     2)  The filing or commencement of an involuntary case or other proceeding
     against Borrower seeking liquidation, reorganization or other relief with
     respect to Borrower or its debts under any bankruptcy, insolvency or other
     similar law now or hereafter in effect, or seeking the appointment of a
     trustee, receiver, liquidator, custodian or other similar official for
     Borrower or any substantial part of its property, and such involuntary case
     or other proceeding shall remain undismissed and unstayed for a period of
     seventy-five (75) days; or the entry of an order for relief against
     Borrower under the federal bankruptcy laws now or hereafter in effect; and

     3)  The willful concealment or removal of any part of the property of
     Borrower with intent to hinder, delay or defraud creditors, or the transfer
     of any of its property which may be fraudulent under any bankruptcy,
     fraudulent conveyance or similar law;

g)  INJUNCTION.  The issuance of any injunction or other order by any court of
competent jurisdiction enjoining the Borrower from conducting its business as it
exists on the date hereof or enjoining or prohibiting Borrower or Bank from
performing this Agreement or any of the other Loan Documents, and such
injunction or order is not vacated within sixty (60) days after the granting
thereof;

h)  JUDGMENT.  The entry of one or more judgments or orders, against Borrower if
such judgment(s) or order(s) is (are) in excess of $150,000 (alone or in the
aggregate), is not covered by insurance or is not satisfied or appealed from
(with execution or similar process stayed) within the time period allowed by law
for automatically staying execution on such judgments or orders;

i)  GARNISHMENT OR ATTACHMENT.  Service of any order of attachment, garnishment
or levy or the existence or the making or issuance of any tax lien or similar
process on or with respect to a material portion of the Collateral, which has
not been released in full within thirty (30) days from the earlier of service,
attachment or execution; and

j)  MATERIAL ADVERSE EFFECT.  The occurrence or existence of any fact or set of
circumstances that in Bank's sole opinion has resulted in a Material Adverse
Effect.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 21

<PAGE>

Section 8.2.  REMEDIES.  Upon the occurrence of an Event of Default, Bank,
acting by or through agents, trustees or otherwise without further notice
(including, without limitation, notice of default, notice of intent to
accelerate or of acceleration) except for any notice that is expressly required
herein, and WITHOUT DEMAND, PRESENTMENT, PROTEST OR ACTION OF ANY NATURE
WHATSOEVER ALL OF WHICH ARE HEREBY WAIVED BY BORROWER, may (i) declare the
entire unpaid balance of the Loan and all Obligations, together with all accrued
interest thereon to be immediately due and payable, and (ii) exercise any and
all other rights, remedies and recourses granted hereunder or under the other
Loan Documents or otherwise now or hereafter existing in equity, at law, by
virtue of statute or otherwise.  Anything contained herein to the contrary
notwithstanding, the obligations and commitment of the Bank shall terminate
forthwith.

Section 8.3.  WAIVER.  Any Event of Default and its resulting consequences as
set forth above may be waived by Bank, but such waiver shall not constitute a
precedent for future action and no delay or failure on the part of the Bank to
exercise any right, power, or privilege hereunder shall operate as a waiver
thereof.

ARTICLE 9.  MISCELLANEOUS.

Section 9.1.  MODIFICATION OF LOAN DOCUMENTS.  No modification, amendment,
consent or waiver whatsoever of any provision under any of the Loan Documents
shall be effective unless in writing and approved by the party against whom
enforcement is sought, and then only to the extent set forth in such writing. 

Section 9.2.  RIGHTS CUMULATIVE.  The rights, remedies and powers provided to a
party in the Loan Documents or otherwise are cumulative, and the exercise of any
particular right, remedy or power does not preclude the exercise of any other
right, remedy or power in addition to, or as an alternative of, such remedy.

Section 9.3.  PROVISIONS SEVERABLE.  If any one or more of the provisions of
this Agreement operates, in whole or in part, or if any one or more of the
provisions of this Agreement would prospectively operate, in whole or in part,
to invalidate this Agreement, then said provision or provisions shall be deemed
null and void, but shall not affect any other provision of this Agreement, and
its remaining provisions shall in no way be affected, prejudiced or disturbed
thereby.

Section 9.4.  TRANSFER OF RIGHTS BY BANK.  Borrower acknowledges and agrees that
Bank may, from time to time, sell or offer to sell participation interests in
the Loan in their entirety or any portion, to one or more participants, or may
directly assign or offer to assign, all or a portion of its right, title and
interest in the Loan to one or more assignees.  Borrower shall execute,
acknowledge and deliver any and all instruments reasonably requested by Bank in
connection with the foregoing.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 22

<PAGE>

Section 9.5.  BORROWER'S OBLIGATIONS ABSOLUTE; NO ASSIGNMENT.  Borrower
understands and agrees that the liability created hereunder is not dependent or
conditioned upon the execution of the Loan Documents by any other party.  The
Loan Documents may not be assigned by Borrower without the express written
consent of Bank.

Section 9.6.  BORROWER ADDITIONALLY BOUND.  Borrower understands and agrees that
it is additionally bound by the terms and conditions of the other Loan
Documents, which terms and provisions are incorporated herein and made a part of
this Agreement.  To the extent that any term or provision of the other Loan
Documents conflicts with a term or provision of this Agreement, the term or
provision of this Agreement shall control; PROVIDED, HOWEVER, that to the extent
the other Loan Documents provide additional rights or remedies that do not
conflict with the provisions of this Agreement or as to which this Agreement is
silent, such rights and remedies shall remain in full force and effect.

Section 9.7.  BORROWER IN CONTROL; NOT A JOINT VENTURE.  In no event shall
Bank's rights and interests under the Loan Documents be construed to give Bank
the right to control, or deemed to indicate that Bank is in control of, the
business, properties, management functions or operating decisions made by
Borrower.  The relationship between Borrower and Bank is solely that of borrower
and lender.  No term, provision or condition of any of the  Loan Documents shall
be construed as creating a joint venture, partnership or association between
Bank and Borrower, and Bank has no fiduciary or other special relationship with
Borrower.

Section 9.8.  SURVIVAL OF REPRESENTATIONS.  All covenants, agreements,
undertakings, indemnities, representations and warranties made by either of the
parties herein or in any certificate delivered pursuant hereto, including, but
not limited to the Borrowing Base Reports, will survive the delivery of the Loan
Documents and the making of the Loan evidenced thereby, and any investigation at
any time made by or on behalf of Bank will not diminish Bank's right to rely
thereon.  All statements contained in any certificate or other instrument
delivered by or on behalf of the Borrower under or pursuant to the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents constitute representations and warranties made by the Borrower
hereunder.

Section 9.9.  FURTHER ASSURANCES.  The parties agree to execute, acknowledge,
obtain and deliver such documents as may be required from time to time in order
to complete and effect the transactions contemplated by the Loan Documents.

Section 9.10.  NO THIRD PARTY BENEFICIARIES.  None of the Loan Documents create
any rights to or for the benefit of any Person not a party thereto.


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 23

<PAGE>

Section 9.11.  NEGOTIATED JOINTLY.  The parties have participated jointly in the
negotiation of this Agreement.  In the event an ambiguity or question of intent
or interpretation arises, there shall be no presumption or burden of proof which
arises favoring or disfavoring any party by virtue of the authorship of any of
the provisions hereof.

Section 9.12.  NOTICES.  All notices, requests, demands, waivers and
communications to any party under the Loan Documents shall be in writing and
shall be deemed to have been duly given if (i) delivered personally, (ii) mailed
by first-class, registered or certified mail, return receipt requested, postage
prepaid, or (iii) sent by next-day or overnight mail or delivery or (iv) sent by
telecopy or telegram to the following address:

If to Borrower:       New York Bagel Enterprises, Inc.
                      Lots A' Bagels, Inc.
                      300 IMA Plaza
                      250 North Water Street
                      Wichita, KS 67202-1213
                      Attn:  Mr. Robert J. Geresi,
                       Chairman and Chief Executive Officer
                      316-267-8154 (facsimile)

     with copy to:    Klenda, Mitchell, Austerman & Zuercher, L.L.C.
                      1600 Epic Center
                      301 North Main Street
                      Wichita, KS 67202-4888
                      Attn: Gregory B. Klenda
                      316-267-0333 (facsimile)


If to Bank:           M. Drayton Alldritt, Sr. Vice President
                      NationsBank, N.A.
                      P.O. Box 4
                      100 North Broadway
                      Wichita, KS  67201-0004
                      316-261-2234 (facsimile)

     with copy to:    Fleeson, Gooing, Coulson & Kitch, L.L.C.
                      125 North Market, Suite 1600
                      Wichita, KS 67202
                      Attn: Thomas J. Lasater
                      316-267-1754 (facsimile)


                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 24

<PAGE>

or to such other address as shall be designated by such party in a written
notice to the other party in accordance with the foregoing procedure.

Section 9.13.  BINDING EFFECT.  This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.

Section 9.14.  APPLICABLE LAW.  The laws of the State of Kansas shall govern the
construction and interpretation of this Agreement.

Section 9.15.  CONFIDENTIALITY.  Each party covenants and agrees that all non-
public information obtained from the other party pursuant to this Agreement
shall be kept strictly confidential and not be disclosed to any third party,
except as may be required by applicable law.

THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, ARE THE FINAL EXPRESSION
OF THE AGREEMENT BETWEEN BANK AND BORROWER AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT BETWEEN US.  BANK ______
AND  BORROWER _______ EACH HEREBY ACKNOWLEDGE AND AFFIRM THAT NO SUCH UNWRITTEN,
ORAL AGREEMENTS EXIST.  EACH PARTY HERETO ACKNOWLEDGES THAT SUFFICIENT SPACE HAS
BEEN PROVIDED HEREIN, AND IN THE OTHER LOAN DOCUMENTS, FOR THE PLACEMENT OF
NONSTANDARD TERMS.

         [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]










                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 25

<PAGE>

     IN WITNESS WHEREOF, this Loan Agreement is executed on this 5th day of
September, 1997.

Borrower:                     NEW YORK BAGEL ENTERPRISES, INC.


                              By:
                                 --------------------------------------------
                                 Robert J. Geresi, Chairman & Chief Executive
                                 Officer

STATE OF KANSAS     )
                    )  SS.
COUNTY OF SEDGWICK  )

This instrument was acknowledged before me on September 5, 1997, by Robert J.
Geresi, Chairman and Chief Executive Officer of New York Bagel Enterprises, Inc.


                                              -------------------------------
                                                Signature of notarial officer
My Appointment Expires:




                              LOTS A' BAGELS, INC.


                              By:
                                 --------------------------------------------
                                 Robert J. Geresi, President

STATE OF KANSAS     )
                    )  SS.
COUNTY OF SEDGWICK  )

This instrument was acknowledged before me on September 5, 1997, by Robert J.
Geresi as  President of Lots A' Bagels, Inc.


                                              -------------------------------
                                                Signature of notarial officer




                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 26


<PAGE>

My Appointment Expires:




Bank:                              NationsBank, N.A.



                              By:
                                 --------------------------------------------
                                   M. Drayton Alldritt, Senior Vice President



















                                                                LOAN AGREEMENT
                                              NationsBank, N.A./New York Bagel
                                                                       Page 27

<PAGE>


                                   EXHIBIT "A"

                               REQUEST FOR ADVANCE




<PAGE>

                                   EXHIBIT "B"

                              OTHER LOAN DOCUMENTS