Document:

Exhibit 10.49

 

NEW WORLD RESTAURANT
GROUP, INC.

as
Issuer,

THE BANK OF NEW YORK,

as
Trustee,

AND

THE SUBSIDIARY GUARANTORS
NAMED HEREIN,

as
Guarantors,

INDENTURE

Dated
as of July 8, 2003

13% Senior Secured Notes
due 2008

 

INDENTURE, dated as of July 8, 2003, among New World
Restaurant Group, Inc., a Delaware corporation (the “Company”), the
Subsidiary Guarantors referred to below and The Bank of New York, as trustee
(the “Trustee”).

The Company has duly authorized the creation of an
issue of Senior Secured Notes due July 1, 2008 (the “Initial Notes”),
and Senior Secured Notes due July 1, 2008, Series B to be issued in exchange
for the Initial Notes pursuant to the Registration Rights Agreement (as
defined) (the “Exchange Notes”) and, to provide therefor, the Company
has duly authorized the execution and delivery of this Indenture.  The Notes (as defined) will be secured by a
lien and security interest in the Collateral (as defined) pursuant to the terms
of the Pledge and Security Agreement (as defined), subject to the subordination
of such lien after the date hereof as provided herein.  The Notes will be jointly and severally
guaranteed, on an unconditional senior secured basis, by the Subsidiary
Guarantors (as defined).  All things
necessary to make the Notes, when duly issued and executed by the Company, and
authenticated and delivered hereunder, the valid obligations of the Company and
the Subsidiary Guarantors, and to make this Indenture a valid and binding
agreement of the Company and the Subsidiary Guarantors, have been done.

Each party hereto agrees as follows for the benefit of
the other party and for the equal and ratable benefit of the Holders (as
defined).

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01                                Definitions.

“Acquired Debt” means, with respect to any
specified Person, (i) Indebtedness of any other Person existing at the time
such other Person merged with or into or became a Subsidiary of such specified
Person, excluding Indebtedness incurred in connection with, or in contemplation
of, such other Person merging with or into or becoming a Subsidiary of such
specified Person and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.

“Additional Interest” has the meaning set forth
in the Registration Rights Agreement.

“Additional Notes” has the meaning provided in Section
2.02 and means any Notes that are not Exchange Notes issued after the Issue
Date from time to time in accordance with the terms of this Indenture
including, without limitation, the provisions of Sections 2.02 and 4.12.

‘‘Adjusted EBITDA’’ means with respect to any
fiscal period of the Company and its Subsidiaries, the net income of the
Company and its consolidated Subsidiaries after provision for income taxes for
such fiscal period, as determined in accordance with GAAP on a consolidated
basis and reported on the financial statements for such period, excluding the
effect of any and all of the following included in the calculation of such net
income:  (a) gain or loss arising from the sale or
other disposal of any capital assets; (b) gain or loss arising from any write-up in
the book value of any asset; (c) earnings or losses of any corporation or
other Person, substantially all the

 

 

 

 

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

 

“Affiliate” of any specified Person means any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person.  For purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as used with respect to any specified Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management of policies of such specified Person,
whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial
ownership of 10% or more of the aggregate voting power of the voting securities
of a Person shall be deemed to be control.

“Agent” means any Registrar, Paying Agent,
Collateral Agent, Authenticating Agent or co-Registrar.

“Asset Sale” means any direct or indirect sale,
issuance, conveyance, transfer, lease (other than operating leases entered into
in the ordinary course of business), assignment or other transfer for value by
the Company or any of its Subsidiaries (including any Sale and Leaseback

 

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Transaction) to any
Person other than the Company or a Wholly-Owned Subsidiary of the Company of
(a) any Capital Stock of any Subsidiary of the Company; or (b) any
other property or assets of the Company or any Subsidiary of the Company other
than in the ordinary course of business and other than franchising of
company-operated stores in the ordinary course of business (excluding sales of
franchise rights and royalties); provided,
however, that Asset Sales shall
not include a transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than $1.0
million.

“Bankruptcy Law” or “Bankruptcy Code”
means Title 11, U.S. Code or any similar Federal, state or foreign law for the
relief of debtors.

“Board of Directors” means, as to any Person,
the board of directors of such Person or any duly authorized committee thereof.

“Board Resolution” means, with respect to any
Person, a copy of a resolution delivered to the Trustee and certified by the
secretary or an assistant secretary of such Person to have been duly adopted by
the Board of Directors of such Person and to be in full force and effect on the
date of such certification.

“Business Day” means a day that is not a Legal
Holiday.

“Capital Expenditures” shall mean, for any
period any direct or indirect (by way of acquisition of securities of a Person
or the expenditure of cash or the transfer of Property or the incurrence of
Indebtedness) expenditures in respect of the purchase or other acquisition of
fixed or capital assets determined in conformity with GAAP, excluding
(i) normal replacement and maintenance programs properly charged to current
operations, and (ii) the purchase price of equipment to the extent that
the consideration therefor consists of used or surplus equipment being traded
in at such time or the proceeds of a concurrent sale of such used or surplus
equipment, net of proceeds from franchising of company-operated store during
such period.

“Capital Lease Obligation” means, as to any
Person, the obligations of such Person under a lease that are required to be
classified and accounted for as capital lease obligations under GAAP and, for
purposes of this definition, the amount of such obligations at any date shall
be the capitalized amount of such obligations at such date, determined in
accordance with GAAP.

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

“Cash Equivalents” means:  (i) obligations issued or
unconditionally guaranteed by the United States of America or any agency
thereof, or obligations issued by any agency or instrumentality thereof and backed
by the full faith and credit of the United States of America;
(ii) commercial paper rated the highest grade by Moody’s Investors
Service, Inc. and Standard & Poor’s Ratings Group and maturing not more
than one year from the date of creation thereof; (iii) time deposits with,
and certificates of deposit and banker’s acceptances issued by, any bank having
capital surplus and undivided profits aggregating at least $500 million and
maturing not

 

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more than one year from
the date of creation thereof; (iv) repurchase agreements that are secured
by a perfected security interest in an obligation described in clause (i)
and are with any bank described in clause (iii); (v) money
market accounts with any bank having capital surplus and undivided profits
aggregating at least $500 million; (vi) readily marketable direct
obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Moody’s Investors Service, Inc. or Standard & Poor’s
Ratings Group; and (vii) money market funds investing only in U.S.
Government Obligations.

“Change of Control” means any transaction or
event occurring on or after the date hereof as a direct or indirect result of
which (a) any Person or any group (other than the Permitted Holders) shall
(1) beneficially own (directly or indirectly) in the aggregate Equity
Interests of the Company having more than 50% of the aggregate voting power of
all Equity Interests of the Company at the time outstanding or (2) have
the right or power to appoint a majority of the board of directors of the
Company; (b) during any period of two consecutive years, individuals who
at the beginning of such period constituted the board of directors of the
Company (together with any new directors whose election by such board of
directors or whose nomination for election by the shareholders of the Company
was approved by a vote of a majority of the directors of the Company then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute at least a majority of the board of directors of the
Company then in office; or (c) any event or circumstance constituting a
“change of control” under any documentation evidencing or governing any
Indebtedness of any Company in a principal amount in excess of $10.0 million
(other than under this Indenture) shall occur which results in an obligation of
any Company to prepay (by acceleration or otherwise), purchase, offer to
purchase, redeem or defease all or a portion of such Indebtedness.

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

“Collateral” shall mean Collateral as such term
is defined in the Pledge and Security Agreement, all property mortgaged under
the Mortgages and any other property, whether now owned or hereafter acquired,
upon which a Lien securing the Obligations is granted or purported to be
granted under any Collateral Agreement.

“Collateral Agent” shall mean the Bank of New
York, as Collateral Agent for the Holders under the Pledge and Security
Agreement, each Mortgage and the Intercreditor Agreement.

 

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“Collateral Agreements” means, collectively,
the Pledge and Security Agreement and each Mortgage, in each case, as the same
may be in force from time to time.

“Commission” means the Securities and Exchange
Commission.

“Common Stock” of any Person means any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or non-voting) of such Person’s common
stock, whether outstanding on the Issue Date or issued after the Issue Date,
and includes, without limitation, all series and classes of such common stock.

“Company” means the party named as such above,
until a successor replaces such Person in accordance with the terms of this
Indenture, and thereafter means such successor.

“Consolidated Cash Flow” means, with respect to
any Person for any period, the Consolidated Net Income of such Person for such
period plus (without duplication) (a) provision for taxes based on income or
profits to the extent such provision for taxes was included in computing
Consolidated Net Income, (b) consolidated interest expense of such Person for
such period, whether paid or accrued (including deferred financing costs,
non-cash interest payments and the interest component of Capital Lease
Obligations), to the extent such expense was deducted in computing Consolidated
Net Income, (c) depreciation and amortization (including amortization of
intangibles) for such period to the extent such deprecation or amortization
were deducted in computing Consolidated Net Income, and (d) all other non-cash
charges (excluding any such non-cash charge to the extent that it represents an
accrual of or reserve for cash expenditures in any future period), in each
case, on a consolidated basis and determined in accordance with GAAP.

“Consolidated Net Income” means, with respect
to any Person for any period, the aggregate of the Net Income of such Person
and its Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided,
that: (i) the Net Income of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid to the referent Person
or a Wholly-Owned Subsidiary thereof; (ii) the Net Income of any Person that is
a Subsidiary (other than a Subsidiary of which at least 80% of the Capital
Stock having ordinary voting power for the election of directors or other
governing body of such Subsidiary is owned by the referent Person directly or
indirectly through one or more Subsidiaries) shall be included only to the
extent of the amount of dividends or distributions paid to the referent Person
or a Wholly-Owned Subsidiary thereof; and (iii) the cumulative effect of a
change in accounting principles shall be excluded.

“Consolidated Net Worth” of any Person means
the consolidated stockholders’ equity of such Person, determined on a
consolidated basis in accordance with GAAP, less (without duplication) amounts
attributable to Disqualified Capital Stock of such Person.

“Custodian” means any receiver, trustee,
assignee, liquidator, sequestrator or similar official under any Bankruptcy
Law.

“Default” means any event that is, or with the
passage of time or the giving of notice or both would be, an Event of Default.

 

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“Depository” means The Depository Trust
Company, its nominees and successors.

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

“DTC” means The Depository Trust Company, a New
York corporation.

“Equity Interests”
means Capital Stock or warrants, options or other rights to acquire Capital
Stock (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).

 

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

 

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

 

“Equity Offering” means any sale of Qualified
Capital Stock of the Company or any capital contribution to the equity of the
Company.

“Exchange Act” means the Securities Exchange
Act of 1934, as amended, or any successor statute or statutes thereto.

“Exchange Notes” has the meaning provided in
the Preamble to this Indenture.

“Exchange Offer” means the offer that may be
made by the Company, pursuant to the Registration Rights Agreement, to exchange
for any and all of the Initial Notes a like aggregate principal amount of
Exchange Notes.

“Existing Indebtedness” means Indebtedness of
the Company and its Subsidiaries set forth on Schedule I attached
hereto.

“Fair Market Value” means, with respect to any
asset or property, the price which could be negotiated in an arm’s-length, free
market transaction, for cash, between a willing seller and a willing and able
buyer, neither of whom is under undue pressure or compulsion to complete the
transaction.  Unless otherwise provided
herein, Fair Market Value shall be determined by the Board of Directors of the
Company acting reasonably and in good faith and shall be evidenced by a Board
Resolution of the Board of Directors of the Company delivered to the Trustee.

“Fixed Charge Coverage Ratio” means, with
respect to any Person for any period, the ratio of the Consolidated Cash Flow
of such Person for such period to the Fixed Charges of such Person for such
period.  In the event that the Company
or any of its Subsidiaries incurs, assumes, guarantees, repays, repurchases or
redeems any Indebtedness (other than revolving credit

 

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borrowings) or issues or
redeems Preferred Stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the event for
which the calculation of the Fixed Charge Coverage Ratio is made, then the
Fixed Charge Coverage Ratio (both the numerator and the denominator therein) shall
be calculated giving pro forma effect to such incurrence, assumption,
guarantee, repayment, repurchase or redemption of Indebtedness, or such
issuance or redemption of Preferred Stock, as if the same had occurred at the
beginning of the applicable period; provided
that pro forma effect shall be given to repayments, repurchases or redemptions
of Indebtedness or Preferred Stock only to the extent such Indebtedness or
Preferred Stock is permanently retired (and, in the case of the Notes,
surrendered to the Trustee for cancellation). 
For purposes of making the computation referred to above, in the event
that acquisitions, divestitures, mergers or consolidations have been made by
the Company or any of its Subsidiaries subsequent to the commencement of the four-quarter
period over which the Fixed Charge Coverage Ratio is being calculated, but
prior to the event for which the calculation of the Fixed Charge Ratio is being
made, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma
effect to such acquisitions, divestitures, mergers and consolidations as if
such transactions had occurred at the beginning of the applicable period.  In addition, for purposes of making the
computation referred to above during the first four fiscal quarters after the
issuance of the Initial Notes, the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to the issuance of the Initial Notes and the
use of proceeds therefrom as if it had occurred at the beginning of the
applicable four-quarter period.

“Fixed Charges” means, with respect to any
Person for any period, the sum of (a) consolidated interest expense of
such Person and its Subsidiaries for such period, whether paid or accrued, to
the extent such expense was deducted in computing Consolidated Net Income
(including amortization of non-cash interest payments and the interest
component of capital leases but excluding amortization of deferred financing
fees and non-cash accretion on securities convertible into Series F Preferred
Stock) and (b) the product of (i) all dividend payments, whether paid
in cash, assets, securities or otherwise, in the case of a Person that is a
Subsidiary of the Company, on any series of preferred stock of such Subsidiary,
and all dividend payments in respect of any series of preferred stock of the
Company, whether paid in cash, assets, securities or otherwise (other than
dividends payable in additional shares of the preferred stock on which such
dividends are paid), times (ii) a fraction, the numerator of which is one
and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.

“GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession, which are in effect on the date of this
Indenture.

“Holder” or “holder” means the Person in
whose name a Note is registered on the Registrar’s books.

“Inactive Subsidiary” means each of MBC
Genesee, LLC, Paragon Bakeries, Inc., Manhattan Bagel Construction Corp., Bay
Area Bagel, Inc., DAB Industries, Inc., CR Bagel

 

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Leases, Inc., 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, and MBC East Aurora,
LLC until such time as the Company is in compliance with Section 4.03 with respect to such entity.

“Indebtedness” means, with respect to any
Person, any indebtedness of such Person, whether or not contingent, in respect
of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or representing the balance deferred and unpaid of the purchase price
of any property (including pursuant to capital leases) or representing any
Interest Swap Obligations, except any such balance that constitutes an accrued
expense or trade payable, if and to the extent any of the foregoing
Indebtedness (other than Interest Swap Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, and also
includes, to the extent not otherwise included, the guarantee (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business), direct or indirect, by such Person in any manner (including, without
limitation, letters of credit and reimbursement agreements in respect thereof),
of all or any part of any of the items which would be included within this
definition.

“Indenture” means this Indenture, as amended or
supplemented from time to time in accordance with the terms hereof.

“Independent Financial Advisor” means a
nationally recognized accounting, appraisal or investment banking firm (i)
which does not, and whose directors, officers and employees or Affiliates do
not, have a direct or indirect financial interest in the Company or any of its
Subsidiaries, (ii) which, in the judgment of the Board of Directors of the
Company, is otherwise independent and qualified to perform the task for which
it is to be engaged and (iii) which has not provided services as a financial advisor,
placement agent or underwriter for the Company within three years of the event
or transaction which requires the Company to employ an Independent Financial
Advisor.

“Initial Notes” has the meaning provided in the
Preamble to this Indenture.

“Initial Purchaser” means Jefferies &
Company, Inc.

“Institutional Accredited Investor” means an
institution that is an “accredited investor” as that term is defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act.

“Intercreditor Agreement” means the intercreditor
agreement among the Senior Lender, the Trustee, the Collateral Agent, the
Company and the Subsidiary Guarantors, dated as of the Issue Date, as the same
may be amended, supplemented or modified from time to time.

“Interest Payment Date” means the stated
maturity of an installment of interest on the Notes.

“Interest Swap Obligations” means the
obligations of any Person pursuant to any arrangement with any other Person,
whereby, directly or indirectly, such Person is entitled to receive from time to
time periodic payments calculated by applying either a floating or a fixed

 

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rate of interest on a
stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements.

“Internal Revenue Code” means the Internal
Revenue Code of 1986, as amended to the date hereof and from time to time
hereafter.

“Inventory” has the meaning set forth in
Section 2.1 of the Pledge and Security Agreement.

“Investments” means, with respect to any
Person, (i) all investments by such Person in other Persons (including Affiliates)
in the form of loans (including direct or indirect guarantees), advances or
capital contributions (excluding compensation, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments
on a balance sheet prepared in accordance with GAAP and (ii) the purchase,
redemption or other acquisition for value of such Person’s Equity Interests.

“Issue Date” means July 8, 2003.

“Lender” means a Person that is not an
Affiliate of the Company and is a lender in the Senior Credit Facility.

“Lien” means, with respect to any asset,
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction, excluding true lease and consignment filings).

“Maturity Date” means July 1, 2008.

“Mortgages” means the mortgages, deeds of
trust, deeds to secure debt or other similar documents securing liens on the
Premises and/or the Leased Premises, as well as the other collateral secured by
and described in the mortgages, deeds of trust, deeds to secure debt or other
similar documents.

“Net Cash Proceeds” means, with respect to any
Asset Sale, the proceeds in the form of cash or Cash Equivalents including
payments in respect of deferred payment obligations when received in the form
of cash or Cash Equivalents (other than the portion of any such deferred
payment constituting interest) received by the Company or any of its
Subsidiaries from such Asset Sale net of (a) reasonable out-of-pocket expenses
and fees relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees and sales commissions), (b) taxes paid
or payable after taking into account any reduction in consolidated tax
liability due to available tax credits or deductions and any tax sharing
arrangements, (c) repayment of Indebtedness (other than the Notes) to the
extent that such Indebtedness is secured by a Permitted Lien on the subject
property required to be repaid as a condition to the sale of

 

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such property and (d)
appropriate amounts to be provided by the Company or any Subsidiary, as the
case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations associated
with such Asset Sale.

“Net Income” means, with respect to any Person,
the net income (loss) of such Person, determined in accordance with GAAP,
excluding, however, any gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss), plus, to the
extent deducted in calculating net income, the amortization of goodwill.

“Non-Recourse Debt” means Indebtedness
(i) as to which neither the Company nor any of its Subsidiaries
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable (as a guarantor or otherwise), or
(c) constitutes the lender; and (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against a Non-Restricted Subsidiary) would permit (upon notice,
lapse of time or both) any holder of any other Indebtedness (other than the
Notes being offered hereby) of the Company or any of its Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which
the lenders have been notified in writing that they will not have any recourse
to the stock or assets of the Company or any of its Subsidiaries.

“Non-Restricted Subsidiaries” means
(i) until such time as they may be designated as a Subsidiary in the
manner provided below, New World EnbcDeb Corp. and the Inactive Subsidiaries
and (ii) any Subsidiary that is designated by the Board of Directors as a
Non-Restricted Subsidiary pursuant to a Board Resolution; but only to the
extent that such Subsidiary: 
(a) has no Indebtedness other than Non-Recourse Debt;
(b) is not party to any agreement, contract, arrangement or understanding
with the Company or any Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Subsidiaries has any direct
or indirect obligation (x) to subscribe for additional Equity Interests or
(y) to maintain or preserve such Person’s financial condition or to cause
such Person to achieve any specified levels of operating results, and
(d) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Subsidiaries.  Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
officers’ certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section
4.10.  If, at any time, any
Non-Restricted Subsidiary would fail to meet the foregoing requirements
as a Non-Restricted Subsidiary, it shall thereafter cease to be a Non-Restricted
Subsidiary for purposes of this Indenture and any Indebtedness of such Person
shall be deemed to be incurred by a Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date
under the covenant described under Section 4.12,
the Company shall be in default of such covenant).  The Board of Directors of the Company may at any time designate
any

 

10

 

Non-Restricted
Subsidiary to be a Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Subsidiary of the Company of any outstanding Indebtedness of such Non-Restricted
Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.12
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default
or Event of Default would be in existence following such designation.

“Non-U.S. Person” means a Person who is
not a U.S. Person, as defined in Regulation S.

“Notes” means the Initial Notes, the Exchange
Notes, the Private Exchange Notes, if any, and Additional Notes, if any,
treated as a single class of securities, as amended or supplemented from time to
time in accordance with the terms hereof, that are issued pursuant to this
Indenture.

“Obligations” means any principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.

“Offering” means the offering of the Initial
Notes.

“Offering Circular” means as of any time
referred to in this Indenture, the most recent offering memorandum (whether the
preliminary Confidential Offering Circular, dated May 15, 2003, as amended by
the final Offering Circular, dated June 27, 2003, or any amendment or
supplement thereto), in each case relating to the offering of the Initial
Notes.

“Officer” means, with respect to any Person,
the chief executive officer, the president, any vice president, the chief
financial officer, the treasurer, the controller, or the secretary or assistant
secretary of such Person, or any other officer designated by the Board of
Directors to serve in a similar capacity.

“Officers’ Certificate” means, with respect to
any Person, a certificate signed by two Officers or by an Officer and either an
assistant treasurer or an assistant secretary of such Person and otherwise
complying with the requirements of Sections 12.04
and 12.05, as they relate to the making
of an Officers’ Certificate.

“Opinion of Counsel” means a written opinion
from legal counsel, who may be counsel for the Company and who is reasonably
acceptable to the Trustee, complying with the requirements of Sections 12.04 and 12.05,
as they relate to the giving of an Opinion of Counsel.

“Pari Passu Indebtedness” means any
Indebtedness of the Company that is pari
passu in right of payment to the
Notes.

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

“Permitted Indebtedness” means each of the
following:

 

11

 

(i)            Indebtedness incurred by the Company
and its Subsidiaries under the Senior Credit Facility in an aggregate principal
amount not to exceed, together with the aggregate principal amount outstanding
pursuant to clauses (x) below, $20 million at any one time outstanding
plus the interest, premiums, penalties, (including, without limitation,
attorneys fees) costs, expenses and charges incurred under the Senior Credit
Facility, reduced by any permanent repayment or permanent reduction of the
Senior Credit Facility after the Issue Date which is accompanied by a
corresponding permanent commitment reduction pursuant to Section 4.15;

(ii)           Indebtedness of the Company
represented by the Initial Notes (whether incurred on the Issue Date or in
connection with the Exchange Offer) and any Subsidiary Guarantees thereof;

(iii)          Existing Indebtedness;

(iv)          Indebtedness incurred by the Company
or its Subsidiaries in connection with or arising out of Capital Lease
Obligations or Purchase Money Obligations; provided
that the aggregate principal amount at any one time outstanding of all such
Capital Lease Obligations and Purchase Money Obligations does not exceed $5
million;

(v)           Indebtedness owed by the Company to
any of its Subsidiary Guarantors for so long as such Indebtedness is held by a
Subsidiary Guarantor of the Company, in each case subject to no Lien (other
than a pledge of such Indebtedness to Lenders under the Senior Credit
Facility); provided that
(i) any such Indebtedness of the Company is subordinated, pursuant to a
written agreement, to the Company’s obligations under this Indenture and the
Notes and (ii) if as of any date any Person other than a Subsidiary Guarantor
of the Company owns or holds any such Indebtedness or any such Person holds a
Lien in respect of such Indebtedness, such date shall be deemed the date of
incurrence of Indebtedness not constituting Permitted Indebtedness of the
Company;

(vi)          Indebtedness of a Wholly-Owned
Subsidiary of the Company to the Company or to a Wholly-Owned Subsidiary
of the Company for so long as such Indebtedness is held by the Company or a
Wholly-Owned Subsidiary of the Company and, if such Indebtedness exceeds
$500,000 in aggregate principal amount, evidenced by a written promissory note
or other instrument in form and substance reasonably satisfactory to the
Trustee, in each case subject to no Lien (other than a pledge of such
Indebtedness to the Lenders under the Senior Credit Facility); provided that if, as of any date any
Person (other than the Lenders under the Senior Credit Facility) owns or holds
such Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the date of incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness;

(vii)         the incurrence by the Company and its
Subsidiaries of Indebtedness issued in exchange for, or the proceeds of which
are contemporaneously used to extend, refinance, renew, replace, or refund
(collectively, “Refinance”) Permitted Indebtedness referred to in clauses
(ii) and (iii) above (the “Refinancing Indebtedness”);

 

12

 

provided, however,
that (1) the principal amount of such Refinancing Indebtedness shall not
exceed the principal amount of Indebtedness so refinanced (plus accrued
interest and the amount of reasonable expenses incurred in connection
therewith); (2) if the Indebtedness being refinanced is subordinate or
junior to the Notes, then such Refinancing Indebtedness shall be subordinated
to the Notes; (3) if the Indebtedness being refinanced is Indebtedness of
the Company, then such Refinancing Indebtedness shall be Indebtedness solely of
the Company; (4) such Refinancing Indebtedness shall have a Weighted
Average Life no less than, and a stated maturity which is no earlier than, that
of the Indebtedness being refinanced (without limiting the generality of the
foregoing subsection, such Refinancing Indebtedness shall not provide for any
payments of principal or interest beyond commercially reasonable interest of
such Refinancing Indebtedness prior to the payment in full of all Obligations
under the Notes); and (5) the Indebtedness so refinanced is permanently
retired (and, in case of the Notes, surrendered to the Trustee for
cancellation);

(viii)        Interest Swap Obligations of the Company
covering Indebtedness of the Company or any of its Subsidiaries and Interest
Swap Obligations of any Subsidiary covering Indebtedness of such Subsidiary; provided, however, that such Interest Swap
Obligations are entered into to protect the Company and its Subsidiaries from
fluctuations in interest rates on Indebtedness incurred in accordance with this
Indenture to the extent the notional principal amount of such Interest Swap
Obligation does not exceed the principal amount of the Indebtedness to which
such Interest Swap Obligation relates;

(ix)           Indebtedness in respect of bid,
performance or surety bonds issued for the account of the Company or any
Subsidiary thereof in the ordinary course of business, including guarantees or
obligations of the Company or any Subsidiary thereof with respect to letters of
credit supporting such bid, performance or surety obligations (in each case other
than for an obligation for money borrowed);

(x)            Indebtedness of the Company
represented by Additional Notes and any Subsidiary Guarantees thereof in an
aggregate principal amount not to exceed, together with the aggregate principal
amount outstanding pursuant to clause (i), $20 million at any one time
outstanding, reduced by any permanent repayment or permanent reduction of the
Senior Credit Facility after the Issue Date which is accompanied by a
corresponding permanent commitment reduction pursuant to Section 4.15; and

(xi)           other Indebtedness of the Company in
an aggregate amount not to exceed, at any one time outstanding, (A) $5
million over (B) the excess, if any, of (I) the aggregate amount of
Indebtedness outstanding under clauses (i) and (x) above, over
(II) $15.0 million.

“Permitted Investments” means:  (i) Investments by the Company or any
of its Subsidiaries in any Person that is or will become immediately after such
Investment a Wholly-Owned Subsidiary of the Company or that will merge or consolidate
into the Company or a Wholly-Owned Subsidiary of the Company;
(ii) Investments in the Company by any Subsidiary of the Company; provided that any Indebtedness evidencing
such Investment is unsecured and

 

13

 

subordinated, pursuant to
a written agreement, to the Company’s obligations under the Notes and this
Indenture; (iii) investments in cash and Cash Equivalents;
(iv) Interest Swap Obligations entered into in the ordinary course of the
Company’s or its Subsidiaries’ businesses and otherwise in compliance with this
Indenture; (v) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers solely in
exchange for a claim against any such trade creditor or customer;
(vi) Investments in the Notes; and (vii) other Investments if the
aggregate amount of such Investment, together with all other Investments made
pursuant to this clause (vii) does not exceed $6.0 million.

“Permitted Liens” means the following types of
Liens:

(i)            Liens for taxes, assessments or
governmental charges or claims either (a) not delinquent or (b) contested in
good faith by appropriate proceedings and as to which the Company or its
Subsidiaries shall have set aside on its books such reserves as may be required
pursuant to GAAP;

(ii)           statutory Liens of landlords and
Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen
and other Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall have
been made in respect thereof;

(iii)          Liens incurred or deposits made in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security, including any Lien
securing letters of credit issued in the ordinary course of business consistent
with past practice in connection therewith, or to secure the performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);

(iv)          judgment Liens not giving rise to an
Event of Default so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;

(v)           easements, rights-of-way, zoning
restrictions and other similar charges or encumbrances in respect of real
property not interfering in any material respect with the ordinary conduct of
the business of the Company or any of its Subsidiaries;

(vi)          any interest or title of a lessor
under any Capital Lease Obligation; provided
that such Liens do not extend to any property or assets which are not leased
property subject to such Capital Lease Obligation;

(vii)         Purchase Money Liens of the Company or
any Subsidiary of the Company; provided,
however, that (A) the
related Purchase Money Obligation shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of the Company or any
Subsidiary of the Company other than the property and

 

14

 

assets
so acquired and (B) the Lien securing such Indebtedness shall be created
within 90 days of such acquisition;

(viii)        Liens securing reimbursement obligations
with respect to commercial letters of credit which encumbered documents and
other property relating to such letters of credit and products and proceeds
thereof;

(ix)           Liens encumbering deposits made to
secure obligations arising from statutory, regulatory, contractual, or warranty
requirements of the Company or any of its Subsidiaries, including rights of
offset and set-off;

(x)            Liens securing Interest Swap
Obligations, which Interest Swap Obligations relate to Indebtedness that is
otherwise permitted under this Indenture;

(xi)           Liens securing Acquired Debt incurred
in accordance with Section 4.12
hereof; provided that
(A) such Liens secured such Acquired Debt at the time of and prior to the
incurrence of such Acquired Debt by the Company or a Subsidiary of the Company
and were not granted in connection with, or in anticipation of, the incurrence
of such Indebtedness by the Company or a Subsidiary of the Company and
(B) such Liens do not extend to or cover any property or assets of the
Company or of any of its Subsidiaries other than the property or assets that
secured the Acquired Debt prior to the time such Indebtedness became Acquired
Debt of the Company or a Subsidiary of the Company and are no more favorable to
the lienholders than those securing the Acquired Debt prior to the incurrence
of such Acquired Debt by the Company or a Subsidiary of the Company;

(xii)          Liens existing on the Issue Date but
only to the extent such Liens are in effect on the Issue Date;

(xiii)         Liens securing Indebtedness and all
other Obligations of the Company and its Subsidiaries under the Senior Credit
Facility;

(xiv)        Liens in favor of the Company or a
Wholly-Owned Subsidiary of the Company on assets of any Subsidiary of the
Company;

(xv)         Liens securing Refinancing Indebtedness
which is incurred to refinance any Indebtedness which has been secured by a
Lien permitted under this Indenture and which has been incurred in accordance
with the provisions of this Indenture; provided,
however, that such Liens (a) are no less favorable to the Holders
and are not more favorable to the lienholders with respect to such Liens than
the Liens in respect of the Indebtedness being refinanced and (b) do not
extend to or cover any property or assets of the Company or any of its
Subsidiaries not securing the Indebtedness so refinanced; and

(xvi)        Liens securing Obligations under this
Indenture.

 

15

 

“Person” means any individual, corporation,
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.

“Pledge and Security Agreement” means the
Pledge and Security Agreement, dated as of even date herewith, made by the
Company and the Subsidiary Guarantors in favor of the Collateral Agent,
substantially in the form of Exhibit G attached hereto, as amended or
supplemented from time to time in accordance with its terms.

“Preferred Stock” means, with respect to any
Person, any Capital Stock of such Person or its Subsidiaries in respect of
which a holder thereof is entitled to receive payment upon dissolution or
otherwise before any payment may be made with respect to any other Capital
Stock of such Person or its Subsidiaries.

“Primary Offering” means an underwritten public
offering of Qualified Capital Stock of the Company or of Einstein and Noah
Corp. pursuant to a registration statement filed with and declared effective by
the Commission pursuant to the Securities Act (other than a registration statement
on Form S-8 or otherwise relating to equity securities under any employee
benefit plans) or pursuant to an exemption from the registration requirements
thereof.

“Private Exchange Notes” shall have the meaning
assigned to such term in the Registration Rights Agreement.

“Private Placement Legend” means the legend
initially set forth on the Notes in the form set forth in Exhibit A
attached hereto.

“pro forma” means, with respect to any
calculation made or required to be made pursuant to the terms of this
Indenture, a calculation in accordance with Article Eleven of Regulation S-X
under the Securities Act, as determined by the Board of Directors of the
Company in consultation with its independent public accountants.

“Purchase Agreement” means the Purchase
Agreement, dated June 27, 2003, relating to the purchase and sale of the
Initial Notes, entered into between the Company and the Initial Purchaser.

“Purchase Money Liens” means (i) Liens to
secure or securing Purchase Money Obligations permitted to be incurred under
this Indenture and (ii) Liens to secure Refinancing Indebtedness incurred
solely to refinance Purchase Money Obligations, provided that such Refinancing Indebtedness is incurred no
later than six (6) months after the satisfaction of such Purchase Money
Obligations and such Lien extends to or covers only the asset or property
securing the Purchase Money Obligations being refinanced.

“Purchase Money Obligations” means Indebtedness
representing, or incurred to finance, the cost of acquiring any assets
(including Purchase Money Obligations of any other Person at the time such
other Person is merged with or into or is otherwise acquired by the Company or
any of its Wholly-Owned Subsidiaries); provided
that (i) the principal amount of such Indebtedness does not exceed 100% of
such cost, (ii) any Lien securing such Indebtedness does not extend to or
cover any other asset or property other than the asset or property being so

 

16

 

acquired and
(iii) such Indebtedness is incurred, and any Liens with respect thereto
are granted, within 90 days of the acquisition of such property or asset.

“Qualified Capital Stock” means any Capital
Stock that is not Disqualified Capital Stock.

“Qualified Institutional Buyer” or “QIB”
shall have the meaning specified in Rule 144A under the Securities Act.

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

“Receivables” has the meaning set forth in
Section 2.1 of the Pledge and Security Agreement.

“Record Date” means any of the Record Dates
specified in the Notes, whether or not a Legal Holiday.

“Refinance” has the meaning provided in clause
(vii) of the definition of “Permitted Indebtedness” in this Section 1.01.

“Refinancing Indebtedness” has the meaning
provided in clause (vii) of the definition of “Permitted Indebtedness”
in this Section 1.01.

“Registration Rights Agreement” means the
Registration Rights Agreement, dated as of even date herewith, among the
Company, the Subsidiary Guarantors, and the Initial Purchaser, as the same may
be amended or modified from time to time in accordance with the terms thereof.

“Regulation S” means Regulation S under the
Securities Act, as such regulation may be amended from time to time.

“Restricted Investment” means an Investment
other than a Permitted Investment.

“Restricted Security” has the meaning assigned
to such term in Rule 144(a)(3) under the Securities Act; provided that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.

“Rule 144A” means Rule 144A under the
Securities Act.

“Sale and Leaseback Transaction” means any
direct or indirect arrangement with any Person or to which any such Person is a
party providing for the leasing to the Company or a Subsidiary of the Company
of any property, whether owned by the Company or any Subsidiary of the Company
at the Issue Date or later acquired, which has been or is to be sold or
transferred by the Company or such Subsidiary to such Person or to any other
Person from whom funds have been or are to be advanced by such Person on the
security of such property.

 

17

 

“SEC” means the Securities and Exchange
Commission.

“Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations of the SEC promulgated
thereunder.

“Security Interests” means the Liens on the
Collateral created by this Indenture and the Collateral Agreements in favor of
the Collateral Agent for the benefit of the Collateral Agent and the Holders.

“Senior Credit Facility” means any credit
agreement to which the Company is party from time to time, including, without
limitation the Loan and Security Agreement dated as of the date of this
Indenture by and among the Company, as borrower, the subsidiary guarantors
thereto, the Senior Lender, as agent, and the lenders party thereto from time
to time, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement exchanging, extending the maturity of, refinancing, renewing,
replacing, substituting or otherwise restructuring (including increasing the
amount of available borrowings thereunder (provided
that such increase in borrowings is permitted under Section 4.12) or
adding Subsidiaries as additional borrowers or guarantors thereunder) all or
any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.

“Senior Lender”
means AmSouth Bank.

“Series Z Certificate of Designation” means the
Company’s Certificate of Designations, Preferences and Rights of Series Z
Preferred Stock.

“Significant Subsidiary” means any Subsidiary
which would be a “significant subsidiary” as defined in Article One, Rule 1-02
of Regulation S-X, promulgated pursuant to the Securities Act, as such
Regulation is in effect on the date hereof.

“Subsidiary” means, with respect to any Person,
any corporation, association or other business entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of that Person or a
combination thereof.  The term
“Subsidiary” does not include any Non-Restricted Subsidiaries.

“Subsidiary Guarantees” means, individually,
the guarantee and, collectively, the guarantees given by the Subsidiary
Guarantors pursuant hereto or pursuant to supplemental indentures executed by
Subsidiaries formed after the Issue Date pursuant to which such Subsidiaries
agree to be bound by the terms of this Indenture.

“Subsidiary Guarantor” means each Subsidiary of
the Company and all future Subsidiaries of the Company other than any
Non-Restricted Subsidiary.

 

18

 

“TIA” means the Trust Indenture Act of 1939 (15
U.S.C. §§ 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture, until such time as this Indenture is qualified under the TIA, and
thereafter as in effect on the date of such qualification, except as otherwise
provided in Section 9.03.

“Trust Officer” means any officer of the
Trustee assigned by the Trustee to administer this Indenture, or in the case of
a successor trustee, an officer assigned to the department, division or group
performing the corporation trust work of such successor and assigned to
administer this Indenture.

“Trustee” means the party named as such in the
Preamble to this Indenture until a successor replaces it in accordance with the
provisions of this Indenture and thereafter means such successor.

“U.S. Government Obligations” means non-callable
direct obligations of, and non-callable obligations guaranteed by, the
United States of America for the payment of which the full faith and credit of
the United States of America is pledged.

“U.S. Legal Tender” means such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts.

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

“Warrant Agreement” means the Warrant
Agreement, dated as of June 19, 2001, as amended, between the Company and The
Bank of New York, as successor in interest to the corporate trust business of
United States Trust Company of New York, as Warrant Agent, pursuant to which
the Warrants were issued.

“Warrants” means the warrants to purchase
shares of the Company’s common stock, par value $0.01 per share, issued by the
Company pursuant to the terms and conditions of the Warrant Agreement.

“Weighted Average Life” means, as of the date
of determination, with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the date of each successive scheduled principal payment of
such Indebtedness multiplied by the amount of such principal payment by (ii)
the sum of all such principal payments.

“Wholly-Owned Subsidiary” means, with respect
to any Person, any Subsidiary of such Person of which all of the voting Capital
Stock (other than directors’ qualifying shares, if any) is owned by such Person
or any Wholly-Owned Subsidiary of such Person.

 

19

 

Other
Definitions.

	
  Term

  	
   

  	
  Defined in
  Section

  	
   

  
	
  “Acceleration Notice”

  	
   

  	
  6.02

  	
   

  
	
  “Affiliate Transaction”

  	
   

  	
  4.11

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.14

  	
   

  
	
  “Asset Proceeds Deficiency”

  	
   

  	
  4.15

  	
   

  
	
  “Asset Proceeds Offer”

  	
   

  	
  4.15

  	
   

  
	
  “Authenticating Agent”

  	
   

  	
  2.02

  	
   

  
	
  “Available Proceeds Amount”

  	
   

  	
  4.15

  	
   

  
	
  “Change of Control Offer”

  	
   

  	
  4.14

  	
   

  
	
  “Change of Control Payment”

  	
   

  	
  4.14

  	
   

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.14

  	
   

  
	
  “Covenant Defeasance”

  	
   

  	
  8.01

  	
   

  
	
  “Default Interest Payment Date”

  	
   

  	
  2.16

  	
   

  
	
  “Event of Default”

  	
   

  	
  6.01

  	
   

  
	
  “Global Note”

  	
   

  	
  2.01

  	
   

  
	
  “incur”

  	
   

  	
  4.12

  	
   

  
	
  “Lease”

  	
   

  	
  4.24

  	
   

  
	
  “Leased Premises”

  	
   

  	
  4.24

  	
   

  
	
  “Legal Defeasance”

  	
   

  	
  8.01

  	
   

  
	
  “Legal Holiday”

  	
   

  	
  12.07

  	
   

  
	
  “Major Premises”

  	
   

  	
  4.24

  	
   

  
	
  “New York Presenting Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Offered Price”

  	
   

  	
  4.15

  	
   

  
	
  “Pari Passu Indebtedness Amount”

  	
   

  	
  4.15

  	
   

  
	
  “Pari Passu Offer”

  	
   

  	
  4.15

  	
   

  
	
  “Paying Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Payment Amount”

  	
   

  	
  4.15

  	
   

  
	
  “Physical Notes”

  	
   

  	
  2.01

  	
   

  
	
  “Premises”

  	
   

  	
  4.23

  	
   

  
	
  “Registrar”

  	
   

  	
  2.03

  	
   

  
	
  “Released Interests”

  	
   

  	
  10.05

  	
   

  
	
  “Replacement Assets”

  	
   

  	
  4.15

  	
   

  
	
  “Restricted Payments”

  	
   

  	
  4.10

  	
   

  
	
  “Valuation Date”

  	
   

  	
  10.05

  	
   

  

 

Section 1.02                                Incorporation by Reference of TIA.

Whenever this Indenture or any Exhibit hereto refers
to a provision of the TIA, such provision is incorporated by reference in, and
made a part of, this Indenture.  The
following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Notes.

“indenture security holder” means a Holder.

 

20

 

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means
the Trustee.

“obligor” on the indenture securities means the
Company, the Subsidiary Guarantors or any other obligor on the Notes.

All other TIA terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute or defined by
SEC rule and not otherwise defined herein have the meanings assigned to them
therein.

Section 1.03                                Rules of Construction.

Unless the context otherwise requires:

(a)           a term has the meaning assigned to
it;

(b)           an accounting term not otherwise
defined has the meaning assigned to it in accordance with GAAP;

(c)           words in the singular include the
plural, and words in the plural include the singular;

(d)           “herein,” “hereof” and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;

(e)           any reference to a statute, law or
regulation means that statute, law or regulation as amended and in effect from
time to time and includes any successor statute, law or regulation; provided, however, that any reference to
the Bankruptcy Law shall mean the Bankruptcy Law as applicable to the relevant
case;

(f)            provisions apply to successive
events and transactions; and

(g)           all references to Sections or
Articles refer to Sections or Articles of this Indenture unless otherwise
indicated.

ARTICLE II

THE NOTES

Section 2.01                                Form and Dating.

The Initial Notes, the Exchange Notes and the
Trustee’s respective certificates of authentication relating thereto shall be
substantially in the forms of Exhibits A and B attached hereto.  The Private Exchange Notes, if required, and
the Trustee’s certificate of authentication relating thereto shall be
substantially in the form of Exhibit B attached hereto, but shall bear
the Private Placement Legend.  The
Additional Notes and the Trustee’s certificate of authentication relating
thereto shall be substantially in the form of Exhibit B attached hereto,
and, if any such

 

21

 

Additional Notes is a
Restricted Security, shall bear the Private Placement Legend. The Notes may
have notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage.  The Company
and the Trustee shall approve the forms of the Notes and any notation, legend
or endorsement on them.  Each Note shall
be dated the date of its issuance and shall show the date of its
authentication.

The terms and provisions contained in the Notes
annexed hereto as Exhibits A and B shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.

Initial Notes offered and sold in reliance on Rule
144A, Initial Notes offered and sold to Institutional Accredited Investors in
reliance on Rule 501(a)(1), (2), (3) or (7) under the Securities Act and
Initial Notes offered and sold in off-shore transactions in reliance on
Regulation S shall be issued initially in the form of one or more permanent
global notes in registered form, substantially in the form set forth in Exhibit
A attached hereto (each such Note, a “Global Note”), deposited with
the Trustee, as custodian for the Depository, and shall bear the legend set
forth in Exhibit C attached hereto, and be duly executed by the Company
and authenticated by the Trustee as hereinafter provided.  Exchange Notes shall be issued initially in
the form of one or more permanent Global Notes, substantially in the form set
forth in Exhibit B attached hereto, deposited with the Trustee, as
custodian for the Depository, duly executed by the Company and authenticated by
the Trustee as hereinafter provided and shall bear the legend set forth in Exhibit
C attached hereto.  The aggregate
principal amount of a Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.

Notes issued in exchange for an interest in a Global
Note pursuant to Section 2.14 may be
issued in the form of permanent certificated Notes in registered form in
substantially the form set forth in Exhibit A attached hereto (each such
Note, a “Physical Note”).

Section 2.02                                Execution and Authentication; Aggregate
Principal Amount.

An Officer shall sign (who shall have been duly
authorized by all requisite corporate actions) the Notes for the Company by
manual or facsimile signature.

If an Officer whose signature is on a Note was an
Officer of the Company at the time of such execution but no longer holds that
office or position at the time the Trustee authenticates the Note, the Note
shall nevertheless be valid.

A Note shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of authentication on
the Note.  The signature shall be
conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed $160,000,000,
(ii) subject to compliance with Section 4.12,
one or more series of Notes for original issue after the Issue Date in an
unlimited amount (“Additional Notes”) in each case upon written orders
of the Company in the form of an Officers’ Certificate, which Officers’
Certificate shall, in the case of any issuance of Additional Notes, certify
that

 

22

 

such issuance is in
compliance with Section 4.12 and
(iii) Private Exchange Notes and Exchange Notes from time to time for
issue only in exchange for a like principal amount of Initial Notes, in each
case upon written orders of the Company in the form of an Officers’
Certificate.  The Officers’ Certificate
shall specify the amount of Notes to be authenticated and the date on which the
Notes are to be authenticated, whether the Notes are to be Initial Notes,
Private Exchange Notes, Exchange Notes or Additional Notes, and shall further
specify the amount of such Notes to be issued as the Global Notes or Physical
Notes.  All Notes issued under this
Indenture shall vote and consent together on all matters as one class and no
series of Notes will have the right to vote or consent as a separate class on
any matter.

The Trustee may appoint an authenticating agent (the “Authenticating
Agent”) reasonably acceptable to the Company to authenticate Notes.  Unless otherwise provided in the
appointment, an Authenticating Agent may authenticate Notes whenever the
Trustee may do so.  Each reference in
this Indenture to authentication by the Trustee includes authentication by such
Authenticating Agent.  An Authenticating
Agent has the same rights as an Agent to deal with the Company and Affiliates
of the Company.

The Notes shall be issuable in fully registered form
only, without coupons, in denominations of $1,000 and any integral multiple
thereof.

Section 2.03                                Registrar and Paying Agent.

The Company shall maintain an office or agency (which
shall be located in the Borough of Manhattan in the City of New York, State of New
York), where (a) Notes may be presented or surrendered for registration of
transfer or for exchange, (b) Notes may be presented or surrendered for payment
and (c) notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served (the “New York Presenting Agent”), which
initially shall be the corporate trust office of the Trustee,  which is currently located 101 Barclay
Street — 8W, New York, New York 10286, Corporate Trust Division.  In addition, the Company shall maintain an
office or agency to maintain the Note register, for purposes of registration of
record ownership of the Notes (“Registrar”) and one or more paying
agents (“Paying Agent”) for payment of the Notes.  The Company hereby initially appoints the
Trustee as Registrar and Paying Agent. 
The Registrar shall keep a register of the Notes and of their transfer
and exchange.  The Company, upon prior
written notice to the Trustee, may have one or more co-Registrars and one
or more additional Paying Agents reasonably acceptable to the Trustee.  Neither the Company nor any Affiliate of the
Company may act as Paying Agent.

The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which agreement shall
incorporate the provisions of the TIA and implement the provisions of this
Indenture that relate to such Agent. 
The Company shall notify the Trustee, in advance, of the name and
address of any such Agent.  If the
Company fails to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such (provided, however,
that such requirement shall not be construed to obligate the Trustee to
maintain an office in New York).

The Company initially appoints the Trustee as
Registrar, Paying Agent and agent for service of demands and notices in
connection with the Notes, until such time as the Trustee has

 

23

 

resigned or a successor
has been appointed.  The Paying Agent or
Registrar may resign upon 30 days notice to the Company.

Section 2.04                                Paying Agent To Hold Assets in Trust.

The Company shall require each Paying Agent other than
the Trustee to agree in writing to hold in trust for the benefit of the Holders
or the Trustee all assets held by the Paying Agent for the payment of principal
of, premium, if any, or interest on, the Notes (whether such assets have been
distributed to it by the Company, a Subsidiary Guarantor or any other obligor
on the Notes), and the Company and the Paying Agent shall notify the Trustee of
any Default by the Company (or any other obligor on the Notes) in making any
such payment.  The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed, and the Trustee may at any time during
the continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee
and to account for any assets distributed. 
Upon distribution to the Trustee of all assets that shall have been
delivered by the Company to the Paying Agent, the Paying Agent shall have no
further liability for such assets.

Section 2.05                                Holder Lists.

The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Holders and shall otherwise comply with TIA Section
312(a).  If the Trustee is not the
Registrar, the Company shall furnish or cause the Registrar to furnish to the
Trustee at least seven Business Days before each Record Date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders, including the aggregate principal amount thereof, which list may be
conclusively relied upon by the Trustee.

Section 2.06                                Transfer and Exchange.

Subject to the provisions of Sections 2.14 and 2.15,
when Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes of other authorized denominations, the
Registrar or co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met,
including an Opinion of Counsel with respect to whether (i) such Note
constitutes a Restricted Security and (ii) the requirements for transfer of
such Note have been satisfied, including the requirements provided for in Section 2.15; provided, however, that the Notes presented or surrendered
for registration of transfer or exchange shall be duly endorsed or accompanied
by a written instrument of transfer in form satisfactory to the Company, the
Trustee and the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.  To permit registrations of transfer and exchanges, the Company
shall execute and the Trustee shall authenticate Notes at the Registrar’s or co-Registrar’s
request.  No service charge shall be
made for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchanges or transfers pursuant to Sections 2.10,

 

24

 

3.08, 4.14,
4.15 or 9.05,
in which event the Company shall be responsible for the payment of such taxes).

The Registrar or co-Registrar shall not be
required to register the transfer or exchange of any Note (i) during a period
commencing at the opening of business 15 days before the day of any selection
of Notes for redemption under Section 3.02
and ending at the close of business on such day of selection, and (ii) selected
for redemption in whole or in part pursuant to Article Three, except the
unredeemed portion of any Note being redeemed in part.

Any Holder of the Global Note shall, by acceptance of
such Global Note, agree that transfers of beneficial interests in such Global
Note may be effected only through a book entry system maintained by the
Depository, and that ownership of a beneficial interest in the Note shall be
required to be reflected in a book entry.

Section 2.07                                Replacement Notes.

If a mutilated Note is surrendered to the Trustee or
if the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note if the Trustee’s requirements are met.  If required by the Trustee or the Company,
such Holder must provide an affidavit of lost certificate and an indemnity bond
or other indemnity, sufficient in the judgment of both the Company and the
Trustee, to protect the Company, the Trustee or any Agent from any loss which
any of them may suffer if a Note is replaced. 
The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Note, including any tax or governmental charge that may
be imposed in relation thereto and reasonable fees and expenses of its counsel
and of the Trustee and its counsel. 
Every replacement Note shall constitute an additional obligation of the
Company and shall be entitled to all the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

In case any such mutilated, lost, destroyed or
wrongfully taken Note has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Note, pay such Note.

Section 2.08                                Outstanding Notes.

Notes outstanding at any time are all the Notes that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding.  Subject to the provisions
of Section 2.09, a Note does not cease
to be outstanding because the Company or any of its Affiliates holds the Note.

If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note
surrendered for replacement), it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Note is held by a bona fide
purchaser.  A mutilated Note ceases to
be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07.

If on a redemption date or the Maturity Date the
Paying Agent holds U.S. Legal Tender or U.S. Government Obligations sufficient
to pay all of the principal and interest due on the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof

 

25

 

pursuant to the terms of
this Indenture, then on and after that date such Notes (to the extent of the
principal amount redeemed, in the case of a partial redemption) cease to be outstanding
and interest on them ceases to accrue.

Section 2.09                                Treasury Notes.

In determining whether the Holders of the required
principal amount of Notes have concurred in any direction, waiver, consent or
notice, Notes owned by the Company or any of its Affiliates shall be considered
as though they are not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Notes which a Trust Officer of the Trustee actually knows are
so owned shall be so considered.  The
Company shall notify the Trustee, in writing (which notice shall constitute
actual notice for purposes of the foregoing sentence), when it or any of its
Affiliates repurchases or otherwise acquires Notes, of the aggregate principal
amount of such Notes so repurchased or otherwise acquired and such other
information as the Trustee may reasonably request and the Trustee shall be
entitled to rely thereon.

Section 2.10                                Temporary Notes.

Until definitive Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Notes upon
receipt of a written order of the Company in the form of an Officers’
Certificate.  The Officers’ Certificate
shall specify the amount of temporary Notes to be authenticated and the date on
which the temporary Notes are to be authenticated.  Temporary Notes shall be substantially in the form of definitive
Notes but may have variations that the Company considers appropriate for
temporary Notes and so indicates in the Officers’ Certificate.  Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate upon receipt of a written
order of the Company pursuant to Section 2.02
definitive Notes of authorized denominations and in like principal amount as
the temporary Notes for which they are being exchanged in exchange for the
temporary Notes, upon surrender of the temporary Notes at the office or agency
of the Company designated for such purpose pursuant to Section 4.02, without charge to the
Holder.  Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.

Section 2.11                                Cancellation.

The Company at any time may deliver Notes to the
Trustee for cancellation.  The Registrar
and the Paying Agent shall forward to the Trustee any Notes surrendered to them
for transfer, exchange or payment.  The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and, at the written direction of the Company,
shall dispose, in its customary manner, of all Notes surrendered for transfer,
exchange, payment or cancellation, and deliver a certificate of destruction to
the Company.  Subject to Section 2.07, the Company may not issue new
Notes to replace Notes that it has paid or delivered to the Trustee for
cancellation.  If the Company shall
acquire any of the Notes, such acquisition shall not operate as a redemption or
satisfaction of the Indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation pursuant to this Section 2.11.

 

26

 

Section 2.12                                CUSIP Number.

The Company in issuing the Notes of each series may
use a “CUSIP” number, and if so, the Trustee shall use the CUSIP number in
notices of redemption or exchange as a convenience to Holders; provided; however,
that no representation is hereby deemed to be made by the Trustee as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes.  The Company shall
promptly, upon its becoming aware of any change in CUSIP numbers, notify the
Trustee of any change in the CUSIP number.

Section 2.13                                Deposit of Monies.

Prior to 10:00 a.m. New York City time on each
Interest Payment Date, Maturity Date, redemption date, Change of Control
Payment Date and Net Proceeds Offer Payment Date, the Company shall have
deposited with the Paying Agent in immediately available funds U.S. Legal
Tender sufficient to make cash payments, if any, due on such Interest Payment
Date, Maturity Date, redemption date, Change of Control Payment Date and Net
Proceeds Offer Payment Date, as the case may be, in a timely manner which
permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Maturity Date, redemption date, Change of Control Payment Date
and Net Proceeds Offer Payment Date, as the case may be.  At the option and direction of the Company,
payment of interest on Physical Notes may be made by the Paying Agent by check
mailed to the Holders on or before the relevant Interest Payment Date.  Payments to Holders to be made by wire
transfer of immediately available funds shall require prior receipt by the
Paying Agent of appropriate wire transfer instructions.

Section 2.14                                Book-Entry Provisions for Global Note.

(a)           The Global Notes initially shall (i)
be registered in the name of the Depository or the nominee of such Depository,
(ii) be delivered to the Trustee as custodian for such Depository and (iii)
bear legends as set forth in Exhibit C attached hereto.

Members of, or participants in, the Depository (“Agent
Members”) shall have no rights under this Indenture with respect to any
Global Notes held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Notes, and the Depository may be treated by the
Company, the Trustee, any agent of the Company, or the Trustee as the absolute
owner of the Global Note for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Note.

(b)           Transfers of any Global Note shall be
limited to transfers of such Global Note in whole, but not in part, to the
Depository, its successors or their respective nominees.  Interests of beneficial owners in any Global
Note may be transferred or exchanged for Physical Notes in accordance with the
rules and procedures of the Depository and the provisions of Section 2.15. In addition, Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in any Global Note (in each case directed by the Depository) if (i)

 

27

 

the Depository notifies
the Company that it is unwilling or unable to continue as Depository for the
Global Note or the Depository ceases to be a “Clearing Agency”
registered under the Exchange Act and a successor depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue Physical Notes.

(c)           In connection with any transfer or
exchange of a portion of the beneficial interest in the Global Note to
beneficial owners pursuant to paragraph (b),
the Registrar shall (if one or more Physical Notes are to be issued) reflect on
its books and records the date and a decrease in the principal amount of the
Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more Physical Notes of
like tenor and amount.

(d)           In connection with the transfer of
the entire Global Note to beneficial owners pursuant to paragraph (b), the Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Note, an equal aggregate principal amount of Physical Notes of
authorized denominations.

(e)           Any Physical Note constituting a
Restricted Security delivered in exchange for an interest in the Global Note
pursuant to paragraph (b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.15, bear the legend regarding transfer restrictions applicable to
the Physical Notes set forth in Exhibit A attached hereto.

(f)            The Holder of the Global Note may
grant proxies and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Notes.

(g)           Neither the Trustee nor the Paying
Agent shall have any responsibility or liability for the accuracy of the
records of the Depository or its Agent Members, or for any actions or omissions
of the Depository or its Agent Members.

(h)           The Trustee is hereby authorized to
enter into a letter of representation with DTC in the form provided to the
Trustee by the Company and to act in accordance with such letter.

Section 2.15                                Special Transfer Provisions.

(a)           Transfers to Non-QIB
Institutional Accredited Investors and Non-U.S. Persons.  The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to any Institutional Accredited Investor which is not a QIB
or to any Non-U.S. Person:

(i)            the Registrar shall register the
transfer of any Note constituting a Restricted Security, whether or not such
Note bears the Private Placement Legend, if (x) the requested transfer is after
July 8, 2005; provided, however,
that neither the Company

 

28

 

nor
any Affiliate of the Company has held any beneficial interest in such Note or
portion thereof, at any time on or prior to July 8, 2004 (as certified to the
Trustee by an Officers’ Certificate of the Company), or (y) (1) in the case of
a transfer to an Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has delivered to
the Registrar a certificate substantially in the form of Exhibit D
attached hereto or (2) in the case of a transfer to a Non-U.S. Person,
the proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit E attached hereto; and

(ii)           if the proposed transferor is an
Agent Member holding a beneficial interest in the Global Note, upon receipt by
the Registrar of (x) the certificate, if any, required by paragraph (i)
above and (y) instructions given in accordance with the Depository’s and the
Registrar’s customary procedures,

whereupon (a) the Registrar shall reflect on its books
and records the date and (if the transfer does not involve a transfer of
outstanding Physical Notes) a decrease in the principal amount of the Global
Note from which the transfer shall occur in an amount equal to the principal
amount of the beneficial interest in the Global Note to be transferred and (b)
the Registrar shall reflect on its books and records the date and (if the
transfer does not involve a transfer of outstanding Physical Notes) a
corresponding increase in the principal amount of the Global Note to which the
transfer shall occur in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred.

(b)           Transfers to QIBs. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note constituting a Restricted Security to a QIB
(excluding transfers to Non-U.S. Persons):

(i)            the Registrar shall register the
transfer if such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Note stating, or has otherwise
advised the Company and the Registrar in writing, that the sale has been made
in compliance with the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Note stating, or has otherwise
advised the Company and the Registrar in writing, that it is purchasing the
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; and

(ii)           if the proposed transferee is an
Agent Member, and the Notes to be transferred consist of Physical Notes which
after transfer are to be evidenced by an interest in the Global Note, upon
receipt by the Registrar of written instructions given in accordance with the
Depository’s and the Registrar’s customary procedures, the Registrar shall
reflect on its books and records the date and an increase in the principal
amount of

 

29

 

the
Global Note in an amount equal to the principal amount of the Physical Notes to
be transferred, and the Trustee shall cancel the Physical Notes so transferred.

(c)           Private Placement Legend.  Upon the transfer, exchange or replacement
of Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not bear the Private Placement Legend.  Upon the transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the circumstance contemplated by paragraph (a)(i)(x) of this Section 2.15 exist or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.

(d)           General.  By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.  The
Registrar shall not register a transfer of any Note unless such transfer complies
with the restrictions on transfer of such Note set forth in this
Indenture.  In connection with any
transfer of Notes, each Holder agrees by its acceptance of the Notes to furnish
the Registrar of the Company such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be
required to determine (but may rely on a determination made by the Company with
respect to) the sufficiency of any such certifications, legal opinions or other
information.

(e)           Transfers of Notes Held by
Affiliates.  Any certificate (i)
evidencing a Note that has been transferred to an Affiliate of the Company
within two years after the Issue Date, as evidenced by a notation on the
assignment form for such transfer or in the representation letter delivered in
respect thereof or (ii) evidencing a Note that has been acquired from an
Affiliate (other than by an Affiliate) in a transaction or a chain of
transactions not involving any public offering, shall, until two years after
the last date on which the Company or any Affiliate of the Company was as owner
of such Note, in each case, bear a Private Placement Legend in substantially
the form set forth in this Section 2.15
hereof, unless otherwise agreed by the Company (with written notice thereof to
the Trustee).

The Registrar shall retain copies of all letters,
notices and other written communications received by it pursuant to Section 2.14 or this Section 2.15 for so long as this Indenture
remains in effect. The Company shall have the right to inspect and make copies
of all such letters, notices or other written communications at any reasonable
time upon the giving of reasonable written notice to the Registrar.

Section 2.16                                Defaulted Interest.

The Company shall pay interest on overdue principal
from time to time on demand at the rate of interest then borne by the
Notes.  The Company shall, to the extent
lawful, pay interest on overdue installments of interest (without regard to any
applicable grace periods) from time to

 

30

 

time on demand at the
rate of interest then borne by the Notes. 
Interest will be computed 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.

If the Company defaults in a payment of interest on
the Notes, it shall pay the defaulted interest, plus (to the extent lawful) any
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the
fifteenth day next preceding the date fixed by the Company for the payment of
defaulted interest or the next succeeding Business Day if such date is not a
Business Day.  The Company shall notify
the Trustee in writing of the amount of defaulted interest proposed to be paid
on each Note and the date of the proposed payment (a “Default Interest
Payment Date”), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
the Trustee for such deposit on or prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons
entitled to such defaulted interest as provided in this Section; provided, however, that in no event shall
the Company deposit monies proposed to be paid in respect of defaulted interest
later than 10:00 a.m. New York City time of the proposed Default Interest
Payment Date.  At least 15 days before
the subsequent special record date, the Company shall mail (or cause to be
mailed) to each Holder, as of a recent date selected by the Company, with a
copy to the Trustee, a notice that states the subsequent special record date,
the payment date and the amount of defaulted interest, and interest payable on
such defaulted interest, if any, to be paid. 
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 10-day period set forth in Section
6.01(a) shall be paid to Holders as of the regular record date for
the Interest Payment Date for which interest has not been paid.  Notwithstanding the foregoing, the Company
may make payment of any defaulted interest in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by such exchange.

Upon a Default or an Event of Default, the applicable
rate of interest in effect at such time with respect to the Notes will be
increased by 2.0% per annum.  In the event that such default interest
becomes applicable, the Company shall be required to pay a minimum amount of
default interest equal to 1/6 of 1.0% of the principal amount of the
Notes (regardless of how long the Default or Event of Default actually
lasts).

ARTICLE III

REDEMPTION

Section 3.01                                Notices to Trustee.

If the Company elects to redeem Notes pursuant to Section 3.03 it shall deliver to the Trustee
and the Paying Agent, at least 30 days but not more than 60 days before a
redemption date (unless a shorter notice period shall be satisfactory to the
Trustee, as evidenced in a writing signed on behalf of the Trustee) written
notice setting forth (i) the redemption date, (ii) the principal
amount of the Notes to be redeemed and that, after the redemption date, upon
cancellation of the original Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued, (iii) the redemption
price, and (iv) that such redemption is

 

31

 

being made pursuant to Section 3.03 of this Indenture, together with
an Officers’ Certificate stating that such redemption shall comply with the
conditions contained herein and in the Notes.

Section 3.02                                Selection of Notes To Be Redeemed.

If fewer than all of the Notes are to be redeemed at
any time, selection of Notes for redemption will be made by the Trustee in
compliance with the requirements of the national securities exchange, if any,
on which the Notes are listed or, if the Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee deems to be fair and
appropriate.  The Trustee shall make the
selection from the Notes outstanding and not previously called for redemption
and shall promptly notify the Company in writing of the Notes selected for
redemption and, in the case of any Note selected for partial redemption, the
principal amount thereof to be redeemed. 
Notes in denominations of $1,000 or less may not be redeemed in
part.  The Trustee may select for
redemption portions (equal to $1,000 or any integral multiple thereof) of the
principal of Notes that have denominations larger than $1,000.  Provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption.

Section 3.03                                Optional Redemption.

The Notes will be redeemable, at the Company’s option,
in whole at any time or in part from time to time, on and after July 1, 2004,
at the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the twelve-month period commencing on July 1 of
the year set forth below, plus, in each case, accrued and unpaid interest
thereon to the date of redemption:

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2004

  	
   

  	
  104.000

  	
  %

  
	
  2005

  	
   

  	
  103.000

  	
  %

  
	
  2006

  	
   

  	
  102.000

  	
  %

  
	
  2007

  	
   

  	
  101.000

  	
  %

  
	
  2008 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

Notwithstanding the foregoing, at any time on or prior
to July 1, 2004, the Company may redeem up to 33 1/3% of the aggregate
principal amount of the Notes originally issued at a redemption price of
113.000% of the principal amount thereof, plus accrued and unpaid interest
thereon to the redemption date, with the net proceeds of any Equity Offering; provided that at least 66 2/3% of the
aggregate principal amount of the Notes originally issued under this Indenture
remains outstanding immediately after the occurrence of such redemption; and provided, further, that such redemption
occurs within 90 days of the date of the closing of such Equity Offering.

 

32

 

Section 3.04                                [Intentionally Omitted]

Section 3.05                                Notice of Redemption.

At least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed a notice of
redemption by first class mail, postage prepaid, to each Holder at each
Holder’s registered address whose Notes are to be redeemed, with a copy to the
Trustee and any Paying Agent.  At the
Company’s written request, the Trustee shall give the notice of redemption in
the Company’s name and at the Company’s expense.  The Company shall provide such notices of redemption to the
Trustee at least five business days before the intended mailing date.

Each notice for redemption shall identify (including
the CUSIP number) the Notes to be redeemed and shall state:

(a)           the redemption date;

(b)           the redemption price and the amount
of accrued interest, if any, to be paid;

(c)           the name and address of the Paying
Agent;

(d)           that such redemption is being made
pursuant to Section 3.03 of this
Indenture;

(e)           that any Physical Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption
price plus accrued interest, if any;

(f)            that, unless the Company defaults in
making the redemption payment, interest on Notes (or applicable portions
thereof) called for redemption ceases to accrue on and after the redemption
date, and the only remaining right of the Holders of such Notes is to receive
payment of the redemption price plus accrued interest, if any, as of the
redemption date upon surrender to the Paying Agent of the Notes redeemed;

(g)           that if any Physical Note is being
redeemed in part, the portion of the principal amount of such Note to be
redeemed and that, after the redemption date, and upon surrender, and
subsequent cancellation of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder; and

(h)           that, if fewer than all the Notes are
to be redeemed, the identification of the particular Physical Notes (or portion
thereof) to be redeemed, as well as the principal amount of Notes to be
redeemed and the principal amount of Notes to be outstanding after such partial
redemption.

The Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the purchase of Notes.

 

33

 

Section 3.06                                Effect of Notice of Redemption.

Once notice of redemption is mailed in accordance with
Section 3.05, Notes called for
redemption become due and payable on the applicable redemption date and at the
applicable redemption price plus accrued interest, if any.  Upon surrender to the Trustee or Paying
Agent, such Notes called for redemption shall be paid at the redemption price
(which shall include accrued and unpaid interest thereon to the redemption
date), but installments of interest, the maturity of which is on or prior to
the redemption date, shall be payable to Holders of record at the close of
business on the applicable Record Dates referred to in the Notes.

Section 3.07                                Deposit of Redemption Price.

On or before 10:00 am New York City time on the
redemption date, the Company shall deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the redemption price plus accrued interest to but
excluding the redemption date, if any, of all Notes to be redeemed on that
date.  The Paying Agent shall promptly
return to the Company any U.S. Legal Tender so deposited which is not required
for that purpose, except with respect to monies owed as obligations to the
Trustee pursuant to Article Seven.

If the Company complies with the preceding paragraph,
then, unless the Company defaults in the payment of such redemption price plus
accrued interest, if any, to but excluding the redemption date, interest on the
Notes to be redeemed will cease to accrue, on and after the applicable
redemption date, whether or not such Notes are presented for payment.

Section 3.08                                Notes Redeemed in Part.

Upon surrender of a Note that is to be redeemed in
part, the Trustee shall authenticate for the Holder a new Note or Notes equal
in principal amount to the unredeemed portion of the Note surrendered.

ARTICLE IV

COVENANTS

Section 4.01                                Payment of Notes.

The Company shall pay the principal of and interest on
the Notes on the dates and in the manner provided in the Notes and in this
Indenture.  An installment of principal
of or interest on the Notes shall be considered paid on the date it is due if
the Trustee or Paying Agent (other than the Company or an Affiliate of the
Company) holds on that date U.S. Legal Tender designated for and sufficient to
pay the installment in full and is not prohibited from paying such money to the
Holders pursuant to the terms of this Indenture.

Notwithstanding anything to the contrary contained in
this Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes from principal or interest
payments hereunder.

 

34

 

Section 4.02                                Maintenance of Office or Agency.

The Company shall maintain the office or agency
required under Section 2.03. The
Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency.  If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section
12.02.

The Company may also from time to time designate one
or more other offices or agencies (in or outside of The City of New York) where
the Notes may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in The City of New York for
such purposes.  The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
any change in the location of any such other office or agency.

Section 4.03                                Corporate Existence.

Except as otherwise permitted by Article Five, the Company shall do or cause
to be done, at its own cost and expense, all things necessary to preserve and
keep in full force and effect its corporate existence and the corporate
existence of each of its Subsidiaries (other than the Inactive Subsidiaries) in
accordance with the respective organizational documents of each such Subsidiary
and the material rights (charter and statutory) and franchises of the Company
and each such Subsidiary.  The Company
hereby represents that the Inactive Subsidiaries do not own any material assets.

Section 4.04                                Payment of Taxes and other Claims.

The Company shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon it or any of
its Subsidiaries or its properties or any of its Subsidiaries’ properties and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a Lien upon its properties or any of its
Subsidiaries’ properties; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being or shall be contested in good faith by
appropriate proceedings properly instituted and diligently conducted for which
adequate reserves, to the extent required under GAAP, have been taken.

Section 4.05                                Maintenance of Properties and Insurance.

(a)           The Company shall, and shall cause
each of its Subsidiaries to, maintain its properties used or held in the
conduct of its business or the business of any of its Subsidiaries in good
working order and condition in all material respects (subject to ordinary wear
and tear) and make all necessary repairs, renewals, replacements, additions,
betterments and improvements thereto necessary or desirable to actively conduct
and carry on its business.

 

35

 

(b)           The Company shall, and shall cause
each of its Subsidiaries to, maintain insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Company, are adequate and appropriate for the conduct of the business of the
Company and its Subsidiaries in a prudent manner, with reputable insurers or
with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as are adequate for the conduct of its business and the value of its
material properties and shall be customary, in the good faith judgment of the
Company, for companies similarly situated within the industry of the Company.

Section 4.06                                Compliance Certificate; Notice of Default.

(a)           The Company shall deliver to the
Trustee, within 120 days after the end of the Company’s fiscal year, an
Officers’ Certificate stating that a review of its activities during the
preceding fiscal year has been made under the supervision of the signing
officers with a view to determining whether it has kept, observed, performed
and fulfilled its obligations under this Indenture and further stating, as to
each such Officer signing such certificate, that, to the best of such Officer’s
knowledge, after due inquiry, the Company during such preceding fiscal year has
kept, observed, performed and fulfilled each and every such covenant under this
Indenture, and that no Default or Event of Default occurred during such year,
and at the date of such certificate there is no Default or Event of Default
that has occurred and is continuing or, if such signers do know of such Default
or Event of Default, the certificate shall describe the Default or Event of
Default and its status with particularity. 
The Officers’ Certificate shall also notify the Trustee should the
Company elect to change the manner in which it fixes its fiscal year end.

(b)           The annual financial statements
delivered pursuant to Section 4.08
shall be accompanied by a written report of the Company’s independent accountants
(who shall be a firm of established national reputation) that in conducting
their audit of such financial statements nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article Four, Five or Six of this Indenture insofar as
they relate to accounting matters or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable hereunder directly or indirectly to any
Person for any failure to obtain knowledge of any such violation.

(c)           (i) 
If any Default or Event of Default has occurred and is continuing or
(ii) if any Holder seeks to exercise any remedy hereunder with respect to a
claimed Default under this Indenture or the Notes, the Company shall deliver to
the Trustee, at its address set forth in Section
12.02 hereof, by registered or certified mail or by telegram, telex
or facsimile transmission followed by hard copy by registered or certified mail
an Officers’ Certificate specifying such event, notice or other action within
three (3) Business Days of its becoming aware of such occurrence. If there
shall be any event, fact, circumstance or condition which constitutes or
results in, or would constitute or result in with the giving of notice or
passage of time or both, a Default or an Event of Default, in each case, under
this Indenture, any Collateral Agreement, the Registration Rights Agreement and
any related document or agreement, the Company shall deliver to the Trustee, at
its address set forth in Section 12.02
hereof, by registered or certified mail or by telegram, telex or facsimile
transmission followed by hard copy by registered or certified mail an Officers’
Certificate specifying such event, notice or other action within ten (10)
Business Days of its becoming aware of such occurrence.

 

36

 

Section 4.07                                Compliance with Laws.

The Company shall, and shall cause each of its
Subsidiaries to, comply with all applicable statutes, rules, regulations,
orders and restrictions of the United States of America, all states and
municipalities thereof, and of any governmental department, commission, board,
regulatory authority, bureau, agency and instrumentality of the foregoing, in
respect of the conduct of its businesses and the ownership of its properties,
except for such noncompliances as are not in the aggregate reasonably likely to
have a material adverse effect on the financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole.

Section 4.08                                Reports.

Whether or not required by the rules and regulations
of the SEC, so long as any Notes are outstanding, the Company shall furnish the
Holders:

(a)           all quarterly and annual financial
information that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K if the Company were required to file such forms, including
a “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” that describes the financial condition and results of operations of
the Company and its consolidated Subsidiaries and, with respect to the annual
information only, a report thereon by the Company’s certified independent
accountants; and

(b)           all current reports that would be
required to be filed with the SEC on Form 8-K if the Company were required to
file such reports, in each case within the time periods specified in the SEC’s
rules and regulations.  Following the
consummation of the exchange offer contemplated by the Registration Rights
Agreement, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability within the time periods specified in
the Commission’s rules and regulations (unless the Commission will not accept
such a filing).  In addition, the
Company has agreed that, for so long as any Notes remain outstanding, it will
furnish to the holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.

Section 4.09                                Waiver of Stay, Extension or Usury Laws.

The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company from paying all or any portion of the principal of or interest on the
Notes as contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this Indenture;
and (to the extent that it may lawfully do so) the Company hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

 

37

 

Section 4.10                                Limitation on Restricted Payments.

The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any distribution on account of the Company’s or any of its Subsidiaries’
Equity Interests (other than dividends or distributions payable in Equity
Interests (other than Disqualified Capital Stock) of the Company or dividends
or distributions payable to the Company or any Wholly-Owned Subsidiary of the
Company); (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Subsidiary or other Affiliate of the
Company (other than any such Equity Interests owned by the Company or any
Wholly-Owned Subsidiary of the Company and other than any such purchase,
redemption or acquisition constituting a Permitted Investment); (iii)
voluntarily purchase, redeem, defease or otherwise acquire or retire for value
any Indebtedness that is subordinated to the Notes; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i)
through (iv) above being collectively referred to as “Restricted
Payments”) unless, at any time of such Restricted Payment:

(a)           no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof;

(b)           immediately after giving effect to
such transaction, on a pro forma basis as if such transaction had occurred at
the beginning of the applicable four-quarter period, the Company would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section
4.12; and

(c)           the amount of such Restricted
Payment, together with the aggregate amount of all other Restricted Payments
made by the Company and its Subsidiaries after the Issue Date, is less than the
sum of (x) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the Issue Date to the end of the
Company’s most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, 100% of such deficit),
plus (y) 100% of the aggregate net cash proceeds received by the Company from
the issuance or sale of Equity Interests of the Company (other than Equity
Interests sold to a Subsidiary of the Company and other than Disqualified
Capital Stock) since the Issue Date, plus (z) 100% of the Net Cash Proceeds
received by the Company from the issuance or sale, other than to a Subsidiary
of the Company, of any debt security of the Company that has been converted
into Equity Interests of the Company (other than Disqualified Capital Stock)
since the Issue Date.  For purposes of
this clause (c) the amount of any Restricted Payment paid in property
other than cash shall be the Fair Market Value of such property as determined
reasonably and in good faith by the Board of Directors of the Company.

If no Default or Event of Default shall have occurred
and be continuing, the foregoing provisions will not prohibit:  (i) the payment of any dividend within 60
days after the date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions of this Indenture; (ii) the
redemption, repurchase, retirement or other acquisition of any Indebtedness or
Equity Interests of the Company in exchange for, or solely out of the proceeds
of, the substantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than any Disqualified
Capital Stock); (iii) the

 

38

 

redemption, repurchase or
payoff of Purchase Money Obligations; (iv) the redemption, repurchase or payoff
of any Indebtedness (including Existing Indebtedness) with proceeds of any
Refinancing Indebtedness permitted to be incurred under Section 4.12; (v) the repurchase, redemption
or other acquisition or retirement for value of any Equity Interests of the
Company held by any officer or employee of the Company or its Subsidiaries; provided, however, that the aggregate
amount of all such repurchases, redemptions and other acquisitions and
retirements under this clause (v) on or after the Issue Date shall not
exceed $1 million; (vi) the purchase or other acquisition of the Warrants
required by the terms of the Warrant Agreement; (vii) payments or distributions
to dissenting stockholders required by applicable law pursuant to or in
connection with a consolidation, merger or Asset Sale that complies with all
applicable provisions of this Indenture; (viii) Restricted Payments made on the
Issue Date as described under “Use of Proceeds” in the Offering Circular and (ix)
the repurchase, redemption or other repayment of the Series Z Preferred Stock
to be issued upon the closing of the Equity Restructuring in the event of a
Change of Control in accordance with the mandatory redemption provision of the
Series Z Certificate of Designations contemplated by the Equity Restructuring
Agreement; provided that, in
accordance with Section 4.14, prior to such repurchase, redemption or
other repayment the Paying Agent has received a deposit of an amount equal to
101% of the aggregate principal amount of the Notes outstanding on the date of
the Change of Control, plus accrued interest thereon through the Change of
Control Payment Date (as evidenced by an acknowledgment of receipt of such
deposit by the Paying Agent) prior to such repurchase, redemption or other
repayment.

The Board of Directors may designate any Subsidiary to
be a Non-Restricted Subsidiary if such designation would not cause a
Default.  For purposes of making such
determination, all outstanding Investments by the Company and its Subsidiaries
(except to the extent repaid in cash) in the Subsidiary so designated will be
deemed to be Restricted Payments at the time of such designation and will
reduce the amount available for Restricted Payments under the first paragraph
of this covenant.  All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of such
designation, (ii) the Fair Market Value of such Investments at the time of such
designation and (iii) the original Fair Market Value of such Investments at the
time they were made.  Such designation
will only be permitted if such Restricted Payment would be permitted at such
time and if the Subsidiary so designated otherwise meets the definition of a
Non-Restricted Subsidiary.

Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers’ Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.10 were computed,
which calculations may be based upon the Company’s latest available quarterly
financial statements.

Section 4.11                                Limitation on Transactions with
Affiliates.

(a)           The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the rendering
of any services) with, or for the benefit of, any of its Affiliates (each an “Affiliate
Transaction”), other than (x) Affiliate Transactions permitted under paragraph
(b) below and (y)

 

39

 

Affiliate Transactions on
terms that are no less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm’s length basis from
a Person that is not an Affiliate of the Company or such Subsidiary.  All Affiliate Transactions (and each series
of related Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a Fair Market Value in
excess of $2,000,000 shall be approved by a majority of the disinterested members
of the Board of Directors of the Company, such approval to be evidenced by a
Board Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions.  If the Company or any such Subsidiary enters into an Affiliate
Transaction (or a series of related Affiliate Transactions which are similar or
part of a common plan) that involves an aggregate Fair Market Value of more
than $5,000,000, the Company or such Subsidiary as the case may be, shall, prior
to the consummation thereof, obtain a favorable opinion as to the fairness of
such transaction or series of related transactions to the Company from a
financial point of view from an Independent Financial Advisor and deliver such
opinion to the Trustee.

(b)           The restrictions set forth in clause
(a) above shall not apply to: (i) reasonable compensation fees and
compensation paid to, and indemnity provided on behalf of, Officers, directors,
employees or consultants of the Company or any Subsidiary as determined in good
faith by the Company’s Board of Directors or senior management; (ii)
transactions exclusively between or among the Company and any of its
Wholly-Owned Subsidiaries or exclusively between or among such Wholly-Owned
Subsidiaries, provided such transactions
are not otherwise prohibited by this Indenture; (iii) Restricted Payments not
prohibited by this Indenture and (iv) transactions contemplated by the Equity
Restructuring Agreement.

Section 4.12                                Limitation on Incurrence of Additional
Indebtedness and Issuance of Disqualified Capital Stock.

The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guaranty or otherwise become directly or indirectly
liable with respect to (collectively, “incur”) any Indebtedness (other
than Permitted Indebtedness), and the Company will not issue any Disqualified
Capital Stock; provided, however,
that the Company may (A) issue shares of Disqualified Capital Stock pursuant to
a Qualified Recapitalization and (B) incur Indebtedness or issue shares of
Disqualified Capital Stock, if (i) no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof and (ii) the
Fixed Charge Coverage Ratio for the Company’s most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Capital Stock is issued would have been at least
equal to 2.25:1.0, determined on a pro forma basis as if the additional
Indebtedness had been incurred, or the Disqualified Capital Stock had been
issued, as the case may be, at the beginning of such four-quarter period.

Section 4.13                                Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.

The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrances or restrictions on the ability of any
such Subsidiary to (i) pay dividends or make any other

 

40

 

distributions to the
Company or any of its Subsidiaries (A) on such Subsidiary’s Capital Stock or
(B) with respect to any other interest or participation in, or measured by, its
profits, or pay any Indebtedness owed to the Company or any of its
Subsidiaries; or (ii) make loans or advances to the Company or any of its
Subsidiaries; or (iii) transfer any of its properties or assets to the Company or
any of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (a) applicable law, (b) this Indenture, the Notes and the
Senior Credit Facility and any related documents, (c) customary non-assignment
provisions of any contract or any lease governing a leasehold interest of any
Subsidiary of the Company, (d) agreements existing on the Issue Date to the
extent and in the manner such agreements are in effect on the Issue Date, or
(e) an agreement governing Indebtedness incurred to refinance the Indebtedness
issued, assumed or incurred pursuant to an agreement referred to in the
immediately preceding clauses (b) or (d) above; provided, however, that the provisions
relating to such encumbrance or restriction contained in any such Indebtedness
are no less favorable to the Company in any material respect as determined by
the Board of Directors of the Company in its reasonable and good faith judgment
than the provisions relating to such encumbrance or restriction contained in agreements
referred to in such clauses (b) or (d).

Section 4.14                                Limitation on Change of Control.

(a)           Upon the occurrence of a Change of
Control, the Company will be required (1) to notify the Trustee in writing
thereof and to offer to repurchase all or any part (equal to $1,000 of
principal at maturity or an integral multiple thereof) of each Holder’s Notes
pursuant to the offer described below (the “Change of Control Offer”) at
a purchase price equal to 101% of the principal amount thereof on the date of
purchase, plus accrued interest thereon, if any, through the date of purchase
(the “Change of Control Payment”) and (2) immediately deposit with the
Payment Agent an amount equal to 101% of the aggregate principal amount of
Notes outstanding on such date plus accrued interest thereon through the Change
of Control Payment Date.

(b)           Within 30 days following the date on
which the Change of Control occurred, the Company shall mail a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of the
Change of Control Offer.  The notice to
the Holders shall contain all instructions and materials necessary to enable
such Holders to tender Notes pursuant to the Change of Control Offer.  Such notice shall state:  (1) that the Change of Control Offer is
being made pursuant to this Section 4.14 and that all Notes tendered and
not withdrawn will be accepted for payment; (2) the purchase price (including
the amount of any accrued interest) and the purchase date, which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed, other than as may be required by law (the “Change of Control Payment
Date”); (3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest on and after the Change of Control Payment Date;
(5) that Holders electing to have any Physical Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Notes, with the form
entitled “Option of Holder to Elect Purchase” on the reverse of the Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the

 

41

 

second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (7) that Holders
whose Physical Notes are being purchased only in part will be issued new
Physical Notes equal in principal amount to the unpurchased portion of the
Physical Notes surrendered; provided,
that each Physical Note purchased and each new Physical Note issued shall be in
a principal amount $1,000 or an integral multiple thereof.  On the Business Day immediately preceding
the Change of Control Payment Date, the Trustee shall notify the Company in
writing of the Holders who have so elected to have their Physical Notes
purchased pursuant to the Change of Control Offer (and who have not withdrawn
such election pursuant to clause (5) above).

On or before the Change of
Control Payment Date, the Company shall, to the extent lawful, (i) accept for
payment Notes or portions thereof tendered pursuant to the Change of Control
Offer, (ii) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers’ Certificate stating the amount of the Notes
or portions thereof being tendered to the Company and (iii) in the event that the Change of Control
Payment is less than the amount deposited with the Paying Agent, the Paying
Agent (as soon as practicable after the Change of Control Payment Date) shall
release to the Company such excess amount.  The Paying Agent shall promptly mail to the Holders of the Notes
so accepted payment in an amount equal to the purchase price for such Notes
plus accrued interest, if any, to the Change of Control Payment Date, and the
Trustee shall promptly authenticate and mail to such Holders new Notes equal in
principal amount to any unpurchased portion of the Notes surrendered, if any; provided, however, that each such new Note
shall be in a principal amount of $1,000 or an integral multiple thereof.  Any Notes not so accepted shall be promptly
mailed by the Company to the Holder thereof. 
For purposes of this Section 4.14, the Trustee shall act as the
Paying Agent.

 

Any amounts deposited with
the Paying Agent and remaining after the purchase of Notes pursuant to a Change
of Control Offer shall be returned by the Paying Agent to the Company.

 

The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder, in each case, to the extent such laws and regulations are
applicable in connection with the repurchase of Notes pursuant to a Change of
Control Offer.  To the extent provisions
of any securities laws or regulations conflict with this Section 4.14 of
this Indenture, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Section 4.14 by virtue thereof.

The Company will announce publicly the results of the
Change of Control Offer on as soon as practicable after the Change of Control
Payment Date.

Neither the Board of Directors of the Company nor the
Trustee may waive the provisions of this Section 4.14 relating to the
Company’s obligation to make a Change of Control Offer under this Section
4.14.

 

42

 

Section 4.15                                Limitation on Asset Sales.

The Company will not, and will not permit any of its
Subsidiaries to, engage in an Asset Sale unless (i) the Company or the
Subsidiary, as the case may be, receives consideration at the time of such
Asset Sale at least equal to the Fair Market Value (evidenced by a resolution
of the Board of Directors of the Company set forth in an Officers’ Certificate
delivered to the Trustee) of the assets or Properties issued or sold or
otherwise disposed of and (ii) at least 85% of the consideration therefor
received by the Company or such Subsidiary is in the form of cash or Cash
Equivalents; provided that the
amount of (x) any liabilities (as shown on the Company’s or such Subsidiary’s
most recent balance sheet) of the Company or any Subsidiary (other than
contingent liabilities and liabilities that are Subordinated Indebtedness or
otherwise by their terms subordinated to the Notes or the Subsidiary
Guarantees) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Subsidiary from
further liability and (y) any notes or other obligations received by the
Company or any such Subsidiary from such transferee that are converted by the
Company or such Subsidiary into cash within 180 days of closing such Asset Sale
(to the extent of the cash received) shall be deemed to be cash for purposes of
this provision.

Within 180 days after the receipt of any Net Cash
Proceeds from any Asset Sale, the Company may (i) apply all or any of the Net
Cash Proceeds therefrom to permanently repay (and, in the case of revolving
borrowings, to correspondingly reduce commitments with respect thereto)
Indebtedness under the Senior Credit Facility or other Indebtedness having a
Lien on the property that was the subject of such Asset Sale (but only to the
extent such Lien was a Permitted Lien), or (ii) invest all or any part of the Net
Cash Proceeds thereof in properties and assets that replace the properties or
other assets that were the subject of such Asset Sale or in other properties or
other assets that will be used in the business of the Company or its
Subsidiaries as existing on the Issue Date. 
Pending the final application of any such Net Cash Proceeds, the Company
may temporarily reduce borrowings under any revolving credit facility or
otherwise invest such Net Cash Proceeds in any manner that is not prohibited by
this Indenture.  Any Net Cash Proceeds
from an Asset Sale that are not applied or invested as provided in the first
sentence of this paragraph will be deemed to constitute “Available Proceeds
Amount.”  When the aggregate
Available Proceeds Amount exceeds $2.0 million, the Company shall make an offer
to purchase, from all Holders of the Notes and any then outstanding Pari Passu
Indebtedness required to be repurchased or repaid on a permanent basis in
connection with an Asset Sale, an aggregate principal amount of Notes and any
such Pari Passu Indebtedness equal to such Available Proceeds Amount as
follows:

(i)            (A) 
The Company shall make an offer to purchase (an “Asset Proceeds Offer”)
from all Holders of the Notes in accordance with the procedures set forth in
this Indenture the maximum principal amount (expressed as a multiple of $1,000)
of Notes that may be purchased out of an amount (the “Payment Amount”)
equal to the product of such Available Proceeds Amount multiplied by a
fraction, the numerator of which is the outstanding principal amount of the
Notes and the denominator of which is the sum of the outstanding principal
amount of the Notes and such Pari Passu Indebtedness, if any (subject to
proration in the event such amount is less than the aggregate Offered Price (as
defined in clause (ii) below) of all Notes tendered), and (B) to the
extent required by any such Pari Passu Indebtedness and provided there is a

 

43

 

permanent
reduction in the principal amount of such Pari Passu Indebtedness, the Company
shall make an offer to purchase such Pari Passu Indebtedness (a “Pari Passu
Offer”) in an amount (the “Pari Passu Indebtedness Amount”) equal to
the excess of the Available Proceeds Amount over the Payment Amount.

(ii)           The offer price for the Notes shall
be payable in cash in an amount equal to 100% of the principal amount of the
Notes tendered pursuant to an Asset Proceeds Offer, plus accrued and unpaid
interest, if any, to the date such Asset Proceeds Offer is consummated  (the “Offered Price”), in accordance
with the procedures set forth in this Indenture.  To the extent that the aggregate Offered Price of the Notes
tendered pursuant to an Asset Proceeds Offer is less than the Payment Amount
relating thereto or the aggregate amount of the Pari Passu Indebtedness that is
purchased or repaid pursuant to the Pari Passu Offer is less than the Pari
Passu Indebtedness Amount (such shortfall constituting an “Asset Proceeds
Deficiency”), the Company may use such Asset Proceeds Deficiency, or a
portion thereof, for general corporate purposes, subject to the limitations of Section
4.10.

(iii)          If the aggregate Offered Price of
Notes validly tendered and not withdrawn by Holders thereof exceeds the Payment
Amount, Notes to be purchased will be selected on a pro rata basis.  Upon completion of such Net Proceeds Offer
and Pari Passu Offer, the Available Proceeds Amount shall be reset to zero.

The Payment Amount may be reduced by the principal
amount of Notes acquired by the Company through purchase or redemption (other
than pursuant to a Change of Control Offer) subsequent to the date of the Asset
Sale and surrendered to the Trustee for cancellation.

The Company will not permit any Subsidiary to enter
into or suffer to exist any agreement (excluding Permitted Liens) that would
place any restriction of any kind (other than pursuant to law or regulation) on
the ability of the Company to make an Asset Proceeds Offer following any Asset
Sale.  The Company will comply with Rule
14e-1 under the Exchange Act, and any other securities laws and
regulations thereunder, if applicable, in the event that an Asset Sale occurs
and the Company is required to purchase Notes as described above.

Section 4.16                                Limitation on Issuances and Sales of
Capital Stock of Subsidiaries.

The Company will not cause or permit any of its
Subsidiaries to issue or sell any Capital Stock (other than director’s
qualifying shares and other than to the Company or to a Wholly-Owned Subsidiary
of the Company) or permit any Person (other than the Company or a Wholly-Owned
Subsidiary of the Company) to own or hold any Capital Stock of any Subsidiary
of the Company or any Lien or security interest therein other than the sale of
Qualified Capital Stock of Einstein/Noah Bagel Corp. in a Primary Offering so
long as it remains a Subsidiary Guarantor of the Company.

Section 4.17                                Limitation on Liens.

Other than Permitted Liens, the Company shall not, and
shall not cause or permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume or permit or suffer to exist any Liens of any kind
against or upon any property or assets of the Company or any of its

 

44

 

Subsidiaries whether
owned on the Issue Date or acquired after the Issue Date, or any income or
profits therefrom, or assign or otherwise convey any right to receive income or
profits therefrom.

Section 4.18                                Conduct of Business.

Neither the Company nor any of its Subsidiaries will
engage in any business other than the business of operating and franchising
quick casual restaurants, the manufacture of bagel dough and cream cheese and
operating the Company’s coffee roasting plant, the distribution of bagel dough,
cream cheese, coffee and related products or any activity related or ancillary
to any of the foregoing.

Section 4.19                                Payments For Consent.

Neither the Company nor any of the Company’s
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for,
or as inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all Holders of Notes then outstanding that
consent, waive or agree to amend any of such terms or provisions in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.

Section 4.20                                Registration Rights Agreement.

The Company will comply with all of the terms and provisions
of the Registration Rights Agreement, including, without limitation, its
obligation to pay Additional Interest to the Holders, as set forth in Section 4
therein (which provision is hereby incorporated in its entirety by reference
herein) and to notify the Trustee immediately of the occurrence of any
Registration Default (as defined in the Registration Rights Agreement)
thereunder.

Section 4.21                                Impairment of Security Interest.

Subject to the Intercreditor Agreement, and except as
otherwise provided in this Indenture, neither the Company nor any of its
Subsidiaries will take or omit to take any action which would adversely affect
or impair the Security Interests in favor of the Collateral Agent, on behalf of
itself, the Trustee and the Holders, with respect to the Collateral.  Neither the Company nor any of its
Subsidiaries shall grant to any Person (other than to the Collateral Agent on
behalf of itself, the Trustee and the Holders), or permit any Person to retain
(other than the Trustee), any interest whatsoever in the Collateral other than
Liens on the Collateral securing the Senior Credit Facility and Permitted
Liens.  Neither the Company nor any of
its Subsidiaries will enter into any agreement that requires the proceeds
received from any sale of Collateral to be applied to repay, redeem, defease or
otherwise acquire or retire any Indebtedness of any Person, other than as
permitted or required by this Indenture, the Senior Credit Facility, the Notes,
the Intercreditor Agreement, and the Collateral Agreements.  The Company shall, and shall cause each
Guarantor to, at their sole cost and expense, execute and deliver all such
agreements and instruments as the Collateral Agent or the Trustee shall
reasonably request to more fully or accurately describe the property intended
to be Collateral or the obligations intended to be secured by the Collateral
Agreements. The Company shall, and shall cause each Subsidiary to, at their
sole cost and expense, file any such notice filings or other agreements or
instruments as may be reasonably

 

45

 

necessary or desirable
under applicable law to perfect the Liens created by the Collateral Agreements
at such times and at such places as the Collateral Agent or the Trustee may
reasonably request.

Section 4.22                                Intercompany Indebtedness.

All intercompany debt shall be unsecured and
subordinate in right of payment to the Obligations.  Each of the Company and the Subsidiary Guarantors, by its
execution and delivery of this Indenture, hereby agrees to subordinate its
right of payment under any intercompany debt owed to it to the full and
complete payment and performance of the Obligations.

Section 4.23                                Real Estate Mortgages and Filings.

With respect to any real property (individually and
collectively, the “Premises”) (i) acquired by the Company or a
Subsidiary Guarantor after the Issue Date for a purchase price greater than
$1,000,000 or (ii) owned by the Company or a Subsidiary Guarantor on the Issue
Date:

(a)           the Company shall deliver to the
Collateral Agent, as mortgagee, fully-executed counterparts of Mortgages, each
dated as of the date of acquisition of such property, duly executed by the
Company or the applicable Subsidiary Guarantor, together with evidence of the
completion (or satisfactory arrangements for the completion), of all recordings
and filings of such Mortgage as may be necessary or, in the reasonable opinion
of the Collateral Agent desirable, to create a valid, perfected Lien, subject
to Permitted Liens, against the properties purported to be covered thereby;

(b)           the Collateral Agent shall have
received mortgagee’s title insurance policies in favor of the Collateral Agent,
as mortgagee for the ratable benefit of the Collateral Agent, the Trustee and
the Holders in amounts and in form and substance and issued by insurers,
reasonably satisfactory to the Initial Purchaser, with respect to the property
purported to be covered by such Mortgage, insuring that title to such property
is marketable and that the interests created by the Mortgage constitute valid
first Liens thereon free and clear of all defects and encumbrances other than
Permitted Liens, and such policies shall also include, to the extent available,
a revolving credit endorsement and such other endorsements as the Initial
Purchaser shall reasonably request and shall be accompanied by evidence of the
payment in full of all premiums thereon; and

(c)           the Company shall deliver to the
Collateral Agent, with respect to each of the covered Premises, filings,
surveys, local counsel opinions, fixture filings, in each case in form and
substance reasonably acceptable to the Initial Purchaser and its counsel, along
with such other documents, instruments, certificates and agreements as the
Initial Purchaser and its counsel shall reasonably request.

None of the Company or
any Subsidiary shall execute and deliver any Mortgage in respect of any such
property in favor of the holders of the Notes unless and until a Mortgage is
delivered to the Senior Lender pursuant to the Senior Credit Facility with
respect to such property.

 

46

 

Section 4.24                                Leasehold Mortgages and Filings.

(a)           The Company and each of its
Subsidiaries shall (i) use its commercially reasonable efforts to deliver
Mortgages with respect to the Company’s leasehold interests in the premises
(the ‘‘Leased Premises’’) occupied by the Company pursuant to leases of
store properties entered into prior to the Issue Date (collectively, the ‘‘Existing
Leases’’) within 60 days of the Issue Date and (ii) deliver Mortgages
with respect to leases of new store properties occupied by the Company pursuant
to leases entered into after the Issue Date; provided, that if after
using its commercially reasonable efforts, the Company is unable to obtain
Mortgages on any or all Leased Premises occupied pursuant to Existing Leases or
Leased Premises having an aggregate value not in excess of 15% of all of the
Company’s leasehold interests with respect to new store properties occupied by
the Company pursuant to leases entered into after the Issue Date, such failure
will not be a breach of the covenant (together with the Existing Leases, the ‘‘Leases’’).

(b)           Prior to the effective date of any
Lease, the Company and such Subsidiaries shall use their commercially
reasonable efforts to provide to the Trustee all of the items described in clauses
(b) and (c) of Section 4.23 and in addition shall provide an
agreement, substantially in the form of Exhibit J attached hereto, and
executed by the lessor of the Lease, whereby the lessor consents to the
Mortgage and waives or subordinates its landlord Lien (whether granted by the
instrument creating the leasehold estate or by applicable law) and which shall
be entered into by the Trustee, as “Mortgagee” thereunder.  The Company shall use its commercially
reasonable efforts to deliver an agreement substantially in the form of Exhibit
J attached hereto as to each of the Major Premises and all of the items
described in clauses (b) and (c) of Section 4.23
contemporaneously with the delivery of leasehold mortgages described in clause
(a)(ii) of this Section 4.24; provided,
however, that in no event shall the Company or any of its
Subsidiaries be required to incur any unreasonable expense, or agree to any
significant increase in the lessee’s obligations thereunder, in order to obtain
any lessor’s consent.  The Company and
such Subsidiaries shall perform all of its obligations required hereunder at
its sole cost and expense.

Section 4.25                                Subsidiary Guarantors.

If the Company or any of its Subsidiaries shall
organize or acquire any Person that becomes a Subsidiary, then such Subsidiary
shall: (i) execute and deliver to the Trustee a supplemental indenture in a
form reasonably satisfactory to the Trustee pursuant to which such Subsidiary
shall unconditionally guarantee on a senior secured basis all of the Company’s
obligations under the Notes, this Indenture and the Senior Credit Facility;
(ii) promptly, (A) execute and deliver to the Collateral Agent, for the benefit
of the Holders and the Lenders and the Trustee such amendments to the
Collateral Agreements as the Collateral Agent deems necessary or advisable in
order to grant to the Collateral Agent, for the benefit of the Holders and the
Lenders, a perfected first priority security interest in the Equity Interests
and debt securities of such new Subsidiary which are owned by the Company or
any Subsidiary and required to be pledged pursuant to the Pledge and Security
Agreement, (B) deliver to Collateral Agent the certificates representing such
Equity Interests (to the extent such Equity Interests are certificated) and
debt securities, together with (1) in the case of such Equity Interests,
undated stock powers endorsed in blank, and (2) in the case of such debt
securities, endorsed in blank, in each case

 

47

 

executed and delivered by
a Officer of the Company or such Subsidiary, as the case may be, and (C) cause
such new Subsidiary to take such actions necessary or advisable to grant to the
Collateral Agent for the benefit of the Holders a perfected first priority
security interest in the collateral described in the Pledge and Security
Agreement with respect to such new Subsidiary, including the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required
by the Pledge and Security Agreement or by law or as may be reasonably
requested by the Collateral Agent; (iii) deliver to the Trustee and the
Collateral Agent an opinion of counsel that such supplemental indenture and any
other documents required to comply with clause (ii) above have been duly
authorized, executed and delivered by such new Subsidiary, and the supplemental
indenture and each such other document constitutes a legal, valid binding and
enforceable obligation of such new Subsidiary; and (iv) take such further
action and execute and deliver such other documents specified in this Indenture
or otherwise reasonably requested by the Trustee or the Collateral Agent to
effectuate the foregoing.  The Company
may transfer, in any one transaction or a series of related transactions, any
collateral to any Subsidiary Guarantor if such transferee Subsidiary Guarantor
shall have complied with the requirements of clauses (i) through (iv)
above; provided that the
guarantee referred to in clause (i) above shall be secured by, in
addition to any collateral existing in such Subsidiary Guarantor, the
collateral so transferred.

Section 4.26                                Limitation on Capital Expenditure.

The aggregate amount of Capital Expenditures made by
the Company and its Subsidiaries in any twelve-month period shall not exceed
$20.0 million.

Section 4.27                                Minimum Consolidated Adjusted EBITDA.

The Company will not permit Adjusted EBITDA during any
twelve-month period ending as of the last day of each fiscal quarter to be less
than $33,000,000.

Section 4.28                                Use of Proceeds.

The Company will use the proceeds of the Offering to
repay (i) the $140,000,000 aggregate principal amount of the Company’s Senior
Secured Increasing Rate Notes due 2003 and (ii) all other Indebtedness of the
Company existing on the date hereof (other than Existing Indebtedness).

4.29         Termination
of Trademark Filings

Within 60 days of the Issue Date, the Company shall
cause the filings in the United States Patent and Trademark Office listed on
Schedule II to be terminated (and the Company hereby represents and warrants
that there is no Indebtedness or other Obligation owing by the Company or any
Subsidiary Guarantor to any of the Persons identified in such filings as ‘assignee’
or ‘secured party’).

 

48

 

ARTICLE V

SUCCESSOR CORPORATION

Section 5.01                                Merger, Consolidation and Sale of Assets.

(a)           The Company will not, in a single
transaction or series of related transactions, consolidate or merge with or
into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets to, another corporation, Person or entity unless:  (i) the Company is the surviving
corporation, or the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; (ii) the entity or person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been
made assumes all the obligations of the Company under the Collateral
Agreements, the Registration Rights Agreement, the Intercreditor Agreement and
all obligations of the Company under the Notes and this Indenture, pursuant to
a supplemental indenture in a form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction (including giving effect to any
Indebtedness and Acquired Debt incurred or expected to be incurred in
connection with or in respect of such transaction and to any assumption
required by clause (ii) above) no Default or Event of Default exists;
(iv) the Company or any Person formed by or surviving any such consolidation or
merger, or to which such sale, assignment, transfer, lease, conveyance or other
disposition will have been made (A) will have Consolidated Net Worth
(immediately after the transaction but prior to any purchase accounting
adjustments resulting from the transaction) equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to this Indenture and will have a Fixed Charge Coverage
Ratio, determined on a pro forma basis, greater than or equal to the Fixed
Charge Coverage Ratio of the Company immediately prior to the transaction; and
(v) the Company or the entity or Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made shall have delivered to the
Trustee an Officers’ Certificate and an opinion of counsel, each stating that
such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition and any supplemental indenture required in connection with
such transaction comply with the applicable provisions of this Indenture and
that all conditions precedent in this Indenture relating to such transaction
have been satisfied.

(b)           For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of transactions) of all or substantially all of the properties or assets
of one or more Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.

 

49

 

(c)           Upon any consolidation, combination
or merger or any transfer of all or substantially all of the assets of the
Company in accordance with the foregoing, in which the Company is not the
continuing corporation, the successor Person formed by such consolidation or
into which the Company is merged or to which such conveyance, lease or transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of the Company under this Indenture and the Notes, the Collateral
Agreements, the Registration Rights Agreement and the Intercreditor Agreement
with the same effect as if such surviving entity had been named as such.

(d)           Each Subsidiary Guarantor (other than
any Subsidiary Guarantor whose Subsidiary Guarantee is to be released in
accordance with the terms of the Guarantee and this Indenture in connection
with any transaction made in compliance with Section 4.15) will not, and
the Company will not cause or permit any Subsidiary Guarantor to, consolidate
with or merge with or into any Person, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets, other than the
Company or any other Subsidiary Guarantors unless:  (i) the entity formed by or surviving any such consolidation or
merger (if other than the Subsidiary Guarantor), or to which such disposition
shall have been made, is a corporation organized and existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) such
entity assumes by supplemental indenture all of the obligations of the
Subsidiary Guarantor on the Subsidiary Guarantee; (iii) immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; and (iv) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis, the
Company could satisfy the provisions of clause (iv) of the first
paragraph of this covenant.  Any merger
or consolidation of a Subsidiary Guarantor with and into the Company (with the
Company being the surviving entity) or another Subsidiary Guarantor need only
to comply with clause (iv) of Section 5.01(a).

ARTICLE VI

DEFAULT AND REMEDIES

Section 6.01                                Events of Default.

An “Event of Default”
occurs if:

(a)           the Company fails to pay interest on
any Notes when the same becomes due and payable and the Default continues for a
period of 10 days;

(b)           the Company fails to pay the
principal (or premium, if any) on any Notes, when such principal becomes due
and payable, at maturity, by acceleration, upon redemption or otherwise
(including the failure to make a payment to purchase Notes tendered pursuant to
a Change of Control Offer);

(c)           the Company or any of its Subsidiaries
(in each case, to the extent a party to the Collateral Agreements) defaults in
the observance or performance of any other covenant, provision or agreement
contained in this Indenture, the Notes or any of the Collateral

 

50

 

Agreements, which default
continues for a period of 30 days after the Company receives written notice
specifying the default;

(d)           a default (after giving effect to any
applicable grace periods or any extension of any maturity date) under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness of the Company or of any
Subsidiary of the Company (or the payment of which is guaranteed by the Company
or any Subsidiary of the Company), whether such Indebtedness now exists or is
created after the Issue Date  (but in no case including any default under
the Senior Credit Facility triggered by the occurrence of a Change in Control
or similar event) (unless the Lenders under the Senior
Credit Facility have accelerated the Indebtedness thereunder as a result of
such default), if (a) either (A) such default results from
the failure to pay principal of or interest on such Indebtedness or (B) as a
result of such default the maturity of such Indebtedness may be accelerated,
and (b) the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness with respect to which a default (after
the expiration of any applicable grace period or any extension of the maturity
date) has occurred, or the maturity of which may be so accelerated, exceeds
$2,000,000 in the aggregate;

(e)           one or more judgments in an aggregate
amount in excess of $2,000,000 (other than any judgment as to which a reputable
insurance company has accepted full liability in writing or any judgment
disclosed in the “Business — Legal Proceedings” section of the final Offering
Circular) shall have been rendered against the Company or any of its
Subsidiaries and such judgments remain undischarged, unpaid, unstayed or
dismissed for a period of 60 days after such judgment or judgments become final
and non-appealable;

(f)            the Company, any Subsidiary
Guarantor or any Subsidiary (A) commences a voluntary case or proceeding under
any Bankruptcy Law with respect to itself, (B) consents to the entry of a
judgment, decree or order for relief against it in an involuntary case or
proceeding under any Bankruptcy Law, (C) consents to the appointment of a
Custodian of it or for substantially all of its property or assets, (D)
consents to or acquiesces in the institution of a bankruptcy or an insolvency
proceeding against it, (E) makes a general assignment for the benefit of its
creditors, (F) shall generally not pay its debts when such debts become due or
shall admit in writing its inability to pay its debts generally or (G) takes
any action to authorize or effect any of the foregoing;

(g)           a court of competent jurisdiction
enters a judgment, decree or order for relief in respect of the Company, any
Subsidiary Guarantor or any Subsidiary in an involuntary case or proceeding
under any Bankruptcy Law, which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company, any Subsidiary Guarantor or any Subsidiary, (B) appoint a Custodian of
the Company, any Subsidiary Guarantor or any Subsidiary or for substantially
all of its property or (C) order the winding-up or liquidation of its
affairs; and such judgment, decree or order shall remain unstayed and in effect
or a period of 60 consecutive days;

(h)           any Collateral Agreement at any time
for any reason shall cease to be in full force and effect, or ceases to give
the Collateral Agent the Liens, rights, powers and privileges purported to be
created thereby, superior to and prior to the rights of all third Persons

 

51

 

other than the holders of
Permitted Liens and subject to no other Liens except as expressly permitted by
the applicable Collateral Agreement, or any judgment creditor having a Lien
against any Collateral commences legal action to foreclose such Lien or
otherwise exercise its remedies against any Collateral and the value of the
claim of such creditor is greater than $500,000; or

(i)            any Subsidiary Guarantee for any
reason ceases to be in full force and effect or becomes or is declared to be
null and void, unenforceable or invalid or any Subsidiary Guarantor denies or
disaffirms its obligations under its Subsidiary Guarantee (other than by reason
of release of a Subsidiary Guarantor in accordance with the terms of this
Indenture).

Section 6.02                                Acceleration.

(a)           If an Event of Default (other than an
Event of Default specified in Section 6.01(f) or (g) with
respect to the Company or any of its Significant Subsidiaries) occurs and is
continuing and has not been waived pursuant to Section 6.04, then the
Trustee or the Holders of at least 25% in principal amount of outstanding Notes
may declare the principal of, premium, if any, and accrued interest on all the
Notes to be due and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a “notice of
acceleration” (the “Acceleration Notice”), and the same shall become
immediately due and payable.

(b)           If an Event of Default specified in Section
6.01(f) or (g) with respect to the Company or any of its Significant
Subsidiaries occurs and is continuing, then all unpaid principal of, and
premium, if any, and accrued and unpaid interest on all of the outstanding
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.

(c)           At any time after a declaration of
acceleration with respect to the Notes in accordance with Section 6.02(a),
the Holders of a majority in principal amount of the Notes may, by written
notice to the Trustee, (i) waive any existing Default or Event of Default and
its consequences, except a continuing Default or Event of Default under Section
6.01(a) or (b) hereof, and (ii) rescind and cancel such declaration
of acceleration and its consequences if (A) the rescission would not conflict with
any judgment or decree of a court of competent jurisdiction, and (B) all
existing Events of Default have been cured or waived (except any such Event of
Default arising from the nonpayment of principal or interest on the Notes that
has become due solely because of the acceleration).

Section 6.03                                Other Remedies.

If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or in equity to
collect the payment of principal of, premium, if any, or interest on the Notes
or to enforce the performance of any provision of the Notes, this Indenture or
the Collateral Agreements.

The Trustee may maintain a proceeding even if it does
not possess any of the Notes or does not produce any of them in the
proceeding.  A delay or omission by the
Trustee or any Holder in exercising any right or remedy arising upon an Event
of Default shall not impair the

 

52

 

right or remedy or
constitute a waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other
remedy.  All available remedies are
cumulative to the extent permitted by law.

Section 6.04                                Waiver of Past Defaults.

Subject to Sections 2.09, 6.07 and 9.02,
the Holders of a majority in principal amount of the outstanding Notes by
written notice to the Trustee may waive an existing Default or Event of Default
and its consequences, except a continuing Default or Event of Default in the
payment of principal of or interest on any Note as specified in clauses (a)
and (b) of Section 6.01. 
When a Default or Event of Default is waived, it is cured and ceases.

Section 6.05                                Control by Majority.

Subject to Section 2.09, the Holders of a
majority in principal amount of the outstanding Notes may direct in writing the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee,
including, without limitation, any remedies provided for in Section 6.03.  Subject to Section 7.01, however,
the Trustee may refuse to follow any direction (i) that the Trustee reasonably
believes conflicts with any law or this Indenture or the Notes, (ii) that the
Trustee determines may be unduly prejudicial to the rights of another Holder or
(iii) that may involve the Trustee in personal liability; provided, further, however, that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction or this Indenture.

Section 6.06                                Limitation on Suits.

No Holder will have any right to institute any
proceeding, judicial or otherwise, or pursue any remedy under this Indenture or
the Notes unless:

(a)           such Holder has previously given
written notice to the Trustee of a continuing Event of Default;

(b)           the Holders of not less than 25% in
principal amount of the outstanding Notes have made a written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee under this Indenture;

(c)           such Holder or Holders have offered
to the Trustee indemnity reasonably satisfactory to the Trustee against any
costs, losses, liabilities or expenses to be incurred in compliance with such
request;

(d)           the Trustee, for 30 days after its
receipt of such notice, request and offer of indemnity, has failed to institute
such proceeding; and

(e)           no direction inconsistent with such
written request has been given to the Trustee during such 30-day period
by the Holders of a majority in principal amount of the outstanding Notes.

 

53

 

The foregoing limitations shall not apply to a suit
instituted by a Holder for the enforcement of the payment of principal and
premium, if any, or interest on such Note on or after the respective due dates
set forth in such Note (including upon acceleration thereof) or the institution
of any proceeding with respect to this Indenture or any remedy hereunder,
including without limitation, acceleration, by the Holders of a majority in
principal amount of outstanding Notes; provided
that upon institution of any proceeding or exercise of any remedy, such Holder
provides the Trustee with prompt notice thereof.

A Holder may not use this Indenture to prejudice the
rights of another Holder or to obtain a preference or priority over such other
Holder.

Section 6.07                                Rights of Holders To Receive Payment.

Notwithstanding any other provision of this Indenture,
the right of any Holder to receive payment of principal of, premium, if any,
and interest on a Note, on or after the respective due dates expressed in such
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, is absolute and unconditional and shall not be impaired or
affected without the written consent of such Holder.

Section 6.08                                Collection Suit by Trustee.

If an Event of Default in payment of principal or
interest specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company or any other obligor on the
Notes for the whole amount of principal of, premium, if any, and accrued
interest remaining unpaid, together with interest on overdue principal and, to
the extent that payment of such interest is lawful, interest on overdue
installments of interest at the rate set forth in Section 2.16 and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

Section 6.09                                Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation, expenses,
taxes, disbursements and advances of the Trustee, its agents, counsel,
accountants and experts) and the Holders allowed in any judicial proceedings
relating to the Company or Subsidiaries or any other obligor upon the Notes,
any of their respective creditors or any of their respective property and shall
be entitled and empowered to participate as a member, voting or otherwise, of
an official committee approved in such manner and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee and the Collateral Agent under Section 7.07.  Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any

 

54

 

Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

Section 6.10                                Priorities.

If the Trustee collects any money or property pursuant
to this Article Six, it shall pay out the money in the following order:

First:  to the
Trustee and Collateral Agent for amounts due under Section 7.07;

Second:  if the
Holders are forced to proceed against the Company directly without the Trustee,
to Holders for their collection costs;

Third:  to
Holders for amounts due and unpaid on the Notes for principal and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal and interest, respectively; and

Fourth:  to the
Company or any other obligor on the Notes, as their interests may appear, or as
a court of competent jurisdiction may direct.

The Trustee, upon prior notice to the Company, may fix
a record date and payment date for any payment to Holders pursuant to this Section
6.10.

Section 6.11                                Undertaking for Costs.

In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys’ fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant.  This Section 6.11 does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07, a suit by a Holder or Holders of more than 10% in principal amount of
the outstanding Notes, or a suit by a Holder or Holders for the enforcement of
the payment of the principal of, premium, if any, or interest on the Notes, on
or after the due dates expressed in the Notes.

Section 6.12                                Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture or any Note and
such proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, the Company, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.

 

55

 

Section 6.13                                Rights and Remedies Cumulative.

Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or wrongfully taken Notes
in Section 2.07, no right or remedy herein conferred upon or reserved to
the Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

Section 6.14                                Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder
to exercise any right or remedy arising upon any Default or Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Default or Event of Default or an acquiescence therein.  Every right and remedy given by this Article
Six or by law to the Trustee or to the Holders may be exercised from time
to time, and as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.

ARTICLE VII

TRUSTEE

Section 7.01                                Duties of Trustee.

The duties and responsibilities of the Trustee shall
be as provided by the TIA and as set forth herein.

(a)           If an Event of Default has occurred
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.

(b)           Except during the
continuance of an Event of Default:

(1)           the Trustee need perform only those
duties as are specifically set forth in this Indenture, and no covenants or
obligations shall be implied in this Indenture against the Trustee; and

(2)           in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture; provided, however,
that the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture, but shall
need not verify the contents thereof.

 

56

 

(c)           Notwithstanding anything to the
contrary herein contained, the Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

(1)           this paragraph does not limit the
effect of paragraph (b) of this Section 7.01;

(2)           the Trustee shall not be liable for
any error of judgment made in good faith by a Trust officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts; and

(3)           the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.02, 6.04 or
6.05 of this Indenture.

(d)           No provision of this Indenture or the
Collateral Documents shall require the Trustee to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

(e)           Every provision of this Indenture
that in any way relates to the Trustee is subject to paragraphs (a), (b),
(c) and (d) of this Section 7.01 and Section 7.02 of
this Indenture.

(f)            The Trustee shall not be liable for
interest on any money or assets received by it except as the Trustee may agree
in writing with the Company.  Assets
held in trust by the Trustee need not be segregated from other assets except to
the extent required by law.

Section 7.02                                Rights of Trustee.

Subject to Section 7.01:

(a)           The Trustee may rely and shall be
fully protected in acting or refraining from acting upon any document
reasonably believed by it to be genuine and to have been signed or presented by
the proper Person.  The Trustee need not
investigate any fact or matter stated in the document.

(b)           Before the Trustee acts or refrains
from acting, it may consult with counsel and may require an Officers’
Certificate or an Opinion of Counsel, or both, which shall conform to Sections
12.04 and 12.05 of this Indenture. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officers’ Certificate or Opinion of Counsel.

(c)           The Trustee may act through its
attorneys and agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts.

 

57

 

(d)           The Trustee shall not be liable for
any action that it takes or omits to take in good faith which it reasonably
believes to be authorized or within its rights or powers under this Indenture.

(e)           The Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, notice, request, direction,
consent, order, bond, debenture, or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled, upon reasonable
notice to the Company, to examine the books, records, and premises of the
Company, personally or by agent or attorney and to consult with the officers
and representatives of the Company, including the Company’s accountants and
attorneys.

(f)            The Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the Holders pursuant to
the provisions of this Indenture, unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to the Trustee against
the costs, expenses and liabilities which may be incurred by it in compliance
with such request, order or direction.

(g)           The Trustee shall not be required to
give any bond or surety in respect of the performance of its powers and duties
hereunder.

(h)           Any permissive right or power
available to the Trustee under this Indenture shall not be construed to be a mandatory
duty or obligation.

(i)            Except with respect to Section
4.01 hereof, the Trustee shall have no duty to inquire as to the
performance of the Company’s covenants in Article Four hereof.  In addition, the Trustee shall not be deemed
to have knowledge of any Default or Event of Default except (i) any Event of
Default occurring  pursuant to Sections
6.01(a), 6.01(b) or (ii) any Default or Event of Default of which
the Trustee shall have received written notification or obtained actual
knowledge..

(j)            Delivery of reports, information and
documents to the Trustee under Section 4.08 is for informational
purposes only and the Trustee’s receipt of the foregoing shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of
the covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers’ Certificates).

Section 7.03                                Individual Rights of Trustee.

The Trustee in its individual or any other capacity
may become the owner or pledgee of Notes and may otherwise deal with the
Company, any Subsidiary of the Company, or their respective Affiliates, with
the same rights it would have if it were not Trustee.  Any Agent may do the same with like rights.  However, the Trustee must comply with Sections
7.10 and 7.11 of this Indenture, and the Trustee is subject to TIA
Sections 310(b) and 311.

 

58

 

Section 7.04                                Trustee’s Disclaimer.

The Trustee makes no representation as to the validity
or adequacy of this Indenture, the Collateral Agreements or the Notes, and it
shall not be accountable for the Company’s use of the proceeds from the Notes,
and it shall not be responsible for any statement of the Company in this
Indenture or the Notes other than the Trustee’s certificate of authentication
or any document used in connection with the offer or sale of the Notes.

Section 7.05                                Notice of Default.

If a Default or an Event of Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to the
Company and each Holder in the manner and to the extent provided in TIA Section
313(c) notice of the Default or Event of Default within 45 days after such
Default or Event of Default occurs, unless such Default or Event of Default has
been cured.  Except in the case of a
Default or an Event of Default in payment of principal of, or interest on, any
Note, including an accelerated payment and the failure to make payment on the
Change of Control Payment Date pursuant to a Change of Control Offer, the
Trustee may withhold the notice of a Default or an Event of Default if and so
long as its Board of Directors, the executive committee of its Board of
Directors or a committee of its directors and/or officers charged with such
responsibility in good faith determines that withholding the notice is in the
interest of the Holders.

Section 7.06                                Reports by Trustee to Holders.

Within 60 days after each July 1, beginning with July
1, 2004, the Trustee shall, to the extent that any of the events described in
Section 313(a) of the TIA occurred within the previous twelve months, but not
otherwise, mail to each Holder a brief report dated as of such date that
complies with Section 313(a) of the TIA. 
The Trustee also shall comply with Sections 313(b) and (c) of the TIA.

A copy of each report at the time of its mailing to
Holders shall be mailed to the Company and filed with the SEC and each stock
exchange or market, if any, on which the Notes are listed or quoted.

The Company shall promptly notify the Trustee if the
Notes become listed or quoted on any stock exchange or market and the Trustee
shall comply with Section 313(d) of the TIA.

Section 7.07                                Compensation and Indemnity.

The Company and the Subsidiary Guarantors shall pay to
the Trustee from time to time reasonable compensation for its services in its
role as Trustee and Collateral Agent as may be agreed upon.  The Trustee’s compensation shall not be
limited by any law on compensation of a trustee of an express trust.  The Company and the Subsidiary Guarantors
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it in connection with the performance of its
duties under this Indenture, except any such expense as may arise from its
negligence, bad faith or willful misconduct in its role as Trustee and gross
negligence or willful misconduct in its role as Collateral Agent.  Such expenses shall include but not be
limited to the reasonable fees and expenses of the Trustee’s agents and
counsel.  The

 

59

 

obligations under this Section
7.07 are joint and several obligations of the Company and the Subsidiary
Guarantors.

The Company and the Subsidiary Guarantors shall indemnify
each of the Trustee (or any predecessor Trustee), and its agents, employees,
stockholders and directors and officers for, and hold them harmless against,
any loss, liability, damage, claim or expense (including reasonable fees and
expenses of counsel), including taxes (other than taxes based on the income of
the Trustee) incurred by them, except for such actions to the extent caused by
any negligence, bad faith or willful misconduct in its role as Trustee and
gross negligence or willful misconduct in its role as Collateral Agent, arising
out of or in connection with the administration of this trust including the
reasonable costs and expenses of enforcing this Indenture against the Company
and the Subsidiary Guarantors (including this Section 7.07) and
defending themselves against any claim (whether asserted by any Holder, the
Company or any Subsidiary Guarantor) or liability in connection with the
exercise or performance of any of their rights, powers or duties hereunder.  The Trustee shall notify the Company and the
Subsidiary Guarantors promptly of any claim asserted against the Trustee for
which it may seek indemnity.  Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder.  At the Trustee’s
sole discretion, the Company shall defend the claim and the Trustee shall
cooperate and may participate in the defense; provided
that any settlement of a claim shall be approved in writing by the
Trustee.  Alternatively, the Trustee may
at its option have separate counsel of its own choosing and the Company shall
pay the reasonable fees and expenses of such counsel; provided that the Company will not be
required to pay such fees and expenses if it assumes the Trustee’s defense and
there is no conflict of interest between the Company and the Trustee in
connection with such defense as reasonably determined by the Trustee.  The Company need not pay for any settlement
made without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned.  The
Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee in its role as Trustee through
its negligence, bad faith or willful misconduct and to the extent incurred by
the Trustee in its role as Collateral Agent through its gross negligence or
willful misconduct.

To secure the Company’s and the Subsidiary Guarantors’
payment obligations in this Section 7.07, the Trustee shall have a lien
prior to the Notes on all assets or money held or collected by the Trustee, in
its capacity as Trustee, except assets or money held in trust to pay principal
of or interest on particular Notes.

When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(f) or (g) of
this Indenture occurs, such expenses (including the reasonable charges and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any Bankruptcy Law.

The obligations of the Company and the Subsidiary
Guarantors under this Section 7.07 shall survive the satisfaction and
discharge of this Indenture.

 

60

 

Section 7.08                                Replacement of Trustee.

A resignation or removal of the Trustee and appointment
of a successor Trustee shall become effective only upon the successor Trustee’s
acceptance of appointment, as provided in this Section 7.08.

The Trustee may resign by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation.  The Holders of a majority in principal
amount of the outstanding Notes may remove the Trustee by so notifying the
Company and the Trustee and may appoint a successor Trustee.  The Company may remove the Trustee if:

(a)           the Trustee fails to comply with Section
7.10;

(b)           the Trustee is adjudged bankrupt or
insolvent;

(c)           a receiver or other public officer
takes charge of the Trustee or its property; or

(d)           the Trustee becomes incapable of
acting.

If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall notify each
Holder of such event and shall promptly appoint a successor Trustee.  Within one year after the successor Trustee
takes office, the Holders of a majority in aggregate principal amount of the
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.

A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company.  Immediately after that, the retiring Trustee
shall transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided in Section 7.07, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture.  The Company and the
successor Trustee shall mail notice of the successor Trustee’s succession to
each Holder.

If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the retiring Trustee,
the Company or the Holders of at least 10% in principal amount of the
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

If the Trustee is no longer eligible under or
otherwise fails to comply with Section 7.10, any Holder who satisfies
the requirements of TIA Section 310(b) may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

The Company shall give notice of any resignation and
any removal of the Trustee and each appointment of a successor Trustee to all
Holders.  Each notice shall include the
name of the successor Trustee and the address of its corporate trust office.

 

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Notwithstanding any resignation or replacement of the
Trustee pursuant to this Section 7.08, the Company’s and the
Subsidiary Guarantors’ obligations under Section 7.07 of this Indenture
shall continue for the benefit of the retiring Trustee.

Section 7.09                                Successor Trustee by Merger, Etc.

If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate trust business to,
another Person the resulting, surviving or transferee Person without any
further act shall, if such resulting, surviving or transferee Person is
otherwise eligible hereunder, be the successor Trustee; provided, however, that such Person shall
be otherwise qualified and eligible under this Article Seven.

Section 7.10                                Eligibility; Disqualification.

This Indenture shall always have a Trustee who
satisfies the requirements of TIA Sections 310(a)(1), (2) and (5).  The Trustee (or, in the case of a
corporation included in a bank holding company system, the related bank holding
company) shall have combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition.  In addition, if the Trustee is a corporation
included in a bank holding company system, the Trustee, independently of such
bank holding company, shall meet the capital requirements of TIA Section
310(a)(2).  The Trustee shall comply
with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities, or certificates of
interest or participation in other securities, of the Company are outstanding,
if the requirements for such exclusion set forth in TIA Section 310(b)(1) are
met.  The provisions of TIA Section 310
shall apply to the Company and its Subsidiaries, as obligor of the Notes.

Section 7.11                                Preferential Collection of Claims Against
Company.

The Trustee shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b).  A Trustee who has resigned or been removed
shall be subject to TIA Section 311(a) to the extent indicated therein.  The provisions of TIA Section 311(a) shall
apply to the Company and its Subsidiaries, as obligor on the Notes.

Section 7.12                                Trustee as Collateral Agent.

References to the Trustee in Sections 7.01(f), 7.02,
7.03, 7.04, and 7.07 shall include the Trustee in its role
as Collateral Agent.

Section 7.13                                Co-trustees, co-Collateral Agent and
Separate Trustees, 

Collateral Agent.

At any time or times, for the purpose of meeting the
legal requirements of any jurisdiction in which any of the Collateral may at
the time be located, the Company and the Trustee shall have power to appoint,
and, upon the written request of the Trustee or of the Holders of at least 25%
in principal amount of the Notes Outstanding, the Company shall for such
purpose join with the Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint, one or more Persons
approved by the Trustee

 

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either to act as
co-trustee, jointly with the Trustee, of all or any part of the Collateral, to
act as co-Collateral Agent, jointly with the Collateral Agent, or to act as
separate trustees or Collateral Agent of any such property, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such Person or Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other provisions of this
Section.  If the Company does not join
in such appointment within 15 days after the receipt by it of a request so to
do, or in case an Event of Default has occurred and is continuing, the Trustee
alone shall have power to make such appointment.

Should any written instrument from the Company be
required by any co-trustee, co-Collateral Agent or separate trustee or separate
Collateral Agent so appointed for more fully confirming to such co-trustee or
separate trustee such property, title, right or power, any and all such
instruments shall, on request, be executed, acknowledged and delivered by the
Company.

Every co-trustee, co-collateral agent or separate
trustee or separate collateral agent shall, to the extent permitted by law, but
to such extent only, be appointed subject to the following terms, namely:

(a)           The Notes shall be authenticated and
delivered, and all rights, powers, duties and obligations hereunder in respect of
the custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder, shall be
exercised solely, by the Trustee.

(b)           The rights, powers, duties and
obligations hereby conferred or imposed upon the Trustee in respect of any
property covered by such appointment shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and such co-trustee or
separate trustee jointly, or by the Collateral Agent and such co-Collateral
Agent or separate Collateral Agent, jointly as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the extent
that under any law of any jurisdiction in which any particular act is to be
performed, the Trustee shall be incompetent or unqualified to perform such act,
in which event such rights, powers, duties and obligations shall be exercised
and performed by such co-trustee or separate trustee.

(c)           The Trustee at any time, by an
instrument in writing executed by it, with the concurrence of the Company
evidenced by a Board Resolution, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section, and, in case an
Event of Default has occurred and is continuing, the Trustee shall have power
to accept the resignation of, or remove, any such co-trustee, co-collateral
agent or separate trustee, separate collateral agent without the concurrence of
the Company.  Upon the written request
of the Trustee, the Company shall join with the Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to effectuate such resignation or removal. 
A successor to any co-trustee, co-collateral agent or separate trustee,
separate collateral agent so resigned or removed may be appointed in the manner
provided in this Section.

(d)           No co-trustee, co-collateral agent,
separate trustee or separate collateral agent hereunder shall be personally
liable by reason of any act or omission of the Trustee, or any, other such
trustee hereunder.

 

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(e)           Any act of Holders delivered to the
Trustee or Collateral Agent shall be deemed to have been delivered to each such
co-trustee, co-collateral agent, separate trustee and separate collateral
agent.

ARTICLE VIII

SATISFACTION AND DISCHARGE OF INDENTURE

Section 8.01                                Legal Defeasance and Covenant Defeasance.

(a)           The Company may, at its option and at
any time, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Notes upon compliance with the applicable
conditions set forth in paragraph (d).

(b)           Upon the Company’s exercise under paragraph
(a) of the option applicable to this paragraph (b), the Company and
the Subsidiary Guarantors shall be deemed to have been released and discharged
from their respective obligations with respect to the outstanding Notes on the
date the applicable conditions set forth below are satisfied (hereinafter, “Legal
Defeasance”).  For this purpose,
such Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be “outstanding” only for the purposes of
the Sections and matters under this Indenture referred to in (i) and (ii)
below, and to have satisfied all its other obligations under such Notes and
this Indenture insofar as such Notes are concerned, except for the following
which shall survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders of outstanding Notes to receive solely from the trust fund
described in paragraph (d) below and as more fully set forth in such
paragraph, payments in respect of the principal, premium, if any, and interest
on such Notes when such payments are due and (ii) obligations listed in Section
8.03, subject to compliance with this Section 8.01.  The Company may exercise its option under
this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) below with respect to the Notes.

(c)           Upon the Company’s exercise under paragraph
(a) of the option applicable to this paragraph (c), the Company and
the Subsidiary Guarantors shall be released and discharged from their
respective obligations under any covenant contained in Article Five, Sections
4.05 and 4.08, and Sections 4.10 through 4.19 with
respect to the outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, “Covenant Defeasance”), and the Notes
shall thereafter be deemed to be not “outstanding” for the purpose of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed “outstanding” for all other purposes hereunder.  For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Notes, the Company and any
Subsidiary Guarantor may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01(c),
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby.  In
addition, upon the Company’s exercise under

 

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paragraph (a) hereof of the option applicable to this paragraph
(c), subject to the satisfaction of the conditions set forth in Section
8.03 hereof, Sections 6.01(d), 6.01(e) and 6.01(h)
shall not constitute Events of Default.

(d)           The following shall be the conditions
to application of either paragraph (b) or paragraph (c) above to
the outstanding Notes:

(1)           The Company shall have irrevocably
deposited in trust with the Trustee, pursuant to an irrevocable trust and
security agreement in form and substance reasonably satisfactory to the
Trustee, U.S. Legal Tender or U.S. Government Obligations or a combination
thereof in such amounts and at such times as are sufficient, in the opinion of
a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Notes to
maturity or redemption; provided,
however, that the Trustee (or
other qualifying trustee) shall have received an irrevocable written order from
the Company instructing the Trustee (or other qualifying trustee) to apply such
U.S. Legal Tender or the proceeds of such U.S. Government Obligations to said
payments with respect to the Notes to maturity or redemption;

(2)           No Default or Event of Default shall
have occurred and be continuing on the date of such deposit or insofar as
Events of Default from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 91st day after the date of deposit (other than
a Default or Event of Default resulting from the incurrence of Indebtedness,
all or a portion of which will be used to defease the Notes concurrently with
such incurrence);

(3)           Such deposit and the defeasance
contemplated hereby will not result in a Default under, or a breach or
violation of, this Indenture or any other material instrument or agreement to
which the Company or any of its Subsidiaries is a party or by which it or their
property or assets is bound;

(4)           (i) In the event the Company elects paragraph
(b) hereof, the Company shall deliver to the Trustee an Opinion of Counsel
in the United States, in form and substance reasonably satisfactory to the
Trustee, to the effect that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the Issue
Date, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel shall
state that, Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and the defeasance contemplated hereby and
will be subject to federal income tax in the same amounts and in the same

 

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manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred or (ii) in the event the Company elects paragraph
(c) hereof, the Company shall deliver to the Trustee an Opinion of Counsel
in the United States, in form and substance reasonably satisfactory to the
Trustee, to the effect that Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and the defeasance
contemplated hereby and will be subject to federal income tax in the same
amounts and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred;

(5)           The Company shall have delivered to
the Trustee an Officers’ Certificate, stating that the deposit under clause
(1) was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;

(6)           The Company shall have delivered to
the Trustee an Opinion of Counsel, reasonably satisfactory to the Trustee, to
the effect that, (A) the trust funds will not be subject to the rights of
holders of Indebtedness of the Company other than the Notes and as otherwise
permitted herein and (B) assuming no intervening bankruptcy of the Company
between the date of deposit and the 91st day following the deposit and that no
Holder is an insider of the Company, after the 91st day following the deposit,
the trust funds will not be subject to any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors’ rights generally; and

(7)           The Company shall have delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that
all conditions precedent specified herein relating to the defeasance
contemplated by this Section 8.01 have been complied with; provided, however, that such counsel may
rely, as to matters of fact, on Officers’ Certificates of the Company.

In the event all or any portion of the Notes are to be
redeemed through such irrevocable trust, the Company must make arrangements
reasonably satisfactory to the Trustee, at the time of such deposit, for the
giving of the notice of such redemption or redemptions by the Trustee in the
name and at the expense of the Company.

Section 8.02                                Satisfaction and Discharge.

In addition to the Company’s rights under Section
8.01, the Company may terminate all of its obligations under this Indenture
(subject to Section 8.03), when:

(a)           either (1) all Notes theretofore
authenticated and delivered (other than Notes which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section 2.07
and Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee for
cancellation or (2) all such Notes not theretofore delivered to the Trustee for
cancellation (i) have become due and payable, (ii) will become due and payable
at their stated maturity within one year or (iii) are called for redemption
within one year under an arrangement satisfactory to the Trustee, and the
Company has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust solely for that purpose an amount of money sufficient to
pay and discharge the entire Indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation, for principal of, premium, if any,
and interest on the Notes to the date of deposit together with irrevocable
instructions from

 

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the Company directing the
Trustee to apply such funds to the payment thereof at maturity or redemption,
as the case may be;

(b)           the Company has paid or caused to be
paid all other sums payable hereunder by the Company;

(c)           the Company has delivered irrevocable
instructions to the Trustee to apply the deposited money toward the payment of
the Notes at maturity or redemption, as the case may be; and

(d)           the Company has delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, stating that all
conditions precedent specified herein relating to the satisfaction and
discharge of this Indenture have been complied with; provided, however, that such counsel may rely, as to matters
of fact, on Officers’ Certificates of the Company.

Section 8.03                                Survival of Certain Obligations.

Notwithstanding the satisfaction and discharge of this
Indenture and of the Notes referred to in Section 8.01 or 8.02,
the respective obligations of the Company and the Trustee under Sections
2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10,
2.13, 4.01, 4.02, 6.07, Article Seven, 8.05,
8.06, 8.07, 11.02 and 11.04 of this Indenture shall
survive until the Notes are no longer outstanding, and thereafter the
obligations of the Company and the Trustee under Sections 7.07, 8.05,
8.06 and 8.07 of this Indenture shall survive.  Nothing contained in this Article Eight
shall abrogate any of the obligations or duties of the Trustee under this
Indenture.

Section 8.04                                Acknowledgment of Discharge by Trustee.

Subject to Section 8.07, after (i) the
conditions of Section 8.01 or 8.02 of this Indenture have been
satisfied, (ii) the Company has paid or caused to be paid all other sums
payable hereunder by the Company and (iii) the Company has delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of the
Company’s obligations under this Indenture except for those surviving
obligations specified in Section 8.03.

Section 8.05                                Application of Trust Monies.

The Trustee or Paying Agent shall hold any U.S. Legal
Tender or U.S. Government Obligations deposited with it in the irrevocable
trust established pursuant to Section 8.01 of this Indenture. The
Trustee shall apply the deposited U.S. Legal Tender or the U.S. Government
Obligations, together with earnings thereon, through the Paying Agent, in
accordance with this Indenture and the terms of the irrevocable trust agreement
established pursuant to Section 8.01, to the payment of principal of and
interest on the Notes.  Anything in this
Article Eight to the contrary notwithstanding, the Trustee shall deliver
or pay to the Company from time to time upon the Company’s request any U.S.
Legal Tender or U.S. Government Obligations held by it as provided in Section
8.01(d) hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the

 

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Trustee, are in excess of
the amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.

The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed or assessed against the U.S. Legal
Tender or U.S. Government Obligations deposited pursuant to Section 8.01
or the principal and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of
outstanding Notes.

Section 8.06                                Repayment to the Company; Unclaimed Money.

Subject to Sections 7.07, 8.01 and 8.02
of this Indenture, the Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess U.S. Legal Tender or U.S. Government
Obligations held by them at any time. 
The Trustee and the Paying Agent will pay to the Company upon receipt by
the Trustee or the Paying Agent, as the case may be, of an Officers’
Certificate, any money held by it for the payment of principal or interest that
remains unclaimed for two years after payment to the Holders is required; provided, however, that the Trustee and
the Paying Agent before being required to make any payment may, but need not,
at the expense of the Company cause to be published once in a newspaper of
general circulation in the City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that after a date
specified therein, which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining will
be repaid to the Company.  After payment
to the Company, Holders entitled to money must look solely to the Company for
payment as general creditors unless an applicable abandoned property law
designated another Person, and all liability of the Trustee or Paying Agent
with respect to such money shall thereupon cease.

Section 8.07                                Reinstatement.

If the Trustee or Paying Agent is unable to apply any
U.S. Legal Tender or U.S. Government obligations in accordance with Section
8.01 or 8.02 of this Indenture by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company’s
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.01 or 8.02
of this Indenture until such time as the Trustee or Paying Agent is permitted
to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 8.01 or 8.02 of this Indenture; provided, however,
that if the Company has made any payment of interest on or principal of any
Notes because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.

 

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ARTICLE IX

AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 9.01                                Without Consent of Holders.

The Company, when authorized by a Board Resolution,
and the Trustee, together, may amend or supplement this Indenture, the
Collateral Agreements or the Notes without notice to or consent of any Holder:

(a)           to cure any ambiguity, defect or
inconsistency; provided that such
amendment or supplement does not adversely affect the rights of any Holder;

(b)           to provide for the assumption of the
Company’s obligations to Holders in the case of a merger, consolidation or
similar transaction and otherwise to comply with Article Five;

(c)           to provide for uncertificated Notes
in addition to or in place of certificated Notes;

(d)           comply with any requirements of the
SEC in order to effect or maintain the qualification of this Indenture and the
Collateral Agreements under the TIA;

(e)           to make any change that would provide
any additional benefit or rights to the Holders or that does not adversely
affect the legal rights hereunder of any Holder; or

(f)            to provide for issuance of the
Exchange Notes, which will have terms substantially identical in all material
respects to the Initial Notes (except that the transfer restrictions contained
in the Initial Notes will be modified or eliminated, as appropriate), and which
will be treated together with any outstanding Initial Notes, as a single issue
of securities;

provided that the Company has delivered to the
Trustee an Opinion of Counsel and an Officers’ Certificate stating that such
amendment or supplement complies with the provisions of this Section 9.01.

Section 9.02                                With Consent of Holders.

Subject to Section 6.07 of this Indenture, the
Company, when authorized by a Board Resolution, and the Trustee, together, with
the written consent of the Holder or Holders of at least a majority in
aggregate principal amount of the outstanding Notes, may amend or supplement
this Indenture, the Collateral Agreements or the Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes) and
may waive any existing Default of Event of Default or compliance by the Company
with any provision of this Indenture, 
the Notes or the Collateral Agreements (including consents obtained in
connection with a tender offer or exchange offer for the Notes).  Notwithstanding the foregoing, no amendment,
supplement or waiver, including a waiver pursuant to Section 6.04 of
this Indenture, shall, without the consent of each Holder of each Note affected
thereby:

 

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(a)           reduce the principal amount of Notes
whose Holders must consent to an amendment, supplement or waiver of any
provision of this Indenture or the Notes;

(b)           reduce the rate of or change or have
the effect of changing the time for payment of interest, including default
interest, on any Notes;

(c)           reduce the principal of, or the
premium on, or change or have the effect of changing the fixed maturity of any
Notes, or alter the provisions with respect to the redemption of the Notes, or
alter the provisions with respect to repurchases or redemptions of the Notes
upon a Change of Control;

(d)           make any Notes payable in money other
than that stated in the Notes;

(e)           waive a Default or Event of Default
in the payment of principal of or premium, if any, or interest on any Note
(other than a Default in the payment of an amount due as a result of an
acceleration, where such acceleration is rescinded pursuant hereto);

(f)            make any change in the provisions of
this Indenture relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or interest on the Notes;

(g)           waive a redemption payment with
respect to any Note;

(h)           modify or change any provision of
this Indenture affecting the ranking of the Notes in a manner which adversely
affects the Holders; or

(i)            release all or substantially all of
the Collateral.

It shall not be necessary for the consent of the
Holders under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.

After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.

Section 9.03                                Compliance with TIA.

Every amendment, waiver or supplement of this
Indenture or the Notes shall comply with the TIA as then in effect.

Section 9.04                                Revocation and Effect of Consents.

Until an amendment, waiver or supplement becomes
effective, a consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of a Note or portion of a Note that evidences the
same Indebtedness as the consenting Holder’s Note, even if notation of the
consent is not made on any Note. 
Subject to the following paragraph, any such Holder or

 

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subsequent Holder may
revoke the consent as to such Holder’s Note or portion of such Note by notice
to the Trustee or the Company received before the date on which the Trustee
receives an Officers’ Certificate certifying that the Holders of the requisite
principal amount of Notes have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.  An amendment, supplement or waiver becomes effective upon receipt
by the Trustee of such Officers’ Certificate and evidence of consent by the
Holders of the requisite percentage in principal amount of outstanding Notes.

The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled to consent to
any amendment, supplement or waiver, which record date shall be at least 30
days prior to the first solicitation of such consent.  If a record date is fixed, then notwithstanding the last sentence
of the immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall
be entitled to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. 
No such consent shall be valid or effective for more than 90 days after
such record date, unless consents from Holders of the requisite percentage in
principal amount of outstanding Notes required hereunder for the effectiveness
of such consents shall have also been given and not revoked within such 90-day
period.

After an amendment, supplement or waiver becomes effective,
it shall bind every Holder, unless it makes a change described in any of clauses
(a) through (i) of Section 9.02, in which case, the
amendment, supplement or waiver shall bind only each Holder who has consented
to it and every subsequent Holder of a Note or portion of a Note that evidences
the same Indebtedness as the consenting Holder’s Note; provided, however, that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal, premium, if any, and interest on a Note, on or after the respective
due dates expressed in such Note, or to bring suit for the enforcement of any
such payment on or after such respective dates without the consent of such
Holder.

Section 9.05                                Notation on or Exchange of Notes.

If an amendment, supplement or waiver changes the
terms of a Note, the Trustee may require the Holder of the Note to deliver the
Note to the Trustee.  The Trustee at the
written direction of the Company may place an appropriate notation on the Note
about the changed terms and return it to the Holder, and the Trustee may place
an appropriate notation on any Note thereafter authenticated.  Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.  Failure to make the appropriate notation, or
issue a new Note, shall not affect the validity and effect of such amendment,
supplement or waiver.  Any such notation
or exchange shall be made at the sole cost and expense of the Company.

Section 9.06                                Trustee To Sign Amendments, Etc.

The Trustee shall execute any amendment, supplement or
waiver authorized pursuant to this Article Nine; provided, however,
that the Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee’s own rights, duties
or immunities under this Indenture.  The
Trustee shall be entitled to receive, and shall be fully

 

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protected in relying
upon, an Opinion of Counsel and an Officers’ Certificate each stating that the
execution of any amendment, supplement or waiver authorized pursuant to this Article
Nine is authorized or permitted by this Indenture and that such amendment
is the legal, valid and binding obligation of the Company and the Subsidiary
Guarantors enforceable against them in accordance with their terms, subject to
customary exceptions, and complies with the provisions hereof (including Section
9.03); provided, that the
legal counsel delivering such Opinion of Counsel may rely as to matters of fact
on one or more Officers’ Certificates of the Company.  Such Opinion of Counsel shall not be an expense of the Trustee or
the Holders.

ARTICLE X

SECURITY

Section 10.01                          Grant of Security Interest.

To secure the due and punctual payment of the
principal of, premium, if any, and interest on the Notes when and as the same
shall be due and payable, whether on an Interest Payment Date, at maturity, by
acceleration, purchase, repurchase, redemption or otherwise, and interest on
the overdue principal of, premium, if any, and interest (to the extent
permitted by law), if any, on the Notes and the performance of all other
Obligations of the Company to the Holders or the Trustee under this Indenture
and the Notes, the Company hereby covenants to cause the Collateral Agreements
to be executed and delivered concurrently with this Indenture.  Subject to the Intercreditor Agreement, the
Collateral Agreements shall grant to the Collateral Agent Security Interests in
the Collateral and shall be deemed hereby incorporated by reference herein to
the same extent and as fully as if set forth in their entirety at this place,
and reference is made hereby to each Collateral Agreement for a more complete
description of the terms and provisions thereof.

Each Holder, by its acceptance of a Note, consents and
agrees to the terms of each Collateral Agreement and the Intercreditor
Agreement, as the same may be in effect or may be amended from time to time in accordance
with its terms, and authorizes and directs the Trustee and the Collateral Agent
to enter into the Collateral Agreements and to perform its obligations and
exercise its rights thereunder in accordance therewith.  The Company shall, and shall cause each of
its Subsidiaries to, do or cause to be done all such actions and things as may
be necessary or proper, or as may be required by the provisions of the
Collateral Agreements, to assure and confirm to the Trustee and the Collateral
Agent the Security Interests in the Collateral contemplated hereby and by the
Collateral Agreements, as from time to time constituted, so as to render the
same available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purpose herein and therein
expressed.  The Company shall, and shall
cause each of its Subsidiaries to, take, upon request of the Trustee or the
Collateral Agent, any and all actions required to cause the Collateral
Agreements to create and maintain, as security for the Obligations contained in
this Indenture and the Notes, valid and enforceable, perfected (except as
expressly provided herein, therein or in the Intercreditor Agreement) Security
Interests in and on all the Collateral, in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons, and subject to no
other Liens, in each case, except as expressly provided herein, therein, or in
the Intercreditor Agreement.

 

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Section 10.02                          Intercreditor Agreement.

This Indenture is subject to the terms, limitations
and conditions set forth in the Intercreditor Agreement.  Each Holder of a Note, by its acceptance
thereof, is deemed to have authorized and instructed the Trustee to enter into
the Intercreditor Agreement on its behalf and acknowledges The Bank of New York
will act as the Collateral Agent for the Holders under the Intercreditor
Agreement.

Section 10.03                          Recording and Opinions.

(a)           The Company shall take or cause to be
taken all action required to perfect, maintain, preserve and protect the
Security Interests in the Collateral granted by the Collateral Agreements to
the extent set forth in such Collateral Agreement, subject to the Intercreditor
Agreement.  The Company shall from time
to time promptly pay all financing and continuation statement recording and/or
filing fees, charges and taxes relating to this Indenture, the Collateral
Agreements, the Intercreditor Agreement and any amendments hereto or thereto
and any other instruments of further assurance required pursuant hereto or
thereto.

(b)           The Company shall furnish to the
Trustee and the Collateral Agent (if other than the Trustee), on the Closing
Date, at such time as required by TIA Section 314(b), and promptly after the
execution and delivery of any other instrument of further assurance or
amendment granting, perfecting, protecting, preserving or making effective a
security interest pursuant to any Collateral Agreement, an Opinion of Counsel
either (i) stating that, in the opinion of such counsel, this Indenture and the
Collateral Agreements, financing statements and fixture filings then executed
and delivered, as applicable, and all other instruments of further assurance or
amendment then executed and delivered have been properly recorded, registered
and filed, and all certificates evidencing Pledged Securities pledged to the
Trustee and the Holders under the Pledge and Security Agreement have been,
subject to the terms of the Intercreditor Agreement and the Pledge and Security
Agreement delivered and duly endorsed in blank, to the extent necessary to
perfect the Security Interests created by this Indenture and the Collateral
Agreements and reciting the details of such action or referring to prior
Opinions of Counsel in which such details are given, and stating that as to
such Collateral Agreements and such other instruments, such recording,
registering, filing and delivery are the only recordings, registerings, filings
and deliveries necessary to perfect such security interest and that no
re-recordings, re-registerings, re-filings or re-deliveries are necessary to
maintain such perfection, and further stating that all financing statements and
continuation statements have been executed and filed, and all such certificates
have been delivered, that are necessary fully to preserve and protect the
rights of and perfect such security interests of the Holders, the Trustee and
the Collateral Agent hereunder and under the Collateral Agreements or (ii)
stating that, in the Opinion of such Counsel, no such action is necessary to
perfect any Security Interest created under this Indenture, the Notes or any of
the Collateral Agreements as intended by this Indenture, the Notes and such
Collateral Agreements.

(c)           Annually, within 30 days after July 1
and beginning with the year 2004, the Company shall furnish to the Trustee and
the Collateral Agent (if other than the Trustee), an Opinion of Counsel, dated
as of such date, either (i) stating that: (A) in the opinion of such counsel,
action has been taken with respect to the registering, recording, filing,
re-recording, re-

 

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registering and refiling
of financing statements, continuation statements and other documents, and
delivery of all certificates, as are then necessary to perfect or continue the
perfection of the Security Interests created by the Collateral Agreements,
subject to the terms of the Intercreditor Agreement and the Pledge and Security
Agreement and reciting the details of such action or referring to prior
Opinions of Counsel in which such details are given; and (B) based on relevant
laws as in effect on the date of such Opinion of Counsel, all financing
statements, continuation statements and other documents have been executed (if
necessary) and filed that are necessary as of such date and during the
succeeding 24 months fully to maintain, perfect or continue the perfection of
such Security Interests under the Collateral Agreements with respect to the
Collateral and to maintain, preserve, and protect the rights of the Holders and
the Trustee hereunder and under the Collateral Agreements or (ii) stating that,
in the opinion of such counsel, no such action is then necessary to perfect or
continue the perfection of such Security Interests.

Section 10.04                          Release of Collateral.

(a)           Subject to the Intercreditor
Agreement, neither the Collateral Agent nor the Trustee, in its capacity as
Collateral Agent under the Collateral Agreements, shall at any time release
Collateral from the Security Interests created by this Indenture and the
Collateral Agreements unless such release is in accordance with the provisions
of this Indenture, the Intercreditor Agreement and the applicable Collateral
Agreements.

(b)           Subject to the Intercreditor Agreements,
at any time when a Default or an Event of Default shall have occurred and be
continuing, no release of Collateral pursuant to the provisions of this
Indenture and the Collateral Agreements shall be effective as against the
Holders.

(c)           The release of any Collateral from
the terms of the Collateral Agreements shall not be deemed to impair the
security under this Indenture in contravention of the provisions hereof if and
to the extent the Collateral is released pursuant to this Indenture and the Collateral
Agreements or pursuant to the Intercreditor Agreement.  To the extent applicable, the Company shall
cause TIA Section 314(d) relating to the release of property from the Security
Interests created by this Indenture and the Collateral Agreements to be
complied with.  Any certificate or
opinion required by TIA 314(d) may be made by an Officer of the Company, except
in cases where TIA Section 314(d) requires that such certificate or opinion be
made by an independent Person, which Person shall be an independent engineer,
appraiser or other expert selected or approved by the Trustee in the exercise
of reasonable care.  A Person is “independent”
if such Person (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Company
or in any Affiliate of the Company and (c) is not an officer, employee,
promoter, underwriter, trustee, partner or director or person performing
similar functions to any of the foregoing for the Company.  The Trustee shall be entitled to receive and
rely upon a certificate provided by any such Person confirming that such Person
is independent within the foregoing definition.

(d)           Notwithstanding anything contained in
the Indenture to the contrary, (i) the provisions of Section 10.04(c) of
this Indenture will not be applicable to any release or withdrawal of
Inventory, Receivables and cash from the Company’s deposit accounts in the
ordinary course of the Company’s business pursuant to the terms of the
Collateral Agreements

 

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and (ii) the fair value
of Inventory, Receivables and cash from the Company’s deposit accounts released
pursuant to this Section 10.04(d) need not be considered in determining
whether the aggregate fair value of Inventory, Receivables and cash from the
Company’s deposit accounts released in any calendar year exceeds the 10%
threshold specified in Section 314(d)(1) of the TIA; provided, that the Company’s right to rely on this Section 10.04(d)
will be conditioned upon the Company delivering to the Trustee, within 30
calendar days following the end of each six-month period beginning on July 1
and January 1 of any year, an Officers’ Certificate to the effect that all such
releases and withdrawals of Inventory, Receivables and cash from the Company’s
deposit accounts during such six-month period in respect of which the
provisions of Section 10.04(c) were not complied with were to make
payments or investment in the ordinary course of the company’s business, which
were not prohibited by this Indenture.

Section 10.05                          Specified Releases of Collateral.

(a)           The Company shall be entitled to
obtain a full release of items of Collateral (the “Released Interests”)
from the Security Interests created by this Indenture and the Collateral
Agreements upon compliance with the conditions precedent set forth in Sections
4.15, 8.01 or 8.02 of this Indenture, the applicable
Collateral Agreements and to the extent applicable, the Intercreditor
Agreement.  So long as no Default or Event
of Default exists, upon the request of the Company and the furnishing of each
of the items required by Section 10.05(b), the Collateral Agent upon the
direction of the Trustee (or the Trustee if acting as Collateral Agent) shall
forthwith take all necessary action (at the request of and the expense of the
Company, without recourse or warranty and without any representation of any
kind), including the delivery of appropriate UCC-3 termination statements (and
authorization to file such termination statements), to release and reconvey to
the Company all of the Released Interests, and shall deliver such Released
Interests in its possession to the Company and its applicable Subsidiary
Guarantors.

(b)           So long as no Default or Event of
Default exists, the Company shall be entitled to obtain a release of, and the
Collateral Agent and the Trustee shall release, the Released Interests upon
compliance with the condition precedent that the Company shall have satisfied
all applicable conditions precedent to any such release set forth in this
Indenture, the applicable Collateral Agreements and to the extent applicable,
the Intercreditor Agreement and shall have delivered to the Trustee and the
Collateral Agent the following, as applicable:

(i)            in connection with release of
Collateral resulting from an Asset Sale under Section 4.15, notice from
the Company requesting the release of Released Interests:  (A) describing the proposed Released
Interests; (B) specifying the value of such Released Interests on a date
within 60 days of such notice (the “Valuation Date”); (C) stating that
the purchase price received is at least equal to the Fair Market Value of the
Released Interests; (D) stating that the release of such Released
Interests will not be expected to interfere with the Collateral Agent’s ability
to realize the value of the remaining Collateral and will not impair the
maintenance and operation of the remaining Collateral; and (E) certifying
that such Asset Sale complies with the terms and conditions of this Indenture
and the applicable Collateral Agreements with respect thereto;

 

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(ii)           in connection with release of
Collateral resulting from an Asset Sale under Section 4.15, an Officers’
Certificate of the Company stating that (A) such Asset Sale covers only
the Released Interests and complies with the terms and conditions of this
Indenture with respect to Asset Sales; (B) all Net Cash Proceeds from the
sale of any of the Released Interests will be applied pursuant to the provisions
of this Indenture in respect of Asset Sales; (C) there is no Default or
Event of Default in effect or continuing on the date thereof, the Valuation
Date or the date of such Asset Sale; (D) the release of the Collateral
will not result in a Default or Event of Default under this Indenture; and
(E) all conditions precedent in this Indenture relating to the release in
question have been or will be complied with;

(iii)          in connection with release of
Collateral resulting from an Asset Sale under Section 4.15, the Net Cash
Proceeds and other non-cash consideration from the Asset Sale to the
extent  required to be delivered to the
Collateral Agent pursuant to this Indenture;

(iv)          to the extent required by the TIA, an
Officers’ Certificate of the Company and an Opinion of Counsel certifying that
all conditions precedent to the release of the Released Interests have been met
and that such release complies with the terms and conditions of this Indenture,
the applicable Collateral Agreements and to the extent applicable, the
Intercreditor Agreement; and

(v)           all applicable certificates, opinions
and other documentation required by the TIA or this Indenture, if any.

Upon compliance by the Company with the conditions
precedent set forth above, the Trustee shall cause to be released and
reconveyed, without recourse and without representation or warranty of any
kind, to the Company, the Released Interests.

Section 10.06                          Form and Sufficiency of Release.

In the event that the Company has sold, exchanged, or
otherwise disposed of or proposes to sell, exchange or otherwise dispose of any
portion of the Collateral that may be sold, exchanged or otherwise disposed of
by the Company, and the Company requests the Trustee or the Collateral Agent to
furnish a written disclaimer, release or quit-claim of any interest in such
property under this Indenture and the Collateral Agreements, the Collateral
Agent and the Trustee, in its capacity as Collateral Agent under the Collateral
Agreements, shall execute, acknowledge and deliver to the Company (in proper
form) such an instrument promptly after satisfaction of the conditions set
forth herein for delivery of any such release. 
Notwithstanding the preceding sentence, all purchasers and grantees of
any property or rights purporting to be released herefrom shall be entitled to
rely upon any release executed by the Trustee hereunder as sufficient for the
purpose of this Indenture and as constituting a good and valid release of the
property therein described from the Lien of this Indenture or of the Collateral
Agreements.

Section 10.07                          Purchaser Protected.

No purchaser or grantee of any property or rights
purporting to be released herefrom shall be bound to ascertain the authority of
the Trustee or the Collateral Agent to execute the release

 

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or to inquire as to the
existence of any conditions herein prescribed for the exercise of such
authority; nor shall any purchaser or grantee of any property or rights
permitted by this Indenture to be sold or otherwise disposed of by the Company
be under any obligation to ascertain or inquire into the authority of the
Company to make such sale or other disposition.

Section 10.08                          Authorization of Actions To Be Taken by
the Trustee Under the Collateral Agreements.

Subject to the provisions of the applicable Collateral
Agreements and the Intercreditor Agreement, (a) the Trustee and the
Collateral Agent may, in their sole discretion and without the consent of the
Holders, take all actions they deem necessary or appropriate in order to
(i) enforce any of the terms of the Collateral Agreements and
(ii) collect and receive any and all amounts payable in respect of the
Obligations of the Company hereunder, and (b) the Trustee and the
Collateral Agent shall have power to institute and to maintain such suits and
proceedings as they may deem expedient to prevent any impairment of the
Collateral by any act that may be unlawful or in violation of the Collateral
Agreements or this Indenture, and suits and proceedings as the Trustee and the
Collateral Agent may deem expedient to preserve or protect their interests and
the interests of the Holders in the Collateral (including the power to
institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the security
interest thereunder or be prejudicial to the interests of the Holders, the
Trustee or the Collateral Agent). 
Notwithstanding the foregoing, the Trustee may, at the expense of the
Company, request the direction of the Holders with respect to any such actions
and upon receipt of the written consent of the Holders of at least a majority
in aggregate principal amount of the Outstanding Notes, shall take such
actions.

Section 10.09                          Authorization of Receipt of Funds by the
Trustee Under the Collateral Agreements.

The Trustee is authorized to receive any funds for the
benefit of the Holders distributed under the Collateral Agreements, and to make
further distributions of such funds to the Holders in accordance with the
provisions of Section 6.10 and the other provisions of this
Indenture.

ARTICLE XI

GUARANTEE

Section 11.01                          Unconditional Guarantee.

(a)           In consideration of the promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each of the Subsidiary Guarantors
hereby, jointly and severally, irrevocably and unconditionally guarantee and
agree to be liable on a senior secured basis to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the Obligations of the Company or any other Subsidiary
Guarantor under this Indenture or the Notes, that:  (a) the principal of, premium,

 

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if any, and interest on
the Notes (and any Additional Interest payable thereon) shall be duly and
punctually paid in full when due, whether at maturity, upon redemption (whether
upon a Change of Control or otherwise), by acceleration or otherwise, and
interest on the overdue principal and (to the extent permitted by law)
interest, if any, on the Notes and all other Obligations of the Company or the
Subsidiary Guarantors to the Holders or the Trustee hereunder or thereunder
(including amounts due the Trustee and Collateral Agent under Section 7.07
hereof), shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations of the Company,
the same shall be promptly paid in full when due or performed in accordance
with the terms of extension or renewal, whether at maturity, upon redemption,
by acceleration or otherwise.  Failing
payment when due of any amount so guaranteed, or failing performance of any
other Obligation of the Company to the Holders or the Trustee under this
Indenture or under the Notes, for whatever reason, each Subsidiary Guarantor
shall be obligated to pay, or to perform or cause the performance of, the same
immediately.  An Event of Default under
this Indenture or the Notes shall constitute an event of default under each
such Subsidiary Guarantee, and shall entitle the Holders or Trustee to
accelerate the Obligations of the Subsidiary Guarantors under the Subsidiary
Guarantees in the same manner and to the same extent as the Obligations of the
Company hereunder or under the Notes.

(b)           Each of the Subsidiary Guarantors
hereby agrees that its Obligations under its Subsidiary Guarantee shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
thereof, any release of any other Subsidiary Guarantor, the recovery of any
judgment against the Company, any action to enforce the same, whether or not a
Subsidiary Guarantee is affixed to any particular Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.  Each of the
Subsidiary Guarantors hereby waives the benefit of diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Subsidiary Guarantee shall not be discharged except by complete performance of
the Obligations contained in the Notes, this Indenture and its Subsidiary
Guarantee.  Each Subsidiary Guarantee
shall be a guarantee of payment and not of collection.  If any Holder or the Trustee is required by
any court or otherwise to return to the Company or to any Subsidiary Guarantor,
or any custodian, trustee, liquidator or other similar official acting in
relation to the Company or such Subsidiary Guarantor, any amount paid by the
Company or such Subsidiary Guarantor to the Trustee or such Holder, the
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.  Each
Subsidiary Guarantor shall further agree that, as between it, on the one hand,
and the Holders and the Trustee, on the other hand, (a) subject to this Article Eleven,
the maturity of the Obligations guaranteed may be accelerated as provided in Article Six
hereof for the purposes of its Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed thereby, and (b) in the event of any acceleration
of such Obligations as provided in Article Six hereof, such
Obligations (whether or not due and payable) shall forthwith become due and
payable jointly and severally by each Subsidiary Guarantor for the purpose of
its Subsidiary Guarantee.

 

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(c)           The Obligations of each Subsidiary
Guarantor hereunder are secured by and under the Pledge and Security Agreement
executed and delivered in connection herewith, pursuant to which each
Subsidiary Guarantor has granted, and each future Subsidiary that becomes a
Subsidiary Guarantor shall grant, a first priority perfected security interest
in and lien on the assets and properties of each such Subsidiary
Guarantor.  The Company agrees to cause
each Person that shall become a Subsidiary after the date of this Indenture to
become a Subsidiary Guarantor and execute and deliver a supplement to this
Indenture, pursuant to which such Person will guarantee the Obligations of the
Company on the same terms and conditions as contained in this Article Eleven.

Section 11.02                          Limitations on Subsidiary Guarantees.

The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee will be limited to the maximum amount which, after giving
effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor and after giving effect to any collections from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of the Obligations of
such Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution Obligations under this Indenture, will result in the Obligations
of such Subsidiary Guarantor under the applicable Subsidiary Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law.  The net worth of any
Subsidiary Guarantor under this Section 11.02 shall include any
claim of such Subsidiary Guarantor against the Company for reimbursement and
any claim against any other Subsidiary Guarantor for contribution.

Section 11.03                          Evidence of Execution and Delivery of
Subsidiary Guarantee.

(a)           To further evidence each Subsidiary
Guarantee referred to in Section 11.01 hereby, each Subsidiary
Guarantor shall agree that a notation of such Subsidiary Guarantee,
substantially in the form of Exhibit H herein, shall be endorsed on
each Note authenticated and delivered by the Trustee.  Each such endorsement shall be executed on behalf of each
Subsidiary Guarantor by either manual or facsimile signature of one Officer of
each Subsidiary Guarantor, each of whom, in each case, shall have been duly
authorized to so execute by all requisite corporate action.  The validity and enforceability of any
Subsidiary Guarantee shall not be affected by the fact that it is not affixed
to any particular Note.

(b)           Each of the Subsidiary Guarantors
hereby agrees that its Subsidiary Guarantee set forth in Section 11.01
hereby shall remain in full force and effect notwithstanding any failure to so
endorse on each Note a notation of such Subsidiary Guarantee.

(c)           If an Officer of a Subsidiary
Guarantor whose signature is on a Subsidiary Guarantee no longer holds that
office at the time the Trustee authenticates the Note on which such Subsidiary
Guarantee is endorsed or at any time thereafter, such Subsidiary Guarantor’s
Subsidiary Guarantee of such Note shall be valid nevertheless.

(d)           The delivery of any Note by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of any Subsidiary Guarantee set forth in this Indenture on behalf of
each Subsidiary Guarantor.

 

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Section 11.04                          Release of a Subsidiary Guarantor.

(a)           If no Default or Event of Default
exists or would exist under this Indenture upon the sale or disposition of all
of the Capital Stock of a Subsidiary Guarantor by the Company or a Subsidiary
of the Company in a transaction constituting an Asset Sale, or upon the
consolidation or merger of a Subsidiary Guarantor with or into any Person in
compliance with Article Five (in each case, other than to the
Company or an Affiliate of the Company or a Subsidiary), such Subsidiary
Guarantor and each Subsidiary of such Subsidiary Guarantor that is also a
Subsidiary Guarantor shall be deemed released from all Obligations under this Article Eleven
and its Subsidiary Guarantee without any further action required on the part of
the Trustee or any Holder; provided, however,
that each Subsidiary Guarantor is sold or disposed of in accordance with this
Indenture and, provided, further,
that any such release shall occur only to the extent that all Obligations of
such Subsidiary Guarantor under its Subsidiary Guarantee, and under the Pledge
and Security Agreement shall also terminate or be released upon such sale or
transfer.  Any Subsidiary Guarantor not
so released or the entity surviving such Subsidiary Guarantor, as applicable,
shall remain or be liable under its Subsidiary Guarantee and the Pledge and
Security Agreement as provided in this Indenture.

(b)           The Trustee shall deliver an
appropriate instrument evidencing the release 
of a Subsidiary Guarantor upon receipt of a request by the Company or
such Subsidiary Guarantor accompanied by an Officers’ Certificate and an
Opinion of Counsel certifying as to the compliance with this Section 11.04,
provided the legal counsel
delivering such Opinion of Counsel may rely as to matters of fact on one or
more Officers’ Certificates of the Company.

(c)           The Trustee shall execute any
documents reasonably requested by the Company or a Subsidiary Guarantor in
order to evidence the release of such Subsidiary Guarantor from its obligations
under its Subsidiary Guarantee, whether or not endorsed on the Notes, the
Pledge and Security Agreement and under this Article Eleven.

Except as set forth in Articles Four and Five
of this Indenture and this Section 11.04, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor
or shall prevent any sale or conveyance of the property of a Subsidiary
Guarantor as an entirety or substantially as an entirety to the Company or
another Subsidiary Guarantor.

Section 11.05                          Waiver of Subrogation.

Until this Indenture is discharged and all of the
Notes are discharged and paid in full, each Subsidiary Guarantor shall
irrevocably waive and agree not to exercise any claim or other rights which it
may hereafter acquire against the Company that arise from the existence,
payment, performance or enforcement of the Obligations of the Company under the
Notes or this Indenture and such Subsidiary Guarantor’s Obligations under its
Subsidiary Guarantee, the Pledge and Security Agreement and this Indenture, in
any such instance, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim, remedy or right arises in equity, or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Company directly or indirectly, in cash or other property or
by set-off or in any other manner,

 

80

 

payment or security on
account of such claim or other rights. 
If any amount shall be paid to any Subsidiary Guarantor in violation of
the preceding sentence and any amounts owing to the Trustee or the Holders
under the Notes, this Indenture, or any other document or instrument delivered
under or in connection with such agreements or instruments, shall not have been
paid in full, such amount shall have been deemed to have been paid to such
Subsidiary Guarantor for the benefit of, and held in trust for the benefit of,
the Trustee or the Holders and shall forthwith be paid to the Trustee for the
benefit of itself or such Holders to be credited against and applied to the
Obligations of the Company, whether matured or unmatured, in accordance with
the terms of this Indenture.  Each
Subsidiary Guarantor hereby acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this
Indenture and that the waiver set forth in this Section 11.05 is
knowingly made in contemplation of such benefits.

Section 11.06                          Immediate Payment.

Each Subsidiary Guarantor shall agree to make
immediate payment to the Trustee on behalf of the Holders of all Obligations of
the Company and such Subsidiary Guarantor owing or payable to the respective
Holders upon receipt of a demand for payment therefor by the Trustee to such
Subsidiary Guarantor in writing.  Each
of the Subsidiary Guarantors agrees that neither the Trustee nor the Holders
need attempt to collect any amounts guaranteed hereunder from the Company, any
other Subsidiary Guarantor or any other Person or to realize upon any
Collateral, but may require any one of the Subsidiary Guarantors to make
immediate payment of all of such guaranteed amounts to the Holders when due,
whether by maturity, acceleration, redemption or otherwise, or at any time
thereafter.

Section 11.07                          No Set-Off.

Each payment to be made by a Subsidiary Guarantor
hereunder in respect of the Obligations under its Subsidiary Guarantee shall be
payable in the currency or currencies in which such Obligations are
denominated, and shall be made without set-off, counterclaim, reduction or
diminution of any kind or nature.

Section 11.08                          Obligations Absolute.

The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee shall be absolute and unconditional and any monies or
amounts expressed to be owing or payable by each Subsidiary Guarantor which may
not be recoverable from such Subsidiary Guarantor on the basis of a Subsidiary
Guarantee shall be recoverable from such Subsidiary Guarantor as a primary
obligor and principal debtor in respect thereof.

Section 11.09                          Obligations Continuing.

The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee shall be continuing and shall remain in full force and
effect until all the Obligations hereunder have been paid and satisfied in
full.  Each Subsidiary Guarantor hereby
agrees with the Trustee that it will from time to time deliver to the Trustee
suitable acknowledgments of this continued liability hereunder and under any
other instrument or instruments in such form as counsel to the Trustee may
advise and as will prevent any action brought against it in respect of any
default hereunder being barred by any statute of limitations now or hereafter
in force and, in the event of the failure

 

81

 

of a Subsidiary Guarantor
so to do, it shall irrevocable appoint the Trustee, the attorney and agent of
such Subsidiary Guarantor to make, execute and deliver such written
acknowledgment or acknowledgments or other instruments as may from time to time
become necessary or advisable, in the judgment of the Trustee on the advice of
counsel, to fully maintain and keep in force the liability of such Subsidiary
Guarantor under its Subsidiary Guarantee.

Section 11.10                          Obligations Not Reduced.

The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee shall not be satisfied, reduced or discharged solely by
the payment of such principal, premium, if any, interest, fees and other monies
or amounts as may at any time prior to discharge of this Indenture pursuant to Article
Eight be or become owing or payable under or by virtue of or otherwise in
connection with the Notes of this Indenture.

Section 11.11                          Obligations Reinstated.

The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee shall continue to be effective or shall be reinstated, as
the case may be, if at any time any payment which would otherwise have reduced
such Obligations of any Subsidiary Guarantor (whether such payment shall have
been made by or on behalf of the Company or by or on behalf of a Subsidiary
Guarantor) is rescinded or reclaimed from any of the Holders upon the
insolvency, bankruptcy, liquidation or reorganization of the Company or any
Subsidiary Guarantor or otherwise, all as though such payment had not been
made.  If demand for, or acceleration of
the time for, payment by the Company is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of the Company, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
each Subsidiary Guarantor as provided herein.

Section 11.12                          Obligations Not Affected.

The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee shall not be affected, impaired or diminished in any way
by any act, omission, matter or thing whatsoever, occurring before, upon or
after any demand for payment (and whether or not known or consented to by any
Subsidiary Guarantor or any of the Holders) which, but for this provision,
might constitute a whole or partial defense to a claim against any Subsidiary
Guarantor under its Subsidiary Guarantee or might operate to release or
otherwise exonerate any Subsidiary Guarantor from any of its Obligations or
otherwise affect such Obligations, whether occasioned by default of any of the
Holders or otherwise, including, without limitation:

(a)           any limitation of status or power,
disability, incapacity or other circumstance relating to the Company or any
other Person, including any insolvency, bankruptcy, liquidation,
reorganization, readjustment, composition, dissolution, winding-up or other
proceeding involving or affecting either the Company or any other Person;

(b)           any irregularity, defect,
unenforceability or invalidity in respect of any Indebtedness or other
Obligation of the Company or any other Person under this Indenture, the Notes
or any other document or instrument;

 

82

 

(c)           any failure of the Company, whether
or not without fault on its part, to perform or comply with any of the
provisions of this Indenture or the Notes, or to give notice thereof to a
Subsidiary Guarantor;

(d)           the taking or enforcing or exercising
or the refusal or neglect to take or enforce or exercise any right or remedy
from or against the Company or any other Person or their respective assets or
the release or discharge of any such right or remedy;

(e)           the granting of time, renewals,
extensions, compromises, concessions, waivers, releases, discharges and other
indulgences to the Company or any other Person;

(f)            any change in the time, manner or
place of payment of, or in any other term of, any of the Notes, or any other
amendment, variation, supplement, replacement or waiver of, or any consent to
departure from, any of the Notes or this Indenture, including, without
limitation, any increase or decrease in the principal amount of or premium, if
any, or interest on any of the Notes;

(g)           any change in the ownership, control,
name, objects, businesses, assets, capital structure or constitution of the
Company or a Subsidiary Guarantor;

(h)           any merger or amalgamation of the
Company or a Subsidiary Guarantor with any Person or Persons other than the
Company;

(i)            the occurrence of any change in the
laws, rules, regulations or ordinances of any jurisdiction by any present or
future action of any governmental authority or court amending, varying,
reducing or otherwise affect, any of the Obligations of the Company under this
Indenture or the Notes or the Obligations of a Subsidiary Guarantor under its
Subsidiary Guarantee; and

(j)            any other circumstance, including
release of the Subsidiary Guarantor pursuant to Section 11.04 hereof
(other than by complete, irrevocable payment) that might otherwise constitute a
legal or equitable discharge or defense of the Company under this Indenture or
the Notes or of a Subsidiary Guarantor in respect of its Subsidiary Guarantee.

Section 11.13                          Waiver.

Without in any way limiting the provisions of Section
11.01 hereof, each Subsidiary Guarantor hereby waives notice of acceptance
hereof, notice of any liability of any Subsidiary Guarantor under its
Subsidiary Guarantee, notice or proof of reliance by the Holders upon the
Obligations of any Subsidiary Guarantor under its Subsidiary Guarantee, and
diligence, presentment, demand for payment on the Company, protest, notice of
dishonor or non-payment of any of the Company’s Obligations under this
Indenture or the Notes, or other notice or formalities to the Company or any
Subsidiary Guarantor of any kind whatsoever.

Section 11.14                          No Obligation To Take Action Against the
Company.

Neither the Trustee nor any other Person shall have
any obligation to enforce or exhaust any rights or remedies or to take any
other steps under any security for the Obligations of the

 

83

 

Company under this
Indenture or the Notes, or against the Company or any other Person or any
assets or properties of the Company or any other Person before the Trustee is
entitled to demand payment and performance by any or all Subsidiary Guarantors
of their liabilities and obligations under any Subsidiary Guarantees or under
this Indenture.

Section 11.15                          Dealing with the Company and Others.

The Holders or the Trustee, without releasing,
discharging, limiting or otherwise affecting in whole or in part the
Obligations of any Subsidiary Guarantor and without the consent of or notice to
any Subsidiary Guarantor, may:

(a)           grant time, renewals, extensions,
compromises, concessions, waivers, releases and discharges to the Company or
any other Person;

(b)           take or abstain from taking security
or Collateral from the Company or from perfecting security interests in the
Collateral;

(c)           release, discharge, compromise,
realize, enforce or otherwise deal with or do any act or thing in respect of
(with or without consideration) any and all collateral, mortgages or other
security, including, without limitation, the Collateral, given by the Company
or any third party with respect to the Obligations of the Company under, or
matters contemplated by, this Indenture or the Notes;

(d)           accept compromises or arrangements
from the Company;

(e)           apply all monies at any time received
from the Company or in respect of the Collateral upon such part of the
Obligations of the Company under this Indenture or the Notes as the Holders may
see fit or change any such application in whole or in part from time to time as
the Holders may see fit; and

(f)            otherwise deal with, or waive or
modify their right to deal with, the Company and all other Persons and any
Collateral as the Holders or the Trustee may see fit.

Section 11.16                          Default and Enforcement.

If any Subsidiary Guarantor fails to comply with Section
11.06 hereof, the Trustee may proceed in its name as trustee hereunder in
the enforcement of the Subsidiary Guarantee and the Pledge and Security
Agreement of any such Subsidiary Guarantor and such Subsidiary Guarantor’s
Obligations thereunder and hereunder by any remedy provided by law, whether by
legal proceedings or otherwise, and to recover from such Subsidiary Guarantor
the Company’s Obligations under this Indenture and the Notes.

Section 11.17                          [Intentionally omitted]

Section 11.18                          Amendment, Etc.

No amendment, modification or waiver of any provision
of this Indenture relating to any Subsidiary Guarantor or consent to any
departure by any Subsidiary Guarantor or any other

 

84

 

Persons from any such
provision will in any event be effective unless it is signed by such Subsidiary
Guarantor and the Trustee.

Section 11.19                          Acknowledgment.

Each Subsidiary Guarantor hereby acknowledges communication
of the terms of this Indenture and the Notes and consents to and approves of
the same.

Section 11.20                          Costs and Expenses.

Each Subsidiary Guarantor shall pay on demand by the
Trustee or the Collateral Agent any and all costs, fees and expenses (including,
without limitation, legal fees) incurred by the Trustee or the Collateral
Agent, their agents, advisors and counsel or any of the Holders in enforcing
any of their rights under any Subsidiary Guarantee or the Pledge and Security
Agreement.

Section 11.21                          No Merger or Waiver; Cumulative Remedies.

No Subsidiary Guarantee shall operate by way of merger
of any of the obligations of a Subsidiary Guarantor under any other agreement,
including, without limitation, this Indenture. 
No failure to exercise and no delay in exercising, on the part of the
Trustee or the Holders, any right, remedy, power or privilege under this
Indenture or the Notes, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege under this
Indenture or the Notes preclude any other or further exercise thereof or the
exercise of any other right, remedy power or privilege.  The rights, remedies, powers and privileges
in each Subsidiary Guarantee and under this Indenture, the Notes and any other
document or instrument between a Subsidiary Guarantor and/or the Company and
the Trustee are cumulative and not exclusive of any rights, remedies, powers
and privilege provided by law.

Section 11.22                          Survival of Obligations.

Without prejudice to the survival of any of the other
obligations of each Subsidiary Guarantor, the obligations of each Subsidiary
Guarantor under Section 11.01 hereof shall be enforceable against such
Subsidiary Guarantor without regard to and without giving effect to any
defense, right of offset or counterclaim available to or which may be asserted
by the Company or any Subsidiary Guarantor.

Section 11.23                          Subsidiary Guarantee in Addition to Other
Obligations.

The obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee and this Indenture are in addition to and not in
substitution for any other obligations to the Trustee or to any of the Holders
in relation to this Indenture or the Notes and any guarantees or security at
any time held by or for the benefit of any of them.

Section 11.24                          Severability.

Any provision of this Article Eleven which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions and any such prohibition or

 

85

 

unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
jurisdiction.

Section 11.25                          Successors and Assigns.

Each Subsidiary Guarantee shall be binding upon and
inure to the benefit of each Subsidiary Guarantor and the Trustee and the other
Holders and their respective successors and permitted assigns, except that no
Subsidiary Guarantor may assign any of its obligations hereunder or thereunder.

ARTICLE XII

MISCELLANEOUS

Section 12.01                          TIA Controls.

If any provision of this Indenture limits, qualifies,
or conflicts with another provision which is required to be included in this
Indenture by the TIA, the provision required to be included by the TIA shall
control; provided, however, that
this Section 12.01 shall not of itself require that this Indenture or
the Trustee be qualified under the TIA or constitute any admission or
acknowledgment by any party hereto that any such qualification is required
prior to the time this Indenture and the Trustee are required by the TIA to be
so qualified.

Section 12.02                          Notices.

Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if
made by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:

if to the Company:

New World Restaurant Group, Inc.

1687 Cole Boulevard

Golden, Colorado 80401

Attn:  Chief Executive Officer

Telephone Number:             (303)
568-8000

Telecopy Number:    (303) 568-8402

with a copy to:

Proskauer Rose LLP

1585 Broadway

New York, NY 10036

Attn: Julie M. Allen

Telephone Number: (212) 969-3155

Telecopy Number: (212) 969-2900

 

86

 

if to the Trustee:

The Bank of New York

101 Barclay Street — 8W

New York, New York 10286

Attn: Corporate Trust Division-New World Restaurant Group, Inc.

Telephone Number:             (212)
815-5733

Telecopy Number:               (212)
815-5707

with a copy to:

Winston & Strawn

200 Park Avenue

New York, New York 10166

Attn: Jeffrey H.  Elkin

Telephone Number: (212) 294-6711

Telecopy Number: (212) 294-4700

Each of the Company and the Trustee by written notice
to each other such Person may designate additional or different addresses for
notices to such Person.  Any notice or communication
to the Company or the Trustee shall be deemed to have been given or made as of
the date so delivered if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if faxed; and five (5) calendar days after
mailing if sent by registered or certified mail, postage prepaid (except that
(a) notices to the Trustee shall not be deemed to have been given until
actually received by the Trustee and (b) a notice of change of address shall
not be deemed to have been given until actually received by the addressee).

Any notice or communication mailed to a Holder shall
be mailed to such Holder by first class mail or other equivalent means at such
Holder’s address as it appears on the registration books of the Registrar and
shall be sufficiently given to such Holder if so mailed within the time
prescribed.

Failure to mail a notice or communication to a Holder
or any defect in it shall not affect its sufficiency with respect to other
Holders.  If a notice or communication
is mailed in the manner provided above, it is duly given, whether or not the
addressee receives it.

Section 12.03                          Communications by Holders with Other
Holders.

Holders may communicate pursuant to TIA Section 312(b)
with other Holders with respect to their rights under this Indenture or the
Notes.  The Company, the Trustee, the
Registrar and any other Person shall have the protection of TIA Section 312(c).

Section 12.04                          Certificate and Opinion as to Conditions
Precedent.

Upon any request or application by the Company or any
Subsidiary Guarantor to the Trustee to take any action under this Indenture,
the Company shall furnish to the Trustee upon request:

 

87

 

(a)           an Officers’ Certificate, in form and
substance reasonably satisfactory to the Trustee, stating that, in the opinion
of the signers, all conditions precedent to be performed by the Company and any
Subsidiary Guarantor, if any, provided for in this Indenture relating to the
proposed action have been complied with; and

(b)           an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent to be performed
by the Company and any Subsidiary Guarantor, if any, provided for in this
Indenture relating to the proposed action have been complied with (which
counsel, as to factual matters, may rely on an Officers’ Certificate).

Section 12.05                          Statements Required in Certificate or
Opinion.

Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture, other than the
Officers’ Certificate required by Section 4.06, shall include:

(a)           a statement that each Person signing
such certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;

(b)           a brief statement as to the nature
and scope of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;

(c)           a statement that, in the opinion of
such Person, an examination or investigation as is reasonably necessary to
enable such Person to express an informed opinion as to whether or not such
covenant or condition has been complied with; and

(d)           a statement as to whether or not, in
the opinion of each such Person, such condition or covenant has been complied
with; provided, however, that with respect to matters of
fact, an Opinion of Counsel may rely on an Officers’ Certificate or
certificates of public officials.

Section 12.06                          Rules by Trustee, Paying Agent, Registrar.

The Trustee may make reasonable rules in accordance
with the Trustee’s customary practices for action by or at a meeting of
Holders.  The Paying Agent or Registrar
may make reasonable rules for its functions.

Section 12.07                          Legal Holidays.

A “Legal Holiday” used with respect to a
particular place of payment is a Saturday, a Sunday or a day on which banking
institutions in New York, New York, or at such place of payment are not
required to be open.  If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.

 

88

 

Section 12.08                          Governing Law; Jurisdiction; Submission
to Venue.

THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  EACH OF THE PARTIES HERETO AGREES TO SUBMIT
TO THE NON-EXCLUSIVE JURISDICTION OF THE COMPETENT COURTS OF THE STATE OF NEW
YORK SITTING IN THE CITY OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE OR THE NOTES. 
EACH OF THE COMPANY AND THE SUBSIDIARY GUARANTORS 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.  EACH OF THE COMPANY AND THE SUBSIDIARY
GUARANTORS 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 THE 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. NOTHING HEREIN SHALL AFFECT ANY 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 OR THE SUBSIDIARY GUARANTORS IN ANY OTHER JURISDICTION.

Section 12.09                          No Adverse Interpretation of other
Agreements.

This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or those of any of its
Subsidiaries.  Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.

Section 12.10                          No Recourse Against Others.

No past, present or future director, officer,
employee, incorporator or stockholder of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any Obligations of the Company
or any Subsidiary Guarantor under the Notes or this Indenture, any Subsidiary
Guarantee, the Registration Rights Agreement or the Collateral Agreements or
for any claim based on, in respect of, or by reason of such obligations or
their creations.  Each Holder by
accepting a Note waives and releases all such liability.  Such waiver and release are part of the
consideration for the issuance of the Notes.

 

89

 

Section 12.11                          Successors.

All agreements of the Company and any Subsidiary
Guarantor in this Indenture and the Notes and under any Subsidiary Guarantee,
as the case may be, shall bind its successors. 
All agreements of the Trustee in this Indenture shall bind its
successors.

Section 12.12                          Duplicate Originals.

All parties may sign any number of copies of this
Indenture.  Each signed copy shall be an
original, but all of them together shall represent the same agreement.

Section 12.13                          Severability.

In case any one or more of the provisions in this
Indenture or in the Notes shall be held invalid, illegal or unenforceable, in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions hereof shall be
enforceable to the full extent permitted by law.

Section 12.14                          Independence of Covenants.

All covenants and agreements in this Indenture and the
Notes shall be given independent effect so that if any particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or otherwise be within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.

Section 12.15                          Table of Contents, Headings, Etc.

The Table of Contents, Cross-Reference Table and
headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and
shall in no way modify or restrict any of the terms and provisions hereof.

 

90

 

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the date first written above.

	
   

  	
  NEW
  WORLD RESTAURANT GROUP,

  INC.,
  a Delaware corporation

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
  Anthony
  D. Wedo

  
	
   

  	
  Title:

  	
  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:

  	
   

  

 

 

 

	
   

  	
  THE
  BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

EXHIBIT
A

FORM OF NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.  NEITHER THIS NOTE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE PRIOR TO THE DATE WHICH
IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE AND THE
LAST DATE ON WHICH NEW WORLD RESTAURANT GROUP, INC. (“THE COMPANY”) OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF
SUCH NOTE)(THE “RESALE RESTRICTION TERMINATION DATE”), ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
“QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) or (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S, OR REGISTRAR’S, AS APPLICABLE,
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING
CASES, AN ASSIGNMENT IN THE FORM APPEARING ON THE OTHER SIDE OF THIS NOTE IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR REGISTRAR.  THIS LEGEND SHALL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

 

 

THIS NOTE IS SUBJECT TO A REGISTRATION RIGHTS
AGREEMENT, DATED AS OF JULY 8,  2003,
BETWEEN THE COMPANY AND JEFFERIES & COMPANY, INC., A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY.

CUSIP No.:

NEW WORLD RESTAURANT GROUP, INC.

SENIOR SECURED NOTE DUE
2008

No.                                                                                                                                                          $

New World Restaurant Group, Inc., a Delaware
corporation (the “Company,” which term includes any successor entity),
for value received promises to pay to ____________________ or registered
assigns, the principal sum of __________________ Dollars, on July 1, 2008.

Interest Payment Dates:      July 1 and January 1

Record Dates:                                       June
15 and December 15

Reference is made to the further provisions of this
Note contained herein, which will for all purposes have the same effect as if
set forth at this place.

IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized officer.

 

	
   

  	
  New
  World Restaurant Group, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:
  July 8, 2003

  	
   

  	
   

  

 

 

Certificate
of Authentication

This is one of the Senior Secured Notes due 2008
referred to in the within-mentioned Indenture.

	
   

  	
  The
  Bank of New York, as Trustee

  
	
   

  
	
  Dated:
  July 8, 2003

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

{REVERSE OF NOTE}

NEW WORLD RESTAURANT
GROUP, INC.

Senior Secured Note due 2008

1.             Interest.  New World Restaurant Group, Inc., a Delaware
corporation (the “Company”), promises to pay interest on the principal
amount of this Note at the rate of (a) 13.0% per annum plus (b) any additional
interest required under Section 4 of the Registration Rights Agreement,
plus (c) during the occurrence and continuance of a Default or Event of
Default, 2.0% per annum.  The Company
will pay interest semi-annually in arrears on each July 1 and January 1 (each
an “Interest Payment Date”), commencing January 1, 2004.  Interest on the Notes will accrue from the
most recent date on which interest has been paid on this Note or, if no
interest has been paid, from July 8, 2003. 
Interest will be computed on the basis of a 360-day year of twelve
30-day months.

2.             Method
of Payment.  The Company shall pay
interest on the Notes to the Persons who are the registered Holders as of the
close of business on the Record Date immediately preceding the applicable
Interest Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date.  Holders must surrender Notes to a Paying
Agent to collect principal payments. 
The Company shall pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts (“U.S. Legal Tender”). 
The Notes will be payable both as to principal and to interest at the
office or agency of the Company, or, at the option of the Company, payment of
interest may be made by its check payable in such U.S. Legal Tender and mailed
to the Holders at their respective registered addresses as set forth in the
register of Holders.  If the Company
defaults in a payment of interest on the Notes, it shall pay the defaulted
interest plus any interest payable on the defaulted interest in accordance with
Section 2.16 of the Indenture.

3.             Paying
Agent and Registrar.  Until otherwise
designated by the Company, the Registrar and Paying Agent for the Notes shall
be The Bank of New York, the trustee (the “Trustee”) under the Indenture
(as defined below), having an address 101 Barclay Street — 8W, New York, New
York 10286, Attention: Corporate Trust Division.  In addition, until otherwise designated by the Company, the
Company’s office or agency maintained in the Borough of Manhattan, in the City
of New York at which the Notes may be presented for payment or for transfer or
exchange will be the office of the Trustee. 
The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.

4.             Indenture.  The Company issued the Notes under an
Indenture, dated as of  July 8, 2003
(the “Indenture”), among the Company, the Subsidiary Guarantors and the
Trustee.  Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) (the “TIA”),
as in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA,

 

and thereafter as in effect on the date on which the Indenture is qualified
under the TIA.  Notwithstanding anything
to the contrary herein, the Notes are subject to all such terms, and Holders
are referred to the Indenture and the TIA for a statement of them.  Payment on the Notes is guaranteed on a
senior basis, jointly and severally, by the Subsidiary Guarantors pursuant to
Article Eleven of the Indenture.  Each
Holder, by accepting a Note, agrees to be bound by all of the terms and
provisions of the Indenture, as the same may be amended from time to time.

5.             Optional
Redemption.  The Notes will be
redeemable, at the Company’s option, in whole at any time or in part from time
to time, on and after July 1, 2004, at the following redemption prices
(expressed as percentages of the principal amount) if redeemed during the
twelve-month period commencing on July 1 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon to the date of
redemption:

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2004

  	
   

  	
  104.000

  	
  %

  
	
  2005

  	
   

  	
  103.000

  	
  %

  
	
  2006

  	
   

  	
  102.000

  	
  %

  
	
  2007

  	
   

  	
  101.000

  	
  %

  
	
  2008 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

Notwithstanding the foregoing, at any time on or prior
to July 1, 2004, the Company may redeem up to 33 1/3% of the aggregate
principal amount of the Notes originally issued at a redemption price of
113.000% of the principal amount thereof, plus accrued and unpaid interest
thereon to the redemption date, with the net proceeds of any Equity Offering; provided that at least 66 2/3% of the
aggregate principal amount of the Notes originally issued under this Indenture
remains outstanding immediately after the occurrence of such redemption; and provided, further, that such redemption
occurs within 90 days of the date of the closing of such Equity Offering.

6.             Notice
of Redemption.  Notice of redemption
will be mailed by first class mail at least 30 days but not more than 60 days
before the redemption date to each Holder, at each of such Holder’s registered
address, whose Notes are to be redeemed. 
If fewer than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee in compliance with the
requirements of the national securities exchange, if any, on which the Notes
are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or
by such method as the Trustee deems to be fair and appropriate; provided that Notes of $1,000 or less may
not be redeemed in part.

Except as set forth in the Indenture, if monies for
the redemption of the Notes called for redemption shall have been deposited
with the Paying Agent for redemption on such redemption

 

 

date, then, unless the
Company defaults in the payment of such redemption price plus accrued interest,
if any, the Notes called for redemption will cease to bear interest from and
after such redemption date, and the only remaining right of the Holders of such
Notes will be to receive payment of the redemption price plus accrued interest,
if any, as of the redemption date upon surrender to the Paying Agent of the
Notes redeemed.

7.             Offers
to Purchase.  Section 4.14 of the
Indenture provides that, upon the occurrence of a Change of Control, and
subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.

8.             Registration
Rights.  Pursuant to the
Registration Rights Agreement dated as of the date of the Indenture among the
Company and the Holders of the Initial Notes, the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company’s Senior Secured Notes due
2008, Series B (the “Exchange Notes”), which have been registered under
the Securities Act, in like principal amount and having terms identical in all
material respects as the Initial Notes. 
The Holders of the Initial Notes shall be entitled to receive certain
additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement.

9.             Denominations;
Transfer; Exchange.  The Notes are
in registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000.  A Holder shall
register the transfer of or exchange of Notes in accordance with the
Indenture.  The Registrar or
co-Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or
similar governmental charges payable in connection therewith as permitted by
the Indenture.  Subject to certain
provisions in the Indenture, the Registrar or co-Registrar need not register
the transfer of or exchange of any Notes or portions thereof selected for
redemption.  Also the Registrar or
co-Registrar need not register the transfer or exchange of any Note during a
period beginning at the opening of business 15 days before the mailing of a
notice of redemption of notes and ending at the close of business on the day of
such mailing.

10.           Persons
Deemed Owners.  The registered
Holder of a Note shall be treated as the owner of such Note for all purposes.

11.           Unclaimed
Money.  If money for the payment of
principal or interest remains unclaimed for two years (or such sooner period as
may be required by applicable abandoned property laws), the Trustee and the
Paying Agent will pay the money back to the Company.  After that, all liability of the Trustee and such Paying Agent
with respect to such money shall cease.

12.           Discharge
Prior to Redemption or Maturity.  If
the Company at any time deposits with the Trustee U.S. Legal Tender or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Notes to redemption or maturity and complies with the other

 

provisions of the Indenture relating thereto, the Company will be
discharged from certain provisions of the Indenture and the Notes (including
certain covenants, but excluding its obligation to pay the principal of and
interest on the Notes).

13.           Amendment;
Supplement; Waiver.  Subject to
certain exceptions, the Indenture or the Notes may be amended or supplemented
by the Company, the Trustee and with the written consent of the Holders of at
least a majority in aggregate principal amount of the Notes then outstanding,
and, subject to Section 6.07 of the Indenture, noncompliance with any provision
of the Indenture or this Note may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding.  Without the consent of any
Holder, the parties thereto may amend or supplement the Indenture or the Notes
to, among other things, cure any ambiguity, defect or inconsistency, provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company’s obligations to Holders in the case
of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders or that does not adversely affect
the legal right under the Indenture of any such Holder, or to comply with the requirements
of the U.S. Securities and Exchange Commission (the “SEC”) in order to
effect or maintain the qualification of the Indenture under the TIA.  As provided in the Indenture, there shall be
no amendment, supplement or waiver without the consent of each Holder of each
Note affected thereby with respect to the circumstances enumerated in Section
9.02 therein.

14.           Restrictive
Covenants.  The Indenture imposes
certain limitations on the ability of the Company and its Subsidiaries to,
among other things, incur additional Indebtedness or Liens, issue or sell its
Capital Stock, enter into transactions with Affiliates, cause to be effective
restrictions affecting Subsidiaries’ abilities to pay certain dividends or make
certain loans, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. 
Such limitations are subject to a number of important qualifications and
exceptions.  The Company must annually
report to the Trustee on compliance with such limitations.

15.           Successors.  When a successor assumes, in accordance with
the Indenture, all the Obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those Obligations.

16.           Defaults
and Remedies.  If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of Notes then outstanding may declare all the Notes
to be due and payable in the manner, at the time and with the effect provided
in the Indenture.  Holders may not
enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee is not obligated to exercise any
of the rights or powers vested in it by the Indenture or the Notes and at the
order or direction of any Holders, unless it has received indemnity reasonably
satisfactory to it.  Subject to certain
limitations set forth in the Indenture, Holders of a majority in aggregate principal
amount of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power.  The Trustee may
withhold from Holders notice of any continuing Default or Event of Default
(except in the case of a Default or

 

Event of Default in payment of principal or interest or a failure to
comply with Article Five of the Indenture) if it determines that withholding
notice is in their interest.

17.           Trustee
Dealings with Company.  The Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company, its
Subsidiaries or their respective Affiliates, as such, with the same rights it
would have as if it were not the Trustee.

18.           No
Recourse Against Others.  No past,
present or future director, officer, employee, incorporator or stockholder of
the Company or any Subsidiary Guarantor, as such, shall have any liability for
any Obligations of the Company or any Subsidiary Guarantor under the Notes or
the Indenture, the Collateral Agreements, any Subsidiary Guarantee, the
Registration Rights Agreement or the Intercreditor Agreement or for any claim
based on, in respect of, or by reason of such obligations or their
creations.  Each Holder by accepting a
Note waives and releases all such liability. 
Such waiver and release are part of the consideration for the issuance
of the Notes.

19.           Authentication.  This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.

20.           Governing
Law.  The laws of the State of New
York shall govern this Note and the Indenture.

21.           Abbreviations
and Defined Terms.  Customary
abbreviations may be used in the name of a Holder or an assignee, such as: TEN
COM (= tenants-in-common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants-in-common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

22.           CUSIP
Numbers.  Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Notes as
a convenience to the Holders.  No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.

The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture.

Requests may be made to:  New World Restaurant Group, Inc., 1687 Cole Boulevard, Golden,
Colorado 80401, Attn:  Chief Executive
Officer.

 

ASSIGNMENT FORM

If you the Holder want to
assign this Note, fill in the form below and have your signature guaranteed:

I or we assign and transfer this Note to:

                                                                                                                                                                                                          

                                                                                                                                                                                                          

(Print or type name, address and zip code and

social security or tax ID number of assignee)

and irrevocably appoint                                                                                                                                                               

agent to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

Dated:                                                                                            Signed:                                                                                    

(Sign exactly as your name
appears on the other side of this Note)

Signature Guarantee:                                                                                           

In connection with any
transfer of this Note occurring prior to the date which is the earlier of
(i) the date of the declaration by the SEC of the effectiveness of a
registration statement under the Securities Act of 1933, as amended (the “Securities
Act”), covering resales of this Note (which effectiveness shall not have
been suspended or terminated at the date of the transfer) and (ii) October 15,
2004, the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer and that
this Note is being transferred:

[Check One]

(1)
______                                     to the Company or a subsidiary thereof;
or

(2)
______                                     pursuant to and in compliance with Rule
144A under the Securities Act; or

(3)
______                                     to an institutional “accredited investor”
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that
has furnished to the Trustee a signed letter containing certain representations
and agreements (the form of which letter can be obtained from the Trustee); or

(4)
______                                     outside the United States to a person
other than a “U.S. person” in compliance with Rule 904 of Regulation S under
the Securities Act; or

 

(5)
______                                     pursuant to the exemption from
registration provided by Rule 144 under the Securities Act; or

(6)
______                                     pursuant to an effective registration
statement under the Securities Act.

Unless one of the boxes is checked, the Trustee will
refuse to register any of the Notes evidenced by this certificate in the name
of any person other than the registered Holder thereof; provided that if
box (3), (4) or (5) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in its sole discretion, such
legal opinions, certifications (including an investment letter in the case of
box (3) or (4)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.

If none of the foregoing
boxes is checked, the Trustee or Registrar shall not be obligated to register
this Note in the name of any person other than the Holder hereof unless and
until the conditions to any such transfer of registration set forth herein and
in Section 2.15 of the Indenture shall have been satisfied.

Dated:                                                                                            Signed:                                                                                    

(Sign exactly as your name
appears on the other side of this Note)

Signature Guarantee:                                                                                           

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

The undersigned represents
and warrants that it is purchasing this Note for its own account or an account
with respect to which it exercises sole investment discretion and that it and
any such account is a “qualified institutional buyer” within the meaning of
Rule 144A under the Securities Act and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned’s foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.

Dated:  _________________________                        __________________________________________

NOTICE:  To be executed by an
executive officer

 

 

[OPTION OF HOLDER
TO ELECT PURCHASE]

If you want to elect to have
this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of
the Indenture, check the appropriate box:

Section
4.14  o

Section
4.15  o

If you want to elect to have
only part of this Note purchased by the Company pursuant to Section 4.14 or
Section 4.15 of the Indenture, state the amount you elect to have purchased:

$                                                                                              

Dated:                                                                                                                                                                                        

NOTICE:  The signature on this assignment must
correspond with the name as it appears upon the face of the within Note in
every particular without alteration or enlargement or any change whatsoever and
be guaranteed by the endorser’s bank or broker.

Signature
Guarantee:  __________________________________________

 

 

 

                                                                                                                                                                                            EXHIBIT B

FORM OF NOTE

CUSIP No.:

NEW WORLD RESTAURANT GROUP, INC.

SENIOR SECURED NOTE DUE
2008, SERIES B

No.                                                                                                                                                                                             $

New World Restaurant Group, Inc., a Delaware
corporation (the “Company,” which term includes any successor entity),
for value received promises to pay to ____________________ or registered
assigns, the principal sum of _________________ Dollars, on July 1, 2008.

Interest Payment Dates:      July 1 and January 1

Record Dates:                                       June
15 and December 15

Reference is made to the further provisions of this
Note contained herein, which will for all purposes have the same effect as if
set forth at this place.

IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized officer.

 

	
   

  	
  New
  World Restaurant Group, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  

 

 

Certificate
of Authentication

This is one of the Senior Secured Notes due 2008,
Series B referred to in the within-mentioned Indenture.

	
   

  	
  The
  Bank of New York, as Trustee

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

{REVERSE OF NOTE}

NEW WORLD RESTAURANT
GROUP, INC.

Senior Secured Note due 2008, Series B

1.             Interest. 
New World Restaurant Group, Inc., a Delaware corporation (the “Company”),
promises to pay interest on the principal amount of this Note at the rate of
(a) 13.0% per annum plus (b) during the occurrence of a Default or Event of
Default, 2.0% per annum. The Company will pay interest semi-annually in arrears
on each July 1 and January 1 (each an “Interest Payment Date”),
commencing January 1, 2004.  Interest on
the Notes will accrue from the most recent date on which interest has been paid
on this Note or, if no interest has been paid, from July 8, 2003.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.

2.             Method of Payment.  On each Interest Payment Date the Company shall pay interest on
the Notes to the Persons who are the registered Holders as of the close of
business on the Record Date immediately preceding the applicable Interest
Payment Date even if the Notes are cancelled on registration of transfer or
registration of exchange after such Record Date.  Holders must surrender Notes to a Paying Agent to collect principal
payments.  The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts (“U.S. Legal Tender”).  The Notes will be payable both as to
principal and to interest at the office or agency of the Company, or, at the
option of the Company, payment of interest may be made by its check payable in
such U.S. Legal Tender and mailed to the Holders at their respective registered
addresses as set forth in the register of Holders.  If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest plus any interest payable on the defaulted
interest in accordance with Section 2.16 of the Indenture.

3.             Paying Agent and Registrar.  Until otherwise designated by the Company,
the Registrar and Paying Agent for the Notes shall be The Bank of New York, the
trustee (the “Trustee”) under the Indenture (as defined below), having
an address at: 101 Barclay Street — 8W, New York, New York 10286, Attention:
Corporate Trust Division.  In addition,
until otherwise designated by the Company, the Company’s office or agency
maintained in the Borough of Manhattan, in the City of New York at which the
Notes may be presented for payment or for transfer or exchange will be the
office of the Trustee.  The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders.

4.             Indenture. 
The Company issued the Notes under an Indenture, dated as of July 8,
2003 (the “Indenture”), among the Company, the Subsidiary Guarantors and
the Trustee.  Capitalized terms herein
are used as defined in the Indenture unless otherwise defined herein.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) (the “TIA”),
as in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA.

 

Notwithstanding anything to the contrary herein, the
Notes are subject to all such terms, and Holders are referred to the Indenture
and the TIA for a statement of them. 
The Notes are senior secured obligations of the Company limited in
aggregate principal amount to $160,000,000. 
Payment on the Notes is guaranteed on a senior basis, jointly and
severally, by the Subsidiary Guarantors, pursuant to Section Eleven of the
Indenture.  Each Holder, by accepting a
Note, agrees to be bound by all of the terms and provisions of the Indenture,
as the same may be amended from time to time.

5.             Optional Redemption.  The Notes will be redeemable, at the Company’s option, in whole
at any time or in part from time to time, on and after July 1, 2004, at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on July 1 of the
year set forth below, plus, in each case, accrued and unpaid interest thereon
to the date of redemption:

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2004

  	
   

  	
  104.000

  	
  %

  
	
  2005

  	
   

  	
  103.000

  	
  %

  
	
  2006

  	
   

  	
  102.000

  	
  %

  
	
  2007

  	
   

  	
  101.000

  	
  %

  
	
  2008 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

Notwithstanding the foregoing, at any time on or prior
to July 1, 2004, the Company may redeem up to 33 1/3% of the aggregate
principal amount of the Notes originally issued at a redemption price of
113.000% of the principal amount thereof, plus accrued and unpaid interest
thereon to the redemption date, with the net proceeds of any Equity Offering; provided that at least 66 2/3% of the
aggregate principal amount of the Notes originally issued under this Indenture
remains outstanding immediately after the occurrence of such redemption; and provided, further, that such redemption
occurs within 90 days of the date of the closing of such Equity Offering.

 6.            Notice of Redemption.  Notice of redemption will be mailed by first
class mail at least 30 days but nor more than 60 days before the redemption
date to each Holder, at each of such Holder’s registered address, whose Notes
are to be redeemed.  If fewer than all
of the Notes are to be redeemed, at any time, selection of Notes for redemption
will be made by the Trustee in compliance with the requirements of the national
securities exchange, if any, on which the Notes are listed, or, if the Notes
are not so listed, on a pro rata basis, by lot or by such method as the Trustee
deems to be fair and appropriate; provided
that Notes of $1,000 or less may not be redeemed in part.

 

Except as set forth in the Indenture, if monies for
the redemption of the Notes called for redemption shall have been deposited
with the Paying Agent for redemption on such redemption date, then, unless the
Company defaults in the payment of such redemption price plus accrued interest,
if any, the Notes called for redemption will cease to bear interest from and
after such redemption date, and the only remaining right of the Holders of such
Notes will be to receive payment of the redemption price plus accrued interest,
if any, as of the redemption date upon surrender to the Paying Agent of the
Notes redeemed.

7.             Offers to Purchase.  Section 4.14 of the Indenture provides that, upon the occurrence
of a Change of Control, and subject to further limitations contained therein,
the Company will make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.

8.             Denominations; Transfer; Exchange. The Notes are
in registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000.  A Holder shall
register the transfer of or exchange of Notes in accordance with the
Indenture.  The Registrar or
co-Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or
similar governmental charges payable in connection therewith as permitted by
the Indenture.  Subject to certain
provisions in the Indenture, the Registrar or co-Registrar need not register
the transfer of or exchange of any Notes or portions thereof selected for redemption.  Also, the Registrar or co-Registrar need not
register the transfer or exchange of any Note during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
notes and ending at the close of business on the day of such mailing.

9.             Persons Deemed Owners.  The registered Holder of a Note shall be treated as the owner of
such Note for all purposes.

10.           Unclaimed Money. 
If money for the payment of principal or interest remains unclaimed for
two years (or such sooner period as may be imposed by applicable abandoned
property laws), the Trustee and the Paying Agent will pay the money back to the
Company.  After that, all liability of
the Trustee and such Paying Agent with respect to such money shall cease.

11.           Discharge Prior to Redemption or Maturity.  If the Company at any time deposits with the
Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the
principal of and interest on the Notes to redemption or maturity and complies
with the other provisions of the Indenture relating thereto, the Company will
be discharged from certain provisions of the Indenture and the Notes (including
certain covenants, but excluding its obligation to pay the principal of and
interest on the Notes).

12.           Amendment: Supplement; Waiver.  Subject to certain exceptions, the Indenture
or the Notes may be amended or supplemented by the Company, the Trustee and
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and, subject to Section 6.07 of
the Indenture, noncompliance with any

 

provision of the Indenture or this Note may be
waived with the written consent of the Holders of a majority in aggregate
principal amount of the Notes then outstanding.  Without the consent of any Holder, the parties thereto may amend
or supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company’s obligations to Holders in the case of a merger or consolidation,
to make any change that would provide any additional rights or benefits to the
Holders or that does not adversely affect the legal right under the Indenture
of any such Holder, or to comply with the requirements of the U.S. Securities
and Exchange Commission (the “SEC”) in order to effect or maintain the
qualification of the Indenture under the TIA. 
As provided in the Indenture, there shall be no amendment, supplement or
waiver without the consent of each Holder of each Note affected thereby with
respect to the circumstances enumerated in Section 9.02 therein.

13.           Restrictive Covenants.  The Indenture imposes certain limitations on the ability of the
Company and its Subsidiaries to, among other things, incur additional
Indebtedness or Liens, issue or sell its Capital Stock, enter into transactions
with Affiliates, cause to be effective restrictions affecting Subsidiaries’
abilities to pay certain dividends or to make certain loans, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation.  Such limitations are
subject to a number of important qualifications and exceptions.  The Company must annually report to the
Trustee on compliance with such limitations.

14.           Successors. 
When a successor assumes, in accordance with the Indenture, all the
Obligations of its predecessor under the Notes and the Indenture, the
predecessor will be released from those Obligations.

15.           Defaults and Remedies.  If an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of Notes then
outstanding may declare all the Notes to be due and payable in the manner, at
the time and with the effect provided in the Indenture.  Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. 
The Trustee is not obligated to exercise any of the rights or powers
vested in it by the Indenture or the Notes and at the order or direction of any
Holders, unless it has received indemnity reasonably satisfactory to it.  Subject to certain limitations set forth in
the Indenture, Holders of a majority in aggregate principal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Holders notice of any continuing Default or Event of Default (except in the
case of a Default or Event of Default in payment of principal or interest or a
failure to comply with Article Five of the Indenture) if it determines that
withholding notice is in their interest.

16.           Trustee Dealings with Company.  The Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company, its Subsidiaries or their respective
Affiliates, as such, with the same rights it would have as if it were not the
Trustee.

 

17.           No Recourse Against Others.  No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any Obligations of the Company
or any Subsidiary Guarantor under the Notes or the Indenture, the Collateral
Agreements, any Subsidiary Guarantee, the Registration Rights Agreement, or the
Intercreditor Agreement, or for any claim based on, in respect of, or by reason
of such obligations or their creation. 
Each Holder by accepting a Note waives and releases all such liability.  Such waiver and release are part of the
consideration for the issuance of the Notes.

18.           Authentication. 
This Note shall not be valid until the Trustee or Authenticating Agent
manually signs the certificate of authentication on this Note.

19.           Governing Law. 
The Laws of the State of New York shall govern this Note and the
Indenture.

20.           Abbreviations and Defined Terms.  Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants-in-common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants-in-common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).

21.           CUSIP Numbers. 
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders.  No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.

The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture.

Requests may be made to:  New World Restaurant Group, Inc., 1687 Cole Boulevard, Golden,
Colorado 80401, Attn:  Chief Executive
Officer.

 

 ASSIGNMENT
FORM

If you the Holder want to
assign this Note, fill in the form below and have your signature guaranteed:

I or we assign and transfer this Note to:

                                                                                                                                                                                                          

                                                                                                                                                                                                          

(Print or type name, address and zip code and

social security or tax ID number of assignee)

and irrevocably appoint                                                                                                                                                               

agent to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

Dated:                                                                                            Signed:                                                                                    

(Sign exactly as your name
appears on the other side of this Note)

Signature Guarantee:                                                                                           

 

[OPTION OF HOLDER
TO ELECT PURCHASE]

If you want to elect to have
this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of
the Indenture, check the appropriate box:

Section
4.14  o

Section
4.15  o

If you want to elect to have
only part of this Note purchased by the Company pursuant to Section 4.14 or
Section 4.15 of the Indenture, state the amount you elect to have purchased:

$                                                                                              

Dated:                                                                                                                                                                                        

NOTICE:  The signature on this assignment must
correspond with the name as it appears upon the face of the within Note in
every particular without alteration or enlargement or any change whatsoever and
be guaranteed by the endorser’s bank or broker.

Signature
Guarantee: 
__________________________________________

 

 

 

                                                                                                                                                                                            EXHIBIT C

FORM OF LEGEND FOR GLOBAL NOTES

Any Global Note authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other legends required
in the case of a Restricted Security) in substantially the following form:

THIS
NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY
OR A SUCCESSOR DEPOSITORY.  THIS NOTE IS
NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS
A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

 

                                                                                                                                                                                            EXHIBIT D

FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION

WITH TRANSFERS TO NON-QIB ACCREDITED
INVESTORS

__________, ____

______________________

______________________

______________________

______________________

Re:          New World Restaurant
Group, Inc. (the “Company”)

Senior Secured Notes due 2008 (the “Notes”)

Ladies and Gentlemen:

In connection with our proposed purchase of
$____________ aggregate principal amount of the Notes, we confirm that:

1.             We have received a copy of the Offering Circular (the “Offering
Circular”), dated June 27, 2003, relating to the Notes and such other
information as we have deemed necessary in order to make our investment
decision.  We acknowledge that we have
read and agreed to the matters stated in the section entitled “Notice to
Investors” of the Offering Circular.

2.             We understand that any subsequent transfer of the Notes
is subject to certain restrictions and conditions set forth in the Indenture
dated as of July 8, 2003, relating to the Notes (the “Indenture”), and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with such restrictions and conditions
and the U.S. Securities Act of 1933, as amended (the “Securities Act”).

3.             We understand that the offer and sale of the Notes have
not been registered under the Securities Act, and that the Notes may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. Persons except as permitted in the following sentence.  We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that if we should
sell or otherwise transfer any Notes prior to the date which is two years after
the later of the date of (x) original issue of the Note and (y) the last date
on which the Note is owned by the Company or an affiliate of the Company, we
will do so only (i) to the Company, (ii) pursuant to a registration statement
which has been declared

 

effective under the Securities Act, (iii) for so
long as the Notes are eligible for resale pursuant to Rule 144A, to a person it
reasonably believes is a Qualified Institutional Buyer (“QIB”) (within
the meaning of Rule 144A) that purchases for its own account or for the account
of a QIB to whom notice is given that the transfer is being made in reliance on
Rule 144A, (iv) inside the United States to an institutional “accredited
investor” (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you and to the Company, a
signed letter containing certain representations and agreements relating to the
restrictions on transfer of the Notes, substantially in the form of this
letter, (v) pursuant to offers and sales to non-U.S. persons that occur outside
of the United States in compliance with Rule 904 of Regulation S under the
Securities Act or (vi) pursuant to any other available exemption from the
registration requirements of the Securities Act, and we further agree to
provide to any person purchasing any of the Notes from us a notice advising
such purchaser that resales of the Notes are restricted as stated herein.

4.             We are not acquiring the Notes for or on behalf of, and
will not transfer the Notes to, any pension or welfare plan (as defined in
Section 3 of the Employee Retirement Income Security Act of 1974) except as
permitted in the section entitled “Notice to Investors” of the Offering
Circular.

5.             We understand that, on any proposed resale of any Notes,
we will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company reasonably may
require to confirm that the proposed sale complies with the foregoing
restrictions.  We further understand
that the Notes purchased by us will bear a legend to the foregoing effect.

6.             We are an institutional “accredited investor” (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and each of the accounts for which we are acting are and is able
to bear the economic risk of our or its entire investment, as the case may be,
for an indefinite period.

7.             We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an institutional
“accredited investor”) as to each of which we exercise sole investment
discretion, for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act.

You, the Company and your and their respective counsel
are entitled to rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters covered
hereby, and we agree to notify you promptly if any of our representations or
warranties herein cease to be accurate and complete.

 

This letter shall be
governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,

[Name of Transferee]

By:

Authorized Signature

 

 

EXHIBIT E

FORM OF CERTIFICATE TO BE DELIVERED IN

CONNECTION WITH TRANSFERS PURSUANT TO
REGULATION S

__________, ____

______________________

______________________

______________________

______________________

Re:                               New World
Restaurant Group, Inc. (the “Company”)

Senior Secured Notes due 2008 (the “Notes”)

Ladies and Gentlemen:

In connection with our proposed sale of $____________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S promulgated under the
U.S. Securities Act of 1933, as amended (the “Securities Act”), and,
accordingly, we represent that:

(1)           the offer of the Notes was not made to a person in the
United States;

(2)           either:  (a) at the
time the buy offer was originated, the transferee was outside the United States
or we and any person acting on our behalf reasonably believed that the
transferee was outside the United States; or (b) the transaction was executed
in, on or through the facilities of a designated off-shore securities
market and neither we nor any person acting on our behalf had knowledge that
the transaction had been pre-arranged with a buyer in the United States;

(3)           no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable;

(4)           the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and

(5)           we have advised the transferee of the transfer
restrictions applicable to the Notes.

 

You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.  Defined terms used herein without definition have the respective
meanings provided in Regulation S.

Very truly yours,

[Name of Transferor]

By:

Authorized Signature

 

 

EXHIBIT
F

 

 

 

 

[FORM OF INTERCREDITOR AGREEMENT]

 

 

EXHIBIT
G

 

 

[FORM OF PLEDGE AND SECURITY AGREEMENT]

 

                                                                                                                                                                                            EXHIBIT H

FORM OF NOTATION ON NOTE RELATING TO
SUBSIDIARY GUARANTEE

For value received, _________________, a
_______________ , hereby unconditionally guarantees to the Holder of the Note
upon which this Subsidiary Guarantee is endorsed:  (a) the due and punctual payment of the principal of, premium, if
any, and interest on the Note, whether at maturity acceleration, redemption or otherwise,
(b) the due and punctual payment of interest on the overdue principal of,
premium, if any, and interest on the Note, if any, to the extent lawful, (c)
the due and punctual performance of all other obligations of the Company to the
Holders or the Trustee, all in accordance with the terms set forth in the
Indenture, and (d) in case of any extension of time of payment or renewal of
any Note or any of such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.  Capitalized terms used herein have the
meanings assigned to them in the Indenture unless otherwise indicated.

This Subsidiary Guarantee shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holder and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof and in the Indenture.

This Subsidiary Guarantee shall not be valid or
obligatory for any purpose until the certificate of authentication on the Note
upon which this Subsidiary Guarantee is noted shall have been executed by the
Trustee under the Indenture by the manual signature of one of its authorized
signatories.

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

EXHIBIT
I

FORM OF LEASEHOLD MORTGAGE

 

________________________________________________________________

________________________________, a

__________
corporation,

Mortgagor,

to

THE BANK OF NEW YORK,

as
Collateral Agent,

Mortgagee

___________________________________________________

LEASEHOLD MORTGAGE AND FIXTURE FILING

___________________________________________________

Dated as of
_______, 2003

This instrument affects certain real and personal
property

located in _______ County,

State of
________.

________________________________________________________________

Record and
return to:

Mayer, Brown, Rowe & Maw

1675 Broadway

New York, New York 10019

Attention:  Ariel M. Dybner, Esq.

This
instrument was prepared by the above-named attorney.

Notice:          This instrument
contains inter  alia obligations which may provide for:

(a)                                  a variable rate
of interest and/or

(b)                                 future advances
or readvances, which when made, shall have the same priority as advances or
readvances made on the date hereof whether or not (i) any advances or
readvances were made on the date hereof and (ii) any indebtedness is
outstanding at the time any advance or re-advance is made.

Notwithstanding anything to the contrary contained
herein, the maximum principal indebtedness secured under any contingency by
this instrument shall in no event exceed $160,000,000.

 

 

LEASEHOLD MORTGAGE AND FIXTURE FILING

LEASEHOLD MORTGAGE AND FIXTURE FILING, dated as of
___________, 200_ (this “Mortgage”), made by __________________________,
a ___________ __________ (the “Mortgagor”), having an address at
_______________ to THE BANK OF NEW YORK, as trustee, having an address at 101
Barclay Street — 8W, New York, New York 10286, Attention: Corporate Trust
Division — New World Restaurant Group, Inc. as the Collateral Agent under the
Indenture (together with its successors and assigns from time to time acting as
Collateral Agent in connection such Indenture, the “Mortgagee”).

W  I  T  N  E  S  S  E  T  H  T  H  A  T:

WHEREAS, pursuant to the lease described on Schedule
2 annexed hereto and made a part hereof, as the same may be amended,
restated or otherwise modified from time to time (individually, an “Encumbered
Lease” and collectively, the “Encumbered Leases”), the Mortgagor is
on the date of delivery hereof the holder of various leasehold estates in the
parcels of land described in Schedule 1 hereto (the “Land”) and
of the Improvements (unless otherwise defined herein or the context otherwise
requires, capitalized terms used in this Mortgage, including its preamble and
recitals, have the meanings provided in the Indenture, as defined below);

WHEREAS, pursuant to the terms, conditions and
provisions of the Indenture dated as of July 8, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the “Indenture”)
among [New World Restaurant Group, Inc.] [the Mortgagor] (the “Company”), the
Subsidiary Guarantors (the “Subsidiary Guarantors”) and the Mortgagee,
as trustee, and various other agreements defined in connection therewith as may
be amended, restated, supplemented or otherwise modified from time to time as
the case may be (the “Indenture Documents”), the Collateral Agent has agreed
for the equal and ratable benefit of the Initial Purchaser and the Holders to
purchase Notes for the benefit of the Mortgagor in the amount of One Hundred
Sixty Million Dollars ($160,000,000);

[WHEREAS, the Mortgagor is a wholly owned subsidiary
of New World Restaurant Group, Inc. and will derive substantial direct and
indirect benefits from the consummation of the transactions described in the
Indenture and from the purchase of the Notes, and in consideration of such
benefits and as a material inducement for the Collateral Agent on behalf of the
Initial Purchaser and Holders to enter into the Indenture, the Mortgagor has
agreed, pursuant to the terms of the Indenture executed by the Mortgagor, to
unconditionally guaranty the payment and performance of all Obligations of the
Issuer and each Obligor under the Indenture and the other Indenture Documents,
as more fully set forth in such Indenture;]

WHEREAS, (i) as a material inducement for the
Collateral Agent on behalf of Initial Purchaser and Holders to enter into the
Indenture and the other Indenture Documents, (ii) to secure the payment and
performance of the Mortgagor’s obligations under the Indenture and the other
Indenture Documents; and (iii) to secure the payment and performance of the
Obligations, the Mortgagor is required to execute and deliver this Mortgage to
the Mortgagee; and

 

1

 

WHEREAS, the Mortgagor has duly authorized the
execution, delivery and performance of this Mortgage.

G R A N T:

NOW, THEREFORE, for and in consideration of the
premises, and of the mutual covenants herein contained, and in order to induce
the Collateral Agent on behalf of Initial Purchaser and Holders to purchase the
Notes pursuant to the Indenture, and in order to secure the full, timely and
proper payment and performance of and compliance with each and every one of the
Obligations, the Mortgagor hereby irrevocably grants, bargains, sells,
mortgages, warrants, aliens, demises, releases, hypothecates, pledges, assigns,
transfers and conveys to the Mortgagee and its successors and assigns, forever,
all of the following (the “Collateral”):

1.1.1        Real Estate.  The leasehold estate in the Land created by
the Encumbered Leases and all rights, options and other benefits inuring to
Mortgagor under each Encumbered Lease, together with all and singular the
tenements, rights, easements, hereditaments, rights of way, privileges,
liberties, appendages and appurtenances now or hereafter belonging or in any
way pertaining to the Land and such additional lands and estates therein
(including, without limitation, all rights relating to storm and sanitary
sewer, water, gas, electric, railway and telephone services); all development
rights, air rights, riparian rights, water, water rights, water stock, all
rights in, to and with respect to any and all oil, gas, coal, minerals and
other substances of any kind or character underlying or relating to the Land
and such additional lands and estates therein and any interest therein; all
estate, claim, demand, right, title or interest of the Mortgagor in and to any
street, road, highway or alley, vacated or other, adjoining the Land or any
part thereof and such additional lands and estates therein; all strips and
gores belonging, adjacent or pertaining to the Land or such additional lands
and estates; and any after acquired title to any of the foregoing (herein
collectively referred to as the “Real Estate”);

1.1.2        Improvements.  All right, title and interest of the
Mortgagor in and to all buildings, structures and other improvements and any
additions and alterations thereto or replacements thereof, now or hereafter
built, constructed or located upon the Real Estate; and, to the extent that any
of the following items of property constitutes fixtures under applicable laws,
all furnishings, fixtures, equipment, machinery, building and construction
materials and other articles of every kind and nature whatsoever and all
replacements thereof, now or hereafter affixed or attached to, placed upon or
used in any way in connection with the complete and comfortable use, enjoyment,
occupation, operation, development and/or maintenance of the Real Estate or
such buildings, structures and other improvements, including, but not limited
to, partitions, furnaces, boilers, oil burners, radiators and piping, plumbing
and bathroom fixtures, refrigeration, heating, ventilating, air conditioning
and sprinkler systems, other fire prevention and extinguishing apparatus and
materials, vacuum cleaning systems, gas and electric fixtures, incinerators,
compactors, elevators, engines, motors, generators and all other articles of
property which are considered fixtures under applicable law (such buildings,
structures and other improvements and such other property are herein
collectively referred to as the “Improvements”; the Real Estate and the
Improvements are herein collectively referred to as the “Property”);

 

2

 

1.1.3        Goods.  All right, title and interest of the Mortgagor in and to all
building materials, goods, construction materials, appliances (including,
without limitation, stoves, ranges, ovens, disposals, refrigerators, water
fountains and coolers, fans, heaters, dishwashers, clothes washers and dryers,
water heaters, hood and fan combinations, kitchen equipment, laundry equipment,
kitchen cabinets and other similar equipment), stocks, beds, mattresses, bedding
and linens, supplies, blinds, window shades, drapes, carpets, floor coverings,
manufacturing equipment and machinery, office equipment, growing plants and
shrubberies, control devices, equipment (including window cleaning, building
cleaning, swimming pool, recreational, monitoring, garbage, pest control and
other equipment), motor vehicles, tools, furnishings, furniture, lighting,
non-structural additions to the Real Estate and Improvements and all other
tangible property of any kind or character, together with all replacements
thereof, now or hereafter located on or in or used or useful in connection with
the complete and comfortable use, enjoyment, occupation, operation, development
and/or maintenance of the Property, regardless of whether or not located on or
in the Property or located elsewhere for purposes of storage, fabrication or
otherwise (herein collectively referred to as the “Goods”);

1.1.4        Intangibles.  All goodwill, trademarks, trade names,
option rights, purchase contracts, real and personal property tax refunds,
books and records and general intangibles of the Mortgagor relating to the
Property and all accounts, contract rights, instruments, chattel paper and
other rights of the Mortgagor for the payment of money for property sold or lent,
for services rendered, for money lent, or for advances or deposits made, and
any other intangible property of the Mortgagor relating to the Property (herein
collectively referred to as the “Intangibles”);

1.1.5        Leases.  All rights of the Mortgagor in, to and under all leases,
licenses, occupancy agreements, concessions and other arrangements, oral or
written, now existing or hereafter entered into, whereby any Person agrees to
pay money or any other consideration for the use, possession or occupancy of, or
any estate in, the Property or any portion thereof or interest therein (herein
collectively referred to as the “Leases”), and the right, subject to
applicable law, upon the occurrence of any Event of Default hereunder, to
receive and collect the Rents (as hereinafter defined) paid or payable
thereunder;

1.1.6        Plans.  All rights of the Mortgagor in and to all plans and
specifications, designs, drawings and other information, materials and matters
heretofore or hereafter prepared relating to the Improvements or any
construction on the Real Estate (herein collectively referred to as the “Plans”);

1.1.7        Permits.  All rights of the Mortgagor, to the extent
assignable, in, to and under all permits, franchises, licenses, approvals and
other authorizations respecting the use, occupation and operation of the
Property and every part thereof and respecting any business or other activity
conducted on or from the Property, and any product or proceed thereof or
therefrom, including, without limitation, all building permits, certificates of
occupancy and other licenses, permits and approvals issued by governmental
authorities having jurisdiction (herein collectively referred to as the “Permits”);

 

3

 

1.1.8        Contracts.  All right, title and interest of the
Mortgagor in and to all agreements, contracts, certificates, instruments,
warranties, appraisals, engineering, environmental, soils, insurance and other
reports and studies, books, records, correspondence, files and advertising
materials, and other documents, now or hereafter obtained or entered into, as
the case may be, pertaining to the construction, use, occupancy, possession,
operation, management, leasing, maintenance and/or ownership of the Property
and all right, title and interest of the Mortgagor therein (herein collectively
referred to as the “Contracts”);

1.1.9        Leases of Furniture, Furnishings and
Equipment.  All right, title and
interest of the Mortgagor as lessee in, to and under any leases of furniture,
furnishings, equipment and any other Goods now or hereafter installed in or at
any time used in connection with the Property;

1.1.10      Rents.  All rents, issues, profits, royalties, avails, income and other
benefits derived or owned, directly or indirectly, by the Mortgagor from the
Property, including, without limitation, any cash or other securities deposited
to secure performance by tenants, under the Leases (herein collectively
referred to as “Rents”);

1.1.11      Certain Rights under the Encumbered
Leases.  All rights of the Mortgagor
as lessee under each Encumbered Lease to exercise (i) any right to renew the
term of any Encumbered Lease, (ii) any right to purchase the premises demised
thereunder, (iii) any right to terminate any Encumbered Lease as a result of a
casualty or the condemnation of all or a portion of the Land (the foregoing
rights are referred to, collectively, as the “Special Encumbered Lease
Rights”);

1.1.12      Proceeds.  All right, title and interest of the Mortgagor in and to all
proceeds of the conversion, voluntary or involuntary of any of the foregoing
into cash or liquidated claims, including, without limitation, proceeds of
insurance and condemnation awards (herein collectively referred to as “Proceeds”);
and

1.1.13      Other Property.  All other property and rights of the
Mortgagor of every kind and character relating to the Property, and all
proceeds and products of any of the foregoing;

AND, without limiting any of the other provisions of
this Mortgage, the Mortgagor expressly grants to the Mortgagee, as secured
party, a security interest in all of those portions of the Collateral which are
or may be subject to the State Uniform Commercial Code provisions applicable to
secured transactions;

TO HAVE AND TO HOLD the Collateral unto the Mortgagee,
its successors and assigns, forever.

FURTHER to secure the full, timely and proper payment
and performance of the Obligations, the Mortgagor hereby covenants and agrees
with and warrants to the Mortgagee as follows:

 

4

 

ARTICLE
2

COVENANTS AND AGREEMENTS OF THE MORTGAGOR

2.1           Payment of Obligations.  The Mortgagor agrees that:

2.1.1        it will duly and punctually pay and
perform or cause to be paid and performed each of the Obligations at the time
and in accordance with the terms of the Indenture Documents, and

2.1.2        when and as due and payable from time to
time in accordance with the terms hereof or of any other Indenture Documents,
pay and perform, or cause to be paid and performed, all other Obligations.

2.2           Title to Collateral, etc.  The Mortgagor represents and warrants to and
covenants with the Mortgagee that as of the date hereof and at all times
hereafter while this Mortgage is outstanding, the Mortgagor is and shall be the
absolute owner and holder of the leasehold interest in the Property created by
each Encumbered Lease so long as such leasehold estate exists, and the absolute
owner of the legal and beneficial title to all other property included in the
Collateral, free and clear of all Liens other than Liens which are subordinate
to the Encumbered Leases or Permitted Liens.

2.3           Encumbered Leases.  (a) 
The Mortgagor further covenants and agrees that it shall not surrender
any leasehold estate and interest hereinabove described, nor terminate or
cancel any Encumbered Lease prior to the expiration of its term, and that it
shall not without the express written consent of the Mortgagee modify, change,
supplement, alter or amend any Encumbered Lease either orally or in writing.

(b)           Perform and observe all of the terms,
covenants and conditions required to be performed and observed by the tenant
under the Encumbered Leases (including, but without limiting the generality of
the foregoing, any payment obligations), do all things necessary to preserve
and to keep unimpaired its rights under the Encumbered Leases, not waive,
excuse or discharge any of the obligations of the __________ (the “Landlord”)
or any other landlord under the Encumbered Leases without the Mortgagee’s prior
written consent in each instance, which consent may be withheld in its absolute
discretion, and diligently and continuously enforce the obligations of the
landlord under the Encumbered Leases;

(c)           Not do, permit or suffer any event or
omission as a result of which there could occur a default under the Encumbered
Leases or any event which, with the giving of notice or the passage of time, or
both, would constitute a default under the Encumbered Leases (including, but
without limiting the generality of the foregoing, a default in any payment
obligation);

(d)           Deliver to the Mortgagee copies of
any notice of default by any party under the Encumbered Leases, or of any
notice from the landlord under the Encumbered Leases of its intention to
terminate the Encumbered Leases or to re-enter and take possession of the Land,
immediately upon delivery or receipt of such notice, as the case may be;

 

5

 

(e)           Promptly furnish to the Mortgagee
copies of such information and evidence as the Mortgagee may request concerning
the Mortgagor’s due observance, performance and compliance with the terms,
covenants and conditions of the Encumbered Leases;

(f)            Not consent to the subordination of
the Encumbered Leases to any mortgage of the fee interest or Landlord’s
interest in all or any portion of the Property;

(g)           At its sole cost and expense, execute
and deliver to the Mortgagee, within five (5) days after request, such
documents, instruments or agreements as may be required to permit the Mortgagee
to cure any default under the Encumbered Leases;

(h)           Promptly deposit with the Mortgagee
an exact copy of any notice, communication, specification or other instrument
or document received or given by it in any way relating to or affecting the
Encumbered Leases which may concern or could in any manner affect the estate of
the landlord or the tenant in or under the Encumbered Leases or in the real
estate thereby demised.

2.4           Representations and Warranties.  In order to induce the Mortgagee to enter
into this Mortgage, the Indenture and the other Indenture Documents, the
Mortgagor agrees that all of the representations and warranties set forth in
the Indenture are incorporated into this Mortgage by reference as if fully set
forth herein.

2.5           Mortgagor’s Covenants.  In order to induce the Mortgagee to enter
into this Mortgage, the Indenture and the other Indenture Documents, the
Mortgagor agrees that all of the covenants set forth in the Indenture are
incorporated into this Mortgage by reference as if fully set forth herein.

2.6           Default Under Encumbered Leases.  In the event of default by the Mortgagor in
the performance of any of its obligations under the Encumbered Leases,
including, but without limiting the generality of the foregoing, any default in
the payment of any sums payable thereunder, then, in each and every case, the
Mortgagee may, at its option, and in addition to its other rights hereunder
following such an event, cause the default or defaults to be remedied and
otherwise exercise any and all of the rights of the Mortgagor thereunder in the
name of and on behalf of the Mortgagor. 
The Mortgagor shall, on demand, reimburse the Mortgagee for all advances
made and expenses incurred by the Mortgagee in curing any such default
(including, without limiting the generality of the foregoing, reasonable
attorneys’ fees and disbursements), together with interest thereon computed at
the Interest Accrual Rate from the date that such advance is made, to and
including the date the same is paid to the Mortgagee.  No release or forbearance of any of the Mortgagor’s obligations
under the Encumbered Leases, pursuant to the Encumbered Leases or otherwise,
shall release the Mortgagor from any obligations under this Mortgage,
including, without limitation, the obligations with respect to the payment of
rent as provided for in the Encumbered Leases and the performance of all of the
terms, provisions, covenants, conditions and agreements contained in the
Encumbered Leases, to be kept, performed and complied with by the tenant
therein.

 

6

 

2.7           Notices of Actions under
Encumbered Leases.  The Mortgagor
shall give the Mortgagee notice of its intention to exercise each and every
option, if any, to extend the term of the Encumbered Leases, or to purchase the
premises demised by the Encumbered Leases, or any portion thereof, or expand
the area of the Encumbered Leases, or to exercise any other right or to give
any other notice which it is entitled to do thereunder, at least thirty (30)
days prior to the expiration of the time to exercise such option or other right
or to give any other notice under the terms thereof.  If the Mortgagor intends to extend the term of the Encumbered
Leases, or purchase all or any part of the Land, or expand the area of the
Encumbered Leases, it shall deliver to the Mortgagee, with the notice of such
decision, a copy of the notice of extension delivered to the landlord under the
Encumbered Leases, together with the terms and conditions of such extension.

2.8           No Assignment.  Anything contained herein to the contrary
notwithstanding, this Mortgage shall not constitute an assignment of the
Encumbered Leases within the meaning of any provisions thereof prohibiting or
restricting its assignment and the Mortgagee shall have no liability or
obligation thereunder by reason of this acceptance of this Mortgage.

2.9           No Merger; Spreader Clause.  So long as this Mortgage is in effect, there
shall be no merger of the Encumbered Leases or any interest therein, nor of the
leasehold estate created thereby, with the fee estate in the Land, by reason of
the fact that the Encumbered Leases or any interest therein or leasehold estate
created thereby may be held directly or indirectly by or for the account of any
person who shall hold the fee estate in the Land or any portion thereof or any
interest of Landlord or any other landlord under the Encumbered Leases.  If the Mortgagor shall acquire fee title to
the Land, or any other estate, title or interest in the Land, or any portion thereof,
then, immediately upon the Mortgagor’s acquisition of such property, this
Mortgage automatically shall spread to cover the Mortgagor’s interest in such
property on the same terms, covenants and conditions as set forth herein.  Upon such acquisition, the Mortgagor, at its
sole cost and expense, shall deliver to the Mortgagee an endorsement to the
Mortgagee’s title insurance policy insuring this Mortgage, in a form acceptable
to the Mortgagee, insuring that this Mortgage, as so spread to cover the
Mortgagor’s interest in such property, is a valid first lien on the Mortgagor’s
interest therein, subject only to the matters set forth in such title
policy.  It is the intention of the
Mortgagor and the Mortgagee that no documents, instruments or agreements shall
be necessary to confirm the foregoing spread of this Mortgage to cover the
Mortgagor’s interest in such property, as aforesaid, and that such spreader
shall occur automatically upon the consummation of the Mortgagor’s acquisition
of such estate, title or interest of such property.  Notwithstanding the foregoing, the Mortgagor shall make, execute,
acknowledge and deliver to the Mortgagee or so cause to be made, executed,
acknowledged and delivered to the Mortgagee, in form satisfactory to the
Mortgagee, all such further or other documents, instruments, agreements or
assurances as may be required by the Mortgagee to confirm the foregoing spread
of this Mortgage to cover the Mortgagor’s interest in such property.  The Mortgagor shall pay all expenses incurred
by the Mortgagee in connection with the preparation, execution, acknowledgment,
delivery and/or recording of any such documents, including but without limiting
the generality of the foregoing, all filing, registration and recording fees
and charges, documentary stamps, mortgage taxes, intangible taxes, and
reasonable attorneys’ fees, costs and disbursements.

 

7

 

2.10         Section 365 Rights.  The lien of this Mortgage shall attach to
all of the Mortgagor’s rights and remedies at any time arising under or
pursuant to Subsection 365(h) of the Bankruptcy Code, 11 U.S.C. § 365(h),
including, without limitation, all of the Mortgagor’s rights to remain in
possession of the Property.

2.11         Section 365 Election.  The Mortgagor shall not without the
Mortgagee’s prior written consent, which may be withheld in its absolute
discretion, elect to treat the Encumbered Leases as terminated under Subsection
365(h)(1) of the Bankruptcy Code, 11 U.S.C. § 365(h)(1).  Any such election made without the
Mortgagee’s prior written consent shall be void and of no force or effect.

2.12         Assignment of Rights and Claims.  The Mortgagor hereby unconditionally
assigns, transfers and sets over unto the Mortgagee all of the Mortgagor’s
rights to the payment of damages arising from any rejection of the Encumbered
Leases by Landlord or any other landlord under the Encumbered Leases pursuant
to the Bankruptcy Code, 11 U.S.C. Sections 101, et seq.  The Mortgagee shall have the right to
proceed in its own name or in the name of Mortgagor in respect of any claim,
suit, action or proceeding relating to the rejection of the Encumbered Leases,
including, without limitation, the right to file and prosecute, to the
exclusion of the Mortgagor, any proof of claim, complaints, motions,
applications, notices and other documents, in any case in respect of the
landlord under the Encumbered Leases pursuant to the Bankruptcy Code.  This assignment constitutes a present,
irrevocable and unconditional assignment of the foregoing claims, rights and
remedies, and shall continue in effect until defeasance of this Mortgage in
accordance with the terms hereof.  Any
amounts received by the Mortgagee as damages arising out of the rejection of
the Encumbered Leases by such landlord shall be applied, first, to all costs
and expenses of the Mortgagee (including, without limitation, attorneys’ fees)
incurred in connection with the assertion, defense, determination or exercise
of any of its rights or remedies under this Section, second, to the pro rata
payment of the Building Bond Note and the Building Loan Notes, and, third, to
the payment of any and all other Obligations, and the surplus, if any, shall be
paid to the Mortgagor.

2.13         Notification to Beneficiary.  If pursuant to Subsection 365(h)(2) of the
Bankruptcy Code, 11 U.S.C. § 365(h)(2), the Mortgagor seeks to offset against
the rent reserved in the Encumbered Leases the amount of any damages caused by
the nonperformance by Landlord or any other landlord under the Encumbered
Leases of any of the landlord’s obligations under the Encumbered Leases after
the rejection by Landlord or any other landlord of the Encumbered Leases under
the Bankruptcy Code, the Mortgagor shall, prior to effecting such offset,
notify the Mortgagee in writing of its intent so to do, setting forth the
amounts proposed to be offset and the basis therefor.  The Mortgagee shall have the right to object to all or any part
of such offset, and, in the event of such objection, the Mortgagor shall not
effect any offset of the amounts so objected to by the Mortgagee.  If the Mortgagee fails to object within
thirty (30) days after receipt of notice from the Mortgagor in accordance with
the first sentence of this Section, the Mortgagor may proceed to effect such
offset in the amounts set forth in the Mortgagor’s notice.  Notwithstanding anything to the contrary
contained herein, neither the Mortgagee’s failure to object nor any objection
or other communication between the Mortgagee and the Mortgagor relating to such
offset shall constitute an approval of any such offset by the Mortgagee.  The Mortgagor shall pay and protect the
Mortgagee, and indemnify, defend and

 

8

 

save the Mortgagee
harmless from and against, any and all claims, demands, actions, suits, proceedings,
damages, losses, costs and expenses of every nature whatsoever (including,
without limitation, attorneys’ fees) arising from or relating to any offset by
the Mortgagor against the rent reserved in the Encumbered Leases.

2.14         Control of Proceedings.  If any action, proceeding, motion or notice
shall be commenced or filed in respect of Landlord or any other landlord under
the Encumbered Leases, all or part of the Property or the Encumbered Leases in
connection with any case under the Bankruptcy Code, 11 U.S.C. Sections 101, et
seq., the Mortgagee shall have the option, to the exclusion of the Mortgagor,
to conduct and control any such litigation with counsel of the Mortgagee’s
choice.  The Mortgagee may proceed in
its own name or in the name of the Mortgagor in connection with any such
litigation, and the Mortgagor agrees to execute any and all powers,
authorizations, consents or other documents required by the Mortgagee in
connection therewith.  The Mortgagor shall,
upon demand, pay to the Mortgagee all costs and expenses (including attorneys’
fees) paid or incurred by the Mortgagee in connection with the prosecution or
conduct of any such proceedings. 
Payment and performance by the Mortgagor of its obligations under and
pursuant to this Section shall be secured by the lien of this Mortgage.  The Mortgagor shall not commence any action,
suit, proceeding or case, or file any application or make any motion, in
respect of the Encumbered Leases in any such case under the Bankruptcy Code
without the prior written consent of the Mortgagee, which may be withheld in
its absolute discretion.

2.15         Notice of Bankruptcy Filing.  The Mortgagor shall, after obtaining
knowledge thereof, promptly notify the Mortgagee orally of any filing by or
against Landlord or any other landlord under the Encumbered Leases, of a
petition under the Bankruptcy Code, 11 U. S.C. Sections 101, et seq., by
telephonic notice to the location for the Mortgagee stated herein for
notice.  Mortgagor shall immediately
thereafter give written notice of such filing to the Mortgagee setting forth
any information available to the Mortgagor as to the date of such filing, the
court in which such petition was filed and the relief sought therein.  The Mortgagor shall promptly deliver to the
Mortgagee, following receipt, copies of any and all notices, summonses,
pleadings, applications, adversary proceedings, contested matters and other
documents received by the Mortgagor in connection with any such petition and
any proceedings relating thereto.

2.16         Rejection of Encumbered Leases.  If there shall be filed by or against the
Mortgagor a petition under the Bankruptcy Code, 11 U.S.C. Section 101, et seq.,
and the Mortgagor, as tenant under the Encumbered Leases, shall (A) determine
to reject the Encumbered Leases pursuant to Section 365(a) of the Bankruptcy
Code or (B) be ordered by a specified date (the “Determination Date”) to
determine whether to assume or reject the Encumbered Leases, the Mortgagor
shall give the Mortgagee (y) not less than thirty (30) days prior written
notice of the date on which the Mortgagor will apply to the Bankruptcy Court
for authority to reject the Encumbered Leases, and (z) immediate telephonic
notice of the order referred to in subpart (B) of this sentence.  The Mortgagee shall have the right, but not
the obligation, to serve upon the Mortgagor within such thirty (30)-day period
or prior to the Determination Date, as the case may be, a notice stating that
(i) the Mortgagee demands that the Mortgagor assume and assign the Encumbered
Leases to the Mortgagee pursuant to Section 365 of the Bankruptcy Code, and
(ii) the Mortgagee covenants to cure or provide adequate assurance

 

9

 

of prompt cure of all
defaults and provide adequate assurance of future performance under the
Encumbered Leases.  If the Mortgagee
serves upon the Mortgagor the notice described in the preceding sentence, the
Mortgagor shall not seek to reject the Encumbered Leases and shall comply with
the demand provided for in clause (i) of the preceding sentence within thirty
(30) days after receipt of the notice, subject to the performance by the
Mortgagee of the covenant provided in the clause (ii) of the preceding
sentence.

2.17         Assignment of Extension Rights.  Effective upon the entry of an order for
relief in respect of the Mortgagor under Chapter 7 of the Bankruptcy Code, 11
U.S.C. Section 101, et seq., the Mortgagor hereby assigns and transfers to the
Mortgagee a nonexclusive right to apply to the Bankruptcy Court under Subsection
365(d)(1) of the Bankruptcy Code for an order extending the period during which
the Encumbered Leases may be rejected or assumed.

ARTICLE
3

EVENTS OF DEFAULT; REMEDIES, ETC.

3.1           Events of Default; Acceleration.  If an “Event of Default” (pursuant to
and as defined in the Indenture) shall have occurred, then and in any such
event the Mortgagee may at any time thereafter (unless all Events of Default
shall theretofore have been remedied and all costs and expenses, including,
without limitation, attorneys’ fees and expenses incurred by or on behalf of
the Mortgagee, shall have been paid in full by the Mortgagor) declare, by
written notice to the Mortgagor, the Notes and all other Obligations to be due
and payable immediately or on a date specified in such notice (provided
that, upon the occurrence of any Event of Default described in Section 6.01 of
the Indenture, the Notes and all other Obligations shall automatically become
due and payable), and on such date the same shall be and become due and payable,
together with interest accrued thereon, without presentment, demand, protest or
notice, all of which the Mortgagor hereby waives.  The Mortgagor will pay on demand all costs and expenses,
including, without limitation, attorneys’ fees and expenses, incurred by or on
behalf of the Mortgagee in enforcing this Mortgage, or any other Indenture
Document, or occasioned by any default hereunder or thereunder.

3.2           Legal Proceedings; Foreclosure.  If an Event of Default shall have occurred,
the Mortgagee at any time may, at its election, proceed at law or in equity or
otherwise to enforce the payment and performance of the Obligations in
accordance with the terms hereof and thereof and to foreclose the lien of this
Mortgage as against all or any part of the Collateral and to have the same sold
under the judgment or decree of a court of competent jurisdiction.  The Mortgagee shall be entitled to recover
in such proceedings all costs incident thereto, including attorneys’ fees and
expenses in such amounts as may be fixed by the court.

3.3           Power of Sale.  If an Event of Default shall have occurred,
the Mortgagee may grant, bargain, sell, assign, transfer, convey and deliver
the whole or, from time to time, any part of the Collateral, or any interest in
any part thereof, at any private sale or at public auction, with or without
demand, advertisement or notice, for cash, on credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Mortgagee in its uncontrolled discretion may determine, or as may be
required by law, and upon such sale the

 

10

 

Mortgagee may execute and
deliver to the purchaser(s) instruments of conveyance pursuant to the terms
hereof and to applicable laws.  Without
limiting the authority granted in this Section 2.3, the Mortgagee shall,
without demand on the Mortgagor, after the lapse of such time as may then be
required by law, and notice of default and notice of sale having been given as
then required by law, sell the Collateral on the date and at the time and place
designated in the notice of sale, either as a whole or in separate parcels and
in such order as the Mortgagee may determine, but subject to any statutory
right of the Mortgagor to direct the order in which such property, if
consisting of several known lots, parcels or interests, shall be sold, at
public auction to the highest bidder, the purchase price payable in lawful
money of the United States at the time of sale.  The Person conducting the sale may, for any cause deemed
expedient, postpone the sale from time to time until it shall be completed and,
in every such case, notice of postponement shall be given by public declaration
thereof by such Person at the time and place last appointed for the sale; provided
that, if the sale is postponed for longer than one (1) day beyond the
day designated in the notice of sale, notice of sale and notice of the time,
date and place of sale shall be given in the same manner as the original notice
of sale.  The Mortgagee shall execute
and deliver to the purchaser at any such sale a mortgagee’s deed conveying the
property so sold, but without any covenant or warranty, express or implied.  The recitals in such mortgagee’s deed of any
matters or facts shall be conclusive proof of the truthfulness thereof.  Any Person, including the Mortgagee, may bid
at the sale.  The Mortgagee shall apply
the proceeds of the sale, to the extent consistent with this Mortgage, to the
payment of (a) the costs and expenses of exercising the power of sale and of
the sale, including the payment of attorneys’ fees and costs, (b) the cost of
any evidence of title procured in connection with such sale, (c) all sums
expended under the terms hereof in conjunction with any default provision
hereof, not then repaid, with accrued interest at the rate provided for in the
Indenture from the date of incurrence, (d) outstanding principal and interest
under the Indenture, (e) all Obligations (other than as provided in clause
(d) above).  The Mortgagee shall
give the remainder, if any, of the proceeds of the sale to the Person or
Persons legally entitled thereto, or the Mortgagee, in the Mortgagee’s
discretion, may deposit the balance of such proceeds with any court or public
official authorized to receive such proceeds.

3.4           Uniform Commercial Code Remedies.  If an Event of Default shall have
occurred, the Mortgagee may exercise from time to time and at any time any
rights and remedies available to it under applicable law upon default in the
payment of indebtedness, including, without limitation, any right or remedy
available to it as a secured party under the Uniform Commercial Code of the
State.

3.5           Waiver of Appraisement, Valuation,
etc.  The Mortgagor hereby waives,
to the fullest extent it may lawfully do so, the benefit of all appraisement,
valuation, stay, extension and redemption laws now or hereafter in force and
all rights of marshaling in the event of any sale of the Collateral or any part
thereof or any interest therein.

3.6           Application of Proceeds of Sale
and Other Moneys.  The proceeds of
any sale of the Collateral or any part thereof or any interest therein under or
by virtue of this Mortgage, whether pursuant to power of sale, foreclosure or
otherwise, and all other moneys at any time held by the Mortgagee as part of
the Collateral, shall be applied as provided in the Indenture.

 

11

 

3.7           Appointment of Receiver.  If an Event of Default shall have occurred,
the Mortgagee shall, as a matter of right, without notice, and without regard
to the adequacy of any security for the indebtedness secured hereby or the
solvency of the Mortgagor, be entitled to the appointment of a receiver for all
or any part of the Collateral, whether such receivership be incidental to a
proposed sale of the Collateral or otherwise, and the Mortgagor hereby consents
to the appointment of such a receiver and will not oppose any such appointment.

3.8           Remedies, etc., Cumulative.  Each right, power and remedy of the Mortgagee
provided for in this Mortgage, the Indenture or any other Indenture Document,
or now or hereafter existing at law or in equity or by statute or otherwise
shall be cumulative and concurrent and shall be in addition to every other
right, power or remedy provided for in this Mortgage, the Indenture or any
other Indenture Document, or now or hereafter existing at law or in equity or
by statute or otherwise, and the exercise or beginning of the exercise by the
Mortgagee of any one or more of the rights, powers or remedies provided for in
this Mortgage, the Indenture, or any other Indenture Document, or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Mortgagee of any or all such
other rights, powers or remedies.

3.9           No Waiver, etc.  No failure by the Mortgagee to insist upon
the strict performance of any term hereof or of the Indenture, or of any other
Indenture Document, or to exercise any right, power or remedy consequent upon a
breach hereof or thereof, shall constitute a waiver of any such term or of any
such breach.  No waiver of any breach
shall affect or alter this Mortgage, which shall continue in full force and
effect with respect to any other then existing or subsequent breach.  By accepting payment or performance of any
amount or other Obligations secured hereby before or after its due date, the
Mortgagee shall not be deemed to have waived its right either to require prompt
payment or performance when due of all other amounts and Obligations payable
hereunder or to declare a default for failure to effect such prompt payment.

ARTICLE
4

MISCELLANEOUS

4.1           Notices, etc.  All notices and other communications
provided to any of the parties hereto shall be in writing and addressed,
delivered or transmitted to such party as set forth in the Indenture.

4.2           Waivers, Amendments, etc.  The provisions of this Mortgage may be
amended, discharged or terminated and the observance or performance of any
provision of this Mortgage may be waived, either generally or in a particular
instance and either retroactively or prospectively, only by an instrument in
writing executed by the Mortgagor and the Mortgagee.

4.3           Governing Law.  THIS MORTGAGE SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE IN WHICH THE
COLLATERAL IS LOCATED.

 

12

 

4.4           Successors and Assigns, etc.  This Mortgage shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.

4.5           Waiver of Jury Trial; Submission
to Jurisdiction. 
4.5.1 EACH OF THE MORTGAGOR AND THE MORTGAGEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS MORTGAGE, THE INDENTURE, ANY INDENTURE DOCUMENT OR ANY
OTHER RELATED INSTRUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE MORTGAGOR OR THE
MORTGAGEE.  THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE MORTGAGEE AND THE INITIAL PURCHASER AND HOLDERS TO ENTER
INTO THE TRANSACTIONS PROVIDED FOR IN THE INDENTURE AND TO MAKE THE CREDIT
EXTENSIONS.

4.5.2        FOR THE PURPOSE OF ANY ACTION OR
PROCEEDING INVOLVING THIS MORTGAGE, THE INDENTURE OR ANY OTHER INDENTURE
DOCUMENT, THE MORTGAGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE COURTS LOCATED IN THE STATE
AND CONSENTS THAT IT MAY BE SERVED WITH ANY PROCESS OR PAPER BY REGISTERED MAIL
OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE IN ACCORDANCE WITH
APPLICABLE LAW, PROVIDED A REASONABLE TIME FOR APPEARANCE IS ALLOWED.  THE MORTGAGOR EXPRESSLY WAIVES, TO THE
EXTENT IT MAY LAWFULLY DO SO, ANY OBJECTION, CLAIM OR DEFENSE WHICH IT MAY HAVE
AT ANY TIME TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING
OUT OF THIS MORTGAGE, THE INDENTURE OR ANY OTHER INDENTURE DOCUMENT IN ANY SUCH
COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER
IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO ANY SUCH CLAIM, SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE
JURISDICTION OVER THE PERSON OF THE MORTGAGOR. 
NOTHING CONTAINED HEREIN WILL BE DEEMED TO PRECLUDE THE MORTGAGEE FROM
BRINGING AN ACTION AGAINST THE MORTGAGOR IN ANY OTHER JURISDICTION.

4.6           Severability.  Any provision of this Mortgage, the
Indenture or any other Indenture Document which is prohibited or unenforceable
in any jurisdiction shall as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Mortgage, the Indenture or such
Indenture Document or affecting the validity or enforceability of such
provision in any other jurisdiction.

4.7           Future Advances.  This Mortgage secures all future advances
under the law of the State in which the Collateral is located.  Any and all future advances under this
Mortgage and the Indenture Documents shall have the same priority as if the
future advance was made on the date

 

13

 

that this Mortgage was
recorded.  This Mortgage shall secure
the Obligations, whenever incurred, such Obligations to be due at the times
provided in the Indenture Documents. 
Notice is hereby given that the Obligations may increase as a
result of any defaults hereunder by Mortgagor due to, for example, and without
limitation, unpaid interest or late charges, unpaid taxes or insurance premiums
which the Mortgagee elects to advance, defaults under leases that the Mortgagee
elects to cure, attorney fees or costs incurred in enforcing the Indenture
Documents or other expenses incurred by the Mortgagee in protecting the
Collateral, the security of this Mortgage or the Mortgagee’s rights and
interests.

 

14

 

IN WITNESS WHEREOF, the undersigned has duly executed,
sealed, acknowledged and delivered this instrument as of the day and year first
above written.

	
   

  	
  [MORTGAGOR]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
  Witnesses as to
  All Signatures

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  

 

 

15

 

[ADD
STATE-SPECIFIC ACKNOWLEDGMENT]

 

16

 

SCHEDULE 1

Legal Description of the
Land

 

17

 

SCHEDULE 2

Encumbered Leases

 

 

18

 

                                                                                                                                                                                             EXHIBIT J

FORM OF LESSOR’S CONSENT TO LEASEHOLD
MORTGAGE

LESSOR CONSENT

THIS LESSOR CONSENT (this “Agreement”), dated
as of the ____ day of _____________, _____, by and among
_______________________ (“Lessor”), __________________________ (“Lessee”),
and The Bank of New York, as trustee, having an address at 101 Barclay Street —
8W, New York, New York 10286, Corporate Trust Division, as the Collateral  Agent (the “Collateral Agent”) on
behalf of the Noteholders, (“Mortgagee”).

WHEREAS, Lessor is the holder of Lessor’s interest and
Lessee is the holder of Lessee’s interest, respectively, in, to and under the
leases and amendments thereof (the “Lease”) described on Schedule “A”
annexed hereto and made a part hereof, which Lease cover the premises described
therein and on Schedule ”B” annexed hereto and made a part hereof
(the “Premises”), Lessee’s estate and interest in the Lease being
hereinafter referred to as the “Leasehold Interest”; and

WHEREAS, Mortgagee and Lessee have entered into an
Indenture dated as of July 8, 2003 pursuant to which certain notes of the
Lessee were issued to the Noteholders, and were to be secured by, among other
things, a lien upon the interest of Lessee under the Lease and upon further
condition, among others, that Lessor and Lessee enter into this Agreement.

NOW, THEREFORE, for good and valuable consideration,
Lessor and Lessee hereby modify and amend the Lease by incorporating the
following as a Rider thereto:

(a)           Lessee shall have the right, without Lessor’s consent, to
mortgage its interest in the Lease to Mortgagee by a “Leasehold Mortgage”
(as hereinafter defined).

(b)           If Lessee shall mortgage its Leasehold Interest, then
until the same shall be satisfied of record, Lessor agrees that it shall not,
without the prior written consent of Mortgagee:

(i)            amend or modify the Lease;

(ii)           consent to, acquiesce in or accept the termination of the
Lease or surrender of all or part of the Premises except pursuant to the
exercise by Lessee of an option to purchase or right of first refusal consented
to by Mortgagee;

(iii)          consent to the assignment or other transfer of all or part
of Lessee’s Leasehold Interest;

 

(iv)          consent to any further encumbrance of Lessee’s Leasehold
Interest;

(v)           create or permit any further encumbrance of Lessor’s
interest in the real property described in Schedule ”A”.

(c)           If Lessee shall mortgage its Leasehold Interest, and if
Mortgagee shall send to Lessor notice of its making a Leasehold Mortgage, then
until the same shall be satisfied of record:  Mortgagee shall have and be
subrogated to any and all rights of Lessee with respect to the curing of any
default under the

 

Lease;  Lessor shall give to Mortgagee,
simultaneously with the serving of the same on Lessee, a copy of each notice or
demand (“Notice”) which it gives to Lessee, including all Notices of
default by Lessee (which shall specify the default), each Notice to be sent to
the address designated by Mortgagee, by registered or certified mail, return
receipt requested, and the same shall be effective upon receipt by such
addressee;  Mortgagee shall have the right, but not the obligation, to
perform any covenant or agreement under the Lease to be performed by Lessee
(including the exercise of renewal or purchase options, if any), and Lessor
shall accept such performance by Mortgagee as though the same had been
performed by Lessee;  Mortgagee shall have the right (but not the
obligation) to cure any default by Lessee in the payment of rent and all other
charges provided for in the Lease  and
Lessor shall accept such performance by Mortgagee as though the same had been
performed by Lessee; and  Lessee may assign its Leasehold Interest to
Mortgagee (or its assignee, designee or nominee) without Lessor’s consent.  Any notice or demand given by Lessor in
derogation hereof shall be deemed of no effect.

(d)           In addition to the right to cure defaults granted to
Mortgagee in the preceding paragraph, Lessor agrees that it will take no action
to effect a termination of the term of the Lease by reason of any default
without first giving Mortgagee reasonable time within which either  to cure each default if such default can be
cured without obtaining possession of the Premises, or  to obtain
possession of the Premises by Mortgagee (including possession by a receiver)
and thereafter to cure such default, if the default be one which can be cured
with the exercise of reasonable diligence by Mortgagee upon so obtaining
possession, or  to institute foreclosure
proceedings and to complete such foreclosure, or otherwise to acquire Lessee’s
interest under the Lease with diligence and without unreasonable delay, in the
case of a default which cannot be cured with the exercise of reasonable
diligence by Mortgagee after obtaining possession of the Premises.  Mortgagee shall not be required to continue
such foreclosure proceedings or proceedings to acquire Lessee’s interest under
the Lease if the default shall be cured by Lessee, and Lessor shall accept such
cure by Lessee even if effected after the time provided to Lessor under the
Lease for effecting such cure.

(e)           In the event of the termination of the Lease prior to its
stated expiration date, or the date of the expiration of any renewal option in
the event a renewal option shall have been exercised prior to the date of such
termination, Lessor agrees that it will give Mortgagee notice of such
termination at least fifteen (15) days prior to the date on which such
termination is to take effect, will waive its right to accelerate any payments
due to it upon a default under the Lease, and will enter into a new lease for
the Premises with Mortgagee or, at Mortgagee’s option, with an assignee,
designee or nominee of Mortgagee for the remainder of the term of the Lease,
effective as of the date of such termination, upon the same covenants,
agreements, rights, terms, options, provisions and limitations contained in the
Lease except for requirements which are no longer applicable or have already
been performed, provided  Mortgagee or
its assignee, designee or nominee makes written request upon Lessor for such
new lease within thirty (30) days after the giving of such notice of
termination and such written request is accompanied by payment to Lessor of all
amounts then due to Lessor of which Lessor shall have given Mortgagee notice (provided, however, that Lessee shall not
be required to make any payments under any provisions of the Lease),  Mortgagee or its assignee, designee or
nominee pays or causes to be paid to Lessor at the time of the execution and
delivery of such new lease any and all additional sums which would at the time
of the execution and delivery thereof be due under the Lease but for such
termination, and pays or causes to be paid any and all expenses including
reasonable counsel fees, court costs and costs and disbursements incurred by
Lessor in connection with any such termination and in connection with the
execution and delivery of such new lease, less the net income from the Premises
collected by Lessor subsequent to the date of the termination of the Lease and
prior to the execution and delivery of such new lease.  The provisions contained herein shall
survive the termination of the Lease.

(i)            Lessee covenants and agrees that there shall be no merger
of the Lease, or of the Leasehold Interest, or of any interest in any building,
building service equipment or other improvement now or hereafter constituting a
portion of the Premises, with the fee estate of the owner or owners of the land
and other property described in the Lease or with a superior leasehold estate,
by reason of the fact that the Lease or the Leasehold Interest or any interest
in any such building, equipment of other improvements, may be held by or for
the account of any person or persons who shall be the owner or owners of such
fee estate or superior leasehold estate in said land and other property, unless
and until all persons at the time having an interest in the fee estate or
superior leasehold estate in said land and premises and all persons, including
Mortgagee, at the time having an interest in the Lease, Leasehold Interest,
buildings, equipment and improvements, shall join in a written instrument
effecting such merger and shall duly record the same.

(f)            With respect to the rights granted to Lessee to assign or
otherwise transfer its interest under the Lease, the granting of the Leasehold
Mortgage to Mortgagee shall not cause Mortgagee to be deemed an assignee or
transferee of the Lease or of the leasehold estate thereby created so as to
require it, as such, to assume the performance of any of the terms, covenants
or conditions on the part of Lessee to be performed thereunder, but the
purchaser at any sale of the Lease and of the leasehold estate thereby created
in any proceedings for the foreclosure of the Leasehold Mortgage, or the
assignee or transferee of the Lease and of the leasehold estate thereby created
under any instrument of assignment or transfer in lieu of the foreclosure of
the Leasehold Mortgage, or the assignee or transferee of the Lease and of the
leasehold estate thereby created pursuant to any other right granted to
Mortgagee under the Leasehold Mortgage, shall be deemed to be an assignee or
transferee within the meaning of the Lease and shall be deemed to have assumed
the performance of all of the terms, covenants and conditions on the

 

part of Lessee to be performed thereunder from and
after the date of such purchase and assignment.

(g)           If Mortgagee or any purchaser at a foreclosure sale shall
acquire Lessee’s Leasehold Interest, and cure all defaults of Lessee which
affect the Premises and are susceptible of being cured (other than requirements
of the Lease which are no longer applicable or have already been performed),
then  said party shall be entitled to exercise any options or rights contained
in the Lease,  such other defaults which are not susceptible of being
cured by Mortgagee or by such purchaser no longer shall be defaults thereunder,
and  notwithstanding any provision in the Lease to the contrary, Mortgagee
or such purchaser or any of their designees or nominees shall have the further
right to assign the Leasehold Interest without Lessor’s consent.

(h)           Lessor hereby agrees that any and all liens, distraints
and other rights against Lessee’s inventory, equipment, machinery, personal
property and trade fixtures located at the Premises which Lessor has or may
have under applicable law or agreement for the payment of rent and other sums
due pursuant to the Lease or otherwise are fully subordinate to Mortgagee’s now
existing and hereafter arising security interests and liens in such property
which secure Lessee’s obligations and indebtedness to Mortgagee.

(i)            As used herein, the term “Leasehold Mortgage”
shall be deemed to mean that certain recorded mortgage lien on the Leasehold
Interest by Mortgagee and any modification of any of the terms thereof,
including, without limitation, any supplement, modification, extension, renewal
or refinancing of the indebtedness secured thereby or any additional advance
secured by the Leasehold Mortgage or any additional Leasehold Mortgage given to
secure the same.

(j)            Notwithstanding any provision in the Lease to the
contrary, in the event of any casualty to or condemnation of the Premises or
any portion thereof, Mortgagee shall be entitled to receive insurance proceeds
and/or condemnation awards otherwise payable to Lessee and shall have the right
(but not the obligation except as provided in the next sentence) to restore the
Premises.  In addition, if Mortgagee (by
reason of its acquiring Lessee’s Leasehold Interest) shall be obligated under
the Lease to restore the Premises in such event, then such obligation shall be
limited to the amount of such proceeds or award.

(k)           Lessor represents that Lessor (i) is the owner of record
of the Premises and (ii) has the necessary power and authority to execute this
Lease Amendment and has obtained all the consents or approvals of any party
necessary to effectuate the terms of this Lease Amendment.

(l)            Except as herein set forth, the Lease shall remain in
full force and effect.

(m)          The rights accorded to Mortgagee hereunder shall bind and
inure to the benefit of its successors, assignees, nominees and designees.

 

(n)           Lessor and Lessee each represent and warrant to Mortgagee,
its successors and/or assigns, that:

(i)            The Lease  sets forth the entire agreement between
Lessor and Lessee with respect to the Premises,  is in full force and
effect, and  has not been amended or modified except for the amendment and
modifications, if any, described in Schedule “A” attached hereto.

(ii)           There are no defaults under the Lease and no event has
occurred which, with the giving of notice, lapse of time, or both, would
constitute a default under the Lease, or if any such default or state of fact
exists the same is hereby waived.

(iii)          All rent payable under the Lease has been paid through
______________.

(o)           Lessor hereby confirms that this Agreement constitutes
notice from Mortgagee that Mortgagee is the holder of a Leasehold
Mortgage.  Any notice or communication
necessary or desirable to be sent under the Lease or this Agreement to
Mortgagee shall be sent by registered or certified mail, postage prepaid,
return receipt requested to ______________________________ or such other
addresses and to such other persons as Mortgagee may designate from time to
time by written notice to Lessor.

(p)           Any notice or communication necessary or desirable to be
sent under the Lease to Lessor and Lessee shall be sent in accordance with the
terms of the Lease to the following addresses:

(i)            If to Lessor:

______________________________

______________________________

______________________________

______________________________

(ii)           If to Lessee:

______________________________

                                                                ______________________________

______________________________

______________________________

(q)           In the event of any conflict or inconsistency between the
terms of the Lease and this Agreement, the terms of this Agreement shall govern
and be binding.

 

IN WITNESS WHEREOF, the parties hereto have executed
this Lessor Consent as of the day and year first above written.

 

	
  WITNESS/ATTEST

  	
   

  	
  LESSOR

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  LESSEE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MORTGAGEE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[ACKNOWLEDGEMENTS]

 

SCHEDULE “A”

DESCRIPTION OF THE LEASE

 

 

SCHEDULE “B”

DESCRIPTION OF THE PREMISES

 

 

SCHEDULE I

 

EXISTING INDEBTEDNESS

 

 

CROSS-REFERENCE
TABLE

	
  TIA
  Section

  	
   

  	
  Indenture
  Section

  	
   

  
	
  310(a)(1)

  	
   

  	
  7.10

  	
   

  
	
  (a)(2)

  	
   

  	
  7.10

  	
   

  
	
  (a)(3)

  	
   

  	
  N.A.

  	
   

  
	
  (a)(4)

  	
   

  	
  N.A.

  	
   

  
	
  (a)(5)

  	
   

  	
  7.08;
  7.10

  	
   

  
	
  (b)

  	
   

  	
  7.03;
  7.08; 7.10; 12.02

  	
   

  
	
  (c)

  	
   

  	
  7.03

  	
   

  
	
  311(a)

  	
   

  	
  7.11

  	
   

  
	
  (b)

  	
   

  	
  7.11

  	
   

  
	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  312(a)

  	
   

  	
  2.05

  	
   

  
	
  (b)

  	
   

  	
  12.03

  	
   

  
	
  (c)

  	
   

  	
  12.03

  	
   

  
	
  313(a)

  	
   

  	
  7.06

  	
   

  
	
  (b)(1)

  	
   

  	
  7.06;
  10.05

  	
   

  
	
  (b)(2)

  	
   

  	
  7.06;
  7.07

  	
   

  
	
  (c)

  	
   

  	
  7.05;
  7.06; 12.02

  	
   

  
	
  (d)

  	
   

  	
  7.06

  	
   

  
	
  314(a)

  	
   

  	
  4.07;
  4.08; 12.02

  	
   

  
	
  (b)

  	
   

  	
  10.03

  	
   

  
	
  (c)(1)

  	
   

  	
  12.04

  	
   

  
	
  (c)(2)

  	
   

  	
  12.04

  	
   

  
	
  (c)(3)

  	
   

  	
  N.A.

  	
   

  
	
  (d)

  	
   

  	
  10.04

  	
   

  
	
  (e)

  	
   

  	
  12.05

  	
   

  
	
  (f)

  	
   

  	
  N.A.

  	
   

  
	
  315(a)

  	
   

  	
  7.01(b

  	
  )

  
	
  (b)

  	
   

  	
  7.05;
  12.02

  	
   

  
	
  (c)

  	
   

  	
  7.01(a

  	
  )

  
	
  (d)

  	
   

  	
  7.01(c

  	
  )

  
	
  (e)

  	
   

  	
  6.11

  	
   

  
	
  316(a) (last sentence)

  	
   

  	
  2.09

  	
   

  
	
  (a)(1)(A)

  	
   

  	
  6.05

  	
   

  
	
  (a)(1)(B)

  	
   

  	
  6.04

  	
   

  
	
  (a)(2)

  	
   

  	
  N.A.

  	
   

  
	
  (b)

  	
   

  	
  6.07

  	
   

  
	
  (c)

  	
   

  	
  9.04

  	
   

  
	
  317(a)(1)

  	
   

  	
  6.08

  	
   

  
	
  (a)(2)

  	
   

  	
  6.09

  	
   

  
	
  (b)

  	
   

  	
  2.04

  	
   

  
	
  318(a)

  	
   

  	
  12.01

  	
   

  
	
  (c)

  	
   

  	
  12.01

  	
   

  

 

N.A.
means not applicable

NOTE:            This
Cross-Reference Table shall not, for any purpose, be deemed to be a part of the
Indenture.

 

 

	
  ARTICLE I

  	
  DEFINITIONS AND
  INCORPORATION BY REFERENCE

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
   

  
	
  Section 1.02

  	
  Incorporation by
  Reference of TIA

  	
   

  
	
  Section 1.03

  	
  Rules of Construction

  	
   

  
	
  ARTICLE II

  	
  THE NOTES

  	
   

  
	
  Section 2.01

  	
  Form and Dating

  	
   

  
	
  Section 2.02

  	
  Execution and
  Authentication; Aggregate Principal Amount

  	
   

  
	
  Section 2.03

  	
  Registrar and Paying
  Agent

  	
   

  
	
  Section 2.04

  	
  Paying Agent To Hold
  Assets in Trust

  	
   

  
	
  Section 2.05

  	
  Holder Lists

  	
   

  
	
  Section 2.06

  	
  Transfer and Exchange

  	
   

  
	
  Section 2.07

  	
  Replacement Notes

  	
   

  
	
  Section 2.08

  	
  Outstanding Notes

  	
   

  
	
  Section 2.09

  	
  Treasury Notes

  	
   

  
	
  Section 2.10

  	
  Temporary Notes

  	
   

  
	
  Section 2.11

  	
  Cancellation

  	
   

  
	
  Section 2.12

  	
  CUSIP Number

  	
   

  
	
  Section 2.13

  	
  Deposit of Monies

  	
   

  
	
  Section 2.14

  	
  Book-Entry
  Provisions for Global Note

  	
   

  
	
  Section 2.15

  	
  Special Transfer
  Provisions

  	
   

  
	
  Section 2.16

  	
  Defaulted Interest

  	
   

  
	
  ARTICLE III

  	
  REDEMPTION

  	
   

  
	
  Section 3.01

  	
  Notices to Trustee

  	
   

  
	
  Section 3.02

  	
  Selection of Notes To
  Be Redeemed

  	
   

  
	
  Section 3.03

  	
  Optional Redemption

  	
   

  
	
  Section 3.04

  	
  [Intentionally
  Omitted]

  	
   

  
	
  Section 3.05

  	
  Notice of Redemption

  	
   

  
	
  Section 3.06

  	
  Effect of Notice of
  Redemption

  	
   

  
	
  Section 3.07

  	
  Deposit of Redemption
  Price

  	
   

  
	
  Section 3.08

  	
  Notes Redeemed in Part

  	
   

  
	
  ARTICLE IV

  	
  COVENANTS

  	
   

  
	
  Section 4.01

  	
  Payment of Notes

  	
   

  
	
  Section 4.02

  	
  Maintenance of Office
  or Agency

  	
   

  

 

 

	
  Section 4.03

  	
  Corporate Existence

  	
   

  
	
  Section 4.04

  	
  Payment of Taxes and
  other Claims

  	
   

  
	
  Section 4.05

  	
  Maintenance of
  Properties and Insurance

  	
   

  
	
  Section 4.06

  	
  Compliance
  Certificate; Notice of Default

  	
   

  
	
  Section 4.07

  	
  Compliance with Laws

  	
   

  
	
  Section 4.08

  	
  Reports

  	
   

  
	
  Section 4.09

  	
  Waiver of Stay,
  Extension or Usury Laws

  	
   

  
	
  Section 4.10

  	
  Limitation on
  Restricted Payments

  	
   

  
	
  Section 4.11

  	
  Limitation on
  Transactions with Affiliates

  	
   

  
	
  Section 4.12

  	
  Limitation on
  Incurrence of Additional Indebtedness and Issuance of Disqualified Capital
  Stock

  	
   

  
	
  Section 4.13

  	
  Limitation on
  Dividends and Other Payment Restrictions Affecting Subsidiaries

  	
   

  
	
  Section 4.14

  	
  Limitation on Change
  of Control

  	
   

  
	
  Section 4.15

  	
  Limitation on Asset
  Sales

  	
   

  
	
  Section 4.16

  	
  Limitation on
  Issuances and Sales of Capital Stock of Subsidiaries

  	
   

  
	
  Section 4.17

  	
  Limitation on Liens

  	
   

  
	
  Section 4.18

  	
  Conduct of Business

  	
   

  
	
  Section 4.19

  	
  Payments For Consent

  	
   

  
	
  Section 4.20

  	
  Registration Rights
  Agreement

  	
   

  
	
  Section 4.21

  	
  Impairment of Security
  Interest

  	
   

  
	
  Section 4.22

  	
  Intercompany
  Indebtedness

  	
   

  
	
  Section 4.23

  	
  Real Estate Mortgages
  and Filings

  	
   

  
	
  Section 4.24

  	
  Leasehold Mortgages
  and Filings

  	
   

  
	
  Section 4.25

  	
  Subsidiary Guarantors

  	
   

  
	
  Section 4.26

  	
  Limitation on Capital
  Expenditure

  	
   

  
	
  Section 4.27

  	
  Minimum Consolidated
  Adjusted EBITDA

  	
   

  
	
  Section 4.28

  	
  Use of Proceeds

  	
   

  
	
  ARTICLE V

  	
  SUCCESSOR CORPORATION

  	
   

  
	
  Section 5.01

  	
  Merger, Consolidation
  and Sale of Assets

  	
   

  

 

 

-ii-

 

	
  ARTICLE VI

  	
  DEFAULT AND REMEDIES

  	
   

  
	
  Section 6.01

  	
  Events of Default

  	
   

  
	
  Section 6.02

  	
  Acceleration

  	
   

  
	
  Section 6.03

  	
  Other Remedies

  	
   

  
	
  Section 6.04

  	
  Waiver of Past
  Defaults

  	
   

  
	
  Section 6.05

  	
  Control by Majority

  	
   

  
	
  Section 6.06

  	
  Limitation on Suits

  	
   

  
	
  Section 6.07

  	
  Rights of Holders To
  Receive Payment

  	
   

  
	
  Section 6.08

  	
  Collection Suit by
  Trustee

  	
   

  
	
  Section 6.09

  	
  Trustee May File
  Proofs of Claim

  	
   

  
	
  Section 6.10

  	
  Priorities

  	
   

  
	
  Section 6.11

  	
  Undertaking for Costs

  	
   

  
	
  Section 6.12

  	
  Restoration of Rights
  and Remedies

  	
   

  
	
  Section 6.13

  	
  Rights and Remedies
  Cumulative

  	
   

  
	
  Section 6.14

  	
  Delay or Omission Not
  Waiver

  	
   

  
	
  ARTICLE VII

  	
  TRUSTEE

  	
   

  
	
  Section 7.01

  	
  Duties of Trustee

  	
   

  
	
  Section 7.02

  	
  Rights of Trustee

  	
   

  
	
  Section 7.03

  	
  Individual Rights of
  Trustee

  	
   

  
	
  Section 7.04

  	
  Trustee’s Disclaimer

  	
   

  
	
  Section 7.05

  	
  Notice of Default

  	
   

  
	
  Section 7.06

  	
  Reports by Trustee to
  Holders

  	
   

  
	
  Section 7.07

  	
  Compensation and
  Indemnity

  	
   

  
	
  Section 7.08

  	
  Replacement of Trustee

  	
   

  
	
  Section 7.09

  	
  Successor Trustee by
  Merger, Etc

  	
   

  
	
  Section 7.10

  	
  Eligibility;
  Disqualification

  	
   

  
	
  Section 7.11

  	
  Preferential Collection
  of Claims Against Company

  	
   

  
	
  Section 7.12

  	
  Trustee as Collateral
  Agent

  	
   

  
	
  Section 7.13

  	
  Co-trustees,
  co-Collateral Agent and Separate Trustees, 
  Collateral Agent

  	
   

  
	
  ARTICLE VIII

  	
  SATISFACTION AND
  DISCHARGE OF INDENTURE

  	
   

  

 

 

-iii-

 

	
  Section 8.01

  	
  Legal Defeasance and
  Covenant Defeasance

  	
   

  
	
  Section 8.02

  	
  Satisfaction and
  Discharge

  	
   

  
	
  Section 8.03

  	
  Survival of Certain
  Obligations

  	
   

  
	
  Section 8.04

  	
  Acknowledgment of
  Discharge by Trustee

  	
   

  
	
  Section 8.05

  	
  Application of Trust
  Monies

  	
   

  
	
  Section 8.06

  	
  Repayment to the
  Company; Unclaimed Money

  	
   

  
	
  Section 8.07

  	
  Reinstatement

  	
   

  
	
  ARTICLE IX

  	
  AMENDMENTS, SUPPLEMENTS
  AND WAIVERS

  	
   

  
	
  Section 9.01

  	
  Without Consent of
  Holders

  	
   

  
	
  Section 9.02

  	
  With Consent of
  Holders

  	
   

  
	
  Section 9.03

  	
  Compliance with TIA

  	
   

  
	
  Section 9.04

  	
  Revocation and Effect
  of Consents

  	
   

  
	
  Section 9.05

  	
  Notation on or
  Exchange of Notes

  	
   

  
	
  Section 9.06

  	
  Trustee To Sign
  Amendments, Etc

  	
   

  
	
  ARTICLE X

  	
  SECURITY

  	
   

  
	
  Section 10.01

  	
  Grant of Security
  Interest

  	
   

  
	
  Section 10.02

  	
  Intercreditor
  Agreement

  	
   

  
	
  Section 10.03

  	
  Recording and
  Opinions

  	
   

  
	
  Section 10.04

  	
  Release of
  Collateral

  	
   

  
	
  Section 10.05

  	
  Specified Releases
  of Collateral

  	
   

  
	
  Section 10.06

  	
  Form and Sufficiency
  of Release

  	
   

  
	
  Section 10.07

  	
  Purchaser Protected

  	
   

  
	
  Section 10.08

  	
  Authorization of
  Actions To Be Taken by the Trustee Under the Collateral Agreements

  	
   

  
	
  Section 10.09

  	
  Authorization of
  Receipt of Funds by the Trustee Under the Collateral Agreements

  	
   

  
	
  ARTICLE XI

  	
  GUARANTEE

  	
   

  
	
  Section 11.01

  	
  Unconditional
  Guarantee

  	
   

  
	
  Section 11.02

  	
  Limitations on
  Subsidiary Guarantees

  	
   

  
	
  Section 11.03

  	
  Evidence of
  Execution and Delivery of Subsidiary Guarantee

  	
   

  
	
  Section 11.04

  	
  Release of a
  Subsidiary Guarantor

  	
   

  

 

 

-iv-

 

	
  Section 11.05

  	
  Waiver of
  Subrogation

  	
   

  
	
  Section 11.06

  	
  Immediate Payment

  	
   

  
	
  Section 11.07

  	
  No Set-Off

  	
   

  
	
  Section 11.08

  	
  Obligations Absolute

  	
   

  
	
  Section 11.09

  	
  Obligations
  Continuing

  	
   

  
	
  Section 11.10

  	
  Obligations Not
  Reduced

  	
   

  
	
  Section 11.11

  	
  Obligations
  Reinstated

  	
   

  
	
  Section 11.12

  	
  Obligations Not
  Affected

  	
   

  
	
  Section 11.13

  	
  Waiver

  	
   

  
	
  Section 11.14

  	
  No Obligation To
  Take Action Against the Company

  	
   

  
	
  Section 11.15

  	
  Dealing with the
  Company and Others

  	
   

  
	
  Section 11.16

  	
  Default and
  Enforcement

  	
   

  
	
  Section 11.17

  	
  [Intentionally
  omitted]

  	
   

  
	
  Section 11.18

  	
  Amendment, Etc

  	
   

  
	
  Section 11.19

  	
  Acknowledgment

  	
   

  
	
  Section 11.20

  	
  Costs and Expenses

  	
   

  
	
  Section 11.21

  	
  No Merger or Waiver;
  Cumulative Remedies

  	
   

  
	
  Section 11.22

  	
  Survival of
  Obligations

  	
   

  
	
  Section 11.23

  	
  Subsidiary Guarantee
  in Addition to Other Obligations

  	
   

  
	
  Section 11.24

  	
  Severability

  	
   

  
	
  Section 11.25

  	
  Successors and
  Assigns

  	
   

  
	
  ARTICLE XII

  	
  MISCELLANEOUS

  	
   

  
	
  Section 12.01

  	
  TIA Controls

  	
   

  
	
  Section 12.02

  	
  Notices

  	
   

  
	
  Section 12.03

  	
  Communications by
  Holders with Other Holders

  	
   

  
	
  Section 12.04

  	
  Certificate and
  Opinion as to Conditions Precedent

  	
   

  
	
  Section 12.05

  	
  Statements Required
  in Certificate or Opinion

  	
   

  
	
  Section 12.06

  	
  Rules by Trustee,
  Paying Agent, Registrar

  	
   

  
	
  Section 12.07

  	
  Legal Holidays

  	
   

  
	
  Section 12.08

  	
  Governing Law;
  Jurisdiction; Submission to Venue

  	
   

  

 

 

-v-

 

	
  Section 12.09

  	
  No Adverse
  Interpretation of other Agreements

  	
   

  
	
  Section 12.10

  	
  No Recourse Against
  Others

  	
   

  
	
  Section 12.11

  	
  Successors

  	
   

  
	
  Section 12.12

  	
  Duplicate Originals

  	
   

  
	
  Section 12.13

  	
  Severability

  	
   

  
	
  Section 12.14

  	
  Independence of
  Covenants

  	
   

  
	
  Section 12.15

  	
  Table of Contents,
  Headings, Etc

  	
   

  

 

 

-vi-

 

EXHIBITS

 

	
  EXHIBIT A - FORM OF INITIAL NOTES

  	
   

  
	
  EXHIBIT B - FORM OF EXCHANGE
  NOTES

  	
   

  
	
  EXHIBIT C - FORM OF LEGEND
  FOR GLOBAL NOTES

  	
   

  
	
  EXHIBIT D -CERTIFICATE IN
  CONNECTION WITH TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS

  	
   

  
	
  EXHIBIT E -CERTIFICATE IN
  CONNECTION WITH REGULATION S TRANSFERS

  	
   

  
	
  EXHIBIT F - FORM OF
  INTERCREDITOR AGREEMENT

  	
   

  
	
  EXHIBIT G - FORM OF PLEDGE
  AND SECURITY AGREEMENT

  	
   

  
	
  EXHIBIT H - FORM OF NOTATION
  ON NOTE RELATING TO SUBSIDIARY GUARANTEE

  	
   

  
	
  EXHIBIT I - FORM OF
  LEASEHOLD MORTGAGE

  	
   

  
	
  EXHIBIT J -FORM OF LESSOR’S
  CONSENT TO LEASEHOLD MORTGAGE

  	
   

  
	
  SCHEDULE I - EXISTING
  INDEBTEDNESS

  	
   

  
	
  SCHEDULE II
  - TERMINATION OF TRADEMARK LIENSExhibit
10.50

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES
LAWS.  NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.

THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE PRIOR TO THE DATE WHICH
IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE AND THE
LAST DATE ON WHICH NEW WORLD RESTAURANT GROUP, INC. (“THE COMPANY”) OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF
SUCH NOTE)(THE “RESALE RESTRICTION TERMINATION DATE”), ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
“QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) or (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S, OR REGISTRAR’S, AS APPLICABLE, RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES,
AN ASSIGNMENT IN THE FORM APPEARING ON THE OTHER SIDE OF THIS NOTE IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR REGISTRAR.  THIS LEGEND SHALL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

THIS NOTE IS SUBJECT TO A REGISTRATION RIGHTS
AGREEMENT, DATED AS OF JULY 8,  2003,
BETWEEN THE COMPANY AND JEFFERIES & COMPANY, INC., A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY.

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.  

 

THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY) MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

CUSIP No.: 
649271AJ2

NEW WORLD RESTAURANT GROUP, INC.

SENIOR SECURED NOTE DUE
2008

	
  No.
  1

  	
   

  	
  $151,000,000

  

New World Restaurant Group, Inc., a Delaware
corporation (the “Company,” which term includes any successor entity),
for value received promises to pay to CEDE & CO. or registered assigns, the
principal sum of ONE HUNDRED AND FIFTY ONE MILLION DOLLARS AND 00/100, on July
1, 2008.

Interest Payment Dates:                      July 1 and January 1

Record Dates:                                       June 15
and December 15

Reference is made to the further provisions of this
Note contained herein, which will for all purposes have the same effect as if
set forth at this place.

 

IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized officer.

	
   

  	
  New World Restaurant
  Group, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  Anthony D. Wedo

  
	
   

  	
  Title:    Chief Executive Officer

  

Dated: July 8, 2003

 

Certificate
of Authentication

This is one of the Senior Secured Notes due 2008
referred to in the within-mentioned Indenture.

 

	
   

  	
  The Bank of New York,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:
  July 8, 2003

  	
  By:

  	
   

  
	
   

  	
  Name:  Margaret Ciesmelewski

  
	
   

  	
  Title:

  

 

{REVERSE OF NOTE}

NEW WORLD RESTAURANT
GROUP, INC.

Senior Secured Note due 2008

1.             Interest.  New World Restaurant Group, Inc., a Delaware
corporation (the “Company”), promises to pay interest on the principal
amount of this Note at the rate of (a) 13.0% per annum plus (b) any additional
interest required under Section 4 of the Registration Rights Agreement,
plus (c) during the occurrence and continuance of a Default or Event of
Default, 2.0% per annum.  The Company
will pay interest semi-annually in arrears on each July 1 and January 1 (each
an “Interest Payment Date”), commencing January 1, 2004.  Interest on the Notes will accrue from the
most recent date on which interest has been paid on this Note or, if no
interest has been paid, from July 8, 2003. 
Interest will be computed on the basis of a 360-day year of twelve
30-day months.

2.             Method
of Payment.  The Company shall pay
interest on the Notes to the Persons who are the registered Holders as of the
close of business on the Record Date immediately preceding the applicable
Interest Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date.  Holders must surrender Notes to a Paying
Agent to collect principal payments. 
The Company shall pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts (“U.S. Legal Tender”). 
The Notes will be payable both as to principal and to interest at the
office or agency of the Company, or, at the option of the Company, payment of
interest may be made by its check payable in such U.S. Legal Tender and mailed
to the Holders at their respective registered addresses as set forth in the
register of Holders.  If the Company
defaults in a payment of interest on the Notes, it shall pay the defaulted
interest plus any interest payable on the defaulted interest in accordance with
Section 2.16 of the Indenture.

3.             Paying
Agent and Registrar.  Until
otherwise designated by the Company, the Registrar and Paying Agent for the
Notes shall be The Bank of New York, the trustee (the “Trustee”) under
the Indenture (as defined below), having an address 101 Barclay Street — 8W,
New York, New York 10286, Attention: Corporate Trust Division.  In addition, until otherwise designated by
the Company, the Company’s office or agency maintained in the Borough of
Manhattan, in the City of New York at which the Notes may be presented for
payment or for transfer or exchange will be the office of the Trustee.  The Company may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders.

4.             Indenture.  The Company issued the Notes under an
Indenture, dated as of  July 8, 2003
(the “Indenture”), among the Company, the Subsidiary Guarantors and the
Trustee.  Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) (the “TIA”),
as in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. 
Notwithstanding anything to the contrary herein, the Notes are subject
to all such terms, and 

 

Holders are referred to the Indenture and the TIA for a statement of
them.  Payment on the Notes is
guaranteed on a senior basis, jointly and severally, by the Subsidiary
Guarantors pursuant to Article Eleven of the Indenture.  Each Holder, by accepting a Note, agrees to
be bound by all of the terms and provisions of the Indenture, as the same may
be amended from time to time.

5.             Optional
Redemption.  The Notes will be
redeemable, at the Company’s option, in whole at any time or in part from time
to time, on and after July 1, 2004, at the following redemption prices
(expressed as percentages of the principal amount) if redeemed during the
twelve-month period commencing on July 1 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon to the date of
redemption:

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2004

  	
   

  	
  104.000

  	
  %

  
	
  2005

  	
   

  	
  103.000

  	
  %

  
	
  2006

  	
   

  	
  102.000

  	
  %

  
	
  2007

  	
   

  	
  101.000

  	
  %

  
	
  2008 and thereafter

  	
   

  	
  100.000

  	
  %

  

Notwithstanding the foregoing, at any time on or prior
to July 1, 2004, the Company may redeem up to 33 1/3% of the aggregate
principal amount of the Notes originally issued at a redemption price of
113.000% of the principal amount thereof, plus accrued and unpaid interest
thereon to the redemption date, with the net proceeds of any Equity Offering; provided that at least 66 2/3% of the
aggregate principal amount of the Notes originally issued under this Indenture
remains outstanding immediately after the occurrence of such redemption; and provided, further, that such redemption
occurs within 90 days of the date of the closing of such Equity Offering.

6.             Notice
of Redemption.  Notice of redemption
will be mailed by first class mail at least 30 days but not more than 60 days
before the redemption date to each Holder, at each of such Holder’s registered
address, whose Notes are to be redeemed. 
If fewer than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee in compliance with the
requirements of the national securities exchange, if any, on which the Notes
are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or
by such method as the Trustee deems to be fair and appropriate; provided that Notes of $1,000 or less may
not be redeemed in part.

Except as set forth in the Indenture, if monies for
the redemption of the Notes called for redemption shall have been deposited
with the Paying Agent for redemption on such redemption date, then, unless the
Company defaults in the payment of such redemption price plus accrued interest,
if any, the Notes called for redemption will cease to bear interest from and
after such redemption date, and the only remaining right of the Holders of such
Notes will be to receive payment of the redemption price plus accrued interest,
if any, as of the redemption date upon surrender to the Paying Agent of the
Notes redeemed.

 

7.             Offers
to Purchase.  Section 4.14 of the
Indenture provides that, upon the occurrence of a Change of Control, and
subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.

8.             Registration
Rights.  Pursuant to the
Registration Rights Agreement dated as of the date of the Indenture among the
Company and the Holders of the Initial Notes, the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company’s Senior Secured Notes due
2008, Series B (the “Exchange Notes”), which have been registered under
the Securities Act, in like principal amount and having terms identical in all
material respects as the Initial Notes. 
The Holders of the Initial Notes shall be entitled to receive certain
additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.

9.             Denominations;
Transfer; Exchange.  The Notes are
in registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000.  A Holder shall
register the transfer of or exchange of Notes in accordance with the
Indenture.  The Registrar or co-Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture.  Subject to certain
provisions in the Indenture, the Registrar or co-Registrar need not register the
transfer of or exchange of any Notes or portions thereof selected for
redemption.  Also the Registrar or
co-Registrar need not register the transfer or exchange of any Note during a
period beginning at the opening of business 15 days before the mailing of a
notice of redemption of notes and ending at the close of business on the day of
such mailing.

10.           Persons
Deemed Owners.  The registered
Holder of a Note shall be treated as the owner of such Note for all purposes.

11.           Unclaimed
Money.  If money for the payment of
principal or interest remains unclaimed for two years (or such sooner period as
may be required by applicable abandoned property laws), the Trustee and the
Paying Agent will pay the money back to the Company.  After that, all liability of the Trustee and such Paying Agent
with respect to such money shall cease.

12.           Discharge
Prior to Redemption or Maturity.  If
the Company at any time deposits with the Trustee U.S. Legal Tender or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Notes to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).

13.           Amendment;
Supplement; Waiver.  Subject to
certain exceptions, the Indenture or the Notes may be amended or supplemented
by the Company, the Trustee and with the written consent of the Holders of at
least a majority in aggregate principal amount of the Notes then outstanding,
and, subject to Section 6.07 of the Indenture, noncompliance with any 

 

provision of the Indenture or this Note may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding.  Without the consent
of any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company’s obligations to Holders in
the case of a merger or consolidation, to make any change that would provide
any additional rights or benefits to the Holders or that does not adversely
affect the legal right under the Indenture of any such Holder, or to comply
with the requirements of the U.S. Securities and Exchange Commission (the “SEC”)
in order to effect or maintain the qualification of the Indenture under the
TIA.  As provided in the Indenture,
there shall be no amendment, supplement or waiver without the consent of each
Holder of each Note affected thereby with respect to the circumstances
enumerated in Section 9.02 therein.

14.           Restrictive
Covenants.  The Indenture imposes
certain limitations on the ability of the Company and its Subsidiaries to,
among other things, incur additional Indebtedness or Liens, issue or sell its
Capital Stock, enter into transactions with Affiliates, cause to be effective
restrictions affecting Subsidiaries’ abilities to pay certain dividends or make
certain loans, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. 
Such limitations are subject to a number of important qualifications and
exceptions.  The Company must annually
report to the Trustee on compliance with such limitations.

15.           Successors.  When a successor assumes, in accordance with
the Indenture, all the Obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those Obligations.

16.           Defaults
and Remedies.  If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of Notes then outstanding may declare all the Notes
to be due and payable in the manner, at the time and with the effect provided
in the Indenture.  Holders may not
enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee is not obligated to exercise any
of the rights or powers vested in it by the Indenture or the Notes and at the
order or direction of any Holders, unless it has received indemnity reasonably
satisfactory to it.  Subject to certain
limitations set forth in the Indenture, Holders of a majority in aggregate
principal amount of the Notes then outstanding may direct the Trustee in its
exercise of any trust or power.  The
Trustee may withhold from Holders notice of any continuing Default or Event of
Default (except in the case of a Default or Event of Default in payment of
principal or interest or a failure to comply with Article Five of the
Indenture) if it determines that withholding notice is in their interest.

17.           Trustee
Dealings with Company.  The Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company, its
Subsidiaries or their respective Affiliates, as such, with the same rights it
would have as if it were not the Trustee.

18.           No
Recourse Against Others.  No past,
present or future director, officer, employee, incorporator or stockholder of
the Company or any Subsidiary Guarantor, as such, shall have any liability for
any Obligations of the Company or any Subsidiary Guarantor under 

 

the Notes or the Indenture, the Collateral Agreements, any Subsidiary
Guarantee, the Registration Rights Agreement or the Intercreditor Agreement or
for any claim based on, in respect of, or by reason of such obligations or
their creations.  Each Holder by
accepting a Note waives and releases all such liability.  Such waiver and release are part of the
consideration for the issuance of the Notes.

19.           Authentication.  This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.

20.           Governing
Law.  The laws of the State of New
York shall govern this Note and the Indenture.

21.           Abbreviations
and Defined Terms.  Customary
abbreviations may be used in the name of a Holder or an assignee, such as: TEN
COM (= tenants-in-common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants-in-common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

22.           CUSIP
Numbers.  Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Notes as
a convenience to the Holders.  No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.

The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture.

Requests may be made to:  New World Restaurant Group, Inc., 1687 Cole Boulevard, Golden,
Colorado 80401, Attn:  Chief Executive
Officer.

 

SUBSIDIARY
GUARANTEE

For value received, CHESAPEAKE BAGEL FRANCHISE CORP.,
a New Jersey corporation, hereby unconditionally guarantees to the Holder of
the Note upon which this Subsidiary Guarantee is endorsed:  (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Note, whether at maturity
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of, premium, if any, and interest on the
Note, if any, to the extent lawful, (c) the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms set forth in the Indenture, and (d) in case of any
extension of time of payment or renewal of any Note or any of such other
obligations, the same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  Capitalized
terms used herein have the meanings assigned to them in the Indenture unless
otherwise indicated.

This Subsidiary Guarantee shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holder and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof and in the Indenture.

This Subsidiary Guarantee shall not be valid or
obligatory for any purpose until the certificate of authentication on the Note
upon which this Subsidiary Guarantee is noted shall have been executed by the
Trustee under the Indenture by the manual signature of one of its authorized
signatories.

 

	
   

  	
  CHESAPEAKE BAGEL FRANCHISE CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SUBSIDIARY
GUARANTEE

For value received, WILLOUGHBY’S INCORPORATED, a
Connecticut corporation, hereby unconditionally guarantees to the Holder of the
Note upon which this Subsidiary Guarantee is endorsed:  (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Note, whether at maturity
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of, premium, if any, and interest on the
Note, if any, to the extent lawful, (c) the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms set forth in the Indenture, and (d) in case of any
extension of time of payment or renewal of any Note or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. 
Capitalized terms used herein have the meanings assigned to them in the
Indenture unless otherwise indicated.

This Subsidiary Guarantee shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holder and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof and in the Indenture.

This Subsidiary Guarantee shall not be valid or
obligatory for any purpose until the certificate of authentication on the Note
upon which this Subsidiary Guarantee is noted shall have been executed by the
Trustee under the Indenture by the manual signature of one of its authorized
signatories.

 

	
   

  	
  WILLOUGHBY’S INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SUBSIDIARY
GUARANTEE

For value received, MANHATTAN BAGEL COMPANY, INC., a
New Jersey corporation, hereby unconditionally guarantees to the Holder of the
Note upon which this Subsidiary Guarantee is endorsed:  (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Note, whether at maturity
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of, premium, if any, and interest on the
Note, if any, to the extent lawful, (c) the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms set forth in the Indenture, and (d) in case of any
extension of time of payment or renewal of any Note or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. 
Capitalized terms used herein have the meanings assigned to them in the
Indenture unless otherwise indicated.

This Subsidiary Guarantee shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holder and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof and in the Indenture.

This Subsidiary Guarantee shall not be valid or obligatory
for any purpose until the certificate of authentication on the Note upon which
this Subsidiary Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized
signatories.

 

	
   

  	
  MANHATTAN BAGEL COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SUBSIDIARY
GUARANTEE

For value received, I. & J. BAGEL, INC., a
California corporation, hereby unconditionally guarantees to the Holder of the
Note upon which this Subsidiary Guarantee is endorsed:  (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Note, whether at maturity
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of, premium, if any, and interest on the
Note, if any, to the extent lawful, (c) the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms set forth in the Indenture, and (d) in case of any
extension of time of payment or renewal of any Note or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. 
Capitalized terms used herein have the meanings assigned to them in the
Indenture unless otherwise indicated.

This Subsidiary Guarantee shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holder and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof and in the Indenture.

This Subsidiary Guarantee shall not be valid or
obligatory for any purpose until the certificate of authentication on the Note
upon which this Subsidiary Guarantee is noted shall have been executed by the
Trustee under the Indenture by the manual signature of one of its authorized
signatories.

 

	
   

  	
  I. & J. BAGEL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SUBSIDIARY
GUARANTEE

For value received, EINSTEIN/NOAH BAGEL PARTNERS,
INC., a California corporation, hereby unconditionally guarantees to the Holder
of the Note upon which this Subsidiary Guarantee is endorsed:  (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Note, whether at maturity
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of, premium, if any, and interest on the
Note, if any, to the extent lawful, (c) the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms set forth in the Indenture, and (d) in case of any
extension of time of payment or renewal of any Note or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. 
Capitalized terms used herein have the meanings assigned to them in the
Indenture unless otherwise indicated.

This Subsidiary Guarantee shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holder and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof and in the Indenture.

This Subsidiary Guarantee shall not be valid or
obligatory for any purpose until the certificate of authentication on the Note
upon which this Subsidiary Guarantee is noted shall have been executed by the
Trustee under the Indenture by the manual signature of one of its authorized
signatories.

 

	
   

  	
  EINSTEIN/NOAH BAGEL PARTNERS, INC., a California corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SUBSIDIARY
GUARANTEE

For value received, EINSTEIN AND NOAH CORP., a
Delaware corporation, hereby unconditionally guarantees to the Holder of the
Note upon which this Subsidiary Guarantee is endorsed:  (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Note, whether at maturity
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of, premium, if any, and interest on the
Note, if any, to the extent lawful, (c) the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms set forth in the Indenture, and (d) in case of any
extension of time of payment or renewal of any Note or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. 
Capitalized terms used herein have the meanings assigned to them in the
Indenture unless otherwise indicated.

This Subsidiary Guarantee shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holder and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof and in the Indenture.

This Subsidiary Guarantee shall not be valid or
obligatory for any purpose until the certificate of authentication on the Note
upon which this Subsidiary Guarantee is noted shall have been executed by the
Trustee under the Indenture by the manual signature of one of its authorized
signatories.

 

	
   

  	
  EINSTEIN AND NOAH CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

ASSIGNMENT FORM

If you the Holder want to assign
this Note, fill in the form below and have your signature guaranteed:

I or we assign and transfer this Note to:

	
   

  
	
   

  
	
   

  

(Print or type name, address and zip code and

social security or tax ID number of assignee)

	
  and irrevocably
  appoint

  	
   

  

agent to transfer this
Note on the books of the Company.  The
agent may substitute another to act for him.

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Sign exactly as
  your name appears on the other side of this Note)

  

 

	
  Signature
  Guarantee:

  	
   

  
	
   

  	
   

  

In connection with any
transfer of this Note occurring prior to the date which is the earlier of
(i) the date of the declaration by the SEC of the effectiveness of a
registration statement under the Securities Act of 1933, as amended (the “Securities
Act”), covering resales of this Note (which effectiveness shall not have
been suspended or terminated at the date of the transfer) and (ii) October 15,
2004, the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer and that
this Note is being transferred:

[Check One]

	
  (1) o

  	
   

  	
  to the Company
  or a subsidiary thereof; or

  
	
  (2) o

  	
   

  	
  pursuant to and
  in compliance with Rule 144A under the Securities Act; or

  
	
  (3) o

  	
   

  	
  to an
  institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
  (7) under the Securities Act) that has furnished to the Trustee a signed
  letter containing certain representations and agreements (the form of which
  letter can be obtained from the Trustee); or

  
	
  (4) o

  	
   

  	
  outside the
  United States to a person other than a “U.S. person” in compliance with Rule
  904 of Regulation S under the Securities Act; or

  
	
  (5) o

  	
   

  	
  pursuant to the
  exemption from registration provided by Rule 144 under the Securities Act; or

  
	
   

  	
   

  	
   

  

 

	
  (6) o

  	
   

  	
  pursuant to an
  effective registration statement under the Securities Act.

  
	
   

  	
   

  	
   

  

Unless one of the boxes is checked, the Trustee will
refuse to register any of the Notes evidenced by this certificate in the name
of any person other than the registered Holder thereof; provided that if
box (3), (4) or (5) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in its sole discretion, such
legal opinions, certifications (including an investment letter in the case of
box (3) or (4)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.

If none of the foregoing
boxes is checked, the Trustee or Registrar shall not be obligated to register
this Note in the name of any person other than the Holder hereof unless and
until the conditions to any such transfer of registration set forth herein and
in Section 2.15 of the Indenture shall have been satisfied.

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Sign exactly as
  your name appears on the other side of this Note)

  

 

	
  Signature
  Guarantee:

  	
   

  
	
   

  	
   

  

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

The undersigned represents
and warrants that it is purchasing this Note for its own account or an account
with respect to which it exercises sole investment discretion and that it and
any such account is a “qualified institutional buyer” within the meaning of
Rule 144A under the Securities Act and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned’s foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.

	
  Dated:  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NOTICE:  To be executed by an executive officer

  

 

 

 [OPTION OF HOLDER TO ELECT PURCHASE]

 

If you want to elect to have
this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of
the Indenture, check the appropriate box:

Section
4.14  o

Section
4.15  o

If you want to elect to have
only part of this Note purchased by the Company pursuant to Section 4.14 or
Section 4.15 of the Indenture, state the amount you elect to have purchased:

	
  $

  	
   

  	
   

  

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NOTICE:

  	
  The
  signature on this assignment must correspond with the name as it appears upon
  the face of the within Note in every particular without alteration or
  enlargement or any change whatsoever and be guaranteed by the endorser’s bank
  or broker.

  

 

	
   

  	
  Signature
  Guarantee:

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