Document:

Exhibit 10.12

SHERMEN WSC ACQUISITION CORP.

FOUNDER WARRANT

PURCHASE AGREEMENT

 

THIS FOUNDER WARRANT PURCHASE AGREEMENT (the “Agreement”)
is made as of [                  ],
2007 between Shermen WSC Acquisition Corp., a Delaware corporation (the “Company”),
on the one hand, and Shermen WSC Holding LLC, on the other hand (the “Purchaser”).

WHEREAS, the Purchaser is one of the Existing
Stockholders of the Company; and

WHEREAS, in furtherance of the Company’s plan
to obtain funding through an initial public offering (the “Offering”) of its
units (the “Units”), each Unit consisting of one share of common stock, par
value $.0001 per share, of the Company (“Common Stock”) and two
warrants (the “Unit Warrants”) and each Unit Warrant entitling the holder
thereof to purchase one share of Common Stock for $5.00 on the terms and
subject to the conditions set forth in that certain Warrant Agreement dated the
date hereof by and between the Company and Continental Stock Transfer &
Trust Company, as the agent of the Company in connection with the issuance,
registration, transfer, exchange, redemption and exercise of the Unit Warrants;

WHEREAS, to demonstrate the commitment of the
Purchaser to the Company’s Offering, the Purchaser desires to make an
investment in the Company by purchasing, on the terms and conditions described
herein, in a private placement 4,357,143 warrants (the “Founder Warrants”),
each Founder Warrant entitling the holder thereof to purchase one share of
Common Stock on the terms and subject to the conditions set forth in that
certain Founder Warrant Agreement dated the date hereof (the “Founder Warrant
Agreement”) by and between the Company and Continental Stock Transfer &
Trust Company, as the agent of the Company in connection with the issuance,
registration, transfer, exchange, redemption and exercise of the Founder
Warrants (in such capacity, the (“Founder Warrant Agent”);

WHEREAS, the consummation of this Agreement
shall occur prior to the execution of the Underwriting Agreement between the
Company and CRT Capital Group LLC (the “Representative”), which Underwriting
Agreement is filed as an exhibit to the Company’s registration statement on
Form S-1, File No. 333-133869, as the same has been and may be amended from
time to time hereafter (the “Registration Statement”) and filed with the
Securities and Exchange Commission (the “Commission”).

NOW THEREFORE, in consideration of the mutual
promises contained in this Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement hereby agree as follows:

Section
1.       Authorization,
Purchase and Sale; Terms of the Founder Warrants.

A.         Authorization
of the Founder Warrants.  The
Company has authorized, and hereby ratifies such authorization by execution
hereof, the issuance and sale in a private placement to the Purchaser of an
aggregate of 4,357,143  Founder
Warrants.

 

 

B.            Purchase
and Sale of the Founder Warrants. 
At the Closing (as defined below), the Company shall sell in a private
placement to the Purchaser, and the Purchaser shall purchase from the Company, an
aggregate of 4,357,143 Founder Warrants, subject to the terms and conditions
hereof.  The purchase price of each Founder
Warrant shall be $0.70 per Founder Warrant (the “Purchase Price”), which shall
be paid in immediately available funds through wire transfers to the account
(the “Account”) designated by the Company. 
The Purchase Price shall be wired to the Account by the Purchaser so as
to be on deposit in the Account no later than the date on which the SEC
declares the Registration Statement effective.

Section 2.       The Closing.  The
closing of the purchase and sale of the Founder Warrants to the Purchaser (the “Closing”)
shall take place at the New York offices of Dechert LLP, or at such other time
and place as the parties may mutually agree, but in no event later than the
date on which the SEC declares the Registration Statement effective.  At the Closing, subject to the terms and
conditions hereof, the Company shall cause the Founder Warrant Agent to issue a
warrant certificate, registered in the Purchaser’s name.

Section 3.       Representations, Warranties and Covenants of Purchaser.  As a material inducement to the Company to
enter into this Agreement and issue and sell the Founder Warrants to the
Purchaser, the Purchaser hereby represents, warrants and covenants to the
Company (which representations, warranties and covenants shall survive the
Closing) that:

A.    Organization
and Corporate Power.  The
Purchaser is a company with limited liability duly organized, validly existing
and in good standing under the laws of the State of Delaware.  The Purchaser possesses all requisite power
and authority necessary to carry out the transactions contemplated by this
Agreement.  The Purchaser has engaged in
the transactions contemplated by this Agreement within a state in which the
offer and sale of the Founder Warrants is permitted under applicable securities
laws.  The Purchaser understands and
acknowledges that the purchase of Common Stock on exercise of the Founder Warrants
may require the registration of such Common Stock under Federal and/or state
securities laws or the availability of an exemption from such registration
requirements.

B.    Authorization;
No Breach.

(i)        This Agreement constitutes
a valid and binding obligation of the Purchaser, enforceable in accordance with
its terms.

(ii)       The execution and
delivery by the Purchaser of this Agreement and the fulfillment of and
compliance with the respective terms hereof by the Purchaser do not and shall
not as of the Closing conflict with or result in a breach of the terms, conditions
or provisions of any other agreement, instrument, order, judgment or decree to
which the Purchaser is subject.

C.    Waiver
and Indemnification.

(i)        The Purchaser agrees
not to seek recourse against the Trust Fund (as defined in the Registration
Statement) for any reason whatsoever in connection

 

2

 

with its purchase of the Founder Warrants or any and all known or
unknown actions, causes of action, suits, claims, or proceedings (collectively,
“Claims”) that may arise now or in the future and related losses, costs,
penalties, fees, liabilities and damages, whether compensatory, consequential
or exemplary, and expenses in connection therewith (collectively, “Losses and
Expenses”) including reasonable attorneys’ and expert witness fees and
disbursements and all other expenses reasonably incurred in investigating,
preparing or defending against any Claims, whether pending or threatened, in
connection with any present or future actual or asserted right relating to the
purchase of the Founder Warrants and the transactions contemplated hereby.

(ii)       The Purchaser agrees to
severally indemnify and hold harmless the Company, the Representative and the
Trust Fund against any and all Losses and Expenses whatsoever to which the
Company, the Representative and the Trust Fund may become subject as a result
of the purchase of the Founder Warrants by the Purchaser, including but not limited
to any Claim by the Purchaser of the Founder Warrants, but only to the extent
necessary to ensure that such Losses and Expenses do not reduce the amount in
the Trust Fund.  To the extent that the
foregoing several indemnification by the Purchaser may be unenforceable for any
reason, the Purchaser agrees to make the maximum contribution permissible by
applicable law to the payment and satisfaction of any Losses and Expenses
relating to Claims that may or will otherwise reduce the amount in the Trust Fund.

(iii)      The Purchaser
acknowledges and agrees that the stockholders of the Company, including those
who purchase the Units in the Offering, are and shall be third-party
beneficiaries of the foregoing provisions of Section 4C of this Agreement.

(iv)      The Purchaser agrees
that to the extent any waiver of rights under this Section 4C is ineffective as
a matter of law, the Purchaser has offered such waiver for the benefit of the
Company as an equitable right that shall survive any statutory disqualification
or bar that applies to a legal right. 
The Purchaser acknowledges the receipt and sufficiency of consideration
received from the Company hereunder in this regard.

D.    Transfer
Restrictions.  The Purchase
agrees that it shall not sell, transfer, assign, encumber, pledge, hypothecate
or otherwise dispose of, directly or indirectly, any of the Founders Warrants
prior to the consummation of a Business Combination (as that term is defined in
the Founder Warrant Agreement); provided, however, that the Purchaser may
transfer Founder Warrants to its members so long as each such member agrees in
writing to be bound by the terms and conditions of this Agreement, including
the transfer restrictions set forth in this Section 3D.

E.     Securities
Laws.

(i)        The Purchaser represents
and warrants that it will acquire the Founder Warrants to be purchased by it
hereunder (and any shares of Common

 

3

 

Stock purchased upon the exercise of any Found Warrant) for its own
account for the purpose of investment and not with a view to the resale or
distribution of any part thereof and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same.

(ii)       The Purchaser acknowledges that it can
bear the economic risk and complete loss of its potential investment in the
Founder Warrants to be purchased by it hereunder and that the Purchaser has
experience in such investment, financial, business and tax matters as to enable
it to evaluate the merits and risks of the investment in the Founder
Warrants.  The Purchaser is an “accredited
investor” as defined in Rule 501(a) of Regulation D, as amended, under the
Securities Act of 1933, as amended (the “Securities Act”), or has consulted a “purchaser
representative” as defined in Rule 501(h) of Regulation D with respect to the
Founder Warrants and the transactions contemplated by this Agreement.

(iii)      The Purchaser acknowledges and agrees
that the Founder Warrants (and any shares of Common Stock purchased upon the
exercise of any Found Warrant) will constitute “restricted securities” under
the Securities Act inasmuch as they are or will be acquired from the Company in
a transaction not involving a public offering and that, under applicable laws
and applicable regulations, such securities may be resold without  registration under the Securities Act only in certain limited
circumstances.  Each Subscriber is
familiar with Rule 144 promulgated by the U.S. Securities and Exchange
Commission (the “SEC”) under the Securities Act, as presently in effect, and
understands the resale limitations imposed on the Founder Warrants (and any
shares of Common Stock purchased upon the exercise of any Found Warrant)
thereby and by applicable provisions of the Securities Act.

(iv)      Without limiting the foregoing, no
transfer of the Founder  Warrants
(and any shares of Common Stock purchased upon the exercise of any Found
Warrant) shall be made by the Purchaser except (i) a transfer pursuant to an
effective registration statement under the Securities Act, (ii) a transfer
complying with Rule 144 (as then in effect) or (iii) a transfer to a third
party in a cash transaction pursuant to an exemption from the registration
requirements of the Securities Act, as confirmed in an opinion of the Purchaser’s
counsel acceptable to the Company.

(v)       The Purchaser hereby acknowledges and
agrees that each of the certificates representing the Founder Warrants  (and any shares of Common Stock purchased
upon the exercise of any Found Warrant) shall bear a legend substantially as
follows:

“The securities
represented by this Certificate may not be sold, pledged, hypothecated or
otherwise disposed of unless registered under the Securities Act of 1933, as
amended, and any applicable state securities law, or unless an exemption from
applicable registration requirements is available.”

 

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Section 4.      Termination.  This Agreement may or will be terminated at
any time prior to the consummation of the Closing under the following described
circumstances:

(i)        automatically upon the
mutual written consent of the Company and the Purchaser; or

(ii)       by either of the
Company or the Purchaser by delivery of written notice thereof, if the Offering
shall not have been consummated prior to the one-month anniversary of the date
of this Agreement.

Section 5.       Miscellaneous.

A.         Successors
and Assigns.  Except as
otherwise expressly provided herein, all covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. 
Notwithstanding the foregoing or anything to the contrary herein, the
parties may not assign this Agreement.

B.       Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

C.    Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures
of more than one party, but all such counterparts taken together shall
constitute one and the same Agreement.

D.       Descriptive
Headings; Interpretation.  The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a substantive part of this Agreement.  The use of the word “including” in this
Agreement shall be by way of example rather than by limitation.

E.     Governing
Law.  The general corporation
law of the State of New York shall govern all issues and questions concerning
the construction, validity, enforcement and interpretation of this Agreement,
without giving effect to any choice of law or conflict of law rules or
provisions that would cause the application of the laws of any jurisdiction
other than the State of New York.

F.     Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid.  Such notices, demands and other
communications shall be sent:

 

5

 

	
  If
  to the Company:

  	
  Shermen
  WSC Acquisition Corp.

  
	
   

  	
  c/o
  The Shermen Group

  
	
   

  	
  1251
  Avenue of the Americas

  
	
   

  	
  Suite
  900

  
	
   

  	
  New
  York, New York 10020

  
	
   

  	
   

  
	
  With a copy to:

  	
  Dechert LLP

  
	
   

  	
  30 Rockefeller Plaza

  
	
   

  	
  New York, New York 10112

  
	
   

  	
  Attn: Gerald Adler, Esq.

  
	
   

  	
   

  
	
  If to the Purchaser:

  	
  At the address of the Purchaser as set forth in the
  records of the Company or to such other address or to the attention of such
  other person as the recipient party has specified by prior written notice to
  the sending party.

  
			

 

G.       No Strict
Construction.  The parties
hereto have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.

[Signatures appear on the next page]

 

6

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Purchase Agreement on the date first written above.

	
   

  	
  Shermen WSC Acquisition
  Corp.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  G. Kenneth Moshenek

  
	
   

  	
   

  	
  Title:

  	
  President and Chief
  Operating Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Shermen WSC Holding LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Shermen Capital
  Partners, LLC,

  
	
   

  	
   

  	
  its Managing Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Francis P. Jenkins, Jr.

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Member

  
							

 

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Exhibit 10.8  

NOTE: THIS DOCUMENT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24b-2 UNDER THE SECURITIES ACT OF 1933. PORTIONS OF THIS DOCUMENT FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED HAVE BEEN REDACTED AND ARE MARKED BY "***". SUCH REDACTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO THE CONFIDENTIAL TREATMENT
REQUEST.

 
  APPROVED SUPPLIER AGREEMENT    
    

As of  

 November 30, 2006  

 among  

 NEW WORLD RESTAURANT GROUP, INC.,  

 EINSTEIN AND NOAH CORP.,  

 MANHATTAN BAGEL COMPANY, INC.,  

 HARLAN BAGEL SUPPLY COMPANY, LLC,  

 and  

 HARLAN BAKERIES, INC.  

APPROVED SUPPLIER AGREEMENT  

        This approved supplier agreement (the "Agreement") is made and entered into as of November 30, 2006 by and among New World Restaurant Group, Inc., a
Delaware corporation ("NWRG"), Einstein and Noah Corp., a Delaware corporation ("ENC"), Manhattan Bagel Company, Inc., a New Jersey corporation ("MBC"), Harlan Bagel Supply Company, LLC, an
Indiana limited liability company (the "Supplier"), and Harlan Bakeries, Inc., an Indiana corporation ("Harlan"). The Supplier and Harlan are herein sometimes individually referred to as a
"Harlan Company" and collectively referred to as the "Harlan Companies." 

Recitals  

        A.    The
Harlan Companies are engaged in the production and distribution of frozen and baked bagels and other frozen and baked goods and have supplied products to New World
(as hereinafter defined) for a number of years. 

        B.    NWRG,
directly and through its wholly-owned subsidiaries and affiliates, owns and operates retail bagel stores and "quick casual" restaurants. In addition, NWRG, directly
and through its wholly-owned subsidiaries and affiliates, has granted or intends to grant franchise and licensing rights to franchisees and licensees that own and operate (or, shall own and operate)
retail bagel stores or "quick casual" restaurants using NWRG's and its subsidiaries' and affiliates' respective proprietary operating systems and products, including but not limited to proprietary
bagel recipes, formulations and manufacturing processes. 

        C.    The
parties desire to enter into a new agreement to govern their relationship from and after the Effective Time (defined below), all as hereinafter set forth. 

Covenants  

        In consideration of the premises and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 

Article 1.0 Definitions  

        1.1   As used herein the following terms shall have the meanings given them below: 

        "Accounting
Period" shall mean one of twelve (12) periods of four or five consecutive weeks in each fiscal year of the Supplier during the Term that is designated by the Supplier
as an accounting period. In the event that the Supplier materially changes its fiscal year, Accounting Period shall mean one of the twelve (12) calendar months of each calendar year. 

        "Authorized
Recipients" shall mean any person or entity approved in advance in writing by the Chief Executive Officer, Chief Operating Officer or Vice President of Supply Chain of NWRG
(or such other person designated by any one of them in writing) to receive deliveries of Products from either of the Harlan Companies. At any time, NWRG may retract or curtail its approval of any
particular person or entity as an Authorized Recipient, after which retraction or curtailment such person or entity shall no longer qualify as an Authorized Recipient or their authorization may be
restricted as designated by NWRG, as the case may be. Notwithstanding any provision of this Agreement to the contrary, and absent retraction of such designation in the future, the following
persons/entities shall constitute Authorized Recipients: New World, any New World Subsidiary (including without limitation ENC and MBC), Costco (including The Price Company), and certain distributors
set forth on the attached Exhibit C, or as may hereafter be authorized by NWRG in writing from time-to-time. 

        "Bagel
Lines" shall mean the Winkler frozen dough bagel lines owned and operated by the Harlan Companies, together with the other components of such bagel production lines installed in
the Production Facility, including without limitation mixers, bagel cooking unit, proofer, retarder, blast freezer, and packaging equipment and improvements or additions thereto, or replacements
thereof. 

 

        "Category A
Products" shall mean all products (including products co-branded) produced on the Bagel Lines by the Harlan Companies that are intended for delivery or
sale to Authorized Recipients and produced using Formulations, Specifications, Procedures, technology (patented or
otherwise) or other trade secrets developed, or owned by, or licensed to, New World, specifically including, without limitation, Einstein Bros. Bagels, Manhattan Bagels, and New World Restaurant Group
Bagels; Powerbagels,® and Good GrainsTM bagels 

        "Category B
Products" shall mean all products produced by the Harlan Companies for New World that are not Category A Products, to include Par Baked Bagels, baked bagels not
consisting of Par Baked Bagels, other baked products, muffins and cupcakes. 

        "Contract
Minimum" shall have the meaning ascribed to it in Section 3.2.1. 

        "Effective
Time" shall mean after the close of business on the 31stday of December, 2006. 

        "Einstein
Bros. Bagels" shall mean Category A Products produced by the Harlan Companies on the Bagel Lines in accordance with New World's specifications therefor and which are to
be sold to the public under the trademarks and proprietary rights owned, franchised and/or licensed by ENC. 

        "Equipment
Lease" shall have the meaning ascribed to it in Section 9.3.2. 

        "Force
Majeure" shall have the meaning ascribed to it in Section 12.5. 

        "Formulations"
shall have the meaning ascribed to it in Section 2.4.1. 

        "Harlans"
shall mean Doug H. Harlan, Hal P. Harlan and Hugh P. Harlan. 

        "Lease"
shall mean that certain Lease Agreement dated August 27, 1996 between Harlan and the Supplier, as may be amended from time to time between Harlan and the Supplier. 

        "Manhattan
Bagels" shall mean Category A Products produced by the Harlan Companies on the Bagel Lines in accordance with New World's specifications therefor and which are to be
sold to the public under the trademarks and proprietary rights owned, franchised and/or licensed by MBC. 

        "Materials
Cost" shall mean the Supplier's cost of ingredients and packaging used in manufacturing the Products determined in the manner set forth in Exhibit A hereto. For this
purpose, ingredients shall include corn meal used in manufacturing the Products. 

        "New
World" shall mean, collectively, NWRG and all New World Subsidiaries, regardless whether now existing or hereafter acquired or created. 

        "New
World Franchisee" shall mean a franchisee or licensee of NWRG or of a New World Subsidiary. 

        "New
World Restaurant Group Bagels" shall mean Category A Products produced by the Harlan Companies on the Bagel Lines in accordance with New World's specifications therefor, and
which are to be sold to the public under the trademarks and/or proprietary rights owned, franchised and/or licensed by New World, except that such Products will not include Einstein Bros. Bagels or
Manhattan Bagels. 

        "New
World Subsidiary" shall mean a subsidiary of NWRG, including, specifically, without limitation, ENC and MBC. 

        "Option
Agreement" shall mean that certain Second Amended and Restated Option Agreement dated October 15, 2002 among the parties hereto and the Harlans. 

        "Par
Baked Bagels" shall mean bagels which are to be partially baked by Harlan before freezing, as specified and directed by NWRG, ENC or MBC. 

2

 

        "Prior
Agreement" means that certain Second Amended and Restated Project and Approved Supplier Agreement dated April 28, 2002, as amended, and entered into by and among the
parties hereto and the Harlans. 

        "Procedures"
shall have the meaning ascribed to it in Section 2.4.1. 

        "Production
Facility" shall mean collectively the production facilities owned and/or operated by the Harlan Companies in Avon, Indiana, Indianapolis, Indiana, and Denver, Colorado. 

        "Products"
shall mean all Category A and Category B Products. 

        "Proprietary
Information" shall have the meaning ascribed to it in Section 11.1. 

        "Quarterly
Period" shall mean the first three Accounting Periods of the Supplier during each fiscal year of the Supplier during the Term and each subsequent period of three Accounting
Periods thereafter during said fiscal year. In the event the Supplier materially changes its fiscal year, Quarterly Period shall mean a calendar quarter period. 

        "Right
of First Refusal Agreement" shall mean that certain Second Amended and Restated Right of First Refusal Agreement dated October 15, 2002 by and among NWRG, ENC, MBC, Harlan
and the Harlans. 

        "Specifications"
shall have the meaning ascribed to it in Section 2.4.1. 

        "Steering
Committee" shall have the meaning ascribed to it in Section 4.5. 

        "Term"
shall mean the period commencing at the Effective Time and continuing until the date this Agreement expires pursuant to Section 3.1 hereof, unless earlier terminated. 

        All
Exhibits and Schedules to this Agreement are incorporated herein by this reference. 

Article 2.0 Purchase and Sale of the Products  

        2.1   Designation of the Supplier and Harlan as an Approved Supplier. NWRG, ENC and MBC hereby
designate the Supplier and Harlan as an approved supplier of Products only to Authorized Recipients. On the terms and subject to the conditions set forth herein, and during the Term hereof, the Harlan
Companies agree to sell to Authorized Recipients those Products produced by the Harlan Companies at the Production Facility, in such quantity as they may order from time to time. NWRG, ENC and MBC
shall have the right, at any time, to direct the Harlan Companies in writing not to sell Products to any Authorized Recipient. The Harlan Companies agree not to sell Products to any person other than
Authorized Recipients as then-currently approved. 

        2.2   Orders. Orders may be placed with either Harlan Company by Authorized Recipients. Authorized
Recipients shall notify the applicable Harlan Company from time to time of the quantity of Products they wish to purchase from the applicable Harlan Company by placing purchase orders with the
applicable Harlan Company. Each order shall be filled by the applicable Harlan Company within ten (10) business days after the Supplier's receipt of the order. The Harlan Companies
expressly acknowledge and agree that New World has delegated to an Authorized Recipient all rights and obligations to place, receive and/or otherwise account for (i.e., proof of shipment, shortages,
overages, damages, inventory tracking/control, lead time, payment term, etc.) orders placed by Authorized Recipients. 

        2.3   Delivery and Shipment; Transfer of Title; Risk of Loss. Products supplied hereunder shall be
shipped F.O.B. the Production Facility, and ownership and risk of loss with respect to the Products supplied hereunder shall pass to the Authorized Recipient when delivered to a carrier at the F.O.B.
point, except that Products supplied to Costco are shipped F.O.B. destination, until otherwise mutually agreed by Supplier, Costco and New World. New World agrees that it and/or its Authorized
Recipients 

3

 

will
have the sole responsibility to coordinate the shipment of Products from the Production Facility in a manner to ensure that each shipment contains a load of Products to maximize the use of space
within a given truck. New World expressly acknowledges and agrees that the Harlan Companies will not be responsible for any delays in shipment or increased freight costs caused by New World's failure
to coordinate such shipments. 

        2.4   Quality. 

        2.4.1 Category A Products. The Category A Products shall be produced (a) using such formulations as New World shall
specify from time to time in writing (the "Formulations"), (b) in accordance with such size, weight and other specifications as New World shall establish from time to time in writing (the
"Specifications"), and (c) in accordance with such manufacturing procedures as New World shall specify from time to time in writing (the "Procedures"), all of which, the Harlan Companies
expressly acknowledge, constitute Proprietary Information. The Harlan Companies agree that they shall not analyze or reverse engineer any such Formulations, Specifications and Procedures or any
ingredients supplied for use therein. 

        2.4.2 Category B Products. The Category B Products shall be produced using such formulations, specifications and procedures
as New World and Supplier shall mutually specify from time to time in writing. 

        2.4.3 Changes. All Formulations, Specifications and Procedures are subject to change, and Formulations, Specifications and Procedures for
new Category A Products may be established, upon reasonable written notice from NWRG (or through a New World Subsidiary) to the Supplier at any time, except that (x) the Supplier shall
have such time as may be reasonably necessary for the Supplier to implement such changed Formulations, Specifications and Procedures in its production of the Products, and (y) to the extent
certain changes in Formulations, Specifications and Procedures could result in positive or negative adjustments in Supplier's costs, such adjustments will be passed on to New World, and if such
changes would require Supplier to purchase capital equipment, the parties will mutually agree as to the allocation of costs and expenses associated with same. 

        2.5   Packaging and Labeling. The Category A Products and Par Baked Bagels shall be packaged
using such packaging materials and labeling as shall be determined by NWRG or by its designated New World Subsidiary. The Supplier agrees to maintain an inventory of such packaging materials and
labels which shall be consistent with the quantity of Category A Products and Par Baked Bagels estimated in the rolling good faith estimates made by NWRG, or as otherwise reasonably directed by
NWRG. Supplier agrees to have a legend legibly and conspicuously printed on all shipping cartons of Products in substantially the following form, unless otherwise required by NWRG: 

"NOTICE:
This product is sold by Harlan Bagel Supply Company, LLC under a trademark license from New World Restaurant Group, Inc. for distribution only to authorized parties designated by New
World Restaurant Group, Inc. Any other distribution is a violation of this trademark license." 

The
Category B Products (other than Par Baked Bagels) shall be packaged using such packaging materials and labeling as shall be reasonably and mutually agreed to by NWRG and the Supplier. 

        2.6   Ingredients. New World shall have the discretion to arrange for the procurement of all
ingredients and raw materials used to produce the Category A Products and Par Baked Bagels on standard vendor terms, provided however, that, at New World's option, New World may require
Supplier to procure certain ingredients, so long as the same are available on standard and customary vendor terms reasonably satisfactory to Supplier. 

4

 

        2.7   Payment; Billing. 

        2.7.1 Payment Terms; Interest. Payment terms for all Products to all Authorized Recipients shall be (a) net *** days,
together with interest at a rate of 12% per annum from the date any amounts are past due or (b) such other terms as are mutually agreed by the seller and buyer, respectively, of the Products.
Further, New World agrees that any amounts due from New World or any New World Subsidiary will be paid by ACH electronic payment or wire transfer within the net *** day terms provided above. Any
amounts owed by NWRG under Section 3.2.3 or 4.4 shall bear interest at a rate of 12% per annum during any period such amounts are past due and remain unpaid. 

        2.7.2 Non-Payment. Supplier agrees to provide New World with written notice (by electronic mail to New World's designated
representative) of any Authorized Recipient who has not paid invoices within ten days of the due date. New World will cooperate with Supplier to seek to obtain payment or resolve any disputes
with Authorized Recipients. Supplier may cease the supply of Products to any particular Authorized Recipient if any balance owed by such Authorized Recipient to the Supplier for Products is not paid
within *** days after the date of invoice. Upon payment in full of all amounts due, Supplier or Harlan shall resume supply to such entity in accordance with the terms of this Agreement. 

        2.7.3 Collection Risk. Notwithstanding anything else in this Agreement, Supplier and Harlan shall look solely to each Authorized Recipient
for payment on orders placed. In no event shall NWRG be responsible for payment of any orders placed by any entity other than New World or a New World Subsidiary. 

Article 3.0 Volume; Scheduling  

        3.1   Term. The initial term of this Agreement will be for five (5) years and shall commence at
the Effective Time and continue until December 31, 2011. At least twelve (12) months prior to the conclusion of such initial term, provided that the Harlan Companies are not then in
default, and are financially stable, the parties hereto will commence with good faith negotiations on a five (5) year extension to this Agreement. NWRG's pursuit of competitive bids for the
business and/or self-manufacturing capabilities shall not be deemed to be a breach of its good faith obligation. 

        3.2   Volumes. 

        3.2.1 Contract Minimums. The parties acknowledge that NWRG will select the amount of Category A Products it (and other Authorized
Recipients) will purchase in a given Contract Year (the "Contract Minimums"), which selection will determine the minimum amount of Category A Products to be purchased by Authorized Recipients
for purposes of Section 3.2.2. The parties agree that the Contract Minimum for Contract Year 1 will be selected by NWRG by no later than December 10, 2006. For these purposes, Contract
Year 1 shall commence at the Effective Time, and shall end at the end of the fourth Quarterly Period in the fiscal year 2007 ("Contract Year 1"). Subsequent Contract Years will commence on the first
day of the first Quarterly Period of such subsequent years and end at the end of the fourth Quarterly Period of such subsequent years. The relevant Contract Minimums for Contract Years
will be determined by NWRG by December 10 of each calendar year by providing written notice to Supplier of the selected level of Contract Minimums for the following year, which must be one of
the six Contract Minimum options set forth in the table below (although the first two Contract Minimum options set forth in the table below will only be available in Contract Year 1). 

5

 
Contract
Minimum Level Options for Category A Products

(in cases of 120 bagels) to be selected by NWRG:

*** (available only for Contract Year 1)

*** (available only for Contract Year 1)

***

***

***

*** 

        Notwithstanding
the foregoing, however, in the event that Costco ceases to purchase Category A Products from New World, the Contract Minimums for the then applicable Contract Year
will be reduced by *** cases (with such amount pro rated in accordance with the remaining days in such Contract Year). Further, in such event the Contract Minimum level options in the table
above for the following Contract Years will be reduced by *** cases. 

        For
purposes of meeting the Contract Minimums, every two muffins and cupcakes shipped by Harlan will equate to one Category A Product, notwithstanding the fact that muffins and
cupcakes constitute Category B Products, and every Good Grains bagel shipped by Harlan will equate to one Category A Product that are produced on the Bagel Lines. 

        3.2.2 On the terms and subject to the conditions set forth herein, in the event that Category A Products shipped by Supplier are
less than the relevant Contract Minimums during the periods provided below, then, NWRG (or such New World Subsidiaries, New World Franchisees or Authorized Recipients as NWRG shall select) shall make
a payment ("Make-Whole Payment") as hereinafter provided. 

        (a)   As
to each Quarterly Period, as follows: 

        (i)    Category A
Products equal to 23% of the relevant Contract Minimum during the first Quarterly Period of each year during the Term; 

        (ii)   Category A
Products equal to 23% of the relevant Contract Minimum during the second Quarterly Period of each year during the Term; 

        (iii)  Category A
Products equal to 22% of the relevant Contract Minimum during the third Quarterly Period of each year during the Term; and 

        (iv)  Category A
Products equal to 24% of the relevant Contract Minimum for the fourth Quarterly Period of each year during the Term. 

        (b)   As
to each Contract Year, Category A Products equal to 100% of the Contract Minimum for each such Contract Year; 

        3.2.3 In the event the minimum volume requirements provided for in Section 3.2.2(a) are not satisfied for any Quarterly Period (the
"Measuring Quarter"), then the Make-Whole Payment shall be equal to the excess of the minimum amounts for the Measuring Quarter over the amounts actually shipped during the Measuring
Quarter, multiplied by *** per bagel. Such Make-Whole Payment shall be made within the Quarterly Period following the Measuring Quarter, except that any Make-Whole Payments for
any Quarterly Period within Contract Year 1 shall be deferred and paid together within the first Quarterly Period after the end of Contract Year 1. Deferred amounts shall not accrue interest charges
until past due (after the end of the first Quarterly Period after the end of Contract Year 1). In the event the minimum volume requirements provided for in Section 3.2.2(b) as to any Contract
Year are not satisfied, then the Make-Whole Payment shall be equal to the excess of the Contract Minimum for such Contract Year over the amounts actually shipped during such Contract Year,
multiplied by *** per bagel, with such Make-Whole Payment to be made within the first Quarterly Period after the end of such Contract Year, except that any 

6

 

Make-Whole
Payments made as a result of Section 3.2.2(a) will be credited toward the Make-Whole Payment due for failing to satisfy the minimum volume requirements
provided for in Section 3.2.2(b) as to any Contract Year. 

        3.2.4 Volume Estimates. During the Term, NWRG agrees to use reasonable best efforts to provide the Supplier, at the beginning of each
month, good faith, twelve (12) month rolling estimates of the volume by Category A and Category B Products (by SKU) it expects to be ordered from the Supplier. Such estimates
shall be used for planning purposes only and shall not be deemed orders or otherwise create any commitment whatsoever on the part of New World or any Authorized Recipient. Supplier will not be
required to supply Category A Products exceeding the following percentages of the Contract Minimums in any given Contract Year in the applicable Quarterly Periods noted below: first Quarterly
Period—27%; second Quarterly Period—27%; third Quarterly Period—26%; and fourth Quarterly Period—27%. 

        In
addition, NWRG will advise the Supplier: 

	(a)
	at
least 6 weeks in advance of the date of proposed delivery, the types and likely quantities of the Products required as a result of business conditions that are likely to cause
increased sales of the Products such as special promotions (including seasonal items) or special sales of the Products;

	(b)
	of
seasonal shifts in demand for Par Baked Bagels and of increased or decreased store counts or third party customers which could affect Par Baked Bagel demand; and

	(c)
	at
least 8 weeks in advance of New World's intention to discontinue a regularly produced Product, which excludes seasonal or special promotion Product. 

Article 4.0 Pricing  

        4.1   Pricing. 

        4.1.1 Category A and B Products. The price for Category A and B Products is set forth on Schedule 4.1.1. The price
charged by Supplier for Category A and B Products shall be equal to the Materials Cost plus the Loss Factor plus the Energy Cost (as hereinafter defined), plus a toll charge per bagel (the
"Toll Charge"). The Toll Charge for Category A and Category B Products will be based on the tables attached hereto as Schedule 4.1.1, except that the Toll Charge and Energy Costs
for Category A Products in Contract Year 1 will be *** per bagel, if NWRG selects *** cases as the Contract Minimum or *** per
bagel, if NWRG selects *** cases as the Contract Minimum, for Contract Year 1 pursuant to Section 3.2.1 hereof. In addition, if Costco ceases to purchase Category A Products from New
World as referenced in Section 3.2.1, the Toll Charge for Category A Products will be increased in accordance with Schedule 4.1.1. The Loss Factor, the Toll Charge and the Energy
Cost shall be subject to adjustment as provided in Sections 4.1.2, 4.1.3, 4.2, 4.3 and 4.4 hereof. The Loss Factor will be equal to *** multiplied by the Materials Cost as to the Products
constituting Einstein Bros. Bagels and *** multiplied by the Materials Cost as to the Products constituting Manhattan Bagels, New World Restaurant Group Bagels and Category B Products. The
Energy Cost initially will be equal to *** per Einstein Bros. and Manhattan and New World Restaurant Group Bagels and other Category A Products which are frozen, *** per Par Baked Bagels and
*** per muffin and other baked Products. The "Energy Cost" means the cost of use of utilities incurred by the Harlan Companies in producing Products, to include water, sewer, gas and electricity. 

        4.1.2 Material Costs. The Materials Cost shall be determined based upon a Statement of Materials Cost for each Quarterly Period which
shall be prepared by the Supplier in accordance with the provisions of Exhibit A. Each Statement of Materials Cost shall[This is covered in 4.2 below] include the
information required by Exhibit A. The Supplier and Harlan acknowledge that 

7

 

a
copy of each Statement of Materials Cost may be provided by NWRG to any New World Subsidiary or New World Franchisee. 

        4.1.3 Energy Costs. The Energy Cost shall be determined based upon a Statement of Energy Costs for each Contract Year which shall be
prepared by the Supplier in accordance with the provisions of Exhibit B. The Energy Cost will be adjusted annually commencing July 1, 2007 and each July 1 thereafter and will be
based upon the Energy Cost in effect immediately before such adjustment, and then adding or subtracting, as the case may be, an amount equal to such amount multiplied by the percentage
increase/decrease in the actual cost per unit of measure (i.e, kilowatt, therm, 100 cubic feet) as actually charged to the Harlan Companies for the four Quarterly Periods ending closest to
March 31 of the year in which the Energy Cost adjustment is to take place. 

        4.2   Quarterly Adjustments. Throughout each year of the Term of this Agreement on February 15,
May 15, August 15 and November 15 (each a "Notification Date"), the Harlan Companies will notify New World in writing the Material Costs of the relevant price to be adjusted for
any Product to reflect only changes in the actual cost of different ingredients of the Product and changes in cost of packaging to the Harlan Companies which adjustment will be consistent with the
Statement of Materials Costs. The Harlan Companies' written notice will include sufficient details about each ingredient and packaging to justify the proposed price adjustment. 

        The
adjusted price will be verified by New World and take effect as follows: 

	Notification Date:
 
	 	Effective Price Change to Authorized Recipients:

	February 15	 	First Day of Second Quarterly Period of Each Fiscal Year of Supplier
	

May 15	
 	

First Day of Third Quarterly Period of Each Fiscal Year of Supplier
	

August 15	
 	

First Day of Fourth Quarterly Period of Each Fiscal Year of Supplier
	

November 15	
 	

First Day of the First Quarterly Period of Each Fiscal Year of Supplier

        4.3   Annual Adjustment. Except as provided below as to Par Baked Bagels and muffins for
January 1, 2007 and July 1, 2007, commencing on July 1, 2007 and each July 1 thereafter, the Toll Charge for the Products shall be adjusted by the percentage change in the
Consumer Price Index (excluding those components attributable to raw food components and energy) for the Midwest U.S. region (which includes Indianapolis, Indiana), published by the Department of
Labor for the 12 month period ("CPI") ending on March 31st of the current year. As to Par Baked Bagels and muffins: on January 1, 2007, the Toll Charge shall be adjusted by the
percentage change in the CPI ending on September 30, 2006; and on July 1, 2007, the Toll Charge shall be adjusted by *** of the CPI ending on March 31, 2007. In the event the CPI
ceases to be published for any reason, the parties shall select another index designed to approximate as closely as practicable the CPI. 

        4.4   Price Adjustments for Product Changes. In the event that changes in Formulations, Specifications
or Procedures for Category A Products, or formulations, specifications or procedures for Category B Products result in additional costs or savings to Harlan or the Supplier that are not
reflected in Materials Cost, the Toll Charge, the Loss Factor and/or the Energy Cost, there shall be appropriate adjustments in the pricing of Category A or B Products, if applicable, to
reflect such cost increases or savings. In addition, the parties agree that New World shall bear the cost of Product losses and production related costs that arise from the development of the Products
or test runs of the Products, except that Supplier will be responsible for bench trials related to new product innovations. The Supplier shall invoice New World for each such cost in a timely manner.
Costs associated with such research and development shall be reimbursed within *** days of invoice. 

8

   
        4.5   Continuous Improvement and Gain Sharing. Each party shall designate up to 3 members from its
respective operations and supply chain functions to serve on a Steering Committee (the "Steering Committee"). The parties agree to generate by January 1, 2007 and maintain thereafter on a
routine basis unless otherwise agreed, an ongoing list of new opportunities and products and continuous improvement ("CI") opportunities. This list shall be reviewed quarterly by the Steering
Committee unless otherwise agreed. CI opportunities are expected to become a source of future volume growth and cost savings. Improvement projects approved by the Steering Committee will become active
projects in both organizations and require quality assurance or management approval prior to implementation. The business benefits will be translated into economic benefits to be shared as agreed by
the parties on a project by project basis and incorporated into the financial plans and all impacted price agreements, except that savings realized by Supplier from operating efficiencies will be
retained by Supplier. 

Article 5 Grant of License to Intellectual Property  

        5.1   Formulations, Specifications and Procedures. All Formulations, Specifications and Procedures
shall be owned exclusively by New World but the Supplier shall have a nonexclusive license, without the right to grant sublicenses, to use such Formulations, Specifications and Procedures and other
intellectual property of New World (including U.S. patent no. 5,707,676) to produce Category A Products for sale to Authorized Recipients under the terms and conditions of this
Agreement, and the Supplier shall have a license to use the Formulations, Specifications and Procedures and other intellectual property of New World (including U.S. patent no. 5,707,676 owned
by ENC as successor to ENBC) to produce Category B Products, to the extent and on the terms granted by NWRG, ENC or MBC, it being understood that any such license may be granted or withheld in
the sole discretion of NWRG, ENC or MBC. Within a reasonable time after receipt of Supplier's written request, NWRG (on behalf of itself and, as the case may be, ENC and MBC) shall advise Supplier in
writing of the Formulations, Specifications, Procedures and other production-related Proprietary Information of New World used to produce Category A Products. 

        All
formulations, specifications and procedures for Category B Products shall be owned by the party who developed such formulations, specifications and procedures but the
non-owning party shall have a nonexclusive license during the Term, without the right to grant sublicenses, to use such formulations, specifications and procedures to produce
Category B Products for sale to Authorized Recipients under the terms and conditions of this Agreement. 

        5.2   Trademarks. All trademarks, trade names and trade dress (together, the "Marks") appearing on or
in packaging and labeling are and shall remain New World's exclusive property, but the Supplier shall have a royalty-free nonexclusive license, without the right to grant sublicenses, to
use such Marks solely to package and label the Products manufactured in accordance with the provisions of this Agreement for sale to Authorized Recipients under this Agreement; provided that Supplier
shall submit to NWRG, for NWRG's prior review, a copy of all proposed uses of the Marks, advertising material, promotional plans, POS material, packaging, containers, labels, and any other marketing
materials whatsoever for the Products. NWRG shall have the right to approve or reject, in writing, any proposed item. If NWRG does not give Supplier its written approval within fifteen
(15) days of the date of receipt by NWRG of such materials, NWRG shall be deemed to have approved them. 

Article 6.0 Product Warranties  

        The Supplier and Harlan warrant to NWRG and all New World Subsidiaries, New World Franchisees and other Authorized Recipients that purchase Products from the
Harlan Companies that each of the following is true. 

9

 

        6.1.  Standard Warranties. Each shipment of Products supplied hereunder shall be manufactured in
accordance with the provisions of Section 2.4 and 2.5 hereof, shall be of good and merchantable quality and shall be fit for the purposes for which they are intended to be used, except to the
extent any lack of merchantability or lack of fitness for the intended purposes is attributable to the proper and correct use of the Formulations, Procedures, Specifications and other
production-related Proprietary Information of New World; 

        6.2   Not Adulterated. None of the Products supplied hereunder shall be adulterated or misbranded
within the meaning of the Federal Food Drug and Cosmetics Act, as amended, except to the extent misbranding is attributable to the proper and correct use of the Formulations, Procedures or
Specifications, and none of the Products will be an article which may not be introduced into interstate commerce under the provisions of Section 404, 409 or 706 of that Act; none of the
Products supplied hereunder shall be adulterated or misbranded within the meaning of any applicable provision of any state or municipal law, which provision is similar to any provision of the Federal
Food, Drug and Cosmetics Act, as amended; except to the extent misbranding is attributable to the proper and correct use of the Formulations, Procedures or Specifications or other production-related
Proprietary Information of New World or the proper and correct use of the Marks or other packaging or labeling required by NWRG; and 

        6.3   Compliance with Laws. The manufacture, production and labeling of the Products shall comply with
all applicable federal and state laws, regulations, and orders (including without limitation those enforced or issued by the United States Department of Agriculture, the Food and Drug Administration,
and the Federal Trade Commission and their counterpart departments and agencies of state government); except to the extent the same is attributable to the proper and correct use of the Formulations,
Procedures, Specifications and other production-related Proprietary Information of New World or the proper and correct use of the Marks or other packaging or labeling required by NWRG. 

All
of the foregoing warranties shall survive inspection and acceptance of any of the Products, and payment therefor, by NWRG, New World Subsidiaries, New World Franchisees and Authorized Recipients. 

Article 7.0 Representations and Warranties of the Harlan Companies  

        In order to induce NWRG, ENC and MBC to enter into this Agreement and to perform their obligations hereunder, the Harlan Companies jointly and severally represent
and warrant to NWRG, ENC and MBC that: 

        7.1   Authority. Each of the Harlan Companies is duly organized and validly existing under the laws of
the jurisdiction of its incorporation or formation, with full corporate or limited liability company power and authority to enter into this Agreement and to carry out the transactions and agreements
contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action
of each of the Harlan Companies. 

        7.2   Enforceability. This Agreement has been duly executed and delivered by each of the Harlan
Companies and is a valid and binding obligation of each of them, enforceable in accordance with its terms. Neither the execution and delivery of this Agreement by the Harlan Companies nor the
consummation of the transactions contemplated hereby will: (a) conflict with or violate any provision of its organizational documents, or of any law, ordinance or regulation or any decree or
order of any court or administrative or other governmental body which is either applicable to, binding upon or enforceable against either of the Harlan Companies or (b) result in a breach of,
constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under, any mortgage, contract, agreement,
indenture, will, trust or other instrument which is either binding upon or enforceable against either of the Harlan Companies or the 

10

 

assets
and properties of either of them, except notice of termination of the Equipment Lease described in Section 9.3.2 hereof, the Option Agreement and the Right of First Refusal Agreement
pursuant to the financing documents of the Harlan Companies with their senior lenders, and the Harlan Companies represent and warrant they have or will timely comply with such notice requirements. No
permit, consent, approval or authorization of, or declaration to or filing with, any regulatory or other governmental authority is required in connection with the execution and delivery of this
Agreement by the Harlan Companies and the consummation by them of the transactions contemplated hereby. 

        7.3   Approvals. Each of the Harlan Companies possesses all licenses and other required governmental or
official approvals, permits or authorizations, the failure to possess which would, individually or in the aggregate, have a material adverse effect on their ability to perform their respective
obligations under this Agreement. All such licenses, approvals, permits and authorizations are in full force and effect, each of the Harlan Companies is in material compliance with its requirements,
and no proceeding is pending or to the best of the knowledge of the Harlan Companies, threatened to revoke or amend any of them. 

        7.4   Ability to Perform. There are no actions, suits, claims, governmental investigations or
arbitration proceedings pending or, to the best of the knowledge of the Harlan Companies, threatened against or affecting either of the Harlan Companies or any of their respective assets or properties
which could have a material adverse effect on their ability to perform their respective obligations under this Agreement, and there are no outstanding orders, decrees or stipulations issued by any
federal, state, local or foreign judicial or administrative authority in any proceeding to which either of the Harlan Companies is or was a party, which could have a material adverse effect on their
ability to perform their respective obligations under this Agreement. 

        7.5   Compliance with Laws. Each of the Harlan Companies is in material compliance with all laws,
regulations and orders applicable to their performance under this Agreement. 

Article 8.0 Representations and Warranties of NWRG, ENC and MBC  

        In order to induce the Harlan Companies to enter into this Agreement and to perform their obligations hereunder, NWRG, ENC and MBC jointly and severally represent
and warrant to the Harlan Companies that: 

        8.1   Authority. They are each duly organized and legally existing under the laws of their
incorporation, with full corporate power and authority to enter into this Agreement and to carry out the transactions and agreements contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action. 

        8.2   Enforceability. This Agreement has been duly executed and delivered by NWRG, ENC and MBC and is a
valid and binding obligation of each corporation, enforceable in accordance with its terms. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated
hereby will: (a) conflict with or violate any provision of the certificate of incorporation of bylaws of NWRG, ENC or MBC or of any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or enforceable against NWRG, ENC or MBC; or (b) result in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or require any notice under, any mortgage, contract, agreement, indenture or other instrument which is either binding upon or
enforceable against NWRG, ENC or MBC, except for any conflicts, breaches, terminations or defaults that would not, individually or in the aggregate have a material adverse affect on the financial
condition, business or assets of NWRG, ENC or MBC. No permit, consent, approval or authorization of, or declaration to or filing with, any regulatory or other government authority is required in
connection with the execution and delivery of this Agreement by NWRG, ENC or MBC and the consummation of the transactions 

11

 

contemplated
hereby, except to the extent this Agreement, in the reasonable opinion of NWRG's counsel, constitutes a "material agreement" under the rules and regulations promulgated by the Securities
and Exchange Commission of the United States of America, in which case NWRG will need to file this Agreement with the SEC. In such event, NWRG will use commercially reasonable efforts to obtain
permission to file the Agreement with all specific pricing, volumes and other non-public information redacted in any publicly available version of the Agreement. 

        8.3   Compliance with Laws. NWRG, ENC and MBC are in material compliance with all laws, regulations and
orders applicable to their performance under this Agreement. 

Article 9 Other Covenants of the Parties  

        9.1   Compliance with Laws; Taxes. Each party shall comply with all governmental laws, regulations and
orders applicable to its operations under this Agreement, and to bear any and all taxes, fees or other governmental charges applicable to its operations. 

        9.2   New World in Production Facility. The Harlan Companies shall permit representatives of New World
to (a) inspect the Production Facility at any reasonable time to assure compliance with the terms of this Agreement, (b) observe the manufacturing of the Products and
(c) participate in research and development activities, and all such individuals will comply with the Harlan Companies' established policies and procedures applicable to similarly situated
employees and will be bound by the confidentiality provisions of Article 11 hereof. 

        9.3   Termination of Other Agreements; Equipment Lease. 

        9.3.1 Other Agreements. The Harlans, the Harlan Companies, New World (and specifically NWRG, MBC and ENC) hereby expressly agree to
terminate the Option Agreement, the Right of First Refusal Agreement, the Leasehold Mortgage dated as of August 27, 1996, executed by Supplier in favor of New World's predecessor, that certain
Subordination and Non-Disturbance Agreement dated as of August 27, 1996 by and among New World's predecessor, Hal P. Harlan, Harlan and Supplier and that certain Intercreditor
Agreement dated August 27, 1996 by and among LaSalle National Bank, New World's predecessor, Supplier and Harlan as of the later of (a) the consummation of the purchase by one of the
Harlan Companies of the equipment associated with the Bagel Lines in accordance with the Equipment Lease described below in Section 9.3.2 or (b) the Effective Time. On or after
termination of such agreements, NWRG, MBC and ENC agree to execute and deliver to the Harlan Companies documents in recordable form to confirm the termination of such Leasehold Mortgage and such
Subordination and Non-Disturbance Agreement. 

        9.3.2 Equipment Lease. The parties acknowledge that equipment associated with the Bagel Lines is currently leased by New World to Supplier
pursuant to a certain Amended and Restated Equipment Lease dated as of May 1, 1998, as amended (the "Equipment Lease") and that the Supplier has given timely notice of its election to purchase
such equipment. Upon receipt by New World of the purchase price for such equipment from Supplier, the parties agree to terminate the Equipment Lease. The parties covenant that they will complete the
purchase and sale of the leased equipment associated with the Bagel Lines in accordance with the terms of the Equipment Lease prior to the Effective Time. 

        9.4   Resources. Harlan shall devote to Supplier such of its resources as may be necessary to assist
Supplier in timely and completely performing all of the Supplier's obligations under this Agreement. Supplier shall ensure it has adequate access to financial and human resources to allow it to timely
and completely perform all of its obligations within this Agreement. 

        9.5   Quality Controls; Audits. The parties agree that Supplier has established specific quality
assurance criteria, which substantially conform to industry standards and which are generally based on 

12

 

New
World's processing quality assurance overview, the form of which is attached hereto as Schedule 9.5. To ensure compliance with such criteria, representatives of NWRG's (or its applicable
New World Subsidiary's) quality assurance department may perform or facilitate the following: plant audits for process control validation or for cause; random product evaluations at distribution
centers; product evaluations at the support center; and distribution trailer temperature monitoring, and such other evaluations reasonably designed to evaluate quality and quality controls pursuant to
New World's quality assurance requirements. Supplier agrees to reimburse NWRG for reasonable expenses incurred only and directly to resolve confirmed material product deviations from the Formulations,
Specifications or Procedures, such expenses to include but not limited to reasonable costs for travel, product evaluation in the New World stores, third party distribution centers or at the support
center, product disposal, product shortages and losses and supply chain re-stocking of Products. The Harlan Companies agree to work with New World in good faith through the Steering
Committee to continue to evaluate the Formulations, Specifications and Procedures to seek to identify methods by which costs could be reduced. 

Article 10.0 Indemnification and Insurance  

        10.1 Harlan. The Harlan Companies agree to indemnify NWRG and all New World Subsidiaries and New
World Franchisees for, and hold NWRG and all New World Subsidiaries and New World Franchisees that purchase Products harmless from and against, all expenses, losses, costs, deficiencies, liabilities
and damages (including related counsel fees) incurred or suffered by them resulting from: (a) any breach of any representation or warranty made by the Harlan Companies in or pursuant to this
Agreement; (b) any default in the performance of any of the covenants or agreements made by the Harlan Companies in this Agreement; (c) any claim or action by any consumer or any other
third party arising out of the production or sale of the Products by the Harlan Companies (including any claims or actions for bodily injury and any products liability claims or actions), provided,
however, that the Harlan Companies shall have no obligation to indemnify NWRG or any New World Subsidiary or New World Franchisee with respect to any claim or action to the extent such claim or action
is attributable to the alteration, handling or misbranding of Products after they have been delivered to NWRG or any New World Subsidiary or New World Franchisee or is attributable to the proper and
correct use by the Harlan Companies of the Formulations, Procedures, Specifications or the other production-related Proprietary Information of New World or the use of the Marks or other packaging or
labeling required by NWRG; or (d) any claim or action brought by any federal, state, local or foreign governmental agency in connection with the production or sale of the Products by the Harlan
Companies (including without limitation any claim or action under any law or regulation relating to public health, the sale of food and drugs, and the safe conduct of business), provided, however,
that the Harlan Companies shall have no obligation to indemnify NWRG or any New World Subsidiary or New World Franchisee with respect to any claim or action to the extent such claim or action is
attributable to the alteration, handling or misbranding of Products after they have been delivered to NWRG or any New World Subsidiary or New World Franchisee or is attributable to the proper and
correct use by the Harlan Companies of the Formulations, Procedures and Specifications or the other production-related Proprietary Information of New World or the use of the Marks or other packaging
or labeling required by NWRG. 

        10.2 New World. NWRG, ENC and MBC agree to indemnify the Harlan Companies for, and to hold the Harlan
Companies harmless from and against, all expenses, losses, costs, deficiencies, liabilities and damages (including related counsel fees) incurred or suffered by the Harlan Companies resulting from:
(a) any breach of any representation or warranty made by NWRG, ENC or MBC in or pursuant to this Agreement; (b) any default in the performance of any of the covenants or agreements made
by New World in this Agreement; (c) any claim or action by any consumer, governmental agency or any other third party, including any claim of infringement or violation of, or conflict with, any
patent or trade secret of any third party, to the extent such claim or action is attributable to the use by the 

13

 

Harlan
Companies of the Formulations, Procedures, Specifications or the other production-related Proprietary Information of New World or is attributable to the alteration, handling or misbranding of
Products after they have been delivered to NWRG, or any New World Subsidiary, New World Franchisee or Authorized Recipient or the use of the Marks or other packaging or labeling required by NWRG, ENC
or MBC; or (d) any claim or action by any third party alleging infringement or violation of, or conflict with, any of the Marks or New World's trade dress, to the extent such claim or action is
attributable to the use of the Marks or New World's trade dress used in accordance with NWRG's, ENC's or MBC's instructions pursuant to this Agreement. 

        10.3 Defense. The parties agree that each party shall have the exclusive right to control the defense
(and the right to establish the terms of any settlement) of any claim or action by any third party that could result in such party having an indemnification obligation under Section 10.1 or
Section 10.2 above with counsel of such party's selection, that each party will promptly give the other party written notice of any claim or action of which it becomes aware that could result
in such other party having an indemnification obligation under Section 10.1 or Section 10.2, and that each party will fully cooperate with the other party in the defense of any claim or
action by the other party hereunder. 

        10.4 Distributors. NWRG, ENC and MBC, and the Harlan Companies, acknowledge and agree that NWRG, New
World Subsidiaries and New World Franchisees, on the one hand, and the Harlan Companies, on the other hand, may be required to enter into indemnity agreements with Authorized Recipients. NWRG, ENC,
MBC and the Harlan Companies agree that (a) in the event NWRG or any New World Subsidiary or New World Franchisee is obligated to make indemnity payments under any such agreement resulting from
any of the matters described in clauses (a) through (d), inclusive, of Section 10.1 hereof, the Harlan Companies shall indemnify NWRG or such New World Subsidiary or New World Franchisee
for, and hold NWRG and such New World Subsidiary or New World Franchisee harmless from and against, such payment in accordance with Section 10.1 hereof, and (b) in the event that either
of the Harlan Companies is obligated to make indemnity payments under any such agreement resulting from any of the matters described in clauses (a) through (d), inclusive, of
Section 10.2 hereof, NWRG, ENC and MBC shall indemnify the Harlan Companies, and hold them harmless from and against, such payment in accordance with Section 10.2 hereof. 

        10.5 Insurance. The Harlan Companies represent and warrant that they carry the following types of
insurance coverage, written by insurance companies reasonably satisfactory to New World, having a current Best's rating of at least "A IX," that are licensed to do business in all relevant states, and
shall include, at a minimum: (a) policies of workers' compensation and employers' liability insurance that comply with all state and federal laws, with employers' liability limits of not less
than $500,000/500,000/500,000, (b) policies of commercial general liability insurance written on an occurrence basis, extended to include contractual liability, products and completed
operations liability, and personal and advertising liability, with combined bodily injury and property damage limits of not less than $1,000,000 per occurrence, (c) policies of business
automobile liability insurance, including bodily injury and property damage coverage, for all owned, non-owned and hired vehicles, with a combined single limit of liability of not less
than $1,000,000 per occurrence for both bodily injury and property damage, (d) policies of commercial umbrella and/or excess liability insurance, sitting over all primary liability coverages
(namely, employers' liability, commercial general liability and business automobile liability) with limits not less than $10,000,000 per occurrence. Such umbrella and/or excess liability insurance
will provide at a minimum those coverages and endorsements required in the underlying policies, and (e) policies of property insurance providing coverage for direct physical loss or damage to
real and personal property for all-risk perils, including flood and earthquake, where applicable. Appropriate coverage shall also be provided for boiler and machinery exposures and
business interruption/extra expense exposures. All such policies shall name New World as an additional insured and contain endorsements (i) providing that the Harlan Companies' commercial
general liability coverage (including products liability) (the "CGL Coverage") is primary relative to NWRG or any New 

14

 

World
Subsidiary or New World Franchisee, and that any other insurance maintained by NWRG or any New World Subsidiary or New World Franchisee with respect to the risks covered by the CGL Coverage is
excess and non-contributing, and (ii) waiving any and all rights of subrogation against NWRG, New World Subsidiaries and New World Franchisees with respect to the CGL Coverage, and
(iii) providing for a continuation of the CGL Coverage beyond the expiration or termination of this Agreement for claims made following such expiration or termination that are attributable to
the manufacture of Products by the Harlan Companies during the Term. The Harlan Companies also represent and warrant that all premiums which have become due on such policies have been paid, that such
policies are in full force and effect, and that such policies may not be canceled, changed or allowed to lapse through non-renewal, failure to pay premiums or otherwise except upon not
less than 60 days' prior written notice to the Harlan Companies and NWRG, except that such notice period need not exceed 10 days in the case of failure to pay premiums. The Harlan
Companies shall deliver to NWRG by the Effective Time evidence of the foregoing insurance coverages by providing to NWRG a satisfactory Acord Certificate of Coverage including NWRG, ENC and MBC as
additional insureds, and will thereafter provide NWRG with a satisfactory Acord Certificate of Coverage upon the issuance of any renewal or replacement policies. The Harlan Companies agree to maintain
such policies in full force and effect, in the amount set forth above, throughout the Term, and to maintain NWRG, ENC and MBC as additional insureds under such policies. 

Article 11.0 Confidentiality  

        11.1 Definitions. As used in this Agreement, the term "Proprietary Information" shall mean any
knowledge or information, written or oral, which relates in any manner to the respective businesses of the Harlan Companies and New World which is confidential and proprietary information of the
disclosing party, whether or not disclosed prior to, on or after the date hereof, including, without limitation, the business concepts, recipes, food preparation methods, equipment, operating
techniques, marketing methods, financial information, demographic and trade area information, prospective site locations, market penetration techniques, plans, or schedules, customer profiles,
preferences, or statistics, menu breakdowns, itemized costs, franchisee composition, territories, and development plans, products, production techniques and all related trade secrets or confidential
or proprietary information treated as such by the disclosing party, whether by course of conduct, by letter or report, or by the use of any appropriate proprietary stamp or legend designating such
information or item to be confidential or proprietary. Proprietary Information shall include, without limitation, all information furnished to a party in writing. As used in this Article, the term
"disclosing party" shall mean the party to this Agreement which discloses or makes available Proprietary Information to the receiving party, and the term "receiving party" shall mean the party to this
Agreement to whom Proprietary Information is disclosed or made available by the disclosing party. 

        11.2 Formulations Specifications and Procedures. Without limiting the generality of
Section 11.1 hereof, the parties acknowledge and agree that the Formulations, Specifications and Procedures are the Proprietary Information of New World and will be treated as Proprietary
Information that does not become stale with the passage of time for purposes of the last sentence of Section 11.3 hereof. The Harlan Companies agree that in the use of the Bagel Lines for
production of any products for persons other than Authorized Recipients, the Harlan Companies shall ensure that Proprietary Information or other intellectual property (including patent rights) of New
World will not be subject to a risk of unauthorized use by third parties or disclosure to third parties by reason of the use of the Bagel Lines. 

        11.3 Obligations. The receiving party shall hold all Proprietary Information in strict confidence,
shall use such Proprietary Information only for the benefit of the disclosing party and shall disclose such Proprietary Information only to the receiving party's employees and agents who have a need
to know such Proprietary Information in order to assist the receiving party in performing its obligations under this Agreement provided such employees and agents each have individually entered into a 

15

 

confidentiality
agreement in form satisfactory to the disclosing party or are otherwise obligated by a written agreement with the receiving party to maintain the confidence of the Proprietary
Information, which agreement the parties hereby agree may be directly enforced by the disclosing party. The receiving party shall not disclose Proprietary Information to any other person or entity.
The obligations hereunder to maintain the confidentiality of Proprietary Information shall continue: (a) for five years from the date of disclosure of the Proprietary Information, in the
case of Proprietary Information that by its nature becomes stale with the passage of time (e.g., financial information, development plans) and (b) indefinitely, in the case of the Proprietary
Information that by its nature does not become stale with the passage of time (e.g. trade secrets, production techniques, recipes). 

        11.4 Exceptions. The obligations of the parties specified in Section 11.3 shall not apply to
any Proprietary Information which (a) is disclosed in a printed publication available to the public prior to the date of this Agreement, or becomes known to the public through no act of the
receiving party or its employees, agents or other person or entity which has received such Proprietary Information from or through the receiving party, provided, however, that a combination of
ingredients or processes that has not been disclosed to, or become known by, the public shall remain subject to Section 11.3 notwithstanding the fact that the identity of such ingredients or
processes may be known, (b) is approved for release by written authorization of an officer of the disclosing party, (c) can be established by the receiving party by documentary evidence
to have been in the legitimate and lawful possession of the receiving party at the time revealed by the disclosing party to the receiving party, (d) is lawfully received by the receiving party
without restriction from a third party subsequent to this Agreement, which third party did not obtain the Proprietary Information through improper means or disclose the Proprietary Information without
authorization, or (e) is required to be disclosed by law or regulation or by proper order of a court of applicable jurisdiction after adequate notice to the disclosing party, sufficient to
permit the disclosing party to seek a protective order therefor, the imposition of which protective order the receiving party agrees to approve and support. In addition, after consultation with the
disclosing party, the receiving party may disclose only that Proprietary Information that the receiving party believes in good faith it is required to disclose (x) in connection with any filing
that is made or disclosure document that is prepared for the purpose of complying with federal or state securities or franchise laws, rules or regulations or (y) to comply with the rules of any
stock exchange or quotation system or any other regulatory requirements; provided, however, that in any event trade secrets, production techniques, recipes and similar Proprietary Information of a
disclosing party will not be disclosed by the receiving party without the written consent of the disclosing party. 

        11.5 Return of Information. The receiving party (and each employee, agent, or other person or entity
which has received such Proprietary Information from or through the receiving party) shall, upon the request of the disclosing party, return all documents and other tangible manifestations of
Proprietary Information received from the disclosing party, including all copies and reproductions thereof. The receiving party will thereafter certify in writing to the disclosing party that all
Proprietary Information has either been returned to the disclosing party or destroyed. 

Article 12.0 Termination  

        12.1 Bankruptcy. If a petition in bankruptcy is filed by any party, or if any party is adjudicated a
bankrupt, or if any party makes a general assignment for the benefit of creditors, or if a receiver is appointed on account of the insolvency of any party, this Agreement may be terminated by New
World if the affected party is a Harlan Company or by the Harlan Companies if the affected party is New World, if such actions are not reversed or such proceedings are not dismissed within sixty
(60) days after written notice given to the affected party. 

16

   
        12.2 Breach of Contract. If any party is in material breach of any warranty or provision of this
Agreement or otherwise materially fails to perform hereunder, then the non-breaching party may, without prejudice to any other right or remedy, terminate this Agreement if the consequences
of such breach are not remedied within thirty (30) days after written notice to the breaching party of such breach, except that such thirty (30) days will be extended if and to the
extent that the breaching party commences a cure within such thirty (30) days and uses commercially reasonable best efforts to effect such cure as soon as possible and completes such cure
within thirty (30) days thereafter. 

        12.3 Survival of Provisions. The provisions of Articles 6, 7, 8, 9, 10 and 11 and any other
provisions hereof requiring performance by a party following termination or otherwise requiring payments (such as, but not limited to, Sections 3.2.3 and 4.4) shall survive the expiration or
any termination of this Agreement. 

        12.4 Purchases Upon Termination. Upon expiration or termination of this Agreement for any reason,
NWRG, ENC and MBC shall purchase from the Harlan Companies all finished Products in inventory, all packaging materials and labeling in inventory purchased by the Harlan Companies pursuant to
Section 2.5 hereof, and reasonable levels of ingredients and raw materials in the Harlan Companies' inventory, at the Harlan Companies' cost, F.O.B. the Production Facility. 

        12.5 Force Majeure. Notwithstanding the foregoing, in case of Force Majeure preventing or hindering a
Harlan Company from manufacturing or delivering the Products or New World from receiving or marketing the Products, the party affected may give written notice to the other containing reasonable
particulars of the Force Majeure in question and the effect of such Force Majeure as it relates to the obligations of the affected party hereunder and such Force Majeure will not constitute a default
hereunder, provided that the party affected by the delay makes reasonable efforts to correct the reason for such delay. Such notice, whether given by a Harlan Company or New World entitles Harlan
Company or New World to suspend deliveries during the period of Force Majeure. For the purpose of this Agreement, "Force Majeure" means any of the following events beyond the control of the parties: 

	(a)
	lightning,
storms, earthquakes, hurricanes, tornados, landslides, floods and other Acts of God;

	(b)
	substantial
or material fires, explosions, breakage of or accidents to plant, machinery, equipment and storage;

	(c)
	civil
disturbances, sabotage, war, blockades, insurrections, vandalism, riots, epidemics, border closures; or

	(d)
	inability
to obtain supplies necessary to manufacture and package the Products at the Production Facility if inability is industry wide among manufacturers of similar product to the
Products or inability to obtain electric power, water, fuel or other utilities, or services necessary to operate the Production Facility; 

but
does not include the inability of either party to obtain financing or any other financial inability on the part of either party. In the event of Force Majeure, the Contact Minimums shall be
appropriately reduced pro rata based upon the number of days the effect of the Force Majeure event exists. 

        12.6 Reoccurring Breaches of Contract. In the event that any of the Harlan Companies are in material
breach of this Agreement, and New World has sent written notice of default pursuant to Section 12.2 above more than four (4) times in any twelve (12) month period, New World shall
have the option to terminate this Agreement by providing the Harlan Companies with at least thirty (30) days prior written notice, provided such notice is given within sixty (60) days of
the last material breach, regardless of whether such material breaches have been cured or are in the process of being cured. 

17

 

Article 13.0 Miscellaneous  

        13.1 Amendment. The parties hereto may amend, modify and supplement this Agreement in such manner as
may be agreed upon by them in writing. 

        13.2 Expense. Each party to this Agreement shall pay all of the expenses incurred by it in connection
with this Agreement, including without limitation its legal and accounting fees and expenses, and the commission, fees and expenses of any person employed or retained by it to bring about, or to
represent it in, the transactions contemplated hereby. 

        13.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Harlan Companies may not assign their rights or delegate their duties hereunder without the prior written consent of NWRG (which
consent shall also be deemed to be given on behalf of ENC and MBC). 

        13.4 Entire Agreement. This instrument and the exhibits and schedules attached hereto contain the
entire agreement of the parties hereto with respect to the purchase and sale of the Products and the other transactions contemplated herein, and supersede all prior understandings and agreements of
the parties with respect to the subject matter hereof, except that the parties acknowledge that the terms of Sections 2 through 9 of that certain letter agreement dated July 18, 2006
remain in full force and effect and that the Prior Agreement remains in effect prior to the Effective Time and remains applicable as to the parties' obligations with respect to Products sold and
performance under the Prior Agreement prior to the Effective Time. Any reference herein to this Agreement shall be deemed to include the exhibits and schedules attached hereto. In the event of any
inconsistency between this Agreement and any purchase order, confirmation or similar document or instrument of NWRG, any New World Subsidiary or New World Franchisee or the Supplier, this Agreement
shall govern. 

        13.5 Business Relationship. Except as expressly set forth in this Agreement or hereafter agreed in
writing by the Harlan Companies and NWRG, ENC and MBC, (a) neither NWRG, ENC, nor MBC are promising, committing to or guaranteeing that any business relationship with the Harlan Companies or
the Harlan Companies' status as an approved supplier will continue for any specified time period, and (b) neither NWRG, ENC, nor MBC are agreeing to reimburse the Harlan Companies for any
costs, expenses, investments or other amounts incurred or expended by the Harlan Companies (and no such amounts have been or will be incurred or expended in reliance on continued business from NWRG or
New World Subsidiaries or New World Franchisees). 

        13.6 Headings. The descriptive headings in this Agreement are inserted for convenience only and do
not constitute a part of this Agreement. 

        13.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall
be deemed an original. 

        13.8 Notices. Any notice, request, information or other document to be given hereunder shall be in
writing. Any notice, request, information or the document shall be deemed duly given three business days after it is sent by registered or certified mail, postage prepaid, to the intended recipient,
addressed as follows: 

        If
to the Supplier or Harlan, addressed to such party at the following address: 

Harlan
Bakeries, Inc.

7597 East U.S. Highway 36

Avon, Indiana 46123

Attention: Hugh P. Harlan 

18

 

        with
a copy to such party at the following address: 

Harlan
Enterprises, LLC

P. O. Box 29176

Indianapolis, Indiana 46229

Attention: Hal P. Harlan 

        and
a copy to: 

Bose
McKinney & Evans LLP

135 North Pennsylvania Street

2700 First Indiana Plaza

Indianapolis, Indiana 46204

Attention: Roberts E. Inveiss, Esq. 

        If
to NWRG, ENC or MBC, addressed as follows: 

New
World Restaurant Group, Inc.

1687 Cole Boulevard

Golden, CO 80401

Attention: Charles Stelmokas 

        with
a copy to: 

New
World Restaurant Group, Inc.

1687 Cole Boulevard

Golden, CO 80401

Attention: Jill B.W. Sisson, Esq. 

Any
party may send any notice, request, information or other document to be given hereunder using any other means (including personal delivery, courier, messenger service, fax or ordinary mail), but
no such notice, request, information or other document shall be deemed duly given unless and until it is actually received by the party for whom it is intended. Any party may change the address to
which notices hereunder are to be sent to it by giving written notice of such change of address in the manner herein provided for giving notice. 

        13.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of Colorado applicable to contracts made and to be performed wholly therein. 

        13.10   Injunctive Relief. In the event of a breach or threatened breach of any of the
provisions of Article 11.0 of this Agreement, the parties acknowledge and agree that the non-breaching party will not have an adequate remedy at law and therefore will be entitled
to enforce any such provision by temporary or permanent injunctive or mandatory relief as a remedy for any such breach, and that such remedy shall not be deemed to be the exclusive remedy for any such
breach but shall be in addition to all other remedies, subject, however, to the provisions of Section 13.11 hereof. In addition, nothing herein contained shall bar a party's right to obtain
injunctive relief against threatened conduct that will cause it loss or damages, under the usual equity rules, including the applicable rules for obtaining restraining orders and preliminary
injunctions. 

        13.11   Limitation of Liability. In no event shall either party hereto seek, or be liable
to the other party hereto for, speculative, exemplary or punitive damages. 

        13.12   Publicity. No press release or other public or trade announcement or statement
related to this Agreement or the transactions contemplated hereby (or the existence of any discussions or negotiations between the parties regarding any other possible transactions) will be issued,
and no disclosure of this Agreement or the terms hereof will made, by either of the Harlan Companies without the prior approval of NWRG. NWRG agrees to use reasonable best efforts to consult with the
Harlan 

19

 

Companies
prior to issuing any press release or public or trade announcement or statement relating to this Agreement or the transactions contemplated hereby, except to the extent immediate disclosure
is required in the opinion of NWRG's counsel, in order for New World to comply with applicable securities laws. 

        13.13   No Agency. Nothing contained herein or done hereunder shall be construed as
creating a joint venture or partnership or as constituting any party hereto the agent of the other. 

        13.14   Waiver. The failure of any party hereto to enforce at any time any of the
provisions of this Agreement, or any rights with respect hereto, shall in no way be considered to be a waiver of such provisions or rights, or in any way affect the validity of this Agreement. No
waiver of any breach of this Agreement by any party shall be deemed a waiver of any preceding or succeeding breach and no such waiver shall be valid or enforceable unless contained in a written
instrument duly signed by the parties hereto. 

        13.15   Severability. If any term or condition of this Agreement shall be finally
adjudicated to be enforceable or invalid by any court having jurisdiction with respect thereto, all the other terms and conditions of this Agreement shall remain in full force and effect and shall not
be affected thereby so long as the remaining terms of this Agreement reflect substantially the intent of the parties. 

        13.16   Venue. The parties agree that any action brought by the Harlan Companies against
NWRG, ENC or MBC in any court, whether federal or state, may be brought within the State of Colorado. Any action brought by NWRG, ENC or MBC against the Harlan Companies in any court, whether federal
or state, may be brought within the state and judicial district in which any of the Harlan Companies has their principal place of business. The parties agree that this Section 13.16 shall not
be construed as preventing either party from removing an action from state to federal court. The parties hereby waive all questions of personal jurisdiction or venue for the purpose of carrying out
this provision. Any such action shall be conducted on an individual basis, and not as part of a consolidated, common, or class action. 

        13.17   Remedies are Cumulative. No right or remedy conferred upon or reserved to NWRG,
ENC or MBC, or the Harlan Companies, by this Agreement is intended to be, nor shall be deemed, exclusive of any other right or remedy herein or by law or equity provided or permitted, but each shall
be cumulative of every other right or remedy, subject, however to the provisions of Section 13.11 hereof. 

20

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. 

	

 	
 	

NEW WORLD RESTAURANT GROUP, INC.
	

 	
 	

By:	
 	

/s/  PAUL J.B. MURPHY III      

	

 	
 	

EINSTEIN AND NOAH CORP.
	

 	
 	

By:	
 	

/s/  PAUL J.B. MURPHY III      

	

 	
 	

MANHATTAN BAGEL COMPANY, INC.
	

 	
 	

By:	
 	

/s/  PAUL J.B. MURPHY III      

	

 	
 	

HARLAN BAGEL SUPPLY COMPANY, LLC
	

 	
 	

By:	
 	

/s/  HUGH P. HARLAN      

	

 	
 	

HARLAN BAKERIES, INC.
	

 	
 	

By:	
 	

/s/  HUGH P. HARLAN      

21

Exhibits 

	Exhibit A	 	Determination of Material Cost (Statement of Material Costs)
	

Exhibit B	
 	

Determination of Energy Costs (Statement of Energy Costs)
	

Exhibit C	
 	

Distributors Constituting Authorized Recipients
	

Schedules
	

Schedule 4.1.1	
 	

Category A Product Pricing
	

Schedule 4.1.2	
 	

Category B Product Pricing
	

Schedule 9.5	
 	

New World Processing Quality Assurance Overview

        Exhibit A

Determination
of Material Cost (Statement of Material Costs) 

Category A Products:  

        (List) 

Category B Products:  

        (List) 

Note:
Determination of material costs will be in accordance to the established pricing format and methods attached as presented during the meeting of September 21, 2006 for August 2006. 

        Exhibit B 

        Determination
of Energy Costs (Statement of Energy Costs) 

        ***

        Exhibit C

Distributors Constituting Authorized Recipients  

	CDI—Warehouse
 5545 Shawland Road

Jacksonville, FL 32254

877-659-1736 x214
 Kristen Carroll
 Kristen.Carroll@cdi-llc.com	 	Mile Hi
 4701 E. 50th Avenue

Denver, CO 80216

303-270-9838
 Bob Mares
 RMares@mhff.net
	
McCabe's Main Contact—All Centers
 17600 NE San Rafael

Portland, OR 97230

800-553-4770 x110
 Staci Becerra
 Staci.Becerra@mccabesfoods.com	
 	
McCabe's Los Al
 10681 Calle Lee

Los Alamitos, CA 90720

800-423-4515 x321
 Dianna Bailey-Thompson
 Dianna.Bailey-Thompson@mccabesfoods.com
	
McCabe's Milpitas
 1025 Montague Expressway

Milpitas, CA 95035

800-637-1232 x7058
 Debbie Correa
 Debbie.Correa@mccabesfoods.com	
 	
McCabe's Portland
 17600 NE San Rafael

Portland, OR 97230

800-553-4770 x141
 Sherry Sewell
 Sherry.Sewell@mccabesfoods.com
	
McCabe's Phoenix
 624 S. 25th Ave, Suite #1

Phoenix, AZ 85009

800-716-7691 x10
 Tammy Brown
 Tammy.Brown@mccabesfoods.com	
 	
Blueline Headquarters
 24120 Haggerty Road

Farmington Hills, MI 48335

248-442-4622
 Larry Gouldman
 Larry.Gouldman@bldcorp.com
	
Blueline Chicago
 1479 Regency Court

Calumet City, IL 60409

708-862-1513
 Dennis O'Neil
 Dennis.ONeil@bldcorp.com	
 	
Blueline Novi
 43600 Gen-Mar Drive

Novi, MI 48375

248-478-6015
 Gary Wilson
 Gary.Wilson@bldcorp.com
	
Blueline Columbus
 2250 Spiegel Drive Suite M

Groveport, OH 43125

614-846-0055
 Sherrie Coulson
 Sherrie. Coulson@bldcorp.com	
 	
Blueline Dallas
 814 Avenue R

Grand Prairie, TX 75050

972-247-7600
 Elsa Garcia
 Elsa.Garcia@bldcorp.com
	
Blueline Swedesboro
 501 Arlington Blvd

Swedesboro, NY 08085

856-467-0641
 Roy DeRidder
 Roy.DeRidder@bldcorp.com	
 	
CDI—Purchasing
 5151 Brook Hollow Pkwy, Ste 225

Norcross, GA 30071

770-242-1553
 Megan Brown
 MBrown@cdi-llc.com

Schedule 4.1.1

Category A Product Pricing  

        See attached pricing, which will be adjusted pursuant to Article 4.0 of the Agreement. 

        *** 

Schedule 4.1.1

Category B Product Pricing  

        *** 

Schedule 9.5 

NWRG QUALITY ASSURANCE  

 PROCESSING EVALUATION  

 Kim Knutsen  

 Senior Director, Quality Assurance  

 Einstein and Noah Corporation  

 303-568-8158  

Einstein and Noah Processing Quality Assurance Overview  

        NWRG Quality Assurance program begins with vendor selection or addition of new items from existing vendors. The process is rigorous and involves all operational
departments associated with procurement, research, store operations, quality maintenance and distribution. After new vendor or new item selection the processor will be notified by NWRG Procurement so
the vendor or new item can be set up for receiving. 

NWRG Corporate Quality Assurance Responsibility  

        NWRG Corporate Quality Assurance will provide to our processors pertinent QC information via a NWRG Material Information document for the purpose of ensuring
receipt, handling, storage and shelf life criteria are known. 

        NWRG
Corporate Quality Assurance is available to clarify food handling procedures and will provide guidance where deviations from the specifications are apparent. 

        NWRG
Corporate Quality Assurance will perform periodic and unannounced inspections and food evaluations to ensure our food and packaging is handled properly and the processor meets
acceptable hygiene and regulatory standards. The visits can occur for the following reasons: 

	1.
	Routine—no
cause

	2.
	Store
or commissary quality complaints

	3.
	Unsatisfactory
or sliding processor service level trends

	4.
	Substandard
processor quality evaluation 

Processor Responsibility  

        The processor will be responsible for utilizing this information to ensure NWRG distributors receive acceptable quality products with appropriate remaining shelf
life. Ensuring NWRG operations receives the quality of food and shelf life will involve the following general processing functions: 

	1.
	Personnel—personnel are trained to recognize basic food quality attributes and appropriate receiving criteria to ensure the
ingredients for NWRG food is received within NWRG specifications.

	2.
	Storage—After receiving, the products are placed in the appropriate storage environment (dry, refrigerated, frozen) until
selection, loading and delivery. The storage areas are maintained at the appropriate temperature ranges and in acceptable sanitary and physical conditions.

	3.
	Stock Rotation—Processors will ensure shelf life sensitive items are used within proper code date rotation.

	4.
	Food Inspection—Processor personnel will perform a weekly inspection of short shelf life products to ensure proper quality
and adequate shelf life is available to production.

	5.
	Temperature Monitoring—Processors will have installed continuous temperature monitoring devices that are interlocked with an
alarm system that will notify personnel when the high and low set points are exceeded. Personnel will daily document the refrigeration and freezing section temperatures.

	6.
	Sanitary and Maintenance condition—Processors will be maintained in a sanitary and physical condition that will not
compromise food quality, food safety and will comply with all food regulatory agency requirements and standards.

	7.
	Delivery Trailers—delivery trailers will be inspected prior to loading to ensure proper sanitary and physical conditions.
Processors will ensure trailers are equipped with appropriate refrigeration and freezer units that will maintain the food at the required temperature throughout the transportation to the DC. 

	8.
	Quality Holds / Damage / Returns—there will be a separate area or a designated locking system in each storage environment
designated for segregation and holding of ingredients and foods placed on QC hold or returned as damaged. These areas will be appropriately identified and the foods tagged with appropriate QC Hold
tags.

	9.
	Product Disposal—Finished products disposed of at the direction of NWRG Corporate Quality Assurance will be inventoried and
a disposal document provided to NWRG QA confirming disposal. Products being disposed will be in accordance with standard disposal procedures, if needed NWRG QA will provide guidance for disposal.

	10.
	Product Retrieval / Recalls—Processors will have the ability to perform product trace, recall and quarantine procedures
consistent with FDA guidelines.

	11.
	Facility Inspection—Processors will have the facility inspected at least monthly to ensure the location is maintained in a
sanitary and physical condition that complies with all food regulatory hygiene requirements. Reports upon request be provided to NWRG Quality Assurance, Golden, Colorado.

	12.
	Critical Products Handling Procedures—the following products are crucial to NWRG menu items and must be handled
accordingly. Failure to follow these procedures will seriously compromise the integrity and functionality of the food.

	a.
	Bagels—bagels must be stored in a frozen environment (<-10 F). Bagels left out of the freezer more
than 30 minutes will begin to thaw and the yeast will activate causing the bagels to proof prematurely and be substandard at the stores.

	b.
	Transportation to DC's—Bagels must be transported in trailers capable of maintaining an environment of 0 F 

        Section B

HACCP—Hazard Analysis Critical Control Point  

        Processors will have implemented a HACCP monitoring program with appropriate monitoring documentation. The HACCP program is designed to segregate the operational
monitoring steps and procedures required to ensure potentially hazardous foods are managed in a manner that eliminates conditions that create or contribute to food borne illness in distribution. 

        Processors
are encouraged to use the nationally recognized HACCP documentation format for developing the HACCP program. 

        The
HACCP program must be designed in a manner consistent with the National Advisory Committee for Microbiological Criteria of Foods (NACMCF). Additionally, NWRGC requires proof of
employee training and CCP performance. Refer to the examples of HACCP component documentation in this section for guidance. The HACCP criteria and NWRG requirements include: 

	A.
	Product
Description

	B.
	Material
Risk Assessment

	C.
	Product
Risk Assessment

	D.
	Equipment
Risk Assessment

	E.
	Process
Flow Chart

	F.
	Critical
Control Point (CCP) Determination

	G.
	Establish
CCP Limits

	H.
	Establish
CCP Monitoring Procedures

	I.
	Establish
DDP Deviation Response Procedures

	J.
	Establish
CCP Verification Procedures

	K.
	Written
Hazard Identification Control Document

	L.
	Establish
effective CCP management documentation

	M.
	Train
employees and document training

	N.
	Evaluation
process of CCP performance

	O.
	Communicate
CCP performance 

Process Control Management  

        Processors must have documented a master "Process Control Requirements" (PCR) plan for producing NWRG products. The PCR will contain the following information for
all critical steps of processing: 

	A.	 	Processing Location	 	Room, Area
	B.	 	Processing Step	 	Ingredient Receiving criteria, scaling, mixing
	C.	 	Processing Measurements	 	Weight, pH, Temperature, Line Speed
	D.	 	Deviation Procedures	 	Discard, rework
	E.	 	Process Validation	 	Process to ensure the PCR is accurate
	F.	 	Finished Product Evaluation	 	Daily, batch, lot

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