ACCOUNT CONTROL AGREEMENT
THIS ACCOUNT CONTROL AGREEMENT (this "Agreement"), dated as of June 19,
2001 is entered into by and among XXXXXXXXX & COMPANY, INC. or its assigns (the
"Creditor"), NEW WORLD ENBCDEB CORP., a New York corporation (the "Debtor") and
a wholly-owned direct subsidiary of New World Coffee Manhattan Bagel, Inc. ("New
World") and XXXXXXXXX & COMPANY, INC., as broker (the "Broker").
RECITALS
WHEREAS, Creditor, as collateral agent and as a purchaser, and Debtor have
entered into a Note Purchase and Security Agreement dated June 19, 2001 (the
"Purchase Agreement") pursuant to which the Creditor has purchased Secured
Increasing Rate Notes (the "Notes"), dated June 19, 2001 from the Debtor in the
principal amount of $35.0 million;
WHEREAS, to secure its obligations under the Purchase Agreement, the Notes
and any "payment-in-kind" notes issued in connection therewith, Debtor has,
pursuant to the Purchase Agreement, granted Collateral Agent, for the benefit of
the Creditor and holders of the Notes, a security interest in the 7.25%
subordinated convertible debentures due June 2004 (the "Einstein Debentures") of
Einstein/Noah Bagel Corp. ("Einstein") held by Broker for Debtor; and
WHEREAS, the parties are entering into this agreement to perfect Creditor's
security interest in that account.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1
THE ACCOUNT
Broker represents and warrants to Creditor that:
(a) Broker maintains a securities account, number 290-14316 (the
"Account"), for Debtor,
(b) the Account is a "securities account" as defined in Section 8-501(a) of
the UCC,
(c) Broker is a "securities intermediary" (as defined in Section
8-102(a)(14) of the Uniform Commercial Code as in effect in the State of New
York (the "UCC")) and is acting as such capacity in respect of the Account, (d)
Broker shall, subject to the terms of this Agreement, treat Debtor as entitled
to exercise the rights that compromise all financial assets from time to time
credited to the Account,
(e) all property delivered to Broker by or on behalf of Debtor will be
promptly credited to the Account, and
(f) all financial assets credited to the Account shall be registered in the
name of Broker, indorsed to Broker or in blank or credited to another securities
account maintained in the name of Broker and in no case will any financial asset
credited to the Account be registered in the name of Debtor, payable to the
order of Debtor or specially indorsed to Debtor unless such financial asset has
been further indorsed to Broker or in blank.
ARTICLE 2
ENTITLEMENT ORDERS
Broker agrees to comply with any "entitlement order" (within the meaning of
Section 8-102(a)(8) of the UCC) originated by the Creditor and relating to the
Account or any financial asset credited thereto without further consent of
Debtor or any other person. Debtor consents to the foregoing agreement by
Broker.
ARTICLE 3
MAINTENANCE OF ACCOUNT
The Broker shall maintain the Account and shall not comply with entitlement
orders originated by the Debtor or any duly authorized agent of the Debtor in
respect of the Account and any or all financial assets credited thereto, except
an entitlement order originated by the Debtor that provides for (a) the tender
of the Einstein Debentures to Einstein or Einstein's authorized agent for
distribution thereon under a confirmed plan or plans of reorganization and (b)
the payment of the proceeds therefrom by the Creditor on behalf of the Debtor.
After Broker receives a written notice from the Creditor that it is exercising
exclusive control over the Account, in the form of Exhibit A hereto (a "Notice
of Exclusive Control"), Broker will cease complying with entitlement orders of
Debtor and any of its agents.
ARTICLE 4
NOTICE OF EXCLUSIVE CONTROL
Creditor hereby agrees with Debtor not to deliver a Notice of Exclusive
Control to Broker unless an Event of Default (as defined in the Note) shall have
occurred and be then continuing. The agreement of Creditor and Debtor in this
Article 4 is intended only to set forth rights and obligations of Debtor and
Creditor between themselves and is not intended to, and shall not, affect the
obligations of Broker under Article 2.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BROKER
Broker makes the following representations, warranties and covenants:
(i) The Account has been established as set forth in Article 1 above and
will be maintained in the manner set forth herein until this Agreement is
terminated. Broker will not change the name or account number of the Account
without the prior written consent of Creditor.
(ii) No financial asset credited to the Account is or will be registered in
the name of Debtor, payable to the order of Debtor or specially indorsed to
Debtor, unless such financial asset has been further indorsed by Debtor to
Broker or in blank.
(iii) This Agreement is a valid and binding agreement of Broker enforceable
in accordance with its terms.
(iv) Broker has not entered into, and until the termination of this
Agreement will not enter into, any agreement with any other person relating to
the Account and/or any financial asset credited thereto pursuant to which it has
agreed, or will agree, to comply with entitlement orders (as defined in Section
8-102(a)(8) of the UCC) of such person. Broker has not entered into any other
agreement with Debtor or Creditor purporting to limit or condition the
obligation of Broker to comply with entitlement orders as agreed in Article 2
hereof.
ARTICLE 6
PRIORITY OF CREDITOR'S SECURITY INTEREST
Broker subordinates in favor of Creditor any security interest, lien, or
right of setoff it may have, now or in the future, against the Account or
property in the Account, except that Broker shall retain its prior lien on
property in the Account to secure payment for property purchased for the Account
and normal commissions and fees for the Account.
ARTICLE 7
STATEMENTS, CONFIRMATIONS, AND NOTICES OF ADVERSE CLAIMS
Broker shall send copies of all statements and confirmations for the
Account simultaneously to Debtor and Creditor. Broker shall use reasonable
efforts promptly to notify Creditor and Debtor if any other person claims that
it has a property interest in property in the Account and that it is a violation
of that person's rights for anyone else to hold, transfer, or deal with the
property.
ARTICLE 8
BROKER'S RESPONSIBILITY
Except for permitting a withdrawal, delivery, or payment in violation of
Article 3, Broker shall not be liable to Creditor for complying with entitlement
orders from Debtor that are received by Broker before Broker receives and has a
reasonable opportunity to act on a Notice of Exclusive Control.
Broker shall not be liable to Debtor for complying with a Notice of
Exclusive Control or with entitlement orders originated by Creditor, even if
Debtor notifies Broker that Creditor is not legally entitled to issue the
entitlement order or Notice of Exclusive Control, unless:
(a) Broker takes the action after it is served with an injunction,
restraining order, or other legal process enjoining it from doing so, issued by
a court of competent jurisdiction, and had a reasonable opportunity to act on
the injunction, restraining order or other legal process, or
(b) Broker acts in collusion with Creditor in violating Debtor's rights.
This agreement does not create any obligation of Broker except for those
expressly set forth in this agreement. In particular, Broker need not
investigate whether Creditor is entitled under Creditor's agreements with Debtor
to give an entitlement order or a Notice of Exclusive Control. Broker may rely
on notices and communications it believes given by the appropriate party.
ARTICLE 9
INDEMNITY
Debtor hereby indemnifies Broker, its officers, directors, employees, and
agents against claims, liabilities, and expenses arising out of this agreement
(including reasonable attorneys' fees and disbursements), except to the extent
the claims, liabilities, or expenses are caused by Broker's gross negligence or
willful misconduct.
ARTICLE 10
TERMINATION; SURVIVAL
Creditor may terminate this agreement by written notice to Broker and
Debtor. Broker may terminate this agreement on 30 days' written notice to
Creditor and Debtor.
If Creditor notifies Broker that Creditor's security interest in the
Account has terminated, this agreement shall immediately terminate and the
property credited to the Account shall be immediately returned and released to
the Debtor.
Articles 8 and 9 shall survive termination of this agreement.
ARTICLE 11
GOVERNING LAW
This agreement and the Account shall be governed by the laws of the State
of New York. The State of New York shall be deemed to be the "securities
intermediary's jurisdiction" for purposes of the UCC (including, without
limitation, Sections 8-110 and 9-103(6) thereof). Broker and Debtor may not
change the law governing the Account without Creditor's express written
agreement.
ARTICLE 12
ENTIRE AGREEMENT
This agreement is the entire agreement, and supersedes any prior agreements
and contemporaneous oral agreements, of the parties concerning its subject
matter.
ARTICLE 13
AMENDMENTS
No amendment of, or waiver of a right under, this agreement shall be
binding unless it is in writing and signed by each of the parties hereto.
ARTICLE 14
SEVERABILITY
To the extent a provision of this agreement is unenforceable, this
agreement shall be construed as if the unenforceable provision were omitted.
ARTICLE 15
FINANCIAL ASSETS
All property credited to the Account shall be treated as financial assets
under Article 8 of the UCC.
ARTICLE 16
SUCCESSORS AND ASSIGNS
A successor to or assignee of Creditor's rights and obligations under the
security agreement between Creditor and Debtor shall succeed to Creditor's
rights and obligations under this agreement.
ARTICLE 17
NOTICES
A notice or other communication to a party under this agreement shall be in
writing (except that entitlement orders may be given orally), shall be sent to
the party's address set forth below or to such other address as the party may
notify the other parties and shall be effective on receipt.
If to the Debtor notices shall be sent to:
New World Coffee-- Manhattan Bagel, Inc.
000 Xxxxxxxxxx Xxx Xxxx Xxxxxxxxx,
Xxx Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: R. Xxxxx Xxxxxx
with a copy to:
Ruskin Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to the Creditor notices shall be sent to:
XXXXXXXXX & COMPANY, INC.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx
If to the Broker notices shall be sent to:
XXXXXXXXX & COMPANY, INC.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx
IN WITNESS WHEREOF, the undersigned have executed this Account Control
Agreement as of the date above written.
NEW WORLD ENBCDEB CORP., as Debtor
By:/s/___________________
Name:
Title:
XXXXXXXXX & COMPANY, INC., as Creditor
By:/s/ ___________________
Name:
Title:
XXXXXXXXX & COMPANY, INC., as Broker
By:/s/___________________
Name:
Title:
Exhibit A
[Letterhead of Secured Party]
[Date]
XXXXXXXXX & COMPANY, INC.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: _________________
Re: Notice of Exclusive Control
Ladies and Gentlemen:
As referenced in the Account Control Agreement dated as of June 19, 2001
among New World ENBCDEB Corp., us and you (a copy of which is attached), we
notify you that we will hereafter exercise exclusive control over securities
account number ______ (the "Account"), all financial assets from time to time
credited thereto and all security entitlements in respect thereof. You are
instructed not to accept any directions, instructions or entitlement orders with
respect to the Account or the financial assets credited thereto from any person
other than the undersigned unless otherwise ordered by a court of competent
jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to New World ENBCDEB Corp.
Very truly yours,
XXXXXXXXX & COMPANY, INC., as Creditor
By:
-----------------------------------
Title:
cc: New World ENBCDEB Corp.
