-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JSe47+1AmnRVj74j9fMdjJv82ZYg9hbG7YIAE8C8vGyXcoKhT7AYeHWBNsZCwaCr WrssOMeOqHTrDCZtfeFpZg== 0000904454-01-500016.txt : 20010410 0000904454-01-500016.hdr.sgml : 20010410 ACCESSION NUMBER: 0000904454-01-500016 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20010406 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NEW WORLD COFFEE MANHATTAN BAGEL INC CENTRAL INDEX KEY: 0000949373 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133690261 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-55609 FILM NUMBER: 1597212 BUSINESS ADDRESS: STREET 1: 246 INDUSTRIAL WAY WEST STREET 2: C/O NEW WORLD HOLDINGS CITY: EATONTOWN STATE: NJ ZIP: 07724 BUSINESS PHONE: 7325440155 MAIL ADDRESS: STREET 1: 246 INDUSTRIAL WAY WEST STREET 2: C/O NEW WORLD HOLDINGS CITY: EATONTOWN STATE: NJ ZIP: 07724 FORMER COMPANY: FORMER CONFORMED NAME: NEW WORLD COFFEE & BAGELS INC / DATE OF NAME CHANGE: 19981007 FORMER COMPANY: FORMER CONFORMED NAME: NEW WORLD COFFEE INC DATE OF NAME CHANGE: 19950815 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HALPERN DENNY III LP CENTRAL INDEX KEY: 0001133588 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043501525 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 500 BOYLSTON STREET STREET 2: SUITE 1880 CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6175366602 MAIL ADDRESS: STREET 1: 500 BOYLSTON STREET STREET 2: SUITE 1880 CITY: BOSTON STATE: MA ZIP: 02116 SC 13D/A 1 schedule13d.txt SC 13D/A CUSIP No. 648904200 Page 1 of 17 Pages SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D-A (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 1)[FN1] NEW WORLD COFFEE - MANHATTAN BAGEL, INC., f/k/a NEW WORLD COFFEE & BAGELS, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $.001 par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 648904200 - -------------------------------------------------------------------------------- (CUSIP Number) William J. Nimmo Joshua A. Leuchtenburg, Esq. Halpern Denny III, L.P. Reboul, MacMurray, Hewitt, 500 Boylston Street Maynard & Kristol Suite 1880 45 Rockefeller Plaza Boston, Massachusetts 02116 New York, New York 10111 Tel. (617) 536-6602 Tel. (212) 841-5700 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) - -------------- 1 The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. CUSIP No. 648904200 Page 2 of 17 Pages March 29, 2001 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d- 1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. 1) Name of Reporting Person Halpern Denny I.R.S. Identification III, L.P. No. of Above Person (If an Entity) 04-3501525 - -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [x] if a Member of a Group (b) [ ] - -------------------------------------------------------------------------------- 3) SEC Use Only - -------------------------------------------------------------------------------- 4) Source of Funds OO - -------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Not Applicable Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of 7) Sole Voting Shares Beneficially Power -0- Owned by Each Reporting Person With ------------------------------------------------- 8) Shared Voting 10,605,140 shares of Power Common Stock ------------------------------------------------- 9) Sole Disposi- -0- tive Power ------------------------------------------------- 10) Shared Dis- 10,605,140 shares of positive Power Common Stock ------------------------------------------------- CUSIP No. 648904200 Page 3 of 17 Pages 11) Aggregate Amount Beneficially 10,605,140 shares of Owned by Each Reporting Person Common Stock - -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares - -------------------------------------------------------------------------------- 13) Percent of Class Represented by 38.95%[FN2] Amount in Row (11) - -------------------------------------------------------------------------------- 14) Type of Reporting Person PN - ------------- 2 Includes shares of Common Stock issuable to Halpern Denny III, L.P. upon exercise of its warrants, but does not include any other shares issuable upon exercise of warrants issued in the transaction described herein. CUSIP No. 648904200 Page 4 of 17 Pages 1) Name of Reporting Person Halpern Denny & I.R.S. Identification Company V, L.L.C. No. of Above Person (If an Entity) 04-3501523 - -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [x] if a Member of a Group (b) [ ] - -------------------------------------------------------------------------------- 3) SEC Use Only - -------------------------------------------------------------------------------- 4) Source of Funds OO - -------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Not Applicable Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of 7) Sole Voting Shares Beneficially Power -0- Owned by Each Reporting Person With ------------------------------------------------- 8) Shared Voting 10,605,140 shares of Power Common Stock ------------------------------------------------- 9) Sole Disposi- tive Power -0- ------------------------------------------------- 10) Shared Dis- 10,605,140 shares of positive Power Common Stock ------------------------------------------------- 11) Aggregate Amount Beneficially 10,605,140 shares of Owned by Each Reporting Person Common Stock - -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares - -------------------------------------------------------------------------------- CUSIP No. 648904200 Page 5 of 17 Pages 13) Percent of Class Represented by 38.95%[FN3] Amount in Row (11) - ---------------------------------------------------------------------------- 14) Type of Reporting Person OO - ------------ 3 Includes shares of Common Stock issuable to Halpern Denny III, L.P. upon exercise of its warrants, but does not include any other shares issuable upon exercise of warrants issued in the transaction described herein. CUSIP No. 648904200 Page 6 of 17 Pages Schedule 13D-A -------------- Item 1. Security and Issuer. ------------------- This Amendment No. 1 (the "Amendment") amends Schedule 13D, which was originally filed on February 1, 2001 and relates to the Common Stock, $.001 par value (the "Common Stock"), of New World Coffee - Manhattan Bagel, Inc., f/k/a New World Coffee & Bagels, Inc., a Delaware corporation (the "New World"). The principal executive offices of the Issuer are located at 246 Industrial Way West, Eatontown, New Jersey 07724. Item 2. Identity and Background. ----------------------- (a) Pursuant to Rules 13d-1(k)(1)-(2) of Regulation 13D-G of the General Rules and Regulations under the Securities Act of 1934, as amended (the "Act"), the undersigned hereby file this Amendment on behalf of Halpern Denny III, L.P., a Delaware limited partnership ("HD III"), and Halpern Denny & Company V, L.L.C., a Delaware limited liability company (the "General Partner"). The General Partner is the sole general partner of HD III. HD III and the General Partner are making this single joint filing because they may be deemed to constitute a "group" within the meaning of Section 13(d)(3) of the Act. The agreement between HD III and the General Partner to file as a group (the "Group Agreement") is attached hereto as Exhibit 99.1. (b)-(c) HD III is a Delaware limited partnership whose principal business is that of a private investment partnership. The sole general partner of HD III is Halpern Denny & Company V, L.L.C., a Delaware limited liability company, whose principal business is that of acting as the general partner of HD III. The following individuals, who are citizens of the United States, are the managing members of the General Partner: (i) John D. Halpern (ii) George P. Denny, III (iii) William J. LaPoint (iv) David P. Malm CUSIP No. 648904200 Page 7 of 17 Pages (v) William J. Nimmo The principal business and principal office address of each entity and person named in this paragraph is 500 Boylston Street, Suite 1880, Boston, Massachusetts 02116. (d) None of the entities or persons identified in this Item 2 has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the entities or persons identified in this Item 2 has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) HD III is a Delaware limited partnership. The General Partner is a Delaware limited liability company. Item 3. Source and Amount of Funds or Other Consideration. ------------------------------------------------- HD III has the right to purchase 10,605,140 shares of Common Stock at a price of $.01 per share upon exercise of its Warrants (as defined in Item 4). The aggregate purchase price of the Common Stock, if the Warrants are exercised in full, is $106,051.40. As described more fully in that Schedule 13D filed on February 1, 2001, HD III acquired its First Warrant (as defined in Item 4), pursuant to a Series F Preferred Stock and Warrant Purchase Agreement (the "First Purchase Agreement") between New World and HD III which is incorporated by reference to Exhibit 99.2 to the Schedule 13D filed on February 1, 2001, as amended by Amendment No. 1 to the First Purchase Agreement dated March 29, 2001, attached hereto as Exhibit 99.2. The aggregate consideration paid by HD III for both its Initial Series F Preferred Stock (as defined in Item 4) and its First Warrant was $20,000,000, which was funded from contributions from HD III's partners. On March 29, 2001, HD III acquired its Second Warrant (as defined in Item 4) pursuant to a Second Series F Preferred CUSIP No. 648904200 Page 8 of 17 Pages Stock and Warrant Purchase Agreement (the "Second Purchase Agreement" and together with the First Purchase Agreement, the "Purchase Agreements") between New World and HD III, which is attached hereto as Exhibit 99.3. The aggregate consideration paid by HD III for both its Subsequent Series F Preferred Stock (as defined in Item 4) and its Second Warrant was $5,000,000, which was funded from contributions from HD III's partners. Item 4. Purpose of Transaction. ---------------------- As described more fully in the Schedule 13D filed on February 1, 2001, on January 18, 2001, New World and HD III entered into the First Purchase Agreement. The closing, under the First Purchase Agreement, pursuant to which HD III purchased its Initial Series F Preferred Stock and its First Warrant, occurred on January 22, 2001. Under the terms of the First Purchase Agreement, HD III purchased (i) 20,000,000 shares of Series F Preferred Stock (the "Initial Series F Preferred Stock") and (ii) a warrant to purchase up to 8,484,112 shares of Common Stock (the "First Warrant"). The form of the First Warrant is incorporated herein by reference to Exhibit 99.3 to the Schedule 13D filed on February 1, 2001. On March 29, 2001, New World and HD III entered into the Second Purchase Agreement. The closing, under the Second Purchase Agreement, pursuant to which HD III purchased its Subsequent Series F Preferred Stock and its Second Warrant, occurred on March 29, 2001. Under the terms of the Second Purchase Agreement, HD III purchased (i) 5,000 shares of Series F Preferred Stock (the "Subsequent Series F Preferred Stock," and together with the Initial Series F Preferred Stock, the "Series F Preferred Stock") and (ii) a warrant to purchase up to 2,121,028 shares of Common Stock (the "Second Warrant," and together with the First Warrant, the "Warrants"). The form of the Second Warrant is attached hereto as Exhibit 99.4. Pursuant to paragraph (f) of the Warrants, the number of shares that HD III may receive upon exercise of its Warrants is subject to upward adjustment depending on certain future events affecting the capitalization of New World. The shares of Common Stock issuable upon exercise of the Warrants are entitled to registration rights under the terms of an Amended and Restated Registration Rights Agreement dated January 18, 2001 among New World, HD III, Brookwood New World Investors, LLC ("Brookwood") and BET Associates, L.P.("BET"), incorporated herein by reference to CUSIP No. 648904200 Page 9 of 17 Pages Exhibit 99.4 to the Schedule 13D filed on February 1, 2001, as amended by Amendment No. 1 to the Amended and Restated Registration Rights Agreement dated March 29, 2001 among New World, HD III, Brookwood and BET, which is attached hereto as Exhibit 99.5. Contemporaneously with the execution of the First Purchase Agreement, New World entered into an Exchange Agreement (the "Exchange Agreement") with Brookwood and BET. Pursuant to the Exchange Agreement, contemporaneously with the closing of the First Purchase Agreement, all of the shares of Series D Preferred Stock held by Brookwood and BET were exchanged for shares of Series F Preferred Stock, and warrants held by Brookwood and BET were exchanged for new warrants with substantially the same terms and conditions as the Warrant held by HD III. According to the Amended Certificate of Designation, Preferences and Rights of the Series F Preferred Stock (the "Amended Certificate of Designation"), attached hereto as Exhibit 99.6, holders of Series F Preferred Stock are entitled to receive, when, as and if declared by New World's board of directors, and to the extent funds are legally available, cumulative dividends payable quarterly, commencing on March 31, 2001 at the rate of 16% per annum (the "Dividend Percentage Rate") of the liquidation preference. The dividends are payable in kind as additional shares of Series F Preferred Stock. The liquidation preference for each share of Series F Preferred Stock is equal to $1,000 plus all accrued and unpaid dividends. The Dividend Percentage Rate will increase by an additional 2% per semi-annum on each January 18 and July 18, commencing on January 18, 2002, on each outstanding share of Series F Preferred Stock until such share of Series F Preferred Stock has been redeemed by New World as required by the Amended Certificate of Designation. No dividends or other distributions of any kind may be declared or paid on, nor will New World redeem, purchase or acquire any shares of the Common Stock, any of the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock or Series D Preferred Stock or any other junior class or series of stock other than stock dividends and distributions of the right to purchase common stock and repurchase any such rights in accordance with New World's Rights Agreement dated June 7, 1999 (the "Rights Plan"), unless all dividends on the Series F Preferred Stock accrued for all past dividend periods have been paid. CUSIP No. 648904200 Page 10 of 17 Pages The Amended Certificate of Designation provides that the Series F Preferred Stock is redeemable at the election of New World, in whole or in part, at any time ("Optional Redemption Date") on not less than 5 nor more than 60 days' prior notice, for an amount equal to 100% of the Purchase Price (as defined below), plus all accrued or declared but unpaid dividends, if any, to the date of redemption (the "Redemption Price"). The "Purchase Price" of each share of the Series F Preferred Stock shall be $1,000 (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares). All outstanding shares of Series F Preferred Stock must be redeemed (subject to the legal availability of funds therefor) in whole on the earlier of January 18, 2004 or the closing date of New World's acquisition of 70% or more of the outstanding stock, or all or substantially all of the assets, of Einstein/Noah Bagel Corporation ("Einstein", or the acquisition by Einstein of all or substantially all of the assets or stock of New World (the "Mandatory Redemption Date"), at the Redemption Price. In the event that New World fails to pay the Redemption Price in cash on the Mandatory Redemption Date, the Redemption Price will be paid on such date by the issuance of a senior subordinated note (the "Note"), in the form attached hereto as Exhibit 99.7. Under the terms of the Purchase Agreements, if within one year of the closing, New World (i) fails to redeem the Series F Preferred Stock in accordance with the terms set forth in the Amended Certificate of Designation, (ii) redeems the Series F Preferred Stock by the issuance of the Note, but has not paid the Note in full or (iii) a business combination with Einstein has not occurred and the Series F Preferred Stock has not been redeemed in full in accordance with the Amended Certificate of Designation, New World will be required to issue to HD III a warrant representing an additional 1.875% of the fully diluted Common Stock (taking into account all options, warrants and other convertible securities of New World, but not including any outstanding warrants or options with a strike price greater than $3.00 per share and not including the New Warrants) outstanding on such first anniversary date and on each June 30 and December 31 thereafter. The percentage will be reduced pro rata to the extent that the Series F Preferred Stock CUSIP No. 648904200 Page 11 of 17 Pages issued to HD III has been redeemed or the Note has been repaid. HD III is entitled to receive additional warrants in certain circumstances. New World has amended its bylaws to provide that the authorization of at least 75% of the board of directors is required to authorize the filing of a petition under the United States bankruptcy code and increased the number of directors to nine. Under a Stockholders Agreement among New World, HD III, Brookwood and BET, dated as of January 18, 2001 (the "Stockholders Agreement"), incorporated herein by reference to Exhibit 99.6 to the Schedule 13D filed on February 1, 2001, as amended by Amendment No. 1 to the Stockholders Agreement among New World, HD III, Brookwood and BET, dated as of March 29, 2001, attached hereto as Exhibit 99.8, New World must take all necessary actions to cause the election of two directors designated by HD III; provided, however, that if the shares of Series F Preferred Stock held by HD III are redeemed for cash in accordance with the Amended Certificate of Designation or the Note to be issued in accordance with the Amended Certificate of Designation is paid in full, HD III will only have the right to designate one director. In addition, after such events have occurred, if HD III owns less than 2% of the voting stock of New World, it will no longer have the right to designate any directors. The Note also requires New World to take all necessary actions to cause the election of one director designated by HD III. Under the Stockholders Agreement, as amended, New World has granted to HD III, Brookwood and BET the right to purchase such stockholder's proportionate percentage in future offerings of securities of New World other than (i) issuances of certain options or warrants to employees, directors or consultants, (ii) issuances in connection with any merger or acquisition, (iii) issuances in an underwritten public offering or (iv) issuances to a bank or other institutional investor in connection with a debt financing. Also pursuant to the Stockholders Agreement, as amended, New World granted HD III, Brookwood and BET a co-sale right in certain situations. Furthermore, according to the Amended Certificate of Designation, so long as any shares of Series F Preferred Stock remain outstanding, New World may not, without the vote or written consent by the holders of at least 67% of the then outstanding CUSIP No. 648904200 Page 12 of 17 Pages shares of the Series F Preferred Stock, voting together as a single class: (i) amend or repeal any provision of New World's Certificate of Incorporation or By-Laws in a manner which materially and adversely affects the rights and preferences of the holders of Series F Preferred Stock; (ii) authorize or issue shares of any class of stock having any preference or priority as to dividends or assets superior to or on a parity with the Series F Preferred Stock; (iii) pay or declare any dividend on any other type or class of securities, other than a dividend payable in Common Stock or rights under the Rights Plan; (iv) repurchase or redeem any shares of capital stock of New World other than the redemption of the Series F Preferred Stock; (v) authorize (i) a sale of any material asset of a value in excess of $1,000,000 of New World or any subsidiary or subsidiaries of New World, (ii) a sale of any substantial portion of the assets of New World or any subsidiary or subsidiaries (other than sales of stores owned by New World or its subsidiaries) or (iii) a recapitalization or reorganization of New World or any subsidiary or subsidiaries of the New World (other than stock splits, combinations and/or dividends); (vi) take any action that results in New World or any subsidiary or subsidiaries of New World incurring or assuming more than $1,000,000 of funded indebtedness (other than borrowings of up to $17,119,848 by New World for funded debt, either on an individual or a cumulative basis except (A) that New World may obtain substitute financings for its existing line of credit on similar terms from a substitute lender up to the outstanding loan balance on the existing line of credit on the date of such substitution, and (B) as contemplated by the Purchase Agreements and the Exchange Agreement; CUSIP No. 648904200 Page 13 of 17 Pages (vii) effect any change of control event, except as contemplated by the Purchase Agreements and the Exchange Agreement; (viii) effect (i) an acquisition of another corporation or other entity, or a unit or business group of another corporation or entity, by merger or otherwise, except as contemplated by the Purchase Agreements and the Exchange Agreement or (ii) the purchase of all or substantially all of the capital stock, other equity interests or assets of any other entity or person, except as contemplated in the Purchase Agreements and the Exchange Agreement; (ix) increase the number of directors of the board of directors of New World except as contemplated in the Purchase Agreements and the Exchange Agreement; (x) effect or allow fundamental change in the nature of New World's business; (xi) otherwise materially affect the rights, privileges and preferences of the holders of New World's Series F Preferred Stock; or (xii) effect any change of the executive officers of New World. Under the Amended Certificate of Designation, the holders of Series F Preferred Stock, except as otherwise required under the laws of Delaware or as set forth in the Amended Certificate of Designation, are not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of New World. Under the Amended Certificate of Designation and the Note, the majority of the then outstanding Series F Preferred Stock, voting or consenting, as the case may be, as one class, will be entitled to elect up to four directors (the "Series F Directors"), provided that two of the Series F Directors shall be designated by HD III. If (i) dividends on the Series F Preferred Stock are in arrears and unpaid for any quarterly period, which failure to pay CUSIP No. 648904200 Page 14 of 17 Pages continues for a period of thirty (30) days; or (ii) New World fails to discharge any redemption obligation with respect to the Series F Preferred Stock and such failure continues more than 90 days following a mandatory redemption date, then (A) the number of members comprising New World's board of directors will automatically increase by such number so that such additional directors (but including the board seats elected by the holders of Series F Preferred Stock) constitutes not less than 50% of the board of directors of New World and (B) the holders of the majority of the then outstanding Series F Preferred Stock, voting or consenting, as the case may be, as one class, will be entitled to elect directors to the board of directors to fill the vacancies created by such increase, provided that such directors are designated equally by (A) HD on the one hand, and (B) Brookwood and BET on the other hand. Such voting rights will continue until such time as, in the case of a dividend default, all dividends in arrears on the Series F Preferred Stock are paid in full and, in the case of the failure to redeem, until payment of the Redemption Price in cash or until the Note is delivered, at which time the term of the directors elected as described in this paragraph will terminate. New World may not modify, change, affect or amend the Certificate of Incorporation or the Amended Certificate of Designation to increase the authorized Series F Preferred Stock, without the affirmative vote or consent of holders of at least a 67% of the shares of Series F Preferred Stock then outstanding, voting or consenting, as the case may be, as one class. HD III was paid a total transaction fee of $700,000 upon consummation of the transactions. Item 5. Interest in Securities of the Issuer. ------------------------------------ (a) As of the date hereof, HD III and the General Partner beneficially own an aggregate 10,605,140 shares (including 10,605,140 shares of Common Stock which HD III has the right to acquire upon exercise of its Warrants) of Common Stock of New World, which constitutes approximately 38.95% of the 27,227,831 (see footnote on pages 3 and 5 above) shares of Common Stock outstanding as of March 29, 2001 after giving effect to the issuance of the shares which HD III has the right to acquire upon exercise of the Warrant. CUSIP No. 648904200 Page 15 of 17 Pages (b) Each of the managing members of the General Partner may be deemed to share the power to vote or direct the voting of and to dispose or to direct the disposition of the Common Stock owned by HD III. Each of the managing members of HD III disclaims beneficial ownership of all shares of Common Stock other than the shares of Common Stock he or she may own directly, if any, or by virtue of his or her indirect pro rata interest, as a managing member of HD III. (c) Other than as described in Items 3 and 4 above, neither HD III nor the General Partner have engaged in any transactions in the Common Stock within the past 60 days. (d) Except as described in this statement, no person has the power to direct the receipt of dividends on, or the proceeds from sales of, the shares of Common Stock owned by HD III or the General Partner. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. --------------------------------------- Except as set forth in Item 4 of this Schedule 13D-A, neither HD III nor the General Partner have any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of New World, including but not lmited to transfer or voting of any of the securities of New World, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, or a pledge or contingency the occurrence of which would give another person voting power over the securities of New World. Item 7. Material to be Filed as Exhibits. -------------------------------- Exhibit 99.1 - Group Agreement Exhibit 99.2 - Amendment No. 1 to Original Purchase Agreement CUSIP No. 648904200 Page 16 of 17 Pages Exhibit 99.3 - Second Purchase Agreement Exhibit 99.4 - Second Warrant Exhibit 99.5 - Amendment No. 1 to Registration Rights Agreement Exhibit 99.6 - Amended Certificate of Designations Exhibit 99.7 - Note Exhibit 99.8 - Amendment No. 1 to Stockholders Agreement CUSIP No. 648904200 Page 17 of 17 Pages Signature --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: April 6, 2001 HALPERN DENNY III L.P. By: Halpern Denny & Company V, L.L.C, General Partner By /s/ William J. Nimmo ----------------------------- Managing Member HALPERN DENNY & COMPANY V, L.L.C. By /s/ William J. Nimmo ----------------------------- Managing Member EX-99.1 2 ex99-1.txt GROUP AGREEMENT EXHIBIT 99.1 AGREEMENT OF HALPERN DENNY III, L.P. AND HALPERN DENNY & COMPANY V, L.L.C PURSUANT TO RULE 13D-1(F) ------------------------- The undersigned hereby agree that the Statement on Schedule 13D-A to which this Agreement is annexed as Exhibit 99.1 is filed on behalf of each of them in accordance with the provisions of Rule 13d-1(f) under the Securities Exchange Act of 1934, as amended. HALPERN DENNY III L.P. By: Halpern Denny & Company V, L.L.C., General Partner By /s/ William J. Nimmo ---------------------------- Managing Member HALPERN DENNY & COMPANY V, L.L.C. By /s/ William J. Nimmo ---------------------------- Managing Member EX-99.2 3 ex99-2.txt AMEND. NO. 1 TO PURCH. AGMT. Exhibit 99.2 AMENDMENT NO. 1 TO SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT AMENDMENT NO. 1 TO SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, dated as of March 29, 2001 ( "Amendment"), by and among NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (the "Company"), and Halpern Denny III, L.P. ("Halpern Denny"), amending the Series F Preferred Stock and Warrant Purchase Agreement, dated as of January 18, 2001 (the "Original Purchase Agreement"), among the Company and Halpern Denny. WHEREAS, the Company and certain purchasers (the "Series F Purchasers") have entered into a Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001 (the "Second Purchase Agreement"), pursuant to which the Series F Purchasers will purchase from the Company an additional 5,000 shares of Series F Preferred Stock, $.001 par value, of the Company and warrants to purchase shares of Common Stock of the Company in the form attached to the Second Purchase Agreement; WHEREAS, the Company and Halpern Denny deem it in their best interests to amend the provisions of the Original Purchase Agreement, and the Company and Halpern Denny are willing to amend the Original Purchase Agreement as provided herein; WHEREAS, as an inducement to the Series F Purchasers to consummate the transactions contemplated by the Second Purchase Agreement, the Company and Halpern Denny have agreed to enter into this Amendment; and NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: 1. The form of Note attached as Exhibit D to the Original Purchase Agreement is hereby amended by deleting the form of Note in its entirety and replacing it with a new form of Note, a copy of which is attached hereto. 2. The Original Purchase Agreement, as amended by this Amendment, is hereby in all respects confirmed and each of the parties hereto acknowledges and agrees that it is bound by all the terms and provisions thereof, as amended hereby. 3. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws principles. 4. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as a sealed instrument, all as of the day and year first above written. NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By /s/ Ramin Kamfar ------------------------------------ Name: Ramin Kamfar Title: Chief Executive Officer HALPERN DENNY III, L.P. By: Halpern Denny & Company V, L.L.C., General Partner By /s/ William J. Nimmo ---------------------------------- Name: William J. Nimmo Title: Managing Member EX-99.3 4 ex99-3.txt SECOND PURCHASE AGMT. Exhibit 99.3 NEW WORLD COFFEE - MANHATTAN BAGEL, INC. SECOND SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT THIS SECOND SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") is entered into as of March 29, 2001, by and among New World Coffee - Manhattan Bagel, Inc., a Delaware corporation (the "Company"), and HALPERN DENNY III, L.P. (the "Purchaser"). RECITALS WHEREAS, the Company has authorized the sale and issuance of up to 73,000 shares of its Series F Preferred Stock (the "Shares") on the terms and conditions set forth herein; WHEREAS, Purchaser purchased 20,000 Shares and warrants to purchase up to 8,484,112 shares of Common Stock pursuant to a Series F Preferred Stock and Warrant Purchase Agreement dated as of January 18, 2001 (the "First Series F Purchase Agreement"); WHEREAS, Purchaser desires to purchase an additional 5,000 Shares and warrants to purchase up to 2,121,028 shares of Common Stock (the "Warrants") on the terms and conditions set forth herein; WHEREAS, the Company desires to issue and sell such additional Shares and Warrants to the Purchaser on the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto agree as follows: 1. AGREEMENT TO SELL AND PURCHASE. 1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as defined in Section 3 below), the Company shall have authorized the Shares. The Shares shall have the rights, preferences, privileges and restrictions set forth in the Amended Certificate of Designation in the form attached hereto as EXHIBIT A (the "Certificate of Designation"). 1.2 SALE AND PURCHASE. (a) At the Closing (as defined below), the Company shall issue and sell to the Purchaser and the Purchaser shall purchase 5,000 shares of Series F Preferred Stock for an aggregate of $5,000,000; and (b) The purchase price at the Closing shall be one thousand dollars ($1,000.00) per share (the "Purchase Price"). 2. WARRANTS 2.1 ISSUANCE OF WARRANTS. (a) At the Closing, the Company will issue Warrants to purchase shares of the Company's Common Stock exercisable at $0.01 per share (the "Warrants") which Warrants will be substantially in the form of the Warrant attached hereto as EXHIBIT B. The Warrants will be issued to the Purchaser, and will entitle the Purchaser initially to acquire up to 2,121,028 shares of Common Stock (representing, in the aggregate, 5.625% of the Fully Diluted Common Stock of the Company as of January 22, 2001, subject to adjustment as provided therein). The term "Fully Diluted" shall mean the fully diluted Common Stock of the Company, determined by taking into account all options, warrants and other convertible securities, but not including any warrants or options with a strike price greater than $3.00 per share and not including any of the Warrants issued under Section 2.2. (b) For purposes of this Section 2.1, the number of shares subject to such Warrants shall be calculated to result in such percentages of Fully Diluted Common Stock after the issuance of such Warrants. 2.2 WARRANT STEP-UP. (a) If within one year following the Closing Date (i) the Company has not redeemed the Shares in accordance with the terms set forth in the Certificate of Designation, (ii) the Company has redeemed the Shares by the issuance of the Notes (as provided in the Certificate of Designation) attached hereto as EXHIBIT C (the "Notes") but has not paid such Notes in full, or (iii) the closing of the Company's acquisition of 70% or more of the outstanding stock, or all or substantially all of the assets, of Einstein/Noah Bagel Corporation ("Einstein"), or the acquisition by Einstein of all or substantially all of the assets or stock of the Company ("Acquisition of Einstein") has not occurred and the Shares have not been redeemed in full in accordance with Section 3 of the Certificate of Designation, the Company will issue to the Purchaser warrants in the form of EXHIBIT C hereto representing an additional .375% of the Fully Diluted Common Stock of the Company outstanding on such first anniversary date and on each June 30 and December 31 following such first anniversary of the Closing Date, which percentage shall be reduced pro rata based upon Shares theretofore redeemed for cash or the Notes theretofore repaid, as applicable. (b) For purposes of this Section 2.2, at the time of each such issuance of Warrants, the number of shares subject to such Warrants shall be calculated to result in the applicable percentage of Fully Diluted Common Stock before such issuance of Warrants. (c) The issuance of any additional warrants pursuant to this Section 2.2 shall be treated as an adjustment to the purchase price of the Shares. 3. CLOSINGS, DELIVERIES, PAYMENT AND USE OF PROCEEDS. 3.1 CLOSING. The closing of the purchase and sale of Shares pursuant to Section 1.2(a) above (the "Closing") shall take place at 10:00 a.m. on March 29, 2001, at the offices of Reboul, MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, New York 10111, or at such other time or place as the Company and the Purchaser may mutually agree (such date is hereinafter referred to as the "Closing Date"). 2 3.1.1 At the Closing, subject to the terms and conditions hereof, the Company shall deliver to the Purchaser the following: (a) Certificates representing the number of Shares to be purchased at the Closing by the Purchaser; (b) A Compliance Certificate, executed by the President of the Company, dated the Closing Date, to the effect that the conditions specified in Section 7.1 have been satisfied. (c) A certificate of the Secretary of the Company, dated as of the Closing Date, in substantially the form attached hereto as EXHIBIT 3.1.1(c). (d) An opinion of legal counsel to the Company addressed to the Purchaser, dated as of the Closing Date, in substantially the form attached hereto as EXHIBIT 3.1.1(d). 3.2 At the Closing, subject to the terms and conditions hereof, the Purchaser shall deliver to the Company a wire transfer in the amount of the Purchase Price for the Shares to be purchased at the Closing, respectively, by the Purchaser. 4. USE OF PROCEEDS. The proceeds from this transaction shall be used to pay the reasonable fees and expenses incurred by the Company in connection with its efforts to consummate an Acquisition of Einstein. 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to the Purchaser as of the date of this Agreement as follows (for purposes of all of the representations and warranties in this Section 5, the term "Company" shall include and encompass all subsidiaries of the Company): 5.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Except as set forth on Schedule 5.1, the Company and each of its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, the Warrant, Amendment No. 1 to Stockholders Agreement attached as EXHIBIT D hereto (the "Stockholders Agreement Amendment") and Amendment No. 1 to Amended and Restated Registration Rights Agreement attached as EXHIBIT E hereto (the "Registration Rights Agreement Amendment" and together with this Agreement, the Warrant and the Stockholders Agreement Amendment, the "Related Agreements"), to issue and sell the Shares and the Warrants and to carry out the provisions of this Agreement, the Related Agreements and the Certificate of Designation and to carry on its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business. 3 5.2 SUBSIDIARIES. Except as set forth in Schedule 5.2, the Company owns no equity securities of any other corporation, limited partnership or similar entity. The Company is not a participant in any joint venture, partnership or similar arrangement. Except as set forth on Schedule 5.2, each of the entities listed on Schedule 5.2 under the heading "Inactive Subsidiaries" (i) has no assets, (ii) has no obligations or liabilities, absolute, accrued or contingent, (iii) has not conducted, since the Statement Date (as defined in Section 5.5), any business except for its organization as a corporation and (iv) will not conduct any business except for its organization as a corporation hereafter. 5.3 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the Company, immediately prior to the Closing and the consummation of the transactions contemplated hereby, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 20,084,846 shares of which are reserved for issuance upon exercise of the Initial Series F Warrants and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 65,000 of which are designated Series F Preferred Stock, 36,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. The authorized capital stock of the Company immediately after the Closing, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 22,205,874 shares of which are reserved for issuance upon exercise of the Warrants, warrants to purchase shares of Common Stock of the Company issued pursuant to the First Series F Purchase Agreement and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 73,000 of which are designated Series F Preferred Stock, 41,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. Except as provided in Schedule 5.3, none of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock designated by the Company may be issued at any time. All issued and outstanding shares of the Company's Common Stock and other capital stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Other than the 24,193,603 shares reserved for issuance under the Option Plans, the Warrants, the Initial Series F Warrants and other warrants and except as may be granted pursuant to the Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of 4 first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Schedule 5.3 sets forth all issued and outstanding options and warrants with an exercise price greater than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances and any restrictions on transfer; provided, however, that the Shares may be subject to restrictions on transfer under applicable state and/or federal securities laws. The consummation of the transactions contemplated by this Agreement and the Related Agreements will not result in acceleration or other changes in the vesting provisions or other terms of any outstanding options granted by the Company. Each subsidiary of the Company is listed on Schedule 5.2 hereto, and each such subsidiary is wholly-owned. 5.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization of this Agreement and the Related Agreements, the performance of all obligations of the Company hereunder and thereunder at the Closing and the authorization, sale, issuance (or reservation for issuance) and delivery of the Shares and the Warrants pursuant hereto have been taken or will be taken prior to the Closing. The Agreement and the Related Agreements, when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights and (b) general principles of equity that restrict the availability of equitable remedies. The sale of the Shares is not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. 5.5 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser (a) the audited consolidated balance sheet for the Company and audited consolidated statement of income and cash flows for the Company for the fiscal year ending December 26, 1999 and (b) the consolidated unaudited balance sheet for the Company as at December 26, 2000 (the "Statement Date") and unaudited consolidated statement of income and cash flows for the Company for the twelve-month period ending on the Statement Date (collectively, the "Financial Statements"), copies of which are certified by the Chief Financial Officer of the Company and attached hereto as EXHIBIT 5.5. The Financial Statements, together with the notes thereto, are complete and correct in all material respects, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated, except as disclosed therein, and present fairly the financial condition and position of the Company as of December 26, 1999 and the Statement Date; provided, however, that the unaudited financial statements are subject to normal recurring year-end audit adjustments (which are not expected to be material), and do not contain all footnotes required under generally accepted accounting principles. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with generally accepted accounting principles. 5 5.6 LIABILITIES. The Company has no material liabilities and, to the best of its knowledge, knows of no material contingent liabilities not disclosed in the Financial Statements, except current liabilities incurred in the ordinary course of business subsequent to the Statement Date which have not been, either in any individual case or in the aggregate, materially adverse. 5.7 AGREEMENTS; ACTION. (a) Except for agreements explicitly contemplated hereby and agreements between the Company and its employees with respect to the sale of the Company's Common Stock, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof. (b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or to its knowledge by which it is bound which may involve (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of $100,000 (other than obligations of, or payments to, the Company arising from purchase or sale agreements entered into in the ordinary course of business, in each case, except as set forth in the Company's filing with the Securities and Exchange Commission as of the date hereof (the "SEC Filings"). (c) The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, other than the Company's payment of a paid-in-kind dividend to the existing holders of the Series D Preferred Stock on November 11, 2000 and as of the exchange date under the Exchange Agreement dated as of January 18, 2001 among the Company and the other parties named therein, (ii) incurred any indebtedness for money borrowed or any other liabilities (other than with respect to dividend obligations, distributions, indebtedness and other obligations incurred in the ordinary course of business or as disclosed in the Financial Statements) individually in excess of $25,000 or in the aggregate in excess of $250,000, (iii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business, in each case, except as set forth in the Company's SEC Filings. (d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. (e) The Company has proposed, and is engaged in, discussions regarding the acquisition of Einstein as described in the Schedule 5.7. 5.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the Company to officers, directors, stockholders, or employees of the Company other than (a) for payment of compensation for services rendered, (b) reimbursement for reasonable expenses incurred on behalf of the Company and (c) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock 6 option plan approved by the Board of Directors of the Company). None of the officers, directors or stockholders of the Company, or any members of their immediate families, are indebted to the Company or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that officers, directors and/or stockholders of the Company may own up to 5% of the capital stock of publicly traded companies which may compete with the Company. No officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, to the knowledge of the Company, interested in any contract with the Company (other than such contracts as relate to any such person's ownership of capital stock or other securities of the Company). Except as may be disclosed in the Financial Statements or Schedule 5.8, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation, other than its subsidiaries. 5.9 CHANGES. Since the Statement Date, there has not been to the Company's knowledge: (a) Any change in the assets, liabilities, financial condition or operations of the Company from that reflected in the Financial Statements, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or is expected to have a material adverse effect on such assets, liabilities, financial condition or operations of the Company; (b) Any resignation or termination of any key officers of the Company except for Sanford Nacht, and the Company, to the best of its knowledge, does not know of the impending resignation or termination of employment of any such officer; (c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise; (d) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties, business or prospects or financial condition of the Company; (e) Any direct or indirect loans or guarantees made by the Company to any stockholder, employee, officer or director of the Company or any members of their immediate families, other than advances made in the ordinary course of business; (f) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder other than as disclosed in the Company's proxy statement filed with the SEC on November 30, 2000; (g) Any declaration or payment of any dividend or other distribution of the assets of the Company, other than the Company's payment of a paid-in-kind dividend to the existing holders of Series D Preferred Stock on November 11, 2000; (h) Any labor organization activity; 7 (i) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business; (j) Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets; (k) Any change in any material agreement to which the Company is a party or by which it is bound which materially and adversely affects the business, assets, liabilities, financial condition, operations or prospects of the Company; or (l) Any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted); (m) Receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company; (n) Any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable; (o) Any declaration, setting aside or payment or other distribution in respect of any of the Company's capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Company other than the Company's payment of a paid-in-kind dividend to the existing holders of Series D Preferred Stock on November 11, 2000; or (p) Any agreement or commitment by the Company to do any of the things described in this Section 5.9. 5.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and marketable title to its properties and assets, including the properties and assets reflected in the most recent balance sheet included in the Financial Statements, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than those resulting from taxes which have not yet become delinquent, and minor liens and encumbrances arising in the ordinary course of business which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used, subject to ordinary wear and tear. The Company is in compliance with all material terms of each lease to which it is a party or is otherwise bound. As of the date of this Agreement, the Company owns at least $47.3 million in principal amount of the Bonds, free of any liens or encumbrances and any restrictions on transfer, other than such restrictions as may be imposed by applicable securities laws. 5.11 PATENTS AND TRADEMARKS. The Company owns or possesses sufficient legal rights to all material patents, trademarks, service marks, trade names, copyrights, trade 8 secrets, licenses, information and other proprietary rights and processes necessary for its business as now conducted and as presently proposed to be conducted, without any known infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of "off the shelf" or standard products except in the ordinary course of business. The Company has not received any communications alleging that the Company has violated or, by conducting its business as presently proposed, would violate any of the material patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company's business as presently proposed to be conducted. Neither the execution nor delivery of this Agreement or the Related Agreements, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as presently proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any material contract, covenant or instrument under which any employee is now obligated. 5.12 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation or default of any term of its Certificate of Incorporation or Bylaws, or of any provision of any material mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to the Company which would individually or in the aggregate materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. The execution, delivery, and performance of and compliance with this Agreement, and the Related Agreements, and the issuance and sale of the Shares, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares") pursuant hereto will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any such mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. 5.13 LITIGATION. There is no action, suit, proceeding or investigation pending, or to the Company's knowledge currently threatened, against the Company that questions the validity of this Agreement, or the Related Agreements or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby, or which might result, either individually or in the aggregate, in any material adverse change in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for the foregoing. The Company is not a party or subject to the provisions of any material order, writ, injunction, judgment or decree of any court or government agency or instrumentality. 9 There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate except in the ordinary course of business. 5.14 TAX RETURNS AND PAYMENTS. The Company has timely filed all federal, state and local tax returns (including informational returns) (the "Returns") required to be filed by it. All taxes shown to be due and payable on the Returns, any assessments imposed, and all other taxes due and payable by the Company on or before the Closing have been paid or will be paid prior to the time they become delinquent. The Company is not currently and has never been subject to any audit relating to taxes. No assessment, deficiency or judgment for taxes has ever been proposed or entered against the Company. No liability for any tax has ever been imposed upon any of the Company's properties or assets. The Company has treated all individuals who are employees of the Company for federal, state and local income tax purposes as employees for such purposes and has withheld and paid over to the appropriate taxing authorities all applicable income and payroll taxes attributable to the compensation of such employees. 5.15 EMPLOYEES. The Company has no collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the Company's knowledge, threatened with respect to the Company. Other than the Option Plans, the Company is not a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement, including any Employee Benefit Plan as defined in the Employee Retirement Income Security Act of 1974, except as set forth in SEC filings and any such plans, arrangements and agreements with non-executive officers. To the Company's knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company because of the nature of the business to be conducted by the Company; and to the Company's knowledge the continued employment by the Company of its present employees, and the performance of the Company's contracts with its independent contractors, will not result in any such violation. The Company has not received any notice alleging that any such violation has occurred. No executive officers of the Company have been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company except as set forth in SEC filings. The Company is not aware that any executive officer who intends to terminate his or her employment with the Company, nor does the Company have a present intention to terminate the employment of any executive officer. 5.16 REGISTRATION RIGHTS. Except as required pursuant to the Amended and Restated Registration Rights Agreement or as disclosed on Schedule 5.16 hereto, the Company is presently not under any obligation, and has not granted any rights, to register any of the Company's presently outstanding securities or any of its securities that may hereafter be issued under the Securities Act of 1933, as amended. 5.17 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which violation would materially and adversely affect 10 the business, assets, liabilities, financial condition, operations or prospects of the Company. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations, qualifications, designations or declarations are required to be filed in connection with the execution and delivery of this Agreement and the issuance of the Shares except such as has been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing, as will be filed in a timely manner. The Company has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses or similar authority. The Company has duly filed, on a timely basis, all filings required pursuant to the Securities Exchange Act of 1934, as amended, and all rules and regulations thereunder. 5.18 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the Company is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation. 5.19 OFFERING VALID. Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 6.2 hereof, the offer, sale and issuance of the Shares will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. Neither the Company nor any agent on its behalf has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the Shares to any person or persons so as to bring the sale of such Shares by the Company within the registration provisions of the Securities Act or any state securities laws. 5.20 FULL DISCLOSURE. The Company has fully provided the Purchaser with all the information that the Purchaser has requested for deciding whether to purchase the Shares. This Agreement, the Disclosure Schedule and Exhibits hereto, the Related Agreements and all other documents delivered by the Company to the Purchaser or their attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby, do not contain any untrue statement of a material fact nor, to the Company's knowledge, omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. 5.21 MINUTE BOOKS; BOARD AND STOCKHOLDER MATERIALS. The Certificate of Designation and Bylaws of the Company are in the form previously provided to special counsel for the Purchaser. The minute books of the Company provided to the Purchaser contain a complete summary of all meetings of directors and stockholders since the time of incorporation. The Board and stockholder materials provided to the Purchaser are all of the materials provided by the Company to its directors and stockholders in connection with such meetings. 11 5.22 REAL PROPERTY HOLDING CORPORATION. The Company is not a real property holding corporation within the meaning of Internal Revenue Code Section 897(c)(2) and any regulations promulgated thereunder. 5.23 INSURANCE. The Company has in full force and effect fire and casualty, products liability and errors and omissions insurance policies with coverage customary for companies similarly situated to the Company. 5.24 INVESTMENT COMPANY ACT. The Company is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 5.25 GOVERNMENTAL APPROVALS. Except as set forth in Schedule 5.25 and for the filing of the Certificate of Designation, no registration or filing with, or consent or approval of, or other action by, any Federal, state or other governmental agency or instrumentality is or will be necessary for (i) the valid execution, delivery and performance of this Agreement and the Related Agreements by the Company, (ii) issuance, sale and delivery by the Company of the Shares hereunder, (iii) the issuance and delivery of the Warrants or the Warrant Shares or (iv) the conduct of the business of the Company after the date hereof in substantially the manner as currently conducted and as proposed to be conducted after the date hereof. 5.26 EMPLOYEE BENEFIT PLANS. (a) The Company has complied and currently is in compliance in all material respects, both as to form and operation, with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Code of 1986, as amended (the "Code"), with respect to each "employee benefit plan" as defined under Section 3(3) of ERISA (a "Plan") which the Company (i) has ever adopted, maintained, established or to which any of the same has been required to contribute to or has ever contributed or (ii) currently maintains or to which any of the same currently contributes or is required to contribute or (iii) currently participates in or is required to participate in. (b) The Company has never maintained, adopted or established, contributed or been required to contribute to, or otherwise participated in or been required to participate in, a "multiemployer plan" (as defined in Section 3(37) of ERISA). No amount is due or owing from the Company on account of a "multiemployer plan" (as defined in Section 3(37) of ERISA) or on account of any withdrawal therefrom. (c) Notwithstanding anything else set forth herein, other than routine contributions to Plans and routine claims for benefits and liability for premiums due to the Pension Benefit Guaranty Corporation, the Company has not incurred any liability with respect to a Plan that is currently due and owing and has not yet been satisfied, including without limitation under ERISA (including without limitation Title I or Title IV thereof), the Code or other applicable law, and, to the best knowledge of the Company, no event has occurred, and, there exists no condition or set of circumstances (other than the contributions to, and accrual of benefits under, the normal terms of the Plans), which could result in the imposition of any liability of the Company with respect to a Plan. 12 (d) Except as required by applicable law or as contemplated by this Agreement, the Company has not committed itself, orally or in writing, (i) to provide or cause to be provided to any person any payments or provision of any "welfare" or "pension" benefits (as defined in Sections 3(1) and 3(2) of ERISA) in addition to, or in lieu of, those payments or benefits set forth under any Plan, (ii) to continue the payment of, or accelerate the payment of, benefits under any Plan, except as expressly set forth thereunder, or (iii) to provide or cause to be provided any severance or other post-employment benefit, salary continuation, termination, disability, death, retirement, health or medical benefit to any person (including without limitation any former current employee) except as set forth under any Plan. (e) Notwithstanding any other provisions to the contrary set forth herein, the Purchaser shall not assume any liability that the Company may have incurred or may incur which arises out of, is a result of, or is in any way related to, any Plan. 5.27 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor to its knowledge any officer, director, employee or agent thereof, nor any other person or entity acting on behalf of the Company, acting alone or together, has (i) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer, supplier, governmental employee or other person or entity with whom either the Company has done business directly or indirectly, or (ii) directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, governmental employee or other person or entity who is or may be in a position to help or hinder the business (or assist either the Company in connection with any actual or proposed transaction) which in the case of either clause (i) or clause (ii) above, (a) would reasonably be expected to subject to the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (b) if not given in the past, would reasonably be expected to have had a material adverse effect on the business, assets, properties, operating condition (financial or otherwise) or prospects of the Company or (c) if not continued in the future, would reasonably be expected to have a material adverse effect on the business, assets, properties, operating condition (financial or otherwise) or prospects of the Company. 5.28 NO BROKER. Except for the transaction fee of $200,000 to be paid to Halpern Denny III, L.P. ("Halpern Denny") on the Closing Date in connection with the transactions contemplated by this Agreement and except as set forth on Schedule 5.28 hereto, no broker has acted on behalf of the Company in connection with this Agreement, and there are no brokerage commissions, finders' fees or similar fees or commissions payable in connection therewith based on any agreement, arrangement or understanding with the Company or any action taken by the Company. 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents and warrants to the Company as follows: 6.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and authority under all applicable provisions of law to execute and deliver this Agreement and the Related Agreements and to carry out their respective provisions. All action on Purchaser's part required for the lawful execution and delivery of this Agreement and the Related 13 Agreements have been or will be effectively taken prior to the Closing. Upon their execution and delivery, this Agreement and the Related Agreements will be valid and binding obligations of Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' right and (b) general principles of equity that restrict the availability of equitable remedies. 6.2 INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares, the Warrants and the Warrant Shares have not been registered under the Securities Act. Purchaser also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser's representations contained in the Agreement. Purchaser hereby represents and warrants as follows: (a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Purchaser must bear the economic risk of this investment indefinitely unless the Shares are registered pursuant to the Securities Act, or an exemption from registration is available. Purchaser understands that the Company has no present intention of registering the Shares, Purchaser also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow Purchaser to transfer all or any portion of the Shares under the circumstances, in the amounts or at the times Purchaser might propose. (b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares for Purchaser's own account for investment only, and not with a view towards their distribution. (c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by reason of its, or of its management's, business or financial experience, Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement, and the Related Agreements. Further, Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement. (d) ACCREDITED INVESTOR. Purchaser represents that it is an accredited investor within the meaning of Regulation D under the Securities Act. (e) COMPANY INFORMATION. Purchaser has received and read the Financial Statements and has had an opportunity to discuss the Company's business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company's operations and facilities and all of the SEC Filings. Purchaser has also had the opportunity to ask questions of, and receive answers from, the Company and its management regarding the terms and conditions of this investment. (f) RULE 144. Purchaser acknowledges and agrees that the Shares, the Warrants and the Warrant Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. 14 Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act as in effect from time to time, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations. (g) RESIDENCE. The office or offices of the Purchaser in which its investment decision was made is located at the address or addresses of the Purchaser set forth on the signature page hereto. 7. CONDITIONS TO CLOSING. 7.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING. The Purchaser's obligations to purchase the Shares at the Closing are subject to the satisfaction, at or prior to the Closing Date, of the following conditions: (a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the Company in Section 5 hereof shall be true and correct in all material respects (except that any representation or warranty that contains a materiality qualifier shall be true and correct in all respects) as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Company shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date. (b) LEGAL INVESTMENT. On the Closing Date, the consummation of the transactions contemplated by the Agreement and the Related Agreements shall be legally permitted by all laws and regulations to which Purchaser and the Company are subject. (c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Related Agreements, including without limitation the consent of the senior lender of the Company prior to the Closing Date. (d) FILING OF CERTIFICATE OF DESIGNATION. The Certificate of Designation shall have been filed with the Secretary of State of the State of Delaware. (e) AMENDMENT NO. 1 TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT. The Registration Rights Agreement Amendment shall have been executed and delivered by the Company on the Closing Date, and shall be in full force and effect as of the Closing Date. (f) AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT. The Stockholders Agreement Amendment shall have been executed and delivered by the Company on the Closing Date, and shall be in full force and effect as of the Closing Date. 15 (g) CLOSING DELIVERIES. The Company shall have delivered to Purchaser all items required to be delivered at the Closing by Section 3.1.1 of this Agreement. (h) CORPORATE DOCUMENTS. The Company shall have delivered to Purchaser or its counsel, copies of all corporate documents of the Company as Purchaser shall reasonably request. (i) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchaser and its counsel, and the Purchaser and its counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. (j) RIGHTS PLAN. All corporate action necessary to waive, (i) on behalf of the Purchaser, individually, and (ii) the permitted assignees of the Shares of such individual Purchaser, the trigger provisions of the Rights Plan dated in June 1999 between the Company and American Stock Transfer and Trust Company which relate to purchases of common stock above a specified percentage of the outstanding common stock of the Company, but only with respect to shares of common stock of the Company purchased directly from the Company as "original issue shares" by the Purchaser under written agreements between the Purchaser and the Company shall have been taken. (k) PAYMENT OF FEES. The Company shall have paid all fees and expenses arising under Section 9.9(a) through such date, including the transaction fee of $200,000 to Halpern Denny. (l) AMENDMENT TO FIRST PURCHASE AGREEMENT AND EXCHANGE AGREEMENT. The First Purchase Agreement and Exchange Agreement shall each be amended to replace Exhibits D and B, respectively, of such Agreements with the form of Note attached as Exhibit C hereto. 7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT THE CLOSING. The Company's obligation to issue and sell the Shares at the Closing is subject to the satisfaction, on or prior to the Closing, of the following conditions: (a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by the Purchaser in Section 5 hereof shall be true and correct in all material respects at the date of the Closing, with the same force and effect as if they had been made on and as of said date. (b) PERFORMANCE OF OBLIGATIONS. The Purchaser shall have performed and complied with all agreements and conditions herein required to be performed or complied with by the Purchaser on or before the Closing. (c) CLOSING DELIVERIES. The Purchaser shall have delivered to the Company all items required to be delivered at the Closing by Sections 3.1.2 and 3.1.3 of this Agreement. 16 (d) CONSENTS, PERMITS, AND WAIVERS. The Compa ny shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Related Agreements. 8. PROTECTIVE PROVISIONS. The Company covenants and agrees as follows: (a) The Company shall not sell or transfer its interest in any of the 7.25% Convertible Subordinated Notes of Einstein (the "Bonds") (or any securities into which such Bond are convertible) other than in connection with an Acquisition of Einstein, unless the price received by the Company, net of cash fees and expenses, is at least equal to 60% of such Bond's face value. (b) There shall be no application of the proceeds from the sale of the Bonds (or securities into which such Bonds are convertible) for any purpose other than the repayment of outstanding senior debt or the redemption of the Series F Preferred Stock. The holders of the Series F Preferred Stock including but not limited to the Stockholders, shall have the right of first offer, in proportion to their respective interests, to purchase any Bonds that the Company desires to sell or transfer. (c) Proceeds received by the Company pursuant to this Agreement (the "Proceeds") may be used only to pay the reasonable fees and expenses incurred by the Company in connection with its efforts to consummate the Acquisition of Einstein. Any of the protective provisions set forth in this Section 8 may be waived with the prior approval of the holders of two-thirds of the outstanding shares of Series F Preferred Stock. 9. MISCELLANEOUS. 9.1 GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the State of New York as such laws are applied to agreements between New York residents entered into and performed entirely in New York. 9.2 SURVIVAL. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Purchaser and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument. 9.3 SUCCESSORS AND ASSIGNS. (a) Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Shares from time to time. 17 (b) Neither this Agreement nor any of the parties' rights hereunder shall be assignable by any party thereto without the prior written consent of the other parties hereto, except that the Purchaser may without prior consent, assign its rights hereunder to any other person or entity (each a "Permitted Transferee") to whom the Shares or the Warrants have been sold or otherwise transferred in accordance with the provisions of the Stockholders Agreement. 9.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto, the Related Agreements and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 9.5 SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 9.6 AMENDMENT AND WAIVER. (a) This Agreement may be amended or modified only upon the written consent of the Company and holders of at least a majority of the Shares. (b) The obligations of the Company and the rights of the holders of the Shares under the Agreement may be waived only with the written consent of the holders of at least a majority of the Shares. 9.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, the Related Agreements or the Certificate of Designation shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on the Purchaser's part of any breach, default or noncompliance under this Agreement, the Related Agreements or under the Certificate of Designation or any waiver on such party's part of any provisions or conditions of the Agreement, the Related Agreements, or the Certificate of Designation must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, the Related Agreements, the Certificate of Designation by law, or otherwise afforded to any party, shall be cumulative and not alternative. 9.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; or (c) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address as set forth on the signature page hereof and to Purchaser at the address set forth on the signature pages hereto or at such other 18 address as the Company or Purchaser may designate by ten (10) days advance written notice to the other parties hereto. 9.9 EXPENSES. (a) Whether or not the transactions herein contemplated are consummated, the Company shall pay (i) the fees and expenses of the Purchaser, including without limitation, the fees and expenses of Purchaser's counsel, accountants and other advisors and (ii) a transaction fee of $200,000 to Halpern Denny. The obligations of the Company under this Section 9.9 shall survive the closing hereunder, the payment or cancellation of the Notes, exercise or cancellation of the Warrants and the termination of the Purchase Agreement. (b) In addition to all other sums due hereunder or provided for in this Agreement, the Company shall pay to the Purchaser or its agents, respectively, an amount sufficient to indemnify such persons against all reasonable costs and expenses (including reasonable attorneys' fees and expenses and reasonable costs of investigation) and damages and liabilities incurred by the Purchaser or its agents pursuant to any investigation or proceeding against any or all of the Company, the Purchaser, or their agents, arising out of or in connection with the Purchase Agreement, the Notes or the Warrants (or any transaction contemplated hereby or thereby or any other document or instrument executed herewith or therewith or pursuant hereto or thereto), whether or not the transactions contemplated by this Purchase Agreement are consummated, which investigation or proceeding requires the participation of the Purchaser or its agents or is commenced or filed against the Purchaser or its agents because of the Purchase Agreement, the Notes or the Warrants or any of the transactions contemplated hereby or thereby (or any other document or instrument executed herewith or therewith or pursuant hereto or thereto), other than any investigation or proceeding (x) in which it is finally determined that there was gross negligence or willful misconduct on the part of the Purchaser seeking indemnification or its agents, (y) which relates to disputes among the Purchaser and its own partners, shareholders or beneficiaries or (z) which relates to the Purchaser's disposition of Notes, Warrants or Shares and the conduct of the Purchaser or its agents giving rise to such investigation or proceeding. The Company shall assume the defense, and shall have its counsel represent the Purchaser and such agents, in connection with investigating, defending or preparing to defend any such action, suit, claim or proceeding (including any inquiry or investigation); provided, however, that the Purchaser, or any such agent, shall have the right (without releasing the Company from any of its obligations hereunder) to employ its own counsel to participate in the Company's defense, but the fees and expenses of such counsel shall be at the expense of such person unless (i) the employment of such counsel shall have been authorized in writing by the Company in connection with such defense or (ii) the Company shall not have provided their counsel to take charge of such defense or (iii) the Purchaser, or such agent of the Purchaser, shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the Company, then in any of such events referred to in clauses (i), (ii) or (iii) such reasonable counsel fees and expenses (but only for one counsel for the Purchaser and its agents) shall be borne by the Company. Any settlement of any such action, suit, claim or proceeding shall require the consent of the Company and such indemnified person (neither of which shall unreasonably withhold its consent). 19 (c) The Company agrees to pay, or to cause to be paid, all documentary, stamp and other similar taxes levied under the laws of the United States of America or any state or local taxing authority thereof or therein in connection with the issuance and sale of the Shares, the Warrants and the Warrants Shares, the issuance and sale of the Notes and the execution and delivery of the Purchase Agreement and any other documents or instruments contemplated hereby or thereby and any modification of any of the Notes or the Purchase Agreement or any such other documents or instruments and will hold the Purchaser harmless without limitation as to time against any and all liabilities with respect to all such taxes. (d) The obligations of the Company under this Section 9.9 shall survive the closing hereunder, the payment or cancellation of the Notes, exercise or cancellation of the Warrants and the termination of the Purchase Agreement. 9.10 TITLES AND SUBTITLES. The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 9.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 9.12 EXCULPATION AMONG PURCHASER. The Purchaser acknowledges that it is not relying upon any person, firm, or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. The Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the Shares, the Warrants and the Warrant Shares. 9.13 PRONOUNS. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require. 9.14 PUBLICITY. Neither the Company nor the Purchaser shall issue any press release or other public statement relating to this Agreement or the Related Agreements or the transactions contemplated hereby or thereby without the prior written approval of the other, not to be unreasonably withheld. 9.15 DISPUTE RESOLUTION. If any dispute arises under this Agreement, the parties shall seek to resolve any such dispute between them in the following manner: (a) GOOD FAITH NEGOTIATIONS. First, by promptly engaging in good faith negotiations among senior executives of each party. (b) MEDIATION. If the parties are unable to resolve the dispute within 20 business days following the first request by either party for good faith negotiations, then the parties shall endeavor to resolve the dispute by mediation administered by the American Arbitration Association ("AAA") under its Commercial Mediation Rules. 20 (c) EQUITABLE RELIEF. No party shall be precluded hereby from securing equitable remedies in courts of any jurisdiction, including, but not limited to, temporary restraining orders and preliminary injunctions to protect its rights and interests, but such relief shall not be sought as a means to avoid, delay or stay mediation, arbitration or Summary Proceeding. (d) CONTINUING PERFORMANCE. Each party is required to continue to perform its obligations under this contract pending final resolution of any dispute arising out of or relating to this contract, unless to do so would be impossible or impracticable under the circumstances. 9.16 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE CITY, COUNTY AND STATE OF NEW YORK AND IRREVOCABLY AGREE THAT, SUBJECT TO THE ELECTION, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE RELATED AGREEMENTS MAY BE LITIGATED IN SUCH COURTS. THE PARTIES ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY (SUBJECT TO ANY APPEAL AVAILABLE WITH RESPECT TO SUCH JUDGMENT) IN CONNECTION WITH THIS AGREEMENT OR THE NOTES. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE PARTIES TO BRING PROCEEDINGS OR OBTAIN OR ENFORCE JUDGMENTS AGAINST EACH OTHER IN THE COURTS OF ANY OTHER JURISDICTION. 9.17 WAIVER OF JURY TRIAL. THE HOLDER AND THE COMPANY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE RELATED AGREEMENTS OR ANY DEALINGS AMONG THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO THE NOTES OR THE WARRANTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT. 21 IN WITNESS WHEREOF, the parties hereto have executed the SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof. NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By: /s/ Ramin Kamfar ------------------------------------ Name: Ramin Kamfar Title: PURCHASER: HALPERN DENNY III, L.P. By: Halpern Denny & Company V, L.L.C., General Partner By: /s/ William J. Nimmo ----------------------------------------- Name: William J. Nimmo Title: Managing Member EXHIBIT A CERTIFICATE OF DESIGNATION EXHIBIT B FORM OF WARRANT EXHIBIT C FORM OF NOTE EXHIBIT D AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT EXHIBIT E AMENDMENT NO. 1 TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT SCHEDULE OF EXCEPTIONS In connection with that certain Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001 by and among New World Coffee - Manhattan Bagel, Inc. (the "Company") and the persons and entities listed on the Schedule of Purchasers attached thereto (the "Agreement"), the Company hereby delivers this Schedule of Exceptions to the Company's representations and warranties given in the Agreement. The section numbers in this Schedule correspond to the section numbers in the Agreement. Capitalized terms used but not defined herein shall have the same meanings given them in the Agreement. EXHIBIT 3.1.1(c) SECRETARY'S CERTIFICATE EXHIBIT 3.1.1(d) OPINION OF COUNSEL EX-99.4 5 ex99-4.txt WARRANT Exhibit 99.4 NEITHER THIS WARRANT NOR THE SECURITIES PURCHASABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION IS AVAILABLE AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER IS DELIVERED TO SUCH EFFECT. THE SECURITY EVIDENCED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE OF SUCH SECURITY ARE SUBJECT TO THE TERMS OF A STOCKHOLDERS AGREEMENT DATED AS OF JANUARY 18, 2001, AMONG THE ISSUER AND THE OTHER PARTIES THERETO, AS AMENDED FROM TIME TO TIME, AND THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO THE CONDITIONS PRECEDENT SPECIFIED IN SUCH STOCKHOLDERS AGREEMENT. Issue Date: March 29, 2001 No. of Shares Subject to Warrant: 2,121,028 WARRANT TO PURCHASE COMMON STOCK OF NEW WORLD COFFEE - MANHATTAN BAGEL, INC. This is to certify that, for value received, HALPERN DENNY III, L.P. (the "Holder") is entitled to purchase, subject to the provisions of this Warrant, from NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (the "Company"), 2,121,028 shares (subject to adjustment or reduction as provided herein) of Common Stock, $0.001 par value, of the Company ("Common Stock"), at a price of $0.01 per share (subject to adjustment as provided herein) at any time during the period beginning on the Issue Date and ending not later than 5:00 p.m. New York time on March 29, 2006 (the "Termination Date"). The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as "Warrant Shares," and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." (a) EXERCISE OF WARRANT. (1) This Warrant may be exercised in whole or in part at any time from time to time on or after the Issue Date until the Termination Date, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of shares specified in such form, in lawful money of the United States of America in cash or by official bank or certified check made payable to the Company. (2) As an alternative to payment of the Exercise Price in cash, the Holder shall have the right, at any time and from time to time, to convert this Warrant in whole or in part into shares of Common Stock (the "Conversion Right"). Upon exercise of the Conversion Right, payment of the aggregate Exercise Price shall be made by delivery of this Warrant with instructions that the Company retain as payment of the aggregate Exercise Price such number of Warrant Shares as shall be determined under the next sentence. The Holder shall receive that number of Warrant Shares determined by multiplying the number of Warrant Shares for which the Conversion Right is exercised by a fraction, the numerator of which shall be the difference between the then fair market value per Warrant Share (based on the closing price on the trading day preceding the exercise of the Conversion Right) and the Exercise Price per Warrant Share, and the denominator of which shall be the then fair market value per Warrant Share. The remaining Warrant Shares for which the Conversion Right has been made shall be deemed to have been paid to the Company as the aggregate Exercise Price. (3) The term "closing price" for each day shall mean the last reported sale price or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case on the principal national securities exchange or the Nasdaq National Market on which the Company's Common Stock is listed or admitted to trading, or if the Company's Common Stock is not listed or admitted to trading on any national securities exchange or the Nasdaq National Market, the average of the highest reported bid and lowest reported asked prices as furnished by the National Association of Securities Dealers Inc. Automated Quotation System, or comparable system. The term "trading day" shall mean (X) if the Common Stock is listed on at least one stock exchange, a day on which there is trading on the principal stock exchange on which the Common Stock is listed or (Y) if the Common Stock is not listed on a stock exchange but sale prices of the Common Stock are reported on an automated quotation system, a day on which trading is reported on the principal automated quotation system on which sales of the Common Stock are reported. (4) If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company, if any, at its office, in proper form for exercise and together with payment of the Exercise Price in the manner provided herein, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise; provided, however, that if at the date of surrender of such Warrants and payment of such Exercise Price, the transfer books for the Common Stock shall be closed, the certificates for the shares in respect of which such 2 Warrants are then exercised shall be issuable as of the date on which such books shall next be opened, and until such date the Company shall be under no duty to deliver any certificate for such shares and the Holder shall not be deemed to have become a holder of record of such shares. (5) Notwithstanding anything herein to the contrary, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of paragraph (a)(2) above, without any further action by or on behalf of the Holder, immediately preceding the time this Warrant would otherwise expire. (6) So long as this Warrant shall be outstanding, (i) if the Company shall declare any dividend or make any distribution upon the Common Stock, or (ii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least 20 days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or offer for subscription or purchase, or (y) such reorganization, reclassification, consolidation, merger, sale, lease, transfer, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of the Common Stock or other capital stock of the Company shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. (7) The Holder shall have no rights as a stockholder of the Company for shares of Common Stock issuable hereunder unless and until such shares are purchased in accordance herewith. (b) RESERVATION OF SHARES. The Company hereby agrees that at all times there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant. (c) FRACTIONAL SHARES. The Company shall not be required to issue fractions of shares on the exercise of Warrants. If any fraction of a share would, except for the provisions of this Section, be issuable on the exercise of any Warrant, the Company will (1) if the fraction of a share otherwise issuable is equal to or less than one-half, round down and issue to the Holder only the largest whole number of shares of Common Stock to which the Holder is otherwise entitled, or (2) if the fraction of a share otherwise issuable is greater than one-half, round-up and issue to the Holder one additional share of Common Stock in addition to the largest whole number of shares of Common Stock to which the holder is otherwise entitled. (d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other 3 Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Subject to the provisions of Section (g), upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the permitted assignee named in such instrument of assignment and this Warrant shall be canceled. If this Warrant should be assigned in part only, the Company shall, upon surrender of this Warrant in accordance with the procedures set forth in the preceding sentence, execute and deliver, in addition to the new Warrant described in the preceding sentence, a new Warrant evidencing the rights of the Holder to purchase the balance of the shares purchasable thereunder. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. (e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. (f) ANTI-DILUTION AND ADJUSTMENT PROVISIONS. The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time beginning on the date of issue of this Warrant, as hereinafter provided: (1) In case the Company shall issue Common Stock as a dividend upon Common Stock or in payment of a dividend thereon shall subdivide the number of outstanding shares of its Common Stock into a greater number of shares or shall contract the number of outstanding shares of its Common Stock into a lesser number of shares, the Exercise Price then in effect shall be adjusted, effective at the close of business on the record date for the determination of stockholders entitled to receive such dividend or be subject to such subdivision or contraction, to the price (computed to the nearest thousandth of a cent) determined by dividing (A) the product obtained by multiplying the Exercise Price in effect immediately prior to the close of business on such record date by the number of shares of Common Stock outstanding prior to such dividend, subdivision or contraction, by (B) the sum of the number of shares of Common Stock outstanding immediately after such dividend, subdivision, or contraction. (2) If any capital reorganization or reclassification of the capital stock of the Company (other than as set forth in subsection (1) of this Section (f)), or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected, then, lawful and adequate provision shall be made whereby the holder of each Warrant shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions specified in the Warrant and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by such Warrant (the "Purchasable Shares"), such shares of stock, securities or assets issuable or payable with respect to or in exchange for the Purchasable Shares 4 had they been purchased immediately before such reorganization, reclassifica- tion, consolidation, merger or sale, and in any such case appropriate provision shall be made with respect to the rights and interest of the Holder to the end that the provisions of the Warrant (including, without limitation, provisions for adjustment of the Exercise Price and of the number of shares issuable upon the exercise of Warrants) shall thereafter be applicable as nearly as may be practicable in relation to any shares of stock, securities, or assets thereafter deliverable upon exercise of Warrants. The Company shall not effect any such consolidation, merger or sale unless prior to or simultaneously with the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume, by written instrument, the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase. (3) Upon the occurrence of each Dilution Event (as hereinafter defined), the number of shares of Common Stock specified in this Warrant shall be adjusted to that number of shares of Common Stock equal to the Existing Warrant Shares plus the Additional Warrant Shares (where X is the number of Additional Warrant Shares derived from the following equation): the number of shares of Common Stock which could be purchased hereunder or have already been purchased hereunder immediately prior to such Dilution Event (the "Existing Warrant Shares") X + the Existing Warrant Shares = - ---------------------------------- ---------------------------------- the Fully-Diluted Common Stock of the the Fully-Diluted Common Stock of the Company immediately prior to such Company immediately after such Dilution Event Dilution Event (including the Additional Warrant Shares and any additional shares of Common Stock issuable pursuant to adjustments in other warrants of the Company due to such Dilution Event) provided, that in each case the number of shares of Fully-Diluted Common Stock shall not include shares of Common Stock, options, warrants or other convertible securities (including convertible debt) issued simultaneously with a Dilution Event but which itself is not a Dilution Event. For purposes of this subsection (3) the "Fully-Diluted Common Stock of the Company" shall include all outstanding shares of Common Stock, and all shares of Common Stock issuable pursuant to all outstanding options, warrants or convertible securities (including convertible debt) of the Company. In the event that this Warrant shall be exercised in full prior to a Dilution 5 Event, a new Warrant representing the amount of the adjustment pursuant to this subsection (3) shall be issued upon the occurrence of each Dilution Event and such Warrant shall be substantially in the form of this Warrant. The preceding provision shall survive the exercise of this Warrant. The Company hereby covenants that it shall not effect any such Dilution Event unless prior to or simultaneously with the consummation thereof, the successor corporation (if other than the Company) resulting from such Dilution Event shall agree, by written instrument, to issue to the Holder a warrant, in substantially the form of this Warrant, to purchase the number of shares of Common Stock of such surviving corporation as provided in this subsection (3). For purposes hereof, a "Dilution Event" shall mean any issuance of Common Stock, options, warrants or other convertible securities (including convertible debt) of the Company or any successor entity (including Einstein) (i) to any shareholder or other stakeholder of Einstein/Noah Bagel Corporation ("Einstein") as consideration for the Company's acquisition of at least a majority of the stock or assets of Einstein, whether by merger, consolidation, asset purchase, stock purchase or otherwise (an "Einstein Transaction") or to any shareholder or other stakeholder of the Company as consideration for an Einstein Surviving Transaction (as hereinafter defined), (ii) to any person or entity prior to an Einstein Transaction if the holders of 66-2/3% of the Common Stock issuable upon exercise of the warrants issued by the Company on the date hereof to Halpern Denny III, L.P. ("Halpern Denny"), Brookwood New World Investors LLC ("Brookwood") and BET Associates, L.P. ("BET") reasonably object to such issuance unless at least 90% of the net proceeds from such issuance are used to redeem shares of Series F Preferred Stock, $.001 par value, of the Company or the notes to be issued pursuant to the Series F Preferred Stock and Warrant Purchase Agreement dated as of January 18, 2001 among the Company and Halpern Denny, the Exchange Agreement dated as of January 18, 2001 among the Company and the several stockholders named therein or the Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001 among the Company and Halpern Denny, (iii) to any person or entity in connection with any equity or convertible debt financing transaction the proceeds of which are used to acquire equity or assets of Einstein in an Einstein Transaction or equity or assets of the Company in an Einstein Surviving Transaction (as hereinafter defined) to the extent such proceeds exceed $25,000,000, or (iv) to any person or entity (X) in connection with a debt financing (other than convertible debt) in which the Company or its subsidiaries is a debtor, or (Y) in connection with a debt financing by Einstein or its subsidiaries in which the proceeds of such financing are used to acquire equity or assets of the Company in connection with an Einstein Surviving Transaction, in each case to the extent such issuance represents in excess of 2% of the Fully-Diluted Common Stock of the Company or Fully-Diluted Common Stock of Einstein, as the case may be, determined by taking into account all options, warrants and other convertible securities. In the event that the Company consummates a transaction with Einstein (a "Einstein Surviving Transaction") pursuant to which Einstein purchases at least a majority of the outstanding stock or assets of the Company, or in which Einstein merges with the Company and Einstein is the surviving corporation, then as a condition to the Company entering into any such Transaction, Einstein shall agree to issue to the Holder a warrant in substantially the form of this Warrant (the "Replacement Warrant") for the Applicable Warrant Percentage of the Fully-Diluted Common Stock of Einstein. The "Fully-Diluted Common Stock of Einstein" shall mean (x) all outstanding shares of common stock, and all shares of common stock issuable pursuant to all 6 outstanding options, warrants or convertible securities (including convertible debt) of Einstein as of the date on which the bankruptcy proceedings of Einstein result in a distribution of the securities of Einstein or a reorganization of Einstein plus (y) any additional shares of common stock, options, warrants or other convertible securities issued pursuant to clauses (i), (iii) and (iv) of the definition of "Dilution Event" above plus (z) any additional shares of common stock of Einstein issuable pursuant to adjustments in the Replacement Warrant and any similar replacement warrants issued to Brookwood, BET, Greenlight Capital, L.P., Greenlight Capital Qualified, LP, Greenlight Capital Offshore, Ltd. or Halpern Denny or any affiliate of the foregoing due to the Dilution Events listed in clause (y). For purposes hereof, the "Applicable Warrant Percentage" shall mean the percentage which is equal to the quotient of (i) the number of shares of Common Stock which could be purchased hereunder or have already been purchased hereunder immediately prior to such Einstein Surviving Transaction (including any adjustments that would be required to be made due to Dilution Events) divided by (ii) the number of shares of Fully-Diluted Common Stock of the Company immediately prior to such Einstein Surviving Transaction. The Company shall not permit its subsidiaries, or shall not consummate an Einstein Surviving Transaction if Einstein has permitted its subsidiaries, to consummate a transaction that, if consummated by the Company or Einstein, as the case may be, would constitute a Dilution Event. (4) Upon each adjustment of the Exercise Price pursuant to subsection (1) of this Section (f), the number of shares of Common Stock specified in each Warrant shall thereupon evidence the right to purchase that number of shares of Common Stock (calculated to the nearest hundredth of a share of Common Stock) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable immediately prior to such adjustment upon exercise of such Warrant and dividing the product so obtained by the Exercise Price in effect after such adjustment. (5) Irrespective of any adjustments of the number or kind of securities issuable upon exercise of Warrants or the Exercise Price, Warrants theretofore or thereafter issued may continue to express the same number of shares of Common Stock and Exercise Price as are stated in similar Warrants previously issued. (6) The Company may, at its sole option, retain the independent public accounting firm regularly retained by the Company, or another firm of independent public accountants of recognized standing selected by the Company's Board of Directors, to make any computation required under this Section (f) and a certificate signed by such firm shall be conclusive evidence of any computation made under this Section (f). (7) Whenever there is an adjustment in the Exercise Price or in the number or kind of securities issuable upon exercise of the Warrants, or both, as provided in this Section (f), the Company shall (i) promptly file in the custody of its Secretary or Assistant Secretary a certificate signed by the Chairman of the Board or the President or a Vice President of the Company and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company, setting forth the facts requiring such adjustment and the number and kind of securities issuable upon exercise of each Warrant after such adjustment; and (ii) cause a notice stating that such adjustment has been effected and stating the Exercise Price then in effect 7 and the number and kind of securities issuable upon exercise of each Warrant to be sent to each registered holder of a Warrant. (8) The Exercise Price and the number of shares issuable upon exercise of this Warrant shall not be adjusted except in the manner and only upon the occurrence of the events heretofore specifically referred to in this Section (f). (9) The Board of Directors of the Company may, in its sole discretion, (a) reduce the Exercise Price of each Warrant, (b) increase the number of shares of Common Stock issuable upon exercise of each Warrant and/or (c) provide for the issuance of other securities (in addition to the shares of Common Stock otherwise issuable upon exercise of the Warrant) upon exercise of each Warrant. (g) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933 AND OTHER APPLICABLE SECURITIES LAWS. This Warrant or the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may not be sold or otherwise disposed of unless Holder provides the Company with an opinion of counsel satisfactory to the Company in form satisfactory to the Company that this Warrant or the Warrant Shares or such other security may be legally transferred without violating the Securities Act of 1933, as amended (the "1933 Act") and any other applicable securities law and then only against receipt of an agreement of the transferee to comply with the provisions of this Section (g) with respect to any resale or other disposition of such securities. Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing that the Warrant Shares are being acquired solely for the Holder's own account and that Holder or Holder's purchaser representative is an accredited investor, as defined in Rule 501 under the 1933 Act. (h) This Warrant is subject to the rights and benefits of the Amended and Restated Registration Rights Agreement dated as of January 18, 2001, as amended from time to time. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as of the Issue Date first set forth above by an authorized officer. NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By: /s/Ramin Kamfar ------------------------------------- Ramin Kamfar, Chief Executive Officer Attest: /s/Jerdd Novack Secretary --------------------, Dated: March 29, 2001 PURCHASE FORM Dated: _______________, 2001 The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing shares of Common Stock and hereby makes payment of ________ in payment of the Exercise Price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name ---------------------------------------------------------------- (Please typewrite or print in block letters.) Address ------------------------------------------------------------- Signature ----------------------------------------------------------- ASSIGNMENT FORM FOR VALUE RECEIVED, hereby sells, assigns and transfers unto Name ---------------------------------------------------- (Please typewrite or print in block letters.) Address ------------------------------------------------- The right to purchase Common Stock represented by this Warrant to the extent of ______ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ______________, Attorney, to transfer the on the books of the Company with full power of substitution in the premises. Date ____________, 2001 Signature - --------------------------------------- EX-99.5 6 ex99-5.txt AMEND. NO. 1 TO REG. RIGHTS AG. Exhibit 99.5 AMENDMENT NO. 1 TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT AMENDMENT NO. 1 TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of March 29, 2001 ( "Amendment"), by and among NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (the "Company") and the holders of certain warrants listed on Schedule I hereto (the "Stockholders"), amending the Amended and Restated Registration Rights Agreement dated as of January 18, 2001 (as heretofore amended, the "Registration Rights Agreement"), among the Company and the Stockholders, which amended and restated the Registration Rights Agreement dated as of August 11, 2000, by and between the Company, BET Associates, L.P., and Brookwood New World Investors, LLC. Capitalized terms used herein without definition shall have the meanings set forth in the Registration Rights Agreement. Background ---------- On March 29, 2001, the Company and Halpern Denny III, L.P. ("Halpern Denny") entered into the Second Series F Preferred Stock and Warrant Purchase Agreement (the "Second Purchase Agreement"), pursuant to which, among other things, Halpern Denny purchased an additional 5,000 shares of Series F Preferred Stock, $.001 par value, of the Company, at a purchase price of $1,000.00 per share and the Company delivered warrants in the form attached to the Second Purchase Agreement (the "Additional Warrants") and agreed to issue in the future certain warrants in similar form. The Company has agreed to grant to Halpern Denny certain registration rights with respect the shares issuable upon exercise of the additional warrants issued pursuant to the Second Purchase Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Amendments. ---------- (a) Section 1 of the Registration Rights Agreement is hereby amended by adding the following definition thereto: "The term "Additional Warrants" means the warrants issued pursuant to and in the form attached to the Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001." (b) Section 1.1(e) of the Registration Rights Agreement is hereby amended to read in its entirety as follows: "The term "Registrable Securities" means the shares of Common Stock issued or issuable (i) upon exercise of the Warrants and the Additional Warrants; and (ii) any securities of the Company issued or issuable in exchange for, or in replacement of the Common Stock, excluding shares of Common Stock which may be immediately sold under Rule 144." (c) The Registration Rights Agreement is hereby amended by deleting Schedule I in its entirety and replacing it with Schedule I attached hereto. 2. The Registration Rights Agreement, as amended by this Amendment, is hereby in all respects confirmed and each of the parties hereto acknowledges and agrees that it is bound by all the terms and provisions thereof, as amended hereby. 3. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws principles. 4. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 2 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as a sealed instrument, all as of the day and year first above written. COMPANY: NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By /s/ Ramin Kamfar ---------------------------------- Name: Ramin Kamfar Title: Chief Executive Officer STOCKHOLDERS: HALPERN DENNY III, L.P. By: Halpern Denny & Company V, L.L.C., General Partner By ---------------------------------- Name: William J. Nimmo Title: Managing Member BET ASSOCIATES, L.P. By: BRU Holding Co., LLC Its General Partner By: --------------------------------- Name: Title: BROOKWOOD NEW WORLD INVESTORS LLC By: Brookwood New World Co., LLC, Its Managing Member By: --------------------------------- Name: Title: SCHEDULE I STOCKHOLDERS Series F Stockholder Preferred Stock Warrant - ----------- --------------- ------- Halpern Denny III, L.P. 25,000,000 10,605,140 BET Associates, L.P. 8,213.01 3,263,178 Brookwood New World Investors, LLC 8,185.32 3,263,178 EX-99.6 7 ex99-6.txt AMENDED CERT. OF DES. Exhibit 99.6 NEW WORLD COFFEE - MANHATTAN BAGEL, INC. AMENDED CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES F PREFERRED STOCK Pursuant to Section 242 of the General Corporation Law of the State of Delaware NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a corporation duly organized and existing under the laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY: 1. That pursuant to the authority contained in Article 4 of its Amended and Restated Certificate of Incorporation and in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware, its Board of Directors has adopted the following resolution: RESOLVED, that there is hereby adopted, an Amended Certificate of Designation of Series F Preferred Stock of the Corporation, in the form attached hereto as Exhibit A (the "Amended Certificate of Designation"), integrating and amending the provisions of the Certificate of Designation for the Series F Preferred Stock of the Corporation, pursuant to which the designations, powers, preferences and relative, participating, optional and other special rights and the qualifications, limitations or restrictions of such Series F Preferred Stock shall be amended. 2. That pursuant to a stockholders consent, the holders of at least 67% of the Series F Preferred Stock approved the amendment of the Certificate of Designation. 3. That the text of the Certificate of Designation of the Series F Preferred Stock of the Corporation is hereby restated and further amended to read in its entirety as follows: Designation and Amount. There is hereby established a series of the Preferred Stock designated "Series F Preferred Stock" (herein referred to as "Series F Preferred Stock"), consisting of 73,000 shares and having the relative rights, designations, preferences, qualifications, privileges, limitations, and restrictions applicable thereto as follows: 1. Dividends. --------- (a) The holders of shares of Series F Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors of the Corporation, and to the extent of funds legally available therefor, cumulative dividends payable quarterly, on each March 31, June 30, September 30 and December 31, commencing on March 31, 2001, with dividends for partial quarters based on the dates of issuance and redemption accruing pro rata. Such dividends shall be paid, for each quarterly period, at the rate of 16% per annum (the "Dividend Percentage Rate") of the Liquidation Preference, payable each quarter as payment in kind Series F Preferred Stock at the rate of 4% per quarter; provided, however, that the Dividend Percentage Rate shall be increased by an additional 2% per semi-annum on each January 18 and July 18, commencing on January 18, 2002 on each outstanding share of Series F Preferred Stock until such share of Series F Preferred Stock has been redeemed in full by the Corporation as required by Section 3 hereof, and provided further that to the extent that the Corporation has insufficient available surplus to declare the dividend, the Board of Directors of the Corporation shall undertake to use its best efforts to increase the available surplus and thereafter shall immediately declare such dividend. Dividends on the Series F Preferred Stock shall be cumulative so that if, for any dividend accrual period, dividends at the rate hereinabove specified are not declared and paid or set aside for payment, the amount of accrued but unpaid dividends shall accumulate, and shall be added to the dividends payable for subsequent dividend accrual periods. If the funds legally available for the payment of such dividends are insufficient to pay in full the dividends payable on all outstanding shares of Series F Preferred Stock, the total available funds may be paid in partial dividends to the holders of the outstanding shares of Series F Preferred Stock ratably in proportion to the fully accrued dividends to which they are entitled. Each issued and outstanding share of Series F Preferred Stock shall entitle the holder of record thereof to receive an equal proportion of said dividends (adjusted for issuance dates). (b) No dividends or other distributions of any kind shall be declared or paid on, nor shall the Corporation redeem, purchase or acquire any shares of the Common Stock, any of the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock or Series D Preferred Stock or any other junior class or series of stock (collectively, "Junior Stock") other than stock dividends and distributions of the right to purchase common stock and repurchase any such rights in accordance with the Rights Agreement dated June 7, 1999, unless all dividends on the Series F Preferred Stock accrued for all past dividend periods shall have been paid. 2. Liquidation Preference. ---------------------- (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series F Preferred Stock shall be entitled to receive, on a pro rata basis, such amount, paid prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock or any Junior Stock by reason of their ownership thereof, an amount equal to $1,000 per share of Series F Preferred Stock then outstanding ("Liquidation Preference") (as adjusted for any stock dividends, combinations or splits with respect to such shares), plus all accrued or declared but unpaid dividends on such share for each share of Series F Preferred Stock then held by them. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the Series F Preferred Stock shall rank at least pari passu with any security hereinafter existing or created ("Parity Stock"). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series F Preferred Stock shall 2 be insufficient to permit the payment to the holders of the Series F Preferred Stock and of any Parity Stock the full amounts to which they otherwise would be entitled, the holders of Series F Preferred Stock and such Parity Stock shall share ratably in any distribution of the entire assets and funds of the Corporation legally available for distribution pro rata in proportion to the respective liquidation preference amounts which would otherwise be payable upon liquidation with respect to the outstanding shares of the Series F Preferred Stock and such Parity Stock if all liquidation preference dollar amounts with respect to such shares were paid in full. (b) Upon the completion of the distribution required by subparagraph (a) of this Section 2, the remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed among the holders of the Common Stock pro rata based on the number of shares of Common Stock held by each, and the holders of Series F Preferred Stock shall not be entitled to participate in such distribution. (c) For purposes of this Section 2, a liquidation, dissolution or winding up of this Corporation shall be deemed to be occasioned by, or to include (A) a change in 50% or more of the members of the Board of Directors, nominated and recommended by the Board of Directors for election at the 2000 Annual Meeting of Stockholders except changes in investor appointed directors, (B) a consolidation or merger of the Corporation with or into any other corporation (other than (i) a merger in which the Corporation is the surviving corporation and which will not result in more than 50% of the capital stock of the Corporation being owned of record or beneficially by persons other than the holders of such capital stock immediately prior to such merger or (ii) a transaction contemplated by the Series F Preferred Stock and Warrant Purchase Agreement dated January 18, 2001 (as amended on March 29, 2001, the "Purchase Agreement"), the Exchange Agreement dated January 18, 2001 (as amended on March 29, 2001, the "Exchange Agreement") or the Second Series F Preferred Stock and Warrant Purchase Agreement dated March 29, 2001 (the "Second Purchase Agreement"), (C) a sale or disposition of all or substantially all of the properties and assets of the Corporation as an entirety to any other person or persons in a single transaction or series of related transactions, (D) an acquisition of "beneficial ownership" by any "person" or "group" of voting stock of the Company representing more than 50% of the voting power of all outstanding shares of such voting stock, whether by way of merger or consolidation or otherwise, other than pursuant to the exercise of the warrants contemplated by the Exchange Agreement, the Purchase Agreement, the Second Purchase Agreement and agreements with other investors disclosed in the schedules thereto and/or the transfer of the Common Stock purchased pursuant to such agreements with other investors (collectively, the "Investor Securities"), or (E) any other transaction which results in the disposition of 50% or more of the voting power of all classes of capital stock of the Corporation on a combined basis, other than relating to the purchase of the Investor Securities (an event or series of events under subsections (A), (B), (C), (D) and (E) above shall be referred to as a "Change of Control Event"). The holders of 67% or more of the voting power of the then outstanding shares of the Series F Preferred Stock may execute a written waiver of any Change of Control Event. 3 3. Redemption. The shares of Series F Preferred Stock shall be ---------- redeemable as follows: (a) Optional Redemption. (i) The shares of Series F Preferred Stock will be redeemable at the election of the Corporation, as a whole or from time to time in part, at any time ("Optional Redemption Date") on not less than 5 nor more than 60 days' prior notice, for an amount equal to 100% of the Purchase Price (as hereinafter defined), plus all accrued or declared but unpaid dividends, if any, to the date of redemption (the "Redemption Price"). The "Purchase Price" of the Series F Preferred Stock shall be $1,000 (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares). (ii) No partial optional redemption may be authorized or made unless on or prior to such redemption all unpaid cumulative dividends shall have been paid in full, or a sum set apart in cash for such payment, on all shares of Series F Preferred Stock then outstanding to the extent dividends are payable in cash. If less than all the shares of Series F Preferred Stock are to be redeemed, the particular shares of Series F Preferred Stock to be redeemed will be determined on a pro rata basis. If less than all of the shares of Series F Preferred Stock are to be redeemed, the Redemption Notice that relates to such shares of Series F Preferred Stock shall state the portion of the shares of Series F Preferred Stock to be redeemed. A new Series F Preferred Stock certificate representing the unredeemed shares of Series F Preferred Stock will be issued in the name of the holder thereof upon cancellation of the original certificate for Series F Preferred Stock and, unless the Company fails to pay the Redemption Price on the Redemption Date, after the Redemption Date dividends will cease to accrue on the shares of Series F Preferred Stock called for redemption. (b) Mandatory Redemption. (i) All outstanding shares of Series F Preferred Stock shall be redeemed (subject to the legal availability of funds therefor) in whole on the earlier of January 18, 2004 or the closing date of the Corporation's acquisition of 70% or more of the outstanding stock, or all or substantially all of the assets, of Einstein/Noah Bagel Corporation ("Einstein"), or the acquisition by Einstein of all or substantially all of the assets or stock of the Company ("Acquisition of Einstein") (the "Mandatory Redemption Date" and together with the "Optional Redemption Date", the "Redemption Date"), at the Redemption Price. (ii) Failure to Redeem. In the event that the Corporation fails to pay the Redemption Price on the Mandatory Redemption Date, the Redemption Price will be paid by the issuance of Senior Subordinated Notes (the "Notes"), which Notes will be substantially in the form of the Note attached as Exhibit D to the First Purchase Agreement, Exhibit B to the Exchange Agreement and Exhibit C to the Second Purchase Agreement and, upon the issuance of such Notes for the full Redemption Price, all 4 outstanding shares of Series F Preferred Stock shall be deemed to be retired and no longer outstanding. (c) Procedure for Redemption. (i) Not more than 60 and not less then 5 days prior to any Optional Redemption Date, and as soon as practical prior to the Mandatory Redemption Date, written notice (the "Redemption Notice") shall be given by first-class mail, postage prepaid, to each holder of record of shares of Series F Preferred Stock to be redeemed on the record date fixed for such redemption of the shares of Series F Preferred Stock at such holder's address as the same appears on the stock register of the Company. The Redemption Notice shall state: (A) the Redemption Price; (B) whether all or less than all of the outstanding shares of Series F Preferred Stock are to be redeemed and the total number of shares of Series F Preferred Stock being redeemed; (C) the number of shares of Series F Preferred Stock held by the holder that the Corporation intends to redeem; (D) the Redemption Date; (E) that the holder is to surrender to the Corporation, at the place or places designated in such Redemption Notice, its certificates representing the shares of Series F Preferred Stock to be redeemed; (F) that dividends on the shares of Series F Preferred Stock to be redeemed shall cease to accrue on such Redemption Date unless the Corporation defaults in the payment of the Redemption Price; and (G) the name of any bank or trust company performing the duties referred to in subsection (c)(iv) below. (ii) On or before the Redemption Date, each holder of shares of Series F Preferred Stock to be redeemed shall surrender the certificate or certificates representing such shares of Series F Preferred Stock to the Corporation, in the manner and at the place designated in the Redemption Notice, and on the Redemption Date the full redemption price for such shares of Series F Preferred Stock shall be payable in cash to the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be returned to authorized but unissued shares of Series F Preferred Stock. In the event that less than all of the shares of Series F Preferred Stock represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares of Series F Preferred Stock. (iii) Unless the Corporation defaults in the payment in full of the Redemption Price, dividends on the shares of Series F Preferred Stock called for redemption shall cease to accrue on the Redemption Date, and the holders of such shares 5 shall cease to have any further rights with respect thereto on the Redemption Date, other than the right to receive the Redemption Price, without interest. Until the Redemption Price is paid in full or the Notes are issued pursuant to Section 3(b)(ii), the holders of shares of Series F Preferred Stock shall have all preferences and rights, including without limitation the right to receive dividends, of holders of the Series F Preferred Stock. (iv) If a Redemption Notice shall have been duly given or if the Corporation shall have given to the bank or trust company hereinafter referred to irrevocable authorization promptly to give such notice, and if on or before the Redemption Date specified therein the funds necessary for such redemption shall have been deposited by the Corporation with such bank or trust company in trust for the pro rata benefit of the holders of the shares of Series F Preferred Stock called for redemption, then, notwithstanding that any certificate for shares of Series F Preferred Stock so called for redemption shall not have been surrendered for cancellation, from and after the time of such deposit, all shares so called, or to be so called pursuant to such irrevocable authorization, for redemption shall no longer be deemed to be outstanding and all rights with respect of such shares of Series F Preferred Stock shall forthwith cease and terminate, except only the right of the holders thereof to receive from such bank or trust company at any time after the time of such deposit the funds so deposited, without interest. The aforesaid bank or trust company shall be organized and in good standing under the laws of the United States of America, and shall have capital, surplus and undivided profits aggregating at least $100,000,000 according to its last published statement of condition, and shall be identified in the Redemption Notice. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so set aside or deposited, as the case may be, and unclaimed at the end of three years from such Redemption Date shall, to the extent permitted by law, be released or repaid to the Corporation, after which repayment the holders of the shares of Series F Preferred Stock so called for redemption shall look only to the Corporation for payment hereof. (v) If the Redemption Price will be paid by the issuance of Notes as required by Section 3(b)(ii) above, the Corporation will issue to each holder of shares of Series F Preferred Stock that has surrendered the certificate or certificates representing such shares of Series F Preferred Stock, a Note in the principal amount of the aggregate Redemption Price payable to such holder, including the increases in the Redemption Price required by Section 3(b)(ii) above, and payable to the holder as such holder's name appears on the stock register of the Corporation. The Corporation will, within 5 days following the 90th day following the Mandatory Redemption Date, send notice to each holder that has not surrendered the certificate or certificates representing its shares of Series F Preferred Stock stating that the Redemption Price is to be paid by the issuance of Notes and confirming the location at which such certificates are to be surrendered. Such notice shall be sent in the same manner as was required for the Redemption Notice. Thereafter, not later than five days following any surrender by a holder of certificates representing shares of Series F Preferred Stock, the Corporation will issue to such holder a Note in the amount specified above. 4. Protective Rights. ----------------- 6 (a) So long as any shares of Series F Preferred Stock remain outstanding, the Corporation shall not, without the vote or written consent by the holders of at least 67% of the then outstanding shares of the Series F Preferred Stock, voting together as a single class: (i) amend or repeal any provision of the Corporation's Certificate of Incorporation or By-Laws in a manner which materially adversely affects the rights and preferences of the holders of Series F Preferred Stock; (ii) authorize or issue shares of any class of stock having any preference or priority as to dividends or assets superior to or on a parity with the Series F Preferred Stock, including, without limitation, the Series E Preferred Stock of the Company; (iii) pay or declare any dividend on any other type or class of securities, other than a dividend payable in common stock or rights under the Rights Plan; (iv) repurchase or redeem any shares of capital stock of the Corporation other than the redemption of the Series F Preferred Stock; (v) authorize (i) a sale of any material asset of a value in excess of $1,000,000 of the Corporation or any subsidiary or subsidiaries of the Corporation, (ii) a sale of any substantial portion of the assets of the Corporation or any subsidiary or subsidiaries (other than sales of stores owned by the Corporation or its subsidiaries), or (iii) a recapitalization or reorganization of the Corporation or any subsidiary or subsidiaries of the Corporation (other than stock splits, combinations and/or dividends); (vi) take any action that results in the Corporation or any subsidiary or subsidiaries of the Corporation incurring or assuming more than $1,000,000 of funded indebtedness (other than borrowings of up to $17,119,848 by the Corporation for funded debt, either on an individual or accumulative basis except (A) that the Corporation may obtain substitute financings for its existing line of credit on similar terms from a substitute lender up to the outstanding loan balance on the existing line of credit on the date of such substitution, and (B) as contemplated by the Corporation and described in the Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement); (vii) effect any Change of Control Event, except as contemplated by the Corporation and described in the Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement; (viii) effect (i) an acquisition of another corporation or other entity, or a unit or business group of another corporation or entity, by merger or otherwise, except as contemplated in the Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement or (ii) the purchase of all or substantially all of the capital stock, other equity interests or assets of any other entity or person, except as 7 contemplated in the Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement; (ix) increase the number of directors of the Board of Directors of the Corporation except as contemplated in the Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement; (x) effect or allow fundamental change in the nature of the Corporation's business; (xi) otherwise materially affect the rights, privileges and preferences of the holders of Corporation's Series F Preferred Stock; or (xii) effect any change of the executive officers of the Company. 5. Voting Rights. ------------- (a) The holders of Series F Preferred Stock, except as otherwise required under the laws of the State of Delaware or as set forth herein, shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation. (b) The majority of the then outstanding Series F Preferred Stock, voting or consenting, as the case may be, as one class, will be entitled to elect up to four directors (the "Series F Directors"), provided that at least two of the Series F Directors shall be designated by Halpern Denny III, L.P. (each a "Halpern Denny Designee"), one of the Series F Directors shall be designated by Brookwood New World Investors, LLC (the "Brookwood Designee") and one of the Series F Directors shall be designated by BET Associates, L.P. (the "BET Designee"). At any meeting held for the purpose of electing directors at which the holders shall have the right, voting separately as a class, to elect directors, the presence in person or by proxy of the holders of a majority of the outstanding shares of Series F Preferred Stock shall be required to constitute a quorum of such holders. Any vacancy occurring in the office of a director elected by the holders pursuant to this Section 5(b) may be filled by the remaining director elected by the holders unless and until such vacancy shall be filled by the holders. (c) If (i) dividends on the Series F Preferred Stock are in arrears and unpaid for any quarterly period, which failure to pay shall continue for a period of thirty (30) days; or (ii) the Corporation fails to discharge any redemption obligation with respect to the Series F Preferred Stock (delivery of the Notes as set forth in Section 3 above shall constitute discharge of the Company's redemption obligation) and such failure continues more than 90 days following a Mandatory Redemption Date; then (A) the number of members comprising the Corporation's Board of Directors shall automatically increase by such number so that such additional directors (but including the Board seats elected by the holders of Series F Preferred Stock pursuant to Section 5(b) above) shall constitute not less than 50% of the Board of Directors of the Corporation and (B) the holders of the majority of the then outstanding Series F Preferred Stock, voting or 8 consenting, as the case may be, as one class, will be entitled to elect directors to the Board of Directors to fill the vacancies created by such increase, provided that such directors shall be designated equally by (A) Halpern Denny III, L.P., on the on hand, and (B) Brookwood New World Investors, LLC and BET Associates, L.P., on the other hand. Such voting rights will continue until such time as, in the case of a dividend default, all dividends in arrears on the Series F Preferred Stock are paid in full and, in the case of the failure to redeem, until payment in cash or until the Notes are delivered, at which time the term of the directors elected pursuant to the provisions of this paragraph shall terminate. (d) Immediately after voting power to elect directors shall have become vested and be continuing in the holders pursuant to Section 5(c) or if vacancies shall exist in the offices of directors elected by the holders, a proper officer of the Corporation shall call a special meeting of the holders for the purpose of electing the directors which such holders are entitled to elect. Any such meeting shall be held at the earliest practicable date, and the Corporation shall provide holders with access to the lists of holders, pursuant to the provisions of this Section 5(d). At any meeting held for the purpose of electing directors at which the holders shall have the right, voting separately as a class, to elect directors, the presence in person or by proxy of the holders of at least a majority of the outstanding shares of Series F Preferred Stock shall be required to constitute a quorum of such holders. (e) Any vacancy occurring in the office of a director elected by the holders pursuant to Section 5(c) may be filled by the remaining director or directors elected by the holders unless and until such vacancy shall be filled by the holders. (f) The Corporation shall not modify, change, affect or amend the Certificate of Incorporation or this Amended Certificate of Designation to affect materially and adversely the specified rights, preferences or privileges of the holders of the Series F Preferred Stock or increase the authorized Series F Preferred Stock, without the affirmative vote or consent of holders of at least a 67% of the shares of Series F Preferred Stock then outstanding, voting or consenting, as the case may be, as one class. (g) In any case in which the holders shall be entitled to vote pursuant to this Section 5 or pursuant to the laws of the State of Delaware, each holder shall be entitled to one vote for each share of Series F Preferred Stock held. (h) In lieu of voting at a meeting, holders may act by written consent in accordance with Section 228 of the General Corporation Law of the State of Delaware ("GCL"). (i) Except as otherwise required by the GCL, holders of at least 67% of the then outstanding shares of Series F Preferred Stock, voting or consenting, as the case may be, separately as a class, may waive compliance with any provisions of this Amended Certificate of Designation. 6. No Reissuance of Series F Preferred Stock. No share or shares of ----------------------------------------- Series F Preferred Stock acquired by the Corporation by reason of redemption, purchase, 9 conversion or otherwise shall be reissued, and all such reacquired shares shall be cancelled, retired and eliminated from the shares which the Corporation shall be authorized to issue. 7. Counterparts. This Certificate may be signed in any number of ------------ counterparts, each of which will be an original, with the same effect as if the signatures hereto were upon the same instrument. 10 IN WITNESS WHEREOF, the Corporation has executed this Amended Certificate of Designation to be prepared and executed by the officers named below as of this 29th day of March, 2001. NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By: /s/ Ramin Kamfar ----------------------------------------- Name: R. Ramin Kamfar Title: Chief Executive Officer By: /s/ Jerold Novack ----------------------------------------- Name: Jerold Novack Title: Secretary 11 EX-99.7 8 ex99-7.txt NOTE Exhibit 99.7 NOTE THE SECURITY EVIDENCED BY THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION THEREFROM, UNLESS AN OPINION OF COUNSEL IS FURNISHED REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO NEW WORLD COFFEE - MANHATTAN BAGEL, INC. STATING THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF APPLICABLE SECURITIES LAWS IS AVAILABLE. THIS NOTE AND THE OBLIGATIONS OF THE COMPANY ARISING HEREUNDER ARE SUBORDINATED IN THE MANNER AND TO THE EXTENT REFERRED TO IN SECTION 6 HEREOF, AND EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS THEREOF. New World Coffee - Manhattan Bagel, Inc. [ ] [FN1]% Senior Subordinated Note Dated: FOR VALUE RECEIVED, the undersigned New World Coffee - Manhattan Bagel, Inc., a Delaware Corporation (herein, together with any successor, referred to as the "Company"), hereby promises to pay to ____________or registered assigns, the principal sum of ___________ ($_______), subject to adjustment as herein provided, on the later of January 18, 2004 and 120 days following the Mandatory Redemption Date, with interest (computed on the basis of a 360 day year) on the unpaid balance of such principal sum from the date hereof at the initial interest rate of [ ][FN1]% per annum, subject to adjustment as herein provided, payable, in arrears, quarterly on the first day of January, April, July and October of each year, commencing April 1 (which first interest payment shall be for the period from and including January 18, 20[_] through and including March 31, 20[_], until the entire principal amount hereof shall have become due and payable, whether at maturity or at a date fixed for prepayment or by acceleration or declaration or otherwise, and such per annum interest rate shall be increased by 2% on each January 18 and July until the principal has been paid in full (including on any overdue installment of principal (including any overdue prepayment of principal) and (to the extent permitted by law) on any overdue installment of interest until paid (whether or not any subordination provision or other circumstance prevents such payment)). The principal amount of the Note shall be increased by 1% on each of the 30th, 60th and 90th day following the Mandatory Redemption Date. - -------------------- [FN1] The interest rate will be equal to the dividend rate of the Series F Preferred Stock in effect as of the date of issuance of the Note. This Note is issued pursuant the (i) Series F Preferred Stock and Warrant Purchase Agreement dated as of January 18, 2001 (as amended, the "First Purchase Agreement") between the Company and the purchasers named therein, (ii) the Exchange Agreement dated as of January 18, 2001 (as amended, the "Exchange Agreement") between the Company and the parties named therein and (iii) the Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001 (the "Second Purchase Agreement" and together with the First Purchase Agreement, the "Purchase Agreements") between the Company and the purchasers named therein, and is one of the "Notes" contemplated in each such Agreement. 1. Payments (a) If any payment of interest due hereunder becomes due and payable on a day which is not a Business Day ("Business Day" means any day, other than a Saturday, Sunday or legal holiday, on which banks in the location of the offices of the Company are open for business), the due date thereof shall be the next preceding day which is a Business Day, and the interest payable on such next preceding Business Day shall be the interest which would otherwise have been payable on the due date which was not a Business Day. (b) Payments of principal and interest shall be made in lawful money of the United States of America to the address or account designated by the holder hereof for such purpose. (c) All payments of principal and interest with respect to this Note and each of the other Notes shall be made pro rata among the holders of the Notes in proportion to the unpaid principal amount and amount of accrued but unpaid interest, as applicable, with respect to each Note as of the date of each such payment. 2. Exchange of Notes; Accrued Interest; Cancellation of Surrendered Notes; Replacement. (a) At any time at the request of any holder of this Note to the Company at its offices the Company at its expense (except for any transfer tax or any other tax arising out of the exchange) will issue and deliver to or upon the order of the holder in exchange therefor new Notes, in such denomination or denominations as such holder may request, in aggregate principal amount equal to the unpaid principal amount of this Note and substantially in the form thereof, dated as of the date to which interest has been paid on this Note (or, if no interest has yet been so paid thereon, then dated the date this Note is so surrendered) and payable to such person or persons or order as may be designated by such holder. (b) In the event that this Note is surrendered to the Company upon a prepayment the Company shall pay all accrued and unpaid interest on this Note or such portion thereof and thereupon interest shall cease to accrue upon that portion of the principal amount of this Note which was prepaid, and the right to receive, and any right or obligation to make, any prepayment on such portion of the principal amount shall terminate all upon the date of such prepayment and upon presentation and surrender of this Note to the Company. 2 (c) Upon any prepayment if only a portion of the principal amount of this Note is prepaid, then this Note shall be surrendered to the Company and the Company shall simultaneously execute and deliver to or on the order of the holder thereof, at the expense of the Company, a new Note or Notes in principal amount equal to the unused or unpaid portion of this Note. (d) This Note or portions thereof which have been prepaid shall be canceled by the Company and no Notes shall be issued in lieu of the principal amount prepaid. (e) Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to the Company (if requested by the Company and unsecured in the case of the Purchaser or an institutional holder), or in the case of any such mutilation, upon surrender of this Note (which surrendered Note shall be canceled by the Company), the Company will issue a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note as if the lost, stolen, destroyed or mutilated Note were then surrendered for exchange. 3. Maximum Legal Rate. The Company shall not be obligated to pay and the holder of this Note shall not collect interest at a rate in excess of the maximum permitted by law or the maximum that will not subject Payee to any civil or criminal penalties. If, because of the acceleration of maturity, the payment of interest in advance, the scheduled increases in the interest rate or any other reason, the Company is required to pay interest at a rate in excess of such maximum rate, the rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate, and any payment made in excess of such maximum rate, together with interest thereon at the rate provided herein from the date of such payment, shall be immediately and automatically applied to the reduction of the unpaid principal balance of this Note as of the date on which such exceeds the unpaid principal balance, the amount of such excess shall be refunded by Payee to Company. It is expressly stipulated and agreed to be the intent of the Company and the holder of this Note at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits the holder of this Note to contract for, charge, take, reserve or receive a greater amount of interest than under state law) and that this section shall control every other covenant and agreement in this Note, the Purchase Agreements and the Exchange Agreement. 4. Protective Rights. (a) The Company shall not, without the prior written consent of the holder or holders of Notes representing at least sixty-seven percent (67%) in aggregate principal amount of the outstanding Notes: (i) pay or declare any dividend on any other type or class of securities, other than a dividend payable in common stock or rights under the Rights Plan and solely paid-in-kind dividends to the holders of the Series E Preferred Stock; (ii) repurchase or redeem any shares of capital stock of the Company; 3 (iii) authorize (i) a sale of any material asset of a value in excess of $1,000,000 of the Company or any subsidiary or subsidiaries of the Company, (ii) a sale of any substantial portion of the assets of the Company or any subsidiary or subsidiaries (other than sales of stores owned by the Company or its subsidiaries), or (iii) a recapitalization or reorganization of the Company or any subsidiary or subsidiaries of the Company (other than stock splits, combinations and/or dividends); (iv) take any action that results in the Company or any subsidiary or subsidiaries of the Company incurring or assuming more than $1,000,000 of funded indebtedness (other than borrowings of up to $17,119,848 by the Company for funded debt, either on an individual or a cumulative basis except (A) that the Company may obtain substitute financings for its existing line of credit on similar terms from a substitute lender up to the outstanding loan balance on the existing line of credit on the date of such substitution, and (B) as contemplated by the Company and described in the Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement); (v) effect any of the following: (i) a consolidation or merger of the Company with or into any other corporation (other than a merger in which the Company is the surviving corporation and which will not result in more than 50% of the capital stock of the Company being owned of record or beneficially by persons other than the holders of such capital stock immediately prior to such merger), except as contemplated by the Purchase Agreements, (ii) sell or otherwise dispose of all or substantially all of the properties and assets of the Company as an entirety to any other person or persons in a single transaction or series of related transactions, except as contemplated by the Purchase Agreements, or (iii) an acquisition of "beneficial ownership" by any "person" or "group" of voting stock of the Company representing more than 50% of the voting power of all outstanding shares of such voting stock, whether by way of merger or consolidation or otherwise, except as contemplated by the Purchase Agreements (each, a "Change of Control"); (vi) effect (i) an acquisition of another corporation or other entity, or a unit or business group of another corporation or entity, by merger or otherwise, except as contemplated by the Purchase Agreements or (ii) the purchase of all or substantially all of the capital stock, other equity interests or assets of any other entity or person, except as contemplated by the Purchase Agreements; (vii) increase the number of directors of the Board of Directors of the Company except as set forth herein; (viii) effect or allow fundamental change in the nature of the Company's business; or (ix) effect any change of the executive officers of the Company. 4 5. Defaults. (a) Any of the following shall constitute an "Event of Default": (i) The Company defaults in the payment of (A) any part of the principal of any Note, when the same shall become due and payable, whether at maturity or at a date fixed for prepayment or by acceleration or otherwise, or (B) the interest on any Note, when the same shall become due and payable, and such default in the payment of interest shall have continued for five (5) Business Days; or (ii) the Company defaults in the performance of any other agreement or covenant contained in the Purchase Agreements, and such default shall not have been remedied within thirty (30) days after written notice thereof shall have been given to the Company by any holder of this Note (the Company to give forthwith to all other holders of this Note at the time outstanding written notice of the receipt of such notice, specifying the default referred to therein); or (iii) any material representation or warranty by the Company herein, in the Purchase Agreements or in any certificate delivered by the Company pursuant hereto proves to have been incorrect in any material respect when made; or (iv) the Company or any Subsidiary shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts; or a receiver or trustee is appointed for the Company or any Subsidiary or for substantially all of its assets and, if appointed without its consent, such appointment is not discharged or stayed within sixty (60) days; or proceedings under any law relating to bankruptcy, insolvency or the reorganization or relief of debtors are instituted by or against the Company or any Subsidiary, and, if contested by it, are not dismissed or stayed within sixty (60) days; or any writ of attachment or execution or any similar process is issued or levied against the Company or any Subsidiary or any of its property and is not released, stayed, bonded or vacated within sixty (60) days after its issue or levy; or the Company or any Subsidiary takes corporate or limited liability company action in furtherance of any of the foregoing. (b) If an Event of Default occurs pursuant to any of clauses (i) through (iii) of Section 5(a) of this Note then and in each such event and with the concurrence of holders of 67% of the Notes any holder of this Note (unless all Events of Default shall theretofore have been waived or remedied) at its option, by written notice or notices to the Company, may declare this Note to be due and payable. If an Event of Default occurs pursuant to clause (iv) of Section 5(a) of this Note, this Note shall automatically and without further action become due and payable. Upon any such declaration (or as to such clause (v) upon its occurrence) this Note shall forthwith immediately mature and become due and payable. However, the foregoing acceleration rights are subject to the following: (i) if, at any time after the principal of this Note shall so become due and payable and prior to the date of maturity stated in this Note, all interest on this Note (with interest at the rate specified in this Note on any overdue principal and, if applicable, on 5 any overdue interest) shall be paid to the holder of this Note by or for the account of the Company, then the Note holder, by written notice or notices to the Company, may waive such Event of Default and its consequences and rescind or annul any such declaration, but no such waiver shall extend to or affect any subsequent Event of Default or impair any right or remedy resulting therefrom; (ii) if any holder or holders of Notes which, at the time, holds or hold at least sixty-seven percent (67%) in aggregate principal amount of the Notes then outstanding exercises the above rights of acceleration, then the Company shall notify each other holder of Notes of the fact of such acceleration and each other holder shall, without limiting any other rights hereunder, (A) have the right for thirty (30) days after such notice from the Company to accelerate its own Notes based on the Event or Events of Default on which such acceleration was based (regardless of whether such Event or Events of Default are then continuing), unless at the time there are no outstanding Events of Default and any acceleration of any Notes has been rescinded or (B) be deemed automatically (without any action by such holder) to have accelerated its Notes if such holder has not received such notice of an acceleration from the Company within ten (10) business days after such acceleration; provided that any such automatic acceleration may take place regardless of whether the Event or Events of Default on which the initial acceleration was based are then continuing but such automatic acceleration shall not take place if at the time any and all accelerations of any Notes have been rescinded or annulled pursuant to subparagraph (i) above or otherwise; (iii) any holder may at any time rescind and annul any acceleration with respect to its own Notes; and (iv) if any holder of a Note shall give any notice or take any other action with respect to a claimed Event of Default, the Company, forthwith upon receipt of such notice or obtaining knowledge of such other action, will give written notice thereof to all other holders of the Notes then outstanding, describing such notice or other action and the nature of the claimed Event of Default. 6. Subordination. This Note shall be subject to the subordination provisions of the Amended and Restated Affiliate Subordination Agreement dated as of March 29, 2001 among the Company, the holder of this Note, the holders of Notes issued pursuant to the Exchange Agreement and Fleet National Bank. 7. Board Representation. The holders of Notes representing at least sixty-seven percent (67%) of the aggregate principal amount of the outstanding Notes shall be entitled to designate at least four members of the Board of Directors of the Company (the "Series F Directors"), and the Company will use all reasonable efforts to cause the election of such designees, provided that two of the Series F Directors shall be designated by Halpern Denny III, L.P. (each a "Halpern Designee"),one of the Series F Directors shall be designated by BET Associates, L.P (the "BET 6 Designee") and one of the Series F Directors shall be designated by Brookwood New World Investors, LLC (the "Brookwood Designee"). 8. Home Office Payments. As long as the Purchaser or any payee named in this Note delivered to the Purchaser on the Closing Date, or any institutional holder which is a direct or indirect transferee from the Purchaser or such payee, shall be the holder of this Note, the Company will make payments (whether at maturity, upon mandatory or optional prepayment, or otherwise) of principal, interest and premium, if any, (i) by check payable to the order of the holder of any this Note duly mailed or delivered to the Purchaser at such address as the Purchaser or such other holder may designate in writing, or (ii) if requested by the Purchaser or such other holder, by wire transfer to the Purchaser's or such other holder's (or its nominee's) account at any bank or trust company in the United States of America, notwithstanding any contrary provision herein or in any Note with respect to the place of payment. If the Purchaser has provided an address for payments by wire transfer, then the Purchaser shall be deemed to have requested wire transfer payments under the preceding clause (ii). All such payments shall be made in federal or other immediately available funds. 9. Miscellaneous. The Company and all endorsers of this Note hereby waive presentment, demand, protest and notice. The holder of this Note shall, promptly upon full payment by the Company of the principal of and interest on this Note, together with all costs and expenses, if any, due hereon, surrender this Note to the Company for retirement and cancellation, provided, however, that to the extent that the Company makes a payment or payments to the holder of this Note, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, and/or required to be repaid to a trustee, receiver, or any other party under the United States Bankruptcy Code, as amended, any state or federal law, common law, or equitable causes (a "Voidable Transfer") and the holder of this Note is required to repay or restore any such Voidable Transfer or the amount or any portion thereof, or upon the advice of its counsel is advised to do so, then as to any such Voidable Transfer or the amount repaid or restored (including all reasonable costs, expenses and attorneys' fees of the holder of this Note related thereto), the liability of the Company shall automatically be revived, reinstated and restored and shall exist in full force and effect as though such Voidable Transfer had never been made. 10. Consent To Jurisdiction And Service Of Process. The parties hereby consent to the jurisdiction of any state or federal court located within the city, county and state of New York and irrevocably agree that, subject to the election, all actions or proceedings relating to this agreement or the related agreements may be litigated in such courts. The parties accept for themselves and in connection with their properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts and waive any defense of forum non conveniens, and irrevocably agree to be bound by any judgment rendered thereby (subject to any appeal available with respect to such judgment) in connection with this Note. 7 Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of the parties to bring proceedings or obtain or enforce judgments against each other in the courts of any other jurisdiction. 11. Waiver of Jury Trial. The holder and the company hereby waive their respective rights to a jury trial of any claim or cause of action based upon or arising out of this agreement, the related agreements or any dealings among them relating to the subject matter of this transaction. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and this waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this agreement or to the notes or the warrants. In the event of litigation, this agreement may be filed as a written consent to a trial (without a jury) by the court. 8 IN WITNESS WHEREOF, New World Coffee - Manhattan Bagel, Inc. has caused this Note to be dated and to be executed and issued on its behalf by its duly authorized officer. NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By________________________________________ Name: Title: EX-99.8 9 ex99-8.txt AMEND. TO STOCKHOLDERS AG.. Exhibit 99.8 AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT, dated as of March 29, 2001 ( "Amendment"), by and among NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (the "Company"), and the several parties listed on Schedule I hereto (the "Stockholders"), amending the Stockholders Agreement, dated as of January 18, 2001 (the "Original Stockholders Agreement"), among the Company and the Stockholders. WHEREAS, the Company and certain purchasers (the "Series F Purchasers") have entered into a Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001 (the "Second Purchase Agreement"), pursuant to which the Series F Purchasers will purchase from the Company an additional 5,000 shares of Series F Preferred Stock, $.001 par value (the "Series F Preferred Stock"), of the Company and warrants (the "Second Warrants") to purchase shares (the "Second Warrant Shares") of Common Stock of the Company in the form attached to the Second Purchase Agreement; WHEREAS, pursuant to Section 9 of the Original Stockholders Agreement, the Company may amend the Original Stockholders Agreement, in an instrument executed by the majority of voting power of shares of capital stock of the Company owned by the Stockholders, including the holders of 66-2/3% of the outstanding shares of Series F Preferred Stock and the Company; WHEREAS, the holders of (i) more than the majority of voting power of shares of capital stock of the Company owned by the Stockholders and (ii) more than 66-2/3% of the outstanding shares of Series F Preferred Stock have executed this Amendment; WHEREAS, the Company and the Stockholders deem it in their best interests to subject the Second Warrants and the Second Warrant Shares to the provisions of the Stockholders Agreement, and the Company and the Stockholders are willing to amend the Original Stockholders Agreement as provided herein; WHEREAS, as an inducement to the Series F Purchasers to consummate the transactions contemplated by the Second Purchase Agreement, the Company and each of the Stockholders have agreed to enter into this Amendment; and NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: 1. The definition of "Warrants" in the Stockholders Agreement is hereby amended to include the Second Warrants. 2. The definition of "Warrant Shares" in the Stockholders Agreement is hereby amended to include the Second Warrant Shares. 3. The shares of Series F Preferred Stock referred to in the Original Stockholders Agreement shall also include the additional 5,000 shares of Series F Preferred Stock purchased by the Series F Purchasers pursuant to the Second Purchase Agreement. 4. The Stockholders Agreement is hereby amended by deleting Schedule I to the Stockholders Agreement in its entirety and replacing it with Schedule I attached hereto. 5. The Stockholders Agreement, as amended by this Amendment, is hereby in all respects confirmed and each of the parties hereto acknowledges and agrees that it is bound by all the terms and provisions thereof, as amended hereby. 6. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws principles. 7. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as a sealed instrument, all as of the day and year first above written. COMPANY: NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By /s/ Ramin Kamfer ------------------------------ Name: Ramin Kamfer Title: Chief Executive Officer STOCKHOLDERS: HALPERN DENNY III, L.P. By: Halpern Denny & Company V, L.L.C., General Partner By /s/ William J. Nimmo ------------------------------ Name: William J. Nimmo Title: Managing Member BET ASSOCIATES, L.P. By: BRU Holding Co., LLC Its General Partner By: ------------------------------ Name: Title: BROOKWOOD NEW WORLD INVESTORS LLC By: Brookwood New World Co., LLC, Its Managing Member By: ------------------------------ Name: Title: SCHEDULE I STOCKHOLDERS Series F Stockholder Preferred Stock Warrant Halpern Denny III, L.P. 25,000,000 10,605,140 BET Associates, L.P. 8,213.01 3,263,178 Brookwood New World Investors, LLC 8,185.32 3,263,178 -----END PRIVACY-ENHANCED MESSAGE-----