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, XXXXXXX XXXXX 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 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 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 had they been
purchased immediately before such reorganization, reclassification,
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 Fully-Diluted Common Stock of the
the Company immediately prior to Company immediately after such Dilution
such Dilution Event 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 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 Xxxxxxx
Xxxxx III, L.P. ("Xxxxxxx Xxxxx"), 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 Xxxxxxx
Xxxxx, 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
Xxxxxxx Xxxxx, (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 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 Xxxxxxx Xxxxx 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 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.
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/ Xxxxx Xxxxxx
----------------
Xxxxx Xxxxxx, Chief Executive
Officer
Attest: /s/ Xxxxxx Xxxxxx, Secretary
-----------------
Dated: Xxxxx 00, 0000
XXXXXXXX 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
