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: __________
No. of Shares Subject to Warrant: ***__________***
WARRANT TO PURCHASE COMMON STOCK
OF
NEW WORLD COFFEE RESTAURANT GROUP, INC.
This is to certify that, for value received, ________________ (the "Holder") is
entitled to purchase, subject to the provisions of this Warrant, from NEW WORLD
RESTAURANT GROUP, INC., a Delaware corporation (formerly known as New World
Coffee-Manhattan Bagel, Inc.) (the "Company"), ____________ 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 June 19, 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,
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.
2
(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, ASSIGNENT 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
3
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 or 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
4
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 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.
(4) 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.
(5) On June 30, 2002, the number of shares specified in this Warrant shall
be increased by 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, X + the Existing Warrant
Shares which could be purchased hereunder or
have already been purchased hereunder
immediately after the issuance of the
Jefferies Warrants (the "Existing Warrant
Shares")
-------------------------------------------- = --------------------------
the Fully-Diluted Common Stock of the the Fully-Diluted Common
Company immediately prior to the issuance Stock of the Company
of the Jefferies Warrants (but excluding immediately after the
5,369,084 shares) issuance of the Jefferies
Warrants
In addition, on June 30, 2002, if Additional Jefferies Warrants have been
issued prior to such date: (i) the number of Additional Warrant Shares (where X
is the number of Additional Warrant Shares) shall be calculated in accordance
with the following equation for each such issuance and (ii) the number of shares
specified in this Warrant
5
shall be further increased by the cumulative amount of Additional Warrant Shares
calculated pursuant to clause (i).
the number of shares of Common Stock, X + the Existing Warrant Shares
which could be purchased hereunder or
have already been purchased hereunder
immediately after the issuance the
Additional Jefferies Warrants (the
"Existing Warrant Shares")
--------------------------------- = --------------------------------
the Fully-Diluted Common Stock of the Fully-Diluted Common Stock
the Company immediately prior to the of the Company immediately after
issuance of the Additional Jefferies the issuance of the Additional
Warrants Jefferies Warrants (including
any additional shares of Common
Stock issuable pursuant to the
terms of other warrants of the
Company similar to this Warrant)
On any date after June 30, 2002, if any Additional Jefferies Warrants (as
defined below) are issued, the number of shares 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, X + the Existing Warrant Shares
which could be purchased hereunder or
have already been purchased hereunder
immediately after the issuance the
Additional Jefferies Warrants (the
"Existing Warrant Shares")
--------------------------------- = --------------------------------
the Fully-Diluted Common Stock of the the Fully-Diluted Common Stock
Company immediately prior to the of the Company immediately after
issuance of the Additional Jefferies the issuance of the Additional
Warrants Jefferies Warrants (including
the Additional Warrant Shares
and any Common Stock issuable
pursuant to the terms of other
warrants of the Company similar
to this Warrant)
Notwithstanding the foregoing, in the event that any shares of Series F
Preferred Stock of the Corporation are redeemed as of the date of the applicable
issuance of Additional Jefferies Warrants (other than through the issuance of
the Notes (as provided in the Certificate of Designation) if such Notes have not
been paid in full), then the Additional Warrant Shares derived on that date from
the equation above shall be reduced to an amount equal to the product of (x) the
Additional Warrant Shares multiplied by (y) the quotient of (i) the number of
shares of Series F Preferred Stock outstanding as of that date divided by (ii)
the number of shares of Series F Preferred Stock outstanding as of June 30,
2001.
For purposes of this subsection (5), the "Fully-Diluted Common Stock of the
Company" shall include all outstanding shares of Common Stock, and all shares of
6
Common Stock issuable pursuant to all outstanding options, warrants or
convertible securities (including convertible debt) of the Company but not
including any warrants or options with a strike price greater than $3.00 per
share. For purposes of this subsection (5), the "Jefferies Warrants" are the
warrants, dated as of June 19, 2001, to purchase Common Stock of the Company
issued to the holders of the Senior Secured Increasing Rate Notes due 2003. The
"Additional Jefferies Warrants" are any additional warrants issued pursuant to
the Jefferies Warrants because the Company has not repaid the Senior Secured
Increasing Rate Notes due 2003. In the event that this Warrant shall be exercise
in full prior to June 30, 2002 or any date thereafter in which Additional
Jefferies Warrants are issued, a new Warrant representing the amount of the
adjustment pursuant to this subsection (5) shall be issued upon the occurrence
of such adjustment and such Warrant shall be substantially in the form of this
Warrant. The preceding provision shall survive the exercise of this Warrant.
(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 of 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 the Holder provides the Company with an opinion of counsel
satisfactory to the Company that this Warrant or the Warrant Shares or such
other
7
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) REGISTRATION RIGHTS AGREEMENT. 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 RESTAURANT GROUP, INC.
By:
-------------------------------
Xxxxxxx X. Xxxx
Chief Executive Officer
PURCHASE FORM
Dated: _____________, ______
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: ___________, _______
Signature: _______________________________________________________________
