[EXECUTION COPY]
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NEW WORLD RESTAURANT GROUP, INC.
STANDSTILL AGREEMENT
June 17, 2003
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TABLE OF CONTENTS
PAGE
1. STANDSTILL; WARRANT ISSUANCE..........................................2
2. REPRESENTATIONS AND WARRANTIES BY THE COMPANY.........................3
2.1 ORGANIZATION AND AUTHORITY OF THE COMPANY....................3
2.2 AUTHORITY OF THE COMPANY.....................................3
2.3 NO CONFLICTS; CONSENTS OF THIRD PARTIES......................4
2.4 CAPITALIZATION...............................................4
2.5 NO OTHER DEFAULTS............................................4
2.6 ISSUANCE OF ADDITIONAL WARRANTS..............................4
2.7 EXERCISE OF WARRANTS.........................................4
2.8 RESERVATION OF COMMON STOCK..................................4
3. REPRESENTATIONS AND WARRANTIES BY THE IRN HOLDERS.....................6
3.1 ORGANIZATION AND AUTHORITY OF SUCH IRN HOLDER................6
3.2 AUTHORITY OF SUCH IRN HOLDER.................................6
3.3 NO CONFLICTS; CONSENTS OF THIRD PARTIES......................6
3.4 OWNERSHIP....................................................7
4. FURTHER AGREEMENTS OF THE PARTIES.....................................7
4.1 TRANSFER OF EXISTING NOTES...................................7
4.2 LIMITED RELEASE..............................................7
4.3 ACCRUED INTEREST; INTEREST RATE; PRINCIPAL AMOUNT...........10
4.4 INTEREST THROUGH JULY 15, 2003..............................11
4.5 CERTAIN MATTERS RELATING TO THE WARRANTS....................11
4.6 FEES AND EXPENSES...........................................11
4.7 FURTHER ASSURANCES..........................................11
4.8 INDENTURE IN FULL FORCE AND EFFECT; NO WAIVER...............11
4.9 ISSUANCE OF WARRANTS........................................11
4.10 OTHER HOLDERS...............................................11
4.11 OTHER TRANSACTIONS..........................................11
5. CONDITIONS...........................................................12
6. MISCELLANEOUS........................................................12
6.1 ENTIRE AGREEMENT............................................12
6.2 HEADINGS....................................................12
6.3 GOVERNING LAW...............................................12
6.4 SEPARABILITY................................................12
6.5 WAIVER......................................................13
6.6 ASSIGNMENT..................................................13
6.7 JURISDICTION................................................13
6.8 NO THIRD PARTY BENEFICIARIES................................13
6.9 COUNTERPARTS................................................13
STANDSTILL AGREEMENT
STANDSTILL AGREEMENT, dated as of June 17, 2003, among New World Restaurant
Group, Inc., a Delaware corporation (the "COMPANY"), Xxxxx E & Xxxxx S Toll
Foundation ("BET FOUNDATION"), Xxxxx X. Toll ("TOLL"), BET Associates, L.P.
("BET ASSOCIATES"), Xxxxx X. Toll Family Trust ("TOLL TRUST"), Xxxxx'x Cove
Special Credits Master Fund, Inc. ("SCSCMF"), Xxxxx'x Cove Special Credits Fund
I, L.P. ("SCSCF"), GSC Capital ("GSC"), Royal Bank of Canada ("RBC"), Farallon
Capital Partners, L.P., Farallon Capital Institutional Partners, L.P., Farallon
Capital Institutional Partners II, L.P., Farallon Capital Institutional Partners
III, L.P., Tinicum Partners, L.P. and Farallon Capital Offshore Investors, Inc.
(collectively, "FARALLON"), and such other holders of the Existing Notes (as
defined below) that execute a signature page to this Agreement (collectively
with BET Foundation, Toll, BET Associates, Toll Trust, SCSCMF, SCSCF, GSC, RBC
and Farallon, the "IRN HOLDERS").
RECITALS
A. The Company called its senior secured increasing rate notes due 2003 (the
"EXISTING NOTES") for redemption on June 10, 2003. The Company has not redeemed
the Existing Notes, and as a result the Company is in payment default of the
Notes and the Indenture dated as of June 19, 2001, as supplemented (the
"INDENTURE"), by and among the Company, the subsidiary guarantors named therein
(the "SUBSIDIARY GUARANTORS") and The Bank of New York (as successor in interest
to the corporate trust business of United States Trust Company of New York), as
trustee (the "TRUSTEE"), pursuant to which the Existing Notes were issued.
B. Each of the IRN Holders holds Existing Notes having an aggregate
principal amount set forth opposite such IRN Holder's name on SCHEDULE 3.4
hereof.
C. The Company is seeking to refinance its Existing Notes and, in connection
therewith, is engaged in negotiations with respect to (i) an offering pursuant
to Rule 144A promulgated under the Securities Act of 1933, as amended, of $160.0
million of senior secured notes due 2008 and (ii) a new senior revolving credit
facility secured by substantially all of the assets of the Company and its
subsidiaries, other than certain inactive subsidiaries (the "REFINANCING").
D. The Company does not want any of the IRN Holders to take any action to
enforce any of its rights and remedies in respect of the Existing Notes against
the Company, either directly or indirectly by so instructing the Trustee, for a
specified period of time so that the Company can continue its efforts to
complete the Refinancing, and the IRN Holders are willing not to take any such
action against the Company for a specified period of time in respect of the
Violations (as defined below) in exchange for the issuance to such IRN Holders
of Additional Warrants (as defined below) and additional interest pursuant to
Section 4.4 hereof.
AGREEMENT
In consideration of the premises and the mutual covenants and the agreements
herein set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. STANDSTILL; WARRANT ISSUANCE.
(a) STANDSTILL. Subject to the terms and conditions of this Agreement,
notwithstanding any provision of the Existing Notes, the Indenture or the
Collateral Agreements (as defined in the Indenture), each of the IRN Holders
hereby agrees during the Standstill Period, not to exercise any of the their
rights or remedies under the Existing Notes or the Indenture with respect to the
Violations; PROVIDED, HOWEVER, that nothing in this Agreement shall be deemed to
be a waiver of any rights or remedies relating to any breach, default, event of
default, Default (as defined in the Indenture) or Event of Default (as defined
in the Indenture) under the Indenture, the Existing Notes or any of the
Collateral Agreements or under any other agreement or document, other than the
Violations. For the avoidance of doubt, the failure to pay interest on the
Existing Notes on July 15, 2003 will be a Default and Event of Default.
(b) DEFINITIONS. For purposes of this Agreement, the following terms
have the following meanings:
(i) "STANDSTILL PERIOD" means the period from the date of this
Agreement, through the earliest to occur of (A) July 15, 2003, (B)
immediately prior to the date on which a Proceeding (as defined below)
with respect to the Company or any of its subsidiaries is commenced,
other than by an IRN Holder in violation of this Agreement, (C) the
date on which any Default or Event of Default, other than the
Violations, shall occur, and (D) the date on which the Company or any
of its subsidiaries breaches any provision of this Agreement, the
Warrant Agreement (as defined below), the warrants issued under the
Warrant Agreement prior to the date of this Agreement (the "EXISTING
WARRANTS", and together with the Additional Warrants, the "WARRANTS")
or the Additional Warrants.
(ii) "PROCEEDING" means any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of
a custodian, receiver, trustee or other officer with similar powers or
any other proceeding for the liquidation, dissolution or other winding
up of a person.
(iii) "VIOLATIONS" means each of the following, to the extent they
have occurred prior to the date of this Agreement, (A) the Defaults and
Events of Default under the Indenture set forth on SCHEDULE 1(b) hereof
(the "SCHEDULE OF DEFAULTS"), (B) the Company's failure to pay interest
on the Existing Notes on June 15, 2003, and (C) the breaches, defaults,
events of default, Defaults and Events of Default under the Indenture,
the Existing Notes, any Collateral Agreements, the Warrant Agreement,
the Warrants or under any agreement or document of the Company relating
to indebtedness of the Company or any of its subsidiaries resulting
from or triggered by, any of the matters or items referred to in
clauses (A) or (B) above.
(c) WARRANT ISSUANCE. In consideration of the agreements by the IRN
Holders in this Agreement, simultaneously with the execution of this Agreement,
the Company shall issue to each IRN Holder additional warrants under the Warrant
Agreement (the "ADDITIONAL WARRANTS") to purchase an aggregate number of shares
of Common Stock equal to the product of (i)
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11,309,994, multiplied by (ii) such IRN Holders' Warrant Percentage (as defined
below). The Company and the IRN Holders agree that each IRN Holder shall receive
Additional Warrants under this Section 1(c) to purchase an aggregate number of
shares of Common Stock as set forth opposite such IRN Holder's name on SCHEDULE
1(c) hereof.
For purposes of this Agreement
(i) "REQUIRED PERCENTAGE" means as of any date, the sum of (A)
31%, plus (B) such additional percentage of Common Stock, if any,
required to be issued pursuant to Section 4.28(c) of the Indenture as
of such date. For the avoidance of doubt, the Required Percentage as of
the date of this Agreement is 31%.
(ii) "FULLY-DILUTED SHARES OF COMMON STOCK" means, as of the time
of determination, all issued and outstanding shares of Common Stock and
all shares of Common Stock issuable upon conversion or exercise of any
rights, options, warrants or other securities convertible into or
exercisable for shares of Common Stock, including, without limitation,
convertible preferred stock of the Company, if any, and the Warrants,
in each case, taking into account all anti-dilution provisions of such
rights, options, warrants and securities.
(iii) "WARRANT PERCENTAGE" for an IRN Holder is the percentage
obtained by dividing (A) the aggregate principal amount of Existing
Notes held by such IRN Holder, by (B) the aggregate principal amount of
all outstanding Existing Notes (not including any Existing Notes held
by the Company or its subsidiaries, if any).
2. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents and
warrants to the IRN Holders as follows:
2.1 ORGANIZATION AND AUTHORITY OF THE COMPANY. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the full power, right and authority to enter into and
perform this Agreement in accordance with its terms and to own, lease and
operate its properties as it now does and to carry on its business as it is
presently being conducted.
2.2 AUTHORITY OF THE COMPANY. The Company has all necessary corporate power
and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate
action on the part of the Company, and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated by this Agreement. This Agreement has been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by each of the other
parties to this Agreement, constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by (i) applicable bankruptcy,
insolvency,
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fraudulent conveyance, reorganization, moratorium and other laws of general
application affecting the enforcement of creditors' rights generally now
or hereafter in effect and (ii) general principles of equity, regardless of
whether asserted in a proceeding in equity or at law.
2.3 NO CONFLICTS; CONSENTS OF THIRD PARTIES.
(a) The execution, delivery and performance of this Agreement by the Company
and the consummation of the transactions contemplated by this Agreement will not
(i) conflict with the certificate of incorporation or by-laws of the Company;
(ii) conflict with, or result in the breach or termination of, or constitute a
default under any material lease, agreement, commitment or other instrument, or
any material order, judgment or decree, to which the Company is a party or by
which the Company, any of its subsidiaries or any of their respective assets or
properties is bound or affected; (iii) constitute a breach or violation of any
law, regulation, order, writ, judgment, injunction or decree applicable to the
Company, any of its subsidiaries or any of their respective assets or
properties; or (iv) result in the creation of any claim, lien, security
interest, charge or encumbrance upon any of the capital stock of the Company or
upon any assets of the Company or any of its subsidiaries.
(b) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement will not, require any
consent, approval, authorization of, or declaration or filing with any
governmental body, court or other person or entity.
2.4 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 150,000,000
shares of Common Stock and 2,000,000 shares of preferred stock, par value $0.001
per share. As of June 15, 2003, (i) 51,016,857 shares of Common Stock were
issued and outstanding, (ii) no shares of Common Stock were held in the treasury
of the Company, (iii) 94,349.053 shares of Series F Preferred Stock were issued
and outstanding (including 16,093.883 shares representing accrued and unpaid
dividends due on outstanding shares of Series F Preferred Stock), (iv) no shares
of Series F Preferred Stock were held in the treasury of the Company, (v) 25,000
shares of Series D Preferred Stock of the Company, par value $0.001 per share,
were designated, (vi) no shares of Series D Preferred Stock were issued and
outstanding, (vii) 500,000 shares of Series C Convertible Preferred Stock of the
Company, par value $0.001 per share, were designated, (viii) no shares of Series
C Convertible Preferred Stock were issued and outstanding, (ix) 225 shares of
Series B Convertible Preferred Stock of the Company, par value $0.001 per share,
were designated, (x) no shares of Series B Convertible Preferred Stock were
issued and outstanding, (xi) 400 shares of Series A Convertible Preferred Stock
of the Company, par value $0.001 per share, were designated, (xii) no shares of
Series A Convertible Preferred Stock were issued and outstanding, (xiii)
5,266,442 shares of Common Stock were reserved for issuance pursuant to
outstanding options, and (xiv) 58,133,784 shares of Common Stock were reserved
for issuance pursuant to outstanding warrants. All of the issued and outstanding
shares of capital stock of the Company are duly authorized, validly issued,
fully paid and non-assessable.
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(b) SCHEDULE 2.4(b) sets forth a true and complete list of each current or
former employee, officer, director or consultant of the Company or any of its
subsidiaries who holds an option ("OPTIONS") to purchase Common Stock as of June
15, 2003, together with the number of shares of Common Stock subject to such
option, the date of grant of such Option, the exercise price of such Option, the
expiration date of such Option, the vesting schedule for such Option.
(c) SCHEDULE 2.4(c) sets forth a true and complete list of all warrants,
rights and other securities convertible into or exchangeable or exercisable for,
Common Stock (other than Options) as of June 15, 2003, together with the number
of shares of Common Stock subject to such warrant, right or security, the date
of grant of such warrant, right or security, the exercise or conversion price of
such warrant, right or security and the expiration date of such warrant, right
or security.
(d) Except as set forth on SCHEDULE 2.4(b), 2.4(c) or 2.4(d) and as
contemplated by this Agreement, there are no securities, Options, warrants,
calls, rights, commitments, agreements, arrangements or preemptive rights
relating to the issued or unissued capital stock of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
transfer, deliver or sell, or cause to be issued, transferred, delivered or
sold, any shares of capital stock of, or any securities directly or indirectly
convertible into or exercisable or exchangeable for any shares of capital stock
of, the Company or any of its subsidiaries.
(e) No holder of any securities of the Company is entitled to any
anti-dilution or similar protections or rights, except with respect to the
securities set forth on SCHEDULE 2.4(e).
(f) The sum of (i) the 11,309,994 shares of Common Stock that may be
purchased pursuant to the Additional Warrants issued pursuant to Section 1(c),
plus (ii) all of the shares of Common Stock that may be purchased pursuant to
all of the Existing Warrants, represents 31% of the Fully-Diluted Shares of
Common Stock of the Company as of the date of this Agreement.
2.5 NO OTHER DEFAULTS. Except for the Violations, the Company is not in
breach of or default under, and no Default, event of default or Event of Default
exists under, the Indenture, the Existing Notes, the Collateral Agreements, the
Warrant Agreement, the Warrants or any other agreement or document of the
Company relating to indebtedness of the Company or any of its subsidiaries.
2.6 ISSUANCE OF ADDITIONAL WARRANTS. The Additional Warrants issued to the
IRN Holders pursuant to this Agreement will have the terms and provisions set
forth in the Warrant Agreement. Upon delivery to the IRN Holders of the warrant
certificates representing the Additional Warrants for the issuance, sale,
transfer, assignment, conveyance and delivery to the IRN Holders hereunder, the
IRN Holders will become the sole record owners of such Additional Warrants and
good and marketable title to such Additional Warrants will pass to the IRN
Holders, free and clear of any liens, claims, encumbrances, security interests,
taxes, options, charges and transfer restrictions of any kind, except for those
created by the Warrant Agreement and applicable securities laws.
2.7 EXERCISE OF WARRANTS. Upon the exercise of the Warrants in accordance
with their
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terms, the person or entity exercising such Warrants will become the
sole record owner of the shares of Common Stock issuable upon such exercise and
good and marketable title to such shares of Common Stock will pass to the person
or entity exercising such Warrant, free and clear of any liens, claims,
encumbrances, security interests, taxes, options, charges and transfer
restrictions of any kind, except for those created by applicable securities
laws, and such shares of Common Stock will be duly authorized, validly issued,
fully paid and nonassessable.
2.8 RESERVATION OF COMMON STOCK. The Company has a sufficient number of
authorized but unissued shares of Common Stock, free from preemptive rights, so
that the Company will at all times have a sufficient number of authorized but
unissued shares of Common Stock to issue upon the exercise in full of all of the
Existing Warrants and the Additional Warrants to be issued under Section 1(c) of
this Agreement.
3. REPRESENTATIONS AND WARRANTIES BY THE IRN HOLDERS. Each of the IRN Holders
severally and not jointly, with respect to itself only, represents and warrants
to the Company as follows:
3.1 ORGANIZATION AND AUTHORITY OF SUCH IRN HOLDER. Such IRN Holder is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation. Such IRN Holder has the full power, right and
authority to enter into and perform this Agreement in accordance with its terms.
3.2 AUTHORITY OF SUCH IRN HOLDER. Such IRN Holder has all necessary power
and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by such IRN
Holder and the consummation by such IRN Holder of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary action
on the part of such IRN Holder, and no other proceedings on the part thereof are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by such IRN Holder and, assuming the due authorization,
execution and delivery of this Agreement by the Company, constitutes a legal,
valid and binding obligation of such IRN Holder, enforceable against such IRN
Holder in accordance with its terms, except as enforceability may be limited by
(i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws of general application affecting the enforcement of
creditors' rights generally now or hereafter in effect and (ii) general
principles of equity, regardless of whether asserted in a proceeding in equity
or at law.
3.3 NO CONFLICTS; CONSENTS OF THIRD PARTIES.
(a) The execution, delivery and performance of this Agreement by such IRN
Holder and the consummation of the transactions contemplated by this Agreement
will not (i) conflict with the constitutive agreements of such IRN Holder; (ii)
conflict with, or result in the breach or termination of, or constitute a
default under any material lease, agreement, commitment or other instrument, or
any material order, judgment or decree, to which such IRN Holder, is a party or
by which it is bound; or (iii) constitute a violation by such IRN Holder of any
law, regulation, order, writ, judgment, injunction or decree applicable to it.
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(b) The execution and delivery of this Agreement by such IRN Holder does
not, and the performance of this Agreement by such IRN Holder and the
consummation by such IRN Holder of the transactions contemplated by this
Agreement will not, require any consent, approval, authorization of, or
declaration or filing with any governmental body, court or other person or
entity.
3.4 OWNERSHIP. Such IRN Holder owns Existing Notes with the aggregate
principal amount set forth opposite its name on SCHEDULE 3.4.
4. FURTHER AGREEMENTS OF THE PARTIES.
4.1 TRANSFER OF EXISTING NOTES. During the Standstill Period, none of the
IRN Holders shall sell, transfer, assign, pledge or otherwise dispose of its
Existing Notes, unless the transferee agrees, in writing, to be bound by the
terms of this Agreement.
4.2 LIMITED RELEASE.
(a) So long as (i) the Company issues Additional Warrants to the IRN Holders
as required by Section 4.5, and (ii) the Company does not breach this Agreement,
each IRN Holder fully and unconditionally releases and discharges the Company
and its subsidiaries from all claims or causes of action, whether known or
unknown, which it ever had or now has relating to the number of warrants to
purchase Common Stock to be issued to it pursuant to the terms of the Warrant
Agreement, dated as of June 19, 2001, as amended between the Company and The
Bank of New York (as successor in interest to the corporate trust business of
United States Trust Company of New York), as warrant agent (the "WARRANT
AGREEMENT"), or any agreement or other document executed in connection
therewith.
(b) With respect to each IRN Holder, so long as such IRN Holder does not
breach this Agreement, the Company fully and unconditionally releases and
discharges such IRN Holder from all claims or causes of action, whether known or
unknown, which it ever had or now has relating to the number of Warrants to
purchase Common Stock to be issued to it pursuant to the terms of the Warrant
Agreement, or any agreement or other document executed in connection therewith.
4.3 ACCRUED INTEREST; INTEREST RATE; PRINCIPAL AMOUNT.
(a) The Company and each of the IRN Holders hereby acknowledges and agrees
that the aggregate amount of accrued and unpaid interest and Additional Interest
(as defined in the Indenture) payable on the Existing Notes as of (a) June 15,
2003 will be an amount equal to $6,650,000.00 (the "JUNE 15 AMOUNT"), and (b)
July 15, 2003, will be an amount equal to (i) $2,216,666.67, plus (ii) the June
15 Amount (if the June 15 Amount is unpaid), plus (iii) interest on the June 15
Amount (if the June 15 Amount is unpaid), from June 15, 2003 to July 15, 2003 in
the amount of $105,291.67.
(b) In addition, the Company and each of the IRN Holders hereby acknowledges
and agrees that as required by the Registration Rights Agreement (the
"REGISTRATION RIGHTS
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AGREEMENT"), dated June 19, 2001 between the Company and Xxxxxxxxx & Company,
Inc., the annual interest rate on the Existing Notes for all purposes of the
Indenture and the Existing Notes is 18%, plus 1% (as required by Section 4(a) of
the Registration Rights Agreement) for an aggregate interest rate of 19% per
annum.
(c) The Company and each of the IRN Holders hereby acknowledges and agrees
that (i) the aggregate principal amount that is due and owing on the Existing
Notes as of the date of this Agreement is $140,000,000 (such amount being the
"OUTSTANDING PRINCIPAL AMOUNT"), and (ii) that the Outstanding Principal Amount
is due and owing by the Company as of the date of this Agreement, without
set-off, counterclaim, defenses or other deduction of any kind.
4.4 INTEREST THROUGH JULY 15, 2003. The Company hereby covenants and agrees
that notwithstanding any provision of this Agreement, the Indenture or the
Existing Notes to the contrary, in the event that the Company shall pay the
redemption price in full for the Existing Notes or otherwise redeem or repay the
Existing Notes prior to July 15, 2003, in addition to the amounts required to be
paid by the Company pursuant to the Indenture and the Existing Notes, the
Company shall be required to pay to the IRN Holders an additional amount in cash
equal to the amount of interest that would have accrued on the Existing Notes
from the actual date of redemption or repayment, through July 15, 2003.
4.5 CERTAIN MATTERS RELATING TO THE WARRANTS.
(a) (i) Subject to the provisions of Section 4.5(a)(ii) below, the Company
hereby covenants and agrees that in the event that on any date during the period
from the date of this Agreement through June 15, 2006, a Warrant Shortfall (as
defined below) shall occur, the Company shall from time to time issue to each
IRN Holder Additional Warrants to purchase an aggregate number of shares of
Common Stock equal to the product of (A) the Per Dollar of Existing Note Amount
(as defined below), multiplied by (B) the aggregate principal amount of Existing
Notes held by such IRN Holder as of such date.
For purposes of this Agreement:
(A) "WARRANT SHORTFALL" means as of any date, that (x) the Required
Share Number (as defined below) as of such date, is greater than (y) the
Aggregate Warrant Share Number (as defined below) as of such date.
(B) "REQUIRED SHARE NUMBER" means as of any date, the Required
Percentage as of such date of the Fully-Diluted Shares of Common Stock of
the Company as of such date.
(C) "AGGREGATE WARRANT SHARE NUMBER" means as of any date, the
aggregate number of shares of Common Stock that may be purchased pursuant to
all Warrants that have ever been issued under the Warrant Agreement (for
purposes of this calculation, including all Warrants that have been
exercised or transferred and whether or not such Warrants are then held by
any IRN Holder).
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(D) "SHORTFALL AMOUNT" means a number of shares of Common Stock equal
to (x) the Required Share Number as of such date, minus (y) the Aggregate
Warrant Share Number as of such date.
(E) "PER DOLLAR OF EXISTING NOTE AMOUNT" means as of any date, (x) the
Shortfall Amount, divided by (y) 140,000,000.
(ii) Notwithstanding the provisions of Section 4.5(a)(i) above, so long as
the Company shall have actually issued all of the Warrants the Company is
required to issue under the Indenture, the Warrant Agreement and this Agreement
as of the date of a Qualified Recapitalization (as defined below), then from and
after the date on which a Qualified Recapitalization shall occur, the Company
shall no longer be required to issue any further Additional Warrants to the IRN
Holders hereunder; PROVIDED, HOWEVER, that notwithstanding the occurrence of a
Qualified Recapitalization, the Company shall be required to issue and deliver
all Warrants to the Warrant Agent (as defined in the Warrant Agreement) in the
manner required by the Warrant Agreement that the Company was required to issue
and deliver on or prior to the date of the Qualified Recapitalization under the
Indenture, the Warrant Agreement or this Agreement. The Company will use its
best efforts to cause the Warrant Agent to transfer the Additional Warrants to
DTC, to cause DTC to transfer the Additional Warrants to its participants and to
otherwise assist the IRN Holders in receiving the Additional Warrants from the
Warrant Agent and DTC.
For purposes of this Agreement, a "QUALIFIED RECAPITALIZATION" means a debt
refinancing and a recapitalization of the equity capital of the Company
consummated on or prior to the "drop-dead" or termination date specified for
such transaction in the definitive documentation for such refinancing and
recapitalization on substantially the following terms (or on such other terms as
IRN Holders holding a majority in principal amount of the Existing Notes held by
the IRN Holders may otherwise agree in their sole discretion):
(i) the Company will issue $160 million aggregate principal amount of
13%, 5 year debt, with no equity component;
(ii) the Company will enter into a $15 million revolving credit
facility on terms and conditions no less favorable to the Company than the
terms and conditions set forth on SCHEDULE 4.5(a);
(iii) certain holders of the Series F Preferred Stock of the Company
will convert all of their shares of Series F Preferred Stock of the Company,
and all of their Common Stock and warrants to purchase Common Stock into
shares of a newly-issued non-interest bearing preferred security of the
Company, having an aggregate face amount of $57 million which is redeemable
by the Company in 5-1/2 years or later;
(iv) the obligations of the Company and New World EnbcDeb Corp. under
the Note Purchase and Security Agreement dated June 19, 2001, as amended, by
and among the Company, New World EnbcDeb Corp. and Xxxxxxxxx & Company, Inc.
and the secured increasing rate notes of New World EnbcDeb Corp.
(approximately $4.5 million)
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will be converted into approximately 5% of the Common Stock;
(v) all remaining holders of Series F Preferred Stock of the Company
will convert all of the remaining shares of Series F Preferred Stock of the
Company (approximately $57 million) into approximately 82% of the Common
Stock; and
(vi) all other Common Stock, options, rights, warrants (including the
Warrants) and equity securities of the Company will represent approximately
13% of the Common Stock. Immediately following the Qualified
Recapitalization, the holders of the Warrants will hold an aggregate number
of shares of Common Stock and/or Warrants to purchase shares of Common Stock
equal to the product of (A) the Required Percentage, multiplied by (B) 13%.
(b) The Company and each of the IRN Holders agrees that nothing in this
Agreement shall be deemed to be a waiver, release, modification or discharge of
the Company's obligations under Section 4.28(c) of the Indenture and that
notwithstanding any provision of this Agreement, the Indenture, the Warrant
Agreement or the Warrants to the contrary, for so long as one or more Existing
Notes remain outstanding, the Company shall be required to issue additional
Warrants to the IRN Holders as provided in such Section 4.28(c) of the
Indenture.
(c) The Company shall reserve and keep available out of its authorized but
unissued shares of Common Stock for issuance upon the exercise in full of all of
the Warrants, free from preemptive rights, such number of shares of Common Stock
for which the Warrants may be from time to time be exercisable; PROVIDED,
HOWEVER, that in the event that the Company shall not have a sufficient number
of authorized and unissued shares of Common Stock reserved for issuance upon the
exercise in full of the Warrants, the Company shall use its best efforts to
promptly obtain the approval of its board of directors and shareholders (and any
other required person or entity) to increase the amount of authorized shares of
Common Stock of the Company such that the Company has a sufficient number of
authorized but unissued shares of Common Stock for issuance upon the exercise in
full of all of the Warrants, free from preemptive rights.
(d) The Company will not, by amendment of its charter documents, or through
reorganization, consolidation, merger, dissolution, issue or sale of securities,
sale or transfer of assets or any other voluntary or involuntary action, (i)
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants or this Agreement to be observed or performed by the Company, (ii)
materially and adversely affect the rights of the IRN Holders in respect of the
Warrants, or (iii) directly or indirectly, create or otherwise cause or suffer
to exist or become effective, any restriction or encumbrance on the ability of
the Company to perform and comply with its obligations under the Warrants. The
Company will at all times in good faith assist in the carrying out of all of the
terms and provisions of the Warrants and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the IRN Holders
under the Warrants.
(e) If and so long as any Common Stock issuable upon the exercise of the
Warrants is listed on any national securities exchange, the Company will, if
permitted by the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of
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Common Stock issuable upon exercise of the Warrants.
4.6 FEES AND EXPENSES. The Company shall be responsible for and reimburse
the IRN Holders for all of the fees and expenses, in an aggregate amount not in
excess of $50,000, incurred by the IRN Holders, including, without limitation,
the fees and expenses of counsel to the holders of a majority of the principal
amount of the Existing Notes, accountants and other advisors, in connection with
the negotiation, drafting and preparation of this Agreement and the performance
of their obligations hereunder, and in connection with any and all financing
alternatives and similar transactions that have been proposed to the Company.
4.7 FURTHER ASSURANCES. At any time and from time to time after the date of
this Agreement, each of the parties shall, without further consideration,
execute and deliver or cause to be executed and delivered to the other parties
such additional instruments, and shall take such other action as the other
parties may reasonably request to carry out the transactions contemplated by
this Agreement.
4.8 INDENTURE IN FULL FORCE AND EFFECT; NO WAIVER. Notwithstanding any other
provision of this Agreement, each party acknowledges and agrees that the
Indenture remains in full force and effect, without waiver or modification, and
shall remain in full force and effect. No provision hereof shall preclude any of
the IRN Holders from exercising any and all rights and/or remedies available to
it under the Existing Notes, the Indenture, the Warrant Agreement, the Warrants
or otherwise from and after the time immediately preceding the commencement of a
Proceeding with respect to the Company or any of its subsidiaries by the
Company, any holder of Existing Notes other than an IRN Holder in violation of
this Agreement or any other person or entity.
4.9 ISSUANCE OF WARRANTS. The Company shall not redeem, retire or repay any
of the Existing Notes unless and until the Company shall have actually issued to
the Warrant Agent in the manner required by the Warrant Agreement all of the
Warrants that the Company was or is required to issue and deliver under the
Indenture, the Warrant Agreement or this Agreement through the date of such
redemption, retirement or repurchase of the Existing Notes. The Company will use
its best efforts to cause the Warrant Agent to transfer the Warrants to DTC, to
cause DTC to transfer the Warrants to its participants and to otherwise assist
the IRN Holders in receiving the Warrants from the Warrant Agent and DTC.
4.10 OTHER HOLDERS. The Company shall promptly hereafter offer to execute
this Agreement with all of the holders of the Company's Existing Notes.
4.11 OTHER TRANSACTIONS. In the event that the Company shall enter into any
transaction with any holder of Existing Notes (each, a "HOLDER") which
transaction contains a term or terms that are more favorable to the Holder than
the terms of this Agreement, the Warrant Agreement or the Warrants, then each
IRN Holder shall have the option (at such IRN Holder's election) to have such
more favorable term or terms apply to, and be incorporated into, the terms of
this Agreement, the Warrants Agreement and the Warrants. The Company shall give
the IRN Holders written notice stating all of the terms and conditions of all
transactions between the Company and a Holder or Holders in writing at least two
business days before entering into or
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consummating any such transaction.
5. CONDITIONS. The provisions of Section 1(a) and 4.2 of this Agreement shall
not be effective unless and until the following conditions shall be satisfied:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. All of
the representations and warranties of the Company in this Agreement shall be
true and correct in all respects and the Company shall have performed and
complied with all of its covenants and other obligations contained in this
Agreement
(b) ADDITIONAL WARRANTS. The Company shall have issued and delivered to
the Warrant Agent in the manner required by the Warrant Agreement, all of
the Additional Warrants that the Company is required to issue to the IRN
Holders on the date of this Agreement.
(c) SECRETARY'S CERTIFICATE. The IRN Holders shall have received a
certificate of the secretary of the Company with respect to (i) the
certificate of formation of the Company, (ii) the bylaws of the Company,
(iii) the resolutions of the board of directors of the Company approving
this Agreement and the other documents to be delivered by the Company under
this Agreement and the performance of the obligations of the Company
hereunder, and (iv) the names and true signatures of the officers of the
Company authorized to sign this Agreement and the other documents to be
delivered by it under the Agreement.
(d) OPINION OF COUNSEL. The IRN Holders shall have received an opinion
of Proskauer Rose LLP, counsel for the Company in form and substance
satisfactory to the IRN Holders.
6. MISCELLANEOUS.
6.1 ENTIRE AGREEMENT. This Agreement, the Warrant Agreement and the Warrants
to be issued hereunder, including the schedules, contains a complete statement
of all the arrangements among the parties with respect to its subject matter,
supersedes any previous agreements among them relating to that subject matter
and cannot be changed or terminated orally. Except as specifically set forth in
this Agreement, the Warrant Agreement and the Warrants, there are no
representations or warranties by any party in connection with the transactions
contemplated by this Agreement.
6.2 HEADINGS. The section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
6.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of New York applicable to agreements made
and to be performed in New York.
6.4 SEPARABILITY. If any provision of this Agreement is invalid or
unenforceable, the
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balance of this Agreement shall remain in effect.
6.5 WAIVER. Any party may waive compliance by any other party with any
provision of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing. No failure or
delay by any party in exercising any right, power or privilege under this
Agreement will operate as a waiver of the right, power or privilege. A single or
partial exercise of any right, power or privilege will not preclude any other or
further exercise of the right, power or privilege or the exercise of any other
right, power or privilege.
6.6 ASSIGNMENT. Except as provided in Section 4.1, no party may assign any
of its rights or delegate any of its duties under this Agreement without the
prior written consent of the other parties.
6.7 JURISDICTION. The courts of the State of New York in New York county and
the United States District Court for the Southern District of New York shall
have exclusive jurisdiction over the parties with respect to any dispute or
controversy among them arising under or in connection with this Agreement and,
by execution and delivery of this Agreement, each of the parties to this
Agreement submits to the jurisdiction of those courts, waives any objection to
such jurisdiction on the grounds of venue or forum non conveniens, the absence
of any personal or subject matter jurisdiction and any similar grounds, consents
to service of process by mail or any other manner permitted by law, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. These consents to jurisdiction shall not be deemed to
confer rights on any person other than the parties to this Agreement.
6.8 NO THIRD PARTY BENEFICIARIES. This Agreement does not create, and shall
not be construed as creating, any rights in favor of any person not a party to
this Agreement.
6.9 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be considered an original and all of which shall be
considered a single instrument.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers or authorized
representatives as of the date first written above.
NEW WORLD RESTAURANT GROUP, INC.
By: _______________________
Name:
Title:
XXXXX E & XXXXX S TOLL FOUNDATION
By: _______________________
Name:
Title:
____________________________
Xxxxx X. Toll
BET ASSOCIATES, L.P.
By:_____________________________________
Name:
Title:
XXXXX X. TOLL FAMILY TRUST
By:_____________________________________
Name:
Title:
14
XXXXX'X COVE SPECIAL CREDITS MASTER FUND, INC.
By: Xxxxx'x Cove Capital Management, LLC, as
investment adviser
By:_______________________________________
Xxxxxx X. Xxxxxxxxx
Managing Member
XXXXX'X COVE SPECIAL CREDITS FUND I, L.P.
By: Xxxxx'x Cove Capital Management, LLC, as
investment adviser
By:_______________________________________
Xxxxxx X. Xxxxxxxxx
Managing Member
15
GSC CAPITAL
By:_______________________________________
Name:
Title:
ROYAL BANK OF CANADA
By: RBC Dominion Securities Corp. as agent
By:_______________________________________
Name:
Title:
16
FARALLON CAPITAL PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS II, L.P.
FARALLON CAPITAL INSTITUTIONAL
PARTNERS III, L.P.
TINICUM PARTNERS, L.P.
By: Farallon Partners, L.L.C.,
their General Partner
By: __________________________________
Name:
Title:
FARALLON CAPITAL OFFSHORE
INVESTORS, INC.
By: Farallon Capital Management, L.L.C.,
its Agent and Attorney-in-Fact
By: ______________________________
Name:
Title:
17
