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NEW WORLD RESTAURANT GROUP, INC.
and
BET ASOCIATES, L.P.
STANDSTILL AGREEMENT
JUNE 17, 2003
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TABLE OF CONTENTS
PAGE
1. PAYMENT DEFAULT; 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......................3
3. REPRESENTATIONS AND WARRANTIES BY BET.................................4
3.1 ORGANIZATION AND AUTHORITY OF BET............................4
3.2 AUTHORITY OF BET.............................................4
3.3 NO CONFLICTS; CONSENTS OF THIRD PARTIES......................4
4. FURTHER AGREEMENTS OF THE PARTIES.....................................5
4.1 FEES AND EXPENSES............................................5
4.2 NOTICE OF BREACHES...........................................5
4.3 DEFAULT INTEREST.............................................5
4.4 FURTHER ASSURANCES...........................................5
5. MISCELLANEOUS.........................................................5
5.1 ENTIRE AGREEMENT.............................................5
5.2 HEADINGS.....................................................5
5.3 GOVERNING LAW................................................6
5.4 SEPARABILITY.................................................6
5.5 WAIVER.......................................................6
5.6 ASSIGNMENT...................................................6
5.7 JURISDICTION.................................................6
5.8 NO THIRD PARTY BENEFICIARIES.................................6
5.9 COUNTERPARTS.................................................6
STANDSTILL AGREEMENT
June 17, 2003
The parties to this agreement are New World Restaurant Group, Inc., a
Delaware corporation (the "Company"), and BET Associates, L.P., a Delaware
limited partnership ("BET").
RECITALS
On March 30, 2002, the Company entered into a Loan and Security
Agreement (the "Loan and Security Agreement") with BET, which provides for a
$7.5 million revolving loan facility. The facility is secured by substantially
all of the Company's assets. The facility was to expire on March 31, 2003. In
February 2003, the Company and BET executed an amendment to the facility to
extend the maturity of the facility to June 1, 2003. The Company has not repaid
the facility and is currently in default of the Loan and Security Agreement.
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 the Company is in 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.
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").
The Company does not want BET to take any action to enforce any of its
rights and remedies against the Company or the Subsidiary Guarantors, either
directly or indirectly by permitting the Trustee to exercise any rights under
the Indenture, for a specified period of time so that the Company can continue
its efforts to complete the Refinancing, and BET is willing not to take any such
action against the Company or the Subsidiary Guarantors in exchange for
$25,000.00.
Accordingly, it is agreed as follows:
1. PAYMENT DEFAULT; WARRANT ISSUANCE.
(a) Notwithstanding anything to the contrary in the Loan Documents
(as defined in the Loan and Security Agreement), BET shall not take any
Enforcement Action (as hereinafter defined) with respect to the Loan Documents
until the earliest of (i) July 15, 2003, (ii) the commencement of a Proceeding
(as hereinafter defined) other than by BET in violation of this Agreement, (iii)
any breach of this Agreement by the Company, (iv) the redemption of all or a
substantial portion of the Existing Notes (as defined in the IRN Standstill
Agreement (as hereinafter defined)), (v) the expiration or termination of the
"Standstill Period" as such term is defined in the IRN Standstill Agreement, and
(vi) the consummation of the Refinancing.
(b) "Enforcement Action" shall mean (i) to ▇▇▇ for payment of the
amounts outstanding under the Loan and Security Agreement, or to initiate or
participate with others in any suit, action or proceeding against the Company or
any Subsidiary Guarantor, to (A) enforce payment of or to collect the whole or
any part of the indebtedness represented by the Loan and Security Agreement or
(B) commence judicial enforcement of any of the rights and remedies under the
Loan Documents or applicable law with respect to the indebtedness represented by
the Loan and Security Agreement, (iii) to take any action under the provisions
of any state or federal law, including, without limitation, the Uniform
Commercial Code or Chapter 11 of Title 11 of the United States Code, as amended
from time to time and any successor statute and all rules and regulations
promulgated thereunder (the "Bankruptcy Code"), or under any contract or
agreement, to enforce, foreclose upon, take possession of or sell any property
or assets of the Company or any Subsidiary Guarantor or (iv) permit the Trustee
to (A) enforce payment of or to collect the whole or any part of the
indebtedness represented by the Existing Notes or (B) commence judicial
enforcement of any of the rights and remedies under the Existing Notes, the
Indenture or any Collateral Agreement or applicable law with respect to the
indebtedness represented by the Existing Notes, (iii) to take any action under
the provisions of any state or federal law, including, without limitation, the
Uniform Commercial Code or the Bankruptcy Code, or under any contract or
agreement, to enforce, foreclose upon, take possession of or sell any property
or assets of the Company or any Subsidiary Guarantor.
(c) "Proceeding" shall mean 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.
(d) Upon execution of this Agreement, the Company shall pay to BET
or its designee by wire transfer of immediately available funds an amount equal
to $25,000.00.
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(e) "IRN Standstill Agreement" shall mean that certain Standstill
Agreement of even date herewith among the Company and the holders of the
Company's senior secured increasing rate notes due 2003.
2. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to BET 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, 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 lease, agreement, commitment or other
instrument, or any order, judgment or decree, to which the Company is a party or
by which it is bound; (iii) constitute a violation by the Company of any law,
regulation, order, writ, judgment, injunction or decree applicable to it; 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.
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(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.
3. REPRESENTATIONS AND WARRANTIES BY BET. BET represents and warrants
to the Company as follows:
3.1 ORGANIZATION AND AUTHORITY OF BET. BET is a limited partnership
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.
3.2 AUTHORITY OF BET. BET has all necessary limited partnership
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 BET and the
consummation by BET of the transactions contemplated by this Agreement have been
duly and validly authorized by all necessary limited partnership action on the
part of BET, and no other limited partnership proceedings on the part of BET 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 BET 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 BET, enforceable against
BET 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
BET and the consummation of the transactions contemplated by this Agreement will
not (i) conflict with the limited partnership agreement of BET; (ii) conflict
with, or result in the breach or termination of, or constitute a default under
any lease, agreement, commitment or other instrument, or any order, judgment or
decree, to which BET, is a party or by which it is bound; or (iii) constitute a
violation by BET 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 BET does not,
and the performance of this Agreement by BET and the consummation by BET 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.
4. FURTHER AGREEMENTS OF THE PARTIES.
4.1 FEES AND EXPENSES. The Company shall be responsible for and
reimburse BET for all of the fees and expenses, in an aggregate amount not in
excess of $5,000, incurred by BET, including, without limitation, the fees and
expenses of counsel to BET, in connection with the negotiation, drafting and
preparation of this Agreement.
4.2 NOTICE OF BREACHES. The Company shall immediately notify BET of
any Default (as defined in the Loan and Security Agreement) or Event of Default
(as defined in the Loan and Security Agreement) after the Company has actual
knowledge of any event or condition that constitutes a Default or an Event of
Default.
4.3 DEFAULT INTEREST. The Company acknowledges that, in accordance
with Section 2.6 of the Loan and Security Agreement, all Obligations (as defined
in the Loan and Security Agreement) that have been charged to the Loan Account
(as defined in the Loan and Security Agreement) since June 1, 2003 shall bear
interest on the Daily Balance (as defined in the Loan and Security Agreement)
thereof at a per annum rate equal to fifteen percent (15%).
4.4 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 request to carry out the transactions contemplated by this
Agreement.
5. Miscellaneous.
5.1 ENTIRE AGREEMENT. This Agreement 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, there are no representations or warranties by any party in
connection with the transactions contemplated by this Agreement.
5.2 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.
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5.3 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.
5.4 SEPARABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
5.5 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.
5.6 ASSIGNMENT. No party may assign any of its rights or delegate
any of its duties under this Agreement without the consent of the other parties.
5.7 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.
5.8 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.
5.9 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.
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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: Chief Executive Officer
BET ASSOCIATES, L.P.
By: _______________________
Name:
Title:
