EXHIBIT 99.6
NOTE
THIS NOTE AND THE OBLIGATIONS OF THE COMPANY ARISING HEREUNDER ARE SUBORDINATED
IN THE MANNER AND TO THE EXTENT SET FORTH IN SECTION 6 HEREOF, AND EACH HOLDER
OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS
THEREOF.
New World Coffee - Manhattan Bagel, Inc.
16% Senior Subordinated Note
Dated:
FOR VALUE RECEIVED, the undersigned New World Coffee -Manhattan Bagel,
Inc., a Delaware Corporation (herein, together with any successor, referred to
as the "Company"), hereby promises to pay to ____________or registered assigns,
the principal sum of ___________ ($_______) on the later of August 11, 2003 and
120 days following the Mandatory Redemption Date, with interest (computed on the
basis of a 360 day year) on the unpaid balance of such principal sum from the
date hereof at the interest rate of 16% per annum, subject to adjustment as
herein provided, payable, in arrears, quarterly on the first day of January,
April, July and October of each year, commencing [___________] (which first
interest payment shall be for the period from and including [__________] through
and including [________], until the entire principal amount hereof shall have
become due and payable, whether at maturity or at a date fixed for prepayment or
by acceleration or declaration or otherwise, and at a rate of 18% per annum (the
"Default Rate") on any overdue installment of principal (including any overdue
prepayment of principal) and (to the extent permitted by law) on any overdue
installment of interest until paid (whether or not any subordination provision
or other circumstance prevents such payment).
This Note is issued pursuant to the Stock and Warrant Purchase Agreement dated
as of August 11, 2000 between the Company and the purchasers named therein (the
"Purchase Agreement") and is one of the "Notes" contemplated thereby.
Capitalized terms and not defined herein shall have the meaning ascribed to such
terms in the Purchase Agreement.
1. Payments
(a) If any payment of interest due hereunder becomes due and payable on a day
which is not a Business Day ("Business Day" means any day, other than a
Saturday, Sunday or legal holiday, on which banks in the location of the offices
of the Company are open for business), the due date thereof shall be the next
preceding day which is a Business Day, and the interest payable on such next
preceding Business Day shall be the interest which would otherwise have been
payable on the due date which was not a Business Day.
(b) Payments of principal and interest shall be made in lawful money of the
United States of America as provided in the Purchase Agreement referred to
below, to the address or account designated by the holder hereof for such
purpose.
(c) All payments of principal and interest with respect to this Note and each of
the other Notes shall be made pro rata among the holders of the Notes in
proportion to the unpaid principal amount and amount of accrued but unpaid
interest, as applicable, with respect to each Note as of the date of each such
payment.
2. Exchange of Notes; Accrued Interest; Cancellation of Surrendered Notes;
Replacement.
(a) At any time at the request of any holder of this Note to the Company at its
offices the Company at its expense (except for any transfer tax or any other tax
arising out of the exchange) will issue and deliver to or upon the order of the
holder in exchange therefor new Notes, in such denomination or denominations as
such holder may request, in aggregate principal amount equal to the unpaid
principal amount of this Note and substantially in the form thereof, dated as of
the date to which interest has been paid on this Note (or, if no interest has
yet been so paid thereon, then dated the date this Note is so surrendered) and
payable to such person or persons or order as may be designated by such holder.
(b) In the event that this Note is surrendered to the Company upon a prepayment
the Company shall pay all accrued and unpaid interest on this Note or such
portion thereof and thereupon interest shall cease to accrue upon that portion
of the principal amount of this Note which was prepaid, and the right to
receive, and any right or obligation to make, any prepayment on such portion of
the principal amount shall terminate all upon the date of such prepayment and
upon presentation and surrender of this Note to the Company.
(c) Upon any prepayment if only a portion of the principal amount of this Note
is prepaid, then this Note shall be surrendered to the Company and the Company
shall simultaneously execute and deliver to or on the order of the holder
thereof, at the expense of the Company, a new Note or Notes in principal amount
equal to the unused or unpaid portion of this Note.
(d) This Note or portions thereof which have been prepaid shall be canceled by
the Company and no Notes shall be issued in lieu of the principal amount
prepaid.
(e) Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note and, in the case of any such loss, theft
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
to the Company (if requested by the Company and unsecured in the case of the
Purchaser or an institutional holder), or in the case of any such mutilation,
upon surrender of this Note (which surrendered Note shall be canceled by the
Company), the Company will issue a new Note of like tenor in lieu of such lost,
stolen, destroyed or mutilated Note as if the lost, stolen, destroyed or
mutilated Note were then surrendered for exchange.
3. Maximum Legal Rate. The Company shall not be obligated to pay and the holder
of this Note shall not collect interest at a rate in excess of the maximum
permitted by law or the maximum that will not subject Payee to any civil or
criminal penalties. If, because of the acceleration of maturity, the payment of
interest in advance, the scheduled increases in the interest rate or any other
reason, the Company is required to pay interest at a rate in excess of such
maximum rate, the rate of interest under such provisions shall immediately and
automatically be reduced to such maximum rate, and any payment made in excess of
such maximum rate, together with interest thereon at the rate provided herein
from the date of such payment, shall be immediately and automatically applied to
the reduction of the unpaid principal balance of this Note as of the date on
which such exceeds the unpaid principal balance, the amount of such excess shall
be refunded by Payee to Company.
4. Protective Rights.
(a) The Company shall not, without the prior written consent of the holder or
holders of Notes representing at least sixty-seven percent (67%) in aggregate
principal amount of the outstanding Notes:
(i) pay or declare any dividend on any type or class of securities, other
than payable to the holders of the Series D Preferred Stock or a
dividend payable in common stock and the issuance of rights under the
Rights Agreement dated June 7, 1999;
(ii) authorize a sale of any substantial portion of the assets of the
Company (other than sales of stores owned by the Company or its
subsidiaries), or a recapitalization or reorganization of the Company
(other than stock splits, combinations and/or dividends);
(iii) take any action that results in the Company and its subsidiaries
incurring, assuming or permitting to exist funded indebtedness, except
as contemplated by the Company and described in the Purchase Agreement
and other than (A) Senior Indebtedness (as hereinafter defined), (B)
$1,000,000 of funded indebtedness and (C) such other funded
indebtedness as is subordinated to the Notes in a manner substantially
comparable to the subordination provisions set forth in Section 6
hereof;
(iv) merge or consolidate with or into any person, or enter into any
agreement to accomplish such merger or consolidation, except as
contemplated by the Company and described in the Purchase Agreement;
(v) effect or allow fundamental change the nature of the Company's business.
5. Defaults.
(a) Any of the following shall constitute an "Event of Default":
(i) The Company defaults in the payment of (A) any part of the principal of any
Note, when the same shall become due and payable, whether at maturity or at
a date fixed for prepayment or by acceleration or otherwise, or (B) the
interest on any Note, when the same shall become due and payable, and such
default in the payment of interest shall have continued for five (5)
Business Days; or
(ii) the Company defaults in the performance of any other agreement or covenant
contained in the Purchase Agreement, and such default shall not have been
remedied within thirty (30) days after written notice thereof shall have
been given to the Company by any holder of this Note (the Company to give
forthwith to all other holders of this Note at the time outstanding written
notice of the receipt of such notice, specifying the default referred to
therein); or
(iii)any material representation or warranty by the Company herein, in the
Purchase Agreement or in any certificate delivered by the Company pursuant
hereto proves to have been incorrect in any material respect when made; or
(iv) the Company or any Subsidiary shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts; or a
receiver or trustee is appointed for the Company or any Subsidiary or for
substantially all of its assets and, if appointed without its consent, such
appointment is not discharged or stayed within sixty (60) days; or
proceedings under any law relating to bankruptcy, insolvency or the
reorganization or relief of debtors are instituted by or against the
Company or any Subsidiary, and, if contested by it, are not dismissed or
stayed within sixty (60) days; or any writ of attachment or execution or
any similar process is issued or levied against the Company or any
Subsidiary or any of its property and is not released, stayed, bonded or
vacated within sixty (60) days after its issue or levy; or the Company or
any Subsidiary takes corporate or limited liability company action in
furtherance of any of the foregoing.
(b) If an Event of Default occurs pursuant to any of clauses (i) through (iii)
of Section 5(a) of this Note then and in each such event and with the
concurrence of holders of 67% of the Notes any holder of this Note (unless all
Events of Default shall theretofore have been waived or remedied) at its option,
by written notice or notices to the Company, may declare this Note to be due and
payable. If an Event of Default occurs pursuant to clause (iv) of Section 5(a)
of this Note, this Note shall automatically and without further action become
due and payable. Upon any such declaration (or as to such clause (v) upon its
occurrence) this Note shall forthwith immediately mature and become due and
payable.
However, the foregoing acceleration rights are subject to the following:
(i) if, at any time after the principal of this Note shall so become due and
payable and prior to the date of maturity stated in this Note, all interest
on this Note (with interest at the rate specified in this Note on any
overdue principal and, if applicable, on any overdue interest) shall be
paid to the holder of this Note by or for the account of the Company, then
the Note holder, by written notice or notices to the Company, may waive
such Event of Default and its consequences and rescind or annul any such
declaration, but no such waiver shall extend to or affect any subsequent
Event of Default or impair any right or remedy resulting therefrom;
(ii) if any holder or holders of Notes which, at the time, holds or hold at
least sixty-seven percent (67%) in aggregate principal amount of the Notes
then outstanding exercises the above rights of acceleration, then the
Company shall notify each other holder of Notes of the fact of such
acceleration and each other holder shall, without limiting any other rights
hereunder, (A) have the right for thirty (30) days after such notice from
the Company to accelerate its own Notes based on the Event or Events of
Default on which such acceleration was based (regardless of whether such
Event or Events of Default are then continuing), unless at the time there
are no outstanding Events of Default and any acceleration of any Notes has
been rescinded or (B) be deemed automatically (without any action by such
holder) to have accelerated its Notes if such holder has not received such
notice of an acceleration from the Company within ten (10) business days
after such acceleration; provided that any such automatic acceleration may
take place regardless of whether the Event or Events of Default on which
the initial acceleration was based are then continuing but such automatic
acceleration shall not take place if at the time any and all accelerations
of any Notes have been rescinded or annulled pursuant to subparagraph (i)
above or otherwise;
(iii)any holder may at any time rescind and annul any acceleration with respect
to its own Notes; and
(iv) if any holder of a Note shall give any notice or take any other action with
respect to a claimed Event of Default, the Company, forthwith upon receipt
of such notice or obtaining knowledge of such other action, will give
written notice thereof to all other holders of the Notes then outstanding,
describing such notice or other action and the nature of the claimed Event
of Default.
6. Subordination
(a) Notwithstanding anything to the contrary expressed or implied in this Note,
the payment of, and any action taken to enforce, this Note is hereby expressly
subordinated in right of payment, and is made subject, to the extent and in the
manner hereinafter set forth, to the prior payment in full in cash of all Senior
Indebtedness (as hereinafter defined), and the Company and each holder of this
Note, by its acceptance hereof, agrees to be bound by the provisions of this
Section 6.
(i) No payment on account on this Note shall be made by or on behalf of the
Company or any of it subsidiaries or other affiliates; provided that the
Company shall be permitted to pay, and the holder of this Note shall be
permitted to receive, regularly scheduled payments of principal and
interest under the terms of this Note as in effect on the date hereof
unless, at the time of any such payment or after giving effect thereto, (A)
a payment default under the Senior Indebtedness shall have occurred and be
continuing or (B) any other event of default under the Senior Indebtedness
shall have occurred and be continuing; provided, however, that such
restriction upon payment pursuant to clause (B) above shall be limited to a
period of 180 days following notice to the holder of this Note of such
Event of Default under the Senior Indebtedness. So long as the Senior
Indebtedness is outstanding, the Company shall not make, or allow or cause
to be made on its behalf, any prepayment (whether by redemption, defeasance
or otherwise) or any principal amount or interest under this Note prior to
the date on which such principal or interest is required to be made under
the terms of this Note as in effect on the date hereof.
(ii) So long as the Senior Indebtedness is outstanding, the holder of this Note
shall not, without the prior written consent of the holders of Senior
Indebtedness or any agent therefor, assert, collect, or enforce all or any
part of this Note or any claims in respect thereof, or take any action to
foreclose upon, take possession of or liquidate or proceed against any
property or assets of the Company or any subsidiary or other affiliate of
the Company, or institute any action or proceeding or otherwise provide for
the payment of this Note or exercise any rights or remedies under this Note
or declare this Note to be due and payable prior to the scheduled maturity
date thereof under the terms of this Note as in effect on the date hereof
or otherwise accelerate the payment of this Note; provided that the
foregoing shall not prevent the holder of Subordinated Debt from
accelerating this Note following the acceleration of any principal payment
due under the Senior Indebtedness.
(iii)Upon any acceleration of the principal amount due on any Senior
Indebtedness or upon any distribution of all or substantially all of the
assets of Company or upon any payment or distribution of assets of Company
of any kind of character, whether in cash, property or securities, to
creditors whether in connection with any dissolution, winding-up, total or
partial liquidation or reorganization of Company whether voluntary of
involuntary or otherwise and whether in bankruptcy, insolvency,
receivership, arrangement or other proceedings, or upon an assignment for
the benefit or creditors, or upon any other marshaling of the assets and
liabilities of Company (each, an "Insolvency Event"), all Senior
Indebtedness shall first be paid in full in cash before the holder of this
Note shall be entitled to receive any payments hereunder; and upon any such
Insolvency Event or similar proceedings, any payment or distribution of
property or assets of Company of any kind or character, whether in cash,
property or securities, to which the holder of this Note, would, except for
the provisions hereof, be entitled, shall be paid or delivered by Company,
or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other person making such payment of distribution, directly to the holders
of Senior Indebtedness pro rata upon the basis of the respective amounts of
Senior Indebtedness held by such holders, to the extent necessary to pay
all Senior Indebtedness in full in cash (after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness) before any payment or distribution is made to the holder of
this Note.
(iv) Upon any such Insolvency Event, any payment or distribution of property or
assets of Company of any kind or character, whether in cash, property or
securities, which shall be received by the holder of this Note before the
entire Senior Indebtedness shall have been paid in full in cash, shall be
held in trust for the benefit of and promptly paid over to the holders of
Senior Indebtedness pro rata as aforesaid, for application to the payment
of Senior Indebtedness remaining unpaid until all Senior Indebtedness shall
have been paid in full in cash, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
(v) Notwithstanding the foregoing provisions of this Note, the holder of this
Note shall be entitled to receive shares of the stock or other securities
of Company issued as part of a reorganization or readjustment of securities
of Company or any other corporation provided for by a plan of
reorganization or readjustment, provided that the terms, rights and
preferences of stock issued in payment of the Note is subordinated at least
to the same extent as this Note to the payment of all Senior Indebtedness
which may at the time be outstanding, and provided further that the rights
of the holders of Senior Indebtedness are not altered by such
reorganization or readjustment.
(b) The foregoing provisions are solely for the purpose of defining the relative
rights of the holder of Senior Indebtedness on the one hand and the holder of
this Note on the other hand, and noting herein shall impair, as between Company
and the holder of this Note, the obligation of Company, to pay to the holder
hereof the principal hereof and interest hereon in accordance with its terms.
The term "Senior Indebtedness" shall mean the principal of, premium, if any,
interest (including, without limitation, all interest on the Senior Indebtedness
accruing after the commencement of any Insolvency Event and any additional
interest that would have accrued but for the commencement of such proceeding
whether or not the claim for such interest is allowed under applicable law) on,
and all other obligations of any type with respect to Indebtedness outstanding
under the Senior Credit Facility in all such cases whether outstanding on the
date hereof or hereinafter incurred; the term "Senior Indebtedness" shall not
include the principal of loans or the amount of letter of credit obligations
under the Senior Credit Facility or any other agreement evidencing Senior
Indebtedness in excess of $20,350,000 at all times prior to the Acquisition of
Xxxxxxxx, and $75,000,000 upon completion of the Acquisition of Xxxxxxxx. The
term "Senior Credit Facility" shall mean the existing Credit Agreement, dated as
of August 31, 1999, with BankBoston, N.A. (the "BankBoston Credit Facility") and
any additional or substitute loan facilities with one or more financial
institutions, provided that the maximum amount of financing the Company may
obtain through any such substitute loan facilities shall not exceed in the
aggregate the then outstanding loan balance on the BankBoston Credit Facility.
7. Board Representation.
The holders of Notes representing at least sixty-seven percent (67%) of
the aggregate principal amount of the outstanding Notes shall be entitled to
designate the minimum number of directors that shall consist of at least
two-sevenths (2/7) of the then existing Board of Directors of the Company, and
the Company will use all reasonable efforts to cause the election of such
designees. If at such time Xxxxxxx Xxxxxxxxxx and/or Xxx Xxxxx are members of
such Board, they will be deemed to be included among such designees.
8. Home Office Payments.
As long as the Purchaser or any payee named in this Note delivered to
the Purchaser on the Closing Date, or any institutional holder which is a direct
or indirect transferee from the Purchaser or such payee, shall be the holder of
this Note, the Company will make payments (whether at maturity, upon mandatory
or optional prepayment, or otherwise) of principal, interest and premium, if
any, (i) by check payable to the order of the holder of any this Note duly
mailed or delivered to the Purchaser at such address as the Purchaser or such
other holder may designate in writing, or (ii) if requested by the Purchaser or
such other holder, by wire transfer to the Purchaser's or such other holder's
(or its nominee's) account at any bank or trust company in the United States of
America, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. If the Purchaser has provided an address for
payments by wire transfer, then the Purchaser shall be deemed to have requested
wire transfer payments under the preceding clause (ii). All such payments shall
be made in federal or other immediately available funds.
9. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE CITY, COUNTY AND STATE OF NEW YORK AND IRREVOCABLY
AGREE THAT, SUBJECT TO THE ELECTION, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT OR THE RELATED AGREEMENTS MAY BE LITIGATED IN SUCH COURTS. THE PARTIES
ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE
ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY (SUBJECT TO ANY APPEAL AVAILABLE WITH RESPECT TO SUCH
JUDGMENT) IN CONNECTION WITH THIS AGREEMENT OR THE NOTES. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE PARTIES TO BRING PROCEEDINGS OR OBTAIN OR ENFORCE
JUDGMENTS AGAINST EACH OTHER IN THE COURTS OF ANY OTHER JURISDICTION.
10. WAIVER OF JURY TRIAL.
THE HOLDER AND THE COMPANY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE RELATED AGREEMENTS OR ANY DEALINGS AMONG THEM RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR TO THE NOTES OR THE WARRANTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
IN WITNESS WHEREOF, New World Coffee - Manhattan Bagel, Inc. has caused
this Note to be dated and to be executed and issued on its behalf by its duly
authorized officer.
NEW WORLD COFFEE -MANHATTAN BAGEL, INC.
By________________________________________
Name:
Title:
