Exhibit 99.5
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NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
000 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, XX 00000
June 19, 2001
To the Parties Named on Schedule I hereto:
Reference is hereby made to the (i) Series F Preferred Stock and
Warrant Purchase Agreement dated as of January 18, 2001 (as amended, the "First
Series F Purchase Agreement") between the Company and Xxxxxxx Xxxxx III, L.P.
("Xxxxxxx Xxxxx"), (ii) the Second Series F Preferred Stock and Warrant Purchase
Agreement dated as of March 29, 2001 (the "Second Series F Purchase Agreement")
between the Company and Xxxxxxx Xxxxx and (iii) the Exchange Agreement dated as
of January 18, 2001 (as amended, the "Exchange Agreement") among the Company,
Brookwood New World Investors L.L.C. and BET Associates, L.P.
The parties hereto agree to amend and restate Section 2 of the
Exchange Agreement in its entirety as follows:
"WARRANT STEP-UP. If within one year from the date hereof, (i) the
Company has not redeemed the Shares or (ii) the Company has redeemed the
Series F Exchange Shares by the issuance of the Notes (as provided in the
Certificate of Designation) attached hereto as EXHIBIT B (the "Notes") but
has not paid such Notes in full, the Company will issue, on such first
anniversary date and on each June 30 and December 31 following such first
anniversary of the date hereof, to the Stockholders warrants in the form of
EXHIBIT C hereto representing an additional 1.154% of the Fully Diluted
Common Stock of the Company outstanding on such date, which percentage
shall be reduced pro rata based upon the Series F Exchange Shares
theretofore redeemed for cash or the Notes theretofore repaid, as
applicable. For purposes of this Section 9.1(c)(ii), at the time of each
such issuance of Warrants, the number of shares subject to such Warrants
shall be calculated to result in the applicable percentage of Fully Diluted
Common Stock before such issuance of Warrants. For purposes of this Section
2, at the time of each such issuance of the warrants referred to in this
Section 2, the number of shares subject to such warrants shall be
calculated to result in the applicable percentage of Fully Diluted Common
Stock before such issuance of warrants. The issuance of any additional
warrants pursuant to this Section 2 shall be treated as an adjustment to
the purchase price of the Series F Exchange Shares."
The parties hereto agree to amend and restate Section 2.2 of the First
Series F Purchase Agreement and the Second Series F Purchase Agreement in their
entirety as follows:
"WARRANT STEP-UP. If within one year following the Closing Date, (i)
the Company has not redeemed the Shares or (ii) the Company has redeemed
the Shares by the issuance of the Notes (as provided in the Certificate of
Designation) attached hereto as EXHIBIT C (the "Notes") but has not paid
such Notes in full, the Company will issue, on such first anniversary date
and on each June 30 and December 31 following such first anniversary of the
Closing Date, to the Purchaser warrants in the form of EXHIBIT B hereto
representing an additional 0.375% of the Fully Diluted Common Stock of the
Company outstanding on such date for every $5,000,000 of Series F Preferred
Stock purchased by the Purchaser pursuant to this Agreement, which
percentage shall be reduced pro rata based upon Shares theretofore redeemed
for cash or the Notes theretofore repaid, as applicable. For purposes of
this Section 2.2, at the time of each such issuance of Warrants, the number
of shares subject to such Warrants shall be calculated to result in the
applicable percentage of Fully Diluted Common Stock before such issuance of
Warrants. The issuance of any additional warrants pursuant to this Section
2.2 shall be treated as an adjustment to the purchase price of the Shares."
The parties hereto agree to amend Section 7 of the Exchange Agreement
and Section 8 of the First Series F Purchase Agreement and Second Series F
Purchase Agreement by adding a new clause which shall read in its entirety as
follows:
"On or prior to the earlier of October 17, 2001 and a Change of
Control Event (as defined in the Certificate of Designation), the Company
shall file an amendment to its Certificate of Incorporation to increase the
number of shares of authorized shares of Common Stock to at least
125,000,000."
The parties hereto agree that the Warrants issued pursuant to the
Exchange Agreement and the First Series F Purchase Agreement and Second Series F
Purchase Agreement shall be amending and restating Section (f) thereof in its
entirety as follows:
"(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 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 each of June 30, 2002 and any date thereafter in which
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 which could be
purchased hereunder or have
already been purchased
hereunder immediately after the X + the Existing
issuance of the Jefferies Warrant Shares
Warrants or the Additional
Jefferies Warrants, as the case
may be (the "Existing Warrant
Shares")
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the Fully-Diluted the Fully-Diluted
Common Stock of the Company Common Stock of the Company
immediately prior to the immediately after the issuance
issuance of the Jefferies of the Jefferies Warrants or
Warrants or the Additional the Additional Jefferies
Jefferies Warrants, as the case Warrants, as the case may be
may be (but excluding 5,369,084 (including the Additional
shares) Warrant Shares and any
additional shares of Common
Stock issuable pursuant to the
terms of other warrants of the
Company similar to this
Warrant)
provided, however, that in the event that any shares of Series F
Preferred Stock of the Corporation are redeemed (other than through the
issuance of the Notes (as provided in the Certificate of Designation) if
such Notes have not been paid in full) prior to June 30, 2002, then the
Additional Warrant Shares derived 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 June 30, 2002 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 Common Stock issuable pursuant to all outstanding options,
warrants or convertible securities (including convertible debt) of the
Company. For purposes of this subsection (5), "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 exercised 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 or in the
number or kind of securities issuable upon exercise of the Warrants, or
both, as provided in this Section (f), the Company shall (i) promptly file
in the custody of its Secretary or Assistant Secretary a certificate signed
by the Chairman of the Board or the President or a Vice President of the
Company and by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary of the Company, setting forth the facts requiring
such adjustment and the number and kind of securities issuable upon
exercise of each Warrant after such adjustment; and (ii) cause a notice
stating that such adjustment has been effected and stating the Exercise
Price then in effect and the number and kind of securities issuable upon
exercise of each Warrant to be sent to each registered holder of a Warrant.
(8) The Exercise Price and the number of shares issuable upon exercise
of this Warrant shall not be adjusted except in the manner and only upon
the occurrence of the events heretofore specifically referred to in this
Section (f).
(9) The Board of Directors of the Company may, in its sole discretion,
(a) reduce the Exercise Price of each Warrant, (b) increase the number of
shares of Common Stock issuable upon exercise of each Warrant and/or (c)
provide for the issuance of other securities (in addition to the shares of
Common Stock otherwise issuable upon exercise of the Warrant) upon exercise
of each Warrant."
As soon as practicable, the holders of the Warrants shall deliver to
the Company the original Warrants, and the Company shall issue amended and
restated Warrants to reflect the amendment described above; provided, however,
that the amendment described above shall be in full force and effect regardless
of whether an amended and restated Warrant is issued.
The Company shall pay the fees and expenses of the parties hereto
(including without limitation, the fees and expenses of their counsel,
accountants and other advisors) in connection with the negotiation and execution
of this letter agreement and the transactions contemplated by the acquisition by
the Company of the assets of Einstein / Noah Bagel Corp.
and the issuance and sale by the Company of certain senior secured increasing
rate notes to Jefferies & Co.
NEW WORLD COFFEE-MANHATTAN
BAGEL, INC.
By:
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ACKNOWLEDGED AND
AGREED:
XXXXXXX XXXXX III, L.P.
By:
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BROOKWOOD NEW WORLD
INVESTORS L.L.C.
By:
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BET ASSOCIATES, L.P.
By:
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