Schedule 13D/A

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WX0DxAt/OZEJNffYOYYaqewHxe3DWOVtEKjuD4P3xaUJGTtADTH41gpRFK57nCQB 2XCCN2L3BkHULjQbEfhwdQ== 0000941302-01-500161.txt : 20010703 0000941302-01-500161.hdr.sgml : 20010703 ACCESSION NUMBER: 0000941302-01-500161 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20010702 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NEW WORLD COFFEE MANHATTAN BAGEL INC CENTRAL INDEX KEY: 0000949373 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133690261 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-55609 FILM NUMBER: 1673697 BUSINESS ADDRESS: STREET 1: 246 INDUSTRIAL WAY WEST STREET 2: C/O NEW WORLD HOLDINGS CITY: EATONTOWN STATE: NJ ZIP: 07724 BUSINESS PHONE: 7325440155 MAIL ADDRESS: STREET 1: 246 INDUSTRIAL WAY WEST STREET 2: C/O NEW WORLD HOLDINGS CITY: EATONTOWN STATE: NJ ZIP: 07724 FORMER COMPANY: FORMER CONFORMED NAME: NEW WORLD COFFEE & BAGELS INC / DATE OF NAME CHANGE: 19981007 FORMER COMPANY: FORMER CONFORMED NAME: NEW WORLD COFFEE INC DATE OF NAME CHANGE: 19950815 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GREENLIGHT CAPITAL LLC CENTRAL INDEX KEY: 0001040272 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133886851 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 420 LEXINGTON AVE SUITE 875 CITY: NEW YORK STATE: NY ZIP: 10170 BUSINESS PHONE: 2129731900 MAIL ADDRESS: STREET 1: 420 LEXINGTON AVENUE STREET 2: SUITE 875 CITY: NEW YORK STATE: NY ZIP: 10170 SC 13D/A 1 nwc13da.htm SCHEDULE 13 D/A Schedule 13D/A SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 13D/A
(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)

(AMENDMENT No. 2)

Under the Securities Exchange Act of 1934

NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
_______________________________________________________________________
(Name of Issuer)

Shares of Common Stock, no par value
_______________________________________________________________________
(Title of Class of Securities)

648904200
_______________________________________________________________________
(CUSIP NUMBER)

Greenlight Capital, L.L.C.
420 Lexington Avenue, Suite 1740
New York, New York 10170
Tel. No.: (212) 973-1900
_______________________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

- with copies to -
Eliot D. Raffkind
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800

June 19, 2001
_______________________________________________________________________
(Date of event which requires filing of this statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g) check the following box [ ]

The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Act"), or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.

CUSIP No. 648904200

13D/A

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Greenlight Capital, L.L.C.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*			(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* AF, WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)			o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
		8	SHARED VOTING POWER 0
		9	SOLE DISPOSITIVE POWER 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
		10	SHARED DISPOSITIVE POWER 0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*			o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 49.8%
14	TYPE OF REPORTING PERSON* OO

*SEE INSTRUCTIONS BEFORE FILLING OUT

CUSIP No. 648904200

13D/A

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) David Einhorn
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*			(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* AF, WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)			o
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
		8	SHARED VOTING POWER 0
		9	SOLE DISPOSITIVE POWER 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
		10	SHARED DISPOSITIVE POWER 0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*			o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 49.8%
14	TYPE OF REPORTING PERSON* IN

*SEE INSTRUCTIONS BEFORE FILLING OUT

CUSIP No. 648904200

13D/A

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Jeffrey A. Keswin
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*			(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* AF, WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)			o
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
		8	SHARED VOTING POWER 0
		9	SOLE DISPOSITIVE POWER 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
		10	SHARED DISPOSITIVE POWER 0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 16,289,023 (includes 16,289,023 shares issuable to affiliates of the reporting person upon exercise of Warrant Agreements with the Issuer)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*			o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 49.8%
14	TYPE OF REPORTING PERSON* IN

*SEE INSTRUCTIONS BEFORE FILLING OUT

CUSIP No. 648904200

13D/A

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Greenlight Capital, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*			(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)			o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 2,947,365 (includes 2,947,365 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
		8	SHARED VOTING POWER 0
		9	SOLE DISPOSITIVE POWER 2,947,365 (includes 2,947,365 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
		10	SHARED DISPOSITIVE POWER 0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,947,365 (includes 2,947,365 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*			o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.2%
14	TYPE OF REPORTING PERSON* PN

*SEE INSTRUCTIONS BEFORE FILLING OUT

CUSIP No. 648904200

13D/A

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Greenlight Capital Qualified, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*			(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)			o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 6,964,721 (includes 6,964,721 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
		8	SHARED VOTING POWER 0
		9	SOLE DISPOSITIVE POWER 6,964,721 (includes 6,964,721 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
		10	SHARED DISPOSITIVE POWER 0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,964,721 (includes 6,964,721 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*			o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 29.8%
14	TYPE OF REPORTING PERSON* PN

*SEE INSTRUCTIONS BEFORE FILLING OUT

CUSIP No. 648904200

13D/A

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Greenlight Capital Offshore, Ltd.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*			(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* AF, WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)			o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 6,376,937 (includes 6,376,937 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
		8	SHARED VOTING POWER 0
		9	SOLE DISPOSITIVE POWER 6,376,937 (includes 6,376,937 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
		10	SHARED DISPOSITIVE POWER 0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,376,937 (includes 6,376,937 shares issuable to the reporting person upon exercise of a Warrant Agreement with the Issuer)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*			o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 27.9%
14	TYPE OF REPORTING PERSON* CO

*SEE INSTRUCTIONS BEFORE FILLING OUT

AMENDMENT NO. 2 TO SCHEDULE 13D

This Amendment No. 2 to Schedule 13D is being filed on behalf of Greenlight Capital, L.L.C., a Delaware limited liability company ("Greenlight"), Greenlight Capital, L.P. ("Greenlight Fund"), of which Greenlight is the general partner, Greenlight Capital Offshore, Ltd. ("Greenlight Offshore"), for whom Greenlight acts as investment advisor, Greenlight Capital Qualified, L.P. ("Greenlight Qualified"), of which Greenlight is the general partner, and Mr. David Einhorn and Mr. Jeffrey A. Keswin, the principals of Greenlight, as an amendment to the statement on Schedule 13D relating to shares of common stock of New World Coffee - Manhattan Bagel, Inc. f/k/a New World Coffee & Bagels, Inc., a Delaware corporation (the "Issuer") as initially filed with the Securities and Exchange Commission (the "Commission") on January 30, 2001 (the "Schedule 13D") and amended by Amendment No. 1 to Schedule 13D ("Schedule 13D Amendment 1") on January 31, 2001.

This Amendment No. 2 to Schedule 13D is being filed to restate Items 3-5.

Item 3.

Source and Amount of Funds

Item 3 of the Schedule 13D is hereby amended and restated in its entirety as follows:

Greenlight has the right to purchase 16,289,023 shares of Common Stock at a price of $.01 per share upon exercise of the Warrants (as defined in Item 4) held by Greenlight Fund, Greenlight Qualified and Greenlight Offshore. The aggregate purchase price of the Common Stock, if the Warrants are exercised in full, is $162,890.23.

On January 17, 2001, Issuer issued warrants to purchase Common Stock in the amount of (i) 831,019 shares to Greenlight Fund, (ii) 1,862,687 shares to Greenlight Qualified, and (iii) 1,548,350 shares to Greenlight Offshore (each, a "First Warrant" and collectively, the "First Warrants"). The First Warrants may be exercised at any time prior to January 17, 2006, and the number of shares of Common Stock stated in the First Warrant may be purchased at an exercise price of $0.01 per share of Common Stock subject to adjustment as provided in the First Warrants. On January 17, 2001 and as consideration for the issuance of the First Warrants, (i) Greenlight Fund invested $1,959,000, (ii) Greenlight Qualified invested $4,391,000, and (iii) Greenlight Offshore invested $3,650,000 in Greenlight New World, L.L.C. ("GNW"). The Issuer is the sole manager of GNW and GNW's sole purpose is to purchase certain bonds (the "Bonds") known as Einstein/Noah Corporation ("Einstein") 7.25% convertible subordinated bonds June 2004.

In connection with an offering of 140,000 Units by the Issuer (each a "Unit"), each Unit consisting of $1,000 principal amount of Senior Secured Increasing Rate Notes due 2003 and one warrant to purchase 98 shares of Common Stock, on June 19, 2001 Greenlight Fund purchased 2600 Units for $2,470,000, Greenlight Offshore purchased 6100 Units for $5,795,000, and Greenlight Qualified purchased 6300 Units for $5,985,000.

On June 19, 2001, under the terms of the Third Purchase Agreement (as defined in Item 4 below), (i) Greenlight Fund purchased a Third Warrant (as defined in Item 4 below) and shares of Series F Preferred Stock for a purchase price of $2,200,000, (ii) Greenlight Qualified purchased a Third Warrant and shares of Series F Preferred Stock for a purchase price of $5,300,000 and (iii) Greenlight Offshore purchased a Third Warrant and shares of Series F Preferred Stock for a purchase price of $5,000,000.

Item 4.

Purpose of the Transaction

Item 4 of the Schedule 13D is hereby amended and restated in its entirety as follows:

On January 16, 2001, Greenlight Fund, Greenlight Qualified, Greenlight Offshore (together, the "Greenlight Entities") and the Issuer entered into a Bond Purchase Agreement (the "First Purchase Agreement"). The form of the First Purchase Agreement is incorporated herein by reference to Exhibit 2 to Schedule 13D Amendment 1. Under the terms of the First Purchase Agreement, Greenlight Fund, Greenlight Qualified, and Greenlight Offshore contributed $1,959,000, $4,391,000 and $3,650,000, respectively, (such amounts, plus the accretion thereon is referred to as the "Contribution Amount") to Greenlight New World, L.L.C. ("GNW"). GNW's sole purpose is to purchase Einstein/Noah Bagel Corporation 7.25% convertible subordinated bonds June 2004 (the "Bonds"). The Greenlight Entities are the sole equity owners of GNW. The Issuer is the sole manager of GNW (the "Manager") and has sole power to vote the Bonds so long as the Bonds are owned by GNW. Under the terms of the First Purchase Agreement, the Greenlight Entities may exchange their equity interests in GNW for shares of the Issuer's Series E Preferred Stock (the "Series E Preferred") within thirty (30) days after a combination of the businesses of Einstein and the Issuer whether effected by merger, combination, sale of assets or sale of capital stock (an "Einstein Combination"). The Certificate of Designation of the Series E Preferred Stock (the "Certificate of Designation") is incorporated by reference to Exhibit 7 to Schedule 13D. Further, under the terms of the First Purchase Agreement, if the Issuer fails to redeem the Series E Preferred for an amount equal to 100% of the liquidation value of the Series E Preferred, plus all accrued or declared but unpaid dividends, if any, prior to the third anniversary of the First Purchase Agreement, and for so long as such failure continues, the Greenlight Entities shall have the right to designate fifty percent (50%) of the Issuer's board of directors.

In connection with the First Purchase Agreement, Greenlight Fund received a warrant to purchase up to 831,019 shares of Common Stock, Greenlight Qualified received a warrant to purchase up to 1,862,687 shares of Common Stock, and Greenlight Offshore received a warrant to purchase up to 1,548,350 shares of Common Stock (each, a "First Warrant" and collectively, the "First Warrants"). The forms of the First Warrants are incorporated herein by reference to Exhibits 4-6 to Schedule 13D. Pursuant to Section 4.2 of the First Purchase Agreement, the number of shares that the Greenlight Entities receive upon exercise of their First Warrants is subject to upward adjustment depending upon certain future events affecting the capitalization of the Issuer. The shares of Common Stock issuable upon exercise of a First Warrant are entitled to registration rights under the terms of a Registration Rights Agreement among the Greenlight Entities and the Issuer, incorporated by reference to Exhibit 3 to Schedule 13D. Under the terms of the First Purchase Agreement, if after the first year from the date of the First Purchase Agreement there has not been an Einstein Combination, and for so long as (1) there has not been an Einstein Combination by the end of the third year after the date of the First Purchase Agreement, or (2) there has been an Einstein Combination and the Greenlight Entities have not elected to exchange the equity of GNW for the Series E Preferred shares within 30 days thereafter or (3) the Greenlight Entities have timely elected to receive the Series E Preferred shares and the same have been redeemed, whichever is sooner, the Issuer will issue pro rata to the Greenlight Entities warrants (the "Additional Warrants") representing an additional .9375% of the fully diluted Common Stock of the Company outstanding at the beginning of each three-month period, commencing with the first anniversary of the date of the First Purchase Agreement, which percentage shall be reduced pro-rata based upon Series E Preferred shares theretofore redeemed at the election of the Greenlight Entities (in the case of a partial redemption) or the funds withdrawn by the Greenlight Entities from GNW. In addition, in the event the Issuer redeems its outstanding shares of Series F Preferred Stock, par value $.001 ("Series F Preferred Stock") and pays the redemption price therefor through the issuance of Senior Subordinated Notes (the "Notes") as provided for in Section 3(b)(ii) of the Certificate of Designation, Preferences and Rights of Series F Preferred Stock filed by the Issuer with the Delaware Secretary of State, then, at the time of such redemption, the Issuer shall issue the Greenlight Entities pro-rata warrants representing an additional 1.5% of the fully diluted Common Stock of the Issuer outstanding at such time. Further, under the terms of the First Purchase Agreement, within 10 days following the Einstein Combination, the Issuer is obligated to issue pro-rata to the Greenlight Entities such additional warrants, if any, to allow the purchase of that number of shares of Common Stock equal to 11.25% of the fully diluted Common Stock issued (i) to the equity or other claim holders of Einstein (the "Einstein Claimholders"), and (ii) in connection with a financing used primarily to acquire the interests in Einstein held by the Einstein Claimholders in connection with the transactions related to an Einstein Combination exclusive of equity sold to unaffiliated third parties.

On June 19, 2001, in connection with the purchase of Units, Greenlight Fund received a warrant to purchase up to 254,800 shares of Common Stock, Greenlight Offshore received a warrant to purchase up to 597,800 shares of Common Stock, and Greenlight Qualified received a warrant to purchase up to 617,400 shares of Common Stock (each, a "Bridge Warrant" and collectively, the "Bridge Warrants"). Each Bridge Warrant has an expiration date of June 15, 2006 and an exercise price of $0.01 per share.

On June 19, 2001, the Issuer, Halpern Denny III, L.P. ("HD III"), the Greenlight Entities, Special Situations Private Equity Fund, L.P. ("Special Situations Private"), Special Situations Cayman Fund, L.P. ("Special Cayman"), Special Situations Fund III, L.P. ("Special III", and together with Special Situations Private and Special Cayman, "Special Situations") entered into a Third Series F Preferred Stock and Warrant Purchase Agreement (the "Third Purchase Agreement"). The Third Purchase Agreement is attached hereto as Exhibit 99.1. The closing under the Third Purchase Agreement occurred on June 19, 2001. Under the terms of the Third Purchase Agreement, (i) Greenlight Fund purchased 2,200 shares of Series F Preferred Stock, (ii) Greenlight Qualified purchased 5,300 shares of Series F Preferred Stock and (iii) Greenlight Offshore purchased 5,000 shares of Series F Preferred Stock.

In connection with the Third Purchase Agreement, (i) Greenlight Fund received a warrant to purchase 1,861,546 shares of Common Stock, (ii) Greenlight Qualified received a warrant to purchase 4,484,634 shares of Common Stock and (iii) Greenlight Offshore received a warrant to purchase 4,230,787 shares of Common Stock (each, a "Third Warrant", collectively, the "Third Warrants", and together with the First Warrants and the Bridge Warrants, the "Warrants"). The form of Third Warrant is attached hereto as Exhibit 99.2. Each of the Third Warrants is exercisable at any time until June 19, 2006. Pursuant to paragraph (f) of the Third Warrants, the number of shares of Common Stock that the Greenlight Entities may receive upon exercise of its Warrants is subject to adjustment for stock splits, recapitalizations and similar changes in the capitalization of the Issuer. The shares of Common Stock issuable upon exercise of the Third Warrants are entitled to registration rights under the terms of an Amendment No. 2 to the Amended and Restated Registration Rights Agreement dated June 19, 2001 among the Issuer, HD III, Brookwood New World Investors, LLC ("Brookwood"), BET Associates, L.P. ("BET"), Greenlight and Special Situations, which is attached hereto as Exhibit 99.3.

The Issuer entered into a Consent and Waiver Agreement (the "Consent and Waiver Agreement") dated June 19, 2001 with HD III, Brookwood, BET, the Greenlight Entities and Special Situations, which is attached hereto as Exhibit 99.4. Pursuant to Section 8 of the Consent and Waiver Agreement, HD III, Brookwood, BET, the Greenlight Entities and Special Situations have agreed not to exercise any of the warrants until such time as the Certificate of Incorporation of the Issuer is amended to increase the authorized common stock to an amount sufficient to permit the exercise of all then outstanding options and warrants. The Issuer has agreed to effect such amendment of the Certificate of Incorporation of the Company on or prior to the earlier of October 17, 2001 and a Change of Control Event (as defined in the Second Amended Certificate of Designation). At any time on or after October 17, 2001, even if such amendment has not been effected, HD III, Brookwood, BET, the Greenlight Entities and Special Situations shall be permitted to exercise their warrants, provided that upon such exercise there is a sufficient number of shares of Common Stock authorized to permit the exercise of the warrants issued in connection with the $140,000,000 Senior Secured Increasing Rate Notes due 2003 by the Issuer. In the event that HD III, Brookwood, BET, Greenlight and Special Situations are permitted to exercise some, but not all of the warrants issued to them due to the restrictions contained therein, then the holders of warrants issued prior to March 31, 2001 have the right to exercise their warrants prior to holders of warrants issued after March 31, 2001.

According to the Second Amended Certificate of Designation, Preferences and Rights of the Series F Preferred Stock (the "Amended Certificate of Designation"), attached hereto as Exhibit 99.5, holders of Series F Preferred Stock are entitled to receive, when, as and if declared by the Issuer's board of directors, and to the extent funds are legally available, cumulative dividends payable quarterly, on each March 31, June 30, September 30 and December 31, commencing on (i) March 31, 2001 with respect to any shares of Series F Preferred Stock issued on or prior to March 31, 2001 and (ii) June 30, 2001 with respect to any shares of Series F Preferred Stock issued after March 31, 2001, with dividends for partial quarters based on the dates of issuance and redemption accruing pro rata, at the rate of 16% per annum (the "Dividend Percentage Rate"). The liquidation preference for each share of Series F Preferred Stock is equal to $1,000 plus all accrued and unpaid dividends. The dividends are payable in kind as additional shares of Series F Preferred Stock. The Dividend Percentage Rate will increase by an additional 2% per semi-annum commencing on (i) January 18, 2002 with respect to any shares of Series F Preferred Stock issued on or prior to March 31, 2001 and (ii) June 30, 2002 with respect to any shares of Series F Preferred Stock issued after March 31, 2001, on each outstanding share of Series F Preferred Stock until such share of Series F Preferred Stock has been redeemed by the Issuer as required by the Second Amended Certificate of Designation. No dividends or other distributions of any kind may be declared or paid on, nor will the Issuer redeem, purchase or acquire any shares of the Common Stock, any of the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock or Series D Preferred Stock or any other junior class or series of stock other than stock dividends and distributions of the right to purchase common stock and repurchase any such rights in accordance with the Issuer's Rights Agreement dated June 7, 1999 (the "Rights Plan"), unless all dividends on the Series F Preferred Stock accrued for all past dividend periods have been paid. The Second Amended Certificate of Designation provides that the Series F Preferred Stock is redeemable at the election of the Issuer, in whole or in part, at any time ("Optional Redemption Date") on not less than 5 nor more than 60 days' prior notice, for an amount equal to 100% of the Purchase Price (as defined below), plus all accrued or declared but unpaid dividends, if any, to the date of redemption (the "Redemption Price"). The "Purchase Price" of each share of the Series F Preferred Stock shall be $1,000 (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares). In the event that the Issuer does not file an amendment to its Certificate of Incorporation in order to increase the number of authorized shares of its Common Stock to at least 125,000,000 on or prior to October 17, 2001, then the Redemption Price shall be increased by 1% per month until such time as such amendment is filed with the Secretary of State of the State of Delaware and is in full force and effect. All outstanding shares of Series F Preferred Stock (x) issued on or prior to March 31, 2001 must be redeemed (subject to the legal availability of funds therefore) in whole on January 18, 2004 and (y) issued after March 31, 2001 must be redeemed (subject to the legal availability of funds therefor) in whole on June 30, 2004 (each a "Mandatory Redemption Date"), at the Redemption Price. In the event that the Issuer fails to pay the Redemption Price in cash on the Mandatory Redemption Date, the Redemption Price will be paid on such date by the issuance of a senior subordinated note (the "Note"), in the form attached hereto as Exhibit 99.6. Under the terms of the Second Purchase Agreement, if within one year of the closing, the Issuer (i) fails to redeem the Series F Preferred Stock or (ii) redeems the Series F Preferred Stock by the issuance of the Note, but has not paid the Note in full, the Issuer will be required to issue (x) to Greenlight Fund a warrant representing an additional 0.165% of the fully diluted Common Stock, (y) to Greenlight Qualified a warrant representing an additional 0.3975% of the fully diluted Common Stock and (z) to Greenlight Offshore a warrant representing an additional 0.375% (collectively the "New Warrants") of the fully diluted Common Stock (in each case, taking into account all options, warrants and other convertible securities of the Issuer, but not including any outstanding warrants or options with a strike price greater than $3.00 per share and not including the New Warrants) outstanding on such first anniversary date and on each June 30 and December 31 thereafter. The percentage will be reduced pro rata to the extent that the Series F Preferred Stock issued to the Greenlight Entities has been redeemed or the Note has been repaid. The Issuer has amended its bylaws to provide that the authorization of at least 75% of the board of directors is required to authorize the filing of a petition under the United States bankruptcy code and increased the number of directors to nine.

Under Amendment No. 2 to the Stockholders Agreement among the Issuer, HD III, Brookwood, BET, Greenlight and Special Situations dated as of June 19, 2001 attached hereto as Exhibit 99.7, [the Issuer must take all necessary actions to cause the election of two directors designated by HD III; provided, however, that if the shares of Series F Preferred Stock held by HD III are redeemed for cash in accordance with the Second Amended Certificate of Designation or the Note to be issued in accordance with the Second Amended Certificate of Designation is paid in full, HD III will only have the right to designate one director. In addition, after such events have occurred, if HD III owns less than 2% of the voting stock of the Issuer, it will no longer have the right to designate any directors. The Note also requires the Issuer to take all necessary actions to cause the election of one director designated by HD III.] Under the Stockholders Agreement, as amended, the Issuer has granted to HD III, Brookwood, BET, the Greenlight Entities and Special Situations the right to purchase such stockholder's proportionate percentage in future offerings of securities of the Issuer other than (i) issuances of certain options or warrants to employees, directors or consultants, (ii) issuances in connection with any merger or acquisition, (iii) issuances in an underwritten public offering or (iv) issuances to a bank or other institutional investor in connection with a debt financing. Also pursuant to the Stockholders Agreement, as amended, the Issuer granted HD III, Brookwood, BET, the Greenlight Entities and Special Situations a co-sale right in certain situations.

Furthermore, according to the Second Amended Certificate of Designation, so long as any shares of Series F Preferred Stock remain outstanding, the Issuer may not, without the vote or written consent by the holders of at least 67% of the then outstanding shares of the Series F Preferred Stock, voting together as a single class: (i) amend or repeal any provision of the Issuer's Certificate of Incorporation or By-Laws in a manner which materially and adversely affects the rights and preferences of the holders of Series F Preferred Stock; (ii) authorize or issue shares of any class of stock having any preference or priority as to dividends or assets superior to or on a parity with the Series F Preferred Stock, including, without limitation, the Series F Preferred Stock of the Issuer, without the vote or written consent by the holders of at least 70% of the then outstanding shares of Series F Preferred Stock, voting together as a single class; (iii) pay or declare any dividend on any other type or class of securities, other than a dividend payable in Common Stock or rights under the Rights Plan; (iv) repurchase or redeem any shares of capital stock of the Issuer other than the redemption of the Series F Preferred Stock; (v) authorize (a) a sale of any material asset of a value in excess of $1,000,000 of the Issuer or any subsidiary or subsidiaries of the Issuer, (b) a sale of any substantial portion of the assets of the Issuer or any subsidiary or subsidiaries (other than sales of stores owned by the Issuer or its subsidiaries) or (c) a recapitalization or reorganization of the Issuer or any subsidiary or subsidiaries of the Issuer (other than stock splits, combinations and/or dividends); (vi) take any action that results in the Issuer or any subsidiary or subsidiaries of the Issuer incurring or assuming more than $1,000,000 of funded indebtedness (other than (w) the $140,000,000 Senior Secured Increasing Rate Notes due 2003 (which have been previously approved by the requisite holders of the Series F Preferred Stock), (x) the $35,000,000 Secured Increasing Rate Note issued on June 19, 2001, (y) borrowings of up to $7,500,000 for a revolving line of credit and (z) up to $4,700,000 of indebtedness outstanding as of June 15, 2001); (vii) effect any change of control event; (viii) effect (a) an acquisition of another corporation or other entity, or a unit or business group of another corporation or entity, by merger or otherwise, except as contemplated by the First Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement or (b) the purchase of all or substantially all of the capital stock, other equity interests or assets of any other entity or person, except as contemplated in the First Purchase Agreement, the Exchange Agreement, the Second Purchase Agreement and the Third Purchase Agreement; (ix) increase the number of directors of the board of directors of the Issuer except as contemplated in the First Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement; (x) effect or allow fundamental change in the nature of the Issuer's business; or (xi) otherwise materially affect the rights, privileges and preferences of the holders of the Issuer's Series F Preferred Stock. Under the Second Amended Certificate of Designation, the holders of Series F Preferred Stock, except as otherwise required under the laws of Delaware or as set forth in the Amended Certificate of Designation, are not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Issuer. Under the Second Amended Certificate of Designation and the Note, the majority of the then outstanding Series F Preferred Stock, voting or consenting, as the case may be, as one class, will be entitled to elect up to four directors (the "Series F Directors"), provided that two of the Series F Directors shall be designated by HD III, one shall be designated by Brookwood and one shall be designated by BET. If (i) dividends on the Series F Preferred Stock are in arrears and unpaid for any quarterly period, which failure to pay continues for a period of thirty (30) days; or (ii) the Issuer fails to discharge any redemption obligation with respect to the Series F Preferred Stock and such failure continues more than 90 days following a mandatory redemption date, then (A) the number of members comprising the Issuer's board of directors will automatically increase by such number so that such additional directors (but including the board seats elected by the holders of Series F Preferred Stock) constitutes not less than 50% of the board of directors of the Issuer and (B) the holders of the majority of the then outstanding Series F Preferred Stock, voting or consenting, as the case may be, as one class, will be entitled to elect directors to the board of directors to fill the vacancies created by such increase, provided that such directors are designated equally by (A) HD III on the one hand, and (B) Brookwood and BET on the other hand. Such voting rights will continue until such time as, in the case of a dividend default, all dividends in arrears on the Series F Preferred Stock are paid in full and, in the case of the failure to redeem, until payment of the Redemption Price in cash or until the Note is delivered, at which time the term of the directors elected as described in this paragraph will terminate. The Issuer may not modify, change, affect or amend the Certificate of Incorporation or the Second Amended Certificate of Designation to increase the authorized Series F Preferred Stock, without the affirmative vote or consent of holders of at least a 67% of the shares of Series F Preferred Stock then outstanding, voting or consenting, as the case may be, as one class. Pursuant to the Third Purchase agreement, the Issuer is obligated to pay to Greenlight Fund a transaction fee of $417,000 which is payable on January 31, 2002.

On June 19, 2001 the Issuer, GNW and the Greenlight Entities entered into a letter agreement (the "Letter Agreement"), a copy of which is attached hereto as Exhibit 99.8. Under the terms of the Letter Agreement, the Greenlight Entities consented to the pledge (the "Pledge") by the Issuer, as manager of GNW, of the Bonds to Jeffries & Company, Inc. to secure a loan to an unrestricted subsidiary of the Issuer in the principal amount of $35.0 million (the "Loan"). The Greenlight Entities also agreed that during the term of the Pledge they would not exercise their rights for the withdrawal of "Section 2.3 Proceeds" (as such term is defined in the First Purchase Agreement) provided in Section 2.3 of the First Purchase Agreement. In consideration for the consent of the Greenlight Entities, the Issuer agreed to distribute to the Greenlight Entities, pro rata according to the contribution made by each member to GNW, the amount of proceeds on the Bonds in excess of the amount used to repay the Loan. In addition, the Issuer agreed to issue to the Greenlight Entities the number of shares of Series F Preferred Stock equal to (i) the excess of the Contribution Amount over the Distributed Proceeds (the "Excess Contribution") divided by (ii) $1000 per share of Series F Preferred Stock (such shares of Series F Preferred Stock herein referred to as the "Shares"). The Shares shall be allocated among the members of GNW pro rata according to the contribution made by each member to GNW (the "Allocation Ratio"). The Issuer may not utilize any other source of funds (other than the amount of proceeds on the Bonds in excess of the amount used to repay the Loan) to return the Contribution Amount to the Greenlight Entities, and any distributions to the Greenlight Entities from any other source of funds will be excluded from the calculation of Distributed Proceeds and Excess Contribution. The Issuer further agreed to issue to the Greenlight Entities warrants (the "Additional Warrants") to purchase that number of shares of Common Stock, equal to the Applicable Percentage (as defined below) of the outstanding Common Stock of the Issuer as of the date of the Letter Agreement (determined on a fully diluted basis) at an exercise price of $0.01 per share of Common Stock. "Applicable Percentage" means the greater of (i) 5.625% and (ii) 1.125% for each $1,000,000 of Excess Contribution (or fraction thereof). The number of shares of Common Stock issuable on exercise of the Additional Warrants will be subject to adjustment as provided in the Third Purchase Agreement. The Issuer agreed to issue the Additional Warrants to Greenlight on the earlier to occur of (a) the date on which shares of Series F Preferred Stock are issued under the Letter Agreement and (b) the date on which the proceeds from the Bonds are received by the Issuer and/or GNW. The Additional Warrants will be allocated among the members of GNW according to their Allocation Ratios.

Other than as described above, neither Greenlight, Greenlight Fund, Greenlight Offshore, Greenlight Qualified, Mr. Einhorn nor Mr. Keswin has present plans or proposals which would result in any of the following:

	1) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries;
	2) any sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;
	3) any change in the present board of directors or managers of the Issuer;
	4) any material change in the present capitalization or dividend policy of the Issuer;
	5) any other material change in the Issuer's business or corporate structure;
	6) any change in the Issuer's charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person;
	7) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;
	8) causing a class of securities of the Issuer to become eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or
	9) any action similar to any of those enumerated above.

Item 5.

Interest in Securities of the Issuer

Item 5 of the Schedule 13D is hereby amended and restated in its entirety as follows:

(a) As of June 29, 2001, Greenlight, Mr. Einhorn and Mr. Keswin beneficially own 16,289,023 shares of Common Stock of the Issuer (which includes 16,289,023 shares issuable to Greenlight Fund, Greenlight Offshore and Greenlight Qualified upon exercise of the Warrants), which represents 49.8% of the Issuer's outstanding shares of Common Stock, which such percentage was calculated by dividing (i) the 16,289,023 shares of Common Stock underlying the Warrants not yet exercised but beneficially owned by Greenlight, Mr. Einhorn and Mr. Keswin as of the date hereof, by (ii) 32,732,470 shares of Common Stock, which equals the sum of (y) 16,443,447 shares of Common Stock outstanding as of May 8, 2001 based upon the Issuer's 10Q filed with the Securities and Exchange Commission on June 7, 2001 and (z) 16,289,023 shares of Common Stock underlying the Warrants. The 16,289,023 shares of Common Stock underlying the Warrants described above are beneficially owned by Greenlight, Mr. Einhorn and Mr. Keswin for the account of Greenlight Fund, Greenlight Offshore or Greenlight Qualified, as the case may be.

As of June 29, 2001, Greenlight Fund beneficially owns 2,947,365 shares of Common Stock of the Issuer (which includes 2,947,365 shares issuable to the reporting persons upon exercise of its Warrants), which represents 15.2% of the Issuer's outstanding shares of Common Stock, which such percentage was calculated by dividing (i) the 2,947,365 shares of Common Stock underlying the Warrant not yet exercised but beneficially owned by Greenlight Fund as of the date hereof, by (ii) 19,390,812 shares of Common Stock, which equals the sum of (y) 16,443,447 shares of Common Stock outstanding as of May 8, 2001 based upon the Issuer's 10Q filed with the Securities and Exchange Commission on June 7, 2001 and (z) 2,947,365 shares of Common Stock underlying its Warrants.

As of June 29, 2001, Greenlight Qualified beneficially owns 6,964,721 shares of Common Stock of the Issuer (which includes 6,964,721 shares issuable to the reporting persons upon exercise of its Warrant), which represents 29.8% of the Issuer's outstanding shares of Common Stock, which such percentage was calculated by dividing (i) the 6,964,721 shares of Common Stock underlying the Warrant not yet exercised but beneficially owned by Greenlight Qualified as of the date hereof, by (ii) 23,408,168 shares of Common Stock, which equals the sum of (y) 16,443,447 shares of Common Stock outstanding as of May 8, 2001 based upon the Issuer's 10Q filed with the Securities and Exchange Commission on June 7, 2001 and (z) 6,964,721 shares of Common Stock underlying its Warrants.

As of June 29, 2001, Greenlight Offshore beneficially owns 6,376,937 shares of Common Stock of the Issuer (which includes 6,376,937 shares issuable to the reporting persons upon exercise of its Warrant), which represents 27.9% of the Issuer's outstanding shares of Common Stock, which such percentage was calculated by dividing (i) the 6,376,937 shares of Common Stock underlying the Warrant not yet exercised but beneficially owned by Greenlight Offshore as of the date hereof, by (ii) 22,820,384 shares of Common Stock, which equals the sum of (y) 16,443,447 shares of Common Stock outstanding as of May 8, 2001 based upon the Issuer's 10Q filed with the Securities and Exchange Commission on June 7, 2001 and (z) 6,376,937 shares of Common Stock underlying its Warrants.

(b) Greenlight, Mr. Einhorn and Mr. Keswin for the account of each of Greenlight Fund, Greenlight Offshore and Greenlight Qualified have the power to vote and dispose of the shares of Common Stock held by each such entity.

(c) Other than as described in Items 3 and 4 above, none of Greenlight, Greenlight Fund, Greenlight Qualified, Greenlight Offshore and the Principals have engaged in any transactions in the Common Stock within the past 60 days.

(d) Not Applicable.

(e) Not Applicable.

Item 7.

Material to be Filed as Exhibits

Exhibit 99.1	Third Purchase Agreement
Exhibit 99.2	Form of Warrant
Exhibit 99.3	Amendment No. 2 to Registration Rights Agreement
Exhibit 99.4	Consent and Waiver Agreement
Exhibit 99.5	Second Amended Certificate of Designation
Exhibit 99.6	Form of Note
Exhibit 99.7	Amendment No. 2 to Stockholders Agreement
Exhibit 99.8	Letter Agreement
Exhibit 99.9	Joint Filing Agreement dated January 29, 2001, among Greenlight, Greenlight Fund, Greenlight Qualified Greenlight Offshore, Mr. Einhorn and Mr. Keswin.

Signature

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: June 29, 2001

	GREENLIGHT CAPITAL, L.L.C.
	By:	JEFFREY A. KESWIN ___________________________________ Jeffrey A. Keswin, Managing Member

	GREENLIGHT CAPITAL, L.P.
	By:	Greenlight Capital, L.L.C., its general partner
	By:	JEFFREY A. KESWIN ___________________________________ Jeffrey A. Keswin, Managing Member

	GREENLIGHT CAPITAL QUALIFIED, L.P.
	By:	Greenlight Capital, L.L.C., its general partner
	By:	JEFFREY A. KESWIN ___________________________________ Jeffrey A. Keswin, Managing Member

	GREENLIGHT CAPITAL OFFSHORE, LTD.
	By:	Greenlight Capital, L.L.C., its general partner
	By:	JEFFREY A. KESWIN ___________________________________ Jeffrey A. Keswin, Director

EX-1 2 nwcex1.htm EXHIBIT 1 EXHIBIT 1 EXHIBIT 1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the undersigned agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including any and all amendments thereto) with respect to the Common Stock, par value $0.001 per share, of New World Coffee - Manhattan Bagel, Inc., and further agree that this Joint Filing Agreement shall be included as an Exhibit to such joint filings.

The undersigned further agree that each party hereto is responsible for the timely filing of such Statement on Schedule 13G and any amendments thereto, and for the accuracy and completeness of the information concerning such party contained therein; provided, however, that no party is responsible for the accuracy or completeness of the information concerning any other party, unless such party knows or has reason to believe that such information is inaccurate.

This Joint Filing Agreement may be signed in counterparts with the same effect as if the signature on each counterpart were upon the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of January 29, 2001.

	GREENLIGHT CAPITAL, L.L.C.
	By:	JEFFREY A. KESWIN ___________________________________ Jeffrey A. Keswin, Managing Member

	GREENLIGHT CAPITAL, L.P.
	By:	Greenlight Capital, L.L.C., its general partner
	By:	JEFFREY A. KESWIN ___________________________________ Jeffrey A. Keswin, Managing Member

	GREENLIGHT CAPITAL QUALIFIED, L.P.
	By:	Greenlight Capital, L.L.C., its general partner
	By:	JEFFREY A. KESWIN ___________________________________ Jeffrey A. Keswin, Managing Member

	GREENLIGHT CAPITAL OFFSHORE, LTD.
	By:	Greenlight Capital, L.L.C., its general partner
	By:	JEFFREY A. KESWIN ___________________________________ Jeffrey A. Keswin, Director

EX-99.1 3 nwcex991.htm 3RD SERIES F PREFERRED STOCK&WARRANT PURCHASE AGM Exhibit 99.1

Exhibit 99.1

NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
THIRD SERIES F PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT

THIS THIRD SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") is entered into as of June 19, 2001, by and among New World Coffee - Manhattan Bagel, Inc., a Delaware corporation (the "Company"), and the purchasers listed in Schedule I hereto (the "Purchasers").

RECITALS

WHEREAS, the Company has authorized the sale and issuance of up to 116,000 shares of its Series F Preferred Stock (the "Shares") on the terms and conditions set forth herein;

WHEREAS, certain Purchasers purchased 25,000 Shares and warrants to purchase up to 10,605,140 shares of Common Stock pursuant to a Series F Preferred Stock and Warrant Purchase Agreement dated as of January 18, 2001, as amended (the "First Series F Purchase Agreement") and a Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001 (the "Second Series F Purchase Agreement");

WHEREAS, one of the Purchasers purchased 1,000 Shares and warrants to purchase up to 846,157 shares of Common Stock, and has agreed to purchase an additional 3,000 Shares and warrants to purchase up to 2,538,472 shares of Common Stock, pursuant to and subject to the terms and conditions of a Series F Preferred Stock Purchase Agreement dated as of June 7, 2001 (the "June Series F Purchase Agreement");

WHEREAS, the Purchasers desire to purchase an additional 21,000 Shares and warrants to purchase up to 17,769,305 shares of Common Stock (the "Warrants") on the terms and conditions set forth herein;

WHEREAS, the Company desires to issue and sell such additional Shares and Warrants to the Purchasers on the terms and conditions set forth herein; and

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto agree as follows:

1. AGREEMENT TO SELL AND PURCHASE.

1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as defined in Section 3 below), the Company shall have authorized the Shares. The Shares shall have the rights, preferences, privileges and restrictions set forth in the Second Amended Certificate of Designation in the form attached hereto as EXHIBIT A (the "Certificate of Designation").

1.2 SALE AND PURCHASE.

(a) At the Closing (as defined below), the Company shall issue and sell to each Purchaser, and each Purchaser shall purchase from the Company the number of shares of Series F Preferred Stock set forth opposite the name of such Purchaser on Schedule I hereto under the heading "Number of Shares of Series F Preferred Stock".

(b) The purchase price at the Closing shall be one thousand dollars ($1,000.00) per Share (the "Purchase Price").

2. WARRANTS

2.1 ISSUANCE OF WARRANTS.

(a) At the Closing, the Company will issue to each Purchaser Warrants to purchase the number of shares (the "Original Warrant Shares") of the Company's Common Stock exercisable at $0.01 per share (the "Warrants") set for the opposite the name of such Purchaser on Schedule I hereto under the heading "Number of Original Warrants", which Warrants will be substantially in the form of the Warrant attached hereto as EXHIBIT B. The Warrants will be issued to the Purchasers, and will entitle the Purchasers initially to acquire up to an aggregate 17,769,305] shares of Common Stock (representing, in the aggregate, 23.625% of the Fully Diluted Common Stock of the Company as of June 19, 2001, subject to adjustment as provided therein). The term "Fully Diluted" shall mean the fully diluted Common Stock of the Company, determined by taking into account all options, warrants and other convertible securities, but not including any warrants or options with a strike price greater than $3.00 per share and not including any of the Warrants issued under Section 2.2.

(b) For purposes of this Section 2.1, the number of shares subject to such Warrants shall be calculated to result in such percentages of Fully Diluted Common Stock after the issuance of such Warrants.

2.2 WARRANT STEP-UP.

(a) 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 December 31 and June 30 following such first anniversary of the Closing Date, to each Purchaser warrants in the form of EXHIBIT B hereto representing the additional percentage of the Fully Diluted Common Stock of the Company outstanding on such date as set forth opposite such Purchaser's name on Schedule I under the heading "Additional Warrant Percentage", which percentage shall be reduced pro rata based upon Shares theretofore redeemed for cash or the Notes theretofore repaid, as applicable.

(b) 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.

(c) 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.

3. CLOSINGS, DELIVERIES, PAYMENT AND USE OF PROCEEDS.

3.1 CLOSING. The closing of the purchase and sale of Shares pursuant to Section 1.2(a) above (the "Closing") shall take place at 10:00 a.m. on June 19, 2001, at the offices of Reboul, MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, New York 10111, or at such other time or place as the Company and the Purchasers may mutually agree (such date is hereinafter referred to as the "Closing Date").

3.1.1 At the Closing, subject to the terms and conditions hereof, the Company shall deliver to each Purchaser the following:

(a) A Compliance Certificate, executed by the President of the Company, dated the Closing Date, to the effect that the conditions specified in Section 7.1 have been satisfied.

(b) A certificate of the Secretary of the Company, dated as of the Closing Date, in substantially the form attached hereto as EXHIBIT 3.1.1(c).

(c) An opinion of legal counsel to the Company addressed to the Purchasers, dated as of the Closing Date, in substantially the form attached hereto as EXHIBIT 3.1.1(d).

3.1.2. At the Closing, subject to the terms and conditions hereof, the Company shall deliver to the Escrow Agent identified in the Escrow Agreement (the "Escrow Agreement") among the Company, certain of the Purchasers (the "Escrow Purchasers") and the Escrow Agent (as defined therein), in the form of EXHIBIT D hereto, the Warrants to be issued to the Escrow Purchasers pursuant to Section 2.1(a) and the certificates representing the number of Shares to be purchased at the Closing by such Escrow Purchaser.

3.2 At the Closing, subject to the terms and conditions hereof, (i) each Escrow Purchaser shall deliver to the Escrow Agent a wire transfer in the amount set forth opposite the name of such Escrow Purchaser on Schedule I hereto under the heading "Purchase Price" for the Shares to be purchased at the Closing, respectively, by such Escrow Purchaser and (ii) each Purchaser (other than the Escrow Purchasers) shall deliver to the Company a wire transfer in the amount set forth opposite the name of such Purchaser on Schedule I hereto under the heading "Purchase Price" for the Shares to be purchased at the Closing, respectively, by such Purchaser.

4. USE OF PROCEEDS.

The proceeds from this transaction shall be used exclusively(along with the proceeds from other financings by the Company) for (i) the purchase price payable in connection with the Acquisition of Einstein, (ii) the repayment in full of all amounts outstanding under the Credit Agreement dated as of August 31, 1999, as amended, among the Company, certain of its subsidiaries and Fleet National Bank (f/k/a BankBoston, N.A.) and (iii) reasonable fees and expenses incurred by the Company in connection with clauses (i) and (ii) above.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchasers as of the date of this Agreement as follows (for purposes of all of the representations and warranties in this Section 5, the term "Company" shall include and encompass all subsidiaries of the Company):

5.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Except as set forth on Schedule 5.1, the Company and each of its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, the Warrant, Amendment No. 2 to Stockholders Agreement attached as EXHIBIT E hereto (the "Stockholders Agreement Amendment") and Amendment No. 2 to Amended and Restated Registration Rights Agreement attached as EXHIBIT F hereto (the "Registration Rights Agreement Amendment" and together with this Agreement, the Warrant and the Stockholders Agreement Amendment, the "Related Agreements"), to issue and sell the Shares and the Warrants and to carry out the provisions of this Agreement, the Related Agreements and the Certificate of Designation and to carry on its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

5.2 SUBSIDIARIES. Except as set forth in Schedule 5.2, the Company owns no equity securities of any other corporation, limited partnership or similar entity. The Company is not a participant in any joint venture, partnership or similar arrangement. Except as set forth on Schedule 5.2, each of the entities listed on Schedule 5.2 under the heading "Inactive Subsidiaries" (i) has no assets, (ii) has no obligations or liabilities, absolute, accrued or contingent, (iii) has not conducted, since the Statement Date (as defined in Section 5.5), any business except for its organization as a corporation and (iv) will not conduct any business except for its organization as a corporation hereafter.

5.3 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the Company, immediately prior to the Closing and the consummation of the transactions contemplated hereby, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 22,727,492 shares of which are reserved for issuance upon exercise of the warrants issued pursuant to the Series F Preferred Stock Purchase Agreement dated January 18, 2001 and the Second Series F Preferred Stock and Warrant Purchase Agreement dated March 29, 2001 (collectively, the "Initial Series F Warrants") and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 73,000 of which are designated Series F Preferred Stock, 45,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. The authorized capital stock of the Company immediately after the Closing, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 43,881,426 shares of which are reserved for issuance upon exercise of the Warrants (subject to the approval and filing of an amendment to the Company's Certificate of Incorporation to increase the number of shares of Common Stock the Company is authorized to issue), warrants to purchase shares of Common Stock of the Company issued pursuant to the First Series F Purchase Agreement and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 116,000 of which are designated Series F Preferred Stock, 66,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. Except as provided in Schedule 5.3, none of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock designated by the Company may be issued at any time. All issued and outstanding shares of the Company's Common Stock and other capital stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Other than the 2,047,729 shares reserved for issuance under the Option Plans, the Warrants, the Initial Series F Warrants and other warrants and except as may be granted pursuant to the Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Schedule 5.3 sets forth all issued and outstanding options and warrants with an exercise price greater than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances and any restrictions on transfer; provided, however, that the Shares may be subject to restrictions on transfer under applicable state and/or federal securities laws. The consummation of the transactions contemplated by this Agreement and the Related Agreements will not result in acceleration or other changes in the vesting provisions or other terms of any outstanding options granted by the Company. Each subsidiary of the Company is listed on Schedule 5.2 hereto, and each such subsidiary is wholly-owned.

5.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization of this Agreement and the Related Agreements, the performance of all obligations of the Company hereunder and thereunder at the Closing and the authorization, sale, issuance (or reservation for issuance) and delivery of the Shares and the Warrants pursuant hereto have been taken or will be taken prior to the Closing. The Agreement and the Related Agreements, when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights and (b) general principles of equity that restrict the availability of equitable remedies. The sale of the Shares is not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.

5.5 FINANCIAL STATEMENTS. The Company has delivered to the Purchasers (a) the audited consolidated balance sheet for the Company and audited consolidated statement of income and cash flows for the Company for the fiscal year ending December 26, 1999, (b) the audited consolidated balance sheet for the Company and audited consolidated statement of income and cash flows for the Company for the fiscal year ending December 31, 2000 and (c) the unaudited consolidated balance sheet and audited consolidated statement of income and cash flows for the Company for March 31, 2001 (the "Statement Date") and unaudited consolidated statement of income and cash flows for the Company for the three-month period ending on the Statement Date (collectively, the "Financial Statements"), copies of which are certified by the Chief Financial Officer of the Company and attached hereto as EXHIBIT 5.5. The Financial Statements, together with the notes thereto, are complete and correct in all material respects, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated, except as disclosed therein, and present fairly the financial condition and position of the Company as of December 26, 1999, December 31, 2000 and the Statement Date; provided, however, that the unaudited financial statements are subject to normal recurring year-end audit adjustments (which are not expected to be material), and do not contain all footnotes required under generally accepted accounting principles. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with generally accepted accounting principles.

5.6 LIABILITIES. The Company has no material liabilities and, to the best of its knowledge, knows of no material contingent liabilities not disclosed in the Financial Statements, except current liabilities incurred in the ordinary course of business subsequent to the Statement Date which have not been, either in any individual case or in the aggregate, materially adverse.

5.7 AGREEMENTS; ACTION.

(a) Except for agreements explicitly contemplated hereby and agreements between the Company and its employees with respect to the sale of the Company's Common Stock, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof.

(b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or to its knowledge by which it is bound which may involve (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of $100,000 (other than obligations of, or payments to, the Company arising from purchase or sale agreements entered into in the ordinary course of business, in each case, except as set forth in the Company's filing with the Securities and Exchange Commission as of the date hereof (the "SEC Filings").

(c) The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, other than the Company's payment of a paid-in-kind dividend to the existing holders of the Series D Preferred Stock on November 11, 2000 and as of the exchange date under the Exchange Agreement dated as of January 18, 2001 (the "Exchange Agreement") among the Company and the other parties named therein, (ii) incurred any indebtedness for money borrowed or any other liabilities (other than with respect to dividend obligations, distributions, indebtedness and other obligations incurred in the ordinary course of business or as disclosed in the Financial Statements) individually in excess of $25,000 or in the aggregate in excess of $250,000, (iii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business, in each case, except as set forth in the Company's SEC Filings.

(d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

(e) The Company has proposed, and is engaged in, discussions regarding the acquisition of Einstein as described in the Schedule 5.7.

5.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the Company to officers, directors, stockholders, or employees of the Company other than (a) for payment of compensation for services rendered, (b) reimbursement for reasonable expenses incurred on behalf of the Company and (c) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company). None of the officers, directors or stockholders of the Company, or any members of their immediate families, are indebted to the Company or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that officers, directors and/or stockholders of the Company may own up to 5% of the capital stock of publicly traded companies which may compete with the Company. No officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, to the knowledge of the Company, interested in any contract with the Company (other than such contracts as relate to any such person's ownership of capital stock or other securities of the Company). Except as may be disclosed in the Financial Statements or Schedule 5.8, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation, other than its subsidiaries.

5.9 CHANGES. Since the Statement Date, there has not been to the Company's knowledge:

(a) Any change in the assets, liabilities, financial condition or operations of the Company from that reflected in the Financial Statements, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or is expected to have a material adverse effect on such assets, liabilities, financial condition or operations of the Company;

(b) Any resignation or termination of any key officers of the Company, and the Company, to the best of its knowledge, does not know of the impending resignation or termination of employment of any such officer;

(c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;

(d) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties, business or prospects or financial condition of the Company;

(e) Any direct or indirect loans or guarantees made by the Company to any stockholder, employee, officer or director of the Company or any members of their immediate families, other than advances made in the ordinary course of business;

(f) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder other than as disclosed in the Company's proxy statement filed with the SEC on November 30, 2000;

(g) Any declaration or payment of any dividend or other distribution of the assets of the Company, other than the Company's payment of a paid-in-kind dividend to the existing holders of Series D Preferred Stock on November 11, 2000;

(h) Any labor organization activity;

(i) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business;

(j) Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets ;

(k) Any change in any material agreement to which the Company is a party or by which it is bound which materially and adversely affects the business, assets, liabilities, financial condition, operations or prospects of the Company; or

(l) Any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted);

(m) Receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

(n) Any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable;

(o) Any declaration, setting aside or payment or other distribution in respect of any of the Company's capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Company other than the Company's payment of a paid-in-kind dividend to the existing holders of Series D Preferred Stock on November 11, 2000; or

(p) Any agreement or commitment by the Company to do any of the things described in this Section 5.9.

5.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and marketable title to its properties and assets, including the properties and assets reflected in the most recent balance sheet included in the Financial Statements, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than those resulting from taxes which have not yet become delinquent, and minor liens and encumbrances arising in the ordinary course of business which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used, subject to ordinary wear and tear. The Company is in compliance with all material terms of each lease to which it is a party or is otherwise bound. As of the date of this Agreement, the Company owns at least $47.3 million in principal amount of the 7.25% Convertible Subordinated Notes of Einstein/Noah Bagel Corp., free of any liens or encumbrances and any restrictions on transfer, other than such restrictions as may be imposed by applicable securities laws.

5.11 PATENTS AND TRADEMARKS. The Company owns or possesses sufficient legal rights to all material patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes necessary for its business as now conducted and as presently proposed to be conducted, without any known infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of "off the shelf" or standard products except in the ordinary course of business. The Company has not received any communications alleging that the Company has violated or, by conducting its business as presently proposed, would violate any of the material patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company's business as presently proposed to be conducted. Neither the execution nor delivery of this Agreement or the Related Agreements, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as presently proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any material contract, covenant or instrument under which any employee is now obligated.

5.12 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation or default of any term of its Certificate of Incorporation or Bylaws, or of any provision of any material mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to the Company which would individually or in the aggregate materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. The execution, delivery, and performance of and compliance with this Agreement, and the Related Agreements, and the issuance and sale of the Shares, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares") pursuant hereto will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any such mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.

5.13 LITIGATION. There is no action, suit, proceeding or investigation pending, or to the Company's knowledge currently threatened, against the Company that questions the validity of this Agreement, or the Related Agreements or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby, or which might result, either individually or in the aggregate, in any material adverse change in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for the foregoing. The Company is not a party or subject to the provisions of any material order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate except in the ordinary course of business.

5.14 TAX RETURNS AND PAYMENTS. The Company has timely filed all federal, state and local tax returns (including informational returns) (the "Returns") required to be filed by it. All taxes shown to be due and payable on the Returns, any assessments imposed, and all other taxes due and payable by the Company on or before the Closing have been paid or will be paid prior to the time they become delinquent. The Company is not currently and has never been subject to any audit relating to taxes. No assessment, deficiency or judgment for taxes has ever been proposed or entered against the Company. No liability for any tax has ever been imposed upon any of the Company's properties or assets. The Company has treated all individuals who are employees of the Company for federal, state and local income tax purposes as employees for such purposes and has withheld and paid over to the appropriate taxing authorities all applicable income and payroll taxes attributable to the compensation of such employees.

5.15 EMPLOYEES. The Company has no collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the Company's knowledge, threatened with respect to the Company. Other than the Option Plans, the Company is not a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement, including any Employee Benefit Plan as defined in the Employee Retirement Income Security Act of 1974, except as set forth in SEC filings and any such plans, arrangements and agreements with non-executive officers. To the Company's knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company because of the nature of the business to be conducted by the Company; and to the Company's knowledge the continued employment by the Company of its present employees, and the performance of the Company's contracts with its independent contractors, will not result in any such violation. The Company has not received any notice alleging that any such violation has occurred. No executive officers of the Company have been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company except as set forth in SEC filings. The Company is not aware that any executive officer who intends to terminate his or her employment with the Company, nor does the Company have a present intention to terminate the employment of any executive officer.

5.16 REGISTRATION RIGHTS. Except as required pursuant to the Amended and Restated Registration Rights Agreement or as disclosed on Schedule 5.16 hereto, the Company is presently not under any obligation, and has not granted any rights, to register any of the Company's presently outstanding securities or any of its securities that may hereafter be issued under the Securities Act of 1933, as amended.

5.17 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which violation would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations, qualifications, designations or declarations are required to be filed in connection with the execution and delivery of this Agreement and the issuance of the Shares except such as has been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing, as will be filed in a timely manner. The Company has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses or similar authority. The Company has duly filed, on a timely basis, all filings required pursuant to the Securities Exchange Act of 1934, as amended, and all rules and regulations thereunder.

5.18 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the Company is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation.

5.19 OFFERING VALID. Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 6.2 hereof, the offer, sale and issuance of the Shares will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. Neither the Company nor any agent on its behalf has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the Shares to any person or persons so as to bring the sale of such Shares by the Company within the registration provisions of the Securities Act or any state securities laws.

5.20 FULL DISCLOSURE. The Company has fully provided the Purchasers with all the information that the Purchasers has requested for deciding whether to purchase the Shares. This Agreement, the Disclosure Schedule and Exhibits hereto, the Related Agreements and all other documents delivered by the Company to the Purchasers or their attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby, do not contain any untrue statement of a material fact nor, to the Company's knowledge, omit to state a material fact necessary in order to make the statements contained herein or therein not misleading.

5.21 MINUTE BOOKS; BOARD AND STOCKHOLDER MATERIALS. The Certificate of Designation and Bylaws of the Company are in the form previously provided to special counsel for the Purchasers. The minute books of the Company provided to the Purchasers contain a complete summary of all meetings of directors and stockholders since the time of incorporation. The Board and stockholder materials provided to the Purchasers are all of the materials provided by the Company to its directors and stockholders in connection with such meetings.

5.22 REAL PROPERTY HOLDING CORPORATION. The Company is not a real property holding corporation within the meaning of Internal Revenue Code Section 897(c)(2) and any regulations promulgated thereunder.

5.23 INSURANCE. The Company has in full force and effect fire and casualty, products liability and errors and omissions insurance policies with coverage customary for companies similarly situated to the Company.

5.24 INVESTMENT COMPANY ACT. The Company is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended.

5.25 GOVERNMENTAL APPROVALS. Except as set forth in Schedule 5.25 and for the filing of the Certificate of Designation, no registration or filing with, or consent or approval of, or other action by, any Federal, state or other governmental agency or instrumentality is or will be necessary for (i) the valid execution, delivery and performance of this Agreement and the Related Agreements by the Company, (ii) issuance, sale and delivery by the Company of the Shares hereunder, (iii) the issuance and delivery of the Warrants or the Warrant Shares or (iv) the conduct of the business of the Company after the date hereof in substantially the manner as currently conducted and as proposed to be conducted after the date hereof.

5.26 EMPLOYEE BENEFIT PLANS.

(a) The Company has complied and currently is in compliance in all material respects, both as to form and operation, with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Code of 1986, as amended (the "Code"), with respect to each "employee benefit plan" as defined under Section 3(3) of ERISA (a "Plan") which the Company (i) has ever adopted, maintained, established or to which any of the same has been required to contribute to or has ever contributed or (ii) currently maintains or to which any of the same currently contributes or is required to contribute or (iii) currently participates in or is required to participate in.

(b) The Company has never maintained, adopted or established, contributed or been required to contribute to, or otherwise participated in or been required to participate in, a "multiemployer plan" (as defined in Section 3(37) of ERISA). No amount is due or owing from the Company on account of a "multiemployer plan" (as defined in Section 3(37) of ERISA) or on account of any withdrawal therefrom.

(c) Notwithstanding anything else set forth herein, other than routine contributions to Plans and routine claims for benefits and liability for premiums due to the Pension Benefit Guaranty Corporation, the Company has not incurred any liability with respect to a Plan that is currently due and owing and has not yet been satisfied, including without limitation under ERISA (including without limitation Title I or Title IV thereof), the Code or other applicable law, and, to the best knowledge of the Company, no event has occurred, and, there exists no condition or set of circumstances (other than the contributions to, and accrual of benefits under, the normal terms of the Plans), which could result in the imposition of any liability of the Company with respect to a Plan.

(d) Except as required by applicable law or as contemplated by this Agreement, the Company has not committed itself, orally or in writing, (i) to provide or cause to be provided to any person any payments or provision of any "welfare" or "pension" benefits (as defined in Sections 3(1) and 3(2) of ERISA) in addition to, or in lieu of, those payments or benefits set forth under any Plan, (ii) to continue the payment of, or accelerate the payment of, benefits under any Plan, except as expressly set forth thereunder, or (iii) to provide or cause to be provided any severance or other post-employment benefit, salary continuation, termination, disability, death, retirement, health or medical benefit to any person (including without limitation any former current employee) except as set forth under any Plan.

(e) Notwithstanding any other provisions to the contrary set forth herein, the Purchasers shall not assume any liability that the Company may have incurred or may incur which arises out of, is a result of, or is in any way related to, any Plan.

5.27 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor to its knowledge any officer, director, employee or agent thereof, nor any other person or entity acting on behalf of the Company, acting alone or together, has (i) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer, supplier, governmental employee or other person or entity with whom either the Company has done business directly or indirectly, or (ii) directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, governmental employee or other person or entity who is or may be in a position to help or hinder the business (or assist either the Company in connection with any actual or proposed transaction) which in the case of either clause (i) or clause (ii) above, (a) would reasonably be expected to subject to the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (b) if not given in the past, would reasonably be expected to have had a material adverse effect on the business, assets, properties, operating condition (financial or otherwise) or prospects of the Company or (c) if not continued in the future, would reasonably be expected to have a material adverse effect on the business, assets, properties, operating condition (financial or otherwise) or prospects of the Company.

5.28 NO BROKER. Except for the transaction fees of (i) $250,000 to be paid to Halpern Denny III, L.P. ("Halpern Denny"), (ii) $166,000 to be paid to Special Situations Private Equity Fund, L.P. ("Special Situations Fund") and (iii) $417,000 to be paid to Greenlight Capital, L.P., each on or prior to January 31, 2002, in connection with the transactions contemplated by this Agreement and except as set forth on Schedule 5.28 hereto, no broker has acted on behalf of the Company in connection with this Agreement, and there are no brokerage commissions, finders' fees or similar fees or commissions payable in connection therewith based on any agreement, arrangement or understanding with the Company or any action taken by the Company.

6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

Each Purchaser, severally and not jointly, hereby represents and warrants to the Company as follows:

6.1 REQUISITE POWER AND AUTHORITY. Such Purchaser has all necessary power and authority under all applicable provisions of law to execute and deliver this Agreement and the Related Agreements and to carry out their respective provisions. All action on each Purchaser's part required for the lawful execution and delivery of this Agreement and the Related Agreements have been or will be effectively taken prior to the Closing. Upon their execution and delivery, this Agreement and the Related Agreements will be valid and binding obligations of such Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' right and (b) general principles of equity that restrict the availability of equitable remedies.

6.2 INVESTMENT REPRESENTATIONS. Such Purchaser understands that the Shares, the Warrants and the Warrant Shares have not been registered under the Securities Act. Such Purchaser also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon such Purchaser's representations contained in the Agreement. Such Purchaser hereby represents and warrants as follows:

(a) PURCHASER BEARS ECONOMIC RISK. Such Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Such Purchaser must bear the economic risk of this investment indefinitely unless the Shares are registered pursuant to the Securities Act, or an exemption from registration is available. Such Purchaser understands that the Company has no present intention of registering the Shares, such Purchaser also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow such Purchaser to transfer all or any portion of the Shares under the circumstances, in the amounts or at the times such Purchaser might propose.

(b) ACQUISITION FOR OWN ACCOUNT. Such Purchaser is acquiring the Shares for such Purchaser's own account for investment only, and not with a view towards their distribution.

(c) PURCHASER CAN PROTECT ITS INTEREST. Such Purchaser represents that by reason of its, or of its management's, business or financial experience, such Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement, and the Related Agreements. Further, such Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement.

(d) ACCREDITED INVESTOR. Such Purchaser represents that it is an accredited investor within the meaning of Regulation D under the Securities Act.

(e) COMPANY INFORMATION. Such Purchaser has received and read the Financial Statements and has had an opportunity to discuss the Company's business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company's operations and facilities and all of the SEC Filings. Such Purchaser has also had the opportunity to ask questions of, and receive answers from, the Company and its management regarding the terms and conditions of this investment.

(f) RULE 144. Such Purchaser acknowledges and agrees that the Shares, the Warrants and the Warrant Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Such Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act as in effect from time to time, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations.

(g) RESIDENCE. The office or offices of such Purchaser in which its investment decision was made is located at the address or addresses of the Purchasers set forth on the signature page hereto.

7. CONDITIONS TO CLOSING.

7.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING.

The Purchasers' obligations to purchase the Shares at the Closing are subject to the satisfaction, at or prior to the Closing Date, of the following conditions:

(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the Company in Section 5 hereof shall be true and correct in all material respects (except that any representation or warranty that contains a materiality qualifier shall be true and correct in all respects) as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Company shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date.

(b) LEGAL INVESTMENT. On the Closing Date, the consummation of the transactions contemplated by the Agreement and the Related Agreements shall be legally permitted by all laws and regulations to which the Purchasers and the Company are subject.

(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Related Agreements, including without limitation the consent of the senior lender of the Company prior to the Closing Date.

(d) FILING OF CERTIFICATE OF DESIGNATION. The Certificate of Designation shall have been filed with the Secretary of State of the State of Delaware.

(e) AMENDMENT NO. 2 TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT. The Registration Rights Agreement Amendment shall have been executed and delivered by the Company on the Closing Date, and shall be in full force and effect as of the Closing Date.

(f) AMENDMENT NO. 2 TO STOCKHOLDERS AGREEMENT. The Stockholders Agreement Amendment shall have been executed and delivered by the Company on the Closing Date, and shall be in full force and effect as of the Closing Date.

(g) CLOSING DELIVERIES. The Company shall have delivered to Purchasers all items required to be delivered at the Closing by Section 3.1.1 of this Agreement.

(h) CORPORATE DOCUMENTS. The Company shall have delivered to Purchasers or their counsel, copies of all corporate documents of the Company as the Purchasers shall reasonably request.

(i) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers and their counsel, and the Purchasers and their counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.

(j) RIGHTS PLAN. All corporate action necessary to waive, (i) on behalf of the Purchasers, individually, and (ii) the permitted assignees of the Shares of such individual Purchaser, the trigger provisions of the Rights Plan dated in June 1999 between the Company and American Stock Transfer and Trust Company which relate to purchases of common stock above a specified percentage of the outstanding common stock of the Company, but only with respect to shares of common stock of the Company purchased directly from the Company as "original issue shares" by the Purchasers under written agreements between the Purchasers and the Company shall have been taken.

(k) PAYMENT OF FEES. The Company shall have paid all fees and expenses arising under Section 9.9(a) through such date .

(l) AMENDMENT TO FIRST SERIES F PURCHASE AGREEMENT, SECOND SERIES F PURCHASE AGREEMENT AND EXCHANGE AGREEMENT. The First Series F Purchase Agreement, the Second Series F Purchase Agreement and the Exchange Agreement shall each be amended in the forms attached as EXHIBIT G hereto.

(m) AMENDMENT TO JUNE SERIES F PURCHASE AGREEMENT. An Amendment to the June Series F Purchase Agreement, in the form attached hereto as EXHIBIT H, shall be executed and delivered by the parties thereto.

(n) ESCROW AGREEMENT. The Company and the Escrow Agent shall have executed and delivered the Escrow Agreement.

(o) WARRANTS. The Company and each of the holders of the Warrants issued pursuant to the First Series F Purchase Agreement, the Second Series F Purchase Agreement and the Exchange Agreement shall have executed a letter agreement, in the form attached as EXHIBIT I hereto, to amend the anti-dilution provisions of the Warrants.

7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT THE CLOSING. The Company's obligation to issue and sell the Shares at the Closing is subject to the satisfaction, on or prior to the Closing, of the following conditions:

(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by the Purchasers in Section 5 hereof shall be true and correct in all material respects at the date of the Closing, with the same force and effect as if they had been made on and as of said date.

(b) PERFORMANCE OF OBLIGATIONS. The Purchasers shall have performed and complied with all agreements and conditions herein required to be performed or complied with by the Purchasers on or before the Closing.

(c) CLOSING DELIVERIES. The Purchasers shall have delivered to the Company all items required to be delivered at the Closing by Sections 3.1.2 and 3.1.3 of this Agreement.

(d) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Related Agreements.

8. PROTECTIVE PROVISIONS.

The Company covenants and agrees as follows:

(a) [RESERVED].

(b) 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.

(c) Proceeds received by the Company pursuant to this Agreement (the "Proceeds") may be used (along with the proceeds from other financings by the Company) only in connection with (i) the purchase price payable in connection with the Acquisition of Einstein, (ii) the repayment in full of all amounts outstanding under the Credit Agreement dated as of August 31, 1999, as amended, among the Company, certain of its subsidiaries and Fleet National Bank (f/k/a BankBoston, N.A.) and (iii) reasonable fees and expenses incurred by the Company in connection with clauses (i) and (ii) above.

(d) The Company shall make such changes to the senior management of the Company as requested by a majority of the Board of Directors of the Company, including the designee of Halpern Denny.

9. MISCELLANEOUS.

9.1 GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the State of New York as such laws are applied to agreements between New York residents entered into and performed entirely in New York.

9.2 SURVIVAL. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Purchasers and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.

9.3 SUCCESSORS AND ASSIGNS.

(a) Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Shares from time to time.

(b) Neither this Agreement nor any of the parties' rights hereunder shall be assignable by any party thereto without the prior written consent of the other parties hereto, except that a Purchaser may without prior consent, assign its rights hereunder to any other person or entity (each a "Permitted Transferee") to whom the Shares or the Warrants have been sold or otherwise transferred in accordance with the provisions of the Stockholders Agreement.

9.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto, the Related Agreements and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.

9.5 SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

9.6 AMENDMENT AND WAIVER.

(a) This Agreement may be amended or modified only upon the written consent of the Company and holders of at least a majority of the Shares.

(b) The obligations of the Company and the rights of the holders of the Shares under the Agreement may be waived only with the written consent of the holders of at least a majority of the Shares.

9.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, the Related Agreements or the Certificate of Designation shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on the Purchaser's part of any breach, default or noncompliance under this Agreement, the Related Agreements or under the Certificate of Designation or any waiver on such party's part of any provisions or conditions of the Agreement, the Related Agreements, or the Certificate of Designation must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, the Related Agreements, the Certificate of Designation by law, or otherwise afforded to any party, shall be cumulative and not alternative.

9.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; or (c) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address as set forth on the signature page hereof and to Purchasers at the address set forth on the signature pages hereto or at such other address as the Company or Purchasers may designate by ten (10) days advance written notice to the other parties hereto.

9.9 EXPENSES.

(a) Whether or not the transactions herein contemplated are consummated, the Company shall pay (i) the fees and expenses of the Purchasers, including without limitation, the fees and expenses of the Purchasers' counsel, accountants and other advisors (including, without limitation, up to $10,000 of the fees and expenses of counsel to Special Situations Fund), (ii) on January 31, 2002, a transaction fee of $166,000 to Special Situations Fund and (iii) on January 31, 2002, a transaction fee of $417,000 to Greenlight Capital, L.P. The obligations of the Company under this Section 9.9 shall survive the closing hereunder, the payment or cancellation of the Notes, exercise or cancellation of the Warrants and the termination of the Purchase Agreement.

(b) In addition to all other sums due hereunder or provided for in this Agreement, the Company shall pay to the Purchasers or their agents, respectively, an amount sufficient to indemnify such persons against all reasonable costs and expenses (including reasonable attorneys' fees and expenses and reasonable costs of investigation) and damages and liabilities incurred by the Purchasers or their agents pursuant to any investigation or proceeding against any or all of the Company, the Purchasers, or their agents, arising out of or in connection with the Purchase Agreement, the Notes or the Warrants (or any transaction contemplated hereby or thereby or any other document or instrument executed herewith or therewith or pursuant hereto or thereto), whether or not the transactions contemplated by this Purchase Agreement are consummated, which investigation or proceeding requires the participation of the Purchasers or their agents or is commenced or filed against the Purchasers or their agents because of the Purchase Agreement, the Notes or the Warrants or any of the transactions contemplated hereby or thereby (or any other document or instrument executed herewith or therewith or pursuant hereto or thereto), other than any investigation or proceeding (x) in which it is finally determined that there was gross negligence or willful misconduct on the part of the Purchasers seeking indemnification or its agents, (y) which relates to disputes among a Purchaser and its own partners, shareholders or beneficiaries or (z) which relates to a Purchaser's disposition of Notes, Warrants or Shares and the conduct of the Purchaser or its agents giving rise to such investigation or proceeding. The Company shall assume the defense, and shall have its counsel represent the Purchasers and such agents, in connection with investigating, defending or preparing to defend any such action, suit, claim or proceeding (including any inquiry or investigation); provided, however, that the Purchasers, or any such agents, shall have the right (without releasing the Company from any of its obligations hereunder) to employ their own counsel to participate in the Company's defense, but the fees and expenses of such counsel shall be at the expense of such person unless (i) the employment of such counsel shall have been authorized in writing by the Company in connection with such defense or (ii) the Company shall not have provided their counsel to take charge of such defense or (iii) the Purchasers, or such agent of the Purchasers, shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the Company, then in any of such events referred to in clauses (i), (ii) or (iii) such reasonable counsel fees and expenses (but only for one counsel for the Purchasers and their agents) shall be borne by the Company. Any settlement of any such action, suit, claim or proceeding shall require the consent of the Company and such indemnified person (neither of which shall unreasonably withhold its consent).

(c) The Company agrees to pay, or to cause to be paid, all documentary, stamp and other similar taxes levied under the laws of the United States of America or any state or local taxing authority thereof or therein in connection with the issuance and sale of the Shares, the Warrants and the Warrants Shares, the issuance and sale of the Notes and the execution and delivery of the Purchase Agreement and any other documents or instruments contemplated hereby or thereby and any modification of any of the Notes or the Purchase Agreement or any such other documents or instruments and will hold the Purchasers harmless without limitation as to time against any and all liabilities with respect to all such taxes.

(d) The obligations of the Company under this Section 9.9 shall survive the closing hereunder, the payment or cancellation of the Notes, exercise or cancellation of the Warrants and the termination of the Purchase Agreement.

9.10 TITLES AND SUBTITLES. The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

9.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

9.12 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it is not relying upon any person, firm, or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any such Purchaser shall be liable for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the Shares, the Warrants and the Warrant Shares.

9.13 PRONOUNS. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.

9.14 PUBLICITY. Neither the Company nor the Purchasers shall issue any press release or other public statement relating to this Agreement or the Related Agreements or the transactions contemplated hereby or thereby without the prior written approval of the other, not to be unreasonably withheld.

9.15 DISPUTE RESOLUTION. If any dispute arises under this Agreement, the parties shall seek to resolve any such dispute between them in the following manner:

(a) GOOD FAITH NEGOTIATIONS. First, by promptly engaging in good faith negotiations among senior executives of each party.

(b) MEDIATION. If the parties are unable to resolve the dispute within 20 business days following the first request by either party for good faith negotiations, then the parties shall endeavor to resolve the dispute by mediation administered by the American Arbitration Association ("AAA") under its Commercial Mediation Rules.

(c) EQUITABLE RELIEF. No party shall be precluded hereby from securing equitable remedies in courts of any jurisdiction, including, but not limited to, temporary restraining orders and preliminary injunctions to protect its rights and interests, but such relief shall not be sought as a means to avoid, delay or stay mediation, arbitration or Summary Proceeding.

(d) CONTINUING PERFORMANCE. Each party is required to continue to perform its obligations under this contract pending final resolution of any dispute arising out of or relating to this contract, unless to do so would be impossible or impracticable under the circumstances.

9.16 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.

9.17 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, the parties hereto have executed the THIRD SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.

NEW WORLD COFFEE - MANHATTAN
     BAGEL, INC.

By:_____________________________________
     Name:
     Title:

PURCHASERS:

ALPERN DENNY III, L.P.

By:_____________________________________
     Name:
     Title:

GREENLIGHT CAPITAL, L.P.

By:_____________________________________
     Name:
     Title:

GREENLIGHT CAPITAL QUALIFIED, L.P.

By:_____________________________________
     Name:
     Title:

GREENLIGHT CAPITAL OFFSHORE, LTD.

By:_____________________________________
     Name:
     Title:

SPECIAL SITUATIONS PRIVATE EQUITY
     FUND, L.P.

By:_____________________________________
     Name:
     Title:

SPECIAL SITUATIONS CAYMAN FUND, L.P.

By:_____________________________________
     Name:
     Title:

SPECIAL SITUATIONS FUND III, L.P.

By:_____________________________________
     Name:
     Title:

SCHEDULE I

Purchasers	Number of Shares of Series F Preferred Stock	Number of Original Warrants	Additional Warrant Percentage	Purchase Price

Halpern Denny III, L.P.	3,500	2,961,551	0.2625%	$3,500,000
Greenlight Capital, L.P.	2,200	1,861,546	0.1650%	2,200,000
Greenlight Capital Qualified, L.P.	5,300	4,484,634	0.3975%	5,300,000
Greenlight Capital Offshore, Ltd.	5,000	4,230,787	0.3750%	5,000,000
Special Situations Fund, L.P. Private Equity	1,200	1,015,389	0.0900%	1,200,000
Special Situations Cayman Fund, L.P.	950	803,850	0.0713%	950,000
Special Situations Fund III, L.P.	2,850	2,411,548	0.2138%	2,850,000
Total	21,000	17,769,305	1.5750%	$21,000,000

EX-99.2 4 nwcex992.htm WARRANT TO PURCHASE COMMON STOCK Exhibit 99.2

Exhibit 99.2

NEITHER THIS WARRANT NOR THE SECURITIES PURCHASABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION IS AVAILABLE AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER IS DELIVERED TO SUCH EFFECT.THE SECURITY EVIDENCED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE OF SUCH SECURITY ARE SUBJECT TO THE TERMS OF A STOCKHOLDERS AGREEMENT DATED AS OF JANUARY 18, 2001, AMONG THE ISSUER AND THE OTHER PARTIES THERETO, AS AMENDED FROM TIME TO TIME, AND THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO THE CONDITIONS PRECEDENT SPECIFIED IN SUCH STOCKHOLDERS AGREEMENT.

Issue Date: June 19, 2001
No. of Shares Subject to Warrant:

WARRANT TO PURCHASE COMMON STOCK
OF
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.

This is to certify that, for value received, __________________ (the "Holder") is entitled to purchase, subject to the provisions of this Warrant, from NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (the "Company"), ___________ shares (subject to adjustment or reduction as provided herein) of Common Stock, $0.001 par value, of the Company ("Common Stock"), at a price of $0.01 per share (subject to adjustment as provided herein) at any time during the period beginning on the Issue Date and ending not later than 5:00 p.m. New York time on June 19, 2006 (the "Termination Date"). The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as "Warrant Shares," and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price."

(a) EXERCISE OF WARRANT.

(1) This Warrant may be exercised in whole or in part at any time from time to time on or after the Issue Date until the Termination Date, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of shares specified in such form, in lawful money of the United States of America in cash or by official bank or certified check made payable to the Company.

(2) As an alternative to payment of the Exercise Price in cash, the Holder shall have the right, at any time and from time to time, to convert this Warrant in whole or in part into shares of Common Stock (the "Conversion Right"). Upon exercise of the Conversion Right, payment of the aggregate Exercise Price shall be made by delivery of this Warrant with instructions that the Company retain as payment of the aggregate Exercise Price such number of Warrant Shares as shall be determined under the next sentence. The Holder shall receive that number of Warrant Shares determined by multiplying the number of Warrant Shares for which the Conversion Right is exercised by a fraction, the numerator of which shall be the difference between the then fair market value per Warrant Share (based on the closing price on the trading day preceding the exercise of the Conversion Right) and the Exercise Price per Warrant Share, and the denominator of which shall be the then fair market value per Warrant Share. The remaining Warrant Shares for which the Conversion Right has been made shall be deemed to have been paid to the Company as the aggregate Exercise Price.

(3) The term "closing price" for each day shall mean the last reported sale price or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case on the principal national securities exchange or the Nasdaq National Market on which the Company's Common Stock is listed or admitted to trading, or if the Company's Common Stock is not listed or admitted to trading on any national securities exchange or the Nasdaq National Market, the average of the highest reported bid and lowest reported asked prices as furnished by the National Association of Securities Dealers Inc. Automated Quotation System, or comparable system. The term "trading day" shall mean (X) if the Common Stock is listed on at least one stock exchange, a day on which there is trading on the principal stock exchange on which the Common Stock is listed or (Y) if the Common Stock is not listed on a stock exchange but sale prices of the Common Stock are reported on an automated quotation system, a day on which trading is reported on the principal automated quotation system on which sales of the Common Stock are reported.

(4) If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company, if any, at its office, in proper form for exercise and together with payment of the Exercise Price in the manner provided herein, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise; provided, however, that if at the date of surrender of such Warrants and payment of such Exercise Price, the transfer books for the Common Stock shall be closed, the certificates for the shares in respect of which such

Warrants are then exercised shall be issuable as of the date on which such books shall next be opened, and until such date the Company shall be under no duty to deliver any certificate for such shares and the Holder shall not be deemed to have become a holder of record of such shares.

(5) Notwithstanding anything herein to the contrary, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of paragraph (a)(2) above, without any further action by or on behalf of the Holder, immediately preceding the time this Warrant would otherwise expire.

(6) So long as this Warrant shall be outstanding, (i) if the Company shall declare any dividend or make any distribution upon the Common Stock, or (ii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least 20 days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or offer for subscription or purchase, or (y) such reorganization, reclassification, consolidation, merger, sale, lease, transfer, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of the Common Stock or other capital stock of the Company shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.

(7) The Holder shall have no rights as a stockholder of the Company for shares of Common Stock issuable hereunder unless and until such shares are purchased in accordance herewith.

(b) RESERVATION OF SHARES. The Company hereby agrees that at all times there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant.

(c) FRACTIONAL SHARES. The Company shall not be required to issue fractions of shares on the exercise of Warrants. If any fraction of a share would, except for the provisions of this Section, be issuable on the exercise of any Warrant, the Company will (1) if the fraction of a share otherwise issuable is equal to or less than one-half, round down and issue to the Holder only the largest whole number of shares of Common Stock to which the Holder is otherwise entitled, or (2) if the fraction of a share otherwise issuable is greater than one-half, round-up and issue to the Holder one additional share of Common Stock in addition to the largest whole number of shares of Common Stock to which the holder is otherwise entitled.

Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Subject to the provisions of Section (g), upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the permitted assignee named in such instrument of assignment and this Warrant shall be canceled. If this Warrant should be assigned in part only, the Company shall, upon surrender of this Warrant in accordance with the procedures set forth in the preceding sentence, execute and deliver, in addition to the new Warrant described in the preceding sentence, a new Warrant evidencing the rights of the Holder to purchase the balance of the shares purchasable thereunder. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date.

(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein.

(f) ANTI-DILUTION AND ADJUSTMENT PROVISIONS. The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time beginning on the date of issue of this Warrant, as hereinafter provided:

(1) In case the Company shall issue Common Stock as a dividend upon Common Stock or in payment of a dividend thereon or shall subdivide the number of outstanding shares of its Common Stock into a greater number of shares or shall contract the number of outstanding shares of its Common Stock into a lesser number of shares, the Exercise Price then in effect shall be adjusted, effective at the close of business on the record date for the determination of stockholders entitled to receive such dividend or be subject to such subdivision or contraction, to the price (computed to the nearest thousandth of a cent) determined by dividing (A) the product obtained by multiplying the Exercise Price in effect immediately prior to the close of business on such record date by the number of shares of Common Stock outstanding prior to such dividend, subdivision or contraction, by (B) the sum of the number of shares of Common Stock outstanding immediately after such dividend, subdivision, or contraction.

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) If the Company redeems all issued and outstanding shares of Series F Preferred Stock on or prior to March 19, 2002, the number of shares issuable upon exercise of the Warrant (the "Original Warrant Shares") shall be reduced by an amount equal to one-third of the number of Original Warrant Shares. If the Company redeems all issued and outstanding shares of Series F Preferred Stock on or prior to June 19, 2002, the number of Original Warrant Shares shall instead be reduced by an amount equal to one-fourth of the number of Original Warrant Shares. In the event of any such reduction, the Company shall cancel the existing Warrant and issue a new Warrant representing the reduced number of shares issuable upon exercise of the 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).

Secretary of the Company, setting forth the facts requiring such adjustment and the number and kind of securities issuable upon exercise of each Warrant after such adjustment; and (ii) cause a notice stating that such adjustment has been effected and stating the Exercise Price then in effect and the number and kind of securities issuable upon exercise of each Warrant to be sent to each registered holder of a Warrant.

(8) The Exercise Price and the number of shares issuable upon exercise of this Warrant shall not be adjusted except in the manner and only upon the occurrence of the events heretofore specifically referred to in this Section (f).

(9) The Board of Directors of the Company may, in its sole discretion, (a) reduce the Exercise Price of each Warrant, (b) increase the number of shares of Common Stock issuable upon exercise of each Warrant and/or (c) provide for the issuance of other securities (in addition to the shares of Common Stock otherwise issuable upon exercise of the Warrant) upon exercise of each Warrant.

(g) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933 AND OTHER APPLICABLE SECURITIES LAWS. This Warrant or the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may not be sold or otherwise disposed of unless Holder provides the Company with an opinion of counsel satisfactory to the Company in form satisfactory to the Company that this Warrant or the Warrant Shares or such other security may be legally transferred without violating the Securities Act of 1933, as amended (the "1933 Act") and any other applicable securities law and then only against receipt of an agreement of the transferee to comply with the provisions of this Section (g) with respect to any resale or other disposition of such securities. Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing that the Warrant Shares are being acquired solely for the Holder's own account and that Holder or Holder's purchaser representative is an accredited investor, as defined in Rule 501 under the 1933 Act.

(h) This Warrant is subject to the rights and benefits of the Amended and Restated Registration Rights Agreement dated as of January 18, 2001, as amended from time to time.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as of the Issue Date first set forth above by an authorized officer.

	NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By: ________________________________ Ramin Kamfar, Chief Executive Officer
Attest: _____________________, Secretary

Dated: June 19, 2001

PURCHASE FORM

Dated: _______________, 2001

The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing shares of Common Stock and hereby makes payment of ________ in payment of the Exercise Price thereof.

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name ___________________________________

(Please typewrite or print in block letters.)

Address ___________________________________

Signature __________________________________

ASSIGNMENT FORM

FOR VALUE RECEIVED,

hereby sells, assigns and transfers unto

Name _____________________________________________

(Please typewrite or print in block letters.)

Address ____________________________________________

The right to purchase Common Stock represented by this Warrant to the extent of ______ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ______________, Attorney, to transfer the on the books of the Company with full power of substitution in the premises. Date ____________, 2001

Signature

_____________________________________

EX-99.3 5 nwcex993.htm AMENDMENT NO.2 TO AMD & RESTATED REGISTRATION Exhibit 99.3

Exhibit 99.3

AMENDMENT NO. 2
TO
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

AMENDMENT NO. 2 TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of June 19, 2001 ("Amendment"), by and among NEW WORLD COFFEE-MANHATTAN BAGEL, INC., a Delaware corporation (the "Company"), and the holders of certain warrants listed on Schedule I hereto (the "Stockholders"), amending the Amended and Restated Registration Rights Agreement dated as of January 18, 2001 and Amendment No. 1 dated March 29, 2001 thereto (as heretofore amended, the "Registration Rights Agreement"), among the Company and the Stockholders, which amended and restated the Registration Rights Agreement dated as of August 11, 2000, by and between the Company, BET Associates, L.P., and Brookwood New World Investors, LLC. Capitalized terms used herein without definition shall have the meanings set forth in the Registration Rights Agreement.

Background

The Company and certain purchasers of Series F Preferred Stock ("Additional Series F Purchasers") entered into (i) a Series F Preferred Stock Purchase Agreement dated as of June 7, 2001 (as amended, the "June Series F Purchase Agreement") and (ii) the Third Series F Preferred Stock and Warrant Purchase Agreement dated as of June 19, 2001 (the "Third Purchase Agreement"), pursuant to which, among other things, the Additional Series F Purchasers purchased an additional 25,000 shares of Series F Preferred Stock, $.001 par value, of the Company, at a purchase price of $1,000.00 per share and the Company delivered warrants in the form attached to the June Series F Purchase Agreement and the Third Purchase Agreement and agreed to issue in the future certain warrants in similar form. The Company has agreed to grant to the Additional Series F Purchasers certain registration rights with respect the shares issuable upon exercise of the additional warrants issued pursuant to the June Series F Purchase Agreement and the Third Purchase Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Amendments.

(a) Section 1 of the Registration Rights Agreement is hereby amended by adding the following definition thereto:

"The term "Additional Warrants" means the warrants issued pursuant to and in the form attached to the Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001, the warrants issued pursuant to the Series F Preferred Stock Purchase Agreement dated as of June 7, 2001, and the warrants issued pursuant to and in the form attached to the Third Series F Preferred Stock and Warrant Purchase Agreement dated as of June 19, 2001."

(b) The Registration Rights Agreement is hereby amended by deleting Schedule I in its entirety and replacing it with Schedule I attached hereto.

2. The Registration Rights Agreement, as amended by this Amendment, is hereby in all respects confirmed and each of the parties hereto acknowledges and agrees that it is bound by all the terms and provisions thereof, as amended hereby.

3. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws principles.

4. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as a sealed instrument, all as of the day and year first above written.

COMPANY:	NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By: ___________________________________________ Name: Title:

STOCKHOLDERS:	HALPERN DENNY III, L.P. By: ___________________________________________ Name: Title: BET ASSOCIATES, L.P. By: BRU Holding Co., LLC Its: General Partner By: ___________________________________________ Name: Title: BROOKWOOD NEW WORLD INVESTORS LLC By: Brookwood New World Co., LLC, Its: Managing Member By: ___________________________________________ Name: Title: GREENLIGHT CAPITAL, L.P. By: ___________________________________________ Name: Title: GREENLIGHT CAPITAL QUALIFIED, L.P. By: ___________________________________________ Name: Title: GREENLIGHT CAPITAL OFFSHORE, LTD. By: ___________________________________________ Name: Title: SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P. By: ___________________________________________ Name: Title: SPECIAL SITUATIONS CAYMAN FUND, L.P. By: ___________________________________________ Name: Title: SPECIAL SITUATIONS FUND III, L.P. By: ___________________________________________ Name: Title:

SCHEDULE I

STOCKHOLDERS

Stockholder	Series F Preferred Stock	Warrant

Halpern Denny III, L.P.	32,500	16,951,320
BET Associates, L.P.	8,213.01	3,263,178
Brookwood New World Investors, LLC	8,185.32	3,263,178

Greenlight Capital, L.P.	2,200	1,861,546
Greenlight Capital Qualified, L.P.	5,300	4,484,634
Greenlight Capital Offshore, Ltd.	5,000	4,230,787
Special Situations Private Equity Fund, L.P.	1,200	1,015,389
Special Situations Cayman Fund, L.P.	950	803,850
Special Situations Fund III, L.P.	2,850	2,411,548

EX-99.4 6 nwcex994.htm CONSENT AND WAIVER AGREEMENT Exhibit 99.4

Exhibit 99.4

CONSENT AND WAIVER AGREEMENT

AGREEMENT made as of the 19th day of June, 2001 by and among New World Coffee-Manhattan Bagel, Inc., a Delaware corporation (the "Company"), with an office at 246 Industrial Way West, Eatontown, NJ 07724, Halpern Denny III, L.P., 500 Boylston Street, Suite 1880, Boston, MA 02116 ("Halpern Denny"), Brookwood New World Investors, L.L.C., 55 Tower Road, Beverly, MA 01915 ("Brookwood"), BET Associates, L.P., 3103 Philmont Avenue, Huntingdon Valley, PA 19006 ("BET"); Greenlight Capital, L.P., Greenlight Capital Qualified, L.P. and Greenlight Capital Offshore, Ltd., c/o Greenlight Capital, 420 Lexington Avenue, Suite 1740, New York, N.Y. 10107 ("Greenlight") and Special Situations Private Equity Fund, L.P., Special Situations Cayman Fund, Ltd. and Special Situations Fund III, L.P., 153 East 53rd Street, New York, NY 10022 ("Special Situations").

RECITALS

New World has sold, or agreed to sell, shares of Series F preferred stock (the "Series F Preferred Stock") to Halpern Denny, Brookwood, BET, Greenlight and Special Situations (collectively, "the Series F Holders"). The Series F Preferred Stock is currently described in a Second Amended Certificate of Designation, Preferences and Rights of Series F Preferred stock dated June 15, 2001, which is being filed with the Secretary of State of Delaware (the " Second Amended Certificate").

The Company proposes to enter into an indenture concerning the issuance and sale of $140 million of senior secured notes (the "Senior Notes") and to obtain a loan (the "Asset Based Loan") secured by the Einstein/Noah Bagel Corp. Debentures held by it and its affiliate New World Greenlight, LLC. As a condition to the sale of the Senior Notes and the making of the Asset Based Loan, the parties purchasing the Senior Notes and making the Asset Based Loan have required, among other matters, that the Company and the Series F Holders enter into this Consent and Waiver Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties hereto agree as follows:


	1. Dividends. Any provision of the Amended Certificate to the contrary notwithstanding, no dividends shall be paid on the Series F Preferred Stock other than in additional shares of Series of F Preferred Stock.

	2. Mandatory Redemption. Notwithstanding the provisions of Section 3(b) of the Amended Certificate entitled "Mandatory Redemption", the Series F Preferred Stock shall be redeemable on the later of (a) January 18, 2004, or June 30, 2004, as the case may be and (b) the maturity date of any notes ("Refinancing Senior Notes") the proceeds of which are used to repay the outstanding Senior Notes, provided that the Indenture for the Refinancing Senior Notes includes substantially the language set forth on Exhibit A hereto. The Company agrees to use any cash available (other than cash required for current operations pursuant to an operating plan approved by the Board of Directors, including the designees of the Series F Holders) to redeem the Series F Preferred Stock as permitted by the terms set forth in Exhibit A, including, without limitation, clause (c) of the exceptions to the definition of Restricted Payments and the "basket" for payments set forth in clause (viii).

	3. Protective Rights. Notwithstanding any provision of Section 4 of the Amended Certificate, the Series F Holders hereby waive any objection or restriction which might be imposed thereunder in connection with (a) the purchase by the Company of substantially all of the assets of Einstein/Noah Bagel Corp.; (b) the sale of the Senior Notes, including the granting of liens on substantially all of the assets of the Company and its subsidiaries and including the creation of a revolving line of credit contemplated by the indenture under which the Senior Notes are to be sold, and the Refinancing Senior Notes (provided that the terms of such Refinancing Senior Notes are consistent with the terms hereof), (c) the use of the 7.25% subordinated convertible debentures due June 2004 of Einstein/Noah Bagel Corp. as security for a $35 million Asset Based Loan to a subsidiary of the Company, the proceeds of which are to be used in connection with the acquisition of substantially all of the assets of Einstein/Noah Bagel Corp. and (d) the issuance of the preferred stock (the "Contingent Preferred Stock"), if any, upon the election of the holders of Newco Notes (as defined in the Company's Offering Circular dated as of June 15, 2001), provided that the preferred stock is issued under substantially the same terms as described in such Offering Circular.

	4. Warrants. Reference is made to certain warrants sold or to be sold by the Company to the Series F Holders in conjunction with the sale of the Series F Preferred Stock (the "Warrants"). Each of the Warrants is hereby amended by deleting therefrom the provisions of Section (f) ANTI-DILUTION AND ADJUSTMENT PROVISIONS, Subsection (3); provided, however, that the foregoing shall not prohibit the Series F Holders from receiving the adjustments to the Warrants afforded to them on June 30, 2002 and thereafter pursuant to the terms of the letter agreement, dated as of June 19, 2001, among the Company, Halpern Denny, BET and Brookwood.

	5. Other Agreements. Insofar as any of the provisions described above are included in any one or more agreements between the Company and the Series F Holders, such provisions shall likewise be waived or consented to, as the case may be.

	6. Preemptive Rights, Etc. Each of Halpern Denny, BET and Brookwood hereby (a) waive any preemptive rights which it may possess concerning (i) the sale of 21,000 shares of Series F Preferred Stock and Warrants to Halpern Denny, Greenlight and Special Situations, (ii) the sale of the Senior Notes, (iii) the sale of the Refinancing Senior Notes, (iv) the sale of the $35,000,000 Secured Increasing Rate Notes issued on June 19, 2001, and (v) the issuance of the Contingent Preferred Stock, if any; (b) consent to the issuance of the 21,000 shares of Series F Preferred Stock to Halpern Denny, Greenlight and Special Situations; and (c) consent to the taking of all necessary actions by the Company to increase the number of authorized shares of Series F Preferred Stock to One Hundred Sixteen Thousand (116,000) shares.

	7. Lock Up. The Series F Holders shall have entered into a written agreement with Jefferies & Company, Inc. in the form of Exhibit B hereto (each such agreement, a "Lock-up Agreement"), and executed originals of each Lock-up Agreement shall be delivered to Jefferies & Company., Inc.

	8. Non-Exercise of Warrants. Until such time as the Certificate of Incorporation of the Company is amended to increase the authorized common stock to an amount sufficient to permit the exercise of all then outstanding options and warrants, the Series F Holders shall not exercise any of the warrants issued to them in conjunction with their purchase of Series F Preferred Stock. The Company shall effect such amendment of the Certificate of Incorporation of the Company on or prior to the earlier of October 17, 2001 and a Change of Control Event (as defined in the Second Amended Certificate of Designation). At any time on or after October 17, 2001, even if such amendment has not been effected, the Series F Holders shall be permitted to exercise their warrants, provided that upon such exercise there is a sufficient number of shares of Common Stock authorized to permit the exercise of the warrants issued in connection with the Senior Notes. In the event that the Series F Holders are permitted to exercise some, but not all, of the warrants issued to them due to the restrictions contained herein, then the Series F Holders who received warrants on or before March 31, 2001 shall have the right to exercise their warrants prior to the Series F Holders who received warrants after March 31, 2001.

	9. Condition. This Agreement shall become effective as of the date hereof and shall continue in effect thereafter, except that if Company fails to purchase the assets of Einstein/Noah Bagel Corp. as contemplated by an Asset Purchase Agreement dated May 14, 2001, as to which affiliates of the Company were the high bidders, or such acquisition is consummated without the sale of the Senior Notes, this Agreement shall terminate and be of no force or effect whatsoever.

IN WITNESS WHEREOF, the parties have executed this agreement as of the date first above written.

NEW WORLD COFFEE-MANHATTAN BAGEL, INC.

By:___________________________________________

HALPERN DENNY III, L.P.

By:___________________________________________

BROOKWOOD NEW WORLD INVESTORS L.L.C.

By:___________________________________________

BET ASSOCIATES, L.P.

By:___________________________________________

GREENLIGHT CAPITAL, L.P.

By:___________________________________________

GREENLIGHT CAPITAL QUALIFIED, L.P.

By:___________________________________________

GREENLIGHT CAPITAL OFFSHORE, LTD.

By:___________________________________________

SPECIAL SITUATIONS PRIVATE EQUITY
FUND, L.P.

By:___________________________________________

SPECIAL SITUATIONS CAYMAN FUND, L.P.

By:___________________________________________

SPECIAL SITUATIONS FUND III, L.P.

By:___________________________________________

Exhibit A

Restricted Payments. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's or any of its Subsidiaries' Equity Interests (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or dividends or distributions payable to the Company or any Wholly-Owned Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company or any Subsidiary or other Affiliate of the Company (other than any such Equity Interests owned by the Company or any Wholly-Owned Subsidiary of the Company); (iii) voluntarily purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is pari passu with or subordinated to the Notes; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments") unless, at the time of such Restricted Payment:

	(a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof,

	(b) immediately after giving effect to such transaction, on a pro forma basis as if such transaction had occurred at the beginning of the applicable four-quarter period, the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to debt incurrence test; and

	(c) the amount of such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Subsidiaries after the date of the Indenture, is less than the sum of (x) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the Issue Date to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, 100% of such deficit), plus (y) 100% of the aggregate net cash proceeds received by the Company from the issuance or sale of Equity Interests of the Company (other than Equity Interests sold to a Subsidiary of the Company and other than Disqualified Stock) since the date of the Indenture, plus (z) 100% of the Net Cash Proceeds received by the Company from the issuance or sale, other than to a Subsidiary of the Company, of any debt security of the Company that has been converted into Equity Interests of the Company (other than Disqualified Stock) since the date of the Indenture. For purposes of this clause (c) the amount of any Restricted Payment paid in property other than cash shall be the fair market value of such property as determined reasonably and in good faith by the Board of Directors of the Company.

If no Default or Event of Default shall have occurred and be continuing, the foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; (ii) the redemption, repurchase, retirement or other acquisition of any Indebtedness or Equity Interests of the Company in exchange for, or solely out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Company) of other Equity Interests of the Company (other than any Disqualified Stock); (iii) the redemption, repurchase or payoff of Purchase Money Obligations; (iv) the redemption, repurchase or payoff of any Indebtedness with proceeds of any Refinancing Indebtedness permitted to be incurred under "Certain Covenants" Incurrence of Indebtedness and Issuance of Preferred Stock"; (v) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company held by any officer or employee of the Company or its Subsidiaries; provided, however, that the aggregate amount of all such repurchases, redemptions and other acquisitions and retirements under this clause (v) on or after the date of the Indenture shall not exceed $1 million; (vi) the purchase, redemption, defeasance or other acquisition or retirement of Warrants required by the terms of the Warrant Agreement described below under "Description of Warrants" Repurchase"; and (vii) payments or distributions to dissenting stockholders required by applicable law pursuant to or in connection with a consolidation, merger or Asset Sale that complies with all applicable provisions of the Indenture and (viii) other Restricted Payments not to exceed $10 million in the aggregate since the Issue Date.

For purposes of paragraph (c), Consolidated Net Income shall exclude the amortization of goodwill and will include gains from asset sales.

Exhibit B

June 19, 2001

Jefferies & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025

Ladies and Gentlemen:

The undersigned, as holder of securities of New World Coffee-Manhattan Bagel, Inc., a Delaware corporation (the "Company"), irrevocably agrees not to, directly or indirectly, without the prior written approval of Jefferies & Company, Inc. (the "Initial Purchaser"), not to be unreasonably withheld, (i) offer, sell or otherwise dispose of any shares of the Company's common stock, par value $.001 per share (the "Common Stock") or enter into any transaction or device that is designed to, or could be expected to, result in the disposition of any share of Common Stock or (ii) sell or grant options, rights or warrants with respect to any shares of Common Stock or any other securities convertible into or exchangeable for Common Stock (collectively, hereinafter, the "Securities") (except with respect to any bona fide third party tender offer open to all holders of Securities) that the undersigned may, directly or indirectly, own for a period of one-hundred and eighty (180) days following the Closing Date (as defined in that certain Purchase Agreement, dated as of June 15, 2001, between the Company and the Initial Purchaser pursuant to which the Company is issuing and selling (the "Private Placement") to the Initial Purchaser 125,000 units each consisting of (i) $1,000 principal amount of Senior Secured Increasing Rate Notes due 2003 and (ii) Warrants to purchase shares of Common Stock.

The undersigned understands that the Initial Purchaser and the Company will rely upon the representations set forth in this letter agreement in proceeding with the Private Placement. The undersigned understands that this letter agreement is irrevocable and shall be binding on the undersigned and the undersigned's successors, heirs, personal representatives and the Company's transfer agent against the transfer of Securities held by the undersigned except in compliance with this letter agreement.

By:___________________________________
Name:
Title:

EX-99.5 7 nwcex995.htm 2ND AMD CERTIFICATE OF DESIGNATION Exhibit 99.5

Exhibit 99.5

NEW WORLD COFFEE - MANHATTAN BAGEL, INC.

SECOND AMENDED CERTIFICATE OF DESIGNATION,

PREFERENCES AND RIGHTS OF

SERIES F PREFERRED STOCK

Pursuant to Section 242 of the

General Corporation Law of the State of Delaware

NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a corporation duly organized and existing under the laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY:
1. That pursuant to the authority contained in Article 4 of its Amended and Restated Certificate of Incorporation and in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware, its Board of Directors has adopted the following resolution:
	RESOLVED, that there is hereby adopted, a Second Amended Certificate of Designation of Series F Preferred Stock of the Corporation, in the form attached hereto as Exhibit A (the "Amended Certificate of Designation"), integrating and amending the provisions of the Certificate of Designation for the Series F Preferred Stock of the Corporation, pursuant to which the designations, powers, preferences and relative, participating, optional and other special rights and the qualifications, limitations or restrictions of such Series F Preferred Stock shall be amended.
2. That pursuant to a stockholders consent, the holders of at least 67% of the Series F Preferred Stock approved the amendment of the Certificate of Designation.
3. That the text of the Certificate of Designation of the Series F Preferred Stock of the Corporation is hereby restated and further amended to read in its entirety as follows:
Designation and Amount. There is hereby established a series of the Preferred Stock designated "Series F Preferred Stock" (herein referred to as "Series F Preferred Stock"), consisting of 116,000 shares and having the relative rights, designations, preferences, qualifications, privileges, limitations, and restrictions applicable thereto as follows:
1. Dividends.
(a) The holders of shares of Series F Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors of the Corporation, and to the extent of funds legally available therefor, cumulative dividends payable quarterly, on

each March 31, June 30, September 30 and December 31, commencing on (i) March 31, 2001 with respect to any shares of Series F Preferred Stock issued on or prior to March 31, 2001 and (ii) June 30, 2001 with respect to any shares of Series F Preferred Stock issued after March 31, 2001, with dividends for partial quarters based on the dates of issuance and redemption accruing pro rata. Such dividends shall be paid, for each quarterly period, at the rate of 16% per annum (the "Dividend Percentage Rate") of the Liquidation Preference, payable each quarter as payment in kind Series F Preferred Stock at the rate of 4% per quarter; provided, however, that the Dividend Percentage Rate for the Series F Preferred Stock shall be increased by an additional 2% per semi-annum on each January 18 and July 18, commencing on (i) January 18, 2002 with respect to any shares of Series F Preferred Stock issued on or prior to March 31, 2001 and (ii) June 30, 2002 with respect to any shares of Series F Preferred Stock issued after March 31, 2001, on each outstanding share of Series F Preferred Stock until such share of Series F Preferred Stock has been redeemed in full by the Corporation as required by Section 3 hereof and provided further that to the extent that the Corporation has insufficient available surplus to declare the dividend, the Board of Directors of the Corporation shall undertake to use its best efforts to increase the available surplus and thereafter shall immediately declare such dividend. Dividends on the Series F Preferred Stock shall be cumulative so that if, for any dividend accrual period, dividends at the rate hereinabove specified are not declared and paid or set aside for payment, the amount of accrued but unpaid dividends shall accumulate, and shall be added to the dividends payable for subsequent dividend accrual periods. If the funds legally available for the payment of such dividends are insufficient to pay in full the dividends payable on all outstanding shares of Series F Preferred Stock, the total available funds may be paid in partial dividends to the holders of the outstanding shares of Series F Preferred Stock ratably in proportion to the fully accrued dividends to which they are entitled. Each issued and outstanding share of Series F Preferred Stock shall entitle the holder of record thereof to receive an equal proportion of said dividends (adjusted for issuance dates).

(b) No dividends or other distributions of any kind shall be declared or paid on, nor shall the Corporation redeem, purchase or acquire any shares of the Common Stock, any of the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock or Series D Preferred Stock or any other junior class or series of stock (collectively, "Junior Stock") other than stock dividends and distributions of the right to purchase common stock and repurchase any such rights in accordance with the Rights Agreement dated June 7, 1999, unless all dividends on the Series F Preferred Stock accrued for all past dividend periods shall have been paid.

2. Liquidation Preference.

(a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series F Preferred Stock shall be entitled to receive, on a pro rata basis, such amount, paid prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock or any Junior Stock by reason of their ownership thereof, an amount equal to $1,000 per share of Series F Preferred Stock then outstanding ("Liquidation Preference") (as adjusted for any stock dividends, combinations or splits

with respect to such shares), plus all accrued or declared but unpaid dividends on such share for each share of Series F Preferred Stock then held by them. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the Series F Preferred Stock shall rank at least pari passu with any security hereinafter existing or created ("Parity Stock"). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series F Preferred Stock shall be insufficient to permit the payment to the holders of the Series F Preferred Stock and of any Parity Stock the full amounts to which they otherwise would be entitled, the holders of Series F Preferred Stock and such Parity Stock shall share ratably in any distribution of the entire assets and funds of the Corporation legally available for distribution pro rata in proportion to the respective liquidation preference amounts which would otherwise be payable upon liquidation with respect to the outstanding shares of the Series F Preferred Stock and such Parity Stock if all liquidation preference dollar amounts with respect to such shares were paid in full.

(b) Upon the completion of the distribution required by subparagraph (a) of this Section 2, the remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed among the holders of the Common Stock pro rata based on the number of shares of Common Stock held by each, and the holders of Series F Preferred Stock shall not be entitled to participate in such distribution.

(c) For purposes of this Section 2, a liquidation, dissolution or winding up of this Corporation shall be deemed to be occasioned by, or to include (A) a change in 50% or more of the members of the Board of Directors, nominated and recommended by the Board of Directors for election at the 2000 Annual Meeting of Stockholders except changes in investor appointed directors, (B) a consolidation or merger of the Corporation with or into any other corporation (other than (i) a merger in which the Corporation is the surviving corporation and which will not result in more than 50% of the capital stock of the Corporation being owned of record or beneficially by persons other than the holders of such capital stock immediately prior to such merger or (ii) a transaction contemplated by the Series F Preferred Stock and Warrant Purchase Agreement dated January 18, 2001 (as amended on March 29, 2001, the "Purchase Agreement"), the Exchange Agreement dated January 18, 2001 (as amended on March 29, 2001, the "Exchange Agreement"), the Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001 (the "Second Purchase Agreement"), or the Third Series F Preferred Stock and Warrant Purchase Agreement dated as of June 19, 2001 (the "Third Purchase Agreement"), (C) a sale or disposition of all or substantially all of the properties and assets of the Corporation as an entirety to any other person or persons in a single transaction or series of related transactions, (D) an acquisition of "beneficial ownership" by any "person" or "group" of voting stock of the Company representing more than 50% of the voting power of all outstanding shares of such voting stock, whether by way of merger or consolidation or otherwise, other than pursuant to the exercise of the warrants contemplated by the Exchange Agreement, the Purchase Agreement, the Second Purchase Agreement, the June Series F Preferred Stock Purchase Agreement, Bond Purchase Agreement dated as of January 17, 2001 among the Corporation, Greenlight Capital L.P. and the other parties named therein, the Third Purchase Agreement and agreements with other investors disclosed in the schedules thereto and/or the transfer of the Common Stock purchased pursuant to such agreements

with other investors (collectively, the "Investor Securities"), or (E) any other transaction which results in the disposition of 50% or more of the voting power of all classes of capital stock of the Corporation on a combined basis, other than relating to the purchase of the Investor Securities (an event or series of events under subsections (A), (B), (C), (D) and (E) above shall be referred to as a "Change of Control Event"). The holders of 67% or more of the voting power of the then outstanding shares of the Series F Preferred Stock may execute a written waiver of any Change of Control Event.

3. Redemption. The shares of Series F Preferred Stock shall be redeemable as follows:

(a) Optional Redemption.

(i) The shares of Series F Preferred Stock will be redeemable at the election of the Corporation, as a whole or from time to time in part, at any time ("Optional Redemption Date") on not less than 5 nor more than 60 days' prior notice, for an amount equal to 100% of the Purchase Price (as hereinafter defined), plus all accrued or declared but unpaid dividends, if any, to the date of redemption (the "Redemption Price"). The "Purchase Price" of the Series F Preferred Stock shall be $1,000 (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares).

(ii) No partial optional redemption may be authorized or made unless on or prior to such redemption all unpaid cumulative dividends shall have been paid in full, or a sum set apart in cash for such payment, on all shares of Series F Preferred Stock then outstanding to the extent dividends are payable in cash. If less than all the shares of Series F Preferred Stock are to be redeemed, the particular shares of Series F Preferred Stock to be redeemed will be determined on a pro rata basis, first among the shares of Series F Preferred Stock issued on or prior to March 31, 2001 and then among the shares of Series F Preferred Stock issued after March 31, 2001. If less than all of the shares of Series F Preferred Stock are to be redeemed, the Redemption Notice that relates to such shares of Series F Preferred Stock shall state the portion of the shares of Series F Preferred Stock to be redeemed. A new Series F Preferred Stock certificate representing the unredeemed shares of Series F Preferred Stock will be issued in the name of the holder thereof upon cancellation of the original certificate for Series F Preferred Stock and, unless the Company fails to pay the Redemption Price on the Redemption Date, after the Redemption Date dividends will cease to accrue on the shares of Series F Preferred Stock called for redemption.

(b) Mandatory Redemption.

(i) All outstanding shares of Series F Preferred Stock (x) issued on or prior to March 31, 2001 shall be redeemed (subject to the legal availability of funds therefore) in whole on January 18, 2004 and (y) issued after March 31, 2001 shall be redeemed (subject to the legal availability of funds therefor) in whole on June 30, 2004 (each, a

"Mandatory Redemption Date" and together with the "Optional Redemption Date", the "Redemption Date"), at the Redemption Price.
(ii) Failure to Redeem. In the event that the Corporation fails to pay the Redemption Price on the Mandatory Redemption Date, the Redemption Price will be paid by the issuance of Senior Subordinated Notes (the "Notes"), which Notes will be substantially in the form of the Note attached as Exhibit D to the First Purchase Agreement, Exhibit B to the Exchange Agreement, Exhibit C to the Second Purchase Agreement and Exhibit C to the Third Purchase Agreement and, upon the issuance of such Notes for the full Redemption Price, all outstanding shares of Series F Preferred Stock shall be deemed to be retired and no longer outstanding.
(c) Procedure for Redemption. (i) Not more than 60 and not less then 5 days prior to any Optional Redemption Date, and as soon as practical prior to the Mandatory Redemption Date, written notice (the "Redemption Notice") shall be given by first-class mail, postage prepaid, to each holder of record of shares of Series F Preferred Stock to be redeemed on the record date fixed for such redemption of the shares of Series F Preferred Stock at such holder's address as the same appears on the stock register of the Company. The Redemption Notice shall state:
	(A)	the Redemption Price;
	(B)	whether all or less than all of the outstanding shares of Series F Preferred Stock are to be redeemed and the total number of shares of Series F Preferred Stock being redeemed;
	(C)	the number of shares of Series F Preferred Stock held by the holder that the Corporation intends to redeem;
	(D)	the Redemption Date;
	(E)	that the holder is to surrender to the Corporation, at the place or places designated in such Redemption Notice, its certificates representing the shares of Series F Preferred Stock to be redeemed;
	(F)	that dividends on the shares of Series F Preferred Stock to be redeemed shall cease to accrue on such Redemption Date unless the Corporation defaults in the payment of the Redemption Price; and
	(G)	the name of any bank or trust company performing the duties referred to in subsection (c)(iv) below.
(ii) On or before the Redemption Date, each holder of shares of Series F Preferred Stock to be redeemed shall surrender the certificate or certificates representing such shares of Series F Preferred Stock to the Corporation, in the manner and at the place designated in the Redemption Notice, and on the Redemption Date the full redemption price for such shares of Series F Preferred Stock shall be payable in cash

5

to the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be returned to authorized but unissued shares of Series F Preferred Stock. In the event that less than all of the shares of Series F Preferred Stock represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares of Series F Preferred Stock.

(iii) Unless the Corporation defaults in the payment in full of the Redemption Price, dividends on the shares of Series F Preferred Stock called for redemption shall cease to accrue on the Redemption Date, and the holders of such shares shall cease to have any further rights with respect thereto on the Redemption Date, other than the right to receive the Redemption Price, without interest. Until the Redemption Price is paid in full or the Notes are issued pursuant to Section 3(b)(ii), the holders of shares of Series F Preferred Stock shall have all preferences and rights, including without limitation the right to receive dividends, of holders of the Series F Preferred Stock.

(iv) If a Redemption Notice shall have been duly given or if the Corporation shall have given to the bank or trust company hereinafter referred to irrevocable authorization promptly to give such notice, and if on or before the Redemption Date specified therein the funds necessary for such redemption shall have been deposited by the Corporation with such bank or trust company in trust for the pro rata benefit of the holders of the shares of Series F Preferred Stock called for redemption, then, notwithstanding that any certificate for shares of Series F Preferred Stock so called for redemption shall not have been surrendered for cancellation, from and after the time of such deposit, all shares so called, or to be so called pursuant to such irrevocable authorization, for redemption shall no longer be deemed to be outstanding and all rights with respect of such shares of Series F Preferred Stock shall forthwith cease and terminate, except only the right of the holders thereof to receive from such bank or trust company at any time after the time of such deposit the funds so deposited, without interest. The aforesaid bank or trust company shall be organized and in good standing under the laws of the United States of America, and shall have capital, surplus and undivided profits aggregating at least $100,000,000 according to its last published statement of condition, and shall be identified in the Redemption Notice. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so set aside or deposited, as the case may be, and unclaimed at the end of three years from such Redemption Date shall, to the extent permitted by law, be released or repaid to the Corporation, after which repayment the holders of the shares of Series F Preferred Stock so called for redemption shall look only to the Corporation for payment hereof.

(v) If the Redemption Price will be paid by the issuance of Notes as required by Section 3(b)(ii) above, the Corporation will issue to each holder of shares of Series F Preferred Stock that has surrendered the certificate or certificates representing such shares of Series F Preferred Stock, a Note in the principal amount of the aggregate Redemption Price payable to such holder, including the increases in the Redemption Price required by Section 3(b)(ii) above, and payable to the holder as such holder's name appears on the stock register of the Corporation. The Corporation will, within 5 days following the 90th day following the Mandatory Redemption Date, send notice to each holder that has not surrendered the certificate or certificates representing

its shares of Series F Preferred Stock stating that the Redemption Price is to be paid by the issuance of Notes and confirming the location at which such certificates are to be surrendered. Such notice shall be sent in the same manner as was required for the Redemption Notice. Thereafter, not later than five days following any surrender by a holder of certificates representing shares of Series F Preferred Stock, the Corporation will issue to such holder a Note in the amount specified above.

(d) Failure to Increase Authorized Shares of Common Stock. In the event that the Corporation does not file an amendment to its Certificate of Incorporation in order to increase the number of authorized shares of its Common Stock to at least 125,000,000 on or prior to October 17, 2001, then the Redemption Price shall be increased by 1% per month until such time as such amendment is filed with the Secretary of State of the State of Delaware and is in full force and effect.

4. Protective Rights.

So long as any shares of Series F Preferred Stock remain outstanding, the Corporation shall not, without the vote or written consent by the holders of at least 67% of the then outstanding shares of the Series F Preferred Stock, voting together as a single class:

(i) amend or repeal any provision of the Corporation's Certificate of Incorporation or By-Laws in a manner which materially adversely affects the rights and preferences of the holders of Series F Preferred Stock;

(ii) authorize or issue shares of any class of stock having any preference or priority as to dividends or assets superior to or on a parity with the Series F Preferred Stock, including, without limitation, the Series E Preferred Stock of the Company, without the vote or written consent by the holders of at least 70% of the then outstanding shares of Series F Preferred Stock, voting together as a single class;

(iii) pay or declare any dividend on any other type or class of securities, other than a dividend payable in common stock or rights under the Rights Plan;

(iv) repurchase or redeem any shares of capital stock of the Corporation other than the redemption of the Series F Preferred Stock;

(v) authorize (i) a sale of any material asset of a value in excess of $1,000,000 of the Corporation or any subsidiary or subsidiaries of the Corporation (other than sales of stores owned by the Company or its subsidiaries), (ii) a sale of any substantial portion of the assets of the Corporation or any subsidiary or subsidiaries (other than sales of stores owned by the Corporation or its subsidiaries), or (iii) a recapitalization or reorganization of the Corporation or any subsidiary or subsidiaries of the Corporation (other than stock splits, combinations and/or dividends);

(vi) take any action that results in the Corporation or any subsidiary or subsidiaries of the Corporation incurring or assuming more than $1,000,000 of funded indebtedness (other than (w) the $140,000,000 Senior Secured Increasing Rate Notes due 2003 (which have been previously approved by the requisite holders of the Series F Preferred Stock), (x) the $35,000,000 Secured Increasing Rate Note issued on June 19, 2001, (y) borrowings of up to $7,500,000 for a revolving line of credit and (z) up to $4,700,000 of indebtedness outstanding as of June 15, 2001);

(vii) effect any Change of Control Event;

(viii) effect (i) an acquisition of another corporation or other entity, or a unit or business group of another corporation or entity, by merger or otherwise, except as contemplated in the Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement or (ii) the purchase of all or substantially all of the capital stock, other equity interests or assets of any other entity or person, except as contemplated in the Purchase Agreement, the Exchange Agreement, the Second Purchase Agreement and the Third Purchase Agreement;

(ix) increase the number of directors of the Board of Directors of the Corporation except as contemplated in the Purchase Agreement, the Exchange Agreement and the Second Purchase Agreement;

(x) effect or allow fundamental change in the nature of the Corporation's business; or

(xi) otherwise materially affect the rights, privileges and preferences of the holders of Corporation's Series F Preferred Stock.

5. Voting Rights.

(a) The holders of Series F Preferred Stock, except as otherwise required under the laws of the State of Delaware or as set forth herein, shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation.

(b) The majority of the then outstanding Series F Preferred Stock, voting or consenting, as the case may be, as one class, will be entitled to elect up to four directors (the "Series F Directors"), provided that at least two of the Series F Directors shall be designated by Halpern Denny III, L.P. (each a "Halpern Denny Designee"), one of the Series F Directors shall be designated by Brookwood New World Investors, LLC (the "Brookwood Designee") and one of the Series F Directors shall be designated by BET Associates, L.P. (the "BET Designee"). At any meeting held for the purpose of electing directors at which the holders shall have the right, voting separately as a class, to elect directors, the presence in person or by proxy of the holders of a majority of the outstanding shares of Series F Preferred Stock shall be required to constitute a quorum of such holders. Any vacancy occurring in the office of a director elected by the holders

pursuant to this Section 5(b) may be filled by the remaining director elected by the holders unless and until such vacancy shall be filled by the holders.

(c) If (i) dividends on the Series F Preferred Stock are in arrears and unpaid for any quarterly period, which failure to pay shall continue for a period of thirty (30) days; or (ii) the Corporation fails to discharge any redemption obligation with respect to the Series F Preferred Stock (delivery of the Notes as set forth in Section 3 above shall constitute discharge of the Company's redemption obligation) and such failure continues more than 90 days following a Mandatory Redemption Date; then (A) the number of members comprising the Corporation's Board of Directors shall automatically increase by such number so that such additional directors (but including the Board seats elected by the holders of Series F Preferred Stock pursuant to Section 5(b) above) shall constitute not less than 50% of the Board of Directors of the Corporation and (B) the holders of the majority of the then outstanding Series F Preferred Stock, voting or consenting, as the case may be, as one class, will be entitled to elect directors to the Board of Directors to fill the vacancies created by such increase, provided that such directors shall be designated equally by (A) Halpern Denny III, L.P., on the on hand, and (B) Brookwood New World Investors, LLC and BET Associates, L.P., on the other hand. Such voting rights will continue until such time as, in the case of a dividend default, all dividends in arrears on the Series F Preferred Stock are paid in full and, in the case of the failure to redeem, until payment in cash or until the Notes are delivered, at which time the term of the directors elected pursuant to the provisions of this paragraph shall terminate.

(d) Immediately after voting power to elect directors shall have become vested and be continuing in the holders pursuant to Section 5(c) or if vacancies shall exist in the offices of directors elected by the holders, a proper officer of the Corporation shall call a special meeting of the holders for the purpose of electing the directors which such holders are entitled to elect. Any such meeting shall be held at the earliest practicable date, and the Corporation shall provide holders with access to the lists of holders, pursuant to the provisions of this Section 5(d). At any meeting held for the purpose of electing directors at which the holders shall have the right, voting separately as a class, to elect directors, the presence in person or by proxy of the holders of at least a majority of the outstanding shares of Series F Preferred Stock shall be required to constitute a quorum of such holders.

(e) Any vacancy occurring in the office of a director elected by the holders pursuant to Section 5(c) may be filled by the remaining director or directors elected by the holders unless and until such vacancy shall be filled by the holders.

(f) The Corporation shall not modify, change, affect or amend the Certificate of Incorporation or this Second Amended Certificate of Designation to affect materially and adversely the specified rights, preferences or privileges of the holders of the Series F Preferred Stock or increase the authorized Series F Preferred Stock, without the affirmative vote or consent of holders of at least a 67% of the shares of Series F Preferred Stock then outstanding, voting or consenting, as the case may be, as one class; provided, however, that Section 4(ii) shall not be amended without the affirmative vote

or consent of holders of at least 70% of the shares of Series F Preferred Stock then outstanding, voting or consenting, as the case may be, as one class.

(g) In any case in which the holders shall be entitled to vote pursuant to this Section 5 or pursuant to the laws of the State of Delaware, each holder shall be entitled to one vote for each share of Series F Preferred Stock held.

(h) In lieu of voting at a meeting, holders may act by written consent in accordance with Section 228 of the General Corporation Law of the State of Delaware ("GCL").

(i) Except as otherwise required by the GCL, holders of at least 67% of the then outstanding shares of Series F Preferred Stock, voting or consenting, as the case may be, separately as a class, may waive compliance with any provisions of this Amended Certificate of Designation.

6. No Reissuance of Series F Preferred Stock. No share or shares of Series F Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such reacquired shares shall be cancelled, retired and eliminated from the shares which the Corporation shall be authorized to issue.

7. Counterparts. This Certificate may be signed in any number of counterparts, each of which will be an original, with the same effect as if the signatures hereto were upon the same instrument.

IN WITNESS WHEREOF, the Corporation has executed this Second Amended Certificate of Designation to be prepared and executed by the officers named below as of this _____ day of June, 2001.

	NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By: ________________________________________ Name: R. Ramin Kamfar Title: Chief Executive Officer By: ________________________________________ Name: Jerold Novack Title: Secretary

EX-99.6 8 nwcex996.htm NOTE Exhibit 99.6

Exhibit 99.6

NOTE

THE SECURITY EVIDENCED BY THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION THEREFROM, UNLESS AN OPINION OF COUNSEL IS FURNISHED REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO NEW WORLD COFFEE - MANHATTAN BAGEL, INC. STATING THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF APPLICABLE SECURITIES LAWS IS AVAILABLE. THIS NOTE AND THE OBLIGATIONS OF THE COMPANY ARISING HEREUNDER ARE SUBORDINATED IN THE MANNER AND TO THE EXTENT REFERRED TO 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.
[ ][FN1]% 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 ___________ ($_______), subject to adjustment as herein provided, on the later of January 18, 2004 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 initial interest rate of [FN1] 1% 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 April 1 (which first interest payment shall be for the period from and including January 18, 20[_] through and including March 31, 20[_], 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 such per annum interest rate shall be increased by 2% on each January 18 and July until the principal has been paid in full (including 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)).

The principal amount of the Note shall be increased by 1% on each of the 30th, 60th and 90th day following the Mandatory Redemption Date.

------------------------------

[FN1] The interest rate will be equal to the dividend rate of the Series F Preferred Stock in effect as of the date of issuance of the Note.

This Note is issued pursuant the (i) Series F Preferred Stock and Warrant Purchase Agreement dated as of January 18, 2001 (as amended, the "First Purchase Agreement") between the Company and the purchasers named therein, (ii) the Exchange Agreement dated as of January 18, 2001 (as amended, the "Exchange Agreement") between the Company and the parties named therein, (iii) the Second Series F Preferred Stock and Warrant Purchase Agreement dated as of March 29, 2001 (the "Second Purchase Agreement") and (iv) the Third Series F Preferred Stock and Warrant Purchase Agreement dated as of June [ ], 2001 and together with the First Purchase Agreement and the Second Purchase Agreement, the "Purchase Agreements") between the Company and the purchasers named therein, and is one of the "Notes" contemplated in each such 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 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. It is expressly stipulated and agreed to be the intent of the Company and the holder of this Note at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits the holder of this Note to contract for, charge, take, reserve or receive a greater amount of interest than under state law) and that this section shall control every other covenant and agreement in this Note, the Purchase Agreements and the Exchange Agreement.

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 other type or class of securities, other than a dividend payable in common stock or rights under the Rights Plan and solely paid-in-kind dividends to the holders of the Series E Preferred Stock;
	(ii) repurchase or redeem any shares of capital stock of the Company;

	(iii) authorize (i) a sale of any material asset of a value in excess of $1,000,000 of the Company or any subsidiary or subsidiaries of the Company (other than sales of stores owned by the Company or its subsidiaries), (ii) a sale of any substantial portion of the assets of the Company or any subsidiary or subsidiaries (other than sales of stores owned by the Company or its subsidiaries), or (iii) a recapitalization or reorganization of the Company or any subsidiary or subsidiaries of the Company (other than stock splits, combinations and/or dividends;
	(iv) take any action that results in the Company or any subsidiary or subsidiaries of the Company incurring or assuming more than $1,000,000 of funded indebtedness (other than (w) the $140,000,000 Senior Secured Increasing Rate Notes due 2003 (which have been previously approved by the requisite holders of the Series F Preferred Stock), (x) the $35,000,000 Secured Increasing Rate Note issued on June 19, 2001, (y) borrowings of up to $7,500,000 for a revolving line of credit and (z) up to $4,700,000 of indebtedness outstanding as of June 15, 2001);
	(v) effect any of the following: (i) a consolidation or merger of the Company with or into any other corporation (other than a merger in which the Company is the surviving corporation and which will not result in more than 50% of the capital stock of the Company being owned of record or beneficially by persons other than the holders of such capital stock immediately prior to such merger), except as contemplated by the Purchase Agreements, (ii) sell or otherwise dispose of all or substantially all of the properties and assets of the Company as an entirety to any other person or persons in a single transaction or series of related transactions, except as contemplated by the Purchase Agreements, or (iii) an acquisition of "beneficial ownership" by any "person" or "group" of voting stock of the Company representing more than 50% of the voting power of all outstanding shares of such voting stock, whether by way of merger or consolidation or otherwise;
	(vi) effect (i) an acquisition of another corporation or other entity, or a unit or business group of another corporation or entity, by merger or otherwise, except as contemplated by the Purchase Agreements or (ii) the purchase of all or substantially all of the capital stock, other equity interests or assets of any other entity or person, except as contemplated by the Purchase Agreements;
	(vii) increase the number of directors of the Board of Directors of the Company except as set forth herein; or
	(viii) effect or allow fundamental change in 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 Agreements, 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 Agreements 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 (iv) 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.

This Note shall be subject to the subordination provisions of the Amended and Restated Affiliate Subordination Agreement dated as of March 29, 2001 among the Company, the holder of this Note, the holders of Notes issued pursuant to the Exchange Agreement and Fleet National Bank.

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 at least four members of the Board of Directors of the Company (the "Series F Directors"), and the Company will use all reasonable efforts to cause the election of such designees, provided that two of the Series F Directors shall be designated by Halpern Denny III, L.P. (each a "Halpern Designee"), one of the Series F Directors shall be designated by BET Associates, L.P (the "BET Designee") and one of the Series F Directors shall be designated by Brookwood New World Investors, LLC (the "Brookwood Designee").

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. Miscellaneous.

The Company and all endorsers of this Note hereby waive presentment, demand, protest and notice. The holder of this Note shall, promptly upon full payment by the Company of the principal of and interest on this Note, together with all costs and expenses, if any, due hereon, surrender this Note to the Company for retirement and cancellation, provided, however, that to the extent that the Company makes a payment or payments to the holder of this Note, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, and/or required to be repaid to a trustee, receiver, or any other party under the United States Bankruptcy Code, as amended, any state or federal law, common law, or equitable causes (a "Voidable Transfer") and the holder of this Note is required to repay or restore any such Voidable Transfer or the amount or any portion thereof, or upon the advice of its counsel is advised to do so, then as to any such Voidable Transfer or the amount repaid or restored (including all reasonable costs, expenses and attorneys' fees of the holder of this Note related thereto), the liability of the Company shall automatically be revived, reinstated and restored and shall exist in full force and effect as though such Voidable Transfer had never been made.

10. 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 Note.

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.

11. 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: _____________________________________

EX-99.7 9 nwcex997.htm AMENDMENT NO. 2 TO STOCKHOLDERS AGREEMENT Exhibit 99.7

Exhibit 99.7

AMENDMENT NO. 2 TO STOCKHOLDERS AGREEMENT

AMENDMENT NO. 2 TO STOCKHOLDERS AGREEMENT, dated as of June 19, 2001 ("Amendment"), by and among NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (the "Company"), and the several parties listed on Schedule I hereto (the "Stockholders"), amending the Stockholders Agreement, dated as of January 18, 2001 and Amendment No. 1 thereto dated March 29, 2001 (the "Original Stockholders Agreement"), among the Company and the Stockholders.

WHEREAS, the Company and certain previous purchasers (the "Initial Series F Purchasers") and certain new purchasers (the "Additional Series F Purchasers," and together with the Initial Series F Purchasers, the "Series F Purchasers") have entered into (i) a Series F Preferred Stock Purchase Agreement dated as of June 7, 2001 (as amended, the "June Series F Purchase Agreement") and (ii) a Third Series F Preferred Stock and Warrant Purchase Agreement dated as of June 19, 2001 (the "Third Purchase Agreement"), pursuant to which the Series F Purchasers have purchased from the Company an additional 25,000 shares of Series F Preferred Stock, $.001 par value (the "Series F Preferred Stock"), of the Company and warrants (the "Third Warrants") to purchase up to 21,153,934 shares (the "Third Warrant Shares") of Common Stock of the Company in the form attached to the June Series F Purchase Agreement and Third Purchase Agreement;

WHEREAS, pursuant to Section 9 of the Original Stockholders Agreement, the Company may amend the Original Stockholders Agreement, in an instrument executed by the majority of voting power of shares of capital stock of the Company owned by the Stockholders, including the holders of 66-2/3% of the outstanding shares of Series F Preferred Stock and the Company;

WHEREAS, the holders of (i) more than the majority of voting power of shares of capital stock of the Company owned by the Stockholders and (ii) more than 66-2/3% of the outstanding shares of Series F Preferred Stock have executed this Amendment; WHEREAS, the Company and the Stockholders deem it in their best interests to subject the Third Warrants and the Third Warrant Shares to the provisions of the Stockholders Agreement, and the Company and the Stockholders are willing to amend the Original Stockholders Agreement as provided herein; and

WHEREAS, as an inducement to the Series F Purchasers to consummate the transactions contemplated by the Second Purchase Agreement, the Company and each of the Stockholders have agreed to enter into this Amendment;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:

1. The definition of "Warrants" in the Original Stockholders Agreement is hereby amended to include the Third Warrants.

2. The definition of "Warrant Shares" in the Original Stockholders Agreement is hereby amended to include the Third Warrant Shares.

3. The shares of Series F Preferred Stock referred to in the Original Stockholders Agreement shall also include the additional 25,000 shares of Series F Preferred Stock purchased by the Series F Purchasers pursuant to the June Series F Purchase Agreement and the Third Purchase Agreement.

4. The Original Stockholders Agreement is hereby amended by deleting Schedule I to the Original Stockholders Agreement in its entirety and replacing it with Schedule I attached hereto.

5. The Original Stockholders Agreement, as amended by this Amendment, is hereby in all respects confirmed and each of the parties hereto acknowledges and agrees that it is bound by all the terms and provisions thereof, as amended hereby.

6. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws principles.

7. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as a sealed instrument, all as of the day and year first above written.

COMPANY:	NEW WORLD COFFEE - MANHATTAN BAGEL, INC. By: ___________________________________________ Name: Title:

STOCKHOLDERS:	HALPERN DENNY III, L.P. By: ___________________________________________ Name: Title: BET ASSOCIATES, L.P. By: BRU Holding Co., LLC Its: General Partner By: ___________________________________________ Name: Title: BROOKWOOD NEW WORLD INVESTORS LLC By: Brookwood New World Co., LLC, Its: Managing Member By: ___________________________________________ Name: Title: GREENLIGHT CAPITAL, L.P. By: ___________________________________________ Name: Title: GREENLIGHT CAPITAL QUALIFIED, L.P. By: ___________________________________________ Name: Title: GREENLIGHT CAPITAL OFFSHORE, LTD. By: ___________________________________________ Name: Title: SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P. By: ___________________________________________ Name: Title: SPECIAL SITUATIONS CAYMAN FUND, L.P. By: ___________________________________________ Name: Title: SPECIAL SITUATIONS FUND III, L.P. By: ___________________________________________ Name: Title:

SCHEDULE I

STOCKHOLDERS

Stockholder	Series F Preferred Stock	Warrant

Halpern Denny III, L.P.	32,500	16,951,320
BET Associates, L.P.	8,213.01	3,263,178
Brookwood New World Investors, LLC	8,185.32	3,263,178
Greenlight Capital, L.P.	2,200	1,861,546
Greenlight Capital Qualified, L.P.	5,300	4,484,634
Greenlight Capital Offshore, Ltd.	5,000	4,230,787
Special Situations Private Equity Fund, L.P.	1,200	1,015,389
Special Situations Cayman Fund, L.P.	950	803,850
Special Situations Fund III, L.P.	2,850	2,411,548

EX-99.8 10 nwcex998.htm LETTER Exhibit 99.8

GREENLIGHT CAPITAL, L.L.C.
420 Lexington Avenue
Suite 1740
New York, N.Y. 10170

New World Coffee-Manhattan Bagel, Inc.
246 Industrial Way West
Eatontown, NJ 07724

Greenlight New World, L.L.C.
c/o New World Coffee-Manhattan Bagel, Inc.
246 Industrial Way West
Eatontown, NJ 07724

Dear Sir or Madam:

Reference is hereby made to that certain Limited Liability Company Operating Agreement (the "LLC Agreement") of Greenlight New World, L.L.C. (the "LLC ") dated as of January 8, 2001 by and among Greenlight Capital, L.P., Greenlight Capital Qualified L.P. and Greenlight Capital Offshore, Ltd. (each individually a "Member" and together, "Greenlight"). Under the terms of the LLC Agreement, New World Coffee-Manhattan Bagel, Inc. (the "Manager") was appointed the manager of the LLC and has been acting in such capacity for the LLC. Reference is also made to that certain Bond Purchase Agreement (the "Bond Purchase Agreement") entered into as of January 17, 2001, by and among the Manager and Greenlight, pursuant to which Greenlight agreed to contribute $10 million (such amount plus the accretion thereon pursuant to the terms of the Bond Purchase Agreement is herein referred to as the "Contribution Amount") to the LLC for the purchase of certain bonds (the "Bonds") known as Einstein/Noah Bagel Corporation 7.25% convertible subordinated bonds June 2004. Capitalized terms used herein, but not otherwise defined, have the meanings ascribed to them in the Bond Purchase Agreement.

Greenlight understands that the Manager desires to pledge (the "Pledge") the Bonds to Jeffries & Company, Inc. or an affiliate (the "Lender") to secure a loan to an unrestricted subsidiary of the Manager in principal amount of $35.0 million (the "Loan"). Pursuant to the terms and conditions contained in this letter agreement, Greenlight hereby consents to the Pledge by the Manager and agrees during the term of the Pledge not to exercise its rights for the withdrawal of "Section 2.3 Proceeds" (as such term is defined in the Bond Purchase Agreement) provided in Section 2.3 of the Bond Purchase Agreement.

In consideration for Greenlight consenting to the Pledge, Manager will distribute or cause LLC to distribute to Greenlight, pro rata according to the contribution made by each Member to the LLC, the amount of proceeds on the Bonds in excess of the amount used to repay the Loan (such excess which is distributed to Greenlight being referred to herein as the "Distributed Proceeds"). The anticipated amount of such Distributed Proceeds, and the calculation method thereof, is reflected in Exhibit A attached hereto. For purposes of this calculation, the Bonds held by the LLC will be deemed to be the last of the Bonds controlled by the Manager which are pledged to the Bank. In addition, Manager will issue to Greenlight the number of shares of Series F Preferred Stock of Manager equal to (i) the excess of the Contribution Amount over the Distributed Proceeds (the "Excess Contribution") divided by (ii) $1000 per share of Series F Preferred Stock (such shares of Series F Preferred Stock herein referred to as the "Shares"). The Shares shall be allocated among the Members pro rata according to the contribution made by each Member to the LLC (the "Allocation Ratio"). Manager may not utilize any other source of funds (other than the amount of proceeds on the Bonds in excess of the amount used to repay the Loan) to return the Contribution Amount to Greenlight, and any distributions to Greenlight from any other source of funds will be excluded from the calculation of Distributed Proceeds and Excess Contribution.

Manager further agrees to issue to Greenlight warrants ("Warrants") to purchase that number of shares of Common Stock, $0.001 par value, of the Manager (" Common Stock") equal to the Applicable Percentage (as defined below) of the outstanding Common Stock of the Manager as of the date of this letter agreement (determined on a fully diluted basis) at an exercise price of $0.01 per share of Common Stock, such Warrants being substantially in the form attached hereto as Exhibit B. The number of shares of Common Stock issuable on exercise of the Warrants will be subject to adjustment as provided in that certain Third Series F Preferred Stock and Warrant Purchase Agreement entered into as of June __, 2001, by and among Manager and the purchasers listed on Schedule I thereto (the "Third Series F Purchase Agreement"). Manager will issue the Warrants to Greenlight on the earlier to occur of (a) the date on which shares of Series F Preferred Stock are issued hereunder and (b) the date on which the proceeds from the Bonds are received by the Manager and/or the LLC. The Warrants will be allocated among the Members according to their Allocation Ratios. For purposes of this paragraph, "Applicable Percentage" means the greater of (i) 5.625% and (ii) 1.125% for each $1,000,000 of Excess Contribution (or fraction thereof).

As an inducement for Greenlight to enter into this letter agreement and the Third Series F Purchase Agreement, Manager represents and warrants to Greenlight that, except for the terms and provisions contained in this letter agreement which apply solely to Greenlight, Greenlight has been offered the shares of Series F Preferred Stock pursuant to the Third Series F Purchase Agreement on the same terms and conditions (including any transaction fees and commissions) as has been offered or granted to any other party to the Third Series F Purchase Agreement.

[Remainder of Page Intentionally Left Blank]

If you are in agreement with the above terms, please acknowledge your agreement by signing in the appropriate space below and returning an originally executed letter to Greenlight at the above address.

Sincerely,

David Einhorn, Manager of Greenlight Capital, LLC (on behalf of Greenlight Capital, L.P. and Greenlight Capital Qualified L.P.) and Director of Greenlight Capital Offshore, Ltd.

Accepted and acknowledged as of this ___ day of June, 2001.

New World Coffee-Manhattan Bagel, Inc. By: __________________________ Name:_________________________ Title: _________________________

Greenlight New World, L.L.C. By: New World Coffee-Manhattan Bagel, Inc., its manager
	By: ___________________________ Name: ___________________________ Title: ___________________________

EXHIBIT A

Anticipated Amount of Distributed Proceeds

Project Nova - Unrestricted Subsidiary
($ in Millions)

Size	$	36.0
Issue Price		100.0%
PIK Coupon⁽¹⁾		15.0%

	At Closing		3 Months Later

Sources of Funds
New Senior Secured Notes	$	36.0	$	-
New World Cash Proceeds from Bankruptcy Settlement		-		43.0
Total Sources	$	36.0 ===	$	43.0 ===

Distributed Proceeds:

7.0

Uses of Funds
Cash to New World (Parent)	$	35.0	$	5.7
Redemption of New Senior Secured Notes		-		37.4
Fees and Expenses		1.0	$	-
	$	36.0 ====	$	43.0 ====
		0.000		0.000

Accrued PIK Interest

0.45

0.90

1.35

	At Closing	Month 1	Month 2	Month 3
Proceeds	$35.0	-	-	-
Accrued PIK Interest	-	-	-	(1.4)
Principal	-	-	-	(36.0)
	$35.0 =====	$- =====	$- =====	$(37.4) =====

_____________________________
(1) Assumes quarterly PIK interest.

EXHIBIT B

NEITHER THIS WARRANT NOR THE SECURITIES PURCHASABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION IS AVAILABLE AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER IS DELIVERED TO SUCH EFFECT.

THE SECURITY EVIDENCED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE OF SUCH SECURITY ARE SUBJECT TO THE TERMS OF A STOCKHOLDERS AGREEMENT DATED AS OF JANUARY 18, 2001, AMONG THE ISSUER AND THE OTHER PARTIES THERETO, AS AMENDED FROM TIME TO TIME, AND THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO THE CONDITIONS PRECEDENT SPECIFIED IN SUCH STOCKHOLDERS AGREEMENT.

Issue Date: June 19, 2001

No. of Shares Subject to Warrant: [ ]

WARRANT TO PURCHASE COMMON STOCK
OF
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.

This is to certify that, for value received, [ ] (the "Holder") is entitled to purchase, subject to the provisions of this Warrant, from NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (the "Company"), [ ] shares (subject to adjustment or reduction as provided herein) of Common Stock, $0.001 par value, of the Company ("Common Stock"), at a price of $0.01 per share (subject to adjustment as provided herein) at any time during the period beginning on the Issue Date and ending not later than 5:00 p.m. New York time on June 19, 2006 (the "Termination Date"). The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as "Warrant Shares," and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price."

(a) EXERCISE OF WARRANT.

(7) The Holder shall have no rights as a stockholder of the Company for shares of Common Stock issuable hereunder unless and until such shares are purchased in accordance herewith.

(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Subject to the provisions of Section (g), upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the permitted assignee named in such instrument of assignment and this Warrant shall be canceled. If this Warrant should be assigned in part only, the Company shall, upon surrender of this Warrant in accordance with the procedures set forth in the preceding sentence, execute and deliver, in addition to the new Warrant described in the preceding sentence, a new Warrant evidencing the rights of the Holder to purchase the balance of the shares purchasable thereunder. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date.

(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.

(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.

(h) This Warrant is subject to the rights and benefits of the Amended and Restated Registration Rights Agreement dated as of January 18, 2001, as amended from time to time.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as of the Issue Date first set forth above by an authorized officer.

	NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
	By:	________________________________ Ramin Kamfar, Chief Executive Officer

Attest: __________________, Secretary Dated: June [ ], 2001

PURCHASE FORM

Dated: _______________, 2001

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name _____________________________________________

(Please typewrite or print in block letters.)

Address ___________________________________________

Signature __________________________________________

ASSIGNMENT FORM

FOR VALUE RECEIVED,

hereby sells, assigns and transfers unto

Name ___________________________________________

(Please typewrite or print in block letters.)

Address __________________________________________

Signature

_______________________________________

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