UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission only (as permitted by Rule
14a-6(e) (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 140-11(c) or Rule 240-2
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:____________.
2) Aggregate Number of securities to which transaction applies: ________.
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange
Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it
was determined): __________.
4) Proposed maximum aggregate value of transaction: ______________.
5) Total fee paid:____________.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:______________.
2) Form, Schedule or Registration Statement No.:_______________.
3) Filing Party:________________________.
4) Date Filed:_________________.
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
246 Industrial Way West
Eatontown, New Jersey 07724
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of New World Coffee - Manhattan Bagel, Inc.:
A special meeting of the stockholders of New World Coffee - Manhattan
Bagel, Inc, a Delaware corporation, will be held on September 5, 2001 commencing
at 9:30 a.m. at the Company's offices located at 246 Industrial Way West,
Eatontown, New Jersey 07724. The meeting is called for the following purposes:
1. To consider and vote upon a proposed amendment to our Certificate of
Incorporation to increase the authorized Common Stock from 50,000,000 shares to
150,000,000 shares.
2. To approve the issuance of warrants to purchase an aggregate of
13,720,000 shares of our Common Stock in connection with the sale of senior
secured increasing rate promissory notes and warrants to purchase an aggregate
of 42,950,564 shares of our Common Stock in connection with the sale of Series F
Preferred Stock, and the issuance of the underlying Common Stock; and
3. To transact such other business as may properly come before the Special
Meeting or any adjournments thereof.
Stockholders of record at the close of business on July 30, 2001 are
entitled to notice of, and to vote at the Special Meeting of Stockholders. The
accompanying form of proxy is solicited by the Board of Directors of the
Company. Reference is made to the enclosed proxy statement for further
information with respect to the business to be transacted at the Special Meeting
of Stockholders.
If you do not expect to attend the Special Meeting of Stockholders in
person, please sign and date the enclosed proxy and mail it promptly in the
enclosed envelope. Sending in your proxy will not prevent your attending and
voting at the meeting in person should you later decide to do so.
By order of the Board of Directors.
Jerold E. Novack, Secretary
Dated: August 15, 2001
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
246 Industrial Way West
Eatontown, New Jersey 07724
PROXY STATEMENT
August 15, 2001
This proxy statement is being mailed to stockholders of record as of July
30, 2001 and is furnished in connection with the solicitation of proxies by the
Board of Directors of New World Coffee - Manhattan Bagel, Inc. (the "Company")
for use at the Special Meeting of Stockholders (the "Special Meeting") of the
Company to be held on September 5, 2001, commencing at 9:30 a.m. at the offices
of the Company at 246 Industrial Way West, Eatontown, New Jersey 07724. Proxies
will be voted in accordance with directions specified thereon and otherwise in
accordance with the judgment of the persons designated as proxy voters. Any
proxy on which no direction is specified will be voted in favor of the action
described in the proxy statement.
A proxy in the enclosed form may be revoked at any time, prior to it being
voted at the Special Meeting by sending a subsequently dated proxy or by giving
written notice to the Company, in each case to the attention of Jerold E.
Novack, Secretary, at the address set forth above. Stockholders who attend the
Special Meeting may withdraw their proxies at any time before their shares are
voted by notifying the Company at the meeting and voting their shares in person.
The expense of the solicitation of proxies for the Special Meeting,
including the cost of preparing, assembling and mailing the notice, proxy and
proxy statement, the handling and tabulation of proxies received and the charges
of brokerage houses and other institutions, nominees or fiduciaries in
forwarding such documents of the proxy material to beneficial owners, will be
paid by the Company. In addition to the mailing of the proxy material, such
solicitation may be made in person or by telephone and telegraph by directors,
officers or regular employees of the Company. The total cost of proxy
solicitations by the Company will not exceed $7,500.
The matters to be considered at the Special Meeting include: (1) to
consider and vote upon a proposed amendment to our Certificate of Incorporation
to increase the authorized Common Stock we are authorized to issue from
50,000,000 shares to 150,000,000 shares; (2) to approve the issuance of warrants
to purchase an aggregate of 13,720,000 shares of our Common Stock in connection
with the sale of senior secured increasing rate promissory notes and warrants to
purchase an aggregate of 42,950,564 shares of our Common Stock in connection
with the sale of Series F Preferred Stock, and the issuance of the underlying
Common Stock; and (3) to transact such other business as may properly come
before the Special Meeting or any adjournments thereof. The Company is aware of
no other matters to be presented for action at the Special Meeting.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
Holders of Common Stock at the close of business on July 30, 2001 will be
entitled to vote. Each share of Common Stock entitles the holder to one (1) vote
on each matter to be voted upon. On the record date there were __________
outstanding shares of Common Stock (excluding any treasury shares), which is the
only class of voting stock outstanding.
MATTERS TO BE VOTED UPON
PROPOSAL NO. 1: TO APPROVE AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
The Board of Directors has approved, and is recommending to the
Stockholders for approval at the Special Meeting, an amendment to the
Certificate of Incorporation to increase the number of shares of Common Stock
which we are authorized to issue from 50,000,000 shares to 150,000,000 shares.
The Board of Directors has determined that this amendment is advisable and
should be considered at the Special Meeting. The full text of the proposed
amendment to the Certificate of Incorporation is set forth below.
Purposes and Effects of Proposed Increase in the Number of Authorized Shares of
Common Stock
The proposed amendment would increase the number of shares of Common Stock
which we are authorized to issue from 50,000,000 shares to 150,000,000 shares.
The additional 100,000,000 shares would be a part of the existing class of
Common Stock and, if and when issued, would have the same rights and privileges
as the shares of Common Stock presently issued and outstanding. At July 30,
2001, _______ shares of Common Stock were outstanding, and ________ shares were
reserved for issuances upon conversion of convertible securities and purchasable
upon the exercise or outstanding options and warrants including those for which
approval is sought. There is a shortfall in authorized Common Stock as of that
date of ______ shares. The Board of Directors believes it is desirable to
increase the number of shares of Common Stock we are authorized to issue by an
additional 100,000,000 shares to provide us with sufficient shares of Common
Stock to be reserved for the exercise of outstanding options and warrants and to
provide us with adequate flexibility in the future.
The holders of our Common Stock are not entitled to preemptive rights or
cumulative voting. Accordingly, the issuance of additional shares of Common
Stock might dilute, under certain circumstances, the ownership and voting rights
of stockholders. The proposed increase in the number of shares of Common Stock
we are authorized to issue is not intended to inhibit a change in control of the
Company. However, the availability for issuance of additional shares of Common
Stock could discourage, or make more difficult, efforts to obtain control of the
Company. For example, the issuance of shares of Common Stock in a public or
private sale, merger, or similar transaction would increase the number of
outstanding shares, thereby possibly diluting the interest of a party attempting
to obtain control of the Company. We are not aware of any pending or threatened
efforts to acquire control of the Company.
Amendment to Certificate of Incorporation
If approved, Article III of our Certificate of Incorporation would be
amended and restated in its entirety as follows:
ARTICLE III
III: This corporation is authorized to issue two classes of
stock to be designated, respectively, the "Common Stock" and
"Preferred Stock." The total number of shares which the
Corporation is authorized to issue is 152,000,000 shares, of
which 150,000,000 shares shall be Common Stock, and 2,000,000
shares shall be Preferred Stock, each with a par value of
$.001 per share.
Vote Required and Board Recommendation
The affirmative vote of holders of a majority of the Shares entitled to
vote at the Special Meeting is required to approve the proposed amendment. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
Officers and Directors
The executive officers, directors and key employees of the Company and
their ages as of July 30, 2001 are as follows:
Name Age Position
- ---- --- --------
R. Ramin Kamfar..................................... 37 Chairman and
Director
Anthony D. Wedo 42 Chief Executive
Officer and Director Nominee*
William Rianhard.................................... 43 President and Chief
Operating Officer
Jerold E. Novack.................................... 45 Executive Vice
President, Chief Financial
Officer, Treasurer
and Secretary
Keith F. Barket(1)(2)............................... 39 Director
Karen Hogan(1)...................................... 39 Director
Edward McCabe(2).................................... 62 Director
Leonard Tannenbaum.................................. 29 Director
Eve Trkla........................................... 38 Director
William Nimmo(2).................................... 46 Director
- -----------
<FN>
* Anthony D. Wedo has been nominated as a Director of the Company and is
expected to assume such post upon the taking of appropriate corporate action.
(1) Member of Audit Committee
(2) Member of Compensation Committee
R. Ramin Kamfar. Mr. Kamfar has served as a Director since founding the
Company and as Chairman and Chief Executive Officer since December 1998. From
May 1996 to December 1998, he served as President and Chief Executive Officer of
the Company. Between October 1993 and May 1996, Mr. Kamfar served in a number of
functions, including Co-President and Co-Chief Executive Officer of the Company.
Between 1988 and 1993, he worked in the Investment Banking Division of Lehman
Brothers Inc., New York, NY, most recently as a Vice President in the firm's
Private Placement Group. Mr. Kamfar is a director of Vsource, Inc. Mr. Kamfar
has a B.S. degree with distinction in Finance from the University of Maryland
and an M.B.A. degree with distinction in Finance from The Wharton School at the
University of Pennsylvania.
Anthony D. Wedo. Mr. Wedo joined the Company as Chief Executive Officer in
July, 2001 and is a nominee to serve as a Director. Since 1998, Mr. Wedo has
served as chief executive officer and managing partner of Atlantic Restaurant
Group, a venture group focused on acquiring high-growth restaurant concepts.
From 1994 through 1997, he served as president and chief executive officer of
Mid-Atlantic Restaurant Systems, a Boston Market franchisee, and from 1988
through 1993, Mr. Wedo was employed by Pepsico Inc.'s KFC division, most
recently as vice president. Ms. Wedo has received a ________________ degree from
________________ and a ____________ degree from ________________________.
William Rianhard. Mr. Rianhard became President and Chief Operating Officer
of the Company in May 2000. From October 1995 to April 2000, Mr. Rianhard was
employed by Sara Lee Corporation as the President and Chief Operating Officer of
Quikava, Inc., Hingham, MA., Chock Full o' Nuts Cafe franchising network. From
1976 to October 1995, Mr. Rianhard was employed by Allied Domecq U.S. Retailing,
Randolph, MA. the parent company of Dunkin' Donuts, in various operations and
development positions, serving the last four years as the Director of Concept
Development. Mr. Rianhard has a B.A. degree from Ulster County College.
Jerold E. Novack. Mr. Novack joined the Company as Vice President-Finance
in June 1994 and has served as Executive Vice President, Chief Financial
Officer, Treasurer and Secretary since July 2000 and Chief Financial Officer,
Treasurer and Secretary since January 1999. From 1991 to 1994, he served as Vice
President/Controller of The Outdoor Furniture Store, Inc., Woodridge, NJ a
specialty retail chain. From 1988 to 1991, he served as Controller for Richmond
Ceramic Tile, Inc., New York, NY a retailer and distributor of ceramic tile.
From 1985 to 1988, Mr. Novack served as Assistant Controller for Brooks Fashion
Stores, Inc., New York, NY a specialty retail chain. Prior to 1985, Mr. Novack
served as Import Division Controller for Mercantile Stores Company, Inc., New
York, NY a department store chain. Mr. Novack has a B.S. degree in Accounting
from Brooklyn College, City University of New York.
Keith F. Barket. Mr. Barket has served as a director of the Company since
June 1995. Mr. Barket is the Managing Director--Real Estate for Angelo, Gordon &
Co., New York, NY. From 1988 to 1997, Mr. Barket was a Managing Director of
Amerimar Enterprises Inc., New York, NY, a real estate investment and
development company during which time he was involved in a variety of office,
retail, residential and hotel projects. From 1984 to 1986, he worked as a senior
tax accountant with Arthur Andersen & Co., New York, NY. Mr. Barket has a B.A.
degree from Georgetown University and an M.B.A. degree from The Wharton School
at the University of Pennsylvania.
Karen Hogan. Ms. Hogan has served as a director of the Company since
December 1997. From 1992 to 1997, Ms. Hogan served as Senior Vice President,
Preferred Stock Product Management at Lehman Brothers, Inc., New York, NY. From
1985 to 1992, Ms. Hogan served as Vice President, New Product Development Group
at Lehman Brothers, Inc., New York, NY. Ms. Hogan has a B.S. degree from the
State University of New York at Albany and an M.B.A. degree in Finance and
Economics from Princeton University.
Edward McCabe. Mr. McCabe has served as director of the Company since
February 1997. Mr. McCabe has served as a marketing and investment banking
consultant since 1998. From 1991 to 1998, Mr. McCabe was Chief Executive Officer
of McCabe & Company, New York, NY, an advertising and communications company.
From 1967 to 1986 he served in various capacities, most recently as President
and Worldwide Creative Director, at Scali, McCabe, Sloves, Inc., New York, NY,
an advertising agency he co-founded. He also serves on the advisory board of
ThinkTanksWorldwide.com.
Leonard Tannenbaum. Leonard Tannenbaum, C.F.A., has served as a director of
the Company since March 1999. Mr. Tannenbaum is currently the Managing Partner
at MYFM Capital LLC, a boutique investment banking firm, and a partner at BET
Associates LP, a $50 million venture capital fund (see "Principal Holders of
Voting Stock"). Mr. Tannenbaum is a holder of the Chartered Financial Analyst
designation and is a member of AIMR. Mr. Tannenbaum currently serves on the
board of directors of the following companies: Corteq, General Devices, Timesys,
an embedded Linux company, and Transcentives.com, an Internet holding company.
Previously, Mr. Tannenbaum was the president of on-line auction company
CollectingNation.com, a partner in a $50 million hedge fund, an assistant
portfolio manager at Pilgrim Baxter, and an Assistant Vice President in the
small company group of Merrill Lynch. Mr. Tannenbaum has an M.B.A in Finance and
Bachelors of Science in Management from the Wharton School at the University of
Pennsylvania.
Eve Trkla. Ms. Trkla is a controlling person of Brookwood Financial
Partners, L.P., an affiliate of Brookwood New World Investors, LLC, (see
"Principal Holders of Voting Stock"). Ms. Trkla has been, since May 1993, the
Chief Financial Officer of Brookwood Financial Partners, L.P. Ms. Trkla's prior
experience in the financial services field includes eight years as a lender at
The First National Bank of Boston and one year as the Senior Credit Officer at
The First National Bank of Ipswich. Ms. Trkla also serves as a director of
UbiquiTel, Inc., a Sprint PCS affiliate. Ms. Trkla is a cum laude graduate of
Princeton University.
William Nimmo. Mr. Nimmo is a partner at Halpern, Denny & Co. a private
equity investment firm and party to the Stock Purchase Agreement (see "Principal
Holders of Voting Stock"). From 1989 to 1997, Mr. Nimmo was a partner at
Cornerstone Equity Investors, L.L.C. and its predecessor firm, Prudential Equity
Investors, Inc. Prior to joining Prudential Equity Investors in 1989; he spent
ten years with J.P. Morgan & Company. Mr. Nimmo is a graduate of Dartmouth
College and received an M.B.A. from the Amos Tuck School of Business
Administration at Dartmouth. Mr. Nimmo serves on the Boards of a number of
private companies.
</FN>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of July 30, 2001, certain information
regarding beneficial ownership of the Company's Common Stock (i) by each person
who, to the knowledge of the Company, beneficially owned more than 5% of the
shares of Common Stock of the Company outstanding at such date; (ii) by each
director of the Company; (iii) by the Chief Executive Officer of the Company;
and (iv) by each executive officer of the Company, other than the Chief
Executive Officer, who was serving as such at July 30, 2001 and whose annual
compensation exceeded $100,000:
Percentage
Shares Owned Beneficially
NAME OF BENEFICIAL OWNER**
Number Owned
- ------------------------
------ -----
Halpern Denny III,
L.P...........................................................
16,951,320(1) 50.88%
Greenlight......................................................................
. 14,961,583(1) 47.64%
Brookwood New World Investors,
LLC............................................... 3,263,178(1)
16.56%
BET Associates,
L.P..............................................................
3,820,523(2) 19.39%
Bruce
Toll.......................................................................
3,820,523(2) 19.39%
Special Situations
Fund..........................................................
4,287,811(1) 20.68%
Frank and Lydia
LaGalia..........................................................
981,800 5.97%
R. Ramin
Kamfar..................................................................
1,012,282(3) 5.91%
William
Rianhard.................................................................
15,000(4) *
Anthony D.
Wedo..................................................................
0(5) *
Jerold E.
Novak..................................................................
703,971(6) 4.17%
Keith F.
Barket..................................................................
67,721(7) *
Edward
McCabe....................................................................
48,532(8) *
Karen
Hogan......................................................................
66,434(9) *
Leonard
Tannenbaum...............................................................
138,972(10) *
Eve
Trkla........................................................................
10,000(11) *
William
Nimmo....................................................................
10,000(12) *
All Directors and Executive Officers as a group (10
persons)..................... 2,072,912 11.65%
<FN>
- -----------
* Less than one percent (1%).
** Address for each officer and director of the Company is the Company's
principal office located at 246 Industrial Way West, Eatontown, NJ.
(1) Consists of Common Stock which may be purchased pursuant to warrants.
(2) Includes 557,345 shares beneficially owned by BET Associates, L.P. and
3,263,178 shares which may be purchased under warrants by it. Mr. Toll is a
controlling person of BET Associates, L.P.
(3) Includes 684,367 shares, which may be acquired upon the exercise of options
which will be exercisable within 60 days.
(4) Includes 15,000 shares, which may be purchased pursuant to the exercise of
options which will be exercisable within sixty (60) days.
(5) Does not include options to purchase ______________ shares of common stock
in connection with Mr. Wedo's employment agreement, which options are not
exercisable within sixty (60) days.
(6) Includes 421,662 shares, which may be acquired upon the exercise of
options.
(7) Includes 37,000 shares, which may be acquired upon the exercise of
presently exercisable options.
(8) Includes 35,000 shares, which may be acquired upon the exercise of
presently exercisable options.
(9) Includes 30,000 shares, which may be acquired upon the exercise of
presently exercisable options.
(10) Includes options to purchase 30,000 shares of Common Stock and warrants to
purchase 70,000 shares of Common Stock. Does not include 3,820,523 shares
owned beneficially by BET Associates, L.P., of which Mr. Tannenbaum is a
limited partner owning 10% of the interest of the limited partners, and of
which shares Mr. Tannenbaum disclaims beneficial ownership.
(11) Includes 10,000 shares, which may be acquired upon the exercise of
presently exercisable options. Ms. Trkla is a controlling person of
Brookwood Financial Partner, L.P., an affiliate of Brookwood New World
Investors, LLC (see Note (1) above). Ms. Trkla disclaims a beneficial
interest in the Common Stock beneficially owned by Brookwood New World
Investors, LLC.
(12) Includes 10,000 shares, which may be acquired upon the exercise of
presently exercisable options. Does not include 10,605,140 shares owned
beneficially by Halpern Denny III, LP (see Note (1)) in which Mr. Nimmo is
a partner. Mr. Nimmo disclaims a beneficial interest in the Common Stock
beneficially owned by Halpern Denny III, LP.
</FN>
PROPOSAL NO. 2. TO APPROVE THE ISSUANCE OF WARRANTS TO PURCHASE AN
AGGREGATE OF 13,720,000 SHARES OF THE COMPANY'S COMMON STOCK IN CONNECTION WITH
THE SALE OF SENIOR SECURED INCREASING RATE PROMISSORY NOTES AND WARRANTS TO
PURCHASE AN AGGREGATE OF 42,950,564 SHARES OF COMMON STOCK IN CONNECTION WITH
THE SALE OF THE SERIES F PREFERRED STOCK, AND THE ISSUANCE OF THE UNDERLYING
COMMON STOCK.
The Board of Directors has approved, and is recommending to the
Stockholders for approval at the Special Meeting, the issuance of warrants to
purchase an aggregate of 13,720,000 shares of the Company's Common Stock in
connection with the sale of senior secured increasing rate promissory notes and
warrants to purchase an aggregate of 42,950,564 shares of Common Stock in
connection with the sale of Series F. Preferred Stock, and the underlying Common
Stock. The exercise price of all of the Warrants is $.01 per share.
The following is a description of the transactions in which such warrants
were issued.
Bond Purchase Agreement dated January 17, 2001. On or about January 17,
2001, the Company entered into a Bond Purchase Agreement (the "Bond Purchase
Agreement") with Greenlight Capital, L.P., Greenlight Capital Qualified, L.P.,
and Greenlight Capital Offshore, Ltd., (collectively the "Greenlight Entities").
Pursuant to the Bond Purchase Agreement, the Greenlight Entities formed a
limited liability company ("Bondco") and invested in the same Ten Million
($10,000,000) Dollars for the purchase of certain debentures ("Einstein
Debentures") issued by the Einstein/Noah Bagel Corporation ("Einstein") (the
"Bonds"). The Company was designated the exclusive manager of Bondco. At the
time of a combination of the Company and Einstein, Bondco had the option to sell
its Bonds. The Company would then share in the profits (if any) and exclusively
bear the losses in relation thereto, based on an agreed to accretion in the
Greenlight Entities investment. Alternatively, Bondco could retain its Bonds or
securities issued in lieu thereof or may sell the same to the Company in
exchange for a newly created class of Series E Preferred Stock. In connection
with the Bond Purchase Agreement, the Company also issued the Greenlight
Entities warrants to purchase an aggregate of four million two hundred forty two
thousand fifty six (4,242,056) shares of the Company's Common Stock at an
exercise price of $.01 per share. The Bond Purchase Agreement provides that for
so long as (i) there has not been a combination between the Company and
Einstein, or (ii) there has been a combination with Einstein and the Series E
Preferred Stock has not been issued to the Greenlight Entities, or (iii) the
Series E Preferred Stock was issued, but has not been redeemed, then the
Greenlight Entities are entitled to receive additional warrants equal to 0.9375%
of the fully diluted Common Stock of the Company (excepting certain options and
warrants) on January 17, 2002 and at the beginning of each succeeding three (3)
month period. The warrant has a term of five (5) years. In addition, warrants
for an additional 1.5% of the fully diluted Common Stock shall be issued at such
time as the Series F Preferred Stock is redeemed. The Company and the Greenlight
Entities entered into a Registration Rights Agreement relating to the shares
purchasable under the warrants.
Series F Preferred Stock and Warrant Purchase Agreement dated January 18,
2001. In January 2001, the Company sold shares of its Series F Preferred Stock
to Halpern Denny III, L.P. ("Halpern Denny") in exchange for Twenty Million
($20,000,000) Dollars to be used for the purchase of Einstein Debentures. In
connection with the purchase of the Series F Preferred Stock, the Company issued
Halpern Denny a warrant to purchase eight million four hundred eighty four
thousand one hundred twelve (8,484,112) shares of the Company's Common Stock at
an exercise price of $.01 per share. The Series F Purchase Agreement provides
that for so long as the Series F Preferred Stock has not been redeemed for cash
(including payment of certain subordinated senior notes (the "Notes") to the
holders of Series F Preferred Stock,) Halpern Denny shall receive additional
warrants equal to 1.5% of the fully diluted Common Stock of the Company
(excepting certain options and warrants) on January 22, 2002 and on each
succeeding June 30th and December 31st. The warrant has a term of five (5)
years. The warrant contains certain anti-dilution provisions which provide that
it will be exercisable for additional shares under certain events, as set forth
in the warrant.
Exchange Agreement dated January 22, 2001. BET Associates, L.P. ("BET") and
Brookwood New World Investors, LLC ("Brookwood") invested the sum of Fifteen
Million ($15,000,000) Dollars in August 2000 for substantially the same purpose
as contemplated by the Series F Purchase Agreement. BET and Brookwood were then
holders of Series D Preferred Stock, and had the right to approve the creation
of Series F Preferred Stock. Therefore, the Company considered it appropriate to
restructure the investment documents relating to their August 2000 investment.
Accordingly, the Company, BET and Brookwood entered into an Exchange Agreement
whereby they exchanged all of their outstanding Series D Preferred Stock,
including accrued, but unpaid dividends (all of which were retired) for certain
shares of Series F Preferred Stock. BET and Brookwood also exchanged the
warrants received by them in August 2000 for warrants to purchase an aggregate
of six million five hundred twenty six thousand three hundred fifty six
(6,526,356) shares of Common Stock of the Company at an exercise price of $.01
per share. The form of these warrants are substantially identical to the form of
the warrant issued to Halpern Denny including the anti-dilution provisions and
provisions thereof relating to the increase of the warrant shares, except that
the semi-annual increases are an aggregate of 1.154% of the fully diluted Common
Stock of the Company (excepting certain options and warrants).
Second Series F Preferred Stock and Warrant Purchase Agreement dated March
29, 2001. On or about March 29, 2001, the Company consummated a sale of five
thousand (5,000) additional shares of Series F Preferred Stock to Halpern Denny
in exchange for the sum of Five Million ($5,000,000) Dollars. The proceeds of
this financing were used by the Company for costs and expenses related to its
ongoing efforts to effect a business combination with Einstein. Pursuant to the
terms of the Second Series F Preferred Stock and Warrants Purchase Agreement
(the "Second Purchase Agreement"), the Company also issued to Halpern Denny
warrants to purchase two million one hundred twenty one thousand and twenty
eight shares (2,121,028) of the Company's Common Stock at an exercise price of
$.01 per share (subject to adjustment as provided in the warrant). The form of
the warrant issued to Halpern Denny is virtually identical to the form of
warrant issued to Halpern Denny pursuant to the Company's January 2001
financing. The Second Purchase Agreement also provides that for so long as the
Series F Preferred Stock has not been redeemed for cash (including payment of
the Notes, if any), or until there is a combination between the Company and
Einstein and a redemption of the Series F Preferred Stock, including delivery of
the Notes (but not payment of the same), Halpern Denny shall receive additional
warrants equal to 0.375% of the fully diluted Common Stock of the Company
(excepting certain options and warrants) on March 29, 2002 and on each
succeeding June 30th and December 31st. The warrant has a term of five (5)
years. The warrant contains certain anti-dilution provisions which provide that
it will be exercisable for additional shares under certain events, as set forth
in the warrant.
Series F Preferred Stock and Warrant Purchase Agreement dated June 7, 2001.
On or about June 7, 2001, the Company consummated the sale of four thousand
(4,000) additional shares of its Series F Preferred Stock to Halpern Denny in
exchange for the sum of Four Million ($4,000,000) Dollars pursuant to the terms
of the Series F Preferred Stock and Warrant Purchase Agreement dated June 7,
2001 (the "June Purchase Agreement"), the proceeds of which were used for costs,
expenses and expenditures related to the Einstein acquisition. In connection
with the June Purchase Agreement, the Company also issued to Halpern Denny
warrants to purchase in the aggregate three million three hundred eighty four
thousand six hundred twenty nine (3,384,629) shares of the Company's Common
Stock at an exercise price of $.01 per share. The warrants have a term of five
(5) years and contain certain anti-dilution provisions which provide that they
will be exercisable for additional shares under certain events as set forth in
the warrants.
Third Series F Preferred Stock and Warrant Purchase Agreement dated June
19, 2001. On or about June 19, 2001, the Company sold twenty one thousand
(21,000) additional shares of its Series F Preferred Stock in exchange for
Twenty One Million ($21,000,000) Dollars pursuant to the terms of the Third
Series F Preferred Stock and Warrant Purchase Agreement with certain investors,
the proceeds of which were used for costs, expenses and expenditures related to
the Einstein acquisition. In addition, in connection with the sale of the Series
F Preferred Stock (the "Third Purchase Agreement"), the Company sold warrants to
purchase in the aggregate eighteen million one hundred ninety two thousand three
hundred eighty three (18,192,383) shares of the Company's Common Stock at an
exercise price of $.01 per share (subject to adjustment as provided in the
warrant). The warrants have a term of five (5) years and contain anti-dilution
provisions which provide they will be exercisable for additional shares under
certain events as set forth in the warrants. The Third Purchase Agreement
provides that for so long as the Series F Preferred Stock has not been redeemed
for cash (including payment of the Notes, if any), Halpern Denny, the Greenlight
Entities and certain investors collectively known as the Special Situations
Funds shall receive additional warrants equal to a percentage (specified
therein) of the fully diluted Common Stock of the Company (excepting certain
options and warrants) on June 19, 2002 and each succeeding June 30th and
December 31st.
One Hundred Forty Million Dollar High Yield Note Sale to Jefferies &
Company, Inc. In connection with acquisition of Einstein, the Company issued One
Hundred Forty Million ($140,000,000) Dollars of Senior Secured Increasing Rate
Notes due 2003 (the "$140 Million Facility") to Jefferies & Company, Inc. In
connection with the $140 Million Facility, the Company also issued warrants to
purchase in the aggregate of thirteen million seven hundred twenty thousand
(13,720,000) shares of the Company's Common Stock at an exercise price of $.01
per share. The warrants are exercisable for a period of five (5) years. In
addition, if on March 15, 2002, the notes issued under the $140 Million Facility
remain outstanding, the Company will issue additional warrants representing 1%
of its fully diluted Common Stock. If on June 15, 2002, the notes issued under
the $140 Million Facility remain outstanding, the Company will issue additional
warrants representing 1% of the Company's fully diluted Common Stock. After June
15, 2002, the Company will issue on a monthly basis additional warrants
representing 1% of the fully diluted Common Stock of the Company until the notes
issued under the $140 Million Facility have been repaid. The warrants also
contain certain anti-dilution provisions which provide that it will be
exercisable for additional shares under certain events as set forth in the
warrant.
The purpose of the requested approval is to attempt to meet a condition of
a continued listing of our common stock on the NASDAQ National Market. The staff
of NASDAQ has advised us that the issuance of the warrants and the potential
issuance of the underlying common stock described above are, in the view of the
staff, in violation of rules requiring prior stockholder approval for
transactions or issuances that may result in a change in control of an issuer,
where more than twenty percent (20%) of an issuer's common stock is issued or
issuable in connection with the acquisition of the stock or assets of another
company and where twenty percent (20%) or more of the common stock of an issuer
is issuable at a price below the then market price.
The staff of NASADQ has advised us that its position is that the approval
being sought by this proxy statement related to the issuance of such warrants
and common stock will not be sufficient to remedy the failure to obtain prior
approval and that the staff will recommend that our common stock be delisted
from the NASDAQ National Market. We will seek an administrative review of this
determination before an appeal panel of NASDAQ. We do not know what the outcome
of such an appeal will be, and there may be a determination that the stockholder
approval being sought hereby is not sufficient to remedy the rule violations
indicated by the staff of NASDAQ, in which event a delisting of our common stock
would result.
In the event a delisting appears to be likely, we will re-apply for listing
of our common stock on the NASDAQ National Market and/or apply for listing on
another nationally recognized stock market. There can be no assurance we can
obtain such listing. A delisting of our common stock from NASDAQ National Market
would, in the absence of another listing, adversely affect the liquidity of the
trading market for our common stock which, in turn, may have an adverse effect
on the price of our common stock.
Vote Required and Board Recommendation
The affirmative vote of holders of a majority of the Shares entitled to
vote at the Special Meeting is required to approve, for purposes of the NASDAQ
National Market listing, the issuance of the warrants and underlying common
stock described above. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL
OF THE ISSUANCE OF THE WARRANTS AND THE UNDERLYING COMMON STOCK.
3. OTHER MATTERS
The Board of Directors has no knowledge of any other matters which may come
before the Special Meeting and does not intend to present any other matters.
However, if any other business shall properly come before the Special Meeting or
any adjournment thereof, the persons named as proxies will have discretionary
authority to vote the shares of Common Stock represented by the accompanying
proxy in accordance with their best judgment.
PROCEDURE FOR SUBMISSION OF YEAR 2001 STOCKHOLDER PROPOSALS
Proposals by stockholders for inclusion in the 2001 annual meeting of
stockholders proxy statement must be received by New World Coffee-Manhattan
Bagel, Inc., 246 Industrial Way West, Eatontown, New Jersey 07724, pursuant to
the provisions of the Restated Certificate of Incorporation. To be timely, a
stockholder's notice must be received not less than sixty (60) days nor more
than ninety (90) days prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than thirty (30) days or delayed by more than sixty
(60) days from such anniversary, notice by the stockholder to be timely must be
so received not earlier than the ninetieth day prior to such annual meeting and
not later than the close of business on the later of (1) the sixtieth day prior
to such annual meeting; or (2) the tenth day following the date on which notice
of the date of the annual meeting was mailed or public disclosure there of was
made, whichever first occurs. All such proposals are subject to the applicable
rules and requirements of the Securities and Exchange Commission.
OTHER MATTERS
So far as the Board of Directors is aware, only the aforementioned matters
will be acted upon at the Special Meeting. If any other matters properly come
before the Special Meeting, it is intended that the accompanying proxy may be
voted on such other matters in accordance with the best judgment of the person
or persons voting said proxy.
By order of the Board of Directors.
Jerold E. Novack, Secretary
Dated: August 15, 2001
COMMON STOCK PROXY
------------------
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
246 Industrial Way West
Eatontown, New Jersey 07724
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned, revoking all previous proxies, hereby appoints R. Ramin
Kamfar and Jerold E. Novack, and each of them, proxies with power of
substitution to each, for and in the name of the undersigned to vote all shares
of Common Stock of New World Coffee - Manhattan Bagel, Inc. (the "Company"),
held of record by the undersigned on July 30, 2001 which the undersigned would
be entitled to vote if present at the Special Meeting of Stockholders of the
Company to be held on September 5, 2001, at 9:30 a.m. at 246 Industrial Way
West, Eatontown, New Jersey 07724, and any adjournments thereof, upon the
matters set forth in the Notice of Special Meeting.
The undersigned acknowledges receipt of the Notice of Special Meeting and
Proxy Statement.
1. TO APPROVE THE PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK FROM 50,000,000 SHARES TO
150,000,000 SHARES.
FOR __________ AGAINST ____________ ABSTAIN _________
2. TO APPROVE THE ISSUANCE OF WARRANTS TO PURCHASE AN AGGREGATE OF
13,720,000 SHARES OF THE COMPANY'S COMMON STOCK IN CONNECTION WITH THE SALE OF
SENIOR SECURED INCREASING RATE PROMISSORY NOTES AND WARRANTS TO PURCHASE AN
AGGREGATE OF 42,950,564 SHARES OF COMMON STOCK IN CONNECTION WITH THE SALE OF
SERIES F PREFERRED STOCK, AND THE ISSUANCE OF THE UNDERLYING COMMON STOCK.
FOR __________ AGAINST ____________ ABSTAIN _________
3. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
FOR __________ AGAINST ___________ ABSTAIN _________
PLEASE SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
and when properly executed will be voted as directed herein. If no direction is
given, this Proxy will be voted "FOR" all proposals.
(Date)
(Signature)
(Signature, if held jointly)
Please sign exactly as name appears below. If Shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please list full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please sign, date and return promptly in the enclosed envelope. No postage
need be affixed if mailed in the United States.