EXHIBIT 10.46


 


 




 





NEW WORLD RESTAURANT GROUP, INC.


 


 


EQUITY RESTRUCTURING AGREEMENT


 


 


 


June 26, 2003




 





 

















 


Table of Contents


 


	
  1.

  	
  EXCHANGE OF HALPERN DENNY’S INTERESTS IN
  THE COMPANY.

  
	
   

  
	
  2.

  	
  EXCHANGE OF GREENLIGHT’S SERIES F PREFERRED
  STOCK.

  
	
   

  
	
  3.

  	
  CAPITALIZATION.

  
	
   

  
	
  4.

  	
  THE
  CLOSING.

  
	
   

  
	
  5.

  	
  REPRESENTATIONS AND WARRANTIES BY THE
  COMPANY.

  
	
   

  	
  5.1

  	
  Organization and Authority of the Company.

  
	
   

  	
  5.2

  	
  Authority of the Company.

  
	
   

  	
  5.3

  	
  No Conflicts; Consents of Third Parties.

  
	
   

  	
  5.4

  	
  Capitalization.

  
	
   

  
	
  6.

  	
  REPRESENTATIONS AND WARRANTIES BY THE
  EQUITY HOLDERS.

  
	
   

  	
  6.1

  	
  Organization and Authority of such Equity
  Holder.

  
	
   

  	
  6.2

  	
  Authority of such Equity Holder.

  
	
   

  	
  6.3

  	
  No Conflicts; Consents of Third Parties.

  
	
   

  	
  6.4

  	
  Ownership.

  
	
   

  
	
  7.

  	
  ADDITIONAL REPRESENTATIONS AND WARRANTIES
  OF GREENLIGHT AND HALPERN DENNY.

  
	
   

  
	
  8.

  	
  FURTHER AGREEMENTS OF THE PARTIES.

  
	
   

  	
  8.1

  	
  Proxy Statement; Company Stockholder
  Approval.

  
	
   

  	
  8.2

  	
  Voting.

  
	
   

  	
  8.3

  	
  No Transfers of or Encumbrances on
  Securities.

  
	
   

  	
  8.4

  	
  Waiver
  of Rights.

  
	
   

  	
  8.5

  	
  Termination of Stockholders Agreement.

  
	
   

  	
  8.6

  	
  Limitation on Accretion.

  
	
   

  	
  8.7

  	
  Amendment to Warrant Agreement.

  
	
   

  	
  8.8

  	
  Fees
  and Expenses.

  
	
   

  	
  8.9

  	
  Further
  Assurances.

  
	
   

  	
  8.10

  	
  Withdrawal of Board Recommendation.

  



 

















 


	
  9.

  	
  CONDITIONS TO CLOSING.

  
	
   

  	
  9.1

  	
  Conditions to the Obligation of each Equity
  Holder.

  
	
   

  	
  9.2

  	
  Conditions to the Obligations of the
  Company.

  
	
   

  
	
  10.

  	
  TRANSACTIONS AT THE CLOSING.

  
	
   

  	
  10.1

  	
  Items to Be Delivered by the Company.

  
	
   

  	
  10.2

  	
  Items to Be Delivered by each Equity
  Holder.

  
	
   

  
	
  11.

  	
  TERMINATION.

  
	
   

  	
  11.1

  	
  Termination.

  
	
   

  	
  11.2

  	
  Liability.

  
	
   

  
	
  12.

  	
  CONTINUING DIRECTOR AND OFFICER
  INDEMNIFICATION.

  
	
   

  
	
  13.

  	
  MISCELLANEOUS.

  
	
   

  	
  13.1

  	
  Notices.

  
	
   

  	
  13.2

  	
  Entire
  Agreement.

  
	
   

  	
  13.3

  	
  Headings.

  
	
   

  	
  13.4

  	
  Governing
  Law.

  
	
   

  	
  13.5

  	
  Separability.

  
	
   

  	
  13.6

  	
  Waiver.

  
	
   

  	
  13.7

  	
  Assignment.

  
	
   

  	
  13.8

  	
  Jurisdiction.

  
	
   

  	
  13.9

  	
  No Third Party Beneficiaries

  
	
   

  	
  13.10

  	
  Counterparts.

  
	
   

  
	
  14.

  	
  FEES AND EXPENSES.

  
	
   

  	
  14.1

  	
  Greenlight Fees and Expenses.

  
	
   

  	
  14.2

  	
  Halpern Denny Fees and Expenses.

  



 


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EQUITY RESTRUCTURING AGREEMENT


 


June 26, 2003


 


The parties to
this Agreement are New World Restaurant Group, Inc., a Delaware corporation (the
“Company”), Greenlight Capital, L.P., a Delaware limited partnership
(“Greenlight Capital”), Greenlight Capital Qualified, L.P., a Delaware limited
partnership (“Greenlight Qualified”), Greenlight Capital Offshore, Ltd., a
British Virgin Islands company (“Greenlight Offshore”), Brookwood New World
Investors, L.L.C., a Delaware limited liability company (“Brookwood”), and NWCI
Holdings, LLC, a Delaware limited liability company (“NWCI” and with Brookwood,
NWCI, Greenlight Capital, Greenlight Qualified, Greenlight Offshore,
“Greenlight”) and Halpern Denny Fund III, L.P. (“Halpern Denny” and together
with Greenlight, the “Equity Holders”).


 


RECITALS


 


The Company is
seeking to refinance its existing senior secured increasing rate notes due 2003
(the “Existing Notes”) and, in connection therewith, is engaged in negotiations
with respect to (i) an offering pursuant to Rule 144A promulgated under the
Securities Act of 1933, as amended, of $160.0 million of senior secured notes
due 2008 and (ii) a new senior revolving credit facility secured by
substantially all of the assets of the Company and its subsidiaries, other than
certain inactive subsidiaries (the “Refinancing”).


 


Greenlight
owns 57,368.756 shares of Series F Preferred Stock, par value $0.001 per share
of the Company (the “Series F Preferred Stock”), 10,061,351 shares of common
stock, par value $0.001 per share of the Company (the “Common Stock”), and
warrants to purchase 22,078,114 shares of Common Stock.


 


Halpern Denny
owns 56,237.994 shares of Series F Preferred Stock, 23,264,107 shares of Common
Stock and warrants to purchase 13,711,054 shares of Common Stock (collectively,
the “Halpern Denny Interests”).


 


Pursuant to
the terms of an amendment to the Note Purchase and Security Agreement dated
June 19, 2001, as amended (the “Note Purchase Agreement”), by and among
Jefferies & Company, Inc. (“Jefferies”), the Company and Greenlight,
Jefferies agreed to purchase all of the secured increasing rate notes (the
“EnbcDeb Corp. Notes”) of New World EnbcDeb Corp., a New York corporation
(“EnbcDeb Corp.”), immediately prior to the consummation of the Refinancing,
and the Company has agreed to issue, contemporaneously with the consummation of
such Refinancing, 4,337.481 shares of its Series F Preferred Stock to Jefferies
in full satisfaction of the Company’s obligations under the Note Purchase
Agreement.  Immediately upon the
issuance to Jefferies of the Series F Preferred Stock, Greenlight agreed to
purchase such shares of Series F Preferred Stock from Jefferies for aggregate
consideration of 


 

















 


$2,770,000, payable in
cash.  Following such purchase,
Greenlight will hold 61,706.237 shares of Series F Preferred Stock.


 


This Agreement
provides for the restructuring of the Company’s capital stock (the “Equity
Restructuring”).


 


Accordingly,
it is agreed as follows:


 


1.               Exchange of Halpern Denny’s
Interests in the Company.  At
the Closing referred to in Section 4, Halpern Denny shall deliver, assign and
transfer to the Company, 56,237.994 shares of Series F Preferred Stock,
23,264,107 shares of Common Stock and warrants to purchase 13,711,054 shares of
Common Stock, and the Company shall issue to Halpern Denny in exchange therefor
57,000 shares of Series Z Preferred Stock, par value $0.001 per share (the
“Series Z Preferred Stock”), which shall have the rights and preferences set
forth in the Certificate of Designation, Preferences and Rights of Series Z
Preferred Stock (the “Certificate of Designation”) attached to this Agreement
as Schedule 1.  Such shares of Series Z
Preferred Stock will not be registered under the Securities Act of 1933, as
amended (the “Securities Act”) and shall contain a legend stating that such
securities have not been registered under the Securities Act and may only be
transferred pursuant to an effective registration statement or an exemption
from the registration requirements of the Securities Act.


 


2.               Exchange of Greenlight’s Series F
Preferred Stock.  At the
Closing referred to in Section 4, Greenlight shall deliver, assign and transfer
to the Company, 61,706.237 shares of Series F Preferred Stock, and the Company
shall issue to Greenlight in exchange therefor 938,084,289 shares of Common
Stock (prior to any reverse stock split effect in connection with the Equity
Restructuring).  Such shares of Common
Stock will not be registered under the Securities Act and shall contain a
legend stating that such securities have not been registered under the
Securities Act and may only be transferred pursuant to an effective
registration statement or an exemption from the registration requirements of
the Securities Act.


 


3.               Capitalization.  The Company and the Equity Holders
acknowledge and agree that immediately upon the Closing of the transactions
contemplated by this Agreement; the Company’s capitalization will be as set
forth on Schedule 3 attached to this Agreement.


 


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4.               The Closing.  The Closing of the transactions contemplated
by this Agreement (the “Closing”) shall take place at the offices of Proskauer
Rose LLP, 1585 Broadway, New York, New York 10036 (or at such other place as
the parties may agree upon in writing) on the fifth business day after the
conditions specified in Section 9 have been fulfilled (or waived by the
applicable parties) or such other date as the parties may agree upon.  The date on which the Closing is held is
referred to in this Agreement as the “Closing Date.”  At the Closing, the parties shall take the actions and execute
and deliver the documents and other items referred to in Section 9.


 


5.               Representations and Warranties by
the Company.  The Company
represents and warrants to the Equity Holders as follows:


 


5.1         Organization and Authority of the
Company.  The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the full power, right and authority to
enter into and perform this Agreement in accordance with its terms and to own,
lease and operate its properties as it now does and to carry on its business as
it is presently being conducted.


 


5.2         Authority of the Company.


 


(a)          The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement and to
consummate the transactions contemplated by this Agreement (other than the
approval and adoption of this Agreement and the amendment of the Company’s
certificate of incorporation by the holders of the Common Stock in accordance
with the Delaware General Corporation Law (“Delaware Law”) and the Company’s
certificate of incorporation (the “Company Stockholders’ Action”)).  The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly and validly authorized by all
necessary corporate action on the part of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated by this Agreement,
other than the Company Stockholders’ Action. 
This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery of this
Agreement by each of the other parties to this Agreement, constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by (i)
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws of general application affecting the enforcement of
creditors’ rights generally now or hereafter in effect and (ii) general
principles of equity, regardless of whether asserted in a proceeding in equity
or at law.


 


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(b)         The
Company’s board of directors (the “Company Board”) has, by resolutions duly
adopted by unanimous vote at a meeting of all directors duly called and held
and not subsequently rescinded or modified in any way, (i) duly declared that this
Agreement and the transactions contemplated by this Agreement are fair to, and
in the best interests of, the Company’s stockholders, (ii) authorized, approved
and adopted this Agreement and the transactions contemplated by this Agreement,
and (iii) recommended that the holders of the Company’s Common Stock approve
and adopt this Agreement and the transactions contemplated by this Agreement
and directed that such matters be submitted to the holders of the Company’s
Common Stock at a meeting of the holder’s of the Company’s Common Stock.


 


(c)          The
Company Board has taken all necessary action so that the restrictions contained
in Section 203 of the Delaware Law applicable to a “business combination” (as
defined in Section 203) are, and at all times upon or prior to the Closing such
restrictions shall be, inapplicable to the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated by
this Agreement.


 


(d)         The
Company Board has taken all necessary action so that (A) neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated by this Agreement will cause (i) the Rights (as defined in the
Rights Agreement) to become exercisable under the Rights Agreement, dated as of
June 7, 1999 between the Company and American Stock Transfer & Trust
Company, as Rights Agent (the “Rights Agreement”), or (ii) Greenlight to be
deemed to be an “Acquiring Person” (as defined in the Rights Agreement).  The “Distribution Date” (as defined in the
Rights Agreement) has not occurred.


 


(e)          The
Company Board has received the opinion of CIBC World Markets Corp., financial
advisor to the Company, to the effect that, as of the date of this Agreement,
the shares of Series Z Preferred Stock and Common Stock to be issued by the
Company in the Equity Restructuring in exchange for the Halpern Denny Interests
and Greenlight’s Series F Preferred Stock is fair, from a financial point of
view, to the Company.


 


5.3         No Conflicts; Consents of Third Parties.


 


(a)          The
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated by this Agreement will not (i)
conflict with the certificate of incorporation or by-laws of the Company; (ii)
conflict with, or result in the breach or termination of, or constitute a
default under any material lease, agreement, commitment or other instrument, or
any material order, judgment or decree, to which the Company, is a party or by
which the Company, any of its subsidiaries or any of their respective assets or
properties is bound or affected; (iii) constitute a breach or violation of any
law, regulation, order, writ, judgment, injunction or decree applicable to the
Company, any of its 


 


4

















 


subsidiaries
or any of their respective assets or properties; or (iv) result in the creation
of any claim, lien, security interest, charge or encumbrance upon any of the
capital stock of the Company or upon any assets of the Company or any of its
subsidiaries.


 


(b)         The
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement will not, require
any consent, approval, authorization of, or declaration or filing with any
governmental body, court or other person or entity, except for the filing with
the Securities and Exchange Commission (the “SEC”) of the proxy statement to be
distributed to the holders of the Company Common Stock in connection with the
meeting of the holders of the Company’s Common Stock to approve the Company
Common Stockholders’ Action (the “Proxy Statement”) under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the “Exchange Act”).


 


5.4         Capitalization.


 


(a)          The
authorized capital stock of the Company consists of 150,000,000 shares of
Common Stock and 2,000,000 shares of preferred stock, par value $0.001 per
share.  The Company designated 116,000
shares of preferred stock as Series F Preferred Stock.  As of June 15, 2003, (i) 51,016,857 shares
of Common Stock were issued and outstanding, (ii) no shares of Common Stock
were held in the treasury of the Company, (iii) 94,349.053 shares of Series F
Preferred Stock were issued and outstanding (including 16,093.883 shares
representing accrued and unpaid dividends due on outstanding shares of Series F
Preferred Stock), (iv) no shares of Series F Preferred Stock were held in the
treasury of the Company, (v) 25,000 shares of Series D Preferred Stock of the
Company, par value $.001 per share, were designated, (vi) no shares of Series D
Preferred Stock were issued and outstanding, (vii) 500,000 shares of Series C
Convertible Preferred Stock of the Company, par value $0.001 per share, were
designated, (viii) no shares of Series C Convertible Preferred Stock were
issued and outstanding, (ix) 225 shares of Series B Convertible Preferred Stock
of the Company, par value $0.001 per share, were designated, (x) no shares of
Series B Convertible Preferred Stock were issued and outstanding, (xi) 400
shares of Series A Convertible Preferred Stock of the Company, par value $0.001
per share, were designated, (xii) no shares of Series A Convertible Preferred Stock
were issued and outstanding, (xiii) 5,266,442 shares of Common Stock were
reserved for issuance pursuant to outstanding options, and (xiv) 58,133,784
shares of Common Stock were reserved for issuance pursuant to outstanding
warrants.


 


(b)         Schedule
5.4(b) sets forth a true and complete list of each current or former employee,
officer, director or consultant of the Company or any of its subsidiaries who
holds an option to purchase Common Stock (“Options”) as of June 15, 2003,
together with the number of shares of Common Stock subject to such option, the
date of grant of such Option, the 


 


5

















 


exercise price
of such Option, the expiration date of such Option, the vesting schedule for
such Option.


 


(c)          Schedule
5.4(c) sets forth a true and complete list of all warrants, rights and other
securities (other than Options) convertible into or exchangeable or exercisable
for, Common Stock as of June 15, 2003, together with the number of shares of
Common Stock subject to such warrant, right or security, the date of grant of
such warrant, right or security, the exercise or conversion price of such
warrant, right or security the expiration date of such warrant, and the vesting
schedule, if any, for such warrant, right or security.


 


(d)         Except
as set forth on Schedule 5.4(b), 5.4(c) or 5.4(d) and as contemplated by this
Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or preemptive rights relating to the
issued or unissued capital stock of the Company any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, transfer, deliver
or sell, or cause to be issued, transferred, delivered or sold, any shares of
capital stock of, or any securities directly or indirectly convertible into or
exercisable or exchangeable for any shares of capital stock of, the Company or
any of its subsidiaries, all of which will be subject to the restructuring
contemplated by this Agreement.


 


(e)          No
holder of any securities of the Company is entitled to any anti-dilution or
similar protections or rights, except with respect to the securities set forth
on Schedule 5.4(d).


 


(f)            Upon
the consummation of the Equity Restructuring, the Company’s capitalization will
be as set forth on Schedule 3 attached to this Agreement.


 


6.               Representations and Warranties by the
Equity Holders.  Each
of the Equity Holders severally and not jointly, with respect to itself only,
represents and warrants to the Company as follows:


 


6.1                   Organization
and Authority of such Equity Holder.  Such Equity Holder is duly organized, validly existing and in
good standing under the laws of its jurisdiction of formation or organization
and has the full power, right and authority to enter into and perform this
Agreement in accordance with its terms.


 


6.2                   Authority
of such Equity Holder.  Such
Equity Holder has all necessary power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement and to consummate
the transactions contemplated by this Agreement.  The execution and delivery of this Agreement by such Equity
Holder and the consummation by such 


 


6

















 


Equity Holder of the
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary action on the part of such Equity Holder, and no
other proceedings on the part of such Equity Holder is necessary to authorize
this Agreement or to consummate the transactions contemplated by this Agreement.  This Agreement has been duly and validly
executed and delivered by such Equity Holder and, assuming the due
authorization, execution and delivery of this Agreement by each of the other
parties to this Agreement, constitutes a legal, valid and binding obligation of
such Equity Holder, enforceable against such Equity Holder in accordance with
its terms, except as enforceability may be limited by (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws of general application affecting the enforcement of creditors’
rights generally now or hereafter in effect and (ii) general principles of
equity, regardless of whether asserted in a proceeding in equity or at law.


 


6.3                   No Conflicts; Consents of Third
Parties.


 


(a)          The
execution, delivery and performance of this Agreement by such Equity Holder and
the consummation of the transactions contemplated by this Agreement will not
(i) conflict with the constitutive agreements of such Equity Holder; (ii)
conflict with, or result in the breach or termination of, or constitute a
default under any material lease, agreement, commitment or other instrument, or
any material order, judgment or decree, to which such Equity Holder, is a party
or by which it is bound; or (iii) constitute a violation by such Equity Holder
of any law, regulation, order, writ, judgment, injunction or decree applicable
to it.


 


(b)         The
execution and delivery of this Agreement by such Equity Holder does not, and
the performance of this Agreement by such Equity Holder and the consummation by
such Equity Holder of the transactions contemplated by this Agreement will not,
require any consent, approval, authorization of, or declaration or filing with
any governmental body, court or other person or entity, other than filings
pursuant to applicable securities laws.


 


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6.4                   Ownership.  Such Equity Holder owns the number of shares
of Series F Preferred Stock, Common Stock and warrants to purchase Common Stock
set forth opposite its name on Schedule 6.4.


 


7.               Additional Representations and
Warranties of Greenlight and Halpern Denny.  Greenlight and Halpern Denny have executed
and delivered the Consent and Waiver Agreement dated June 26, 2003, and the
Consent and Waiver Agreement has not been superseded, amended or terminated.


 


8.               Further Agreements of the Parties.


 


8.1                   Proxy
Statement; Company Stockholder Approval.


 


(a)          As
promptly as practicable after the consummation of the Refinancing, the Company
shall prepare and file the Proxy Statement with the SEC.  The Company shall use all commercially
reasonable efforts to respond as promptly as practicable to any comments of the
SEC on the Proxy Statement.


 


(b)         The
Company shall notify the other parties hereto of the receipt of any comments
from the SEC relating to the Proxy Statement.


 


(c)          The
Company shall, in accordance with Delaware Law and the Company’s certificate of
incorporation and by-laws, call, hold and convene a special meeting of the
holders of the Common Stock (the “Company Stockholders’ Meeting”) to consider
and vote upon the approval and adoption of the Company Stockholders’
Action.  The Company Board shall
recommend the approval and adoption of the Company Stockholders’ Action by the
holders of the Common Stock and shall include such recommendation in the notice
of and in the Proxy Statement.  The
Company will use its commercially reasonable efforts to cause the Proxy
Statement to be mailed to the holders of the Common Stock as promptly as
practicable after the SEC has no further comments on the Proxy Statement.  The Company shall take all lawful action to
solicit from the holders of the Common Stock proxies in favor of the approval
and adoption of the Company Stockholders’ Action and will take all other action
necessary or advisable to secure the vote or consent of the holders of the
Common Stock required by Delaware Law to obtain such approvals.


 


8.2                   Voting.  Each Equity Holder shall vote all of its
shares of Common Stock that such Equity Holder is entitled to vote at the
Company Stockholders’ Meeting in favor of the approval and adoption of the
Company Stockholders’ Action.  Each
Equity Holder shall not vote any of its shares of Common Stock that such Equity
Holder is entitled to vote at the Company 


 


8

















 


Stockholders’ Meeting, in favor
of the approval of any corporate action that would frustrate the purposes, or
prevent or delay the consummation, of the transactions contemplated by this
Agreement.


 


8.3                   No Transfers of or Encumbrances on
Securities.  Except
pursuant to the terms of this Agreement, no Equity Holder shall, without the
prior written consent of the Company, directly or indirectly, (i) grant any
proxies or enter into any voting trust or other agreement or arrangement with
respect to the voting of any of its shares of capital stock of the Company or
(ii) sell, assign, transfer, encumber or otherwise dispose of, or enter into
any contract, option or other arrangement or understanding with respect to the
direct or indirect sale, assignment, transfer, encumbrance or other disposition
of, any of its shares of capital stock of the Company during the term of this
Agreement.  No Equity Holder shall seek
or solicit any such sale, assignment, transfer, encumbrance or other
disposition or any such contract, option or other arrangement or understanding
and agrees to notify the Company promptly, and to provide all details requested
by the Company, if that Equity Holder shall be approached or solicited,
directly or indirectly, by any person with respect to any of the foregoing.


 


8.4                   Waiver of
Rights.  Each Equity
Holder waives any preemptive rights and rights to anti-dilution protection that
such Equity Holder may possess pursuant to any warrants, rights and other
securities issued to such Equity Holder by the Company or agreements with the
Company in connection with (i) the Equity Restructuring and (ii) any Common
Stock, options, rights and other securities exercisable for Common Stock that
may be issued to any of the Company’s or its subsidiaries’ officers or
employees pursuant to any management incentive plans approved and adopted by
the Company Board and stockholders.


 


8.5                   Termination of Stockholders Agreement.  Immediately prior to the Closing, the
Company, Halpern Denny and Greenlight shall cause the Stockholders Agreement
dated January 18, 2001, as amended March 29, 2001, June 19, 2001 and July 9,
2001 by and among the Company, BET Associates, L.P., Brookwood, Halpern Denny
and Greenlight (the “Stockholders Agreement”) to be terminated.


 


8.6                   Limitation
on Accretion.  Notwithstanding
anything to the contrary contained in the LLC Agreement, the Bond Purchase
Agreement or the letter agreement dated as of June 19, 2001 (the “Side
Letter”), among Greenlight Capital, Greenlight Qualified and Greenlight
Offshore, the Company and Greenlight New World, L.L.C. (the “LLC”), the LLC
Agreement and the Bond Purchase Agreement (each, as defined in the Side
Letter), in the event (and only in the event) of the consummation of the Equity
Restructuring, the Contribution Amount (as defined in the Bond Purchase
Agreement) shall be calculated as of June 30, 2003, without accretion
thereafter, regardless of the date upon which the Equity Restructuring is
consummated, for purposes of determining the number of warrants to purchase
shares of Common Stock and shares of Series F Preferred Stock issuable to
Greenlight Capital, Greenlight Qualified and Greenlight Offshore pursuant to
the Side Letter.  The warrants to
purchase Common Stock and shares of Series F Preferred Stock so issued shall be
issued in full 


 


9

















 


satisfaction of all obligations
of the Company to Greenlight Capital, Greenlight Qualified and Greenlight
Offshore under the LLC Agreement, the Bond Purchase Agreement and the Side
Letter.


 


8.7                   Amendment to
Warrant Agreement.  The
Company and Greenlight shall execute Amendment No. 2 to the Warrant Agreement
dated as of June 19, 2001, as amended between the Company and The Bank of New
York, as successor in interest to the corporate trust business of United States
Trust Company of New York, as warrant agent in substantially the form attached
hereto as Schedule 8.7 (the “Warrant Agreement Amendment”).


 


8.8                   Fees and
Expenses.  Subject to Section
14, each party shall bear its own expenses incurred in connection with the
negotiation and preparation of this Agreement and in connection with all
obligations required to be performed by it under this Agreement.


 


8.9                   Further
Assurances.  At any time
and from time to time after the Closing, each of the parties shall, without
further consideration, execute and deliver or cause to be executed and
delivered to the other parties such additional instruments, and shall take such
other action as the other parties may request to carry out the transactions
contemplated by this Agreement.


 


8.10               Withdrawal
of Board Recommendation.  The
Company Board shall not (i) withdraw or modify or propose to withdraw or
modify, the approval or recommendation of the Company Board of this Agreement,
or (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal (as hereinafter defined) provided that, the Company Board
may withdraw or modify or propose to withdraw or modify its recommendation of
this Agreement or recommend or propose to recommend an Acquisition Proposal if,
in each case, the Company Board determines in good faith, after consultation
with its financial advisor, that such Acquisition Proposal is a Superior
Proposal (as hereinafter defined) and determines in good faith, based upon
advice of its outside legal counsel, that it would be inconsistent not to do so
in order to comply with its fiduciary duties to the Company’s stockholders
under applicable law.  The Company shall
provide reasonable notice to the Equity Holders to the effect that it is taking
such action.  For purposes of this
Agreement, “Acquisition Proposal” shall mean any offer or proposal, whether in
writing or otherwise, made by a third party to acquire beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of all or a material portion of
the assets of, or any material equity interest in, the Company or its material
subsidiaries pursuant to a merger, consolidation or other business combination,
recapitalization, sale of shares of capital stock, sale of assets, tender offer
or exchange offer or similar transaction involving the Company (other than the
transactions contemplated by this Agreement). 
The term “Superior Proposal” means any proposal to acquire, directly or
indirectly, for consideration consisting of cash or securities, more than a
majority of each class of capital stock then outstanding or all or
substantially all of the assets of the Company, and otherwise on terms which
the Company Board determines in good faith to be more favorable to the Company
and its stockholders than the Equity Restructuring contemplated by this
Agreement, for which financing, to the extent required, is then committed.


 


10

















 


8.11             “Short Form” Merger. 
Greenlight shall not effect a merger of the Company with any other
entity pursuant to Section 253 of the Delaware Law.


 


9.               Conditions
to Closing.


 


9.1                   Conditions to the Obligation of each
Equity Holder.  Each
Equity Holder’s obligation to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or prior to the Closing, of each
of the following conditions (any of which may be waived in writing by such
Equity Holder):


 


(a)          all
representations and warranties of the Company under this Agreement shall be
true and correct (i) at and as of the time given (or with respect to any
representation and warranty, which speaks as of a specific date, as of such
date) and (ii) at and as of the time of the Closing with the same effect as if
the representations and warranties had been made again at and as of that time;


 


(b)         the
Company shall have performed and complied in all material respects with all
obligations, covenants and conditions required by this Agreement to be
performed or complied with by the Company prior to or at the Closing;


 


(c)          the
Refinancing shall have been consummated on substantially the terms set forth in
the preliminary offering circular dated June 26, 2003;


 


(d)         the
Company shall have entered into a new senior revolving credit facility on
substantially the terms set forth in the preliminary offering circular dated
June 26, 2003;


 


(e)          Jefferies
shall have purchased all of the EnbcDeb Corp. Notes;


 


(f)            Greenlight
shall have purchased all of the Series F Preferred Stock held by Jefferies;


 


(g)         the
Company Stockholders’ Action shall have been approved and adopted by the
Company’s stockholders at the Company Stockholders’ Meeting in accordance with
Delaware Law and the Company’s certificate of incorporation;


 


11

















 


(h)         the
Company shall have filed the Certificate of Designation with the Secretary of
State of the State of Delaware and the Certificate of Designation shall have
been accepted and certified by the Secretary of State of the State of Delaware;


 


(i)             the
Company shall have filed an amendment to its certificate of incorporation in a
form reasonably acceptable to the parties with the Secretary of State of the
State of Delaware and such amendment shall have been accepted and certified by
the Secretary of State of the State of Delaware;


 


(j)             in
the case of Greenlight, the Company and such Equity Holder shall have executed
and delivered the Registration Rights Agreement in the form attached hereto as
Schedule 9.1(j);


 


(k)          there
shall not be any material litigation pending which seeks to enjoin the
consummation of the Refinancing, the purchase of the EnbcDeb Corp. Notes, the
issuance of the Series F Preferred Stock to Jefferies contemplated by the Note
Purchase Agreement, Greenlight’s purchase of Jefferies’ shares of Series F
Preferred Stock and the transactions contemplated by this Agreement;


 


(l)             such
Equity Holder shall have been furnished with each of the items to be delivered
in accordance with Section 10.1;


 


(m)       the
Company shall have executed and delivered the Warrant Agreement Amendment;


 


(n)         the
Stockholders Agreement shall have been terminated;


 


(o)         Farallon
Capital Partners, L.P., Farallon Capital Institutional Partners, L.P., Farallon
Capital Institutional Partners II, L.P., Farallon Capital Institutional
Partners III, L.P., Tinicum Partners, L.P. and Farallon Capital Offshore
Investors, Inc. (collectively, “Farallon”) shall have consummated the
transactions contemplated by the Agreement of even date herewith between
Farallon and the Company;


 


(p)         Halpern
Denny shall have received the opinion of Proskauer Rose LLP, counsel to the
Company in form and substance reasonably acceptable to Halpern Denny; and


 


12

















 


(q)         Greenlight
shall have received the opinion of Proskauer Rose LLP, counsel to the Company
in form and substance reasonably acceptable to Greenlight.


 


9.2                   Conditions to the Obligations of the
Company.  The obligation of the
Company to consummate the transactions under this Agreement is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions
(any of which may be waived in writing by the Company):


 


(a)          all
representations and warranties of each of the Equity Holders contained in this
Agreement shall be true in all material respects at and as of the time of the
Closing with the same effect as if the representations and warranties had been
made again at and as of that time;


 


(b)         each
Equity Holder shall have performed and complied in all material respects with
all obligations, covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing;


 


(c)          there
shall not be any material litigation pending which seeks to enjoin the
consummation of the transactions contemplated by this Agreement;


 


(d)         Greenlight
shall have executed and delivered the Registration Rights Agreement;


 


(e)          Greenlight
shall have executed and delivered the Warrant Agreement Amendment; and


 


(f)            the
Company shall have been furnished with each of the other items to be delivered
in accordance with Section 10.2.


 


10.         Transactions at the Closing.


 


10.1             Items to Be
Delivered by the Company.  At
the Closing, the Company shall deliver the following:


 


(a)          to
Greenlight: (i) certificates representing the shares of Common Stock to be
issued to Greenlight, (ii) the general release in substantially the form of
Schedule 10.1(a) 


 


13

















 


and (iii) such
other certificates, instruments and documents as Greenlight may reasonably
request; and


 


(b)         to
Halpern Denny: (i) certificates representing the shares of Series Z Preferred
Stock to be issued to Halpern Denny, (ii) the general release in substantially
the form of Schedule 10.1(a), including, without limitation, a general release
for any of Halpern Denny’s former designees to the Company Board or any of the
boards of directors of the Company’s subsidiaries and (iii) such other
certificates, instruments and documents as Halpern Denny may reasonably
request.


 


10.2      Items to Be Delivered by each Equity
Holder.


 


(a)          At
the Closing, Greenlight shall deliver to the Company or Halpern Denny, as
applicable the following: (i) stock certificates representing all of the shares
of Series F Preferred Stock owned by Greenlight, together with duly executed
stock powers; (ii) a general release in favor of the Company in substantially
the form of Schedule 10.1(a); (iii) a general release in favor of Halpern Denny
in substantially the form of Schedule 10.1(a); and (iv) such other
certificates, instruments and documents as the Company may reasonably request.


 


(b)         At
the Closing, Halpern Denny shall deliver to the Company or Greenlight, as
applicable the following: (i) stock certificates representing all of the shares
of Series F Preferred Stock owned by Halpern Denny, together with duly executed
stock powers; (ii) stock certificates representing all shares of Common Stock
owned by Halpern Denny, together with duly executed stock powers; (iii) all of
the warrants held by Halpern Denny, duly endorsed for transfer; (iv) a general
release in favor of the Company in substantially the form of Schedule 10.1(a);
(v) a general release in favor of Greenlight in substantially the form of
Schedule 10.1(a); and (vi) such other certificates, instruments and documents
as the Company may reasonably request.


 


11.         Termination.


 


11.1   Termination. 
This Agreement may be terminated:


 


(a)          by
written agreement of the parties;


 


(b)         by
any of the parties if the Equity Restructuring shall not have occurred by
September 30, 2003; or


 


14

















 


(c)          by
any of the parties if the Company Board shall have withdrawn its recommendation
set forth in Section 5.2(b) as to the advisability of the circumstances contemplated
by this Agreement.


 


11.2   Liability. 
The termination of this Agreement under Section 11.1 shall not relieve
any party of any liability for breach of this Agreement prior to the date of
termination.


 


12.         Continuing Director and Officer
Indemnification.


 


(a)          From
and after the Closing, the Company shall fulfill and honor the obligations of
the Company pursuant to the indemnification and advancement provisions in the
Company’s certificate of incorporation and by-laws existing as in effect on the
date of this Agreement with respect to the Company’s directors and officers,
including former directors and officers, for a period of six years.


 


(b)         For
a period of six years after the Closing, the Company shall use its commercially
reasonable efforts to maintain in effect, a directors and officers liability
insurance policy covering those persons who are covered by the Company’s
directors and officers liability insurance policy as of the date of this
Agreement, which policy provides coverage for such individuals on at least as
favorable terms as the policy or policies from time to time in effect for the
Company’s then existing directors and officers.


 


(c)          The
provisions of this Section 12 are intended to be for the benefit of any
designee of any Equity Holder who has served as a director of the Company.


 


13.         Miscellaneous.


 


13.1             Notices.  Any notice or other communication under this
Agreement shall be in writing and shall be considered given when delivered
personally, one business day after being sent by a major overnight courier, or
four days after being mailed by registered mail, return receipt requested, to
the parties at the addresses set forth below (or at such other address as a
party may specify by notice to the other):


 


(a)          If
to the Company:


 


New World Restaurant Group, Inc.

1687 Cole Boulevard

Golden, CO 80401

Facsimile: (303) 568-8039

Attention: Anthony D. Wedo


 


15

















 


(b)         if
to Greenlight:


 


c/o Greenlight Capital, Inc.
420 Lexington
Avenue, Suite 1740
New York, New York 10017

Facsimile: (212) 973-1900

Attention: David Einhorn


 


(c)          if
to Halpern Denny:


 


Halpern Denny Fund III, L.P.
500 Boylston
Street

Suite 1880

Boston, MA  02116
Facsimile: (617) 536-8535

Attention: William J. Nimmo


 


13.2             Entire Agreement.  This Agreement, including the schedules,
contains a complete statement of all the arrangements among the parties with
respect to its subject matter, supersedes any previous agreements among them
relating to that subject matter and cannot be changed or terminated
orally.  Except as specifically set
forth in this Agreement, there are no representations or warranties by any
party in connection with the transactions contemplated by this Agreement.


 


13.3             Headings.  The section headings of this Agreement are
for reference purposes only and are to be given no effect in the construction
or interpretation of this Agreement.


 


13.4             Governing Law.  This Agreement shall be governed by and
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed in New York without giving effect to choice
of law or conflicts of law principles.


 


13.5             Separability.  If any provision of this Agreement is
invalid or unenforceable, the balance of this Agreement shall remain in effect.


 


13.6             Waiver.  Any party may waive compliance by any other
party with any provision of this Agreement. 
No waiver of any provision shall be construed as a waiver of any other
provision.  Any waiver must be in
writing.  No failure or delay by any
party in exercising any right, power or privilege under this Agreement will
operate as a waiver of the right, power or privilege.  A single or partial exercise of any right, power or 


 


16

















 


privilege will not preclude any
other or further exercise of the right, power or privilege or the exercise of
any other right, power or privilege.


 


13.7             Assignment.  No party may assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other parties.


 


13.8             Jurisdiction.    The courts of the State of New York in New
York county and the United States District Court for the Southern District of
New York shall have exclusive jurisdiction over the parties with respect to any
dispute or controversy among them arising under or in connection with this
Agreement and, by execution and delivery of this Agreement, each of the parties
to this Agreement submits to the jurisdiction of those courts, waives any
objection to such jurisdiction on the grounds of venue or forum non conveniens,
the absence of any personal or subject matter jurisdiction and any similar
grounds, consents to service of process by mail (in accordance with Section
13.1) or any other manner permitted by law, and irrevocably agrees to be bound
by any judgment rendered thereby in connection with this Agreement.  These consents to jurisdiction shall not be
deemed to confer rights on any person other than the parties to this Agreement.


 


13.9             No
Third Party Beneficiaries  This
Agreement does not create, and shall not be construed as creating, any rights
in favor of any person not a party to this Agreement.


 


13.10       Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be considered an original and all of which
shall be considered a single instrument.


 


14.         Fees
and Expenses.


 


14.1             Greenlight
Fees and Expenses.  The
Company shall pay any and all legal fees and expenses of counsel to Greenlight,
which fees and expenses relate to services rendered in connection with
Greenlight’s investment in the Company, including, without limitation, the
transactions contemplated by this Agreement, provided, however, that such fees
and expenses shall not exceed $500,000.


 


14.2             Halpern
Denny Fees and Expenses. 
The Company shall pay any and all legal fees and expenses of Ropes &
Gray LLP (or its predecessor), counsel to Halpern Denny, which fees and
expenses relate to services rendered since May 1, 2003 in connection with
Halpern Denny’s investment in the Company, including, without limitation, the
transactions contemplated by this Agreement, provided, however, that such fees
and expenses shall not exceed $125,000.


 


17

















 


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18

















 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers or authorized
representatives as of the date first written above.


 


 


	
   

  	
  NEW WORLD
  RESTAURANT GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY D. WEDO

  	
   

  
	
   

  	
   

  	
  Name: Anthony D. Wedo

  
	
   

  	
   

  	
  Title:

  
	
   

  
	
   

  
	
   

  	
  BROOKWOOD
  NEW WORLD INVESTORS,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:
  GREENLIGHT CAPITAL, L.P., its member

  
	
   

  	
   

  
	
   

  	
  By:
  GREENLIGHT CAPITAL, L.L.C., its general

  partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DAVID EINHORN

  	
   

  
	
   

  	
   

  	
  Name: David Einhorn

  
	
   

  	
   

  	
  Title: Senior Managing Member

  
	
   

  
	
   

  
	
   

  	
  NWCI
  HOLDING, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  GREENLIGHT CAPITAL, L.P., its member

  
	
   

  	
   

  
	
   

  	
  By:
  GREENLIGHT CAPITAL, L.L.C., its general

  partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DAVID EINHORN

  	
   

  
	
   

  	
   

  	
  Name: David Einhorn

  
	
   

  	
   

  	
  Title: Senior Managing Member

  
	
   

  
	
   

  
	
   

  	
  GREENLIGHT
  CAPITAL, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  GREENLIGHT CAPITAL, L.L.C., its general

  partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DAVID EINHORN

  	
   

  
	
   

  	
   

  	
  Name: David Einhorn

  
	
   

  	
   

  	
  Title: Senior Managing Member

  
	
   

  
	
   

  
	
   

  	
  GREENLIGHT
  CAPITAL QUALIFIED, L.P.

  
	
   

  	
   

  
	
   

  	
  By: GREENLIGHT
  CAPITAL, L.L.C., its general

  partner

  
							



 

















 


	
   

  	
   

  	
  By:

  	
  /s/ DAVID EINHORN

  	
   

  
	
   

  	
   

  	
  Name: David Einhorn

  
	
   

  	
   

  	
  Title: Senior Managing Member

  
	
   

  
	
   

  
	
   

  	
  GREENLIGHT
  CAPITAL OFFSHORE, LTD.

  
	
   

  	
   

  
	
   

  	
  By:
  GREENLIGHT CAPITAL, INC., its

  investment advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID EINHORN

  	
   

  
	
   

  	
   

  	
  Name:  David Einhorn

  
	
   

  	
   

  	
  Title: Senior Managing Member

  
	
   

  
	
   

  
	
   

  	
  HALPERN
  DENNY FUND III, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ WILLIAM NIMMO

  	
   

  
	
   

  	
   

  	
  Name: William Nimmo

  
	
   

  	
   

  	
  Title: