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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported): July 31, 1997
(December 6, 1996)
NEW YORK BAGEL ENTERPRISES, INC
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(Exact name of Registrant as specified in its charter)
0-21205
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(Commission file number)
Kansas 73-1369185
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
300 I.M.A. Plaza
250 North Water Street
Wichita, Kansas 67202-1213
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(Address of principal executive offices, including zip code)
316-267-7373
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 25, 1996, New York Bagel Enterprises, Inc. (the "Company,"
which term shall be deemed to include its subsidiaries, unless the context
indicates otherwise) entered into an Asset Purchase Agreement (the
"Agreement") with Lots A' Bagels, Inc. ("Lots A' Bagels") and Mr. Stephen K.
Goldstone and Mrs. Linda F. Goldstone to acquire through the Company's
wholly owned subsidiary, LAB Acquisition Corporation ("LAB"), certain of the
assets and assume certain of the liabilities of Lots A' Bagels (the
"Acquisition"). On December 6, 1996, the Company completed the Acquisition.
Under the terms of the Agreement, the Company acquired substantially all of
the operating assets, business operations and facilities of Lots A' Bagels,
including seven restaurants and a bagel commissary located in Colorado
Springs and Monument, Colorado for $2.1 million in cash and the assumption of
certain liabilities of Lots A' Bagels. Additionally, certain contingent
consideration was provided for as discussed below. LAB entered into a
consulting agreement with Mr. Goldstone, a former executive officer of Lots
A' Bagels, which agreement expired by its terms on March 30, 1997. In
connection with the acquisition, Lots A' Bagels, Mr. Goldstone and Mrs.
Goldstone executed noncompete agreements in favor of the Company.
Pursuant to the Agreement, the Company acquired from Lots A' Bagels'
seven leased restaurants, a leased bagel commissary and substantially all of
Lots A' Bagels' inventory, property, operating equipment, intellectual
property and certain other assets. In connection with the Acquisition, all
lease agreements for the restaurants were assigned to and assumed by the
Company. The Company intends to operate the restaurants in substantially the
same manner as they were operated by Lots A' Bagels. The intellectual
property acquired from Lots A' Bagels consists principally of the trademarks
and logos of Lots A' Bagels.
The Agreement also provides for contingent consideration which includes a
$563,000 Promissory Note from the Company. The principal amount and accrued
interest payable under the Promissory Note were subject to offset (up to the
full amount of such principal and interest) for (i) certain adjustments to
have been made upon the completion of a final statement of operations for the
period from July 1, 1996 through March 30, 1997 (the "Final Statement of
Operations") and (ii) any amounts required to have been paid by Lots A'
Bagels pursuant to the indemnification provisions of the Agreement. In
addition, depending upon adjustments which may have resulted from the Final
Statement of Operations, the Company may have been required to pay up to an
additional $325,000 in cash and may have been required to issue to Lots A'
Bagels a promissory note in the amount, if any, by which the Final Statement
of Operations adjustment exceeded $325,000. In addition, the Company was
obligated to issue a Warrant to Purchase Common Stock entitling Lots A'
Bagels to purchase a to be determined number of shares of the Company's
common stock at a price per share equal to the total amount of debt issued to
Lots A' Bagels times sixty percent (60%) divided by the average final "close"
price per share of the Company's Common Stock for the ten trading days ending
three trading days prior to December 6, 1996.
Notwithstanding the terms of the Agreement or the determination of the
Final Statement of Operations, the parties entered into a Post Closing
Purchase Price Modification Agreement (the
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"Modification Agreement") on July 17, 1997 whereby the Company paid $515,000
in cash to Lots A' Bagels in full satisfaction of all contingent
consideration under the Agreement. Accordingly, the $563,000 Promissory Note
has been canceled, and the Company is not required to remit any additional
consideration to Lots A' Bagels, including, without limitation, any cash,
promissory note and/or the Warrant to Purchase Common Stock. No other
provisions of the Agreement are modified by the Modification Agreement.
The Company's source of the cash portion of the initial purchase price
and the post closing purchase price was a portion of the net proceeds from
the Company's initial public offering of Common Stock during August 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
The financial statements of Lots A' Bagels, Inc. were filed by amendment to
the Registrant's Report in Form 8-K, dated February 18, 1997.
(b) Pro Forma Financial Information
The Registrant's pro forma consolidated financial information, were filed by
amendment to the Registrant's Report on Form 8-K, dated February 18, 1996.
(c) Exhibits
The following exhibits, from which schedules and attachments have been
omitted and will be furnished to the Commission upon its request, are filed
with this report on Form 8-K/A. Exhibits incorporated by reference to a
prior filing (on Form 8-K) are designated by an asterisk (*); all other
exhibits not so designated are documents required to be filed as exhibits to
this Form 8-K/A.
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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2.1* Asset Purchase Agreement dated November 25, 1996 by and among LAB
Acquisition Corporation, New York Bagel Enterprises, Inc., Lots
A' Bagels, Inc., and Stephen K. Goldstone and Linda F. Goldstone.
2.2 Post Closing Purchase Price Modification Agreement dated July 17,
1997 by and among Lots A' Bagels, Inc., formerly known as LAB
Acquisition Corporation, New York Bagel Enterprises, Inc., JBA
Enterprises, Inc.,
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formerly known as Lots A' Bagels, Inc., and Stephen K. Goldstone
and Linda F. Goldstone.
4* New York Bagel Enterprises, Inc. Warrant to Purchase Common Stock.
99.1* Financial Statements of Business Acquired.
99.2* Pro Forma Financial Information.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
NEW YORK BAGEL ENTERPRISES, INC.
/s/ JON H. CRAMER
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Jon H. Cramer
CHIEF FINANCIAL OFFICER, TREASURER AND SECRETARY
Dated: July 31, 1997
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EXHIBIT 2.2
POST CLOSING PURCHASE PRICE MODIFICATION AGREEMENT
THIS POST CLOSING PURCHASE PRICE MODIFICATION AGREEMENT (this
"Modification Agreement") is made and entered into as of the 17th day of
July, 1997, by and among LOTS A' BAGELS, INC., formerly known as LAB
Acquisition Corporation, a Kansas corporation ("Buyer"), NEW YORK BAGEL
ENTERPRISES, INC., a Kansas corporation and the parent corporation of Buyer
("NYBE"), JBA ENTERPRISES, INC., formerly known as Lots A' Bagels, Inc., a
Colorado corporation ("Seller"), and STEPHEN K. GOLDSTONE AND LINDA F.
GOLDSTONE, who are owners of all of the issued and outstanding capital stock
of Seller (collectively, "Stockholders").
W I T N E S S E T H:
WHEREAS, The parties entered into a certain Asset Purchase Agreement
dated November 25, 1996 (the "Agreement ");
WHEREAS, Article IV of the Agreement provides for certain Purchase Price
consideration at Closing, including the Initial Cash, the assumption of the
Assumed Liabilities and the Initial Promissory Note, which is subject to
offset, all of which the parties acknowledge as paid, assumed and delivered
by Buyer and received by Seller;
WHEREAS, Article IV of the Agreement also provides for certain
contingent Purchase Price consideration to be rendered after Closing pursuant
to the calculation of the Final Statement of Operations which determines the
Final Purchase Value, including the potential offset to the Initial
Promissory Note, the potential issuance of the Final Promissory Note, the
potential issuance of the Warrant and the potential additional cash portion
of the Adjustment; and
WHEREAS, The parties desire to modify the Purchase Price to be rendered
after Closing as set forth herein, all in accordance with the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
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1. DEFINED TERMS; RECITALS. Unless otherwise defined herein, the
capitalized terms utilized herein shall have the meanings set forth in the
Agreement. The above recitals are incorporated herein as if originally set
forth herein.
2. MODIFICATION OF TERMS OF AGREEMENT. Notwithstanding the terms of
the Agreement or the determination of the Final Statement of Operations and
the related Final Purchase Value, the parties agree that Buyer will pay on
the date of this Agreement by means of federal funds wire transfer pursuant
to Seller's instructions Five Hundred Fifteen Thousand Dollars ($515,000.00)
to Seller (the "Post Closing Payment"). The parties acknowledge and agree
that upon Buyer's payment of the Post Closing Payment the same will be
considered payment in full by Buyer of all Purchase Price obligations,
whether as of the Closing Date or thereafter, including, without limitation,
the potential adjustment to the Initial Promissory Note, the issuance of the
Final Promissory Note, the issuance of the Warrant and the cash portion of
the Adjustment.
3. CANCELLATION OF THE INITIAL PROMISSORY NOTE. Upon Buyer's payment
of the Post Closing Payment, Seller shall cancel the Initial Promissory Note
by marking it "Canceled-July 17, 1997," executing the same and delivering it
to Buyer by facsimile and by overnight delivery.
4. SURVIVAL OF AGREEMENT. Except as set forth herein, no other
provisions of the Agreement are modified and all provisions of the Agreement
and any agreement, certificate or other document delivered or given pursuant
to the Agreement shall survive the completion of the transactions
contemplated by this Modification Agreement, including, without limitation,
all terms, covenants, representations, warranties, indemnifications,
agreements and other provisions of the Agreement and such related documents.
5. ALLOCATION OF POST CLOSING PAYMENT. Buyer, Seller and Stockholders
covenant and agree with each other that the Post Closing Payment shall be
allocated to goodwill for purposes of purchase price allocation. Buyer and
Seller covenant to file all tax returns on the basis consistent with such
allocation. Seller, if necessary, and Buyer will each file a supplemental
Internal Revenue Service Form 8594 reflecting the final agreed upon Purchase
Price allocation with their respective 1997 federal income tax returns.
6. AMENDMENT. This Modification Agreement may be amended or modified
in whole or in part only by an agreement in writing executed in the same
manner as this Modification Agreement and making specific reference thereto.
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7. COUNTERPARTS; FACSIMILE SIGNATURES. This Modification Agreement
may be executed in one or more counterparts, all of which taken together
shall constitute one instrument. Facsimile signatures of the parties hereto
shall be binding.
8. BINDING ON SUCCESSORS AND ASSIGNS. This Modification Agreement
shall be binding upon, inure to the benefit of, and be enforceable by and
against, the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns; provided, however, that
nothing contained in this Modification Agreement shall confer upon any other
person not a party to this Modification Agreement any rights or remedies
hereunder. This is not a third party beneficiary contract. In particular,
without limitation, it is not the intention of the parties that this
Modification Agreement be a contract of which any governmental entity is a
third party beneficiary. No one shall be entitled to enforce any provision
of this Modification Agreement except the parties hereto, their successors
and permitted assigns.
9. HEADINGS AND DEFINITIONS. The headings in the paragraphs of this
Modification Agreement are inserted for convenience only and in no way alter,
amend, modify, limit or restrict the contractual obligation of the parties.
10. EXHIBITS. The Exhibits hereto form an integral part of this
Modification Agreement and are incorporated herein by reference and expressly
made a part hereof.
11. PUBLIC ANNOUNCEMENTS. The parties agree that all statements and/or
public announcements, including those to the media, concerning this
transaction shall be subject to Buyer's and NYBE's prior written approval.
Buyer and NYBE may make any statement and/or public announcement concerning
this transaction in their sole discretion.
12. ENTIRE AGREEMENT; LAW GOVERNING. All prior negotiations and
agreements between the parties hereto are superseded by this Modification
Agreement, and there are no understandings or agreements other than those
expressly set forth herein or in any Exhibit delivered pursuant hereto,
except as modified in writing concurrently herewith or subsequent hereto.
This Modification Agreement shall be governed by and construed and
interpreted according to the laws of the State of Kansas.
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IN WITNESS WHEREOF, this Modification Agreement has been duly executed
by Buyer, NYBE, Seller and Stockholders as of and on the date first above
written.
LOTS A' BAGELS, INC.
By /s/ ROBERT J. GERESI /s/ STEPHEN K. GOLDSTONE
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Robert J. Geresi, President STEPHEN K. GOLDSTONE
"Buyer"
NEW YORK BAGEL ENTERPRISES, INC. /s/ LINDA F. GOLDSTONE
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LINDA F. GOLDSTONE
By /s/ ROBERT J. GERESI "Stockholders"
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Robert J. Geresi, Chief Executive Officer
"NYBE"
JBA ENTERPRISES, INC.
By /s/ STEPHEN K. GOLDSTONE
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Stephen K. Goldstone, Chief Executive Officer
"Seller"
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