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EXHIBIT 99.11
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of January 18, 2001, by and
among NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (the
"Company") and the several holders (the "Stockholders") listed on Schedule I
hereto of Series F Preferred Stock, $.001 par value of the Company (the "Series
F Preferred Stock").
WHEREAS, the Company and certain purchasers (the "Series F
Purchasers") have entered into a Series F Preferred Stock and Warrant Purchase
Agreement dated as of January 18, 2001 (the " Purchase Agreement"), pursuant to
which the Series F Purchasers will purchase from the Company an aggregate of
20,000 shares of Series F Preferred Stock of the Company and warrants (the
"Warrants") to purchase shares (the "Warrant Shares") of Common Stock, $.001 par
value (the "Common Stock"), of the Company;
WHEREAS, simultaneously with the closing of the transactions
contemplated by the Purchase Agreement, the holders of Series D Preferred Stock
(the "Series D Purchasers", together with the Series F Purchasers, the
"Stockholders") have entered into an Exchange Agreement (the "Exchange
Agreement") with the Company pursuant to which such Series D Preferred Holders
have agreed to exchange the shares of Series D Preferred Stock, $.001 par value
(the "Series D Preferred Stock"), and warrants issued pursuant to a Series D
Preferred Stock and Warrant Purchase Agreement dated August 11, 2000 for the
respective number of shares of Series F Preferred Stock and Warrants set forth
opposite its name on Schedule I hereto;
WHEREAS, as an inducement to the Stockholders to consummate
the transactions contemplated by the Purchase Agreement and the Exchange
Agreement, the Company and each of the Stockholders have agreed to enter into
this Agreement; and
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto, intending
to be legally bound, hereby agree as follows:
SECTION 1. Election of Directors; Number of Directors. (a) At
any annual or special stockholders meeting called for such purpose, and whenever
the stockholders of the Company act by written consent with respect to election
of directors, each Stockholder agrees to vote or otherwise give such
Stockholder's consent in respect of all shares of voting capital stock of the
Company (whether now or hereafter acquired) owned by such Stockholder or as to
which such Stockholder is entitled to vote, and the Company shall take all
necessary and desirable actions within its control, in order to cause:
(i) the authorized number of directors on the Board of Directors
of the Company (the "Board") to be established and remain at nine (9);
(ii) the election to the Board of:
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(A) two directors (the "Xxxxxxx Xxxxx Designees")
designated by Xxxxxxx Xxxxx III, L.P. ("Xxxxxxx Xxxxx"), one of which
directors shall initially be Xxxxxxx Xxxxx and the other director shall
initially remain unnamed; provided, however, (i) in the event that (X)
the shares of Series F Preferred Stock held by Xxxxxxx Xxxxx are
redeemed for cash in accordance with the Certificate of Designation or
(Y) the Notes to be issued in accordance with the Certificate of
Designation are paid in full, Xxxxxxx Xxxxx shall be entitled to
designate only one director and (ii) in the event that (X) Xxxxxxx
Xxxxx owns less than 2% of the voting stock of the Company and (Y) the
events described in clause (i) above have occurred, it shall no longer
have the right to designate directors hereunder; and
(B) one director (the "Brookwood Designee") designated by
Brookwood New World Investors, LLC ("Brookwood"), which director shall
initially be Xxx Xxxxx; provided, however, that (X) the shares of
Series F Preferred Stock held by Brookwood are redeemed for cash in
accordance with the Certificate of Designation or (Y) the Notes to be
issued in accordance with the Certificate of Designation are paid in
full, Brookwood shall no longer have the right to designate a director
hereunder; and
(C) one director (the "BET Designee", together with the
Xxxxxxx Designees and the Brookwood Designee, the "Series F Designees")
designated by BET Associates, L.P., which director shall initially be
Xxxxxxx Xxxxxxxxxx;
(D) one director (the "Management Director") who shall be
the Chief Executive Officer of the Company and, in the event that there
are two Xxxxxxx Xxxxx Designees, there shall be one additional
Management Director; provided, however, that if by the first
anniversary hereof, the Company has not (i) consummated an Acquisition
of Einstein (as defined in the Purchase Agreement) or (ii) does not
control or is not scheduled to control the Board of Directors of
Einstein/Noah Bagel Corporation, then there shall only be one
Management Director;
(E) three individuals other than an employee or officer
of the Company or its subsidiaries or any other individual having a
relationship which, in the reasonable opinion of the Board, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director, which individual shall be designated by
the non-investor directors (the "Independent Directors"), which
Independent Directors shall initially be Xxxxx Xxxxx, Xxxxxx XxXxxx and
Xxxxx Xxxxxx;
all of which persons shall hold office, subject to their earlier removal in
accordance with clause (iii) below, the By-laws of the Company and applicable
corporate law, until their respective successors shall have been elected and
shall have qualified;
(iii) the removal from the Board (with or without cause) of any of
the Series F Designee upon the written request of the Stockholder that
designated such Series F Designee; and
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(iv) upon any vacancy in the Board as a result of any of the Series
F Designee ceasing to be a member of the Board, whether by resignation or
otherwise, the election to the Board of a replacement such Series F Designee to
be designated as provided in clause (ii) above.
(b) The Company shall establish and maintain an
Audit Committee and a Compensation Committee (collectively, the "COMMITTEES") as
soon as practicable after the date hereof. Each Committee shall consist of a
maximum of three (3) members. One of the Xxxxxxx Xxxxx Directors may, at his or
her election, serve on any Committee. In such event, the Xxxxxxx Xxxxx Director
may only be removed from such Committees, and any such vacancy may be filled, by
the entity who designated the Xxxxxxx Xxxxx Director.
(c) The Board shall meet on a quarterly basis until
otherwise agreed by the Board. The Company will reimburse all such directors for
all expenses reasonably incurred in connection with attending meetings of the
Board.
SECTION 2. (a) Preemptive Rights. The Company hereby
grants to each Stockholder the right to purchase such Stockholder's
Proportionate Percentage (as hereinafter defined) of any future Eligible
Offering (as hereinafter defined). For purposes of this Section 2(a):
"Proportionate Percentage" means, with respect to any
Stockholder as of any date, the result (expressed as a percentage)
obtained by dividing (i) the number of shares of Common Stock issuable
or issued upon exercise of warrants to purchase Common Stock of the
Company owned by such Stockholder as of such date, by (ii) the total
number of shares of Common Stock outstanding as of such date.
"Eligible Offering" means an offer by the Company to sell to
investors (including any of its stockholders) for cash, cash
equivalents or indebtedness, any securities of the Company, including,
without limitation, (i) shares of capital stock of the Company, or any
security convertible into or exchangeable for, or carrying rights or
options to purchase, capital stock of the Company, (ii) notes,
debentures, bond or other evidences of indebtedness of the Company, and
(iii) any combination or derivative of the foregoing, other than an
offering by the Company:
(i) to its full-time employees, and/or officers
and/or directors and/or consultants and/or advisors of options
or warrants to purchase shares of Common Stock representing up
to 15% of the fully-diluted Common Stock of the Company in
connection with or pursuant to any stock option or restricted
stock option plan approved and adopted by the Company, whether
currently in existence or created hereafter, or shares
issuable upon the exercise thereof; or
(ii) in connection with any merger of, or acquisition
by, the Company; or
(iii) in an underwritten public offering registered
under the Securities Act; or
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(iv) to a bank or other institutional investor in
connection with, and in consideration for, the issuance of
debt.
(b) The Company shall, before issuing any securities
pursuant to an Eligible Offering, give written notice thereof to each
Stockholder (the "Offering Notice"). Such notice shall specify the security or
securities the Company proposes to issue and the consideration that the Company
intends to receive therefor. For a period of fifteen (15) days following the
date of such notice, each Stockholder shall be entitled, by written notice to
the Company, to elect to purchase all or any part of such Stockholder's
Proportionate Percentage of the securities being sold in the Eligible Offering,
provided, however, that if two or more securities shall be proposed to be sold
as a "unit" in an Eligible Offering, any such election must relate to such unit
of securities. In the event that elections pursuant to this Section 2(b) shall
not be made with respect to any securities included in an Eligible Offering
within such fifteen (15) day period, then the Company may issue such securities
to investors, but only for a consideration payable in cash not less than, and
otherwise on no more favorable terms to the investors than, that set forth in
the Company's notice and only within ninety (90) days after the end of such
fifteen (15) day period. In the event that any such offer is accepted by one or
more Stockholders within the fifteen (15) day period designated above, the
Company shall sell to such Stockholder or Stockholders, and such Stockholder or
Stockholders shall purchase from the Company, for the consideration and on the
terms set forth in the notice as aforesaid, the securities that such Stockholder
or Stockholders shall have elected to purchase.
(c) Right of Co-Sale. In the event all of the securities
being sold in the Eligible Offering are not purchased pursuant to paragraph (b)
above, then each Stockholder shall have the right and option to elect to sell,
at the price and on the terms stated in the Offering Notice, all or part of that
number of securities being offered which is equal to the product obtained by
multiplying (i) the aggregate number of shares or securities covered by the
proposed sale by (ii) such Stockholder's Proportionate Percentage.
Notwithstanding the foregoing, this provision shall not apply to an Eligible
Offering (X) in which the proceeds are used to redeem the Series F Preferred
Stock or the notes issuable in accordance with the terms of the Series F
Preferred Stock or (Y) if the Company's investment banking firm determines that
the exercise by the Stockholder of its rights pursuant to this paragraph (c)
would materially impact the Company's ability to sell the Requisite Number of
Securities (as hereinafter defined), it being agreed that "materially impact"
shall mean the inability to sell at least 75% of the Requisite Number of
Securities. For purposes hereof, "Requisite Number of Securities" shall mean the
number of securities that the Company's investment banking firm determines is
necessary for the Company to issue in order to fund working capital and other
general corporate uses of the Company.
(d) Preemptive Right Procedures. With respect to any
election pursuant to paragraph (a) above, the closing of such sale of securities
in an Eligible Offering shall take place at the office of counsel for the
purchasing Stockholder no later than sixty (60) days following the delivery date
of the Offering Notice, or such other place and earlier date as may be agreed by
all parties to the transaction. At such closing, as payment in full for the
securities being purchased in an Eligible Offering, and against delivery hereof,
the purchasing Stockholder shall deliver to
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the Company a certified, official bank or attorney client trust check, payable
to the order of the Company the purchase price of such securities, or shall
transfer such purchase price by wire transfer to the account specified by the
Company in writing.
(e) Co-Sale Procedures. With respect to any election pursuant to
paragraph (c) above:
(i) Any such election shall be made by written notice (a
"Co-Sale Notice") to the Company within ten (10) business days after
receipt by such Stockholder of the notice required by Section 2(b)
above. Thereupon, the Stockholder shall not sell any of the securities
to be sold in an Eligible Offering except at the price and on the terms
stated in the Company's Offering Notice and, if a Stockholder shall
have delivered a Co-Sale Notice in respect thereof as aforesaid, unless
such Stockholder shall have been afforded the opportunity to sell the
shares in respect of which such Co-Sale Notice shall have been
delivered, at said price and on said terms;
(ii) Upon electing to participate in a proposed sale
pursuant to paragraph (c) above, each Stockholder shall deliver to the
Company, as its agent, for transfer to the proposed acquiror, one or
more certificates, duly endorsed for transfer or accompanied by stock
transfer powers duly endorsed for transfer, with all stock transfer
taxes paid and stamps affixed, which represent the number and the type
of securities that such Stockholder shall have so elected to sell; and
(iii) The stock certificate or certificates delivered by
each Stockholder to the Company pursuant to subparagraph (ii) above
shall be transferred by the Company to the acquiror in consummation of
the sale of the securities pursuant to the terms and conditions
specified in the Offering Notice, and the Company shall promptly
thereafter remit to such Stockholder that portion of the proceeds to
which such Investor is entitled by reason of such participation.
SECTION 3. Legend on Stock Certificates. Each certificate
representing Warrants, Warrant Shares issuable upon the exercise of the Warrants
or shares of Series F Preferred Stock, as the case may be, held by any
Stockholder shall conspicuously bear the following legend until such time as the
shares represented thereby are no longer subject to the provisions hereof:
"[THE SHARES EVIDENCED BY THIS CERTIFICATE] [THE SECURITY
EVIDENCED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE OF SUCH SECURITY] ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF JANUARY 18,
2001 AMONG THE ISSUER AND THE OTHER PARTIES THERETO, AS MAY BE
AMENDED FROM TIME TO TIME IN ACCORDANCE WITH ITS TERMS. COPIES
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
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THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE COMPANY."
The Company covenants that it shall keep a copy of this
Agreement on file at the address listed in Section 8 for the purpose of
furnishing copies to the holders of record of Warrants, Warrant Shares or Series
F Preferred Stock, as the case may be.
SECTION 4. Representations and Warranties. Each Stockholder
represents and warrants to the Company and the other Stockholders as follows:
(a) The execution, delivery and performance of this
Agreement by such Stockholder will not violate any provision of law, any order
of any court or other agency of government, or any provision of any indenture,
agreement or other instrument to which such Stockholder or any of its or his
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of such Stockholder.
(b) This Agreement has been duly executed and delivered
by such Stockholder and constitutes the legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with its
terms.
(c) The shares of Series F Preferred Stock, the Warrants
or the Warrant Shares listed in Schedule I hereto, as the case may be, opposite
the name of such Stockholder constitute all the shares of the capital stock of
the Company owned by such Stockholder or that such Stockholder has acquired or
may acquire pursuant to the Purchase Agreement and the Exchange Agreement.
SECTION 5. Headings. Headings of articles, sections and
paragraphs of this Agreement are inserted for convenience of reference only and
shall not affect the interpretation or be deemed to constitute a part hereof.
SECTION 6. Severability. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein shall, for any reason, be held to be invalid, illegal or
unenforceable, such illegality, invalidity or unenforceability shall not affect
any other provisions of this Agreement.
SECTION 7. Benefits of Agreement. Nothing expressed by or
mentioned in this Agreement is intended or shall be construed to give any person
other than the parties hereto and their respective successors and permitted
assigns and transferees any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of the parties hereto and their respective successors
and permitted assigns and transferees. Anything herein to the contrary
notwithstanding, each Stockholder shall have the right to assign its interests
hereunder to any transferee, provided that such transferee shall
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agree in writing with the parties hereto to be bound by, and to comply with, all
applicable provisions of this Agreement and to be deemed to be a Stockholder for
purposes of this Agreement.
SECTION 8. Notices. Any notice or other communications
required or permitted hereunder shall be deemed to be sufficient and received if
contained in a written instrument delivered in person or by courier or duly sent
by first class certified mail, postage prepaid, or by facsimile addressed to
such party at the address or facsimile number set forth below:
(1) if to the Company, to:
New World Coffee - Manhattan Bagel, Inc.
000 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Fascimile: 000-000-0000
Attention: Chief Executive Officer
with a copy to:
Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxxx
(2) if to any Stockholders, to the address of such Stockholder
appearing in Schedule I hereto;
or, in any case, at such other address or facsimile number as shall have been
furnished in writing by such party to the other parties hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal or courier delivery, on the date of
such delivery, (b) in the case of mailing, on the fifth business day following
the date of such mailing and (c) in the case of facsimile, when received.
SECTION 9. Modification. Except as otherwise provided herein,
neither this Agreement nor any provision hereof may be modified, changed,
discharged or terminated except by an instrument in writing signed by the party
against whom the enforcement of any modification, change, discharge or
termination is sought or by the agreement of (i) the majority of voting power of
shares of capital stock of the Company owned by the Stockholders, including the
holders of 66-2/3% of the outstanding shares of Series F Preferred Stock and
(ii) the Company; or if such modification, change, discharge or termination
would adversely affect the rights of one party hereto without equally affecting
all of the other parties hereto, such modification, change, discharge or
termination requires the consent of such adversely affected party.
SECTION 10. Counterparts. This Agreement may be executed in
any number of counterparts (and may be delivered by facsimile), and each such
counterpart hereof shall be
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deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement.
SECTION 11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as a sealed instrument, all as of the day and year first above
written.
COMPANY: NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
By______________________________
Name:
Title:
STOCKHOLDERS: XXXXXXX XXXXX III, L.P.
By______________________________
Name:
Title:
BET ASSOCIATES, L.P.
By: BRU Holding Co., LLC
Its General Partner
By: ____________________________
Name:
Title:
BROOKWOOD NEW WORLD INVESTORS LLC
By: Brookwood New World Co., LLC,
Its Managing Member
By: ____________________________
Name:
Title:
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SCHEDULE I
STOCKHOLDERS
Series F
Stockholder Preferred Stock Warrant
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Xxxxxxx Xxxxx III, L.P. 20,000,000 8,484,112
BET Associates, L.P. 8,213.01 3,263,178
Brookwood New World Investors, LLC 8,185.32 3,263,178
