Exhibit 99.2
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NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
SERIES F PREFERRED STOCK
PURCHASE AGREEMENT
THIS SERIES F PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of June 7, 2001, by and among New World Coffee - Manhattan
Bagel, Inc., a Delaware corporation (the "Company") and XXXXXXX XXXXX III, L.P.
(the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of up to
4,000 shares of its Series F Preferred Stock (the "Shares") on the terms and
conditions set forth herein;
WHEREAS, the Purchaser desires to purchase 4,000 Shares on the terms
and conditions set forth herein;
WHEREAS, the Company desires to issue and sell such Shares to the
Purchaser on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the First Closing (as defined
in Section 3 below), the Company shall have authorized the Shares. The Shares
shall have the rights, preferences, privileges and restrictions set forth in the
Certificate of Designation in the form attached hereto as EXHIBIT A (the
"Certificate of Designation").
1.2 SALE AND PURCHASE.
(a) At the First Closing (as defined below), the Company shall issue
and sell to the Purchaser and the Purchaser shall purchase 1,000 shares of
Series F Preferred Stock for an aggregate of $1,000,000; and
(b) At the Second Closing (as defined below), the Company shall issue
and sell to the Purchaser and the Purchaser shall purchase 3,000 shares of
Series F Preferred Stock for an aggregate of $3,000,000; and
(c) The purchase price at each of the First Closing and the Second
Closing shall be one thousand dollars ($1,000) per share.
2. CLOSINGS, DELIVERIES, PAYMENT AND USE OF PROCEEDS.
3.1 CLOSINGS. The closing of the purchase and sale of Shares pursuant to
Section 1.2(a) above (the "First Closing") shall take place on June 7, 2001, at
the offices of Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol, 00 Xxxxxxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time or place as the Company
and the Purchaser may mutually agree (such date is hereinafter referred to as
the "First Closing Date"). The closing of the purchase and sale of the Shares
pursuant to Section 1.2(b) above (the "Second Closing" and together with the
First Closing, the "Closings") shall take place on June 15, 2001, at the offices
of Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or at such other time or place as the Purchaser may mutually
agree (such date is hereinafter referred to as the "Second Closing Date" and
together with the First Closing Date, the "Closing Dates")
3.1.1 At each of the Closings, subject to the terms and conditions
hereof, the Company shall deliver to the Purchaser the following:
(a) Certificates representing the number of Shares to be purchased at
such Closing by the Purchaser;
(b) A Compliance Certificate, executed by the President of the
Company, dated as of such Closing Date, to the effect that the conditions
specified in Section 7.1 have been satisfied.
(c) A certificate of the Secretary of the Company, dated as of such
Closing Date, in substantially the form attached hereto as EXHIBIT 3.1.1(c).
(d) An opinion of legal counsel to the Company addressed to such
Purchaser, dated as of such Closing Date, in substantially the form attached
hereto as EXHIBIT 3.1.1(d).
3.2 At such Closing, subject to the terms and conditions hereof, the
Purchaser shall deliver to the Company a wire transfer in the amount of the
Purchase Price for the Shares to be purchased at such Closing by the Purchaser.
4. USE OF PROCEEDS. The proceeds from (i) the First Closing shall be used
to pay the commitment fee due to Jefferies & Co. pursuant to the Commitment
Letter dated as of June 1, 2001 and (ii) the Second Closing shall be used to
pay a bid deposit made in connection with the purchase of the assets of
Einstein/Noah Bagel Corporation ("Einstein").
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser as of the date
of this Agreement as follows (for purposes of all of the representations and
warranties in this Section 5, the term "Company" shall include and encompass all
subsidiaries of the Company):
5.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Except as set forth on
Schedule 5.1, the Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power and authority to own and
operate its properties and assets, to execute and deliver this Agreement, the
Warrants (as defined in Section 9.1(c), and together with any other agreements
entered to in connection with this Agreement, the "Related Agreements"),
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to issue and sell the Shares and the Warrants and to carry out the provisions of
this Agreement, the Related Agreements and the Certificate of Designation and to
carry on its business as presently conducted and as presently proposed to be
conducted. The Company is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so would not have a material adverse effect on the Company or its business.
5.2 SUBSIDIARIES. Except as set forth in Schedule 5.2, the Company owns no
equity securities of any other corporation, limited partnership or similar
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement. Except as set forth on Schedule 5.2, each of the entities
listed on Schedule 5.2 under the heading "Inactive Subsidiaries" (i) has no
assets, (ii) has no obligations or liabilities, absolute, accrued or contingent,
(iii) has not conducted, since the Statement Date (as defined in Section 5.5),
any business except for its organization as a corporation and (iv) will not
conduct any business except for its organization as a corporation hereafter.
5.3 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the
Company, immediately prior to the First Closing and the consummation of the
transactions contemplated hereby, will consist of (i) 50,000,000 shares of
Common Stock, par value $.001 per share, 16,622,691 shares of which are issued
and outstanding, and 2,047,729 shares of which are reserved for future issuance
to pursuant to the Company's Stock Option Plans, as amended and restated (the
"Option Plan"), 20,084,846 shares of which are reserved for issuance upon
exercise of the Initial Series F Warrants and other warrants of the Company, and
(ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of
which are designated Series A Preferred Stock, none of which are issued and
outstanding, 225 of which are designated Series B Preferred Stock, none of which
are issued and outstanding, 500,000 of which are designated Series C Preferred
Stock, none of which are issued and outstanding, 25,000 of which are designated
Series D Preferred Stock, none of which are issued and outstanding, 65,000 of
which are designated Series F Preferred Stock, 41,398.33 of which are issued and
outstanding and 700,000 shares of Series A Junior Participating Preferred Stock,
none of which is issued or outstanding. The authorized capital stock of the
Company immediately after the First Closing, will consist of (i) 50,000,000
shares of Common Stock, par value $.001 per share, 16,622,691 shares of which
are issued and outstanding, and 2,047,729 shares of which are reserved for
future issuance to pursuant to the Company's Stock Option Plans, as amended and
restated (the "Option Plan"), 22,205,874 shares of which are reserved for
issuance upon exercise of the Warrants, warrants to purchase shares of Common
Stock of the Company issued pursuant to the First Series F Purchase Agreement
and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock,
par value $.001 per share, 400 of which are designated Series A Preferred Stock,
none of which are issued and outstanding, 225 of which are designated Series B
Preferred Stock, none of which are issued and outstanding, 500,000 of which are
designated Series C Preferred Stock, none of which are issued and outstanding,
25,000 of which are designated Series D Preferred Stock, none of which are
issued and outstanding, 73,000 of which are designated Series F Preferred Stock,
42,398.33 of which are issued and outstanding and 700,000 shares of Series A
Junior Participating Preferred Stock, none of which is issued or outstanding.
Except as provided in Schedule 5.3, none of the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
designated by the Company may be
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issued at any time. All issued and outstanding shares of the Company's Common
Stock and other capital stock (a) have been duly authorized and validly issued,
(b) are fully paid and nonassessable, and (c) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities. The
rights, preferences, privileges and restrictions of the Shares are as stated in
the Certificate of Designation. Other than the 24,193,603 shares reserved for
issuance under the Option Plans, the Warrants, the Initial Series F Warrants and
other warrants and except as may be granted pursuant to this Agreement and the
Related Agreements, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal), proxy
or stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. Schedule 5.3 sets forth
all issued and outstanding options and warrants with an exercise price greater
than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a
party or subject to any agreement or understanding, and, to the Company's
knowledge, there is no agreement or understanding between any persons and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any security or by a director of the Company. When issued in
compliance with the provisions of this Agreement and the Certificate of
Designation, the Shares will be validly issued, fully paid and nonassessable,
and will be free of any liens or encumbrances and any restrictions on transfer;
provided, however, that the Shares may be subject to restrictions on transfer
under applicable state and/or federal securities laws. The consummation of the
transactions contemplated by this Agreement and the Related Agreements will not
result in acceleration or other changes in the vesting provisions or other terms
of any outstanding options granted by the Company. Each subsidiary of the
Company is listed on Schedule 5.2 hereto, and each such subsidiary is
wholly-owned.
5.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder and thereunder at the Closing and the
authorization, sale, issuance (or reservation for issuance) and delivery of the
Shares and the Warrants pursuant hereto have been taken or will be taken prior
to the Closing. The Agreement and the Related Agreements, when executed and
delivered, will be valid and binding obligations of the Company enforceable in
accordance with their terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (b) general principles of equity
that restrict the availability of equitable remedies. The sale of the Shares is
not and will not be subject to any preemptive rights or rights of first refusal
that have not been properly waived or complied with.
5.5 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser (a)
the audited consolidated balance sheet for the Company and audited consolidated
statement of income and cash flows for the Company for the fiscal year ending
December 26, 1999 and (b) the audited consolidated balance sheet for the Company
and audited consolidated statement of income and cash flows for the Company as
at December 26, 2000 (the "Statement Date") (collectively, the "Financial
Statements"), copies of which are certified by the Chief Financial Officer of
the Company and attached hereto as EXHIBIT 5.5. The Financial Statements,
together with the notes thereto, are complete and correct in all material
respects, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated,
except as disclosed therein, and present fairly the
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financial condition and position of the Company as of December 26, 1999 and the
Statement Date. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with generally
accepted accounting principles.
5.6 LIABILITIES. The Company has no material liabilities and, to the best
of its knowledge, knows of no material contingent liabilities not disclosed in
the Financial Statements, except current liabilities incurred in the ordinary
course of business subsequent to the Statement Date which have not been, either
in any individual case or in the aggregate, materially adverse.
5.7 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby and
agreements between the Company and its employees with respect to the sale of the
Company's Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or to its knowledge by which it is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to, the Company in excess
of $100,000 (other than obligations of, or payments to, the Company arising from
purchase or sale agreements entered into in the ordinary course of business, in
each case, except as set forth in the Company's filing with the Securities and
Exchange Commission as of the date hereof (the "SEC Filings").
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, other than the Company's payment of a paid-in-kind
dividend to the existing holders of the Series D Preferred Stock on November 11,
2000 and as of the exchange date under the Exchange Agreement dated as of
January 18, 2001 among the Company and the other parties named therein, (ii)
incurred any indebtedness for money borrowed or any other liabilities (other
than with respect to dividend obligations, distributions, indebtedness and other
obligations incurred in the ordinary course of business or as disclosed in the
Financial Statements) individually in excess of $25,000 or in the aggregate in
excess of $250,000, (iii) made any loans or advances to any person, other than
ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business, in each case, except as set forth in the
Company's SEC Filings.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company has proposed, and is engaged in, discussions regarding
the acquisition of Einstein as described in the Schedule 5.7.
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5.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company to officers, directors, stockholders, or employees of the Company other
than (a)for payment of compensation for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). None of the officers, directors or stockholders of
the Company, or any members of their immediate families, are indebted to the
Company or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company, except that officers, directors and/or stockholders of the Company may
own up to 5% of the capital stock of publicly traded companies which may compete
with the Company. No officer, director or stockholder, or any member of their
immediate families, is, directly or indirectly, to the knowledge of the Company,
interested in any contract with the Company (other than such contracts as relate
to any such person's ownership of capital stock or other securities of the
Company). Except as may be disclosed in the Financial Statements or Schedule
5.8, the Company is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation, other than its subsidiaries.
5.9 CHANGES. Since the Statement Date, there has not been to the
Company's knowledge:
(a) Any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a material adverse effect on
such assets, liabilities, financial condition or operations of the Company;
(b) Any resignation or termination of any key officers of the Company
except for Xxxxxxx Xxxxx, and the Company, to the best of its knowledge, does
not know of the impending resignation or termination of employment of any such
officer;
(c) Any material change, except in the ordinary course of business, in
the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any direct or indirect loans or guarantees made by the Company to
any stockholder, employee, officer or director of the Company or any members of
their immediate families, other than advances made in the ordinary course of
business;
(f) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder other than as disclosed in
the Company's proxy statement filed with the SEC on November 30, 2000;
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(g) Any declaration or payment of any dividend or other distribution
of the assets of the Company, other than the Company's payment of a paid-in-kind
dividend to the existing holders of Series D Preferred Stock on November 11,
2000;
(h) Any labor organization activity;
(i) Any debt, obligation or liability incurred, assumed or guaranteed
by the Company, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business;
(j) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(k) Any change in any material agreement to which the Company is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
the Company; or
(l) Any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);
(m) Receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(n) Any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(o) Any declaration, setting aside or payment or other distribution in
respect of any of the Company's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by the Company
other than the Company's payment of a paid-in-kind dividend to the existing
holders of Series D Preferred Stock on November 11, 2000; or
(p) Any agreement or commitment by the Company to do any of the things
described in this Section 5.9.
5.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and
marketable title to its properties and assets, including the properties and
assets reflected in the most recent balance sheet included in the Financial
Statements, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than those resulting
from taxes which have not yet become delinquent, and minor liens and
encumbrances arising in the ordinary course of business which do not materially
detract from the value of the property subject thereto or materially impair the
operations of the Company. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used, subject to ordinary wear and tear. The
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound. As
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of the date of this Agreement, the Company owns at least $47.3 million in
principal amount of the Bonds, free of any liens or encumbrances and any
restrictions on transfer, other than such restrictions as may be imposed by
applicable securities laws.
5.11 PATENTS AND TRADEMARKS. The Company owns or possesses sufficient legal
rights to all material patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes necessary for its business as now conducted and as presently
proposed to be conducted, without any known infringement of the rights of
others. There are no outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the purchase of "off
the shelf" or standard products except in the ordinary course of business. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business as presently proposed, would violate any
of the material patents, trademarks, service marks, trade names, copyrights or
trade secrets or other proprietary rights of any other person or entity. The
Company is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company or that would
conflict with the Company's business as presently proposed to be conducted.
Neither the execution nor delivery of this Agreement or the Related Agreements,
nor the carrying on of the Company's business by the employees of the Company,
nor the conduct of the Company's business as presently proposed, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any material
contract, covenant or instrument under which any employee is now obligated.
5.12 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation or
default of any term of its Certificate of Incorporation or Bylaws, or of any
provision of any material mortgage, indenture, contract, agreement, instrument
or contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to the Company which would individually or in the aggregate
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. The execution, delivery, and
performance of and compliance with this Agreement, and the Related Agreements,
and the issuance and sale of the Shares, the Warrants and the shares of Common
Stock issuable upon exercise of the Warrants (the "Warrant Shares") pursuant
hereto will not, with or without the passage of time or giving of notice, result
in any such material violation, or be in conflict with or constitute a default
under any such term, or result in the creation of any such mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of the Company
or the suspension, revocation, impairment, forfeiture or nonrenewal of any
material permit, license, authorization or approval applicable to the Company,
its business or operations or any of its assets or properties.
5.13 LITIGATION. There is no action, suit, proceeding or investigation
pending, or to the Company's knowledge currently threatened, against the Company
that questions the validity of this Agreement, or the Related Agreements or the
right of the Company to enter into any of
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such agreements, or to consummate the transactions contemplated hereby or
thereby, or which might result, either individually or in the aggregate, in any
material adverse change in the assets, condition, affairs or prospects of the
Company, financially or otherwise, or any change in the current equity ownership
of the Company, nor is the Company aware that there is any basis for the
foregoing. The Company is not a party or subject to the provisions of any
material order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or investigation
by the Company currently pending or which the Company intends to initiate except
in the ordinary course of business.
5.14 TAX RETURNS AND PAYMENTS. The Company has timely filed all federal,
state and local tax returns (including informational returns) (the "Returns")
required to be filed by it. All taxes shown to be due and payable on the
Returns, any assessments imposed, and all other taxes due and payable by the
Company on or before the Closing have been paid or will be paid prior to the
time they become delinquent. The Company is not currently and has never been
subject to any audit relating to taxes. No assessment, deficiency or judgment
for taxes has ever been proposed or entered against the Company. No liability
for any tax has ever been imposed upon any of the Company's properties or
assets. The Company has treated all individuals who are employees of the Company
for federal, state and local income tax purposes as employees for such purposes
and has withheld and paid over to the appropriate taxing authorities all
applicable income and payroll taxes attributable to the compensation of such
employees.
5.15 EMPLOYEES. The Company has no collective bargaining agreements with
any of its employees. There is no labor union organizing activity pending or, to
the Company's knowledge, threatened with respect to the Company. Other than the
Option Plans, the Company is not a party to or bound by any currently effective
employment contract, deferred compensation arrangement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee compensation
plan or agreement, including any Employee Benefit Plan as defined in the
Employee Retirement Income Security Act of 1974, except as set forth in SEC
filings and any such plans, arrangements and agreements with non-executive
officers. To the Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company; and to the Company's knowledge the continued employment by the
Company of its present employees, and the performance of the Company's contracts
with its independent contractors, will not result in any such violation. The
Company has not received any notice alleging that any such violation has
occurred. No executive officers of the Company have been granted the right to
continued employment by the Company or to any material compensation following
termination of employment with the Company except as set forth in SEC filings.
The Company is not aware that any executive officer who intends to terminate his
or her employment with the Company, nor does the Company have a present
intention to terminate the employment of any executive officer.
5.16 REGISTRATION RIGHTS. Except as required pursuant to the Amended and
Restated Registration Rights Agreement dated as of March 29, 2001 (the
"Registration Rights Agreement") among the Company, the Purchaser and the other
parties named therein, or as disclosed on Schedule 5.16 hereto, the Company is
presently not under any obligation, and has
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not granted any rights, to register any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued under the
Securities Act of 1933, as amended.
5.17 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is not in
violation of any applicable statute, rule, regulation, order or restriction of
any domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties which
violation would materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Company. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations, qualifications, designations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of the Shares except such as has
been duly and validly obtained or filed, or with respect to any filings that
must be made after the Closing, as will be filed in a timely manner. The Company
has all material franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it, the lack
of which could materially and adversely affect the business, properties,
prospects or financial condition of the Company and believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted. The Company is not in default in any
material respect under any of such franchises, permits, licenses or similar
authority. The Company has duly filed, on a timely basis, all filings required
pursuant to the Securities Exchange Act of 1934, as amended, and all rules and
regulations thereunder.
5.18 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the Company is not in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
5.19 OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchaser contained in Section 6.2 hereof, the offer, sale and
issuance of the Shares will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws. Neither the Company nor any agent on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the Shares to any person or persons so as to
bring the sale of such Shares by the Company within the registration provisions
of the Securities Act or any state securities laws.
5.20 FULL DISCLOSURE. The Company has fully provided the Purchaser with all
the information that the Purchaser has requested for deciding whether to
purchase the Shares. This Agreement, the Disclosure Schedule and Exhibits
hereto, the Related Agreements and all other documents delivered by the Company
to the Purchaser or their attorneys or agents in connection herewith or
therewith or with the transactions contemplated hereby or thereby, do not
contain any untrue statement of a material fact nor, to the Company's knowledge,
omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
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5.21 MINUTE BOOKS; BOARD AND STOCKHOLDER MATERIALS. The Certificate of
Designation and Bylaws of the Company are in the form previously provided to
special counsel for the Purchaser. The minute books of the Company provided to
the Purchaser contain a complete summary of all meetings of directors and
stockholders since the time of incorporation. The Board and stockholder
materials provided to the Purchaser are all of the materials provided by the
Company to its directors and stockholders in connection with such meetings.
5.22 REAL PROPERTY HOLDING CORPORATION. The Company is not a real property
holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
5.23 INSURANCE. The Company has in full force and effect fire and casualty,
products liability and errors and omissions insurance policies with coverage
customary for companies similarly situated to the Company.
5.24 INVESTMENT COMPANY ACT. The Company is not an "investment company", or
a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
5.25 GOVERNMENTAL APPROVALS. Except as set forth in Schedule 5.25 and for
the filing of the Certificate of Designation, no registration or filing with, or
consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for (i) the valid
execution, delivery and performance of this Agreement and the Related Agreements
by the Company, (ii) issuance, sale and delivery by the Company of the Shares
hereunder, (iii) the issuance and delivery of the Warrants or the Warrant Shares
or (iv) the conduct of the business of the Company after the date hereof in
substantially the manner as currently conducted and as proposed to be conducted
after the date hereof.
5.26 EMPLOYEE BENEFIT PLANS.
(a) The Company has complied and currently is in compliance in all material
respects, both as to form and operation, with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
Internal Revenue Code of 1986, as amended (the "Code"), with respect to each
"employee benefit plan" as defined under Section 3(3) of ERISA (a "Plan") which
the Company (i) has ever adopted, maintained, established or to which any of the
same has been required to contribute to or has ever contributed or (ii)
currently maintains or to which any of the same currently contributes or is
required to contribute or (iii) currently participates in or is required to
participate in.
(b) The Company has never maintained, adopted or established, contributed
or been required to contribute to, or otherwise participated in or been required
to participate in, a "multiemployer plan" (as defined in Section 3(37) of
ERISA). No amount is due or owing from the Company on account of a
"multiemployer plan" (as defined in Section 3(37) of ERISA) or on account of any
withdrawal therefrom.
(c) Notwithstanding anything else set forth herein, other than routine
contributions to Plans and routine claims for benefits and liability for
premiums due to the Pension Benefit
11
Guaranty Corporation, the Company has not incurred any liability with respect to
a Plan that is currently due and owing and has not yet been satisfied, including
without limitation under ERISA (including without limitation Title I or Title IV
thereof), the Code or other applicable law, and, to the best knowledge of the
Company, no event has occurred, and, there exists no condition or set of
circumstances (other than the contributions to, and accrual of benefits under,
the normal terms of the Plans), which could result in the imposition of any
liability of the Company with respect to a Plan.
(d) Except as required by applicable law or as contemplated by this
Agreement, the Company has not committed itself, orally or in writing, (i) to
provide or cause to be provided to any person any payments or provision of any
"welfare" or "pension" benefits (as defined in Sections 3(1) and 3(2) of ERISA)
in addition to, or in lieu of, those payments or benefits set forth under any
Plan, (ii) to continue the payment of, or accelerate the payment of, benefits
under any Plan, except as expressly set forth thereunder, or (iii) to provide or
cause to be provided any severance or other post-employment benefit, salary
continuation, termination, disability, death, retirement, health or medical
benefit to any person (including without limitation any former current employee)
except as set forth under any Plan.
(e) Notwithstanding any other provisions to the contrary set forth herein,
the Purchaser shall not assume any liability that the Company may have incurred
or may incur which arises out of, is a result of, or is in any way related to,
any Plan.
5.27 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor to its
knowledge any officer, director, employee or agent thereof, nor any other person
or entity acting on behalf of the Company, acting alone or together, has (i)
received, directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefits, regardless of their
nature or type, from any customer, supplier, governmental employee or other
person or entity with whom either the Company has done business directly or
indirectly, or (ii) directly or indirectly, given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other person
or entity who is or may be in a position to help or hinder the business (or
assist either the Company in connection with any actual or proposed transaction)
which in the case of either clause (i) or clause (ii) above, (a) would
reasonably be expected to subject to the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (b) if not given in
the past, would reasonably be expected to have had a material adverse effect on
the business, assets, properties, operating condition (financial or otherwise)
or prospects of the Company or (c) if not continued in the future, would
reasonably be expected to have a material adverse effect on the business,
assets, properties, operating condition (financial or otherwise) or prospects of
the Company.
5.28 NO BROKER. Except for the transaction fee of $250,000 to be paid to
Xxxxxxx Xxxxx III, L.P. ("Xxxxxxx Xxxxx") on January 31, 2002 in connection with
the transactions contemplated by this Agreement and except as set forth on
Schedule 5.28 hereto, no broker has acted on behalf of the Company in connection
with this Agreement, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with the Company or any action taken by
the Company.
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6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company as follows:
6.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and to carry out the provisions hereof. All action on Purchaser's part
required for the lawful execution and delivery of this Agreement have been or
will be effectively taken prior to each of the Closings. Upon execution and
delivery, this Agreement will be valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' right and (b) general principles
of equity that restrict the availability of equitable remedies.
6.2 INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares, the
Warrants and the Warrant Shares have not been registered under the Securities
Act. Purchaser also understands that the Shares, the Warrants and the Warrant
Shares are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Purchaser's representations
contained in the Agreement. Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares are registered pursuant to the
Securities Act, or an exemption from registration is available. Purchaser
understands that the Company has no present intention of registering the Shares,
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares under the circumstances, in the amounts or at the times Purchaser
might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares for
its own account for investment only, and not with a view towards their
distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by
reason of its, or of its management's, business or financial experience, it has
the capacity to protect its own interests in connection with the transactions
contemplated in this Agreement. Further, Purchaser is aware of no publication of
any advertisement in connection with the transactions contemplated in the
Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Purchaser has received and read the Financial
Statements (as defined in the Second Series F Preferred Stock Purchase
Agreement) and has had an opportunity to discuss the Company's business,
management and financial affairs with directors, officers and management of the
Company and has had the opportunity to review
13
the Company's operations and facilities and all of the SEC Filings (as defined
in the Second Series F Preferred Stock Purchase Agreement). Purchaser has also
had the opportunity to ask questions of, and receive answers from, the Company
and its management regarding the terms and conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that the Shares, the
Warrants and the Warrant Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Company, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) RESIDENCE. The office or offices of Purchaser in which its
investment decision was made is located at the address or addresses of Purchaser
set forth on the signature page hereto.
7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING.
Purchaser's obligations to purchase the Shares at each Closing are subject
to the satisfaction, at or prior to such Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS.
The representations and warranties made by the Company in Section 5 hereof shall
be true and correct in all material respects (except that any representation or
warranty that contains a materiality qualifier shall be true and correct in all
respects) as of such Closing Date with the same force and effect as if they had
been made as of such Closing Date, and the Company shall have performed all
obligations and conditions herein required to be performed or observed by it on
or prior to such Closing Date.
(b) LEGAL INVESTMENT. On such Closing Date, the consummation of the
transactions contemplated by the Agreement shall be legally permitted by all
laws and regulations to which the Purchaser and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement, including
without limitation the consent of the senior lender of the Company prior to such
Closing Date.
(d) SUBORDINATION AGREEMENT. Each holder of Series F Preferred Stock,
other than the Purchaser, shall have executed and delivered a Subordination
Agreement, in form and substance satisfactory to the Purchaser, providing that
such holder's shares of Series F Preferred Stock are subordinate to the Shares
with respect to liquidation preference.
14
(e) CLOSING DELIVERIES. The Company shall have delivered to each
Purchaser all items required to be delivered at the Closing by Section 3.1.1 of
this Agreement.
(f) CORPORATE DOCUMENTS. The Company shall have delivered to each
Purchaser or its counsel, copies of all corporate documents of the Company as
such Purchaser shall reasonably request.
(g) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at such Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to each Purchaser and its counsel, and
Purchaser and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(h) PAYMENT OF FEES. The Company shall have paid all fees and expenses
arising under Section 9.9(a) through such date.
(i) CONSENT OF SERIES F PREFERRED STOCKHOLDERS. The Company shall have
received written consent of all of the holders of Series F Preferred Stock,
other than the Purchaser, with respect to the issuance of the Shares and the
amendment to the Certificate of Designation described in Section 8.1(a) below.
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT EACH CLOSING. The
Company's obligation to issue and sell the Shares at each Closing is subject to
the satisfaction, on or prior to such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
in all material respects at the date of such Closing, with the same force and
effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. The Purchaser shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by the Purchaser on or before such Closing.
(c) CLOSING DELIVERIES. The Purchaser shall have delivered to the
Company all items required to be delivered at such Closing by Sections 3.1.2 and
3.1.3 of this Agreement.
(d) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement.
8. PROTECTIVE PROVISIONS.
The Company covenants and agrees as follows:
15
(a) The Company shall not sell or transfer its interest in any of the
7.25% Convertible Subordinated Notes of Einstein (the "Bonds") (or any
securities into which such Bond are convertible) other than in connection with
an Acquisition of Einstein (as herein defined), unless the price received by the
Company, net of cash fees and expenses, is at least equal to 60% of such Bond's
face value.
(b) There shall be no application of the proceeds from the sale of the
Bonds (or securities into which such Bonds are convertible) for any purpose
other than the repayment of outstanding senior debt or the redemption of the
Series F Preferred Stock. The holders of the Series F Preferred Stock including
but not limited to the Stockholders, shall have the right of first offer, in
proportion to their respective interests, to purchase any Bonds that the Company
desires to sell or transfer.
(c) Proceeds received by the Company pursuant to this Agreement (the
"Proceeds") may be used only to pay the reasonable fees and expenses incurred by
the Company in connection with its efforts to consummate the Acquisition of
Einstein.
Any of the protective provisions set forth in this Section 8 may be
waived with the prior approval of the holders of two-thirds of the outstanding
shares of Series F Preferred Stock.
9. MISCELLANEOUS.
9.1 POST-CLOSING MATTERS.
(a) AMENDMENT TO AMENDED CERTIFICATE OF DESIGNATION. The Company
covenants and agrees that, no later than July 6, 2001, it shall file an
amendment to the Certificate of Designation in order to increase the number of
authorized shares of Series F Preferred Stock from 73,000 shares to 80,000
shares (or to such other amount as agreed upon by the Purchaser).
(b) APPLICATION OF PURCHASE OF SHARES. The parties hereto agree that
the Shares being purchased by the Purchaser hereunder are part of, and not in
addition to, the commitment of the Purchaser to purchase 7,500 shares of Series
F Preferred Stock as set forth in the commitment letter, dated as of June 1,
2001 ("Commitment Letter"), between the Company and the Purchaser. In the event
that the Company and the Purchaser consummate the financing described in the
Commitment Letter, the parties hereto agree that the Shares shall be subject to
the same rights, terms and conditions of the other shares of Series F Preferred
Stock issued to the Purchaser in such financing, including without limitation,
the rights, terms and conditions set forth in any purchase agreement,
stockholders agreement or other agreement executed in connection therewith.
(c) ISSUANCE OF WARRANTS. The Company covenants and agrees that, no
later than July 6, 2001, it shall issue to the Purchaser Warrants to purchase
shares of the Company's Common Stock exercisable at $0.01 per share (the
"Warrants") which Warrants will be substantially in the form of the Warrant
attached as EXHIBIT B hereto. The Warrants will be issued to the Purchaser, and
will entitle the Purchaser initially to acquire the number of shares
representing, in the aggregate, 4.5% of the Fully Diluted Common Stock of the
Company as of
16
the date hereof (subject to adjustment as provided therein). If
within one year following the First Closing Date (i) the Company has not
redeemed the Shares in accordance with the terms set forth in the Certificate of
Designation, (ii) the Company has redeemed the Shares by the issuance of the
Notes (as defined in the Certificate of Designation) but has not paid such Notes
in full, or (iii) the closing of the Company's acquisition of 70% or more of the
outstanding stock, or all or substantially all of the assets, of Einstein, or
the acquisition by Einstein of all or substantially all of the assets or stock
of the Company (an "Acquisition of Einstein") has not occurred and the Shares
have not been redeemed in full in accordance with Section 3 of the Certificate
of Designation, the Company will issue to the Purchaser warrants in the form of
EXHIBIT B hereto representing an additional .300% of the Fully Diluted Common
Stock of the Company outstanding on such first anniversary date and on each June
30 and December 31 following such first anniversary of the Closing Date, which
percentage shall be reduced pro rata based upon Shares theretofore redeemed for
cash or the Notes theretofore repaid, as applicable. The term "Fully Diluted"
shall mean the fully diluted Common Stock of the Company, determined by taking
into account all options, warrants and other convertible securities, but not
including any warrants or options with a strike price greater than $3.00 per
share and not including any of the Warrants issued under this Section 9.1(c).
The Company agrees that all of the rights and privileges of the Purchaser
provided in the Registration Rights Agreement and the Stockholders Agreement
dated as of January 18, 2001, as amended, shall apply to the Warrants and the
Warrant Shares. The Company further agrees that it shall take all corporate
action necessary to waive (i) on behalf of the Purchaser, individually, and (ii)
the permitted assignees of the Shares of such individual Purchaser, the trigger
provisions of the Rights Plan dated in June 1999 between the Company and
American Stock Transfer and Trust Company which relate to purchases of common
stock above a specified percentage of the outstanding common stock of the
Company, but only with respect to shares of common stock of the Company
purchased directly from the Company as "original issue shares" by the Purchaser
under written agreements between the Purchaser and the Company.
9.2 GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the State of New York as such laws are applied to agreements between New
York residents entered into and performed entirely in New York.
9.3 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
9.4 SUCCESSORS AND ASSIGNS.
(a) Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be enforceable by each person who shall be a holder
of the Shares from time to time.
17
(b) Neither this Agreement nor any of the parties' rights hereunder
shall be assignable by any party thereto without the prior written consent of
the other parties hereto, except that the Purchaser may without prior consent,
assign its rights hereunder to any affiliate of such Purchaser.
9.5 ENTIRE AGREEMENT. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
9.6 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
9.7 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the written
consent of each of the parties hereto.
(b) The obligations of the Company and the rights of the holders of
the Shares under the Agreement may be waived only with the written consent of
each of the parties hereto.
9.8 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the
Certificate of Designation shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on a Purchaser's
part of any breach, default or noncompliance under this Agreement or under the
Certificate of Designation or any waiver on such party's part of any provisions
or conditions of the Agreement or the Certificate of Designation must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, the Certificate of
Designation, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.
9.9 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; or (c) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent to the Company at the address as set forth on the
signature page hereof and to the Purchaser at the address set forth on the
signature pages hereto or at such other address as the Company or the Purchaser
may designate by ten (10) days advance written notice to the other parties
hereto.
9.10 EXPENSES.
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(a) Whether or not the transactions herein contemplated are
consummated, the Company shall pay (i) the fees and expenses of the Purchaser,
including without limitation, the fees and expenses of Purchaser's counsel,
accountants and other advisors and (ii) on January 31, 2002, a transaction fee
of $250,000 to Xxxxxxx Xxxxx. The obligations of the Company under this Section
9.10 shall survive the closing hereunder, the payment or cancellation of the
Notes, exercise or cancellation of the Warrants and the termination of this
Agreement.
(b) In addition to all other sums due hereunder or provided for in
this Agreement, the Company shall pay to the Purchaser or its agents,
respectively, an amount sufficient to indemnify such persons against all
reasonable costs and expenses (including reasonable attorneys' fees and expenses
and reasonable costs of investigation) and damages and liabilities incurred by
Purchaser or its agents pursuant to any investigation or proceeding against any
or all of the Company, Purchaser, or their agents, arising out of or in
connection with this Agreement, the Notes or the Warrants (or any transaction
contemplated hereby or thereby or any other document or instrument executed
herewith or therewith or pursuant hereto or thereto), whether or not the
transactions contemplated by this Agreement are consummated, which investigation
or proceeding requires the participation of Purchaser or its agents or is
commenced or filed against Purchaser or its agents because of this Agreement,
the Notes or the Warrants or any of the transactions contemplated hereby or
thereby (or any other document or instrument executed herewith or therewith or
pursuant hereto or thereto), other than any investigation or proceeding (x) in
which it is finally determined that there was gross negligence or willful
misconduct on the part of Purchaser seeking indemnification or its agents, (y)
which relates to disputes among Purchaser and its own partners, shareholders or
beneficiaries or (z) which relates to Purchaser's disposition of Notes, Warrants
or Shares and the conduct of Purchaser or its agents giving rise to such
investigation or proceeding. The Company shall assume the defense, and shall
have its counsel represent Purchaser and such agents, in connection with
investigating, defending or preparing to defend any such action, suit, claim or
proceeding (including any inquiry or investigation); provided, however, that
Purchaser, or any such agent, shall have the right (without releasing the
Company from any of its obligations hereunder) to employ its own counsel to
participate in the Company's defense, but the fees and expenses of such counsel
shall be at the expense of such person unless (i) the employment of such counsel
shall have been authorized in writing by the Company in connection with such
defense or (ii) the Company shall not have provided their counsel to take charge
of such defense or (iii) Purchaser, or such agent of the Purchaser, shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to the Company, then in any
of such events referred to in clauses (i), (ii) or (iii) such reasonable counsel
fees and expenses (but only for one counsel for Purchaser and its agents) shall
be borne by the Company. Any settlement of any such action, suit, claim or
proceeding shall require the consent of the Company and such indemnified person
(neither of which shall unreasonably withhold its consent).
(c) The Company agrees to pay, or to cause to be paid, all
documentary, stamp and other similar taxes levied under the laws of the United
States of America or any state or local taxing authority thereof or therein in
connection with the issuance and sale of the Shares, the Warrants and the
Warrants Shares, the issuance and sale of the Notes and the execution and
delivery of this Agreement and any other documents or instruments contemplated
hereby or thereby and any modification of any of the Notes, the Warrants or this
Agreement or any such
19
other documents or instruments and will hold the Purchaser
harmless without limitation as to time against any and all liabilities with
respect to all such taxes.
(d) The obligations of the Company under this Section 9.9 shall
survive the closing hereunder, the payment or cancellation of the Notes,
exercise or cancellation of the Warrants and the termination of this Agreement.
9.11 TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
9.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.13 EXCULPATION AMONG PURCHASER. The Purchaser acknowledges that it is not
relying upon any person, firm, or corporation, other than the Company and its
officers and directors, in making its investment or decision to invest in the
Company. The Purchaser agrees that no Purchaser nor the respective controlling
persons, officers, directors, partners, agents, or employees of the Purchaser
shall be liable for any action heretofore or hereafter taken or omitted to be
taken by any of them in connection with the Shares.
9.14 PRONOUNS. All pronouns contained herein, and any variations thereof,
shall be deemed to refer to the masculine, feminine or neutral, singular or
plural, as to the identity of the parties hereto may require.
9.15 PUBLICITY. Neither the Company nor the Purchaser shall issue any press
release or other public statement relating to this Agreement or the transactions
contemplated hereby or thereby without the prior written approval of the other,
not to be unreasonably withheld.
9.16 DISPUTE RESOLUTION. If any dispute arises under this Agreement, the
parties shall seek to resolve any such dispute between them in the following
manner:
(a) GOOD FAITH NEGOTIATIONS. First, by promptly engaging in good faith
negotiations among senior executives of each party.
(b) MEDIATION. If the parties are unable to resolve the dispute within
20 business days following the first request by either party for good faith
negotiations, then the parties shall endeavor to resolve the dispute by
mediation administered by the American Arbitration Association ("AAA") under its
Commercial Mediation Rules.
(c) EQUITABLE RELIEF. No party shall be precluded hereby from securing
equitable remedies in courts of any jurisdiction, including, but not limited to,
temporary restraining orders and preliminary injunctions to protect its rights
and interests, but such relief shall not be sought as a means to avoid, delay or
stay mediation, arbitration or Summary Proceeding.
20
(d) CONTINUING PERFORMANCE. Each party is required to continue to
perform its obligations under this contract pending final resolution of any
dispute arising out of or relating to this contract, unless to do so would be
impossible or impracticable under the circumstances.
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE PARTIES HEREBY
CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN XXX
XXXX, XXXXXX XXX XXXXX XX XXX XXXX AND IRREVOCABLY AGREE THAT, SUBJECT TO THE
ELECTION, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE RELATED
AGREEMENTS MAY BE LITIGATED IN SUCH COURTS. THE PARTIES ACCEPT FOR THEMSELVES
AND IN CONNECTION WITH THEIR PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM
NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY (SUBJECT TO ANY APPEAL AVAILABLE WITH RESPECT TO SUCH JUDGMENT) IN
CONNECTION WITH THIS AGREEMENT OR THE NOTES. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE PARTIES TO BRING PROCEEDINGS OR OBTAIN OR ENFORCE JUDGMENTS AGAINST
EACH OTHER IN THE COURTS OF ANY OTHER JURISDICTION.
9.18 WAIVER OF JURY TRIAL. THE HOLDER AND THE COMPANY HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, THE RELATED AGREEMENTS OR ANY DEALINGS AMONG THEM
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO THE NOTES OR THE WARRANTS. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE
COURT.
21
IN WITNESS WHEREOF, the parties hereto have executed the SERIES F
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
By:
---------------------------------
Name:
Title:
XXXXXXX XXXXX III, L.P.
By:
---------------------------------
Name:
Title:
Address:
EXHIBIT A
CERTIFICATE OF DESIGNATION
EXHIBIT 3.1.1(c)
SECRETARY'S CERTIFICATE
EXHIBIT 3.1.1(d)
OPINION OF COUNSEL
