NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
SERIES F PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
THIS SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the
"Agreement") is entered into as of January 18, 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 65,000
shares of its Series F Preferred Stock (the "Shares") on the terms and
conditions set forth herein;
WHEREAS, Purchaser desires to purchase 20,000 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;
WHEREAS, the Company issued 16,216.216 shares of Series D Preferred Stock,
$0.001 par value (the "Series D Shares"), to certain purchasers (the "Series D
Purchasers") pursuant to a Series D Preferred Stock and Warrant Purchase
Agreement dated as of August 11, 2000 (the "Series D Purchase Agreement"), and
the Company has issued or is obligated to issue an additional 503.54 shares (the
"PIK Shares") of Series D Preferred Stock in accordance with the dividend
provisions of the Series D Preferred Stock;
WHEREAS, simultaneously with the Closing (as hereinafter defined), the
Series D Purchasers have entered into an Exchange Agreement in the form attached
hereto as EXHIBIT A (the "Exchange Agreement") pursuant to which such Series D
Purchasers have agreed to surrender the Series D Shares, the PIK Shares and the
warrants to purchase shares of Common Stock (the "Initial Warrants") in exchange
for shares (the "Exchange Shares") of Series F Preferred Stock and new warrants
in the form attached to the Exchange Agreement; and
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 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 B (the
"Certificate of Designation").
1.2 SALE AND PURCHASE.
(a) At the Closing (as defined below), the Company shall issue and sell to
the Purchaser and the Purchaser shall purchase 20,000 shares of Series F
Preferred Stock for an aggregate of $20,000,000; and
(b) The purchase price at the Closing shall be one thousand dollars
($1,000.00) per share (the "Purchase Price").
2. WARRANTS
2.1 ISSUANCE OF WARRANTS.
(a) At the Closing, the Company will issue 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 hereto as
EXHIBIT C. The Warrants will be issued to the Purchaser, and will entitle the
Purchaser initially to acquire up to 8,484,112 shares of Common Stock
(representing, in the aggregate, 22.5% of the Fully Diluted Common Stock of the
Company as of the Closing, subject to adjustment as provided therein). 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
Section 2.2.
(b) For purposes of this Section 2.1, the number of shares subject to such
Warrants shall be calculated to result in such percentages of Fully Diluted
Common Stock after the issuance of such Warrants.
2.2 WARRANT STEP-UP.
(a) If within one year following the 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 provided in the Certificate of Designation) attached hereto as EXHIBIT
D (the "Notes") 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/Noah Bagel Corporation, or the
acquisition by Einstein of all or substantially all of the assets or stock of
the Company ("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 C hereto representing an additional 1.5% 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.
(b) For purposes of this Section 2.2, at the time of each such issuance of
Warrants, the number of shares subject to such Warrants shall be calculated to
result in the applicable percentage of Fully Diluted Common Stock before such
issuance of Warrants.
(c) The issuance of any additional warrants pursuant to this Section 2.2
shall be treated as an adjustment to the purchase price of the Shares.
3. CLOSINGS, DELIVERIES, PAYMENT AND USE OF PROCEEDS.
3.1 CLOSING. The closing of the purchase and sale of Shares pursuant to
Section 1.2(a) above (the " Closing") shall take place at 10:00 a.m. on January
18, 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 " Closing Date").
3.1.1 At the Closing, 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 the
Closing by the Purchaser;
(b) A Compliance Certificate, executed by the President of the Company,
dated the 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 the 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 the Purchaser,
dated as of the Closing Date, in substantially the form attached hereto as
EXHIBIT 3.1.1(d).
3.2 At the 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 the Closing, respectively, by
the Purchaser.
4. USE OF PROCEEDS. The proceeds from this transaction shall be used only
to purchase the 7.25% Convertible Subordinated Notes (the "Bonds") issued by
Einstein/Noah Bagel Corporation ("Einstein") at a blended average price no
greater than 60% of the face amount thereof (the "Target Purchase Price"), and
to pay interest, fees, and expenses related to this transaction. In the event
that the Bonds are unavailable in the open market at a price that would keep the
blended average at or below the Target Purchase Price the Company may, with the
prior consent of the holders of at least 67% of the Shares, purchase the Bonds
at a price that would cause the blended average to exceed the Target Purchase
Price. The Purchaser will use good faith efforts to respond within one business
day to any request by the Company for consent to purchase bonds at a price that
would cause the blended average to exceed the Target Purchase Price, but any
failure to respond within such time will not be deemed consent.
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. The Company 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 Exchange Agreement, the Warrant, the Stockholders Agreement
attached as EXHIBIT D hereto (the "Stockholders Agreement") and the Amended and
Restated Registration Rights Agreement attached as EXHIBIT E hereto (the
"Amended Registration Rights Agreement" and together with this Agreement, the
Warrant and the Stockholders Agreement, the "Related Agreements"), 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.
5.3 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the
Company, immediately prior to the Closing and the consummation of the
transactions contemplated hereby and by the Exchange Agreement, will consist of
(i) 50,000,000 shares of Common Stock, par value $.001 per share, 15,904,829
shares of which are issued and outstanding, and 1,987,729 shares of which are
reserved for future issuance to pursuant to the Company's Stock Option Plans, as
amended and restated (the "Option Plan"), 3,747,760 shares of which are reserved
for issuance upon exercise of the Initial 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, 16,719.76 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 Closing and the consummation of the transactions
contemplated by the Exchange Agreement, will consist of (i) 50,000,000 shares of
Common Stock, par value $.001 per share, 15,904,829 shares of which are issued
and outstanding, and 1,987,729 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 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, 36,398.33 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 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 22,072,575 shares reserved for
issuance under the Option Plans, the Warrants and other warrants and except as
may be granted pursuant to 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, the Exchange
Agreement and the Certificate of Designation, the Shares and the Exchange 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 and the Exchange 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 consolidated unaudited balance sheet for the
Company as at September 25, 2000 (the "Statement Date") and unaudited
consolidated statement of income and cash flows for the Company for the nine
month period ending on the Statement Date (collectively, the "Financial
Statements"), copies of which are 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 financial
condition and position of the Company as of December 26, 1999 and the Statement
Date; provided, however, that the unaudited financial statements are subject to
normal recurring year-end audit adjustments (which are not expected to be
material), and do not contain all footnotes required under generally accepted
accounting principles. 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, (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.
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;
(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 of January 12, 2001, the Company owns at least
$23 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 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 or as disclosed on Schedule 5.16 hereto,
the Company is presently not under any obligation, and has 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.
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 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 $500,000 to be paid to
Xxxxxxx Xxxxx III, L.P. ("Xxxxxxx Xxxxx") on the Closing Date 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.
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 the Related Agreements and to carry out their respective
provisions. All action on Purchaser's part required for the lawful execution and
delivery of this Agreement and the Related Agreements have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Related Agreements will be valid and binding obligations of
Purchaser, 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' 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 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
Purchaser's 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, Purchaser has
the capacity to protect its own interests in connection with the transactions
contemplated in this Agreement, and the Related Agreements. 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 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 the Company's operations and
facilities and all of the SEC Filings. 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 the Purchaser in which its
investment decision was made is located at the address or addresses of the
Purchaser set forth on the signature page hereto.
7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING.
The Purchaser's obligations to purchase the Shares at the Closing are
subject to the satisfaction, at or prior to the 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 the Closing Date with the same force and effect as if they had
been made as of the 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 the Closing Date.
(b) LEGAL INVESTMENT. On the Closing Date, the consummation of the
transactions contemplated by the Agreement and the Related Agreements shall be
legally permitted by all laws and regulations to which 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 and the Related Agreements,
including without limitation the consent of the senior lender of the Company
prior to the Closing Date.
(d) FILING OF CERTIFICATE OF DESIGNATION. The Certificate of Designation
shall have been filed with the Secretary of State of the State of Delaware.
(e) AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT. The Amended
Registration Rights Agreement shall have been executed and delivered by the
Company on the Closing Date, and shall be in full force and effect as of the
Closing Date.
(f) STOCKHOLDERS AGREEMENT. The Stockholders Agreement shall have been
executed and delivered by the Company on the Closing Date, and shall be in full
force and effect as of the Closing Date.
(g) BOARD OF DIRECTORS. Upon the Closing, the authorized size of the Board
of Directors of the Company shall be nine and the Board shall initially consist
seven members, including Xxxxxxx Xxxxxxxxxx, Xxx Xxxxx, Xxxxx Xxxxxx, Xxxxx
Xxxxxx, Xxxxxx XxXxxx, Xxxxx Xxxxx, and Xxxxxxx Xxxxx.
(h) CLOSING DELIVERIES. The Company shall have delivered to Purchaser all
items required to be delivered at the Closing by Section 3.1.1 of this
Agreement.
(i) CORPORATE DOCUMENTS. The Company shall have delivered to Purchaser or
its counsel, copies of all corporate documents of the Company as Purchaser shall
reasonably request.
(j) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(k) RIGHTS PLAN. 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 shall have been taken.
(l) PAYMENT OF FEES. The Company shall have paid all fees and expenses
arising under Section 9.9(a) through such date, including the transaction fee of
$500,000 to Xxxxxxx Xxxxx.
(m) EXCHANGE AGREEMENT. The Exchange Agreement shall have been executed and
delivered by the Company and each of the parties thereto on the Closing Date,
and shall be in full force and effect as of the Closing Date. The holders of
Series D Preferred Stock shall have surrendered the shares of Series D Preferred
Stock and the Initial Warrants to the Company for cancellation and such shares
and Warrants shall have been cancelled by the Company.
(n) BYLAWS. The Bylaws shall have been amended to increase the authorized
number of directors of the Company from seven (7) to nine (9).
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT THE CLOSING. The Company's
obligation to issue and sell the Shares at the Closing is subject to the
satisfaction, on or prior to the 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 the 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 the Closing.
(c) CLOSING DELIVERIES. The Purchaser shall have delivered to the Company
all items required to be delivered at the 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 and the Related Agreements.
8. PROTECTIVE PROVISIONS.
The Company covenants and agrees as follows:
(a) The Company shall not sell or transfer its interest in any Bond (or
securities into which such Bond is convertible) other than in connection with an
Acquisition of Einstein, unless the price received by the Company, net of any
cash fees and expenses, is at least equal to 60% of such bonds' 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 purchase at one time Bonds (with a maximum
price, including cash fees and expenses, of 60% of the face value of each such
Bond) having a face amount of at least $30 million and expenses associated with
the issuance of the Series F Preferred Stock and the Acquisition of Einstein
including fees incurred pursuant to Section 8(b) of the Exchange Agreement and
Section 9.9(a) of this Agreement, subject to the reasonable approval of the
Einstein Supervisory Committee of the Company's Board of Directors (the
"Einstein Supervisory Committee"). The Einstein Supervisory Committee shall be
comprised of two (2) designees of the management of the Company (the "Management
Designees") and one (1) designee of BET Associates, L.P. and Brookwood New World
Investors, LLC (the "BET/Brookwood Designee"). The initial Management Designees
shall be R. Xxxxx Xxxxxx and Xxxxx Xxxxx and the initial BET/Brookwood Designee
shall Xxx Xxxxx.
(d) Contemporaneously with the Closing, the Company shall deposit proceeds
in an amount sufficient to purchase the Bonds in the minimum amount specified in
Section 8(c) with the Company's broker(s) who shall be authorized to purchase
the Bonds in accordance with the requirements of Section 8(c) and 8(e).
(e) The Company shall utilize its best efforts to apply the Proceeds first
toward the purchase of all Bonds held by the three bondholders currently
represented on the Einstein Unsecured Creditors Committee.
(f) The Company shall amend its bylaws to provide that the authorization of
at least 75% of the Board of Directors shall be required to authorize the filing
of a petition under the United States Bankruptcy Code.
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 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.
9.2 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.
9.3 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.
(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 other person or entity (each a "Permitted
Transferee") to whom the Shares or the Warrants have been sold or otherwise
transferred in accordance with the provisions of the Stockholders Agreement.
9.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Related Agreements 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.
9.5 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.
9.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the written consent
of the Company and holders of at least a majority of the Shares.
(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 the
holders of at least a majority of the Shares.
9.7 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, the Related Agreements 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 the Purchaser's
part of any breach, default or noncompliance under this Agreement, the Related
Agreements or under the Certificate of Designation or any waiver on such party's
part of any provisions or conditions of the Agreement, the Related Agreements,
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 Related Agreements, the Certificate of Designation by law,
or otherwise afforded to any party, shall be cumulative and not alternative.
9.8 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 Purchaser at the address set forth on the signature
pages hereto or at such other address as the Company or Purchaser may designate
by ten (10) days advance written notice to the other parties hereto.
9.9 EXPENSES.
(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) a transaction fee of $500,000 to Xxxxxxx Xxxxx. 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 the Purchase 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 the Purchaser or its
agents pursuant to any investigation or proceeding against any or all of the
Company, the Purchaser, or their agents, arising out of or in connection with
the Purchase 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 Purchase Agreement are consummated, which
investigation or proceeding requires the participation of the Purchaser or its
agents or is commenced or filed against the Purchaser or its agents because of
the Purchase 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 the Purchaser seeking
indemnification or its agents, (y) which relates to disputes among the Purchaser
and its own partners, shareholders or beneficiaries or (z) which relates to the
Purchaser's disposition of Notes, Warrants or Shares and the conduct of the
Purchaser or its agents giving rise to such investigation or proceeding. The
Company shall assume the defense, and shall have its counsel represent the
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 the 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)
the 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 the 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 the
Purchase Agreement and any other documents or instruments contemplated hereby or
thereby and any modification of any of the Notes or the Purchase Agreement or
any such 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 the Purchase Agreement.
9.10 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.
9.11 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.
9.12 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 any 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, the Warrants and the Warrant
Shares.
9.13 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.
9.14 PUBLICITY. Neither the Company nor the Purchaser shall issue any press
release or other public statement relating to this Agreement or the Related
Agreements or the transactions contemplated hereby or thereby without the prior
written approval of the other, not to be unreasonably withheld.
9.15 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.
(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.
9.16 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.
9.17 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.
IN WITNESS WHEREOF, the parties hereto have executed the SERIES F PREFERRED
STOCK AND WARRANT PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
By:/s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
PURCHASER:
XXXXXXX XXXXX III, L.P.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Name: Xxxxxxx X. Xxxxx
Title:
EXHIBIT A
EXCHANGE AGREEMENT
EXHIBIT B
CERTIFICATE OF DESIGNATION
EXHIBIT C
FORM OF WARRANT
EXHIBIT D
FORM OF NOTE
EXHIBIT D
STOCKHOLDERS AGREEMENT
EXHIBIT E
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
SCHEDULE OF EXCEPTIONS
In connection with that certain Second Series F Preferred Stock and Warrant
Purchase Agreement dated as of January 18, 2001 by and among New World Coffee -
Manhattan Bagel, Inc. (the "Company") and the persons and entities listed on the
Schedule of Purchasers attached thereto (the "Agreement"), the Company hereby
delivers this Schedule of Exceptions to the Company's representations and
warranties given in the Agreement. The section numbers in this Schedule
correspond to the section numbers in the Agreement. Capitalized terms used but
not defined herein shall have the same meanings given them in the Agreement.
EXHIBIT 3.1.1(c)
SECRETARY'S CERTIFICATE
EXHIBIT 3.1.1(d)
OPINION OF COUNSEL
