STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT, dated as of March 14, 2003, by and among
Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P. and
Special Situations Private Equity Fund, L.P. (each a "Seller" and collectively,
the "Sellers") and Xxxxxxx Xxxxx III, L.P. (the "Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the terms of the Third Series F Preferred Stock
and Warrant Purchase Agreement, dated as of June 19, 2001 (the "Purchase
Agreement"), among New World Restaurant Group, Inc. (the "Company"), the
Sellers, the Purchaser and certain other purchasers, the Sellers acquired shares
of the Company's Series F Preferred Stock, par value $0.001 per share (the
"Series F Preferred Stock"), and warrants to acquire shares of the common stock,
par value $0.001 per share ("Common Stock"), of the Company; and
WHEREAS, on the date hereof, the Sellers own an aggregate of (i)
6,422.917 shares of the Series F Preferred Stock (together with payment-in-kind
dividends accrued on such shares, the "Shares") and (ii) warrants to acquire an
aggregate of 4,551,326 shares of Common Stock (the "Warrants" and, collectively
with the Shares, the "Securities"); and
WHEREAS, the Sellers desires to sell and transfer the Securities to
the Purchaser, and the Purchaser desires to purchase the Securities from the
Sellers all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Securities
Section 1.1. Purchase and Sale of Securities. Upon the terms and
subject to the conditions of this Agreement and on the basis of the
representations, warranties and agreements contained herein, at the Closing (as
defined herein) the Sellers shall sell, assign, transfer, convey and deliver to
the Purchaser the Securities and the Purchaser shall purchase such Securities
from the Sellers for an aggregate cash purchase price of $5,000,000 (the
"Purchase Price"). At the Closing, the Purchaser shall pay the Purchase Price by
wire transfer of immediately available funds to an account or accounts
previously specified by the Sellers.
The closing of the purchase and sale of the Securities (the "Closing")
shall occur as promptly as practicable following the date hereof. The date of
the Closing is hereinafter referred to as the "Closing Date."
Section 1.2. Transactions to be Effected at Closing. At the Closing:
(a) The Sellers shall surrender to the transfer agent for the Shares
(the "Transfer Agent") for the benefit of the Purchaser the certificate or
certificates representing the Shares accompanied by duly executed stock powers
endorsed in blank.
(b) The Sellers shall surrender to the Purchaser or, at the
Purchaser's direction, the Company, the Warrants with irrevocable instructions
to transfer the Warrants to the Purchaser.
(c) The Purchaser shall deliver the Purchase Price to the Sellers in
accordance with Section 1.1.
(d) The Sellers shall deliver to the Transfer Agent, with a copy to
the Company and its counsel, an opinion from Sellers' counsel (a copy of which
shall be provided to the Purchaser), addressed to the Transfer Agent, that the
sale of Shares by the Sellers to the Purchaser may be made as contemplated by
this Agreement without registration under the Securities Act of 1933, as amended
(the "Act").
(e) The Purchaser shall deliver to the Sellers a certificate stating
that the representations and warranties of the Purchaser shall have been true
and correct in all respects when made and shall be true and correct on as and of
the Closing Date with the same force and effect as though made on and as of such
Closing Date.
(f) The Sellers shall deliver to the Purchaser a certificate stating
that the representations and warranties of the Sellers shall have been true and
correct in all respects when made and shall be true and correct on and as of the
Closing Date with the same force and effect as though made on and as of such
Closing Date.
(g) Each of the parties shall execute and deliver to the other parties
hereto such other documents or instruments as any party hereto reasonably
requests to effect the transactions contemplated hereby.
Section 1.3. Termination. In the event that the Closing does not occur
on or before March 31, 2003, the Sellers may terminate this Agreement upon
written notice to the Purchaser, provided that such failure is not the result of
a breach by the Sellers of their obligations hereunder.
ARTICLE II
Representations and Warranties Regarding the Sellers
The Sellers hereby jointly and severally represent and warrant to the
Purchaser as follows:
Section 2.1. Authorization. The Sellers have the power and authority
to execute and deliver this Agreement and to sell the Securities as contemplated
hereby, all of which have been duly authorized by all requisite partnership
action. This Agreement has been duly authorized, executed and delivered by the
Sellers and constitutes a valid and binding obligation of the Sellers,
enforceable against the Sellers in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 2.2. No Consents. Except for notice to the Company and the
issuance of an opinion of counsel to the Transfer Agent as described above, no
notice to, filing with, or authorization, registration, consent or approval of
any Governmental Authority or other individual, partnership, corporation, joint
stock company, unincorporated organization or association, trust or joint
venture, or a governmental agency or political subdivision thereof (each, a
"Person") is necessary for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby by the
Sellers.
Section 2.3. Ownership of the Securities. The Sellers own the
Securities beneficially and of record, free and clear of any liens, claims or
encumbrances (collectively, "Encumbrances"), other than those created pursuant
to the terms of the Purchase Agreement and those arising under applicable
federal and state securities laws. As of the date hereof, the Sellers do not own
any shares of Series F Preferred Stock or any warrants or other rights to
acquire Common Stock other than the Securities. Except for the Purchase
Agreement, there are no agreements (i) granting any option, warrant or right of
first refusal with respect to the Securities to any Person, (ii) restricting the
right of the Sellers to sell the Securities to the Purchaser, or (iii)
restricting any other right of the Sellers with respect to the Securities.
Subject to compliance with the requirements of the Act and the Purchase
Agreement, the Sellers have the absolute and unrestricted right, power and
capacity to sell, assign and transfer the Shares to the Purchaser free and clear
of any Encumbrances (except for Encumbrances created pursuant to the Purchase
Agreement and those arising under applicable federal and state securities laws).
Upon delivery of the Securities to the Purchaser in exchange for the Purchase
Price, the Purchaser will acquire good, valid and marketable title to the
Securities, free and clear of any Encumbrances created by the Sellers, other
than those arising pursuant to the Purchase Agreement.
Section 2.4. Affiliate Status. No Seller is an "affiliate" of the
Company as that term is defined in Rule 144 promulgated under the Act.
Section 2.5. Brokers. No Person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Sellers in connection with this Agreement or any of the transactions
contemplated hereby.
ARTICLE III
Representations and Warranties Regarding the Purchaser
The Purchaser hereby represents and warrants to the Sellers as
follows:
Section 3.1. Authorization. The Purchaser has the power and authority
to execute and deliver this Agreement and to perform its obligations hereunder,
all of which have been duly authorized by all requisite partnership action. This
Agreement has been duly authorized, executed and delivered by the Purchaser and
constitutes a valid and binding agreement of the Purchaser, enforceable against
it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 3.2. Access to Information. The Purchaser has received all
information regarding the Company that it deems necessary or advisable to
evaluate the risks and merits of an investment in the Securities. In addition,
the Purchaser has had an opportunity to ask questions of and receive answers
from the Sellers and representatives of the Company concerning the business of
the Company, its condition and prospects (financial and other) and the terms and
conditions of the sale of the Securities as contemplated hereby.
Section 3.3. Accredited Investor. The Purchaser is an "Accredited
Investor" as such term is defined in Rule 501 of the rules and regulations of
the Commission promulgated under the Securities Act.
Section 3.4. Investment Decision. (a) The Purchaser is acquiring the
Securities for its own account for investment only and not for or with a view to
resale or distribution in violation of the Act. The Purchaser has not entered
into any contract, undertaking, agreement or arrangement with any Person to
sell, transfer or pledge to such person or anyone else the Securities in
violation of the Act and the Purchaser has no present plans or intentions to
enter into any such contract, undertaking, agreement or arrangement.
(b) The Purchaser has the financial ability to bear the economic risk
of losing its entire investment in the Securities, is prepared to bear the
economic risk of its investment and can afford to sustain a complete loss of its
investment therein.
(c) The Purchaser has substantial experience in making investment
decisions of this type and, therefore, has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in the Securities.
(d) The Purchaser understands that the Securities constitute
restricted securities within the meaning of Rule 144 promulgated under the Act,
and that none of the Securities, or any interest therein, may be sold except
pursuant to an effective registration statement under the Act or in a
transaction exempt from registration under the Act, and understands the meaning
and effect of such restriction. The Purchaser acknowledges that the certificates
representing the Securities contain, and the certificates representing any
shares of Common Stock issued upon the exercise of the Warrants (the "Warrant
Shares") will contain, contain a legend summarizing the restrictions on transfer
of the Securities and that the Transfer Agent has been instructed not to effect
a transfer of the Shares or the Warrant Shares absent an opinion of counsel that
such transfer may be effected pursuant to the Act.
(e) The Purchaser has considered and, to the extent it believed such
discussion was necessary, discussed with its professional legal, tax and
financial advisers the suitability of an investment in the Securities for the
Purchaser's particular tax and financial situation and the Purchaser has
determined that the Securities are a suitable investment for it.
Section 3.5. Financial Resources. The Purchaser has, or has the
absolute and unconditional right to obtain prior to the Closing, sufficient
financial resources to enable it to consummate the transactions contemplated
hereby.
Section 3.6. Brokers. No person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Purchaser in connection with this Agreement or any of the transactions
contemplated hereby.
ARTICLE IV
Covenants
Section 4.1. Capital Call. Promptly following the execution and
delivery of this Agreement by the parties hereto, the Purchaser shall make a
capital call on its partners in accordance with the terms of its partnership
agreement in a sufficient amount to enable the Purchaser to consummate the
transactions contemplated hereby. The Purchaser shall use its commercially
reasonable efforts to obtain such capital from its partners so as to enable the
Closing to occur as soon as practicable following the date hereof.
Section 4.2. Commercially Reasonable Efforts. Each of the parties
hereto shall use its respective commercially reasonable efforts to effect the
consummation of the transactions contemplated hereby as promptly as practicable
following the date hereof.
Section 4.3. Further Assurances. From and after the Closing, each of
the parties hereto shall execute and deliver such other documents, certificates,
agreements or instruments and shall take or cause to be taken such other actions
as may be necessary or appropriate to more perfectly effect the sale of the
Securities to the Purchaser as contemplated hereby.
ARTICLE V
Survival, Amendment and Waiver
Section 5.1. Survival. The representations and warranties contained in
this Agreement or any certificate delivered in connection herewith shall survive
the sale of the Shares as contemplated hereby.
Section 5.2. Amendments. This Agreement (including the provisions of
this Section 5.2) may not be amended or modified except by an instrument in
writing signed on behalf of all of the parties affected by such amendment or
modification.
Section 5.3. Extension; Waiver. The parties hereto may (i) extend the
time for performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the agreements
of the other parties hereto or satisfaction of any of the conditions to such
party's obligations contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of a party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE VI
Miscellaneous
Section 6.1. Notices. All notices, requests, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, when delivered by courier, three
days after being deposited in the mail (registered or certified mail, postage
prepaid, return receipt requested), or when received by facsimile transmission
upon receipt of a confirmed transmission report, as follows:
If to the Sellers: c/o Special Situations Fund III, L.P.
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxx
If to the Purchaser: Xxxxxxx Xxxxx III, L.P.
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxx
Any party hereto, by notice given to the other parties hereto in accordance with
this Section 6.1 may change the address or facsimile transmission number to
which such notice or other communications are to be sent to such party.
Section 6.2. Expenses. Each of the parties hereto shall pay its own
expenses incident to this Agreement and the transactions contemplated herein.
Section 6.3. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York, without reference to the choice of law principles thereof.
Each of the parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
Section 6.4. Assignment; Successors and Assigns; No Third Party
Rights. This Agreement may not be assigned by operation of law or otherwise, and
any attempted assignment shall be null and void. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors, permitted assigns and legal representatives. This Agreement shall be
for the sole benefit of the parties to this Agreement and their respective
heirs, successors, permitted assigns and legal representatives and is not
intended, nor shall be construed, to give any Person, other than the parties
hereto and their respective heirs, successors, assigns and legal
representatives, any legal or equitable right, remedy or claim hereunder.
Section 6.5. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 6.6. Titles and Headings. The titles and headings in this
Agreement are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 6.7. Entire Agreement. This Agreement constitute the entire
agreement among the parties with respect to the matters covered hereby and
thereby and supersede all previous written, oral or implied understandings among
them with respect to such matters.
Section 6.8. Severability. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 6.9. Interpretation. Unless otherwise indicated to the
contrary herein by the context or use thereof: (i) the words, "herein,"
"hereto," "hereof" and words of similar import refer to this Agreement as a
whole and not to any particular Section or paragraph hereof; (ii) words
importing the masculine gender shall also include the feminine and neutral
genders, and vice versa; and (iii) words importing the singular shall also
include the plural, and vice versa.
Section 6.10. No Strict Construction. Each of the parties hereto
acknowledge that this Agreement has been prepared jointly by the parties hereto,
and shall not be strictly construed against either party.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
SPECIAL SITUATIONS FUND III, L.P.
By: /s/ Xxxxxx Xxxxx
_______________________________
Xxxxxx Xxxxx,
General Partner
SPECIAL SITUATIONS CAYMAN FUND, L.P.
By: /s/ Xxxxxx Xxxxx
_______________________________
Xxxxxx Xxxxx,
General Partner
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
By: /s/ Xxxxxx Xxxxx
________________________________
Xxxxxx Xxxxx,
General Partner
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: /s/ Xxxxxx Xxxxx
________________________________
Xxxxxx Xxxxx,
General Partner
XXXXXXX XXXXX III, L.P.
By: /s/ Xxxxxxx Xxxxx
________________________________
Xxxxxxx Xxxxx
